Definition Of "Officer" For The Purposes Of Loan Limitations - Q4 1998

By the Division of Banks

Regulation Bulletin 2.1-102, section III, ¶ A(1) provides that Massachusetts statutory prohibitions and limitations on loans to officers and directors or trustees are to be read in conjunction with comparable provisions of Regulation O. The general rule is that the more stringent or restrictive provision of state or federal law will control. Mass. Gen. Laws chapter 172, section 18 provides that " . . . the term 'officer' shall mean a president, vice-president, a treasurer and a clerk, and any other officer who participates in major policy functions . . . ." Thus, named officers are subject to lending limitations even if they do not participate in major policy functions. Regulation O is not determinative on this issue as presented.

Former Administrative Bulletin 9-1 provided that records of loans to the immediate family of officers, directors or principal shareholders be maintained as loans to the bank's insiders. The current Regulation Bulletin 2.1-102, does not cover loans to the spouse or children of an insider unless such loans would trigger the requirements of Regulation O.