17:9A-62. Limitations on liability

62. Limitations on Liability. A. The total loans and extensions of credit by a bank or savings bank outstanding to one borrower at one time and not fully secured by collateral having a market value at least equal to the amount of the loans and extensions of credit shall not exceed 15 percent of the capital funds of the bank or savings bank.

B. The total loans and extensions of credit by a bank or savings bank outstanding to one borrower at one time and fully secured by readily available marketable collateral having a market value, as determined by reliable and continuously available price quotations, at least equal to the amount of the funds outstanding shall not exceed 10 percent of the capital funds of the bank or savings bank. This limitation shall be separate from and in addition to the limitation contained in subsection A of this section. If a bank's or savings bank's lending limit calculated under this subsection and under subsection A of this section is less than $500,000, the bank or savings bank may nevertheless have total loans and extensions of credit outstanding to one borrower at one time not to exceed $500,000.

C. Except as the commissioner may otherwise prescribe from time to time by regulation promulgated pursuant to subsection H of this section, the total loans and extensions of credit to a person by a bank or savings bank shall not be subject to any limitations imposed by this article, to the extent that loans and extensions of credit are secured by direct or indirect obligations of the United States which have a face or par value at least equal to the amount of such loans and extensions of credit, and which are fully guaranteed as to principal and interest by the United States.

D. Except as the commissioner may otherwise prescribe from time to time by regulation promulgated pursuant to subsection H of this section, loans and extensions of credit to, and investments in the obligations of any municipality or school district of this State may equal but not exceed 100% of the capital funds of a bank.

E. The commissioner may, from time to time, approve the obligations of any other state of the United States, or of any political or municipal or county subdivision or instrumentality thereof, or of any political subdivision or instrumentality of a municipality or county of this State, other than a school district, or of the Port Authority of New York and New Jersey or other instrumentality of two or more states or of the United States, or loans to any such other state, or to such subdivision, or instrumentality, and, unless the commissioner, acting pursuant to subsection H of this section prescribed otherwise by regulation, loans and extensions of credit may be made to, and investments may be made in the obligations of any such other State, or of any such subdivision or instrumentality in excess of 15 % but not in excess of 25% of the capital funds of a bank or savings bank.

F. Except as the commissioner may otherwise prescribe from time to time by regulation promulgated pursuant to subsection H of this section, the total amount of investment securities of any one person held by a bank or savings bank for its own account, other than investments specified in paragraphs (1) and (2) of section 61 and subsections D and E of this section, shall not exceed 15 % of the capital funds of the bank or savings bank.

G. In determining whether the total loans and extensions of credit made to any person are within the limitations imposed by this article, a bank or savings bank and its directors, officers and employees may rely upon, and be protected in relying upon, the written statements or representations of such person, made to induce such bank or savings bank to permit such loans and extensions of credit to be made.

H. The commissioner may, from time to time, make, amend and repeal regulations (1) imposing a limitation, expressed in terms of a percentage of capital funds, upon loans and extensions of credit secured as specified in subsection C of this section, and (2) decreasing, increasing, or removing entirely the limitations on loans and extensions of credit imposed by this article upon the loans and extensions of credit, obligations and investments specified in subsections A, B, D, E and F of this section. Regulations made pursuant to this section shall be directed toward creating and maintaining substantial equality between State banks and savings banks and national banks, to the end that no class or group of banks or savings banks shall have any substantial competitive advantage over another. When not defined in this article or in regulations promulgated by the commissioner, terms used in this article shall be construed in a manner consistent with their definition by the Comptroller of the Currency, or any other appropriate federal regulatory agency.

L.1948,c.67,s.62; amended 1949, c.246, s.1; 1953, c.141, s.2; 1956, c.115; 1960, c.181; 1965, c.171, s.21; 1969, c.244, s.4; 1997, c.33, s.11.