HOUSE BILL NO. 285
AS AMENDED BY HOUSE AMENDMENT NOS. 1 AND 2 AND SENATE AMENDMENT NO. 1
AN ACT TO AMEND CHAPTER 9, TITLE 5, OF THE DELAWARE CODE RELATING TO BANK LOAN LIMITATIONS TO ONE INDIVIDUAL, CHAPTER 1, TITLE 5 OF THE DELAWARE CODE RELATING TO SUPERVISORY ASSESSMENTS, AND CHAPTER 33 OF TITLE 12 RELATING TO INVESTMENTS BY FIDUCIARIES.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-fifths of all members elected to each House thereof concurring therein):
Section 1. Amend Section 909, Title 5 of the Delaware Code by striking subsections (a), (b) and (c) in their entireties and substituting in lieu thereof new subsections (a), (b) and (c) as follows:
"(a) No bank or trust company including mutual savings banks and savings societies 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 the sum of the capital, surplus, undivided profit and the valuation portion of the loan loss reserve accounts of the lender or, in the case of a mutual savings bank or savings society, the sum of the surplus, undivided profit and the valuation portion of the loan loss reserve accounts of the lender.
(1) Fifteen percent, if the loan be without collaterial 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 the provisions of 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 the provisions of 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 (I) of this subsection and this paragraph to any one 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 collaterial security, but the two (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 (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 sixty (60) days after demand;
(3) The sale of federal funds to depository institutions as defined in Section 19 of the Federal Reserve Act and to Edge Act corporations 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;
(4) The purchase or discount of bankers acceptances of the kind described in Section 13 of the Federal Reserve Act and issued by other banks;
(5) Loans or extensions of credit arising from the discount of commercial or business paper evidencing an obligation to the persons negotiating it with recourse;
(6) Loans or extensions of credit secured by a segregated deposit account in the lending bank;
(7) Loans and extensions of credit arising from the discount of negotiable or non-negotiable 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;
(8) 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, it 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; and
(9) 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.
(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
(i) 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
(II) 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:
(I) 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
(ii) 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."
"The Commissioner shall annually assess each out-of-state bank holding company which has acquired a bank located in this state pursuant to Chapter 8 of this Title, on or before December 31 of the preceding year, a supervisory assessment in the amount of $8,000 which shall be invoiced and payable as in the case of other supervisory assessments. Provided, however, there shall be allowed as a credit against this assessment the amount of the supervisory assessment otherwise due from a subsidiary bank of such out-of-state banking holding company."
Section 3. Amend 53302, Chapter 33, Part V, Title 12 of the Delaware Code by striking said section in its entirety and substituting in lieu thereof the following:
"§3302. Investment standards and powers of fiduciaries
In acquiring, investing, reinvesting, exchanging, retaining, selling and managing property for the benefit of another, fiduciaries shall exercise the judgment and care under the circumstances then prevailing which men of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital. Within the limitations of the foregoing standard, fiduciaries may acquire and retain every kind of property, real, personal or mixed, and every kind of investment, specifically including but not by way of limitation, bonds, debentures and other corporate obligations and stocks, preferred or common, shares or interests In common funds or common trust funds, and securities of any open-end or closed-end mangement type investment company or investment trust registered under the Federal Investment Company Act of 1940, which men of prudence, discretion and intelligence acquire or retain for their own account and within the limitations of the foregoing standard, fiduciaries may retain property properly acquired, without limitation as to time and without regard to its suitability for original purchase. Where a bank or trust company acting in a fiduciary capacity invests trust funds in, or otherwise acquires an interest in, funds of the type described above which are managed by Itself or an affiliate thereof, as defined in Section 23A of the Federal Reserve Act, such investment shall be made subject to Section 3307 of this Title; provided that with respect to Section 3307(a), where such fund is managed by such affiliate, the plan for such fund shall be filed and recorded in the Office of the Register In Chancery of the county in which is located the main office of the bank or trust company which is the fiduciary for such trust funds."
Approved July 12, 1983.