The rule
Under 12 CFR 32.3, a national bank's or savings association's loans and extensions of credit to one borrower may not exceed 15 percent of its capital and surplus. A further 10 percent is allowed if the amount above the 15 percent limit is fully secured by readily marketable collateral. To qualify, the bank must perfect a security interest and the collateral must be worth at least 100 percent of the amount above the general limit at all times.
Capital and surplus is defined in 12 CFR 32.2. For a bank that elected the community bank leverage ratio framework it is Tier 1 capital plus the allowance. For other national banks and federal savings associations it is Tier 1 plus Tier 2 capital as reported in the call report, plus the part of the allowance not included in Tier 2. This tool takes those three figures.
What the estimate leaves out
- State banks. Part 32 covers national banks, their domestic operating subsidiaries and savings associations, federal and state. A state-chartered bank follows its state's law, so check the state's banking code.
- Special limits. Eligible banks may lend more to one borrower for residential real estate, small business and small farm loans under 12 CFR 32.7. This tool does not add them.
- Related borrowers. Loans to people who depend on each other, or who share a direct benefit or a common enterprise, are combined, so the limit can bind on a group.
- The house limit. A bank may set a lower internal limit. The legal limit is the ceiling, not the amount a bank is comfortable holding.
- Participations. A national bank does not count the part of a loan it sells as a participation on a nonrecourse basis, when credit risk is shared pro rata (12 CFR 32.2). That is how a bank makes a loan larger than its own limit.
How this relates to the lender pages
A bank's page on this site shows an estimated largest single loan. It is 15 percent of Tier 1 capital plus the allowance from the call report. That agrees with the rule exactly for a community bank leverage ratio bank and approximates it for others, because the page does not add Tier 2 capital. It leaves out the added 10 percent, and it is our calculation, not a limit the bank has stated. This tool lets you add the figures the page leaves out.
Using it well
- Compare the loan to the 15 percent line. A request near the limit is a conversation about a participation, a smaller hold, or a different lender.
- Do not read it as appetite. A bank with room under its limit may still not want the loan. The limit says what it can lend, not what it will.
- Ask for the house limit. The lender knows the number that matters to your request.
In the data here
The call report carries Tier 1 capital, Tier 2 capital and the allowance for every bank that files. This site uses Tier 1 capital and the allowance, with the date of the filing, in the estimate on each bank's page. That estimate is labeled as one. It is not a rating and not a statement about safety or deposits.
Terms used here
- Legal lending limit: The most a bank may have outstanding to one borrower by law. For national banks it is 15 percent of capital and surplus, plus 10 percent more when the extra is fully secured by readily marketable collateral.
- Capital and surplus: The capital base a national bank's lending limit is measured against: tier 1 and tier 2 capital plus the part of the loan loss allowance that tier 2 leaves out.
- Tier 1 capital: A bank's core capital under the capital rule: common equity tier 1 plus additional tier 1. The minimums are 6 percent of risk-weighted assets and a 4 percent leverage ratio.
Sources
- 12 CFR 32.2 (definitions, capital and surplus) and 32.3 (lending limits), OCC, current as of .
- 12 CFR 32.1 (scope) and 32.7 (supplemental lending limits), current as of .
Next step: check the record
- Find a bank by sizeEach lender page shows its own estimated largest single loan, with the formula and the filing it comes from.
- Loan CompsDescribe a large loan and see which lenders have made loans of that size.
Keep reading
- The legal lending limit, explained: A bank may not lend more than a set share of its capital to one borrower. The rule explains why a large loan gets shared, and why a lender can say a request is too big for it.
- How to pick banks for a deal with public data: Public filings cannot tell you which bank will say yes. They can tell you which banks are large enough, already hold loans like yours and lend where the property is. That is enough to turn four thousand banks into six phone calls.
Estimate from your inputs. Not a quote or advice about which loan to take. Another tool: all calculators.