§ 23-47-503 — Loans involving stock of state bank

(a) It shall be unlawful for any state bank to knowingly: (1) Loan its funds to its stockholders on its own stock, or stock in its bank holding company, as collateral security; (2) Make any loan, the proceeds of which are used to purchase its own stock or stock of its bank holding company; or (3) Carry as an asset any loan representing, either directly or indirectly, an investment in its own stock or that of its bank holding company. Provided, however, that there shall be no violation of this subdivision (a)(3) when a bank acquires its own stock or stock in its bank holding company in the regular course of collecting a debt previously contracted in good faith if the bank complied with subdivisions (a)(1) and (2) of this section at the time the loan was made and if the bank divests the stock within two (2) years. (b) (1) Any officer or director of any state bank or any stockholder violating the provisions of this section shall be subject to civil money penalties of one thousand dollars ($1,000) per day, up to a maximum of one hundred thousand dollars ($100,000) in the aggregate, for each violation. (2) The civil penalties may be imposed by the commissioner pursuant to his or her power to and the procedure for issuing cease and desist orders.

Legislative History

Acts 1997, No. 89, § 1.