J. MILLARD TAWES, GOVERNOR                             1401

company, or other institution engaged in lending or investing funds
or whose activities include lending or investing funds.

420. Loan Limits

(a)  Each member shall lend funds to such corporation as and
when called upon to do so, but the total amount on loan by any
member at any one time shall not exceed the following limit to be de-
termined as of the time it became a member, and such amount shall
thereafter be readjusted annually in the event of any change in the
base of the loan limit of such member: national banking associations,
state-chartered commercial banks and trust companies, two per cent
of capital and surplus; savings banks, two per cent of the guarantee
fund and undivided surplus; savings and loan associations, two per
cent of guaranty funds; stock insurance companies, two per cent of
capital and surplus; surety and casualty companies, two per cent of
capital and surplus; mutual insurance companies, two per cent of
guaranty funds or of surplus, whichever is applicable; and compara-
ble limits for other banking, lending and insurance organizations or
other commercial institutions as established by the Board of Direc-
tors; provided, however, that the total amount on loan by any member
at any time shall not exceed two hundred fifty thousand dollars. All
loan limits shall be established at the thousand dollar nearest to the
amount computed on an actual basis. All calls of funds which mem-
bers are committed to lend to such corporation shall be prorated by
such corporation among the members in the same proportion that
the maximum loan limit of each bears to the aggregate loan limits
of all members of such corporation.

Notwithstanding the provisions of any other law, general or
special, the notes or other interest-bearing obligations of such cor-
poration, issued in accordance with and by virtue of this sub-title
and the by-laws of such corporation, shall be legal investments for
the banking, insurance and surety organizations which become mem-
bers of such corporation, up to but in no event exceeding the loan
limits established herein.

(b)  All loans to the corporation by members shall be evidenced by
bonds, debentures, notes or other evidences of indebtedness of the
corporation, which shall be freely transferable at all times, and
which shall bear interest at a rate of not less than one quarter of
one per cent in excess of the rate of interest determined by the Board
of Directors to be the prime rate prevailing at the date of issuance
thereof in the City of Baltimore on unsecured commercial loans.

(c)  At no time, shall the aggregate outstanding principal balance
of the corporation's indebtedness to its members, exceed an amount
equal to ten times the sum of the corporation's paid-in capital and
surplus.

421. Capital Stock.

The authorized capital stock of the corporation shall consist of
two million shares of common stock with a par value of one dollar
each, which shares shall be issued only on receipt by the corpora-
tion of cash in such amount not less than the par value thereof as
may be determined by the Board of Directors.