Loans to Executive Officers, Directors and Principal Shareholders
FIL-45-97 May 2, 1997
CHIEF EXECUTIVE OFFICER
Amendments to Regulation O, Loans to Executive Officers, Directors and Principal Shareholders
(Section 337.3 of FDIC's Rules and Regulations)
The Board of Governors of the Federal Reserve System has adopted the attached two final rules
implementing changes to Regulation O (12 C.F.R., Part 215), which governs loans to executive
officers, Directors, and principal shareholders of member banks ("insiders").
The FDIC has incorporated applicable sections of Regulation O by cross-reference in Section
337.3 of its Rules and Regulations. Therefore, Regulation O provisions apply to insured state
nonmember banks, their subsidiaries and insiders, and related interests of insiders in the same
manner and to the same extent as if the bank were a member bank.
The first rule became effective on November 4, 1996; the second, April 1, 1997. A summary of
the amendments follows.
Insiders of an institution or its affiliates can now obtain loans under a company-wide
employee benefit plan if the plan does not give preference to insiders over other
The procedure has been simplified for a depository institution’s board of Directors to
exclude executive officers and Directors of an affiliate from policy-making functions of
the bank, and thereby from the restrictions of Regulation O.
Regulation O no longer applies to extensions of credit by a bank to an executive officer or
Director of an affiliate, provided that the executive officer or Director is not engaged in
major policy-making of the bank and the affiliate does not account for more than 10
percent of the consolidated assets of the bank’s parent holding company.
For more information, please contact William P. McNamara, Examination Specialist in the
Division of Supervision (202-898-6778), or Mark Mellon, Counsel in the Legal Division (202-
Distribution: FDIC-Supervised Banks (Commercial and Savings)
NOTE: Paper copies of FDIC financial institution letters may be obtained through the FDIC’s
Public Information Center, 801 17th St., N.W., Room 100, Washington, D.C. 20434 ((703) 562-2200 or 800-276-6003).