Jump to Content
ABA: The American Bankers Association
Skip Section Navigation

An executive officer at our bank wishes to obtain a loan for $125,000 that the bank will secure in full by a certificate of deposit or savings account. Does Regulation O limit such loans to $100,000?

No. Per §215.5(c)(3) of Regulation O, a bank is authorized to extend credit to an executive officer in “any amount” if it is secured in a manner described in §215.4(d)(3)(i)(A) through (C). Section 215.4(d)(3)(i)(C) allows for “extensions of credit secured by a perfected security interest in a segregated deposit account in the lending bank.” Thus, as long as there is a perfected security interest in the certificate of deposit or savings account, the loan is not subject to the other limits of §215.5(c)(4), i.e., the higher of 2.5% of the bank’s unimpaired capital and unimpaired surplus or $25,000, but in no event more than $100,000. (June 2019)

Compliance Hotline

Have a compliance-related question? We're here to help. Members, reach us by phone or email.