Louisiana Administrative Code › Title 10 - FINANCIAL INSTITUTIONS, CONSUMER CREDIT, INVESTMENT SECURITIES AND UCC › Part III - Banking › Chapter 3 - Powers › Subchapter A - Miscellaneous Lending Activities › Section III-305 - Loans Secured by Bank or Bank Holding Company Stock

Current through Register Vol. 50, No. 6, June 20, 2024
A. Definitions
Bank
- Louisiana state-chartered banks and
					 state-chartered savings banks.
Commissioner
- the Commissioner of
					 Financial Institutions.
Executive Officer
- an employee who
					 participates or has authority to participate in major policy-making functions
					 of the bank but does not include a director who is not also employed as an
					 officer of the bank.
Holding Company
- any company that directly
					 or indirectly controls a bank.
B. General Provisions
1. If holding company stock is used as
				  collateral, provisions of Section 23A of the Federal Reserve Act may apply. The
				  bank should review this Section of the law and ensure compliance with its
				  provisions.
2. The total dollar
				  volume of all loans secured by own bank or holding company stock (hereinafter
				  collectively referred to as "stock"), when aggregated with the total dollar
				  amount of stock acquired for debts previously contracted, shall not exceed 10
				  percent of the bank's Tier 1 leverage capital. For the purposes of this
				  calculation, any stock held as a result of debts previously contracted shall be
				  valued at fair market value. For a loan which is partially secured by such
				  stock, the amount of the loan to be included in this calculation shall be the
				  loan amount less the collateral value of the nonstock collateral.
3. The bank shall maintain a list of all
				  loans which are secured by its stock. The list shall, at a minimum, contain the
				  borrower's name, the account number of the loan, the original amount of the
				  loan and the certificate number(s) of the shares pledged as
				  collateral.
4. Any loan made to a
				  director or executive officer under the provisions of this rule must be fully
				  disclosed to the bank's board of directors and approved by a majority of the
				  directors in advance, with the interested party not present or participating in
				  the discussion or approval process. Loans made to directors and executive
				  officers under provisions of this rule must be made on substantially the same
				  terms, including interest rates and collateral margins, as those prevailing at
				  the time for comparable transactions by the bank with other persons who are not
				  employed by or associated with the bank. Loans made to directors and executive
				  officers for the purpose of disposition of stock acquired for debts previously
				  contracted must have an adequate, well supported assessment of the stock value
				  documented within the file.
5.
				  Loans secured by a bank's stock made prior to the effective date of
				  R.S.
				  6:416(A), as amended by Act
				  Number 371 of 1991, effective July 6, 1991, shall not be subject to the
				  requirements of this rule provided:
a. there
				  have been no changes in terms of the loan;
b. no additional funds have been
				  advanced;
c. subsequent renewals
				  were made with full board approval and are fully documented in the board's
				  meeting minutes; and
d. the loan is
				  amortized over a reasonable period.