La. Admin. Code tit. 10 § III-301

Current through Register Vol. 50, No. 12, December 20, 2024

Section III-301 - Direct Lease-Financing Transactions

A. Direct lease-financing transactions are valid and proper activities that Louisiana state banks may engage in, in their course of business under the following.

1. A Louisiana state bank may become the owner and lessor of personal and real property upon the specific request of and for the use of a lessee-customer.

2. The leasing agreement is to serve as the functional equivalent of an extension of credit to the lessee while preserving to the banks such lessor's rights as are contained in the lease.

3. The lease must provide for definite monthly payments, the total of which, together with a reasonable "residual," will return to the lessor bank its full investment in the property, its cost of financing and a reasonable profit.

4. The lease must be on a nonoperating basis whereby the lessee assumes all expenses of maintaining the property.

5. The term of the lease shall in no event exceed 10 years.

6. The total investment by a bank for the benefit of any customer engaged in a lease-financing transaction shall at no time exceed 10 percent of the capital and surplus of such bank.

7. The total investment by a bank in leasing shall not exceed 3 percent of total assets.

8. The commissioner may at any time inspect and review any and all lease-financing transactions engaged in by state banks in Louisiana.

La. Admin. Code tit. 10, § III-301

Promulgated by the Department of Commerce, Office of Financial Institutions, LR 3:475 (December 1977).

AUTHORITY NOTE: Promulgated in accordance with R.S. 6:237.