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#1446736 - 09/22/10 06:04 PM REG O
Tryin-2-Comply Offline
100 Club
Joined: Apr 2003
Posts: 202
Hills of TN
Loan to related interest of principal shareholder - she owns 73% of the related interest. The loan is for $600,000.

The "other bank debt" rule for $100,000 is stumping me. We have other loans to related interests she has (all CD secured) that total over $100,000. All done before my time.

Does the fact that all the other loans are CD secured exempt it from the more restrictive lending limit?

Please help.

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Lending Compliance
#1446879 - 09/22/10 07:29 PM Re: REG O Tryin-2-Comply
Ted Dreyer Offline
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Ted Dreyer
Joined: Apr 2001
Posts: 2,245
The rule of 215.5 limiting "other purpose" loans to $100,000 only applies to executive officers, not to principal shareholders.

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#1446881 - 09/22/10 07:30 PM Re: REG O Tryin-2-Comply
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,765
Bloomington, IN
215.4(d)(3)(C)
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1446911 - 09/22/10 07:59 PM Re: REG O Dan Persfull
Tryin-2-Comply Offline
100 Club
Joined: Apr 2003
Posts: 202
Hills of TN
So, to be sure i understand (i hate reg O) - the principal shareholder is designated as an executive officer, therfore, the limits apply.

Dan - you are pointing me to the above cite which discusses "general lending limits" - not the more restrictive lending limit. Are the exceptions also exempt from the "more restrictive lending limits" So, if it's a CD secured loan - it would be exempt from the more restrictive lending limits - or am i misunderstanding?

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#1447053 - 09/23/10 12:48 AM Re: REG O Tryin-2-Comply
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,288
Galveston, TX
215.5(c) A member bank is authorized to extend credit to any executive officer of the bank:

(3) In any amount, if the extension of credit is secured in a manner described in Sec. 215.4(d)(3)(i)(A) through (d)(3)(i)(C) of this part.

Sec. 215.4(d)(3)(i)(C)Extensions of credit secured by a perfected security interest in a segregated deposit account in the lending bank;

So, the CD secured loans are not an issue. You didn't say how the new loan would be secured. If not under one of the exclusion, that loan will be a problem.
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#1447254 - 09/23/10 02:32 PM Re: REG O rlcarey
Tryin-2-Comply Offline
100 Club
Joined: Apr 2003
Posts: 202
Hills of TN
Thank you so much!!!

It will be secured by a CD.

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