Certified Regulatory Compliance Manager (CRCM) — Question 306

Which of the following relationships does NOT violate Regulation L?
"¢ Relationship A: First National Bank is located in the same city as an affiliate of First Savings and Loan. First National and the affiliate share a board member.
"¢ Relationship B: State Bank and an affiliate of First National Bank are located in the same RMSA but not in the same town. State Bank has assets of $60 million, and the affiliate has assets of $7 million. The two institutions share a board member.
"¢ Relationship C: Savings and Loan Association and Bank Holding Company do not have offices within the same RMS
Bank Holding Company's assets are in excess of $1.75 billion, and Savings and Loan Association's assets are in excess of $2.5 billion. These institutions share a board member.

Answer options

Correct answer: B

Explanation

Relationship B does not violate Regulation L, as the institutions are in the same RMSA but not the same town, and their asset sizes are sufficiently different. In contrast, Relationships A and C are problematic due to shared board members while being in close proximity and having significant asset overlaps, which can raise regulatory concerns. Therefore, the correct answer is B.