Banks ask committee to raise legal lending limit, shorten de novo period to remain competitive

Christy Merrill, president and CEO of the New Hampshire Bankers Association, testified in support of Senate Bill 85, which would (1) raise the state legal lending limit for New Hampshire‑chartered banks from 15% of capital to 20%, with an option to increase to 25% when the additional 5% is fully secured, and (2) shorten the statutory de novo supervisory period for newly chartered banks from five years to three years (with a commissioner‑approved extension back to five years for safety and soundness if needed).

Merrill said neighboring states and out‑of‑state banks operating in New Hampshire commonly have higher legal lending limits (20% or higher), which can disadvantage New Hampshire‑chartered banks in syndications and participation lending. She and other witnesses said the change would be most helpful to smaller in‑state banks and could keep more credit activity — and related funds — in New Hampshire.

Committee members asked about risk management and supervisory oversight. Merrill and witnesses pointed to routine bank examinations, loan committees and loan review processes as existing risk‑management measures; they said the statutory change would not remove regulatory oversight and that examiners regularly review credit concentrations. Merrill said the de novo change aligns state practice with the Federal Deposit Insurance Corporation’s standard and that the banking commissioner retains authority to extend the period for safety reasons.

No formal committee action or vote was recorded during the hearing.