I have 2 Reg O questions. 1st - director with nsf item presented less than $1,000 covered by deposit from our trust dept before 9:00 am that day and before pay/return decision cutoff. Director has VERY large balances with the bank and with our trust dept. In "similar circumstances" (similar balance, relationship) we would not charge the OD fee to a non-director. Must I charge the director? Second question, we have a director's related interest with aggregate loans over $500k so all extensions of credit require BOD pre-approval. We did a change in terms several months back to lower the rate due to competitive pressures. No other changes were made. Was the board required to pre-approve this?

Yes, you cannot waive the OD fee.

As to the OD fee - you are not "waiving" anything if your bank would not normally charge any other customer. I believe you are okay from the facts.

12CFR 215.4(d)
ii) The member bank charges the executive officer or director the same fee charged any other customer of the bank in similar circumstances.

As to your second question regarding the Director, I believe it requires approval unless it meets an exception under 215.4(d)(3). Check those exceptions out. Depends on if its secured or unsecured, etc, etc...

allyn: if you mean that the director covered the check with his or her own funds, here is a Federal Reserve legal interpretation that might be helpful:

FRB Interpretation

Thanks for all of your replies and references. You were a BIG help!