12 U.S.C. § 1835 — Insured depository institution capital re-

Page 1213 TITLE 12—BANKS AND BANKING § 1835 opment bank and thereafter by the Commu- nity Investment Board from nominations re- ceived from the community; and (B) are appointed for a single term of 2 years, except that, of the initial members appointed to the Community Investment Board, 1⁄3 shall be appointed for a term of 8 months, 1⁄3 shall be appointed for a term of 16 months, and 1⁄3 shall be appointed for a term of 24 months, as designated by the board of directors of the community development bank at the time of the appointment; (2) 1⁄3 of the members of the community de- velopment bank’s board of directors are ap- pointed from among individuals nominated by the Community Investment Board; and (3) the bylaws of the community develop- ment bank require that the board of directors of the bank meet with the Community Invest- ment Board at least once every 3 months. (c) Community development corporation require- ments Any community development corporation, or community development unit within any in- sured depository institution meets the require- ments of this subsection if the corporation or unit provides the same or greater, as determined by the appropriate Federal banking agency, community participation in the activities of such corporation or unit as would be provided by a Community Investment Board under sub- section (b) if such corporation or unit were a community development bank. (d) Adequate dispersal requirement The appropriate Federal banking agency may approve the establishment of a community de- velopment organization under this subtitle only upon finding that the distressed community is not adequately served by an existing community development organization. (e) Definitions For purposes of this section— (1) Community development bank The term ‘‘community development bank’’ means any depository institution (as defined in section 1813(c)(1) of this title). (2) Community development organization The term ‘‘community development organi- zation’’ means any community development bank, community development corporation, community development unit within any in- sured depository institution, or community development credit union. (3) Low- and moderate-income persons The term ‘‘low- and moderate-income per- sons’’ has the meaning given such term in sec- tion 5302(a)(20) of title 42. (4) Nonprofit organization; small business The terms ‘‘nonprofit organization’’ and ‘‘small business’’ have the meanings given to such terms by regulations which the appro- priate Federal banking agency shall prescribe for purposes of this section. (5) Qualified distressed community The term ‘‘qualified distressed community’’ has the meaning given to such term in section 1834a(b) of this title. (Pub. L. 102–242, title II, § 234, Dec. 19, 1991, 105 Stat. 2315.) Editorial Notes REFERENCES IN TEXT This subtitle, referred to in subsecs. (a) and (d), is subtitle C (§§ 231–234) of title II of Pub. L. 102–242, Dec. 19, 1991, 105 Stat. 2308, known as the Bank Enterprise Act of 1991, which enacted this section and sections 1834 and 1834a of this title, amended section 1817 of this title, and enacted provisions set out as a note under section 1811 of this title. For complete classification of subtitle C to the Code, see section 231 of Pub. L. 102–242, set out as a Short Title of 1991 Amendment note under section 1811 of this title and Tables. Section 1602(i) of title 15, referred to in subsec. (a)(3), was redesignated section 1602(j) of title 15 by Pub. L. 111–203, title X, § 1100A(1)(A), July 21, 2010, 124 Stat. 2107. CODIFICATION Section was enacted as part of the Bank Enterprise Act of 1991, and also as part of the Foreign Bank Super- vision Enhancement Act of 1991 and as part of the Fed- eral Deposit Insurance Corporation Improvement Act of 1991, and not as part of the Federal Deposit Insur- ance Act which comprises this chapter. § 1835. Insured depository institution capital re- quirements for transfers of small business obligations (a) Accounting principles The accounting principles applicable to the transfer of a small business loan or a lease of personal property with recourse contained in re- ports or statements required to be filed with Federal banking agencies by a qualified insured depository institution shall be consistent with generally accepted accounting principles. (b) Capital and reserve requirements With respect to the transfer of a small busi- ness loan or lease of personal property with re- course that is a sale under generally accepted accounting principles, each qualified insured de- pository institution shall— (1) establish and maintain a reserve equal to an amount sufficient to meet the reasonable estimated liability of the institution under the recourse arrangement; and (2) include, for purposes of applicable capital standards and other capital measures, only the amount of the retained recourse in the risk- weighted assets of the institution. (c) Qualified institutions criteria An insured depository institution is a quali- fied insured depository institution for purposes of this section if, without regard to the account- ing principles or capital requirements referred to in subsections (a) and (b), the institution is— (1) well capitalized; or (2) with the approval, by regulation or order, of the appropriate Federal banking agency, adequately capitalized. (d) Aggregate amount of recourse The total outstanding amount of recourse re- tained by a qualified insured depository institu- tion with respect to transfers of small business loans and leases of personal property under sub- sections (a) and (b) shall not exceed— (1) 15 percent of the risk-based capital of the institution; or Page 1214 TITLE 12—BANKS AND BANKING § 1835a 1 See References in Text note below. (2) such greater amount, as established by the appropriate Federal banking agency by regulation or order. (e) Institutions that cease to be qualified or ex- ceed aggregate limits If an insured depository institution ceases to be a qualified insured depository institution or exceeds the limits under subsection (d), this sec- tion shall remain applicable to any transfers of small business loans or leases of personal prop- erty that occurred during the time that the in- stitution was qualified and did not exceed such limit. (f) Prompt corrective action not affected The capital of an insured depository institu- tion shall be computed without regard to this section in determining whether the institution is adequately capitalized, undercapitalized, sig- nificantly undercapitalized, or critically under- capitalized under section 1831o of this title. (g) Regulations required Not later than 180 days after September 23, 1994, each appropriate Federal banking agency shall promulgate final regulations imple- menting this section. (h) Alternative system permitted (1) In general At the discretion of the appropriate Federal banking agency, this section shall not apply if the regulations of the agency provide that the aggregate amount of capital and reserves re- quired with respect to the transfer of small business loans and leases of personal property with recourse does not exceed the aggregate amount of capital and reserves that would be required under subsection (b). (2) Existing transactions not affected Notwithstanding paragraph (1), this section shall remain in effect with respect to transfers of small business loans and leases of personal property with recourse by qualified insured de- pository institutions occurring before the ef- fective date of regulations referred to in para- graph (1). (i) Definitions For purposes of this section— (1) the term ‘‘adequately capitalized’’ has the same meaning as in section 1831o(b) of this title; (2) the term ‘‘appropriate Federal banking agency’’ has the same meaning as in section 1813 of this title; (3) the term ‘‘capital standards’’ has the same meaning as in section 1831o(c) of this title; (4) the term ‘‘Federal banking agencies’’ has the same meaning as in section 1813 of this title; (5) the term ‘‘insured depository institution’’ has the same meaning as in section 1813 of this title; (6) the term ‘‘other capital measures’’ has the meaning as in section 1831o(c) of this title; (7) the term ‘‘recourse’’ has the meaning given to such term under generally accepted accounting principles; (8) the term ‘‘small business’’ means a busi- ness that meets the criteria for a small busi- ness concern established by the Small Busi- ness Administration under section 632(a) of title 15; and (9) the term ‘‘well capitalized’’ has the same meaning as in section 1831o(b) of this title. (Pub. L. 103–325, title II, § 208, Sept. 23, 1994, 108 Stat. 2201.) Editorial Notes CODIFICATION Section was enacted as part of the Small Business Loan Securitization and Secondary Market Enhance- ment Act of 1994 and as part of the Riegle Community Development and Regulatory Improvement Act of 1994, and not as part of the Federal Deposit Insurance Act which comprises this chapter. § 1835a. Prohibition against deposit production offices (a) Regulations The appropriate Federal banking agencies shall prescribe uniform regulations effective June 1, 1997, which prohibit any out-of-State bank from using any authority to engage in interstate branching pursuant to this title,1 or any amendment made by this title 1 to any other provision of law, primarily for the purpose of de- posit production. (b) Guidelines for meeting credit needs Regulations issued under subsection (a) shall include guidelines to ensure that interstate branches operated by an out-of-State bank in a host State are reasonably helping to meet the credit needs of the communities which the branches serve. (c) Limitation on out-of-State loans (1) Limitation Regulations issued under subsection (a) shall require that, beginning no earlier than 1 year after establishment or acquisition of an inter- state branch or branches in a host State by an out-of-State bank, if the appropriate Federal banking agency for the out-of-State bank de- termines that the bank’s level of lending in the host State relative to the deposits from the host State (as reasonably determinable from available information including the agency’s sampling of the bank’s loan files dur- ing an examination or such data as is other- wise available) is less than half the average of total loans in the host State relative to total deposits from the host State (as determinable from relevant sources) for all banks the home State of which is such State— (A) the appropriate Federal banking agen- cy for the out-of-State bank shall review the loan portfolio of the bank and determine whether the bank is reasonably helping to meet the credit needs of the communities served by the bank in the host State; and (B) if the agency determines that the out- of-State bank is not reasonably helping to meet those needs— (i) the agency may order that an inter- state branch or branches of such bank in the host State be closed unless the bank