§412:6-303 - Limitations on loans and extensions of credit to one borrower.
§412:6-303 Limitations on loans and extensions of credit to one borrower. (a) No savings bank shall permit a person to become indebted or liable to it, either directly or indirectly, on loans and extensions of credit, in a total amount outstanding at any one time in excess of twenty per cent of the capital and surplus of the savings bank.
(b) This section applies to all loans and extensions of credit made by a savings bank and its subsidiaries. It does not apply to loans and extensions of credit made by a savings bank or its subsidiaries to its affiliates or subsidiaries.
(c) The limitations set forth in this section shall not apply to:
(1) A savings bank's deposits with a Federal Reserve Bank, Federal Home Loan Bank, or another depository institution made in compliance with this chapter;
(2) A savings bank's sale of federal funds to another depository institution with a maturity of one business day or under a continuing contract;
(3) Loans and extensions of credit secured by the interest-bearing obligations of the United States or those for which the faith and credit of the United States are distinctly pledged to provide for the payment of the principal and interest thereof or of the State or any county or municipal or political subdivision of this State, issued in compliance with the laws of this State, where the market value of the security shall be at any time not less than one hundred five per cent of the face amount of the loans and extensions of credit;
(4) Loans and extensions of credit to the extent secured by a pledge or security interest in a deposit account in the savings bank serving as the lender; and
(5) Loans and extensions of credit arising from the discount of negotiable or nonnegotiable credit sales contracts which carry a partial recourse endorsement or limited guarantee by the person transferring the credit sales contract, if the savings bank's respective file or the knowledge of its officers of the financial condition of each maker of such consumer paper is reasonably adequate, and an officer of the savings bank certifies in writing that the savings bank is relying primarily upon the responsibility of each maker for payment of such credit sales contract and not upon any partial recourse endorsement or limited guarantee by the transferor. Under these circumstances, such credit sales contract will be considered a loan and extension of credit to the maker of the credit sales contract rather than the seller of the credit sales contract.
(d) In computing the total loans and extensions of credit made by a savings bank to any person, all loans and extensions of credit by the savings bank to the person and to any partnership, joint venture or unincorporated association of which the person is a partner or a member shall be included unless the person is a limited partner, but not a general partner, in a limited partnership, or unless the person is a partner in a limited or general partnership, or a member of a joint venture or unincorporated association, if such partner or member, by law, by the terms of the partnership, joint venture or membership agreement, or by the terms of an agreement with the savings bank, is not to be held liable to the savings bank for the debts of the partnership, joint venture or association. In computing the total loans and extensions [of] credit made by a savings bank to any firm, partnership, joint venture or unincorporated association, all loans and extensions of credit to its individual partners or members shall be included unless such individual partner is a limited partner, but not a general partner, in a limited partnership, or unless such individual partner or member, by law, by the terms of the partnership, joint venture, or membership agreement, or by the terms of an agreement with the bank, is not to be held liable to the savings bank for the debts of the partnership, joint venture or association.
(e) Alternatively, a savings bank may, with the prior approval of the commissioner, comply with the lending limits applicable to national banking association, as and to the same extent it would, at the time, be so required by federal law or regulation if it were a national banking association. In monitoring a savings bank's compliance with the national banking association lending limits, the commissioner shall give substantial weight to the Office of the Comptroller of the Currency's regulations and opinions interpreting the national banking association lending limits and will regard them as strong evidence of safe and sound banking practices. [L 1993, c 350, pt of §1; am L 1994, c 107, §16]