Ala. Code § 5-5A-22 (1975) Limits of Indebtedness

• Library: Alabama Statutes
• Edition: 2023
• Currency: Current with legislation from the 2023 Regular and Special Sessions.
• Year: 2023
• Citation: Ala. Code § 5-5A-22 (1975)

(a) No bank shall make a loan to any one person which, when combined with all other loans to such person, would cause total loans to that person to exceed:

(1) Ten percent of the capital accounts of the bank, if such loans are not secured, or

(2) Twenty percent of the capital accounts of the bank, if loans in excess of 10 percent of capital are fully secured.

(b) No loans which would exceed the limitation set forth in subsection (a)(1) shall be made unless duly authorized or approved in advance by the board of directors of the bank, a committee of the board of directors of the bank, or a loan committee, with such authorization or approval recorded in minutes of the meeting at which the authority was given.

(c)

(1) As used in this section, the term "capital accounts" shall include capital, surplus, and undivided profits as defined in Section 5-1A-2, together with obligations of the bank subordinated in priority upon liquidation or dissolution to the claims of depositors of the bank. The term shall also include such reserves as may from time to time be permitted to be included by the superintendent.

(2) In calculating total loans to a person under this section the following rules shall govern:

a. In computing the total liabilities of any person to a bank, there shall be included all liabilities to the bank as maker or acceptor of paper discounted with or sold to such bank and the liability of the indorser, drawer, or guarantor who obtains a loan from or discounts paper with or sells paper under his or her guaranty or repurchase agreement to such bank.

b. In computing the total liabilities of any person to a bank, there shall be included all liabilities to the bank of any partnership or any unincorporated association of which such person is a member, any loans made for such person's benefit or for the benefit of such partnership or unincorporated association, and any loans made to, or for the benefit of, a corporation of which such person owns 35 percent or more of the capital.

c. In computing the total liabilities of any partnership or unincorporated association to a bank, there shall be included all liabilities of its individual members to such bank, loans made for the benefit of such partnership or unincorporated association or any member thereof, and any loan made to, or for the benefit of, any corporation of which any member owns 35 percent or more of the capital.

d. In computing the total liabilities of any corporation to a bank, there shall be included all loans made for the benefit of the corporation, and all loans to, or for the benefit of any partnership or unincorporated association, or any member thereof, who owns 35 percent or more of the capital of such corporation.