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F ederal reserve Bank DALLAS, TEXAS of D allas 75222 Circular No. 80-211 November 6, 1980 BULLETIN 2 "LOANS" TO ALL DEPOSITORY INSTITUTIONS IN THE ELEVENTH FEDERAL RESERVE DISTRICT: The Depository Institutions Deregulation and Monetary Control Act of 1980 entitles any depository institution that holds transaction accounts or nonpersonal time deposits to the same borrowing privileges that are allowed Federal Reserve member banks. To implement this and make other needed minor revisions, our Bulletin 2, "Loans" has been revised, effective immediately, and a copy is enclosed. Member banks and others maintaining regulations binders should file this bulletin in their binders, and the bulletin dated August 1979 should be destroyed. Nonmember depository institutions who have not yet been supplied a binder should retain the enclosed bulletin for future use. Sincerely yours, Ernest T. Baughman President Enclosure Banks and others are encouraged to use the following incoming W ATS numbers in contacting this Bank: 1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the extension referred to above. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) B U L L E T I N 2 Loans F E D E R A L RE S E RV E B A N K O F D A L L A S SCOPE This bulletin sets forth the general terms and conditions under which we may extend credit accommodations to member banks and other depository institutions and the procedures to be followed in connection with extensions of such accommodations. All references in this bulletin to us apply equally to our Branches, and depository institutions located in the territory of any of those Branches should request credit accommodations from the appropriate Branch. Additional information, including statements concerning the policy by which the “discount window” is administered, may be found in Regulation A and the Federal Reserve Act (see references in section 2 of this bulletin). Our current discount rate and our current rates on advances are found in Supplement A to this bulletin. V BULLETIN 2 FEDERAL RESERVE BANK OF DALLAS TABLE OF CONTENTS Payment at maturity and prepayment 5.20 Renewal 5.25 Advances due on Saturdays, Sundays, or holidays 5.30 Use of reserve, pass-through, or other accounts 5.35 Effectiveness of continuing lending agreement Section 1, DEFINITIONS 5.15 1.00 1.05 1.10 1.15 Acceptable and acceptability Act Advance Authorized officer and duly authorized officer 1.20 Borrow and borrowing 1.25 Collateral 1.30 Depository institution 1.35 Basic rate 1.40 Paper 1.45 Reference to Bulletin 1 Section 6, PROCEDURES FO R COLLATERAL GENERALLY 6.00 Section 2, REFERENCES 6.05 6.10 Section 3, U N I F O R M PROVISIONS 3.00 3.05 3.10 3.15 3.20 3.25 3.30 3.35 Kinds of credit accommodations Continuing lending agreement Granting of credit accommodations Collateral security Rates Statements and reports Authorization of officers to obtain advances and discounts Agreement to this bulletin 6.15 Section 7, PAPER 7.00 7.05 7.10 7.15 7.20 7.25 7.30 7.35 Section 4, CREDIT A C C O M M O D A T I O N S 4.00 4.05 4.10 Types of credit accommodations Usual form of accommodations Other information 8.00 8.05 8.10 10-80 Approval of paper Endorsement Demand paper Secured paper Loan participations Financial statements Currency of financial statements Collection of paper Section 8, SECURITIES AS COLLATERAL Section 5, PROCEDURES CONCERNING ADVANCES 5.00 5.05 5.10 Collateral must have adequate maturity Release of collateral Alternative procedure when payments are received on collateral Off-premises collateral arrangements Qualifying to borrow Filing of signatures Information to be furnished Securities held elsewhere Securities held by an approved custodian depository institution Simplified description in certain cases Section 9, RIGHT T O A M E N D i BULLETIN 2 FEDERAL RESERVE BANK OF DALLAS Section 1, DEFINITIONS institution pledges to secure an advance. 1.00 Reference: sections 6, 7, and 8 of this bulletin. Acceptable and acceptability “Acceptable” and “acceptability” refer to the credit quality of paper and other collateral. Ac ceptability depends on the financial responsibility of makers, endorsers, or guarantors, or on the security behind the obligation, or on all of these, as appropriate. W e determine to our own satisfaction the acceptability of paper and cer tain other collateral. 1.05 1.30 “Depository institution” means a member bank or another depository institution, as that term is defined in section 19(b) of the Act, which holds transaction accounts or nonpersonal time deposits and which is eligible to obtain advances from or discounts with a Federal Reserve Bank. 1.35 Act Advance “Advance” means a borrowing under the Contin uing Lending Agreement Regarding Advances by Federal Reserve Bank of Dallas (Form LD-176), or at our option on a note of the borrowing depository institution. All advances are secured. Reference: Supplement A to this bulletin for current rates. 1.40 1.15 Authorized officer and duly authorized officer Reference: section 7 of this bulletin. “Authorized officer” and “duly authorized of ficer” mean, for purposes of this bulletin, an of ficer or other agent of a depository institution cur rently holding one of the positions which the depository institution’s borrowing resolution authorizes to borrow from this Bank, and whose signature is currently on file with us. 1.45 Section 2, REFERENCES In addition to the specific references found throughout this bulletin, the following general references are important to an understanding of borrowing transactions with this Bank: Borrow and borrowing “Borrow” and “borrowing” refer to a depository institution receiving an extension of credit from this Bank. (1) Section 201.1(b) of Regulation A, containing general principles concerning the use of Federal Reserve credit. Reference: 3.00, 4.00, and 4.05 of this bulletin. (2) Section 201.2 of Regulation A, covering defini tions of depository institutions eligible to borrow. Collateral (3) Section 201.3 of Regulation A, covering availability and terms. “Collateral” refers to obligations in the form of securities or paper which a borrowing depository 10-80 Reference to Bulletin 1 Several definitions, rules of construction, and other provisions applicable to this bulletin are found in our Bulletin 1, “General Provisions,” and are incorporated herein by reference. Reference: 3.30 and 5.05 of this bulletin. 1.25 Paper “Paper” refers to notes and similar obligations of various obligors, usually customers of borrowing depository institutions. Reference: 3.05 and 5.35 of this bulletin. 1.20 Basic rate “Basic rate” refers to the lowest rate charged for borrowing. It is fixed by our Board of Directors subject to review and determination by the Board of Governors of the Federal Reserve System. “Act” means the Federal Reserve Act. 1.10 Depository institution 1 BULLETIN 2 FEDERAL RESERVE BANK OF DALLAS (4) S ectio n 201.4 of R e g u la tio n A, c o v e rin g a d v a n c e s a n d d is c o u n ts. (5) S e c tio n 201.5 o f g e n e r a l r e q u ir e m e n ts . R e g u la tio n A, 3.05 In g e n e r a l, w e w ill m a k e a d v a n c e s to a d e p o s ito ry in s titu tio n p u r s u a n t to a c o n tin u in g le n d in g a g r e e m e n t (Form LD-176) to b e e x e c u te d b y a du ly a u th o riz e d o ffic e r of th e d e p o s ito ry in stitu tio n ; a n d p a r t i c u l a r a d v a n c e s p u r s u a n t to s u c h a g r e e m e n t w ill b e e v id e n c e d b y a n a d v ic e of c r e d it t h a t w e s h a ll tr a n s m it to th e d e p o s ito ry in s titu tio n a t th e tim e of th e p a r t i c u l a r a d v a n c e , sp e c ify in g th e a m o u n t a n d m a tu rity of th e a d v a n c e a n d th e r a te of in te r e s t w ith r e s p e c t th e r e to . H o w e v e r, w e r e s e r v e th e rig h t a t a n y tim e to r e q u ir e th e e x e c u tio n b y a n y d e p o s ito ry in s titu tio n of a p ro m is s o ry n o te w ith r e s p e c t to a p a r ti c u l a r a d v a n c e o r p a r tic u la r a d v a n c e s . c o v e rin g (6) T h e follow ing p o rtio n s of th e A ct: s e c tio n s 4(8), 9(13), 10(b), 12(2), 13(2), 13(3), 13(4), 13(5), 13(6), 13(7), 13(8), 13(10), 13(12), 13(13), 1 3 a(l), 13a(2), 13a(4), 14(5), 19(5), a n d 24(4). Section 3, UNIFORM PROVISIONS1 3 .0 0 C o n tin u in g le n d in g a g r e e m e n t K in d s o f c r e d it a c c o m m o d a tio n s U n d e r p ro v isio n s of th e F e d e r a l R e s e rv e A c t a n d s u b je c t to R eg u la tio n A a n d in th e lig h t of th e g e n e r a l p rin c ip le s s e t fo rth in t h a t re g u la tio n , w e a r e a u th o r iz e d to m a k e c r e d it a v a ila b le to d e p o s ito ry in s titu tio n s by th e follow ing m e a n s: R e fe re n c e : 5.35 o f this bulletin. (a) W e m a y m a k e a d v a n c e s to a d e p o s ito ry in s titu tio n , p u r s u a n t to se c tio n 10(b) of th e A ct, fo r p e rio d s n o t to e x c e e d fo u r m o n th s ,2 s e c u r e d to o u r s a tis fa c tio n , w h e th e r o r n o t th e c o lla te r a l m e e ts th e r e q u ir e m e n ts of p a r a g r a p h s (b) o r (c) b elo w . 3 .1 0 G ra n tin g o f c r e d it a c c o m m o d a tio n s (a) In g e n e r a l, w e do n o t r e q u ir e t h a t a r e q u e s t for a n a d v a n c e b e a c c o m p a n ie d by a w r itte n a p p lic a tio n , a n d a n y s u c h r e q u e s t m ay b e m a d e by te le p h o n e , le tte r , o r w ir e b y a n a u th o r iz e d o ffic e r of a d e p o s ito ry in s titu tio n . H o w e v e r, w e r e s e r v e th e r ig h t to r e q u ir e th e s u b m issio n of a w r itte n a p p lic a tio n . E a c h r e q u e s t fo r a n a d v a n c e m u st sp e c ify th e a m o u n t a n d m a tu r ity of th e r e q u e s te d a d v a n c e , th e c o lla te r a l o ffe re d a s s e c u r ity , a n d , in th e e v e n t s u c h c o lla te r a l is n o t a lr e a d y h e ld by u s, th e m a n n e r in w h ic h s u c h c o lla te r a l w ill b e p l a c e d in o u r p o s s e s sio n , u n d e r o u r c o n tro l, o r o th e rw is e p le d g e d to u s. A ny d e p o s ito ry in s titu tio n d e s irin g to d is c o u n t p a p e r w ith u s , a s in d ic a te d in 3.00(d) ab o v e , s h o u ld c o n su lt u s r e g a r d ing th e p r o c e d u r e to b e follow ed. (b) W e m ay m a k e a d v a n c e s to a d e p o s ito ry in s titu tio n , p u r s u a n t to s e c tio n 13 of th e A ct, fo r p e rio d s n o t e x c e e d in g 90 d a y s ,2 on th e s e c u r ity of o b lig a tio n s of, o r fully g u a r a n te e d a s to b o th p r in c ip a l a n d in te r e s t by, th e U n ite d S ta te s o r a n y a g e n c y of th e U n ite d S ta te s . (c) W e m a y m a k e a d v a n c e s to a d e p o s ito ry in stitu tio n , p u r s u a n t to s e c tio n 13 of th e A ct, fo r p e rio d s n o t e x c e e d in g 90 d a y s ,2 on th e s e c u rity of a n y p a p e r eligible fo r d is c o u n t o r fo r p u r c h a s e by th e R e se rv e B a n k s u n d e r p ro v isio n s of th e A ct. (d) W e m ay d is c o u n t c u s to m e r s ’ p a p e r of a d e p o s ito ry in s titu tio n , p u r s u a n t to s e c tio n s 13 a n d 1 3 a of th e A ct, if s u c h p a p e r s a tis f ie s th e “ e lig ib ility ” r e q u ir e m e n ts s e t fo rth in s e c tio n 201.4 of R e g u la tio n A. In o r d in a r y c ir c u m s ta n c e s , w e w o u ld p r e f e r to m a k e a d v a n c e s s e c u r e d by s u c h c o lla te ra l. (b) If a r e q u e s t fo r c r e d it is re c e iv e d b y u s b e fo re 2 p.m . (3 p.m . C e n tra l T im e in u n u s u a l c a s e s a n d w h e n th e c o lla te r a l is h e ld a t th is B an k o r a p p ro v e d c o lla te r a l is b e in g h e ld in a b e y a n c e ) a n d th e r e q u e s t is a p p ro v e d , th e b o rro w in g d e p o s ito ry in s titu tio n w ill b e g iv en im m e d ia te c r e d it in its r e s e r v e o r c le a rin g o r o th e r a c c o u n t on o u r books u n le s s th e d e p o s ito ry in s titu tio n r e q u e s ts t h a t c r e d it b e g iv en on a s u b s e q u e n t d ay . R e fe re n c e : se c tio n 4 o f th is b u lletin fo r th e v a rio u s p r o g r a m s by w h ich c r e d it is e x te n d e d u n d e r th e s ta tu to r y p ro v isio n s c ited ab o v e, a n d p a r tic u la r ly 4.05 fo r th e u s u a l m e th o d of e x te n d in g c re d it. A lso , 201.3 o f R eg ulation A. 3.15 C o lla te ra l s e c u r ity (a) C o lla te ra l o ffe re d a s s e c u r ity fo r a n y a d Section 3 contains uniform provisions on extensions of credit adopted by all Federal Reserve Banks. Sections 5 through 8 contain information, procedures, and other provisions applicable only to the Federal Reserve Bank of Dallas. it is expected, however, that advances normally will be for shorter periods commensurate with the period of time Federal Reserve credit is actually needed. 10-80 2 FEDERAL RESERVE BANK OF DALLAS BULLETIN 2 vance, in addition to meeting requirements of the continuing lending agreement or any applicable off-premises or third-party custody agreement, must be: (i) acceptable to us; (ii) endorsed or assigned by the depository institution (except in the case of bearer paper); (iii)in such form, or ac companied by such documents, that it may be transferred readily to us without further action by the depository institution. provisions of that bulletin. In such event, such securities will be handled pursuant to the terms and conditions of that bulletin notwithstanding any inconsistent provisions herein. (b) Under certain conditions, collateral offered as security for our advances may be held by the depository institution itself or another depository institution or Federal Reserve Bank or other custodian authorized by us in lieu of actual delivery of the collateral to us. W e should be con sulted in advance with respect to any such ar rangements, and we reserve the right to disap prove any such arrangement. In general, offpremises custody arrangements are governed by 3.25, 6.15, 7.00, and 8.00 of this bulletin and the provisions on our Form BD-59, and third-party custody arrangements are governed by 8.00 and 8.05 of this bulletin. 3.20 Rates Reference: 6.10 of this bulletin for an alternative to the procedure in 3.15(c), above; and sections 6 through 8 of this bulletin for provisions dealing with collateral of various types. Interest on an advance will be payable to us at the time of repayment of the advance at the ap plicable rate indicated in Supplement A to this bulletin at the time the advance was made, except that, if the rate is changed while the advance is outstanding, the new rate shall apply from and after the effective date of such change, unless the advance and all interest due with respect thereto are paid in full by the borrowing depository in stitution before our close of business on the effec tive date of the change of rate. Interest will be computed on a basis of 365 days to the year and will continue to accrue after the maturity of any advance with respect to any outstanding portion of the advance until the advance and all interest due with respect thereto are paid in full. The rate of interest after maturity, including the occur rence of any instance of default stated in the con tinuing lending agreement, with respect to any ad vance shall be the rate specified for advances under 12 USC 347c unless we have agreed in writing that a different rate would apply after the maturity of that advance. Interest with respect to any advance shall continue to accrue at the prematurity rate until the advance is actually repaid, notwithstanding the occurrence of any public holiday or emergency public holiday or another event postponing the date of final pay ment of an advance that would not constitute an instance of default under the terms of the continu ing lending agreement. (c) In the absence of our explicit instructions to the contrary, if a depository institution that has pledged or discounted paper with us, or has other wise transferred collateral to us, receives any funds in payment for such paper or other col lateral so pledged, discounted, or transferred, the depository institution must immediately remit the funds to us, and until so remitted the payment will be considered as having been received in trust for us. (d) Subpart 0 of Part 306 of 31 CFR, comparable regulations issued by certain agencies, in strumentalities, and establishments of the United States (“Agencies”), and our current Bulletin 14, “Book-Entry Securities,” provide for the maintenance in book-entry form of United States and certain Agency securities deposited with us as collateral for our advances. Transferable Treasury securities and securities issued by those Agencies listed in Appendix B to our Bulletin 14 which are on deposit or are hereafter deposited as collateral for our advances will be converted into book-entry form and maintained in a bookentry collateral account in accordance with the 10-80 Reference: Supplement A to this bulletin for our current rates; also, 5.15 and 5.25 of this bulletin. 3.25 Statements and reports In connection with any advance or discount, we 3 FEDERAL RESERVE BANK OF DALLAS BULLETIN 2 (a) S h o rt-te rm a d ju s tm e n t c r e d it u n d e r 201.3(a) of R e g u la tio n A. T h is ty p e of c r e d it is g r a n t e d a t th e b a s ic r a t e b u t u n d e r c e r t a i n c ir c u m s ta n c e s a s u r c h a r g e m a y b e im p o sed . r e s e r v e th e r ig h t to r e q u ir e a c u r r e n t c o n d itio n r e p o r t of th e b o rro w in g d e p o s ito ry in s titu tio n , a r e c e n t b a la n c e s h e e t a n d p ro fit-a n d -lo ss s t a t e m e n t o f a n y o b lig o r o n p a p e r o f fe re d a s c o lla te r a l fo r a n a d v a n c e o r fo r d is c o u n t, a n d s u c h o th e r r e p o r ts a n d s ta te m e n ts a s w e m a y d e e m d e s ir a b le . In a d d itio n , w e r e s e r v e th e rig h t to v is it th e p r e m is e s w h e r e a n y c o lla te r a l p le d g e d to u s to s e c u r e a n a d v a n c e is k e p t a n d to in s p e c t th e col l a t e r a l d u rin g th e r e g u la r b u s in e s s h o u r s a p p lic a b le a t a n y p la c e w h e r e s u c h c o lla te r a l is k e p t. (b) S e a s o n a l c r e d it u n d e r 201.3(bX l) of R e g u la tio n A. T h is ty p e of c r e d it is g r a n te d a t th e b a s ic r a t e b u t u n d e r c e r ta in c ir c u m s ta n c e s a s u r c h a r g e m a y b e im p o sed . (c) O th e r e x te n d e d c r e d it u n d e r 201.3(bX2) of R e g u la tio n A. T h is ty p e of c r e d it is p ro v id e d w h e r e th e r e a r e e x c e p tio n a l c ir c u m s ta n c e s o r p r a c t ic e s involving only a p a r t i c u l a r d e p o s ito ry in s titu tio n , a n d a ls o to a c c o m m o d a te th e n e e d s of d e p o s ito ry in s titu tio n s , in c lu d in g th o s e w ith lo n g e r te r m a s s e t p o rtfo lio s, t h a t m a y b e e x p e rie n c in g d iffic u ltie s a d ju s tin g to c h a n g in g m oney m a r k e t c o n d itio n s o v e r a lo n g e r p e rio d , p a r tic u la r ly in tim e s o f d e p o s it d is in te rm e d ia tio n . A s p e c ia l r a t e o r r a t e s a b o v e th e b a s ic r a t e m ay b e a p p lie d . Reference: 5.10, 7.30, and 7.35 of this bulletin. 3 .3 0 A u t h o r i z a t i o n o f a d v a n c e s a n d d is c o u n ts o ffic e rs to o b ta in A c e r tif ie d c o p y of a re s o lu tio n a d o p te d b y a d e p o s ito ry in s titu tio n ’s b o a r d o f d ir e c to r s o r tr u s te e s o r o th e r g o v e rn in g b o a r d o r co m m itte e a u th o r iz in g d e s i g n a t e d o f f ic e r s to e x e c u te a g re e m e n ts w ith u s a n d to o b ta in a d v a n c e s o r d is c o u n ts on its b e h a lf fro m u s m u st b e o n file w ith u s in o r d e r fo r a n y d e p o s ito ry in s titu tio n to o b ta in c r e d it a c c o m m o d a tio n s. O u r b o rro w in g re so lu tio n fo rm (Form BD-1) sh o u ld b e u s e d fo r th is p u rp o s e . 4.05 C re d it a c c o m m o d a tio n s of th e ty p e s d e s c r ib e d in 4 .0 0 of th is b u lle tin a r e u s u a lly m a d e in th e fo rm of a d v a n c e s c o lla te r a liz e d to o u r s a tis f a c tio n by s e c u r itie s o r p a p e r w ith o u t r e g a r d to th e elig ib ili ty o r o th e r r e q u ir e m e n ts of s e c tio n s 13 a n d 1 3a of th e A ct. A ny s u c h c o lla te r a l m u s t b e a c c e p ta b le to u s, a n d w e m u s t o b ta in a p e r f e c te d s e c u r ity in t e r e s t in it. Reference: 5.05 of this bulletin for additional re quirements concerning the filing of signatures. 3.35 A g re e m e n t to th is b u lle tin E a c h d e p o s ito ry in s titu tio n a p p ly in g to u s fo r a n a d v a n c e o r d is c o u n t s h a ll b e d e e m e d b y s u c h a c tio n to h a v e a g r e e d to a ll o f th e te r m s a n d co n d i tio n s s e t fo rth in th is b u lle tin , a n y o th e r a p p lic a b le b u lle tin o r a n y a p p lic a b le a p p e n d ix th e r e to , a n y c o n tin u in g le n d in g o r o th e r a p p lic a b le a g re e m e n t, a n d R e g u la tio n A. Reference: sections 6, 7, and 8 of this bulletin for additional information on collateral. 4 .1 0 T y p e s o f c r e d it a c c o m m o d a tio n s U n d e r 201.3 o f R e g u la tio n A, a n d c o n s is te n t w ith th e s ta tu to ry c o lla te ra l a n d m a tu rity r e q u ire m e n ts su m m a riz e d in 3.00 of th is b u lle tin , w e e x te n d c r e d it o f th e follow ing ty p e s to d e p o s ito ry in stitu tio n s : 10-80 O th e r in fo rm a tio n F o r f u r th e r in fo rm a tio n o n th e c r e d it a c c o m m o d a tio n s d e s c r ib e d in 4 .0 0 of th is b u lle tin , in c lu d in g d is c u s s io n s of a p p r o p r ia te b o rro w in g , n e t s a le s of F e d e r a l fu n d s w h ile b o rro w in g , q u a lific a tio n for s e a s o n a l c r e d it, a n d fu ll u s e of o th e r r e a s o n a b ly a v a ila b le s o u r c e s of fu n d s, s e e R e g u la tio n A a n d th e p a m p h le t, “ O p e ra tio n of th e F e d e r a l R e se rv e D isc o u n t W in d o w U n d e r th e M o n e ta ry C o n tro l A c t o f 1 9 8 0 ,” b o th of w h ic h a r e a v a ila b le o n r e q u e s t fro m th is B ank. Section 4, CREDIT ACCOMMODATIONS 4 .0 0 U s u a l fo rm o f a c c o m m o d a tio n s 4 BULLETIN 2 • FEDERAL RESERVE BANK OF DALLAS Section 5, PROCEDURES CONCERNING ADVANCES 5 .0 0 depository institution requesting seasonal credit should be prepared to submit certain financial data for the current year to date and for the last two full years on a monthly basis on our Form LD-215, “Historical Data for Establishing Seasonal Credit.” In addition, we may require other information in connection with any borrow ing if we find it appropriate in that case. Q u a lify in g to b o r r o w A depository institution may qualify to borrow by filing a borrowing resolution (see 3.30), by exe cuting and filing a continuing lending agreement (see 3.05), and by filing signatures (see 5.05). Ad ditionally, if it does not maintain a direct reserve or clearing account on our books, itmust execute our Form LD-217, “Designated Account Agree ment for Loan Transactions,” before an extension of credit can be made (see 5.30). 5.05 Re/erence: 3.25, 7.30, and 7.35 of this bulletin. 5.15 Repayment of an extension of credit plus accrued interest will be charged to the borrowing depository institution’s reserve or clearing or other account on our books at maturity. The bor rowing depository institution, at its option, may prepay all or part of any borrowing, and in such cases, the amount paid plus accrued interest will be charged to the borrowing depository institu tion’s reserve or clearing or other account on our books. Filing o f s ig n a tu r e s For an officer to be authorized to borrow, he or she must have his or her signature filed with this Bank on a signature card, Form AG-150, or on a Certificate of Incumbency and Signatures of Of ficers Named in Authority to Borrow filed with us, before he or she is recognized by us as authorized to sign any documents in connection with borrow ing. 5.2 0 Reference: 3.30 of this bulletin. 5 .1 0 R enew al A borrowing depository institution wishing to renew an advance should follow the same pro cedure necessary to obtain an original advance. I n fo rm a tio n to b e f u r n is h e d A depository institution which qualifies to borrow (see 5.00) should be prepared to furnish us certain asset and liability information weekly on our Form LD-216, “Weekly Report of Selected Assets and Liabilities.” This form should be completed and mailed no later than Friday. During periods when the depository institution is not borrowing and does not contemplate borrowing in the near future, we will usually waive the filing of this form. The LD-216 is supplemental to other infor mation reported to us weekly, and if information requested on it is reported weekly elsewhere (such as on the FR 2900, “Report of Transaction Accounts, Other Deposits and Vault Cash,” or FR 2644, “Weekly Report of Loans and Securities,” or FR 2644S, “Weekly Report of Selected Assets”),itneed not be duplicated on the LD-216. If a depository institution seeking to bor row has not been filing the LD-216, it will be re quested at the time of borrowing to provide us by telephone equivalent information for the current period and at least the past two weeks. A 10-80 P a y m e n t a t m a tu r ity a n d p r e p a y m e n t Reference: 3.10(a) and 5.10 of this buiietin for original advance procedure. 5.25 A d v a n c e s d u e o n S a tu r d a y s , S u n d a y s, o r h o lid a y s If an advance is agreed to fall due on one of our nonbanking days, the due date will be changed so that the advance will mature on our next banking day. Reference: Supplement A to Bulletin 1, containing our non banking days. 5.30 U se o f r e s e r v e , c le a rin g , p a s s -th ro u g h , o r o th e r a c c o u n ts W e will credit advances to and debit repayments from the direct reserve or clearing account of the borrowing depository institution on our books. If the borrowing depository institution does not maintain an account on our books, it must use 5 BULLETIN 2 FEDERAL RESERVE BANK OF DALLAS collateral. W h e n there is an excess of collateral equal to or greater than the amount of such pay ment, we will reduce the collateral value by the amount of the payment. In other cases, we will charge the borrowing depository institution’s reserve or clearing or other account on our books in the amount of the payment plus accrued in terest thereon. Until we take either of the above actions, as appropriate, such payment will be con sidered as having been received in trust for us. another depository institution’s account on our books for these purposes, such as a correspon dent’s reserve account or separate commingled account (for “pass-through” reserves). If the bor rowing depository institution seeks to use a cor respondent’s account, it must obtain our agree ment and that of the correspondent, and all three parties should execute our Form LD-217, “Designated Account Agreement for Loan Trans actions.” W e cannot extend credit to a depository institution which does not maintain a reserve or clearing account with us if it has not filed Form LD-217. 6 .1 5 If approved by us, depository institutions located in N e w Mexico, Oklahoma, and Texas may retain collateral consisting of paper (including loan par ticipations and one-to-four family residential mortgages) and Group I municipal securities in their possession rather than transmit such col lateral to us or a custodian depository institution.3 To participate in such arrangement the depository institution should execute Form BD-59, “Application to Act as Off-Premises Custodian of Collateral and Security Agreement.” Collateral under an off-premises arrangement can secure an advance for up to 21 calendar days. It can secure subsequent advances if before each there is a period of at least seven calendar days in which it is released from the security agreement or in which no credit is outstanding to the borrowing depository institution. 5.35 E ffe c tiv e n e s s o f c o n tin u in g le n d in g a g r e e m ent The continuing lending agreement (Form LD-176) remains in effect until cancelled by either party by notice in writing to the other; however, cancellation does not affect extensions of credit made prior to the date of cancellation. f i e / e r e n e e : 3 .0 5 o f this b u ll e ti n . Section 6, PROCEDURES FOR COL LATERAL GENERALLY 6 .0 0 C o lla te ra l m u s t h a v e a d e q u a te m a tu rity Collateral should not mature earlier than the date on which the borrowing matures (except col lateral which is to be exchanged for similar col lateral, with our advance agreement, before the maturity of the borrowing). 6.05 O ff-p re m is e s c o lla te r a l a r r a n g e m e n ts Reference: 3.15(b), 3.25, 7.00, and 8.00 of this bulletin. R e le a s e o f c o lla te r a l Section 7, PAPER Unless the borrowing depository institution re quests otherwise, we release collateral im mediately following payment of the related bor rowing. All paper held as collateral will be returned to the borrowing depository institution and securities will be held by us in safekeeping subject to the order of the borrowing depository institution. 7.00 A p p ro v a l o f p a p e r 6 .1 0 A lte rn a tiv e p r o c e d u r e w h e n p a y m e n ts a r e r e c e iv e d o n c o lla te r a l Paper offered to secure an advance should be submitted prior to actual need to allow time for processing and approval by our Discount Commit tee. Paper which has been so approved will be ac cepted at face value and held in abeyance pend ing a request for credit. The offering should be listed on one of the following forms: In lieu of the procedure set out in 3.15(c) of this bulletin, a depository institution may elect to ad vise us immediately of any payment received on (1) Form BD-29, to be used when the paper is to be held by us. (In certain cases subcollateral sup porting the paper may continue to be held by the L ouisiana law precludes use of off-premises collateral arrangements. 10-80 6 FEDERAL RESERVE BANK OF DALLAS BULLETIN 2 offering depository institution.) 7.15 (2) Form BD-59, to be used when the paper is to be held by the offering depository institution (see 3.15(b) and 3.25). The borrowing depository institution should see that copies of security agreements or similar in struments accompany secured paper. Evidence of compliance with the appropriate statutes cover ing the creation and perfection of security in terests and other liens should also be provided. If paper is not submitted in advance of actual need, we have the option of assigning a collateral value of less than 100 percent pending its ap proval. If such paper is ultimately approved by the Discount Committee, it can thereafter be utilized at 100 percent of its face value; but ifitis not so approved, the assigned collateral value will be charged to the borrowing depository institu tion’s reserve or clearing or other account on our books unless acceptable substitute collateral is promptly provided. 7.20 — Payment of the participation (or the underlying loan) is guaranteed by the lender. — The participation is to be repaid on a schedule different from that of the underlying loan. — Interest rates on the participation are substantially different from the rates applicable to the underlying loan. — The original lender is obligated to repurchase the participation (a right of the lender to repurchase, which is common in participations, is not such an obligation). Endorsement Paper must be endorsed, by or on behalf of the holder, on the back of the instrument. The en dorsement should read: Pay to the order of Federal Reserve Bank of Dallas (Name of borrowing depository institution and location) If the underlying obligation of the borrower to the original lender is eligible, a participation in that obligation will be eligible. Loan participations of fered should be listed on Form BD-29 ifthey are to be held by us, or on Form BD-59 if they are to be held by the offering depository institution under an off-premises collateral arrangement (see 6.15 and provisions there referenced). (Manually signed by an authorized officer) Reference: 3.15(a) of this bulletin. 7.10 Demand paper Paper in the form of demand notes is acceptable to secure advances. However, demand paper can not be accepted if offered more than a reasonable time after issue, if dishonored after demand for payment, or if otherwise overdue. Subject to the above restrictions, or unless limited by facts which establish an earlier payment date, demand paper is generally considered timely if offered within 90 days after issue and such demand paper can be used to secure advances for up to 90 days from the date of pledge. 10-80 Loan participations Loan participations which clearly reflect the pur chase of a portion of an obligation by a depository institution from the original lender may be used as collateral if we find them acceptable. Loan participations containing the following provisions will not be acceptable: Reference: the reverse side of Form BD-29 for detailed information as to the preparation and submission of an offering. 7.05 Secured paper 7.25 Financial statements In connection with any advance, copies of finan cial statements, including complete schedules of important items, should be submitted with all paper. Copies of financial statements of en dorsers or guarantors, if any, should also be sub mitted. Under certain conditions, the requirement for a financial statement may be waived. Finan cial statements need not be in any special form 7 FEDERAL RESERVE BANK OF DALLAS BULLETIN 2. of the returned notes. In other cases, w e will charge the borrowing depository institution’s reserve or clearing or other account on our books in the face amount of returned notes plus accrued interest thereon. but should consist of a complete and reasonably detailed balance sheet, profit and loss statement, and reconciliation of net worth. W e may request additional information when deemed desirable for a better understanding of the financial condi tion and operation of the obligor. W e have prepared five forms for optional use by depository institutions in this connection, and we supply sam ple copies so that you can reproduce them. They are: Section 8, SECURITIES AS COLLATERAL4 8.00 Under certain conditions, securities offered as collateral may be held elsewhere than at this Bank and should be handled in the following man ner: (1) Form C-5, financial statement for farmers and ranchers. (2) Form C-5a, operating statement-farmerstockman. (1) If held by an approved custodian depository institution, arrangements may be made for us to accept a custody receipt. (See 8.05 of this bulletin for procedure.) (3) Form C-6, financial statement for commercial borrowers. (4) Form C-7, for comparative posting of five years of financial data on the borrower. (2) If held by a correspondent depository institu tion in a Federal Reserve office city outside this District, they may be delivered to the Federal Reserve office in that city. The procedure for this will be supplied on request and should be initiated early in the morning on the day the advance is needed. (5) Form C-8, personal financial statement. Reference: 3.25 and 7.30 of this bulletin. 7.30 Currency of financial statements If more current financial statements or other per tinent data should come into the possession of the depository institution during the time approved paper remains in our custody or remains subject to an off-premises custody arrangement (see 6.15), we request that such information be sup plied to us promptly. W e will return or otherwise remove from collateral status all paper not sup ported by a current financial statement; for this purpose, a financial statement will be considered noncurrent 18 months after its date, but in ap propriate circumstances it may be considered noncurrent earlier than that. (3) If the borrowing depository institution is ap proved to hold collateral under an off-premises arrangement (see 6.15), securities consisting of Group I municipal securities may be retained by the borrowing depository institution pursuant to that arrangement. Form BD-59 must be executed in connection with such offering. (4) In all other cases the securities should be delivered to us. 8.05 Securities held by an approved custodian depository institution Certain depository institutions have agreed to hold collateral for us. Their names will be sup plied on request. If securities such as direct U.S. Government obligations, direct obligations of and obligations fully guaranteed as to principal and interest by agencies of U.S. Government, and municipal obligations are held by such a custo dian, the borrowing depository institution should telephone and instruct the custodian to hold the securities subject to our order and for the account Reference: 3.25 and 7.25 of this bulletin. 7.35 Securities held elsewhere Collection of paper Paper which has been pledged as collateral will be returned to the borrowing depository institu tion in advance of maturity to permit collection. W h e n there is an excess of collateral equal to or greater than the amount of such returned paper, w e will reduce the collateral value by the amount 4See also 3.15(d) of this bulletin and our Bulletin 14 for provisions concerning the use of book-entry securities as collateral. 10-80 8 BULLETIN 2 FEDERAL RESERVE BANK OF DALLAS bearer securities held in custody with us or bookentry Treasury securities on our books, the bor rowing depository institution need only advise us of the description of the securities and the number of the custody receipt or advice of deposit. of the borrowing depository institution. The name of the individual contacted at the custodian should be furnished us in order that we may con firm that the securities are held as collateral. The borrowing depository institution should execute a Pledge Agreement Form (LD-168X), though when necessary the agreement may be obtained after the funds are advanced. W h e n the securities are no longer pledged, we will instruct the custodian to release them and hold in free safekeeping. Reference: 3.15(d) of this bulletin and Bulletin 14 of this Bank (“Book-Entry Securities"). Section 9, RIGHT TO AMEND Reference: 8.00(1) and 3.15(d) of this bulletin. 8.10 Simplified description in certain cases W e reserve the right to amend any of the provi sions of this bulletin at any time. W h e n securities pledged as collateral are regular 10-80 9 BULLETIN 2 JFEDERAL RESERVE BANK OF DALLAS Supplement A RATES FOR DISCOUNTS A N D A D V A N C E S The following rates with respect to discounts and advances under the Federal Reserve Act and Regulation A are now in effect at this Bank: Rates on Discounts and Advances Per Annum Effective from 11% September 26, 1980 12% September 26, 1980 14% September 26, 1980 Depository institutions subject to reserve requirements under Regulation D Basic rate: short-term adjustment credit under 201.3(a) and seasonal credit under 201.3(b)(1) of Regulation A * ........................................................................... Other extended credit under 201.3(b)(2) of Regulation A Exceptional circumstances or practices involving a particular institution** .......................... .. Other individuals, partnerships, and corporations Advances secured by direct or fully guaranteed obligations of the United States or its agencies under 12 USC 347c and 201.3(c) of Regulation A ............ * This is also the discount rate for 90-day commercial paper and other paper eligible for discount. ** This rate can be waived, in which case the basic rate applies. 9 -26 -8 0 A-1 F ederal reserve Ba n k DALLAS, TEXAS Dallas of 75222 Circular No. 80-186 September 26, 1980 RATES FOR DISCOUNTS AND ADVANCES TO ALL DEPOSITORY INSTITUTIONS AND OTHERS CONCERNED IN THE ELEVENTH FEDERAL RESERVE DISTRICT: E ffectiv e September 26, 1980, the Board of Governors of the Federal Reserve System approved action by the Directors of the Federal Reserve Bank of Dallas increasing by one percent the rates on discounts and advances. There is printed on the reverse of this circular a copy of Supplement A to Bulletin No. 2 which sets forth all of the rates in e ff e c t at this Bank. This supplement should be inserted in the regulations binder previously furnished and the supplement dated August 29, 1980 should be destroyed. Depository institutions who have not yet been provided a binder should retain the supplement for future reference. Sincerely yours, Ernest T. Baughman President Banks and others are encouraged to use the following incoming W ATS numbers in contacting this Bank: 1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the extension referred to above.
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