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Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations
V. Regulatory Analysis A. Regulatory Flexibility Act Pursuant to section 605b of the Regulatory Flexibility Act 5 U.S.C. 601
et seq., FCA hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities. Each of the banks in the System, considered together with its affiliated associations, has assets and annual income in excess of the amounts that would qualify them as small entities. Therefore, System institutions are not small entities as defined in the Regulatory Flexibility Act.
B. Congressional Review Act Under the provisions of the Congressional Review Act 5 U.S.C. 801
et seq., the Office of Management and Budgets Office of Information and Regulatory Affairs has determined that this final rule is not a major rule as the term is defined at 5 U.S.C. 8042.
List of Subjects 12 CFR Part 614
Agriculture, Banks, Banking, Foreign trade, Reporting and recordkeeping requirements, Rural areas.

12 CFR Part 628
Accounting, Agriculture, Banks, Banking, Capital, Government securities, Investments, Rural areas.
For the reasons stated in the preamble, the Farm Credit Administration amends parts 614, 615, 620, and 628 of chapter VI, title 12 of the Code of Federal Regulations as follows:
PART 614LOAN POLICIES AND
OPERATIONS
1. The authority citation for part 614
is revised to read as follows:

Authority: Secs. 1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 1.11, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 2.13, 2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 4.12A, 4.13B, 4.14, 4.14A, 4.14D, 4.14E, 4.18, 4.18A, 4.19, 4.25, 4.26, 4.27, 4.28, 4.36, 4.37, 5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 7.8, 7.12, 7.13, 8.0, 8.5 of the Farm Credit Act 12 U.S.C.
2011, 2013, 2014, 2015, 2017, 2018, 2019, 2071, 2073, 2074, 2075, 2091, 2093, 2094, 2097, 2121, 2122, 2124, 2128, 2129, 2131, 2141, 2149, 2183, 2184, 2201, 2202, 2202a,
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614.4351 Computation of lending and leasing limit base.

a Lending and leasing limit base. An institutions lending and leasing limit base is composed of the total capital tier 1 and tier 2 of the institution, as defined in 628.2 of this chapter, with adjustments applicable to the institution provided for in 628.22 of this chapter, and with the following further adjustments:
1 Reserved 2 Eligible third-party capital that is required to be excluded from total capital under 628.23 of this chapter may be included in the lending limit base.

PART 615FUNDING AND FISCAL
AFFAIRS, LOAN POLICIES AND
OPERATIONS, AND FUNDING
OPERATIONS
3. The authority citation for part 615
is revised to read as follows:

12 CFR Part 620
Accounting, Agriculture, Banks, Banking, Reporting and recordkeeping requirements, Rural areas.

16:40 Sep 30, 2021

2. Amend 614.4351 by revising paragraph a to read as follows:

12 CFR Part 615
Accounting, Agriculture, Banks, Banking, Government securities, Investments, Rural areas.

VerDate Sep<11>2014

2202d, 2202e, 2206, 2206a, 2207, 2211, 2212, 2213, 2214, 2219a, 2219b, 2243, 2244, 2252, 2279a, 2279a2, 2279b, 2279c1, 2279f, 2279f1, 2279aa, 2279aa5; 12 U.S.C. 2121
note; 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.

Authority: Secs. 1.5, 1.7, 1.10, 1.11, 1.12, 2.2, 2.3, 2.4, 2.5, 2.12, 3.1, 3.7, 3.11, 3.25, 4.3, 4.3A, 4.9, 4.14B, 4.25, 5.9, 5.17, 8.0, 8.3, 8.4, 8.6, 8.8, 8.10, 8.12 of the Farm Credit Act 12
U.S.C. 2013, 2015, 2018, 2019, 2020, 2073, 2074, 2075, 2076, 2093, 2122, 2128, 2132, 2146, 2154, 2154a, 2160, 2202b, 2211, 2243, 2252, 2279aa, 2279aa-3, 2279aa4, 2279aa6, 2279aa8, 2279aa10, 2279aa12; 12 U.S.C.
2154 note; 15 U.S.C. 78o7 note.

4. Revise 615.5200 to read as follows:

615.5200

Capital planning.

a The Board of Directors of each System institution shall determine the amount of regulatory capital needed to assure the System institutions continued financial viability and to provide for growth necessary to meet the needs of its borrowers. The minimum capital standards specified in this part and part 628 of this chapter are not meant to be adopted as the optimal capital level in the System institutions capital adequacy plan. Rather, the standards are intended to serve as minimum levels of capital that each System institution must maintain to protect against the credit and other general risks inherent in its operations.
b Each Board of Directors shall establish, adopt, and maintain a formal written capital adequacy plan as a part of the financial plan required by
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618.8440 of this chapter. The plan shall include the capital targets that are necessary to achieve the System institutions capital adequacy goals as well as the minimum permanent capital, common equity tier 1 CET1 capital, tier 1 capital, total capital, and tier 1
leverage ratios including the unallocated retained earnings URE and URE equivalents minimum standards.
The plan shall expressly acknowledge the continuing and binding effect of all board resolutions adopted in accordance with 628.20b1xiv, c1xiv, and d1xi of this chapter, and with 628.21 of this chapter. The plan shall address any projected dividend payments, patronage payments, equity retirements, or other action that may decrease the System institutions capital or the components thereof for which minimum amounts are required by this part and part 628 of this chapter. The plan shall set forth the circumstances and minimum timeframes in which equities may be redeemed or revolved consistent with the System institutions applicable bylaws or board of directors resolutions.
c In addition to factors that must be considered in meeting the minimum standards, the board of directors shall also consider at least the following factors in developing the capital adequacy plan:
1 Capability of management and the board of directors the assessment of which may be a part of the assessments required in paragraphs b2ii and b7i of 618.8440 of this chapter;
2 Quality of operating policies, procedures, and internal controls;
3 Quality and quantity of earnings;
4 Asset quality and the adequacy of the allowance for losses to absorb potential loss within the loan and lease portfolios;
5 Sufficiency of liquid funds;
6 Needs of a System institutions customer base; and 7 Any other risk-oriented activities, such as funding and interest rate risks, potential obligations under joint and several liability, contingent and offbalance-sheet liabilities or other conditions warranting additional capital.
5. Amend 615.5201 by revising the definition of System institution to read as follows:
615.5201

Definitions.

System institution means a System bank, an association of the Farm Credit System, and their successors, and any other institution chartered by the Farm Credit Administration FCA that the FCA determines should be considered a
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