Section 340.10  Scope and Authority

 

The Illinois Commissioner of Banks and Real Estate is responsible for the administration of the Illinois Banking Act (the Act) [205 ILCS 5].  Section 37(1) of the Act requires the Commissioner to prescribe by rule limits on loans made by a state bank to any of its officers, employees, directors or to corporations or firms controlled by them or in the management of which any of them are actively engaged without receiving the prior approval of the bank's board of directors.

 

Section 340.20  Definitions

 

For purposes of this Part:

 

            "actively engaged" means direct involvement in the policies of a corporation or firm;

 

            "control" means:

 

            the ownership of or the power to vote 10% or more of any class of voting securities of a corporation; or

 

            the ability to direct in any manner the election of a majority of a corporation's board of directors.

 

            "director" means any individual elected or appointed to serve on a bank's board of directors, whether or not such individual receives compensation.  An advisory director is not considered a director for purposes of this Part.  An individual is an advisory director if he:

 

            is not elected by the bank's shareholders;

 

            is not authorized to vote on matters before the board of directors; and

 

            provides solely general policy advice to the bank's board of directors.

 

            "firm" means a general or limited partnership.

 

            "he" includes the feminine as well as the masculine form.

 

            "loan or extension of credit" shall include all direct or indirect advances of funds made on the basis of an obligation to repay the funds. Such term shall also include any obligation of a state bank to advance funds pursuant to a contractual commitment, such as a letter of credit.

 

            "officer" means a president, vice president or other salaried officer of the lending bank.

 

            "person" means a bank officer, employee or director.

 

(Source:  Amended at 11 Ill. Reg. 812, effective December 24, 1986)

 

Section 340.30  Limits

 

Any loan or extension of credit by a state bank to any of its officers, employees, directors or to corporations or firms controlled by them or in the management of which any of them are actively engaged must receive the prior approval of the board of directors of the bank if such loan or extension of credit exceeds the higher of $25,000 or 5% of the bank's capital, surplus and undivided profits when aggregated with all other loans or extensions of credit then outstanding by the bank to that person or to any corporation or firm controlled by that person or in the management of which that person is actively engaged. In no event shall a state bank make any loan or extension of credit to any of its officers, employees, directors or to corporations or firms controlled by them or in the management of which any of them are actively engaged in an amount that, when aggregated with all other loans or extensions of credit then outstanding by the bank to that person or to any corporation or firm controlled by that person or in the management of which that person is actively engaged, exceeds $500,000, except with the prior approval of the board of directors of the bank.  When the bank's board of directors votes on a specific loan or extension of credit to the bank's officer, employee, director or to a corporation or firm controlled by them or in the management of which any of them are actively engaged, that officer, employee or director shall not be present during the discussion of such loan or extension of credit and shall abstain from participating in the vote.