As Amended
SEC. 79-5-15. Financial institutions may become members; loans to corporations; limits; evidences of indebtedness; interest.
Any financial institution may request membership in the corporation by making application to the board of directors on such form and in such manner as the board of directors may require, and membership shall be effective upon acceptance of such application by the board.
Each member of the corporation may in its discretion make loans to the corporations as and when called upon by it to do so, on such terms as may be agreed upon by the corporation and the member and consistent with the provisions of the respective charters of the corporation and the members and the bylaws of each, subject to the following conditions:
(a) All loan limits shall be established at the thousand dollar amount nearest to the amount computed in accordance with the provisions of this section.
(b) No loan to the corporation shall be made if immediately thereafter the total amount of the obligations of the corporation, direct of indirect, through endorsements, guaranties or otherwise, would exceed the sum of ten times the amount then paid in on the outstanding unimpaired net capital stock of the corporation, plus surplus.
(c) The total amount outstanding at any one time on loans to corporations organized hereunder made by a single member when added to the total amount of such member's investment in capital stock of all such corporations shall not exceed the following limit, to be determined at such time on the basis of the balance sheet of the member at the close of its fiscal year immediately preceding its application for membership, or, in the case of an insurance company, its last annual statement to the insurance commissioner. The loan limits prescribed by this paragraph shall be: three per cent (3%) of the capital and surplus of commercial banks and trust companies; two per cent (2%) of the total outstanding loans made by a building and loan association; three per cent (3%) of the capital and unassigned surplus of stock insurance companies, except fire insurance companies; three per cent (3%) of the unassigned surplus of mutual insurance companies, except fire insurance companies; one per cent (1%) of the assets of fire insurance companies, and such limits as may be approved by the board of directors of the corporation for other financial institutions.
(d) Subject to paragraph (c) of this section, each call made by the corporation may, in the discretion of the board of directors, be prorated among the members of the corporation agreeing to participate therein in substantially the same proportion that the adjusted loan limit of each member bears to the aggregate of the adjusted loan limits of all members. The adjusted loan limit of a member shall be the amount of such member's loan limit, reduced by the balance of outstanding loans made by such member to the corporation and the investment in capital stock of the corporation held by such member at the time of such call.
(e) All loans to the corporation by members shall be evidenced by bonds, debentures, notes or other evidences of indebtedness of the corporation which shall be freely transferable at all times, and which shall bear interest at a rate of not less than one quarter of one per cent (1 /4 of 1%) in excess of the rate of interest determined by the board of directors to be the prime rate prevailing at the date of issuance thereof on unsecured commercial loans.
SOURCES: Codes, 1942, Sec. 5390-08; Laws, 1960, ch. 186, Sec. 8, eff from and after passage (approved March 23, 1960).