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4000 - Advisory Opinions
Possible Management Interlock in Employment
Agreement
FDIC-85-15
July 9, 1985
Pamela E. F. LeCren, Senior Attorney
I have reviewed the materials forwarded by you to the Washington
Office which were submitted by counsel for *** to Regional Counsel
Glion Curtis requesting an opinion on whether or not the employment
agreement described below creates a prohibited management official
interlock. Based on the analysis set forth below, it is my opinion that
the agreement does not result in a prohibited management official
interlock.
Discussion:
According to the material submitted for our review, ***, a director
of ***, is also president of *** Mortgage and Financial Services, Inc.
*** Mortgage entered into an agency agreement with *** Savings and Loan
Association, *** on May 17, 1984 designating *** Mortgage as agent for
the following: (1) solicitation of savings deposits on forms and under
conditions determined by *** Savings, (2) the solicitation of real
estate loans to be submitted to *** Savings' home office, and (3) the
rental of real estate owned by *** Savings on terms authorized thereby.
A separate "agency compensation schedule" indicates that in
addition to the agent's responsibilities as set forth in the general
agency agreement, *** Mortgage shall collect certain loan and rental
payments on behalf of *** Savings. According to the documents, the
above listed powers and authorities comprise the entire scope of the
agent's responsibilities.
Section 348.2(h) of the FDIC's regulations defines "management
official" for the purposes of the interlocking management
prohibitions to mean an employee or officer with management functions
(including a branch manager), a director (including an advisory or
honorary director), a trustee of a mutual savings bank, or any person
who has a representative or nominee serving in any such capacity. The
issue with respect to the instant agreement is therefore whether or not
*** is a management official of *** Savings and Loan as a result of the
agency agreement entered into by the company of which he is president.
Even if we were to assume that *** himself performs the duties
described in the agency agreement, we would not conclude that those
duties cause him to be a management official of *** Savings and Loan.
The agency agreement appears to only cover ministerial, administrative
type responsibilities and does not appear to confer any authority to
set loan policies, interest rates, or make any other managerial
decision let alone even accept or reject loan applications. Although it
could be viewed as a conflict of interest for *** to be the president
of a company that acts as agent for the solicitation of deposits and
acceptance of loan applications for a savings and loan with which ***
may compete, the relationship described above does not fall within the
ambit of Part 348, nor do the two institutions appear to compete within
the meaning of Part 348. 1
1 Even if we were to determine that the agency agreement causes
*** to be a management official of *** Savings and Loan, the resulting
management official interlock between the savings and loan and *** ***
would not appear to be prohibited under Part 348. We have no
information that would indicate that the two institutions have offices
located in the same or contiguous cities, towns or villages nor that
they have offices located in the same relevant metropolitan statistical
area. Even if one were to characterize *** Mortgage to be a loan
production office of *** Savings and Loan as a result of the agency
agreement, Part 348 does not recognize a loan production office as an
office of a depository institution within the meaning of the
regulation. Unless the institutions have total assets of $500 million
and one billion dollars respectively, Part 348 would not prohibit the
two from having a management official interlock. Go Back to Text
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