No member bank may pay an overdraft of an executive officer or director of the bank or executive officer or director of its affiliates* on an account at the bank, unless the payment of funds is made in accordance with:
- A written, preauthorized, interest-bearing extension of credit plan that specifies a method of repayment; or
- A written, preauthorized transfer of funds from another account of the account holder at the bank.
The prohibition of this section does not apply to payment of inadvertent overdrafts on an account in an aggregate amount of $1,000 or less, provided:
- The account is not overdrawn for more than 5 business days; and
- The member bank charges the executive officer or director the same fee charged any other customer of the bank in similar circumstances.
* This prohibition does not apply to the payment by a member bank of an overdraft of a principal shareholder of the member bank, unless the principal shareholder is also an executive officer or director. This prohibition also does not apply to the payment by a member bank of an overdraft of a related interest of an executive officer, director, or principal shareholder of the member bank or executive officer, director, or principal shareholder of its affiliates.
Reference: 12 CFR 215.4(e).