1420                             Laws of Maryland                      [Ch. 667

which a participating interest has been allocated pursuant to the
particular call involved.

Principal payments received on loans made by the corporation
shall be allocated among the members on the basis of their partici-
pating interests and remitted not later than three months following
receipt of such payments, in reduction of the indebtedness of the
corporation to members under the time notes relating to such loan
or loans. Interest accrued on the time notes shall be calculated and
paid to members on the basis as set forth in such time notes and
shall be paid at least once every three months.

Whenever any loan made by the corporation in which participating
interests have been allocated to members pursuant to calls is deter-
mined by vote of the Executive Committee of the Board of Directors
to be uncollectible, payment of the uncollectible principal balance of
such loan shall be made from the capital, surplus and reserve funds
of the corporation and shall be allocated among the members on the
basis of each member's participating interest therein and remitted
on the next following payment date.

Notwithstanding the provisions of any other law, general or spe-
cial, the notes or other interest-bearing obligations of such corpora-
tion, issued in accordance with and by virtue of this subtitle and
by the bylaws of such corporation, shall be legal investments for the
financial institutions which become members of such corporation.

428. Rate of Interest.

Notwithstanding any other provisions of the law to the contrary,
the corporation is authorized to charge interest on loans at a rate
of not more than four and one half percent in excess of the rate of
interest determined by the Board of Directors to be the prime rate
prevailing from time to time (at the time of making, extending or
renewing any such loan,) in the City of Baltimore on unsecured
commercial loans.

It shall be permissible for such maximum interest rate to be fixed
at the time of the making, extending or renewing of any loan or for
such maximum interest rate to fluctuate up and down with the prime
rate of interest as so determined by the Board of Directors.

If a fluctuating interest rate is charged on any loan, such rate shall
first be determined on the date the loan is made and shall thereafter
be redetermined on the first day of each January, April, July and
October, whereupon the interest rate shall be appropriately increased
or decreased to reflect the change, if any, in said prime rate of inter-
est as so redetermined for the quarter commencing on the date of
such redetermination of the interest rate.

Neither any management consultant fee charged in connection with
a loan application nor any stock option taken in connection with any
loan made by the corporation shall be taken into consideration when
arriving at the maximum interest rate chargeable.

Sec. 2. And be it further enacted, That this Act shall take effect

July 1, 1971.