---
kind: "section"
citation: "12 C.F.R. § 366.4"
title: "12"
number: "366.4"
heading: "When is there a pattern or practice of defalcation?"
url: "https://uscodex.org/cfr/12/366.4"
---

# §366.4. When is there a pattern or practice of defalcation?

- (a) You have a pattern or practice of defalcation under [§ 366.3(c)](/cfr/12/366.3.md?p=c) when you, any person that owns or controls you, or any entity you own or control has a legal responsibility for the payment on at least two obligations that are:
  - (1) To one or more insured depository institutions;
  - (2) More than 90 days delinquent in the payment of principal, interest, or a combination thereof; and
  - (3) **More than $50,000 each.**
- (b) **The following are examples of when you have or do not have a pattern or practice of defalcation.** These examples are not inclusive.
  - (1) **You have five loans at insured depository institutions.** Three of them are 90 days past due. Two of the three loans have outstanding balances of more than $50,000 each. You have a pattern or practice of defalcation.
  - (2) **You have five loans at insured depository institutions.** Two of them are 90 days past due. One of the two is with ABC Bank for $170,000. The other one is with XYZ bank for $60,000. You have a pattern or practice of defalcation.
  - (3) **You have five loans at insured depository institutions.** Three of them are 90 days past due. One of the three has an outstanding balance of more than $50,000. The other two have outstanding balances of less than $50,000. You do not have a pattern or practice of defalcation.
  - (4) **You have five loans at insured depository institutions.** Three of them have outstanding balances of more than $50,000. Two of those three were 90 days past due but are now current. You do not have a pattern or practice of defalcation.

## Notes

### Authority

Authority: Section 9 (Tenth) of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 1819 (Tenth); sections 12(f)(3) and (4) of the FDI Act, 12 U.S.C. 1822(f)(3) and (4); and section 19 of Pub. L. 103-204, 107 Stat. 2369.

### Source

Source: 67 FR 69991, Nov. 20, 2002, unless otherwise noted.