Montana Code 32-1-465. Limit on loans to officer, director, or principal shareholder
32-1-465. Limit on loans to officer, director, or principal shareholder. (1) Except as provided in subsection (2), a bank may not extend credit to an officer, director, or principal shareholder unless the extension of credit is in an amount that, when aggregated with the amount of all outstanding extensions of credit by that bank to all officers, directors, or principal shareholders, does not exceed the bank’s unimpaired capital and unimpaired surplus.
Terms Used In Montana Code 32-1-465
- bank: as used in this chapter means any corporation that has been incorporated to conduct the business of receiving money on deposit or transacting a trust or investment business, as defined in this chapter. See Montana Code 32-1-102
- Department: means the department of administration provided for in Title 2, chapter 15, part 10. See Montana Code 32-1-109
- Principal shareholder: means a person who directly or indirectly owns or controls, individually or through others, more than 10% of any class of voting stock. See Montana Code 32-1-109
- Surplus: means a fund paid in or created under this chapter by a bank from its net earnings or undivided profits that, when set apart and designated as surplus, is not available for the payment of dividends and cannot be used for the payment of expenses or losses so long as the bank has undivided profits. See Montana Code 32-1-109
(2)A bank with deposits of less than $100 million may by resolution of its board of directors increase the general limit in subsection (1) to a limit that does not exceed two times the bank’s unimpaired capital and unimpaired surplus if:
(a)the board of directors determines that a higher limit is consistent with prudent, safe, and sound banking practices in light of the bank’s experience in lending to officers, directors, and principal shareholders and is necessary to attract or retain directors or to prevent restricting the availability of credit in small communities;
(b)the resolution sets forth the facts and reasoning on which the board of directors bases the finding, including the amount of the bank’s lending to officers, directors, and principal shareholders as a percentage of the bank’s unimpaired capital and unimpaired surplus as of the date of the resolution;
(c)the bank has submitted the resolution to the department; and
(d)the bank meets or exceeds, on a fully phased-in basis, all applicable capital requirements established by the department.