(1) Any financial institution may request membership in the corporation by making application to the board of directors on such form and in such manner as said board of directors may require, and membership shall become effective upon acceptance of such application by said board. Each member of the corporation shall make loans to the corporation as and when called upon by it to do so, on such terms and other conditions as shall be approved from time to time by the board of directors, subject to the following conditions:
(a) All loan limits shall be established at the thousand-dollar amount nearest to the amount computed in accordance with the provisions of this section.
(b) No loan to the corporation shall be made if immediately thereafter the total amount of the obligations of the corporation would exceed the greater of the following:
1. Twenty times the aggregate of the amount then paid in on the outstanding capital stock of the corporation and the retained earnings of the corporation.
2. Twenty times the amount then paid in on the outstanding capital stock of the corporation.
(c) The total amount outstanding on loans to the corporation made by any member at any one time, when added to the amount of the investment in the capital stock of the corporation then held by such member, shall not exceed:
1. Twenty percent of the total amount then outstanding on loans to the corporation by all members, including, in said total amount outstanding, amounts validly called for loan but not yet loaned.
2. The following limit, to be determined as of the time such member becomes a member on the basis of the audited balance sheet of such member at the close of its fiscal year immediately preceding its application for membership, or, in the case of an insurance company, its last annual statement to the Office of Insurance Regulation of the Financial Services Commission: 2.5 percent of the capital and surplus of commercial banks and trust companies; 0.5 percent of the total outstanding loans made by savings and loan associations and building and loan associations; 2.5 percent of the capital and unassigned surplus of stock insurance companies, except fire insurance companies; 2.5 percent of the unassigned surplus of mutual insurance companies, except fire insurance companies; 0.1 percent of the assets of fire insurance companies; and such limits as may be approved by the board of directors of the corporation for other financial institutions.
(2) Subject to subparagraph (1)(c)1., each call made by the corporation shall be prorated among the members of the corporation in substantially the same proportion that the adjusted loan limit of each member bears to the aggregate of the adjusted loan limits of all members. The adjusted loan limit of a member shall be the amount of such member’s loan limit, reduced by the balance of outstanding loans made by such member to the corporation and the investment in capital stock of the corporation held by such member at the time of such call.
(3) 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 1 percent 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 on unsecured commercial loans.