Texas Register, Volume 37, Number 35, Pages 6819-7008, August 31, 2012 Page: 6,843
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(11) Qualifying central counterparty--As defined in 2 of
the federal capital adequacy guidelines.
(12) Qualifying master netting agreement--As defined in
2 of the federal capital adequacy guidelines.
(13) Sale of federal funds--A transaction between deposi-
tory institutions involving the transfer of immediately available funds
resulting from credits to deposit balances at Federal Reserve Banks, or
from credits to new or existing deposit balances due from a correspon-
dent depository institution.
(14) Securities financing transaction--A repurchase agree-
ment, reverse repurchase agreement, securities lending transaction, or
securities borrowing transaction.
(15) Tier 1 capital--A state bank's unimpaired capital and
surplus. A state bank's Tier 1 capital is calculated under the federal
risk-based capital standards, is reported in the bank's most recent call
report, and is periodically re-calculated as provided by 12.11 of this
title (relating to Calculation of Lending Limit).
(16) Unimpaired capital and surplus--A state bank's core
capital, equal to its Tier 1 capital calculated under the federal risk-based
capital standards, and referred to as Tier 1 capital in this chapter.
12.3. Loans and Extensions of Credit.
(a) Loans or extensions of credit for purposes of the Finance
Code, 34.201, and this subchapter include:
(1) - (8) (No change.)
(9) aggregate cash surrender value of life insurance poli-
cies from any one insurance company; [and]
(10) any credit exposure to a person arising from a deriva-
tive transaction or a securities financing transaction between a state
bank and the person, as determined pursuant to 12.12 of this title (re-
lating to Credit Exposure Arising from Derivative and Securities Fi-
nancing Transactions); and
(11) [(o0)] another category of transactions that is the
equivalent of a loan or extension of credit as determined by the
banking commissioner in the exercise of discretion.
(b) Loans or extensions of credit for purposes of the Finance
Code, 34.201, and this subchapter do not include:
(1) - (2) (No change.)
(3) that portion of a loan or extension of credit sold as a par-
ticipation by a bank on a nonrecourse basis, provided the participation
results in a pro rata sharing of credit risk proportionate to respective
interests of the originating and participating lenders, except that:
(A) notwithstanding any requirement of Statement of
Financial Accounting Standards No. 166 (Financial Accounting Stan-
dards Bd. 2009), for lending limit purposes, if the participation agree-
ment provides that repayment must be applied first to the portions sold,
a pro rata sharing will be considered to exist only if, in the event of de-
fault or comparable event provided in the agreement, the participants
share in all subsequent repayments and collections in proportion to
their actual percentage participation at the time of the occurrence of
(B)- (D) (No change.)
(4) (No change.)
(5) the sale of Federal funds with a maturity of one day or
less, or Federal funds sold under a continuing contract, including con-
tracts that provide for weekly settlement if the parties have the contrac-
tual right to obtain their funds at maturity of each transaction; [er]
(6) intraday credit exposures arising from a derivative
transaction or a securities financing transaction; or
(7) [(6)] a renewal or restructuring of a nonconforming
loan as a new loan or extension of credit, subject to compliance with
12.10(b) of this title (relating to Nonconforming Loans).
12.6. Loans Not Subject to Lending Limits.
(a) - (h) (No change.)
(i) Credit exposures arising from transactions financing cer-
tain government securities. Pursuant to Finance Code, 34.201(b)(2),
credit exposures arising from securities financing transactions in which
the securities financed are securities in which a state bank may invest
without limit pursuant to Finance Code, 34.101(d), are not subject to
the limitations of Finance Code, 34.201, and this subchapter.
12.10. Nonconforming Loans.
(a) A loan or extension of credit, within a bank's legal lending
limit when made, will not be considered a violation of the applicable
lending limit but will be cited as nonconforming if the loan no longer
complies with the bank's legal lending limit because:
(1) - (3) (No change.)
(4) the lending limit or capital definitions or standards have
changed after the date the loan or extension of credit was originated;
(5) in the case of a credit exposure arising from a trans-
action identified in 12.12(a) of this title (relating to Credit Exposure
Arising from Derivative and Securities Financing Transactions) and
measured by the internal model method specified in 12.12(b)(1)(A)
or (c)(1)(A) of this title, an increase in the credit exposure subject to
the lending limits of Finance Code, 34.201, or this subchapter after
execution of the transaction; or
(6) [(5)] collateral securing the loan or extension of credit
to satisfy the requirements of a special lending limit or lending limit
exception has declined in value.
(b) A bank must exercise reasonable efforts to bring a loan or
extension of credit that is nonconforming as a result of circumstances
described in subsection (a)(1) - (5) [(a)(! - (4)] of this section into
conformity with the legal lending limit, consistent with safe and sound
banking practices. As a last resort, a bank may renew or restructure an
existing, nonconforming loan or extension of credit as a new, noncon-
forming loan or extension of credit without violating the Finance Code
or this subchapter, unless:
(1) - (3) (No change.)
(c) (No change.)
12.12. Credit Exposure Arising from Derivative and Securities Fi-
(a) Scope. This section sets forth the rules for calculating the
credit exposure arising from a derivative transaction or a securities fi-
nancing transaction entered into by a state bank for purposes of deter-
mining the bank's lending limit pursuant to Finance Code, 34.201, and
(b) Derivative transactions.
(1) Non-credit derivatives. Subject to paragraphs (2) and
(3) of this subsection, a state bank shall calculate the credit exposure
to a counterparty arising from a derivative transaction by one of the
following methods. Subject to paragraph (3) of this subsection, a bank
shall use the same method for calculating counterparty credit exposure
arising from all of its derivative transactions.
PROPOSED RULES August 31, 2012 37 TexReg 6843
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Texas. Secretary of State. Texas Register, Volume 37, Number 35, Pages 6819-7008, August 31, 2012, periodical, August 31, 2012; Austin, Texas. (texashistory.unt.edu/ark:/67531/metapth253227/m1/25/: accessed September 20, 2017), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government Documents Department.