Section 6:289 - Loans to executive officers and employeesA. No executive officer, director, or principal shareholder of any state bank shall borrow any of its funds, which term includes a line of credit, directly or indirectly for himself or for any corporation or other entity of which he has a related interest, in an amount that, when aggregated with the amount of all other loans to that person and to all other related interests of that person, exceeds the higher of twenty-five thousand dollars or five percent of the state bank's unimpaired capital and unimpaired surplus, unless the loan is in pursuance of a resolution of the board of directors passed prior to making the loan at a meeting at which the borrower was not present or participating.B. As used in this Section, the following terms shall have the following meanings: (1) "Director" means any director of a state bank, regardless of compensation, excluding advisory directors.(2) "Executive officer" means an employee who participates or has authority to participate in major policymaking functions of the state bank but does not include a director who is not also employed as an officer of the bank.(3) "Principal shareholder" means any person that directly or indirectly, or acting through or in concert with one or more persons owns, controls, or has the authority to vote more than ten percent of any class of voting securities of the bank or its parent company. Voting securities owned or controlled by a member of a person's immediate family are considered to be held by that person.(4) "Related interest" of a person means a company that is controlled by an executive officer, director, or principal shareholder.(5) "Unimpaired capital and unimpaired surplus" means the state bank's Tier 1 and Tier 2 capital included in the bank's risk-based capital, based on the bank's most recent consolidated report of condition; and the balance of the bank's allowance for loan and lease losses not included in the bank's Tier 2 capital for purposes of the calculation of risk-based capital, based on the bank's most recent consolidated report of condition. For purposes of this Paragraph, the definitions for Tier 1 and Tier 2 capital are the same as the definitions provided in 12 C.F.R. Pt. 325, Appendix A.C.(1) Notwithstanding any other provision of the law, no state bank may extend credit, which term includes granting a line of credit, to any of its executive officers, directors, or principal shareholders unless: (a) The extension of credit is made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions by the bank with other persons who are not employed by the bank; or(b) The extension of credit is made under similar terms and conditions as offered to other bank employees and to the extent permitted under federal banking laws and regulations.(2) A bank may make loans to its other employees at rates permitted by Titles 6 and 9 of the Louisiana Revised Statutes of 1950, by R.S. 9:3500, or by any applicable provision of federal law.Acts 1984, No. 719, §1, eff. Jan. 1, 1985; Acts 1999, No. 860, §1, eff. July 2, 1999; Acts 2004, No. 743, §3, eff. Jan. 1, 2005; Acts 2005, No. 231, §1, eff. June 29, 2005.Acts 1984, No. 719, §1, eff. 1/1/1985; Acts 1999, No. 860, §1, eff. 7/2/1999; Acts 2004, No. 743, §3, eff. 1/1/2005; Acts 2005, No. 231, §1, eff. 6/29/2005.