I am auditing a loan in which the amount was for a Director in the amount of $766,000. The loan was booked the day before the board approved it. Is this a Reg O violation? I know that according to 215.4 (b):
"No member bank may extend credit (which term includes granting a line of credit) to any insider of the bank or insider of its affiliates in an amount that, when aggregated with the amount of all other extensions of credit to that person and to all related interests of that person, exceeds the higher of $25,000 or 5 percent of the member bank's unimpaired capital and unimpaired surplus, unless:
(i) The extension of credit has been approved in advance by a majority of the entire board of directors of that bank; and
(ii) The interested party has abstained from participating directly or indirectly in the voting."

This would constitute a violation I am assuming in not getting prior approval. Any other considerations as well?

Was there an undocumented consensus prior to the formal approval where the qualifications were discussed and approved?

Certainly the chain of events appears to be a violation leading one to ask, was it approved because it had to be as the money was already loaned.

No, there was not. An email was sent out with the loan officer admitting that he already booked the loan and needed to get board approval. I'm sure it had been talked about because there were some other legal issues with this person guarantying a loan and it falling through. The purpose for this loan was to "clean up" the problem and so I'm sure the board had possibly discussed it. As far as "formal" approval, it wasn't until the day after the loan was booked.