(1) Except as provided by subsection (2) of this section, an association shall not directly or indirectly make a loan to or for the benefit or use of an individual, partnership, association or corporation or subsidiary thereof if:
(a) Any officer or director of the lender has, or represents to the public to have, a contract or right to control or manage the borrower;
(b) Any officer or director of the lender is the proprietor of or a partner in the borrower; or
(c) Twenty-five percent or more of the stock of the borrower is owned or controlled, by option or otherwise, by any one or more of the officers or directors of the lender.
(2) An association may make any loan to a director or officer of the association that is authorized under ORS 722.302 to 722.356. However, if the loan is made to an executive officer or director, all of the following conditions must be met:
(a) An independent appraiser shall be employed by the lending association to appraise the security for the loan.
(b) The loan shall have the prior approval of not less than two-thirds of the authorized members of the board of directors and the approval shall be entered in the minutes of the meeting at which the loan is approved.
(c) A director who is directly or indirectly interested in the loan shall fully disclose to the other directors on the board of the lending association the director’s interest in the loan or in the borrower. The director shall abstain from voting on the question of approval of the loan.
(d) The loan must be made under a written agreement.
(3) The directors of a savings association, if the association makes loans to its directors, officers or employees, shall establish written procedures for approving such loans.
(4) The Director of the Department of Consumer and Business Services by rule may exclude from the applicability of subsection (2) of this section any indebtedness for which the requirements of subsection (2) of this section create, according to the director, an excessive burden in regard either to the savings association or to the borrower without an offsetting regulatory benefit.
(5) Notwithstanding the conditions described in subsection (2)(a), (b) and (c) of this section, the directors of the lending association need not first approve a loan to an executive officer or director unless the loan, when aggregated with all other loans to the executive officer or director and to all related interests of the executive officer or director, as defined by ORS 722.458, exceeds $25,000. [1975 c.582 §105; 1979 c.863 §12; 1985 c.786 §59]
Section: Previous 722.330 722.332 722.334 722.335 722.336 722.338 722.340 722.342 722.345 722.350 722.352 722.354 722.355 722.356 722.360 NextLast modified: August 7, 2008