|
[Main Tabs]
[Table of Contents - 4000]
[Index]
[Previous Page]
[Next Page]
[Search]
4000 - Advisory Opinions
Bank Management Official Serving as Member of Branch
Advisory Board
FDIC-79-11
November 7, 1979
Pamela E.F. LeCren, Attorney
The following is in response to your letter of August 28, 1979
requesting an opinion regarding the Depository Institutions Management
Interlocks Act ("Title II" of the Financial Institutions
Regulatory and Interest Rate Control Act of 1978) and its implementing
regulations (12 C.F.R. Part 348). Specifically, you inquired as to
whether or not *** would be in violation of Title II and Part 348 if
(1) a corporator of *** was a management official of another financial
institution, and (2) a member of one of the branch advisory boards was
a management official of another financial institution.
Title II generally prohibits a financial institution from sharing
management officials with another financial institution if the two
institutions have offices located in the same local community or the
same standard metropolitan statistical area ("SMSA"). The
prohibitions do not apply if the person serving both institutions has
done so since prior to November 10, 1978 and such service did not at
that time violate section 8 of the Clayton Act (15 U.S.C. § 19).
"Community'' is defined by 12 C.F.R. section 348.2(c) to mean city,
town, or village or contiguous or adjacent (within ten miles of each
other) cities, towns, or villages. A "management official" is an
employee or officer who has management functions, a director (including
an advisory or honorary director), a trustee of a savings bank, or any
person who has a representative or nominee who is serving in any of the
above positions.
1. Corporators.
According to the information in your letter and information given to
me over the phone, *** has approximately forty-five corporators who
meet at least once a year at which time the trustees and the officers
of the bank are elected. The corporators also select the CPA audit firm
used by the bank and vote on the bank's bylaws. Fifteen trustees are
elected, all of whom are selected from the pool of corporators. A
nominating committee consisting of several trustees and one corporator
nominates the slate of trustees. The corporators have
{{4-28-89 p.4029}}no other functions than those listed
above. The corporators in effect serve the same function as the
stockholders of a commercial bank or stock savings bank.
In our opinion, a corporator is neither a director, trustee, officer
nor an employee. Therefore, *** would not be in violation of Title II
if one of its corporators was serving as a director, trustee, etc. of
another financial institution located in the same SMSA or same local
community unless that corporator can be said to have a
representative or nominee serving as a trustee, etc. of ***. If that
were the case, corporator "X" would be a management official of
both *** and the other financial institution and Title II would
prohibit the corporator's continued service.
A proposed amendment 1
to Part 348 (§ 348.2(k)) defines "representative or nominee'' to
mean a person who serves as a management official and has an express or
implied duty to act on behalf of another person with respect to
management responsibilities. That express or implied duty can be found
on the basis of a family, employment, agency or other relationship as
well as on the basis of an agreement or understanding. We have not been
presented sufficient information at this time to be able to determine
whether or not any corporator who is currently serving as a management
official at another financial institution has a "representative or
nominee" (within the meaning of proposed § 348.2(k)) serving as a
management official of ***.
2. Branch Advisory Board Members.
As pointed out above, a management official includes an officer or
employee with management functions, advisory or honorary directors, and
trustees. 2
You have indicated to me that every branch bank of *** has an advisory
board made up of persons from the community. The board meets twice a
year, informs the branch management of the needs of the community, and
has no relation to the board of trustees of the entire *** bank. Each
member is paid thirty dollars a meeting. The members have no title
other than that of advisory board member. Currently, there are members
of the various branch advisory boards who serve as management officials
of other financial institutions. It is our opinion based on the facts
as presented to us that the advisory board members are neither
employees nor officers with management functions. Nor will we consider
them to be advisory directors or advisory trustees as they are not in a
position to influence the policy-making decisions of the board of
directors of ***. Title II does not therefore prohibit the service of
these persons as advisory board members.
Should you have any questions regarding the substance of this
opinion, Title II or Part 348, please contact
me.
1 The comment period on the proposal ended on September 17,
1979. No official action has been taken with regard thereto as of the
writing of this letter. Go Back to Text
2 It is our opinion that advisory and honorary trustees are
management officials as well. Go Back to Text
[Main Tabs]
[Table of Contents - 4000]
[Index]
[Previous Page]
[Next Page]
[Search]
|
