(1)  Under authority granted by 32-2-824, MCA, the department permits state mutual associations to engage in the business of direct leasing of personal property under the following regulations: 

(a)  A mutual association may purchase personal property to be leased only after it has a valid and binding commitment from the prospective lessee to lease the specific property under terms acceptable to the mutual association.

(b)  Lease agreements with any one lessee may not exceed 10% of the assets of the mutual association.  If the lessee is also a borrower from the mutual association, this 10% must be reduced by the balance of loans to the lessee.

(c)  Every lease agreement must provide for full payout to the mutual association of its full acquisition cost of the lease property during the initial term of the lease.

(d)  Residual value of the property at the end of a lease agreement's original term may be considered by the mutual association to constitute partial recovery of its cost of acquisition if such residual value is not more than 25% of the cost of acquisition.

(e)  No lease agreement shall extend for an initial period of more than ten years or the leased property's normal useful life, whichever is less, unless the mutual association receives from the department prior written approval of each lease agreement of longer term.

(f)  Each lease agreement must include provisions whereby the lessee disclaims any liability of the mutual association for the condition of the leased property or its quality; and whereby the lessee assumes full responsibility for protection and maintenance of the leased property.

(2)  Any formerly leased personal property returned to the mutual association by default, completion of the lease, or otherwise, must be disposed of by the mutual association by sale or lease within one year after gaining legal possession.