Limitations on loans and extensions of credit to one borrower
HRS §412:6-303
in effect412:6-303. Limitations on loans and extensions of credit to one borrower
(a) No savings bank shall permit a person to become indebted or liable to it, either directly or indirectly, on loans and extensions of credit, including any credit exposure arising out of derivative transactions entered into by a savings bank and its subsidiaries, in a total amount outstanding at any one time in excess of twenty per cent of the capital and surplus of the savings bank.
(b) As used in this section, a
"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, any quantitative measure of, or the
occurrence of any event relating to one or more commodities, securities,
currencies, interest or other rates, indices, or other assets.
(c) This section applies to all loans,
extensions of credit made, and credit exposure arising out of derivative
transactions entered into, by a savings bank and its subsidiaries. It does not
apply to loans and extensions of credit made by a savings bank or its
subsidiaries to its affiliates or subsidiaries.
(d) The limitations set forth in this section
shall not apply to:
(1) A savings bank's deposits with a Federal Reserve
Bank, Federal Home Loan Bank, or another depository institution made in
compliance with this chapter;
(2) A savings bank's sale of federal funds to another
depository institution with a maturity of one business day or under a
continuing contract;
(3) Loans and extensions of credit secured by the
interest-bearing obligations of the United States or those for which the faith
and credit of the United States are distinctly pledged to provide for the
payment of the principal and interest thereof or of the State or any county or
municipal or political subdivision of this State, issued in compliance with the
laws of this State, where the market value of the security shall be at any time
not less than one hundred five per cent of the face amount of the loans and
extensions of credit;
(4) Loans and extensions of credit to the extent
secured by a pledge or security interest in a deposit account in the savings
bank serving as the lender; and
(5) Loans and extensions of credit arising from the
discount of negotiable or nonnegotiable credit sales contracts which carry a
partial recourse endorsement or limited guarantee by the person transferring
the credit sales contract, if the savings bank's respective file or the
knowledge of its officers of the financial condition of each maker of the
consumer paper is reasonably adequate, and an officer of the savings bank certifies
in writing that the savings bank is relying primarily upon the responsibility
of each maker for payment of the credit sales contract, and not upon any
partial recourse endorsement or limited guarantee by the transferor. Under
these circumstances, the credit sales contract will be considered a loan and
extension of credit to the maker of the credit sales contract rather than the
seller of the credit sales contract.
(e) In computing the total loans and
extensions of credit made by a savings bank to any person, all loans and
extensions of credit by the savings bank to the person and to any partnership,
joint venture, or unincorporated association of which the person is a partner
or a member and all credit exposure arising from a derivative transaction with
any person and with any partnership, joint venture, or unincorporated
association of which the person is a partner or a member shall be included
unless the person is a limited partner, but not a general partner, in a limited
partnership, or unless the person is a partner in a limited or general
partnership, or a member of a joint venture or unincorporated association, if
such partner or member, by law, by the terms of the partnership, joint venture,
or membership agreement, or by the terms of an agreement with the savings bank,
is not to be held liable to the savings bank for the debts of the partnership,
joint venture, or association. In computing the total loans and extensions of
credit made by a savings bank to any firm, partnership, joint venture, or
unincorporated association, all loans and extensions of credit to and all
credit exposure arising from a derivative transaction with its
individual partners or members shall be included unless such individual partner
is a limited partner, but not a general partner, in a limited partnership, or
unless such individual partner or member, by law, by the terms of the
partnership, joint venture, or membership agreement, or by the terms of an
agreement with the savings bank, is not to be held liable to the savings bank
for the debts of the partnership, joint venture, or association.
(f) Alternatively, a savings bank may, with
the prior approval of the commissioner, comply with the lending limits
applicable to federal financial institutions, as and to the same extent it
would, at the time, be so required by federal law or regulation if it were a
federal financial institution. A savings bank utilizing this alternative shall
use a single method for calculating lending limits, including any credit
exposure to the person arising from a derivative transaction, repurchase
agreement, reverse purchase agreement, securities lending transaction, or
securities borrowing transaction between the savings bank and the person. In
monitoring a savings bank's compliance with the federal financial institution
lending limits, the commissioner shall give substantial weight to the Office of
the Comptroller of the Currency's regulations and opinions interpreting the
federal financial institution lending limits, including but not limited to
those related to the internal model method or the conversion factor matrix
method for calculating credit exposure to derivative transactions as described
in title 12 Code of Federal Regulations part 32 of the Interim Rule as
may be amended. The commissioner will regard the regulations and opinions as
strong evidence of safe and sound banking practices.
[L 1993, c 350, pt of §1;
am L 1994, c 107, §16; am L 2013, c 172, §7]
Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: https://www.capitol.hawaii.gov/hrscurrent/Vol08_Ch0401-0429/HRS0412/HRS_0412-0006-0303.htmFetched: 11/10/2026