Reg O Financial Reporting Requirements-Directors

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Question:

What are the financial reporting requirements for Directors and their related interests under Reg O? Do they need to produce tax returns or appropriate financial statements annually for their personal loans and loans to their related interests?

Answer:

There are no specific requirements for such actions under Regulation O. A loan to an executive officer can only be made when "Preceded by the submission of a detailed current financial statement of the executive officer". However, there are no requirements for annual financial statements. Loans to executive officers and directors are also subject to the following: "Is made on substantially the same terms (including interest rates and collateral) as, and following credit underwriting procedures that are not less stringent than, those prevailing at the time for comparable transactions by the bank with other persons that are not covered by this part and who are not employed by the bank." If you require annual financial statements from other borrowers on similar loan transactions, then that same requirement would have to be imposed on the EO or director.

Also, check your State law, as in some States, I believe that an annual financial statement is required on specific management officials.

First published on BankersOnline.com 5/20/13