12 CFR §366.4

1. (a)You have a pattern or practice of defalcation under § 366.3(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. (1)To one or more insured depository institutions;
   2. (2)More than 90 days delinquent in the payment of principal, interest, or a combination thereof; and
   3. (3)More than $50,000 each.
2. (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. (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. (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. (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. (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.