Louisiana § RS 6:1235 - Loans to one borrower

§ RS 6:1235. Loans to one borrower

A.  A state savings bank shall not loan on an unsecured basis to any one person, directly or indirectly, an amount in excess of ten percent of its net worth.

B.(1)  A state savings bank shall not loan on a secured basis to any one person, directly or indirectly, an amount in excess of twenty-five percent of its net worth.  The cumulative lending to one person, directly or indirectly, on a secured and unsecured basis, shall not exceed twenty-five percent of the savings bank's net worth.

(2)  The total direct and indirect loans and extensions of credit by a savings bank to any person outstanding at one time and at least one hundred percent secured by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations, shall not exceed ten percent of the savings bank's net worth.  This limitation shall be separate from and in addition to the limitations contained in Subsection A and Paragraph (B)(1) of this Section.

C.  For the purposes of this Part, the term "person" shall be deemed to include an individual, firm, corporation, business trust, partnership, trust, estate, association, joint venture, pool, syndicate, sole proprietorship, unincorporated association, or any political subdivisions, or any similar entity or organization.

D.  For the purposes of this Part, any loan or extension of credit granted to one person, the proceeds of which are used for the direct benefit of a second person, shall be deemed a loan or extension of credit to the second person, as well as the first person.

E.  For the purposes of this Part, the total liabilities of a firm shall include the liabilities of the members of the firm.

F.(1)  For the purposes of this Part, the term "readily marketable collateral" shall mean financial instruments or bullion which are salable under ordinary circumstances with reasonable promptness at a fair market value on an auction or a similarly available daily bid and ask price market.

(2)  "Financial instruments" include stocks, bonds, notes, and debentures traded on a national exchange or over the counter, commercial paper, negotiable certificates of deposit, bankers' acceptances, and shares in money market or mutual funds.

G.  Each savings bank shall institute adequate procedures to ensure that collateral fully secures the outstanding loan or extension of credit at all times.

H.  If collateral values fall below one hundred percent of the outstanding loan or extension of credit to the extent that the loan or extension of credit no longer is in conformance with Paragraph (B)(2) of this Section and which exceeds the twenty-five percent limitation of Paragraph (B)(1) of this Section, the loan shall be brought in conformance with this Part within five business days, except where judicial proceedings or other similar extraordinary occurrences prevent the savings bank from taking action.  A savings bank may petition the commissioner to grant it an extension of time to bring a nonconforming loan into compliance with the provisions of this Part.

I.  This Part shall not apply to loans or extension of credit to the United States of America or its agencies or to this state or its agencies.

J.  For the purposes of this Part, the term "net worth" shall mean:

(1)  Common stock outstanding and unimpaired;

(2)  Noncumulative perpetual preferred stock outstanding and unimpaired;

(3)  Unimpaired capital surplus, undivided profits, capital reserves, minus intangible assets;

(4)  Purchased mortgage servicing rights; or

(5)  Mandatory convertible debt up to twenty percent of the total categories contained in Paragraphs (1), (2), (3), and (4) of this Subsection.

K.  A savings bank's net worth for purposes of this Part shall be calculated at any time based upon its last quarterly call report.

Acts 1990, No. 816, §1, eff. Sept. 1, 1990; Acts 2000, 1st Ex. Sess., No. 26, §1, eff. April 14, 2000.