(a) No bank, trust company or savings bank shall make any loans, directly or indirectly, to any person, firm, association or corporation, aggregating an amount which (including any extension of credit to such person, firm, association or corporation, by means of the issuance of letters of credit, or the discount or purchase of the notes, bills of exchange or other obligations of, such person, firm, association or corporation, or the acceptance, discount or purchase of drafts not eligible for discount by a Federal Reserve bank) shall exceed the following percentage of the lender’s total capital, which for this purpose means, in the case of a bank (including a bank and trust company and a savings bank), the bank’s Tier 1 and Tier 2 capital included in the bank’s risk-based capital under the capital guidelines of the appropriate federal banking agency, plus the balance of the bank’s allowance for loan and lease losses not included in the bank’s Tier 2 capital for purposes of the calculation of risk-based capital by the appropriate federal banking agency, based on the bank’s most recent consolidated report of condition filed under 12 U.S.C. § 1817(a)(3), or, in the case of a trust company (other than a bank and trust company), the sum of the capital, surplus, undivided profit and the valuation portion of the loan loss reserve accounts of the lender:
(1) Fifteen percent, if the loan be without collateral security. Nothing herein contained shall prohibit the taking or receiving of any kind, character or amount of security whatsoever, either real or personal, for the protection of any loan made under this paragraph, but no such loan or any part thereof shall be considered or construed as a secured loan within the meaning of this paragraph unless the whole thereof has collateral security worth at least 15 percent more than the amount of such loan; or
(2) Ten percent (in addition to the amount that may be loaned under paragraph (1) of this subsection) upon collateral security worth at least 15 percent more than the amount of such loan so secured; provided, the aggregate amount which can be loaned under paragraph (1) of this subsection and this paragraph to any 1 person, firm, association or corporation shall not exceed 25 percent of the lender’s total capital; and provided further that no loan which is without collateral security shall be combined or blended with a loan which has collateral security, but the 2 classes of loans shall be kept separate and independent and each shall be represented by a separate evidence of indebtedness; or
(3) Twenty-five percent upon collateral security worth at least 15 percent more than the amount of the loans so secured. When loans so secured are made to this amount, then no loans not so secured shall be permitted in addition to such secured loans, except as set forth in subsection (b) below.
(b) None of the limitations or restrictions contained in subsection (a) of this section shall apply to:
(1) Loans, discounts or other extensions of credit secured by bonds or other obligations of the United States (defined to include any Federal Reserve bank or any department, bureau, board, agency, instrumentality, commission or establishment of the United States including any corporation wholly owned directly or indirectly by the United States) or of this State (defined to include any department, bureau, board, agency, instrumentality, commission or establishment of this State, including any corporation wholly owned directly or indirectly by this State);
(2) Any loan, discount or extension of credit, to the extent that any of the loans, discounts or extensions of credit are to, or are secured or covered by, guaranties, or by commitments, or agreements to take over or to purchase any such loans, discounts or extensions of credit made by the United States or this State, provided that such guaranties, agreements or commitments are unconditional and must be performed by payment of cash or its equivalent within 60 days after demand;
(3) Any loan, discount or extension of credit to an affiliate or subsidiary other than a subsidiary referred to in subsection (e) of this section.
(4) The sale of federal funds to depository institutions as defined in § 19 of the Federal Reserve Act [12 U.S.C. § 461] and to Edge Act corporations [12 U.S.C. § 611 et seq.] or the purchase of securities under agreements to resell provided such sales and purchases shall be repayable on the banking day next following their date of execution;
(5) The purchase or discount of bankers acceptances of the kind described in § 13 of the Federal Reserve Act [12 U.S.C. § 342 et seq.] and issued by other banks;
(6) Loans or extensions of credit arising from the discount of commercial or business paper evidencing an obligation to the persons negotiating it with recourse;
(7) Loans or extensions of credit secured by a segregated deposit account in the lending bank;
(8) Loans and extensions of credit arising from the discount of negotiable or nonnegotiable installment consumer paper which carries a full recourse endorsement or unconditional guaranty by the person transferring the paper, which shall be subject to a maximum loan limitation equal to 25 percent of such total capital;
(9) Loans and extensions of credit secured by bills of lading, warehouse receipts or similar documents transferring or securing title to readily marketable staples which shall be subject to a limitation of 35 percent of such total capital, if the market value of the staples securing each additional loan or extension of credit at all times equals or exceeds 15 percent more than the outstanding amount of such loan or extension of credit;
(10) The acceptance of a draft eligible for discount by a Federal Reserve bank drawn on the bank or the issue or confirmation of time letters of credit calling for the creation of such acceptances, which shall be subject to a loan limitation of 10 percent of such total capital, unless, with respect to that part in excess of 10 percent of such total capital, the institution is secured either by attached documents or by some other actual security growing out of the same transaction as the acceptance; and
(11) Any provisional debit, loan or extension of credit made by the lending bank or trust company to the demand deposit account of a customer of the lending bank or trust company in the course of settling overlimit checks drawn on such demand deposit account, provided that any such debit, loan or extension of credit is revocable at will by the lending bank or trust company as of the close of business the banking day next following the settlement of such checks, and provided further that any such debit, loan or extension of credit is funded by the customer within such time period.
(c) In computing loans to each of the following types of borrower, the loans shall be computed for such type of borrower only on the basis set forth in the applicable subparagraph below designated for such type of borrower and not with reference to either of the other subparagraphs:
(1) In computing loans to any individual person under this section, there shall be included all loans or extensions of credit by the lending corporation to:
a. Any partnership or unincorporated association of which the borrower is a member, to the extent that the borrower is actually liable to the lending corporation for the liabilities of the partnership or unincorporated association; and
b. All loans made for the borrower’s benefit, or for the benefit of any partnership or unincorporated association, of which the borrower is a member, except partnerships of which the borrower is a limited partner and not also a general partner, and is not otherwise liable for the liabilities of such partnership to the lending corporation.
(2) In computing the loans to any partnership, or unincorporated association under this section there shall be included:
a. All liabilities of its members to the lending corporation except liabilities of limited partners who are not also general partners, and who are not generally liable for the debts of the limited partnership, either by agreement or by operation of law; and
b. All loans made for the benefit of the partnership, or unincorporated association or any member thereof, except limited partners who are not also general partners, and who are not generally liable for the debts of the limited partnership, either by agreement or by operation of law.
(3) In computing the loans to any corporation under this section there shall be included all loans made for the benefit of the corporation. A loan shall not be deemed to be made for the benefit of a corporation if such loan is made to a person other than the corporation, including a subsidiary or affiliate of the corporation, unless the loan proceeds are to be loaned to the corporation or are to be transferred to the corporation without fair and adequate consideration, but the discharge of an equivalent amount of debt previously incurred in good faith and for value shall be considered fair and adequate consideration.
(d) No bank, trust company or savings bank shall make any loans directly or indirectly to any of its executive officers or directors in an amount that, when aggregated with the amount of all other extensions of credit to that person, exceeds the lesser of $500,000 or 5% of the bank’s total capital, except on the following conditions:
(1) That the loan be approved by the vote of a majority of the whole board of directors, or where the granting of loans is vested in a committee of the board of directors, then by a vote of a majority of the whole committee, and the proposed borrower shall not be present when the application for the loan is acted on;
(2) That at the time the loan shall be voted upon, there shall be submitted to and examined by the directors voting upon the loan a written statement signed by the proposed borrower setting forth clearly the proposed borrower’s financial condition and disclosing the proposed borrower’s assets and liabilities, and in case the loan shall be granted, the statement shall be preserved and kept with the evidence of the loan while the same remains unpaid, but no such statement shall be necessary where the loan is secured by liquid collateral worth at least 20 percent more than the amount of the loan.
(e) A department or division or subsidiary of a bank or trust company which engages in any activity authorized by § 761(a)(14) or § 1661(a)(14) of this title shall be deemed a corporation subject to the limitations of this section.