02-029-128 Me. Code R. § 1
Title 9-B M.R.S. §439-A establishes the basis for determining the legal lending limits for financial institutions, including their subsidiaries, organized under the laws of this State. The lending limit law prohibits loans or extensions of credit at any one time to an individual borrower in excess of 20% of the financial institution's total capital. In addition, this statute authorizes the Superintendent to adopt rules to define or further define terms used in the statute and to establish limits or requirements other than those specified in the statute. This regulation protects the safety and soundness of financial institutions by preventing excessive loans to one person while promoting diversification of loans and equitable access to financial institution services.
The purpose of this amendment is to update Chapter 128's definition of "Total capital and surplus" so that it is consistent with the calculation of the Federal Deposit Insurance Corporation's Community Bank Leverage Ratio (CBLR) as found in 12 C.F.R. Part 324 . The amendment accommodates those financial institutions using CBLR that are no longer required to calculate Tier 2 capital. Previously, the definition of Total Capital and Surplus contemplated only those financial institutions calculating both Tier 1 and Tier 2 capital. The change also incorporates a definition of Adjusted Allowance for Credit Losses, which is part of the federal Financial Accounting Standards Board's Current Expected Credit Losses methodology used by financial institutions. In addition, the amendment also adds explanatory language to the Conversion Factor Matrix Method used for calculating credit exposure from derivatives. The explanatory language will more closely align the regulation with the language found in the Conversion Factor Matrix Method found in federal law at 12 C.F.R. § 32.9. The Bureau has determined that these changes will be useful for financial institutions utilizing modern approaches to capital calculations, including those that utilize the CBLR Framework. The Superintendent has determined these changes to be necessary for the protection of the public that deals with financial institutions using CBLR framework.
Credit unions have lending limit requirements other than those found in the regulation.
02-029 C.M.R. ch. 128, § 1