The following restrictions on
extensions of credit by a member bank to any of its executive officers
apply in addition to any restrictions on extensions of credit by a
member bank to insiders of itself or its affiliates set forth elsewhere
in this part. The restrictions of this section apply only to executive
officers of the member bank and not to executive officers of its affiliates.
(a) No member bank may extend credit to any of its
executive officers, and no executive officer of a member bank shall
borrow from or otherwise become indebted to the bank, except in the
amounts, for the purposes, and upon the conditions specified in paragraphs
(c) and (d) of this section.
(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.
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(c) A member bank is authorized to extend credit
to any executive officer of the bank—
(1) in any amount to finance the education
of the executive officer’s children;
(2) in any amount to finance or refinance
the purchase, construction, maintenance, or improvement of a residence
of the executive officer, provided —
(i) the extension of credit
is secured by a first lien on the residence and the residence is owned
(or expected to be owned after the extension of credit) by the executive
officer; and
(ii)
in the case of a refinancing, that only the amount thereof used to
repay the original extension of credit, together with the closing
costs of the refinancing, and any additional amount thereof used for
any of the purposes enumerated in this paragraph (c)(2), are included
within this category of credit;
(3) in any amount, if the extension of
credit is secured in a manner described in paragraphs (d)(3)(i)(A)
through (d)(3)(i)(C) of section 215.4 of this part; and
(4) for any other purpose not
specified in paragraphs (c)(1) through (c)(3) of this section, if
the aggregate amount of extensions of credit to that executive officer
under this paragraph does not exceed at any one time the higher of
2.5 percent of the bank’s unimpaired capital and unimpaired surplus
or $25,000, but in no event more than $100,000.
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(d) Any extension of credit by a member bank to any of its executive
officers shall be—
(1) promptly reported to the member bank’s
board of directors;
(2) in compliance with the requirements of section 215.4(a) of this
part;
(3) preceded
by the submission of a detailed current financial statement of the
executive officer; and
(4) 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.
