Mississippi Code 1972 (2023) › Title 81 - BANKS AND FINANCIAL INSTITUTIONS (§§ 81-1-1 — 81-29-3) › Chapter 5 - GENERAL PROVISIONS RELATING TO BANKS AND BANKING (§§ 81-5-1 — 81-5-153) › GENERAL PROVISIONS (§§ 81-5-1 — 81-5-107) › Section 81-5-51 - Loans to directors and executive officers

Loans aggregating fifteen percent (15%) of the unimpaired capital and unimpaired surplus may be made by any state bank to any director or executive officer thereof, as defined in Regulation O promulgated by the Board of Governors of the Federal Reserve System, less existing direct and indirect liabilities thereto, upon affirmative approval of a majority of all directors spread on the minutes of a directors' meeting held before such loan is made, provided, such loan is made on substantially the same terms and conditions extended to other borrowers for comparable transactions. Any state bank may lend to any such director or executive officer thereof, upon affirmative approval of a majority of all directors spread on the minutes of a directors' meeting held before such loan is made, not more than twenty percent (20%) of the unimpaired capital and unimpaired surplus of the bank, less the amount of existing direct and indirect liabilities, when secured; or when the portion thereof in excess of any amount loaned under the first provision hereof is secured by obligations of the United States government, the State of Mississippi, and the levee districts, counties, road districts, school districts, and municipalities of the State of Mississippi, obligations of any other state of the United States and other bonds of recognized character and standing, which are the subject of daily newspaper market quotations, provided such loan shall not exceed eighty percent (80%) of the market or par value (whichever is less) of the bonds or obligations offered as security. Any state bank may lend to any executive officer or director thereof upon affirmative approval of a majority of all directors spread on the minutes of a directors' meeting held before such loan is made, such amount as is safe and proper, when secured by warehouse receipts or shippers' order bills of lading representing actual existing values, provided the amount loaned shall not exceed eighty percent (80%) of the market value of the commodities representing the actual existing values, and loans of this nature shall be made payable on demand so that the security held therefor may be sold on any date and the proceeds thereof applied to the payment of the loan. However, a bank's board of directors may, as shown in its minutes, give to a bank officer the authority to make secured or unsecured loans to an executive officer or director of such bank, without receiving the board's prior approval, in an amount that, when aggregated with the amount of all other extensions of credit to that person and to all related interests of that person, does not exceed the greater of Twenty-five Thousand Dollars ($25,000.00) or five percent (5%) of the bank's unimpaired capital and unimpaired surplus. However, no state bank shall extend credit to any director or executive officer thereof, in an amount that, when aggregated with all other extensions of credit to that person and to all related interests of that person, exceeds Five Hundred Thousand Dollars ($500,000.00) without documented prior affirmative approval of a majority of its directors.
Loans and discounts by a state bank to a director or executive officer thereof secured in full by funds on deposit in time or savings accounts with the lending bank to the credit of the borrower shall not be restricted to the fifteen percent (15%) or twenty percent (20%) limitations herein prescribed.
The limitations of this section shall not apply where an executive officer or director shall bona fide purchase from the bank at a reasonable price real or personal property acquired by the bank in payment of debts due the bank, provided such transactions are approved by a majority of the board of directors, such approval to be shown in their minutes; and, in cases where loans are made by branch banks, the sum total of loans made by any branch or branches and its parent bank to such executive officer or director shall be computed as against the total capital stock and surplus of the parent bank and its branch or branches. Loans heretofore made to executive officers or directors may be renewed or extended if in accord with sound banking practice.
Codes, 1942, § 5201; Laws, 1934, ch. 146; Laws, 1936, ch. 165; Laws, 1966, ch. 249, § 1; Laws, 1983, ch. 342, § 2; Laws, 1988, ch. 543, § 1; Laws, 1995, ch. 308, § 4; Laws, 1996, ch. 400, § 16, eff. 3/19/1996.