87-3

July 21, 1987

Dear Mr. ________:

Responsive to your letter of July 20, 1987, and our prior conversations concerning a loan your bank intends to make, we have the following comments.

It is the position of the department that loan commitments in excess of the lending limits of the California Financial Code do not necessarily involve a violation, but the making of such commitments without pre-arranged disposition of the excess may be unsafe and unsound banking. In this regard, you have indicated that your bank will structure the loan in question such that the outstanding balance will never exceed the banks legal lending limits and that it will be monitored closely for conformance to those limits.

Under the circumstances so outlined, the Superintendent of Banks will interpose no objections to your structuring of the loan as we have discussed.

Very truly yours,

HOWARD GOULD
Superintendent of Banks

by:

JERRY C. BERTSCH
Assistant Deputy Superintendent

JCB:cea