Regulatory Alerts2022-08-02
Investment in Real Estate for Business Purposes
The Louisiana Office of Financial Institutions issued Policy DI-01-2005 to establish comprehensive guidelines for state-chartered banks, thrifts, and holding companies acquiring, holding, and disposing of real property for business operations. The policy caps fixed asset investments at 50 percent of Tier 1 capital plus loan loss allowances, mandates prior regulatory approval for troubled institutions and transactions exceeding appraised values by more than 10 percent, and requires a minimum 50 percent utilization rate for acquired facilities. It further clarifies rules for insider transactions, contiguous property acquisitions, branch closures, and the mandatory transfer of unused premises to Other Real Estate Owned status.
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