two copies of the transcript to the Regional Administrator, being borne by the person or persons requesting the opportunity to be heard, except for hearings ordered by the Comptroller's office, where the applicant will bear the expense of furnishing transcripts of the record.

(f) The record. The public file described in § 5.3 shall automatically be deemed a part of the record of these proceedings a well as all evidence submitted pursuant to § 5.10(c) and the transcript described in § 5.10(e).

§ 5.11

Closing of the public file.

If requested by any participant, the public file shall remain open for 15 days following receipt of the transcript by the Regional Administrator during which time the applicant and protestants may submit additional written statements. A copy of any statement so submitted during this period of time shall also be sent simultaneously to the other persons represented at the hearing. 141 FR 47937, Nov. 1, 1976]

§ 5.12 Retained authority.

The Comptroller may adopt such different procedures as he deems necessary and reasonable in acting upon any particular application.

§ 5.13 Comptroller's decision.

The applicant and all persons so requesting in writing shall be notified of the final disposition of the application. [41 FR 47937, Nov. 1, 1976]

§ 5.14 Computation of time.

In computing any period of days provided for in this part, the day of the act from which the period begins to run shall not be included. The last day of the period so computed shall be included, unless it is a Saturday, a Sunday, or a legal holiday, in which event the period runs until the end of the next day which is not a Saturday, a Sunday, or a legal holiday. As used in this section, "legal holiday" means a day on which the office of the appropriate Regional Administrator remains closed.

PART 6-LOANS MADE BY NATIONAL BANKS SECURED BY OBLIGATIONS OF THE UNITED STATES

AUTHORITY: The provisions of this Part 6 issued under R.S. 5200, as amended; 12 U.S.C. 84(8).

SOURCE: The provisions of this Part 6 appear at 30 FR. 14365, Nov. 17, 1965, unless otherwise noted.

§ 6.1 Scope and application.

(a) This part is issued by the Comptroller of the Currency with the approval of the Secretary of the Treasury under authority of paragraph (8) of section 5200 of the Revised Statutes, as amended (12 U.S.C. 84), and section 321(b) of the act of August 23, 1935 (49 Stat. 713);

(b) This part applies to loans made by National Banks secured by either direct obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States. § 6.2 General authorization.

The obligations to any national banking association of any person, copartnership, association, or corporation secured by not less than a like amount (at par or face value) of either direct obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States, shall not be subject to any limitation based upon the capital and surplus of the association.

INTEREST CHARGES AND USURY

7.7310 Charging interest at rates permitted competing institutions; charging interest to corporate borrowers. 7.7312 Loan agreement providing for share in profits, income or earnings. 7.7316 Charging additional fee for credit report or investigation of borrower. TRANSACTIONS WITH AFFILIATES

7.7355 Debts of affiliate as bank indebted

ness.

7.7360 Loans secured by stock or obligations of an affiliate.

7.7361 Standby letters of credit or ineligible acceptance on behalf of affiliate. 7.7365 Federal funds transactions between affiliates.

7.7370 Interest-bearing deposits between affiliated banks.

OPERATIONS THROUGH SUBSIDIARIES

7.7876 Operating subsidiaries. 7.7378 Issuance of credit cards.

7.7379 Servicing of mortgage and other loans as agent.

7.7380 Loans originating at other than banking offices.

7.7390 Bank service corporations.

7.7590 7.7595

Interest rate escalation clause.

Acquisition of national bank stock by employees; profit-sharing or pension trust.

7.8000 Charges by banks.

AUTHORITY: The provisions of this Part 7 issued under R.S. 324 et seq., as amended; 12 U.S.C. 1 et seq.

SOURCE: The provisions of this Part 7 appear at 36 F.R. 17000, Aug. 26, 1971, unless otherwise noted.

Subpart A-Lending Limits OBLIGATIONS SUBJECT TO LENDING LIMITS § 7.1100 Lending limits.

(a) Law-12 U.S.C. 84.

The total obligations to any national banking association of any person, copartnership, association, or corporation shall at no time exceed 10 per centum of the amount of the capital stock of such association

actually paid in and unimpaired and 10 per centum of its unimpaired surplus fund.

[For exceptions to lending limits, see 7.1510 et seq.]

(b) Unimpaired surplus. The term "unimpaired surplus fund" as used in 12 U.S.C. 84 shall consist of the amounts reportable in the following items as defined in the instructions for preparation of the Report of Condition form:

(1) Fifty percent of Reserve for possible loan losses;

(2) Subordinated notes and debentures;

(3) Surplus;

(4) Undivided profits; and

(5) Reserve for contingencies and other capital reserves (excluding accrued dividends on preferred stock).

NOTE.-The above definition of "unimpaired surplus fund" also is used in computing other statutory limitations. See § 7.7545.

136 FR 17000, Aug. 26, 1971, as amended at 41 FR 10211, Mar. 10, 1976]

§7.1105 Purchase of open accounts.

(a) General. The purchase of open accounts is a part of the business of banking and within the power of a national bank. Such accounts need not in every case represent an evidence of debt.

(b) Export transactions. A national bank may also purchase open accounts in connection with export transactions, particularly when the accounts are protected by insurance such as that provided by the Foreign Credit Insurance Association and the Export-Import Bank.

§ 7.1110 Purchase of paper: repurchase

agreements.

Where a bank buys third party paper (including open accounts), but the seller agrees to repurchase it upon default, the seller's obligation to repurchase is subject to the lending limit and is measured by the total unpaid balance of the paper owned by the bank less the applicable seller's reserves against defaulted paper, if any. Where the seller's obligation to repurchase is limited, it is measured by the total amount of paper the seller may ultimately be obligated to repurchase.

§7.1115 Purchase of paper: seller's re

serve.

Where no more than an agreed percentage of the price paid for third party paper is retained and credited to a re

(a) Law-12 U.S.C. 84:

The term "obligations" shall mean the direct liability of the maker or acceptor of paper discounted with or sold to such association and the liability of the endorser, drawer, or guarantor who obtains a loan from or discounts paper with or sells paper under his guaranty * *

(b) The liability of a maker, acceptor, drawer, endorser, or guarantor is an obligation within the meaning of this section when the party has obtained a loan or has sold or discounted the paper.

(c) The liability of an endorser, drawer, or guarantor who does not receive any of the proceeds of the loan or discount from the bank is ordinarily not considered an obligation of such endorser, drawer, or guarantor for the purposes of 12 U.S.C. 84.

§ 7.1130 Sale of Federal Reserve funds to another bank.

When a bank purchases Federal Reserve funds from another bank, the transaction ordinarily takes the form of a transfer from a seller's account in a Federal Reserve Bank to the buyer's account therein, payment to be made by the purchaser, usually with a specified fee. The transaction does not create on the part of the buyer an obligation subject to 12 U.S.C. 84 or a borrowing subject to 12 U.S.C. 82, but is to be considered a purchase and sale of such funds. But see § 7.7365 for federal funds transactions between affiliates. [39 FR 3927, Jan. 31, 1974]

§7.1131 Purchase or sale of securities:

resale or repurchase agreement.

The purchase or sale of securities by a bank, under an agreement to resell or repurchase at the end of a stated period is not a borrowing subject to 12 U.S.C. 82 nor an obligation subject to the lending limit of 12 U.S.C. 84.

§ 7.1135 Sale of loan participations: agreement on effect of default.

Where a participation in a loan is sold to another bank the agreement may provide that repayment must first be applied to the share sold. Since one of the purposes of such a sale may be to reduce the bank's retention of loans which may exceed its lending limit, the agreement should as a matter of prudent banking practice also provide that, in the event of default or a comparable event defined in the agreement, the participants shall share in all subsequent repayments and collections in proportion to the percentage of participation at the time of the happening of the event. 87.1150 Interest or discount on loan.

The lending limit applies, without regard to the form of the obligation to the amounts actually advanced by the bank and not to any interest which may accrue thereon.

§ 7.1160 Application of lending limits to standby letters of credit.

(a) Definition. A "standby letter of credit" is any letter of credit, or similar arrangement however named or described, which represents an obligation to the beneficiary on the part of the issuer (1) to repay money borrowed by or advanced to or for the account of the account party or (2) to make payment on account of any indebtedness undertaken by the account party, or (3) to make payment on account of any default by the account party in the performance of an obligation.1

(b) Subject to lending limits. A standby letter of credit is subject to the limitations of section 84 and must be combined with any other nonexcepted loans to the

1 As defined in this subsection (a), the term "standby letter of credit" does not include commercial letters of credit and similar instruments where the issuing bank expects the beneficiary to draw upon the issuer, which do not "guaranty" payment of a money obligation and which do not provide for payment in the event of default by the account party.

account party by the issuing bank for the purposes of applying section 84.'

(c) Exceptions. All standby letters of credit shall be subject to the provisions of this paragraph except where:

(1) Prior to or at the time of issuance, the issuing bank is paid an amount equal to the bank's maximum liability under the standby letter of credit; or

(2) Prior to or at the time of issuance, the issuing bank has set aside sufficient funds in a segregated deposit account, clearly earmarked for that purpose, to cover the bank's maximum liability under the standby letter of credit; or

(3) The Comptroller of the Currency has found that a particular standby letter of credit or class of standby letters of credit will not expose the issuer to the similar risk of loss as would a loan to the account party.

[39 FR 28974, Aug. 13, 1974] § 7.1161

Overdrafts.

The use of overdrafts which represent prearranged financing is a legal means of extending credit. Significantly sizable overdrafts will be reviewed for credit quality and adherence to statutory lending limits in the same manner as other loans.

§ 7.1180 Investment securities: separate limitation.

The lending limits prescribed by 12 U.S.C. 84 are separate and distinct from the investment limits prescribed by 12 U.S.C. 24. Accordingly, a national bank may make loans to one borrower to the full amount permitted by 12 U.S.C. 84 and also hold eligible investment securities of the same obligor to the full amount permitted by 12 U.S.C. 24.

§ 7.1181 Loan to industrial development authority.

A loan or other extension of credit to an industrial development authority or similar public entity created for the purpose of constructing and leasing a plant facility to an industrial occupant is not an obligation of the authority for the purpose of 12 U.S.C. 84 if: (a) The bank relies on the credit of the industrial occupant in making the loan; (b) the authority's liability with respect to the

Where the standby letter of credit is subject to a nonrecourse participation agreement with another bank or banks, this paragraph shall apply to the issuer and each participant in the same manner as in the case of a participated loan.