Academic journal article ABA Banking Journal

Can This Banker Moonlight?

Academic journal article ABA Banking Journal

Can This Banker Moonlight?

Article excerpt

Q. I'm CEO of a community bank in one state, and I've been asked to serve on the hoard of a startup bank in another state. Is this allowed?

A. There is specific law prohibiting management interlocks, that is, prohibiting officers and directors from serving on competing institutions. However, with a de nova institution that is unrelated, and noncompeting, it appears you could do this. However, you'll have to address for yourself any difficulties you'll have in getting to the de novo's board meetings and serving adequately, as an out-of-towner.

To be absolutely sure of your ground, for reasons you'll see in a moment, review the regulation. If FDIC is your federal regulator, see Part 348, the main provision of which is: "Sect. 348.3 Prohibitions.

"(a) Community. A management official of a depository organization may not serve at the same time as a management official of an unaffiliated depository organization if the depository organizations in question (or a depository institution affiliate thereof) have offices in the same community.

"(b) RMSA. A management official of a depository organization may not serve at the same time as a management official of an unaffiliated depository organization if the depository organizations in question (or a depository institution affiliate thereof) have offices in the same RMSA and, in the case of depository institutions, each depository organization has total assets of $20 million or more.

"(c) Major assets. A management official of a depository organization with total assets exceeding $2. …

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