(a) Except as otherwise provided in this section, the total direct or indirect liabilities of any one obligor that are not fully secured, however incurred, to any Connecticut bank, exclusive of such bank's investment in the investment securities of such obligor, shall not exceed at the time incurred fifteen per cent of the capital and surplus of such bank. The total direct or indirect liabilities of any one obligor that are fully secured, however incurred, to any Connecticut bank, exclusive of such bank's investment in the investment securities of such obligor, and except as otherwise provided in subsection (l) of this section, shall not exceed at the time incurred ten per cent of the capital and surplus of such bank, provided this limitation shall be separate from and in addition to the limitation on liabilities that are not fully secured. Notwithstanding any provision of this section, the limitation on the liabilities of any one obligor shall take into account the credit exposure to such obligor arising from a derivative transaction. The commissioner shall have the authority to establish the method for determining the credit exposure and the extent to which the credit exposure shall be taken into account. As used in this section, an obligor shall not include any person who is a guarantor or indemnitor of a direct or indirect liability when (1) in the case of a liability where the primary obligor is not a natural person, the bank seeks repayment of any such liability out of the operations of the business of the primary obligor, (2) the bank relies primarily on the primary obligor's general credit standing and, in the case of a liability where the primary obligor is not a natural person, the forecast of operation of the primary obligor's business, (3) there is no aspect of the loan that is being made as an exception to the bank's lending policies, and (4) such guarantor or indemnitor is not an obligor with respect to such liability pursuant to the direct benefit or common enterprise tests set forth in subsection (b) of this section. As used in this subsection, (A) “primary obligor” means a person who is named as a borrower or debtor, but not a guarantor or indemnitor, in a direct or indirect liability, (B) “guarantor” means a person who is obligated to pay a direct or indirect liability when the primary obligor has defaulted on such liability pursuant to the terms of the liability, (C) “indemnitor” means a person who becomes obligated to pay a direct or indirect liability pursuant to an indemnity agreement, and (D) “derivative transaction” includes any transaction that is a contract, agreement, swap, warrant, note or option that is based, in whole or in part, on the value of any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices or other assets. The commissioner may adopt regulations in accordance with the provisions of chapter 54 establishing the method for determining credit exposure to derivative transactions and the extent to which the credit exposure shall be taken into account. For purposes of this section, a liability shall be considered to be fully secured if it is secured by readily marketable collateral, as defined in 12 CFR 32.2, at least equal to the amount of the liability. For purposes of determining the limitations of this section, in computing the liabilities of an obligor, a liability is incurred at the time of the closing of the transaction, unless such closing is preceded by a legally binding written commitment to enter into the transaction, in which case such liability is incurred at the time of commitment and is net of any liabilities of the obligor to such bank that will be paid with the proceeds of the commitment at the time of closing. The limitations provided for in this section may be exceeded for a period of time not to exceed six hours if at the closing of any transaction at which such obligor incurs such liabilities to a Connecticut bank in excess of such limitations, such bank immediately assigns or participates out to one or more other persons an amount that constitutes not less than the excess over the applicable limitation. Obligations as endorser or guarantor of negotiable or nonnegotiable installment consumer paper which carry an agreement to repurchase on default, unless the bank's sole recourse is to an agreed reserve held by it, in which case the liability shall be excluded, a full recourse endorsement or an unconditional guarantee by the person, partnership, association or corporation transferring the same, shall, except as otherwise provided in subsection (l) of this section, be subject under this section to a limitation of fifteen per cent of the bank's capital and surplus in addition to the applicable limitations of this section with respect to the makers of such obligations; provided, upon certification by an officer of the bank designated for that purpose by the governing board that the responsibility of each maker of such obligations has been evaluated and the bank is relying primarily upon each such maker for the payment of such obligations, the limitations of this section as to the obligations of each maker shall be the sole applicable loan limitation; and provided such certification shall be in writing and shall be retained as part of the records of such bank. (b) Liabilities of one obligor shall be attributed to another person and each such person shall be deemed to be an obligor when proceeds of a loan are to be used for the direct benefit of the other person, to the extent of the proceeds to be so used, or a common enterprise is deemed to exist between such persons. For purposes of this section, the proceeds of a loan to an obligor shall be deemed to be used for the direct benefit of another person and shall be attributed to the person when the proceeds, or assets purchased with the proceeds, are transferred to another person, other than in a bona fide arm's length transaction where the proceeds are used to acquire property, goods or services. For purposes of this section, a common enterprise shall be deemed to exist and liabilities of separate obligors shall be aggregated: (1) When the expected source of repayment for each liability is the same for each obligor and neither obligor has another source of income from which the liability, together with the obligor's other liabilities, may be fully repaid. An employer shall not be treated as a source of repayment under this subdivision because of wages and salaries paid to an employee, unless the standards of subdivision (2) of this subsection are met; (2) When loans are made (A) to obligors who are related directly or indirectly through common control, including where one obligor is directly or indirectly controlled by another obligor; and (B) substantial financial interdependence exists between or among the obligors. Substantial financial interdependence is deemed to exist when fifty per cent or more of one obligor's gross receipts or gross expenditures, on an annual basis, are derived from transactions with the other obligor. Gross receipts and expenditures include gross revenues, expenses, intercompany loans, dividends, capital contributions, and similar receipts or payments; (3) When separate persons borrow from a Connecticut bank to acquire a business enterprise of which such obligors will own more than fifty per cent of the voting securities or voting interests, in which case a common enterprise is deemed to exist between the obligors for purposes of combining the acquisition loans; or (4) When the commissioner determines, based upon an evaluation of the facts and circumstances of particular transactions, that a common enterprise exists. (c) Loans to an obligor and its subsidiary, or to different subsidiaries of an obligor shall not be aggregated unless either the direct benefit or the common enterprise test is met. For purposes of this subsection, a corporation or a limited liability company is a subsidiary of an obligor if the obligor owns or beneficially owns directly or indirectly more than fifty per cent of the voting securities or voting interests of the corporation or company. (d) Loans to a partnership, joint venture, limited liability company or association shall be deemed to be loans to each member of the partnership, joint venture, limited liability company or association. This provision shall not apply to limited partners in limited partnerships or to members of joint ventures, limited liability companies or associations unless the partners or members, by the terms of the partnership or membership agreement, are held generally liable for the debts or actions of the partnership, joint venture, limited liability company or association, and such terms are valid under applicable law. Loans to partners or members of a partnership, joint venture, limited liability company or association are not attributed to the partnership, joint venture, limited liability company or association unless either the direct benefit or the common enterprise test is met. Both the direct benefit and common enterprise tests are met between a partner or member of a partnership, joint venture, limited liability company or association and such partnership, joint venture, limited liability company or association, when loans are made to the partner or member to purchase an interest in the partnership, joint venture, limited liability company or association. Loans to partners or members of a partnership, joint venture, limited liability company or association are not attributed to other members of the partnership, joint venture, limited liability company or association unless either the direct benefit or the common enterprise test is met. (e) Loans to foreign governments and their agencies and instrumentalities shall be aggregated only if the loans fail to meet either the means test or the purpose test at the time the loan is made. The means test is met if the obligor has resources or revenue of its own sufficient to service its debt obligations. If the government's support, excluding guarantees by a central government of the obligor's debt, exceeds the obligor's annual revenues from other sources, it shall be presumed that the means test has not been satisfied. The purpose test is met if the purpose of the loan is consistent with the purposes of the obligor's general business. In order to show that the means test or the purpose test has been satisfied, a Connecticut bank shall, at a minimum, retain in its files the following items: (1) A statement, accompanied by supporting documentation, describing the legal status and the degree of financial and operational autonomy of the borrowing entity; (2) Financial statements for the borrowing entity for a minimum of three years prior to the date the loan or extension of credit was made or for each year that the borrowing entity has been in existence, if less than three; (3) Financial statements for each year the loan is outstanding; (4) The bank's assessment of the obligor's means of servicing the loan, including specific reasons in support of that assessment. The assessment shall include an analysis of the obligor's financial history, its present and projected economic and financial performance, and the significance of any financial support provided to the obligor by third parties, including the obligor's central government; and (5) A loan agreement or other written statement from the obligor which clearly describes the purpose of the loan. The written representation shall ordinarily constitute sufficient evidence that the purpose test has been satisfied. However, when, at the time the funds are disbursed, the bank knows or has reason to know of other information suggesting the obligor will use the proceeds in a manner inconsistent with the written representation, it may not, without further inquiry, accept the representation. (f) Obligations of the United States or this state, or of any town, city, borough or legally established district in this state which has the power to levy taxes for the payment of such obligations, shall not be subject to any limitation based upon such capital and surplus. (g) Obligations of any one obligor, with the exception of loans secured by mortgage of real estate and insured by the Federal Housing Administrator, which are secured or covered by guaranties, or by commitments or agreements to take over or to purchase, made by the United States or the Federal Reserve Bank or by any department, bureau, board, commission or establishment of the United States, including any corporation wholly owned, directly or indirectly by the United States, which, at the time of making such guaranty or commitment or agreement to take over or purchase, is authorized by law to enter into contracts with any financing institution guaranteeing such financing institution against loss of principal and interest on loans, taxes or advances or agreeing to take over or purchase the same, shall not be subject to any limitation based upon such capital and surplus. (h) Obligations of any one obligor secured by the pledge of direct or fully guaranteed obligations of the United States, except as otherwise provided in subsection (l) of this section, shall be limited to fifty per cent of such capital and surplus; except that obligations secured by the pledge of direct or fully guaranteed obligations of the United States which will mature in not more than eighteen months shall not be subject under this section to any limitation based upon such capital and surplus, except as otherwise provided in subsection (l) of this section. (i) Any Connecticut bank may accept drafts or bills of exchange drawn upon it having not more than six months' sight to run, exclusive of days of grace, which grow out of transactions involving the importation or exportation of goods, or which grow out of transactions involving the domestic shipment of goods, provided shipping documents conveying or securing title are attached at the time of acceptance, or which are secured at the time of acceptance by a warehouse receipt or other such document conveying or securing title covering readily marketable staples. No Connecticut bank shall accept such bills to an amount equal at any time in the aggregate to more than one-half of its capital and surplus, except as otherwise provided in subsection (l) of this section; provided the commissioner may authorize any Connecticut bank to accept such bills to an amount not exceeding at any time in the aggregate one hundred per cent of its capital and surplus, except as otherwise provided in subsection (l) of this section; provided further, the aggregate of acceptances growing out of domestic transactions shall in no event exceed fifty per cent of such capital and surplus, except as otherwise provided in subsection (l) of this section. (j) The following, except as otherwise provided in subsection (l) of this section, shall not be subject under this section to any limitation based upon such capital and surplus: (1) Obligations in the form of bankers' acceptances of other banks, provided such acceptances have at the time of discount not more than six months' sight, exclusive of days of grace, and are endorsed by at least one other bank; (2) obligations resulting from the purchase of securities subject to a resale agreement; and (3) the rental obligation of a lessee of real or personal property under a lease made or held by such bank. (k) Obligations of any one obligor which are secured by a first mortgage on real estate, except as otherwise provided in subsection (l) of this section, shall be limited to fifty per cent of such capital and surplus, provided the total obligations to any one obligor to which this subsection and subsection (a) of this section apply, except as otherwise provided in subsection (l) of this section, shall not exceed fifty per cent of such capital and surplus. Loans made to manufacturing, industrial or commercial borrowers when the bank looks for repayment out of the operations of the borrowers' business, relying primarily on the borrowers' general credit standing and forecast of operation, shall not be considered to be secured by a mortgage on real estate for purposes of this subsection, even though such loan may be secured by a mortgage on real estate. (l) (1) Not later than January 1, 2024, a Connecticut bank may, provided the Connecticut bank notifies the commissioner of such election, in writing, not later than said date, elect to use equity capital and adjusted allowances for credit losses, instead of capital and surplus, for the purposes of: (A) Calculating the limitations established in subsection (a) of this section on liabilities of any one obligor; (B) calculating the limitations established in subsection (a) of this section on obligations as endorser or guarantor of negotiable or nonnegotiable installment consumer paper which carry an agreement to repurchase on default; (C) determining the exceptions from limitations established in subsection (f) of this section on obligations of the United States or this state, or of any town, city, borough or legally established district in this state which has the power to levy taxes for the payment of such obligations; (D) determining the exceptions from limitations established in subsection (g) of this section on obligations of any one obligor, with the exception of loans secured by mortgage of real estate and insured by the Federal Housing Administrator, which are secured or covered by guaranties, or by commitments or agreements to take over or to purchase, made by the United States or the Federal Reserve Bank or by any department, bureau, board, commission or establishment of the United States, including any corporation wholly owned, directly or indirectly by the United States, which, at the time of making such guaranty or commitment or agreement to take over or purchase, is authorized by law to enter into contracts with any financing institution guaranteeing such financing institution against loss of principal and interest on loans, taxes or advances or agreeing to take over or purchase the same; (E) calculating the limitations on any one obligor established in subsection (h) of this section; (F) calculating the limitations established in subsection (i) of this section on the amount of bills of exchange a Connecticut bank may accept; (G) determining the exceptions from limitations on obligations established in subsection (j) of this section; and (H) calculating the limitations established in subsection (k) of this section on obligations which are secured by a first mortgage on real estate. (2) Any Connecticut bank that makes the election as provided in subdivision (1) of this subsection may subsequently elect, provided such Connecticut bank notifies the commissioner, in writing, that such Connecticut bank has made such subsequent election, to use capital and surplus, instead of equity capital and adjusted allowances for credit losses, for the purposes of: (A) Calculating the limitations established in subsection (a) of this section on liabilities of any one obligor; (B) calculating the limitations established in subsection (a) of this section on obligations as endorser or guarantor of negotiable or nonnegotiable installment consumer paper which carry an agreement to repurchase on default; (C) determining the exceptions from limitations established in subsection (f) of this section on obligations of the United States or this state, or of any town, city, borough or legally established district in this state which has the power to levy taxes for the payment of such obligations; (D) determining the exceptions from limitations established in subsection (g) of this section on obligations of any one obligor, with the exception of loans secured by mortgage of real estate and insured by the Federal Housing Administrator, which are secured or covered by guaranties, or by commitments or agreements to take over or to purchase, made by the United States or the Federal Reserve Bank or by any department, bureau, board, commission or establishment of the United States, including any corporation wholly owned, directly or indirectly by the United States, which, at the time of making such guaranty or commitment or agreement to take over or purchase, is authorized by law to enter into contracts with any financing institution guaranteeing such financing institution against loss of principal and interest on loans, taxes or advances or agreeing to take over or purchase the same; (E) calculating the limitations on any one obligor established in subsection (h) of this section; (F) calculating the limitations established in subsection (i) of this section on the amount of bills of exchange a Connecticut bank may accept; (G) determining the exceptions from limitations on obligations established in subsection (j) of this section; and (H) calculating the limitations established in subsection (k) of this section on obligations which are secured by a first mortgage on real estate.