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Reg O in a Box
by Pam Zbylut

Pam Zbylut put Reg O in a box! By making the box fairly devoid of "regulatory gobbletygook", Pam reports it works well for the loan officers. Some of the the most frequent questions she gets as a compliance officer of a $700 million bank involve clarification on approval levels and dollar limits. She makes this form available on the common directory of her bank's network, but only in read-only format to assure it doesn't accidentally get changed.

It identifies Executive Officers by name, so there are no mistakes in classification, and spells out her specific bank's applicable dollar limits. It also serves as a reminder of who falls within the definition of director and principal shareholder, and refers to their state insider lending limits as well. Right click on this link to download the chart as a Word doc.


INSIDER LOANS
Law Applicability Prior Approval Board Approval $ Limit

Regulation O

Applies to Directors, Executive Officers, Prin. Shareholders and their Related Interests.

EO for Regulation O are     (write in names here)

Applies to Directors and Executive Officers and their related interests of (fill in blanks) (banks that comprise > 10% of holding co. assets)

· Prior approval from a majority of the Board of Directors is required for loans exceeding $500,000

· Prior approval from a majority of the Board of Directors is required when aggregate borrowings exceed $500,000

· EO loans must include demand clause that loan MAY be called if EO becomes indebted to any other bank(s) in amounts exceeding $ limit specified by Reg O. (EO Limits = state law $ limit (if applicable) þ lower right-hand box.)

· Document approval in Board minutes if prior approval required

· Document in Board minutes that the director abstained from voting

· Promptly report EO debt to Board and document in minutes if prior approval N/A

· Director and Related Interest Lending Limit:

Direct loans +

Loans to related interests +

Loans guaranteed by a director,

EO, or Prin. Shareholder must be ≤ bank’s lending limit which is

Calculated quarterly by bank

Controller

· EO Lending Limits = NE state law $ limit þ lower right-hand box.)

Þ Credit cards up to $15,000 not

included in debt subject to

insider lending limit

Þ Overdraft protection up to

$5,000 not included in debt

subject to insider lending limit

 

State Law

(THIS CHART ILLUSTRATES, FOR EXAMPLE PURPOSES, THE STATE LAW IN PAM'S STATE)

*Director and related interest restrictions under state law = Regulation O restrictions as stated above

· Not required by state law

 

· Debt acquired from other financial institutions must be reported to the Board of Directors by the next Board meeting

· Include direct and guaranteed debts

· Any amount to finance education of executive officer’s children.

· Any amount to finance or refinance the purchase, improvement, or construction of the executive officer’s residence

(Note: this excludes home equity loans for purposes other than those mentioned. First lien loans only.)

· For any other purpose not specified above provided total "other purpose " debt to the executive officer does not exceed $100,000

Þ Minimal risk transactions, such

as those secured by a CD or

investment securities are

exempt from the $100,000

limitation

***Banks must follow normal credit underwriting procedures when extending credit to insiders. Comparable transactions with non-insiders must support that credit standards to insiders are not less stringent than the norm. Document comparable loan transactions.***

Pam Zbylut
I am Vice President of Audit and Compliance at Great Western Bank in Omaha, NE. Great Western Bank is a $700 million community bank with 15 branches in the Omaha metropolitan area. I have been in my present position 7 years. Prior to that I was a bank examiner with the FDIC for 10 years and have background in both safety and soundness and compliance.



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