Pub. 12 2015 Issue 3

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S 14 DEBBIE RAMIREZ SHAREHOLDER MODRALL SPERLING LAW FIRM COUNSELOR’S CORNER The Court of Appeals found there was evidence in the record that the bank’s regulators and its independent auditor found its commercial loan administration and underwriting process lacking. Doesn’t My Business Judgment Rule? Bank Director and Officer Liability Arising From Loan Underwriting and Administration I n New Mexico, as in most states, a court will not interfere with, or substitute its judgment for, a director’s or officer’s decision if the decision was made in good faith, with the care that a reasonably prudent personwould use, and in the reasonable belief that the director or officer was acting in the best interests of the corporation. In a recent decision from the United States Court of Appeals for the Fourth Circuit, the Court refused to find that the business judg- ment rule protected a bank’s officers from lia- bility. While this case from the Fourth Circuit is not necessarily binding on federal courts in New Mexico (which is in the Tenth Circuit), the case provides a caution to bank directors and officers in the exercise of their management functions on behalf of the banks they serve.