32-1-432. Limitations on loans -- rulemaking. (1) (a) The total loans or extensions of credit to a person, partnership, or corporation by a bank, including loans to a partnership and to the members of the partnership, may not exceed 20% of the amount of the unimpaired capital and surplus of that bank.
(b) The discount of bills of exchange drawn in good faith against actual existing values, the discount of bankers, acceptances of other banks, the discount of commercial or business paper actually owned by the person negotiating it and the obligations of the United States, general obligations of any state or of any political subdivision, or obligations issued under authority of the Federal Farm Loan Act may not be considered as money borrowed.
(c) The limitations imposed on total loans and extensions of credit by this section do not apply to loans and investments secured by obligations of the United States having a current market value of 100% of the amount loaned or invested.
(d) Loans or obligations are not subject under this section to any limitation based upon that unimpaired capital and surplus to the extent that they are secured or covered by guaranties, or by commitments or agreements to take over or to purchase them, made by a federal reserve bank or by the United States or a department, bureau, board, commission, or establishment of the United States, including a corporation wholly owned, directly or indirectly, by the United States.
(2) The combined liabilities of the members of a firm, partnership, or unincorporated association to the loaning bank must be included in the liabilities of the firm, partnership, or unincorporated association. The portion of the liabilities of the firm, partnership, or unincorporated association for which a member individually is legally responsible must be included in the liabilities of the member in determining the limitations imposed by this section. In determining the limitation for loans or extensions of credit to a limited partner of a limited partnership, the portions of the liabilities of the limited partnership for which the limited partner is free from liability must be excluded.
(3) When, in the judgment of the department, the liabilities of a corporation or the combined liabilities of a corporation and one or more of its stockholders to a bank are excessive, it shall require the reduction to the limits and within the time it prescribes.
(4) The limitations of this section do not apply to the extent that the loan or extension of credit is secured by pledged deposits in the lending bank.
(5) The limitations of this section do not apply to a loan of funds or an extension of credit made by a bank to another bank if the term of the loan or extension of credit does not exceed 2 business days.
(6) The limitations of this section do not apply to the extent that a loan is covered by a guaranty or by commitments or agreements to take over or purchase the loan made by an agency or board of the state of Montana authorized by law to provide the guaranties, commitments, or agreements.
(7) (a) A state-chartered bank may be exempted from the limitations of this section by applying to the department for a written waiver stipulating that the bank will be subject to the limitations imposed on national banks under 12 U.S.C. 84 and the regulations of the office of the comptroller of the currency.
(b) A written waiver provided to a state-chartered bank in accordance with subsection (7)(a) may not be changed by the bank or revoked by the department for 2 years from the date of issue or for a different period determined by the department by rule.
(8) The department may adopt rules to carry out the purposes of this section, including rules differentiating between discretionary and nondiscretionary contractual commitments and rules specifying the types of derivative transactions in which a bank may engage and setting safety and soundness standards for engaging in derivative transactions.
(9) For purposes of this section, the terms "loan", "extension of credit", and "obligation" include:
(a) all direct or indirect advances of funds to a person on the basis of an obligation of the person to repay the funds;
(b) a liability of a state-chartered bank to advance funds to or on behalf of a person pursuant to a contractual commitment; and
(c) any credit exposure to a person arising from a derivative transaction, as defined in 12 U.S.C. 84(b)(3).
History: En. Sec. 44, Ch. 89, L. 1927; re-en. Sec. 6014.48, R.C.M. 1935; amd. Sec. 1, Ch. 71, L. 1943; amd. Sec. 1, Ch. 6, L. 1969; amd. Sec. 1, Ch. 118, L. 1973; amd. Sec. 17, Ch. 431, L. 1975; R.C.M. 1947, 5-523; amd. Sec. 1, Ch. 258, L. 1983; amd. Sec. 1, Ch. 315, L. 1985; amd. Sec. 29, Ch. 395, L. 1993; amd. Sec. 5, Ch. 100, L. 1999; amd. Sec. 1, Ch. 121, L. 2013.
Structure Montana Code Annotated
Title 32. Financial Institutions
Chapter 1. Banks and Trust Companies
Part 4. Operation and Regulation
32-1-401. Bank advertising before issuance of charter
32-1-402. When advertising as bank prohibited -- trade names restricted
32-1-403. Penalty for transacting business without certificate
32-1-404. through 32-1-410 reserved
32-1-411. Extent assets may be pledged
32-1-412. Limits on excessive borrowing
32-1-413. Borrowing money for capital purposes -- status of capital
32-1-414. No certificate of deposit to issue for borrowed money
32-1-415. through 32-1-419 reserved
32-1-420. Investment by trust fiduciary in management investment company or investment trust
32-1-421. Investment of capital of savings banks
32-1-422. Restriction on investment in corporate stock -- rulemaking authority
32-1-423. Real estate that banks may purchase, hold, or convey
32-1-424. Investments of financial institutions
32-1-426. Deposit of securities in central depository
32-1-427. Fiduciaries -- deposit of securities with a federal reserve bank
32-1-429. Insurance activities -- exemption -- rulemaking
32-1-430. Authority of state banks to make real estate loans -- borrower insurance requirements
32-1-432. Limitations on loans -- rulemaking
32-1-433. Investment in certain securities -- rulemaking authority
32-1-435. Federal housing securities eligible collateral
32-1-437. Acceptance and issuance of drafts -- rulemaking authority
32-1-438. and 32-1-439 reserved
32-1-444. Deposit in name of minor
32-1-445. Demand or time deposits
32-1-446. Safe deposit department
32-1-447. Giving security for deposit prohibited -- exceptions
32-1-448. Payments to foreign administrator
32-1-449. and 32-1-450 reserved
32-1-451. Statement of capital, resources, and liabilities
32-1-452. Dividends, surplus, losses, and bad debts
32-1-453. Calculation of profits
32-1-454. Past-due and doubtful paper
32-1-455. Reserve requirements
32-1-456. through 32-1-460 reserved
32-1-461. Bonding of employees
32-1-462. Persons previously convicted under banking laws -- bank employment
32-1-463. Sale of securities by officer to bank
32-1-464. Fraud by director, officer, agent, or employee
32-1-465. Limit on loans to officer, director, or principal shareholder
32-1-466. Purchase of obligation of bank by officer
32-1-467. Loans to managing officer
32-1-468. Removal of directors, officers, or employees -- hearing
32-1-469. and 32-1-470 reserved
32-1-471. Penalty for unlawful hypothecation of property received
32-1-472. Concealing actions from directors
32-1-473. Theft of funds by directors, officers, or employees
32-1-474. False statement to obtain loan
32-1-475. through 32-1-480 reserved
32-1-482. Transaction on holidays
32-1-483. Closing on Saturdays authorized -- Saturday treated as holiday
32-1-484. Banking hours and business days
32-1-485. Interest payable at bank on Saturday -- how paid
32-1-486. through 32-1-490 reserved
32-1-491. Destruction of records
32-1-492. Definitions -- reproduction of bank records -- admissibility in evidence -- cost recovery
32-1-493. Admissibility of copies in evidence -- exception when original available
32-1-494. Destruction or reproduction "in regular course of business" defined