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"Due on Demand" Clause- Executive Officer Loans

Question: 
Is it still a requirement that all executive officer loans contain a "due on demand" clause as well as other normal terms?
Answer: 

Answer from Dan: Yes. There has been no revision to that requirement.

Answer: 

Answer from Andy: The section you are after is Section 215.5(d)(4) - Any extension of credit by a member bank to any of its executive officers shall be: "Made subject to the condition in writing that the extension of credit will, at the option of the member bank, become due and payable at any time that the officer is indebted to any other bank or banks in an aggregate amount greater than the amount specified for a category of credit in paragraph (c) of this section."

You may have a signed and dated statement from the borrowers (I recommend all borrowers if there are more than insiders so they too understand the loan conditions) to the effect of "This loan is made expressly subject to the condition that it may, at the option of Lender, be declared to be due and payable at any time that Borrower is indebted to any other bank or banks in an aggregate amount greater than the amount specified for a category of credit in 12 CFR 215.5(c)."

First published on BankersOnline.com 8/1/11

First published on 08/01/2011

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