Certified Regulatory Compliance Manager (CRCM) — Question 121

Which of the following is true regarding extensions of credit to executive officers, directors, and principal shareholders?

Answer options

• A. Must be approved in advance by the board of directors if the aggregate credit is more than the greater of either $25,000 or 5 percent of the bank's capital and surplus, not exceeding $500,000
• B. Must be approved in advance by the board of directors if the credit is greater than $50,000 or 5 percent of the bank's capital and surplus
• C. May not exceed $100,000 in the aggregate, regardless of approvals
• D. May not exceed $250,000 in the aggregate, regardless of approvals

Correct answer: A

Explanation

The correct answer is A, as it correctly states the requirement for board approval based on the specified thresholds. Options B, C, and D are incorrect because they either misstate the approval limits or the aggregate credit cap that applies to such extensions of credit.