Compliance Q&A: Extension of Credit to Executive Officers

Q: It is my understanding that the aggregate amount of extensions of credit to executive officers cannot exceed $100,000 for Regulation O purposes. If an executive officer has a loan that is guaranteed by FSA or SBA, is the guaranteed portion of that loan counted in their aggregate debt?

A: Extensions of credit secured by guarantees of any department, agency, bureau, board, commission or establishment of the United States are not included in the aggregate amount of extensions of credit restriction calculation (the higher of 2.5 per cent of the bank’s unimpaired capital and unimpaired surplus or $25,000, but in no event more than $100,000).

(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 §215.4(d)(3)(i)(A) through (d)(3)(i)(C) 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 per cent of the bank’s unimpaired capital and unimpaired surplus or $25,000, but in no event more than $100,000.

Reg. O: https://www.ecfr.gov/cgi-bin/text-idx?SID=cf04bbcae4670a8a0df670f32fc1873d&mc=true&node=pt12.2.215&rgn=div5#se12.2.215_15

(3) Exceptions. (i) The general limit specified in paragraph (d)(1) of this section does not apply to the following:

…

(B) Extensions of credit to or secured by unconditional takeout commitments or guarantees of any department, agency, bureau, board, commission or establishment of the United States or any corporation wholly owned directly or indirectly by the United States;

…

Reg. O: https://www.ecfr.gov/cgi-bin/text-idx?SID=cf04bbcae4670a8a0df670f32fc1873d&mc=true&node=pt12.2.215&rgn=div5#se12.2.215_14

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