Can this banker moonlight?

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.

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 $2.5 billion (or any affiliate of such an organization) may not serve at the same time as a management official of an unaffiliated depository organization with total assets exceeding $1.5 billion (or any affiliate of such an organization), regardless of the location of the two depository organizations. [Emphasis added.] ..."

There is also a small market share exemption that might apply, as follows:

"Section 348.5 Small market share exemption.

"(a) Exemption. A management interlock that is prohibited by [section] 348.3 is permissible, if:

"(1) The interlock is not prohibited by [section] 348.3(c), and

"(2) The depository organizations (and their depository institution affiliates) hold, in the aggregate, no more than 20 percent of the deposits in each RMSA or community in which both depository organizations (or their depository institution affiliates) have offices. The amount of deposits shall be determined by reference to the most recent annual Summary of Deposits published by the FDIC for the RMSA or community.

"(b) Confirmation and records. Each depository organization must maintain records sufficient to support its determination of eligibility for the exemption under paragraph (a) of this section, and must reconfirm that determination on an annual basis." Each regulator has its own version of this, which you should check appropriate to your charters.