Current through Register Vol. XLI, No. 49, December 6, 2024
Section 106-9-3 - Limitations and Compliance3.1. General limitation. The total loans and extensions of credit made by a state-chartered banking institution to any one person or common enterprise (as defined in subsection 4.2 of this rule) and not fully secured, as determined in a manner consistent with subsection 3.2 of this rule, shall not exceed fifteen percent (15%) of the unimpaired capital and unimpaired surplus of that state-chartered banking institution initially determined for the period that the loan or extension of credit is made.
3.2. Additional general limitation; loans fully secured by readily marketable collateral. Where the total loans and extensions of credit by a state-chartered banking institution to any one person or common enterprise are fully secured by readily marketable collateral having a current market value, as determined by reliable and continuously available price quotations, at least equal to the outstanding amount of those loans and extensions, then the bank may provide these loans or extensions of up to ten percent (10%) of the unimpaired capital and unimpaired surplus of that state-chartered banking institution initially determined for the period that the loan or extension is made. This limitation is separate from and in addition to the limitation contained in subsection 3.l of this rule.
3.3. Compliance with W. Va. Code '31A-4-26(a)(2). (a) Each loan or extension of credit based on the limitation contained in W. Va. Code '31A-4-26(a)(2) shall be secured by readily marketable collateral having a current market value of at least one hundred percent (100%) of the amount of the loan or extension of credit at all times.(b) Each bank shall institute adequate procedures to ensure that the collateral value fully secures the outstanding loan at all times.(c) Financial instruments may be denominated in foreign currencies which are freely convertible to United States dollars. If collateral is denominated and payable in a currency other than that of the loan or extension of credit which it secures, the bank's procedures shall require that the collateral be revalued at least monthly, using appropriate foreign exchange rates, in addition to being repriced at current market value.(d) If collateral values fall below one hundred percent (100%) of the outstanding loan, to the extent that the loan is no longer in conformance with this section and exceeds the general fifteen percent (15%) limitation, the bank shall bring the loan into conformance within five (5) business days, except where judicial proceedings, regulatory actions or other extraordinary occurrences prevent the bank from taking action.3.4. Material decline of unimpaired capital and unimpaired surplus. (a) Where there is a material decline in a state-chartered bank's unimpaired capital and unimpaired surplus causing it to decrease during any quarterly reporting period more than twenty percent (20%) from that amount reported in the bank's most recent report of income and condition or causing it to decrease more than thirty percent (30%) in any twelve month period, the bank shall review its outstanding loans and extensions of credit and report to the commissioner of banking those loans and extensions of credit that exceed the limitations of this section using the bank's current re-evaluated unimpaired capital and unimpaired surplus. The report shall detail the bank's position in each loan and extension of credit. The commissioner may, within his or her discretion, require that these loans and extensions of credit be brought into conformity with the bank's current re-evaluated legal lending and investment limitation.(b) The commissioner of banking may direct any state-chartered bank to recalculate its lending limits at more frequent intervals than provided in this section and require all outstanding loans and extensions of credit to be brought into conformance with the re-evaluated limitation in order to ensure a bank's safety and soundness. In these cases, the commissioner shall provide the bank a written notice explaining briefly the specific reasons why the determination was made to require the more frequent calculations.