Section 7-1-285. Limits on obligations of one person or corporation

   (a) As used in this Code section, the term:

   (1) "Credit exposure as a counterparty in derivative transactions" means an amount that the bank reasonably determines pursuant to a methodology acceptable to the department under the terms of the derivative or otherwise would be its loss if a counterparty were to default on the date of determination, taking into account any netting and collateral arrangements and any guarantees or other credit enhancements; provided, however, that the bank may elect to determine credit exposure on the basis of such other method of determining credit exposure as may be permitted by the department and the bank's primary federal regulator.

   (2) "Derivative transaction" includes any transaction that is an agreement, contract, note, option, swap, or warrant that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.

   (3) "Person or corporation" includes, but is not limited to, an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, or unincorporated organization. The term "person or corporation" shall not include the affiliates of a bank or a clearing organization registered or exempt from registration with the Commodity Futures Trading Commission, the Securities and Exchange Commission, any other federal agency, or any successor agencies.

(a.1) A bank shall not at any time:

   (1) Make loans to any one person or corporation;

   (2) Have obligations owing to it from any one person or corporation as a result of purchasing or discounting evidences of indebtedness or agreements for the payment of money; or

   (3) Have credit exposure as a counterparty in derivative transactions with any one person or corporation,

where the aggregate of such loans, obligations, and credit exposure together exceeds 15 percent of the statutory capital base of the bank unless each loan, discount, purchase, or derivative transaction in excess of such 15 percent limit is approved in advance by the board of directors or a committee authorized to act for it.

(b) Except as provided in subsection (c) of this Code section, a bank shall not directly or indirectly make loans, have obligations, or have credit exposure as a counterparty in derivative transactions to any one person or corporation which in aggregate exceed 15 percent of the statutory capital base of the bank unless the entire amount of such loans, obligations, and credit exposure in derivative transactions is secured by good collateral or other ample security and does not exceed 25 percent of the statutory capital base. Except as otherwise indicated in subsection (c) of this Code section, the purchase or discount of agreements for the payment of money or evidences of indebtedness shall be regarded as indirect loans to the person or corporation receiving the proceeds of such transactions. In estimating the legal lending limit for any one person or corporation, loans to related corporations, partnerships, and other entities shall be combined subject to regulations established by the department.

(c) The limitations of subsection (b) of this Code section shall not apply to:

   (1) Obligations arising from the purchase or discount of drafts drawn in good faith against actually existing values or commercial or business paper actually owned by the person negotiating the paper to the extent of 25 percent of the statutory capital base of the bank;

   (2) Obligations arising from the bona fide purchase of commercial or business paper, subject to restrictions which the department may impose by regulation, taken in sale or service transactions incident to a business where the party to whom the goods or services are provided is obligated on the paper;

   (3) Obligations in the form of bona fide loans upon the security of agricultural, manufactured, or industrial products or livestock (or documents of title covering such property) for which there is a ready sale in open market, provided no more than 80 percent of the market value of such products is loaned or advanced thereon, the bank has the right to demand additional collateral to maintain this ratio and does so maintain it, and the bank's interest in such collateral is fully protected by insurance against loss by fire and other standard hazards; and provided, further, that such obligations shall qualify for exemption for not more than ten months if secured by nonperishable staples and for not more than six months if secured by frozen or refrigerated staples;

   (4) Obligations of and obligations guaranteed by:

      (A) The United States;

      (B) The State of Georgia or a public body thereof authorized to levy taxes; or

      (C) Any state of the United States or any public body thereof if the obligations or guarantees are general obligations;

   (5) Obligations to the extent secured by:

      (A) Obligations specified in paragraph (6) of this subsection;

      (B) Obligations which the bank would be authorized to acquire without limit as investment securities pursuant to Code Section 7-1-287;

      (C) Obligations fully guaranteed by the United States;

      (D) Guaranties or commitments or agreements to take over or purchase made by any public body of the United States or any corporation owned directly or indirectly by the United States; or

      (E) Loan agreements between a local public agency or a public housing agency and an instrumentality of the United States pursuant to national housing legislation under which funds will be provided for payment of the obligations secured by such loan agreements;

   (6) Obligations in the form of investment securities acquired pursuant to Code Section 7-1-287;

   (7) Obligations with respect to acceptances under Code Section 7-1-284;

   (8) Obligations with respect to the sale of federal or correspondent funds to financial institutions having their deposits insured to the same extent as that required of similar institutions chartered in this state; and

   (9) A renewal or restructuring of a loan as a new loan or extension of credit following the exercise by the bank of reasonable efforts, consistent with safe and sound banking practices, to bring the loan into conformance with the lending limits of this Code section, unless:

      (A) New funds are advanced by the bank to the borrower, except as permitted under this Code section;

      (B) A new borrower replaces the original borrower; or

      (C) The department determines that a renewal or restructuring was undertaken as a means to evade the bank's lending limit.

(d) In lieu of following the limitations contained in subsections (a) through (c) of this Code section, a bank may petition the department for approval to utilize limits applicable to national banks regarding obligations of a single person or corporation.

(e) The department may, by regulation not inconsistent with this Code section, prescribe definitions of and requirements for transactions included in or excluded from the indebtedness to which this Code section applies. The department may also by regulation prescribe less restrictive limitations than those listed in subsections (a) through (c) of this Code section for banks meeting certain financial and management criteria. In addition, the department may, by regulation or otherwise, specify that the liabilities of a group of one or more persons or corporations or both shall be considered as owed by one person or corporation for the purposes of this Code section because the group relies substantially on a common source for the payment of its obligations or makes common use of funds received by it, or meets other criteria established by the department for the combination of indebtedness for legal lending limitation purposes.

Ga. L. 1919, p. 135, art. 19, § 13; Ga. L. 1922, p. 63, § 1; Ga. L. 1927, p. 195, § 9; Code 1933, § 13-2013; Ga. L. 1943, p. 254, § 1; Ga. L. 1951, p. 201, § 1; Ga. L. 1955, p. 414, § 1; Ga. L. 1966, p. 590, § 7; Ga. L. 1969, p. 603, § 1; Ga. L. 1973, p. 526, § 4; Code 1933, § 41A-1306, enacted by Ga. L. 1974, p. 705, § 1; Ga. L. 1981, p. 1366, § 8; Ga. L. 1982, p. 3, § 7; Ga. L. 1983, p. 602, § 6; Ga. L. 1992, p. 6, § 7; Ga. L. 2000, p. 174, § 6; Ga. L. 2009, p. 86, § 5/HB 141; Ga. L. 2010, p. 1, § 1/HB 926; Ga. L. 2012, p. 349, § 1/HB 886.