2023 Maryland Statutes › Financial Institutions › Title 3 - Banking Institutions -- Commercial Banks › Subtitle 6 - Miscellaneous Regulations › Section 3-601 - Maximum Liabilities of Person to Commercial Bank

(a)    This section does not apply to:
(1)    Any readily marketable bond or like obligation that is held by a commercial bank as an investment;
(2)    Any loan that is made to this State or to a political subdivision and that matures in less than 1 year;
(3)    Any loan of $3,500 or less, unless that loan exceeds 20 percent of the unimpaired capital and surplus of the commercial bank; or
(4)    Any liability lawfully incurred before June 1, 1937.
(b)    The total of all liabilities of any one person to a commercial bank, including all liabilities referred to in this section, may not exceed at any time 30 percent of the unimpaired capital and surplus of the commercial bank.
(c)    (1)    In this subsection, “loan”:
(i)    Includes an obligation under a standby letter of credit; and
(ii)    Does not include any discount or obligation that is subject to subsection (d) or (e) of this section.
(2)    The total liability of any one person to a commercial bank for loans may not exceed at any time:
(i)    10 percent of the unimpaired capital and surplus of the commercial bank; or
(ii)    30 percent of the unimpaired capital and surplus of the commercial bank if the excess over 10 percent is approved by a two-thirds vote of the board of directors and is secured by currency or obligations of the United States or obligations of this State or any political subdivision.
(d)    (1)    In this subsection, “commercial paper” means any commercial paper issued in connection with a commercial transaction or any chattel paper, if the person negotiating the commercial paper or chattel paper owns it.
(2)    The total liability of any one person to a commercial bank for discounts of commercial paper may not exceed at any time 25 percent of the unimpaired capital and surplus of the commercial bank.
(e)    (1)    In this subsection, “obligations secured by goods” means obligations that are drawn in good faith against actual existing values and are:
(i)    Secured by goods in the process of shipment; or
(ii)    When accepted, accompanied by documents of title for these goods.
(2)    The total liability of any one person to a commercial bank for obligations secured by goods may not exceed at any time 25 percent of the unimpaired capital and surplus of the commercial bank.
(f)    For purposes of this section, the rules set forth in subsections (g) through (j) of this section apply in computing the total liabilities of any one person to a commercial bank.
(g)    (1)    Except as provided in paragraph (2) of this subsection, the total liabilities of any individual to a commercial bank include:
(i)    All liabilities to the commercial bank of any partnership or unincorporated association of which the individual is a member; and
(ii)    All loans that the commercial bank makes for the benefit of the individual or for the benefit of any partnership or unincorporated association of which the individual is a member.
(2)    If the individual holds only a limited interest in a limited partnership, the liabilities of the limited partnership and the loans made for its benefit that are included in the individual’s total liabilities may not exceed the value of the individual’s interest in the limited partnership.
(h)    The total liabilities of any partnership or unincorporated association to a commercial bank include:
(1)    All liabilities of its individual members to the commercial bank; and
(2)    All loans that the commercial bank makes for the benefit of the partnership or association or for the benefit of any member of the partnership or association.
(i)    The total liabilities of any corporation to a commercial bank include all loans that the commercial bank makes for the benefit of the corporation.
(j)    For purposes of this section, a loan is considered to be made for the benefit of a corporation, partnership, or unincorporated association to the extent that the proceeds of the loan are transferred to the corporation, partnership, or association.
(k)    For purposes of this section, “unimpaired surplus” of a commercial bank includes surplus, retained earnings, and 100 percent of the reserve for possible loan losses.