PARRIS N. GLENDENING, Governor                          H.B. 1154

(3)     interest derived from a United States obligation;

(4)     State tax exempt interest received from a mutual fund and allowed to be
subtracted under § 10-307(g)(5) of this article; and

(5)     interest excluded from federal gross income under § 103 of the Internal
Revenue Code and derived from a bond:

(i) issued by a state or a public corporation, special district, political
subdivision of a state or their instrumentalities; or

(ii) under § 150 of the Internal Revenue Code, treated as a bond
issued by a state or a public corporation, special district, or political subdivision of a state
or their instrumentalities.

(c) A financial institution shall subtract from its net earnings computed under
subsection (a) of this section interest expense incurred to purchase or carry a bond as
defined in subsection (b)(5) of this section.

(D) IN COMPUTING TAXABLE NET EARNINGS, A FINANCIAL INSTITUTION
THAT IS A COMMERCIAL BANK, A SAVINGS BANK, A TRUST COMPANY, OR A
COMPANY THAT SUBSTANTIALLY COMPETES WITH NATIONAL BANKS IN THE STATE
SHALL SUBTRACT FROM ITS NET EARNINGS COMPUTED UNDER SUBSECTION (A) OF
THIS SECTION:

(1) FOR A TAXABLE YEAR BEGINNING AFTER DECEMBER 31, 1995 BUT
BEFORE JANUARY 1, 1997, 50% OF THE AMOUNT REQUIRED TO BE ADDED UNDER
SUBSECTION (B)(1), (3), (4), AND (5) OF THIS SECTION; AND

(2) FOR A TAXABLE YEAR BEGINNING AFTER DECEMBER 31, 1996 BUT
BEFORE JANUARY 1, 1998, 75% OF THE AMOUNT REQUIRED TO BE ADDED UNDER
SUBSECTION (B)(1), (3), (4), AND (5) OF THIS SECTION-
SECTION 5. AND BE IT FURTHER ENACTED, That the Laws of Maryland
read as follows:

Article - Tax - General

8-101.

(c) (1) "Financial institution" means:

(i) [a commercial bank;

(ii) a credit company;

[(iii)](II) except as provided in paragraph (2)(i) of this subsection, a
finance company;

[(iv)](III) an international banking facility;

[(v)](IV) a loan company;

[(vi)](V) a mortgage company;

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