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#213085 - 07/20/04 01:20 PM
Reg O Question
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Anonymous
Unregistered
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Question #1: Are "companies" of insiders able to be excluded from the "related interests" definition under Reg O if they have a certain type of collateral or additional source of income securing the loan?
Question #2: I know that loans to executive officers are excluded from Reg O if they are for their residence and secured by a first lien, however, what is the remaining limits for executive officers? Let's say, we have an executive officer and related interests of the executive officer?
Any help would be greatly appreciated!!!!
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#213086 - 07/20/04 02:24 PM
Re: Reg O Question
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10K Club
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Posts: 27,752
On the Net
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I haven't reviewed this in some time. But they are not "excluded" from being related interests but with certain collateral, bonds, T-bills, etc., you can adjust the and increase the loan limits to insiders.
As to Q2, you have an individual lending limit that is in .2 of the definitions and an aggregate lending limit for all insiders explained in .4.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#213087 - 07/20/04 02:25 PM
Re: Reg O Question
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10K Club
Joined: Sep 2002
Posts: 13,965
TN
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I thought the lending limit to executive officers (not including the home, education of children, etc.) is $100,000.
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#213089 - 07/20/04 03:49 PM
Re: Reg O Question
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Diamond Poster
Joined: Apr 2001
Posts: 2,245
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Quote:
I thought the lending limit to executive officers (not including the home, education of children, etc.) is $100,000.
Yes, but the etc. in your statement includes 215.5(c)(3) which excludes from the "other purpose" limit of $100,000 extensions of credit secured by certain types of collateral, such as US Treasury obligations and segregated deposit accounts at your institution.
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#213090 - 07/20/04 04:18 PM
Re: Reg O Question
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Anonymous
Unregistered
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Just a sidenote as long as Reg. O related interest and companies were mentioned.
I believe related interests (i.e., companies, etc.) of Reg. O "insiders" (exec. officers, principal shareholders, directors) are exempt from the overdraft Reg. O "paying an overdraft" restrictions. I believe you can pay as long as you follow standard practice (charge, etc.).
Good luck.
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#213091 - 07/21/04 02:53 PM
Re: Reg O Question
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Anonymous
Unregistered
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Did anyone ever hear of "Stand - Alone" Loans? I guess I am not asking clearly..... Let's say, that a Director owns 3 different companies. Company 1 is owned by him and his partner. Each has 50% ownership in the company. His partner has adequate additional income and resources that would be fully able to re-pay the loan by himself - can this loan be classified as a "stand-alone" loan and excluded from the Reg O loan balance for the director?
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#213092 - 07/21/04 03:05 PM
Re: Reg O Question
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Power Poster
Joined: Nov 2000
Posts: 2,701
PA
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I've never heard of that and I wouldn't do it unless whoever's suggesting it to you can show you in the reg where it says it's okay (and I doubt they'll be able to do that).
_________________________
Opinions expressed are mine and not necessarily those of my employer.
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#213094 - 07/21/04 03:17 PM
Re: Reg O Question
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Posts: 27,752
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I would say, "not only no, but...". The director has liability, correct, and that is what you are tracking. If there is a lock on the amount of their liability you may be able to limit it to that amount. When I was on the loan desk we wanted everyone 100% liable though.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#213096 - 07/21/04 05:09 PM
Re: Reg O Question
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Anonymous
Unregistered
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Also, another question - Are loans to Executive Officers limited to a maximum of $100,000 in agregate (excluing loans for residences and education)?
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#213097 - 07/21/04 05:43 PM
Re: Reg O Question
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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The so-called "other purposes" loans are capped in the aggregate. The EO cannot get a bundle of $100,000 loans from his bank.
Other than that, there's the aggregate insider lending cap which will include all insider loans by the bank.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8
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#213098 - 07/21/04 08:20 PM
Re: Reg O Question
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Anonymous
Unregistered
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So for example, our CFO owns his own company and we lend the Company $80,000.00. Now the CFO comes to the Bank and wants to take out a $25,000 car loan. Can we grant the car loan?
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#213099 - 07/21/04 08:26 PM
Re: Reg O Question
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Anonymous
Unregistered
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Quote:
So for example, our CFO owns his own company and we lend the Company $80,000.00. Now the CFO comes to the Bank and wants to take out a $25,000 car loan. Can we grant the car loan?
AND, our legal lending limit is $6,000,000 AND, we do not have any other loans to this CFO (executive officer).
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#213100 - 07/23/04 06:48 PM
Re: Reg O Question
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Anonymous
Unregistered
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Quote:
So for example, our CFO owns his own company and we lend the Company $80,000.00. Now the CFO comes to the Bank and wants to take out a $25,000 car loan. Can we grant the car loan?
Can we grant the car loan?
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#213101 - 07/23/04 09:49 PM
Re: Reg O Question
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10K Club
Joined: Aug 2002
Posts: 34,318
under the Lone Star
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No, unless you have as security cash or near cash items as identified in Reg O. If your collateral for these loans is not the type that would allow exclusion, you have exceeded the $100,000 limitation. So you have a CFO that works elswhere, sounds like (s)he is not busy enough.
_________________________
Societies that do not find work in and of itself "pleasing to God and requisite to Man," tend to be highly corrupt.
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#213103 - 07/26/04 03:26 PM
Re: Reg O Question
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Power Poster
Joined: Dec 2000
Posts: 3,455
The Pennant Race
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If the related interest is a partnership, and the executive officers own or control a majority interest in the partnership, then the 215.5 limits will apply to extensions of credit to the partnership. See Section 215.5(b):
(b) No member bank may extend credit in an aggregate amount greater than the amount permitted in paragraph (c)(4) of this section to a partnership in which one or more of the bank's executive officers are partners and, either individually or together, hold a majority interest. For the purposes of paragraph (c)(4) of this section, the total amount of credit extended by a member bank to such partnership is considered to be extended to each executive officer of the member bank who is a member of the partnership.
I have always taken that to mean that partnership loans are included in an executive officer's 215.5 limits (presuming the ownership test is met).
_________________________
The opinions expressed here are personal and do not represent opinions of my employer.
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#213105 - 07/27/04 02:01 PM
Re: Reg O Question
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Anonymous
Unregistered
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Doesn't it also state that if the executive officer is a "guarantor" than it would be a related interest - if not a guarantor, then it would NOT be a related interest?
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#213107 - 07/27/04 06:25 PM
Re: Reg O Question
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Anonymous
Unregistered
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Is it true that loans that stand alone do not get included in director loans but are added as affiliated loans in the aggregate for Reg O purposes?
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#213108 - 07/27/04 07:02 PM
Re: Reg O Question
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Anonymous
Unregistered
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HELP - does anyone have a sample Reg O policy other then the one that they have available on Kirchman?
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