# WAC 208-512A-005: WAC 208-512A-005. "Loans and extensions of credit" and "contractual commitment to advance funds" — Defined > Washington · Regulations · In force URL: https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_005 ## Section - **Citation:** WAC 208-512A-005 - **Heading:** WAC 208-512A-005. "Loans and extensions of credit" and "contractual commitment to advance funds" — Defined - **Jurisdiction:** Washington - **Kind:** Regulations - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** Washington Administrative Code / Title 208 / Chapter 208-512A / Section 208-512A-005 ## Text (1) "Loan or extension of credit" generally includes: (a) Any direct or indirect advance of funds to a person made on a basis of any obligation of that person to repay the funds, or repayable from specific property pledged by or on behalf of a person; (b) Any credit exposure of a bank arising from a derivative transaction or a securities financing transaction, but only to the extent that a securities financing transaction is required, by the Federal Reserve Board or the FDIC, with respect to state member banks and state insured banks, respectively, to be treated as a loan or extension of credit for purposes of RCW 30A.04.111 and this chapter; and (c) Any contractual commitment to advance funds, and includes a renewal, modification, or extension of the maturity date of a loan or extension of credit. (2) Notwithstanding any other provision of this section, a "loan or extension of credit" excludes the following: (a) Special exceptions, conditions and limitations to the general lending limit to the extent set forth in WAC 208-512A-020 through 208-512A-090 , inclusive; (b) A renewal, extension or restructuring of an existing loan, with interest paid current and no further advance of funds, by a bank under the direction and control of a conservator appointed by the director; (c) A renewal or restructuring of a loan as a new loan or extension of credit, following the exercise by a bank of reasonable efforts, consistent with safe and sound banking practices, to bring the loan into conformance with the lending limit, unless new funds are advanced by the bank to the borrower (except as permitted by WAC 208-512A-015 ), or a new borrower replaces the original borrower, or unless the division determines that a renewal or restructuring was undertaken as a means to evade the bank's lending limit; ble efforts, consistent with safe and sound banking practices, to bring the loan into conformance with the lending limit, unless new funds are advanced by the bank to the borrower (except as permitted by WAC 208-512A-015 ), or a new borrower replaces the original borrower, or unless the division determines that a renewal or restructuring was undertaken as a means to evade the bank's lending limit; (d) Additional funds advanced for the benefit of a borrower by a bank for payment of taxes, insurance, utilities, security, and maintenance and operating expenses necessary to preserve the value of real property securing the loan, consistent with safe and sound banking practices, but only if the advance is for the protection of the bank's interest in the collateral, and provided that such amounts must be treated as an extension of credit if a new loan or extension of credit is made to the borrower; (e) Accrued and discounted interest on an existing loan or extension of credit, including interest that has been capitalized from prior notes and interest that has been advanced under terms and conditions of a loan agreement; (f) Financed sales of a bank's own assets, including other real estate owned, if the financing does not put the bank in a worse position than when the bank held title to the assets; (g) Amounts paid against uncollected funds in the normal process of collection; (h) Credit exposures arising from securities financing transactions in which the securities financed are Type I securities, or securities listed in section 5 (c)(1)(C), (D), (E), and (F) of the Home Owners Loan Act and general obligations of a state or subdivision as listed in section 5 (c)(1)(H) of the Home Owners Loan Act, at 12 U.S.C. Sec. 1464 (c)(1)(C), (D), (E), (F), and (H); (i) Intraday credit exposures arising from a derivative transaction or securities financing transaction; and inanced are Type I securities, or securities listed in section 5 (c)(1)(C), (D), (E), and (F) of the Home Owners Loan Act and general obligations of a state or subdivision as listed in section 5 (c)(1)(H) of the Home Owners Loan Act, at 12 U.S.C. Sec. 1464 (c)(1)(C), (D), (E), (F), and (H); (i) Intraday credit exposures arising from a derivative transaction or securities financing transaction; and (j) That portion of a loan or extension of credit sold as a participation by a bank on a nonrecourse basis, provided that the participation results in a pro rata sharing of credit risk proportionate to the respective interests of the originating and participating lenders. Where a participation agreement provides that repayment must be applied first to the portions sold, a pro rata sharing will be deemed to exist only if the agreement also provides that, in the event of a default or comparable event defined in the agreement, participants must share in all subsequent repayments and collections in proportion to their percentage participation at the time of the occurrence of the event. When an originating bank funds the entire loan, it must receive funding from the participants before the close of business of its next business day. If the participating portions are not received within that period, then the portions funded will be treated as a loan by the originating bank to the borrower. If the portions so attributed to the borrower exceed the originating bank's lending limit, the loan may be treated as nonconforming subject to WAC 208-512A-012 , rather than a violation, if: re the close of business of its next business day. If the participating portions are not received within that period, then the portions funded will be treated as a loan by the originating bank to the borrower. If the portions so attributed to the borrower exceed the originating bank's lending limit, the loan may be treated as nonconforming subject to WAC 208-512A-012 , rather than a violation, if: (i) The originating bank had a valid and unconditional participation agreement with a participant or participants that was sufficient to reduce the loan to within the originating bank's lending limit; (ii) The participant reconfirmed its participation and the originating bank had no knowledge of any information that would permit the participant to withhold its participation; and (iii) The participation was to be funded by close of business of the originating bank's next business day. As used in this chapter and to the extent used in RCW 30A.04.111 , the term "loans and extensions of credit," unless otherwise indicated, shall have the meaning set forth in this section. As used in RCW 30A.04.111 and this chapter, the terms "loan," "loans," "extension of credit," "extensions of credit," and "loan or extension of credit" refer, as applicable, to the singular or plural of "loans and extensions of credit." (3) "Contractual commitment to advance funds" generally means a bank's obligation to advance funds under a legally binding contractual commitment to make a loan or extension of credit. (a) For purposes of this chapter and calculation of the general lending limit, "contractual commitment to advance funds" includes: refer, as applicable, to the singular or plural of "loans and extensions of credit." (3) "Contractual commitment to advance funds" generally means a bank's obligation to advance funds under a legally binding contractual commitment to make a loan or extension of credit. (a) For purposes of this chapter and calculation of the general lending limit, "contractual commitment to advance funds" includes: (i) A bank's obligation to make payment (directly or indirectly) to a third person contingent upon default by a customer of the bank in performing an obligation and to make such payment in keeping with the agreed upon terms of the customer's contract with the third person, or to make payments upon some other stated condition; (ii) A bank's obligation to guarantee or act as surety for the benefit of a person; and (iii) A bank's obligation to advance funds under a standby letter of credit, a put, or other similar arrangement. (b) For purposes of this chapter and calculation of the general lending limit, "contractual commitment to advance funds" does not include: (i) The undisbursed portion of any loan or extension of credit; (ii) The entire amount of any such commitment that has not yet been drawn upon; and (iii) Letters of credit and similar instrument: (A) Which do not guarantee payment; (B) Which do not provide for payment in the event of a default of a third party; and (C) In which the issuing bank expects the beneficiary to draw on the issuer. ## Nearby sections - [WAC 208-512A-001 WAC 208-512A-001. Promulgation of rules](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_001.md) - [WAC 208-512A-003 WAC 208-512A-003. Findings and purpose](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_003.md) - [WAC 208-512A-005 WAC 208-512A-005. "Loans and extensions of credit" and "contractual commitment to advance funds" — Defined](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_005.md) - [WAC 208-512A-007 WAC 208-512A-007. Other general chapter definitions](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_007.md) - [WAC 208-512A-009 WAC 208-512A-009. Applicability of chapter](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_009.md) - [WAC 208-512A-010 WAC 208-512A-010. General limitation on loans and extensions of credit](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_010.md) - [WAC 208-512A-011 WAC 208-512A-011. Exception to general limitation—Loans and extensions of credit fully secured by readily marketable collateral](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_011.md) - [WAC 208-512A-012 WAC 208-512A-012. Exception to general limitation—Nonconforming loans](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_012.md) - [WAC 208-512A-013 WAC 208-512A-013. Exception to general limitation—Declining capital—Inability to otherwise effectively operate in marketplace—Director discretion](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_013.md) - [WAC 208-512A-014 WAC 208-512A-014. Exception to general limitation — Extenuating facts and circumstances — Standards for division determination—Director of banks' discretion](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_014.md) - [WAC 208-512A-015 WAC 208-512A-015. Renewals and additional advances under a contractual commitment to advance funds—Project funding](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_015.md) - [WAC 208-512A-020 WAC 208-512A-020. Special rule—Discount of commercial or business paper](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_020.md) - [WAC 208-512A-030 WAC 208-512A-030. Special rule—Purchase of bankers' acceptances](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_030.md) - [WAC 208-512A-040 WAC 208-512A-040. Special rule—Readily marketable staples](https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_040.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/STATE_WA_ADC_208_512A_005. Check the current official text before relying on it. Not legal advice.