12 C.F.R. § 225.71

Definitions

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(a) Director means a person who serves on the board of directors of a regulated institution, except that this term does not include an advisory director who:

(1) Is not elected by the shareholders of the regulated institution;

(2) Is not authorized to vote on any matters before the board of directors or any committee thereof;

(3) Solely provides general policy advice to the board of directors and any committee thereof; and

(4) Has not been identified by the Board or Reserve Bank as a person who performs the functions of a director for purposes of this subpart.

(b) Regulated institution means a state member bank or a bank holding company.

(c) Senior executive officer means a person who holds the title or, without regard to title, salary, or compensation, performs the function of one or more of the following positions: president, chief executive officer, chief operating officer, chief financial officer, chief lending officer, or chief investment officer. Senior executive officer also includes any other person identified by the Board or Reserve Bank, whether or not hired as an employee, with significant influence over, or who participates in, major policymaking decisions of the regulated institution.

(d) Troubled condition for a regulated institution means an institution that:

(1) Has a composite rating, as determined in its most recent report of examination or inspection, of 4 or 5 under the Uniform Financial Institutions Rating System or under the Federal Reserve Bank Holding Company Rating System;

(2) Is subject to a cease-and-desist order or formal written agreement that requires action to improve the financial condition of the institution, unless otherwise informed in writing by the Board or Reserve Bank; or

(3) Is informed in writing by the Board or Reserve Bank that it is in troubled condition for purposes of the requirements of this subpart on the basis of the institution's most recent report of condition or report of examination or inspection, or other information available to the Board or Reserve Bank.

Notes of Decisions

Cited in 2 cases (1 in the last 5 years), 2013–2023 · leading case: Martinez v. Rocky Mountain Bank, 540 F. App'x 846 (10th Cir. 2013).

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Martinez v. Rocky Mountain Bank, 540 F. App'x 846 (10th Cir. 2013). “On June 14, 2010, the Bank was notified by its primary regulator, the Federal Reserve Board (“Federal Reserve”) that it was in a “troubled condition” as defined by 12 C.F.R. § 225.71 (d). That designation triggered the regulatory prohibition on golden parachute payments.”

Bauer v. Fed. Deposit Ins. Corp. (D.D.C. 2023). “§ 1828 (k)(4)(A)(ii); 12 C.F.R. §§ 225.71 (d)(2), 303.l0I(c). The consent order also required Southern Community to obtain a management assessment report from an independent consultant, who ultimately concluded that Bauer's and Clark's deficient leadership had contributed to the…”

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