Integration of National Bank and Federal Savings Association Regulations: Licensing Rules, 28345-28481 [2015-11229]
Download as PDF
Vol. 80
Monday,
No. 95
May 18, 2015
Part II
Department of the Treasury
asabaliauskas on DSK5VPTVN1PROD with RULES
Office of the Comptroller of the Currency
12 CFR Parts 4, 5, 7, et al.
Integration of National Bank and Federal Savings Association Regulations:
Licensing Rules; Final Rule
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
PO 00000
Frm 00001
Fmt 4717
Sfmt 4717
E:\FR\FM\18MYR2.SGM
18MYR2
28346
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Parts 4, 5, 7, 14, 24, 32, 34, 100,
116, 143, 144, 145, 146, 150, 152, 159,
160, 161, 162, 163, 174, 192, 193
[Docket ID OCC–2014–0007]
RIN 1557–AD80
Integration of National Bank and
Federal Savings Association
Regulations: Licensing Rules
Office of the Comptroller of the
Currency, Treasury.
ACTION: Final rule.
AGENCY:
The Office of the Comptroller
of the Currency (OCC) is adopting a
final rule to integrate its rules relating
to policies and procedures for corporate
activities and transactions involving
national banks and Federal savings
associations, to revise some of these
rules in order to eliminate unnecessary
requirements consistent with safety and
soundness and to promote fairness in
supervision, and to make other
technical and conforming changes. The
OCC also is adopting amendments to
update its rules for agency organization
and function.
DATES: This final rule is effective July 1,
2015.
FOR FURTHER INFORMATION CONTACT: For
additional information, contact Heidi
Thomas, Special Counsel; Melissa
Lisenbee, Attorney; or Stuart Feldstein,
Director, Legislative and Regulatory
Activities Division, (202) 649–5490, for
persons who are deaf or hard of hearing,
TTY, (202) 649–5597; Kevin Corcoran,
Assistant Director, or Richard Cleva,
Senior Counsel, Bank Activities and
Structure, (202) 649–5500; or Stephen
Lybarger, Deputy Comptroller for
Licensing, (202) 649–6319, Office of the
Comptroller of the Currency, 400 7th
Street SW., Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
SUMMARY:
asabaliauskas on DSK5VPTVN1PROD with RULES
I. Background
Title III of the Dodd-Frank Wall Street
Reform and Consumer Protection Act
(Dodd-Frank Act),1 transferred to the
OCC all functions of the former Office
of Thrift Supervision (OTS) and the
Director of the OTS relating to Federal
savings associations.2 As a result, the
1 Public
Law 111–203, 124 Stat. 1376 (2010).
2 Title III of the Dodd-Frank Act transferred the
functions of the former OTS relating to state savings
associations to the Federal Deposit Insurance
Corporation (FDIC). Dodd-Frank Act, section
312(b)(2)(C), 12 U.S.C. 5412(b)(2)(C). The DoddFrank Act also transferred to the OCC the
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
OCC is now responsible for the ongoing
examination, supervision, and
regulation of Federal savings
associations, in addition to national
banks and Federal branches and
agencies. With some exceptions, the
OCC has one set of rules applicable to
national banks and another set of rules
applicable to Federal savings
associations, or, where appropriate, to
all savings associations.3
The OCC is in the process of
reviewing its rules to determine whether
it is appropriate to integrate them into
a single set of rules for both national
banks and savings associations, taking
into account consistency with the
underlying statutes that apply to each
type of institution. The key objectives of
this review are to reduce regulatory
duplication, promote fairness in
supervision, eliminate unnecessary
burden consistent with safety and
soundness, and create efficiencies for
both national banks and savings
associations, as well as the OCC.4
rulemaking authority of the OTS relating to all
savings associations, both state and Federal, unless
rulemaking authority is provided to another agency
by a specific statute. See Dodd-Frank Act, section
312(b)(2)(B)(i)(II), 12 U.S.C. 5412(b)(2)(B)(i)(II). On
July 21, 2011, the OCC issued an interim final rule
and request for comments that restated the former
OTS regulations as 12 CFR parts 100 through 197,
with nomenclature and other technical changes. See
76 FR 48950 (Aug. 9, 2011). The FDIC has identified
a number of independent bases for rulemaking
authority for state savings associations in some
cases. Where there is no such independent
rulemaking authority, the FDIC will enforce
applicable OCC regulations for state savings
associations.
3 The OCC previously has issued rulemakings that
integrated, or proposed to integrate, its rules for
national banks and Federal savings associations
relating to lending limits, capital, flood insurance,
and safety and soundness standards. See 78 FR
37930 (June 25, 2013), 78 FR 62018 (Oct. 11, 2013),
78 FR 65108 (October 30, 2013), and 79 FR 54518
(September 11, 2014), respectively. Furthermore,
the OCC has integrated its rules relating to
consumer protection in insurance sales, Bank
Secrecy Act compliance, management interlocks,
appraisals, disclosure and reporting of Community
Reinvestment Act (CRA)-related agreements, and
the Fair Credit Reporting Act. See 79 FR 28393
(May 16, 2014).
4 Concurrent with our integration of national bank
and Federal savings association rules, the OCC also
is reviewing OTS-issued supervisory policies to
integrate them into the OCC’s policy framework and
to rescind any issuances that are duplicative,
outdated, or replaced by other supervisory
guidance. Our goal is to produce uniform policies
for national banks and Federal savings associations,
while recognizing differences that exist in statute.
This policy review is occurring in conjunction with
this integration rulemaking project. Many OTSissued supervisory policies already have been
integrated, rescinded, or replaced by new or
existing OCC guidance. We will update this policy
guidance, as appropriate, to reflect the integration
of OCC rules as of the effective date of the final
rules. Until that time, the Dodd-Frank Act provides
that all such OTS issuances continue in effect until
modified, terminated, set aside, or superseded. See
Dodd-Frank Act section 316(b)(2) (12 U.S.C.
5414(b)(2)); OCC Bulletins 2011–47 (Dec. 11, 2011),
PO 00000
Frm 00002
Fmt 4701
Sfmt 4700
As part of this review of our national
bank and savings association rules, the
OCC published in the Federal Register 5
on June 10, 2014, a proposal to integrate
its rules relating to corporate activities
and transactions involving national
banks and Federal savings associations
(licensing rules). One of the objectives
of this rulemaking is to create, where
possible, filing parity for all activities
and transactions addressed in the OCC’s
licensing rules. The OCC believes that it
is more equitable and efficient to have
a single filing and review process for
corporate activities and transactions of
national banks and Federal savings
associations. In addition, the OCC is in
the latter stages of developing an
electronic applications filing system
capable of handling applications and
other filings from both national banks
and Federal savings associations.
Accordingly, another important
objective of this rulemaking is to
complete the integration of our licensing
rules expeditiously so that we can
include these integrated rules in this
new applications system.
Concurrently, the OCC also is
participating in an interagency review of
regulations pursuant to section 2222 of
the Economic Growth and Regulatory
Paperwork Reduction Act of 1996
(EGRPRA).6 The EGRPRA requires the
Federal Financial Institutions
Examination Council (FFIEC) and the
OCC, the FDIC, and the Board of
Governors of the Federal Reserve
System (Federal Reserve Board)
(collectively, the Agencies) to conduct a
review of all their regulations to identify
outdated, unnecessary, or unduly
burdensome regulations applicable to
insured depository institutions. The
FFIEC and the Agencies must conduct
this review at least once every 10 years,
and the next review must be completed
by December 31, 2016. Over the next
two years the OCC, FDIC and Federal
Reserve Board will issue joint notices
requesting comments on their rules
pursuant to the EGRPRA. The EGRPRA
contemplates that the Agencies will
initiate appropriate rulemakings to
change or eliminate outdated,
unnecessary, or unduly burdensome
rules, as appropriate, based on the
comments received.
The Agencies published the first
EGRPRA notice on June 4, 2014,7 and
requested comments on three categories
2012–2 (Jan. 6, 2012), 2012–3 (Jan. 6, 2012), 2012–
15 (May 17, 2012), 2013–34 (Nov. 20, 2013), and
2014–49 (Oct. 1, 2014); and www.occ.gov/
publications/publications-by-type/comptrollershandbook/index-comptrollers-handbook.html.
5 79 FR 33260.
6 12 U.S.C. 3311.
7 79 FR 32172.
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
of rules, including the Agencies’
licensing rules.8 The licensing Notice of
Proposed Rulemaking (NPRM or
proposed rule) indicated that the OCC
would consider comments received in
response to both the EGRPRA notice
and the NPRM when finalizing its
licensing integration rule. We received
eight comment letters on our licensing
rules and our licensing proposed rule in
response to our first EGRPRA notice,
and this final rule reflects these
comments.
As part of this EGRPRA review, the
Agencies also are holding a number of
outreach meetings to provide interested
parties with an opportunity to comment
on regulatory burden reduction in our
regulations. This preamble discusses
relevant comments received at outreach
meetings held on December 2, 2014, in
Los Angeles, Calif., and February 4,
2015 in Dallas, Texas, to the extent they
relate to OCC licensing rules.
II. Overview of the Final Rule
Twelve CFR part 5 sets forth the
OCC’s rules, policies and procedures for
national bank corporate activities and
transactions. Subpart A sets forth the
generally applicable rules and
procedures, while subparts B through D
contain the rules for national bank
initial activities, the expansion of
activities, and other changes in
activities and operations. Subpart E
addresses a national bank’s payment of
dividends, and subpart F addresses
Federal branches and agencies. The
OCC’s equivalent rules, policies and
procedures for Federal savings
associations are dispersed throughout
parts 100–199 with the generally
applicable rules and procedures in part
116. This final rule revises part 5 to
make it applicable to both national
banks and Federal savings associations
and, to the extent appropriate, deletes
the corresponding provisions found in
parts 100 through 199.
Specifically, the final rule
consolidates most licensing provisions
for Federal savings associations into the
existing national bank rule in part 5 and
eliminates parts 116, 146, 152, 159, 174
and the corresponding provision in
parts 143, 144, 145, 150, 160, and 163.
These combined rules are as follows:
• Rules of general applicability
(subpart A)
• Organizing a national bank or
Federal savings association (§ 5.20)
• Conversion from a national bank or
Federal savings association to a state
bank or state savings association (§ 5.25)
8 The OCC issued its second EGRPRA notice,
requesting review of banking operations, capital,
and the Community Reinvestment Act regulations,
on February 13, 2015, 80 FR 7980.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
• Fiduciary powers of national banks
or Federal savings associations (§ 5.26)
• Business combinations involving a
national bank or Federal savings
association (§ 5.33)
• Bank service company investments
of a national bank or Federal savings
association (§ 5.35)
• Investment in national bank or
Federal savings association premises
(§ 5.37)
• Change in location of a main office
of a national bank or home office of a
Federal savings association (§ 5.40)
• Corporate title of a national bank or
Federal savings association (§ 5.42)
• Voluntary liquidation of a national
bank or Federal savings association
(§ 5.48)
• Change in control of a national bank
or Federal savings association; reporting
of stock loans (§ 5.50)
• Changes in directors and senior
executive officers of a national bank or
Federal savings association (§ 5.51)
• Change of address of a national
bank or Federal savings association
(§ 5.52)
• Substantial asset change by a
national bank or Federal savings
association (§ 5.53)
In other cases, this final rule retains
separate rules for national banks and
Federal savings association in part 5
because the rules do not apply to both
charters, are better organized as separate
rules, or their differences and
complexity make integration difficult.
The new Federal savings association
rules are as follows:
• Federal mutual savings association
charters and bylaws (§ 5.21)
• Federal stock savings association
charters and bylaws (§ 5.22)
• Conversion to become a Federal
savings association (§ 5.23)
• Establishment, acquisition, and
relocation of a branch and establishment
of an agency office of a Federal savings
association (§ 5.31)
• Operating subsidiaries of a Federal
savings association (§ 5.38)
• Increases in permanent capital of a
Federal stock savings association
(§ 5.45)
• Capital distributions by a Federal
savings association (§ 5.55)
• Inclusion of subordinated debt
securities and mandatorily redeemable
preferred stock as supplementary (tier 2)
capital (§ 5.56)
• Pass-through investments by a
Federal savings association (§ 5.58)
• Service corporations of Federal
savings associations (§ 5.59)
The remaining rules in part 5
continue to be applicable only to
national banks, with the exception of
subpart E. (Subpart E applies only to
PO 00000
Frm 00003
Fmt 4701
Sfmt 4700
28347
Federal branches and agencies, and we
did not propose to amend it in the
NPRM.) We are amending some of these
rules to be consistent with the changes
for Federal savings associations,
revising the titles of some of these rules
to reflect the inclusion of rules
applicable to Federal savings
associations in part 5, and making other
technical changes. These national bankonly rules are as follows:
• Conversion to become a national
bank (§ 5.24)
• Establishment, acquisition, and
relocation of a branch of a national bank
(§ 5.30)
• Expedited procedures for certain
reorganizations of a national bank
(§ 5.32)
• Operating subsidiaries of a national
bank (§ 5.34)
• Other equity investments by a
national bank (§ 5.36)
• Financial subsidiaries of a national
bank (§ 5.39)
• Changes in permanent capital of a
national bank (§ 5.46)
• Subordinated debt issued by a
national bank (§ 5.47)
• Payment of dividends by national
banks (Subpart E)
In addition to the placement and
integration of Federal savings
association rules, the final rule makes
substantive changes to the OCC’s
licensing rules to eliminate unnecessary
requirements and to further the safe and
sound operation of the institutions the
OCC supervises. Furthermore, the final
rule makes conforming and technical
changes to the rules in parts 5, 7, and
34 and in various provisions of parts
100 through 199 to reflect the movement
of the licensing rules for savings
associations to part 5, to adjust section
titles, and to conform cross-references.
In particular, the final rule replaces,
where appropriate, references to ‘‘bank’’
with ‘‘national bank,’’ because it better
parallels the term ‘‘Federal savings
association.’’ Finally, the rulemaking
amends the OCC’s licensing rules to
make consistent the OCC office to which
a national bank or Federal savings
association must file its notice or
application. Specifically, the final rule
amends each rule in part 5 to direct
such filings to the institution’s
appropriate OCC licensing office or
appropriate OCC supervisory office, as
applicable, and, in clarifying
amendments, updates the description of
the OCC’s supervisory structure in part
4.
A description of amendments made
by this final rule, the comments
received on the proposed rule, relevant
comments received in response to the
June 2014 EGRPRA notice, and
E:\FR\FM\18MYR2.SGM
18MYR2
28348
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
licensing-related comments made at the
EGRPRA outreach meetings held in Los
Angeles, California and Dallas, Texas
appears in the section-by-section
description of the final rule set forth
below in Section III of this preamble.
Section IV of the preamble summarizes
the significant changes for national
banks and Federal savings associations
resulting from this final rule. Section VI
of the preamble contains a redesignation
table that indicates changes in the
numbering of the rules as a result of this
final rule. Sections IV and VI may be
used as a quick-reference guide to our
rulemaking and are intended to assist
national banks and Federal savings
associations, especially community
institutions, in understanding the
changes made by this rulemaking.
asabaliauskas on DSK5VPTVN1PROD with RULES
III. Description of the Final Rule and
Public Comments
The OCC received one comment in
response to the proposed rule, and that
comment referred the OCC to a
comment received in connection with
the June 2014 EGRPRA notice. The OCC
also received 48 public comments in
response to the June 2014 EGRPRA
notice, seven of which addressed issues
related to licensing rule integration.
These comments, the provisions they
address, and the resulting changes to the
OCC’s rules are discussed below.
A. Part 4—District Offices (§ 4.5)
Part 4 covers several areas, including
regulations pertaining to the OCC’s
organizational structure. Section 4.4
describes the role of the OCC’s
Washington, DC office. Section 4.5
describes the role of the OCC’s district
and field offices and sets forth the
address of, and the geographical area
covered by, each district office.
However, §§ 4.4 and 4.5 do not
completely describe all of the OCC’s
supervisory offices. We proposed to
amend 12 CFR 4.5 to reflect more
accurately the current supervisory
structure for national banks and Federal
savings associations. Specifically, we
proposed to revise § 4.5 to include a
description and address of the OCC’s
Midsize Bank Supervision program, and
to provide that the district offices
supervise community banks not
otherwise supervised by the Washington
office or Midsize Bank Supervision. The
NPRM also proposed to replace the
outdated reference to ‘‘duty stations’’
with the currently used term ‘‘field
office.’’ We received no public
comments on the proposed § 4.5
amendments and adopt them as
proposed with some technical changes.
First, the final rule adds American
Samoa to the list of territories in
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
§ 4.5(b)(1). It was inadvertently left out
of the proposed rule. Second, the final
rule replaces the term ‘‘field office
satellite offices’’ with ‘‘other
supervisory offices’’ in § 4.5(b)(2), and
makes changes to paragraph headings.
B. Part 5—Rules, Policies, and
Procedures for Corporate Activities
General Comments
A number of public commenters made
general comments regarding the OCC’s
licensing rule integration effort. One
commenter, a banking trade association,
supported the OCC’s efforts to integrate
its licensing rules as a starting point for
a more efficient and streamlined
regulatory regime for both national
banks and Federal savings associations.
However, this commenter stated that, by
including a number of new substantive
requirements and amendments, this
rulemaking will increase burden on the
industry, and is therefore inconsistent
with the stated purpose of the EGRPRA
process. This commenter requested that
the OCC issue a separate proposed rule
for any substantive changes that create
burdens greater than those imposed by
existing rules.
We note that the OCC has taken
several considerations into account in
integrating the national bank and
Federal savings association rules. As
stated in the preamble to the proposal,
the key objective of this rulemaking is
to integrate the national bank and
Federal savings association rules in a
way that promotes fairness in
supervision, reduces regulatory
duplication, eliminates unnecessary
burden consistent with safety and
soundness, and creates efficiencies for
both national banks and savings
associations, as well as the OCC. The
final rule reflects a balance of these
considerations.
In addition, this commenter stated
that the OCC should have conducted
industry outreach in advance of
proposing the integration of national
bank and Federal savings association
licensing rules and should create a plan
for outreach and the education of
institutions on the proposed changes
going forward. We note that we do
intend to engage in efforts to educate the
industry on the final rule, including
discussing these changes in meetings
with bankers, trade groups, and other
interested parties, as appropriate, and
providing summaries of the changes on
the OCC’s Internet Web page,
www.occ.gov. In addition, we note that
OCC staff is available to provide
assistance to institutions planning a
filing under the revised rules, as
needed. Furthermore, the Comptroller’s
PO 00000
Frm 00004
Fmt 4701
Sfmt 4700
Licensing Manual provides applicants
with more detailed explanations of the
requirements and procedures for
licensing filings with the OCC. The OCC
is in the process of revising the
Comptroller’s Licensing Manual to
reflect the changes made by this final
rule. We will post the individual
booklets of the Manual to the OCC Web
site as they are finalized.
Another trade association commenter
requested that the OCC provide tiered
regulation that would provide different
treatment for large banks and
community banks. The OCC is
committed to finding ways to reduce
burden on community banks without
negatively affecting the safety and
soundness of those institutions,
including applying less burdensome
regulatory requirements where
permissible and appropriate. However,
we note that tiered regulation based on
asset-size is not always appropriate in
the licensing context because many of
the application requirements are
mandated by statutes that do not
authorize the OCC to differentiate
among institutions based on size or
status as a community bank.
Rules of General Applicability (Part 5,
Subpart A)
Twelve CFR part 5, subpart A, and 12
CFR part 116 set forth the OCC’s
generally applicable rules and
procedures for processing filings 9
related to corporate activities and
transactions of national banks and
Federal savings associations. Both sets
of regulations include filing
requirements and explain where and
how to file. We believe that it is more
efficient to have a single filing process
for national banks and Federal savings
associations, where possible. As
proposed, this final rule amends subpart
A to apply to both national banks and
Federal savings associations, to make
additional substantive and technical
changes to subpart A, and to remove
part 116 in its entirety.
Section 5.2 Rules of General
Applicability. Current rules differ with
respect to the scope and applicability of
the generally applicable licensing
procedures for national banks and
Federal savings associations. The
national bank rule at 12 CFR 5.2(a)
states that the subpart A procedures
9 Current rules use slightly different terminology
for national banks and Federal savings associations.
Under 12 CFR 5.3(i), a ‘‘filing’’ is an application or
notice submitted under part 5. Twelve CFR 116.1(a)
uses the word ‘‘application’’ to mean an
application, notice, or filing related to a Federal
savings association. In this preamble, when it is not
necessary to distinguish among the three, we use
the word ‘‘filing’’ to refer to an application, notice,
or other filing.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
apply to all part 5 filings, unless
otherwise stated.10 Section 5.2(b) states
that the OCC may adopt materially
different procedures if it provides notice
to affected parties. In contrast, the
Federal savings association rule at
§ 116.1 states that the part 116 prefiling
and filing procedures and the rules for
OCC review apply to all required filings
related to Federal savings associations,
but that the publication requirements
and the comment and meeting
procedures apply only when an OCC
regulation specifically incorporates
these procedures or the OCC otherwise
requires. Section 116.1(b) also specifies
that part 116 does not apply to filings
related to transactions under sections
13(c) or (k) of the Federal Deposit
Insurance Act (FDI Act); 11 certain final
agency action requests; certain requests
related to litigation, enforcement
proceedings, or supervisory directives
or agreements; or applications filed
under an OCC regulation that prescribes
other application processing procedures
and time frames.
We proposed to apply all subpart A
procedures to all part 5 OCC filings,
unless the substantive rule specifically
exempts the filing or the OCC states
otherwise. We received no comments on
this provision and adopt the procedures
as proposed. This change creates more
parity for national banks and Federal
savings associations when filing an
application for activities and
transactions addressed in part 5.
Section 5.2(c) also states that the
Comptroller’s Licensing Manual
provides additional filing information
and is available on-line and, for a fee,
in print. We proposed to revise this
provision to state only that the Manual
is available on-line. This proposed
revision reflected the OCC’s decision to
stop printing the Manual in hard copy,
to reduce paper consumption and to
ensure that the public receives only the
most up-to-date information. The OCC
also is in the process of updating the
Manual, as well as filing forms, to
contain information on both national
bank and Federal savings association
filings. As indicated earlier in this
preamble discussion, we are updating
our electronic filing system so that a
single system will receive filings from
both national banks and Federal savings
associations.
Additionally, § 5.2(d) states that the
OCC may permit electronic filing for
any class of filings. In order to reflect
10 Certain substantive activity or transaction rules
in part 5 specify that one or more of the procedures
in subpart A do not apply. In some cases, the rule
specifies other procedures.
11 12 U.S.C. 1823(c) and (k).
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
the agency’s move toward the more
efficient and less costly electronic
filings, we proposed to revise this
provision to state that the OCC
encourages all filings to be made
electronically. We received one
comment on the § 5.2 filing procedures,
which requested that the OCC make
electronic submission available for all
forms and reporting requirements.
Currently, certain OCC licensing forms
can be filled and submitted
electronically, e.g., branch
establishment. Furthermore, the
modifications the OCC is currently
making to its electronic filing system, as
discussed above, will permit national
banks and Federal savings associations
to submit all filings electronically. No
changes are needed to our proposed rule
to incorporate this comment, and we
therefore adopt § 5.2(d) as proposed.
Section 5.3 Definitions. Section 5.3
contains definitions of terms used
throughout part 5. We proposed to
amend many of these definitions so that
they would apply to both national bank
and Federal savings association filings
in part 5. For example, we proposed to
amend the definition of ‘‘capital and
surplus’’ to include reference to Federal
savings associations.12
The OCC also proposed to amend the
definition of ‘‘eligible bank’’ in § 5.3(g)
to add the term ‘‘eligible savings
associations.’’ Currently, an ‘‘eligible
bank’’ is a national bank that (1) is well
capitalized under the OCC’s Prompt
Corrective Action (PCA) regulations, (2)
has a composite rating of 1 or 2 under
the Uniform Financial Institutions
Rating System (CAMELS), (3) has an
‘‘Outstanding’’ or ‘‘Satisfactory’’
Community Reinvestment Act (CRA)
rating, and (4) is not subject to a cease
and desist order, consent order, formal
written agreement, or PCA directive, or,
if it is, the OCC has informed the bank
that it may nonetheless be treated as an
‘‘eligible bank.’’ Under certain rules in
part 5, an eligible bank may receive
expedited review of a filing in the
manner set out in the rule. Section
5.13(a)(2) sets out additional
information about the expedited review
process.
Part 116 also has an expedited review
process for certain filings. Specifically,
§ 116.5 provides that a Federal savings
association filing will receive expedited
treatment unless: (1) It has a composite
or compliance rating below 2 or a CRA
12 We note that the OCC issued a final rule on
October 11, 2013 that, among other things,
integrates the OCC’s national bank and Federal
savings association capital rules. See 78 FR 62018.
The OCC issued an interim final rule on Feb. 28,
2014, that amends the OCC’s rules, including part
5, to reflect this integration. 79 FR 11300.
PO 00000
Frm 00005
Fmt 4701
Sfmt 4700
28349
rating of ‘‘Needs to Improve’’ or
‘‘Substantial Noncompliance,’’ (2) it
fails any part 3 capital requirement, as
applicable, and has been notified that it
is in troubled condition,13 (3) it does not
have a composite, compliance, or CRA
rating, or (4) the applicable regulation
does not specifically state that
expedited treatment is available.
We proposed to amend § 5.3(g) by
defining ‘‘eligible bank or eligible
savings association’’ (instead of ‘‘eligible
bank’’) and by adding an OCC
compliance rating of 1 or 2 to the
eligibility requirements for all
institutions. As indicated in the
preamble to the proposed rule, the OCC
believes that a bank’s compliance with
consumer-related statutes and
regulations should be a factor in
determining whether a bank may qualify
for expedited treatment. In addition, we
note that, because a Federal savings
association’s compliance rating is
included in part 116 as one of the
criteria for expedited review, the
addition of this rating to § 5.3(g) is a
change for national banks, but not for
Federal savings associations. However,
as explained in greater detail below,
because § 5.13(a)(2)(i) permits the OCC
to remove a filing from expedited
review if it raises certain issues,
including compliance concerns,14 this is
not a significant change for national
banks. We are making one technical
clarification to this provision, however.
We are replacing the reference to OCC
compliance rating with consumer
compliance rating under the Uniform
Interagency Consumer Compliance
Rating System, which is the more
accurate name for this rating.
Also, the proposal clarified that the
CRA rating component of ‘‘eligible bank
or eligible savings association’’ applies
only if the CRA is applicable to the
institution. We proposed this change
because some limited purpose banks,
such as trust banks, are not subject to
the CRA.
We received one comment on
proposed § 5.3(g). This commenter
stated that adding a compliance rating
as part of the eligibility requirement is
redundant because it is already
included in the CAMELS composite
rating. However, while compliance is a
factor in the management component of
the CAMELS rating, the compliance
rating referred to by the commenter, and
in our proposed rule, is a separate
assessment from the CAMELS rating,
13 ‘‘Troubled condition’’ for this purpose is
currently defined at 12 CFR 163.555.
14 In addition, § 5.2(b) provides the OCC with the
authority to make exceptions for particular filings,
where appropriate.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28350
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
with different objectives and assessment
factors. This commenter also stated that
adding a compliance rating component
to the expedited review process would
create no greater certainty for national
banks regarding eligibility for expedited
review because the OCC would still
have the discretion to remove filings
from expedited review. The OCC
disagrees. As indicated above, the OCC
may remove a filing from expedited
review if it raises compliance concerns.
Because banks would know prior to
applying for expedited processing
whether or not their consumer
compliance rating would prevent them
from qualifying for such treatment, we
believe that this change would provide
more certainty regarding a bank’s
eligibility for expedited review before it
begins that process.
For these reasons, the OCC is
adopting the amendment to § 5.3(g) as
proposed, with the technical
clarification to the name of the
compliance rating, discussed above.
We note that, with respect to Federal
savings associations, there may be
changes for some filings because the
criteria in §§ 5.3 and 116.5 are not
identical. Under the current rules, the
two standards are similar in that they
both require a composite CAMELS
rating of 1 or 2 and a CRA rating of
outstanding or satisfactory. In addition,
if an institution has not received a
rating, it is not eligible for expedited
treatment under either set of current
rules and would remain ineligible under
the final rule. However, under the
current savings association rule both
well and adequately capitalized
institutions are eligible for expedited
treatment. Under the final rule, only
savings associations that are well
capitalized qualify for expedited review.
We proposed to apply the well
capitalized requirement to savings
associations because, in the OCC’s
experience, national banks and Federal
savings associations that are less than
well capitalized are more likely than
other institutions to present supervisory
concerns and, therefore, expedited
review is not necessarily appropriate.
As a result, some savings associations
that qualify for expedited treatment
under the current rule may no longer
qualify for such treatment under the
final rule.
A second difference involves the
supervisory condition of the savings
association. Under the current savings
association rule, the OCC must not have
notified the institution that it is in a
troubled condition while, under the
new rule, an eligible savings association
must not be subject to certain orders,
agreements or directives. Although
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
these standards are slightly different, we
expect the outcomes generally will be
similar and we will monitor for
significant disparities.
The OCC also proposed to amend the
definition of ‘‘eligible depository
institution’’ to address the fact that
either a national bank or a Federal
savings association may enter into a
transaction with an eligible depository
institution. We received no comments
on this provision and adopt it as
proposed.
We also proposed to change the § 5.3
definition of ‘‘notice.’’ Section 5.3(j)
defines a notice as a submission
informing the OCC that a national bank
intends to engage in or has commenced
certain corporate activities or
transactions. Under § 5.3, an
‘‘application’’ is a submission
requesting prior OCC approval to engage
in various corporate activities and
transactions. The two definitions
suggest that a ‘‘notice’’ does not require
OCC approval. However, the rules use
the term ‘‘notice’’ in several different
ways. In some rules, a ‘‘notice’’ is the
same as an application in that the filer
must obtain prior OCC approval before
engaging in the activity or transaction.
In other rules, a ‘‘notice’’ is similar to
an application in that, while the OCC
does not ‘‘approve’’ the filing, the OCC
may disapprove it. In still other rules,
the notice only informs the OCC that the
filer intends to engage in or has engaged
in a transaction. The OCC may review
the notice, but there is no requirement
of prior OCC approval. Some of the
latter notices can be filed after-the-fact.
We proposed to add language to § 5.3(j)
stating that the specific meaning of
notice depends on the context of the
rule in which it is used and may require
the filer to obtain prior OCC approval
before engaging in the activity or
transaction, may provide the OCC with
authority to disapprove the notice, or
may be informational requiring no
official OCC action. We also proposed to
add Federal savings associations to
§ 5.3(j). We received no comments on
this provision and adopt it as proposed.
The OCC also proposed to strike the
§ 5.3 definition of ‘‘appropriate district
office’’ and, instead, to define
‘‘appropriate OCC licensing office’’ as
described at www.occ.gov and
‘‘appropriate OCC supervisory office’’ as
described in subpart A of 12 CFR part
4. We proposed this change to eliminate
confusion caused by the current
definition with respect to where a filing
should be made. The proposal included
conforming changes throughout part 5.
We received no comments on these
proposed changes, and we adopt the
amendments as proposed.
PO 00000
Frm 00006
Fmt 4701
Sfmt 4700
The OCC also proposed to change the
definition of ‘‘short-distance
relocation,’’ a term that is used in
current national bank branch and main
office relocations regulations,15 to
reference both national bank main office
relocations and Federal savings
association home office relocations,
consistent with the changes proposed in
12 CFR 5.40 and discussed elsewhere in
this rulemaking.16
The current ‘‘short-distance
relocation’’ definition in the banking
rule also references whether a branch is
located within a ‘‘central city of a MSA
(metropolitan statistical area).’’ The
Office of Management and Budget
(OMB), which designates MSAs, uses
the term ‘‘principal city’’ in describing
MSAs.17 The current Federal savings
association regulation also uses the term
‘‘principal city.’’ We proposed to amend
the rule for national banks to use the
term ‘‘principal city,’’ to conform with
the MSA terminology used by OMB. We
received no comments on these
proposed changes and adopt the
amendments as proposed.
§ 5.4 Filing required. Section 5.4(a)
directs a depository institution to file an
application or notice with the OCC to
engage in national bank activities and
transactions described in part 5. As a
result of the other changes made by this
final rule to part 5, this directive also
applies to Federal savings associations
with respect to part 5 transactions and
activities. No change is needed to the
regulatory language in § 5.4 to achieve
this result.
We received one comment letter on
the general requirement to file a notice
or application. This commenter
advocated that institutions that are well
capitalized and well managed generally
should be exempt from prior notice or
approval requirements, as in the FRB’s
Regulation Y (12 CFR 225.4(b)(1)) for
purchases and redemptions of holding
company stock for well-capitalized
holding companies that meet certain
requirements. The OCC disagrees with
this comment. In many cases, we are
required to consider approval standards
under the relevant statute, and in these
cases and in others, the review process
serves a significant supervisory purpose.
Furthermore, as described below, our
licensing rules provide expedited
processing for certain highly rated
15 See 12 CFR 5.30(h)(2) and 12 CFR 5.40(d)(5)(ii),
respectively.
16 As explained in the discussion of the changes
to 12 CFR 5.40, the Federal savings association
home office is the equivalent of a national bank
main office.
17 See, e.g., www.ffiec.gov/Geocode/help1.aspx
(referencing MSAs and principal cities).
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
institutions for many filings. We
therefore decline to make this change.
Section 5.4(b) states that forms and
instructions for filings are available in
the Comptroller’s Licensing Manual or
from an OCC district office. We
proposed to revise this section because
the Manual is now only available online. As noted above, the OCC will be
updating this Manual, and it will
contain information on both national
bank and Federal savings association
filings.
Section 5.4(c) states that, at a filer’s
request, the OCC may accept another
agency’s form or filing if it contains
substantially the same information
required by the OCC. Section 116.25(c),
which allows the OCC to waive certain
filing requirements, has been used for
this same purpose with respect to
Federal savings association filings.
Under the final rule, this option remains
available for both national banks and
Federal savings associations.
Section 5.4(d) directs a filer to submit
a filing or other submission to the OCC’s
Director for District Licensing at the
appropriate district office, unless
directed otherwise in a prefiling
communication. For Federal savings
associations, § 116.40(a) directs filings
to the Director for District Licensing at
the appropriate OCC licensing office or
the OCC licensing office at OCC
headquarters. In addition, under
§ 116.40(b), if a filing involves
significant issues of law or policy, or if
the applicable regulation or form so
directs, the applicant must also file
copies at the OCC headquarters
licensing office.
We proposed to change § 5.4(d) to
direct that applicants address part 5
filings and related submissions to the
appropriate OCC licensing or
appropriate OCC supervisory office
(unless the OCC advises otherwise
through a prefiling communication) and
to state that the relevant addresses are
on the OCC’s Internet Web page,
www.occ.gov.
Furthermore, the OCC’s current rules
do not specify how many copies an
applicant must file with the OCC. This
information generally is stated on the
form itself or in the Comptroller’s
Licensing Manual. In contrast,
§ 116.40(a) states that Federal savings
association filers must submit to the
appropriate licensing office or the OCC
licensing office at headquarters the
original form plus the number of copies
specified on the application. If the
number of copies is not specified there,
§ 116.40(a) directs applicants to submit
the original plus two copies. We
proposed to remove this requirement
from the regulation for Federal savings
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
associations and, instead, direct Federal
savings association filers to consult the
appropriate form and the Comptroller’s
Licensing Manual for information on the
number of required copies.
Section 5.4(e) permits an applicant to
incorporate by reference information
contained in another OCC application or
filing, provided that the material (1) is
attached to the application, (2) is
current, and (3) is responsive to the
requested information. The filing must
clearly indicate that the information is
incorporated and include a crossreference to the incorporated
information. With respect to Federal
savings association filings, § 116.25(c),
which allows the OCC to waive certain
filing requirements, is currently used to
allow incorporation by reference.
Moreover, the Federal savings
association filing forms themselves
typically provide for incorporating by
reference other documents. We
proposed to apply § 5.4(e) to all filings
with the OCC, without any change to
the regulatory language and with no
material change to affected institutions
or persons.
Finally, § 116.15(b)(2) encourages all
applicants to contact the appropriate
OCC licensing office to determine
whether the applicant must attend a
prefiling meeting or whether the
submission of a draft business plan or
other information would expedite the
application review process. Section
116.20 describes the required contents
of a draft business plan.18 In contrast,
part 5, subpart A does not include rules
on prefiling meetings, although other
rules in part 5 may address these
meetings,19 and the OCC may request
such a meeting on a case-by-case basis
under § 5.2(b). Subpart A also does not
address the submission of business
plans to the OCC.
The OCC has found that prefiling
meetings, as well as the submission of
business plans or other information
before such meetings, often result in a
more efficient review process.
Accordingly, we proposed to revise
subpart A by adding a new § 5.4(f) that
encourages application filers to contact
the OCC to determine the need for a
prefiling meeting, regardless of whether
a prefiling meeting is specifically
required by another regulation. This
new provision also states that the OCC
18 Certain Federal savings association activity and
transaction rules also address these meetings. See,
e.g., 12 CFR 116.15(a)(1) (discussing prefiling
meetings when organizing a Federal savings
association).
19 See, e.g., 12 CFR 5.20(i) (discussing prefiling
meetings when organizing a national bank); and 12
CFR 5.24(d)(2) (discussing prefiling meetings when
converting to a national bank).
PO 00000
Frm 00007
Fmt 4701
Sfmt 4700
28351
will decide on a case-by-case basis
whether a meeting is necessary and that
the prior submission of a draft business
plan or other relevant information may
expedite the process. Unlike part 116,
however, the new provision does not
specify the information to include in a
draft business plan because that level of
detail is better handled in the
Comptroller’s Licensing Manual.
We received no specific public
comments on these proposed changes to
§ 5.4. However, one commenter at the
Los Angeles EGRPRA outreach meeting
advocated the use of prefiling meetings
for both the agency and the organizers.
We are adopting the amendments as
proposed.
Section 5.5 Filing fees. Section 5.5
states that an applicant shall submit
filing fees in the form of a check made
payable to the OCC. The rule also states
that the OCC publishes a fee schedule
annually and does not generally refund
filing fees. Section 116.45(a)(3)
addresses the payment of Federal
savings association filings fees, directing
applicants to submit fees to the
appropriate OCC licensing office and
permitting applicants to pay fees by
check, money order, cashier’s check, or
wire transfer.
We proposed to apply § 5.5 to all fees
paid to the OCC and to revise § 5.5 to
state that fees may be paid by check,
money order, cashier’s check, or wire
transfer. This statement is consistent
with both the current Federal savings
association rule and the OCC’s ability to
accept these forms of payment from all
filers. The proposed section also states
that additional filing fee information,
including where to submit the fee, can
be found in the Comptroller’s Licensing
Manual. Finally, as a technical
amendment, we proposed to remove the
word ‘‘annually’’ from the § 5.5
description of when the OCC publishes
a fee schedule, to clarify that, as stated
in 12 CFR 8.8, the OCC may publish an
interim or amended filing fee schedule,
in addition to its annual publication.
We received no public comments on
the proposed § 5.5 amendments and
adopt these amendments as proposed.
Section 5.7 Investigations. Section 5.7
states that the OCC may examine or
investigate and evaluate facts related to
a filing to the extent necessary to reach
an informed decision. Section 116.230
has a narrower scope and time frame,
providing that the OCC may conduct an
eligibility examination at any time
before it deems an application complete.
We proposed to apply § 5.7 to all filings
received by the OCC, including those
related to Federal savings associations,
because the OCC believes that the more
flexible approach in § 5.7 is preferable.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28352
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Section 5.7 also states that, as
described in 12 CFR 8.6, the OCC has
the authority to assess fees for special
examinations and investigations.
Section 8.6 is currently applicable to
both national banks and Federal savings
associations and related filings, as a
result of the July 21, 2011 final rule,20
discussed above. As a result, the
application of § 5.7 to Federal savings
association filings is a technical change
only.
We received no public comments on
the proposed § 5.7 amendments, and
adopt them as proposed.
Section 5.8 Public notice. Under
§ 5.8(a), on the date of filing or as soon
as practicable before or after filing, a
national bank applicant shall publish a
public notice in a general circulation
newspaper in the community in which
the applicant proposes to engage in
business. The rules do not specify the
language in which the applicant must
publish the notice.
Under § 116.60, a Federal savings
association applicant must publish
notice no earlier than seven days before,
and no later than the date of, the filing.
Under § 116.80, the applicant must
publish this notice in an Englishlanguage newspaper unless the OCC
determines that the primary language of
a significant number of adult residents
of the community is not English, in
which case the agency may require the
applicant to publish simultaneously one
or more additional notices in the
appropriate language or languages.
We proposed to apply § 5.8(a) to all
applicants, and we are adopting the
amendments as proposed. As a result,
Federal savings associations are no
longer required to publish a public
notice within the seven days before the
filing date but may publish as soon as
practicable before or after filing, unless
otherwise required.21 This change
provides Federal savings association
filers with the same flexibility that
national bank filers have on when to
publish a public notice while still
providing the public with timely notice.
In addition, final § 5.8(a) includes the
requirement from § 116.80 to publish
notices in English and, if the OCC
determines it is necessary, also in other
languages. This change further ensures
that interested persons have meaningful
access to the § 5.8(a) notice.
Section 5.8(b) now states that a public
notice must include: (1) A statement
that a filing is being made, (2) the date
20 76
FR 43549.
activities and transactions are exempt
from the § 5.8 notice requirements and subject to
other notice requirements. See, e.g., 12 CFR 5.50(g)
(notice of change in bank control).
21 Certain
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
of the filing, (3) the applicant’s name,
(4) the subject matter of the filing, (5) a
statement that the public may submit
comments to the OCC and where such
comments should be sent, (6) the
comment period closing date, and (7)
any other information that the OCC
requires. Section 116.55 requires
similar, but not identical, information to
be included in a public notice.
The OCC proposed to revise § 5.8(b) to
include Federal savings associations
and to add some requirements to the
notice included in § 116.55. We did not
receive any comments on these
proposed changes and are adopting the
amendments as proposed. As a result, in
addition to what § 5.8(b) currently
requires, a public notice related to a
national bank filing must also include:
(1) The name of the institution that is
the subject of the filing, (2) a statement
that the public portion of the filing is
available on request, and (3) the address
of the applicant. The public notice also
must state that the public may submit
comments to the appropriate OCC
licensing office and provide the address
of this office. A public notice related to
a Federal savings association filing, in
addition to the information currently
required under § 116.55, also must
include a specific statement that a filing
is being made and the date of the filing.
The OCC believes that new § 5.8(b) will
provide the public with the full range of
helpful information and will treat all
part 5 filings consistently, while adding
little additional burden for filers. We
also are adopting other proposed minor
technical changes to § 5.8(b).
Section 5.8(c) currently requires a
filer to confirm that the § 5.8(a) notice
has been published by delivering to the
OCC a statement of the date of
publication, the name and address of
the paper in which notice was
published, and a copy of the notice.
Federal savings association filers are
required to do the same, although this
requirement is set forth on the
application itself and not included in
the regulatory text. The OCC is adopting
the proposal to apply § 5.8(c) to both
national bank and Federal savings
association filings pursuant to part 5.
Section 5.8(d) currently states that the
OCC may consider more than one
transaction, or a series of transactions,
to be a single filing for purposes of the
publication requirements of this section.
When filing a single public notice for
multiple transactions, the filer shall
explain in the notice how the
transactions are related. Although this is
not specifically permitted under part
116, it has been an accepted practice for
Federal savings association filings. No
changes to § 5.8(d) are necessary for it
PO 00000
Frm 00008
Fmt 4701
Sfmt 4700
to apply to a Federal savings association
filing. Under this rulemaking, both
national banks and Federal savings
associations may continue to engage in
this practice, which eliminates
unnecessary publications while
ensuring that the public’s need for
notice is met.
Section 5.8(f) allows the OCC to
require or give public notice and request
comment on any filing and in any
manner that it determines is appropriate
for a particular filing. There is no
equivalent provision in part 116. The
OCC is adopting the proposal to apply
this provision to both national banks
and Federal savings associations.
In addition, § 116.240(b) provides
that, prior to the end of the applicable
review period, if the OCC determines
that an issue of law or change in
circumstances has arisen that will
substantially affect an application, it
may require an applicant to publish,
among other things, a new public
notice. Although no specific national
bank rule provides for this result, the
OCC has a similar practice for national
bank filings. In order to codify and
clarify this practice, the OCC proposed
to add a new § 5.8(g) that states that the
OCC, at its discretion, may require an
applicant to publish a new public notice
if: (1) The applicant submits either a
revised filing or new or additional
information related to a filing, (2) there
is a major issue of law or a change in
circumstances that arises after a filing,
or (3) the agency determines that a new
public notice is appropriate. This
provision does not represent a material
change for either national bank or
Federal savings association filers. The
OCC did not receive any comments on
this change, and we are adopting the
amendment as proposed.
Section 5.9 Public availability.
Section 5.9 addresses access to the
public portion of a filing and the
confidential treatment that may be
provided to certain information in a
filing. Specifically, § 5.9(a) states that
the OCC will provide a copy of the
public portion of a pending filing in
response to a written request made to
the appropriate district office. A person
may submit a written request to the
OCC’s Communication’s Division for a
copy of the public portion of a decided
or closed application. In either case, the
OCC may impose a fee for the copy.
Section 5.9(b) explains that a public file
consists of the portions of the filing,
supporting data, supplementary
information, and information submitted
by interested persons to the extent that
these items have not been afforded
confidential treatment.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Section 5.9(c) addresses the
confidential treatment of information
included in a filing, explaining both that
an applicant and an interested person
submitting information may request that
specific information be treated as
confidential under the Freedom of
Information Act (FOIA) 22 and how to
make this request. The provision also
states that if the OCC does not consider
the information to be confidential, the
agency may include that information in
the public portion of a filing after
providing notice to the submitter. In
addition, it permits the OCC to
determine, on its own initiative, that
certain information should be treated as
confidential and to withhold that
information from the public file.
Section 116.35 addresses the public
and confidential aspects of a Federal
savings association filing. Paragraph (a)
states that the OCC generally makes part
116 submissions available to the public
but may keep portions confidential.
Section 116.35(b) provides that an
applicant may request confidential
treatment of certain portions of a filing
and explains how to make this request.
It also states that the OCC will not treat
as confidential the portion of a filing
that describes how an applicant plans to
meet its CRA objectives and notes that
the agency will advise an applicant
before it makes information designated
as confidential available to the public.
We proposed to apply § 5.9 to all
filings made pursuant to part 5, as
revised. We received no public
comments on the proposed § 5.9
amendments, and are adopting them as
proposed. This revision is not intended
to result in material changes for either
national bank or Federal savings
association filings. Although § 5.9 does
not explicitly address the OCC’s
treatment of filing information regarding
how a filer plans to meet its CRA
objectives, the OCC does not treat this
information as confidential.
We are also adopting other minor
proposed changes to § 5.9(a) and (c),
including to which OCC office a request
to obtain the public portion of a decided
or closed application or to withhold
information from a public file should be
submitted.
Section 5.10 Comments. Section
5.10(a) provides that any person may
submit a comment to the appropriate
district office during the comment
period. Section 5.10(b)(1) provides that,
unless otherwise stated, the comment
period runs for 30 days after publication
of the § 5.8(a) public notice. Under
§ 5.10(b)(2), the OCC may extend the
comment period if an applicant either
22 5
U.S.C. 552.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
fails to file all required publicly
available information in a timely
manner or makes a request for
confidential treatment that is not
granted by the OCC and that delays the
public availability of information. The
comment period also may be extended
to develop factual information needed
to consider the application or if the OCC
determines that other extenuating
circumstances exist. In addition, the
rule provides that the OCC may give an
applicant an opportunity to respond to
comments received during the comment
period.
The Federal savings association rules
are much more detailed, particularly
with respect to application comments.
Section 116.110 provides that any
person may comment on a filing and
§ 116.120(a) states that a comment
should include all relevant facts
supporting the commenter’s position. It
further provides that a comment should
address at least one reason why the OCC
may deny the application under
relevant law, recite facts and data
supporting these reasons, and discuss
how the approval could harm the
commenter or any community. Under
§ 116.120(b), any request for a meeting
must be included with the comment.
Section 116.130 states that a commenter
must file with the appropriate OCC
licensing office and simultaneously
must provide a copy of any written
comment to the applicant. Under
§ 116.140, a commenter must file a
comment within 30 days after
publication of the initial public notice
and further states that the OCC may
consider later filed comments if the
comment will assist in the disposition
of the application.
The OCC has found that the less
detailed and prescriptive approach in
the current part 5 rules works well for
both filers and the public and proposed
to apply § 5.10 to all filings received by
the OCC, with one clarification. We
received no public comments on the
proposed § 5.10 amendments and are
adopting them as proposed. Therefore,
the final rule will result in two changes
with respect to Federal savings
association filings. First, the amended
rule does not specify what information
to include in a comment. Second, a
commenter on a Federal savings
association filing will not be required to
provide a copy of the comment to the
Federal savings association, although
the commenter may still do so if
preferred. Instead, the Federal savings
association will obtain a copy of the
public portion of any comment from the
OCC. The rule clarifies that comments
relating to either a national bank or a
Federal savings association should be
PO 00000
Frm 00009
Fmt 4701
Sfmt 4700
28353
submitted to the appropriate OCC
licensing office. This is consistent with
the current Federal savings association
rule.
The OCC also is adopting other
proposed changes to § 5.10 that affect
both national banks and Federal savings
associations. First, as revised,
§ 5.10(b)(1) provides that the OCC may
require a new comment period of up to
30 days if a new public notice is
required under proposed § 5.8(g). This
change is necessary to provide
interested parties with an opportunity to
comment when a new notice is
published, which, as explained in the
discussion of proposed § 5.8(g), may be
required in certain circumstances.
Finally, the OCC is adopting a minor
change to § 5.10(b)(2) to clarify that the
OCC can extend any comment period,
either an original or a new comment
period. We did not receive any
comments on these provisions.
Section 5.11 Hearings and other
meetings. Pursuant to § 5.11(a), any
person can request a hearing on a filing
by submitting to the appropriate district
office a description of the issues or facts
to be presented and explaining why a
written submission is not adequate. The
requestor must simultaneously provide
the request to the applicant. As noted
above, under § 116.120(b), the person
must include a request for a hearing
(referred to as a meeting in this section)
in the comment and explain why
written submissions are insufficient.
Also under § 116.130, the person must
file the comment, including the meeting
request with the appropriate OCC
licensing office, with a copy to the
applicant.
We proposed to apply § 5.11(a) to all
OCC hearing requests with respect to
both national banks and Federal savings
associations. As with the other proposed
changes to § 5.11, the OCC did not
receive any comments related to
§ 5.11(a) and we are adopting it as
proposed, with one technical change. As
a result, pursuant to the new § 5.11(a),
a person seeking a hearing on a filing
pertaining to a Federal savings
association will no longer be required to
request a hearing as part of a comment
submission, and a hearing request
would be submitted to the appropriate
OCC office. This revision provides
added flexibility to those requesting
hearings related to Federal savings
association filings.
Section 5.11(b) states that the OCC
may grant or deny a hearing request,
limit the issues to those it deems
relevant or material, and order a hearing
in the public’s interest. Under § 5.11(c),
if the OCC denies a hearing request, the
agency will notify the requestor of the
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28354
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
reason for the denial. Sections
116.170(a) and (b) are substantively the
same as § 5.11(b) and (c). The OCC is
adopting the proposal to apply § 5.11(b)
and (c) to all hearings with no
substantive change for affected parties.
Section 5.11(d) describes the OCC’s
pre-hearing procedures. Specifically,
under § 5.11(d)(1), if the OCC decides to
hold a hearing, it sends a Notice of
Hearing to the applicant, the person
requesting the hearing, and anyone else
who requests a copy. The Notice states
the subject and date of the filing, the
time and place of the hearing, and the
issues to be addressed at the hearing.
Section 5.11(d)(2) states that the OCC
appoints a presiding officer to conduct
a hearing.
There are no equivalent provisions in
the Federal savings association
regulations. Instead, § 116.170(a) states
that the OCC may either grant a meeting
request or hold one on its own
initiative, and it may limit the issues
considered at a meeting to those it
deems relevant or material. The OCC is
adopting the proposal to apply
§ 5.11(d)(1) to all part 5 OCC hearings so
that all interested parties are notified of
an upcoming hearing when it is
scheduled. As proposed, the rule would
have amended § 5.11(d)(1) to state that
the OCC may limit the issues considered
at a hearing to those it determines are
relevant or material. We are removing
this statement in § 5.11(d)(1) in the final
rule because it is duplicative of the
language in § 5.11(b), and therefore
unnecessary.
Section 5.11(e) states that a person
who wishes to appear at a hearing shall
notify the appropriate district office
within 10 days after the OCC issues a
Notice of Hearing. It also requires, at
least five days before the hearing, that
each participant submit the names of
witnesses and one copy of each exhibit
to be presented, to the OCC, the
applicant, and any other person the
OCC requires. There are no equivalent
rules for Federal savings associations.
The OCC is adopting the proposal to
apply § 5.11(e) to all persons who wish
to appear at an OCC hearing. Section
5.11(e) allows the OCC and other
persons to prepare for a hearing and
results in a more efficient and
productive hearing.
Section 5.11(f) states that the OCC
arranges for a hearing transcript and
states that the person requesting a
hearing generally bears the cost of one
copy of the transcript. There is no
equivalent part 116 provision. The OCC
is adopting the proposal to apply this
provision to all OCC hearings and also
to replace the ‘‘generally bears’’ phrase
with ‘‘may be required to bear.’’ This
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
change reflects the fact that the OCC
generally has not passed this cost onto
a person who requests a hearing but
may find it appropriate to do so in
certain cases. Although this is a
technical change with respect to
national bank filers, a person requesting
a hearing on a filing pertaining to a
Federal savings association should be
aware that, under the amended rule, a
hearing transcript will be prepared and
that the person may be required to pay
its cost.
Section 5.11(g) explains how a part 5
hearing is conducted, providing
generally that the applicant and
participants may make opening
statements and present witnesses,
material, and data. It also requires a
copy of any documentary material to be
provided to the OCC, the applicant, and
each participant. In contrast, the
§ 116.180 procedures for Federal savings
association hearings provide that the
OCC may conduct a meeting in any
format, including telephone
conferences, face-to-face meetings, or
formal meetings. In addition, both
§§ 5.11(g) and 116.180 provide that the
Administrative Procedure Act, the
Federal Rules of Evidence, the Federal
Rules of Civil Procedure, and the OCC’s
relevant rules of practice and procedure
(12 CFR part 19 and part 109,
respectively) do not apply to these
hearings. The OCC is adopting the
proposal to apply § 5.11(g) to all subpart
A hearings.
Under § 5.11(h), at an applicant’s or
participant’s request, the OCC may keep
the hearing record open for up to 14
days following its receipt of the hearing
transcript. The agency resumes
processing the filing after the record
closes. Section 116.190 states that if the
OCC conducts a meeting, it may
suspend the applicable filing time
frames. If suspended, the time period
will resume when the OCC determines
that the record has been sufficiently
developed to support a determination
on the issue(s) considered at the
meeting.
The proposal would apply § 5.11(h) to
all filings on which a hearing is held.
The OCC is adopting this provision in
the final rule unchanged, and as a
result, all applicants, commenters, and
other interested persons should be
aware that the hearing record may be
kept open for up to 14 days following
receipt of the transcript, after which the
OCC will resume processing the filing.
The OCC believes that the public and
affected parties benefit from knowing
how long the record will remain open
following a hearing.
Finally, § 5.11(i) addresses meetings
other than hearings that the OCC may
PO 00000
Frm 00010
Fmt 4701
Sfmt 4700
hold in connection with an application.
Section 5.11(i)(1) states that the OCC
may hold a public meeting either in
response to a written request received
during the comment period or on its
own initiative. These public meetings
are arranged and overseen by a
presiding officer. Alternatively, under
§ 5.11(i)(2), the OCC may arrange a
private meeting with an applicant or
other interested parties to clarify,
narrow, and resolve the issues. As noted
above, § 116.180 states that the OCC
may conduct meetings related to Federal
savings association filings in any format.
As proposed, the OCC is adding
paragraph (i)(3) to § 5.11, stating that the
OCC may limit the issues considered at
a meeting to those it determines to be
relevant or material. This provision is
substantively the same as the provision
added to § 5.11(d) (regarding hearings)
and permits the agency to ensure that
meetings are meaningful and efficient.
The OCC also is adopting minor,
clarifying changes to § 5.11(i).
The final rule adds a new paragraph
§ 5.11(i)(4) that states that the OCC may
conduct a meeting in any format that it
determines is appropriate, including a
telephone conference, a face-to-face
meeting, or a more formal meeting. This
new provision, which mirrors
§ 116.180(a), does not change what is
permissible for the OCC, but rather
highlights the options available to the
agency. The proposed rule included this
provision in § 5.11(g)(4). However, as
the subject matter of paragraph (g) is
hearings, this provision more
appropriately belongs in paragraph (i),
which contains the rules for meetings.
Section 116.185 states that the OCC
will not approve or deny an application
at a meeting. Although no similar
language is included in either current or
revised § 5.11, it is the OCC’s practice
not to decide on applications at hearings
or other meetings. While hearings and
meetings provide an opportunity for
interested persons to share information
with the OCC, the OCC considers
information obtained at a hearing
together with other materials and
information pertaining to the
application before rendering a decision.
Decisions on filings are discussed in
greater detail below.
In addition, § 116.190 provides that
the OCC may suspend the application
processing time frames if it decides to
conduct a meeting. Although the part 5,
subpart A rules do not state this
directly, § 5.10(b)(2) allows the OCC to
extend a comment period when
necessary, § 5.11(h) allows the OCC to
keep a hearing record open for 14 days
after a hearing and resume processing
the filing only when the record closes,
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
and revised § 5.13(a)(2) allows the OCC
to extend the expedited review period
in certain circumstances or remove a
filing from expedited review when
necessary. These provisions provide the
OCC with the tools it needs to adjust the
processing time frames when
appropriate, while balancing the need
for interested persons to have a
predictable set of procedures on which
to rely.
Section 5.12 Computation of time.
The OCC computes the relevant time
periods related to a national bank filing
by including the day of the act or event
(e.g., the date an application is received
by the OCC) and the last day of a time
period even if it is a Saturday, Sunday,
or legal holiday. Under § 116.10, for a
Federal savings association filing, the
OCC does not include the day of the act
or the event that commences the time
period. When the last day is a Saturday,
Sunday or Federal holiday, the time
period runs until the end of the next day
that is not a Saturday, Sunday or
Federal holiday.
A single set of time computation rules
for OCC filings would promote
efficiency. Accordingly, we proposed to
change § 5.12 to mirror the current
Federal savings association rule. We
received one comment in support of this
change, and we are adopting the
amendment as proposed. We also note
that revised § 5.12 replaces ‘‘legal
holiday’’ with ‘‘Federal holiday,’’
consistent with the current Federal
savings association rule, to eliminate
confusion when a legal state holiday is
not also a Federal holiday.
Section 5.13 Decisions. Under
§ 5.13(a), the OCC may approve or deny
a national bank filing based on the
OCC’s review and consideration of the
record, including the activities,
resources, or condition of a filer’s
affiliate to the extent relevant. Under
§ 5.13(a)(1), the OCC may impose
conditions on an approval, including to
address significant supervisory, CRA (if
applicable), or compliance concerns.
Section 5.13(a)(2) explains the OCC
expedited review process for filings
concerning ‘‘eligible’’ banks, as defined
in § 5.3. Specifically, these filings are
deemed approved a certain number of
days after the filing date or the close of
the public comment period (or
extension of the comment period under
§ 5.10), unless, prior to this date, the
OCC notifies the filer otherwise. The
number of days after which a particular
filing is deemed approved varies
depending on the activity or transaction
at issue and is set out in the substantive
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
part 5 rule for that particular activity or
transaction.23
Under § 5.13(a)(2)(i), the OCC may
extend the expedited review period for
filings subject to the CRA up to 10 days
if the OCC receives comments
containing certain assertions about the
bank’s CRA performance. Section
5.13(a)(2)(ii) states that the OCC will
remove a filing from expedited review if
a filing or a comment raises a significant
supervisory, CRA (if applicable),
compliance, legal, or policy concern or
issue. The OCC will provide a written
explanation if this removal occurs.
Section 5.13(a)(2)(iii) also states that not
all adverse comments cause the OCC to
extend the expedited review period or
remove a filing from expedited review.
Finally, § 5.13(a)(2)(iv) provides that
if approval of a filing is contingent on
the approval of another filing, or if
multiple requests for approval are
combined in a single application, none
of the filings is deemed approved unless
all of the applications are subject to
expedited review procedures and the
longest time period expires without the
OCC issuing a decision or notifying the
bank that the filings are not eligible for
expedited review.
Filings that are not eligible for, or do
not receive, expedited review are
considered under the standard review
process. The process and timeframes
associated with the standard review
process vary depending on the nature
and circumstances of a filing and are set
forth in the applicable rule.
Under § 5.13(b), the OCC may deny a
filing if a significant supervisory, CRA
(if applicable), compliance, legal, or
policy concern exists or if an applicant
fails to provide the OCC with
information that it requests. Pursuant to
§ 5.13(c), a filing must contain the
information required in the applicable
part 5 rule, as well as any information
the OCC may require. Section 5.13(c)
further provides that the OCC may deem
a filing abandoned if information that is
required or requested is not provided
within a specified time period and may
return a filing it finds to be materially
deficient.
Section 5.13(d) provides that the OCC
will notify a filer and other interested
party (or parties) of the final disposition
of a filing, including a notification
confirming expedited review. If a filing
is denied, the OCC will explain the
reasons for the denial. Under § 5.13(e),
23 For example, § 5.20(j) provides that certain
applications to establish a national bank are
deemed preliminarily approved as of the 15th day
after the close of the public comment period or the
45th day after the filing is received by the OCC,
whichever is later, unless the OCC takes certain
action to remove the filing from expedited review.
PO 00000
Frm 00011
Fmt 4701
Sfmt 4700
28355
the OCC will make a decision public if
it represents new or changed policy or
issues of general interest. In rendering
decisions, the OCC also may elect not to
disclose information that it deems to be
private or confidential.
Section 5.13(f) provides that a filer
can appeal a decision by writing to the
Deputy Comptroller for Licensing or the
OCC Ombudsman (or, in some cases, to
the Chief Counsel). Section § 5.13(g)
provides that when the OCC approves or
conditionally approves a filing, the
agency generally gives the filer a
specified period of time in which to
commence the activity and generally
does not grant extensions.
Finally, § 5.13(h) states that the OCC
can nullify a filing decision if, for
example, it discovers a
misrepresentation or omission in a filing
or supporting material after it renders a
filing decision. A person responsible for
a material misrepresentation or
omission may be subject to various
sanctions, including criminal penalties.
The OCC also may nullify a filing
decision that is contrary to law,
regulation, or OCC policy or that was
granted due to clerical or administrative
error or a material mistake of law or fact.
Pursuant to part 116, a Federal
savings association filing may receive
either expedited treatment or standard
treatment. If a filer is eligible for
expedited treatment, as determined
under § 116.5, it may file its application
in the form of a notice. Pursuant to
§ 116.200, 30 days after filing a notice,
the filer may engage in the proposed
activity or transaction unless the OCC:
(1) Requests additional information; 24
(2) determines that standard treatment is
appropriate; (3) suspends the applicable
time frame under § 116.190; or (4)
disapproves the notice.
Pursuant to § 116.25, an applicant
files a standard application if it is not
eligible for expedited treatment. Under
§ 116.210, within 30 calendar days after
receiving a standard application, the
OCC will: (1) Notify the applicant that
the application is complete and review
will commence; (2) request more
information; or (3) determine that the
application is materially deficient, in
which case the OCC will not process the
filing. If the OCC takes no action, an
application is deemed complete and the
review period begins. Under § 116.270,
this review period is generally 60
calendar days after an application is
complete but may be extended. For
example, under § 116.270(c), the OCC
may extend the review period for up to
24 Section 116.200(a) explains the sequence of
events and timing when the OCC requests
additional information about a notice.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28356
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
30 days for any reason or for as long as
needed if the application presents a
significant issue of law or policy
requiring additional time to resolve. In
either situation, the OCC must provide
a written notification of any extension.
Section 116.280 explains that the OCC
will approve or deny an application
before the end of the applicable review
period and will notify applicants of the
decision. Under § 116.280(b), the
application is approved if the OCC fails
to notify an applicant.
Section 116.220 provides a detailed
explanation of how the OCC will
process an application if the OCC
requests more information to complete a
filing, including the time frames for
taking certain actions. Section
116.240(a) explains that even if an
application is deemed complete under
§ 116.210, the OCC may still require the
filer to provide additional information
to resolve or clarify an issue presented
by the application. If the OCC
determines that a major issue or law or
change of circumstances has arisen, it
may notify the filer that the application
is now incomplete and require a new
public notice to be filed under
§ 116.250. Under § 116.290, an
application that is not approved or
denied within two calendar years of
filing is deemed withdrawn, subject to
certain exceptions.
As is clear, the OCC has two different,
albeit similar, sets of application
processing procedures. In order to gain
the efficiencies inherent in
administering a single set of procedures
and to create parity for OCC-regulated
institutions, we proposed to apply
§ 5.13 to all OCC filings and to amend
§ 5.13, as described below.
The OCC did not receive written
comments on any of the proposed
changes to § 5.13. Commenters at both
the Los Angeles and Dallas EGRPRA
outreach meetings requested that the
OCC make decisions on new charters
and other applications at the district
level instead of in Washington, DC. We
agree with the importance of the
relevant district office in the decisionmaking process, and our current process
involves district level input in
application decisions as well as our
licensing office in Washington. Most
filings are processed by the relevant
district office and typically involve
examination staff familiar with the
applicant. The Comptroller’s Licensing
Manual also encourages applicants to
contact the director for district licensing
at the appropriate OCC district office to
discuss the proposal.25 However, it is
25 See, e.g., the Charters Booklet of the
Comptroller’s Licensing Manual, p. 23.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
also important for the OCC’s
Washington office to be involved in the
applications process in order to address
significant or novel issues, to provide
consistency in OCC decision-making,
and to utilize staff expertise available in
OCC headquarters. For these reasons,
we decline to make any changes to our
rule to reflect this comment.
We therefore are adopting § 5.13 as
proposed.
As a result, Federal savings
association filers will need to determine
whether a filing is eligible for expedited
review under subpart A based on the
§ 5.3(g) definition of ‘‘eligible bank or
eligible savings association.’’ Because,
as explained above, the criteria in §§ 5.3
and 116.5 are substantively similar, the
OCC believes the status of most savings
associations as eligible or not eligible
will not be affected by the requirement
to use the definition in § 5.3, nor does
the OCC anticipate that there will be a
significant difference in the filings that
are eligible for expedited review under
the current rules and the rules as
revised. Furthermore, unlike § 116.200,
part 5, subpart A, does not state the
applicable expedited review time
frames. These time frames are unique to
the type of activity or transaction and
are set out in the relevant part 5 section
detailing that activity or transaction. If
a filing is not eligible for expedited
review, the filer must follow the
standard review procedures set out in
the rules applicable to the particular
activity or transaction at issue.
In addition, the OCC is adopting the
following proposed changes to § 5.13,
which apply to filings related to both
national banks and Federal savings
associations. Specifically, the final rule
adds a statement to the § 5.13(a)
introductory language providing that
when reviewing a filing, the OCC may
consider information available from any
source, including any comments
submitted by interested parties or views
expressed by interested parties at
meetings with the OCC.
With respect to § 5.13(a)(2)
concerning expedited review, the final
rule removes the clause that states that
the OCC grants eligible banks expedited
review within a specified time,
‘‘including any extension of the
comment period granted pursuant to
§ 5.10.’’ This change reflects the fact that
when the OCC grants an extension of
the comment period under § 5.10 a
filing is no longer considered under the
expedited review procedures. The
circumstances that lead to an extended
comment period are generally not
compatible with expedited review.
In addition, as discussed above,
§ 5.13(a)(2)(i) provides that the OCC
PO 00000
Frm 00012
Fmt 4701
Sfmt 4700
may extend the expedited review period
for a filing subject to the CRA for up to
10 days if a comment makes certain
assertions about the CRA and
§ 5.13(a)(2)(ii) provides that the OCC
will remove a filing from expedited
review if the filing presents significant
supervisory, CRA (if applicable),
compliance, legal or policy concerns or
issues. This section also explains what
constitutes a significant CRA concern in
this context.
The final rule combines § 5.13(a)(2)(i)
and (ii) into new § 5.13(a)(2)(i). These
changes simplify § 5.13(a)(2) and are not
intended to have a substantive effect on
expedited review procedures.
Comments and concerns about the CRA
will continue to be given the same
weight. The OCC also is adopting other
proposed minor, technical, or
conforming changes to § 5.13.
Organizing a National Bank or Federal
Savings Association; Federal Savings
Association Charters and Bylaws (§ 5.20,
New § 5.21, New § 5.22)
Overview. Twelve CFR 5.20 sets forth
the requirements and procedures
involved in organizing a de novo
national bank. Corresponding rules
applicable to organizing Federal savings
associations are set forth in various CFR
parts: Part 143 sets forth the
requirements and procedures for
organizing a Federal mutual savings
association; part 144 covers the charter
and bylaws of Federal mutual savings
associations; and part 152 sets forth the
requirements and procedures for
organizing a Federal stock savings
association and also contains the
requirements for the charter and bylaws
of Federal stock savings associations, as
well as related matters, including
shareholders, board of directors, and
officers. In addition, § 163.1 imposes
certain rules concerning a Federal
savings association’s charter and
bylaws.
Many of the procedures organizers
must follow to charter a national bank
or Federal savings association are
substantively similar. The OCC believes
that many of these rules should be
coordinated and harmonized to promote
consistency and equal treatment
between the two types of institutions
and to remove unnecessary regulatory
burden where possible. To accomplish
these goals, the proposed rule amended
§ 5.20 to include Federal savings
associations, added to § 5.20 some
provisions that address the organizing
process currently in parts 143 and 152,
and removed other provisions in part
143, 152, and 163 that address the
organizing process (§§ 143.2 through
143.7, 152.1 and 152.2, and 163.1).
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
The regulations for national banks
and for Federal savings associations
treat the provisions related to
‘‘organizing documents’’ (organization
certificate and articles of association for
national banks, charter for Federal
savings associations, and bylaws)
differently.26 For national banks, there
are several applicable statutes, but few
regulations.27 For Federal savings
associations, there are no statutory
requirements, but §§ 144.1 and 152.3
contain requirements for charters of
Federal mutual savings associations and
Federal stock savings associations,
respectively, and §§ 144.2 and 152.4
contain requirements for the bylaws of
Federal mutual savings associations and
Federal stock savings associations,
respectively. Also, the charter
provisions for Federal mutual savings
associations are substantially different
from national banks and Federal stock
savings associations. These differences
stem from the unique characteristics of
Federal mutual charters, such as the
inability of members to communicate
directly with each other (because
membership is based on the depository
relationship) under § 144.8, the use of
‘‘running proxies,’’ 28 and the potential
that certain charter or bylaw provisions
could later affect a mutual-to-stock
conversion by the association. These
characteristics require greater controls
over changes to the Federal mutual
charter to prevent the inappropriate
transfer of the association’s equity and
to prevent provisions that may impede
a mutual-to-stock conversion. In order
to preserve the enforceability of the
Federal savings association charter and
bylaw requirements and to ensure the
necessary controls unique to the Federal
mutual savings association charter, we
26 It may be helpful to clarify terminology. For
national banks, the term ‘‘charter’’ is used to refer
to the certificate of authority to commence banking
issued by the OCC under 12 U.S.C. 27. A national
bank’s ‘‘articles of association’’ is similar to a
business corporation’s articles of incorporation
setting out the general features of the business’s
organizational structure and purpose. A Federal
savings association’s ‘‘charter’’ issued by the OCC
under 12 U.S.C. 1464(a)(2) is the agency’s
authorization to engage in business as a savings
association, but it also contains provisions
comparable to a national bank’s articles of
association.
27 Additional guidance for national banks is
provided by sample articles and bylaws in the
Comptroller’s Licensing Manual (www.occ.gov/
publications/publications-by-type/licensingmanuals/index-licensing-manuals.html#sd) and by
review of the proposed documents during the
application process.
28 A ‘‘running proxy’’ generally is a proxy
executed by a member of a mutual savings
association, which authorizes directors of the
association to cast the votes the member otherwise
would be authorized to cast, and which, rather than
pertaining to a specific member meeting, is effective
for an indefinite period of time.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
proposed to continue to include
separate provisions concerning a
Federal savings association’s charter
and bylaws.
Specifically, we proposed to amend
12 CFR part 5, subpart B, by: (1)
Revising § 5.20 to apply to both national
banks and Federal savings associations
and to make certain other changes as
described below; (2) adding a new § 5.21
(based on part 144) to specify the
language and requirements for the
Federal mutual savings association
charter, bylaws, and charter
amendments and to require a Federal
mutual savings association to make its
charter and bylaws available to
accountholders; and (3) adding a new
§ 5.22 (based on §§ 152.3 through
152.11) to specify the language and
requirements for the Federal stock
savings association charter, bylaws,
charter amendments, and related
matters. In addition, we proposed to
amend parts 143, 144, 152, and 163 by
rescinding various provisions in those
parts concerning charters and bylaws.
Applying Existing National Bank
Requirements to Federal Savings
Associations. The majority of the
proposed changes to § 5.20 apply
existing requirements for organizing a
national bank to organizing a Federal
savings association by inserting
‘‘Federal savings association’’ where
appropriate. Most of these amendments
result in little or no change to existing
practices concerning an application to
charter a Federal savings association.
However, potential organizers should
carefully review the following
amendments that would change the
current process.
First, based on statute and
longstanding practice, the OCC uses a
two-part approval process for de novo
national bank charters. The OCC will
issue a preliminary approval after an
application is filed, if the OCC
determines it meets the applicable
standards. Once it has received this
approval, the national bank in
organization proceeds to organize, raise
capital, obtain any other regulatory
approvals, and become ready to
commence business. Many of these
steps are not specified in § 5.20 but
instead are provided in the OCC’s
preliminary approval and in the
Charters Booklet of the Comptroller’s
Licensing Manual. The OCC issues a
‘‘final approval’’ and the national bank’s
charter only after all these steps are
concluded, including compliance with
any conditions imposed in the
preliminary approval. Under the current
Federal savings association rule, the
OCC issues only one approval before it
issues the charter but this approval is
PO 00000
Frm 00013
Fmt 4701
Sfmt 4700
28357
subject to the institution completing
various post-approval organizational
steps and other requirements before it
can commence business. These steps
and requirements are specified in
§§ 143.4, 143.5, 143.6, and 152.1(c)
through 152.1(i).
The national bank and Federal
savings association processes in practice
may not be different, but the OCC
believes that use of a formal two-part
approval framework provides more
certainty and reduces the risk of an
institution inadvertently operating
before it has completed all required
steps. Applying the bank rule’s two-step
approval process to savings associations
also enhances consistency between the
chartering application process for
national banks and Federal savings
associations. Therefore, we proposed to
make an application to charter a Federal
savings association subject to the twopart approval process contained in
§ 5.20(i)(5) and to remove §§ 143.4,
143.5, 143.6, and 152.1(c) through
152.1(i). We did not receive any
comments on this change and are
adopting it as proposed.
Second, § 5.20(i)(5)(iv) provides that
preliminary approval expires if the
national bank has not raised the
required capital within 12 months or
has not commenced business within 18
months. Sections 143.5(d) and 152.1(i)
provide that a Federal savings
association’s charter becomes void if
organization is not completed within six
months after approval. The OCC
proposed to amend § 5.20(i)(5)(iv) to
apply the same 12- and 18-month
expiration periods to Federal savings
associations, rather than the six-month
period. We received one comment in
support of this change, and we are
adopting it as proposed.
Third, we proposed to add Federal
savings associations and savings and
loan holding companies to § 5.20(j),
which allows for expedited review of an
application to establish a full-service
national bank filed by a bank holding
company with a lead depository
institution that is an eligible depository
institution. The current regulations for
chartering a de novo Federal savings
association do not have a comparable
expedited review process. Under this
expedited review, the application is
deemed preliminarily approved by the
OCC as of the 15th day after the close
of the public comment period or the
45th day after the filing is received by
the OCC, whichever is later, unless the
OCC notifies the applicant prior to that
date that: (1) The filing is not eligible for
expedited review, (2) the OCC is
extending the review period, or (3) the
OCC has determined the proposed bank
E:\FR\FM\18MYR2.SGM
18MYR2
28358
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
will offer banking services that are
materially different than those provided
by the lead depository institution of the
holding company. We also proposed to
limit the availability of this expedited
review to applications to charter a
national bank or Federal savings
association where the existing lead
depository institution is an eligible
national bank or eligible Federal savings
association. In those cases, the OCC will
have knowledge and experience of the
lead institution’s operations and will be
familiar with the holding company. In
cases where a state institution is the
lead depository institution, the OCC
will not have that knowledge and
experience, and we believe expedited
review would not be appropriate. We
did not receive any comments on these
changes, and are adopting the
amendments as proposed.29
Fourth, the OCC is adopting the
proposal to add Federal savings
associations to § 5.20(k)(3), which
addresses investments in bankers’ banks
and § 5.20(l), which addresses
chartering special purpose institutions.
These provisions reflect authority that
national banks and Federal savings
associations possess. We did not receive
any comments on this change.
Fifth, parts 143, 144, 152, and 163
contain various filing procedural
matters. As discussed above, the OCC is
amending part 5, subpart A, rules of
general applicability, to include filing
rules and procedures for Federal savings
associations for all matters covered by
part 5. Thus, because Federal savings
associations are included in § 5.20 and
new §§ 5.21 and 5.22 are added to part
5, filings related to the organizing
process and to charters and bylaws will
be governed by the filing provisions in
subpart A. The final rule, therefore does
not include the filing procedures
provisions in parts 143, 144, 152, and
163 in the amendments to § 5.20, or in
new §§ 5.21 and 5.22.
Amendments That Specifically Cover
Federal Savings Association Matters.
The OCC proposed to incorporate
certain provisions contained in parts
143 and 152 into § 5.20. Specifically,
with respect to an application to
29 We note that we received comments at the Los
Angeles EGRPRA outreach meeting requesting that
the Agencies shorten their review period for de
novo applications. In general, the OCC review
period is 120 days for independent national banks
and Federal savings associations and 45 to 90 days
for institutions that are part of a holding company.
The OCC believes that this timing is appropriate as
it provides us with sufficient time to complete our
analysis of the application, including the
assessment of proposed management and the
reasonableness of the proposed business plan. We
therefore decline to make any change to this review
period.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
organize a Federal savings association,
section 5(e) of the Home Owners’ Loan
Act (HOLA) 30 requires the OCC to
consider whether: (1) The applicants are
of good character and responsibility; (2)
there is a need for the association in the
community to be served; (3) there is a
reasonable probability of usefulness and
success; and (4) there will be undue
injury to existing local thrift and home
financing institutions. These criteria are
included in §§ 143.2(g)(1) and
152.1(b)(1), and the proposed rule
added them to § 5.20(e). We received
one comment suggesting that the OCC
should no longer consider whether there
is necessity for the Federal savings
association in the community to be
served because this would be
duplicative of other factors the OCC
considers, such as probability of
usefulness and success under
§ 152.1(b)(1)(iii). However, the OCC’s
consideration of whether a ‘‘necessity
exists’’ is required by section 5(e) of the
HOLA. We therefore adopt the
amendments as proposed.
Sections 143.2(g)(2)(i) and
152.1(b)(3)(i) provide that approval of
an application to organize a Federal
mutual or stock savings association,
respectively, is conditioned on OCC
receipt of written confirmation from the
FDIC that accounts will be insured.
Similar requirements appear in
§§ 143.5(c) and 152.1(f) (when a charter
is issued, a Federal savings association,
or a Federal stock savings association,
respectively, must promptly meet all
requirements necessary to obtain FDIC
insurance of its accounts), as well as
§§ 143.5(d) and 152.1(h)(1) (organization
of a Federal savings association, or a
Federal stock savings association,
respectively, is complete when, among
other things, the OCC receives
confirmation of FDIC insurance).
For these reasons, the OCC proposed
in § 5.20(e)(3) to retain the requirement
that all Federal savings associations be
insured by the FDIC. We did not receive
any comments on this proposed change
and adopt the amendment as proposed.
Application of Federal Savings
Association Application Requirements
to National Bank Applications. The
OCC proposed to amend § 5.20 to apply
certain requirements applicable to
Federal savings associations to both
national banks and Federal savings
associations. First, § 143.1(a) prohibits a
Federal savings association from
adopting a title that misrepresents the
nature of the institution or the services
it offers. The OCC believes that
incorporating such a provision in a
regulation is good public policy because
30 12
PO 00000
U.S.C. 1464(e).
Frm 00014
Fmt 4701
Sfmt 4700
it protects both customers and the
institution. Therefore, we proposed to
amend § 5.20(e)(1) to apply this
requirement to both Federal savings
associations and national banks. We
received one comment in support of this
proposal and we adopt the amendment
as proposed.
Second, § 143.3(b)(1) requires that all
securities of a particular class in an
initial offering must be sold at the same
price. The OCC proposed to amend
§ 5.20(i)(5)(iii) to apply this requirement
to both Federal savings associations and
national banks. This requirement
promotes fairness and uniformity, does
not allow insiders to gain an unfair
advantage over other shareholders, and
discourages the formation of an
institution for speculative purposes.
Moreover, the FDIC also imposes this
requirement in determining whether to
approve an application for deposit
insurance.31 We did not receive any
comments on this proposed change and
adopt it as proposed.
Third, §§ 143.5(d) and 152.1(i) require
that, in the event the organization of a
Federal savings association is not
completed, all cash collected on
subscriptions shall be returned. We
proposed to amend § 5.20(i)(5)(iv) to
apply this requirement to both Federal
savings associations and national banks.
We received no comments on this
proposed change and adopt it as
proposed.
Elimination of Certain Federal
Savings Association Approval Criteria.
The OCC proposed to rescind the
following provisions of parts 143 and
152 that are redundant, unnecessary, or
no longer appropriate.
First, the OCC did not propose that
§ 5.20 include §§ 143.2(g)(1) and
152.1(b)(1), which require the OCC to
consider whether the Federal savings
association will provide credit for
housing in a safe and sound manner and
whether the factors in § 143.3 (regarding
capitalization, business and investment
plans, the board of directors, and
management) will be met. These
approval criteria are not statutorily
required. In most cases, these factors are
similar to factors the OCC currently
considers either under § 5.20 or as a
matter of practice. Moreover, the
provision of housing credit also is
addressed by the lending and
investment provisions of 12 U.S.C.
1464(c) and the qualified thrift lender
test of 12 U.S.C. 1467a(m).
31 See FDIC Statement of Policy on Applications
for Deposit Insurance, 63 FR 44752, 44757 (Aug. 20,
1998), and FDIC Financial Institution Letter FIL–
56–2014 (Nov. 20, 2014) and related Q&As at
https://www.fdic.gov/news/news/financial/2014/
fil14056a.pdf).
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Second, as proposed, the final rule
does not include the requirement in
§ 143.3(d) that the majority of a de novo
Federal savings association’s board of
directors be representative of the state in
which the association is located. We
believe that this requirement is outdated
and unnecessary given the advanced
communication technology available
today, and that it may unnecessarily
impede the formation of new Federal
savings associations. We note that one
commenter to the June EGRPRA notice
requested that we remove this
requirement. The final rule retains the
existing provision in § 5.20(g)(1),
applicable to Federal savings
association by this rulemaking, that the
institution’s initial board of directors
generally is composed of many, if not
all, of the organizers of the institution,
and that the organizing group must
include diverse community
involvement.
Third, the OCC proposed to rescind
§§ 143.7 and 152.17, which exempt from
the requirements of part 143 and
§§ 152.1 and 152.2 Federal savings
associations created in connection with
an association in default or in danger of
default. These provisions are not
necessary in light of the FDIC’s
authority, as part of the resolution
process, to create new and bridge
Federal savings associations under 12
U.S.C. 1821(m) and (n).
Fourth, we proposed to rescind
§ 143.3(f), which provides that the
normal requirements that apply to an
application to charter a Federal savings
association do not apply to a
supervisory transaction. This provision
is not necessary because the OCC has
the ability to waive such requirements
under 12 CFR 5.2(b). Also, we proposed
to rescind the requirements in
§§ 143.5(c) and 152.1(f) for a proposed
Federal savings association to promptly
qualify as a member of a Federal Home
Loan Bank. The HOLA no longer
requires such membership.
We did not receive comments
opposed to the removal of these
provisions. Therefore, we adopt the
amendments as proposed.
Amendments to Reflect Current OCC
Policy or Practice. The OCC proposed
several amendments to update § 5.20 to
reflect current OCC policy or practice.
Specifically, the OCC proposed to
amend § 5.20(f)(1) to update the OCC’s
general policy in making determinations
regarding charter applications to reflect
the OCC’s statutory mission as amended
in section 314 of the Dodd-Frank Act.32
Second, § 5.20(g)(2) notes that, as a
condition of a charter approval, the OCC
32 12
U.S.C. 1.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
retains the right to object to the hiring
of any officer or appointment or election
of any director for a two-year period
from the date the institution commences
business. We proposed to clarify that, in
appropriate instances, the OCC may
impose this condition for a longer
period. This regulatory change reflects
current authority and practice.
Third, § 5.20(g)(3)(ii) requires a
proposed director to be able to supply
or have a realistic plan to enable the
institution to obtain capital when
needed. The OCC proposed to clarify
that this requirement applies to the
proposed directors as a group, rather
than each director individually.
We did not receive comments on any
of these proposed changes. Therefore,
we adopt the amendments as proposed.
Federal Mutual Savings Association
Charter, Bylaws and Related Provisions.
As discussed above, the OCC believes it
is necessary and appropriate to continue
to include separate regulations setting
forth the provisions concerning a
Federal savings association’s charter
and bylaws. With respect to Federal
mutual savings associations, these
provisions are currently in part 144. The
OCC proposed to add a new § 5.21,
‘‘Federal Mutual Savings Associations
Charters and Bylaws,’’ which
incorporates most of part 144. We did
not receive comments on any of
proposed new § 5.21 and adopt this
section as proposed, with minor
changes to § 5.21(j), discussed below.
New § 5.21(d) sets forth exceptions to
the rules of general applicability. More
specifically, it provides that §§ 5.8
through 5.11 do not apply to this
section. These sections provide for
public notice, public availability,
comments and hearings on an
application. The OCC believes it is not
necessary to subject the charter and
bylaws requirements to these
provisions. This belief is consistent with
current requirements for Federal mutual
savings associations as well as national
banks. New § 5.21(e) prescribes the
language and requirements for a Federal
mutual savings association charter and
is substantively identical to § 144.1.
New § 5.21(f) through (h) cover matters
related to charter amendments and are
substantively identical to § 144.2. New
§ 5.21(i) requires a Federal mutual
savings association to make its charter,
bylaws, and all amendments available to
accountholders at all times in each
savings association office, and to deliver
to any accountholders a copy of the
charter, bylaws or amendments, upon
PO 00000
Frm 00015
Fmt 4701
Sfmt 4700
28359
request. This provision is substantively
identical to § 144.7.33
New § 5.21(j) specifies the language
and requirements for Federal mutual
savings association bylaws. This new
paragraph reflects the provisions in
§ 144.5. To reflect advances in
technology, the final rule updates the
provision regarding meetings of the
board of directors by permitting
telephonic or electronic participation of
board members. The current rule
provides only for telephonic
participation. We note that the final rule
also adds section headings and makes
corresponding paragraph numbering
changes to § 5.21(j).
Section 144.5(b)(11) provides that
directors may only be removed ‘‘for
cause’’ as defined in § 163.39 of this
chapter, by a vote of the holders of a
majority of the shares then entitled to
vote at an election of directors,’’ and
§ 144.5(b)(10) provides that ‘‘[a]ny
officer may be removed by the board of
directors with or without cause, but
such removal, other than for cause, shall
be without prejudice to the contractual
rights, if any, of the person so
removed.’’ For ease of use, the OCC is
including the definition of ‘‘for cause’’
in new § 5.21(j)(2)(x)(B), rather than
cross-referencing the definition in
§ 163.39. Where the term ‘‘for cause’’ is
used elsewhere in § 5.21, and in § 5.22,
for Federal stock savings associations,
the regulation references the definition
at § 5.21(j)(2)(x)(B).
The OCC believes that many of the
bylaw provisions in § 144.5 are
unnecessarily detailed or self-evident.
Therefore, new § 5.21 does not include
the provisions described below.34
Section 144.5(b)(1) discusses the
annual meeting of members. It provides,
among other things, that the meeting be
held ‘‘as designated by its board of
directors, at a location within the state
that constitutes the principal place of
business of the association, or at any
other convenient place the board of
directors may designate.’’ New
§ 5.21(j)(2)(i) does not include the
requirement that the meeting be held in
the state that constitutes the principal
place of business of the association. The
OCC believes that this requirement
introduces unnecessary detail into the
regulation and that, in certain cases,
there may be locations outside the state
constituting the association’s principal
place of business at which the annual
meeting may be held that are
appropriately convenient to members.
33 See related discussion concerning 12 CFR
163.1(b) infra.
34 Federal mutual savings associations will not be
required to amend their existing bylaws to conform
to these changes.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28360
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Section 144.5(b)(2) provides, among
other things, that the subject matter of
a special shareholder meeting must be
established in the notice for such
meeting. The OCC believes this
provision is self-evident and
unnecessarily detailed and it is not
included in new § 5.21(j).
Section 144.5(b)(3) covers the
requirements for providing notice of
meetings to members. Among other
things, it provides that notice must be
provided at a member’s last address
appearing on the books of the
association. The OCC believes this
provision merely states the obvious and
it is not included in new § 5.21(j)(2)(iii).
Section 144.5(b)(4) states that the
purpose of determining the record date
is to determine the ‘‘members entitled to
notice of or to vote at any meeting of
members or any adjournment thereof, or
in order to make a determination of
members for any other proper purpose.’’
The OCC believes this provision is selfevident and it is not included in new
§ 5.21(j)(2)(iv).
Section 144.5(b)(6) provides that
procedures must be established for
voting by proxy pursuant to the rules
and regulations of the OCC, ‘‘including
the placing of such proxies on file with
the secretary of the association, for
verification, prior to the convening of
such meeting.’’ The OCC believes the
inclusion language is self-evident and
unnecessarily detailed and it is not
included in § 5.21(j)(2)(vi).
Section 144.5(b)(9) provides that
board of director meetings ‘‘shall be
under the direction of a chairman,
appointed annually by the board; or in
the absence of the chairman, the
meetings shall be under the direction of
the president.’’ The OCC believes this
provision is unnecessarily detailed and
it is not included in § 5.21(j)(2)(ix).
Section 144.5(b)(10) provides, among
other things, that ‘‘[a]ll officers and
agents of the association, as between
themselves and the association, shall
have such authority and perform such
duties in the management of the
association as may be provided in the
bylaws, or as may be determined by
resolution of the board of directors not
inconsistent with the bylaws. In the
absence of any such provision, officers
shall have such powers and duties as
generally pertain to their respective
offices.’’ The OCC believes this
provision is unnecessary and selfevident and it is not included in
§ 5.21(j)(2)(x).
Section 144.5(b)(11) covers vacancies,
resignation, and removal of directors.
New § 5.21(j)(2)(xi) does not include the
requirements in § 144.5(b)(11) that
directors be elected by ballot and that
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
resignation of a director be by written
notice. The OCC believes that these
provisions are self-evident.
Section 144.5(b)(12) covers the
powers of the board of directors. It
provides, among other things, that a
board may, by resolution, ‘‘appoint from
among its members and remove an
executive committee and one or more
other committees, which committee[s]
shall have and may exercise all the
powers of the board between the
meetings or the board; but no such
committee shall have the authority of
the board to amend the charter or
bylaws, adopt a plan of merger,
consolidation, dissolution, or provide
for the disposition of all or substantially
all the property and assets of the
association. Such committee shall not
operate to relieve the board, or any
member thereof, of any responsibility
imposed by law.’’ This section further
provides that a board may fix the
compensation of directors, officers, and
employees. The OCC believes these
provisions are self-evident and
unnecessarily detailed, and therefore,
they are not included in § 5.21(j)(2)(xii).
Section 144.5(b)(14) provides in part
that procedures for the introduction of
new business at the annual meeting may
require that such new business be stated
in writing and filed with the secretary
prior to the annual meeting at least 30
days prior to the date of the annual
meeting. The OCC believes this
provision is overly detailed and
unnecessary. Accordingly, the OCC is
not including this provision in new
§ 5.21(j)(2)(xiv).
Finally, § 144.5(b)(16) provides that
the bylaws may address age limitations
for directors or officers as long as they
are consistent with applicable Federal
law, rules or regulations. The OCC
believes this provision is self-evident
and unnecessary and therefore it is not
included in new § 5.21(j)(2)(xvi).
Federal Stock Savings Association
Charter, Bylaws and Related Provisions.
The provisions concerning the charter
and bylaws of a Federal stock savings
association, as well as related
provisions, are currently in §§ 152.3
through 152.9. The OCC proposed to
add a new § 5.22, ‘‘Federal Stock
Savings Association Charters and
Bylaws,’’ which incorporates most of
§§ 152.3 through 152.9. We did not
receive any comments on this proposed
change and are adopting new § 5.22 as
proposed, with one change to
§ 5.22(l)(1) as discussed below.
New § 5.22(d) sets forth exceptions to
the rules of general applicability. More
specifically, it provides that §§ 5.8
through 5.11 do not apply to this
section. These sections provide for
PO 00000
Frm 00016
Fmt 4701
Sfmt 4700
public notice, public availability,
comments and hearings on an
application. The OCC believes it is not
necessary to subject the charter and
bylaws requirements to these
provisions.
New § 5.22(e) prescribes the language
and requirements for a Federal stock
savings association charter and is
substantively identical to § 152.3. New
§ 5.22(f) through (i) cover matters
related to charter amendments and are
substantively identical to § 152.4, with
the addition of one provision. Section
152.4(b)(8) provides that a Federal stock
savings association may amend its
charter by adding certain anti-takeover
provisions following mutual to stock
conversions. One such provision is a
prohibition on a person acquiring more
than 10 percent of any class of equity
securities of the association, unless ‘‘the
purchase of shares [is] by a tax-qualified
employee stock benefit plan which is
exempt from the approval requirements
under § 174.3(c)(2)(i)(D) of the OCC’s
regulations.’’ The final rule eliminates
the cross-reference and includes the
appropriate language in § 5.22(g)(8). The
OCC does not intend for this
amendment to have any substantive
effect.
New § 5.22(j) specifies the
requirements for adopting and filing
Federal stock savings association
bylaws. This paragraph reflects the
provisions in § 152.5 with two
exceptions. The first sentence of
§ 152.5(a) provides that ‘‘[a]t its first
organizational meeting, the board of
directors of a Federal stock association
shall adopt a set of bylaws for the
administration and regulation of its
affairs.’’ The third sentence requires the
bylaws to contain sufficient provisions
to govern the association in accordance
with the requirements of other sections
of part 152 and prohibits the bylaws
from containing a provision that is
inconsistent with those sections or with
applicable laws, rules, regulations or the
association’s charter. The OCC believes
that these two provisions are
unnecessarily detailed and self-evident
and they are not included in new
§ 5.22(j).
The OCC is adding a new § 5.22(k) to
address shareholder meetings and
related matters. This paragraph reflects
the provisions in § 152.6 with two
exceptions. Section 152.6(a) provides,
among other things, that shareholder
meetings must be held in the state in
which the association has its principal
place of business. With respect to
shareholder voting by proxy, § 152.6(f)
provides, in part, that a ‘‘proxy may
designate as holder a corporation,
partnership or company as defined in
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
part 174 of this chapter, or other
person.’’ Section 5.22(k) does not
include these provisions because the
OCC believes they are unnecessary.35
The OCC is adding a new § 5.22(l) to
address matters involving a Federal
stock savings association’s board of
directors. This paragraph reflects the
provisions in § 152.7, with certain
exceptions. Section 152.7(b) sets forth
the permissible number and terms of
directors to be included in an
association’s bylaws. It provides, among
other things, that in ‘‘the case of a
converting or newly chartered
association where all directors shall be
elected at the first election of directors,
if a staggered board is chosen, the terms
shall be staggered in length from one to
three years.’’ Section 152.7(g) addresses
matters concerning executive and other
committees of a board of directors. It
provides in pertinent part that each
committee, to the extent provided in the
resolution or bylaws of the association,
shall have and may exercise all of the
authority of the board of directors,
subject to certain exceptions. The OCC
believes these provisions are overly
detailed and unnecessary. Accordingly,
§ 5.22(l)(2) and (7), respectively, do not
include these provisions. In addition,
this final rule does not include the
provision in proposed § 5.22(l)(1), taken
from § 152.7(a), that requires the savings
association’s board of directors to
annually elect a chairman of the board
from among its members and designate
the chairman of the board, when
present, to preside over meetings. As
proposed, the final rule does not
include this requirement in the new
Federal mutual savings associations
rule, § 5.21 because we find it to be
unnecessarily detailed. We are removing
this provision from § 5.22(l)(1) for the
same reason and to conform our rules
for stock and mutual Federal savings
associations.
New § 5.22(m) addresses matters
involving a Federal stock savings
association’s officers. This paragraph is
substantively identical to § 152.8, with
one exception. Section 152.8 mandates
that a Federal stock savings association
have certain officers. It further provides
that the ‘‘board of directors also may
elect or authorize the appointment of
such other officers as the business of the
association may require. The officers
shall have such authority and perform
such duties as the board of directors
may from time to time authorize or
determine. In the absence of action by
the board of directors, the officers shall
35 Federal stock savings associations will not be
required to amend their existing bylaws to conform
to these changes.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
have such powers and duties as
generally pertain to their respective
offices.’’ The OCC believes that the
quoted provision is self-evident and
unnecessary and therefore has not
included it in new § 5.22(m).
New § 5.22(n) addresses stock
certificates. This new paragraph is
substantively identical to § 152.9, with
one exception. Section 152.9(a) provides
in pertinent part that the ‘‘certificates
shall be signed by the chief executive
officer or by any other officer of the
association authorized by the board of
directors, attested by the secretary or an
assistant secretary, and sealed with the
corporate seal or a facsimile thereof. The
signatures of such officers upon a
certificate may be facsimiles if the
certificate is manually signed on behalf
of a transfer agent or a registrar other
than the association itself or one of its
employees. Each certificate for shares of
capital stock shall be consecutively
numbered or otherwise identified.’’ The
OCC believes this provision is overly
detailed and is not included in new
§ 5.22(n)(1).
Federal Savings Association Charter
and Bylaws Availability Requirement.
Section 163.1(b) requires each Federal
savings association to cause a true copy
of its charter and bylaws and all
amendments thereto to be available to
accountholders at all times in each
office of the savings association, and to
deliver to any accountholders a copy of
such charter and bylaws or amendments
thereto, upon request. As discussed
above, § 144.7 imposes the same
requirement, but is applicable only to
Federal mutual savings associations.
There is no comparable requirement
for national banks and the OCC believes
this provision is no longer necessary for
Federal stock savings associations as
this information is relatively easy for
accountholders of these types of
institutions to obtain. Conversely,
accountholders of Federal mutual
savings associations may not have easy
access to these documents in light of the
inability of accountholders to
communicate directly with each other
under § 144.8. Accordingly, the final
rule continues to apply this requirement
only with respect to Federal mutual
savings associations under new § 5.21(i).
Disposition of current Federal savings
association organization, charter, and
bylaws provisions. As discussed above,
we proposed amendments to remove
from Title 12 of the Code of Federal
Regulations §§ 143.2 through 143.7, all
of part 144 except § 144.8, § 152.1(b)(1),
§ 152.1(c) through (i), §§ 152.2 through
152.9, § 152.17, § 163.1(b), and
§ 163.22(b)(1)(ii) and (b)(2). We did not
receive any comments on these
PO 00000
Frm 00017
Fmt 4701
Sfmt 4700
28361
proposed changes and are adopting the
amendments as proposed.
Section 144.8, which addresses
communication between members of a
Federal mutual savings association, is
not a licensing regulation and does not
involve an application process. The
OCC is leaving it unchanged. Because it
will be the only section that remains in
part 144, the OCC is renaming part 144
as part 144—Federal mutual savings
associations—communication between
members.
Other provisions of § 152.2, which
provide procedures for the organization
of interim Federal savings associations,
are addressed in revisions to the
business combinations regulation—
§ 5.33, described below. The remaining
provisions of part 143, part 152, and
part 163 contain other provisions
applicable to Federal mutual and stock
savings associations. The OCC is
rescinding some of these provisions as
described elsewhere in this preamble.
Charter Conversions (New § 5.23, § 5.24,
New § 5.25)
Twelve CFR 5.24 sets forth the rules
and procedures that a state bank, state
savings association, or Federal savings
association must follow to convert to a
national bank and for a national bank to
convert to a state bank or Federal or
state savings association. The OCC’s
rules for a mutual depository institution
to convert to a Federal mutual savings
association are at 12 CFR 143.8 through
143.14, and the rules for a stock form
depository institution to convert to a
Federal stock savings association are at
12 CFR 152.18. The rules for a Federal
savings association to convert to a
national bank or state bank are set forth
at 12 CFR 152.19 and 163.22(b)(1)(ii)
and (b)(2). While there are some
differences in procedures, as discussed
below, the rules for national banks and
Federal savings associations are
substantively similar.
We proposed to simplify this
regulatory framework by: (1) Revising
§ 5.24 to include only rules for
converting into a national bank, (2)
placing all rules for converting into a
Federal savings association (either stock
or mutual) in new § 5.23, and (3) placing
rules for conversion from national bank
and Federal savings association charters
in new § 5.25. We also proposed
additional substantive and technical
changes to these rules. The substantive
changes include provisions
implementing section 612 of the DoddFrank Act, which prohibits conversions
from state to Federal charter, or Federal
to state charter, in certain circumstances
and adds requirements to the
conversion process.
E:\FR\FM\18MYR2.SGM
18MYR2
28362
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
We did not receive any comments
related to charter conversions. We
therefore adopt the amendments to
these provisions as proposed, with the
changes described below.
Implementation of section 612 of the
Dodd-Frank Act. Section 612 of the
Dodd-Frank Act added several
provisions that address conversions.
First, section 612(b) amended 12 U.S.C.
35 to provide that the OCC may not
approve an application by a state bank
or a state savings association to convert
to a national bank or Federal savings
association during any period in which
the state bank or state savings
association is subject to a cease and
desist order (or other formal
enforcement order) issued by, or a
memorandum of understanding entered
into with, a state banking supervisor or
the appropriate Federal banking agency
with respect to a significant supervisory
matter or a final enforcement action by
a state Attorney General. We do not
need to amend our regulations to
implement this prohibition because
current regulations include compliance
with applicable law among the criteria
for approval or denial, and this criterion
is carried over in the final rule.36
Specifically, §§ 5.24(e)(2)(x) and
5.23(d)(2)(ii)(J) require the conversion
application to include information
about enforcement actions and other
supervisory criticisms and the
applicant’s analysis of whether
conversion is permissible under 12
U.S.C. 35, as amended by section 612.
We will use this information to assess
the permissibility of the proposed
conversion under section 35, including
the possibility of using the exception to
the prohibition on conversions provided
in section 612.37
36 See §§ 5.23(d)(1) and 5.24(d) (each
incorporating § 5.13(b)).
37 Subsection (d) of section 612 provides for an
exception to the prohibition. Specifically, the
prohibition on conversion does not apply if: (1) The
Federal banking agency that would be the
appropriate Federal banking agency after the
conversion (the OCC in conversions of a statechartered institution to a national bank or Federal
savings association) gives written notice of the
proposed conversion to the current Federal
appropriate banking agency or state bank supervisor
that issued the enforcement action, including a plan
to address the significant supervisory matter in a
manner that is consistent with the safe and sound
operation of the institution; (2) the current Federal
appropriate banking agency or state bank supervisor
that issued the enforcement action does not object
to the conversion or the plan; (3) after conversion,
the plan is implemented; and (4) in the case of a
final enforcement action by a state Attorney
General, approval of the conversion is conditioned
on the institution’s compliance with the terms of
such final enforcement action. Section 612(d) is
codified as a note attached to 12 U.S.C. 35.
Applicants should be aware that the Agencies have
issued interagency guidance stating the Agencies’
position that such exceptions would be rare, and
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
Second, section 612(b) added a new
section 12 U.S.C. 214d prohibiting a
national bank from converting to a state
bank or state savings association during
any period in which the national bank
is subject to a cease and desist order (or
other formal enforcement order) issued
by, or a memorandum of understanding
entered into with, the OCC with respect
to a significant supervisory matter.
Section 612(c) similarly added a new
paragraph (6) to the end of section 5(i)
of the HOLA 38 prohibiting a Federal
savings association from converting to a
state bank or state savings association
during any period in which the Federal
savings association is subject to a cease
and desist order (or other formal
enforcement order) issued by, or a
memorandum of understanding entered
into with, the OTS or the OCC with
respect to a significant supervisory
matter. The exception to the
prohibitions on conversions in section
612(d), discussed above, applies to the
prohibitions in sections 214d and
1464(i)(6). As amended by this final
rule, § 5.25(d)(3) requires that the
information that must be submitted to
the OCC when a national bank or
Federal savings association plans to
convert to a state bank or state savings
association must include a discussion of
the impact of any enforcement action on
the permissibility of the conversion
under 12 U.S.C. 214d or 1464(i)(6). This
discussion will assist the OCC in
monitoring compliance with these
statutes.
Third, paragraph (e)(1) of section 612
requires that at the time an insured
depository institution files a conversion
application, it must transmit a copy of
the conversion application to both the
appropriate Federal banking agency for
the institution and the Federal banking
agency that would become the
appropriate Federal banking agency for
the institution after the proposed
conversion. Reflecting this statutory
requirement, as noted above, the final
rule adds to our regulations at
§§ 5.23(d)(2)(ii), 5.24(e)(2), and
5.25(d)(3)(i)(last sentence) a requirement
to send a copy of the conversion
application to the appropriate Federal
banking agencies. Including the
requirement in our regulations will help
generally would occur only when the institution
already has substantially addressed the matters in
the enforcement action or there are substantial
changes in circumstances. See Interagency
Statement on Section 612 of the Dodd-Frank Act:
Restrictions on Conversions of Troubled Banks
(November 26, 2012), available at www.occ.gov/
news-issuances/bulletins/2012/bulletin-201239a.pdf.
38 Section 5(i), 12 U.S.C. 1464(i)(6).
PO 00000
Frm 00018
Fmt 4701
Sfmt 4700
ensure applicants are aware of this
requirement.
Conversion to a national bank charter.
As part of the reorganization of the
conversion rules, the final rule moves
the provisions governing national bank
conversions to a state bank or Federal
savings association from § 5.24 to new
§§ 5.25 and 5.23, respectively. As a
result, § 5.24 applies only to
conversions to become a national bank.
The final rule also makes several other
changes to § 5.24.
The final rule adds ‘‘stock state
savings associations’’ to the description
of the types of institutions that can
apply to convert to a national bank and
also adds the word ‘‘stock’’ before the
phrase ‘‘Federal savings associations’’
throughout revised § 5.24. Stock state
savings associations currently are
included in the rule because they are
within the definition of ‘‘state bank’’
incorporated from 12 U.S.C. 214(a). We
are adding the express term both in the
interest of eliminating any confusion
and because section 612 added the term
‘‘state savings association’’ to 12 U.S.C.
35. We are adding the term ‘‘stock’’ to
Federal savings association for clarity as
well. National banks are corporate
bodies, and a mutual institution cannot
become a national bank unless it has
first changed into corporate form under
other law. These changes clarify the
existing regulation and have no
substantive impact.
Section 5.24(d) states the OCC’s
policy for approving and disapproving
conversions to national bank charters.
The final rule adds a statement that the
institution seeking to convert to a
national bank charter must obtain all
necessary regulatory and shareholder
approvals. Although this requirement is
not new, it was not previously stated in
§ 5.24. There is a similar provision in
the current Federal savings association
regulation, § 143.8(a)(2). The final rule
continues this requirement for Federal
savings associations in § 5.23, and adds
this requirement for national banks as
well.
The final rule also clarifies the
information the applicant must include
in the application. As proposed,
§ 5.24(e)(2)(vii) in the final rule requires
applicants to add bank service company
investments and other equity
investments to the current requirement
to identify subsidiaries. This change
reflects the OCC’s current practice in
conversion applications of reviewing
the legal permissibility for the converted
national bank to continue to hold these
investments.
The OCC currently requests an
applicant to include a business plan in
the application on a case-by-case basis
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
during the application process.
Proposed 5.24(e)(2)(ix) requires the
application to include a business plan if
the converting institution: (1) Has been
operating for less than three years, or (2)
plans to make significant changes to its
business after the conversion.39 We
believe this requirement should apply to
all such applications because a business
plan would provide valuable
information about the financial
institution’s safety and soundness and
allow the OCC to make a more informed
decision. The final rule amends this
provision to also require a business plan
at the request of the OCC. This
amendment allows the OCC to require a
business plan in other circumstances, as
necessary, and conforms this provision
to that included in new
§ 5.23(d)(2)(ii)(I). Though the preamble
to the proposed rule referred to this
amendment, it was inadvertently
omitted in the regulatory text of
proposed § 5.24.
Section 5.24 currently addresses the
OCC’s authority to permit a national
bank to retain nonconforming assets of
a converting state bank, subject to the
requirements in 12 U.S.C. 35. The final
rule (redesignated as paragraph (e)(4) in
the revised regulation) clarifies that a
converted national bank also may be
permitted to retain nonconforming
activities (as well as assets) of a state
bank or stock state savings association
and nonconforming assets or activities
of a Federal stock savings association for
a transition period after conversion. We
believe this provision facilitates the
transition from a state institution or
Federal savings association to a national
bank and also incorporates current OCC
practice.
Current OCC rules require both a
notice or application to the OCC to
convert out of a Federal savings
association charter 40 and an application
to the OCC to convert to the new
national bank charter.41 The notice or
application to convert out must
demonstrate compliance with
applicable laws regarding the
permissibility, requirements, and
procedures for the conversion.42 The
proposed rule included both a notice
requirement to convert out of the
existing charter in proposed § 5.25(e)
and the application requirement to
convert to a national bank in proposed
§ 5.24. Upon further review, we are
removing the conversion out notice
39 Appendix G of the ‘‘Charters’’ booklet of the
Comptroller’s Licensing Manual (Significant
Deviations after Opening) contains a discussion of
what constitutes a ‘‘significant change.’’
40 § 163.22(b).
41 § 163.22(b)(2).
42 § 5.24.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
requirement from § 5.25(e) and instead
adding a new paragraph (f) to § 5.24 to
require a Federal savings association to
include the information from this notice
in its application to convert to a
national bank. This process is less
burdensome for Federal savings
associations as they will no longer be
required to file both a ‘‘conversion out’’
notice and a ‘‘conversion in’’
application to the OCC to accomplish
the conversion transaction.
As proposed, the final rule also
amends the expedited review provisions
for a conversion application filed by an
eligible depository institution. These
provisions are set forth in the current
rule at § 5.24(d)(4) and redesignated in
this final rule as § 5.24(h). The final rule
limits the availability of expedited
review to applications by institutions
already supervised by the OCC (i.e.,
conversions from a Federal savings
association to a national bank pursuant
to § 5.24 or from a national bank to a
Federal savings association pursuant to
§ 5.23). In those cases, the OCC is
already familiar with the institution.
The OCC will require more time to
review a state institution applicant’s
condition and proposal, and therefore,
expedited review would not be
appropriate in those cases.
The final rule also extends the
expedited review period from 30 days to
60 days. New § 5.23(d)(4) contains a
similar expedited review provision for
conversions of an eligible national bank
to a Federal savings association.
In addition, the final rule adds a new
paragraph (i) to § 5.24 (paragraph (h) in
the proposed rule) providing that the
resulting national bank after a
conversion is the same business and
corporate entity as the converting
institution, and all assets, rights,
liabilities, obligations, and other
business of the converting institution
continue in the resulting national bank
by operation of law. This paragraph
reflects longstanding case law under 12
U.S.C. 35 43 and is similar to statutory
provisions in 12 U.S.C. 214b
(continuation in conversion of national
bank to state bank or merger of national
bank into state bank) and 12 U.S.C.
215(e) and 215a(e) (continuation in
consolidation or merger of national or
state bank into national bank). The
specific language is based on 12 U.S.C.
214b and on current provisions
governing Federal savings associations
at §§ 146.14 (Federal mutual savings
43 See, e.g., Michigan Insurance Bank v. Eldred,
143 U.S. 293, 300 (1892); Metropolitan National
Bank v. Claggett, 141 U.S. 520, 527 (1891). See
generally, CJS Banks and Banking, § 529 (citing
cases); 10 a.m. Jur. 2d § 203 (citing cases).
PO 00000
Frm 00019
Fmt 4701
Sfmt 4700
28363
associations) and 152.18(b) (Federal
stock savings associations).
Finally, the final rule adds provisions
to § 5.24 to implement section 612 of the
Dodd-Frank Act, which are discussed
below, and makes several technical or
housekeeping changes to § 5.24 to make
it easier to read.
Conversion to a Federal savings
association charter. As noted above, the
final rule creates a new § 5.23 to address
conversions of a mutual depository
institution to a Federal mutual savings
association or of a stock depository
institution to a Federal stock savings
association. This new section is similar
to § 5.24, conversions to a national bank,
except that references to national
banking laws are replaced by references
to the HOLA, including the statutory
criteria in section 5(e) of the HOLA for
granting a Federal savings association
charter.
The requirements of § 5.23 include
many of the requirements in the current
Federal savings association conversion
regulations. However, the final rule does
not retain certain provisions in parts
143 and 152 for which there is no
statutory requirement in the HOLA.
These include the confidentiality
provisions set forth at § 143.8, which
instead are addressed under the OCC’s
general confidentiality regulations, 12
CFR part 4, and the public notice and
inspection requirements set forth at
§ 143.9(a)(2) (incorporating § 143.2(d)),
which require public notice and
inspection for applications to organize a
new savings association. The OCC
believes public notice is unnecessary in
the case of conversions because the
business of the existing institution
continues under its new charter. We
note that if there are instances where the
OCC believes publication is warranted,
the OCC could require publication
under § 5.23(d)(3), which allows the
OCC to require public notice if an
application presents significant or novel
policy, supervisory, or legal issues.
The final rule excludes a number of
provisions in § 143.9 that advise
applicants of the various steps in the
process. Instead, the OCC addresses this
information through the Comptroller’s
Licensing Manual, application forms,
and the application process.
As with the amendments to § 5.24, the
final rule adds a new paragraph § 5.23(f)
that contains the provision regarding the
‘‘conversion out’’ aspect for national
banks applying to convert to a Federal
stock savings association originally
included in proposed § 5.25(e)(1) and
(e)(3). As a result, a national bank
converting to a Federal stock savings
association must include in its
application filed pursuant to § 5.23
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28364
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
information demonstrating compliance
with the applicable requirements of 12
U.S.C. 214a instead of including this
information in a separate notice to the
OCC. This process is less burdensome
for national banks because they will not
have to file both a notice and an
application for these transactions, as
provided in the current and proposed
rule.
We note that there are four significant
differences between §§ 5.24 and 5.23.
First, the definition of ‘‘depository
institution’’ for purposes of § 5.23,
which is based on the definition in
§§ 143.8(a) and 152.13, includes credit
unions, unlike the definition in § 5.3(f),
which is used in § 5.24. This is because
credit unions may convert to a mutual
Federal savings association but not to a
national bank. Second, paragraph (c) of
§ 5.23 provides that the converting
institution must have deposits insured
by the FDIC or, if it is not so insured,
must obtain insurance before
converting. While some national banks
may be uninsured, i.e., trust banks that
do not accept deposits, all Federal
savings associations are required to be
insured. Third, paragraph (d)(2)(ii)(K) of
§ 5.23, requires a converting institution
that does not meet the qualified thrift
lender test of 12 U.S.C. 1467a(m) to
include a plan to achieve compliance
within a reasonable period of time and
to request an exception from the OCC in
the application. This requirement
reflects agency practice but is not
expressly included in the current
regulation. Fourth, paragraph (e) of
§ 5.23 includes certain provisions
contained in § 143.10 that are unique to
conversions of a mutual depository
institution to a Federal mutual savings
association. These provisions reflect the
unique organizational structure of
mutual depository institutions, which
are not owned by shareholders but are
mutual enterprises composed of
depositor-members.
Lastly, the final rule includes
provisions in § 5.23 to implement
section 612 of the Dodd-Frank Act, as
discussed below.
Conversion from a national bank or
Federal savings association charter to a
state charter. New § 5.25 addresses
conversions from a national bank or
Federal savings association to a state
charter. Proposed § 5.25(d) provided
that converting from a Federal charter
does not require prior OCC approval.
Instead, the institution must file a notice
with the OCC. This process is a change
for some Federal savings associations.
Under the current regulations, Federal
savings associations that are not eligible
for expedited treatment must file an
application to convert to a national bank
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
or state bank.44 Under the new rule, this
notice must contain a copy of its
conversion application to the regulator
to which it is applying for approval to
convert (as required by section 612 of
the Dodd-Frank Act), a showing of its
compliance with applicable
requirements for converting from the
charter (as required under the current
rule), and a discussion of any issues
regarding the permissibility of the
conversion under section 612 of DoddFrank Act. This section also requires the
institution to file a copy of its
conversion application with the Federal
banking agency that would become its
appropriate Federal banking agency
after the conversion, pursuant to section
612 of the Dodd-Frank Act, as discussed
below.
The proposed rule had required, at
new § 5.25(e), institutions planning to
convert between a national bank and a
Federal savings association to file a
notice with the OCC to convert out of
the old charter. This filing would be in
addition to filing an application to
convert to the new charter. As noted
above, the final rule removes this notice
requirement and instead adds a
provision to § 5.23(f) and to § 5.24(f) to
require that this ‘‘conversion-out’’
information be included in its
application filed pursuant to § 5.23 or
§ 5.24. As a result, national banks and
Federal savings associations will not
have to file both a notice and an
application for these transactions, as
required by the current and proposed
rule.
As discussed above, the applicable
‘‘converting-in’’ regulation (§ 5.24 or
§ 5.23) requires the institution to file an
application with the OCC with respect
to the ‘‘converting-in’’ aspect of the
transaction.
Disposition of current Federal savings
association conversion regulations.
Sections 5.23 and 5.25 will replace most
of the current Federal savings
association regulations on conversions.
Accordingly, the final rule removes
§§ 143.8, 143.9, 143.10, 143.14, 152.18,
and 152.19.45 As proposed, the final
rule also removes § 143.11, which
provides for an organizational plan for
governance during the first six years
after a state mutual savings bank
converts to a Federal charter. The OCC
believes that the application process is
44 See
12 CFR 152.19 and 163.22(b)(2).
preamble discusses the removal of
§ 163.22(b)(1)(ii) and (b)(2) in the discussion of
amendments to the OCC’s rules regarding the
organization of a national bank or Federal savings
association and Federal savings association charters
and bylaws, above. Other provisions of this
rulemaking remove the remaining provisions of part
143 (except for § 143.12), part 152 and § 163.22.
45 This
PO 00000
Frm 00020
Fmt 4701
Sfmt 4700
sufficient for the OCC to monitor a the
converting institution’s compliance
with the requirements for Federal
mutual savings banks.
Section 143.12, which implements
section 5(i)(4) of the HOLA,46 addresses
grandfathered authority of certain
Federal savings associations. It is not a
licensing regulation and does not
involve an application process. The
final rule leaves § 143.12 unchanged. As
a result of other changes in this
rulemaking, it will be the only section
that remains in part 143. Therefore, the
final rule renames part 143 as part 143—
Federal Savings Associations—
Grandfathered Authority.
Fiduciary Powers (§ 5.26)
Twelve CFR 5.26 contains the
application requirements and processes
for national banks’ fiduciary powers.
Twelve CFR part 150, subpart A
(§§ 150.70 through 150.125) addresses
the fiduciary powers application
requirements and processes for Federal
savings associations. We proposed to
consolidate the application and notice
filing procedures for fiduciary powers
for national banks and Federal savings
associations by revising § 5.26 to cover
Federal savings associations,
incorporating certain provisions from
part 150 in § 5.26, amending § 150.70 to
remove the current language regarding
filing requirements, directing Federal
savings associations to § 5.26 for the
application and notice procedures they
should follow, and deleting §§ 150.80
through 150.125, which contain
additional current Federal savings
association filing requirements. We
received one comment on our fiduciary
powers rule, discussed below. We are
adopting the amendments to § 5.26 and
part 150, subpart A as proposed.
In general, the final rule revises § 5.26
by adding language that makes it
applicable to both national banks and
Federal savings associations. The final
rule also makes the following revisions
to the application requirements in
§ 5.26.
First, the final rule adds
§ 5.26(e)(2)(iii) to provide examples of
factors the OCC will consider when
reviewing an application to exercise
fiduciary powers. These factors include
financial condition, adequacy of capital,
character and ability of proposed trust
management, the adequacy of any
proposed business plan, and the needs
of the community served. These factors
help to clarify the standard of review
the OCC will use. Three of the factors
are requirements found in both the
46 12
E:\FR\FM\18MYR2.SGM
U.S.C. 1464(i)(4).
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
National Bank Act 47 and the HOLA: 48
Capital adequacy, requiring that the
needs of the community be served, and
providing that the OCC may consider
any other factors or circumstances that
the agency considers proper. A review
of the financial condition of the national
bank or Federal savings association, the
experience and character of the
management of the institution, and the
adequacy of any proposed business plan
are all factors that the OCC already takes
into account when reviewing an
application submitted by a national
bank or Federal savings association to
conduct fiduciary powers. In addition,
the Federal savings association rule,
§ 150.100, includes the factor requiring
assessment of the financial condition,
the overall performance, and the
proposed supervision of the Federal
savings association.
Second, the final rule adds a new
paragraph (e)(5) to § 5.26. This
paragraph requires a national bank or a
Federal savings association that has not
conducted previously approved
fiduciary powers for 18 consecutive
months to provide a notice to the OCC
containing the information required by
§ 5.26(e)(2)(i) 60 days in advance of
commencing the activities. This
amendment is similar to a requirement
for Federal savings associations at
§ 150.560, which requires filing a notice
if the savings association has not
conducted the fiduciary activity for five
years after it was approved to engage in
the activity. We have determined,
however, that 18 months is a more
appropriate timeframe for this notice
because the management and condition
of a national bank or Federal savings
association may change in a shorter
period of time. This amendment ensures
that both a national bank and a Federal
savings association previously granted
fiduciary powers will still have the
financial ability and managerial
expertise necessary to conduct fiduciary
activities in a safe and sound manner.
The OCC also believes this notification
is important because it will enable the
agency to allocate supervisory resources
to evaluate the institution when it
resumes fiduciary activities in which it
has not engaged for a long period of
time.
Third, the final rule adds a new
§ 5.26(e)(1)(iv) that specifies that a
national bank or Federal savings
association that has received approval
from the OCC to exercise limited
fiduciary powers and would like to
exercise full fiduciary powers must
apply to the OCC. An applicant can
47 12
48 12
U.S.C. 92a(i).
U.S.C. 1464(n)(8).
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
apply for approval to offer limited
services (authority for one or more
specific type of fiduciary powers
described in the application) or to offer
full services (authority to exercise all
powers authorized under the law). If an
institution received prior approval to
offer only certain services, it would
need to file an application if it wished
to begin offering other services.
However, an institution that received
approval to exercise full fiduciary
powers could add to the activities in
which it engages without additional
application.
Finally, incorporating Federal savings
associations in the application
framework of § 5.26 also results in some
other minor changes or clarifications of
requirements for Federal savings
associations. New paragraphs (b)(2) and
(4) of § 5.26 set out circumstances in
which a Federal savings association
does not need to apply for fiduciary
powers in connection with certain
mergers. The new provision in
§ 5.26(e)(1)(iv), discussed above,
requiring an application when an
institution previously approved only to
exercise specified limited powers
planned to exercise more powers,
replaces a current provision requiring a
Federal savings association to apply if it
planned to conduct fiduciary activities
that are ‘‘materially different’’ from
those previously approved, regardless of
whether the prior approval had been for
limited or full powers. Section 5.26(e)(3)
provides for expedited review of
applications by eligible national banks
and eligible Federal savings
associations. Part 150 does not provide
for expedited treatment of fiduciary
powers applications by Federal savings
associations.
We received one comment with
respect to fiduciary powers in response
to our June EGRPRA notice. This
comment requested that we amend the
approval process in the existing Federal
savings association rule, § 150.70(b), so
that once the OCC has granted a Federal
savings association permission to
exercise some fiduciary powers, the
association may exercise all fiduciary
powers without further approval. The
OCC disagrees with this commenter.
The exercise of all fiduciary powers may
raise safety and soundness concerns not
associated with the exercise of limited
fiduciary powers. Therefore, as
described above, we are adopting the
provision as proposed. We note that the
change in standard of fiduciary
activities ‘‘materially different from
previously approved’’ in the current
Federal savings association rule to the
standard of limited powers to full
powers in § 5.26 should reduce
PO 00000
Frm 00021
Fmt 4701
Sfmt 4700
28365
regulatory burden by lessening the need
for a later filing.
Establishment, Acquisition, and
Relocation of a Branch (§ 5.30 and
§ 5.31)
Overview. Section 5.30 of the OCC’s
rules addresses the establishment,
acquisition, and relocation of national
bank branch offices. Sections 145.92,
145.93, 145.95, and 145.96 address
these subjects for Federal savings
associations and also cover agency
offices for Federal savings
associations.49 While these national
bank and Federal savings association
rules address a common subject there
are two important differences between
them, namely the definition of ‘‘branch’’
(and many provisions related to the
definition) and the scope of the
requirement for prior OCC approval.50
These differences stem from the statutes
applicable to national banks and Federal
savings associations.
Specifically, with respect to national
banks, the term ‘‘branch’’ is defined by
statute. The McFadden Act defines a
‘‘branch’’ as an office ‘‘at which deposits
are received, or checks paid, or money
lent.’’ 51 Over the years, the meaning of
the term in various contexts has been
addressed extensively in case law and
regulatory interpretation. The OCC
codified much of that interpretive
explanation in § 5.30 and in a number
of provisions in part 7 that specify what
constitutes a branching activity and
what does not. For Federal savings
associations, the HOLA does not have a
general definition of ‘‘branch.’’ 52
Consideration of whether an office of a
Federal savings association is a branch
office has focused on activities
involving deposit accounts, not lending.
Furthermore, there is little in the
regulations specifying which activities
49 An agency office is an office of a Federal
savings association that services, originates, or
approves loans and contracts; manages or sells real
estate owned by the savings association; or
conducts fiduciary activities or activities ancillary
to the savings association’s fiduciary business, or,
with the approval of the OCC, provides other
services. See 12 CFR 145.96.
50 There are also differences in the locations at
which a national bank or a Federal savings
association may establish a branch. Generally,
Federal savings associations have somewhat
broader branching authority than national banks.
The relevant application procedure regulations do
not address this subject.
51 Section 5155(j) of the Revised Statutes, 12
U.S.C. 36(j).
52 There is a definition of ‘‘branch’’ in section
5(m) of the HOLA, 12 U.S.C. 1464(m), but it
addresses branching only in the District of
Columbia. In that subsection, branch is defined as
an office ‘‘at which accounts are opened or
payments are received or withdrawals are made.’’
12 U.S.C. 1464(m)(2).
E:\FR\FM\18MYR2.SGM
18MYR2
28366
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
are branching activities and which are
not.
In addition,the statutes authorizing a
national bank to establish a branch
require that it obtain approval from the
OCC.53 Accordingly, the OCC licensing
regulations at 12 CFR 5.30 require
national banks to file an application and
obtain OCC approval for every branch.
The HOLA does not have a general
provision requiring approval for a
Federal savings association to establish
a branch.54 By regulation, at § 145.93,
the OCC (continuing a provision
originally adopted by the OTS) requires
an application for a Federal savings
association to establish or relocate a
branch, but this rule also provides
certain exceptions.55
The proposal retained these
differences between national banks and
Federal savings associations.
Specifically, we proposed to add a new
§ 5.31 to part 5 in order to bring the
establishment and relocation of
branches by a Federal savings
association within the licensing
procedures of part 5 and did not
propose adding Federal savings
associations to 12 CFR 5.30 New § 5.31
is similar in format to § 5.30, but
includes provisions based on §§ 145.92
and 145.93 regarding the definition of
‘‘branch’’ and the scope of the
application requirements. Section 5.31
also includes the provisions of § 145.96
regarding agency offices. As a result,
national banks and Federal savings
associations generally will continue to
be subject to different branching
application provisions and
requirements.
The preamble to the proposed rule
also requested comment on two
alternatives to the proposed rule’s
treatment of branching by Federal
savings associations. The first
alternative required Federal savings
associations to file applications to
establish or relocate a branch without
exceptions. This alternative would
harmonize the treatment of the branch
licensing regulations of national banks
and Federal savings associations in
order to simplify our licensing
procedures and provide for comparable
treatment of national banks and Federal
savings associations. The second
alternative approach required Federal
savings associations to file an after-the53 See
12 U.S.C. 36(b), 36(c), 36(g).
the provision regarding branching in
the District of Columbia does require prior
regulatory approval. 12 U.S.C. 1464(m)(1).
55 As part of the OCC’s EGRPRA review, the OCC
will consider whether to recommend to Congress a
statutory change to make the requirements for
establishing or relocating a branch consistent for
national banks and Federal savings associations.
54 However,
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
fact notice instead of an application in
cases where an application was not
required. Such a notice would enable
the OCC to obtain timely information on
Federal savings association branching
activity without requiring eligible
Federal savings association to obtain
prior OCC approval to engage in an
activity that they now may do without
approval.
We also proposed several minor
substantive clarifications in § 5.30.
We adopt § 5.30 as proposed. We also
adopt § 5.31 as proposed with the
addition of the second alternative
outlined above. We received one
comment letter on this branching
proposal and the alternatives. This
comment is discussed below. Also as
proposed, the final rule removes 12 CFR
145.93, 145.95 and 145.96, and makes a
conforming change to § 145.92.
Branches of national banks (§ 5.30).
The final rule revises § 5.30(c), the
scope section. Section 5.30(c)(2)
(formerly part of § 5.30(c)) continues to
provide that the standards of § 5.30
(governing review and approval of
applications by the OCC) and, as
applicable, 12 U.S.C. 36(b), applies to
branches established as a result of a
business combination approved under
§ 5.33. The final rule adds branches
acquired or retained in a conversion
approved under § 5.24 to the scope of
§ 5.30, while maintaining the
application procedures set forth in
§ 5.24 for these transactions. The
addition of branches acquired or
retained in a conversion under § 5.24 to
this section reflects current practice.
The final rule also revises the
definition of ‘‘branch.’’ Section
5.30(d)(1)(ii)(B) currently excepts from
the definition of ‘‘branch’’ a facility that
is located at the site of, or is an
extension of, an approved main office or
branch office of the national bank. The
final rule amends this paragraph to state
that the OCC will consider a drive-in or
pedestrian facility located within 500
feet of a public entrance to an existing
main office or branch office to be such
an extension, provided the functions
performed at the drive-in or pedestrian
facility are limited to functions
ordinarily performed at a teller window.
This ‘‘bright-line’’ 500-foot test for
national banks is consistent with
§ 145.93(b)(1), which provides this
exception for Federal savings
associations. The final rule also adds
new § 5.30(d)(1)(iii) to describe more
clearly what is not a branch, including
ATMs and remote service units,56 as
56 The final rule also amends § 7.4003
(establishment and operation of a remote service
unit) to add a number of additional examples of
PO 00000
Frm 00022
Fmt 4701
Sfmt 4700
well as loan production offices, deposit
production offices, administrative
offices, and any other office that does
not engage in any of the activities set
out in paragraph (d)(1).
In addition, the final rule updates
§ 5.30(e), relating to the principles that
guide the OCC in making
determinations on applications under
this section, to reflect the OCC’s
statutory mission as amended in section
314 of the Dodd-Frank Act.57
Finally, the final rule amends
§ 5.30(f)(6), which sets forth the
procedures for expedited review of
applications by eligible national banks.
This change clarifies that the time
period for review of an application for
a short-distance relocation is the 15th
day after the close of the comment
period or the 30th day after the filing is
received by the OCC, whichever is later.
This period is consistent with the
shorter comment period for applications
for short-distance relocations (15 days
rather than the standard 30 days).
Branches and agency offices of
Federal savings associations (§ 5.31). As
indicated above, new § 5.31 addresses
the establishment or relocation of
branches, or the establishment of agency
offices, by Federal savings associations.
Its format follows that of § 5.30, but it
does not include provisions from § 5.30
that apply only to national banks.
The OCC received one comment on
proposed § 5.31. This commenter stated
that the OCC should retain the different
branching rules for national banks and
Federal savings associations, as
proposed, and strongly supported this
approach over the first alternative
described in the preamble, which would
require both national banks and Federal
savings associations to file an
application to establish or relocate a
branch. With respect to this first
alternative, the commenter noted that an
application requirement would impose
an unnecessary regulatory burden on
Federal savings associations by making
their branching decisions subject to
prior OCC approval and by requiring
Federal savings associations to adapt to
the extensive case law and regulatory
history associated with the meaning of
‘‘branch.’’ Finally, this commenter
noted that implementing this alternative
would reverse a burden reducing
measure adopted as a result of the last
EGRPRA review at the same time that
the OCC is seeking further burden
reducing measures in its second
EGRPRA review.
remote service units. The rule expands this
illustrative list in order to modernize the regulation
to capture new technology with similar functional
capability.
57 12 U.S.C. 1(a).
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
The OCC has decided not to adopt the
first alternative but to adopt the second
alternative that requires the filing of an
after-the-fact notice. This notice will
enable the OCC to obtain timely
information on Federal savings
association branching activity without
imposing significant regulatory burden.
Specifically, an after-the fact notice will
strengthen the OCC’s ability to monitor
savings association branching activity
and will enable the OCC to maintain
comprehensive supervisory and
structural data for Federal savings
associations. We note that we received
no comments on this after-the-fact
notice alternative.
Section 5.31 as adopted by this final
rule, and its differences with the current
Federal savings association branching
rule, are described below.
Section 5.31(a) recites the statutory
authority for the rule. Section 5.31(b)
sets out the basic requirement that a
Federal savings association must file an
application to establish or relocate a
branch, unless the transaction qualifies
for one of the exceptions in the rule.
Section 5.31(c), the scope section,
generally describes what the section
covers—namely, the procedures and
standards for review and approval of
applications to establish or relocate a
branch, the circumstances in which an
application is not required, and the
authority to establish agency offices.
Section 5.31(c)(2) (similar to § 5.30(c)(2)
as amended by this final rule) provides
that the standards of § 5.31 (governing
review and approval of applications by
the OCC) apply to branches acquired or
retained in a conversion approved
under § 5.23 or a business combination
approved under § 5.33, but that such
branches are subject only to the
application procedures set forth in
§§ 5.23 or 5.33. Section 5.31(c)(3) states
that § 5.31 also implements section 5(m)
of the HOLA,58 which addresses
branching by Federal and state savings
associations in the District of Columbia.
Section 5.31(d) adds a definition of
‘‘branch office’’ for Federal savings
associations for purposes of § 5.31 by
referring to the definition in 12 CFR
145.92(a). The final rule also includes a
definition of ‘‘home state’’—the state in
which the association’s home office is
located.
Section 5.31(e) sets forth the policy
principles that guide the OCC’s review
of an application to establish or relocate
a branch. These principles reflect the
OCC’s statutory mission as amended in
section 314 of the Dodd-Frank Act, and
are identical to those principles set forth
in § 5.30(e) for the OCC’s review of a
58 See
12 U.S.C. 1464(m).
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
national bank branch application or
relocation.59
Paragraph (f)(1) of § 5.31 requires each
Federal savings association to submit a
separate application to establish or
relocate a branch, unless the transaction
qualifies for an exception in paragraph
(f)(2). Sections 145.93 and 145.95
contain a number of provisions
regarding the filing of notices and
applications with the OCC as well as
notices to the public. These provisions
are no longer necessary once Federal
savings association branch filings are
subject to part 5. Paragraph (e) of
§ 145.93 does not have a corresponding
provision in § 5.30, and the OCC is not
including it in § 5.31. Under § 145.93(e),
a Federal savings association may not
file an application or notice, or use any
of the exceptions, to establish a branch
if the association has filed an
application to merge or otherwise
surrender its charter and the application
has been pending for less than six
months.
Paragraph (f)(2) of § 5.31 incorporates
three of the exceptions from § 145.93(b)
to the requirement to file an application:
(1) The exception for the establishment
of a drive-in or pedestrian office that is
located within 500 feet of an existing
home or branch office, (2) the exception
for a short-distance relocation of a
branch, and (3) the exception for the
establishment or relocation of a branch
by highly rated Federal savings
associations.60
Under this third exception in
§ 145.93(b)(3), a highly rated Federal
savings association is not required to
file an application to change the
permanent location of an existing
branch or to establish a new branch if
it meets certain requirements. Those
requirements are: (1) The Federal
savings association is eligible for
expedited treatment, (2) it publishes
notice, at a time period specified in the
rule, of its intent to establish or relocate
a branch, (3) in the case of a relocation,
it posts notice of its intent to relocate
the branch at the existing branch, and
(4) no person files a comment opposing
the action, or if a comment is filed, the
59 12
U.S.C. 1(a).
final rule replaces the fourth exception
(which provides that a Federal savings association
may re-designate an existing branch office as a
home office at the same time that it re-designates
its existing home office as a branch office) with
provisions in § 5.40. Section 5.40 governs changes
in the locations of a national bank’s main office or
a Federal savings association’s home office.
Changes in the location of a home office, including
to an existing branch office, are subject to § 5.40.
If the Federal savings association proposes to
establish a branch at its former home office
location, paragraph (c)(3) of § 5.40 directs the
association to follow § 5.31.
60 The
PO 00000
Frm 00023
Fmt 4701
Sfmt 4700
28367
OCC determines the comment raises
issues that are not relevant to the
standards for approving a branch
application.
The final rule continues these
qualifying requirements with the
following differences. First, as with
other sections in part 5, the condition
for qualifying is that the Federal savings
association is an ‘‘eligible savings
association’’ rather than eligible for
expedited treatment. As discussed
earlier in this preamble, there are some
differences in these tests. Second, the
application exceptions in § 5.31(f)(2) do
not apply in the context of section 5(m)
of the HOLA, described below in the
discussion of § 5.31(j).
Section 5.31(f)(3) requires that highly
rated Federal savings associations not
required to file a branch application
must file a notice with the OCC within
10 days after the opening of the branch.
This notice must include the date the
bank established or relocated the branch
and the address of the branch. As
indicated above, this is a new
requirement for Federal savings
associations.
Paragraph (d) of § 145.93 provides
that the bank may retain such branches
after a conversion or combination unless
the transaction approval specifies
otherwise. The final rule does not retain
this provision in § 5.31. Instead, the
final rule addresses the retention of
branches in a conversion or business
combination in the conversion and
business combination regulations (in
this final rule, § 5.23 for conversions to
become a Federal savings association
and § 5.33 for business combinations
resulting in a Federal savings
association).
Paragraph (g) of § 5.31 sets out
exceptions to the rules of general
applicability for applications by a
Federal savings association to establish
or relocate a branch. Specifically, the
OCC may waive or reduce the public
notice and comment period in certain
emergency situations or with respect to
certain temporary branches.
Paragraph (h) of § 5.31 provides that
the OCC’s approval of a branch expires
if the branch has not commenced
business within 18 months, unless the
OCC grants an extension. This period is
longer than the current 12-month
expiration period for branch approvals
for Federal savings associations under
§ 145.95(c).
Paragraph (i) of § 5.31 provides that
Federal savings associations must
comply with the portions of 12 U.S.C.
1831r–1 that apply to Federal savings
associations with respect to branch
closings.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28368
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Section 5.31(j) implements section
5(m)(1) of the HOLA.61 Section 5(m)(1),
which applies to both Federal and state
savings associations, provides that no
savings association incorporated under
the laws of the District of Columbia or
organized in the District or doing
business in the District shall establish
any branch or move its principal office
or any branch without the Comptroller’s
prior written approval and that no
savings association shall establish any
branch in the District or move its
principal office or any branch in the
District without the Comptroller’s prior
written approval. Section 145.93(c)
currently provides prior approval for
any savings association branch that
would be subject to section 5(m)(1), if
the association meets the requirements
of § 145.93(b) for an exception to the
branch application filing requirement.
As indicated in the preamble to the
proposed rule, the OCC believes
requiring an application and issuing a
prior written approval for each
application is more consistent with the
statutory language of section 5(m)(1).
Accordingly, the final rule amends the
provisions implementing section
5(m)(1) of the HOLA to require an
application. The rule provides a short
paraphrase of the statutory provision
and instructs savings associations
requiring approval under section
5(m)(1) to follow the application
procedures of 12 CFR 5.31.
Finally, paragraph (k) to § 5.31
includes provisions currently in
§ 145.96 regarding agency offices.
We note that the comment letter we
received on the branching proposal
asked the OCC to clarify that mobile
phones and similar devices are not
branches. With respect to national
banks, if the mobile phone or similar
device belongs to the customer, then it
is not a facility established by the bank.
If the mobile phone or similar device is
owned or controlled by the bank, then
it would be a remote service unit, and
therefore not a branch pursuant to 12
U.S.C. 36(j) and 12 CFR 7.4003.
Moreover, the final rule at
§ 5.30(d)(1)(iii) implicitly addresses this
point by including ‘‘personal computer’’
as an example of a remote service unit.
With respect to Federal savings
associations, a mobile phone is an
‘‘electronic means or facility’’ pursuant
to current § 155.200 and excluded from
the definition of branch under current
§ 145.92, as incorporated in proposed
§ 5.31.
61 12
U.S.C. 1464(m)(1).
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
Expedited procedures for certain
reorganizations (§ 5.32)
Twelve CFR 5.32 provides the
procedures for OCC review and
approval of a national bank’s
reorganization to become a subsidiary of
a bank holding company or a company
that will, upon consummation of such
reorganization, become a bank holding
company. Section 5.32 currently does
not expressly exempt such
reorganizations from the general
procedures in part 5 for public notice,
public availability, and hearings and
other meetings (§§ 5.8, 5.9, and 5.11).
When originally adopted, it was not the
OCC’s intent to apply these procedures
to these reorganizations, and, in general,
the OCC has not required national banks
to comply with these procedures. The
OCC proposed to amend § 5.32 to make
clear in the regulation that these
procedural requirements do not apply
unless the OCC concludes that an
application presents significant and
novel policy, supervisory, or other legal
issues. This approach is consistent with
procedural exceptions for conversions
(§ 5.24), fiduciary powers (§ 5.26),
operating subsidiaries (§ 5.34), bank
service companies (§ 5.35), and change
in asset composition (§ 5.53). The OCC
did not receive any comments related to
§ 5.32, and we adopt it as proposed.
Business Combinations (§ 5.33)
Business combinations include
mergers and consolidations, as well as
certain purchase and assumption
transactions. The OCC’s regulations
governing the application requirements
and procedures for national banks
engaging in business combinations are
contained in 12 CFR 5.33. The
regulations governing the application
requirements and procedures for
Federal savings associations engaging in
business combinations are contained in
12 CFR 163.22. The statutes governing
mergers and consolidations by national
banks contain extensive specifications
for their authority, the procedures the
bank must follow, and the effect of the
merger or consolidation.62 Thus, there
are few OCC regulations on these
matters. By contrast, the statutes
governing mergers and consolidations
by Federal savings associations contain
few provisions addressing these
matters.63 Accordingly, the OCC (and its
predecessor regulators of Federal
savings associations) has adopted
extensive regulations addressing the
authority of Federal savings associations
to engage in mergers and consolidations,
62 See
12 U.S.C. 214–214d, 215–215b, and 215c,
respectively.
63 See 12 U.S.C. 1464(d)(3)(A) and 1467a(s).
PO 00000
Frm 00024
Fmt 4701
Sfmt 4700
the procedures the savings association
must follow, and the effect of the merger
or consolidation. These rules are
contained in 12 CFR part 146 for
Federal mutual savings associations and
in 12 CFR 152.13, 152.14, and 152.15 for
Federal stock savings associations.
While these rules address a common
subject, there are a number of
differences between them. We proposed
to harmonize the treatment of the
business combination activities of
national banks and Federal savings
associations where consistent with
underlying statutory authorities, to
consolidate our regulations by
amending 12 CFR 5.33 to apply to
Federal savings associations, and to
remove 12 CFR part 146 and 12 CFR
152.13, 152.14, 152.15, and 163.22.64
These changes are intended to reduce
regulatory duplication and promote
fairness in supervision. We also
proposed to include in § 5.33 some
provisions from the Federal savings
association application requirements
and procedures, to make several other
substantive changes in § 5.33, and to
make a number of clarifying or technical
amendments. As explained below, the
OCC proposed to subject national banks
and Federal savings associations to the
same application requirements and
procedures. In addition, we proposed to
add to § 5.33 new paragraphs, based on
12 CFR part 146 and 12 CFR 152.13 and
152.14, that would continue to provide
regulations addressing the authority of
Federal savings associations to engage
in mergers and consolidations, describe
the procedures the savings association
must follow, and explain the effect of
the merger or consolidation.
We received three comment letters
addressing proposed § 5.33. These
comment letters and revised § 5.33 are
discussed below.
Scope. The final rule modifies the
scope section, § 5.33(b), to remove the
reference to a merger between a national
bank and its nonbank affiliate because
those transactions are now covered in
the revised definition of ‘‘business
combination,’’ discussed below. The
final rule also revises the language
regarding notices to the OCC relating to
when a national bank or Federal savings
association is not the resulting
institution to address situations in
which the merger is with an entity that
is not a ‘‘depository institution’’ as
defined for purposes of § 5.33.65 In
addition, the final rule adds a footnote
to the licensing requirements section
64 The removal of part 146 and § 163.22 also is
discussed elsewhere in this preamble.
65 Under § 5.3(f), ‘‘depository institution’’ means
any bank or savings association.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
indicating that some of the transactions
that do not require an application under
§ 5.33 may require an application under
12 CFR 5.53 for a substantial asset
change.
Definitions. Section 5.33(d) contains
definitions. The final rule revises and
reorganizes the definition of ‘‘business
combination,’’ § 5.33(d)(2), in several
ways. First, § 5.33(d)(2)(i) now includes
consolidations and mergers of Federal
savings associations with state trust
companies. Second, new § 5.33(d)(2)(ii)
includes mergers and consolidations
between a Federal savings association
and a credit union in the definition of
business combinations. Federal savings
associations have authority to engage in
these transactions under certain
circumstances but national banks do
not. Third, new § 5.33(d)(2)(iii) includes
the provision in the current definition
regarding mergers between a national
bank and its nonbank affiliates. National
banks have this merger authority, but
Federal savings associations do not.
Fourth, new § 5.33(d)(2)(v) revises an
existing provision in § 5.33(d)(2), which
currently includes in the definition of
business combination only the
assumption of deposit liabilities from
another depository institution, to also
include the assumption, from a credit
union or any other institution that is not
FDIC-insured, of deposit accounts or
other liabilities that will become
deposits at the assuming national bank
or Federal savings association. Section
163.22(c) requires an application by a
Federal savings association in such
cases.66 The final rule keeps this
requirement and extends it to national
banks. This requirement will assist the
OCC in monitoring acquisitions of
deposit liabilities from outside the
FDIC-insured system.
Fifth, the final rule includes the new
term ‘‘other combination’’ in
§ 5.33(d)(10) to describe the following
combinations that do not require
application to the OCC under § 5.33: (1)
mergers or consolidations where a
national bank or Federal savings
association is not the resulting
institution; (2) the transfer of deposit
liabilities by a national bank or Federal
savings association to another insured
depository institution, a credit union, or
any other institution; and (3)
acquisitions by a national bank or
Federal savings association of all, or
substantially all, of the assets or
liabilities of any company not an
insured depository institution (whole
entity purchase and assumption
transactions).
66 Section 163.22(c) also is discussed elsewhere in
this preamble in connection with 12 CFR 5.53.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
Currently, a Federal savings
association has authority to engage in
whole entity purchase and assumption
transactions only with an entity with
which it could engage in a consolidation
or merger. These entities do not include
a nonbank affiliate or other company.
When a Federal savings association is
permitted to engage in such
transactions, it is required to file an
application. A national bank has
authority to engage in a whole entity
purchase and assumption transaction
without regard for whether it has the
authority to consolidate or merge with
the counterparty. The purchase and
assumption of bank-permissible assets
and liabilities is an exercise of a bank’s
power to engage in the business of
banking under 12 U.S.C. 24(Seventh),
not the power to combine organically
with another institution, as in a merger.
As proposed, the final rule adopts the
same position regarding the power of a
Federal savings association to engage in
purchase and assumption transactions.
Thus, a Federal savings association will
have the authority to engage in a whole
entity purchase and assumption without
regard to whether it has authority to
consolidate or merge with the
counterparty because such transactions
are included in the final rule at
§ 5.33(n)(2).
While national banks currently have
this whole entity purchase and
assumption authority, they are not
required to apply to the OCC for
approval unless it is a whole entity
purchase and assumption with a
depository institution. The proposed
rule required an application for both
national banks and Federal savings
associations for a whole entity purchase
and assumption that would result in a
25 percent or more increase in the asset
size of the bank or savings association.
We included this provision in the
business combination rule because these
transactions are similar to a merger. One
commenter opposed this new
application requirement, stating that the
requirement is not connected to the
integration of national banks and
Federal savings association rules. We
note, however, that Federal savings
associations in current § 163.22(c) are
subject to an application requirement
for the purchase or sale in bulk not in
the ordinary course of business.
However, upon further consideration,
we have amended this provision to
streamline our rules. Because whole
entity purchase and assumption
transactions meeting the 25 percent
asset size threshold may be subject to an
application requirement under revised
§ 5.53(c)(1)(iii) as a substantial asset
PO 00000
Frm 00025
Fmt 4701
Sfmt 4700
28369
change, we find that the application
requirement in § 5.33 for such
transactions is not necessary. We
therefore have removed these
transactions from § 5.33 in the final rule
by removing whole entity purchase and
assumption transactions that result in a
25 percent or more increase in asset size
from the definition of ‘‘business
combination’’ in § 5.33(d)(2) and
removing the asset size qualification
from § 5.33(d)(10)(iv).
The OCC also is adding definitions of
‘‘credit union,’’ ‘‘savings association,’’
‘‘state savings association,’’ and ‘‘state
trust company’’ in § 5.33(d)(6), (11), and
(12), respectively. In addition, the final
rule is revising the definition of ‘‘home
state’’ included in the proposed rule to
remove references to savings
associations, as this term is only used
with respect to national banks in § 5.33.
Policy factors. The final rule expressly
adds to § 5.33(e)(1), in new paragraph
(i), the general factors the OCC uses to
evaluate all business combination
applications, including both those the
OCC reviews under the Bank Merger Act
and those the OCC does not. These
factors are: (1) the institution’s capital
level; (2) the conformity of the
transaction to applicable law,
regulation, and supervisory policies; (3)
the purpose of the transaction; (4) the
impact of the transaction on safety and
soundness; and (5) the effect of the
transaction on the institution’s
shareholders (or members in the case of
a mutual savings association),
depositors, other creditors, and
customers. These factors all reflect
current practice. Some of these factors
are included in § 5.33(g)(4) and (5) now
for a merger with a nonbank affiliate, in
which the OCC does not review the
transaction under the Bank Merger Act.
Other factors are included in the Federal
savings association regulations at
§ 163.22(d). Section 163.22(d)(1)(vi) also
has factors relating to the fairness of and
disclosure concerning the transaction
and includes a detailed presentation of
considerations involved in assessing the
factor. The OCC believes it is not
necessary to include this detailed
material in the regulation. We believe
the factor in § 5.33(e)(1)(i)(E) regarding
the effect of the transaction on the
institution’s shareholders,(or members
in the case of a mutual savings
association), depositors, other creditors,
and customers is sufficient to provide a
basis to review such matters in
appropriate cases.
The final rule includes three
additional factors in § 5.33(e)(1)(ii) for
applications in which the OCC reviews
the transaction under the Bank Merger
Act. First, the rule moves the money
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28370
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
laundering factor included in current
§ 5.33(e)(1)(iii) to the Bank Merger Act
paragraph because it is a factor in the
Bank Merger Act. The rule adds factors
relating to financial stability and deposit
concentration limit because the DoddFrank Act added these factors to the
Bank Merger Act.67
As in the current rule, proposed
§ 5.33(e)(1)(iii) provides that, when the
OCC evaluates an application for a
business combination under the CRA,
the OCC also considers the performance
of the applicant and the other
depository institutions involved in the
business combination in helping to meet
the credit needs of the relevant
communities, including low- and
moderate-income neighborhoods,
consistent with safe and sound banking
practices. One commenter
recommended that the OCC require
banks to demonstrate a record of strong
community development and that this
requirement should go beyond
demonstrating a Satisfactory rating or
above on the most recent CRA exam.
This commenter also recommended that
the OCC require banks to demonstrate a
clear public benefit to both the current
and expanded assessment areas,
together with a formal CRA agreement
with the local communities. The OCC
declines to accept these
recommendations. The commenter’s
proposed standards of a record of strong
community development and clear
public benefit are more stringent than
the statutory requirement under the
CRA. They are also different than the
convenience and needs factor under the
Bank Merger Act, 12 U.S.C. 1828(c)(5).
Another commenter stated that, in
considering office closings in their
assessment of the convenience and
needs and CRA factors as part of a
merger application review, the Federal
banking agencies should recognize
technological advancements that have
led consumers to make greater use of
alternative means to obtain products
and services, including the use of
mobile phones. The commenter states
that the agencies should balance the
consideration of office closings with
consideration of an institution’s use of
alternative technologies that serve the
public. We agree that an office closing
does not necessarily result in a negative
impact on service to the community
given the increased use of alternate
systems for delivering retail banking
services. In assessing the probable
effects of the business combination on
the convenience and needs of the
community to be served, the OCC would
67 Pub. L. 111–203, sections 604(f) and 623(a), 124
Stat. 1376, 1602, and 1634 (2010).
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
consider alternative systems for
delivering retail banking services to the
extent that the alternative delivery
systems are available and effective in
providing financial services to low- and
moderate-income geographies and
individuals. Furthermore, one reason
the OCC’s review of a merger
application focuses on office closings is
because of the branch closing
procedural requirements of 12 U.S.C.
1831r–1. We therefore decline to make
any change to our regulations on this
point.
The final rule also clarifies the
information the applicant must include
in its application. Section 5.33(e)(2)
currently requires an applicant to
disclose the location of any branch it
will acquire and retain in a business
combination. The final rule provides
that this disclosure include the location
of any branches that are approved but
not yet opened. Revised § 5.33(e)(3)
adds a financial subsidiary investment,
bank service company investment,
service corporation investment, and
other equity investment to the current
requirement to identify subsidiaries and
provide an analysis of the permissibility
for the national bank or Federal savings
association to hold the subsidiary or
investment. This requirement reflects
the current practice of the OCC to
review the legal permissibility for the
resulting national bank or Federal
savings association to continue to hold
these other investments when
evaluating a business combination
application.
In addition, the final rule adds
Federal savings associations to the
provision in § 5.33(e)(5) that allows
banks to retain nonconforming assets for
a limited period of time after
consummation of a business
combination. The final rule also adds a
new paragraph (e)(5)(ii) applicable to
Federal savings associations to address
provisions in the HOLA regarding
certain nonconforming assets.
In the provision regarding the exercise
of fiduciary powers by the resulting
national bank or Federal savings
association, § 5.33(e)(6), the final rule
adds a new paragraph (e)(6)(ii) to clarify
that if the applicant intends to exercise
fiduciary powers after the combination
and requires OCC approval for such
powers, it must include in the business
combination application the
information required in § 5.26 for a
request for fiduciary powers. This
requirement reflects current practice.
In the provision regarding the
expiration of approval, § 5.33(e)(7), the
final rule shortens the time an approval
expires if the transaction has not been
consummated from one year to six
PO 00000
Frm 00026
Fmt 4701
Sfmt 4700
months, and adds a provision under
which the OCC can extend the sixmonth period.
Exceptions to rules of general
procedure. Section 5.33(f) contains the
exceptions to the rules of general
applicability for filings under § 5.33.
Paragraph (f)(1) addresses filings in
which a national bank (and, as revised,
a Federal savings association) is the
applicant. The final rule amends
paragraph (f)(1) to clarify that the
requirement of public notice and
comment apply only when the
application is subject to a public notice
requirement under the Bank Merger Act
or other applicable statute that requires
notice to the public. In such cases, the
statutory requirements apply. In other
cases, the public notice and comment
provisions in §§ 5.8, 5.10, and 5.11 do
not apply unless the OCC concludes a
particular application presents
significant or novel policy, supervisory,
or legal issues.68 Applying this
provision to Federal savings
associations results in a change for
Federal savings associations with
respect to the frequency and timing of
publication for transactions that are
subject to the Bank Merger Act. Section
163.22(e)(1)(i) requires an initial
publication in a newspaper and then
publication on a weekly basis during the
public comment period. For national
banks, the OCC requires an initial
newspaper publication and two
subsequent publications at intervals
during the standard 30-day public
comment period, as provided in the
Comptroller’s Licensing Manual.
One commenter requested that we
allow other forms of public notice of
proposed transactions in addition to the
newspaper notice required by 12 U.S.C.
1828(c)(3)(D), such as notice on an
institution’s Web site, and specifically
requested that the OCC endorse a
statutory amendment to the Bank
Merger Act that permits alternative
forms of public notice. We note that
providing additional alternative forms
of notice does not require a change in
the law or our rules. An institution may
provide notice on its Web site on its
own initiative if it so chooses and
thereby provide for increased notice
opportunities to the public. With
68 Section 5.33(f) currently includes a list of
several other statutory or regulatory requirements
for publication in connection with certain mergers
or consolidations that also except those transactions
from the one-time publication of notice requirement
of § 5.8(a). However, those provisions concern
publication of notice of the shareholders’ meeting
being called to vote on the proposed merger or
consolidation. They are not notices to the public
inviting comment on the merger or consolidation
application. Accordingly, the OCC is removing
these referenced provisions in revised § 5.33(f)(1)(i).
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
respect to the requested statutory
change, we believe that replacing the
newspaper publication with alternative
means could reduce the availability of
the notice to the public. However, we
will continue to review this proposal as
we review other EGRPRA requests for
statutory changes.
Paragraph (f)(1)(ii) continues the
current provisions under which a
merger between a national bank and its
nonbank affiliate is excepted from
public notice and comment. Such
mergers are merely internal
reorganizations of the entities’ existing
operations.
Section 5.33(f)(3) addresses filings in
which a national bank (and as revised,
a Federal savings association) is the
target company and will not be the
resulting institution. The final rule
clarifies this provision so that it no
longer includes a Federal savings
association as a resulting institution, as
Federal savings associations now apply
to the OCC under revised § 5.33(g)(3).
The final rule also adds credit unions to
this section because a merger or
consolidation of a Federal savings
association into a credit union may now
be within the scope of § 5.33. In
addition, the final rule removes §§ 5.2
(rules of general applicability) and 5.5
(fees) from the list of sections that do
not apply to § 5.33(g)(6) and (g)(7), as
they include general provisions that
may be useful to apply in some
situations.
Provisions governing consolidations
and mergers of a national bank with
other national banks and state banks.
The final rule amends § 5.33(g)(1)
(merger or consolidation of a national
bank or a state bank into a national
bank) to require that a national bank
that will not be the resulting bank in a
merger or consolidation with another
national bank must file a notice to the
OCC under § 5.33(k). This notice, which
also is required whenever a national
bank or Federal savings association
merges or consolidates into another
institution, provides the OCC
information about the target national
bank’s compliance with requirements to
combine into another bank, and
describes the steps for the national bank
to end its separate existence. Section
5.33(k) is discussed further below.
The final rule amends § 5.33(g)(2)
(merger or consolidation of a Federal
savings association into a national bank)
to reflect that the OCC now is the
regulator of Federal savings
associations. First, § 5.33(g)(2)(i)(B)
includes requirements similar to those
in 12 CFR part 146 and 12 CFR 152.13
and 163.22 (by referring to § 5.33(n) and
(o)). In addition, § 5.33(g)(2)(i)(B)
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
includes a provision under which a
whole purchase and assumption of the
target Federal savings association is
treated as a consolidation for the
Federal savings association, thus
applying the procedural requirements in
paragraph (o). The current regulations,
at 12 CFR part 146 and 12 CFR 152.13,
apply these requirements to these
transactions through the definition of
‘‘combination’’ in § 152.13(b)(1), which
includes a whole purchase and
assumption transaction between
depository institutions.
Second, because the OCC now has
regulatory authority over both the
national bank and the Federal savings
association, the final rule amends the
provision in § 5.33(g)(2)(ii), which
currently provides that the OCC may
conduct an appraisal of dissenters’
shares of stock in a national bank
involved in a consolidation with a
Federal savings association if all the
parties agree, to require that the OCC
conduct this appraisal. The final rule
also redesignates this provision as
§ 5.33(g)(2)(ii)(C).
Third, the final rule adds new
§ 5.33(g)(2)(ii)(A) and (B) to set out the
process for appraisal of dissenters’
shares of stock in a Federal stock
savings association involved in a
consolidation with or merger into a
national bank. Consolidations and
mergers of national and state banks into
a national bank are governed by 12
U.S.C. 215 and 215a. These statutes
include provisions on dissenters’ rights.
Consolidations and mergers of Federal
savings associations into national banks
are authorized under 12 U.S.C. 215c, but
the statute has no provisions addressing
dissenters’ rights. Applications in which
there are dissenting shareholders and
the appraisal process is used are rare.
The basic frameworks of the national
bank and Federal savings association
processes in the current rules are
similar. In the interest of simplicity of
administration and similar treatment for
each type of institution, the OCC prefers
to use only one dissenters’ rights
process. Because the process governing
national bank dissenters’ rights
included in current § 5.33 for national
banks is required by 12 U.S.C. 215 and
215a, the final rule applies this process
to transactions in which a Federal
savings association is merging or
consolidating into a national bank rather
than continuing the regulatory
dissenters’ rights provision in 12 CFR
152.14. However, the final rule makes
one change to this process. Under the
statutes, the bank is required to bear all
costs.69 Under § 152.14(c)(9), the OCC
69 See
PO 00000
12 U.S.C. 214a(b), 215(d), and 215a(d).
Frm 00027
Fmt 4701
Sfmt 4700
28371
may apportion costs. For transactions in
which the process for dissenters’ rights
is not governed by statute, such as
transactions governed by
§ 5.33(g)(2)(ii)(C), the final rule includes
the authority for the OCC to apportion
costs among the parties for both
participating Federal savings
associations and participating national
banks.
Section 5.33(g)(2)(iii) includes a
requirement that the consolidation or
merger agreement must address the
effect upon, and the terms of the
assumption of, any liquidation account
of any other participating institution by
the resulting institution. This
requirement is based on provisions in
§§ 146.2(b)(9) and 152.13(f)(9). Although
not currently in § 5.33, it is a
requirement for national banks as
discussed in the Comptroller’s
Licensing Manual.
New § 5.33(g)(3) addresses
consolidations and mergers of other
institutions into a Federal savings
association.70 This section requires
application to the OCC and, in
§ 5.33(g)(3)(i)(A) (referring to § 5.33(n)
and (o)), requires the Federal savings
association to comply with
requirements and procedures similar to
those in 12 CFR part 146 and 12 CFR
152.13 and 163.22. Section
5.33(g)(3)(i)(A) also provides that if a
combination involves a whole purchase
and assumption of a Federal savings
association, then the combination is be
treated as a consolidation for
participating Federal savings
associations and the procedural
requirements in paragraph (o) will
apply. As discussed above, the current
regulations, at 12 CFR part 146 and 12
CFR 152.13, apply these requirements to
such transactions through the definition
of ‘‘combination’’ in § 152.13(b)(1),
which includes a whole purchase and
assumption transaction between
depository institutions.
Section 5.33(g)(3)(i)(B)(1) continues
the provisions in current
§ 5.33(g)(3)(iii)(A) by requiring a target
national bank to follow the procedures
of 12 U.S.C. 214a and 12 U.S.C. 214c,
as if the Federal savings association
were a state bank. Section
5.33(g)(3)(i)(B)(2) continues the
provisions in current § 5.33(g)(3)(iii)(B),
under which the OCC may conduct an
appraisal of dissenters’ shares of stock
70 The final rule redesignates the provisions in
current § 5.33(g)(3) that address a consolidation or
merger of a national bank into a state chartered
depository institution as § 5.33(g)(6). The provisions
in current § 5.33(g)(3) that address a consolidation
or merger of a national bank into a Federal savings
association remain here in new § 5.33(g)(3) with
modifications, as discussed in the text.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28372
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
in a target national bank involved in a
merger or consolidation with a Federal
savings association if all the parties
agree. However, the final rule makes the
appraisal of dissenters’ rights in
§ 5.33(g)(3)(i)(B)(2) a required process
because the OCC now has regulatory
authority over both the national bank
and the Federal savings association
involved in the transaction. As
discussed above, because we are
applying this process by regulation to
types of transactions that do not have
statutory dissenters’ rights provisions,
the final rule includes the authority of
the OCC to apportion appraisal costs
between the institution and dissenters.
Section 5.33(g)(3)(i)(C) sets out the
process for appraisal of dissenters’
shares of stock in a Federal stock
savings association involved in a
consolidation or merger into another
Federal savings association. In
applications in which a Federal savings
association is merging into another
Federal savings association, the final
rule applies the statutory provisions
governing national bank dissenters’
rights in 12 U.S.C. 214a to Federal
savings associations, as if the Federal
savings association were a national bank
merging into a state bank under section
214a. We are using the national bank
dissenters’ right process rather than
continuing the regulatory dissenters’
rights provision in 12 CFR 152.14 for
the reasons discussed above. As above,
because the process is being applied in
these situations by regulation, not
statute, the final rule includes a cost
allocation provision. The final rule also
includes the requirement from 12 U.S.C.
214a(b) that the plan of merger or
consolidation must provide the manner
of disposing of the shares of the
resulting Federal savings association not
taken by the dissenting shareholders.
This requirement is a change from
§ 152.14(c)(11), under which such
shares shall have the status of
authorized and unissued shares of the
resulting association. The plan of
merger or consolidation could still
provide such status for these shares, but
such status is no longer mandatory.
Section 5.33(g)(3)(i)(D) provides that a
state bank, state savings association or
credit union that engages in a
consolidation or merger into a Federal
savings association follows the
procedures and dissenters’ rights
process set out for such transactions in
the law of the state or other jurisdiction
under which it is organized. This
provision is similar to the current
provisions in § 5.33(g)(4) and (g)(5) for
mergers between a national bank and its
nonbank affiliate.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
Section 5.33(g)(3)(ii) includes a
requirement that the consolidation or
merger agreement must address the
effect upon and the terms of the
assumption of, any liquidation account
of any other participating institution by
the resulting institution. This
requirement is based on provisions in
§§ 146.2(b)(9) and 152.13(f)(9). Although
not currently in § 5.33, it is a
requirement for national banks as
discussed in the Comptroller’s
Licensing Manual.
Sections 5.33(g)(4) and (g)(5) address
mergers between a national bank and its
nonbank subsidiary or affiliate. Section
5.33(g)(4) covers mergers into the
national bank; § 5.33(g)(5) covers
mergers into the nonbank subsidiary or
affiliate. They implement a statute
applicable only to national banks, not
Federal savings associations.71 The final
rule amends § 5.33(g)(4), to clarify that
the transaction is subject to review by
the FDIC under the Bank Merger Act
only when the national bank is insured.
The final rule also removes the factors
the OCC considers in reviewing these
applications from § 5.33(g)(4)(i) and
(g)(5)(i). These factors no longer are
needed in these provisions because the
final rule adds them to § 5.33(e)(1)(i)
and applies them to all business
combinations.
Section 5.33(g)(6) addresses a
consolidation or merger under 12 U.S.C.
214a of a national bank with a state
bank resulting in a state bank (as
defined in 12 U.S.C. 214(a)). This new
paragraph is based on the portions of
current § 5.33(g)(3) that address a
consolidation or merger of a national
bank into a state bank.72 The final rule
also adds express provisions on
procedures and dissenters’ rights. These
requirements are statutory and were
implied in current § 5.33(g)(3)(i). The
final rule moves the provisions on
termination of charter and notice to the
OCC in current § 5.33(g)(3)(i) and (ii) to
new § 5.33(k). In § 5.33(g)(6)(iv), the
final rule includes a requirement that
the consolidation or merger agreement
must address the effect upon, and the
terms of the assumption of, any
liquidation account of any other
participating institution by the resulting
institution. This requirement is based
on provisions in §§ 146.2(b)(9) and
152.13(f)(9). Although not currently in
§ 5.33, it is a requirement for national
banks as discussed in the Comptroller’s
Licensing Manual.
71 See
12 U.S.C. 215a–3.
portions of current § 5.33(g)(3) that address
a consolidation or merger of a national bank into
a Federal savings association remain in revised
§ 5.33(g)(3).
72 The
PO 00000
Frm 00028
Fmt 4701
Sfmt 4700
The final rule adds a new § 5.33(g)(7),
similar to proposed § 5.33(g)(6), to
address a consolidation or merger of a
Federal savings association into a state
bank, state savings bank, state savings
association, state trust company, or
credit union. Under § 5.33(g)(7)(i), such
transactions, where permissible, require
only a notice to the OCC, not
application and approval. This
requirement is a change for Federal
savings associations because, under
§ 163.22(c), an application is required
for a combination with an uninsured
bank, savings association or trust
company or a credit union. Section
5.33(g)(7)(ii) addresses the procedures
Federal savings association must follow
to engage in the consolidation or merger
and requires the association to follow
the provisions of § 5.33(n) and (o),
which are based on provisions in 12
CFR part 146 and 12 CFR 152.13 and
163.22. In addition, § 5.33(g)(7)(ii)
includes a provision under which a
whole purchase and assumption of the
target Federal savings association is
treated as a consolidation for the
Federal savings association so that the
procedural requirements in paragraph
(o) apply. The current regulations, at 12
CFR part 146 and 12 CFR 152.13, apply
these requirements to such transactions
now through the definition of
‘‘combination’’ in § 152.13(b)(1), which
includes a whole purchase and
assumption transaction between
depository institutions, in addition to a
consolidation and a merger.
Section 5.33(g)(7)(iii) sets out the
process for appraisal of dissenters’
shares of stock in a Federal stock
savings association involved in a
consolidation or merger into a state
bank, state savings bank, state savings
association, state trust company, or
credit union. The process is similar to
the process included in
§ 5.33(g)(3)(i)(C), described above, for
appraisal of dissenters’ shares of stock
in a Federal stock savings association
involved in a consolidation or merger
into a another Federal savings
association. Section 5.33(g)(7)(iv)
includes a requirement that the
consolidation or merger agreement must
address the effect upon, and the terms
of the assumption of, any liquidation
account of any other participating
institution by the resulting institution.
This requirement is based on provisions
in §§ 146.2(b)(9) and 152.13(f)(9).
Although not currently in § 5.33, it is a
requirement for national banks as
discussed in the Comptroller’s
Licensing Manual.
Expedited review. Section 5.33(i)
provides for expedited review of
business reorganizations (defined in
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
§ 5.33(d)(3)) and for streamlined
applications for eligible business
organizations (described in § 5.33(j)).
The proposal adds Federal savings
associations to § 5.33(d)(3) and (j) so
that Federal savings association
applications that meet the requirements
are eligible for expedited review. Under
expedited review, an application is
deemed approved as of the later of the
45th day after the application was filed
or the 15th day after the close of the
comment period, unless the OCC
notifies the applicant that the
application is not eligible for expedited
review or the expedited review process
is extended. Business reorganizations
eligible for expedited review are (1) a
business combination between eligible
depository institutions owned by the
same holding company, or (2) a business
combination between an eligible bank or
savings association and an interim
national bank or interim Federal savings
association that is being effected to form
a holding company that would own the
eligible bank or savings association. For
both business reorganizations eligible
for expedited review and for
streamlined applications, the acquiring
bank must be an eligible bank and the
resulting institution must be well
capitalized. There are several types of
streamlined applications. The different
types of streamlined applications vary
depending on the other institutions’
status as eligible institutions, the
amount by which the resulting
institution would grow in size, and, in
some cases, a prefiling approval from
the OCC to use a streamlined
application.
Under the final rule, expedited review
under § 5.33(j) replaces the automatic
approval provision in § 163.22(f) for
Federal savings associations. Under
§ 163.22(f), an application is deemed to
be approved automatically 30 days after
the OCC sends the applicant a written
notice that the application is complete.
An application is removed from the
automatic approval process in a number
of specified circumstances. Many of
these circumstances are the same as
those that would cause an application
not to be eligible for expedited review
under § 5.33(j). However, the size-based
limit included in § 163.22(f) is more
restrictive than eligibility for expedited
review as a business reorganization or
streamlined application in § 5.33. Under
§ 163.22(f)(10), an application does not
qualify for the automatic approval
process if the acquiring institution has
assets of $1 billion or more and
proposes to acquire assets of $1 billion
or more. Business reorganizations have
no size limit. Streamlined applications
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
under § 5.33(j) have limits based on the
relative size of the acquiring institution
and the assets to be acquired but do not
have a fixed maximum dollar amount
limit on the size. In addition, under
§ 163.22(f) a number of the other
disqualifying conditions are based on
the competitive impact of the proposed
combination, creating safe harbors that
the proposal must meet in order to
qualify for the automatic approval
process. The OCC believes it is not
necessary to include competitive impact
thresholds in the regulation. The OCC
will notify the applicant that the
application is not eligible for expedited
review if it raises potential competitive
concerns. Accordingly, the final rule
does not include the automatic approval
process of § 163.22(f), but does add one
of the disqualifying factors set forth in
§ 163.22(f) to the streamlined
application provision. Specifically,
under § 5.33(j)(2), an applicant would
not qualify for a streamlined business
combination application if the
transaction is part of a mutual to stock
conversion under 12 CFR part 192.
We received one comment on this
expedited process advocating the
removal of expedited review from the
regulation, stating that no bank should
be able to merge without explicitly
outlining the public benefits that will
result from the merger. This commenter
also notes that stating that the merger
will not impede the bank’s ability to
comply with the CRA should not qualify
as a plan under the CRA. The OCC
disagrees with this comment. Allowing
a merger only if explicit public benefits
exist would represent a policy change
and is more stringent than the statutory
requirement. Furthermore, the OCC will
remove the application from expedited
processing if the application, or adverse
comments regarding the application,
presents a significant CRA concern.
Finally, the OCC does not believe
expedited processing should be
withheld from the many filings where
the CRA is not a concern.
The same commenter also requested
that we actively continue to reach out to
community organizations in the area
affected by the transaction, through
interviews and public hearings, to
evaluate fully how the bank is
addressing community needs and how it
will do more after the merger. We note
that in conjunction with the Federal
Reserve Board the OCC has recently
held a public meeting regarding a bank
merger application and has periodically
participated in public hearings or
meetings sponsored by the Federal
Reserve Board. The OCC will continue
to consider carefully each application
on the basis of all relevant factors when
PO 00000
Frm 00029
Fmt 4701
Sfmt 4700
28373
determining whether to grant a request
for a public hearing, pursuant to § 5.11.
Exit Notice. The final rule adds a new
§ 5.33(k) for notices to be filed when a
national bank or Federal savings
association is consolidating or merging
with another national bank or Federal
savings association or with a state
chartered institution or credit union and
the target national bank or Federal
savings association is not the resulting
institution. This section also includes
the steps an institution takes to
terminate its status as a national bank or
Federal savings association. This new
provision gathers in one place material
from current §§ 5.33(g)(3), 163.22(b) and
163.22(h)(1)(i) on filing the notice and
the timing of the filing, material from
§ 163.22(h)(1)(i) and (ii) on the content
of the notice, and material from
§§ 5.33(g)(3), 146.2(g), and 152.13(k) on
termination of the institution’s status as
a national bank or Federal savings
association. There is no change for
Federal savings associations. However,
national banks are required to include
more information in the notice than
currently required in § 5.33. This
additional information includes a short
description of the transaction or a copy
of the filing made by the acquiring
institution to its regulators for approval
of the transaction and information
showing the target national bank or
Federal savings association has
complied with the requirements to
engage in the transaction (e.g., board
and shareholder approval). The OCC is
adding this requirement to monitor the
transaction to ensure that the national
bank or Federal savings association
complies with applicable law. The
institution should have compiled this
information already and therefore this
change likely will result in minimal
additional burden to the institution.
Finally, § 5.33(k)(5) provides that an
institution must submit a new notice if
the business combination contemplated
by the notice has not occurred within
six months after receipt of the notice
unless the OCC grants an extension of
time. This requirement is in
§ 163.22(h)(1)(ii), except that the time
period is shortened in the final rule
from one year to six months to be
consistent with the expiration period for
OCC approvals under § 5.33(e)(7). This
expiration provision is new for national
banks. After six months the information
in the original notice could be out of
date. Moreover, a delay in
consummating the transaction may
indicate changes in the condition or
circumstances of the parties. Treating
the notice as having expired and
requiring a new notice is similar to the
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28374
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
requirement in various sections of part
5 that an approval expires after a
specified amount of time.
Transfer of assets and liabilities to the
resulting institution. The final rule adds
new § 5.33(l) to address corporate
succession, i.e. the transfer of assets,
liabilities, rights, franchises, interests,
and fiduciary appointments to the
resulting national bank or Federal
savings association. It reflects the
corporate succession provisions in
national bank statutes 73 and continues
the substance of current regulations
providing succession for a Federal
savings association when it is the
resulting institution in a consolidation
or merger.74
Certification of combination; effective
date. The final rule adds a new
§ 5.33(m) to address the certification of
a consolidation or merger and
documentation of its effective date.
Specifically, § 5.33(m) requires the
applicant to submit information
showing that all steps needed to
complete the transaction have been met
and to notify the OCC of the planned
consummation date. The OCC would
then issue a certification letter
documenting that the consolidation or
merger occurred and specifying the
effective date. This new section reflects
current OCC practice for national banks.
The new section accomplishes through
an applicant notification letter and
issuance of an OCC certification letter
what § 152.13(j) does in requiring the
applicant to submit two sets of ‘‘Articles
of Combination’’ that are filed with the
OCC, and then endorsed by the OCC,
with one set returned to the applicant
with a specification of the effective date.
The difference in forms and terminology
does not represent a change in
substance for Federal savings
associations.
Authority and limits on business
combinations and other transactions by
Federal savings associations. The final
rule adds a new § 5.33(n), which
includes provisions in §§ 146.2 and
152.13 that set out the authority for
Federal savings associations to engage
in various types of business
combinations and the limitations on
that authority. Section 5.33(n)(1) is
based on § 152.13(a) and provides that
Federal savings associations may enter
into business combinations only in
accordance with § 5.33, the Bank Merger
Act, and sections (5)(d)(3)(A) and 10(s)
of the HOLA. Section 5.33(n)(2) is based
on §§ 146.2(a) and 152.13(c), which
73 12
U.S.C. 214b, 215(e) and 215a(e).
CFR 146.3 (Federal mutual savings
associations); 12 CFR 152.13(l) (stock Federal
savings associations).
74 12
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
provide that a Federal savings
association may consolidate or merge
with another depository institution, a
state trust company or a credit union.
However, in a merger or consolidation
with a mutual Federal savings
association, a mutual savings
association must be the resulting
institution. Section 5.33(n)(2) expands
this authority to include the other
business combinations listed in
§ 5.33(d)(2)(iv) and (v) and the other
combinations listed in § 5.33(d)(10),
including whole entity purchase and
assumptions with any entity. Also, the
final rule does not include the
requirement in §§ 146.2(a) and 152.13(c)
with respect to Federal Home Loan
Bank membership because membership
in a Federal Home Loan Bank is no
longer mandatory. Section 5.33(n)(3),
which provides requirements for
Federal mutual savings association
boards of directors, is based on
§ 146.2(d). Section 5.33(n)(4),which
provides requirements for notifying
accountholders of the transaction, is
based on § 163.22(e)(2). The final rule
makes a conforming change to this
provision based on the final rule’s
amendment of the definition of business
combination, discussed above.
Procedural requirements for Federal
savings association approval of
combinations. The final rule adds a new
§ 5.33(o), which includes various
provisions in §§ 146.2 and 152.13 that
set out the procedural requirements for
board, shareholder (in the case of stock
savings associations), and, if required by
the OCC, voting member (in the case of
mutual savings associations) approval of
business combinations involving the
Federal savings association. As noted
earlier, §§ 146.2 and 152.13 use the term
‘‘combination’’ to include a whole
purchase and assumption transaction, as
well as a consolidation or merger, and
therefore apply these procedural
requirements to those transactions.
Section 5.33 uses the term business
combination more broadly. In order to
avoid applying the requirements to a
broader set of transactions and achieve
the same result as §§ 146.2 and 152.13,
the final rule uses ‘‘consolidation or
merger’’ instead of ‘‘combination’’ in
§ 5.33(o), and requires in § 5.33(g)(2),
(g)(3), and (g)(7) that a whole purchase
and assumption transaction be treated
as a consolidation by a Federal savings
association for purposes of applying the
requirements of § 5.33(o).
Section 5.33(o)(1) is based on
§§ 146.2(b) and 152.13(e), except that
the final rule reduces the required
majority for the board of directors
approval for Federal stock savings
associations from two-thirds to a
PO 00000
Frm 00030
Fmt 4701
Sfmt 4700
majority. The final rule does not reduce
the requirement for Federal mutual
savings associations. The board of
directors vote is the principal vote and
there typically is not a vote of the voting
members, unless the OCC requires it as
provided in § 5.33(o)(4). The final rule
does not include in § 5.33 the provisions
in §§ 146.2(b)(1) and 152.13(f) that
require the savings association to
include all terms regarding the
combination in a combination
agreement and to set out in some detail
provisions that the agreement must
contain. OCC practice with respect to
national banks has not been to include
these requirements in detailed
regulations, as the drafting of a merger
agreement is a business matter for the
participating parties. However, we note
that the Comptroller’s Licensing Manual
includes sample agreements.
Operating Subsidiaries of a National
Bank (§ 5.34)
The proposal included a number of
changes to the provisions governing
operating subsidiaries of national banks
set forth at 12 CFR 5.34. Some of these
changes incorporated elements of the
Federal savings association operating
subsidiary regulations currently
contained in 12 CFR part 159 in order
to promote consistency between the
regulations for operating subsidiaries for
both charters.75 A number of other
changes clarified existing provisions in
§ 5.34.
The OCC is adopting the amendments
to § 5.34 as proposed with one clarifying
change related to joint ventures. A
summary of changes to § 5.34 and the
comments we received on this provision
are set forth below.
Scope. The final rule amends the
scope section in § 5.34(c) by including
language from § 159.1(a) that provides
that the OCC may, at any time, limit a
national bank’s investment in an
operating subsidiary, or may limit or
refuse to permit any activities in an
operating subsidiary, for supervisory,
legal, or safety and soundness reasons.
While the OCC currently has this
authority, we are clarifying the
regulation by explicitly including this
language.
Standards and requirements. The
final rule adds a new § 5.34(e)(1)(ii),
75 Elsewhere in this final rule, we add a new
§ 5.38 to part 5 of our regulations to address Federal
savings association operating subsidiaries. New
§ 5.38 is based on § 5.34, and many of its provisions
are nearly identical or very similar. However, the
rules reflect some differences between national
bank operating subsidiaries and Federal savings
association operating subsidiaries based on certain
statutory provisions. The similarities and
differences are discussed in the § 5.38 portion of
this preamble.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
which provides that before beginning
business an operating subsidiary must
comply with other laws applicable to it,
including applicable licensing or
registration requirements. This is not a
new requirement for national banks.
The final rule also clarifies that
compliance with § 5.34 and approval of
an operating subsidiary by the OCC are
not the only requirements that must be
met to establish an operating subsidiary.
Section 5.34(e)(2) provides the criteria
for a subsidiary to qualify as a national
bank operating subsidiary. Section
5.34(e)(2)(i)(A) currently states that the
national bank must have the ability to
control the management and operations
of the subsidiary. The proposed rule
clarified this provision by adding that
no other person or entity has the ability
to control the management or operations
of the subsidiary. This statement reflects
current OCC practice regarding national
bank operating subsidiaries and is based
on a provision in § 159.3(c)(1). We
added it to be consistent with that
provision and the new Federal savings
association operating subsidiary
regulation.
We received two comments on this
provision regarding control. One
commenter stated that the current
requirements already ensure the banks
have sufficient control and that this new
provision will create uncertainty for
joint venture arrangements organized as
national bank operating subsidiaries.
Another commenter stated that the
proposed language could be read to
suggest that a bank must own 100
percent of the voting stock of an entity
for that entity to be an operating
subsidiary. This reading would prohibit
a bank from acquiring a controlling
interest in a joint venture as an
operating subsidiary if another entity or
person owns or controls a minority
interest in the voting shares of the
entity. The commenter noted that this
would significantly depart from OCC
precedent and therefore requests the
OCC to clarify that a national bank may
continue to invest in a joint venture or
partnership that qualifies as an
operating subsidiary under § 5.34(e)(2) if
the bank has the ability to control the
management and operations of the
subsidiary and no other party controls
more than 50 percent of the voting (or
similar type of controlling) interest in
the subsidiary.
As noted above, the proposed change
was based on a provision in the Federal
savings association rule and reflects
current practice regarding national bank
operating subsidiaries. However, to
address the commenter’s concern that
this statement could be interpreted
overly broadly, the final rule replaces
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
the proposed language with the
following statement: ‘‘and no other
person or entity exercises effective
operating control over the subsidiary or
has the ability to influence the
subsidiary’s operations to an extent
equal to or greater than that of the
bank.’’ This language is taken in part
from § 159.2, and we believe that it
implements more clearly our intent that,
for a joint venture company to qualify
as an operating subsidiary, no other
investor in the joint venture may have
control or influence over the company
that is equal to or more than the
national bank.76 The final rule makes a
similar, conforming change to
§ 5.34(e)(5)(ii)(A)(3) in the context of
joint ventures qualifying for expedited
review, as discussed below.
The final rule also revises
§ 5.34(e)(2)(i)(B) to clarify that where the
bank owns less than 50 percent of an
operating subsidiary (but still controls
it), no other party can own a greater
percentage than the bank. This reflects
current OCC practice set out in the
Comptroller’s Licensing Manual.
In addition, the final rule adds
community development corporation
subsidiaries under 12 U.S.C.
24(Eleventh) and part 24 as an
additional example of the type of
operating subsidiary not subject to
§ 5.34. The proposed rule did not
include this example. We have added it
to the final rule for clarification
purposes.
Furthermore, the final rule adds a
new § 5.34(e)(2)(iii) to clarify that the
national bank must have reasonable
policies and procedures to preserve the
limited liability of the bank and its
operating subsidiaries. We adapted this
provision from § 159.10 and it is
consistent with the new operating
subsidiary rule for Federal savings
associations. It clarifies that the
requirement that the bank must control
the operating subsidiary does not mean
they should be treated as a single entity.
We received one comment on new
§ 5.34(e)(2)(iii). This commenter stated
that the proposal did not provide
sufficient analysis to explain why
national banks should be subject to a
new policies and procedures
requirements and does not believe that
this is a clarifying change. However, we
believe that this requirement is
necessary so that the bank and
subsidiary are not treated as a single
entity even if the bank controls the
subsidiary. We also note that this
76 If this requirement of control by the national
bank is not met, the bank’s investment may still be
permissible as a noncontrolling investment under
12 CFR 5.36.
PO 00000
Frm 00031
Fmt 4701
Sfmt 4700
28375
requirement and the requirement in the
Federal savings association operating
subsidiary rule (§ 5.38) is much simpler
and less burdensome than the current
savings association rule requirements
for separate corporate identity in 12 CFR
159.10. We therefore decline to make
the suggested changes.
Current § 5.34(e)(3) provides that a
national bank’s operating subsidiary
conducts activities authorized under
§ 5.34 pursuant to the same
authorization, terms and conditions that
apply to the conduct of the parent
national bank, except as otherwise
provided under sections 1044 and 1045
of the Dodd-Frank Act. The final rule
revises § 5.34(e)(3) to provide that a
national bank’s operating subsidiary
conducts these activities unless
otherwise specifically provided by
regulation or published OCC policy, in
addition to as provided by statute,
including 1044 and 1045 of the DoddFrank Act. This change clarifies that
there are other instances where different
treatment of the operating subsidiary
and the parent national bank may occur
in addition to those regarding the
application of state law addressed by
the Dodd-Frank Act.
Current § 5.34(e)(5)(i) provides that
national banks meeting certain
requirements are not required to file a
prior application but may give after-thefact notice when establishing or
acquiring an operating subsidiary or
performing a new activity in an existing
operating subsidiary. Current
§ 5.34(e)(5)(ii) requires a prior
application and OCC approval in other
instances and sets out the information
that must be included in the filing. The
final rule reverses the order of the
application and notice provisions so
that the application provision is first.
This change simplifies and clarifies the
opening language of each paragraph. It
also makes the order of these provisions
the same as that of the similar
provisions in the regulation for
operating subsidiaries of Federal savings
associations. The final rule also makes
technical revisions in
§ 5.34(e)(5)(ii)(A)(3), as redesignated in
the final rule (current
§ 5.34(e)(5)(i)(A)(3)), to account for
instances in which the operating
subsidiary is a limited liability
company, and makes other clarifying
and technical changes in redesignated
§ 5.34(e)(5)(i) through (v).
Current § 5.34(e)(5)(vi) provides that
no application or notice is required for
a national bank that is well managed
and adequately capitalized or well
capitalized to acquire or establish an
operating subsidiary or to perform a
new activity in an existing operating
E:\FR\FM\18MYR2.SGM
18MYR2
28376
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
subsidiary, if the activities of the new
subsidiary are limited to those
previously reported to the OCC in
connection with a prior operating
subsidiary and certain other
requirements are met. The final rule
changes the requirement from
adequately capitalized to well
capitalized to be consistent with the
well capitalized requirement to be
eligible for the after-the-fact notice
procedure.
The final rule also amends
§ 5.34(e)(5)(vii) to codify the OCC’s
position that when a national bank
operating subsidiary wishes to act as a
fiduciary, its national bank parent must
have fiduciary powers and the operating
subsidiary also must have its own
fiduciary powers under the law
applicable to the subsidiary. The
operating subsidiary may not rely on the
national bank’s fiduciary powers.
Further, this provision explicitly
provides that when an operating
subsidiary that exercises investment
discretion on behalf of customers or
provides investment advice for a fee is
a registered investment adviser, it is not
necessary for its national bank parent to
have fiduciary powers. These provisions
reflect OCC practice as set out in the
Comptroller’s Licensing Manual.
Approvals. The final rule adds a new
§ 5.34(e)(5)(viii) to provide that OCC
approvals granted under § 5.34 expire
within 12 months if a national bank has
not established or acquired the
operating subsidiary or commenced the
new activity in an existing operating
subsidiary, unless the OCC shortens or
extends the time period. One
commenter stated that this 12-month
expiration for OCC approvals is a new
substantive requirement for both
national banks and Federal savings
associations. We disagree. This
provision is included currently in
operating subsidiary approval letters
and, therefore, is not a new concept for
national banks. We also note that this
timing is similar to provisions in other
sections of part 5 regarding the
expiration of an OCC approval.
Furthermore, setting a time limit on
approvals is necessary to ensure that the
approval reflects the current status of
the applicant and that the application is
not stale. For these reasons, we decline
to make any changes to this provision.
National Bank and Federal Savings
Association Investments in Service
Companies (§ 5.35)
Twelve CFR 5.35 addresses national
bank investments in bank service
companies pursuant to the Bank Service
Company Act, 12 U.S.C. 1861–1867.
The Bank Service Company Act was
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
amended in 2006 to permit Federal
savings associations to invest in bank
service companies.77 The OTS did not
adopt implementing regulations.
The authority of Federal savings
associations to invest in bank service
companies under the Bank Service
Company Act is separate from the
authority to invest in service
corporations under section 5(c)(4)(B) of
the HOLA.78 Accordingly, a Federal
savings association’s investments in
bank service companies are not
included in the investment limits for
service corporations in section
5(c)(4)(B). They instead are subject to
the separate limits of the Bank Service
Company Act, codified at 12 U.S.C.
1862. The OCC proposed to amend
§ 5.35 to make it applicable to Federal
savings associations, to state explicitly
certain authority of the OCC, to conform
definitions to Dodd-Frank Act changes,
and to make technical changes. The
changes for Federal savings associations
are not likely to be significant because
Federal savings associations are already
subject to the statute, and the filing
procedures in § 5.35 follow the statute.
Specifically, the OCC proposed to
amend the scope section in § 5.35(c) by
including language, based on 12 CFR
159.1(a) to provide that the OCC may,
for supervisory, legal, or safety and
soundness reasons, limit at any time a
national bank’s or Federal savings
association’s investment in a bank
service company or limit or refuse to
permit any activities of any bank service
company for which a national bank or
Federal savings association is the
principal investor. We did not receive
any comments on this change and adopt
it as proposed.
In addition, the OCC is adopting the
proposed technical amendment to the
definition of the term ‘‘depository
institution’’ in § 5.35(d)(3) to conform it
to 12 U.S.C. 1861(b)(4) as amended by
section 357 of the Dodd-Frank Act.
Section 357 of the Dodd-Frank Act also
amended 12 U.S.C. 1861(b)(5) by
striking the definition of ‘‘insured
depository institution’’ and adding in its
place a second definition of ‘‘depository
institution’’ that refers to section 3 of
the FDI Act. The OCC believes that the
deletion of the term ‘‘insured depository
institution’’ was inadvertent and not
intended to effect a change because the
statute continues to use this term
throughout. Therefore, we have not
changed the definition of ‘‘insured
depository institution’’ in § 5.35(d)(4).
77 Public Law 109–351, section 602, 120 Stat.
1966, 1967 (2006).
78 12 U.S.C. 1464(c)(4)(B).
PO 00000
Frm 00032
Fmt 4701
Sfmt 4700
The OCC also proposed to change the
filing and review process in § 5.35(f)(2).
That section currently provides for an
after-the-fact notice with no requirement
for OCC approval before the bank makes
the investment if specified eligibility
conditions are met. We proposed to
change it to a prior notice with OCC
approval through an expedited review
process, under which the notice is
deemed approved on the 30th day after
filing unless the OCC notifies the filer
otherwise. We received one comment on
this change. This commenter stated that
the prior notice would be more
burdensome than an after-the-fact
notice. However, this prior notice
process follows the statutory provisions
more closely. Furthermore, because
there have been very few Bank Service
Company Act filings, this change should
not add any material burden to the
industry. Therefore, we are adopting the
amendments as proposed.
We also are moving some of the
provisions in § 5.35(f)(2) regarding what
must be included in the notice to
paragraph (g) of § 5.35, the general
provision covering the required
information. We also proposed to make
a number of technical changes in
§ 5.35(c), (d)(3), (d)(4), (d)(6), (e), (f)(1),
(f)(2), (f)(3), (f)(5) and (i). We did not
receive any comments on these changes
and adopt them as proposed. We also
are making a technical change to correct
a cross-reference in § 5.35(f)(2)(ii)(B),
which currently refers to § 5.38(d). It
should refer to § 5.38(e)(5)(v).
Investment in National Bank or Federal
Savings Association Premises (§§ 5.37,
7.1000, 7.3001)
Under 12 U.S.C. 29, a national bank
may purchase and hold real property
necessary to transact business and may
hold real estate in exchange for debts
previously contracted subject to certain
divestiture requirements. Under 12
U.S.C. 371d, a national bank is required
to obtain prior OCC approval to invest
in bank premises, unless its aggregate
investment and related indebtedness is
less than or equal to either the bank’s
capital stock or 150 percent of the
bank’s capital and surplus (and the bank
meets certain other criteria, as described
below).
National banks are subject to several
regulations that further delineate the
parameters of their investment in and
use of real property. Specifically, 12
CFR 7.1000 details the types of real
estate that are necessary, pursuant to 12
U.S.C. 29, for a national bank’s
transaction of business, including
premises owned and occupied by the
bank, its branches, and its subsidiaries;
property intended to be used for future
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
bank expansion; and other property to
be used by bank customers and
employees. Section 7.1000 crossreferences 12 CFR 5.37, which contains
the quantitative limitations based on a
national bank’s capital that are specified
in 12 U.S.C. 371d. Section 5.37 also
prescribes the OCC premises approval
process. Twelve CFR 7.3001 sets forth
the rules that apply when a national
bank shares its space and employees
with other entities. Finally, 12 CFR
34.84 sets forth specific requirements
for property held for future bank
expansion.
No statute specifically addresses a
Federal savings association’s investment
in banking premises.79 However, the
OCC issued regulations governing a
Federal savings association’s investment
in banking premises pursuant to the
OCC’s general supervisory and
rulemaking authority under the HOLA.
Specifically, 12 CFR 160.37 permits a
Federal savings association to invest in
real estate, whether improved or
unimproved, to be used for office and
related facilities of the association if
such investment is made and
maintained under a prudent program of
property acquisition to meet the
association’s present needs for office
and related facilities and the
outstanding book value of these
investments does not exceed the
association’s total capital. In addition,
OCC regulations at 12 CFR part 159
recognize certain real estate-related
activities as permissible for a Federal
savings association service corporation,
including real estate development and
the acquisition of real estate for use by
a stockholder of the service corporation.
OCC guidance provides that a Federal
savings association ordinarily must
obtain prior OCC approval if such
investments would exceed the amount
of its total capital.80 Currently, a Federal
savings association seeking to exceed
the total capital limitation would
request a waiver under 12 CFR 100.2.
The OCC proposed numerous changes
to these regulations, including applying
the national bank regulations to Federal
savings associations, rescinding 12 CFR
160.37, and making clarifying
amendments. We did not receive any
comments on these proposed changes
and adopt them as proposed, except for
the change in date for the grandfathering
provisions, discussed below.
National bank ownership of property
(12 CFR 7.1000). The final rule amends
79 The OCC is using the term ‘‘banking premises’’
instead of ‘‘bank premises’’ in revised §§ 5.37,
7.1000, and 7.3001 to alleviate any confusion with
respect to Federal savings associations.
80 OTS Handbook, Section 252, Fixed Assets,
April 1999, p. 2.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
12 CFR 7.1000 to make it applicable to
Federal savings associations and to
make other changes described below.
While we do not believe that there are
significant substantive differences
between §§ 7.1000 and 160.37 and
related OTS guidance, § 7.1000 provides
additional detailed regulatory guidance
that we believe, as a supervisory matter,
is appropriate to apply to both national
banks and Federal savings associations.
Revised § 7.1000(a) permits a Federal
savings association to invest in real
estate necessary to transact its business.
Revised § 7.1000(a)(2) provides a nonexclusive list of permissible real estate
investments for Federal savings
associations. These investments are
generally permitted for Federal savings
associations under § 160.37, with the
addition of lodging for customers,
officers, or employees of the Federal
savings association, its branches or
consolidated subsidiaries in areas where
suitable commercial lodging is not
readily available, which is currently
permissible for national banks.
Under § 7.1000(a)(3), a national bank
is permitted to hold premises through
any reasonable and prudent means,
including fee ownership, leasehold
estate, and interest in a cooperative. It
also is permitted to hold such premises
directly or through one or more
subsidiaries and to organize a premises
subsidiary as a corporation, partnership,
or similar entity, such as a limited
liability company. Section 160.37
permits a Federal savings association to
invest in real estate, whether improved
or unimproved, to be used for office and
related facilities of the association under
certain conditions, though it does not
address how a Federal savings
association may hold such premises. By
adding Federal savings associations to
§ 7.1000(a)(3), the OCC is making clear
that a Federal savings association may
hold its premises in any of the means
set forth in that section. In addition, the
OCC is adding a new paragraph to
recognize a Federal savings association’s
separate authority under part 159,
which is amended and redesignated as
12 CFR 5.59 in this final rule, to acquire
and hold banking premises in a service
corporation.
In paragraph (c)(1) of § 7.1000, the
final rule deletes the reference to 12
U.S.C. 371d and replaces it with
language to clarify that the quantitative
limitations in § 5.37(d)(1)(i) and (d)(3)(i)
govern when OCC approval is required
to invest in banking premises. The final
rule also divides § 7.1000(c)(2) into two
separate paragraphs. Paragraph (c)(2)(i)
clarifies that a national bank or Federal
savings association must seek approval
to invest in banking premises in
PO 00000
Frm 00033
Fmt 4701
Sfmt 4700
28377
accordance with § 5.37(d). New
paragraph (c)(2)(ii) clarifies that a
Federal savings association that invests
in banking premises through a service
corporation must comply with the
quantitative limitations in § 5.37(d),
and, to the extent applicable, § 5.59. As
described below, the amendments to
§ 5.37(d) clarify which requirements in
§ 5.37(d) apply to service corporations.
Under redesignated § 7.1000(c)(3), a
national bank must receive OCC
approval to exercise an option to
purchase banking premises or stock in
a corporation holding banking premises
if the price of the option and the bank’s
other investments in banking premises
exceed the amount of the bank’s capital
stock. The final rule simplifies
paragraph (c)(3) by removing the
unnecessary language explaining when
approval is required and replacing it
with a statement that the national bank
or Federal savings association must
comply with the requirements in
§ 5.37(d). The procedures in § 5.37(d)
are discussed below. In addition, we are
making other nonsubstantive, clarifying
changes. Section 160.37 does not
address an option to purchase banking
premises or stock in a corporation
holding banking premises; therefore,
this is a new requirement for a Federal
savings association.
The final rule deletes § 7.1000(d),
Other real property, because the two
examples provided are based on wellestablished precedent, and we believe it
is unnecessary to include them in
§ 7.1000. Section 7.1000(d) was not
intended to be a limitation on
ownership of real property, and deleting
it eliminates the need to add clarifying
language. Furthermore, deleting
§ 7.1000(d) simplifies § 7.1000 by
limiting it to real estate necessary for the
transaction of business.
Current § 34.84 provides rules for a
national bank’s investment in future
banking premises and is contained in
the OCC’s rules on ‘‘other real estate
owned’’ (OREO). Specifically, this
section provides that a national bank
normally should use real estate acquired
for future expansion within five years
and, after holding such real estate for
one year, state by resolution of the board
of directors or an appropriate authorized
bank official or a subcommittee of the
board of directors, definite plans for the
use of such real estate.81 This resolution
81 National banks and Federal savings
associations should be aware that if they decide not
to use real estate acquired for future banking
premises, the investment will be considered other
real estate owned and subject to applicable OREO
requirements. For savings associations, see
Comptroller’s Handbook, ‘‘Other Real Estate
E:\FR\FM\18MYR2.SGM
Continued
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28378
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
or other official action must be available
for inspection by bank examiners. The
final rule moves § 34.84 from part 34,
subpart E, Other real estate owned, to
§ 7.1000 as paragraph (d) because it
relates to banking premises, not other
real estate owned, and amends it to
include Federal savings associations.
To minimize practical difficulties that
may arise as a result of these changes,
the proposed rule included a transition
provision, § 7.1000(e), that
grandfathered Federal savings
associations’ existing premises
investments, provided the investment
complies with the legal requirements in
effect prior to the publication date of the
proposal and continues to comply with
those requirements. The final rule
includes this grandfathering provision.
However, we have changed the
transition date to the date of publication
of the final rule, as we believe this is the
more appropriate date on which to
grandfather such investments. We note
that modifying, expanding, or
improving such investments, with the
exception of routine maintenance,
requires prior approval of the
appropriate OCC supervisory office. We
believe it is appropriate to require prior
approval in these circumstances to
ensure safety and soundness concerns
are satisfied and to apply consistent
standards to national banks and Federal
savings associations.
Sharing space and employees
(§ 7.3001). The final rule amends 12
CFR 7.3001 to make it applicable to
Federal savings associations. While
§ 7.3001 is more detailed than OTS
guidance, as described below, we do not
believe that there are substantive
differences in the way in which national
banks and savings associations share
offices and employees. Section 7.3001
provides additional guidance on how to
share offices and employees in a manner
that protects customers and is consistent
with safe and sound banking practices.
The OCC believes that, as a supervisory
matter, it is appropriate to apply similar
specific safety and soundness
restrictions to both national banks and
Federal savings associations.
Although current § 7.3001 provides
for the sharing of office space and
employees, § 160.37 does not
specifically provide for such sharing
arrangements. However, through
guidance, a Federal savings association
is authorized to share space in a manner
similar to that provided in § 7.3001, and
the safety and soundness requirements
imposed are substantially similar,
Owned’’ (Sept. 2013) (‘‘OREO Handbook’’), and for
national banks, see 12 CFR part 34, subpart E and
the OREO Handbook.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
though not identical, to those imposed
by § 7.3001(c). For example, both the
guidance and § 7.3001(c) prohibit joint
ventures, but the methods to determine
what constitutes a joint venture are
different. Under § 7.3001(c)(3), what
constitutes a joint venture or
partnership is determined by applicable
state law. In addition, under revised
§ 7.3001(a), a Federal savings
association is permitted to: (1) lease
excess space on banking premises to one
or more other businesses (including
other banks, Federal or state savings
institutions, or financial institutions);
(2) share space jointly held with one or
more other businesses; or (3) offer its
services in space owned or leased to
other businesses. Under revised
§ 7.3001(b), as part of such a sharing
arrangement, a Federal savings
association may, pursuant to a written
agreement, agree that its employee may
act as an agent for the other business, or
an employee of the other business may
act as an agent for the savings
association. Under revised § 7.3001(c), a
Federal savings association sharing
office space is required to satisfy eight
requirements intended to ensure that
the practice of sharing space was
conducted in a safe and sound manner
and also provides customer protections.
This treatment is substantially similar to
that in OCC guidance for Federal
savings associations.82
To minimize practical difficulties that
may arise as a result of these changes,
the proposed rule added a transition
provision, § 7.3001(e), that grandfathers
existing sharing arrangements, provided
such sharing arrangements comply with
the legal requirements in effect prior to
the publication date of this proposal and
continue to comply with those
requirements. The final rule includes
this grandfathering provision. However,
we have changed the transition date to
the date of publication of the final rule,
as we believe this is the more
appropriate date on which to
grandfather such arrangements. We note
that the savings association may not
amend or renew the agreement, or
extend the agreement beyond its current
term, without the prior approval of the
appropriate OCC supervisory office. We
believe it is appropriate to require prior
approval in such circumstances to
ensure customers are protected and
safety and soundness concerns are
satisfied, and to apply consistent
standards to national banks and Federal
savings associations.
Investment in banking premises
(§ 5.37). The proposed rule amends
82 OTS
Handbook, Section 252, Fixed Assets, p.
3.
PO 00000
Frm 00034
Fmt 4701
Sfmt 4700
§ 5.37 to make it applicable to Federal
savings associations and to make other
changes as described below. The OCC
believes that, for safety and soundness
purposes, it is prudent to apply the
procedures and quantitative investment
limitations in § 5.37 to both national
banks and Federal savings associations.
We received no comments on these
amendments and adopt them as
proposed, with one technical
amendment, discussed below.
Current § 5.37(d)(1)(i) requires a
national bank to submit an application
to the appropriate supervisory office to
make an investment in bank premises,
or to make loans to or upon the security
of the stock of such a corporation, if the
aggregate of all such investments and
loans, together with the indebtedness
incurred by any such corporation that is
an affiliate of the national bank, will
exceed the amount of its capital stock.
Section 5.37(c) defines ‘‘bank premises’’
as including (but not limited to): (1)
Premises that are owned and occupied
(or to be occupied, if under
construction) by the bank, its branches,
or its consolidated subsidiaries; (2)
capitalized leases and leasehold
improvements, vaults, and fixed
machinery and equipment; (3)
remodeling costs to existing premises;
(4) real estate acquired and intended, in
good faith, for use in future expansion,
or (5) parking facilities that are used by
customers or employees of the bank, its
branches, and its consolidated
subsidiaries. In contrast, § 160.37 does
not contain a detailed definition and
states, in general, that real estate may be
used for office and related facilities for
the association’s current and future use.
Current § 5.37(d)(1)(ii) requires the
application to make an investment in
banking premises to include a
description of the bank’s present
investment in banking premises, the
investment in the premises that the
bank intends to make, the business
reason for the investment, and the
amount by which the national bank’s
aggregate investment will exceed the
amount of its capital stock. Current
§ 5.37(d)(2) provides information
regarding the approval process,
including that an application is deemed
approved on the 30th day after the filing
is received by the OCC, unless the OCC
notifies the national bank prior to that
date that the filing presents a significant
supervisory or compliance concern, or
raises a significant legal or policy issue.
The final rule makes these provisions
applicable to a Federal savings
association, and makes other
nonsubstantive, clarifying changes.
Current § 5.37(d)(3) provides an afterthe-fact notice process if a national bank
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
satisfies certain requirements.
Specifically, a national bank may make
an aggregate investment in banking
premises up to 150 percent of its capital
and surplus with after-the-fact notice to
the OCC instead of the OCC’s prior
approval, provided that the national
bank has a 1 or 2 CAMELS rating, is
well capitalized as defined in 12 CFR
part 6, and will continue to be well
capitalized after it makes the investment
or loan.
The final rule makes these provisions
applicable to Federal savings
associations. However, a Federal savings
association may not be eligible for afterthe-fact notice if 12 U.S.C. 1828(m)(1)
applies to the transaction. Twelve
U.S.C. 1828(m)(1) requires a Federal
savings association to file a 30-day prior
notice when it establishes or acquires a
subsidiary or when it conducts a new
activity in a subsidiary. Thus, a Federal
savings association would not be
eligible for the after-the-fact notice
process described in § 5.37(d)(3)(i) if it
proposes to establish or acquire a
subsidiary to make an investment in
banking premises, or if investing in
banking premises would be a new
activity for such a subsidiary. In those
circumstances, the Federal savings
association is required to comply with
the provisions of § 5.38 in the case of an
operating subsidiary or § 5.59 in the
case of a service corporation.
Accordingly, the final rule reorganizes
current § 5.37(d)(3) by redesignating it
as § 5.37(d)(3)(i), General rule, and
adding a new paragraph (d)(3)(ii),
Exception, to describe the
circumstances under which a Federal
savings association is not eligible for the
after-the-fact notice process and to
identify the applicable requirements.
Furthermore, the final rule provides
that Federal savings associations’
investments in banking premises
through a service corporation are not
subject to the application and notice
requirements of § 5.37(d); instead, a
Federal savings association must
comply with the requirements in
proposed § 5.59. However, the
institution must include the amount of
the investment when calculating the
quantitative limitations in paragraph
(d). Therefore, the final rule
redesignates current § 5.37(d)(4),
Exceptions to rules of general
applicability, as paragraph (d)(5), and
adds a new paragraph (d)(4) to clarify
the treatment of an investment in
banking premises through a service
corporation.
As indicated above, pursuant to 12
U.S.C. 29 and 371d, current § 5.37
provides that the quantitative
limitations on a national bank’s
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
investment in banking premises are
expressed as a percentage of ‘‘capital
stock’’ or ‘‘capital and surplus.’’ Under
§ 160.37, the sole quantitative limit on
a Federal savings association’s
investment in banking premises is based
on ‘‘total capital.’’ 83 The final rule
applies the quantitative investment
limitations currently applicable to
national banks to Federal savings
associations, with the exception of
Federal mutual savings associations, as
discussed more fully below. To avoid
confusion, the final rule also adds the
definitions for the terms ‘‘capital stock’’
and ‘‘capital and surplus’’ in paragraph
(c). Because the vast majority of national
banks and Federal savings associations
have a CAMELS rating of 1 or 2,84 we
believe the relevant limit for a Federal
savings association generally will be
‘‘capital and surplus,’’ which is not
materially different from ‘‘total capital.’’
In addition, for a Federal savings
association that satisfies the criteria in
§ 5.37(d)(3)(i), the quantitative
limitation will be 150 percent of capital
and surplus, which would be a greater
amount than 100 percent of ‘‘total
capital.’’ Thus, we expect that the
amount that most Federal savings
associations can invest in banking
premises without OCC approval will be
increased, thereby reducing burden on
those Federal savings associations. For a
Federal savings association that does
not have a CAMELS rating of 1 or 2 or
is not well capitalized the relevant
limitation instead is ‘‘capital stock,’’
which is a significantly lower threshold
than ‘‘total capital.’’ While we are aware
that this new lower threshold likely
would increase the burden on low-rated
Federal savings associations, we believe
that additional scrutiny of investments
in banking premises by such Federal
83 As mentioned previously in this preamble, the
OCC issued a final rule on October 11, 2013 that,
among other things, amends the OCC’s risk-based
and leverage capital rules and integrates the OCC’s
national bank and Federal savings association
capital rules. 78 FR 62018 (Oct. 11, 2013). This
capital final rule had a two-tier effective date,
however, with the rule applicable for all banks and
savings associations on January 1, 2015. Because
this licensing final rule is issued after the January
1, 2015 effective date, we have removed references
to the former Federal savings association capital
rule, 12 CFR part 167, and related provisions of 12
CFR 165 (prompt corrective action) originally
included in the proposed rule, as they are no longer
applicable,
84 According to the OCC’s 2014 Annual Report, in
the fiscal year 2014, 87 percent of national banks
and Federal savings associations had a CAMELS
rating of 1 or 2. Office of the Comptroller of the
Currency, Annual Report, Fiscal Year 2014, at 70,
available at https://www.occ.gov/publications/
publications-by-type/annual-reports/2014/ar-2014full.pdf.
PO 00000
Frm 00035
Fmt 4701
Sfmt 4700
28379
savings associations is warranted for
safety and soundness purposes.
In the case of a Federal mutual
savings association, which by definition
does not issue stock, a limit based on
capital stock will not work. However,
we believe it is important, wherever
possible, to apply consistent standards
to national banks and Federal savings
associations, both from a safety and
soundness perspective and an
administrative perspective.
Accordingly, because a Federal mutual
savings association’s equity capital
consists primarily of retained earnings,
we will use retained earnings as a proxy
for capital stock for purposes of the
quantitative limitations on investments
in banking premises by Federal mutual
savings associations. This limitation
based on retained earnings is not a
significant change for a Federal mutual
savings association because, generally,
‘‘total capital’’ of a Federal mutual
savings association mostly consists of
retained earnings. Moreover, a Federal
mutual savings association that is
CAMELS 1- or 2-rated and well
capitalized will have a higher limit of
150 percent of retained earnings.
The proposed rule added a transition
provision, § 5.37(e), to grandfather
existing banking premises investments.
However, as indicated above,
§ 7.1000(e), which contains the
substantive authority for national banks
and Federal savings associations to
invest in banking premises, contains the
identical transition provision. Section
5.37(e) is therefore unnecessary and the
final rule does not include it.
Operating Subsidiaries of Federal
Savings Associations (New § 5.38)
Twelve CFR part 159 addresses
subordinate organizations of Federal
savings associations. This part covers
both operating subsidiaries and service
corporations of Federal savings
associations. The OCC proposed to
create a new § 5.38 to address only
operating subsidiaries of Federal savings
associations and to remove those
provisions of part 159 that address
Federal savings association operating
subsidiaries.85 The OCC is adopting new
§ 5.38 with the changes discussed
below.
In order to make the regulations
applicable to Federal savings
85 As stated elsewhere in this rulemaking, the
final rule includes a new § 5.59 that addresses
Federal savings association service corporations.
The OCC is separating the regulations for Federal
savings association operating subsidiaries and
service corporations in order to better organize our
rules and to have consistent parallel provisions for
operating subsidiaries of national banks and Federal
savings associations. As a result, all of part 159 is
removed.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28380
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
associations more consistent with those
that apply to national banks, new § 5.38
is based on current OCC regulations at
12 CFR 5.34. As a result, many of the
provisions in new § 5.38 and § 5.34, as
revised by this final rule, are nearly
identical. Other requirements in new
§ 5.38 are similar to those in part 159.
However, there are some differences
between new § 5.38 and provisions in
part 159 and § 5.34. These differences
are described below.
New § 5.38(b) requires a Federal
savings association, when required
under section 18(m) of the FDI Act,86 to
file an application to acquire or
establish any operating subsidiary or to
commence a new activity in an existing
operating subsidiary. Under §§ 159.1(a)
and 159.11, when required under
section 18(m) of the FDI Act, a Federal
savings association must give 30 days’
notice 87 to the OCC prior to establishing
or acquiring an operating subsidiary or
commencing a new activity in an
operating subsidiary.88 The final rule
changes this prior notice requirement in
the current rule to an application in
order to provide the OCC with an
appropriate opportunity to review the
proposed transaction. We did not
receive any comments on this change.
We have made a technical correction to
this provision in the final rule, however,
by adding back in the reference to
section 18(m) of the FDI Act to the text
of § 5.38(b).
Section 159.3(a)(1) also provides that
any finance subsidiary that existed on
January 1, 1997, is deemed to be an
operating subsidiary without further
action by the savings association. The
OCC is not including this provision in
§ 5.38 as it is not needed. This omission
is not intended to be a change in
substance.
Paragraph (c) of new § 5.38 addresses
the scope of this section. This paragraph
mirrors paragraph (c) of § 5.34,
including the additional language
currently contained in § 159.1(a) added
to § 5.34(c) by this rulemaking, that
permits the OCC to limit a Federal
savings association’s investment in an
operating subsidiary or limit or refuse to
permit any activities of an operating
subsidiary for supervisory, legal, or
safety and soundness reasons. The OCC
did not receive any comments on this
provision.
Paragraph (d) of new § 5.38 sets out
definitions for ‘‘well capitalized’’ and
‘‘well managed,’’ which the OCC will
86 12
U.S.C. 1828(m).
these provisions in part 159, the OCC
treats the notice as an application that is eligible for
expedited treatment.
88 See 12 U.S.C. 1828(m)(1) and (4).
87 Under
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
use to determine if an application is
eligible for expedited review by the
OCC. These definitions are the same as
those in § 5.34(d), and the OCC uses
these terms as criteria to permit national
banks to make an after-the-fact notice
filing pursuant to § 5.34(e)(5). They are
used similarly in § 5.38 to determine if
an application by a Federal savings
association is eligible for expedited
review. The OCC did not receive any
comments on this provision.
Like §§ 159.3(e)(1) and 5.34(e)(1)(i),
paragraph (e)(1)(i) of new § 5.38
provides that a Federal savings
association may conduct in an operating
subsidiary activities that are permissible
for the savings association to engage in
directly. Section 5.38(e)(1) provides that
before beginning business, an operating
subsidiary must comply with other laws
applicable to it, including applicable
licensing or registration requirements.
This requirement is not new for Federal
savings associations. The final rule adds
this language to clarify that compliance
with § 5.38 and approval of an operating
subsidiary by the OCC are not the only
requirements that must be met. As
indicated above, the final rule amends
§ 5.34(e) to also include this provision
for national banks. The OCC did not
receive any comments on § 5.38(e)(1).
Pursuant to § 159.3(c)(1), a Federal
savings association must own, directly
or indirectly, more than 50 percent of
the voting shares of an operating
subsidiary and no one else may exercise
effective operating control. New
§ 5.38(e)(2) describes what entities are
‘‘qualifying subsidiaries’’ for purposes
of § 5.38. We have revised this provision
in the final rule to mirror revised
§ 5.34(e)(2). Unlike § 159.3(c)(1), the
rule includes as a qualifying subsidiary
one in which the savings association
owns less than 50 percent of the voting
shares. Specifically, under the final rule,
a qualifying subsidiary is one in which:
(1) The savings association has the
ability to control the management and
operations of the subsidiary and no
other person or entity exercises effective
operating control over the subsidiary or
has the ability to influence the
subsidiary’s operations to an extent
equal to or greater than the savings
association; and (2) the savings
association owns and controls more
than 50 percent of the voting (or similar
type of controlling) interest of the
operating subsidiary, or the parent
savings association otherwise controls
the operating subsidiary and no other
party controls a greater percentage of the
voting (or similar type of controlling)
interest of the operating subsidiary than
the Federal savings association. In
addition, as is currently the case under
PO 00000
Frm 00036
Fmt 4701
Sfmt 4700
part 159, the operating subsidiary must
be consolidated with the savings
association under generally accepted
accounting principles (GAAP). Section
5.38(e)(2)(iii), adapted from § 159.10,
expressly requires the savings
association to have reasonable policies
and procedures to preserve the limited
liability of the savings association and
its operating subsidiaries. Furthermore,
it clarifies that the requirement that the
savings association must control the
operating subsidiary does not mean they
should be treated as a single entity. We
note that § 5.38 does not contain the
detailed requirements for this corporate
separateness that are in § 159.10.
We received one comment relating to
§ 5.38(e)(2) that requested additional
clarification on how Federal savings
associations could ‘‘otherwise [control]
the operating subsidiary.’’ Because this
is the same standard that is applied to
national banks, Federal savings
associations can look to the applications
of this provision with respect to
national banks to better understand how
this standard operates, and the OCC
staff is available to assist with any
questions. We do not believe a change
in this provision is necessary and adopt
it as proposed.
We also are making a clarifying
change to § 5.38(e)(2). Section
159.3(e)(1) explicitly provides that a
Federal savings association may hold
another insured depository institution
as an operating subsidiary. While this
proposition remained the case under the
proposed rule, it was not explicitly set
out in the regulatory text. Upon further
review, we believe the regulation should
explicitly indicate this permissibility,
even though we expect these
transactions to be rare, and have added
new paragraph (e)(2)(ii) to § 5.38 to state
this.
Paragraph (e)(3) of new § 5.38 mirrors
proposed § 5.34(e)(3). Similar to
§ 159.3(h)(1), paragraph (e)(3) generally
provides that an operating subsidiary of
a Federal savings association conducts
activities pursuant to the same
authorization, terms, and conditions
that apply to the parent savings
association, unless otherwise
specifically provided by statute,
regulation or published OCC policy. It
also includes reference to the provisions
in the Dodd-Frank Act regarding the
application of state law, the subject of
which is currently addressed in
§ 159.3(n)(1), and language to clarify
that regulations or published OCC
policy also may provide other instances
in which different treatment of the
operating subsidiary and the parent
Federal savings association may occur
in addition to those regarding the
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
application of state law addressed by
the Dodd-Frank Act. In addition, this
paragraph provides that, subject to
certain statutory limitations, if the OCC
determines that an operating subsidiary
is in violation of law, regulation, or
written condition, or in an unsafe or
unsound manner or otherwise threatens
the safety or soundness of the bank, the
OCC will direct the savings association
or operating subsidiary to take
appropriate remedial action, which may
include requiring the savings
association to divest or liquidate the
operating subsidiary, or discontinue
specified activities. This provision is
similar to § 159.3(q)(1). The OCC did not
receive any comments on this provision.
Twelve U.S.C. 1467a(m)(5) governs
consolidation of the assets of a
subsidiary with those of the parent
savings association for purposes of
calculating portfolio assets and the
qualified thrift lender test. New
§ 5.38(e)(4) addresses consolidation of
figures and provides that the savings
association and its operating
subsidiaries shall be combined for
purposes of applying statutory or
regulatory limitations when the
combination is needed to effect the
intent of the statute or regulation.
Section 5.38(e)(4) is consistent with
§ 159.3(i)(1), (j)(1), (k)(1), and (m)(1).
The OCC did not receive any comments
on this provision.
Section § 159.11 provides that when
required by 12 U.S.C. 1828(m), Federal
savings associations must file a notice at
least 30 days prior to establishing or
acquiring an operating subsidiary or
conducting a new activity in an existing
operating subsidiary. The OCC
processes this notice in a manner
similar to the OCC’s expedited review
for applications and notices of national
banks.89 Paragraph (e)(5) of new § 5.38
sets out the detailed procedures a
Federal savings association must follow
when filing applications required under
§ 5.38.90 Paragraph (e)(5)(i)(B) of § 5.38
describes the contents of the application
and mirrors current § § 5.34(e)(5)(i)(B),
which is redesignated as
§ 5.34(e)(5)(ii)(B) in this final rule.
Paragraph (e)(5)(ii)(A) of § 5.38 also
mirrors § 5.34 and provides for
expedited review of applications to
establish or acquire an operating
subsidiary, or to perform a new activity
in an existing operating subsidiary.
89 If the OCC determines that the notice presents
supervisory concerns or raises significant issues of
law or policy, a Federal savings association must
apply for approval under standard treatment
processing procedures in part 116.
90 Applications filed pursuant to § 5.38 also serve
to satisfy the requirement for notice under 12 U.S.C.
1828(m).
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
These applications are deemed
approved by the OCC as of the 30th day
after the filing is received, unless the
OCC notifies the savings association
otherwise during the 30-day period.91 In
order to be eligible for expedited review,
§ 5.38(e)(5)(ii)(B) provides that the
savings association must be ‘‘well
capitalized’’ and ‘‘well managed,’’ the
activities to be performed by the
operating subsidiary must be listed in
§ 5.38(e)(5)(v), and the operating
subsidiary must be a corporation,
limited liability company, or limited
partnership. In addition, the savings
association must clearly demonstrate
control over the operating subsidiary,
i.e., the savings association: (1) must
have the ability to control the
management and operations of the
operating subsidiary by holding voting
interests sufficient to select the number
of directors needed to control the
subsidiary’s board and to select and
terminate senior management; (2) must
hold more than 50 percent of the voting,
or equivalent, interests in the operating
subsidiary, and, in the case of a limited
partnership or limited liability
company, the savings association or an
operating subsidiary thereof must be the
sole general partner of the limited
partnership or the sole managing
member of the limited liability
company; and (3) must be required to
consolidate its financial statements with
those of the operating subsidiary under
GAAP. The OCC did not receive any
comments on these provisions.
The § 5.38 expedited review process
operates much like the process in
§ 159.11. As indicated above, under
§ 159.11 all Federal savings associations
that wish to establish or obtain an
interest in an operating subsidiary file a
notice with the OCC when required
under 12 U.S.C. 1828(m). No further
action is required unless the OCC
notifies the savings association within
30 days that the notice presents
supervisory concerns or raises
significant issues of law or policy, in
which case the savings association must
receive the OCC’s approval under
standard treatment processing
procedures under part 116. Under
§ 159.11, all filings begin and are
processed in this manner. Under the
§ 5.38 expedited review process, only
filings that meet the eligibility
requirements can begin as an expedited
review application. However, we do not
91 This differs from the national bank regulation.
Under § 5.34(e)(5)(ii), as redesignated in this
rulemaking, national banks may provide after-thefact notice in certain circumstances. After-the-fact
notice is not available to Federal savings
associations due to a statutory requirement for prior
notice. See 12 U.S.C. 1828(m).
PO 00000
Frm 00037
Fmt 4701
Sfmt 4700
28381
believe this change will be significant
for savings associations. A filing that
does not meet the eligibility test under
the final rule has a higher likelihood of
presenting supervisory concerns or
raising significant issues of law or
policy that would require an application
under part 159. The OCC did not receive
any comments on this provision.
Paragraph (e)(5)(iii) of new § 5.38
provides that the rules of general
applicability at 12 CFR 5.8 (requiring
public notice), 5.10 (addressing public
comments received), and 5.11
(addressing requests for hearings or
other meetings) do not apply to § 5.38,
but the OCC may determine that any of
these rules apply if the OCC concludes
that the application presents significant
or novel policy, supervisory, or legal
issues.
Paragraph (e)(5)(v) of § 5.38 sets out a
list of activities that are eligible for
expedited review. This list is based on
the list of activities eligible for notice for
national banks in § 5.34(e)(5)(v), but has
been adapted for Federal savings
associations by listing only those
activities that have been approved for
operating subsidiaries of Federal savings
associations in the past.. The OCC did
not receive any comments on this
provision.
Section 159.3(p)(1) provides that a
Federal savings association must
consult with the appropriate OCC
licensing office prior to redesignating a
service corporation as an operating
subsidiary. It also requires the Federal
savings association to make available for
examination adequate internal records
demonstrating that the redesignated
operating subsidiary meets all of the
requirements for an operating subsidiary
and that the board of directors has
approved the redesignation. Paragraph
(e)(5)(vi) of § 5.38 requires a Federal
savings association to provide 30 days’
prior notice to the OCC when the
savings association wants to redesignate
a service corporation as an operating
subsidiary. The OCC did not receive any
comments on this provision.
Paragraph (e)(5)(vii) of new § 5.38
mirrors § 5.34(e)(5)(vii) and provides
that when a Federal savings association
operating subsidiary wishes to act as a
fiduciary, its savings association parent
must have fiduciary powers and the
operating subsidiary also must have its
own fiduciary powers under the law
applicable to the subsidiary. The
operating subsidiary may not rely on the
savings association’s fiduciary powers.
Further, this provision provides that
when an operating subsidiary that
exercises investment discretion on
behalf of customers or provides
investment advice for a fee is a
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28382
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
registered investment adviser, it is not
necessary for its savings association
parent to have fiduciary powers. These
provisions reflect OCC practice for
national banks as set out in the
Comptroller’s Licensing Manual. The
OCC did not receive any comments on
this provision.
Paragraph (e)(5)(viii) of new § 5.38
provides that an OCC approval granted
under § 5.38 expires within 12 months
if a Federal savings association has not
established or acquired the operating
subsidiary or commenced the new
activity in an existing operating
subsidiary, unless the OCC shortens, or
extends the time period. The final rule
also adds this provision to § 5.34 for
national banks. As previously indicated,
this provision is similar to other
provisions in part 5 regarding the
expiration of an OCC approval. A
commenter noted that this change
would be a new requirement for Federal
savings associations. The OCC does not
believe this change is an entirely new
requirement for Federal savings
associations, because in a number of
cases, the OTS imposed the requirement
as a condition of approval of the
formation of the operating subsidiary.
Moreover, the OCC finds that setting a
time limit for OCC approval is necessary
to ensure that the approval reflects the
current status of the applicant.
Therefore, we are adopting the
amendment as proposed.
Paragraph (e)(6) of new § 5.38
contains provisions regarding
grandfathered Federal savings
association operating subsidiaries. It is
modeled on § 5.34(e)(6) and provides
that, notwithstanding the requirements
for a qualifying operating subsidiary in
§ 5.38(e)(2) and unless otherwise
notified by the OCC with respect to a
particular operating subsidiary, an
operating subsidiary that a Federal
savings association lawfully acquired or
established before May 18, 2015 the date
of Federal Register publication of this
final rule, may continue to operate as a
Federal savings association operating
subsidiary, provided that the savings
association and the operating subsidiary
were, and continue to be, conducting
authorized activities in compliance with
the standards and requirements
applicable when the operating
subsidiary was established or acquired.
The OCC did not receive any comments
on this provision. However, we note
that we have changed the grandfather
date included in the proposed rule, June
10, 2014, the date of publication of the
proposal, to the date of publication of
the final rule, as we believe this is the
more appropriate date on which to
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
grandfather such existing operating
subsidiaries.
Paragraph (e)(7) of new § 5.38
addresses the issuance of securities by
an operating subsidiary. It is based on
portions of § 159.12(a) and (c). The OCC
also did not receive any comments on
this provision.
The proposed rule included a new
requirement for Federal savings
associations to file an annual report
with the OCC on operating subsidiaries
that do business directly with
consumers in the United States and that
are not functionally regulated. This
proposal mirrored the requirement for
national banks at § 5.34(e)(7); there is no
similar provision in part 159. We
received one comment on this proposed
report. This commenter stated that this
reporting requirement would impose a
new compliance burden without
sufficient analysis or justification. The
OCC has reconsidered this proposed
report in light of this comment and no
longer believes it is necessary. Federal
savings associations have fewer
operating subsidiaries than national
banks, and the OCC is able to determine
operating subsidiary ownership by
means that are less burdensome than an
annual report, such as through the
examination process. However, the OCC
will continue to monitor this area to
determine if such a report becomes
necessary in the future.
Finally, a chart in § 159.3 provides a
detailed side-by-side comparison of
operating subsidiaries and service
corporations. The final rule includes
some of this information from this chart
in various provisions of § 5.38, such as
the specific items that are necessary to
set out qualifying requirements and
licensing requirements. Furthermore,
§ 5.38(e)(4), Consolidation of figures,
covers provisions included in the chart
at § 159.3(i)(1), (k)(1), (l)(1), and
(m)(1).92 Other provisions of the chart
are not necessary to include in a
regulation as they merely repeat
applicable law and are in the chart for
purposes of the comparison with service
corporations. These provisions include
§ 159.3(b)(1), (d)(1), (f)(1), (g)(1), and
(j)(1). While the OCC is removing the
chart from its regulations, we are
considering including a similar chart in
the Comptroller’s Licensing Manual as a
reference.
Change in Location of Main Office/
Home Office (§ 5.40)
Twelve CFR 5.40 addresses changes
in location of a national bank’s main
92 Part 32, lending limits, currently provides the
information that had been included in § 159.3(k)(1).
See 78 FR 37930 (June 25, 2013).
PO 00000
Frm 00038
Fmt 4701
Sfmt 4700
office. Twelve CFR 145.91, 145.93 and
145.95 address changes in location of a
Federal savings association’s home
office.93 While these rules address a
common subject there are a number of
differences between them. We proposed
to make the procedures for national
banks and Federal savings associations
more consistent and to consolidate our
regulations by amending 12 CFR 5.40 to
apply to Federal savings associations
and to remove 12 CFR 145.91, 145.93
and 145.95.94 We did not receive any
comments on the proposed changes, and
adopt the amendments as proposed,
with one clarifying change. As
described below, as a result of these
changes, Federal savings associations
are subject to certain additional notices
and applications to assist the OCC in
monitoring these institutions’ activities.
Although these procedures are different
from those that savings associations
currently follow when taking certain
actions with respect to their home
offices, we expect those institutions that
qualify for treatment as highly rated
savings associations under the current
regulation will also qualify for
expedited treatment under the amended
regulation and that this will result in
only minimal additional requirements.
Pursuant to § 145.93(a), a Federal
savings association must file an
application or notice with the OCC and
receive approval or non-objection prior
to changing the permanent location of
its home office or prior to establishing
a new home office. However, § 145.93(b)
provides that an application or notice is
not required for a Federal savings
association to: (i) Establish a drive-in or
pedestrian office within 500 feet of a
public entrance to its existing home
office; (ii) make a short-distance
relocation of its home office; or (iii)
redesignate an existing branch office as
a home office when redesignating the
existing home office as a branch office.
In addition, § 145.93(b) permits certain
highly rated Federal savings
associations to change the permanent
location of their home office or establish
a new home office if the associations
meet certain requirements without filing
a notice or application. Section 145.95
contains processing procedures that
apply to the aforementioned
transactions.
93 The terms ‘‘main office’’ and ‘‘home office’’ are
functionally the same. However, both terms are
used in our regulations in order to be consistent
with the relevant statutes that govern national
banks and Federal savings associations,
respectively.
94 Sections 145.93 and 145.95 also address branch
offices. The preamble discusses these provisions
with respect to branch offices, above.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
The final rule reorganizes § 5.40
slightly and applies it to Federal savings
associations. It therefore discontinues
the exceptions to filing applications or
notices under § 145.93(b) related to
main office locations, and replaces the
applicable processing procedures
contained in § 145.95 with those
contained in 12 CFR part 5.
Section 5.40(b) sets out the licensing
requirements for national banks to
relocate their main office, and § 5.40(c)
sets out the scope of the rule. Section
5.40(d)(1) provides that national banks
may relocate their main office to an
authorized branch location within the
same city, town, or village limits by
giving prior notice to the OCC, and
§ 5.40(d)(2) provides that national banks
may relocate their main office to any
other location by filing an application
with the OCC. Section 5.40(d)(3)
requires national banks to obtain OCC
approval pursuant to the standards in
§ 5.30 in order to establish a branch at
the site of a former main office. Section
5.40(d)(4) provides that an application
submitted by an eligible national bank
to move its main office to a location
other than an authorized branch
location will be approved by the OCC as
of the 15th day after the close of the
public comment period or the 45th day
after the filing is received by the OCC,
whichever is later, unless the OCC
notifies the bank prior to that time that
the filing is not eligible for expedited
review, or the expedited review period
is extended under § 5.13(a)(2). Section
5.40(d)(5) provides for exceptions to
rules of general applicability in part 5
for relocations to an authorized branch
location within the same city, town, or
village limits. Finally, § 5.40(e) provides
that an OCC approval of a main office
relocation shall expire if the national
bank has not opened its main office at
the relocated site within 18 months of
the date of the approval.
The final rule redesignates the scope
section as § 5.40(b) and combines former
paragraphs (b) and (d), which address
licensing requirements and procedures,
into a redesignated § 5.40(c). The final
rule also applies these newly
redesignated provisions to Federal
savings associations. Redesignated
§ 5.40(c)(1) requires national banks and
Federal savings associations to give
prior notice to the OCC when relocating
a main office or home office, as
applicable, to an authorized branch
location within city, town, or village
limits. Redesignated § 5.40(c)(2)(i)
requires national banks to submit an
application to the appropriate OCC
licensing office in order to relocate a
main office to any location other than an
authorized branch location in the city,
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
town, or village in which the main
office of the bank is located or to any
other location within 30 miles of the
limits of such city, town, or village, as
provided by 12 U.S.C. 30.95 As in the
current rule, if a national bank is
relocating its main office outside the
limits of its city, town, or village, the
national bank also must obtain the
approval of shareholders owning twothirds of the voting stock of the bank
and amend its articles of association.
This shareholder vote is required by
statute.96
Redesignated § 5.40(c)(2)(ii) requires a
Federal savings association to submit an
application to the appropriate OCC
licensing office and obtain prior OCC
approval to relocate its home office to
any location other than an authorized
branch location within the city, town, or
village in which the home office of the
savings association is located. As with
a national bank, a Federal savings
association relocating the home office
outside the limits of its city, town, or
village is required to amend its charter.
The final rule adds clarifying language
to indicate that the savings association
must obtain shareholder approval for
such relocation of its main office if so
required by its charter. We note that,
unlike national banks, this shareholder
approval is not required by statute.
Redesignated § 5.40(c)(3) requires a
national bank or Federal savings
association to follow the provisions of
§ 5.30 or § 5.31, respectively, in order to
establish a branch at the site of a former
main office or home office.
Redesignated § 5.40(c)(4) provides
expedited review for applications
submitted under paragraph (c)(2)
(relocations of a main office or home
office to any location other than an
authorized branch location) for eligible
Federal savings associations as well as
eligible national banks. The final rule
also revises the expedited review time
for short-distance relocations of a main
office or home office so that they are
deemed approved 15 days after the close
of the comment period or 30 days after
the date the notice is filed, whichever is
later. This change reflects the shorter
15-day comment period for shortdistance relocations.
Redesignated § 5.40(c)(5) provides
exceptions to the OCC’s rules of general
applicability in part 5 of the OCC’s
regulations for relocations of a main
office or home office to an authorized
branch location within city, town, or
95 There is no similar statutory provision for
Federal savings associations with respect to moving
the office to a location within 30 miles of the home
office.
96 12 U.S.C. 30.
PO 00000
Frm 00039
Fmt 4701
Sfmt 4700
28383
village limits under paragraph (c)(1) and
applies these exceptions to Federal
savings associations. Redesignated
§ 5.40(d) requires Federal savings
associations, like national banks, to
open a relocated home office within 18
months from the date of OCC approval,
unless the OCC grants an extension.
Under § 145.95(c), Federal savings
associations currently must open or
relocate a home office for which they
have received approval or non-objection
from the OCC within 12 months.
Corporate Title (§ 5.42)
Sections 5.42 and 143.1 set forth
standards and procedures for when a
national bank or Federal savings
association seeks to change its corporate
title. Under § 5.42(c), a national bank
may change its corporate title without
prior notice to the OCC if the new title
includes the word ‘‘national’’ and
complies with other OCC guidance and
Federal laws, including laws regarding
false advertising and misuse of names.
In addition, if the national bank’s
articles of association specify the
corporate title, § 5.42(d)(2) requires the
bank to amend the articles in
accordance with 12 U.S.C. 21a.
Pursuant to § 143.1(b), a Federal
savings association must provide the
OCC with prior notice of a change in
corporate title. If the OCC does not
object within 30 days, the Federal
savings association may change its title
by amending its charter in accordance
with the Federal mutual savings
association or Federal stock association
charter amendment regulatory
procedures in §§ 5.21 or 5.22,
respectively. There is no specific statute
addressing Federal savings association
charter amendments. In addition,
§ 143.1(a) prohibits a Federal savings
association from adopting a title that
misrepresents the nature of the
institution or the services it offers.
The OCC proposed to amend § 5.42 to
include Federal savings associations.
The OCC did not receive any comments
on § 5.42, and we adopt the
amendments as proposed, with one
clarifying change. The result of the final
rule is to eliminate the advance notice
requirement currently applicable to
Federal savings association corporate
title changes. Instead, Federal savings
associations must promptly provide a
notice to the appropriate OCC licensing
office subsequent to any change in its
corporate title. The OCC believes that an
after-the-fact notice will provide the
OCC with adequate information for
regulatory purposes and will reduce
burden on Federal savings associations
without affecting safety and soundness.
E:\FR\FM\18MYR2.SGM
18MYR2
28384
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
The proposed rule did not incorporate
a provision in § 143.1(a) that prohibits a
Federal savings association from
adopting a title that misrepresents the
nature of the institution or the services
it offers. The preamble to the proposed
rule stated that this statement is implicit
in the current national bank rule as well
as the proposed rule for both national
banks and Federal savings associations
and therefore not necessary in the
revised rule. However, to emphasize
this prohibition, we have amended the
final rule to include a statement that the
new title must continue to be consistent
with § 5.20(f)(2)(i)(F). This provision,
added by this final rule, states that, in
approving an application to establish a
national bank or Federal savings
association, the OCC must consider
whether the proposed bank or savings
association does not have a title that
misrepresents the nature of the
institution or the services it offers.
The OCC also is making a number of
conforming edits. Specifically, the OCC
is adding to § 5.42 a cross-reference to
§§ 5.21(g) or 5.22(g), the regulatory
charter amendment procedures that a
Federal mutual savings association or
Federal stock association must follow
when amending its charter to reflect a
corporate title change. This crossreference simply transfers these
requirements from the current Federal
savings association rule to the integrated
rule. In addition, the OCC is removing
the word ‘‘Federal’’ in § 5.42(c)(1) to
clarify that the new title must comply
with all applicable laws, whether
Federal or state.
Increases in Permanent Capital by a
Federal Stock Savings Association (new
§ 5.45)
Twelve CFR 5.46 sets out the OCC’s
rules for national bank changes in
permanent capital. These rules
implement statutory provisions that
establish the processes and
requirements for a national bank to
increase or decrease its permanent
capital (i.e., capital stock and capital
surplus), including 12 U.S.C. 51a, 51b,
51b–1, 52, 56, 57, 59, and 60. The
statutes require OCC approval for all
increases and decreases in permanent
capital at a national bank.
The OCC has established a
streamlined approval process for most
increases in permanent capital by
national banks. However, in certain
cases, the OCC requires a full
application and prior approval. These
involve situations in which the OCC has
supervisory concerns or the capital
contribution is not in cash, thus raising
issues of properly valuing the capital
increase.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
These statutes do not apply to Federal
savings associations, and there are not
comparable provisions in the HOLA
requiring a savings association to
receive prior approval for increases to
permanent capital. Accordingly, we did
not propose to add Federal savings
associations to § 5.46. However, we
proposed to add a new § 5.45 to require
a Federal stock savings association to
apply to the OCC and obtain prior
approval in the same circumstances in
which a national bank would be
required to file a full application under
§ 5.46. Those circumstances are: (1)
When the savings association is
required to receive OCC approval
pursuant to letter, order, directive,
written agreement or otherwise, (2)
when the savings association is selling
common or preferred stock for
consideration other than cash, or (3)
when the savings association is
receiving a material noncash
contribution to capital surplus. We did
not receive any comments on new § 5.45
and adopt it as proposed, with one
technical correction to § 5.45(g)(5) to
reference Federal savings associations.
New § 5.45 applies only to Federal
stock savings associations. Federal
mutual savings associations generally
do not raise additional capital, other
than through retained earnings, by
methods comparable to Federal stock
savings associations and national banks.
The OCC will review any proposed
capital increases at Federal mutual
savings associations on a case-by-case
basis.
Changes in Permanent Capital by a
National Bank (§ 5.46)
As indicated above, 12 CFR 5.46
implements statutory provisions that
establish the processes and
requirements for a national bank to
increase or decrease 97 its permanent
capital (i.e., capital stock and capital
surplus). We proposed clarifying
amendments to § 5.46 regarding
increases in capital. We did not receive
any comments on these changes and
adopt them as proposed. Specifically,
the final rule revises paragraph (g)(1) to
describe more fully those increases not
requiring an application and prior
approval and when such increases are
97 Reductions in capital for Federal savings
associations are currently included in the
regulations governing capital distributions by
Federal savings associations, 12 CFR part 163,
subpart E (which will become new § 5.55 in this
rulemaking). The current rule and § 5.55 treat a
reduction in capital by a Federal savings association
that is comparable to a reduction in capital that
would be subject to § 5.46 for a national bank (i.e.,
a reduction other than a dividend from undivided
profits) in a similar manner, requiring an
application to the OCC.
PO 00000
Frm 00040
Fmt 4701
Sfmt 4700
considered approved by the OCC.
Portions of this provision are currently
in paragraph (i)(3) which principally
deals with the bank’s notification to the
OCC that the increase has occurred and
the certification of the increase by the
OCC. In the revised rule, the discussion
of the approval process is included in
paragraph (g)(1), and paragraph (i)(3)
covers only the bank’s notice of increase
and OCC certification. The final rule
also revises paragraph (i)(3) to make it
easier to follow by dividing it into
provisions covering the bank’s notice of
increase and OCC certification. In
addition, the final rule describes more
fully the certification process and
clarifying that the effective date of a
capital increase is the date the increase
occurred, not the date on which the
OCC issues its certification. No changes
in substance are intended by these
clarifications.
The final rule also makes a small
number of technical changes, including
revising the section’s title to indicate
that it applies only to national banks.
Voluntary Liquidation (§ 5.48)
Twelve U.S.C. 181 and 182 establish
liquidation standards and procedures
for national banks, including
requirements for public notice of
liquidation plans.98 Twelve CFR 5.48
implements these statutes and provides
that a national bank: (1) May liquidate
in accordance with 12 U.S.C. 181; (2)
must notify the OCC when it is
considering voluntary liquidation; (3)
must provide the public notice required
by 12 U.S.C. 182, as well as notice to the
OCC, after its shareholders have voted
to voluntarily liquidate; and (4) must
file reports of both condition and
progress with the OCC. In addition,
§ 5.48(f) contains provisions for
expedited voluntary liquidations in
connection with certain acquisitions
and § 5.48(g) addresses a national bank
as the acquirer of a liquidating national
bank.
There are no statutory requirements
similar to 12 U.S.C. 181 and 182 that
apply to Federal savings associations.
However, § 146.4 contains standards
and procedures for a Federal savings
98 Twelve U.S.C. 181 sets forth the liquidation
standards and procedures with respect to
shareholder approval, liquidating agents, progress
reports, and OCC examination of a liquidating bank.
It requires, inter alia, that two-thirds of a national
bank’s shareholders vote to liquidate in order for a
liquidation to proceed. Twelve U.S.C. 182 requires,
inter alia, that a liquidating national bank’s board
of directors publish for two months a notice of
liquidation in every newspaper published where
the bank is located (or nearby, if no paper is
published in that city or town). The notice must
state that the bank is closing up its affairs and notify
creditors to present their claims for payment.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
association to dissolve voluntarily.
Under these rules, a Federal savings
association’s board of directors may
propose a dissolution plan and submit
the plan to the OCC for approval. The
OCC may approve the plan, make
recommendations concerning the plan,
or disapprove the plan. Once approved
by both the board of directors and the
OCC, the Federal savings association
must submit the plan to the savings
association’s members or shareholders
for a vote. If approved by a majority of
the members or voting shares, the plan
becomes effective. After dissolution, the
savings association must provide a
certificate evidencing such dissolution
to the OCC, after which the OCC will
cancel the savings association’s
charter.99
The OCC proposed to amend § 5.48 to
incorporate certain provisions from
§ 146.4, to make § 5.48 applicable to
both Federal savings associations and
national banks, and to rescind § 146.4.
The OCC did not receive any comments
on these proposed changes and adopts
them as proposed. These changes
provide the OCC with additional
methods to ensure the safety and
soundness of national banks and
Federal savings associations. These
changes also streamline and improve
the process for an OCC-regulated
institution to liquidate and thus reduce
regulatory burden for the institution.
The amendments result in changes to
the liquidation procedures for both
types of institutions. Specifically, under
§ 5.48(b), a Federal savings association
must provide preliminary notice to the
OCC when it is considering voluntary
liquidation and again when its
liquidation plan is definite. These
requirements currently apply only to
national banks. The OCC has found that
these advance notices are helpful to the
agency in ensuring that the liquidations
are planned and executed in a safe and
sound manner and in anticipating any
issues that may arise as liquidation
commences. Also under § 5.48(b),
neither a national bank nor a Federal
savings association may commence
liquidation until the OCC has notified it
that the agency does not object to the
liquidation plan. Although this
requirement is included only in the
current Federal savings association
regulation, it is consistent with the
OCC’s current supervisory practice for
national banks. The OCC has found that
it can identify and communicate
supervisory concerns in a timely
99 These rules do not apply to transactions such
as mergers or consolidations, which are currently
governed by 12 CFR 163.22, which is replaced by
12 CFR 5.33 by this final rule.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
manner if it reviews liquidation plans
prior to the commencement of
liquidation and believes that it is
appropriate to include this requirement
in the final rule.
Section 5.48(d) of the final rule
specifies the factors the OCC will
consider when reviewing a proposed
liquidation plan. Current § 5.48 does not
provide any factors and § 146.4 states
only that the OCC will approve the plan
if it believes dissolution is advisable
and the plan is best for all concerned.
However, the OCC believes that the
additional specificity provided by the
final rule assists filers in the preparation
of liquidation plans. Specifically,
§ 5.48(d)(1) in the final rule states that
in reviewing a liquidation plan, the OCC
will consider the purpose of the
liquidation, its impact on the
liquidating institution’s safety and
soundness, and its impact on the
institution’s depositors, other creditors,
and customers. These factors are similar
to those that the OCC currently
considers when reviewing the merger of
a national bank with a nonbank affiliate
and substantial changes in the
composition of a national bank’s
assets.100 Furthermore, the OCC
currently uses similar considerations in
reviewing voluntary dissolutions of
Federal savings associations and bulk
transfers by Federal savings
associations.101 These factors provide
the OCC with a clear understanding of
a plan’s potential effect and help to
ensure that liquidations are carried out
in a safe and sound manner.
Section 5.48(d)(2) states that the OCC
also will review a national bank’s
liquidation plan for compliance with 12
U.S.C. 181 and 182. These statutory
requirements do not apply to Federal
savings associations and the OCC does
not believe it is necessary to extend
them to these institutions by regulation.
Finally, because of the unique structure
of mutual savings associations, revised
§ 5.48(d)(3) states that the OCC will
assess the advisability and effect of
liquidation, as well as any alternatives
to such action, when a mutual savings
association plans to liquidate. As stated
above, the OCC believes it must
consider these factors in assessing a
plan and that it is appropriate to
provide affected parties with notice that
the OCC will consider these factors.
Sections 5.48(e)(1) and (e)(2) describe
the requirements to provide notice of
consideration of a plan, to submit a
plan, and to receive OCC non-objection
before proceeding with a plan. As
amended, § 5.48(e)(3) provides that a
100 See
101 See
PO 00000
12 CFR 5.33(g) and 5.53.
12 CFR 146.4(b) and 163.22(c).
Frm 00041
Fmt 4701
Sfmt 4700
28385
national bank or Federal savings
association’s board of directors and its
shareholders (or, in the case of a Federal
mutual savings association, directors
and members) must vote to approve a
voluntary liquidation plan. While this
requirement is included in § 146.4, only
shareholders are required to vote on a
liquidation plan under § 5.48(e). The
OCC believes that it is prudent and
appropriate for a national bank’s board
of directors also to vote to liquidate
because of its direct role in governing
the operation of the institution. We also
believe that the addition of this
requirement reflects existing practices of
boards of directors in voluntary
liquidations.
Currently, only a national bank is
required to notify the OCC of a vote to
liquidate. The OCC believes that each
institution that it regulates should
inform the OCC of such a vote so that
the OCC knows the status of the
liquidation process. Therefore, the final
rule amends § 5.48(e)(3)(A) to state that
a national bank or Federal savings
association must file a notice with the
OCC once the specified parties vote to
liquidate. In addition, revised
§ 5.48(e)(3)(A) requires the bank or
savings association to provide notice to
depositors, other known creditors, and
known claimants. Currently, § 146.4 has
no specific notice requirement and, as
noted above, § 5.48(e)(1) simply directs
a bank to publish notice in accordance
with 12 U.S.C. 182. The OCC believes
that the public will be best served when
notice to depositors, creditors, and
claimants is provided and, therefore, the
OCC has included this notice in the
final rule. Section 5.48(e)(3)(B) makes
clear, however, that the statutory vote
and notice requirements of 12 U.S.C.
181 and 182 are applicable only to
national banks.
The final rule also extends to Federal
savings associations the § 5.48(e)(4) and
(e)(5) requirements to submit reports of
condition and progress to the OCC. The
OCC finds these reports useful in
determining whether a national bank is
following its plan of liquidation and
conducting the liquidation in a safe and
sound manner. The OCC believes that it
is useful to have this same information
for a liquidating Federal savings
association. In addition, the OCC is
requiring the liquidating agent or
committee to submit to the OCC a report
at the start of liquidation showing the
bank’s current balance sheet.
Revised § 5.48(e)(6) requires a
national bank and Federal savings
association to submit a final report of
the liquidation to the OCC. This
requirement currently exists only for
Federal savings associations. However,
E:\FR\FM\18MYR2.SGM
18MYR2
28386
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
this report allows the agency to confirm
that the institution accomplished the
liquidation in accordance with the
liquidation plan. Furthermore, this
requirement is consistent with the
OCC’s current supervisory practice.
Revised § 5.48(e)(6) also specifically
requires both national banks and
Federal savings associations to return
the charter certificate to the OCC.
Sections 5.48(f) and 146.4(b) contain
substantively similar provisions for
expedited liquidations, and the OCC is
consolidating the two provisions by
applying § 5.48(f) to Federal stock
savings associations. The result of the
§ 146.4(b) provision that excepts from
the voluntary liquidation requirements
the transfer of all of a Federal savings
association’s assets and liabilities to a
bank in a business combination
transaction remains in effect under
§ 5.48(f). Consistent with § 146.4(b),
however, the final rule does not extend
paragraph (f) to Federal mutual savings
associations because of the unique
ownership structure of those savings
associations. The final rule also
eliminates § 5.48(g), concerning a
national bank as an acquirer of a
liquidating national bank, because it
does not impose requirements beyond
those stated in current law. Finally, the
OCC is making other technical changes
to clarify § 5.48 where necessary.
Change in Control (§ 5.50)
Twelve CFR 5.50, Change in bank
control; Reporting of stock loans, and 12
CFR part 174, Acquisition of control of
Federal savings associations, set forth
the policy and establish the process for
acquisitions of control of national banks
and Federal savings associations,
respectively. These rules provide the
framework for prospective acquirers
when they seek to acquire control of a
national bank or Federal savings
association. Specifically, § 5.50 and part
174 describe the application process
and the factors the OCC considers in
reviewing the qualifications of the
prospective acquirer. The section also
addresses the factors that prospective
acquirers should consider when
exploring possible acquisitions.
While both § 5.50 and part 174
implement the Change in Bank Control
Act 102 and many of the substantive
requirements are the same, part 174
includes certain substantive
requirements that are not included in
§ 5.50. For example, the rules for
Federal savings associations contain
many of the same thresholds and
control concepts included in § 5.50, but
part 174 includes rebuttable control
102 12
U.S.C. 1817(j).
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
presumptions and rebuttable
presumptions of concerted action that
are absent in § 5.50.
We proposed to amend 12 CFR 5.50
to make it applicable to both national
banks and Federal savings associations
and to rescind 12 CFR part 174. As
discussed below, we are adopting these
amendments as proposed. The
amendments to § 5.50 make uniform the
treatment of ownership interests held in
all national banks and Federal savings
associations. The amendments also give
guidance to investors contemplating
purchasing shares in a national bank or
Federal savings association by providing
information about what transactions are
covered by the requirements and when
a notice is necessary. In addition, the
amendments clarify the OCC’s
supervisory expectations for these
transactions.
Specifically, the final rule amends
§ 5.50 to include a number of the
definitions and substantive provisions
found in part 174. In some instances,
these amendments codify substantive
differences, as described below.
The final rule also amends the
definition section in § 5.50 to add a
number of definitions from part 174.
These additional terms include
‘‘controlling shareholder,’’
‘‘management official,’’ ‘‘company,’’ and
several definitions that are necessary
because we have added Federal savings
associations to the rule. The final rule
also replaces the definition of
‘‘acquisition’’ with that of ‘‘acquire’’
from part 174, which contains a more
detailed description of transactions that
are be covered by the rule. Specifically,
the final rule defines ‘‘acquire’’ as
obtaining ownership, control, power to
vote, or sole power of disposition of
stock, directly or indirectly or through
one or more transactions or subsidiaries,
through purchase, assignment, transfer,
pledge, exchange, succession, or other
disposition of voting stock. The final
rule also includes specific examples.
Finally, the final rule retains and
applies to Federal savings associations
the current definition of ‘‘voting
securities,’’ which replaces the part 174
definition of ‘‘voting stock.’’ The change
will affect the standard for convertible
securities. Currently, part 174 includes
as voting stock any security that, upon
transfer or otherwise, is convertible into
voting stock or exercisable to acquire
voting stock where the holder of the
convertible security has the
preponderant economic risk in the
underlying voting stock. Section 5.50,
by contrast, defines voting securities to
include securities that are immediately
convertible into voting securities at the
option of the owner or holder. The OCC
PO 00000
Frm 00042
Fmt 4701
Sfmt 4700
believes the immediately convertible
standard is simpler and easier to apply
than the preponderant economic risk
standard and provides an appropriate
standard for the treatment of securities
that are convertible into, or
exchangeable for, voting securities.
One commenter requested that the
Federal banking agencies make the
definitions of ‘‘acting in concert’’ and
‘‘immediate family’’ uniform. However,
this change is outside the scope of our
licensing integration and would need to
be undertaken on an interagency basis.
We will consider this change when
reviewing our rules for any possible
joint rulemakings in response to other
EGRPRA-related amendments.
The amendments to § 5.50 add several
presumptions of concerted action. These
additional presumptions provide
guidance about how and when parties
are presumed to be acting in concert for
purposes of § 5.50. Currently, an
acquirer that proposes to rebut control
of a national bank cannot have a
representative on the board of directors.
The amended rule allows acquirers to
rebut a presumption of control in cases
where the acquirer will have a
representative on the board of directors
of the relevant national bank or Federal
savings association. This amendment
provides greater flexibility for acquirers;
in addition, these changes help make
the OCC’s proposed change in control
regulations consistent with the Federal
Reserve System’s regulations.
Additionally, the final rule establishes
specific limitations in the rebuttal of
control context on the total equity
invested, where an acquirer proposes to
acquire more than fifteen percent of the
national bank’s or Federal savings
association’s voting stock. The final rule
also removes certain of the rebuttable
presumptions of control with respect to
Federal savings associations that are
currently set forth in § 174.4(b) and (c),
and certain of the rebuttable
presumptions of concerted action
currently set forth in § 174.4(d).
The final rule does not include the
detailed part 174 procedures for rebuttal
of control and concerted action,
retaining instead the procedures in
§ 5.50(f)(2)(vi) and applying them to
Federal savings associations. The OCC
believes that rebuttals are processed in
a timely manner under § 5.50, and that
the processing procedures established in
part 174 are unnecessarily detailed. The
final rule also excludes certain other
provisions that are included in part 174.
For instance, amended § 5.50 retains the
current prior notice exemption
provisions for acquisition of control as
a result of testate or intestate succession.
Thus, both national banks and Federal
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
savings associations must file a notice
and pay the appropriate filing fee within
90 calendar days after the transaction
occurs. Previously, persons who
acquired control of a Federal savings
association as a result of testate or
intestate succession needed only to file
a notification of acquisition to the OCC
within 60 days of the acquisition and
provide information requested by the
OCC. The OCC believes this change is
appropriate because it enables the OCC
to review acquisitions of control
through testate or intestate succession
under the standards set forth in § 5.50.
We did not receive any comments on
these changes.
Likewise, amended § 5.50 does not
include the presumptive disqualifiers
from part 174—a list of factors, which,
if present, may show a lack of integrity
or lack of financial capability to proceed
with a proposed transaction. While the
OCC believes that the presumptive
disqualifiers provide helpful guidance
regarding circumstances in which the
OCC might consider a change of control
notice to be objectionable under the
standards for disapproval, the OCC does
not consider it necessary to include
these detailed provisions in the
regulation. The OCC intends to amend
the Change in Bank Control Act booklet
of the Comptroller’s Licensing Manual
to address the situations described in
the presumptive disqualifiers to the
extent it considers appropriate. The
amended regulation retains the
standards for disapproval set forth in
§ 5.50(e)(5) and (6).
One commenter recommended that
the OCC amend § 5.50 to include a
process by which institutions can obtain
a binding interpretation of what
constitutes a change in control so that
institutions will know when a filing is
necessary. However, the OCC does not
believe a rule change is necessary to
provide this information. Institutions
can, and often have, asked the OCC for
a legal opinion or interpretation of the
statute and regulation regarding whether
a change in control filing is required
based on the facts and circumstances
presented. The OCC will continue to
provide this information on a case-bycase basis.
Revised § 5.50 also does not include
the requirement at § 174.5(a) that
acquirers of beneficial ownership
exceeding 10 percent of any class of
stock of a Federal savings association
that do not file a control notice or
control rebuttal file a certification of
ownership. The OCC believes that the
regulatory burden of these filings
exceeds the benefits derived from them.
We did not receive any comments on
this change.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
One comment letter, as well as a
commenter at the Dallas EGRPRA
outreach meeting, noted that the change
in control application process allows
the regulator to keep the application
review period open indefinitely by
stating that the filing is not yet
informationally complete. These
commenters noted that this creates
uncertainty, which has a cost to the
parties and the affected institutions.
One of these commenters requested that
there be a definitive cutoff period.
However, such a change should be made
on an interagency basis. Therefore, we
will consider this comment when we
review our rules for any possible joint
rulemakings in response to other
EGRPRA-related amendments.
We received comments at the Los
Angeles EGRPRA outreach meeting
requesting that we should approve
change of control applications within 30
days, rather than the 60-day period that
is currently used. We do not agree that
this statutory period should be reduced
as 60 days is necessary for the OCC to
complete our review of the filing.
Finally, the final rule eliminates
Appendix A to 174—Rebuttal of Control
Agreement. Our rules contain no similar
model agreement for national banks,
and we do not believe this model is
necessary for Federal savings
associations.
Change in Directors & Senior Executive
Officers (§ 5.51)
Twelve CFR 5.51, Changes in
directors and senior executive officers,
and 12 CFR part 163, subpart H, Notice
of change of director or senior executive
officer (§§ 163.550 through 163.590),
implement 12 U.S.C. 1831i, which
requires certain national banks and
Federal savings associations to notify
the OCC of a change in a director or
senior executive officer. In order to
make the treatment of national banks
and Federal savings associations more
consistent, we proposed to amend § 5.51
by adding language to make it
applicable to both national banks and
Federal savings associations, making
various clarifying changes to the rule,
and rescinding 12 CFR part 163, subpart
H.
The final rule adopts these
amendments as proposed. The resulting
changes for both national banks and
Federal savings associations, and the
comments that we received in response
to the proposal, are described below.
Definitions. The definition in
§ 5.51(c)(1) of a ‘‘director’’ for a national
bank is not as broad as the definition of
the same term in § 163.555 for a Federal
savings association. Specifically, the
definition in the bank rule includes an
PO 00000
Frm 00043
Fmt 4701
Sfmt 4700
28387
advisory director who is authorized to
vote on any matters before, or provides
more than general advice to, the board
of directors. The savings association
rule includes an advisory director who
votes or provides such advice to a
committee of the board in addition to
the board of directors. The final rule
amends § 5.51(c)(1)(ii) to include this
broader definition. As a result, an
advisory director of a national bank who
may vote on matters before, or provides
more than general advice to, any
committee of the board of directors is
now subject to the requirements of
§ 5.51. We did not receive any
comments on this change.
Section 5.51(c)(2) defines the term
‘‘national bank.’’ To provide parallel
treatment, the final rule redesignates
§ 5.51(c)(2) as § 5.51(c)(3) and adds a
definition for the term ‘‘Federal savings
association’’ at § 5.51(c)(2).
‘‘Senior executive officer’’ is defined
in § 5.51(c)(3) for a national bank and in
§ 163.555 for a Federal savings
association. In addition to minor
variances in wording, the definitions
have two primary differences. First, the
definition in § 163.555 includes an
individual serving as president of the
institution, while § 5.51(c)(3) does not.
To eliminate any ambiguity, the final
rule adds ‘‘president’’ to the definition
of senior executive officer and
redesignates § 5.51(c)(3) as § 5.51(c)(4).
Second, the definition in § 163.555
specifies that a ‘‘senior executive
officer’’ also includes any other person
identified by the OCC or the OTS in
writing as an individual who exercises
significant influence over, or
participates in, major policymaking
decisions, whether or not hired as an
employee, while § 5.51(c)(3) does not
specify that the OCC provide notice in
writing. The final rule amends
redesignated § 5.51(c)(4) to clarify that
the notification must be in writing.
We received one comment on this
definition, which requested that the
Federal banking agencies adopt uniform
definitions of ‘‘director and senior
officers.’’ This change is outside the
scope of our licensing integration
rulemaking and would need to be
undertaken on an interagency basis. We
will consider this change when
reviewing our rules for any possible
joint rulemakings in response to other
EGRPRA-related amendments.
Section 5.51(c)(4) defines the term
‘‘technically complete notice’’ for a
national bank to mean a notice that
includes all information required by
§ 5.51(e)(2), and includes information
that may be requested by the OCC after
the original submission of the notice.
While § 163.555 does not include a
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28388
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
specific definition of this term for a
Federal savings association, the term
‘‘technically complete notice’’ as
defined in the bank rule is generally
consistent with the content
requirements in § 163.570 and the
procedures in § 163.575 governing
review of a notice for completeness. The
final rule amends this definition to
delete the phrase ‘‘original submission
of the notice’’ and replace it with
‘‘notice’’ to allow for subsequent OCC
requests for additional information. We
did not receive any comments on this
change.
Redesignated § 5.51(c)(6) defines the
term ‘‘technically complete notice date’’
to mean the date on which the OCC has
received a technically complete notice
for a national bank or Federal savings
association. A Federal savings
association should be aware of this
definition because it triggers the 90-day
time period for OCC review and
decision discussed below. We did not
receive any comments on this change.
‘‘Troubled condition’’ is defined in
§ 5.51(c)(6) for a national bank and in
§ 163.555 for a Federal savings
association. The definitions are
substantially similar, and we believe the
definition of troubled condition for a
national bank encompasses all of the
actions included in the definition for a
Federal savings association. However,
§ 5.51(c)(6) provides that a national
bank may be designated in troubled
condition based on information
obtained as a result of an examination,
while § 163.555 provides that a Federal
savings association may be designated
in troubled condition based on
information available to the OCC. The
language in § 163.555 is broader and
thus provides the OCC with greater
ability to ensure the safety and
soundness of the institutions we
supervise. Accordingly, the final rule
amends § 5.51(c)(6) by redesignating it
§ 5.51(c)(7) and by deleting the phrase
‘‘as a result of an examination’’ and
replacing it with the phrase ‘‘based on
information pertaining to such national
bank or Federal savings association.’’
We did not receive any comments on
this change.
Prior Notice. Sections 5.51(d) and
(e)(6)(ii) prescribe when a national bank
must provide prior notice to the OCC,
and §§ 163.560, 163.585(a)(2), and
163.590(b) are the corresponding
provisions for a Federal savings
association. The description of
circumstances requiring prior notice are
similar in most respects, but there are
differences in the timeframe for prior
notice and the treatment of an
individual seeking election to the board
of directors who has not been
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
nominated by management. Under
§ 5.51(d), a national bank must provide
90 days prior notice before adding or
replacing any director or senior
executive officer, or changing the
position of a current senior executive
officer, if the bank is not in compliance
with minimum capital requirements, is
otherwise in a troubled condition, or the
OCC determines, under section 38 of the
FDI Act,103 that prior notice is
appropriate. Section 163.560 requires 30
days prior notice for a Federal savings
association if similar prerequisites are
met. The OCC may extend this review
period under § 163.585(a)(2) for an
additional period not to exceed 60 days.
Furthermore, in lieu of following the
procedures under § 163.590(b), this 30day notice requirement applies to an
individual seeking election to the board
of directors who has not been
nominated by management.
The final rule applies the national
bank standards to Federal savings
associations requiring them to provide
90 days prior notice of a new director
or senior executive officer if certain
prerequisites are met. We believe this
longer prior notice is appropriate for
both banks and savings associations and
conforms with the review of these
notices under current OCC practice
pursuant to the notice period extension.
In addition, under the revised rule, only
a Federal savings association may file
the notice with the OCC; an individual
seeking election to the board of directors
of a Federal savings association who has
not been nominated by management no
longer is allowed to do so. We believe
that conducting the necessary review
only after an individual has been
elected to the board of directors is a
more judicious use of OCC resources.
The final rule also requires that if the
OCC determines that prior notice is
required based on review of an agency
plan under section 38 of the FDI Act,
such determination must be in writing.
We received one comment on the
required 90-day notice, which requested
that the Federal banking agencies adopt
a uniform 30-day prior notice
requirement. However, we disagree with
this comment. The OCC frequently
needs 90 days to make its
determination. Therefore, we are
adopting the provisions as proposed.
Exceptions to rules of general
procedure. For a national bank, under
§ 5.51(e)(8), notices are not subject to
public notice and comment, are not
publicly available, and are excepted
from certain other generally applicable
application processing provisions of
part 5. Under part 163, subpart H, and
103 12
PO 00000
U.S.C. 1831o.
Frm 00044
Fmt 4701
Sfmt 4700
the application processing regulations
applicable to Federal savings
associations, notices pertaining to
Federal savings associations are treated
similarly. The final rule amends
§ 5.51(e)(8) to include Federal savings
associations and to clarify that the
procedures in § 5.13(c) regarding
required information and abandonment
of a filing apply to the extent provided
for in amended § 5.51(e)(3)(iii) and
(e)(7). We did not receive any comments
on these amendments.
Content of Notice. Current § 5.51(e)(2)
and 163.570 provide, respectively, the
requirements governing the content of a
notice for a national bank and a Federal
savings association. Although
§ 5.51(e)(2) lists the specific items
required and § 163.570 refers to 12
U.S.C. 1817(j)(6)(A) and the Interagency
Biographical and Financial Report
(IBFR), these requirements are
essentially the same, except that
§ 5.51(e)(2) currently does not require
the financial portion of the IBFR for a
national bank. Because the financial
section of the IBFR provides
information that is useful and relevant
to the disapproval standards and may
not be available to the OCC in the
information currently required to be
provided, the final rule revises
§ 5.51(e)(2) to require the submission of
the financial portion of the IBFR, except
when the OCC determines in writing
that this information is not required.
The final rule also adds language to
§ 5.51(e)(2) to permit the OCC to require
additional information and to require or
accept other information in place of the
information required by this paragraph.
This language, which provides valuable
flexibility to the OCC, is currently
included in § 163.570(a)(3) and (b). In
addition, the final rule adds language to
§ 5.51(e)(2) to clarify how to calculate
the three-year exception for providing
fingerprints.
We did not receive any comments on
these changes.
Request for additional information.
The final rule amends § 5.51(e)(3),
redesignated as § 5.51(e)(3)(i), to remove
the qualification that the OCC’s request
for information be in writing ‘‘where
feasible’’ and instead requires that the
OCC’s request must always be in writing
and that the OCC must provide an
explanation of why the information is
needed. In addition, the final rule adds
a new § 5.51(e)(3)(ii) to provide that a
national bank or Federal savings
association that cannot provide the
requested information within the time
specified by the OCC may request that
the OCC suspend processing of the
notice and that the OCC, in its
discretion, may either grant or deny the
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
request in writing, and if granted,
specify the time period during which
the information must be provided. This
provision is similar to § 163.575(b). The
final rule also adds new § 5.51(e)(3)(iii),
which provides that if a national bank
or Federal savings association fails to
provide the requested information
within the time specified in
§ 5.51(e)(3)(i) or in the OCC’s grant of
the suspension request pursuant to
§ 5.51(e)(3)(ii), the OCC may either
deem the filing abandoned under
§ 5.13(c) or review the notice based on
the information provided. This
provision is included in § 163.575(b).
Based on our supervisory experience, it
is appropriate to apply these specific
consequence for failing to provide such
additional information to national banks
in addition to Federal savings
associations. We did not receive any
comments on these changes.
Notice of disapproval/notice of intent
not to disapprove. Sections 5.51(e)(4)
and (5) describe the requirements
governing a notice of disapproval and a
notice of intent not to disapprove for a
national bank, and §§ 163.580 and
163.585 are the equivalent provisions
for a Federal savings association.
Although there are minor differences in
wording, they are substantively the
same. Accordingly, the final rule
amends § 5.51(e)(4) and (5) to include
Federal savings associations. In
addition, the final rule amends
§ 5.51(e)(4) and (5) to clarify that the
notice of disapproval and the notice of
intent not to disapprove must be in
writing.
The final rule also clarifies in
§ 5.51(e)(5) that the OCC will provide
the notice of intent not to disapprove to
the individual in addition to the
institution. This change clarifies an
ambiguity and makes this provision
consistent with other provisions in
§ 5.51.
Finally, the final rule revises
§ 5.51(e)(5) to require that an individual
must satisfy all applicable legal
requirements to begin service as a
director or senior executive officer after
receiving a notice of intent not to
disapprove.
We did not receive any comments on
these changes.
Waiver. Section 5.51(e)(6) prescribes
the waiver procedure that allows an
individual to serve as a director or
senior executive officer of a national
bank prior to filing a notice. Section
163.590 prescribes corresponding
procedures for a Federal savings
association. Although these provisions
are similar in terms of standards for
granting a waiver and requiring that a
notice is filed within a specified time
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
period after the waiver has been
granted, the savings association rule
does not detail the length of service of
such an interim position. The final rule
applies § 5.51(e)(6) to savings
associations, reorganizes and renumbers
§ 5.51(e)(6), and makes the changes
described below. We did not receive
comments on any of these changes.
First, under redesignated
§ 5.51(e)(6)(i)(B), the final rule clarifies
that the OCC’s finding in support of the
waiver must be in writing, which is the
OCC’s current practice and which is
included in the savings association rule.
Second, § 5.51(e)(6) provides that the
OCC may waive the prior notice
requirement if delay could harm the
national bank or the public interest, or
if other extraordinary circumstances
justify waiving the requirement. Under
§ 163.590(a), the OCC may grant a
waiver if delay would threaten the
safety and soundness of the savings
association, would not be in the public
interest, or if there are other
extraordinary circumstances. The final
rule revises § 5.51(e)(6) to incorporate
the safety and soundness standard and
modifies it slightly from what is
included in the savings association rule.
Specifically, as amended, the OCC may
grant a waiver if delay could adversely
affect the safety and soundness of the
national bank or Federal savings
association, would not be in the public
interest, or other extraordinary
circumstances justify the waiver.
Third, both § 5.51(e)(6) and § 163.590
provide that if the OCC grants a waiver,
the national bank must file the required
notice within the time period specified
in the waiver. The final rule amends
redesignated § 5.51(e)(6)(i)(C) to clarify
that such notices must be technically
complete within this specified time
period.
Fourth, the final rule amends
redesignated § 5.51(e)(6)(i)(D) by
changing the alternative outcomes that
may occur after a waiver is granted and
the proposed individual has assumed
the position on an interim basis. Section
163.590 does not include similar
provisions. Under the current bank rule,
if a proposed director or senior
executive officer who is serving under a
waiver receives notice of disapproval,
that person could continue to serve
pending resolution of an appeal. We
believe it is not in the best interest of
the national bank or Federal savings
association, and would be unsafe or
unsound, to allow a disapproved
individual to continue to serve pending
an appeal. Therefore, amended
§ 5.51(e)(6)(i)(D)(2) requires an
individual who is serving on an interim
basis and receives a notice of
PO 00000
Frm 00045
Fmt 4701
Sfmt 4700
28389
disapproval to resign immediately from
the board. This person may assume the
position on a permanent basis only if
the notice of disapproval is reversed on
appeal and all other applicable legal
requirements are satisfied.
Section 5.51(e)(6) also provides that if
the required notice is not filed within
the time period specified in the waiver,
the proposed individual must resign his
or her position. Thereafter, the
individual may assume the position on
a permanent basis only after the
national bank receives a notice of intent
not to disapprove, the review period
elapses, or a notice of disapproval has
been overturned on appeal. Section
163.590 does not include a similar
provision. The rule also provides that a
waiver does not affect the OCC’s
authority to issue a notice of
disapproval within 30 days of the
expiration of such waiver. The final rule
clarifies in § 5.51(e)(6)(i)(E) that the
individual may assume the position
under these circumstances only after a
technically complete notice has been
filed and all other applicable
requirements are satisfied. Furthermore,
the final rule specifies in
§ 5.51(e)(6)(i)(D)(3) that the review
period elapses when the OCC fails to act
within 90 calendar days after
submission of a technically complete
notice and the individual satisfies all
other legal requirements. As a matter of
practice, the OCC has taken the position
that waiver of prior notice does not
affect the general 90-day review period
and this amendment codifies this
position in our rule.
The final rule also clarifies in
§ 5.51(e)(6)(i)(D)(1) that following
receipt of a notice of intent not to
disapprove the individual may assume
the position on a permanent basis if all
other applicable legal requirements are
satisfied.
Section 5.51(e)(6)(ii) prescribes the
requirements for an automatic waiver of
the prior notice requirement for a
national bank, and § 163.590(b) is the
corresponding provision for a Federal
savings association. Specifically,
§ 5.51(e)(6)(ii) provides that if a new
director not proposed by management is
elected at a shareholder meeting, a
waiver of the prior notice requirement is
granted automatically and the elected
individual may begin service as a
director. However, the national bank
must file the required notice as soon as
practical and not later than seven days
from the date the individual is notified
of the election. This provision differs
from § 163.590(b), which requires the
individual, and not the institution, to
file the notice. The final rule applies
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28390
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
§ 5.51(e)(6)(ii) to Federal savings
associations.
Commencement of Service. For a
national bank, § 5.51(e)(7) prescribes
when a proposed individual may
assume the office. Section 163.585 is the
corresponding provision for a Federal
savings association. Under § 5.51(e)(7),
an individual may begin service at the
end of the OCC’s review period unless
the OCC issues a notice of disapproval
or the OCC deems the notice to be
abandoned because the bank does not
provide additional requested
information. Under § 163.585, an
individual may begin service at the end
of the 30-day review period (or, if
extended, the 90-day review period)
unless the OCC issues a notice of
disapproval, or when the OCC notifies
the bank in writing of its intent not to
disapprove.
The final rule adds new § 5.51(e)(7)(i)
to clarify that an individual may assume
the office on a permanent basis prior to
expiration of the review period only if
the OCC notifies the national bank or
Federal savings association in writing
that the OCC does not disapprove the
proposed director or senior executive
officer. As indicated above, this
provision is included in § 163.585(b).
The final rule also adds conforming
language in § 5.51(e)(7)(i), redesignated
as § 5.51(e)(7)(ii)(A), to provide that the
OCC’s notice of disapproval must be in
writing. We note that redesignated
§ 5.51(e)(7)(ii)(B) specifically prohibits
individuals from beginning service at a
Federal savings association, in addition
to at a national bank, if the OCC deems
the application abandoned. While
§ 163.575 applies the concept of
abandonment to a Federal savings
association when a notice is not
complete, § 163.585 does not
specifically prohibit individuals from
serving if the OCC deems the
application abandoned. We did not
receive any comments on this change.
Appeal. Section 5.51(f) prescribes the
applicable procedures for a national
bank or a proposed individual to appeal
a notice of disapproval. There is no
equivalent rule in part 163, subpart H
for a Federal savings association.
Accordingly, under § 5.51(f) as amended
by this final rule, this appeal process is
available to both a Federal savings
association and the proposed
individual.
We received one comment related to
the appeal of notices of disapproval.
That commenter requested that all of the
Federal banking agencies’ rules include
a procedure for the appeal of the denial
of a notice for a change in a director or
senior executive officer. However, this
change is unnecessary for the OCC rules
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
because, as indicated above, the OCC’s
current national bank rule already
includes an appeals process and the
OCC in this final rule applies that
process to Federal savings associations.
Technical changes. The final rule
makes minor technical changes
throughout § 5.51. For example, § 5.51
uses the terms ‘‘individual’’ and
‘‘person’’ interchangeably and uses the
terms ‘‘lapse,’’ ‘‘end,’’ and ‘‘expire’’
interchangeably. To promote
consistency and conform to the
language in 12 U.S.C. 1831i, the final
rule replaces the word ‘‘person’’ with
‘‘individual’’ and uses the word
‘‘expire’’ or ‘‘expiration.’’ To promote
consistency and avoid confusion, the
final rule adds the word ‘‘calendar’’
before the word ‘‘days.’’ Finally, in the
definition of ‘‘national bank’’ in
§ 5.51(c)(2), the final rule deletes the
reference to § 5.3(j) because it is
obsolete. We did not receive any
comments on these changes.
Change in Address (§ 5.52)
Twelve CFR 5.52 requires a national
bank to submit a written notice to the
OCC if its main office or post office box
address changes. Twelve CFR 145.91(b)
requires a Federal savings association to
notify the appropriate OCC licensing
office if it changes the permanent
address of its home office, with certain
exceptions. The rules are substantially
similar. In order to consolidate these
rules and make them consistent, the
OCC proposed amending § 5.52 to make
it applicable to both national banks and
Federal savings associations and to
rescind § 145.91(b). The OCC did not
receive any comments on the proposed
changes and adopt the amendments as
proposed. As previously discussed in
this preamble with respect to § 5.40, the
OCC uses the term ‘‘main office’’ when
discussing a national bank and ‘‘home
office’’ when discussing a Federal
savings association.
As noted above, the current national
bank and Federal savings association
notice requirements are subject to
certain exceptions. Specifically,
§ 5.52(b) currently provides that a
national bank is not required to provide
notice of a main office or post office box
address change if the change results
from a transaction approved under part
5. Section 145.91(b) provides that a
Federal savings association is not
required to provide a change of address
notice if the association submitted an
application or notice to relocate or
establish a new home or branch office
pursuant to §§ 145.93 and 145.95. The
OCC is making these provisions
consistent by providing in the final rule
that neither a national bank nor a
PO 00000
Frm 00046
Fmt 4701
Sfmt 4700
Federal savings association is required
to file a notice if it submitted a notice
under § 5.40(b), which addresses a
relocation of a main office or home
office. In addition, a Federal savings
association is not required to file a
notice for a transaction approved under
part 5, consistent with the current
treatment for national banks.
We note that under current Federal
savings association rules, highly rated
savings associations are exempt from
the §§ 145.93 and 145.95 provisions
requiring an application or notice for
the relocation or establishment of a new
home or branch office, and therefore
must file a change in address notice
under 145.91. As a result of the
integration of §§ 145.93 and 145.95 into
§ 5.40 with respect to a relocation of a
home office and the concurrent removal
of the exemption for highly rated
savings associations, all savings
associations file an application or notice
for the relocation of a home office
pursuant to § 5.40 and therefore are
exempt from the change in address
notice under § 5.52.
Finally, § 145.91(a) provides that all
operations of a Federal savings
association are subject to direction from
the home office. There is no equivalent
provision for national banks. The OCC
believes this provision to be
unnecessary and has not included it in
revised § 5.52.
Change in Asset Composition (§ 5.53)
Twelve CFR 5.53 sets out the OCC’s
rules addressing changes in asset
composition for national banks. It
requires a national bank to apply to the
OCC and obtain prior written approval
before changing the composition of all,
or substantially all, of its assets (1)
through sales or other dispositions, or,
(2) having sold or disposed of all or
substantially all of its assets, through
subsequent purchases or other
acquisitions or other expansions of its
operations. It contains exceptions for
changes in asset composition that occur
in connection with an enforcement
action, a liquidation under 12 CFR 5.48,
or a bank’s ordinary and ongoing
business of originating and securitizing
loans.
Twelve CFR 163.22(c) and (h)(2) set
out the OCC’s rules addressing changes
in asset composition, as well as several
other types of changes in business, for
Federal savings associations. Section
163.22(c) requires a Federal savings
association to file either an expedited
treatment notice (which is a form of
application) or a standard treatment
application, as specified in
§ 163.22(h)(2), for transactions described
in § 163.22(c). Section 163.22(c)
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
includes: (1) Purchases or sales or other
transfers of assets in bulk not made in
the ordinary course of business, unless
the transaction is a combination with, or
the assumption of deposits from,
another insured depository institution
and is subject to the Bank Merger Act,
(2) assumptions or sales or other
transfers of savings account liabilities,
deposit accounts, or other liabilities in
bulk not made in the ordinary course of
business, unless the transaction is a
combination with, or the assumption of
deposits from, another insured
depository institution and is subject to
the Bank Merger Act, and (3)
combinations with a depository
institution other than an insured
depository institution.104
The OCC proposed to combine these
rules in an expanded § 5.53 by
including some additional requirements
for approval of asset transfers based on
§ 163.22(c).105 We also proposed to
make clarifications in some of the
existing provisions of § 5.53 and to
revise the rule’s layout to make it easier
to follow. Finally, as a result of these
changes and others in this rulemaking,
we proposed to remove 12 CFR
163.22(c) and (h)(2).106 The OCC did not
receive any comments on the proposed
changes, and adopt the amendments as
proposed, with one technical correction
that is described below.
Specifically, the final rule revises
§ 5.53(b), the scope section, to make it
a single sentence and moves the
extended description of covered
transactions and exceptions into a new
definition section. In § 5.53(c)(1)(i) of
the definition section, the final rule
amends an existing provision to clarify
that a sale of all or substantially all
assets in a series of transactions is
covered, not only the sale of assets in a
single transaction to one purchaser.
The final rule adds two provisions in
the definition that will bring some of the
asset transfers that are covered by
§ 163.22(c) within the scope of § 5.53.
Section 163.22(c) includes all purchases
or sales or other transfers of assets in
bulk not made in the ordinary course of
business, unless the transaction is a
combination with, or the assumption of
deposits from, another insured
depository institution and is subject to
the Bank Merger Act. The final rule
104 Transfers and combinations with insured
depository institutions that are subject to the Bank
Merger Act are covered by other parts of § 163.22.
105 We are addressing the provisions in
§ 163.22(c) regarding combinations and transfers of
deposits and other liabilities in revised 12 CFR 5.33
on business combinations, discussed elsewhere in
the preamble.
106 Other provisions of this rulemaking remove
the remaining provisions of § 163.22.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
adds some, but not all, such transfers to
§ 5.53. The existing national bank rule at
§ 5.53(b) and (c)(1)(ii) (which this
rulemaking includes at § 5.53(c)(1)(ii))
includes asset purchases only after a
prior asset sale. The final rule adds: (1)
Any other asset purchases or other
expansions of business that are part of
a plan to increase the size of the bank
or savings association by more than 25
percent in one year; and (2) any other
material increase or decrease in the size
of the national bank or Federal savings
association or a material alteration in
the composition of the types of assets or
liabilities of the national bank or
Federal savings association (including
the entry or exit of business lines), on
a case-by-case basis, as determined by
the OCC.
The amended rule advises banks and
savings associations that are
contemplating transactions that may
constitute a material change to consult
the appropriate OCC supervisory office
and sets out factors the OCC will use in
determining whether an application is
required. The intent of this provision is
to establish a mechanism for requiring
prior approval of significant changes
when the OCC considers it necessary for
supervisory reasons without
establishing specific application criteria
in the rule that would require banks and
savings associations to file applications
in other cases.
The net effect of these changes on
national banks is to require applications
for approval in more situations than
under current § 5.53, but these
additional situations likely already
would involve discussions between the
bank and its supervisory office. The net
effect of these changes on Federal
savings associations will be fewer
situations in which applications for
approval are required than are now
required under current § 163.22(c).
Section 5.53 has three exceptions to
the requirement to file an application.
An application under § 5.53 is not
required if the bank is making the asset
change in response to direction from the
OCC (e.g., in an enforcement action), if
the asset change is part of a voluntary
liquidation under 12 U.S.C. 181 and 182
and 12 CFR 5.48 that will be completed
within one year, or if the asset change
occurs as a result of a bank’s ordinary
and ongoing business of originating and
securitizing loans. The final rule
amends § 5.53 to provide that the
exception for asset changes that are part
of a voluntary liquidation applies only
if the OCC has notified the bank or
savings association that it has no
objection to the liquidation plan. We
note that the final rule amends § 5.48,
Voluntary liquidation, to require this
PO 00000
Frm 00047
Fmt 4701
Sfmt 4700
28391
non-objection. We also note that the
proposed rule required OCC ‘‘approval’’
of the liquidation plan as the
prerequisite for this exception, and this
final rule makes the terminology
consistent with § 5.48. The final rule
also adds an exception for changes in
assets that are subject to OCC approval
under another application to the OCC.
In such cases, an additional application
under § 5.53 is not required. Under the
current rule, this exception is only
implied.
Section 5.53 currently does not have
a provision granting expedited review of
applications by eligible banks. Section
163.22(c) covers a broader range of
transactions than § 5.53, and § 163.22(c)
and (h)(2) provided for expedited
treatment of bulk transfer filings if all
the participating Federal savings
associations meet the conditions for
expedited treatment. The OCC believes
the transactions covered under § 5.53
will always be significant enough that
expedited review is not appropriate.
Therefore, the final rule does not
include expedited review in § 5.53.
Finally, the final rule revises the
approval requirement provision in
§ 5.53(d)(1) to eliminate language that is
now covered by the term ‘‘substantial
asset change’’ and revises the manner in
which the review factors are set out in
§ 5.53(d)(2)(i) to be the same as the
similar factors in 12 CFR 5.33.
Capital Distributions by Federal Savings
Associations (new § 5.55)
Subpart E of part 163, Capital
distributions, sets forth the procedures
and standards for all capital
distributions made by a Federal savings
association. Section 5.46, Changes in
permanent capital, and subpart E of part
5, Payment of dividends, describe the
procedures and standards relating to a
transaction resulting in a change in a
national bank’s permanent capital and
declaration and payment of national
bank dividends, respectively. Although
part 163, subpart E and § 5.46 and
subpart E of part 5 cover similar
transactions, they are structured
differently and apply in different ways
to Federal savings associations and
national banks. Therefore, the OCC did
not propose to integrate these rules.
However, in order to include all OCC
licensing-related rules in part 5, we
proposed to move the provisions
contained in subpart E of part 163 to
part 5 as new 12 CFR 5.55, update the
cross-references in §§ 192.510(c)(1) and
192.520(c) to reflect the new § 5.55, and
to make other conforming changes.
In addition, we proposed including in
new § 5.55 filing procedures based on
provisions in part 5 regarding eligible
E:\FR\FM\18MYR2.SGM
18MYR2
28392
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
savings associations and expedited
review. These part 5 procedures result
in filing requirements similar to those in
subpart E of part 163. However, as
described in the discussion of the part
5, subpart A, definition of ‘‘eligible bank
or eligible savings association’’
elsewhere in this preamble, because the
eligibility requirements in part 5 and in
the current Federal savings association
rules are not identical, the part 5
eligibility requirements for expedited
review could affect which savings
associations qualify for the expedited
process. We also proposed clarifying the
provisions regarding the filing of a
notice with the OCC and Federal
Reserve Board in proposed
§ 5.55(e)(2)(iii), (2)(iv) and (4) to more
precisely describe the requirements.
We proposed no further substantive
changes to the capital distributions rule
for Federal savings associations.
The OCC did not receive any
comments on proposed § 5.55.
Therefore, we adopt these amendments
as proposed.
Subordinated Debt (New § 5.56)
The OCC currently has separate rules
for subordinated debt issued by national
banks and Federal savings associations
(12 CFR 5.47 and 12 CFR 163.81,
respectively). Because of the differences
and complexity of these rules, we did
not propose to integrate them in this
rulemaking at this time. However, in
order to include all OCC licensingrelated rules in part 5, we proposed to
move § 163.81 to part 5 as new 12 CFR
5.56 and update the cross-reference in
§ 193.101(c) to reflect the new § 5.56.
In addition, we proposed to include
in new § 5.56 filing procedures based on
provisions in part 5 regarding eligible
savings associations and expedited
review that would result in filing
requirements similar to those in
§ 163.81. However, as described in the
discussion of the part 5, subpart A,
definition of ‘‘eligible bank or eligible
savings association’’ elsewhere in this
preamble, because the eligibility
requirements in part 5 and in the
current Federal savings association rules
are not identical, the part 5 eligibility
requirements for expedited review
could affect which savings associations
qualify for the expedited process.
We did not propose any other
substantive changes to rules on
subordinated debt for Federal savings
associations.
The OCC did not receive any
comments on proposed § 5.56, and we
adopt it as proposed, with the following
technical amendments. First, the final
rule replaces the term ‘‘non-objection,’’
a carryover from § 163.81, with the term
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
‘‘approval’’ in § 5.56, which is the term
used in part 5.
Second, because the effective date for
the Basel III revisions to our capital
rules took effect on a staggered basis, the
proposed rule contained provisions
specifically applicable to non-advanced
approaches Federal savings
associations, which did not need to
comply with the revised capital rules
until January 1, 2015. However, as this
final rule is effective after this date,
these specific provisions are no longer
necessary, and the final rule removes
them.
Pass-Through Investments by Federal
Savings Associations (New § 5.58)
National banks and Federal savings
associations may make, directly or
through an operating subsidiary, noncontrolling investments (the national
bank term) or pass-through investments
(the Federal savings association term) in
entities pursuant to their respective
authority under 12 U.S.C. 24 (Seventh)
(national banks) and 12 U.S.C. 1464(c)
(Federal savings associations) and other
statutes. Twelve CFR 5.36 describes the
procedures for making these noncontrolling investments for national
banks. Twelve CFR 160.32(a) addresses
the authority of Federal savings
associations to make pass-through
investments, while § 160.32(b) and (c)
describe the procedures for making
pass-through investments for Federal
savings associations.
With respect to Federal savings
associations, § 160.32(a) codifies the
authority of Federal savings associations
to make pass-through investments in
certain entities that hold only assets and
engage only in activities permissible for
Federal savings associations. When
making the pass-through investment, a
Federal savings association must
comply with all the statutes and
regulations that would apply if it were
engaging in the activity directly. For
example, a Federal savings association
must aggregate a proportionate share of
its pass-through investment in an entity
with the assets the Federal savings
association holds directly in calculating
its investment limits.107
Section 160.32(b) provides that a
Federal savings association may make
certain qualifying pass-through
investments without prior notice to the
OCC (a ‘‘no-notice procedure’’) in any
entity that is a limited partnership, an
open-ended mutual fund, a closed-end
investment trust, a limited liability
company, or an entity in which the
107 See 12 CFR 160.32(a) (noting, as an example,
aggregation for purposes of the non-residential real
estate loan limits under section 5(c) of the HOLA).
PO 00000
Frm 00048
Fmt 4701
Sfmt 4700
Federal savings association is investing
primarily to use the company’s services.
To qualify for this no-notice procedure,
the investment must satisfy the
conditions set forth in § 160.32(b): (1)
the investment is not more than 15
percent of the association’s total capital,
(2) the book value of the association’s
aggregate pass-through investments does
not exceed 50 percent of the
association’s total capital, (3) the
investment does not give the association
direct or indirect control of the
company, and (4) the association’s
liability is limited to the amount of the
investment. Section 160.32(c) requires a
Federal savings association to provide
the OCC with 30 days advance written
notice prior to making any pass-through
investment that does not meet these nonotice standards. The notice is a form of
application and may become a standard
application if the OCC notifies the filer
that the investment presents
supervisory, legal, or safety and
soundness concerns. Section 160.32
does not specify the content of the
notice or application, as does § 5.36.
The OCC proposed to add a new
§ 5.58 to part 5 to make its filing
requirements for non-controlling and
pass-through investments consistent.
New § 5.58 is based on § 5.36 and
subjects Federal savings association
pass-through investments to filing
requirements very similar to those
applicable to national banks. The OCC
also proposed amending § 160.32(b) to
become a cross-reference referring
Federal savings associations to the new
rule and removing § 160.32(c). We
retained § 160.32(a) without change.
We did not propose to add Federal
savings associations to § 5.36 at this
time because of differences in the
respective statutory authorities, the
regulations implementing them, and
their interpretation.
The OCC did not receive any
comments on new § 5.58 and the
amendments to § 160.32, and we adopt
these provisions as proposed, with one
technical amendment that corrects the
cross-reference in § 160.32. New § 5.58
is described below.
The scope section at § 5.58(b) refers to
the authority of Federal savings
associations to make equity
investments, including pass-through
investments, under 12 U.S.C. 1464 and
other statutes. It also reflects that the
authority to make a pass-through
investment subject to §§ 5.58(b) and
160.32(a) is in addition to authorities to
make investments subject to §§ 5.35,
Bank service company investments;
5.37, Investment in bank premises; 5.38,
Operating subsidiaries; and 5.59,
Service corporations.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Paragraph (c) of § 5.58 requires a
Federal savings association to file a
notice or application for a pass-through
investment when required by § 5.58.
Section 5.58(d) contains definitions
used in the section. The definitions are
like those in § 5.36(c).
Paragraph (e) of § 5.58 mirrors
§ 5.36(e) and provides that a well
capitalized, well managed Federal
savings association may make certain
pass-through investments, directly or
through its operating subsidiary, in
certain entities 108 by filing a written
notice with the OCC no later than 10
days after making the investment. This
after-the-fact notice procedure is
available if the activity conducted by
the enterprise is on the list of activities
eligible for a notice filing for operating
subsidiaries under revised § 5.38, or if it
is substantially the same as an activity
that has been previously approved for a
Federal savings association (or its
operating subsidiary) in published OCC
precedent, including published former
OTS precedent, and is conducted on the
same terms and conditions that apply to
the activity approved in that precedent.
This notice must contain the
information enumerated in § 5.58(e),
including: (1) A description of the
structure of the investment and the
types of activities conducted by the
enterprise in which the bank is
investing, (2) how the activity comports
with the activities listed in § 5.38 or
OCC precedent, (3) a certification that
the savings association is well managed
and well capitalized at the time of the
investment, (4) how the savings
association will prevent the enterprise
from engaging in impermissible
activities, (5) a description of how the
investment is convenient and useful to
the savings association and not a
passive investment, (6) a certification
that the savings association’s loss
exposure is limited and that it does not
have unlimited liability for the
obligations of the enterprise, and (7) a
certification that the enterprise agrees to
be subject to OCC supervision and
examination as permitted under certain
Federal statutes.
If a Federal savings association is not
well capitalized and well managed or if
the activity conducted by the enterprise
does not qualify for the after-the-fact
notice procedure, the savings
association is required to apply to the
OCC and receive prior approval for the
non-controlling investment under
§ 5.58(f), which mirrors § 5.36(f). The
108 Under new § 5.58(d)(1), a Federal savings
association may invest in an ‘‘enterprise’’ that is a
corporation, limited liability company, partnership,
trust, or similar business entity.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
application must satisfy the other
conditions enumerated in proposed
§ 5.58(e).
Section 5.58(g)(1), based on
§ 5.36(g)(1), provides for an expedited
notice procedure for pass-through
investments in entities holding assets in
satisfaction of debts previously
contracted. Under § 5.58(g)(2), based on
§ 5.36(g)(2), a Federal savings
association is not required to file a
notice or application under § 5.58 when
acquiring a non-controlling investment
in shares of a company through
foreclosure or otherwise in good faith to
compromise a doubtful claim, or in the
ordinary course of collecting a debt
previously contracted.
The requirement for Federal savings
associations to follow filing
requirements for pass-through
investments similar to the filing
requirements for national bank noncontrolling investments does not affect
the authority of Federal savings
associations to make pass-through
investments in entities that engage only
in activities permissible for Federal
savings associations. In addition, § 5.36
permits national banks to make noncontrolling investments greater than 25
percent of the company’s equity. Under
§ 5.58, Federal savings associations are
permitted to do the same. Such an
investment, however, constitutes
‘‘control’’ under the definition used in
12 U.S.C. 1828(m) that is applicable to
Federal savings associations, which
makes the enterprise a subsidiary of the
association for purposes of section
1828(m) and triggers a filing with the
OCC pursuant to section 1828(m).109
Accordingly, § 5.58(f)(2) provides that,
in all cases in which a Federal savings
association proposes to invest in an
enterprise that would be a subsidiary of
the Federal savings association for
purposes of section 1828(m) and would
not be an operating subsidiary or service
corporation, the Federal savings
association must submit an application
for approval to the OCC, similar to the
application required under § 5.58(f)(1)
for investments that do not qualify for
the notice procedure.
Section 5.58 also changes the filing
requirements for Federal savings
associations’ non-controlling
investments. Some pass-through
investments could meet the
109 A ‘‘non-controlling’’ investment is not defined
in § 5.36. It is generally understood to mean an
investment other than one that would constitute
‘‘control’’ under the OCC’s operating subsidiary
regulation, § 5.34, which is a different standard than
the one applicable for section 1828(m). Because of
this general understanding, national banks’ noncontrolling investments have not, in general,
exceeded 50 percent of an enterprise’s equity.
PO 00000
Frm 00049
Fmt 4701
Sfmt 4700
28393
requirements for the after-the-fact notice
procedure, and the Federal savings
association would need to file only the
after-the-fact notice, not an application
required under § 160.32(c). However,
some non-controlling investments that
currently may qualify for the no-notice
procedure under current § 160.32(b) will
require a filing under § 5.58. In this
regard, we understand the no-notice
procedure under current § 160.32(b) was
primarily used for investments in
investment companies that held assets
permissible for a Federal savings
association to hold directly. Section
5.58(h) continues the no-notice
procedure for such investments by
Federal savings associations.110 In
addition, some investments that may
have qualified for the no-notice
procedure may be eligible for the afterthe-fact notice of § 5.58(e). Thus, the
OCC believes there should not be a
substantial impact of this change on
Federal savings associations, since the
final rule continues the most common
exception to the application
requirement in § 160.32, and other passthrough investments may qualify for
after-the-fact filing.
Service Corporations of Federal Savings
Associations (New § 5.59)
Section 5(c)(4)(B) of the HOLA 111
authorizes Federal savings associations
to invest in service corporations. There
is no similar authority for national
banks. OCC rules addressing service
corporations of Federal savings
associations (as well as operating
subsidiaries of Federal savings
associations) are currently set forth at 12
CFR part 159 (Subordinate
organizations). The OCC proposed to
remove these provisions of part 159 and
create a new § 5.59 based on part 159
that would address only Federal savings
association service corporations.112 This
new part sets forth the characteristics of
Federal savings association service
corporations, the requirements
applicable to such service corporations,
and the filing requirements that apply to
110 Currently, national banks similarly are not
required to file under § 5.36 for such investments.
The rule contains exceptions to the § 5.36 filing
requirements when the bank is required to make the
investment under another regulation implementing
a specific statutory authority. One of those
exceptions is for investments made under 12 CFR
part 1. Investments by national banks in pooled
investment vehicles are covered by 12 CFR 1.3(h).
Thus, a national bank is not required to file under
§ 5.36 for such investments. Section 5.58(h) will
provide the same exception to the filing
requirement for Federal savings associations.
111 12 U.S.C. 1464(c)(4)(B).
112 As noted elsewhere in this preamble, the final
rule includes a new § 5.38 that addresses Federal
savings association operating subsidiaries. As a
result, all of part 159 will be removed.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28394
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
a Federal savings association’s
establishment or acquisition of a service
corporation or its commencement of
new activities in an existing service
corporation.
The OCC received one comment on
new § 5.59, relating to the proposed
annual reporting requirement. The OCC
is amending its proposal to reflect this
comment, and adopting the remaining
provisions of § 5.59 as proposed.
Revised § 5.59 and this comment are
described below.
The current service corporation
regulation provides that, when required
by section 18(m) of the FDI Act, a
Federal savings association must file a
notice under 12 CFR part 116 at least 30
days before establishing or acquiring a
subsidiary or engaging in a new activity
in a subsidiary.113 The regulation
defines a ‘‘subsidiary’’ as a subordinate
organization directly or indirectly
controlled by a Federal savings
association.114 Accordingly, under the
current regulation, a Federal savings
association is not required to file a
service corporation application if the
association proposes to make a noncontrolling investment in a service
corporation.
New § 5.59 amends the service
corporation regulation to require that a
Federal savings association file with the
OCC before acquiring or establishing
any service corporation, including one
that it would not control. The OCC
believes that this requirement is more
consistent with the underlying statute,
12 U.S.C. 1828(m), and also is more
prudent from a regulatory standpoint,
because it enables the OCC to review the
proposed establishment or acquisition
of all service corporations, not merely
ones the Federal savings association
controls.115 This ability to review is
particularly important because service
corporations may engage in a broader
range of activities than Federal savings
associations, and because Federal
savings associations may make sizable
investments in service corporations (the
aggregate statutory limit for all service
corporation investments is two percent
of assets or three percent, provided that
any amount in excess of two percent
consists of community development
investments). The OCC believes that the
amendment will not materially increase
the regulatory burden on Federal
savings associations because, in most
113 12
CFR 159.11.
CFR 159.2.
115 The OCC is retaining the requirement that,
with respect to an existing service corporation that
proposes to engage in new activities, a Federal
savings association files with the OCC only if the
association controls the service corporation. This
requirement is consistent with 12 U.S.C. 1828(m).
114 12
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
cases, the notice process is not lengthy
and information requirements are not
extensive.
As a result of this amendment, some
Federal savings associations may
currently have non-controlling
investments in service corporations, for
which the Federal savings association
did not submit a filing under 12 U.S.C.
1828(m), but for which, if the Federal
savings association made the service
corporation investment now, an
application would be required. The OCC
does not believe that an application
should be required in order for a Federal
savings association to retain such
investments, many of which may have
occurred several years ago, and did not
intend this result in the proposed rule.
Accordingly, the final rule includes new
paragraph (e)(10), which provides that
where a Federal savings association
made a non-controlling investment in a
service corporation before May 18, 2015,
the date of Federal Register publication
of this final rule, but did not submit a
filing under 12 U.S.C. 1828(m), the
Federal savings association is not
required to file a service corporation
application with respect to such
investment, provided that the Federal
savings association does not acquire
additional stock or similar interests in
the service corporation and the service
corporation does not engage in any
activities in which it was not engaged as
of May 18, 2015. We note that we have
changed the original date included in
the proposed rule, June 10, 2014, the
date of publication of the proposal, to
the date of publication of the final rule,
as we believe this is the more
appropriate date on which to
grandfather such existing investments.
The current service corporation
regulation uses the definition of
‘‘control’’ in 12 CFR part 174. Instead,
the final rule states, in § 5.59(d)(1) that
‘‘control’’ has the meaning set forth in
12 U.S.C. 1841, the Bank Holding
Company Act (BHC Act), and the
Federal Reserve Board’s regulations
thereunder, at 12 CFR part 225. The
term ‘‘control’’ as it relates to the filing
requirement, is set forth in section
18(m)(1) of the FDI Act. The FDI Act
defines control by cross-referencing the
definition of the term in the BHC Act,
at 12 U.S.C. 1841.116 Accordingly, the
OCC believes that the appropriate
definition of control is the BHC Act
definition. The OCC does not believe
that this definitional change will have a
significant impact on Federal savings
associations.117
116 12
U.S.C. 1813(w)(5).
primary differences between the
definition of control in part 174 and the definition
117 The
PO 00000
Frm 00050
Fmt 4701
Sfmt 4700
Section 5.59(e)(5) explicitly states that
service corporations may be organized
in any organizational form that provides
the same protections as the corporate
form of organization, including limited
liability. This provision is consistent
with the OTS’s intent in promulgating
12 CFR part 559, the predecessor to part
159,118 and is consistent with OTS
precedent. In amending the service
corporation regulation to provide
explicitly that service corporations were
not required to be in the corporate form,
the OTS stated that it was following its
standard practice of interpreting the
HOLA in a manner that does not elevate
form over substance and that the HOLA
authorization to invest in service
corporations should be read ‘‘to permit
any organizational form that provides
the same basic protections as the
corporate form of organization.’’ 119
The current service corporation
regulation provides that state law
applies to a service corporation
regardless of whether state law applies
to the parent Federal savings
association.120 The OCC previously has
amended its regulations to reflect the
preemption provisions of the DoddFrank Act.121 Accordingly, this
rulemaking does not include this
statement in § 5.59. This result does not
effect a substantive change from the
current regulations.
Twelve CFR 163.161, Management
and financial policies, includes a
requirement that service corporations
must be well managed and operate
safely and soundly. That section also
provides that service corporations must
pursue financial policies that are safe
and consistent with the purposes of
savings associations and that service
corporations must maintain sufficient
liquidity to ensure their safe and sound
operation. These requirements
addressing service corporations are
more appropriately included in the
service corporation regulations, and the
final rule includes them at § 5.59(e)(7).
Section 5.59(e)(8) retains the current
rule’s provisions regarding separate
of control in the BHC Act at 12 U.S.C. 1841(a)(2)
and the Federal Reserve Board’s implementing
regulations (BHC definition) are: (i) Part 174
includes certain rebuttable control presumptions
that are not in the BHC definition; and (ii) part 174
includes certain presumptions of concerted action
that are not in the BHC regulations.
118 See 61 FR 66561, at 66564 (Dec. 18, 1996). The
OTS noted that it would review any proposal to
organize an LLC or limited partnership as a firsttier service corporation in the notice process to
ascertain whether liability will in fact be limited
and whether any other safety and soundness
concerns are present.
119 Id.
120 12 CFR 159.3(n)(2).
121 76 FR 43549 at 43552, 43558, and 43565–66
(July 21, 2011).
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
corporate identity, with one exception.
Specifically, § 5.59(e)(8) does not
include the provision in § 159.10(a)(3)
that requires adequate financing as a
separate unit in light of normal
obligations reasonably foreseeable for a
business of the service corporation’s
size and character because the OCC
believes that this provision may be
unnecessarily burdensome. For a service
corporation that the Federal savings
association does not control, the savings
association may not have the power to
ensure that it is adequately financed at
all times and such lack of control may
help demonstrate the service
corporation’s separate corporate
identity. Where the savings association
controls the service corporation, the
savings association may find it an
ineffective use of resources to finance
the entity far in advance; the proposed
change helps provide a savings
association with flexibility as to when it
provides financing to the service
corporation and reduces uncertainty
regarding what the agency may consider
adequate financing.
Section 5.59(f) retains the list of
preapproved activities currently in
§ 159.4, with minor changes. Section
159.4(h) addresses both community
development and charitable activities.
Section 5.59(f) divides this paragraph
into two separate provisions, one
addressing community development
(paragraph (f)(8)), and the other
addressing charitable activities
(paragraph (f)(9)). In addition, the final
rule simplifies the community
development provision by deleting the
current list of examples of preapproved
community development activities
(which generally fall within the scope of
the 12 CFR 24.3 description of public
welfare investments) and by revising the
provision to include a reference to
community and economic development
or public welfare investments that are
permissible under part 24. We note that
the final rule makes technical edits to
this provision as proposed to more
accurately describe the types of
investments considered community
development investments by
specifically referencing economic
development and public welfare
investments and to clarify that
investments in rural business
companies are permissible if those
companies are licensed by the U.S.
Department of Agriculture.
Section 5.59(g) is based on § 159.5,
which specifies the limitations for a
Federal savings association’s
investments in service corporations. As
in the current rule, § 5.59(g)(1) provides
that a Federal savings association may
invest up to three percent of assets in
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
service corporations, and that any
investment that would cause a savings
association’s investment in service
corporations to exceed two percent of
assets must serve primarily community,
inner city, or community development
purposes. The current rule specifies
several types of investments as serving
primarily community, inner city, or
community development purposes. As
in the proposed rule, the final rule
deletes these examples, all of which are
within the scope of § 24.6, and instead
provides that such investments must be
consistent with § 24.6. The final rule
makes technical edits to this provision
as proposed to more accurately describe
the types of investments permissible
above two percent of assets by adding
investments with economic
development or public welfare
purposes.
Section 5.59(g)(2) specifies the
limitations for a Federal savings
association’s loans to service
corporations. As permitted by the
HOLA, and as proposed, the final rule
clarifies that these loans may be made
to any service corporation, both
consolidated and nonconsolidated,
provided that loans to service
corporations that are not GAAPconsolidated meet the lending limits in
12 CFR part 32. Section 159.5(b) does
not specifically address consolidated
service corporations.
Section 5.59(h)(1)(ii) includes an
information requirement for service
corporations with respect to insurance
activities that is similar to the
requirement for operating subsidiaries.
This provision, which is intended to
help the OCC carry out its statutory
responsibilities,122 requires a Federal
savings association to list for each state
the lines of business for which the
service corporation holds, or will hold,
an insurance license, and each state in
which the service corporation holds a
resident license or charter.
Section 5.59(h)(2) revises the
circumstances under which a Federal
savings association receives expedited
review for a service corporation filing.
Currently, the criteria for expedited
review are set forth in 12 CFR part 116.
Pursuant to this rulemaking, a service
corporation filing is eligible for
expedited review if the savings
association is ‘‘well capitalized’’ and
122 Section 307(c) of the Gramm-Leach-Bliley Act,
Public Law 106–102, 113 Stat. 1338, 1416, codified
at 15 U.S.C. 6716, requires the OCC to consult with
the appropriate state insurance regulator, and take
such regulator’s views into account, before making
any determination relating to the initial affiliation
of, or the continuing affiliation of, a depository
institution with a company engaged in insurance
activities.
PO 00000
Frm 00051
Fmt 4701
Sfmt 4700
28395
‘‘well managed,’’ and the service
corporation engages only in one or more
of the preapproved activities listed in
§ 5.59(f).
The proposed rule included a new
requirement for Federal savings
associations to file an annual report
listing, for each service corporation
subsidiary that is not functionally
regulated and does business with
consumers in the United States, certain
information including the name and
principal place of business of the
service corporation, the lines of
business in which the service
corporation subsidiary engages directly
with consumers, and the nature of the
parent savings association’s interest in
the service corporation subsidiary. This
proposal was mirrored on the
requirement for national banks at
§ 5.34(e)(7); there is no similar provision
in part 159. We received one comment
on this proposed report. As with the
proposed report for operating
subsidiaries of Federal savings
associations, in proposed § 5.38, this
commenter stated that this reporting
requirement would impose a new
compliance burden without sufficient
analysis or justification. As we have
done with the reporting requirement in
§ 5.38, the OCC has reconsidered this
proposed report in light of this comment
and no longer believes it is necessary.
Fewer Federal savings association
service corporations exist than national
bank operating subsidiaries, and the
OCC is able to determine service
corporation ownership by means that
are less burdensome than an annual
report, such as through the examination
process. However, the OCC will
continue to monitor this area to
determine if such a report becomes
necessary in the future.
C. Conforming and Technical
Amendments
As indicated above, the OCC
proposed to make conforming and
technical changes to parts 5, 7, and 34
and in various provisions of parts 100
through 199 to reflect the movement of
the licensing rules for savings
association rules to part 5, to adjust
section titles, and to conform crossreferences. The OCC did not receive any
comments on these proposed changes,
and we adopt the amendments as
proposed with the exception of the
changes proposed to § 5.47. Because the
OCC’s interim final rule amending
§ 5.47, issued subsequent to the
Licensing proposed rule, includes these
technical amendments, we have
E:\FR\FM\18MYR2.SGM
18MYR2
28396
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
removed them from the final rule as no
longer necessary.123
Specifically, the final rule amends
§ 162.4, Audit of savings associations, to
replace the cross-reference to the part
116 definition of composite ratings with
a reference to the Uniform Financial
Institutions Rating System, as referred to
in other OCC rules. The final rule also
amends part 192, Conversions from
mutual to stock form, to replace
references to part 116; part 152, Federal
savings associations incorporation,
organization and conversion; subpart E,
Capital distributions, and subpart H,
Notice of change in directors or senior
executive officers, of part 163; and part
174, Change in control, with the
appropriate cross-references in amended
part 5. In addition, the final rule amends
§ 160.35, Adjustments to home loans, by
replacing the reference to the standard
treatment processing procedures of part
116 with a statement that Federal
savings associations must apply for and
receive the OCC’s prior written
approval. Furthermore, the final rule
conforms the cross-references to part
159, Subordinate Organizations, and
§ 163.81, (subordinated debt) to
proposed §§ 5.59 and 5.56, respectively.
Part 32, Lending limits, also
references the expedited and standard
application processing procedures of
part 116 at § 32.3(d), Loans by savings
associations to develop domestic
residential housing units. The OCC
proposed to replace this reference with
a new paragraph that sets forth the
application procedures for Federal
savings associations for this activity.
These procedures are based on those in
§ 32.7(b) with the addition of an
expedited review process. With respect
to state savings associations, the OCC
proposed to replace the citation to the
FDIC application processing rule with a
more general reference to the rules and
procedures established by the
appropriate Federal banking agency.
The OCC did not receive any comments
on these proposed changes to part 32,
and adopt them as proposed.
The OCC also proposed to amend
§§ 5.39, Financial subsidiaries124 and
5.64 (dividends), which are not being
integrated in this rulemaking, to clarify
and make consistent the OCC office to
asabaliauskas on DSK5VPTVN1PROD with RULES
123 79
FR 75417 (Dec. 18, 2014).
received one comment letter regarding
§ 5.39, which asked that the OCC provide greater
clarity on how to convert a financial subsidiary
back to an operating subsidiary, as neither § 5.24,
Conversion, nor § 5.39, Financial subsidiaries,
address this type of transaction. We agree that it
may be helpful to provide this information and will
consider including these procedures in either a
future rulemaking issued in response to other
EGRPRA comments, or a more general explanation
in Comptroller’s Licensing Manual.
124 We
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
which a national bank or Federal
savings association must file a notice or
application. We received no comments
on these changes and adopt them as
proposed. Specifically, the final rule
directs such filings to the institution’s
appropriate OCC licensing office or
appropriate OCC supervisory office, as
noted, instead of the appropriate district
office.
Furthermore, the OCC proposed to
amend §§ 100.1, Certain regulations
superseded, and 100.2, Waiver
authority, so that these provisions
continue to apply to rules pertaining to
savings associations that would be
included in parts other than parts 100
through 199 of Title I of Chapter 12 of
the Code of Federal Regulations as a
result of this rulemaking. The OCC
received no comments on these
amendments and adopt them as
proposed.
Finally, the final rule makes
additional technical amendments to our
rules not included in the proposed rule.
Specifically, the final rule corrects
inaccurate cross-references in
paragraphs (d)(2) and (g)(1) of § 5.36 and
in § 32.2(g)(1)(iv). The final rule also
updates the OCC’s telephone number in
§ 4.18(b) and footnote 2 to part 7.
Furthermore, the final rule makes a
technical amendment to the definition
of ‘‘service corporation’’ in § 161.45 that
replaces the current definition with a
cross-reference to the definition
included in § 5.59(d)(4), as added by
this final rule.
IV. Summary of Substantive Changes
for National Banks and Federal Savings
Associations
A. Substantive Changes for National
Banks
The following is a summary of the
substantive changes, listed by rule,
contained in this final rule for national
banks. This summary is provided for
reader reference only; it does not take
the place of the actual regulatory text of
the final rule.
Rules of General Applicability (12 CFR
part 5, subpart A)
• To qualify for expedited review as
an ‘‘eligible bank,’’ a national bank will
be required to have a consumer
compliance rating of 1 or 2 under the
Uniform Interagency Consumer
Compliance Rating System. Currently, a
bank’s consumer compliance rating is
not a factor in the requirements for
eligibility; however, § 5.13(a)(2)
currently permits the OCC to remove a
filing from expedited review if it raises
certain issues, including any
compliance concerns.
PO 00000
Frm 00052
Fmt 4701
Sfmt 4700
• A national bank will be required to
publish its public notice of a filing in
English and, if the OCC determines
necessary, also in other languages.
Currently, the rules do not specify the
language in which the notice must be
published.
• In addition to what is currently
required, a public notice related to a
national bank filing will be required to
state: (1) the name of the institution that
is the subject of the filing, (2) that the
public portion of the filing is available
on request, and (3) the address of the
applicant.
• The OCC, at its discretion, can
require an applicant to publish a new
public notice if: (1) The applicant
submits either a revised filing or new or
additional information related to a
filing, (2) there is a major issue of law
or a change in circumstances arises after
a filing, or (3) the agency determines
that a new public notice is appropriate.
(Although this is not specifically
permitted under current rules, this has
been the practice of the OCC.)
• When computing time for national
bank filings, the day of the filing will no
longer be included and the time period
will no longer end on a Saturday,
Sunday, or Federal holiday but will end
on the next day that is not a Saturday,
Sunday or Federal holiday.
Articles of Association, Bylaws,
Charters and Chartering Procedures (12
CFR 5.20, 5.21, 5.22)
• National banks will be prohibited
by regulation from adopting a title that
misrepresents the nature of the
institution or the services it offers. This
reflects current practice.
• National banks will be required to
sell all securities of a particular class in
an initial offering at the same price.
• In the event the organization of a
national bank is not completed, the
organizers will be required to return all
cash collected on subscriptions.
• The OCC charter approval may
include a condition that the OCC will
review proposed directors and officers
for more than two years after the bank
commences business. The regulation
currently says two years, but a longer
time is sometimes imposed in practice.
• Expedited OCC review will be
available for an application to establish
a full-service national bank filed by a
bank holding company or savings and
loan holding company only when the
lead depository institution is an eligible
national bank or eligible Federal savings
association. Currently, the lead
depository institution can be an eligible
state institution.
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
Conversions (12 CFR 5.24, 5.25)
• Conversion to a National Bank
Charter:
Æ An institution seeking to convert to
a national bank charter will be required
by regulation to obtain all necessary
regulatory and shareholder approvals.
(OCC policy currently requires these
approvals.)
Æ The application must:
D Identify bank service company
investments and other equity
investments, in addition to subsidiaries.
(This requirement reflects current
practice.)
D Include a business plan if the
converting institution has been
operating for less than three years, plans
to make significant changes to its
business after the conversion, or at the
request of the OCC. (The OCC currently
requests this information on a case-bycase basis.)
D Include information about
enforcement actions and other
supervisory criticisms and the
applicant’s analysis of whether
conversion is permissible under 12
U.S.C. 35, especially the provisions
added to section 35 by section 612 of
the Dodd-Frank Act.
Æ The OCC may permit a converted
national bank to retain nonconforming
activities of a state bank or stock state
savings association and nonconforming
assets or activities of a Federal stock
savings association for a transition
period after conversion. (This regulatory
change reflects current OCC practice.)
The regulation now provides that the
OCC may only permit the retention of
nonconforming assets of a converting
state bank, subject to requirements in 12
U.S.C. 35.
Æ Expedited OCC review will be
available only for conversion
applications by Federal savings
associations because they are
institutions the OCC already regulates.
Expedited review will no longer be
available for state-chartered institutions.
The time for expedited review is
extended from 30 to 60 days.
• Conversions from a National Bank
to a Federal Savings Association
Æ A national bank converting to a
Federal savings association no longer is
required to file a notice with the OCC
as well as a separate application.
Information included in this former
notice instead will be included in the
conversion-in application pursuant to
§ 5.23.
• Conversions from a National Bank
to a State-Chartered Institution:
Æ As required by section 612 of the
Dodd-Frank Act, a national bank must
include a copy of its conversion
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
application filed with the state regulator
to which it is applying for approval to
convert in its notice to the OCC to
convert, and it must send a copy of the
application to the Federal banking
agency that will become its appropriate
Federal banking agency after the
conversion.
Æ It must also include a showing of
its compliance with applicable
requirements for converting.
Fiduciary Powers Applications (12 CFR
5.26)
• When reviewing an application to
exercise fiduciary powers, the OCC will
by regulation consider the bank’s
financial condition and capital
adequacy, the character and ability of
proposed trust management, the
adequacy of any proposed business
plan, and the needs of the community
served. (Some of these factors are
statutory and all reflect current OCC
practice.)
• A national bank that has not
conducted previously approved
fiduciary powers for 18 consecutive
months will be required to provide a
notice to the OCC 60 days in advance
of commencing the activities.
• A national bank that has received
approval from the OCC to exercise
limited fiduciary powers and desires to
exercise full fiduciary powers will be
required to apply to the OCC. (This
requirement reflects current OCC
practice.)
Branching (12 CFR 5.30 and BranchingRelated Sections in part 7)
• A drive-in or pedestrian facility
located within 500 feet of a branch will
always be an extension of the branch,
not a separate branch. Currently, this
result depends on a case-by-case
analysis.
• Under the expedited approval
process, short-distance relocations of
branches will be deemed approved 15
days after the close of the comment
period or 30 days after the date the
notice is filed, whichever is later.
Currently, short-distance relocations are
deemed approved 15 days after the close
of the comment period or 45 days after
the date the notice is filed, whichever is
later.
Expedited Procedures for Certain
Reorganizations (12 CFR 5.32)
• A national bank will not be
required to comply with the public
notice, public availability, and hearing
requirements of part 5, subpart A (12
CFR 5.8, 5.9, and 5.11) for an
application to reorganize to become a
subsidiary of a bank holding company
or a company that will, upon
PO 00000
Frm 00053
Fmt 4701
Sfmt 4700
28397
consummation of such reorganization,
become a bank holding company unless
the OCC concludes that an application
presents significant and novel policy,
supervisory, or other legal issues.
Currently, such applications are subject
to these subpart A requirements.
Business Combinations (12 CFR 5.33)
• An application to the OCC will be
required for the assumption of deposit
liabilities or other liabilities from a
credit union or any other institution that
is not FDIC-insured that will become
deposits at the assuming national bank.
• In the application for a business
combination, national banks will be
required to identify a financial
subsidiary investment, bank service
company investment, service
corporation investment, and other
equity investment in addition to the
current requirement to identify
subsidiaries and provide an analysis of
the permissibility for the national bank
to hold the subsidiary or investment.
This regulatory change reflects current
practice.
• If the applicant intends to exercise
fiduciary powers after the combination
and requires OCC approval for such
powers, the applicant will be required
to include in the business combination
application the information required in
§ 5.26 for a request for fiduciary powers.
This regulatory change reflects current
practice.
• Filings in which a national bank is
the target company and will not be the
resulting institution will no longer be
exempt from §§ 5.2 and 5.5. Section 5.2,
Rules of general applicability, provides
that the OCC may adopt different
procedures for particular filings, in
exceptional circumstances or for
unusual transactions, and that the OCC
permits electronic filing. Section 5.5
provides that an applicant must pay the
applicable filing fee, if any.
• If there are dissenting shareholders
in a merger or consolidation between a
national bank and Federal savings
association, the OCC will conduct an
appraisal of dissenters’ shares of stock
according to the statutory dissenters’
appraisal processes that apply to
mergers between national banks and
state banks. Under the current rule, the
OCC may conduct such an appraisal if
all the parties agree.
• The OCC will have the authority to
apportion costs for the dissenters’ rights
process for transactions to which 12
U.S.C. 214a or 215 and 215a are not
applicable. (These statutes require the
bank to bear all costs.) Under the
current rule, in transactions that are not
subject to those statutes, the parties
must agree how costs are to be divided.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28398
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Under the final rule, if the OCC
regulates the institutions and the
transaction is not subject to the statutes,
then the OCC will have the authority to
apportion costs as the OCC determines.
• A national bank’s consolidation or
merger agreement will be required to
address the effect upon, and the terms
of the assumption of, any liquidation
account of any participating institution
by the resulting institution. Although
not currently in § 5.33, a resulting
national bank in such transactions is
required to establish and maintain a
liquidation account, as discussed in the
Comptroller’s Licensing Manual.
• The national bank applicant in a
consolidation or merger will be required
to submit information showing that all
steps needed to complete the
transaction have been met and to notify
the OCC of the planned consummation
date. The OCC will then issue a
certification letter documenting that the
consolidation or merger occurred and
specifying the effective date. This
process reflects current OCC practice for
national banks.
• The OCC’s approval of a transaction
under § 5.33 will expire in six months
instead of 12 months; the OCC could
extend this six-month period.
• A national bank that will not be the
resulting bank in a merger or
consolidation with another national
bank will be required to file a notice to
the OCC under § 5.33(k). (This notice is
discussed in the next item.)
• When a national bank is
consolidating or merging with a Federal
savings association or a state chartered
institution or credit union and the
national bank is not the resulting
institution, it will be required to include
more information in the notice than
currently required in § 5.33. This
additional information includes a short
description of the transaction or a copy
of the filing made by the acquiring
institution to its regulators for approval
of the transaction and information
showing the target national bank or
Federal savings association has
complied with the requirements to
engage in the transaction (e.g., board
and shareholder approval). (The bank
should already have compiled this
information.)
• If a consolidation or merger of a
national bank in which the national
bank is not the resulting institution has
not occurred within six months after the
OCC’s receipt of the notice of the
transaction, the bank will be required to
submit a new notice with the OCC.
Operating Subsidiaries (12 CFR 5.34)
• Before beginning business, an
operating subsidiary will be required to
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
comply with other laws applicable to it,
including applicable licensing or
registration requirements. This change
codifies current OCC policy.
• The final rule makes the following
changes regarding a national bank’s
control of an operating subsidiary:
Æ Where a national bank has the
ability to control the management and
operations of an operating subsidiary,
no other person or entity can exercise
effective operating control over the
subsidiary or have the ability to
influence the subsidiary’s operations to
an extent equal to or greater than that of
the bank. This change codifies current
OCC policy.
Æ Where a bank owns less than 50
percent of an operating subsidiary (but
still controls it), no other party could
own a greater percentage than the bank.
This change codifies current OCC
policy.
• A national bank must have
reasonable policies and procedures to
preserve the limited liability of the bank
and its operating subsidiaries.
• Adequately capitalized banks will
no longer be exempt from the
application or notice requirements
when acquiring or establishing an
operating subsidiary or performing a
new activity in an existing operating
subsidiary when the activities of the
new subsidiary are limited to those
previously reported to the OCC in
connection with a prior operating
subsidiary and certain other
requirements are met.
• If a national bank operating
subsidiary wishes to act as a fiduciary,
its national bank parent will be required
to have fiduciary powers and the
operating subsidiary also must have its
own fiduciary powers under the law
applicable to the subsidiary. The
operating subsidiary no longer may rely
on the national bank’s fiduciary powers,
except when the subsidiary exercises
investment discretion on behalf of
customers or provides investment
advice for a fee as a registered
investment adviser. This change
codifies longstanding OCC practice.
• OCC approvals granted under § 5.34
expire within 12 months if a national
bank has not established or acquired the
operating subsidiary or commenced the
new activity in an existing operating
subsidiary, unless the OCC shortens or
extends the time period.
Investment in Bank Service Companies
(12 CFR 5.35)
• To invest in a bank service
company, a national bank will be
required to file a prior notice for OCC
approval through an expedited review
process, under which the notice will be
PO 00000
Frm 00054
Fmt 4701
Sfmt 4700
deemed approved on the 30th day after
filing unless the OCC notifies otherwise.
Under the current rule, a national bank
files an after-the-fact notice with no
requirement for OCC approval before
the bank makes the investment, if
specified eligibility conditions are met.
Other Equity Investments (12 CFR 5.36)
• No substantive changes.
Banking Premises (12 CFR 5.37, 7.1000,
7.3001)
• No substantive changes.
Main Office and Home Office
Relocations (12 CFR 5.40)
• Under the expedited approval
process, short-distance relocations of
main offices will be deemed approved
15 days after the close of the comment
period or 30 days after the date the
notice is filed, whichever is later.
Currently, short-distance relocations are
deemed approved 15 days after the close
of the comment period or 45 days after
the date the notice is filed, whichever is
later.
Change in Corporate Title (12 CFR 5.42)
• No substantive changes.
Changes in Permanent Capital (12 CFR
5.46)
• No substantive changes.
Voluntary Liquidation (12 CFR 5.48)
• The following provisions in the
final rule codify existing OCC or
national bank practice:
Æ A national bank may not commence
liquidation until the OCC has notified it
that the agency does not object to the
liquidation plan.
Æ A national bank’s board of
directors, in addition to its
shareholders, must vote to approve a
voluntary liquidation plan.
Æ A national bank must provide
notice of the liquidation to depositors,
other known creditors, and known
claimants in addition to the current
requirement to publish notice in
accordance with 12 U.S.C. 182.
Æ The national bank’s liquidating
agent or committee must submit to the
OCC a report at the start of liquidation
showing the bank’s current balance
sheet and a final report of the
liquidation.
Change in Control (12 CFR 5.50)
• The final rule adds several
presumptions of concerted action. These
additional presumptions provide clarity
and guidance about how and when
parties are presumed to be acting in
concert for purposes of § 5.50.
• Acquirers will be permitted to rebut
a presumption of control in cases where
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
the acquirer will have a representative
on the board of directors of the national
bank to be acquired. Currently, an
acquirer that proposes to rebut control
of a national bank cannot have a
representative on the board.
• The final rule establishes specific
limitations, in the rebuttal of control
context, on the total equity invested,
where an acquirer proposes to acquire
more than fifteen percent of the national
bank’s voting stock.
Changes in Directors and Senior
Executive Officers (12 CFR 5.51)
• An advisory director of a national
bank who may vote on matters before,
or provides more than general advice to,
any committee of the board of directors,
in addition to the board itself, will be
subject to the requirements of § 5.51.
• The notice of a change in directors
or senior executive officers for a
national bank will need to include
financial information on the individual,
except when the OCC determines in
writing that such information is not
required.
• If the OCC requests additional
information regarding the notice, a
national bank that cannot provide the
requested information within the time
specified by the OCC may request
additional time to provide the
information.
• An individual who is serving on an
interim basis pursuant to an OCCgranted waiver and receives a notice of
disapproval will be required to resign
immediately from the board, and will be
able to assume the position on a
permanent basis only if the notice of
disapproval is reversed on appeal and
all other applicable legal requirements
are satisfied. Currently, the individual
may continue on the board pending
resolution of an appeal.
Change in Address (12 CFR 5.52)
• A national bank will not be
required to file a notice of a change in
the permanent address of its home office
if it submitted a notice under § 5.40(b),
Relocation of a main office to a branch
location in the same city, town or
village.
asabaliauskas on DSK5VPTVN1PROD with RULES
Change in Asset Composition (12 CFR
5.53)
• With regard to a change in asset
composition, the national bank rule
requires approval of only the sale of all
or substantially all of a bank’s assets,
and the subsequent purchase of assets or
expansion of operations after such a
sale. Under the final rule, the following
additional transactions require approval
under § 5.53:
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
Æ Any other asset purchases or other
expansions of business that are part of
a plan to increase the size of the bank
by more than 25 percent in one year.
Æ As determined by the OCC on a
case-by-case basis, any other material
increase or decrease in the size of the
bank or a material alteration in the
composition of the types of its assets or
liabilities (including the entry or exit of
business lines). The OCC will consider
the size and nature of the transaction
and the condition of the institutions in
determining whether to require an
application and believes the additional
situations in which the OCC will require
an application likely already involve
discussions between the bank and its
appropriate supervisory office.
• The OCC will need to approve a
bank’s plan of voluntary liquidation in
order for asset changes that are part of
such liquidation to be exempt from the
approval requirements of § 5.53. (The
OCC also is amending the regulation
governing liquidations, § 5.48, to require
OCC approval of the plan of
liquidation.)
• Asset changes that are subject to
OCC approval under another
application to the OCC will specifically
be exempt from the approval
requirements of § 5.53. This exception is
now only implied.
B. Substantive Changes for Federal
Savings Associations
The following is a summary of the
substantive changes contained in this
final rule, listed by revised rule, for
Federal savings associations. This
summary is provided for reader
reference only; it does not take the place
of the actual regulatory text of the final
rule.
Rules of General Applicability (12 CFR
part 5, subpart A)
• As a result of removing 12 CFR part
116 and applying 12 CFR part 5, subpart
A, Federal savings associations will
need to follow different procedural and
processing provisions. While many of
the underlying processes are similar,
minor variations and different
terminology is sometimes used. Federal
savings associations will need to adjust
to these variations and differences.
• Adequately capitalized Federal
savings associations will no longer
qualify for expedited treatment; only
well capitalized institutions will be
eligible.
• A Federal savings association will
no longer have to publish a public
notice within the seven days before a
filing date but may publish as soon as
practicable before or after filing, unless
otherwise required.
PO 00000
Frm 00055
Fmt 4701
Sfmt 4700
28399
• In addition to what is currently
required, a public notice related to a
Federal savings association filing will
have to state that a filing is being made
and the date of the filing.
• A Federal savings association can
publish a single public notice for
multiple transactions or a single notice
that will comply with the notice
requirement of both the OCC and
another Federal agency, if accepted by
the OCC. (Although this is not
specifically permitted under current
rules, this has been an accepted practice
for Federal savings association filings.)
• Federal savings associations will
obtain from the OCC the public
comments made in response to a filing’s
public notice. Currently, the commenter
is required to send comments directly to
the institution.
Articles of Association, Bylaws,
Charters and Chartering Procedures (12
CFR 5.20, 5.21, 5.22)
• All Federal savings associations:
Æ The majority of a de novo savings
association’s board of directors will no
longer be required to be representative
of the state in which the association is
located.
Æ A savings association’s board of
directors no longer will be required to
annually elect a chairman of the board
from among its members and designate
the chairman of the board, when
present, to preside over meetings.
Æ An application to charter a Federal
savings association will be subject to the
same two-part approval process used for
de novo national bank charters, whereby
the OCC first issues a preliminary
approval, followed by a final approval
and charter issuance if the applicant
completes all of the steps required by
the preliminary approval and the
Comptroller’s Licensing Manual. Under
the current Federal savings association
rule, there is one approval before the
OCC issues the charter but the approval
is subject to the institution completing
various post-approval organizational
steps and other requirements before it
can commence business, as specified in
12 CFR 143.4, 143.5, 143.6, and 152.1(c)
through 152.1(i).
Æ Expedited OCC review will be
available for an application to establish
a full-service Federal savings
association filed by a bank holding
company or savings and loan holding
company when the lead depository
institution is an eligible national bank
or eligible Federal savings association.
The current regulations for chartering a
de novo Federal savings association do
not have a comparable expedited review
process.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28400
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Æ The OCC’s preliminary approval of
an application for a new Federal savings
association will expire if the savings
association has not raised the required
capital within 12 months or has not
commenced business within 18 months.
Under current rules, a Federal savings
association’s charter becomes void if
organization is not completed within six
months after approval.
Æ In the de novo chartering approval
process, the OCC will no longer be
required to consider the criteria in
§§ 143.2(g)(1) and 152.1(b)(1) as to
whether the Federal savings association
will provide credit for housing in a safe
and sound manner and the approval
considerations set forth in § 143.3
regarding the composition of board or
directors.
• Federal Stock Savings Associations:
Æ A Federal stock savings
associations no longer will be required
to cause a true copy of its charter and
bylaws to be available to accountholders
at all times in each office of the savings
association, or to deliver to any
accountholders a copy of such charter
and bylaws or amendments upon
request.
Æ The requirements for adopting and
filing Federal stock savings association
bylaws will no longer include the
requirements that the adoption of
bylaws be by the board of directors at
its first organizational meeting.
Æ Shareholder meetings no longer
will be required to be held in the state
in which the association has its
principal place of business.
Æ Staggered terms for certain
directors will no longer be specified.
Æ Stock certificates of a Federal
savings association will no longer be
required to be signed by the chief
executive officer or by any other officer
of the association authorized by the
board of directors, attested by the
secretary or an assistant secretary, and
sealed with the corporate seal or a
facsimile thereof. Furthermore, each
certificate for shares of capital will not
be required to be consecutively
numbered or otherwise identified.
• Federal Mutual Savings
Associations:
Æ Federal mutual savings association
bylaws no longer will be required to
provide some of the language or
requirements specified in current
§ 144.5(b) regarding aspects of: the
location of and notices for the annual
meeting of members; reporting
requirements at the annual meeting;
record dates; proxy voting; annual
meeting governance; duties of officers
and agents of the association; director
election and resignation; executive
committees; director, officer and
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
employee compensation and removal;
and age limits for directors.
Conversions (12 CFR 5.23, 5.25)
• Conversions to a Federal Savings
Association Charter:
Æ The applicant will no longer be
required to publish a public notice of
the application, and the application will
no longer be available for public
inspection, unless specifically required
by the OCC.
Æ An applicant that does not meet the
qualified thrift lender test will be
required to include in its application a
plan for achieving compliance and a
request for an exception. This is agency
practice but is not expressly mentioned
in the regulation.
Æ Many details of the application
process will no longer be included in
the regulations. Instead, this
information will be found in the
Comptroller’s Licensing Manual and
other OCC guidance.
Æ The applicant will be required to
include in its conversion application
information about enforcement actions
and other supervisory criticisms and its
analysis of whether conversion is
permissible under 12 U.S.C. 35,
especially the provisions added to
section 35 by section 612 of the DoddFrank Act.
• Conversions from a Federal Savings
Association to a National Bank:
Æ A Federal savings association
converting from its charter to a national
bank no longer must file a notice to
convert out as well as a separate
application. Instead, information
formerly included in this notice will be
included in the conversion-in
application pursuant to § 5.24.
Conversions From a Federal Savings
Association to a State Chartered
Institution
Æ As required by section 612 of the
Dodd-Frank Act, a Federal savings
association must include a copy of its
conversion application filed with the
state regulator to which it is applying
for approval to convert in its notice to
the OCC, and it must file a copy of its
conversion application with the Federal
banking agency that will become its
appropriate Federal banking agency
after the conversion.
Æ The application must also include
a showing of its compliance with
applicable requirements for converting.
Fiduciary Powers Applications (12 CFR
5.26 and Part 150, Subpart A)
• The time period that triggers the
need to re-notify the agency before
beginning to exercise previously
approved fiduciary powers that have not
PO 00000
Frm 00056
Fmt 4701
Sfmt 4700
been exercised is shortened from 5 years
to 18 months.
• The trigger for requiring a new
application for a Federal savings
association will be whether the original
approval for fiduciary activities is for
limited or full fiduciary powers. Under
the current rule, the trigger for a new
application is whether the activity is
‘‘materially different’’ from what had
been approved.
• Eligible Federal savings
associations will receive expedited
review of applications for fiduciary
powers.
Branching (12 CFR 5.31)
• Only well capitalized Federal
savings associations could be ‘‘eligible
savings associations’’ as defined in part
5, and therefore exempt from the branch
application requirement. Currently both
well and adequately capitalized Federal
savings associations are eligible for
expedited treatment and therefore can
be exempt from this requirement.
• A Federal savings association must
obtain OCC approval in order to
establish a branch at the site of a former
home office unless the branch
establishment meets one of the
exceptions in § 5.31. Under the current
rule, no notice or application is required
in all cases of home office and branch
office re-designations.
• Highly rated Federal savings
associations not required to file a branch
application must file a notice with the
OCC within 10 days after the opening of
the branch. This is a new requirement
for Federal savings associations.
• The OCC’s approval of a branch
expires after 18 months, unless the OCC
grants an extension. Under the current
rule, OCC approval expires after 12
months.
• A state and Federal savings
association must file an application
with the OCC to establish or move a
branch in the District of Columbia or
move its principal office in the District
of Columbia, pursuant to statutory
requirements.
Business Combinations (12 CFR 5.33)
• A Federal savings association may
acquire all or substantially all of the
assets, or to assume all or substantially
all of the liabilities, of nonbank
affiliates, or any other company that is
not a depository institution, in addition
to credit unions. Currently, such
acquisitions are limited to banks,
savings associations, and credit unions.
• In the factors the OCC considers in
reviewing a business combination, the
factor covering the fairness of the
transaction, equitable treatment, and
disclosure is replaced by a factor
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
assessing the effect of the transaction on
the association’s shareholders (or
members in the case of a mutual savings
association), depositors, other creditors,
and customers.
• In the application for a business
combination, Federal savings
associations must identify a financial
subsidiary investment, bank service
company investment, service
corporation investment, and other
equity investment in addition to the
current requirement to identify
subsidiaries and provide an analysis of
the permissibility for the Federal
savings association to hold the
subsidiary or investment. This
requirement reflects current practice.
• If the applicant intends to exercise
fiduciary powers after the combination
and requires OCC approval for such
powers, the applicant must include in
the business combination application
the information required in § 5.26 for a
request for fiduciary powers. This
requirement reflects current practice.
• The OCC’s approval of a transaction
expires in six months; the OCC could
extend this six-month period. Under
current OCC practice, transactions not
involving an interim association must
be consummated in 120 days.
• A Federal savings association must
publish an initial public notice and two
other public notices during the standard
30-day public comment period.
Currently, § 163.22(e)(1)(i) requires an
initial publication and then publication
on a weekly basis during the public
comment period.
• The statutory provisions governing
national bank dissenters’ rights in 12
U.S.C. 215 and 215a apply to
transactions in which a Federal savings
association is merging or consolidating
into a national bank, rather than the
regulatory dissenters’ rights provision in
12 CFR 152.14, with one exception—the
final rule includes authority for the OCC
to apportion costs for the dissenters’
rights process.
• In consolidation or merger of a state
bank, state savings association, state
trust company or a credit union into a
Federal savings association, the
institution must follow the procedures
and dissenters’ rights process set out for
such transactions in the law of the state
or other jurisdiction under which it is
organized.
• For consolidations or mergers of a
Federal stock savings association into a
another Federal savings association, the
plan of merger or consolidation must
provide the manner of disposing of the
shares of the resulting Federal savings
association not taken by dissenting
shareholders. Under § 152.14(c)(11),
such shares have the status of
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
authorized and unissued shares of the
resulting association. The plan of
merger or consolidation could still
provide such status for these shares, but
under the final rule such status no
longer is mandatory.
• A consolidation or merger of a stock
Federal savings association into an
uninsured bank, savings association, or
trust company or into a credit union, or
a consolidation or merger of a mutual
Federal savings association into an
uninsured bank, savings association, or
trust company, requires only a notice to
the OCC, not application and approval
as required under § 163.22(c).
• Federal savings association
applications for business
reorganizations (defined in § 5.33(d)(3))
and streamlined applications (described
in § 5.33(j)) that meet the requirements
are eligible for expedited review, under
which an application is deemed
approved as of the later of the 45th day
after the application was filed or the
15th day after the close of the comment
period, unless the OCC notifies the
applicant that the application is not
eligible for expedited review or the
expedited review process is extended.
This process replaces the automatic
approval provision in § 163.22(f), under
which an application is deemed to be
approved automatically 30 days after
the OCC sends the applicant a written
notice that the application is complete.
Æ The size-based limit for expedited
review of a business reorganization or
streamlined application included in the
final rule is less restrictive than the
criteria for automatic approval under
the current savings association rule, 12
CFR 163.22(f), which provides that an
application does not qualify for the
automatic approval process if the
acquiring institution has assets of $1
billion or more and proposes to acquire
assets of $1 billion or more. To qualify
for expedited review under the final
rule, business reorganizations are not
limited by size and instead are limited
based on the relative size of the
acquiring institution and the assets to be
acquired but do not have a fixed
maximum dollar amount limit on the
size.
Æ The expedited procedures in the
final rule do not include competitive
impact thresholds as a disqualifier, as in
the current savings association rule.
Æ However, as in the current savings
association rule, an applicant does not
qualify for a streamlined business
combination application if the
transaction is part of a mutual to stock
conversion under 12 CFR part 192.
• Federal savings associations will no
longer be required by regulation to meet
the requirements for Federal Home Loan
PO 00000
Frm 00057
Fmt 4701
Sfmt 4700
28401
Bank membership, as membership in a
Federal Home Loan Bank is no longer
mandatory.
• The approval of a board of directors
of a business combination involving a
Federal stock savings association is
reduced from two-thirds to a majority of
the directors.
• For a Federal stock savings
association, the execution and filing of
Articles of Combination as the method
of documenting shareholder approval of
the combination, consummation of the
combination, and its effective date is
replaced by a letter to the OCC followed
by a certification issued by the OCC.
• A Federal savings association will
not be required to include all terms
regarding the combination in a
combination agreement nor include the
specific provisions in the agreement that
are required by the current savings
association rule.
• If a consolidation or merger of a
Federal savings association in which the
savings association is not the resulting
institution has not occurred within six
months after the OCC’s receipt of the
notice of the transaction, the savings
association must submit a new notice to
the OCC. The current rule requires a
new notice after 12 months.
Investment in Bank Service Companies
(12 CFR 5.35)
• No substantive changes. There are
no regulations addressing Federal
savings association investment in bank
service companies, and the new rule
closely implements the statute.
Banking Premises (12 CFR 5.37, 7.1000,
7.3001)
• For Federal stock savings
associations, the quantitative limitations
on investment in banking premises will
be based on the association’s capital
stock or, if a 1 or 2 CAMELS rated, well
capitalized association, 150 percent of
capital and surplus. Currently, the sole
quantitative limit on a Federal savings
association’s investment in banking
premises is total capital. Because 150
percent of capital and surplus will be a
greater amount than 100 percent of total
capital, we expect that under the final
rule, the amount that a savings
association can invest in banking
premises without OCC approval will be
increased. For Federal savings
associations that do not have a CAMELS
rating of 1 or 2 and are not well
capitalized, the relevant limitation will
be capital stock, which is a significantly
lower threshold than total capital.
• For Federal mutual savings
associations, the quantitative
investment limit in banking premises
E:\FR\FM\18MYR2.SGM
18MYR2
28402
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
will be based on the amount of retained
earnings, instead of total capital.
• A Federal savings association will
be required to follow the specific
application requirements contained in
§ 5.37.
• The rulemaking will grandfather
Federal savings associations’ existing
premises investments and arrangements
for sharing office space and employees,
provided the investment complies with
the legal requirements in effect prior to
the effective date of the final rule, and
continues to comply with those
requirements.
• The rule will specifically permit
Federal savings associations to invest in
lodging for customers, officers, or
employees of the savings association, its
branches, or consolidated subsidiaries
in areas where suitable commercial
lodging is not readily available.
• A Federal savings association will
need to obtain OCC approval or provide
after-the-fact notice to exercise an
option to purchase banking premises or
stock in a corporation that holds
banking premises.
• A Federal savings association will
be permitted by regulation to hold
banking premises through an operating
subsidiary and to hold premises by any
reasonable and prudent means.
• A Federal savings association
normally will need to use real estate
acquired for future expansion within
five years and, after holding such real
estate for one year; will be required to
state, by resolution of the board of
directors or an appropriate authorized
association official or a subcommittee of
the board of directors, definite plans for
use of such real estate. Currently, OCC
guidance provides a Federal savings
association with a one to three year
timeframe for the use of real estate
acquired for future premises.
Operating Subsidiaries (New 12 CFR
5.38)
• Before beginning business, an
operating subsidiary of a Federal
savings association will be required to
comply with other laws applicable to it,
including applicable licensing or
registration requirements. This change
will codify current OCC policy.
• Under the amended rule, an entity
can be an operating subsidiary if a
Federal savings association owns less
than 50 percent of the voting shares of
the entity, provided no other party owns
a greater percentage than the savings
association, the savings association
otherwise controls the subsidiary, and
no other person or entity can exercise
effective operating control over the
subsidiary or have the ability to
influence the subsidiary’s operations to
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
an extent equal to or greater than that of
the savings association. Currently, for an
entity to be an operating subsidiary, a
savings association must own, directly
or indirectly, more than 50 percent of
the voting shares of the subsidiary.
• A Federal savings association will
be required to have reasonable policies
and procedures to preserve the limited
liability of the savings association and
its operating subsidiaries. The detailed
requirements for separate corporate
identities for subsidiaries in 12 CFR
159.10 are removed.
• A Federal savings association will
need to file an application and receive
prior OCC approval to acquire or
establish an operating subsidiary or to
commence a new activity in an existing
operating subsidiary. The current rule in
§ 159.11 requires filing a notice at least
30 days prior to establishing or
acquiring a subsidiary or engaging in
new activities in a subsidiary; this
notice is treated like an application
under § 159.1(b).
• Some applications will qualify for
the expedited review of applications
process. This expedited review is
similar to the current rule’s notice
process: applications will be deemed
approved by the OCC as of the 30th day
after the filing is received, unless the
OCC notifies the Federal savings
association otherwise during the 30-day
period.
Æ For the application to qualify, the
Federal savings association must be
‘‘well capitalized’’ and ‘‘well managed,’’
the activities to be performed by the
operating subsidiary must be listed in
§ 5.38(e)(5)(v) (activities that have been
approved for operating subsidiaries of
Federal savings associations in the past),
the operating subsidiary must be a
corporation, limited liability company,
or limited partnership, and the savings
association must clearly demonstrate
control over the operating subsidiary (it
must meet a standard for control that is
more stringent than the general standard
for operating subsidiaries).
Æ Under the current rule, all filings
start as 30-day prior notices. They
become standard treatment applications
if the OCC notifies the applicant that the
notice presents supervisory concerns or
raises significant issues of law or policy.
Æ While there is overlap between an
application failing to meet the criteria to
qualify for expedited review (and so
requiring standard processing) and
raising issues that would cause a filing
to present supervisory concerns, or
raises significant issues of law or policy
(and so requiring standard processing),
there may be instances in which a filing
would have had to be processed under
PO 00000
Frm 00058
Fmt 4701
Sfmt 4700
standard procedures under one test but
not the other.
• For a Federal savings association
operating subsidiary to act as a
fiduciary, its savings association parent
will be required to have fiduciary
powers and the operating subsidiary
also must have its own fiduciary powers
under the law applicable to the
subsidiary. The operating subsidiary no
longer will be able to rely on the savings
association’s fiduciary powers, except
when the subsidiary exercises
investment discretion on behalf of
customers or provides investment
advice for a fee as a registered
investment adviser. This change will
codify OCC and OTS practice.
• OCC approvals granted under § 5.38
will expire within 12 months if a
Federal savings association has not
established or acquired the operating
subsidiary or commenced the new
activity in an existing operating
subsidiary, unless the OCC shortens or
extends this time period.
Main Office and Home Office
Relocations (12 CFR 5.40)
• Under the current rule, no notice or
application is required if the relocation
is a short-distance relocation, if the
Federal savings association redesignates
an existing branch office as a home
office when redesignating the existing
home office as a branch office, or if the
savings association is highly rated and
certain other requirements are met. If
the relocation does not meet the above
exceptions, a notice is required for
savings associations that qualify for
expedited treatment and OCC approval
is required for all other savings
associations. Under the final rule, all
Federal savings associations will be
required to:
Æ Submit prior notice to the OCC for
home office relocations to a branch site
in the same city, town, or village of the
current home office; and
Æ Obtain prior OCC approval for
home office relocations to a branch
location other than a branch site in the
same city, town, or village of the current
home office. An application submitted
by an eligible Federal savings
association will be deemed approved by
the OCC as of the 15th day after the
close of the public comment period or
the 45th day after the filing is received
by the OCC (or in the case of a shortdistance relocation, the 30th day after
the filing is received by the OCC),
whichever is later, unless the OCC
notifies the bank or savings association
prior to that time that the filing is not
eligible for expedited review, or the
expedited review period is extended.
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Æ Obtain OCC approval pursuant to
§ 5.31 (branching) in order to establish
a branch at the site of a former home
office unless the branch establishment
meets one of the exceptions in § 5.31.
Under the current rule, no notice or
application is required in all cases of
home office and branch office redesignations.
Æ Open a relocated home office
within 18 months from the date of OCC
approval, unless the OCC grants an
extension. Under the current rule, this
office must be opened within 12 months
of OCC approval or non-objection.
Change in Corporate Title (12 CFR 5.42)
• Federal savings associations will be
required to submit an after-the-fact
notice to the OCC instead of a 30-day
prior notice for a change in corporate
title.
Increases in Permanent Capital (New 12
CFR 5.45)
• Federal stock savings associations
will be required to apply to the OCC and
obtain prior approval for increases in
capital in the following circumstances:
(1) When the savings association is
required to receive OCC approval
pursuant to letter, order, directive,
written agreement or otherwise, (2)
when the savings association is selling
common or preferred stock for
consideration other than cash, or (3)
when the savings association is
receiving a material noncash
contribution to capital surplus.
Currently, savings associations are not
required to apply for increases in
capital.
asabaliauskas on DSK5VPTVN1PROD with RULES
Voluntary Liquidation (12 CFR 5.48)
• The Federal savings association’s
liquidating agent or committee will be
required to submit to the OCC:
Æ At the start of liquidation, a report
showing the association’s current
balance sheet;
Æ Quarterly Consolidated Reports of
Condition and Income (Call Reports);
and
Æ Annual reports on the progress of
the liquidation.
• The following provisions in the
final rule codify existing OCC practice:
Æ A Federal savings association will
be required to provide notice of the
liquidation to depositors, other known
creditors, and known claimants.
Æ A Federal savings association will
be required to publish public notice of
its plan to liquidate if so directed by the
OCC.
Change in Control (12 CFR 5.50)
• The current definition of ‘‘voting
securities’’ in § 5.50 replaces the part
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
174 definition of ‘‘voting stock.’’ This
will affect the standard for convertible
securities. Currently, part 174 includes
as voting stock any security that, upon
transfer or otherwise, is convertible into
voting stock or exercisable to acquire
voting stock where the holder of the
convertible security has the
preponderant economic risk in the
underlying voting stock. Section 5.50,
by contrast, defines voting securities to
include securities that are immediately
convertible into voting securities at the
option of the owner or holder.
• The final rule excludes part 174
procedures for rebuttal of control and
concerted action, applying instead the
provisions in § 5.50(f)(2)(vi).
• Persons who acquire control of a
Federal savings association as a result of
testate or intestate succession will need
to file a notice and pay the appropriate
filing fee within 90 calendar days after
the transaction occurs. Currently, such
persons need only file a notification of
acquisition to the OCC within 60 days
of the acquisition and provide
information requested by the OCC.
• The final rule excludes the
presumptive disqualifiers from part
174—a list of factors, which, if present,
may show a lack of integrity or lack of
financial capability to proceed with a
proposed transaction.
• The regulatory changes have the
effect of eliminating most of the
rebuttable presumptions of control with
respect to Federal savings associations
that are currently set forth in 12 CFR
174.4(b) and (c). The regulatory changes
also remove certain of the rebuttable
presumptions of concerted action
currently set forth in § 174.4(d).
• Acquirers of beneficial ownership
exceeding 10 percent of any class of
stock of a Federal savings association
that do not file a control notice or
control rebuttal will not be required to
file a certification of ownership.
Changes in Directors and Senior
Executive Officers (12 CFR 5.51)
• A Federal savings association will
be required to provide 90 days prior
notice of a new director or senior
executive officer if the association is not
in compliance with minimum capital
requirements, is otherwise in a troubled
condition, or the OCC determines,
under section 38 of the FDI Act (12
U.S.C. 1831o), that prior notice is
appropriate. Currently, such an
association is required to provide 30
days prior notice, which the OCC may
extend for an additional 60 days.
• Only a Federal savings association
will be permitted to file the notice with
the OCC; an individual seeking election
to the board of directors who has not
PO 00000
Frm 00059
Fmt 4701
Sfmt 4700
28403
been nominated by management will no
longer be allowed to do so.
• A Federal savings association or a
proposed individual will be able to
appeal an OCC notice of disapproval.
The current rule does not provide an
appeal process, although the OCC has
permitted appeals by Federal savings
associations in practice.
Change in Address (12 CFR 5.52)
• A Federal savings association no
longer will be required to provide notice
of a home office or post office box
address change if the change results
from any transaction approved under 12
CFR part 5. The current rule provides
this exception only in cases of an
application to relocate or establish a
new home or branch office.
• All Federal savings associations no
longer will be required to provide notice
of a home office or post office box
address change if they have filed a
notice for the relocation or
establishment of a new home or branch
office pursuant to § 5.40 (main office
and home office relocations). Under
current rules, highly rated savings
associations are required to file a change
in address notice because they are
exempt from the relocation notice
requirement.
• Federal savings associations no
longer will be subject to the requirement
that all operations be directed from the
home office.
Change in Asset Composition (12 CFR
5.53)
• The Federal savings association rule
now requires approval of all purchases
or sales or other transfers of assets in
bulk not made in the ordinary course of
business, unless the transaction is
subject to the Bank Merger Act (in
which case other parts of the rule
apply). Under the final rule, Federal
savings associations will be required to
obtain OCC approval only for the
following (unless one of the exceptions
applies):
Æ The sale or other disposition of all,
or substantially all, of the savings
association’s assets in a transaction or a
series of transactions.
Æ After having sold or disposed of all,
or substantially all, of its assets,
subsequent purchases or other
acquisitions or other expansions of the
savings association’s operations.
Æ Any other asset purchases or other
expansions of business that are part of
a plan to increase the size of the savings
association by more than 25 percent in
one year.
Æ As determined by the OCC on a
case-by-case basis, any other material
increase or decrease in the size of the
E:\FR\FM\18MYR2.SGM
18MYR2
28404
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
savings association or a material
alteration in the composition of the
types of its assets or liabilities
(including the entry or exit of business
lines). The OCC will consider the size
and nature of the transaction and the
condition of the institutions in
determining whether to require an
application and believes the additional
situations in which the OCC will require
an application likely already would
involve discussions with the bank’s
appropriate supervisory office.
• When an application is required, it
will have standard processing.
Currently, an application can qualify for
expedited treatment if all participating
Federal savings associations meet the
conditions for expedited treatment.
asabaliauskas on DSK5VPTVN1PROD with RULES
Capital Distributions (New 12 CFR 5.55)
• The expedited review process in
part 5 will apply to Federal savings
associations seeking expedited review of
filings for capital distributions instead
of the expedited treatment process in
part 116. Because the eligibility
requirements for expedited review differ
from the requirements for expedited
treatment, this change could affect
which savings associations qualify for
the expedited process.
Æ Under the current savings
association rule, both well and
adequately capitalized institutions are
eligible for expedited treatment. Under
the new rule, only savings associations
that are well capitalized will qualify for
expedited review.
Æ Under the current savings
association rule, the institution must not
have been notified that it is in troubled
condition, while under the new rule an
eligible savings association must not be
subject to an enforcement action.
(Although different, these supervisory
condition tests generally should
overlap.)
Æ Under the current rule, a savings
association that has not been assigned a
CAMELS rating, a CRA rating, and a
compliance rating is not eligible for
expedited treatment. This requirement
is not a factor in the requirements for
eligible bank or eligible savings
association status in part 5.
Subordinated Debt and Mandatorily
Redeemable Preferred Stock (New 12
CFR 5.56)
• The expedited review process in
part 5 will apply to Federal savings
associations seeking expedited review of
filings to issue subordinated debt
instead of the expedited treatment
process in part 116. Because the
eligibility requirements for expedited
review differ from the requirements for
expedited treatment, this change could
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
affect which savings associations qualify
for the expedited process, as described
above for the capital distributions rule.
or will hold, an insurance license, and
the state where the service corporation
holds a resident license or charter.
Pass-Through Investments (New 12 CFR
5.58)
• Federal savings associations are
allowed to make pass-through
investments greater than 25 percent of
the company’s equity, but because this
investment would make the company a
subsidiary under law applicable to the
Federal savings associations, the
association will be required to submit
an application for approval as a
subsidiary.
• Federal savings associations may be
subject to different filing requirements:
Æ Some pass-through investments
that currently may qualify for the nonotice procedure under current
§ 160.32(b) will require a filing under
§ 5.58. (However, pass-through
investments in investment companies
that hold assets permissible for a
Federal savings association to hold
directly will continue not to require a
filing.)
Æ For pass-through investments that
meet the requirements for the after-thefact notice procedure, the Federal
savings association will need to file only
the after-the-fact notice. This treatment
applies both to investments that would
have required a prior application under
§ 160.32(c) and investments that would
have qualified for the no-notice
procedure under current § 160.32(b).
• Federal savings associations are
subject to the notice content
requirements of § 5.58. Section 160.32
does not specify the content of the
notice or application.
V. Administrative Law Matters
Service Corporations (New 12 CFR 5.59)
• The corporate separateness
requirements are amended to eliminate
the requirement that a Federal savings
association’s service corporation be
adequately financed as a separate unit
in light of normal obligations reasonably
foreseeable for a business of the service
corporation’s size and character in order
to maintain the requisite corporate
separateness.
• Consistent with 12 U.S.C. 1828(m),
a Federal savings association will be
required to file an application with the
OCC before investing in any service
corporation, including one that it would
not control. Currently, the service
corporation regulation requires a
Federal savings association to file with
the OCC only if it directly or indirectly
controls the service corporation.
• Applications to establish or acquire
a service corporation will be required to
list for each state the lines of business
for which the service corporation holds,
PO 00000
Frm 00060
Fmt 4701
Sfmt 4700
Notice and Comment
Pursuant to the Administrative
Procedure Act (APA), at 5 U.S.C.
553(b)(B), notice and comment are
required prior to the issuance of a final
rule unless an agency, for good cause,
finds that ‘‘notice and public procedure
thereon are impracticable, unnecessary,
or contrary to the public interest.’’ This
final rule includes amendments not
originally include in the proposed rule
published on June 10, 2014, that: (1)
Update OCC telephone or fax numbers
in parts 4, 7, and 24, (2) replace a form
in appendix 1 to part 24 with an
identical form updated to include a new
OCC phone number and revision date,
and (3) corrects a number of inaccurate
cross-references. These amendments are
purely technical in nature and for this
reason, the OCC has good cause to
conclude that advance notice and
comment under the APA are not
necessary prior to their issuance.
Effective Date
The APA requires that a substantive
rule must be published not less than 30
days before its effective date, unless,
among other things, the rule grants or
recognizes an exemption or relieves a
restriction.125 Section 302 of the Riegle
Community Development and
Regulatory Improvement Act of 1994
(RCDRIA) requires that regulations
imposing additional reporting,
disclosure, or other requirements on
insured depository institutions take
effect on the first day of the calendar
quarter after publication of the final
rule, unless, among other things, the
agency determines for good cause that
the regulations should become effective
before such time.126 The July 1, 2015
effective date of this final rule meets
both the APA and RCDRIA effective
date requirements, as it will take effect
at least 30 days after its publication date
of May 18, 2015 and on the first day of
the calendar quarter following
publication, July 1, 2015.
Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (RFA),127 an agency must prepare a
regulatory flexibility analysis for all
proposed and final rules that describe
the impact of the rule on small entities,
unless the head of an agency certifies
125 5
U.S.C. 553(d)(1).
U.S.C. 4802.
127 Public Law 96–354, 94 Stat. 1164 (1980),
codified at 5 U.S.C. 601–612.
126 12
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
that the rule will not have ‘‘a significant
economic impact on a substantial
number of small entities.’’ The OCC
currently supervises approximately
1,109 small entities—339 Federal
savings associations, 751 national
banks, and 19 trust companies
(collectively, small banks).128 Because
some of the final rule’s provisions could
impact any national bank and other
provisions could impact any Federal
savings association, the final rule could
impact a substantial number of OCCsupervised small institutions.
We estimate that the monetized direct
cost per bank will range from a low of
approximately $7.6 thousand per bank
to a high of approximately $15.4
thousand per bank. Using the upper
bound average direct cost per small
entity, we believe the compliance costs
will have a significant economic impact
on no more than 19 small entities (of
which eight are small Federal savings
associations), which is not a substantial
number.129 The OCC classifies the
economic impact of total costs on a
small entity as significant if the total
monetized costs in a single year are
greater than 5 percent of total salaries
and benefits or greater than 2.5 percent
of total non-interest expense. We believe
19 is not a substantial number of small
entities because it represents
approximately 1.7 percent of OCCsupervised small entities.
Although we believe that investments
in premises may impact a small entity’s
competitiveness and profitability, our
estimate of monetized direct costs does
not include costs or benefits that may be
associated with the OCC’s
implementation of the reduction in the
quantitative limit for a Federal savings
association’s investments in premises.
We exclude these costs and benefits for
a variety reasons including the
uncertainty surrounding the number of
Federal savings associations that may
128 We base our estimate of the number of small
entities on the SBA’s size thresholds for commercial
banks and savings institutions, and trust
companies, which are $550 million and $38.5
million, respectively. Consistent with the General
Principles of Affiliation 13 CFR 121.103(a), we
count the assets of affiliated financial institutions
when determining if we should classify a bank we
supervise as a small entity. We use December 31,
2014, to determine size because a ‘‘financial
institution’s assets are determined by averaging the
assets reported on its four quarterly financial
statements for the preceding year.’’ See footnote 8
of the U.S. Small Business Administration’s Table
of Size Standards.
129 The OCC classifies the economic impact of
total costs on a bank as significant if the total
monetized costs in a single year are greater than 5
percent of total salaries and benefits or greater than
2.5 percent of total non-interest expense. We
believe 19 is not a substantial number of small
banks because it represents approximately 1.7
percent of OCC-supervised small entities.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
submit applications to invest in
premises, uncertainty about how the
OCC will respond to any applications
that may be submitted, and uncertainty
of how investments in premises, if
constrained, may impact small entities.
However, because the OCC will require
some Federal savings associations to
obtain approval, we assume that
investments in premises may be
constrained for some small Federal
savings associations. Specifically, we
assume that investments may be
constrained for 18 small Federal savings
associations with a positive return on
assets (ROA) that are currently eligible
to file an after-the-fact notice for
investments in premises and will not be
able to do so under the final rule.130
However, based on the recent behavior
of these Federal savings associations, it
is unlikely that all 18 would seek to
increase their investments in premises
in any one year. For purposes of this
analysis we assume that the
amendments to § 5.37 and constrained
investments will have a significant
economic impact on no more than seven
additional Federal savings associations
in any one year.131 To test if a
substantial number of small entities
could be impacted by the final rule, we
assume that requests made by these
seven small Federal savings associations
to make additional investments in
premises will be declined. Based on the
assumptions outlined in the above
paragraphs, we conclude that the final
rule in total could have a significant
economic impact on no more than 26
small institutions of the 1,109 small
entities supervised by the OCC
(approximately 2.3 percent of small
entities) which is not a substantial
number.
Based on the information set forth
above, and pursuant to section 605(b) of
the RFA, the OCC hereby certifies that
this final rule will not have a significant
economic impact on a substantial
number of small entities. Accordingly, a
regulatory flexibility analysis is not
required.
130 We assume that all small entities seek to
maximize ROA and net income. Thus, we assume
that those small Federal savings associations that
currently have a negative ROA are not likely to seek
approval to increase their investment in premises.
131 Our assumption is based on the current
number of Federal savings associations that are
likely to have their ability to invest in premises
impacted by the final rule (i.e., the Federal savings
association exceeds the new limit and its limit for
investment in premises was reduced) and also meet
the following three conditions: (i) The amount
reported on line 6 of schedule RC increased during
either of the last two years; (ii) it has a positive
ROA; and, (iii) it reported having at least one office
in addition to the Federal savings association’s
main office as of June 2014.
PO 00000
Frm 00061
Fmt 4701
Sfmt 4700
28405
Unfunded Mandates Reform Act of 1995
The OCC has analyzed the final rule
under the factors in the Unfunded
Mandates Reform Act of 1995
(UMRA).132 Under this analysis, the
OCC considered whether the final rule
includes a Federal mandate that may
result in the expenditure by state, local,
and tribal governments, in the aggregate,
or by the private sector, of $100 million
or more in any one year (adjusted
annually for inflation) ($152 million in
2014). Under Title II of the UMRA,
indirect costs, foregone revenues and
opportunity costs are not included
when determining if a mandate meets or
exceeds UMRA’s cost threshold. The
UMRA does not apply to regulations
that incorporate requirements
specifically set forth in law.
The OCC’s estimated UMRA cost is
approximately $17 thousand.133
Therefore, the OCC finds that the final
rule does not trigger the UMRA cost
threshold. Accordingly, this final rule is
not subject to section 202 of the
Unfunded Mandates Act.
Paperwork Reduction Act
Under the Paperwork Reduction Act
(PRA) of 1995,134 the OCC may not
conduct or sponsor, and a person is not
required to respond to, an information
collection unless the information
collection displays a valid Office of
Management and Budget (OMB) control
number. The OCC submitted the
information collection requirements
imposed by the proposed rule to OMB
at the time of publication as an
amendment to its Licensing Regulations
PRA Collection (OMB Control No.
1557–0014). Pursuant to 5 CFR
1320.11(c), OMB filed a comment on the
information collection instructing the
OCC to examine public comment in
response to the proposed rule and
describe in the supporting statement of
its next collection any public comments
received regarding the collection as well
as why (or why it did not) incorporate
132 Public Law 104–4, 109 Stat. 48 (1995),
codified at 2 U.S.C. 1501 et seq.
133 The OCC finds that the requirement for
Federal savings associations (that are otherwise
exempt from the branch application requirement) to
file an after-the-fact notice when opening a new
branch is a conditional mandate under the UMRA
that is likely to impact a substantial number of
Federal savings associations per year. We estimate
that the cost associated with this new mandate is
approximately $17,380 per year (182 Federal
savings associations × 1 hour × $95.5 per hour). Our
estimate is based on the number of 1- or 2-rated
Federal savings associations that have more than
one office that increased their investment in
premises during either of the last two years (or
approximately 50 percent of all 1- and 2-rated
Federal savings associations).
134 Public Law 104–13, 109 Stat. 163 (1995),
codified at 44 U.S.C. 3501 et seq.
E:\FR\FM\18MYR2.SGM
18MYR2
28406
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
asabaliauskas on DSK5VPTVN1PROD with RULES
the commenter’s recommendation. The
OCC received no comments regarding
the information collection and has
resubmitted the information collection
requirements to OMB for review in
connection with the final rule.
The final rule contains both new and
revised information collection
requirements. Some of the revisions
provide exceptions to existing
requirements, which will result in a
reduction in burden. Some of the
requirements are currently in place for
national banks and are being extended
to cover both national banks and
Federal savings associations. Some of
the amendments impose new
requirements on Federal savings
associations and amend the
requirements for national banks. A
number of the revisions involve
amendments to definitions, which, in
some cases, will affect the respondent
count for related provisions. For
example, the change in the definition of
‘‘eligible bank’’ to include the consumer
compliance rating in addition to the
CAMELS and CRA rating will affect
respondent counts. A number of the
provisions being amended contain
existing PRA requirements that have
been previously approved by OMB.135
The amendments made today do not
create any new information collection
requirements and, therefore, require no
PRA filings, other than non-material
changes necessary due to the
consolidation of the regulations.
Rules of General Applicability
Federal savings associations will be
required to follow the procedure and
processing provisions currently
imposed on national banks (part 5,
subpart A) instead of those in part 116,
which they currently follow. Only well
capitalized Federal savings associations
will qualify for expedited treatment and
adequately capitalized institutions will
no longer qualify. Public notices of
filings will be required to be filed as
soon as practicable after a filing date
instead of seven days prior to the filing
date. Public notice will have to state
that a filing is being made and the date
of the filing. A single public notice will
be acceptable for multiple transactions
or transactions filed with the OCC and
another agency, under certain
circumstances. Comments in response
to a filing will have to be obtained from
the OCC, as comments will no longer be
sent directly to the institution.
The requirement for publication of
notice of a filing by national banks will
135 OMB Control Nos. 1557–0106, 1557–0140,
1557–0190, 1557–0204, 1557–0221, 1557–0266, and
1557–0310.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
be made more specific and require the
notice: To be published in English; to
specify the name of institution that is
the subject of the filing; to indicate that
the public portion is available on
request; and to provide the address of
the applicant. Under certain
circumstances, the OCC can require the
applicant to publish a new notice.
Fiduciary Powers
In order to exercise fiduciary powers,
Federal savings associations will be
required to comply with the application
requirements of § 5.26 in place of the
requirements under current part 150. In
addition, § 5.26 will be revised to
require a national bank or Federal
savings association that has not
conducted previously approved
fiduciary powers for 18 consecutive
months to provide the OCC with 60
days’ advance notice before engaging in
the activities. It will also require that a
national bank or Federal savings
association that has received approval to
exercise limited fiduciary powers apply
to the OCC to exercise full fiduciary
powers. Eligible Federal savings
associations will receive expedited
review of applications. A provision is
added setting out the circumstances
under which a Federal savings
association does not need to apply for
fiduciary powers in connection with
certain mergers.
Establishment, Acquisition, and
Relocation of a Branch
New § 5.31 addresses the
establishment and relocation of
branches, or the establishment of agency
offices, by Federal savings associations
and replaces several provisions
currently found in part 145.
Section 5.31(f)(1) sets out the general
requirement that each Federal savings
association proposing to establish or
relocate a branch shall submit a separate
application for each proposed branch,
unless the transaction qualifies for an
exception. The provision in § 145.93(e)
stating that a Federal savings association
may not file an application or notice, or
use any of the exceptions, to establish
a branch if the association has filed an
application to merge or otherwise
surrender its charter and the application
has been pending for less than six
months has not been carried over to
§ 5.31.
Section 145.93(b)(3) provided that
certain highly rated Federal savings
associations are not required to file an
application to change the permanent
location of an existing branch or to
establish a new branch if it meets
certain requirements, including that the
Federal savings association meet the
PO 00000
Frm 00062
Fmt 4701
Sfmt 4700
eligibility requirements for expedited
treatment. Under § 5.31(f)(2)(iii) of the
final rule, the Federal savings
association is an ‘‘eligible savings
association,’’ as defined in 12 CFR
5.3(g), rather than eligible for expedited
treatment.
Section 5.31(f)(3) is added in the final
rule, which requires that highly rated
Federal savings associations not
required to file a branch application
must file a notice with the OCC within
10 days after the opening of the branch.
This notice must include the date the
branch was established or relocated and
the address of the branch.
Section 5.31(g) sets out exceptions to
the rules of general applicability for
applications by a Federal savings
association to establish or relocate a
branch and specifies that the OCC will
be able to waive or reduce the public
notice and comment period in certain
emergency situations or with respect to
certain temporary branches.
Section 5.31(h) provides that OCC’s
approval of a branch expires if the
branch has not commenced business
within 18 months, unless the OCC
grants an extension. This period is
longer than the current 12-month
expiration period for branch approvals
for Federal savings associations under
§ 145.95(c).
Section 145.93(c) currently requires
prior approval for any savings
association branch that would be subject
to section 5(m)(1) of the HOLA
(regarding District of Columbia savings
associations), if the association meets
the requirements of § 145.93(b) for an
exception to the branch application
filing requirement. New § 5.31(j)
requires an application and prior
written approval for each application.
State and Federal savings associations
will be required to file an application
with the OCC to establish or move a
branch in the District of Columbia.
Investment in Bank Service Companies
Section 5.35 is expanded to cover
Federal savings associations. It replaces
the after-the-fact notice before making
an investment in the equity of a bank
service company or performing new
activities in an existing bank service
company with an expedited prior notice
procedure.
Investments in Premises
Section 5.37 is expanded to cover
Federal savings associations. In
addition, an alternative, after-the-fact
notice process is added for both national
banks and Federal savings associations
and an exception to the premise
application and notice requirements for
investments in banking premises
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
through a service corporation is
provided for Federal savings
associations. Amendments to the
definitions of ‘‘capital stock’’ and
‘‘capital and surplus,’’ which will
increase the amount that a Federal
savings association can invest in
banking premises without OCC
approval, will result in a decrease in the
number of requests for approval. A
transition provision is added for Federal
savings associations to grandfather
existing banking premises investments.
Modifying, expanding, or approving
such investments will require prior
approval. Section 7.1000(d) provides
that a Federal savings association will
be given a five year timeframe for the
use of real estate acquired for future
premises in place of the current
guidance, which requires use of real
estate acquired for future expansion
within one to three years and, after
holding the real estate for one year,
requires a statement by resolution of the
definite plans for use.
Main Office and Home Office
Relocations
Under § 5.40, Federal savings
associations will be required to submit
prior notice to the OCC for home office
relocations to a branch site in the same
city, town, or village of the current
home office and obtain prior approval
for other relocations. They will also be
required to obtain prior approval to
establish a branch at the site of a former
main or home office.
Change in Corporate Title
For change in corporate title, Federal
savings associations will be required to
submit an after-the-fact notice in place
of the current 30-day prior notice under
§ 5.42.
asabaliauskas on DSK5VPTVN1PROD with RULES
Voluntary Liquidation
Section 5.48 is expanded to cover
Federal savings associations. The
liquidating agent or committee of the
national bank or Federal savings
association will be required to submit:
A report to the appropriate OCC
licensing office at the start of liquidation
showing the bank’s or savings
association’s balance sheet as of the start
of liquidation; quarterly Call Reports; a
report of condition at the start of the
liquidation; annual progress reports;
and a final report of liquidation.
National banks and Federal savings
associations will be required to notify
all depositors, other known creditors,
and known claimants of the bank or
savings association.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
Change in Control; Reporting of Stock
Loans
This section is expanded to cover
Federal savings associations. Certain
procedures for rebuttal of control and
concerted action under part 174 will no
longer be applicable to Federal savings
associations. Persons who acquire
control of a Federal savings association
as a result of testate or intestate
succession will need to file a notice
within 90 days of the transaction, while
the current regulations require only a
notification of the acquisition within 60
days. Under § 5.50, acquirers of
beneficial ownership exceeding 10
percent of any class of stock of a Federal
savings association that does not file a
control notice or control rebuttal will
not be required to file a certification of
ownership.
Changes in Directors and Senior
Executive Officers
The notice of a change in directors or
senior executive officers for a national
bank in § 5.51 will need to include
financial information on the individual,
except when the OCC determines it is
not required. If the OCC requests
additional information, a national bank
may request a time extension to provide
the information, if necessary.
Federal savings associations will be
required to provide 90 days prior notice
of a new director or senior executive
officer, under certain circumstances, in
place of the current shorter notice
period. Only a Federal savings
association will be permitted to file the
notice; nominees no longer will be able
to file. Federal savings associations will
be able to appeal an OCC notice of
disapproval.
Change in Address
Section 5.52 provides that, under
certain circumstances, national banks
and Federal savings associations will no
longer be required to file a notice of
home office change of address and
Federal savings associations will no
longer be required to provide notice of
a post office box address.
Bank Activities and Operations
A number of provisions in part 7 are
being expanded to cover Federal savings
associations. A transition period is
added to grandfather Federal savings
associations’ existing premise
investments, provided they are not
modified, expanded, or improved. A
transition period is also provided for
Federal savings associations that share
space or employees with another
business under an agreement that
complies with legal requirements
previously in place that would violate
PO 00000
Frm 00063
Fmt 4701
Sfmt 4700
28407
this provision. They will be permitted to
continue under the existing agreement,
but will not be able to amend, renew, or
extend the agreement without prior
approval.
The requirements in part 145
regarding the establishment of agency
offices of Federal savings associations is
removed and agency offices of Federal
savings associations that conduct nonbranch activities will not be considered
branches and will not be required to
obtain OCC approval for these offices.
Organizing a National Bank or Federal
Savings Association
In § 5.20, paragraph (h) specifies
requirements for the organizers’
business plan or operating plan,
paragraph (i) lists the procedures that
the organizers must follow, paragraph (j)
specifies the requirements for expedited
review of an application, and paragraph
(l) lists requirements for the
establishment of special purpose banks.
An application to charter a Federal
savings association will be subject to the
two-part approval process contained in
paragraph (i)(5). The OCC uses a twopart approval process for de novo
national bank charters. After an
application is filed, if the OCC
determines it meets the applicable
standards, the application is given
preliminary approval. The national
banking organization would then take
the steps needed to organize itself, raise
capital, obtain any other regulatory
approvals, and generally become ready
to commence business. Final approval is
given and the national bank’s charter is
issued only after all these steps are
concluded, including compliance with
any conditions imposed in the
preliminary approval. Currently, the
OCC issues only one approval before it
issues the charter, but this approval is
subject to the institution completing
various post-approval organizational
steps and other requirements before it
can begin conducting business.
Paragraph (j) currently provides for
expedited review of an application to
establish a full-service national bank
filed by a bank holding company with
a lead depository institution that is an
eligible depository institution. Under
the final rule, Federal savings
associations and savings and loan
holding companies are added.
The corresponding rules applicable to
organizing Federal savings associations
are found in parts 143, 144, and 152,
and § 163.1. Sections 144.1 and 152.3
contain specific language and
requirements to be used for the charter
of Federal mutual savings associations
and Federal stock savings associations,
respectively, and §§ 144.2 and 152.4
E:\FR\FM\18MYR2.SGM
18MYR2
28408
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
contain specific requirements for the
bylaws of Federal mutual savings
associations and Federal stock savings
associations, respectively. Sections
143.2(g)(2)(i) and 152.1(b)(3)(i) provide
that approval of an application to
organize a Federal mutual or stock
savings association, respectively, is
conditioned on OCC receipt of written
confirmation from the FDIC that
accounts will be insured. Section 152.2,
which provides procedures for the
organization of interim Federal savings
associations, is rescinded and addressed
in the business combinations regulation
at § 5.33.
Section 5.21(j) specifies the language
and requirements for Federal mutual
savings association bylaws. The
provision reflects the requirements in
§ 144.5.
Federal Stock Savings Association
Charter, Bylaws and Related Provisions
Section 5.22(e) specifies the language
and requirements for a Federal stock
savings association charter. The
provision reflects the requirements in
§ 152.3.
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Savings Association Charter and
Bylaws Availability Requirement
Section 163.1(b), which requires each
Federal savings association to cause a
true copy of its charter and bylaws and
all amendments thereto to be available
to accountholders at all times in each
office of the savings association, and to
deliver to any accountholders a copy of
such charter and bylaws or amendments
thereto, upon request, is rescinded and
the OCC will continue applying this
requirement only with respect to
Federal mutual savings associations
under new § 5.21(i).
Conversions to and From National Bank
and Federal Savings Association
Charters
In § 5.24(d), regarding the policy for
approving and disapproving
conversions to national bank charters, a
statement is added that the institution
seeking to convert to a national bank
charter must obtain all necessary
regulatory and shareholder approvals. A
parallel provision is found in
§ 143.8(a)(2), which is now in § 5.25 of
the final rule. The public notice and
inspection requirements at § 143.9(a)(2)
are rescinded. If there are instances
where the OCC believes publication is
warranted, the OCC may require
publication under § 5.2(b), which allows
the OCC to require materially different
procedures for a particular filing.
Section 5.24(e)(2)(ix) requires the
application for conversion to include a
business plan if the converting
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
institution has been operating for less
than three years or plans to make
significant changes to its business after
the conversion, instead of the current
policy of requesting it on a case-by-case
basis.
Section 5.24(g), which allows for
expedited review of a conversion
application filed by an eligible
depository institution, will be limited to
applications by institutions already
supervised by the OCC.
Section 5.23(d)(2)(ii)(K) requires a
converting institution that does not
meet the qualified thrift lender test of 12
U.S.C. 1467a(m) to include a plan to
achieve compliance within a reasonable
period of time and to request an
exception from the OCC in the
application.
Section 5.25(d) provides that
converting from a Federal charter does
not require prior OCC approval. The
institution must file only a notice with
the OCC. Currently, Federal savings
associations that are not eligible for
expedited treatment must file an
application to convert to a national bank
or state bank. The notice must contain
a copy of the conversion application to
the regulator to which it is applying for
approval to convert, and a discussion of
any issues regarding the permissibility
of the conversion under section 612 of
Dodd-Frank Act. The institution will
also be required to file a copy of its
conversion application with the Federal
banking agency that would become its
appropriate Federal banking agency
after the conversion.
For conversions between a national
bank and a Federal savings association,
the applicable ‘‘converting-in’’
regulation (§ 5.23 or § 5.24) will require
the institution to file an application
with the OCC with respect to the
‘‘converting-in’’ aspect of the
transaction. Information regarding the
‘‘converting-out’’ to a national bank
from a Federal savings association or
from a Federal savings association to a
national bank will no longer be required
in a separate notice but included in the
‘‘converting-in’’ application.
Sections 5.24(e)(2)(x) and
5.23(d)(2)(ii)(J) will require the
conversion application to include
information about enforcement actions
and other supervisory criticisms and the
applicant’s analysis of whether
conversion is permissible under 12
U.S.C. 35, as amended by section 612.
Section 5.25(d)(3) would require that
the information that must be submitted
to the OCC when a national bank or
Federal savings association plans to
convert to a state bank or state savings
association must include a discussion of
the impact of any enforcement action on
PO 00000
Frm 00064
Fmt 4701
Sfmt 4700
the permissibility of the conversion
under 12 U.S.C. 214d or 1464(i)(6).
Sections 5.24(e)(2), 5.23(d)(2)(ii),
5.25(d)(3)(i), and 5.25(d)(3)(ii)(A)
require that, at the time an insured
depository institution files a conversion
application, it must transmit a copy of
the conversion application to both the
appropriate Federal banking agency for
the institution and the Federal banking
agency that will become the appropriate
Federal banking agency for the
institution after the proposed
conversion.
Service Corporations
Under the current service corporation
regulation, a Federal savings association
must file a notice under part 116 at least
30 days before establishing or acquiring
a subsidiary or engaging in a new
activity in a subsidiary. A Federal
savings association is not required to
file a service corporation application if
the association proposes to make a noncontrolling investment in a service
corporation. The final rule amends the
service corporation regulation at § 5.59
to require that a Federal savings
association file with the OCC before
acquiring or establishing any service
corporation, including one that it would
not control.
Section 5.59(h)(1)(ii) requires a
Federal savings association to list for
each state the lines of business for
which the service corporation holds, or
will hold, an insurance license, and
each state in which the service
corporation holds a resident license or
charter. Section 5.59(h)(2) changes the
circumstances under which a Federal
savings association would receive
expedited review for a service
corporation filing, currently found in
part 116. A service corporation filing
will be eligible for expedited review if
the savings association is ‘‘well
capitalized’’ and ‘‘well managed,’’ and
the service corporation engages only in
one or more of the preapproved
activities listed in § 5.59(f).
Operating Subsidiaries; Subordinate
Organizations
New § 5.34(e)(2)(iii) is added to clarify
that a national bank must have
reasonable policies and procedures to
preserve the limited liability of the bank
and its operating subsidiaries. This
requirement has been adapted from
§ 159.10 and is consistent with the new
operating subsidiary rule for Federal
savings associations.
Current § 5.34(e)(5)(i) provides that
national banks meeting certain
requirements are not required to file a
prior application but may give after-thefact notice when establishing or
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
acquiring an operating subsidiary or
performing a new activity in an existing
operating subsidiary. Paragraph (e)(5)(ii)
requires a prior application and OCC
approval in other instances and sets out
the information that must be included
in the filing.
Current § 5.34(e)(5)(vi) provides that
no application or notice is required for
a national bank that is well managed
and adequately capitalized or well
capitalized to acquire or establish an
operating subsidiary or perform a new
activity in an existing operating
subsidiary, if the activities of the new
subsidiary are limited to those
previously reported to the OCC in
connection with a prior operating
subsidiary and certain other
requirements are met. The final rule
changes the criteria from adequately
capitalized to well capitalized. This is
consistent with the well capitalized
requirement to be eligible for the afterthe-fact notice procedure.
Section 5.38(b) will require a Federal
savings association to file an application
to acquire or establish any operating
subsidiary or to commence a new
activity in an existing operating
subsidiary. Part 159 required Federal
savings associations to give 30 days’
notice to the OCC prior to establishing
or acquiring an operating subsidiary or
commencing a new activity in an
operating subsidiary. Section 159.11
required a filing when it is required
under 12 U.S.C. 1828(m), and section
1828(m) does not require a filing if the
subsidiary is an insured depository
institution. Section 5.38(b) will require
an application to acquire an insured
depository institution as an operating
subsidiary. A proposal for a Federal
savings association to own an insured
depository institution subsidiary that
would cause the savings association to
be a bank holding company or a savings
and loan holding company raises issues
of law and policy as well as supervisory
concerns. The acquisition of other
insured depository institutions as
operating subsidiaries also requires
agency review. Accordingly, the OCC
believes an application is needed, even
if not required under 12 U.S.C. 1828(m).
Section 5.38(d) sets out definitions for
‘‘well capitalized’’ and ‘‘well managed,’’
which will be used as part of the
determination of which applications are
eligible for expedited review by the
OCC. These definitions are the same as
those in § 5.34(d), and the OCC uses
these terms as criteria to permit national
banks to make an after-the-fact notice
filing pursuant to § 5.34(e)(5). They are
also used in § 5.38 to determine if an
application by a Federal savings
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
association is eligible for expedited
review.
Section 5.38(e)(2)(iv)(A) (similar to
§ 159.10) expressly requires a savings
association to have reasonable policies
and procedures to preserve the limited
liability of the savings association and
its operating subsidiaries. Section
5.38(e)(5) sets forth the operating
subsidiary application requirements for
savings associations.
Section 159.11 specifies when Federal
savings associations must file a notice at
least 30 days prior to establishing or
acquiring an operating subsidiary or
conducting a new activity in an existing
operating subsidiary. Section 5.38(e)(5)
specifies the procedures a Federal
savings association must follow when
filing applications required under
§ 5.38. Section 5.38(e)(5)(ii)(A) provides
for expedited review of applications to
establish or acquire an operating
subsidiary, or to perform a new activity
in an existing operating subsidiary. The
expedited review process is similar to
that contained in § 159.11.
Section 159.3(p)(1) provided that a
Federal savings association must
consult with the appropriate OCC
licensing office prior to redesignating a
service corporation as an operating
subsidiary, and make available for
examination adequate internal records
demonstrating that the redesignated
office meets all of the requirements for
an operating subsidiary and that the
board of directors has approved of the
redesignation. Section 5.38(e)(vi)
requires a Federal savings association to
provide 30 days’ prior notice to the OCC
when the savings association wants to
redesignate a service corporation as an
operating subsidiary.
Pass-Through Investments
Section 160.32(b) currently provides
that a Federal savings association may
make certain qualifying pass-through
investments without prior notice to the
OCC in any entity that is a limited
partnership, an open-ended mutual
fund, a closed-end investment trust, a
limited liability company, or an entity
in which the Federal savings association
is investing primarily to use the
company’s services. Section 160.32(c)
requires a Federal savings association to
provide the OCC with written notice 30
days prior to making any pass-through
investment that does not meet the nonotice standards. The notice is a form of
application and may become a standard
application if the OCC notifies the filer
that the investment presents
supervisory, legal, or safety and
soundness concerns. The final rule
removes these provisions and crossreferences § 5.36.
PO 00000
Frm 00065
Fmt 4701
Sfmt 4700
28409
New § 5.58(e) mirrors § 5.36(e) and
provides that a well capitalized, well
managed Federal savings association
may make certain pass-through
investments, directly or through its
operating subsidiary, in certain entities
by filing a written after-the-fact notice
with the OCC no later than 10 days after
making the investment if the activity
conducted by the enterprise is on the
list of activities eligible for a notice
filing for operating subsidiaries, or if it
is substantially the same as an activity
that has been previously approved for a
Federal savings association (or its
operating subsidiary).
If a Federal savings association is not
well capitalized and well managed or if
the activity conducted by the enterprise
does not qualify for the after-the-fact
notice procedure, the savings
association will be required to apply to
the OCC and receive prior approval for
the non-controlling investment.
Section 5.58(g)(1) provides for an
expedited notice procedure for passthrough investments in entities holding
assets in satisfaction of debts previously
contracted. A Federal savings
association will not be required to file
a notice or application under § 5.58
when acquiring a non-controlling
investment in shares of a company
through foreclosure or otherwise in
good faith to compromise a doubtful
claim, or in the ordinary course of
collecting a debt previously contracted.
Under § 5.58, Federal savings
associations will be permitted to make
non-controlling investments greater
than 25 percent of the company’s
equity. The investment, however, will
constitute ‘‘control,’’ making the
enterprise a subsidiary of the
association and triggering a filing.
Section 5.58(f)(2) provides that a
Federal savings association must submit
an application for approval prior to
investing in an enterprise that is
considered a subsidiary of the Federal
savings association that would not be an
operating subsidiary or a service
corporation.
Section 5.58 changes the filing
requirements for Federal savings
associations’ non-controlling
investments. Some pass-through
investments will meet the requirements
for the after-the-fact notice procedure,
and only the after-the-fact notice will be
required. Some non-controlling
investments that qualify for the nonotice procedure under § 160.32(b) will
require a filing under § 5.58. Section
5.58(h) will continue the no-notice
procedure for investments by Federal
savings associations in investment
companies that held assets permissible
to be held directly. Some investments
E:\FR\FM\18MYR2.SGM
18MYR2
28410
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
that may have qualified for the nonotice procedure may be eligible for the
after-the-fact notice of § 5.58(e).
asabaliauskas on DSK5VPTVN1PROD with RULES
Change in Asset Composition
The final rule expands the
requirements of § 5.53 and removes
§ 163.22 regarding change in asset
composition. Institutions contemplating
transactions that may constitute a
material change will be advised to
consult the appropriate OCC
supervisory office. National banks will
find more situations in which
applications for approval are required
than under current § 5.53, but these
additional situations likely already will
involve discussions between the bank
and its supervisory office. Federal
savings associations will find fewer
situations in which applications for
approval are required than now required
under current § 163.22(c).
Under the application exception for
asset changes that are part of a voluntary
liquidation, the final rule adds that the
bank or savings association must have
received OCC approval of its plan of
liquidation.
The expedited treatment under
§ 163.22(c) for of bulk transfer filings if
all of the participating Federal savings
associations meet the conditions for
expedited treatment is not carried over
into § 5.53.
Business Combinations
Section 5.33(d)(2)(v) expands the
definition of ‘‘business combination’’ in
§ 5.33(d)(2), which currently includes
only the assumption of deposit
liabilities from another depository
institution, to also include the
assumption, from a credit union or any
other institution that is not FDICinsured, of deposit accounts or other
liabilities that will become deposits at
the assuming national bank or Federal
savings association. Federal savings
associations are currently required to
file an application under § 163.22(c).
The final rule retains the requirement
and expands it to cover national banks.
The final rule amends § 5.33(e)(3) to
require that the business combination
application identify financial subsidiary
investments, bank service company
investments, service corporation
investments, and other equity
investments in addition to subsidiaries,
and provide an analysis of the
permissibility for the national bank or
Federal savings association to hold the
subsidiary or investment.
Under § 5.33(e)(6), regarding the
exercise of fiduciary powers by the
resulting national bank or Federal
savings association, a clarification is
made that if the applicant intends to
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
exercise fiduciary powers after the
combination and requires OCC approval
for such powers, it must include in the
business combination application the
information required in § 5.26 for a
request for fiduciary powers.
Section 5.33(f)(1) is amended to
clarify that the requirement of public
notice and comment would apply only
when the application is subject to a
public notice requirement under the
Bank Merger Act or other applicable
statute that requires notice to the public.
This publication requirement is not a
change for national banks or Federal
savings associations. The frequency and
timing of publication for transactions
that are subject to the Bank Merger Act
are changed for Federal savings
associations. Section 163.22(e)(1)(i)
requires an initial publication and then
publication on a weekly basis during the
public comment period. Under
§ 5.33(f)(1), the OCC will require the
initial publication and two other
publications during the standard 30-day
public comment period.
Section 5.33(g)(1), addressing the
merger or consolidation of a national
bank or a state bank into a national
bank, requires that a national bank that
will not be the resulting bank in a
merger or consolidation with another
national bank file a notice to the OCC
under § 5.33(k). This notice will also be
required whenever a national bank or
Federal savings association merges or
consolidates into another institution. It
provides the OCC information about the
target national bank’s compliance with
requirements to ‘‘merge-out’’ and sets in
motion the steps for the disappearing
national bank to end its separate
existence.
Section 5.33(g)(2)(ii), under which the
OCC may conduct an appraisal of
dissenters’ shares of stock in a national
bank involved in a consolidation with a
Federal savings association if all the
parties agree, is changed from a
voluntary to a required process.
Sections 5.33(g)(2)(ii)(A) and (B) specify
the process for appraisal of dissenters’
shares of stock in a stock Federal
savings association involved in a
consolidation or merger into a national
bank.
Section 5.33(g)(2)(iii) includes a
requirement that a consolidation or
merger agreement must address the
effect upon, and the terms of the
assumption of, any liquidation account
of any other participating institution by
the resulting institution.
New § 5.33(g)(3), addressing
consolidations and mergers of other
institutions into a Federal savings
association, requires an application to
the OCC and compliance with
PO 00000
Frm 00066
Fmt 4701
Sfmt 4700
requirements and procedures similar to
those currently imposed on them. If a
combination involves a whole purchase
and assumption of a Federal savings
association, then the combination will
be treated as a consolidation for
participating Federal savings
associations, and the procedural
requirements in § 5.33(o) will apply.
Section 5.33(g)(3)(ii) includes a
requirement that the consolidation or
merger agreement must address the
effect upon and the terms of the
assumption of, any liquidation account
of any other participating institution by
the resulting institution.
Section 5.33(g)(6)(iv) includes a
requirement that the consolidation or
merger agreement must address the
effect upon, and the terms of the
assumption of, any liquidation account
of any other participating institution by
the resulting institution. This
requirement is based on provisions in
§§ 146.2(b)(9) and 152.13(f)(9).
Section 5.33(g)(7) addresses a
consolidation or merger of a Federal
savings association into a state bank,
state savings bank, state savings
association, state trust company, or
credit union and requires only a notice
to the OCC, not application and
approval. This requirement is a change
for Federal savings associations from
§ 163.22(c), under which an application
is required for a combination with an
uninsured bank, savings association or
trust company or a credit union. Section
5.33(g)(7)(ii) includes a provision under
which a whole purchase and
assumption of the target Federal savings
association will be treated as a
consolidation for the Federal savings
association, so that the procedural
requirements in § 5.33(o) will apply.
Section 5.33(g)(7)(iii) sets out the
process for appraisal of dissenters’
shares of stock in a stock Federal
savings association involved in a
consolidation or merger into a state
bank, state savings bank, state savings
association, state trust company, or
credit union. Section 5.33(g)(7)(iv)
requires that the consolidation or
merger agreement must address the
effect upon, and the terms of the
assumption of, any liquidation account
of any other participating institution by
the resulting institution.
Section 5.33(i), which provides for
expedited review of business
reorganizations and streamlined
applications, is expanded to include
Federal savings association
applications. Expedited review under
§ 5.33(j) replaces the automatic approval
provision in § 163.22(f) for Federal
savings associations, which provides
that an application is deemed to be
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
approved automatically 30 days after
the OCC sends the applicant a written
notice that the application is complete.
New § 5.33(k) addresses notices to be
filed when a national bank or Federal
savings association is consolidating or
merging with another national bank or
Federal savings association or with a
state chartered institution or credit
union and the target national bank or
Federal savings association is not the
resulting institution. It includes the
steps to be taken to terminate the
institution’s status as a national bank or
Federal savings association. This
consolidates requirements from
§§ 5.33(g)(3), 146.2(g), 152.13(k),
163.22(b), and 163.22(h)(1)(i) and (ii).
There is no change for Federal savings
associations, but national banks will be
required to include more information in
the notice than currently required.
Section 5.33(m) addresses
certification of a consolidation or
merger and documentation of its
effective date. The applicant will be
required to submit information showing
that all steps needed to complete the
transaction have been met and to notify
the OCC of the planned consummation
date. This reflects current OCC practice
for national banks. It accomplishes
through an applicant notification letter
and issuance of an OCC certification
letter what § 152.13(j) does in requiring
the applicant to submit two sets of
‘‘Articles of Combination’’ that are filed
with the OCC, and then endorsed by the
OCC, with one set returned to the
applicant with a specification of the
effective date.
New § 5.33(o) includes provisions
from §§ 146.2 and 152.13 that set out the
procedural requirements for board,
shareholder (in the case of stock savings
associations), and, if required by the
OCC, voting member (in the case of
mutual savings associations) approval of
business combinations involving the
Federal savings association.
Changes in Permanent Capital
Section 5.46(g)(1) is amended to
describe more fully those increases in
permanent capital of a national bank for
which an application and prior approval
are not required and when such
increases are considered approved by
the OCC. Portions of this requirement
are currently in paragraph (i)(3), which
addresses the bank’s notification to the
OCC that the increase has occurred and
the certification of the increase by the
OCC.
Subordinated Debt
The expedited treatment process in
part 116 for savings associations is
replaced by the expedited review
process in part 5 for Federal savings
associations seeking expedited review of
filings to issue subordinated debt. This
could result in a change in which
savings associations qualify for the
expedited process, due to the difference
between the eligibility requirements for
expedited review and the requirements
for expedited treatment.
Capital Distributions
New § 5.55 contains Federal savings
association procedures and standards
for capital distributions currently found
in part 163 and filing procedures based
on provisions in part 5 regarding
eligible savings associations and
expedited review. A Federal savings
association must be an ‘‘eligible savings
association’’ in order to qualify for
expedited review of filings for capital
distributions. Because the eligibility
requirements in part 5 and in the
current Federal savings association rules
are not identical, the part 5 eligibility
requirements for expedited review may
affect which Federal savings
associations qualify for the expedited
process.
Title of Information Collection:
Comptroller’s Licensing Rules.
OMB Control No: 1557–0014.
Frequency of Response: Event
generated.
Affected Public: Businesses or other
for-profit organizations.
Current Burden for the Comptroller’s
Licensing Rules:
Number of Respondents: 3,831.
Average Burden per Respondent: 3.18
hours.
Total Burden: 12,174 hours.
28411
Burden Estimates for the
Comptroller’s Licensing Rules as
Amended by the Final Rule:
Number of Respondents: 3,863.
Average Burden per Respondent: 3.16
hours.
Total Burden: 12,220 hours.
The change in burden for the
collection is an overall increase of 46
hours, or 0.37 percent. The change in
number of respondents is due to an
increase in the number of regulated
entities involved in licensing activities
and the revisions to certain definitions.
The change in burden per respondent is
an overall decrease of .02 hours. This is
a result of the combination of the
expansion of national bank
requirements to savings associations,
the revision of requirements for both
national banks and savings associations,
the addition of exemptions, and the
streamlining and elimination of
unnecessary requirements.
The OCC requests comment on:
a. Whether the information collection
is necessary for the proper performance
of the OCC’s functions, and how the
instructions can be clarified so that
information gathered has more practical
utility;
b. The accuracy of the OCC’s
estimates of the burdens of the
information collection, including the
validity of the methodology and
assumptions used;
c. Ways to enhance the quality,
utility, and clarity of the information to
be collected;
d. Ways to minimize the burden of the
information collection on respondents,
including through the use of automated
collection techniques or other forms of
information technology; and
e. Estimates of capital or startup costs
and costs of operation, maintenance,
and purchase of services to provide
information.
VI. Redesignation Table
The following redesignation table is
provided for reader reference. It lists the
current savings association provision
and identifies the provision in this final
rule that replace it.
Former section No./guidance
New section No.
Application Processing Procedures: .......................................................
asabaliauskas on DSK5VPTVN1PROD with RULES
Subject
Part 116 .........................................
What does this part do? ...................................................................
Do the same procedures apply to all applications under this part?
How does the OCC compute time periods under this part? ...........
Must I meet with the OCC before I file my application? .................
What information must I include in my draft business plan? ..........
What type of application must I file? ...............................................
What information must I provide with my application? ....................
May I keep portions of my application confidential? .......................
116.1 ..............................................
116.5 ..............................................
116.10 ............................................
116.15 ............................................
116.20 ............................................
116.25 ............................................
116.30 ............................................
116.35 ............................................
Part 5, subpart A. See also relevant activity or transaction rule
in part 5.
5.1, 5.2.
5.2.
5.12.
5.4(f).
See 5.4(f).
See 5.4.
See 5.4 (e).
5.9.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
PO 00000
Frm 00067
Fmt 4701
Sfmt 4700
E:\FR\FM\18MYR2.SGM
18MYR2
28412
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Subject
Former section No./guidance
New section No.
Where do I file my application? .......................................................
What is the filing date of my application?/Filing fees ......................
How do I amend or supplement my application? ............................
Public notice .....................................................................................
Comment procedures: What does this subpart do? ........................
Public comment ................................................................................
Meeting procedures: What does this subpart do? ...........................
When will the OCC conduct a meeting on an application? .............
What procedures govern the conduct of a meeting? ......................
Will the OCC approve or disapprove an application at a meeting?
Will a meeting affect application processing time frames? .............
116.40 ............................................
116.45 ............................................
116.47 ............................................
116.50–116.80 ...............................
116.100 ..........................................
116.110–116.140 ...........................
116.160 ..........................................
116.170 ..........................................
116.180 ..........................................
116.185 ..........................................
116.190 ..........................................
If I file a notice under expedited treatment, when may I engage in
the proposed activities?.
What will the OCC do after I file my application? ...........................
If the OCC requests additional information to complete my application, how will it process my application?.
Will the OCC conduct an eligibility examination? ............................
What may the OCC require me to do after my application is
deemed complete?.
Will the OCC require me to publish a new public notice? ..............
May the OCC suspend processing of my application? ...................
How long is the OCC review period? ..............................................
116.200 ..........................................
116.210 ..........................................
116.220 ..........................................
5.4(d).
See 5.12.
None.
5.8.
None.
5.10.
None.
5.11.
5.11.
None.
See 5.10(b)(2), 5.11(h), and
5.13(a)(2).
See relevant activity or transaction
rule in part 5.
5.13.
5.13.
116.230 ..........................................
116.240 ..........................................
5.7.
5.8(g), 5.13(c).
116.250 ..........................................
116.260 ..........................................
116.270 ..........................................
116.280 ..........................................
116.290 ..........................................
5.8(g).
None.
5.13; See also relevant activity or
transaction rule in part 5.
5.13(d).
See 5.13(c).
Part 143 .........................................
5.20; 5.42.
143.1
143.2
143.3
143.4
143.5
143.6
143.7
5.20(f)(2(i)), 5.42.
5.20.
5.20.
None.
5.20.
None.
None.
asabaliauskas on DSK5VPTVN1PROD with RULES
How will I know if my application is approved? ...............................
What will happen if the OCC does not approve or disapprove my
application within two calendar years after the filing date?.
Federal Mutual Savings Associations—Incorporation, Organization,
and Conversion.
Corporate title ...................................................................................
Application for permission to organize .............................................
‘‘De novo’’ applications for a Federal savings association charter
Issuance of charter ..........................................................................
Completion of organization ..............................................................
Limitations on transaction of business .............................................
Federal savings association created in connection with an association in default or in danger of default.
Conversions .....................................................................................
Organization plan for governance during first years after issuance
of Federal mutual savings bank charter.
Continuity of existence .....................................................................
Federal Mutual Savings Associations—Charter and Bylaws ..................
Federal mutual charter .....................................................................
Charter amendments .......................................................................
Issuance of charter ..........................................................................
Federal mutual savings association bylaws ....................................
Effect of subsequent charter of bylaw change ................................
Availability—in association offices ...................................................
Communication between members of a Federal mutual savings
association.
Federal Savings Associations—Operations ............................................
Home office ......................................................................................
Branch offices ..................................................................................
Application and notice requirements and processing procedures
for branch and home offices.
Agency office ....................................................................................
Federal Mutual Savings Associations—Merger, Dissolution, Reorganization, and Conversion.
Definitions, procedures, and transfer of assets upon merger or
consolidation.
Voluntary dissolution ........................................................................
Fiduciary Powers of Federal Savings Associations ................................
Obtaining fiduciary powers: Must I obtain OCC approval or file a
notice before I exercise fiduciary powers?.
Obtaining fiduciary powers ...............................................................
Federal Stock Associations—Incorporation, Organization, and Conversion.
Procedure for organization of Federal stock association ................
Procedures for organization of interim Federal stock association ..
Charters, bylaws, boards of directors and officers, share certificates, and books and records.
Business combinations ....................................................................
Effect of subsequent charter or bylaw change ................................
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
PO 00000
Frm 00068
Fmt 4701
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
..............................................
143.8–143.10 .................................
143.11 ............................................
5.23.
None.
143.14 ............................................
144 .................................................
144.1 ..............................................
144.2 ..............................................
144.4 ..............................................
144.5 ..............................................
144.6 ..............................................
144.7 ..............................................
144.8 ..............................................
5.23.
5.21.
5.21(e).
5.21(f)–(h).
None.
See 5.21(j).
5.21(j)(5).
5.21(i).
144.8.
Part 145 .........................................
145.91(a) .......................................
145.91(b) .......................................
145.92 ............................................
145.93, 145.95 ...............................
145.96 ............................................
Part 146 .........................................
5.31, 5.40, 5.52.
None.
5.52.
5.31.
5.31 (branch office)
5.40 (home office).
5.31(k).
5.33, 5.48.
146.1–146.3 ...................................
5.33.
146.4 ..............................................
Part 150, subpart A .......................
150.70 ............................................
5.48.
5.26.
150.70 (revised), 5.26.
150.80–150.125 .............................
Part 152 .........................................
5.26.
5.20, 5.22, 5.23, 5.24, 5.25, 5.33.
152.1 ..............................................
152.2 ..............................................
152.3–152.11 .................................
5.20.
5.33(e)(4).
5.22.
152.13–152.15 ...............................
152.16 ............................................
5.33.
5.22(j)(4).
Sfmt 4700
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Subject
Former section No./guidance
Federal stock association created in connection with an association in default or in danger of default.
Conversion from stock form depository institution to Federal stock
association.
Conversion to National banking association or state bank .............
Subordinate organizations .......................................................................
Lending and investment.
Pass-through investments ................................................................
Real estate for office and related facilities ......................................
Savings Associations—Operations.
Submission for approval of chartering documents ..........................
Availability of chartering documents ................................................
Merger, consolidation, purchase or sale of assets, or assumption
of liabilities.
Conversion to state bank .................................................................
Conversion to national bank ............................................................
Inclusion of subordinated debt securities and mandatorily redeemable preferred stock as supplementary capital.
Capital Distributions .........................................................................
Management and financial policies ..................................................
Notice of change of director or senior executive officer ..................
Acquisition of Control of Federal Savings Associations .........................
List of Subjects
Administrative practice and
procedure, Freedom of information,
Individuals with disabilities, Minority
businesses, Organization and functions
(Government agencies), Reporting and
recordkeeping requirements, Women.
12 CFR Part 5
None.
152.18 ............................................
5.23.
152.19 ............................................
159 (159.1–159.13) .......................
5.24
5.25
5.38
5.59
160.32, except: ..............................
160.32(a) ................................
160.32(b) ................................
160.37 ............................................
5.58.
160.32(a) (same).
160.32(b) (revised).
5.37, 7.1000, 7.3001.
163.1(a) .........................................
163.1(b) .........................................
163.22 ............................................
See 5.20(e)(1)(iii)(A).
None (Federal stock savings associations).
5.21(i) (Federal mutual savings associations).
5.33, 5.53.
163.22(b)(1)(ii) ...............................
163.22(b)(2) ...................................
163.81 ............................................
5.25.
5.24.
5.56.
163.140–163.146 (subpart E) ........
163.161 ..........................................
5.55.
5.59 (e)(7) (service corporations
only).
5.51.
5.50.
None.
163.550–163.590 (subpart H) .......
174.1–174.7 ...................................
174, Appendix A ............................
12 CFR Part 32
National banks, Reporting and
recordkeeping requirements.
12 CFR Part 34
Mortgages, National banks, Reporting
and recordkeeping requirements.
12 CFR Part 100
Administrative practice and
procedure, National banks, Reporting
and recordkeeping requirements,
Securities.
Savings associations.
12 CFR Part 116
12 CFR Part 7
Computer technology, Credit,
Insurance, Investments, National banks,
Reporting and recordkeeping
requirements, Securities, Surety bonds.
Administrative practice and
procedure, Reporting and recordkeeping
requirements, Savings associations.
12 CFR Part 143
Reporting and recordkeeping
requirements; Savings associations.
12 CFR Part 14
12 CFR Part 144
Banks, Banking, Consumer protection,
Insurance, National banks, Reporting
and recordkeeping requirements.
Reporting and recordkeeping
requirements, Savings associations.
asabaliauskas on DSK5VPTVN1PROD with RULES
12 CFR Part 24
Affordable housing, Community
development, Credit, Investments,
Economic development and job
creation, Low- and moderate-income
areas, Low and moderate income
housing, National banks, Public welfare
investments, Reporting and
recordkeeping requirements, Rural
VerDate Sep<11>2014
19:52 May 15, 2015
Jkt 235001
12 CFR Part 145
Consumer protection, Credit,
Electronic funds transfers, Investments,
Manufactured homes, Mortgages,
Reporting and recordkeeping
requirements, Savings associations.
12 CFR Part 146
Reporting and recordkeeping
requirements, Savings associations.
PO 00000
Frm 00069
Fmt 4701
New section No.
152.17 ............................................
areas, Small businesses, Tax credit
investments.
12 CFR Part 4
28413
Sfmt 4700
(to national bank).
(to state bank).
(operating subsidiaries).
(service corporations).
12 CFR Part 150
Administrative practice and
procedure, Reporting and recordkeeping
requirements, Savings associations,
Trusts and trustees.
12 CFR Part 152
Reporting and recordkeeping
requirements, Savings associations,
Securities.
12 CFR Part 159
Reporting and recordkeeping
requirements, Savings associations,
Subsidiaries.
12 CFR Part 160
Consumer protection, Investments,
Manufactured homes, Mortgages,
Reporting and recordkeeping
requirements, Savings associations,
Securities.
12 CFR Part 161
Administrative practice and
procedure, Savings associations.
12 CFR Part 162
Accounting, Reporting and
recordkeeping requirements, Savings
associations.
12 CFR Part 163
Accounting, Administrative practice
and procedure, Advertising, Conflict of
interests, Crime, Currency, Investments,
Mortgages, Reporting and recordkeeping
E:\FR\FM\18MYR2.SGM
18MYR2
28414
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
requirements, Savings associations,
Securities, Surety bonds.
12 CFR Part 174
Administrative practice and
procedure, Reporting and recordkeeping
requirements, Savings associations,
Securities.
12 CFR Part 192
Reporting and recordkeeping
requirements, Savings associations,
Securities.
12 CFR Part 193
Accounting, Savings associations,
Securities.
For the reasons set forth in the
preamble, and under the authority of 12
U.S.C. 93a and 5412(b)(2)(B), chapter I
of title 12 of the Code of Federal
Regulations is amended as follows:
PART 4—ORGANIZATION AND
FUNCTIONS, AVAILABILITY AND
RELEASE OF INFORMATION,
CONTRACTING OUTREACH
PROGRAM, POST-EMPLOYMENT
RESTRICTIONS
1. The authority citation for part 4 is
revised to read as follows:
■
Authority: 12 U.S.C. 1, 12 U.S.C. 93a, 12
U.S.C. 5321, 12 U.S.C. 5412, and 12 U.S.C.
5414. Subpart A also issued under 5 U.S.C.
552. Subpart B also issued under 5 U.S.C.
552; E.O. 12600 (3 CFR 1987 Comp., p. 235).
Subpart C also issued under 5 U.S.C. 301,
552; 12 U.S.C. 161, 481, 482, 484(a), 1442,
1462a, 1463, 1464 1817(a)(2) and (3), 1818(u)
and (v), 1820(d)(6), 1820(k), 1821(c), 1821(o),
1821(t), 1831m, 1831p–1, 1831o, 1867, 1951
et seq., 2601 et seq., 2801 et seq., 2901 et seq.,
3101 et seq., 3401 et seq.; 15 U.S.C. 77uu(b),
78q(c)(3); 18 U.S.C. 641, 1905, 1906; 29
U.S.C. 1204; 31 U.S.C. 5318(g)(2), 9701; 42
U.S.C. 3601; 44 U.S.C. 3506, 3510. Subpart D
also issued under 12 U.S.C. 1833e. Subpart
E is also issued under 12 U.S.C. 1820(k).
■
2. Revise § 4.5 to read as follows:
§ 4.5
Other OCC supervisory offices.
(a) Midsize Bank Supervision (MBS).
Midsize Bank Supervision is
responsible for supervising midsize
national banks and Federal savings
associations that present unique
supervisory challenges based on size,
complexity, and/or product line. MBS
also supervises credit card and certain
other special purpose banks. MBS is
headquartered in Chicago, IL and
located at 1 South Wacker Drive, Suite
2000, Chicago, IL 60606.
(b) District offices. Each district office
of the OCC is responsible for the direct
supervision of the national banks and
Federal savings associations in its
district, with the exception of the
national banks and Federal savings
associations supervised by the
Washington office pursuant to § 4.4 of
this part or Midsize Bank Supervision
pursuant to § 4.5(a). The four district
offices cover the United States, Puerto
Rico, the Virgin Islands, Guam,
American Samoa, and the Northern
Mariana Islands. The geographical
composition of each district follows:
District
Office location
Geographical composition
Northeastern District ....
Office of the Comptroller of the Currency, 340
Madison Avenue, 5th Floor, New York, NY
10173–0002.
Central District ..............
Office of the Comptroller of the Currency, One Financial Place, Suite 2700, 440 South LaSalle
Street, Chicago, IL 60605.
Office of the Comptroller of the Currency, 500
North Akard Street, Suite 1600, Dallas, TX
75201.
Office of the Comptroller of the Currency, 1225
17th Street, Suite 300, Denver, CO 80202.
Connecticut, Delaware, District of Columbia, northeast Kentucky,
Maine, Maryland, Massachusetts, New Hampshire, New Jersey,
New York, North Carolina, Pennsylvania, Puerto Rico, Rhode
Island, South Carolina, Vermont, the Virgin Islands, Virginia,
and West Virginia.
Illinois, Indiana, central and southern Kentucky, Michigan, northern and eastern Minnesota, eastern Missouri, North Dakota,
Ohio, and Wisconsin.
Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi,
Oklahoma, Tennessee, and Texas.
Southern District ...........
Western District ............
Alaska, American Samoa, Arizona, California, Colorado, Guam,
Hawaii, Idaho, Iowa, Kansas, southwestern Minnesota, western
Missouri, Montana, Nebraska, Nevada, New Mexico, Northern
Mariana Islands, Oregon, South Dakota, Utah, Washington, and
Wyoming.
(c) Field offices and other supervisory
offices. Field offices and other
supervisory offices support the bank
and savings association supervision
responsibilities of the district offices.
Authority: 12 U.S.C. 1 et seq., 24a, 93a,
215a–2, 215a–3, 481, 1462a, 1463, 1464, 2901
et seq., 3907, and 5412(b)(2)(B).
§ 4.18
§ 5.1
[Amended]
3. Section 4.18(b) is amended by
removing ‘‘202 874–4700’’ and adding
in its place ‘‘(202) 649–6700’’.
asabaliauskas on DSK5VPTVN1PROD with RULES
■
PART 5—RULES, POLICIES, AND
PROCEDURES FOR CORPORATE
ACTIVITIES
4. The authority citation for part 5 is
revised to read as follows:
■
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
5. Section 5.1 is revised to read as
follows:
■
Scope.
This part establishes rules, policies
and procedures of the Office of the
Comptroller of the Currency (OCC) for
corporate activities and transactions
involving national banks and Federal
savings associations. It contains
information on rules of general and
specific applicability, where and how to
file, and requirements and policies
applicable to filings. This part also
establishes the corporate filing
PO 00000
Frm 00070
Fmt 4701
Sfmt 4700
procedures for Federal branches and
agencies of foreign banks.
6. Subpart A of part 5 is revised to
read as follows:
■
Subpart A—Rules of General Applicability
Sec.
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
5.12
5.13
Rules of general applicability.
Definitions.
Filing required.
Filing fees.
[Reserved]
Investigations.
Public notice.
Public availability.
Comments.
Hearings and other meetings.
Computation of time.
Decisions.
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Subpart A—Rules of General
Applicability
§ 5.2
Rules of general applicability.
(a) In general. The rules in this
subpart apply to all sections in this part
unless otherwise stated.
(b) Exceptions. The OCC may adopt
materially different procedures for a
particular filing, or class of filings, in
exceptional circumstances or for
unusual transactions, after providing
notice of the change to the applicant
and to any other party that the OCC
determines should receive notice.
(c) Comptroller’s Licensing Manual.
The ‘‘Comptroller’s Licensing Manual’’
provides additional filing guidance,
including policies and procedures. This
Manual and sample forms are available
on the OCC’s Internet Web page at
www.occ.gov.
(d) Electronic filing. The OCC
encourages electronic filing for all
filings. The Comptroller’s Licensing
Manual describes the OCC’s electronic
filing procedures.
asabaliauskas on DSK5VPTVN1PROD with RULES
§ 5.3
Definitions.
As used in this part:
(a) Applicant means a person or entity
that submits a notice or application to
the OCC under this part.
(b) Application means a submission
requesting OCC approval to engage in
various corporate activities and
transactions.
(c) Appropriate OCC licensing office
means the OCC office that is responsible
for processing applications or notices to
engage in various corporate activities or
transactions, as described at
www.occ.gov.
(d) Appropriate OCC supervisory
office means the OCC office that is
responsible for the supervision of a
national bank or Federal savings
association, as described in subpart A of
12 CFR part 4.
(e) Capital and surplus means:
(1) A bank’s or Federal savings
association’s tier 1 and tier 2 capital
calculated under the OCC’s risk-based
capital standards set forth in 12 CFR
part 3, as applicable, as reported in the
bank’s or savings association’s
Consolidated Reports of Condition and
Income (Call Reports) filed under 12
U.S.C. 161 or 12 U.S.C. 1464(v),
respectively; plus
(2) The balance of the national bank’s
or Federal savings association’s
allowance for loan and lease losses not
included in the institution’s tier 2
capital, for purposes of the calculation
of risk-based capital reported in the
institution’s Call Reports, described in
paragraph (e)(1) of this section.
(f) Depository institution means any
bank or savings association.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(g) Eligible bank or eligible savings
association means a national bank or
Federal savings association that:
(1) Is well capitalized as defined in 12
CFR 6.4;
(2) Has a composite rating of 1 or 2
under the Uniform Financial
Institutions Rating System (CAMELS);
(3) Has a Community Reinvestment
Act (CRA), 12 U.S.C. 2901 et seq., rating
of ‘‘Outstanding’’ or ‘‘Satisfactory,’’ if
applicable;
(4) Has a consumer compliance rating
of 1 or 2 under the Uniform Interagency
Consumer Compliance Rating System;
and
(5) Is not subject to a cease and desist
order, consent order, formal written
agreement, or Prompt Corrective Action
directive (see 12 CFR part 6, subpart B)
or, if subject to any such order,
agreement, or directive, is informed in
writing by the OCC that the bank or
savings association may be treated as an
‘‘eligible bank or eligible savings
association’’ for purposes of this part.
(h) Eligible depository institution
means:
(1) With respect to a national bank, a
state bank or a Federal or state savings
association that meets the criteria for an
‘‘eligible bank or eligible savings
association’’ under § 5.3(g) and is FDICinsured; and
(2) With respect to a Federal savings
association, a state or national bank or
a state savings association that meets the
criteria for an ‘‘eligible bank or eligible
savings association’’ under § 5.3(g) and
is FDIC-insured.
(i) Filing means an application or
notice submitted to the OCC under this
part.
(j) Notice, in general, means a
submission notifying the OCC that a
national bank or Federal savings
association intends to engage in or has
commenced certain corporate activities
or transactions. The specific meaning of
notice depends on the context of the
rule in which it is used and may require
the filer to obtain prior OCC approval
before engaging in the activity or
transaction, may provide the OCC with
authority to disapprove the notice, or
may be informational requiring no
official OCC action.
(k) Principal city means an area
designated as a ‘‘principal city’’ by the
Office of Management and Budget.
(l) Short-distance relocation means
moving the premises of a branch or
main office of a national bank or a
branch or home office of a Federal
savings association within a:
(1) One thousand foot-radius of the
site if the branch, main office, or home
office is located within a principal city
of an MSA;
PO 00000
Frm 00071
Fmt 4701
Sfmt 4700
28415
(2) One-mile radius of the site if the
branch, main office, or home office is
not located within a principal city, but
is located within an MSA; or
(3) Two-mile radius of the site if the
branch, main office, or home office is
not located within an MSA.
§ 5.4
Filing required.
(a) Filing. A depository institution
shall file an application or notice with
the OCC to engage in corporate activities
and transactions as described in this
part.
(b) Availability of forms. Forms and
instructions for filing are available on
the OCC’s Internet Web page at
www.occ.gov.
(c) Other agency’s applications or
filings. At the request of the applicant,
the OCC may accept an application or
other filing submitted to another Federal
agency that covers the proposed action
or transaction and contains substantially
the same information as required by the
OCC. The OCC also may require the
applicant to submit supplemental
information.
(d) Where to file. An applicant should
address a filing or other submission
under this part to the appropriate OCC
licensing office or appropriate OCC
supervisory office, unless the OCC
advises an applicant otherwise.
Relevant addresses are listed on the
OCC’s Internet Web page at
www.occ.gov.
(e) Incorporation of other material. An
applicant may incorporate any material
contained in any other application or
filing filed with the OCC or other
Federal agency by reference, provided
that the material is attached to the
application and is current and
responsive to the information requested
by the OCC. The filing must clearly
indicate that the information is so
incorporated and include a crossreference to the information
incorporated.
(f) Prefiling meeting. When submitting
an application to the OCC, an applicant
is encouraged to contact the appropriate
OCC licensing office to determine the
need for a prefiling meeting. The OCC
decides whether to require a prefiling
meeting on a case-by-case basis.
Submission of a draft business plan or
other relevant information before any
prefiling meeting may expedite the
filing review process. Information on
model business plans can be found in
the Comptroller’s Licensing Manual.
§ 5.5
Filing fees.
(a) Procedure. An applicant shall
submit the appropriate filing fee, if any,
in connection with its filing. Filing fees
may be paid by check, money order,
E:\FR\FM\18MYR2.SGM
18MYR2
28416
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
cashier’s check, or wire transfer.
Additional information on filing fees,
including where to file, can be found in
the Comptroller’s Licensing Manual.
The OCC generally does not refund the
filing fees.
(b) Fee schedule. The OCC publishes
a fee schedule in the ‘‘Notice of
Comptroller of the Currency Fees,’’ as
described in 12 CFR 8.8.
§ 5.6
[Reserved]
§ 5.7
Investigations.
(a) Authority. The OCC may examine
or investigate and evaluate facts related
to a filing to the extent necessary to
reach an informed decision.
(b) Fees. As described in 12 CFR 8.6,
the OCC may assess fees for
investigations or examinations
conducted under paragraph (a) of this
section. The OCC publishes a fee
schedule in the ‘‘Notice of Comptroller
of the Currency Fees,’’ as described in
12 CFR 8.8.
asabaliauskas on DSK5VPTVN1PROD with RULES
§ 5.8
Public notice.
(a) In general. An applicant shall
publish a public notice of its filing in a
newspaper of general circulation in the
community in which the applicant
proposes to engage in business, on the
date of filing, or as soon as practicable
before or after the date of filing. This
notice shall be published in the English
language but if the OCC determines that
the primary language of a significant
number of adult residents of the
community is a language other than
English, the OCC may require that an
additional notice(s) simultaneously be
published in the community in the
appropriate language(s).
(b) Contents of the public notice. The
public notice shall state that a filing is
being made, the date of the filing, the
name and address of the applicant, the
subject matter of the filing (including
the name of the institution that is the
subject of the filing), that the public may
submit comments to the appropriate
OCC licensing office, the address of the
appropriate OCC licensing office where
comments should be sent, the closing
date of the public comment period, that
the public portion of the filing is
available on request, and any other
information that the OCC requires.
(c) Confirmation of public notice.
Promptly following publication, the
applicant shall mail or otherwise deliver
to the appropriate OCC licensing office
a statement containing the date of
publication, the name and address of
the newspaper that published the public
notice, a copy of the public notice, and
any other information that the OCC
requires.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(d) Multiple transactions. The OCC
may consider more than one
transaction, or a series of transactions,
to be a single filing for purposes of the
publication requirements of this section.
When filing a single public notice for
multiple transactions, the applicant
shall explain in the notice how the
transactions are related.
(e) Joint public notices accepted.
Upon the request of an applicant, for a
transaction subject to a public notice
requirement of both the OCC and
another Federal agency, the OCC may
accept publication of a single joint
notice containing the information
required by both the OCC and the other
Federal agency, provided that the notice
states that comments must be submitted
to both the OCC and, if applicable, the
other Federal agency.
(f) Public notice by the OCC. In
addition to the foregoing, the OCC may
require or give public notice and request
comment on any filing and in any
manner the OCC determines appropriate
for the particular filing.
(g) New public notice. At the OCC’s
discretion, an applicant may be required
to publish a new public notice if:
(1) The applicant submits either a
revised filing or new or additional
information related to a filing;
(2) A major issue of law or change in
circumstance arises after a filing; or
(3) The OCC determines that a new
public notice is appropriate.
§ 5.9
Public availability.
(a) In general. The OCC provides a
copy of the public file to any person
who requests it. A requestor should
submit a written request for the public
file concerning a pending filing to the
appropriate OCC licensing office. A
requestor should submit a written
request for the public file concerning a
decided or closed filing to the OCC’s
Freedom of Information Act Officer,
Communications Division, at the
address listed on www.occ.gov. The
OCC may impose a fee in accordance
with 12 CFR 4.17 and at the rate the
OCC publishes in the ‘‘Notice of
Comptroller of the Currency Fees,’’
described in 12 CFR 8.8.
(b) Public file. A public file consists
of the portions of the filing, supporting
data, supplementary information, and
information submitted by interested
persons, to the extent that those
documents have not been afforded
confidential treatment. Applicants and
other interested persons may request
that confidential treatment be afforded
information submitted to the OCC
pursuant to paragraph (c) of this section.
(c) Confidential treatment. The
applicant or an interested person
PO 00000
Frm 00072
Fmt 4701
Sfmt 4700
submitting information may request that
specific information be treated as
confidential under the Freedom of
Information Act, 5 U.S.C. 552 (see 12
CFR 4.12(b)). A submitter should draft
its request for confidential treatment
narrowly to extend only to those
portions of a document it considers
confidential. If a submitter requests
confidential treatment for information
that the OCC does not consider to be
confidential, the OCC may include that
information in the public file after
providing notice to the submitter.
Moreover, at its own initiative, the OCC
may determine that certain information
should be treated as confidential and
withhold that information from the
public file. A person requesting
information withheld from the public
file should submit the request to the
OCC’s Freedom of Information Act
Officer, Communications Division,
under the procedures described in 12
CFR part 4, subpart B. That request may
be subject to the predisclosure notice
procedures of 12 CFR 4.16.
§ 5.10
Comments.
(a) Submission of comments. During
the comment period, any person may
submit written comments on a filing to
the appropriate OCC licensing office.
(b) Comment period—(1) In general.
Unless otherwise stated, the comment
period is 30 days after publication of the
public notice required by § 5.8(a). If a
new public notice is required under
§ 5.8(g), the OCC may require a new
comment period of up to 30 days after
publication of the new public notice.
(2) Extension. The OCC may extend a
comment period if:
(i) The applicant fails to file all
required publicly available information
on a timely basis to permit review by
interested persons or makes a request
for confidential treatment not granted by
the OCC that delays the public
availability of that information;
(ii) Any person requesting an
extension of time satisfactorily
demonstrates to the OCC that additional
time is necessary to develop factual
information that the OCC determines is
necessary to consider the application; or
(iii) The OCC determines that other
extenuating circumstances exist.
(3) Applicant response. The OCC may
give the applicant an opportunity to
respond to comments received.
§ 5.11
Hearings and other meetings.
(a) Hearing requests. Prior to the end
of the comment period, any person may
submit to the appropriate OCC office a
written request for a hearing on a filing.
The request must describe the nature of
the issues or facts to be presented and
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
the reasons why written submissions
would be insufficient to make an
adequate presentation of those issues or
facts to the OCC. A person requesting a
hearing shall simultaneously submit a
copy of the request to the applicant.
(b) Action on a hearing request. The
OCC may grant or deny a request for a
hearing and may limit the issues to
those it deems relevant or material. The
OCC generally grants a hearing request
only if the OCC determines that written
submissions would be insufficient or
that a hearing would otherwise benefit
the decision-making process. The OCC
also may order a hearing if it concludes
that a hearing would be in the public
interest.
(c) Denial of a hearing request. If the
OCC denies a hearing request, it shall
notify the person requesting the hearing
of the reason for the denial.
(d) OCC procedures prior to the
hearing—(1) Notice of hearing. The OCC
issues a Notice of Hearing if it grants a
request for a hearing or orders a hearing
because it is in the public interest. The
OCC sends a copy of the Notice of
Hearing to the applicant, to the person
requesting the hearing, and anyone else
requesting a copy. The Notice of
Hearing states the subject and date of
the filing, the time and place of the
hearing, and the issues to be addressed.
The OCC may limit the issues
considered at a hearing to those it
determines are relevant or material.
(2) Presiding officer. The OCC
appoints a presiding officer to conduct
the hearing. The presiding officer is
responsible for all procedural questions
not governed by this section.
(e) Participation in the hearing. Any
person who wishes to appear
(participant) shall notify the appropriate
OCC licensing office of his or her intent
to participate in the hearing within 10
days from the date the OCC issues the
Notice of Hearing. At least five days
before the hearing, each participant
shall submit to the appropriate OCC
licensing office, the applicant, and any
other person the OCC requires, the
names of witnesses and one copy of
each exhibit the participant intends to
present.
(f) Hearing transcripts. The OCC
arranges for a hearing transcript. The
person requesting the hearing may be
required to bear the cost of one copy of
the transcript for his or her use.
(g) Conduct of the hearing—(1)
Presentations. Subject to the rulings of
the presiding officer, the applicant and
participants may make opening
statements and present witnesses,
material, and data.
(2) Information submitted. A person
presenting documentary material shall
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
furnish one copy to the OCC and one
copy to the applicant and each
participant.
(3) Laws not applicable to hearings.
The Administrative Procedure Act (5
U.S.C. 551 et seq.), the Federal Rules of
Evidence (28 U.S.C. appendix), the
Federal Rules of Civil Procedure (28
U.S.C. Rule 1 et seq.), and the OCC’s
Rules of Practice and Procedure (12 CFR
part 19) do not apply to hearings under
this section.
(h) Closing the hearing record. At the
applicant’s or participant’s request, the
OCC may keep the hearing record open
for up to 14 days following the OCC’s
receipt of the transcript. The OCC
resumes processing the filing after the
record closes.
(i) Other meetings—(1) Public
meetings. The OCC may arrange for a
public meeting in connection with an
application, either upon receipt during
the comment period of a written request
for such a meeting or upon the OCC’s
own initiative, if the OCC finds that
written submissions are insufficient to
address facts or issues raised in the
application or otherwise determines that
a meeting will benefit the decisionmaking process. Public meetings will be
arranged and presided over by a
presiding officer.
(2) Private meetings. The OCC may
arrange a meeting with an applicant or
other interested parties to clarify and
narrow the issues and to facilitate the
resolution of the issues.
(3) Issues at meetings. The OCC may
limit the issues considered at a meeting
to those it determines are relevant or
material.
(4) Meeting format. The OCC may
conduct a meeting in the format that it
determines is appropriate, including a
telephone conference, a face-to-face
meeting, or a more formal meeting.
§ 5.12
Computation of time.
In computing the period of days, the
OCC does not include the day of the act
or event (e.g., the date an application is
received by the OCC) from which the
period begins to run. When the last day
of a time period is a Saturday, Sunday,
or Federal holiday, the time period runs
until the end of the next day that is not
a Saturday, Sunday or Federal holiday.
§ 5.13
Decisions.
(a) In general. The OCC may approve,
conditionally approve, or deny a filing
after appropriate review and
consideration of the record. In
reviewing a filing, the OCC may
consider the activities, resources, or
condition of an affiliate of the applicant
that may reasonably reflect on or affect
the applicant. It also may consider
PO 00000
Frm 00073
Fmt 4701
Sfmt 4700
28417
information available from any source,
including any comments submitted by
interested parties or views expressed by
interested parties at meetings with the
OCC.
(1) Conditional approval. The OCC
may impose conditions on any
approval, including to address a
significant supervisory, CRA (if
applicable), or compliance concern, if
the OCC determines that the conditions
are necessary or appropriate to ensure
that approval is consistent with relevant
statutory and regulatory standards and
OCC policies thereunder and safe and
sound banking practices.
(2) Expedited review. The OCC grants
eligible banks and eligible savings
associations expedited review within a
specified time after filing or
commencement of the public comment
period.
(i) The OCC may extend the expedited
review period or remove a filing from
expedited review procedures if it
concludes that the filing, or an adverse
comment regarding the filing, presents a
significant supervisory, CRA (if
applicable), or compliance concern, or
raises a significant legal or policy issue,
requiring additional OCC review. The
OCC will provide the applicant with a
written explanation if it decides not to
process an application from an eligible
bank or eligible savings association
under expedited review pursuant to this
paragraph.
(ii) Adverse comments that the OCC
determines do not raise a significant
supervisory, CRA (if applicable), or
compliance concern, or a significant
legal or policy issue, or are frivolous,
filed primarily as a means of delaying
action on the filing, or that raise a CRA
concern that the OCC determines has
been satisfactorily resolved, do not
affect the OCC’s decision under
paragraph (a)(2)(i) of this section. The
OCC considers a CRA concern to have
been satisfactorily resolved if the OCC
previously reviewed (e.g., in an
examination or an application) a
concern presenting substantially the
same issue in substantially the same
assessment area during substantially the
same time, and the OCC determines that
the concern would not warrant denial or
imposition of a condition on approval of
the application.
(iii) If a bank or savings association
files an application for any activity or
transaction that is dependent upon the
approval of another application under
this part, or if requests for approval for
more than one activity or transaction are
combined in a single application under
applicable sections of this part, none of
the subject applications may be deemed
approved upon expiration of the
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28418
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
applicable time periods, unless all of the
applications are subject to expedited
review procedures and the longest of the
time periods expires without the OCC
issuing a decision or notifying the bank
or savings association that the filings are
not eligible for expedited review under
the standards in paragraph (a)(2)(i) of
this section.
(b) Denial. The OCC may deny a filing
if:
(1) A significant supervisory, CRA (if
applicable), or compliance concern
exists with respect to the applicant;
(2) Approval of the filing is
inconsistent with applicable law,
regulation, or OCC policy thereunder; or
(3) The applicant fails to provide
information requested by the OCC that
is necessary for the OCC to make an
informed decision.
(c) Required information and
abandonment of filing. A filing must
contain information required by the
applicable section set forth in this part.
To the extent necessary to evaluate an
application, the OCC may require an
applicant to provide additional
information. The OCC may deem a filing
abandoned if information required or
requested by the OCC in connection
with the filing is not furnished within
the time period specified by the OCC.
The OCC may return an application
without a decision if it finds the filing
to be materially deficient. A filing is
materially deficient if it lacks sufficient
information for the OCC to make a
determination under the applicable
statutory or regulatory criteria.
(d) Notification of final disposition.
The OCC notifies the applicant, and any
person who makes a written request, of
the final disposition of a filing,
including confirmation of an expedited
review under this part. If the OCC
denies a filing, the OCC notifies the
applicant in writing of the reasons for
the denial.
(e) Publication of decision. The OCC
will issue a public decision when a
decision represents a new or changed
policy or presents issues of general
interest to the public or the banking
industry. In rendering its decisions, the
OCC may elect not to disclose
information that the OCC deems to be
private or confidential.
(f) Appeal. An applicant may file an
appeal of an OCC decision in writing
with the Deputy Comptroller for
Licensing or with the Ombudsman at
the address listed on www.occ.gov. In
the event that the Deputy Comptroller
for Licensing was the deciding official
of the matter appealed, or was involved
personally and substantially in the
matter, the appeal may be referred
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
instead to the Chief Counsel or the
Ombudsman.
(g) Extension of time. When the OCC
approves or conditionally approves a
filing, the OCC generally gives the
applicant a specified period of time to
commence that new or expanded
activity. The OCC does not generally
grant an extension of the time specified
to commence a new or expanded
corporate activity approved under this
part, unless the OCC determines that the
delay is beyond the applicant’s control.
(h) Nullifying a decision—(1) Material
misrepresentation or omission. An
applicant shall certify that any filing or
supporting material submitted to the
OCC contains no material
misrepresentations or omissions. The
OCC may review and verify any
information filed in connection with a
notice or an application. If the OCC
discovers a material misrepresentation
or omission after the OCC has rendered
a decision on the filing, the OCC may
nullify its decision. Any person
responsible for any material
misrepresentation or omission in a filing
or supporting materials may be subject
to enforcement action and other
penalties, including criminal penalties
provided in 18 U.S.C. 1001.
(2) Other nullifications. The OCC may
nullify any decision on a filing that is:
(i) Contrary to law, regulation, or OCC
policy thereunder; or
(ii) Granted due to clerical or
administrative error, or a material
mistake of law or fact.
■ 7. Section 5.20 is revised to read as
follows:
§ 5.20 Organizing a national bank or
Federal savings association.
(a) Authority. 12 U.S.C. 21, 22,
24(Seventh), 26, 27, 92a, 93a, 1814(b),
1816, 1462a, 1463, 1464, 2903, and
5412(b)(2)(B).
(b) Licensing requirements. Any
person desiring to establish a national
bank or a Federal savings association
shall submit an application and obtain
prior OCC approval.
(c) Scope. This section describes the
procedures and requirements governing
OCC review and approval of an
application to establish a national bank
or a Federal stock or mutual savings
association, including a national bank or
a Federal savings association with a
special purpose. Information regarding
an application to establish an interim
national bank or an interim Federal
savings association solely to facilitate a
business combination is set forth in
§ 5.33.
(d) Definitions. For purposes of this
section:
PO 00000
Frm 00074
Fmt 4701
Sfmt 4700
(1) Bankers’ bank means a bank
owned exclusively (except to the extent
directors’ qualifying shares are required
by law) by other depository institutions
or depository institution holding
companies (as that term is defined in
section 3 of the Federal Deposit
Insurance Act, 12 U.S.C. 1813), the
activities of which are limited by its
articles of association exclusively to
providing services to or for other
depository institutions, their holding
companies, and the officers, directors,
and employees of such institutions and
companies, and to providing
correspondent banking services at the
request of other depository institutions
or their holding companies.
(2) Control means with respect to an
application to establish a national bank,
control as used in section 2 of the Bank
Holding Company Act, 12 U.S.C.
1841(a)(2), and with respect to an
application to establish a Federal
savings association, control as used in
section 10 of the Home Owners’ Loan
Act, 12 U.S.C. 1467a(a)(2).
(3) Final approval means the OCC
action issuing a charter and authorizing
a national bank or Federal savings
association to open for business.
(4) Holding company means any
company that controls or proposes to
control a national bank or a Federal
savings association whether or not the
company is a bank holding company
under section 2 of the Bank Holding
Company Act, 12 U.S.C. 1841(a)(1), or a
savings and loan holding company
under section 10 of the Home Owners’
Loan Act, 12 U.S.C. 1467a.
(5) Lead depository institution means
the largest depository institution
controlled by a bank holding company
or savings and loan holding company
based on a comparison of the average
total assets controlled by each
depository institution as reported in its
Consolidated Report of Condition and
Income required to be filed for the
immediately preceding four calendar
quarters.
(6) Institution means either a national
bank or Federal savings association.
(7) Organizing group means five or
more persons acting on their own
behalf, or serving as representatives of a
sponsoring holding company, who
apply to the OCC for a national bank or
Federal savings association charter.
(8) Preliminary approval means a
decision by the OCC permitting an
organizing group to go forward with the
organization of the proposed national
bank or Federal savings association. A
preliminary approval generally is
subject to certain conditions that an
applicant must satisfy before the OCC
will grant final approval.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(e) Requirements—(1) In general. (i)
The OCC charters a national bank under
the authority of the National Bank Act
of 1864, as amended, 12 U.S.C. 1 et seq.
The bank may be a special purpose bank
that limits its activities to fiduciary
activities or to any other activities
within the business of banking. A
special purpose bank that conducts
activities other than fiduciary activities
must conduct at least one of the
following three core banking functions:
Receiving deposits; paying checks; or
lending money. The name of a proposed
national bank must include the word
‘‘national.’’
(ii) The OCC charters a Federal
savings association under the authority
of section 5 of the Home Owners’ Loan
Act, 12 U.S.C. 1464, which in an
application to establish a Federal
savings association requires the OCC to
consider:
(A) Whether the applicants are
persons of good character and
responsibility;
(B) Whether a necessity exists for the
association in the community to be
served;
(C) Whether there is a reasonable
probability of the association’s
usefulness and success; and
(D) Whether the association can be
established without undue injury to
properly conducted existing local
savings associations and home financing
institutions.
(iii) In determining whether to
approve an application to establish a
national bank or Federal savings
association, the OCC verifies that the
proposed national bank or Federal
savings association has complied with
the following requirements. A national
bank or a Federal savings association
shall:
(A) File either articles of association
(for a national bank), or a charter and
by-laws (for a Federal savings
association) with the OCC;
(B) In the case of an application to
establish a national bank, file an
organization certificate containing
specified information with the OCC;
(C) Ensure that all capital stock is
paid in, or in the case of a Federal
mutual savings association, ensure that
at least a minimum amount of capital is
paid in; and
(D) Have at least five elected directors.
(2) Community Reinvestment Act. (i)
Twelve CFR part 25 requires the OCC to
take into account a proposed insured
national bank’s description of how it
will meet its CRA objectives.
(ii) Twelve CFR part 195 requires the
OCC to take into account a proposed
insured Federal savings association
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
description of how it will meet its CRA
objectives.
(3) Federal Deposit Insurance.
Preliminary approval for an application
to establish a Federal savings
association will be conditioned on the
savings association applying for and
receiving approval for deposit insurance
from the Federal Deposit Insurance
Corporation (FDIC). Final approval for
an application to establish a Federal
savings association will not be issued
until receipt by the OCC of written
confirmation by the FDIC that the
accounts of the Federal savings
association will be insured by the FDIC.
(f) Policy—(1) In general. In
determining whether to approve an
application to establish a national bank
or Federal savings association, the OCC
is guided by the following principles:
(i) Maintaining a safe and sound
banking system;
(ii) Encouraging a national bank or
Federal savings association to provide
fair access to financial services by
helping to meet the credit needs of its
entire community;
(iii) Ensuring compliance with laws
and regulations; and
(iv) Promoting fair treatment of
customers including efficiency and
better service.
(2) Policy considerations. (i) In
evaluating an application to establish a
national bank or Federal savings
association, the OCC considers whether
the proposed institution:
(A) Has organizers who are familiar
with national banking laws and
regulations or Federal savings
association laws and regulations,
respectively;
(B) Has competent management,
including a board of directors, with
ability and experience relevant to the
types of services to be provided;
(C) Has capital that is sufficient to
support the projected volume and type
of business;
(D) Can reasonably be expected to
achieve and maintain profitability;
(E) Will be operated in a safe and
sound manner; and
(F) Does not have a title that
misrepresents the nature of the
institution or the services it offers.
(ii) In evaluating an application to
establish a Federal savings association,
the OCC considers whether the
proposed Federal savings association
will be operated as a qualified thrift
lender under section 10(m) of the Home
Owners’ Loan Act, 12 U.S.C. 1467a(m).
(iii) The OCC may also consider
additional factors listed in section 6 of
the Federal Deposit Insurance Act, 12
U.S.C. 1816, including the risk to the
Federal deposit insurance fund, and
PO 00000
Frm 00075
Fmt 4701
Sfmt 4700
28419
whether the proposed institution’s
corporate powers are consistent with the
purposes of the Federal Deposit
Insurance Act, the National Bank Act,
and the Home Owners’ Loan Act, as
applicable.
(3) OCC evaluation. The OCC
evaluates a proposed institution’s
organizing group and its business plan
or operating plan together. The OCC’s
judgment concerning one may affect the
evaluation of the other. An organizing
group and its business plan or operating
plan must be stronger in markets where
economic conditions are marginal or
competition is intense.
(g) Organizing group—(1) In general.
Strong organizing groups generally
include diverse business and financial
interests and community involvement.
An organizing group must have the
experience, competence, willingness,
and ability to be active in directing the
proposed institution’s affairs in a safe
and sound manner. The institution’s
initial board of directors generally is
comprised of many, if not all, of the
organizers. The business plan or
operating plan and other information
supplied in the application must
demonstrate an organizing group’s
collective ability to establish and
operate a successful national bank or
Federal savings association in the
economic and competitive conditions of
the market to be served. Each organizer
should be knowledgeable about the
business plan or operating plan. A poor
business plan or operating plan reflects
adversely on the organizing group’s
ability, and the OCC generally denies
applications with poor business plans or
operating plans.
(2) Management selection. The initial
board of directors must select competent
senior executive officers before the OCC
grants final approval. Early selection of
executive officers, especially the chief
executive officer, contributes favorably
to the preparation and review of a
business plan or operating plan that is
accurate, complete, and appropriate for
the type of national bank or Federal
savings association proposed and its
market, and reflects favorably upon an
application. As a condition of the
charter approval, the OCC retains the
right to object to and preclude the hiring
of any officer, or the appointment or
election of any director, for a two-year
period from the date the institution
commences business, or longer as
appropriate.
(3) Financial resources. (i) Each
organizer must have a history of
responsibility, personal honesty, and
integrity. Personal wealth is not a
prerequisite to become an organizer or
director of a national bank or Federal
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28420
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
savings association. However, directors’
stock purchases, or, in the case of a
Federal mutual savings association,
capital contributions, individually and
in the aggregate, should reflect a
financial commitment to the success of
the institution that is reasonable in
relation to their individual and
collective financial strength. A director
should not have to depend on
institution dividends, fees, or other
compensation to satisfy financial
obligations.
(ii) Because directors are often the
primary source of additional capital for
an institution not affiliated with a
holding company, it is desirable that the
proposed directors of the national bank
or Federal savings association, as a
group, be able to supply or have a
realistic plan to enable the institution to
obtain capital when needed.
(iii) Any financial or other business
arrangement, direct or indirect, between
the organizing group or other insiders
and the proposed national bank or
Federal savings association must be on
nonpreferential terms.
(4) Organizational expenses. (i)
Organizers are expected to contribute
time and expertise to the organization of
the national bank or Federal savings
association. Organizers should not bill
excessive charges to the institution for
professional and consulting services or
unduly rely upon these fees as a source
of income.
(ii) A proposed national bank or
Federal savings association shall not
pay any fee that is contingent upon an
OCC decision. Such action generally is
grounds for denial of the application or
withdrawal of preliminary approval.
Organizational expenses for denied
applications are the sole responsibility
of the organizing group.
(5) Sponsor’s experience and support.
A sponsor must be financially able to
support the new institution’s operations
and to provide or locate capital when
needed. The OCC primarily considers
the financial and managerial resources
of the sponsor and the sponsor’s record
of performance, rather than the financial
and managerial resources of the
organizing group, if an organizing group
is sponsored by:
(i) An existing holding company;
(ii) Individuals currently affiliated
with other depository institutions; or
(iii) Individuals who, in the OCC’s
view, are otherwise collectively
experienced in banking and have
demonstrated the ability to work
together effectively.
(h) Business plan or Operating plan—
(1) In general. (i) Organizers of a
proposed national bank or Federal
savings association shall submit a
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
business plan or operating plan that
adequately addresses the statutory and
policy considerations set forth in
paragraphs (e) and (f)(2) of this section.
In the case of a proposed Federal
savings association the plan must also
specifically address meeting qualified
thrift lender requirements. The plan
must reflect sound banking principles
and demonstrate realistic assessments of
risk in light of economic and
competitive conditions in the market to
be served.
(ii) The OCC may offset deficiencies
in one factor by strengths in one or more
other factors. However, deficiencies in
some factors, such as unrealistic
earnings prospects, may have a negative
influence on the evaluation of other
factors, such as capital adequacy, or
may be serious enough by themselves to
result in denial. The OCC considers
inadequacies in a business plan or
operating plan to reflect negatively on
the organizing group’s ability to operate
a successful institution.
(2) Earnings prospects. The organizing
group shall submit pro forma balance
sheets and income statements as part of
the business plan or operating plan. The
OCC reviews all projections for
reasonableness of assumptions and
consistency with the business plan or
operating plan.
(3) Management. (i) The organizing
group shall include in the business plan
or operating plan information sufficient
to permit the OCC to evaluate the
overall management ability of the
organizing group. If the organizing
group has limited banking experience or
community involvement, the senior
executive officers must be able to
compensate for such deficiencies.
(ii) The organizing group may not hire
an officer or elect or appoint a director
if the OCC objects to that person at any
time prior to the date the institution
commences business.
(4) Capital. A proposed bank or
Federal savings association must have
sufficient initial capital, net of any
organizational expenses that will be
charged to the institution’s capital after
it begins operations, to support the
institution’s projected volume and type
of business.
(5) Community service. (i) The
business plan or operating plan must
indicate the organizing group’s
knowledge of and plans for serving the
community. The organizing group shall
evaluate the banking needs of the
community, including its consumer,
business, nonprofit, and government
sectors. The business plan or operating
plan must demonstrate how the
proposed national bank or Federal
savings association responds to those
PO 00000
Frm 00076
Fmt 4701
Sfmt 4700
needs consistent with the safe and
sound operation of the institution. The
provisions of this paragraph may not
apply to an application to organize an
institution for a special purpose.
(ii) As part of its business plan or
operating plan, the organizing group
shall submit a statement that
demonstrates its plans to achieve CRA
objectives.
(iii) Because community support is
important to the long-term success of a
national bank or Federal savings
association, the organizing group shall
include plans for attracting and
maintaining community support.
(6) Safety and soundness. The
business plan or operating plan must
demonstrate that the organizing group
(and the sponsoring company, if any), is
aware of, and understands, applicable
depository institution laws and
regulations, and safe and sound banking
operations and practices. The OCC will
deny an application that does not meet
these safety and soundness
requirements.
(7) Fiduciary powers. The business
plan or operating plan must indicate if
the proposed institution intends to
exercise fiduciary powers. The
information required by § 5.26 shall be
filed with the charter application. A
separate application is not required.
(i) Procedures—(1) Prefiling meeting.
The OCC normally requires a prefiling
meeting with the organizers of a
proposed national bank or Federal
savings association before the organizers
file an application. Organizers should be
familiar with the OCC’s chartering
policy and procedural requirements in
the Comptroller’s Licensing Manual
before the prefiling meeting. The
prefiling meeting normally is held in the
district office where the application will
be filed but may be held at another
location at the request of the applicant.
(2) Business plan or operating plan.
An organizing group shall file a
business plan or operating plan that
addresses the subjects discussed in
paragraph (h) of this section.
(3) Contact person. The organizing
group shall designate a contact person
to represent the organizing group in all
contacts with the OCC. The contact
person shall be an organizer and
proposed director of the new national
bank or Federal savings association,
except a representative of the sponsor or
sponsors may serve as contact person if
an application is sponsored by an
existing holding company, individuals
currently affiliated with other
depository institutions, or individuals
who, in the OCC’s view, are otherwise
collectively experienced in banking and
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
have demonstrated the ability to work
together effectively.
(4) Decision notification. The OCC
notifies the spokesperson and other
interested persons in writing of its
decision on an application.
(5) Activities. (i) Before the OCC
grants final approval, a proposed
national bank or Federal savings
association must be established as a
legal entity. A national bank becomes a
legal entity after it has filed its
organization certificate and articles of
association with the OCC as required by
law. A Federal savings association
becomes a legal entity after it has filed
its proposed charter and bylaws with
the OCC. A proposed national bank may
offer and sell securities prior to OCC
preliminary approval of the proposed
national bank’s charter application,
provided that the proposed national
bank has filed articles of association, an
organization certificate, and a
completed charter application and the
bank complies with paragraph (i)(5)(iii)
of this section. A proposed Federal
stock savings association may offer and
sell securities prior to OCC preliminary
approval of the proposed Federal stock
savings association’s charter
application, provided that the proposed
Federal stock savings association has
filed a proposed charter, bylaws, and a
completed charter application and the
Federal stock savings association
complies with paragraph (i)(5)(iii) of
this section.
(ii)(A) After the OCC grants
preliminary approval, the organizing
group shall elect a board of directors,
take steps necessary to organize the
proposed national bank or Federal
savings association and prepare it for
commencing business.
(B) A proposed national bank may not
conduct the business of banking until
the OCC grants final approval and issues
a charter. A proposed Federal savings
association may not commence business
until the OCC grants final approval and
issues a charter, which shall be in the
form provided in this part.
(iii) For all capital obtained through a
public offering a proposed national bank
or Federal savings association shall use
an offering circular that complies with
the OCC’s securities offering
regulations, 12 CFR part 16 or part 197,
as applicable. All securities of a
particular class in the initial offering
shall be sold at the same price.
(iv) A national bank or Federal
savings association in organization shall
raise its capital before it commences
business. Preliminary approval expires
if the proposed national bank or Federal
savings association does not raise the
required capital within 12 months from
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
the date the OCC grants preliminary
approval. Preliminary approval expires
if the proposed national bank or Federal
savings association does not commence
business within 18 months from the
date of preliminary approval, unless the
OCC grants an extension. If preliminary
approval expires, all cash collected on
subscriptions shall be returned.
(j) Expedited review. An application
to establish a full-service national bank
or Federal savings association that is
sponsored by a bank holding company
or savings and loan holding company
whose lead depository institution is an
eligible bank or eligible savings
association is deemed preliminarily
approved by the OCC as of the 15th day
after the close of the public comment
period or the 45th day after the filing is
received by the OCC, whichever is later,
unless the OCC:
(1) Notifies the applicant prior to that
date that the filing is not eligible for
expedited review, or the expedited
review process is extended, under
§ 5.13(a)(2); or
(2) Notifies the applicant prior to that
date that the OCC has determined that
the proposed bank will offer banking
services that are materially different
than those offered by the lead
depository institution.
(k) National bankers’ banks—(1)
Activities and customers. In addition to
the other requirements of this section,
when an organizing group seeks to
organize a national bankers’ bank, the
organizing group shall list in the
application the anticipated activities
and customers or clients of the proposed
national bankers’ bank.
(2) Waiver of requirements. At the
organizing group’s request, the OCC
may waive requirements that are
applicable to national banks in general
if those requirements are inappropriate
for a national bankers’ bank and would
impede its ability to provide desired
services to its market. An applicant
must submit a request for a waiver with
the application and must support the
request with adequate justification and
legal analysis. A national bankers’ bank
that is already in operation may also
request a waiver. The OCC cannot waive
statutory provisions that specifically
apply to national bankers’ banks
pursuant to 12 U.S.C. 27(b)(1).
(3) Investments. A national bank or
Federal savings association may invest
up to 10 percent of its capital and
surplus in a bankers’ bank and may own
five percent or less of any class of a
bankers’ bank’s voting securities.
(l) Special purpose institutions. An
applicant for a national bank or Federal
savings association charter that will
limit its activities to fiduciary activities,
PO 00000
Frm 00077
Fmt 4701
Sfmt 4700
28421
credit card operations, or another
special purpose shall adhere to
established charter procedures with
modifications appropriate for the
circumstances as determined by the
OCC. An applicant for a national bank
or Federal savings association charter
that will have a community
development focus shall also adhere to
established charter procedures with
modifications appropriate for the
circumstances as determined by the
OCC. A national bank that seeks to
invest in a bank or savings association
with a community development focus
must comply with applicable
requirements of 12 CFR part 24. A
Federal savings association that seeks to
invest in a bank or savings association
with a community development focus
must comply with § 160.36 or any other
applicable requirements.
■ 8. Section 5.21 is added to read as
follows:
§ 5.21 Federal Mutual Savings Association
Charter and Bylaws.
(a) Authority. 12 U.S.C. 1462a, 1463,
1464, and 2901 et seq.
(b) Licensing requirements. A Federal
mutual savings association must file an
application, notice, or other filing as
prescribed by this section when
adopting or amending its charter or
bylaws.
(c) Scope. This section describes the
procedures and requirements governing
charters and bylaws for Federal mutual
savings associations.
(d) Exceptions to rules of general
applicability. Notwithstanding any
other provision of this part, §§ 5.8
through 5.11 shall not apply to this
section.
(e) Charter form. Except as provided
in paragraphs (f) and (g) of this section,
a Federal mutual savings association
shall have a charter in the following
form. A charter for a Federal mutual
savings bank shall substitute the term
‘‘savings bank’’ for ‘‘association.’’ The
term ‘‘trustee’’ may be substituted for
the term ‘‘director.’’ Associations
adopting this charter with existing
borrower members must grandfather
those borrower members who were
members as of the date of issuance of
the new charter by the OCC. Such
borrowers shall have one vote for the
period of time such borrowings are in
existence.
Federal Mutual Charter
Section 1. Corporate title. The full
corporate title of the Federal savings
association is ___.
Section 2. Office. The home office
shall be located in ___ [city, state].
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28422
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Section 3. Duration. The duration of
the association is perpetual.
Section 4. Purpose and powers. The
purpose of the association is to pursue
any or all of the lawful objectives of a
Federal mutual savings association
chartered under section 5 of the Home
Owners’ Loan Act and to exercise all the
express, implied, and incidental powers
conferred thereby and by all acts
amendatory thereof and supplemental
thereto, subject to the Constitution and
laws of the United States as they are
now in effect, or as they may hereafter
be amended, and subject to all lawful
and applicable rules, regulations, and
orders of the Office of the Comptroller
of the Currency (‘‘OCC’’).
Section 5. Capital. The association
may raise capital by accepting payments
on savings and demand accounts and by
any other means authorized by the OCC.
Section 6. Members. All holders of the
association’s savings, demand, or other
authorized accounts are members of the
association. In the consideration of all
questions requiring action by the
members of the association, each holder
of an account shall be permitted to cast
one vote for each $100, or fraction
thereof, of the withdrawal value of the
member’s account. No member,
however, shall cast more than 1,000
votes. All accounts shall be
nonassessable.
Section 7. Directors. The association
shall be under the direction of a board
of directors. The authorized number of
directors shall not be fewer than five nor
more than fifteen persons, as fixed in
the association’s bylaws, except that the
number of directors may be decreased to
a number less than five or increased to
a number greater than fifteen with the
prior approval of the OCC.
Section 8. Capital, surplus, and
distribution of earnings. The association
shall maintain for the purpose of
meeting losses the amount of capital
required by section 5 of the Home
Owners’ Loan Act and by regulations of
the OCC. The association shall
distribute net earnings on its accounts
on such basis and in accordance with
such terms and conditions as may from
time to time be authorized by the OCC:
Provided, That the association may
establish minimum-balance
requirements for accounts to be eligible
for distribution of earnings. All holders
of accounts of the association shall be
entitled to equal distribution of assets,
pro rata to the value of their accounts,
in the event of voluntary or involuntary
liquidation, dissolution, or winding up
of the association. Moreover, in any
such event, or in any other situation in
which the priority of such accounts is
in controversy, all such accounts shall,
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
to the extent of their withdrawal value,
be debts of the association having the
same priority as the claims of general
creditors of the association not having
priority (other than any priority arising
or resulting from consensual
subordination) over other general
creditors of the association.
Section 9. Amendment of charter.
Adoption of any preapproved charter
amendment shall be effective after such
preapproved amendment has been
approved by the members at a legal
meeting. Any other amendment,
addition, change, or repeal of this
charter must be approved by the OCC
prior to approval by the members at a
legal meeting, and shall be effective
upon filing with the OCC in accordance
with regulatory procedures.
Attest: lllllllllllllll
Secretary of the Association
By: llllllllllllllll
President or Chief Executive Officer of
the Association
Attest: lllllllllllllll
Deputy Comptroller for Licensing
By: llllllllllllllll
Comptroller of the Currency
Effective Date: lllllllllll
(f) Charter amendments. In order to
adopt a charter amendment, a Federal
mutual savings association must comply
with the following requirements:
(1) Board of directors approval. The
board of directors of the association
must adopt a resolution proposing the
charter amendment that states the text
of such amendment;
(2) Form of filing—(i) Application
requirement. If the proposed charter
amendment would: Render more
difficult or discourage a merger, proxy
contest, the assumption of control by a
mutual account holder of the
association, or the removal of
incumbent management; or involve a
significant issue of law or policy; then,
the association shall file the proposed
amendment and obtain the prior
approval of the OCC.
(ii) Notice requirement. If the
proposed charter amendment does not
involve a provision that would be
covered by paragraph (f)(2)(i) of this
section and is permissible under all
applicable laws, rules and regulations,
then the association shall submit the
proposed amendment to the appropriate
OCC licensing office, at least 30 days
prior to the effective date of the
proposed charter amendment.
(g) Approval. Any charter amendment
filed pursuant to paragraph (f)(2)(ii) of
this section shall automatically be
approved 30 days from the date of filing
of such amendment, provided that the
PO 00000
Frm 00078
Fmt 4701
Sfmt 4700
association follows the requirements of
its charter in adopting such amendment.
This automatic approval does not apply
if, prior to the expiration of such 30-day
period, the OCC notifies the association
that such amendment is rejected or that
such amendment is deemed to be filed
under the provisions of paragraph
(f)(2)(i) of this section. In addition,
notwithstanding anything in paragraph
(f) of this section to the contrary, the
following charter amendments,
including the adoption of the Federal
mutual charter as set forth in paragraph
(e) of this section, shall be effective and
deemed approved at the time of
adoption, if adopted without change
and filed with the OCC, within 30 days
after adoption, provided the association
follows the requirements of its charter
in adopting such amendments:
(1) Purpose and powers. Add a second
paragraph to section 4, as follows:
Section 4. Purpose and powers. * * *
The association shall have the express
power: (i) To act as fiscal agent of the
United States when designated for that
purpose by the Secretary of the
Treasury, under such regulations as the
Secretary may prescribe, to perform all
such reasonable duties as fiscal agent of
the United States as may be required,
and to act as agent for any other
instrumentality of the United States
when designated for that purpose by
any such instrumentality; (ii) To sue
and be sued, complain and defend in
any court of law or equity; (iii) To have
a corporate seal, affixed by imprint,
facsimile or otherwise; (iv) To appoint
officers and agents as its business shall
require and allow them suitable
compensation; (v) To adopt bylaws not
inconsistent with the Constitution or
laws of the United States and rules and
regulations adopted thereunder and
under this Charter; (vi) To raise capital,
which shall be unlimited, by accepting
payments on savings, demand, or other
accounts, as are authorized by rules and
regulations made by the OCC, and the
holders of all such accounts or other
accounts as shall, to such extent as may
be provided by such rules and
regulations, be members of the
association and shall have such voting
rights and such other rights as are
thereby provided; (vii) To issue notes,
bonds, debentures, or other obligations,
or securities, provided by or under any
provision of Federal statute as from time
to time is in effect; (viii) To provide for
redemption of insured accounts; (ix) To
borrow money without limitation and
pledge and otherwise encumber any of
its assets to secure its debts; (x) To lend
and otherwise invest its funds as
authorized by statute and the rules and
regulations of the OCC; (xi) To wind up
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
and dissolve, merge, consolidate,
convert, or reorganize; (xii) To purchase,
hold, and convey real estate and
personalty consistent with its objects,
purposes, and powers; (xiii) To
mortgage or lease any real estate and
personalty and take such property by
gift, devise, or bequest; and (xiv) To
exercise all powers conferred by law. In
addition to the foregoing powers
expressly enumerated, this association
shall have power to do all things
reasonably incident to the
accomplishment of its express objects
and the performance of its express
powers.
(2) Title change. A Federal mutual
savings association that has complied
with § 5.42 may amend its charter by
substituting a new corporate title in
section 1.
(3) Home office. A Federal mutual
savings association may amend its
charter by substituting a new home
office in section 2, if it has complied
with applicable requirements of § 5.40.
(4) Maximum number of votes. A
Federal mutual savings association may
amend its charter by substituting any
number of votes per member between 1
and 1000 in section 6.
(h) Reissuance of charter. A Federal
mutual savings association that has
amended its charter may apply to have
its charter, including the amendments,
reissued by the OCC. Such request for
reissuance should be filed at the
appropriate OCC licensing office and
contain signatures required under
paragraph (e) of this section, together
with such supporting documents as may
be needed to demonstrate that the
amendments were properly adopted.
(i) Availability of chartering
documents. A Federal mutual savings
association shall cause a true copy of its
charter and bylaws and all amendments
thereto to be available to accountholders
at all times in each office of the savings
association, and shall upon request
deliver to any accountholders a copy of
such charter and bylaws or amendments
thereto.
(j) Bylaws for Federal mutual savings
associations—(1) In general. A Federal
mutual savings association shall operate
under bylaws that contain provisions
that comply with all requirements
specified by the OCC in this paragraph
and that are not otherwise inconsistent
with the provisions of this paragraph,
the association’s charter, and all other
applicable laws, rules, and regulations
provided that, a bylaw provision
inconsistent with the provisions of this
paragraph may be adopted with the
approval of the OCC. Bylaws may be
adopted, amended or repealed by a
majority of the votes cast by the
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
members at a legal meeting or a majority
of the association’s board of directors.
The bylaws for a Federal mutual savings
bank shall substitute the term ‘‘savings
bank’’ for ‘‘association’’. The term
‘‘trustee’’ may be substituted for the
term ‘‘director’’.
(2) Requirements. The following
requirements are applicable to Federal
mutual savings associations:
(i) Annual meetings of members. (A)
An association shall provide for and
conduct an annual meeting of its
members for the election of directors
and at which any other business of the
association may be conducted. Such
meeting shall be held at any convenient
place the board of directors may
designate, and at a date and time within
150 days after the end of the
association’s fiscal year.
(B) At each annual meeting, the
officers shall make a full report of the
financial condition of the association
and of its progress for the preceding
year and shall outline a program for the
succeeding year.
(ii) Special meetings of members.
Procedures for calling any special
meeting of the members and for
conducting such a meeting shall be set
forth in the bylaws. The board of
directors of the association or the
holders of 10 percent or more of the
voting capital shall be entitled to call a
special meeting. For purposes of this
paragraph, ‘‘voting capital’’ means
FDIC-insured deposits as of the voting
record date.
(iii) Notice of meeting of members.
Notice specifying the date, time, and
place of the annual or any special
meeting and adequately describing any
business to be conducted shall be
published for two successive weeks
immediately prior to the week in which
such meeting shall convene in a
newspaper of general circulation in the
city or county in which the principal
place of business of the association is
located, or mailed postage prepaid at
least 15 days and not more than 45 days
prior to the date on which such meeting
shall convene to each of its members of
record. A similar notice shall be posted
in a conspicuous place in each of the
offices of the association during the 14
days immediately preceding the date on
which such meeting shall convene. The
bylaws may permit a member to waive
in writing any right to receive personal
delivery of the notice. When any
meeting is adjourned for 30 days or
more, notice of the adjournment and
reconvening of the meeting shall be
given as in the case of the original
meeting.
(iv) Fixing of record date. The bylaws
shall provide for the fixing of a record
PO 00000
Frm 00079
Fmt 4701
Sfmt 4700
28423
date and a method for determining from
the books of the association the
members entitled to vote. Such date
shall be not more than 60 days nor
fewer than 10 days prior to the date on
which the action, requiring such
determination of members, is to be
taken. The same determination shall
apply to any adjourned meeting.
(v) Member quorum. Any number of
members present and voting,
represented in person or by proxy, at a
regular or special meeting of the
members shall constitute a quorum. A
majority of all votes cast at any meeting
of the members shall determine any
question, unless otherwise required by
regulation. At any adjourned meeting,
any business may be transacted that
might have been transacted at the
meeting as originally called. Members
present at a duly constituted meeting
may continue to transact business until
adjournment.
(vi) Voting by proxy. Procedures shall
be established for voting at any annual
or special meeting of the members by
proxy pursuant to the rules and
regulations of the OCC. Proxies may be
given telephonically or electronically as
long as the holder uses a procedure for
verifying the identity of the member. All
proxies with a term greater than eleven
months or solicited at the expense of the
association must run to the board of
directors as a whole, or to a committee
appointed by a majority of such board.
(vii) Communications between
members. Provisions relating to
communications between members
shall be consistent with § 144.8 of this
chapter. No member, however, shall
have the right to inspect or copy any
portion of any books or records of a
Federal mutual savings association
containing:
(A) A list of depositors in or
borrowers from such association;
(B) Their addresses;
(C) Individual deposit or loan
balances or records; or
(D) Any data from which such
information could be reasonably
constructed.
(viii) Number of directors,
membership. The bylaws shall set forth
a specific number of directors, not a
range. The number of directors shall be
not fewer than five nor more than
fifteen, unless a higher or lower number
has been authorized by the OCC. Each
director of the association shall be a
member of the association. Directors
may be elected for periods of one to
three years and until their successors
are elected and qualified, but if a
staggered board is chosen, provision
shall be made for the election of
approximately one-third or one-half of
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28424
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
the board each year, as appropriate.
State-chartered savings banks
converting to Federal savings banks may
include alternative provisions for the
election and term of office of directors
so long as such provisions are
authorized by the OCC, and provide for
compliance with the standard
provisions of this paragraph no later
than six years after the conversion to a
Federal savings association.
(ix) Meetings of the board. The board
of directors shall determine the place,
frequency, time, procedure for notice,
which shall be at least 24 hours unless
waived by the directors, and waiver of
notice for all regular and special
meetings. The board also may permit
telephonic or electronic participation at
meetings. The bylaws may provide for
action to be taken without a meeting if
unanimous written consent is obtained
for such action. A majority of the
authorized directors shall constitute a
quorum for the transaction of business.
The act of a majority of the directors
present at any meeting at which there is
a quorum shall be the act of the board.
(x) Officers, employees and agents.
(A) The bylaws shall contain provisions
regarding the officers of the association,
their functions, duties, and powers. The
officers of the association shall consist
of a president, one or more vice
presidents, a secretary, and a treasurer
or comptroller, each of whom shall be
elected annually by the board of
directors. Such other officers and
assistant officers and agents as may be
deemed necessary may be elected or
appointed by the board of directors or
chosen in such other manner as may be
prescribed in the bylaws. Any two or
more offices may be held by the same
person, except the offices of president
and secretary.
(B) Any officer may be removed by
the board of directors with or without
cause, but such removal, other than for
cause, shall be without prejudice to the
contractual rights, if any, of the person
so removed. Termination for cause, for
purposes of this § 5.21 and § 5.22, shall
include termination because of the
person’s personal dishonesty,
incompetence, willful misconduct,
breach of fiduciary duty involving
personal profit, intentional failure to
perform stated duties, willful violation
of any law, rule, or regulation (other
than traffic violations or similar
offenses) or final cease and desist order,
or material breach of any provision of an
employment contract.
(xi) Vacancies, resignation or removal
of directors. In the event of a vacancy on
the board, the board of directors may, by
their affirmative vote, fill such vacancy,
even if the remaining directors
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
constitute less than a quorum. A
director elected to fill a vacancy shall be
elected to serve only until the next
election of directors by the members.
The bylaws shall set out the procedure
for the resignation of a director.
Directors may be removed only for
cause, as defined in § 5.21(j)(2)(x)(B), by
a vote of the holders of a majority of the
shares then entitled to vote at an
election of directors.
(xii) Powers of the board. The board
of directors shall have the power to
exercise any and all of the powers of the
association not expressly reserved by
the charter to the members.
(xiii) Nominations for directors. The
bylaws shall provide that nominations
for directors may be made at the annual
meeting by any member and shall be
voted upon, except, however, the
bylaws may require that nominations by
a member must be submitted to the
secretary and then prominently posted
in the principal place of business, at
least 10 days prior to the date of the
annual meeting. However, if such
provision is made for prior submission
of nominations by a member, then the
bylaws must provide for a nominating
committee, which, except in the case of
a nominee substituted as a result of
death or other incapacity, must submit
nominations to the secretary and have
such nominations similarly posted at
least 15 days prior to the date of the
annual meeting.
(xiv) New business. The bylaws shall
provide procedures for the introduction
of new business at the annual meeting.
(xv) Amendment. Bylaws may include
any provision for their amendment that
would be consistent with applicable
law, rules, and regulations and
adequately addresses its subject and
purpose.
(A) Amendments shall be effective:
(1) After approval by a majority vote
of the authorized board, or by a majority
of the vote cast by the members of the
association at a legal meeting; and
(2) After receipt of any applicable
regulatory approval.
(B) When an association fails to meet
its quorum requirement, solely due to
vacancies on the board, the bylaws may
be amended by an affirmative vote of a
majority of the sitting board.
(xvi) Miscellaneous. The bylaws may
also address any other subjects
necessary or appropriate for effective
operation of the association.
(3) Form of filing—(i) Application
requirement. (A) Any bylaw amendment
shall be submitted to the appropriate
OCC licensing office for OCC approval
if it would render more difficult or
discourage a merger, proxy contest, the
assumption of control by a mutual
PO 00000
Frm 00080
Fmt 4701
Sfmt 4700
account holder of the association, or the
removal of incumbent management;
involve a significant issue of law or
policy, including indemnification,
conflicts of interest, and limitations on
director or officer liability; or be
inconsistent with the requirements of
this paragraph or with applicable laws,
rules, regulations, or the association’s
charter.
(B) For purposes of paragraph (j)(2) of
this section, bylaw provisions that adopt
the language of the OCC’s model or
optional bylaws, if adopted without
change, and filed with the OCC within
30 days after adoption, are effective
upon adoption.
(ii) Filing requirement. If the proposed
bylaw amendment does not involve a
provision that would be covered by
paragraph (j)(2)(i)(A) of this section,
then the association shall submit the
amendment to the appropriate OCC
licensing office at least 30 days prior to
the date the bylaw amendment is to be
adopted by the association.
(iii) Corporate governance
procedures. A Federal mutual
association may elect to follow the
corporate governance procedures of the
laws of the state where the main office
of the institution is located, provided
that such procedures may be elected
only to the extent not inconsistent with
applicable Federal statutes, regulations,
and safety and soundness, and such
procedures are not of the type described
in paragraph (j)(2)(i)(A) of this section.
If this election is selected, a Federal
mutual association shall designate in its
bylaws the provision or provisions from
the body of law selected for its corporate
governance procedures, and shall file a
copy of such bylaws, which are effective
upon adoption, within 30 days after
adoption. The submission shall
indicate, where not obvious, why the
bylaw provisions meet the requirements
stated in paragraph (j)(2)(i)(A) of this
section.
(4) Effectiveness. Any bylaw
amendment filed pursuant to paragraph
(j)(2)(ii) of this section shall
automatically be effective 30 days from
the date of filing of such amendment,
provided that the association follows
the requirements of its charter and
bylaws in adopting such amendment.
This automatic effective date does not
apply if, prior to the expiration of such
30-day period, the OCC notifies the
association that such amendment is
rejected or that such amendment
requires an application to be filed
pursuant to paragraph (j)(2)(i) of this
section.
(5) Effect of subsequent charter or
bylaw change. Notwithstanding any
subsequent change to its charter or
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
bylaws, the authority of a Federal
mutual savings association to engage in
any transaction shall be determined
only by the association’s charter or
bylaws then in effect.
■ 9. Section 5.22 is added to read as
follows:
§ 5.22 Federal stock savings association
charter and bylaws.
asabaliauskas on DSK5VPTVN1PROD with RULES
(a) Authority. 12 U.S.C. 1462a, 1463,
1464, and 2901 et seq.
(b) Licensing requirements. A Federal
stock savings association must file an
application, notice, or other filing as
prescribed by this section when
adopting or amending its charter or
bylaws.
(c) Scope. This section describes the
procedures and requirements governing
charters and bylaws for Federal stock
savings associations.
(d) Exceptions to rules of general
applicability. Notwithstanding any
other provision of this part, §§ 5.8
through 5.11 shall not apply to this
section.
(e) Charter form. The charter of a
Federal stock association shall be in the
following form, except as provided in
this section. An association that has
converted from the mutual form
pursuant to part 192 of this chapter
shall include in its charter a section
establishing a liquidation account as
required by § 192.3(c)(13) of this
chapter. A charter for a Federal stock
savings bank shall substitute the term
‘‘savings bank’’ for ‘‘association.’’
Charters may also include any
preapproved optional provision
contained in this section.
Federal Stock Charter
Section 1. Corporate title. The full
corporate title of the association is ll.
Section 2. Office. The home office
shall be located in ll [city, state].
Section 3. Duration. The duration of
the association is perpetual.
Section 4. Purpose and powers. The
purpose of the association is to pursue
any or all of the lawful objectives of a
Federal savings association chartered
under section 5 of the Home Owners’
Loan Act and to exercise all of the
express, implied, and incidental powers
conferred thereby and by all acts
amendatory thereof and supplemental
thereto, subject to the Constitution and
laws of the United States as they are
now in effect, or as they may hereafter
be amended, and subject to all lawful
and applicable rules, regulations, and
orders of the Office of the Comptroller
of the Currency (‘‘OCC’’).
Section 5. Capital stock. The total
number of shares of all classes of the
capital stock that the association has the
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
authority to issue is ll, all of which
shall be common stock of par [or if no
par is specified then shares shall have
a stated] value of ll per share. The
shares may be issued from time to time
as authorized by the board of directors
without the approval of its shareholders,
except as otherwise provided in this
Section 5 or to the extent that such
approval is required by governing law,
rule, or regulation. The consideration
for the issuance of the shares shall be
paid in full before their issuance and
shall not be less than the par [or stated]
value. Neither promissory notes nor
future services shall constitute payment
or part payment for the issuance of
shares of the association. The
consideration for the shares shall be
cash, tangible or intangible property (to
the extent direct investment in such
property would be permitted to the
association), labor, or services actually
performed for the association, or any
combination of the foregoing. In the
absence of actual fraud in the
transaction, the value of such property,
labor, or services, as determined by the
board of directors of the association,
shall be conclusive. Upon payment of
such consideration, such shares shall be
deemed to be fully paid and
nonassessable. In the case of a stock
dividend, that part of the retained
earnings of the association that is
transferred to common stock or paid-in
capital accounts upon the issuance of
shares as a stock dividend shall be
deemed to be the consideration for their
issuance.
Except for shares issued in the initial
organization of the association or in
connection with the conversion of the
association from the mutual to stock
form of capitalization, no shares of
capital stock (including shares issuable
upon conversion, exchange, or exercise
of other securities) shall be issued,
directly or indirectly, to officers,
directors, or controlling persons of the
association other than as part of a
general public offering or as qualifying
shares to a director, unless the issuance
or the plan under which they would be
issued has been approved by a majority
of the total votes eligible to be cast at a
legal meeting. The holders of the
common stock shall exclusively possess
all voting power. Each holder of shares
of common stock shall be entitled to one
vote for each share held by such holder,
except as to the cumulation of votes for
the election of directors, unless the
charter provides that there shall be no
such cumulative voting. Subject to any
provision for a liquidation account, in
the event of any liquidation,
dissolution, or winding up of the
PO 00000
Frm 00081
Fmt 4701
Sfmt 4700
28425
association, the holders of the common
stock shall be entitled, after payment or
provision for payment of all debts and
liabilities of the association, to receive
the remaining assets of the association
available for distribution, in cash or in
kind. Each share of common stock shall
have the same relative rights as and be
identical in all respects with all the
other shares of common stock.
Section 6. Preemptive rights. Holders
of the capital stock of the association
shall not be entitled to preemptive
rights with respect to any shares of the
association which may be issued.
Section 7. Directors. The association
shall be under the direction of a board
of directors. The authorized number of
directors, as stated in the association’s
bylaws, shall not be fewer than five nor
more than fifteen except when a greater
or lesser number is approved by the
OCC.
Section 8. Amendment of charter.
Except as provided in Section 5, no
amendment, addition, alteration, change
or repeal of this charter shall be made,
unless such is proposed by the board of
directors of the association, approved by
the shareholders by a majority of the
votes eligible to be cast at a legal
meeting, unless a higher vote is
otherwise required, and approved or
preapproved by the OCC.
Attest: lllllllllllllll
Secretary of the Association
By: llllllllllllllll
President or Chief Executive Officer of
the Association
Attest: lllllllllllllll
Deputy Comptroller for Licensing
By: llllllllllllllll
Comptroller of the Currency
Effective Date: lllllllllll
(f) Charter amendments. In order to
adopt a charter amendment, a Federal
stock savings association must comply
with the following requirements:
(1) Board of directors approval. The
board of directors of the association
must adopt a resolution proposing the
charter amendment that states the text
of such amendment;
(2) Form of filing—(i) Application
requirement. If the proposed charter
amendment would render more difficult
or discourage a merger, tender offer, or
proxy contest, the assumption of control
by a holder of a block of the
association’s stock, the removal of
incumbent management, or involve a
significant issue of law or policy, the
association shall file the proposed
amendment and shall obtain the prior
approval of the OCC; and
(ii) Notice requirement. If the
proposed charter amendment does not
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28426
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
involve a provision that would be
covered by paragraph (f)(2)(i) of this
section and such amendment is
permissible under all applicable laws,
rules or regulations, then the association
shall submit the proposed amendments
to the appropriate OCC licensing office,
at least 30 days prior to the date the
proposed charter amendment is to be
mailed for consideration by the
association’s shareholders.
(g) Approval. Any charter amendment
filed pursuant to paragraph (f)(2)(ii) of
this section shall automatically be
approved 30 days from the date of filing
of such amendment, provided that the
association follows the requirements of
its charter in adopting such amendment,
unless prior to the expiration of such
30-day period the OCC notifies the
association that such amendment is
rejected or that such amendment is
deemed to be filed under the provisions
of paragraph (f)(2)(i) of this section. In
addition, the following charter
amendments, including the adoption of
the Federal stock charter as set forth in
paragraph (e) of this section, shall be
approved at the time of adoption, if
adopted without change and filed with
the OCC within 30 days after adoption,
provided the association follows the
requirements of its charter in adopting
such amendments:
(1) Title change. A Federal stock
association that has complied with
§ 5.42 of this chapter may amend its
charter by substituting a new corporate
title in section 1.
(2) Home office. A Federal savings
association may amend its charter by
substituting a new home office in
section 2, if it has complied with
applicable requirements of § 5.40.
(3) Number of shares of stock and par
value. A Federal stock association may
amend Section 5 of its charter to change
the number of authorized shares of
stock, the number of shares within each
class of stock, and the par or stated
value of such shares.
(4) Capital stock. A Federal stock
association may amend its charter by
revising Section 5 to read as follows:
Section 5. Capital stock. The total
number of shares of all classes of capital
stock that the association has the
authority to issue is ll, of which
ll shall be common stock of par [or
if no par value is specified the stated]
value of ll per share and of which
[list the number of each class of
preferred and the par or if no par value
is specified the stated value per share of
each such class]. The shares may be
issued from time to time as authorized
by the board of directors without further
approval of shareholders, except as
otherwise provided in this Section 5 or
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
to the extent that such approval is
required by governing law, rule, or
regulation. The consideration for the
issuance of the shares shall be paid in
full before their issuance and shall not
be less than the par [or stated] value.
Neither promissory notes nor future
services shall constitute payment or part
payment for the issuance of shares of
the association. The consideration for
the shares shall be cash, tangible or
intangible property (to the extent direct
investment in such property would be
permitted), labor, or services actually
performed for the association, or any
combination of the foregoing. In the
absence of actual fraud in the
transaction, the value of such property,
labor, or services, as determined by the
board of directors of the association,
shall be conclusive. Upon payment of
such consideration, such shares shall be
deemed to be fully paid and
nonassessable. In the case of a stock
dividend, that part of the retained
earnings of the association that is
transferred to common stock or paid-in
capital accounts upon the issuance of
shares as a stock dividend shall be
deemed to be the consideration for their
issuance.
Except for shares issued in the initial
organization of the association or in
connection with the conversion of the
association from the mutual to the stock
form of capitalization, no shares of
capital stock (including shares issuable
upon conversion, exchange, or exercise
of other securities) shall be issued,
directly or indirectly, to officers,
directors, or controlling persons of the
association other than as part of a
general public offering or as qualifying
shares to a director, unless their
issuance or the plan under which they
would be issued has been approved by
a majority of the total votes eligible to
be cast at a legal meeting.
Nothing contained in this Section 5
(or in any supplementary sections
hereto) shall entitle the holders of any
class of a series of capital stock to vote
as a separate class or series or to more
than one vote per share, except as to the
cumulation of votes for the election of
directors, unless the charter otherwise
provides that there shall be no such
cumulative voting: Provided, That this
restriction on voting separately by class
or series shall not apply:
i. To any provision which would
authorize the holders of preferred stock,
voting as a class or series, to elect some
members of the board of directors, less
than a majority thereof, in the event of
default in the payment of dividends on
any class or series of preferred stock;
ii. To any provision that would
require the holders of preferred stock,
PO 00000
Frm 00082
Fmt 4701
Sfmt 4700
voting as a class or series, to approve the
merger or consolidation of the
association with another corporation or
the sale, lease, or conveyance (other
than by mortgage or pledge) of
properties or business in exchange for
securities of a corporation other than the
association if the preferred stock is
exchanged for securities of such other
corporation: Provided, That no
provision may require such approval for
transactions undertaken with the
assistance or pursuant to the direction
of the OCC or the Federal Deposit
Insurance Corporation;
iii. To any amendment which would
adversely change the specific terms of
any class or series of capital stock as set
forth in this Section 5 (or in any
supplementary sections hereto),
including any amendment which would
create or enlarge any class or series
ranking prior thereto in rights and
preferences. An amendment which
increases the number of authorized
shares of any class or series of capital
stock, or substitutes the surviving
association in a merger or consolidation
for the association, shall not be
considered to be such an adverse
change.
A description of the different classes
and series (if any) of the association’s
capital stock and a statement of the
designations, and the relative rights,
preferences, and limitations of the
shares of each class of and series (if any)
of capital stock are as follows:
A. Common stock. Except as provided
in this Section 5 (or in any
supplementary sections thereto) the
holders of the common stock shall
exclusively possess all voting power.
Each holder of shares of the common
stock shall be entitled to one vote for
each share held by each holder, except
as to the cumulation of votes for the
election of directors, unless the charter
otherwise provides that there shall be
no such cumulative voting.
Whenever there shall have been paid,
or declared and set aside for payment,
to the holders of the outstanding shares
of any class of stock having preference
over the common stock as to the
payment of dividends, the full amount
of dividends and of sinking fund,
retirement fund, or other retirement
payments, if any, to which such holders
are respectively entitled in preference to
the common stock, then dividends may
be paid on the common stock and on
any class or series of stock entitled to
participate therewith as to dividends
out of any assets legally available for the
payment of dividends.
In the event of any liquidation,
dissolution, or winding up of the
association, the holders of the common
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
stock (and the holders of any class or
series of stock entitled to participate
with the common stock in the
distribution of assets) shall be entitled
to receive, in cash or in kind, the assets
of the association available for
distribution remaining after: (i) Payment
or provision for payment of the
association’s debts and liabilities; (ii)
distributions or provision for
distributions in settlement of its
liquidation account; and (iii)
distributions or provision for
distributions to holders of any class or
series of stock having preference over
the common stock in the liquidation,
dissolution, or winding up of the
association. Each share of common
stock shall have the same relative rights
as and be identical in all respects with
all the other shares of common stock.
B. Preferred stock. The association
may provide in supplementary sections
to its charter for one or more classes of
preferred stock, which shall be
separately identified. The shares of any
class may be divided into and issued in
series, with each series separately
designated so as to distinguish the
shares thereof from the shares of all
other series and classes. The terms of
each series shall be set forth in a
supplementary section to the charter.
All shares of the same class shall be
identical except as to the following
relative rights and preferences, as to
which there may be variations between
different series:
a. The distinctive serial designation
and the number of shares constituting
such series;
b. The dividend rate or the amount of
dividends to be paid on the shares of
such series, whether dividends shall be
cumulative and, if so, from which
date(s), the payment date(s) for
dividends, and the participating or other
special rights, if any, with respect to
dividends;
c. The voting powers, full or limited,
if any, of shares of such series;
d. Whether the shares of such series
shall be redeemable and, if so, the
price(s) at which, and the terms and
conditions on which, such shares may
be redeemed;
e. The amount(s) payable upon the
shares of such series in the event of
voluntary or involuntary liquidation,
dissolution, or winding up of the
association;
f. Whether the shares of such series
shall be entitled to the benefit of a
sinking or retirement fund to be applied
to the purchase or redemption of such
shares, and if so entitled, the amount of
such fund and the manner of its
application, including the price(s) at
which such shares may be redeemed or
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
purchased through the application of
such fund;
g. Whether the shares of such series
shall be convertible into, or
exchangeable for, shares of any other
class or classes of stock of the
association and, if so, the conversion
price(s) or the rate(s) of exchange, and
the adjustments thereof, if any, at which
such conversion or exchange may be
made, and any other terms and
conditions of such conversion or
exchange.
h. The price or other consideration for
which the shares of such series shall be
issued; and
i. Whether the shares of such series
which are redeemed or converted shall
have the status of authorized but
unissued shares of serial preferred stock
and whether such shares may be
reissued as shares of the same or any
other series of serial preferred stock.
Each share of each series of serial
preferred stock shall have the same
relative rights as and be identical in all
respects with all the other shares of the
same series.
The board of directors shall have
authority to divide, by the adoption of
supplementary charter sections, any
authorized class of preferred stock into
series, and, within the limitations set
forth in this section and the remainder
of this charter, fix and determine the
relative rights and preferences of the
shares of any series so established.
Prior to the issuance of any preferred
shares of a series established by a
supplementary charter section adopted
by the board of directors, the association
shall file with the OCC a dated copy of
that supplementary section of this
charter established and designating the
series and fixing and determining the
relative rights and preferences thereof.
(5) Limitations on subsequent
issuances. A Federal stock association
may amend its charter to require
shareholder approval of the issuance or
reservation of common stock or
securities convertible into common
stock under circumstances which would
require shareholder approval under the
rules of the New York Stock Exchange
if the shares were then listed on the
New York Stock Exchange.
(6) Cumulative voting. A Federal stock
association may amend its charter by
substituting the following sentence for
the second sentence in the third
paragraph of Section 5: ‘‘Each holder of
shares of common stock shall be entitled
to one vote for each share held by such
holder and there shall be no right to
cumulate votes in an election of
directors.’’
(7) Anti-takeover provisions following
mutual to stock conversion.
PO 00000
Frm 00083
Fmt 4701
Sfmt 4700
28427
Notwithstanding the law of the state in
which the association is located, a
Federal stock association may amend its
charter by renumbering existing sections
as appropriate and adding a new section
8 as follows:
Section 8. Certain Provisions
Applicable for Five Years.
Notwithstanding anything contained in
the Association’s charter or bylaws to
the contrary, for a period of [specify
number of years up to five] years from
the date of completion of the conversion
of the Association from mutual to stock
form, the following provisions shall
apply:
A. Beneficial Ownership Limitation.
No person shall directly or indirectly
offer to acquire or acquire the beneficial
ownership of more than 10 percent of
any class of an equity security of the
association. This limitation shall not
apply to a transaction in which the
association forms a holding company
without change in the respective
beneficial ownership interests of its
stockholders other than pursuant to the
exercise of any dissenter and appraisal
rights, the purchase of shares by
underwriters in connection with a
public offering, or the purchase of less
than 25 percent of a class of stock by a
tax-qualified employee stock benefit
plan as defined in § 192.25 of the OCC’s
regulations.
In the event shares are acquired in
violation of this section 8, all shares
beneficially owned by any person in
excess of 10 percent shall be considered
‘‘excess shares’’ and shall not be
counted as shares entitled to vote and
shall not be voted by any person or
counted as voting shares in connection
with any matters submitted to the
stockholders for a vote.
For purposes of this section 8, the
following definitions apply:
1. The term ‘‘person’’ includes an
individual, a group acting in concert, a
corporation, a partnership, an
association, a joint stock company, a
trust, an unincorporated organization or
similar company, a syndicate or any
other group formed for the purpose of
acquiring, holding or disposing of the
equity securities of the association.
2. The term ‘‘offer’’ includes every
offer to buy or otherwise acquire,
solicitation of an offer to sell, tender
offer for, or request or invitation for
tenders of, a security or interest in a
security for value.
3. The term ‘‘acquire’’ includes every
type of acquisition, whether effected by
purchase, exchange, operation of law or
otherwise.
4. The term ‘‘acting in concert’’ means
(a) knowing participation in a joint
activity or conscious parallel action
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28428
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
towards a common goal whether or not
pursuant to an express agreement, or (b)
a combination or pooling of voting or
other interests in the securities of an
issuer for a common purpose pursuant
to any contract, understanding,
relationship, agreement or other
arrangements, whether written or
otherwise.
B. Cumulative Voting Limitation.
Stockholders shall not be permitted to
cumulate their votes for election of
directors.
C. Call for Special Meetings. Special
meetings of stockholders relating to
changes in control of the association or
amendments to its charter shall be
called only upon direction of the board
of directors.
(h) Anti-takeover provisions. The OCC
may grant approval to a charter
amendment not listed in paragraph (g)
of this section regarding the acquisition
by any person or persons of its equity
securities provided that the association
shall file as part of its application for
approval an opinion, acceptable to the
OCC, of counsel independent from the
association that the proposed charter
provision would be permitted to be
adopted by a corporation chartered by
the state in which the principal office of
the association is located. Any such
provision must be consistent with
applicable statutes, regulations, and
OCC policies. Further, any such
provision that would have the effect of
rendering more difficult a change in
control of the association and would
require for any corporate action (other
than the removal of directors) the
affirmative vote of a larger percentage of
shareholders than is required by this
part, shall not be effective unless
adopted by a percentage of shareholder
vote at least equal to the highest
percentage that would be required to
take any action under such provision.
(i) Reissuance of charter. A Federal
stock association that has amended its
charter may apply to have its charter,
including the amendments, reissued by
the OCC. Such requests for reissuance
should be filed with the appropriate
OCC licensing office, and contain
signatures required under (c) of this
part, together with such supporting
documents as needed to demonstrate
that the amendments were properly
adopted.
(j) Bylaws for Federal stock savings
associations—(1) In general. Bylaws
may be adopted, amended or repealed
by either a majority of the votes cast by
the shareholders at a legal meeting or a
majority of the board of directors. A
bylaw provision inconsistent with
paragraph (k), (l), (m) or (n) of this
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
section may be adopted only with the
approval of the OCC.
(2) Form of filing—(i) Application
requirement. (A) Any bylaw amendment
shall be submitted to the OCC for
approval if it would:
(1) Render more difficult or
discourage a merger, tender offer, or
proxy contest, the assumption of control
by a holder of a large block of the
association’s stock, or the removal of
incumbent management; or
(2) Be inconsistent with paragraphs
(k) through (n) of this section, with
applicable laws, rules, regulations or the
association’s charter or involve a
significant issue of law or policy,
including indemnification, conflicts of
interest, and limitations on director or
officer liability.
(B) Bylaw provisions that adopt the
language of the OCC’s model or optional
bylaws, if adopted without change, and
filed with the OCC within 30 days after
adoption, are effective upon adoption.
(ii) Filing requirement. If the proposed
bylaw amendment does not involve a
provision that would be covered by
paragraph (j)(2)(i) or (iii) of this section
and is permissible under all applicable
laws, rules, or regulations, then the
association shall submit the amendment
to the OCC at least 30 days prior to the
date the bylaw amendment is to be
adopted by the association.
(iii) Corporate governance
procedures. A Federal stock association
may elect to follow the corporate
governance procedures of: The laws of
the state where the main office of the
association is located; the laws of the
state where the association’s holding
company, if any, is incorporated or
chartered; Delaware General
Corporation law; or The Model Business
Corporation Act, provided that such
procedures may be elected to the extent
not inconsistent with applicable Federal
statutes and regulations and safety and
soundness, and such procedures are not
of the type described in paragraph
(j)(2)(i) of this section. If this election is
selected, a Federal stock association
shall designate in its bylaws the
provision or provisions from the body or
bodies of law selected for its corporate
governance procedures, and shall file a
copy of such bylaws, which are effective
upon adoption, within 30 days after
adoption. The submission shall
indicate, where not obvious, why the
bylaw provisions meet the requirements
stated in paragraph (j)(2)(i) of this
section.
(3) Effectiveness. Any bylaw
amendment filed pursuant to paragraph
(j)(2)(ii) of this section shall
automatically be effective 30 days from
the date of filing of such amendment,
PO 00000
Frm 00084
Fmt 4701
Sfmt 4700
provided that the association follows
the requirements of its charter and
bylaws in adopting such amendment,
unless prior to the expiration of such
30-day period the OCC notifies the
association that such amendment is
rejected or that such amendment
requires an application to be filed
pursuant to paragraph (j)(2)(i) of this
section.
(4) Effect of subsequent charter or
bylaw change. Notwithstanding any
subsequent change to its charter or
bylaws, the authority of a Federal
savings association to engage in any
transaction shall be determined only by
the association’s charter or bylaws then
in effect.
(k) Shareholders of Federal stock
savings associations—(1) Shareholder
meetings. A meeting of the shareholders
of the association for the election of
directors and for the transaction of any
other business of the association shall
be held annually within 150 days after
the end of the association’s fiscal year.
Unless otherwise provided in the
association’s charter, special meetings of
the shareholders may be called by the
board of directors or on the request of
the holders of 10 percent or more of the
shares entitled to vote at the meeting, or
by such other persons as may be
specified in the bylaws of the
association. All annual and special
meetings of shareholders shall be held
at any convenient place the board of
directors may designate.
(2) Notice of shareholder meetings.
Written notice stating the place, day,
and hour of the meeting and the
purpose or purposes for which the
meeting is called shall be delivered not
fewer than 20 nor more than 50 days
before the date of the meeting, either
personally or by mail, by or at the
direction of the chairman of the board,
the president, the secretary, or the
directors, or other persons calling the
meeting, to each shareholder of record
entitled to vote at such meeting. If
mailed, such notice shall be deemed to
be delivered when deposited in the
mail, addressed to the shareholder at the
address appearing on the stock transfer
books or records of the association as of
the record date prescribed in paragraph
(i)(3) of this section, with postage
thereon prepaid. When any
shareholders’ meeting, either annual or
special, is adjourned for 30 days or
more, notice of the adjourned meeting
shall be given as in the case of an
original meeting. Notwithstanding
anything in this section, however, a
Federal stock association that is wholly
owned shall not be subject to the
shareholder notice requirement.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(3) Fixing of record date. For the
purpose of determining shareholders
entitled to notice of or to vote at any
meeting of shareholders or any
adjournment thereof, or shareholders
entitled to receive payment of any
dividend, or in order to make a
determination of shareholders for any
other proper purpose, the board of
directors shall fix in advance a date as
the record date for any such
determination of shareholders. Such
date in any case shall be not more than
60 days and, in case of a meeting of
shareholders, not less than 10 days prior
to the date on which the particular
action, requiring such determination of
shareholders, is to be taken. When a
determination of shareholders entitled
to vote at any meeting of shareholders
has been made as provided in this
section, such determination shall apply
to any adjournment thereof.
(4) Voting lists. (i) At least 20 days
before each meeting of the shareholders,
the officer or agent having charge of the
stock transfer books for the shares of the
association shall make a complete list of
the stockholders of record entitled to
vote at such meeting, or any
adjournments thereof, arranged in
alphabetical order, with the address and
the number of shares held by each. This
list of shareholders shall be kept on file
at the home office of the association and
shall be subject to inspection by any
shareholder of record or the
stockholder’s agent during the entire
time of the meeting. The original stock
transfer book shall constitute prima
facie evidence of the stockholders
entitled to examine such list or transfer
books or to vote at any meeting of
stockholders. Notwithstanding anything
in this section, however, a Federal stock
association that is wholly owned shall
not be subject to the voting list
requirements.
(ii) In lieu of making the shareholders
list available for inspection by any
shareholders as provided in paragraph
(j)(4)(i) of this section, the board of
directors may perform such acts as
required by paragraphs (a) and (b) of
Rule 14a–7 of the General Rules and
Regulations under the Securities
and Exchange Act of 1934 (17 CFR
240.14a–7) as may be duly requested in
writing, with respect to any matter
which may be properly considered at a
meeting of shareholders, by any
shareholder who is entitled to vote on
such matter and who shall defray the
reasonable expenses to be incurred by
the association in performance of the act
or acts required.
(5) Shareholder quorum. A majority of
the outstanding shares of the association
entitled to vote, represented in person
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
or by proxy, shall constitute a quorum
at a meeting of shareholders. The
shareholders present at a duly organized
meeting may continue to transact
business until adjournment,
notwithstanding the withdrawal of
enough shareholders to leave less than
a quorum. If a quorum is present, the
affirmative vote of the majority of the
shares represented at the meeting and
entitled to vote on the subject matter
shall be the act of the stockholders,
unless the vote of a greater number of
stockholders voting together or voting
by classes is required by law or the
charter. Directors, however, are elected
by a plurality of the votes cast at an
election of directors.
(6) Shareholder voting—(i) Proxies.
Unless otherwise provided in the
association’s charter, at all meetings of
shareholders, a shareholder may vote in
person or by proxy executed in writing
by the shareholder or by a duly
authorized attorney in fact. Proxies may
be given telephonically or electronically
as long as the holder uses a procedure
for verifying the identity of the
shareholder. Proxies solicited on behalf
of the management shall be voted as
directed by the shareholder or, in the
absence of such direction, as
determined by a majority of the board of
directors. No proxy shall be valid more
than eleven months from the date of its
execution except for a proxy coupled
with an interest.
(ii) Shares controlled by association.
Neither treasury shares of its own stock
held by the association nor shares held
by another corporation, if a majority of
the shares entitled to vote for the
election of directors of such other
corporation are held by the association,
shall be voted at any meeting or counted
in determining the total number of
outstanding shares at any given time for
purposes of any meeting.
(7) Nominations and new business
submitted by shareholders. Nominations
for directors and new business
submitted by shareholders shall be
voted upon at the annual meeting if
such nominations or new business are
submitted in writing and delivered to
the secretary of the association at least
five days prior to the date of the annual
meeting. Ballots bearing the names of all
the persons nominated shall be
provided for use at the annual meeting.
(8) Informal action by stockholders. If
the bylaws of the association so provide,
any action required to be taken at a
meeting of the stockholders, or any
other action that may be taken at a
meeting of the stockholders, may be
taken without a meeting if consent in
writing has been given by all the
PO 00000
Frm 00085
Fmt 4701
Sfmt 4700
28429
stockholders entitled to vote with
respect to the subject matter.
(l) Board of directors—(1) General
powers and duties. The business and
affairs of the association shall be under
the direction of its board of directors.
Directors need not be stockholders
unless the bylaws so require.
(2) Number and term. The bylaws
shall set forth a specific number of
directors, not a range. The number of
directors shall be not fewer than five nor
more than fifteen, unless a higher or
lower number has been authorized by
the OTS, prior to July 21, 2011 or the
OCC. Directors shall be elected for a
term of one to three years and until their
successors are elected and qualified. If
a staggered board is chosen, the
directors shall be divided into two or
three classes as nearly equal in number
as possible and one class shall be
elected by ballot annually.
(3) Regular meetings. The board of
directors shall determine the place,
frequency, time and procedure for
notice of regular meetings.
(4) Quorum. A majority of the number
of directors shall constitute a quorum
for the transaction of business at any
meeting of the board of directors. The
act of the majority of the directors
present at a meeting at which a quorum
is present shall be the act of the board
of directors, unless a greater number is
prescribed by regulation of the OCC.
(5) Vacancies. Any vacancy occurring
in the board of directors may be filled
by the affirmative vote of a majority of
the remaining directors although less
than a quorum of the board of directors.
A director elected to fill a vacancy shall
be elected to serve only until the next
election of directors by the
shareholders. Any directorship to be
filled by reason of an increase in the
number of directors may be filled by
election by the board of directors for a
term of office continuing only until the
next election of directors by the
shareholders.
(6) Removal or resignation of
directors. (i) At a meeting of
shareholders called expressly for that
purpose, any director may be removed
only for cause, as termination for cause
is defined in § 5.21(j)(2)(x)(B), by a vote
of the holders of a majority of the shares
then entitled to vote at an election of
directors. Associations may provide for
procedures regarding resignations in the
bylaws.
(ii) If less than the entire board is to
be removed, no one of the directors may
be removed if the votes cast against the
removal would be sufficient to elect a
director if then cumulatively voted at an
election of the class of directors of
which such director is a part.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28430
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(iii) Whenever the holders of the
shares of any class are entitled to elect
one or more directors by the provisions
of the charter or supplemental sections
thereto, the provisions of this section
shall apply, in respect to the removal of
a director or directors so elected, to the
vote of the holders of the outstanding
shares of that class and not to the vote
of the outstanding shares as a whole.
(7) Executive and other committees.
The board of directors, by resolution
adopted by a majority of the full board,
may designate from among its members
an executive committee and one or more
other committees. No committee shall
have the authority of the board of
directors with reference to: The
declaration of dividends; the
amendment of the charter or bylaws of
the association; recommending to the
stockholders a plan of merger,
consolidation, or conversion; the sale,
lease, or other disposition of all, or
substantially all, of the property and
assets of the association otherwise than
in the usual and regular course of its
business; a voluntary dissolution of the
association; a revocation of any of the
foregoing; or the approval of a
transaction in which any member of the
executive committee, directly or
indirectly, has any material beneficial
interest. The designation of any
committee and the delegation of
authority thereto shall not operate to
relieve the board of directors, or any
director, of any responsibility imposed
by law or regulation.
(8) Notice of special meetings. Written
notice of at least 24 hours regarding any
special meeting of the board of directors
or of any committee designated thereby
shall be given to each director in
accordance with the bylaws, although
such notice may be waived by the
director. The attendance of a director at
a meeting shall constitute a waiver of
notice of such meeting, except where a
director attends a meeting for the
express purpose of objecting to the
transaction of any business because the
meeting is not lawfully called or
convened. Neither the business to be
transacted at, nor the purpose of, any
meeting need be specified in the notice
or waiver of notice of such meeting. The
bylaws may provide for electronic
participation at a meeting.
(9) Action without a meeting. Any
action required or permitted to be taken
by the board of directors at a meeting
may be taken without a meeting if a
consent in writing, setting forth the
actions so taken, shall be signed by all
of the directors.
(10) Presumption of assent. A director
of the association who is present at a
meeting of the board of directors at
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
which action on any association matter
is taken shall be presumed to have
assented to the action taken unless his
or her dissent or abstention shall be
entered in the minutes of the meeting or
unless a written dissent to such action
shall be filed with the person acting as
the secretary of the meeting before the
adjournment thereof or shall be
forwarded by registered mail to the
secretary of the association within five
days after the date on which a copy of
the minutes of the meeting is received.
Such right to dissent shall not apply to
a director who voted in favor of such
action.
(11) Age limitation on directors. A
Federal association may provide a
bylaw on age limitation for directors.
Bylaws on age limitations must comply
with all Federal laws, rules and
regulations.
(m) Officers—(1) Positions. The
officers of the association shall be a
president, one or more vice presidents,
a secretary, and a treasurer or
comptroller, each of whom shall be
elected by the board of directors. The
board of directors may also designate
the chairman of the board as an officer.
The offices of the secretary and treasurer
or comptroller may be held by the same
person and the vice president may also
be either the secretary or the treasurer
or comptroller. The board of directors
may designate one or more vice
presidents as executive vice president or
senior vice president.
(2) Removal. Any officer may be
removed by the board of directors
whenever in its judgment the best
interests of the association will be
served thereby; but such removal, other
than for cause, as termination for cause
is defined in § 5.21(j)(2)(x)(B), shall be
without prejudice to the contractual
rights, if any, of the person so removed.
Employment contracts shall conform
with 12 CFR 163.39.
(3) Age limitation on officers. A
Federal association may provide a
bylaw on age limitation for officers.
Bylaws on age limitations must comply
with all Federal laws, rules, and
regulations.
(n) Certificates for shares and their
transfer—(1) Certificates for shares.
Certificates representing shares of
capital stock of the association shall be
in such form as shall be determined by
the board of directors and approved by
the OCC. The name and address of the
person to whom the shares are issued,
with the number of shares and date of
issue, shall be entered on the stock
transfer books of the association. All
certificates surrendered to the
association for transfer shall be
cancelled and no new certificate shall
PO 00000
Frm 00086
Fmt 4701
Sfmt 4700
be issued until the former certificate for
a like number of shares shall have been
surrendered and cancelled, except that
in the case of a lost or destroyed
certificate a new certificate may be
issued upon such terms and indemnity
to the association as the board of
directors may prescribe.
(2) Transfer of shares. Transfer of
shares of capital stock of the association
shall be made only on its stock transfer
books. Authority for such transfer shall
be given only by the holder of record or
by a legal representative, who shall
furnish proper evidence of such
authority, or by an attorney authorized
by a duly executed power of attorney
and filed with the association. The
transfer shall be made only on surrender
for cancellation of the certificate for the
shares. The person in whose name
shares of capital stock stand on the
books of the association shall be deemed
by the association to be the owner for
all purposes.
■ 10. Section 5.23 is added to read as
follows:
§ 5.23 Conversion to become a Federal
savings association.
(a) Authority. 12 U.S.C. 35, 1462a,
1463, 1464, 1467a, 2903, and
5412(b)(2)(B).
(b) Scope. (1) This section describes
procedures and standards governing
OCC review and approval of an
application by a mutual depository
institution to convert to a Federal
mutual savings association or an
application by a stock depository
institution to convert to a Federal stock
savings association.
(2) As used in this section, depository
institution means any commercial bank
(including a private bank), a savings
bank, a trust company, a savings and
loan association, a building and loan
association, a homestead association, a
cooperative bank, an industrial bank or
a credit union, chartered in the United
States and having its principal office
located in the United States.
(c) Licensing requirements. A
depository institution that is mutual in
form (‘‘mutual depository institution’’)
shall submit an application and obtain
prior OCC approval to convert to a
Federal mutual savings association. A
stock depository institution shall submit
an application and obtain prior OCC
approval to convert to a Federal stock
savings association. At the time of
conversion, the applicant must have
deposits insured by the Federal Deposit
Insurance Corporation (FDIC). An
institution that is not already insured by
the FDIC must apply to the FDIC, and
obtain FDIC approval, for deposit
insurance before converting.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(d) Conversion of a mutual depository
institution or a stock depository
institution to a Federal savings
association—(1) Policy. Consistent with
the OCC’s chartering policy, it is OCC
policy to allow conversion to a Federal
savings association charter by another
financial institution that can operate
safely and soundly as a Federal savings
association in compliance with
applicable laws, regulations, and
policies. This includes consideration of
the factors set out in section 5(e) of the
Home Owners’ Loan Act, 12 U.S.C.
1464(e). The converting financial
institution must obtain all necessary
regulatory and shareholder or member
approvals. The OCC may deny an
application by any mutual depository
institution or stock depository
institution to convert to a Federal
mutual savings association charter or
Federal stock association charter,
respectively, on the basis of the
standards for denial set forth in § 5.13(b)
or when conversion would permit the
applicant to escape supervisory action
by its current regulators.
(2) Procedures—(i) Prefiling
communications. The applicant should
consult with the appropriate OCC
licensing office prior to filing if it
anticipates that its application will raise
unusual or complex issues. If a prefiling
meeting is appropriate, it will normally
be held in the OCC licensing office
where the application will be filed, but
may be held at another location at the
request of the applicant.
(ii) Application. A mutual depository
institution or a stock depository
institution shall submit its application
to convert to a Federal mutual savings
association or Federal stock depository
association, respectively, to the
appropriate OCC licensing office and
shall send a copy of the application to
its current appropriate Federal banking
agency. The application must:
(A) Be signed by the president or
other duly authorized officer;
(B) Identify each branch that the
resulting financial institution expects to
operate after conversion;
(C) Include the institution’s most
recent audited financial statements (if
any);
(D) Include the latest report of
condition and report of income (the
most recent daily statement of condition
will suffice if the institution does not
file these reports);
(E) Unless otherwise advised by the
OCC in a prefiling communication,
include an opinion of counsel that, in
the case of state-chartered institutions,
the conversion is not in contravention of
applicable state law, or in the case of
Federally-chartered institutions, the
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
conversion is not in contravention of
applicable Federal law;
(F) State whether the institution
wishes to exercise fiduciary powers
after the conversion;
(G) Identify all subsidiaries, service
corporation investments, bank service
company investments, and other equity
investments that will be retained
following the conversion, and provide
the information and analysis of the
subsidiaries’ activities and the service
corporation investments and other
equity investments that would be
required if the converting mutual
institution or stock institution were a
Federal mutual savings association or
Federal stock savings association,
respectively, establishing each
subsidiary or making each service
corporation or other equity investment
pursuant to §§ 5.35, 5.36, 5.38, or 5.59,
or other applicable law and regulation;
(H) Identify any nonconforming assets
(including nonconforming subsidiaries)
and nonconforming activities that the
institution engages in, and describe the
plans to retain or divest those assets and
activities;
(I) Include a business plan if the
converting institution has been
operating for less than three years, plans
to make significant changes to its
business after the conversion, or at the
request of the OCC;
(J) Include a list of all outstanding
conditions or other requirements
imposed by the institution’s current
appropriate Federal banking agency
and, if applicable, current state bank
supervisor or state attorney-general in
any cease and desist order, written
agreement, other formal enforcement
order, memorandum of understanding,
approval of any application, notice or
request, commitment letter, board
resolution, or in any other manner,
including the converting institution’s
analysis whether any such actions
prohibit conversion under 12 U.S.C. 35,
and the converting institution’s plans
regarding adhering to such conditions
and requirements after conversion; and
(K) If the converting institution does
not meet the qualified thrift lender test
of 12 U.S.C. 1467a(m), include a plan to
achieve compliance within a reasonable
period of time and a request for an
exception from the OCC.
(iii) The OCC may permit a Federal
savings association to retain
nonconforming assets of a converting
institution for the time period
prescribed by the OCC following a
conversion, subject to conditions and an
OCC determination of the carrying value
of the retained assets consistent with the
requirements of section 5(c) of the
HOLA relating to loans and
PO 00000
Frm 00087
Fmt 4701
Sfmt 4700
28431
investments. The OCC may permit a
Federal savings association to continue
nonconforming activities of a converting
institution for the time period
prescribed by the OCC following a
conversion, subject to conditions.
(iv) Approval for an institution to
convert to a Federal savings association
expires if the conversion has not
occurred within six months of the
OCC’s approval of the application,
unless the OCC grants an extension of
time.
(v) When the OCC determines that the
applicant has satisfied all statutory and
regulatory requirements and any other
conditions, the OCC issues a charter.
The charter provides that the institution
is authorized to begin conducting
business as a Federal mutual savings
association or a Federal stock savings
association as of a specified date.
(3) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to this section.
However, if the OCC concludes that an
application presents significant or novel
policy, supervisory, or legal issues, the
OCC may determine that any or all parts
of §§ 5.8, 5.10, and 5.11 apply.
(4) Expedited review. An application
by an eligible national bank to convert
to a Federal savings association charter
is deemed approved by the OCC as of
the 60th day after the filing is received
by the OCC, unless the OCC notifies the
applicant prior to that date that the
filing is not eligible for expedited
review under § 5.13(a)(2).
(e) Conversion of a mutual depository
institution to a Federal mutual savings
association—supplemental rules. In
addition to the rules and procedures set
forth in paragraph (d) of this section, an
applicant converting from a mutual
depository institution to a Federal
mutual savings association shall comply
with the following: After a Federal
charter is issued to a converting
institution, the association’s members
shall after due notice, or upon a valid
adjournment of a previous legal
meeting, hold a meeting to elect
directors and take care of all other
actions necessary to fully effectuate the
conversion and operate the association
in accordance with law and these rules
and regulations. Immediately thereafter,
the board of directors shall meet, elect
officers, and transact any other
appropriate business.
(f) Conversion of a national bank to a
Federal stock savings association—
supplemental rules—(1) Additional
procedures. A national bank may
convert to a Federal stock savings
association. In addition to the rules and
procedures set forth in paragraph (d) of
this section, a national bank that desires
E:\FR\FM\18MYR2.SGM
18MYR2
28432
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
to convert to a Federal stock savings
association shall follow the
requirements and procedures set forth
in 12 U.S.C. 214a as if it were
converting to a state bank and include
in its application information
demonstrating compliance with the
applicable requirements of 12 U.S.C.
214a.
(2) Termination and change of status.
The appropriate OCC licensing office
provides instructions to the converting
national bank for terminating its status
as a national bank and beginning its
status as a Federal savings association.
(g) Continuation of business and
entity. The existence of the converting
institution shall continue in the
resulting Federal savings association.
The resulting Federal savings
association shall be considered the same
business and entity as the converting
institution, although as to rights,
powers, and duties, the resulting
Federal savings association is a Federal
savings association. Any and all of the
assets and other property (whether real,
personal, mixed, tangible or intangible,
including choses in action, rights, and
credits) of the converting institution
become assets and property of the
resulting Federal savings association
when the conversion occurs. Similarly,
any and all of the obligations and debts
of and claims against the converting
institution become obligations and debts
of and claims against the Federal
savings association when the conversion
occurs.
■ 11. Section 5.24 is revised to read as
follows:
asabaliauskas on DSK5VPTVN1PROD with RULES
§ 5.24.
bank.
Conversion to become a national
(a) Authority. 12 U.S.C. 35, 93a, 214a,
214b, 214c, and 2903.
(b) Licensing requirements. A state
bank, a stock state savings association,
or a Federal stock savings association
shall submit an application and obtain
prior OCC approval to convert to a
national bank charter. A Federal mutual
savings association that plans to convert
to a national bank must first convert to
a Federal stock savings association
under 12 CFR part 192.
(c) Scope. (1) This section describes
procedures and standards governing
OCC review and approval of an
application by a state bank, a stock state
savings association, or a Federal stock
savings association to convert to a
national bank charter.
(2) As used in this section, state bank
includes a state bank as defined in 12
U.S.C. 214(a).
(d) Policy. Consistent with the OCC’s
chartering policy, it is OCC policy to
allow conversion to a national bank
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
charter by another financial institution
that can operate safely and soundly as
a national bank in compliance with
applicable laws, regulations, and
policies. A converting financial
institution also must obtain all
necessary regulatory and shareholder
approvals. The OCC may deny an
application by any state bank, stock
state savings association, and any
Federal stock savings association to
convert to a national bank charter on the
basis of the standards for denial set forth
in § 5.13(b), or when conversion would
permit the applicant to escape
supervisory action by its current
regulators.
(e) Procedures—(1) Prefiling
communications. The applicant should
consult with the appropriate OCC
licensing office prior to filing if it
anticipates that its application will raise
unusual or complex issues. If a prefiling
meeting is appropriate, it will normally
be held at the OCC licensing office
where the application will be filed, but
may be held at another location at the
request of the applicant.
(2) Application. A state bank, a stock
state savings association, or a Federal
stock savings association shall submit
its application to convert to a national
bank to the appropriate OCC licensing
office and send a copy to its current
appropriate Federal banking agency.
The application must:
(i) Be signed by the president or other
duly authorized officer;
(ii) Identify each branch that the
resulting bank expects to operate after
conversion;
(iii) Include the institution’s most
recent audited financial statements (if
any);
(iv) Include the latest report of
condition and report of income (the
most recent daily statement of condition
will suffice if the institution does not
file these reports);
(v) Unless otherwise advised by the
OCC in a prefiling communication,
include an opinion of counsel that, in
the case of a state bank, the conversion
is not in contravention of applicable
state law, or in the case of a Federal
stock savings association, the
conversion is not in contravention of
applicable Federal law;
(vi) State whether the institution
wishes to exercise fiduciary powers
after the conversion;
(vii) Identify all subsidiaries, bank
service company investments, and other
equity investments that will be retained
following the conversion, and provide
the information and analysis of the
subsidiaries’ activities, the bank service
company investments, and the other
equity investments that would be
PO 00000
Frm 00088
Fmt 4701
Sfmt 4700
required if the converting bank or
savings association were a national bank
establishing each subsidiary or making
each bank service company investment
or other equity investment pursuant to
§§ 5.34, 5.35, 5.36, 5.39, 12 CFR part 1,
or other applicable law and regulation;
(viii) Identify any nonconforming
assets (including nonconforming
subsidiaries) and nonconforming
activities that the institution engages in
and describe the plans to retain or
divest those assets and activities;
(ix) Include a business plan if the
converting institution has been
operating for fewer than three years,
plans to make significant changes to its
business after the conversion, or at the
request of the OCC; and
(x) List all outstanding conditions or
other requirements imposed by the
institution’s current appropriate Federal
banking agency and, if applicable,
current state bank supervisor or state
attorney-general in any cease and desist
order, written agreement, other formal
enforcement order, memorandum of
understanding, approval of any
application, notice or request,
commitment letter, board resolution, or
in any other manner, including the
converting institution’s analysis
whether the conversion is prohibited
under 12 U.S.C. 35, and state the
institution’s plans regarding adhering to
such conditions or requirements after
conversion.
(3) The OCC may permit a national
bank to retain nonconforming assets of
a state bank or stock state savings
association, subject to conditions and an
OCC determination of the carrying value
of the retained assets, pursuant to 12
U.S.C. 35. The OCC may permit a
national bank to continue
nonconforming activities of a state bank
or stock state savings association, or to
retain the nonconforming assets or
nonconforming activities of a Federal
stock savings association, for a
reasonable period of time following a
conversion, subject to conditions
imposed by the OCC.
(4) Approval for an institution to
convert to a national bank expires if the
conversion has not occurred within six
months of the OCC’s approval of the
application, unless the OCC grants an
extension of time.
(5) When the OCC determines that the
applicant has satisfied all statutory and
regulatory requirements, including
those set forth in 12 U.S.C. 35, and any
other conditions, the OCC issues a
charter certificate. The certificate
provides that the institution is
authorized to begin conducting business
as a national bank as of a specified date.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(f) Conversion of a Federal stock
savings association to a national bank—
supplemental rules—(1) Additional
information. A Federal stock savings
association may convert to a national
bank. In addition to the rules and
procedures set forth in paragraph (e) of
this section, a Federal stock savings
association that desires to convert to a
national bank shall include in its
application information demonstrating
compliance with applicable laws
regarding the permissibility,
requirements, and procedures for
conversions, including any applicable
stockholder or account holder approval
requirements.
(2) Termination and change of status.
The appropriate OCC licensing office
provides instructions to the converting
Federal stock savings association for
terminating its status as a Federal stock
savings association and beginning its
status as a national bank.
(g) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to this section.
However, if the OCC concludes that an
application presents significant or novel
policy, supervisory, or legal issues, the
OCC may determine that any or all of
§§ 5.8, 5.10, and 5.11 apply.
(h) Expedited review. An application
by an eligible savings association to
convert to a national bank charter is
deemed approved by the OCC as of the
60th day after the filing is received by
the OCC, unless the OCC notifies the
applicant prior to that date that the
filing is not eligible for expedited
review under § 5.13(a)(2).
(i) Continuation of business and
corporate entity. The corporate
existence of the converting institution
shall continue in the resulting national
bank. The resulting national bank shall
be considered the same business and
corporate entity as the converting
institution, although as to rights,
powers, and duties, the resulting
national bank is a national bank. Any
and all of the assets and other property
(whether real, personal, mixed, tangible
or intangible, including choses in
action, rights, and credits) of the
converting institution become assets
and property of the resulting national
bank when the conversion occurs.
Similarly, any and all of the obligations
and debts of and claims against the
converting institution become
obligations and debts of and claims
against the national bank when the
conversion occurs.
12. Section 5.25 is added to read as
follows:
■
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
§ 5.25 Conversion from a national bank or
Federal savings association to a state bank
or state savings association.
(a) Authority. 12 U.S.C. 93a, 214a,
214b, 214c, 214d, 1462a, 1463, 1464,
and 5412(b)(2)(B).
(b) Licensing requirement. A national
bank shall give notice to the OCC before
converting to a state bank (including a
state bank as defined in 12 U.S.C.
214(a)) or a state savings association. A
Federal savings association shall give
notice to the OCC before converting to
a state savings association or a state
bank. A Federal mutual savings
association that plans to convert to a
stock state bank must first convert to a
Federal stock savings association under
12 CFR part 192.
(c) Scope. This section describes the
procedures for a national bank seeking
to convert to a state bank or a state
savings association or for a Federal
savings association seeking to convert to
a state savings association or a state
bank.
(d) Procedures—(1) National banks. A
national bank may convert to a state
bank (including a state bank as defined
in 214(a)) or a state savings association
in accordance with 12 U.S.C. 214a and
214c, without prior OCC approval,
subject to compliance with 12 U.S.C.
214d. Termination of a national bank’s
status as a national bank occurs upon
the bank’s completion of the
requirements of 12 U.S.C. 214a, and
upon the OCC’s receipt of the bank’s
national bank charter in connection
with the consummation of the
conversion.
(2) Federal savings associations. A
Federal savings association may convert
to a state savings association or to a state
bank, without prior OCC approval,
subject to compliance with 12 U.S.C.
1464(i)(6). Termination of a Federal
savings association’s status as a Federal
savings association occurs upon receipt
of the Federal savings association’s
charter in connection with the
consummation of the conversion.
(3) Notice of intent. (i) A national
bank that desires to convert to a state
bank (including a state bank as defined
in 214(a)) or state savings association, or
a Federal savings association that
desires to convert to a state savings
association or a state bank, shall submit
a notice of intent to convert to the
appropriate OCC licensing office. The
national bank or Federal savings
association shall file this notice with the
OCC at the time it files a conversion
application with the appropriate state
authority or the prospective appropriate
Federal banking agency. The national
bank or Federal savings association also
shall transmit a copy of the conversion
PO 00000
Frm 00089
Fmt 4701
Sfmt 4700
28433
application to the prospective
appropriate Federal banking agency if it
has not already done so.
(ii) The notice shall include:
(A) A copy of the conversion
application; and
(B) An analysis demonstrating that the
conversion is in compliance with laws
of the applicable jurisdictions regarding
the permissibility, requirements, and
procedures for conversions, including
any applicable stockholder or account
holder approval requirements.
(4) Consultation. The OCC may
consult with the appropriate state
authorities or the prospective
appropriate Federal banking agency
regarding the proposed conversion.
(5) Termination of status. After
receipt of the notice, the appropriate
OCC licensing office provides
instructions to the national bank or
Federal savings association for
terminating its status as a national bank
or Federal savings association.
(e) Exceptions to rules of general
applicability. Sections 5.5 through 5.8
and 5.10 through 5.13 do not apply to
this section.
■ 13. Section 5.26 is revised to read as
follows:
§ 5.26 Fiduciary powers of national banks
and Federal savings associations.
(a) Authority. 12 U.S.C. 92a and
1462a, 1463, 1464(n), and 5412(b)(2)(B).
(b) Licensing requirements. A national
bank or Federal savings association
must submit an application and obtain
prior approval from, or in certain
circumstances file a notice with, the
OCC in order to exercise fiduciary
powers. No approval or notice is
required in the following circumstances:
(1) Where two or more national banks
consolidate or merge, and any of the
national banks has, prior to the
consolidation or merger, received OCC
approval to exercise fiduciary powers
and that approval is in force at the time
of the consolidation or merger, the
resulting national bank may exercise
fiduciary powers in the same manner
and to the same extent as the national
bank to which approval was originally
granted;
(2) Where two or more Federal
savings associations consolidate or
merge, and any of the Federal savings
associations has, prior to the
consolidation or merger, received
approval from the OCC or the Office of
Thrift Supervision to exercise fiduciary
powers and that approval is in force at
the time of the consolidation or merger,
the resulting Federal savings association
may exercise fiduciary powers in the
same manner and to the same extent as
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28434
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
the Federal savings association to which
approval was originally granted;
(3) Where a national bank with prior
OCC approval to exercise fiduciary
powers is the resulting bank in a merger
or consolidation with a state bank, state
savings association, or Federal savings
association and the national bank will
exercise fiduciary powers in the same
manner and to the same extent to which
approval was originally granted; and
(4) Where a Federal savings
association with prior approval from the
OCC or the Office of Thrift Supervision
to exercise fiduciary powers is the
resulting savings association in a merger
or consolidation with a state bank, state
savings association, or national bank
and the Federal savings association will
exercise fiduciary powers in the same
manner and to the same extent to which
approval was originally granted.
(c) Scope. This section sets forth the
procedures governing OCC review and
approval of an application, and in
certain cases the filing of a notice, by a
national bank or Federal savings
association to exercise fiduciary powers.
Fiduciary activities of national banks
are subject to the provisions of 12 CFR
part 9. Fiduciary activities of Federal
savings associations are subject to the
provisions of 12 CFR part 150.
(d) Policy. The exercise of fiduciary
powers is primarily a management
decision of the national bank or Federal
savings association. The OCC generally
permits a national bank or Federal
savings association to exercise fiduciary
powers if the bank or savings
association is operating in a satisfactory
manner, the proposed activities comply
with applicable statutes and regulations,
and the bank or savings association
retains qualified fiduciary management.
(e) Procedure—(1) In general. The
following institutions must obtain
approval from the OCC in order to
exercise fiduciary powers:
(i) A national bank or Federal savings
association without fiduciary powers:
(ii) A national bank without fiduciary
powers that desires to exercise fiduciary
powers as the resulting bank after
merging with a state bank, state savings
association, or Federal savings
association with fiduciary powers or a
Federal savings association without
fiduciary powers that desires to exercise
fiduciary powers as the resulting
savings association after merging with a
state bank, state savings association or
national bank with fiduciary powers;
(iii) A national bank that results from
the conversion of a state bank or a state
or Federal savings association that was
exercising fiduciary powers prior to the
conversion or a Federal savings
association that results from a
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
conversion of a state or national bank or
a state savings association that was
exercising fiduciary powers prior to the
conversion; and
(iv) A national bank or Federal
savings association that has received
approval from the OCC to exercise
limited fiduciary powers that desires to
exercise full fiduciary powers.
(2) Application. (i) Except as provided
in paragraph (e)(2)(ii) of this section, a
national bank or Federal savings
association that desires to exercise
fiduciary powers shall submit to the
OCC an application requesting approval.
The application must contain:
(A) A statement requesting full or
limited powers (specifying which
powers);
(B) A statement that the capital and
surplus of the national bank or Federal
savings association is not less than the
capital and surplus required by state
law of state banks, trust companies, and
other corporations exercising
comparable fiduciary powers;
(C) Sufficient biographical
information on proposed trust
management personnel to enable the
OCC to assess their qualifications;
(D) A description of the locations
where the national bank or Federal
savings association will conduct
fiduciary activities;
(E) If requested by the OCC, an
opinion of counsel that the proposed
activities do not violate applicable
Federal or state law, including citations
to applicable law; and
(F) Any other information necessary
to enable the OCC to sufficiently assess
the factors described in paragraph
(e)(2)(iii) of this section.
(ii) If approval to exercise fiduciary
powers is desired in connection with
any other transaction subject to an
application under this part, the
applicant covered under paragraph
(e)(1)(ii), (e)(1)(iii), or (e)(1)(iv) of this
section may include a request for
approval of fiduciary powers, including
the information required by paragraph
(e)(2)(i) of this section, as part of its
other application. The OCC does not
require a separate application requesting
approval to exercise fiduciary powers
under these circumstances.
(iii) When reviewing any application
filed under this section, the OCC
considers factors such as the following:
(A) The financial condition of the
national bank or Federal savings
association;
(B) The adequacy of the national
bank’s or Federal savings association’s
capital and surplus and whether it is
sufficient under the circumstances and
not less than the capital and surplus
required by state law or state banks,
PO 00000
Frm 00090
Fmt 4701
Sfmt 4700
trust companies, and other corporations
exercising comparable fiduciary powers;
(C) The character and ability of
proposed trust management, including
qualifications, experience, and
competency. The OCC must approve
any trust management change the bank
or savings association makes prior to
commencing trust activities;
(D) The adequacy of the proposed
business plan, if applicable;
(E) The needs of the community to be
served; and
(F) Any other factors or circumstances
that the OCC considers proper.
(3) Expedited review. An application
by an eligible national bank or eligible
Federal savings association to exercise
fiduciary powers is deemed approved
by the OCC as of the 30th day after the
application is received by the OCC,
unless the OCC notifies the bank or
savings association prior to that date
that the filing is not eligible for
expedited review under § 5.13(a)(2).
(4) Permit. Approval of an application
under this section constitutes a permit
under 12 U.S.C. 92a for national banks
and 12 U.S.C. 1464(n) for Federal
savings associations to conduct the
fiduciary powers requested in the
application.
(5) Notice required. A national bank
or Federal savings association that has
ceased to conduct previously approved
fiduciary powers for 18 consecutive
months must provide the OCC with a
notice describing the nature and manner
of the activities proposed to be
conducted and containing the
information required by paragraph
(e)(2)(i) of this section 60 days prior to
commencing any fiduciary activity.
(6) Notice of fiduciary activities in
additional states. (i) No further
application under this section is
required when a national bank or
Federal savings association with
existing OCC approval to exercise
fiduciary powers plans to engage in any
of the activities specified in § 9.7(d) of
this chapter or to conduct activities
ancillary to its fiduciary business, in a
state in addition to the state described
in the application for fiduciary powers
that the OCC has approved.
(ii) Unless the national bank or
Federal savings association provides
notice through other means (such as a
merger application), the national bank
or Federal savings association shall
provide written notice to the OCC no
later than 10 days after it begins to
engage in any of the activities specified
in § 9.7(d) of this chapter in a state in
addition to the state described in the
application for fiduciary powers that the
OCC has approved. The written notice
must identify the new state or states
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
involved, identify the fiduciary
activities to be conducted, and describe
the extent to which the activities differ
materially from the fiduciary activities
the national bank or Federal savings
association previously conducted.
(iii) No notice is required if the
national bank or Federal savings
association is conducting only activities
ancillary to its fiduciary business
through a trust representative office or
otherwise.
(7) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to this section.
However, if the OCC concludes that an
application presents significant or novel
policy, supervisory, or legal issues, the
OCC may determine that any or all parts
of §§ 5.8, 5.10, and 5.11 apply.
(8) Expiration of approval. Approval
expires if a national bank or Federal
savings association does not commence
fiduciary activities within 18 months
from the date of approval, unless the
OCC grants an extension of time.
■ 14. Section 5.30 is revised to read as
follows:
asabaliauskas on DSK5VPTVN1PROD with RULES
§ 5.30 Establishment, acquisition, and
relocation of a branch of a national bank.
(a) Authority. 12 U.S.C. 1–42 and
2901–2907.
(b) Licensing requirements. A national
bank shall submit an application and
obtain prior OCC approval in order to
establish or relocate a branch.
(c) Scope—(1) In general. This section
describes the procedures and standards
governing OCC review and approval of
an application by a national bank to
establish a new branch or to relocate a
branch.
(2) Branch established through a
conversion or business combination.
The standards of this section governing
review and approval of applications by
the OCC and, as applicable, 12 U.S.C.
36(b), but not the application
procedures set forth in this section,
apply to branches acquired or retained
in a conversion approved under 12 CFR
5.24 or a business combination
approved under § 5.33. A branch
acquired or retained in a conversion or
business combination is subject to the
application procedures set forth in
§§ 5.24 or 5.33.
(d) Definitions—(1) Branch includes
any branch bank, branch office, branch
agency, additional office, or any branch
place of business established by a
national bank in the United States or its
territories at which deposits are
received, checks paid, or money lent.
(i) A branch established by a national
bank includes a mobile facility,
temporary facility, intermittent facility,
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
drop box or a seasonal agency as
described in 12 U.S.C. 36(c).
(ii) A facility otherwise described in
this paragraph (d)(1) is not a branch if:
(A) The bank establishing the facility
does not permit members of the public
to have physical access to the facility for
purposes of making deposits, paying
checks, or borrowing money (e.g., an
office established by the bank that
receives deposits only through the
mail); or
(B) It is located at the site of, or is an
extension of, an approved main office or
branch office of the national bank. The
OCC determines whether a facility is an
extension of an existing main office or
branch office on a case-by-case basis.
For this purpose, the OCC will consider
a drive-in or pedestrian facility located
within 500 feet of a public entrance to
an existing main office or branch office
to be an extension of the existing main
office or branch office, provided the
functions performed at the drive-in or
pedestrian facility are limited to
functions that are ordinarily performed
at a teller window.
(iii) A branch does not include an
automated teller machine (ATM), a
remote service unit (such as an
automated loan machine or personal
computer used in providing financial
services), a loan production office, a
deposit production office, a trust office,
an administrative office, a data
processing office, or any other office
that does not engage in any of the
activities in paragraph (d)(1) of this
section.
(2) Home state means the state in
which the national bank’s main office is
located.
(3) Intermittent branch means a
branch that is operated by a national
bank for one or more limited periods of
time to provide branch banking services
at a specified recurring event, on the
grounds or premises where the event is
held or at a fixed site adjacent to the
grounds or premises where the event is
held, and exclusively during the
occurrence of the event. Examples of an
intermittent branch include the
operation of a branch on the campus of,
or at a fixed site adjacent to the campus
of, a specific college during school
registration periods; or the operation of
a branch during a state fair on state
fairgrounds or at a fixed site adjacent to
the fairgrounds.
(4) Messenger service has the meaning
set forth in 12 CFR 7.1012.
(5) Mobile branch is a branch of a
national bank, other than a messenger
service branch, that does not have a
single, permanent site, and includes a
vehicle that travels to various public
locations to enable customers to
PO 00000
Frm 00091
Fmt 4701
Sfmt 4700
28435
conduct their banking business. A
mobile branch may provide services at
various regularly scheduled locations or
it may be open at irregular times and
locations such as at county fairs,
sporting events, or school registration
periods. A branch license is needed for
each mobile unit.
(6) Temporary branch means a branch
of a national bank that is located at a
fixed site and which, from the time of
its opening, is scheduled to, and will,
permanently close no later than a
certain date (not longer than one year
after the branch is first opened)
specified in the branch application and
the public notice.
(e) Policy. In determining whether to
approve an application to establish or
relocate a branch, the OCC is guided by
the following principles:
(1) Maintaining a safe and sound
banking system;
(2) Encouraging a national bank to
provide fair access to financial services
by helping to meet the credit needs of
its entire community;
(3) Ensuring compliance with laws
and regulations; and
(4) Promoting fair treatment of
customers including efficiency and
better service.
(f) Procedures—(1) In general. Except
as provided in paragraph (f)(2) of this
section, each national bank proposing to
establish a branch shall submit to the
appropriate OCC licensing office a
separate application for each proposed
branch.
(2) Messenger services. A national
bank may request approval, through a
single application, for multiple
messenger services to serve the same
general geographic area. (See 12 CFR
7.1012). Unless otherwise required by
law, the bank need not list the specific
locations to be served.
(3) Jointly established branches. If a
national bank proposes to establish a
branch jointly with one or more national
banks or other depository institutions,
only one of the national banks must
submit a branch application. The
national bank submitting the
application may act as agent for all
national banks in the group of
depository institutions proposing to
share the branch. The application must
include the name and main office
address of each national bank in the
group.
(4) Intermittent branches. Prior to
operating an intermittent branch, a
national bank shall file a branch
application and publish notice in
accordance with § 5.8, both of which
shall identify the event at which the
branch will be operated; designate a
location for operation of the branch
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28436
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
which shall be on the grounds or
premises at which the event is held or
on a fixed site adjacent to those grounds
or premises; and specify the
approximate time period during which
the event will be held and during which
the branch will operate, including
whether operation of the branch will be
on an annual or otherwise recurring
basis. If the branch is approved, then the
bank need not obtain approval each
time it seeks to operate the branch in
accordance with the original application
and approval.
(5) Authorization. The OCC
authorizes operation of the branch when
all requirements and conditions for
opening are satisfied.
(6) Expedited review. An application
submitted by an eligible bank to
establish or relocate a branch is deemed
approved by the OCC as of the 15th day
after the close of the applicable public
comment period or the 45th day after
the filing is received by the OCC (or in
the case of a short-distance relocation
the 30th day after the filing is received
by the OCC), whichever is later, unless
the OCC notifies the bank prior to that
date that the filing is not eligible for
expedited review, or the expedited
review process is extended, under
§ 5.13(a)(2). An application to establish
or relocate more than one branch is
deemed approved by the OCC as of the
15th day after the close of the last public
comment period.
(g) Interstate branches. A national
bank that seeks to establish and operate
a de novo branch in any state other than
the bank’s home state or a state in which
the bank already has a branch shall
satisfy the standards and requirements
of 12 U.S.C. 36(g).
(h) Exceptions to rules of general
applicability. (1) A national bank filing
an application for a mobile branch or
messenger service branch shall publish
a public notice, as described in § 5.8, in
the communities in which the bank
proposes to engage in business.
(2) The comment period on an
application to engage in a short-distance
relocation is 15 days.
(3) The OCC may waive or reduce the
public notice and comment period, as
appropriate, with respect to an
application to establish a branch to
restore banking services to a community
affected by a disaster or to temporarily
replace banking facilities where,
because of an emergency, the bank
cannot provide services or must curtail
banking services.
(4) The OCC may waive or reduce the
public notice and comment period, as
appropriate, for an application by a
national bank with a CRA rating of
Satisfactory or better to establish a
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
temporary branch which, if it were
established by a state bank to operate in
the manner proposed, would be
permissible under state law without
state approval.
(i) Expiration of approval. Approval
expires if a branch has not commenced
business within 18 months after the date
of approval unless the OCC grants an
extension.
(j) Branch closings. A national bank
shall comply with the requirements of
12 U.S.C. 1831r–1 with respect to
procedures for branch closings.
15. Section 5.31 is added to read as
follows:
■
§ 5.31 Establishment, acquisition, and
relocation of a branch and establishment of
an agency office of a Federal savings
association.
(a) Authority. 12 U.S.C. 1462a, 1463,
1464. 2901–2907 and 5412(b)(2)(B).
(b) Licensing requirements. A Federal
savings association shall submit an
application and obtain prior OCC
approval in order to establish or relocate
a branch or to establish an agency office
or conduct additional activities at an
agency office, if required under this
section.
(c) Scope—(1) In general. This section
describes the procedures and standards
governing OCC review and approval of
an application by a Federal savings
association to establish a new branch or
to relocate a branch and the
circumstances in which a Federal
savings association may establish or
relocate a branch without application to
the OCC. It also describes the authority
of a Federal savings association to
establish an agency office.
(2) Branch established through a
conversion or business combination.
The standards of this section governing
review and approval of applications by
the OCC, but not the application
procedures set forth in this section,
apply to branches acquired or retained
in a conversion approved under 12 CFR
5.23 or a business combination
approved under 12 CFR 5.33. A branch
acquired or retained in a conversion or
business combination is subject to the
application procedures set forth in
§§ 5.23 or 5.33.
(3) Branching by savings associations
in the District of Columbia. This section
also implements section 5(m) of the
HOLA, 12 U.S.C. 1464(m), addressing
branching by savings associations in the
District of Columbia.
(d) Definitions. (1) A branch office of
a Federal savings association for
purposes of this section is a branch
office as defined in 12 CFR 145.92(a).
PO 00000
Frm 00092
Fmt 4701
Sfmt 4700
(2) Home state means the state in
which the Federal savings association’s
home office is located.
(e) Policy. In determining whether to
approve an application to establish or
relocate a branch, the OCC is guided by
the following principles:
(1) Maintaining a safe and sound
banking system;
(2) Encouraging a Federal savings
association to provide fair access to
financial services by helping to meet the
credit needs of its entire community;
(3) Ensuring compliance with laws
and regulations; and
(4) Promoting fair treatment of
customers including efficiency and
better service.
(f) Procedures—(1) Application
requirements. (i) Except as provided in
paragraph (f)(2) of this section, each
Federal savings association proposing to
establish or relocate a branch shall
submit to the appropriate OCC licensing
office a separate application for each
proposed branch.
(ii) Authorization. The OCC
authorizes operation of the branch when
all requirements and conditions for
opening are satisfied.
(iii) Expedited review. If an
application to establish or relocate a
branch is required of an eligible Federal
savings association, the application is
deemed approved by the OCC as of the
15th day after the close of the applicable
public comment period or the 45th day
after the filing is received by the OCC,
whichever is later, unless the OCC
notifies the savings association prior to
that date that the filing is not eligible for
expedited review, or the expedited
review process is extended, under
§ 5.13(a)(2). An application to establish
or relocate more than one branch is
deemed approved by the OCC as of the
15th day after the close of the last public
comment period.
(2) Exceptions. Except as provided in
paragraph (j) of this section, a Federal
savings association is not required to
submit an application and receive OCC
approval under the following
circumstances:
(i) Drive-in or pedestrian offices. A
Federal savings association may
establish a drive-in or pedestrian office
that is located within 500 feet of a
public entrance to its existing home or
branch office, provided the functions
performed at the office are limited to
functions that are ordinarily performed
at a teller window.
(ii) Short-distance relocation. A
Federal savings association may change
the permanent location of an existing
branch office to a site that is within the
market area and short-distance location
area, as defined in § 5.3(l).
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(iii) Highly rated Federal savings
associations. A Federal savings
association that is an eligible savings
association as defined in § 5.3(g) may
change the permanent location of, or
establish a new, branch office if it meets
all of the following requirements:
(A) It published a public notice under
§ 5.8 of its intent to change the location
of the branch office or establish a new
branch office. The public notice must be
published at least 35 days before the
proposed action establishment or
relocation. If the notice is published
more than 12 months before the
proposed action, the publication is
invalid.
(B) If the Federal savings association
intends to change the location of an
existing branch office, it must post a
notice of its intent in a prominent
location in the existing office to be
relocated. This notice must be posted
for 30 days from the date of publication
of the initial public notice described in
paragraph (f)(2)(iii)(A) of this section.
(C)(1) No person files a comment
opposing the proposed action within 30
days after the date of the publication of
the public notice; or
(2) A person files a comment
opposing the proposed action and the
OCC determines that the comment
raises issues that are not relevant to the
approval standards for an application
for a branch or that OCC action in
response to the comment is not
required.
(3) Notice of branch opening. If a
Federal savings association is not
required to file an application to
establish or relocate a branch pursuant
to paragraph (f)(2)(iii) of this section, the
Federal savings association shall file a
notice with the OCC with the date the
branch was established or relocated and
the address of the branch within 10 days
after the opening of the branch.
(g) Exceptions to rules of general
applicability. (1) The OCC may waive or
reduce the public notice and comment
period, as appropriate, with respect to
an application to establish a branch to
restore banking services to a community
affected by a disaster or to temporarily
replace banking facilities where,
because of an emergency, the savings
association cannot provide services or
must curtail banking services.
(2) The OCC may waive or reduce the
public notice and comment period, as
appropriate, for an application by a
Federal savings association with a CRA
rating of Satisfactory or better to
establish a temporary branch which, if
it were established by a state bank to
operate in the manner proposed, would
be permissible under state law without
state approval.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(h) Expiration of approval. Approval
expires if a branch has not commenced
business within 18 months after the date
of approval unless the OCC grants an
extension.
(i) Branch closings. A Federal savings
association shall comply with the
applicable requirements of 12 U.S.C.
1831r–1 with respect to procedures for
branch closings.
(j) Section 5(m) of the HOLA. (1)
Under section 5(m)(1) of the HOLA (12
U.S.C. 1464(m)(1)), no savings
association may establish or move any
branch in the District of Columbia or
move its principal office in the District
of Columbia without the OCC’s prior
written approval.
(2) Any Federal savings association
that must obtain approval of the OCC
under 12 U.S.C. 1464(m)(1) shall follow
the application procedures of this
section. Any state savings association
that must obtain approval of the OCC
under 12 U.S.C. 1464(m)(1) shall follow
the application procedures of this
section as if it were a Federal savings
association.
(k) Agency offices—(1) In general. A
Federal savings association may
establish or maintain an agency office to
engage in one or more of the following
activities:
(i) Servicing, originating, or approving
loans and contracts;
(ii) Managing or selling real estate
owned by the Federal savings
association; and
(iii) Conducting fiduciary activities or
activities ancillary to the association’s
fiduciary business in compliance with
§ 5.26(e).
(2) Additional services—(i) In general.
A Federal savings association may
request, and the OCC may approve, any
service not listed in paragraph (k)(1) of
this section, except for payment on
savings accounts.
(ii) Application required. A Federal
savings association desiring to engage in
such additional services shall submit an
application to the appropriate OCC
licensing office.
(iii) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to filings under this
paragraph (k)(2). However, if the OCC
concludes that an application presents
significant or novel policy, supervisory,
or legal issues, the OCC may determine
that some or all provisions in §§ 5.8,
5.10, and 5.11 apply.
(3) Records. A Federal savings
association must maintain records of all
business it transacts at an agency office.
It must maintain these records at the
agency office, and must transmit copies
to a home or branch office.
■ 16. Section 5.32 is amended by:
PO 00000
Frm 00093
Fmt 4701
Sfmt 4700
28437
a. Revising the section heading;
b. Adding paragraph (d)(4); and
c. Removing, in paragraph (h)(2), the
phrase ‘‘to the appropriate district
office’’ and adding in its place the
phrase ‘‘to the appropriate OCC
licensing office’’.
The revision and additions read as
follows:
■
■
■
§ 5.32 Expedited procedures for certain
reorganizations of a national bank.
*
*
*
*
*
(d) * * *
(4) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to this section.
However, if the OCC concludes that an
application presents significant or novel
policy, supervisory, or legal issues, the
OCC may determine that some or all
provisions in §§ 5.8, 5.10, and 5.11
apply.
*
*
*
*
*
■ 17. Section 5.33 is revised to read as
follows:
§ 5.33 Business combinations involving a
national bank or Federal savings
association.
(a) Authority. 12 U.S.C. 24(Seventh),
93a, 181, 214a, 214b, 215, 215a, 215a–
1, 215a–3, 215b, 215c, 1462a, 1463,
1464, 1467a, 1828(c), 1831u, 2903, and
5412(b)(2)(B).
(b) Scope. This section sets forth the
provisions governing business
combinations and the standards for:
(1) OCC review and approval of an
application by a national bank or a
Federal savings association for a
business combination resulting in a
national bank or Federal savings
association; and
(2) Requirements of notices and other
procedures for national banks and
Federal savings associations involved in
other combinations in which a national
bank or Federal savings association is
not the resulting institution.
(c) Licensing requirements. As
prescribed by this section, a national
bank or Federal savings association
shall submit an application and obtain
prior OCC approval for a business
combination when the resulting
institution is a national bank or Federal
savings association. As prescribed by
this section, a national bank or Federal
savings association shall give notice to
the OCC prior to engaging in an other
combination where the resulting
institution will not be a national bank
or Federal savings association.1 A
national bank shall submit an
1 Other combination transactions do not require
an application under this section. However, some
may require an application under 12 CFR 5.53.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28438
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
application and obtain prior OCC
approval for any merger between the
national bank and one or more of its
nonbank affiliates.
(d) Definitions. For purposes of this
section:
(1) Bank means any national bank or
any state bank.
(2) Business combination means:
(i) Any merger or consolidation
between a national bank or a Federal
savings association and one or more
depository institutions or state trust
companies, in which the resulting
institution is a national bank or Federal
savings association;
(ii) In the case of a Federal savings
association, any merger or consolidation
with a credit union in which the
resulting institution is a Federal savings
association;
(iii) In the case of a national bank, any
merger between a national bank and one
or more of its nonbank affiliates;
(iv) The acquisition by a national
bank or a Federal savings association of
all, or substantially all, of the assets of
another depository institution; or
(v) The assumption by a national bank
or a Federal savings association of any
deposit liabilities of another insured
depository institution or any deposit
accounts or other liabilities of a credit
union or any other institution that will
become deposits at the national bank or
Federal savings association.
(3) Business reorganization means
either:
(i) A business combination between
eligible banks and eligible savings
associations, or between an eligible
bank or an eligible savings association
and an eligible depository institution,
that are controlled by the same holding
company or that will be controlled by
the same holding company prior to the
combination; or
(ii) A business combination between
an eligible bank or an eligible savings
association and an interim national
bank or interim Federal savings
association chartered in a transaction in
which a person or group of persons
exchanges its shares of the eligible bank
or eligible savings association for shares
of a newly formed holding company and
receives after the transaction
substantially the same proportional
share interest in the holding company as
it held in the eligible bank or eligible
savings association (except for changes
in interests resulting from the exercise
of dissenters’ rights), and the
reorganization involves no other
transactions involving the bank or
savings association.
(4) Company means a corporation,
limited liability company, partnership,
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
business trust, association, or similar
organization.
(5) For business combinations under
paragraphs (g)(4) and (5) of this section,
a company or shareholder is deemed to
control another company if:
(i) Such company or shareholder,
directly or indirectly, or acting through
one or more other persons owns,
controls, or has power to vote 25
percent or more of any class of voting
securities of the other company, or
(ii) Such company or shareholder
controls in any manner the election of
a majority of the directors or trustees of
the other company. No company shall
be deemed to own or control another
company by virtue of its ownership or
control of shares in a fiduciary capacity.
(6) Credit union means a financial
institution subject to examination by the
National Credit Union Administration
Board.
(7) Home state means, with respect to
a national bank, the state in which the
main office of the national bank is
located and, with respect to a state bank,
the state by which the bank is chartered.
(8) Interim national bank or interim
Federal savings association means a
national bank or Federal savings
association that does not operate
independently but exists solely as a
vehicle to accomplish a business
combination.
(9) Nonbank affiliate of a national
bank means any company (other than a
bank or Federal savings association) that
controls, is controlled by, or is under
common control with the national bank.
(10) Other combination means:
(i) Any merger or consolidation
between a national bank or a Federal
savings association and one or more
depository institutions or state trust
companies, in which the resulting
institution is not a national bank or
Federal savings association;
(ii) In the case of a Federal stock
savings association, any merger or
consolidation with a credit union in
which the resulting institution is a
credit union;
(iii) The transfer by a national bank or
a Federal savings association of any
deposit liabilities to another insured
depository institution, a credit union or
any other institution; or
(iv) The acquisition by a national
bank or a Federal savings association of
all, or substantially all, of the assets, or
the assumption of all or substantially all
of the liabilities, of any company other
than a depository institution.
(11) Savings association and state
savings association have the meaning
set forth in section 3(b)(1) of the Federal
Deposit Insurance Act, 12 U.S.C.
1813(b)(1).
PO 00000
Frm 00094
Fmt 4701
Sfmt 4700
(12) State trust company means a trust
company organized under state law that
is not engaged in the business of
receiving deposits, other than trust
funds.
(e) Policy—(1) Factors—(i) In general.
When the OCC evaluates any
application for a business combination,
the OCC considers the following factors:
(A) The capital level of any resulting
national bank or Federal savings
association
(B) The conformity of the transaction
to applicable law, regulation, and
supervisory policies;
(C) The purpose of the transaction;
(D) The impact of the transaction on
safety and soundness of the national
bank or Federal savings association; and
(E) The effect of the transaction on the
national bank’s or Federal savings
association’s shareholders (or members
in the case of a mutual savings
association), depositors, other creditors,
and customers.
(ii) Bank Merger Act. When the OCC
evaluates an application for a business
combination under the Bank Merger
Act, the OCC also considers the
following factors:
(A) Competition. (1) The OCC
considers the effect of a proposed
business combination on competition.
The applicant shall provide a
competitive analysis of the transaction,
including a definition of the relevant
geographic market or markets. An
applicant may refer to the Comptroller’s
Licensing Manual for procedures to
expedite its competitive analysis.
(2) The OCC will deny an application
for a business combination if the
combination would result in a
monopoly or would be in furtherance of
any combination or conspiracy to
monopolize or attempt to monopolize
the business of banking in any part of
the United States. The OCC also will
deny any proposed business
combination whose effect in any section
of the United States may be
substantially to lessen competition, or
tend to create a monopoly, or which in
any other manner would be in restraint
of trade, unless the probable effects of
the transaction in meeting the
convenience and needs of the
community clearly outweigh the
anticompetitive effects of the
transaction. For purposes of weighing
against anticompetitive effects, a
business combination may have
favorable effects in meeting the
convenience and needs of the
community if the depository institution
being acquired has limited long-term
prospects, or if the resulting national
bank or Federal savings association will
provide significantly improved,
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
additional, or less costly services to the
community.
(B) Financial and managerial
resources and future prospects. The
OCC considers the financial and
managerial resources and future
prospects of the existing or proposed
institutions.
(C) Convenience and needs of
community. The OCC considers the
probable effects of the business
combination on the convenience and
needs of the community served. The
applicant shall describe these effects in
its application, including any planned
office closings or reductions in services
following the business combination and
the likely impact on the community.
The OCC also considers additional
relevant factors, including the resulting
national bank’s or Federal savings
association’s ability and plans to
provide expanded or less costly services
to the community.
(D) Money laundering. The OCC
considers the effectiveness of any
insured depository institution involved
in the business combination in
combating money laundering activities,
including in overseas branches.
(E) Financial stability. The OCC
considers the risk to the stability of the
United States banking and financial
system.
(F) Deposit concentration limit. The
OCC will not approve a transaction that
would violate the deposit concentration
limit in 12 U.S.C. 1828(c)(13) for certain
interstate merger transactions.
(iii) Community Reinvestment Act.
When the OCC evaluates an application
for a business combination under the
Community Reinvestment Act, the OCC
also considers the performance of the
applicant and the other depository
institutions involved in the business
combination in helping to meet the
credit needs of the relevant
communities, including low- and
moderate-income neighborhoods,
consistent with safe and sound banking
practices.
(2) Acquisition and retention of
branches. An applicant shall disclose
the location of any branch it will
acquire and retain in a business
combination, including approved but
unopened branches. The OCC considers
the acquisition and retention of a branch
under the standards set out in § 5.30 or
§ 5.31, as applicable, but it does not
require a separate application.
(3) Subsidiaries. (i) An applicant must
identify any subsidiary, financial
subsidiary investment, bank service
company investment, service
corporation investment, or other equity
investment to be acquired in a business
combination and state the activities of
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
each subsidiary or other company in
which the applicant would be acquiring
an investment. The OCC does not
require a separate application or notice
under §§ 5.34, 5.35, 5.36, 5.38, 5.39,
5.58, and 5.59.
(ii) An national bank applicant
proposing to acquire, through a business
combination, a subsidiary, financial
subsidiary investment, bank service
company investment, service
corporation investment, or other equity
investment of any entity other than a
national bank must provide the same
information and analysis of the
subsidiary’s activities, or of the
investment, that would be required if
the applicant were establishing the
subsidiary, or making such investment,
pursuant to §§ 5.34, 5.35, 5.36, or 5.39.
(iii) A Federal savings association
applicant proposing to acquire, through
a business combination, a subsidiary,
bank service company investment,
service corporation investment, or other
equity investment of any entity other
than a Federal savings association must
provide the same information and
analysis of the subsidiary’s activities, or
of the investment, that would be
required if the applicant were
establishing the subsidiary, or making
such investment, pursuant to §§ 5.35,
5.38, 5.58, or 5.59.
(4) Interim national bank or interim
Federal savings association. (i)
Application. An applicant for a business
combination that plans to use an interim
national bank or interim Federal savings
association to accomplish the
transaction shall file an application to
organize an interim national bank or
interim Federal savings association as
part of the application for the related
business combination.
(ii) Conditional approval. The OCC
grants conditional preliminary approval
to form an interim national bank or
interim Federal savings association
when it acknowledges receipt of the
application for the related business
combination.
(iii) Corporate status. An interim
national bank or interim Federal savings
association becomes a legal entity and
may enter into legally valid agreements
when it has filed, and the OCC has
accepted, the interim national bank’s
duly executed articles of association and
organization certificate or the Federal
savings association’s charter and
bylaws. OCC acceptance occurs:
(A) On the date the OCC advises the
interim national bank that its articles of
association and organization certificate
are acceptable or advises the interim
Federal savings association that its
charter and bylaws are acceptable; or
PO 00000
Frm 00095
Fmt 4701
Sfmt 4700
28439
(B) On the date the interim national
bank files articles of association and an
organization certificate that conform to
the form for those documents provided
by the OCC in the Comptroller’s
Licensing Manual or the date the
interim Federal savings association files
a charter and bylaws that conform to the
requirements set out in this part 5.
(iv) Other corporate procedures. An
applicant should consult the
Comptroller’s Licensing Manual to
determine what other information is
necessary to complete the chartering of
the interim national bank as a national
bank or the interim Federal savings
association as a Federal savings
association.
(5) Nonconforming assets. (i) An
applicant shall identify any
nonconforming activities and assets,
including nonconforming subsidiaries,
of other institutions involved in the
business combination that will not be
disposed of or discontinued prior to
consummation of the transaction. The
OCC generally requires a national bank
or Federal savings association to divest
or conform nonconforming assets, or
discontinue nonconforming activities,
within a reasonable time following the
business combination.
(ii) Any resulting Federal savings
association shall conform to the
requirements of sections 5(c) and 10(m)
of the Home Owners’ Loan Act (12
U.S.C. 1464(c) and 1467a(m)) within the
time period prescribed by the OCC.
(6) Fiduciary powers. (i) An applicant
shall state whether the resulting
national bank or Federal savings
association intends to exercise fiduciary
powers pursuant to § 5.26(b).
(ii) If an applicant intends to exercise
fiduciary powers after the combination
and requires OCC approval for such
powers, the applicant must include the
information required under § 5.26(e)(2).
(7) Expiration of approval. Approval
of a business combination, and
conditional approval to form an interim
national bank or interim Federal savings
association, if applicable, expires if the
business combination is not
consummated within six months after
the date of OCC approval, unless the
OCC grants an extension of time.
(8) Adequacy of disclosure. (i) An
applicant shall inform shareholders of
all material aspects of a business
combination and shall comply with any
applicable requirements of the Federal
securities laws and securities
regulations of the OCC. Accordingly, an
applicant shall ensure that all proxy and
information statements prepared in
connection with a business combination
do not contain any untrue or misleading
statement of a material fact, or omit to
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28440
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
state a material fact necessary in order
to make the statements made, in the
light of the circumstances under which
they were made, not misleading.
(ii) A national bank or Federal savings
association applicant with one or more
classes of securities subject to the
registration provisions of section 12(b)
or (g) of the Securities Exchange Act of
1934, 15 U.S.C. 78 l (b) or 78 l (g), shall
file preliminary proxy material or
information statements for review with
the Director, Securities and Corporate
Practices Division, OCC, Washington,
DC 20219. Any other applicant shall
submit the proxy materials or
information statements it uses in
connection with the combination to the
appropriate OCC licensing office no
later than when the materials are sent to
the shareholders.
(f) Exceptions to rules of general
applicability—(1) National bank or
Federal savings association applicant—
(i) In general. Sections 5.8, 5.10, and
5.11 do not apply to this section.
However, if the OCC concludes that an
application presents significant or novel
policy, supervisory, or legal issues, the
OCC may determine that some or all
provisions in §§ 5.8, 5.10 and 5.11
apply.
(ii) Statutory notice. If an application
is subject to the Bank Merger Act or to
another statute that requires notice to
the public, a national bank or Federal
savings association applicant shall
follow the public notice requirements
contained in 12 U.S.C. 1828(c)(3) or the
other statute and sections 5.8(b) through
5.8(e), 5.10, and 5.11.
(2) Interim national bank or interim
Federal savings association. Sections
5.8, 5.10, and 5.11 do not apply to an
application to organize an interim
national bank or interim Federal savings
association. However, if the OCC
concludes that an application presents
significant or novel policy, supervisory,
or legal issues, the OCC may determine
that any or all parts of §§ 5.8, 5.10, and
5.11 apply. The OCC treats an
application to organize an interim
national bank or interim Federal savings
association as part of the related
application to engage in a business
combination and does not require a
separate public notice and public
comment process.
(3) State bank, or state savings
association, state trust company, or
credit union as resulting institution.
Sections 5.7 through 5.13 do not apply
to transactions covered by paragraphs
(g)(6) or (g)(7) of this section.
(g) Provisions governing
consolidations and mergers with
different types of entities—(1)
Consolidations and mergers under 12
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
U.S.C. 215 or 215a of a national bank
with other national banks and state
banks as defined in 12 U.S.C. 215b(1)
resulting in a national bank. (i) A
national bank entering into a
consolidation or merger authorized
pursuant to 12 U.S.C. 215 or 215a,
respectively, is subject to the approval
procedures and requirements with
respect to treatment of dissenting
shareholders set forth in those
provisions.
(ii) Any national bank that will not be
the resulting bank in a consolidation or
merger under 12 U.S.C. 215 or 215a
shall provide a notice to the OCC under
paragraph (k) of this section.
(2) Consolidations and mergers of a
national bank with Federal savings
associations under 12 U.S.C. 215c
resulting in a national bank. (i) With the
approval of the OCC, any national bank
and any Federal savings association may
consolidate or merge with a national
bank as the resulting institution by
complying with the following
procedures:
(A) A national bank entering into the
consolidation or merger shall follow the
procedures of 12 U.S.C. 215 or 215a,
respectively, as if the Federal savings
association were a national bank.
(B)(1) A Federal savings association
entering into the consolidation or
merger shall comply with the
requirements of paragraph (n) of this
section and follow the procedures set
out in paragraph (o) of this section and
shall provide a notice to the OCC under
paragraph (k) of this section.
(2) For purposes of this paragraph
(g)(2), a combination in which a
national bank acquires all or
substantially all of the assets, or
assumes all or substantially all of the
liabilities, of a Federal savings
association shall be treated as a
consolidation for the Federal savings
association.
(ii)(A) National bank shareholders
who dissent from a plan to consolidate
may receive in cash the value of their
national bank shares if they comply
with the requirements of 12 U.S.C. 215
as if the Federal savings association
were a national bank.
(B) Federal savings association
shareholders who dissent from a plan to
merge or consolidate may receive in
cash the value of their Federal savings
association shares if they comply with
the requirements of 12 U.S.C. 215 or
215a as if the Federal savings
association were a national bank.
(C) The OCC will conduct an
appraisal or reappraisal of the value of
the national bank or Federal savings
association held by dissenting
shareholders in accordance with the
PO 00000
Frm 00096
Fmt 4701
Sfmt 4700
provisions of 12 U.S.C. 215 or 215a, as
applicable, except that the costs and
expenses of any appraisal or reappraisal
may be apportioned and assessed by the
Comptroller as he or she may deem
equitable against all or some of the
parties. In making this determination
the Comptroller shall consider whether
any party has acted arbitrarily or not in
good faith in respect to the rights
provided by this paragraph.
(iii) The consolidation or merger
agreement must address the effect upon,
and the terms of the assumption of, any
liquidation account of any participating
institution by the resulting institution.
(3) Consolidation or merger of a
Federal savings association with
another Federal savings association, a
national bank, a state bank, a state
savings bank, a state savings
association, a state trust company, or a
credit union resulting in a Federal
savings association. (i) With the
approval of the OCC, a Federal savings
association may consolidate or merge
with another Federal savings
association, a national bank, a state
bank, a state savings association, a state
trust company, or a credit union with
the Federal savings association as the
resulting institution by complying with
the following procedures:
(A)(1) The applicant Federal savings
association shall comply with the
requirements of paragraph (n) of this
section and follow the procedures set
out in paragraph (o) of this section.
(2) For purposes of this paragraph
(g)(3), a combination in which a Federal
savings association acquires all or
substantially all of the assets, or
assumes all or substantially all of the
liabilities, of another other participating
institution shall be treated as a
consolidation for the acquiring Federal
savings association and as a
consolidation by a Federal savings
association whose assets are acquired, if
any.
(B)(1) A national bank entering into a
merger or consolidation with a Federal
savings association when the resulting
institution will be a Federal savings
association shall comply with the
requirements of 12 U.S.C. 214a and 12
U.S.C. 214c as if the Federal savings
association were a state bank. However,
for these purposes the references in 12
U.S.C. 214c to ‘‘law of the State in
which such national banking
association is located’’ and ‘‘any State
authority’’ mean ‘‘laws and regulations
governing Federal savings associations’’
and ‘‘Office of the Comptroller of the
Currency’’ respectively. The national
bank also shall provide a notice to the
OCC under paragraph (k) of this section.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(2) National bank shareholders who
dissent from a plan to merge or
consolidate may receive in cash the
value of their national bank shares if
they comply with the requirements of
12 U.S.C. 214a as if the Federal savings
association were a state bank. The OCC
will conduct an appraisal or reappraisal
of the value of the national bank shares
held by dissenting shareholders in
accordance with the provisions of 12
U.S.C. 214a, except that the costs and
expenses of any appraisal or reappraisal
may be apportioned and assessed by the
Comptroller as he or she may deem
equitable against all or some of the
parties. In making this determination
the Comptroller shall consider whether
any party has acted arbitrarily or not in
good faith in respect to the rights
provided by this paragraphs.
(C)(1) A Federal savings association
entering into a merger or consolidation
with another Federal savings association
when the resulting institution will be
the other Federal savings association
shall comply with the requirements of
paragraph (n) of this section and the
procedures of paragraph (o) of this
section and shall provide a notice to the
OCC under paragraph (k) of this section.
(2) Federal savings association
shareholders who dissent from a plan to
merge or consolidate may receive in
cash the value of their Federal savings
association shares if they comply with
the requirements of 12 U.S.C. 214a as if
the other Federal savings association
were a state bank. The OCC will
conduct an appraisal or reappraisal of
the value of the Federal savings
association shares held by dissenting
shareholders in accordance with the
provisions of 12 U.S.C. 214a, except that
the costs and expenses of any appraisal
or reappraisal may be apportioned and
assessed by the Comptroller as he or she
may deem equitable against all or some
of the parties. In making this
determination the Comptroller shall
consider whether any party has acted
arbitrarily or not in good faith in respect
to the rights provided by this paragraph.
(3) The plan of merger or
consolidation must provide the manner
of disposing of the shares of the
resulting Federal savings association not
taken by the dissenting shareholders of
the Federal savings association.
(D)(1) A state bank, state savings
association, state trust company, or
credit union entering into a
consolidation or merger with a Federal
savings association when the resulting
institution will be a Federal savings
association shall follow the procedures
for such consolidations or mergers set
out in the law of the state or other
jurisdiction under which the state bank,
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
state savings association, state trust
company, or credit union is organized.
(2) The rights of dissenting
shareholders and appraisal of
dissenters’ shares of stock in the state
bank, state savings association, or state
trust company, entering into the
consolidation or merger shall be
determined in the manner prescribed by
the law of the state or other jurisdiction
under which the state bank, state
savings association, or state trust
company is organized.
(ii) The consolidation or merger
agreement must address the effect upon,
and the terms of the assumption of, any
liquidation account of any participating
institution by the resulting institution.
(4) Mergers of a national bank with its
nonbank affiliates under 12 U.S.C.
215a–3 resulting in a national bank. (i)
With the approval of the OCC, a
national bank may merge with one or
more of its nonbank affiliates, with the
national bank as the resulting
institution, in accordance with the
provisions of this paragraph, provided
that the law of the state or other
jurisdiction under which the nonbank
affiliate is organized allows the nonbank
affiliate to engage in such mergers. If the
national bank is an insured bank, the
transaction is also subject to approval by
the FDIC under the Bank Merger Act, 12
U.S.C. 1828(c).
(ii) A national bank entering into the
merger shall follow the procedures of 12
U.S.C. 215a as if the nonbank affiliate
were a state bank, except as otherwise
provided herein.
(iii) A nonbank affiliate entering into
the merger shall follow the procedures
for such mergers set out in the law of
the state or other jurisdiction under
which the nonbank affiliate is
organized.
(iv) The rights of dissenting
shareholders and appraisal of
dissenters’ shares of stock in the
nonbank affiliate entering into the
merger shall be determined in the
manner prescribed by the law of the
state or other jurisdiction under which
the nonbank affiliate is organized.
(v) The corporate existence of each
institution participating in the merger
shall be continued in the resulting
national bank, and all the rights,
franchises, property, appointments,
liabilities, and other interests of the
participating institutions shall be
transferred to the resulting national
bank, as set forth in 12 U.S.C. 215a(a),
(e), and (f) in the same manner and to
the same extent as in a merger between
a national bank and a state bank under
12 U.S.C. 215a(a), as if the nonbank
affiliate were a state bank.
PO 00000
Frm 00097
Fmt 4701
Sfmt 4700
28441
(5) Mergers of an uninsured national
bank with its nonbank affiliates under
12 U.S.C. 215a–3 resulting in a nonbank
affiliate. (i) With the approval of the
OCC, a national bank that is not an
insured bank as defined in 12 U.S.C.
1813(h) may merge with one or more of
its nonbank affiliates, with the nonbank
affiliate as the resulting entity, in
accordance with the provisions of this
paragraph, provided that the law of the
state or other jurisdiction under which
the nonbank affiliate is organized allows
the nonbank affiliate to engage in such
mergers.
(ii) A national bank entering into the
merger shall follow the procedures of 12
U.S.C. 214a, as if the nonbank affiliate
were a state bank, except as otherwise
provided in this section.
(iii) A nonbank affiliate entering into
the merger shall follow the procedures
for such mergers set out in the law of
the state or other jurisdiction under
which the nonbank affiliate is
organized.
(iv)(A) National bank shareholders
who dissent from an approved plan to
merge may receive in cash the value of
their national bank shares if they
comply with the requirements of 12
U.S.C. 214a as if the nonbank affiliate
were a state bank. The OCC may
conduct an appraisal or reappraisal of
dissenters’ shares of stock in a national
bank involved in the merger if all
parties agree that the determination is
final and binding on each party and
agree on how the total expenses of the
OCC in making the appraisal will be
divided among the parties and paid to
the OCC.
(B) The rights of dissenting
shareholders and appraisal of
dissenters’ shares of stock in the
nonbank affiliate involved in the merger
shall be determined in the manner
prescribed by the law of the state or
other jurisdiction under which the
nonbank affiliate is organized.
(v) The corporate existence of each
entity participating in the merger shall
be continued in the resulting nonbank
affiliate, and all the rights, franchises,
property, appointments, liabilities, and
other interests of the participating
national bank shall be transferred to the
resulting nonbank affiliate as set forth in
12 U.S.C. 214b, in the same manner and
to the same extent as in a merger
between a national bank and a state
bank under 12 U.S.C. 214a, as if the
nonbank affiliate were a state bank.
(6) Consolidation or merger under 12
U.S.C. 214a of a national bank with a
state bank resulting in a state bank as
defined in 12 U.S.C. 214(a)—(i) Policy.
Prior OCC approval is not required for
the merger or consolidation of a national
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28442
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
bank with a state bank as defined in 12
U.S.C. 214(a) Termination of a national
bank’s existence and status as a national
banking association is automatic, and its
charter cancelled, upon completion of
the statutory and regulatory
requirements for engaging in the
consolidation or merger and
consummation of the consolidation or
merger.
(ii) Procedures. A national bank
desiring to merge or consolidate with a
state bank as defined in 12 U.S.C. 214(a)
when the resulting institution will be a
state bank shall comply with the
requirements and follow the procedures
of 12 U.S.C. 214a and 214c and shall
provide notice to the OCC under
paragraph (k) of this section.
(iii) Dissenters’ rights and appraisal
procedures. National bank shareholders
who dissent from a plan to merge or
consolidate may receive in cash the
value of their national bank shares if
they comply with the requirements of
12 U.S.C. 214a. The OCC conducts an
appraisal or reappraisal of the value of
the national bank shares held by
dissenting shareholders as provided for
in 12 U.S.C. 214a.
(iv) Liquidation account. The
consolidation or merger agreement must
address the effect upon, and the terms
of the assumption of, any liquidation
account of any participating institution
by the resulting institution.
(7) Consolidation or merger of a
Federal savings association with a state
bank, state savings bank, state savings
association, state trust company, or
credit union resulting in a state bank,
state savings bank, state savings
association, state trust company, or
credit union—(i) Policy. Prior OCC
approval is not required for the merger
or consolidation of a Federal savings
association with a state bank, state
savings bank, state savings association,
state trust company, or credit union
when the resulting institution will be a
state institution or credit union.
Termination of a national bank’s or
Federal savings association’s existence
and status as a national banking
association or Federal savings
association is automatic, and its charter
cancelled, upon completion of the
statutory and regulatory requirements
for engaging in the consolidation or
merger and consummation of the
consolidation or merger.
(ii) Procedures. (A) A Federal savings
association desiring to merge or
consolidate with a state bank, state
savings bank, state savings association,
state trust company, or credit union
when the resulting institution will be a
state institution or credit union shall
comply with the requirements of
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
paragraph (n) of this section and the
procedures of paragraph (o) of this
section and shall provide notice to the
OCC under paragraph (k) of this section.
(B) For purposes of this paragraph
(g)(7), a combination in which a state
bank, state savings bank, state savings
association, state trust company, or
credit union acquires all or substantially
all of the assets, or assumes all or
substantially all of the liabilities, of a
Federal savings association shall be
treated as a consolidation by the Federal
savings association.
(iii) Dissenters’ rights and appraisal
procedures. (A) Federal savings
association shareholders who dissent
from a plan to merge or consolidate may
receive in cash the value of their Federal
savings association shares if they
comply with the requirements of 12
U.S.C. 214a as if the Federal savings
association were a national bank. The
OCC conducts an appraisal or
reappraisal of the value of the Federal
savings association shares held by
dissenting shareholders only if all
parties agree that the determination will
be final and binding. The parties shall
also agree on how the total expenses of
the OCC in making the appraisal will be
divided among the parties and paid to
the OCC.
(B) The plan of merger or
consolidation must provide the manner
of disposing of the shares of the
resulting state institution not taken by
the dissenting shareholders of the
Federal savings association.
(iv) Liquidation account. The
consolidation or merger agreement must
address the effect upon, and the terms
of the assumption of, any liquidation
account of any participating institution
by the resulting institution.
(h) Interstate combinations under 12
U.S.C. 1831u. A business combination
between insured banks with different
home states under the authority of 12
U.S.C. 1831u must satisfy the standards
and requirements and comply with the
procedures of 12 U.S.C. 1831u and
either 12 U.S.C. 215, 215a, and 215a–1,
as applicable, if the resulting bank is a
national bank, or 12 U.S.C. 214a, 214b,
and 214c if the resulting bank is a state
bank. For purposes of 12 U.S.C. 1831u,
the acquisition of a branch without the
acquisition of all or substantially all of
the assets of a bank is treated as the
acquisition of a bank whose home state
is the state in which the branch is
located.
(i) Expedited review for business
reorganizations and streamlined
applications. A filing that qualifies as a
business reorganization as defined in
paragraph (d)(3) of this section, or a
filing that qualifies as a streamlined
PO 00000
Frm 00098
Fmt 4701
Sfmt 4700
application as described in paragraph (j)
of this section, is deemed approved by
the OCC as of the 45th day after the
application is received by the OCC, or
the 15th day after the close of the
comment period, whichever is later,
unless the OCC notifies the applicant
that the filing is not eligible for
expedited review, or the expedited
review process is extended, under
§ 5.13(a)(2). An application under this
paragraph must contain all necessary
information for the OCC to determine if
it qualifies as a business reorganization
or streamlined application.
(j) Streamlined applications. (1) An
applicant may qualify for a streamlined
business combination application in the
following situations:
(i) At least one party to the transaction
is an eligible bank or eligible Federal
savings association, and all other parties
to the transaction are eligible banks,
eligible Federal savings associations, or
eligible depository institutions, the
resulting national bank or resulting
Federal savings association will be well
capitalized immediately following
consummation of the transaction, and
the total assets of the target institution
are no more than 50 percent of the total
assets of the acquiring bank or Federal
savings association, as reported in each
institution’s Consolidated Report of
Condition and Income filed for the
quarter immediately preceding the filing
of the application;
(ii) The acquiring bank or Federal
savings association is an eligible bank or
eligible Federal savings association, the
target bank or savings association is not
an eligible bank, eligible Federal savings
association, or an eligible depository
institution, the resulting national bank
or resulting Federal savings association
will be well capitalized immediately
following consummation of the
transaction, and the applicants in a
prefiling communication request and
obtain approval from the appropriate
OCC licensing office to use the
streamlined application;
(iii) The acquiring bank or Federal
savings association is an eligible bank or
eligible Federal savings association, the
target bank or savings association is not
an eligible bank, eligible Federal savings
association, or an eligible depository
institution, the resulting bank or
resulting Federal savings association
will be well capitalized immediately
following consummation of the
transaction, and the total assets acquired
do not exceed 10 percent of the total
assets of the acquiring national bank or
acquiring Federal savings association, as
reported in each institution’s
Consolidated Report of Condition and
Income filed for the quarter immediately
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
preceding the filing of the application;
or
(iv) In the case of a transaction under
paragraph (g)(4) of this section, the
acquiring bank is an eligible bank, the
resulting national bank will be well
capitalized immediately following
consummation of the transaction, the
applicants in a prefiling communication
request and obtain approval from the
appropriate OCC licensing office to use
the streamlined application, and the
total assets acquired do not exceed 10
percent of the total assets of the
acquiring national bank, as reported in
the bank’s Consolidated Report of
Condition and Income filed for the
quarter immediately preceding the filing
of the application.
(2) Notwithstanding paragraph (j)(1)
of this section, an applicant does not
qualify for a streamlined business
combination application if the
transaction is part of a conversion under
part 192 of this chapter.
(3) When a business combination
qualifies for a streamlined application,
the applicant should consult the
Comptroller’s Licensing Manual to
determine the abbreviated application
information required by the OCC. The
OCC encourages prefiling
communications between the applicants
and the appropriate OCC licensing
office before filing under paragraph (j) of
this section.
(k) Exit notice to OCC—(1) Notice
required. As provided in paragraphs
(g)(1)(ii), (g)(2)(i)(B), (g)(3)(i)(B)(1),
(g)(3)(i)(C)(1), (g)(6)(ii), and (g)(7)(ii) of
this section, a national bank or Federal
savings association engaging in a
consolidation or merger in which it is
not the applicant and the resulting
institution must file a notice rather than
an application to the appropriate OCC
licensing office advising of its intention.
(2) Timing of notice. The national
bank or Federal savings association
shall submit the notice at the time the
application to merge or consolidate is
filed with the responsible agency under
the Bank Merger Act, 12 U.S.C. 1828(c),
or if there is no such filing then no later
than 30 days prior to the effective date
of the merger or consolidation.
(3) Content of notice. The notice shall
include the following:
(i)(A) A short description of the
material features of the transaction, the
identity of the acquiring institution, the
identity of the state or Federal regulator
to whom the application was made, and
the date of the application; or
(B) A copy of a filing made with
another Federal or state regulatory
agency seeking approval from that
agency for the transaction under the
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
Bank Merger Act or other applicable
statute;
(ii) The planned consummation date
for the transaction;
(iii) Information to demonstrate
compliance by the national bank or
Federal savings association with
applicable requirements to engage in the
transactions (e.g., board approval or
shareholder or accountholder
requirements); and
(iv) If the national bank or Federal
savings association submitting the
notice maintains a liquidation account
established pursuant to part 192 of this
chapter, the notice must state that the
resulting institution will assume such
liquidation account.
(4) Termination of status. The
national bank or Federal savings
association shall advise the OCC when
the transaction is about to be
consummated. Termination of a
national bank’s or Federal savings
association’s existence and status as a
national banking association or Federal
savings association is automatic, and its
charter cancelled, upon completion of
the statutory and regulatory
requirements and consummation of the
consolidation or merger. When the
national bank or Federal savings
association files the notice under
paragraph (k)(2) of this section, the OCC
provides instructions to the national
bank or Federal savings association for
terminating its status as a national bank
or Federal savings, including
surrendering its charter to the OCC
immediately after consummation of the
transaction.
(5) Expiration. If the action
contemplated by the notice is not
completed within six months after the
OCC’s receipt of the notice, a new notice
must be submitted to the OCC, unless
the OCC grants an extension of time.
(l) Mergers and consolidations;
transfer of assets and liabilities to the
resulting institution. (1) In any
consolidation or merger in which the
resulting institution is a national bank
or Federal savings association, on the
effective date of the merger or
consolidation, all assets and property
(real, personal and mixed, tangible and
intangible, choses in action, rights, and
credits) then owned by each
participating institution or which would
inure to any of them, shall, immediately
by operation of law and without any
conveyance, transfer, or further action,
become the property of the resulting
national bank or Federal savings
association. The resulting national bank
or Federal savings association shall be
deemed to be a continuation of the
entity of each participating institution,
the rights and obligations of which shall
PO 00000
Frm 00099
Fmt 4701
Sfmt 4700
28443
succeed to such rights and obligations
and the duties and liabilities connected
therewith.
(2) The authority in paragraph (l)(1) of
this section is in addition to any
authority granted by applicable statutes
for specific transactions and is subject to
the National Bank Act, the Home
Owners’ Loan Act, and other applicable
statutes.
(m) Certification of combination;
effective date. (1) When a national bank
or Federal savings association is the
applicant and will be the resulting
entity in a consolidation or merger, after
receiving approval from the OCC, it
shall complete any remaining steps
needed to complete the transaction,
provide the OCC with a certification
that all other required regulatory or
shareholder approvals have been
obtained, and inform the OCC of the
planned consummation date.
(2) When the transaction is
consummated, the applicant shall notify
the OCC of the consummation date. The
OCC will issue a letter certifying that
the combination was effective on the
date specified in the applicant’s notice.
(n) Authority for and certain limits on
business combinations and other
transactions by Federal savings
associations (1) Federal savings
associations may enter into business
combinations only in accordance with
this section, the Bank Merger Act, and
sections 5(d)(3)(A) and 10(s) of the
Home Owners’ Loan Act.
(2) A Federal savings association may
consolidate or merge with another
depository institution, a state trust
company or a credit union, or may
engage in another business combination
listed in paragraphs (d)(2)(iv) and (v) of
this section, or may engage in an other
combination listed in paragraph (d)(10),
provided that:
(i) The combination is in compliance
with, and receives all approvals
required under, any applicable statutes
and regulations;
(ii) Any resulting Federal savings
association meets the requirements for
insurance of accounts; and
(iii) If any combining savings
association is a mutual savings
association, the resulting institution
shall be a mutually held savings
association, unless:
(A) The transaction is approved under
part 192 governing mutual to stock
conversions; or
(B) The transaction involves a mutual
holding company reorganization under
12 U.S.C. 1467a(o).
(3) Where the resulting institution is
a Federal mutual savings association,
the OCC may approve a temporary
increase in the number of directors of
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28444
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
the resulting institution provided that
the association submits a plan for
bringing the board of directors into
compliance with the requirements of
§ 5.21(e) within a reasonable period of
time.
(4)(i) The Federal savings associations
described in paragraph (n)(4)(ii) of this
section below must provide affected
accountholders with a notice of a
proposed account transfer and an option
of retaining the account in the
transferring Federal savings association.
The notice must allow affected
accountholders at least 30 days to
consider whether to retain their
accounts in the transferring Federal
savings association.
(ii) The following savings associations
must provide the notices:
(A) A Federal mutual savings
association transferring account
liabilities to an institution the accounts
of which are not insured by the Deposit
Insurance Fund or the National Credit
Union Share Insurance Fund; and
(B) Any Federal mutual savings
association transferring account
liabilities to a stock form depository
institution.
(o) Procedural requirements for
Federal savings association approval of
combinations—(1) Board approval.
Before a Federal savings association
files a notice or application for any
consolidation or merger, the
combination and combination
agreement must be approved by
majority vote of the entire board of each
constituent Federal savings association
in the case of Federal stock savings
associations or a two-thirds vote of the
entire board of each constituent Federal
savings association in the case of
Federal mutual savings associations;
(2) Change of name or home office. If
the name the resulting Federal savings
association or the location of the home
office of the resulting Federal savings
association will be changed as a result
of the business combination, the
resulting Federal savings association
shall amend its charter accordingly;
(3) Shareholder vote—(i) General rule.
Except as otherwise provided in this
paragraph (n)(3), an affirmative vote of
two-thirds of the outstanding voting
stock of any constituent Federal stock
savings association shall be required for
approval of a consolidation or merger. If
any class of shares is entitled to vote as
a class pursuant to § 152.4 of this part,
an affirmative vote of a majority of the
shares of each voting class and twothirds of the total voting shares shall be
required. The required vote shall be
taken at a meeting of the savings
association.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(ii) General exception. Stockholders of
the resulting Federal stock savings
association need not authorize a
consolidation or merger if:
(A) It does not involve an interim
Federal savings association or an
interim state savings association;
(B) The association’s charter is not
changed;
(C) Each share of stock outstanding
immediately prior to the effective date
of the consolidation or merger is to be
an identical outstanding share or a
treasury share of the resulting Federal
stock savings association after such
effective date; and
(D) Either:
(1) No shares of voting stock of the
resulting Federal stock savings
association and no securities convertible
into such stock are to be issued or
delivered under the plan of
combination, or
(2) The authorized unissued shares or
the treasury shares of voting stock of the
resulting Federal stock savings
association to be issued or delivered
under the plan of combination, plus
those initially issuable upon conversion
of any securities to be issued or
delivered under such plan, do not
exceed 15 percent of the total shares of
voting stock of such association
outstanding immediately prior to the
effective date of the consolidation or
merger.
(iii) Exceptions for certain
combinations involving an interim
association. Stockholders of a Federal
stock savings association need not
authorize by a two-thirds affirmative
vote consolidations or mergers
involving an interim Federal savings
association or interim state savings
association when the resulting Federal
stock savings association is acquired
pursuant to the regulations of the Board
of Governors of the Federal Reserve
System at 12 CFR 238.15(e) (relating to
the creation of a savings and loan
holding company by a savings
association). In those cases, an
affirmative vote of 50 percent of the
shares of the outstanding voting stock of
the Federal stock savings association
plus one affirmative vote shall be
required. If any class of shares is
entitled to vote as a class pursuant to
§ 5.22(g), an affirmative vote of 50
percent of the shares of each voting
class plus one affirmative vote shall be
required. The required votes shall be
taken at a meeting of the association.
(4) Mutual member vote.
Notwithstanding any other provision of
this section, the OCC may require that
a consolidation, merger or other
business combination be submitted to
the voting members of any mutual
PO 00000
Frm 00100
Fmt 4701
Sfmt 4700
savings association participating in the
proposed transaction at duly called
meetings and that the transaction, to be
effective, must be approved by such
voting members.
■ 18. Section 5.34 is revised to read as
follows:
§ 5.34
bank.
Operating subsidiaries of a national
(a) Authority. 12 U.S.C. 24 (Seventh),
24a, 25b, 93a, 3101 et seq.
(b) Licensing requirements. A national
bank must file an application or notice
as prescribed in this section to acquire
or establish an operating subsidiary, or
to commence a new activity in an
existing operating subsidiary.
(c) Scope. This section sets forth
authorized activities and application or
notice procedures for national banks
engaging in activities through an
operating subsidiary. The procedures in
this section do not apply to financial
subsidiaries authorized under § 5.39.
Unless provided otherwise, this section
applies to a Federal branch or agency
that acquires, establishes, or maintains
any subsidiary that a national bank is
authorized to acquire or establish under
this section in the same manner and to
the same extent as if the Federal branch
or agency were a national bank, except
that the ownership interest required in
paragraphs (e)(2) and (e)(5)(i)(B) of this
section shall apply to the parent foreign
bank of the Federal branch or agency
and not to the Federal branch or agency.
The OCC may, at any time, limit a
national bank’s investment in an
operating subsidiary or may limit or
refuse to permit any activities in an
operating subsidiary for supervisory,
legal, or safety and soundness reasons.
(d) Definitions. For purposes of this
section:
(1) Authorized product means a
product that would be defined as
insurance under section 302(c) of the
Gramm-Leach-Bliley Act (Pub. L. 106–
102, 113 Stat. 1338, 1407) (GLBA) (15
U.S.C. 6712) that, as of January 1, 1999,
the OCC had determined in writing that
national banks may provide as principal
or national banks were in fact lawfully
providing the product as principal, and
as of that date no court of relevant
jurisdiction had, by final judgment,
overturned a determination by the OCC
that national banks may provide the
product as principal. An authorized
product does not include title
insurance, or an annuity contract the
income of which is subject to treatment
under section 72 of the Internal Revenue
Code of 1986 (26 U.S.C. 72).
(2) Well capitalized means the capital
level described in 12 CFR 6.4 or, in the
case of a Federal branch or agency, the
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
capital level described in 12 CFR
4.7(b)(1)(iii).
(3) Well managed means, unless
otherwise determined in writing by the
OCC:
(i) In the case of a national bank:
(A) The national bank has received a
composite rating of 1 or 2 under the
Uniform Financial Institutions Rating
System in connection with its most
recent examination; or
(B) In the case of any national bank
that has not been examined, the
existence and use of managerial
resources that the OCC determines are
satisfactory.
(ii) In the case of a Federal branch or
agency:
(A) The Federal branch or agency has
received a composite ROCA supervisory
rating (which rates risk management,
operational controls, compliance, and
asset quality) of 1 or 2 at its most recent
examination; or
(B) In the case of a Federal branch or
agency that has not been examined, the
existence and use of managerial
resources that the OCC determines are
satisfactory.
(e) Standards and requirements—(1)
Authorized activities. (i) A national
bank may conduct in an operating
subsidiary activities that are permissible
for a national bank to engage in directly
either as part of, or incidental to, the
business of banking, as determined by
the OCC, or otherwise under other
statutory authority, including:
(A) Providing authorized products as
principal; and
(B) Providing title insurance as
principal if the national bank or
subsidiary thereof was actively and
lawfully underwriting title insurance
before November 12, 1999, and no
affiliate of the national bank (other than
a subsidiary) provides insurance as
principal. A subsidiary may not provide
title insurance as principal if the state
had in effect before November 12, 1999,
a law which prohibits any person from
underwriting title insurance with
respect to real property in that state.
(ii) In addition to OCC authorization,
before it begins business an operating
subsidiary also must comply with other
laws applicable to it and its proposed
business, including applicable licensing
or registration requirements, if any, such
as registration requirements under
securities laws.
(2) Qualifying subsidiaries. (i) An
operating subsidiary in which a national
bank may invest includes a corporation,
limited liability company, limited
partnership, or similar entity if:
(A) The bank has the ability to control
the management and operations of the
subsidiary, and no other person or
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
entity exercises effective operating
control over the subsidiary or has the
ability to influence the subsidiary’s
operations to an extent equal to or
greater than that of the bank;
(B) The parent bank owns and
controls more than 50 percent of the
voting (or similar type of controlling)
interest of the operating subsidiary, or
the parent bank otherwise controls the
operating subsidiary and no other party
controls a percentage of the voting (or
similar type of controlling) interest of
the operating subsidiary greater than the
bank’s interest; and
(C) The operating subsidiary is
consolidated with the bank under
generally accepted accounting
principles (GAAP).
(ii) However, the following
subsidiaries are not operating
subsidiaries subject to this section:
(A) A subsidiary in which the bank’s
investment is made pursuant to specific
authorization in a statute or OCC
regulation (e.g., a bank service company
under 12 U.S.C. 1861 et seq., a financial
subsidiary under section 5136A of the
Revised Statutes (12 U.S.C. 24a), or a
community development corporation
subsidiary under 12 U.S.C. 24
(Eleventh) and part 24; and
(B) A subsidiary in which the bank
has acquired, in good faith, shares
through foreclosure on collateral, by
way of compromise of a doubtful claim,
or to avoid a loss in connection with a
debt previously contracted.
(iii) Notwithstanding the
requirements of paragraph (e)(2)(i) of
this section,
(A) A national bank must have
reasonable policies and procedures to
preserve the limited liability of the bank
and its operating subsidiaries; and
(B) OCC regulations shall not be
construed as requiring a national bank
and its operating subsidiaries to operate
as a single entity.
(3) Examination and supervision. An
operating subsidiary conducts activities
authorized under this section pursuant
to the same authorization, terms and
conditions that apply to the conduct of
such activities by its parent national
bank, unless otherwise specifically
provided by statute, regulation, or
published OCC policy, including
sections 1044 and 1045 of the DoddFrank Wall Street Reform and Consumer
Protection Act (12 U.S.C. 25b) with
respect to the application of state law.
If the OCC determines that the operating
subsidiary is operating in violation of
law, regulation, or written condition, or
in an unsafe or unsound manner or
otherwise threatens the safety or
soundness of the bank, the OCC will
direct the bank or operating subsidiary
PO 00000
Frm 00101
Fmt 4701
Sfmt 4700
28445
to take appropriate remedial action,
which may include requiring the bank
to divest or liquidate the operating
subsidiary, or discontinue specified
activities. OCC authority under this
paragraph is subject to the limitations
and requirements of section 45 of the
Federal Deposit Insurance Act (12
U.S.C. 1831v) and section 115 of the
Gramm-Leach-Bliley Act (12 U.S.C.
1820a).
(4) Consolidation of figures—(i)
National banks. Pertinent book figures
of the parent national bank and its
operating subsidiary shall be combined
for the purpose of applying statutory or
regulatory limitations when
combination is needed to effect the
intent of the statute or regulation, e.g.,
for purposes of 12 U.S.C. 56, 59, 60, 84,
and 371d.
(ii) Federal branches or agencies.
Transactions conducted by all of a
foreign bank’s Federal branches and
agencies and state branches and
agencies, and their operating
subsidiaries, shall be combined for the
purpose of applying any limitation or
restriction as provided in 12 CFR 28.14.
(5) Procedures—(i) Application
required. (A) Except for an operating
subsidiary that qualifies for the notice
procedures in paragraph (e)(5)(ii) of this
section or is exempt from application or
notice requirements under paragraph
(e)(5)(vi) of this section, a national bank
must first submit an application to, and
receive prior approval from, the OCC to
establish or acquire an operating
subsidiary or to perform a new activity
in an existing operating subsidiary.
(B) The application must explain, as
appropriate, how the bank ‘‘controls’’
the enterprise, describing in full detail
structural arrangements where control is
based on factors other than bank
ownership of more than 50 percent of
the voting interest of the subsidiary and
the ability to control the management
and operations of the subsidiary by
holding voting interests sufficient to
select the number of directors needed to
control the subsidiary’s board and to
select and terminate senior
management. In the case of a limited
partnership or limited liability company
that does not qualify for the notice
procedures set forth in paragraph
(e)(5)(ii) of this section, the bank must
provide a statement explaining why it is
not eligible. The application also must
include a complete description of the
bank’s investment in the subsidiary, the
proposed activities of the subsidiary, the
organizational structure and
management of the subsidiary, the
relations between the bank and the
subsidiary, and other information
necessary to adequately describe the
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28446
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
proposal. To the extent that the
application relates to the initial
affiliation of the bank with a company
engaged in insurance activities, the bank
must describe the type of insurance
activity in which the company is
engaged and has present plans to
conduct. The bank must also list for
each state the lines of business for
which the company holds, or will hold,
an insurance license, indicating the
state where the company holds a
resident license or charter, as
applicable. The application must state
whether the operating subsidiary will
conduct any activity at a location other
than the main office or a previously
approved branch of the bank. The OCC
may require an applicant to submit a
legal analysis if the proposal is novel,
unusually complex, or raises substantial
unresolved legal issues. In these cases,
the OCC encourages applicants to have
a prefiling meeting with the OCC. Any
bank receiving approval under this
paragraph is deemed to have agreed that
the subsidiary will conduct the activity
in a manner consistent with published
OCC guidance.
(ii) Notice process only for certain
qualifying filings. (A) Except for an
operating subsidiary that is exempt from
application or notice procedures under
paragraph (e)(5)(vi) of this section, a
national bank that is ‘‘well capitalized’’
and ‘‘well managed’’ may establish or
acquire an operating subsidiary, or
perform a new activity in an existing
operating subsidiary, by providing the
appropriate OCC licensing office written
notice prior to, or within 10 days after,
acquiring or establishing the subsidiary,
or commencing the new activity, if:
(1) The activity is listed in paragraph
(e)(5)(v) of this section;
(2) The entity is a corporation, limited
liability company, or limited
partnership; and
(3) The bank:
(i) Has the ability to control the
management and operations of the
subsidiary by holding voting interests
sufficient to select the number of
directors needed to control the
subsidiary’s board and to select and
terminate senior management (or, in the
case of a limited partnership or a
limited liability company, has the
ability to control the management and
operations of the subsidiary by
controlling the selection and
termination of senior management), and
no other person or entity exercises
effective operating control over the
subsidiary or has the ability to influence
the subsidiary’s operations to an extent
equal to or greater than the bank’s;
(ii) Holds more than 50 percent of the
voting, or equivalent, interests in the
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
subsidiary, and, in the case of a limited
partnership or limited liability
company, the bank or an operating
subsidiary thereof is the sole general
partner of the limited partnership or the
sole managing member of the limited
liability company, provided that under
the partnership agreement or limited
liability company agreement, limited
partners or other limited liability
company members have no authority to
bind the partnership or limited liability
company by virtue solely of their status
as limited partners or members; and
(iii) Is required to consolidate its
financial statements with those of the
subsidiary under generally accepted
accounting principles (GAAP).
(B) The written notice must include a
complete description of the bank’s
investment in the subsidiary and of the
activity conducted and a representation
and undertaking that the activity will be
conducted in accordance with OCC
policies contained in guidance issued
by the OCC regarding the activity. To
the extent that the notice relates to the
initial affiliation of the bank with a
company engaged in insurance
activities, the bank must describe the
type of insurance activity in which the
company is engaged and has present
plans to conduct. The bank also must
list for each state the lines of business
for which the company holds, or will
hold, an insurance license, indicating
the state where the company holds a
resident license or charter, as
applicable. Any bank receiving approval
under this paragraph is deemed to have
agreed that the subsidiary will conduct
the activity in a manner consistent with
published OCC guidance.
(iii) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to this section.
However, if the OCC concludes that an
application presents significant or novel
policy, supervisory, or legal issues, the
OCC may determine that some or all
provisions in §§ 5.8, 5.10, and 5.11
apply.
(iv) OCC review and approval. The
OCC reviews a national bank’s
application to determine whether the
proposed activities are legally
permissible under Federal banking laws
and to ensure that the proposal is
consistent with safe and sound banking
practices and OCC policy and does not
endanger the safety or soundness of the
parent national bank. As part of this
process, the OCC may request additional
information and analysis from the
applicant.
(v) Activities eligible for notice. The
following activities qualify for the
notice procedures in paragraph (e)(5)(ii)
of this section, provided the activity is
PO 00000
Frm 00102
Fmt 4701
Sfmt 4700
conducted pursuant to the same terms
and conditions as would be applicable
if the activity were conducted directly
by a national bank:
(A) Holding and managing assets
acquired by the parent bank or its
operating subsidiaries, including
investment assets and property acquired
by the bank through foreclosure or
otherwise in good faith to compromise
a doubtful claim, or in the ordinary
course of collecting a debt previously
contracted;
(B) Providing services to or for the
bank or its affiliates, including
accounting, auditing, appraising,
advertising and public relations, and
financial advice and consulting;
(C) Making loans or other extensions
of credit, and selling money orders,
savings bonds, and travelers checks;
(D) Purchasing, selling, servicing, or
warehousing loans or other extensions
of credit, or interests therein;
(E) Providing courier services between
financial institutions;
(F) Providing management consulting,
operational advice, and services for
other financial institutions;
(G) Providing check guaranty,
verification and payment services;
(H) Providing data processing, data
warehousing and data transmission
products, services, and related activities
and facilities, including associated
equipment and technology, for the bank
or its affiliates;
(I) Acting as investment adviser
(including an adviser with investment
discretion) or financial adviser or
counselor to governmental entities or
instrumentalities, businesses, or
individuals, including advising
registered investment companies and
mortgage or real estate investment
trusts, furnishing economic forecasts or
other economic information, providing
investment advice related to futures and
options on futures, and providing
consumer financial counseling;
(J) Providing tax planning and
preparation services;
(K) Providing financial and
transactional advice and assistance,
including advice and assistance for
customers in structuring, arranging, and
executing mergers and acquisitions,
divestitures, joint ventures, leveraged
buyouts, swaps, foreign exchange,
derivative transactions, coin and
bullion, and capital restructurings;
(L) Underwriting and reinsuring
credit related insurance to the extent
permitted under section 302 of the
GLBA (15 U.S.C. 6712);
(M) Leasing of personal property and
acting as an agent or adviser in leases
for others;
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(N) Providing securities brokerage or
acting as a futures commission
merchant, and providing related credit
and other related services;
(O) Underwriting and dealing,
including making a market, in bank
permissible securities and purchasing
and selling as principal, asset backed
obligations;
(P) Acting as an insurance agent or
broker, including title insurance to the
extent permitted under section 303 of
the GLBA (15 U.S.C. 6713);
(Q) Reinsuring mortgage insurance on
loans originated, purchased, or serviced
by the bank, its subsidiaries, or its
affiliates, provided that if the subsidiary
enters into a quota share agreement, the
subsidiary assumes less than 50 percent
of the aggregate insured risk covered by
the quota share agreement. A ‘‘quota
share agreement’’ is an agreement under
which the reinsurer is liable to the
primary insurance underwriter for an
agreed upon percentage of every claim
arising out of the covered book of
business ceded by the primary
insurance underwriter to the reinsurer;
(R) Acting as a finder pursuant to 12
CFR 7.1002 to the extent permitted by
published OCC precedent for national
banks; 2
(S) Offering correspondent services to
the extent permitted by published OCC
precedent for national banks;
(T) Acting as agent or broker in the
sale of fixed or variable annuities;
(U) Offering debt cancellation or debt
suspension agreements;
(V) Providing real estate settlement,
closing, escrow, and related services;
and real estate appraisal services for the
subsidiary, parent bank, or other
financial institutions;
(W) Acting as a transfer or fiscal
agent;
(X) Acting as a digital certification
authority to the extent permitted by
published OCC precedent for national
banks, subject to the terms and
conditions contained in that precedent;
(Y) Providing or selling public
transportation tickets, event and
attraction tickets, gift certificates,
prepaid phone cards, promotional and
advertising material, postage stamps,
and Electronic Benefits Transfer (EBT)
script, and similar media, to the extent
permitted by published OCC precedent
for national banks, subject to the terms
and conditions contained in that
precedent;
(Z) Providing data processing, and
data transmission services, facilities
2 See, e.g., the OCC’s monthly publication
‘‘Interpretations and Actions.’’ Beginning with the
May 1996 issue, the OCC’s Web site provides access
to electronic versions of ‘‘Interpretations and
Actions’’ (www.occ.gov).
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(including equipment, technology, and
personnel), databases, advice and access
to such services, facilities, databases
and advice, for the parent bank and for
others, pursuant to 12 CFR 7.5006 to the
extent permitted by published OCC
precedent for national banks;
(AA) Providing bill presentment,
billing, collection, and claimsprocessing services;
(BB) Providing safekeeping for
personal information or valuable
confidential trade or business
information, such as encryption keys, to
the extent permitted by published OCC
precedent for national banks;
(CC) Providing payroll processing;
(DD) Providing branch management
services;
(EE) Providing merchant processing
services except when the activity
involves the use of third parties to
solicit or underwrite merchants; and
(FF) Performing administrative tasks
involved in benefits administration.
(vi) No application or notice required.
A national bank may acquire or
establish an operating subsidiary, or
perform a new activity in an existing
operating subsidiary, without filing an
application or providing notice to the
OCC, if the bank is well managed and
well capitalized and the:
(A) Activities of the new subsidiary
are limited to those activities previously
reported by the bank in connection with
the establishment or acquisition of a
prior operating subsidiary;
(B) Activities in which the new
subsidiary will engage continue to be
legally permissible for the subsidiary;
(C) Activities of the new subsidiary
will be conducted in accordance with
any conditions imposed by the OCC in
approving the conduct of these activities
for any prior operating subsidiary of the
bank; and
(D) The standards set forth in
paragraphs (e)(5)(ii)(A)(2) and (3) of this
section are satisfied.
(vii) Fiduciary powers. (A) If an
operating subsidiary proposes to accept
fiduciary appointments for which
fiduciary powers are required, such as
acting as trustee or executor, then the
national bank must have fiduciary
powers under 12 U.S.C. 92a and the
subsidiary also must have its own
fiduciary powers under the law
applicable to the subsidiary.
(B) Unless the subsidiary is a
registered investment adviser, if an
operating subsidiary proposes to
exercise investment discretion on behalf
of customers or provide investment
advice for a fee, the national bank must
have prior OCC approval to exercise
fiduciary powers pursuant to § 5.26 and
12 CFR part 9.
PO 00000
Frm 00103
Fmt 4701
Sfmt 4700
28447
(viii) Expiration of approval.
Approval expires if the national bank
has not established or acquired the
operating subsidiary, or commenced the
new activity in an existing operating
subsidiary within 12 months after the
date of the approval, unless the OCC
shortens or extends the time period.
(6) Grandfathered operating
subsidiaries. Notwithstanding the
requirements for a qualifying operating
subsidiary in paragraph (e)(2) of this
section and unless otherwise notified by
the OCC with respect to a particular
operating subsidiary, an entity that a
national bank lawfully acquired or
established as an operating subsidiary
before April 24, 2008 may continue to
operate as a national bank operating
subsidiary under this section, provided
that the bank and the operating
subsidiary were, and continue to be,
conducting authorized activities in
compliance with the standards and
requirements applicable when the bank
established or acquired the operating
subsidiary.
(7) Annual Report on Operating
Subsidiaries—(i) Filing requirement.
Each national bank shall prepare and
file with the OCC an Annual Report on
Operating Subsidiaries containing the
information set forth in paragraph
(e)(7)(ii) of this section for each of its
operating subsidiaries that:
(A) Is not functionally regulated
within the meaning of section 5(c)(5) of
the Bank Holding Company Act of 1956,
as amended (12 U.S.C. 1844(c)(5)); and
(B) Does business directly with
consumers in the United States. For
purposes of paragraph (e)(7) of this
section, an operating subsidiary, or any
subsidiary thereof, does business
directly with consumers if, in the
ordinary course of its business, it
provides products or services to
individuals to be used primarily for
personal, family, or household
purposes.
(ii) Information required. The Annual
Report on Operating Subsidiaries must
contain the following information for
each covered operating subsidiary
listed:
(A) The name and charter number of
the parent national bank;
(B) The name (include any ‘‘dba’’
(doing business as), abbreviated names,
or trade names used to identify the
operating subsidiary when it does
business directly with consumers),
mailing address (include the street
address or post office box, city, state,
and zip code), email address (if any),
and telephone number of the operating
subsidiary;
(C) The principal place of business of
the operating subsidiary, if different
E:\FR\FM\18MYR2.SGM
18MYR2
28448
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
from the address provided pursuant to
paragraph (e)(7)(ii)(B) of this section;
and
(D) The lines of business in which the
operating subsidiary is doing business
directly with consumers by designating
the appropriate code contained in
appendix B (NAICS Activity Codes for
Commonly Reported Activities) to the
Instructions for Preparation of Report of
Changes in Organizational Structure,
Form FR Y–10, a copy of which is set
forth on the OCC’s Internet Web page at
www.occ.gov. If the operating subsidiary
is engaged in an activity not set forth in
this list, a national bank shall report the
code 0000 and provide a brief
description of the activity.
(iii) Filing time frames and
availability of information. Each
national bank’s Annual Report on
Operating Subsidiaries shall contain
information current as of December 31st
for the year prior to the year the report
is filed. The national bank shall submit
its Annual Report on Operating
Subsidiaries on or before January 31st
each year. The national bank may
submit the Annual Report on Operating
Subsidiaries electronically or in another
format prescribed by the OCC. The OCC
will make available to the public the
information contained in the Annual
Report on Operating Subsidiaries at
www.helpwithmybank.gov.
■ 19. Section 5.35 is revised to read as
follows:
asabaliauskas on DSK5VPTVN1PROD with RULES
§ 5.35 Bank service company investments
by a national bank or Federal savings
association investment.
(a) Authority. 12 U.S.C. 93a, 1462a,
1463, 1464, 1861–1867, 5412(b)(2)(B).
(b) Licensing requirements. Except
where otherwise provided, a national
bank or Federal savings association
shall submit a notice and obtain prior
OCC approval to invest in the equity of
a bank service company or to perform
new activities in an existing bank
service company.
(c) Scope. This section describes the
procedures and requirements regarding
OCC review and approval of a notice by
a national bank or Federal savings
association to invest in the equity of a
bank service company. The OCC may, at
any time, limit a national bank’s or
Federal savings association’s investment
in a bank service company or may limit
or refuse to permit any activities in any
bank service company for which a
national bank or Federal savings
association is the principal investor for
supervisory, legal, or safety and
soundness reasons.
(d) Definitions—(1) Bank service
company means a corporation or limited
liability company organized to provide
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
services authorized by the Bank Service
Company Act, 12 U.S.C. 1861 et seq., all
of whose capital stock is owned by one
or more insured depository institutions
in the case of a corporation, or all of the
members of which are one or more
insured depository institutions in the
case of a limited liability company.
(2) Limited liability company means
any company, partnership, trust, or
similar business entity organized under
the law of a state (as defined in section
3 of the Federal Deposit Insurance Act)
which provides that a member or
manager of such company is not
personally liable for a debt, obligation,
or liability of the company solely by
reason of being, or acting as, a member
or manager of such company.
(3) Depository institution for purposes
of this section, means, except when
such term appears in connection with
the term ‘insured depository
institution’, an insured bank (as defined
in section 3 of the Federal Deposit
Insurance Act), a savings association (as
defined in section 3 of the Federal
Deposit Insurance Act), a financial
institution subject to examination by the
appropriate Federal banking agency or
the National Credit Union
Administration Board, or a financial
institution the accounts or deposits of
which are insured or guaranteed under
state law and are eligible to be insured
by the Federal Deposit Insurance
Corporation or the National Credit
Union Administration Board.
(4) Insured depository institution, for
purposes of this section, has the same
meaning as in section 3 of the Federal
Deposit Insurance Act.
(5) Invest includes making any
advance of funds to a bank service
company, whether by the purchase of
stock, the making of a loan, or
otherwise, except a payment for rent
earned, goods sold and delivered, or
services rendered before the payment
was made.
(6) Principal investor means the
insured depository institution that has
the largest amount invested in the
equity of a bank service company. In
any case where two or more insured
depository institutions have equal
amounts invested and no other insured
depository institution has a larger
amount invested, the bank service
company shall designate one of those
insured depository institutions as its
principal investor.
(e) Standards and requirements. A
national bank or Federal savings
association may invest in a bank service
company that conducts activities
described in paragraphs (f)(3) and (f)(4)
of this section and activities (other than
taking deposits) permissible for the
PO 00000
Frm 00104
Fmt 4701
Sfmt 4700
national bank or Federal savings
association and other insured
depository institution shareholders or
members of the bank service company.
(f) Procedures—(1) OCC notice and
approval required. Except as provided
in paragraphs (f)(3) and (f)(4) of this
section, a national bank or Federal
savings association that intends to
invest in the equity of a bank service
company, or to perform new activities
in an existing bank service company,
must submit a notice to and receive
prior approval from the OCC. The notice
must include the information required
by paragraph (g) of this section. The
OCC approves or denies a proposed
investment within 60 days after the
filing is received by the OCC, unless the
OCC notifies the bank prior to that date
that the filing presents a significant
supervisory or compliance concern, or
raises a significant legal or policy issue.
(2) Expedited review for certain
activities. (i) A notice to invest in the
equity of a bank service company, or to
perform new activities in an existing
bank service company, that meets the
requirements of this paragraph is
deemed approved by the OCC as of the
30th day after the notice is received by
the OCC, unless the OCC notifies the
filer prior to that date that the filing is
not eligible for expedited review or the
expedited review process is extended.
Any bank or savings association making
an investment pursuant to this
paragraph is deemed to have agreed that
the bank service company will conduct
the activity in a manner consistent with
the published OCC guidance.
(ii) A notice is eligible for expedited
review if all of the following
requirements are met:
(A) The national bank or Federal
savings association is ‘‘well capitalized’’
and ‘‘well managed’’ as defined in
§ 5.34(d) or § 5.38(d), as applicable; and
(B) The bank service company
engages only in activities that are
permissible for the bank service
company under 12 U.S.C. 1864 and that
are listed in § 5.34(e)(5)(v) or
§ 5.38(e)(5)(v), as applicable.
(3) Investments requiring no approval
or notice. A national bank or Federal
savings association does not need to
submit a notice or obtain OCC approval
to invest in a bank service company, or
to perform a new activity in an existing
bank service company, if the bank
service company will provide only the
following services only for depository
institutions: Check and deposit posting
and sorting; computation and posting of
interest and other credits and charges;
preparation and mailing of checks,
statements, notices, and similar items;
or any other clerical, bookkeeping,
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
accounting, statistical, or similar
functions.
(4) Federal Reserve approval. A
national bank or Federal savings
association also may, with the approval
of the Board of Governors of the Federal
Reserve System (Federal Reserve Board),
invest in the equity of a bank service
company that provides any other service
(except deposit taking) that the Federal
Reserve Board has determined, by
regulation, to be permissible for a bank
holding company under 12 U.S.C.
1843(c)(8).
(5) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to a request for
approval to invest in a bank service
company. However, if the OCC
concludes that an application presents
significant or novel policy, supervisory,
or legal issues, the OCC may determine
that any or all provisions of §§ 5.8, 5.10,
and 5.11 apply.
(g) Required information. A notice
required under paragraph (f)(1) of this
section must contain the following:
(1) The name and location of the bank
service company;
(2) A complete description of the
activities the bank service company will
conduct and a representation and
undertaking that the activities will be
conducted in accordance with OCC
guidance. To the extent the notice
relates to the initial affiliation of the
national bank or Federal savings
association with a company engaged in
insurance activities, the national bank
or Federal savings association should
describe the type of insurance activity
that the company is engaged in and has
present plans to conduct. The national
bank or Federal savings association also
must list for each state the lines of
business for which the company holds,
or will hold, an insurance license,
indicating the state where the company
holds a resident license or charter, as
applicable;
(3) A complete description of the
national bank’s or Federal savings
association’s investment in the bank
service company and information
demonstrating that the national bank or
Federal savings association will comply
with the investment limitations of
paragraph (i) of this section; and
(4) Information demonstrating that the
bank service company will perform only
those services that each insured
depository institution shareholder or
member is authorized to perform under
applicable Federal or state law and will
perform such services only at locations
in a state in which each such
shareholder or member is authorized to
perform such services unless performing
services that are authorized by the
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
Federal Reserve Board under the
authority of 12 U.S.C. 1865(b).
(h) Examination and supervision.
Each bank service company in which a
national bank or Federal savings
association is the principal investor is
subject to examination and supervision
by the OCC in the same manner and to
the same extent as that national bank or
Federal savings association. OCC
authority under this paragraph is subject
to the limitations and requirements of
section 45 of the Federal Deposit
Insurance Act (12 U.S.C. 1831v) and
section 115 of the Gramm-Leach-Bliley
Act (12 U.S.C. 1820a).
(i) Investment limitations. A national
bank or Federal savings association may
not invest more than 10 percent of its
capital and surplus in a bank service
company. In addition, the national
bank’s or Federal savings association’s
total investments in all bank service
companies may not exceed five percent
of the national bank’s or Federal savings
association’s total assets.
■ 20. Section 5.36 is amended by:
■ a. Revising the section heading;
■ b. In paragraphs (d)(1), (e)
introductory text, and (g)(1), by
removing the phrase ‘‘the appropriate
district office’’ and adding in its place
the phrase ‘‘the appropriate OCC
licensing office’’;
■ c. In paragraph (d)(2), remove the
phrase ‘‘paragraph (c)(1)’’ and add in its
place the phrase ‘‘paragraph (d)(1)’’; and
■ d. In paragraph (g)(1), remove the
phrase ‘‘paragraph (g)(i)’’ each time it
appears and add in its place the phrase
‘‘paragraph (g)(1)’’.
The revision reads as follows:
§ 5.36 Other equity investments by a
national bank.
*
*
*
*
*
21. Section 5.37 is revised to read as
follows:
■
§ 5.37 Investment in national bank or
Federal savings association premises.
(a) Authority. 12 U.S.C. 29, 93a, 317d,
1464(c)(2), 1464(c)(4)(B), 1828(m), and
5412(b)(2)(B).
(b) Scope. This section addresses a
national bank’s or Federal savings
association’s investment in banking
premises and other premises-related
investments, loans, or indebtedness.
This section also sets forth the
quantitative investment limitations and
procedures governing the OCC’s review
and approval of an application by a
national bank or Federal savings
association to invest in these premises.
(c) Definitions. The following
definitions apply for purposes of this
section.
(1) Banking premises includes:
PO 00000
Frm 00105
Fmt 4701
Sfmt 4700
28449
(i) Premises that are owned and
occupied (or to be occupied, if under
construction) by a national bank or
Federal savings association, its
respective branches, or its consolidated
subsidiaries;
(ii) Capitalized leases and leasehold
improvements, vaults, and fixed
machinery and equipment;
(iii) Remodeling costs to existing
premises;
(iv) Real estate acquired and intended,
in good faith, for use in future
expansion; or
(v) Parking facilities that are used by
customers or employees of the national
bank or Federal savings association.
(2) Capital stock means, for national
banks and Federal stock savings
associations, the amount of common
stock outstanding and unimpaired plus
the amount of perpetual preferred stock
outstanding and unimpaired. With
respect to Federal mutual savings
associations, ‘‘capital stock’’ should be
read to mean the amount of the
association’s retained earnings.
(3) Capital and surplus means:
(i) A national bank’s or Federal
savings association’s tier 1 and tier 2
capital calculated under 12 CFR part 3,
as applicable, as reported in the bank’s
or savings association’s Consolidated
Reports of Condition and Income (Call
Reports) filed under 12 U.S.C. 161 or 12
U.S.C. 1464(v), respectively; plus
(ii) The balance of a national bank’s
or Federal savings association’s
allowance for loan and lease losses not
included in the bank’s or savings
association’s tier 2 capital, for purposes
of the calculation of risk-based capital
described in paragraph (c)(3)(i) of this
section, as reported in the national
bank’s or Federal savings association’s
Call Reports filed under 12 U.S.C. 161
or 1464(v), respectively.
(d) Procedure—(1) Premises
application—(i) When required. A
national bank or Federal savings
association shall submit an application
to the appropriate OCC supervisory
office to invest in banking premises, or
in the stock, bonds, debentures, or other
such obligations of any corporation
holding the premises of the national
bank or Federal savings association, or
to make loans to or upon the security of
the stock of such corporation, if the
aggregate of all such investments and
loans, together with the indebtedness
incurred by any such corporation that is
an affiliate of the national bank or
Federal savings association, as defined
in 12 U.S.C. 221a or 12 U.S.C. 1462,
respectively, will exceed the amount of
the capital stock of the national bank or
Federal savings association, or, in the
case of a Federal mutual savings
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28450
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
association the amount of retained
earnings.
(ii) Contents of premises application.
The application must include:
(A) A description of the national
bank’s or Federal savings association’s
present investment in banking premises;
(B) The investment in banking
premises that the national bank or
Federal savings association intends to
make, and the business reason for
making the investment; and
(C) The amount by which the national
bank’s or Federal savings association’s
aggregate investment will exceed the
amount of the national bank’s or Federal
stock savings association’s capital stock,
or, in the case of a Federal mutual
savings association, the amount of
retained earnings.
(2) Approval of premises application.
An application from a national bank or
Federal savings association to invest in
banking premises or in certain banking
premises-related investments, loans or
indebtedness, as described in paragraph
(d)(1)(i) of this section, is deemed
approved as of the 30th day after the
filing is received by the OCC, unless the
OCC notifies the national bank or
Federal savings association prior to that
date that the filing presents a significant
supervisory or compliance concern, or
raises a significant legal or policy issue.
An approval for a specified amount
under this section remains valid up to
that amount until the OCC notifies the
national bank or Federal savings
association otherwise.
(3) Premises notice process—(i)
General rule. Notwithstanding
paragraph (d)(1)(i) of this section, a
national bank or Federal savings
association that is rated 1 or 2 under the
Uniform Financial Institutions Rating
System (CAMELS) may make an
aggregate investment in banking
premises up to 150 percent of the
national bank’s or Federal savings
association’s capital and surplus
without the OCC’s prior approval,
provided that the national bank or
Federal savings association is well
capitalized as defined in 12 CFR part 6
and will continue to be well capitalized
after the investment or loan is made.
However, the national bank or Federal
savings association shall notify the
appropriate OCC supervisory office in
writing of the investment within 30
days after the investment or loan is
made. The written notice must include
a description of the national bank’s or
Federal savings association’s investment
or loan.
(ii) Exception. If a Federal savings
association that would otherwise be
eligible for the premises notice process
described in paragraph (d)(3)(i) of this
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
section proposes to establish or acquire
a subsidiary to make an investment in
banking premises, or if investing in
banking premises would be a new
activity for such a subsidiary, the
Federal savings association would not
be eligible for the premises notice
process and would be required to
comply with the provisions of § 5.59 in
the case of a service corporation, or
§ 5.38 in the case of an operating
subsidiary.
(4) Service corporation. A Federal
savings association that invests in
banking premises through a service
corporation is not subject to the
premises application and premises
notice requirements of paragraph (d) of
this section; however, it must include
this investment when calculating the
quantitative limitations in paragraph (d)
of this section, and must comply with
12 CFR 5.59.
(5) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to this section.
However, if the OCC concludes that an
application presents significant or novel
policy, supervisory, or legal issues, the
OCC may determine that any or all parts
of §§ 5.8, 5.10, and 5.11 apply.
■ 22. Section 5.38 is added to read as
follows:
§ 5.38 Operating subsidiaries of a Federal
savings association.
(a) Authority. 12 U.S.C. 1462a, 1463,
1464, 1465, 1828, 5412(b)(2)(B).
(b) Licensing requirements. When
required by section 18(m) of the Federal
Deposit Insurance Act, a Federal savings
association must file an application as
prescribed in this section to acquire or
establish an operating subsidiary, or to
commence a new activity in an existing
operating subsidiary.
(c) Scope. This section sets forth
authorized activities and application
procedures for Federal savings
associations engaging in activities
through an operating subsidiary. The
OCC may, at any time, limit a Federal
savings association’s investment in an
operating subsidiary or may limit or
refuse to permit any activities in an
operating subsidiary for supervisory,
legal, or safety and soundness reasons.
(d) Definitions. For purposes of this
section:
(1) Well capitalized means the capital
level described in 12 CFR 6.4.
(2) Well managed means, unless
otherwise determined in writing by the
OCC:
(i) The Federal savings association has
received a composite rating of 1 or 2
under the Uniform Financial
Institutions Rating System in
PO 00000
Frm 00106
Fmt 4701
Sfmt 4700
connection with its most recent
examination; or
(ii) In the case of any Federal savings
association that has not been examined,
the existence and use of managerial
resources that the OCC determines are
satisfactory.
(e) Standards and requirements—(1)
Authorized activities. (i) A Federal
savings association may conduct in an
operating subsidiary activities that are
permissible for a Federal savings
association to engage in directly.
(ii) In addition to OCC authorization,
before it begins business an operating
subsidiary also must comply with other
laws applicable to it and its proposed
business, including applicable licensing
or registration requirements, if any, such
as registration requirements under
securities laws.
(2) Qualifying subsidiaries. (i) An
operating subsidiary in which a Federal
savings association may invest includes
a corporation, limited liability company,
limited partnership, or similar entity if:
(A) The savings association has the
ability to control the management and
operations of the subsidiary, and no
other person or entity exercises effective
operating control over the subsidiary or
has the ability to influence the
subsidiary’s operations to an extent
equal to or greater than that of the
savings association;
(B) The parent savings association
owns and controls more than 50 percent
of the voting (or similar type of
controlling) interest of the operating
subsidiary, or the parent savings
association otherwise controls the
operating subsidiary and no other party
controls a percentage of the voting (or
similar type of controlling) interest of
the operating subsidiary greater than the
savings association’s interest; and
(C) The operating subsidiary is
consolidated with the savings
association under generally accepted
accounting principles (GAAP).
(ii) Subject to the requirements in this
section, a Federal savings association
may hold another insured depository
institution as an operating subsidiary.
(iii) However, the following
subsidiaries are not operating
subsidiaries subject to this section:
(A) A subsidiary in which the savings
association’s investment is made
pursuant to specific authorization in a
statute or OCC regulation (e.g., a service
corporation under 12 U.S.C. 1464(c)(4)
or a bank service company under 12
U.S.C. 1861 et seq.); and
(B) A subsidiary in which the savings
association has acquired, in good faith,
shares through foreclosure on collateral,
by way of compromise of a doubtful
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
claim, or to avoid a loss in connection
with a debt previously contracted.
(iv) Notwithstanding the requirements
of paragraph (e)(2)(i) of this section:
(A) A Federal savings association
must have reasonable policies and
procedures to preserve the limited
liability of the savings association and
its operating subsidiaries; and
(B) OCC regulations shall not be
construed as requiring a Federal savings
association and its operating
subsidiaries to operate as a single entity.
(3) Examination and supervision. An
operating subsidiary conducts activities
authorized under this section pursuant
to the same authorization, terms and
conditions that apply to the conduct of
such activities by its parent Federal
savings association, unless otherwise
specifically provided by statute,
regulation, or published OCC policy,
including sections 1045 and 1046 of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act (12 U.S.C. 25b
and 1465) with respect to the
application of state law. If the OCC
determines that the operating subsidiary
is operating in violation of law,
regulation, or written condition, or in an
unsafe or unsound manner or otherwise
threatens the safety or soundness of the
savings association, the OCC will direct
the savings association or operating
subsidiary to take appropriate remedial
action, which may include requiring the
savings association to divest or liquidate
the operating subsidiary, or discontinue
specified activities. OCC authority
under this paragraph is subject to the
limitations and requirements of section
45 of the Federal Deposit Insurance Act
(12 U.S.C. 1831v) and section 115 of the
Gramm-Leach-Bliley Act (12 U.S.C.
1820a).
(4) Consolidation of figures. (i) Except
as provided in paragraph (e)(4)(ii) of this
section, pertinent book figures of the
parent Federal savings association and
its operating subsidiary shall be
combined for the purpose of applying
statutory or regulatory limitations when
combination is needed to effect the
intent of the statute or regulation, e.g.,
for purposes of 12 U.S.C. 1464(c) and
1464(u).
(ii) Consolidation for purposes of
calculating portfolio assets and qualified
thrift investments is subject to 12 U.S.C.
1467a(m)(5).
(5) Procedures—(i) Application
required. (A) A Federal savings
association must first submit an
application to, and receive prior
approval from, the OCC to establish or
acquire an operating subsidiary, or to
perform a new activity in an existing
operating subsidiary.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(B) The application must explain, as
appropriate, how the savings association
‘‘controls’’ the enterprise, describing in
full detail structural arrangements
where control is based on factors other
than savings association ownership of
more than 50 percent of the voting
interest of the subsidiary and the ability
to control the management and
operations of the subsidiary by holding
voting interests sufficient to select the
number of directors needed to control
the subsidiary’s board and to select and
terminate senior management. In the
case of a limited partnership or limited
liability company that does not qualify
for the expedited review procedure set
forth in paragraph (e)(5)(ii) of this
section, the savings association must
provide a statement explaining why it is
not eligible. The application also must
include a complete description of the
savings association’s investment in the
subsidiary, the proposed activities of the
subsidiary, the organizational structure
and management of the subsidiary, the
relations between the savings
association and the subsidiary, and
other information necessary to
adequately describe the proposal. To the
extent that the application relates to the
initial affiliation of the savings
association with a company engaged in
insurance activities, the savings
association must describe the type of
insurance activity in which the
company is engaged and has present
plans to conduct. The savings
association must also list for each state
the lines of business for which the
company holds, or will hold, an
insurance license, indicating the state
where the company holds a resident
license or charter, as applicable. The
application must state whether the
operating subsidiary will conduct any
activity at a location other than the
home office or a previously approved
branch of the savings association. The
OCC may require an applicant to submit
a legal analysis if the proposal is novel,
unusually complex, or raises substantial
unresolved legal issues. In these cases,
the OCC encourages applicants to have
a prefiling meeting with the OCC. Any
savings association receiving approval
under this paragraph is deemed to have
agreed that the subsidiary will conduct
the activity in a manner consistent with
published OCC guidance.
(ii) Expedited review. (A) An
application to establish or acquire an
operating subsidiary, or to perform a
new activity in an existing operating
subsidiary, that meets the requirements
of this paragraph is deemed approved
by the OCC as of the 30th day after the
filing is received by the OCC, unless the
PO 00000
Frm 00107
Fmt 4701
Sfmt 4700
28451
OCC notifies the applicant prior to that
date that the filing is not eligible for
expedited review, or the expedited
review process is extended under
§ 5.13(a)(2). Any savings association
receiving approval under this paragraph
is deemed to have agreed that the
subsidiary will conduct the activity in a
manner consistent with published OCC
guidance.
(B) An application is eligible for
expedited review if all of the following
requirements are met:
(1) The savings association is ‘‘well
capitalized’’ and ‘‘well managed’’;
(2) The activity is listed in paragraph
(e)(5)(v) this section;
(3) The entity is a corporation, limited
liability company, or limited
partnership; and
(4) The savings association:
(i) Has the ability to control the
management and operations of the
subsidiary by holding voting interests
sufficient to select the number of
directors needed to control the
subsidiary’s board and to select and
terminate senior management (or, in the
case of a limited partnership or a
limited liability company, has the
ability to control the management and
operations of the subsidiary by
controlling the selection and
termination of senior management), and
no other person or entity has the ability
to control the management or operations
of the subsidiary;
(ii) Holds more than 50 percent of the
voting, or equivalent, interests in the
subsidiary, and, in the case of a limited
partnership or limited liability
company, the savings association or an
operating subsidiary thereof is the sole
general partner of the limited
partnership or the sole managing
member of the limited liability
company, provided that under the
partnership agreement or limited
liability company agreement, limited
partners or other limited liability
company members have no authority to
bind the partnership or limited liability
company by virtue solely of their status
as limited partners or members; and
(iii) Is required to consolidate its
financial statements with those of the
subsidiary under generally accepted
accounting principles (GAAP). An
applicant proposing to qualify for
expedited review must include in the
application all necessary information
showing the application meets the
requirements.
(iii) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to this section.
However, if the OCC concludes that an
application presents significant or novel
policy, supervisory, or legal issues, the
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28452
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
OCC may determine that some or all
provisions in §§ 5.8, 5.10, and 5.11
apply.
(iv) OCC review and approval. The
OCC reviews a Federal savings
association’s application to determine
whether the proposed activities are
legally permissible under Federal
savings association law and to ensure
that the proposal is consistent with safe
and sound banking practices and OCC
policy and does not endanger the safety
or soundness of the parent Federal
savings association. As part of this
process, the OCC may request additional
information and analysis from the
applicant.
(v) Activities eligible for expedited
review. The following activities qualify
for the expedited review procedures in
paragraph (e)(5)(ii) of this section,
provided the activity is conducted
pursuant to the same terms and
conditions as would be applicable if the
activity were conducted directly by a
Federal savings association:
(A) Holding and managing assets
acquired by the parent savings
association or its operating subsidiaries,
including investment assets and
property acquired by the savings
association through foreclosure or
otherwise in good faith to compromise
a doubtful claim, or in the ordinary
course of collecting a debt previously
contracted;
(B) Providing services to or for the
savings association or its affiliates,
including accounting, auditing,
appraising, advertising and public
relations, and financial advice and
consulting;
(C) Making loans or other extensions
of credit, and selling money orders and
travelers checks;
(D) Purchasing, selling, servicing, or
warehousing loans or other extensions
of credit, or interests therein;
(E) Providing management consulting,
operational advice, and services for
other financial institutions;
(F) Providing check payment services;
(G) Acting as investment adviser
(including an adviser with investment
discretion) or financial adviser or
counselor to governmental entities or
instrumentalities, businesses, or
individuals, including advising
registered investment companies and
mortgage or real estate investment
trusts;
(H) Providing financial and
transactional advice and assistance,
including advice and assistance for
customers in structuring, arranging, and
executing mergers and acquisitions,
divestitures, joint ventures, leveraged
buyouts, swaps, foreign exchange,
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
derivative transactions, coin and
bullion, and capital restructurings;
(I) Underwriting and reinsuring credit
life and disability insurance;
(J) Leasing of personal property;
(K) Providing securities brokerage;
(L) Underwriting and dealing,
including making a market, in savings
association permissible securities and
purchasing and selling as principal,
asset backed obligations;
(M) Acting as an insurance agent or
broker for credit life, disability, and
unemployment insurance; single
property interest insurance; and title
insurance;
(N) Offering correspondent services to
the extent permitted by published OCC
precedent for Federal savings
associations;
(O) Acting as agent or broker in the
sale of fixed annuities;
(P) Offering debt cancellation or debt
suspension agreements;
(Q) Providing escrow services;
(R) Acting as a transfer agent; and
(S) Providing or selling postage
stamps.
(vi) Redesignation. A Federal savings
association that proposes to redesignate
a service corporation as an operating
subsidiary must submit a notification to
the OCC at least 30 days prior to the
redesignation date. The notification
must include a description of how the
redesignated service corporation meets
all of the requirements of this section to
be an operating subsidiary, a resolution
of the savings association’s board of
directors approving the redesignation,
and the proposed effective date of the
redesignation. The savings association
may effect the redesignation on the
proposed date unless the OCC notifies
the savings association otherwise prior
to that date. The OCC may require an
application if the redesignation presents
policy, supervisory, or legal issues.
(vii) Fiduciary powers. (A) If an
operating subsidiary proposes to accept
fiduciary appointments for which
fiduciary powers are required, such as
acting as trustee or executor, then the
Federal savings association must have
fiduciary powers under 12 U.S.C.
1464(n) and the subsidiary also must
have its own fiduciary powers under the
law applicable to the subsidiary.
(B) Unless the subsidiary is a
registered investment adviser, if an
operating subsidiary proposes to
exercise investment discretion on behalf
of customers or provide investment
advice for a fee, the Federal savings
association must have prior OCC
approval to exercise fiduciary powers
pursuant to § 5.26 (or a predecessor
provision) and 12 CFR part 150.
PO 00000
Frm 00108
Fmt 4701
Sfmt 4700
(viii) Expiration of approval.
Approval expires if the Federal savings
association has not established or
acquired the operating subsidiary, or
commenced the new activity in an
existing operating subsidiary within 12
months after the date of the approval,
unless the OCC shortens or extends the
time period.
(6) Grandfathered operating
subsidiaries. Notwithstanding the
requirements for a qualifying operating
subsidiary in paragraph (e)(2) of this
section and unless otherwise notified by
the OCC with respect to a particular
operating subsidiary, an entity that a
Federal savings association lawfully
acquired or established as an operating
subsidiary before May 18, 2015, may
continue to operate as a Federal savings
association operating subsidiary under
this section, provided that the savings
association and the operating subsidiary
were, and continue to be, conducting
authorized activities in compliance with
the standards and requirements
applicable when the savings association
established or acquired the operating
subsidiary.
(7) Issuances of securities by
operating subsidiaries. An operating
subsidiary shall not state or imply that
the securities it issues are covered by
Federal deposit insurance. An operating
subsidiary shall not issue any security
the payment, maturity, or redemption of
which may be accelerated upon the
condition that the controlling Federal
savings association is insolvent or has
been placed into receivership. For as
long as any securities are outstanding,
the controlling Federal savings
association must maintain all records
generated through each securities
issuance in the ordinary course of
business, including but not limited to a
copy of the prospectus, offering circular,
or similar document concerning such
issuance, and make such records
available for examination by the OCC.
23. Section 5.39 is amended by:
a. Revising the section heading; and
■ b. In paragraphs (i)(1)(i) and (ii), and
(i)(2), removing the phrase ‘‘the
appropriate district office’’ and adding
in its place the phrase ‘‘the appropriate
OCC licensing office’’.
The revision reads as follows:
■
■
§ 5.39
bank.
*
Financial subsidiaries of a national
*
*
*
*
24. Section 5.40 is revised to read as
follows:
■
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
§ 5.40 Change in location of a main office
of a national bank or home office of a
Federal savings association.
asabaliauskas on DSK5VPTVN1PROD with RULES
(a) Authority. 12 U.S.C. 30, 93a,
1462a, 1463, 1464, 1828, 2901–2907 and
5412(b)(2)(B).
(b) Scope. This section describes OCC
procedures and approval standards for
an application or a notice by a national
bank to change the location of its main
office or by a Federal savings
association to change the location of its
home office.3 A national bank or Federal
savings association shall follow the
procedures described in paragraph (c) of
this section to relocate its main office or
home office, as applicable.
(c) Licensing requirements and
procedures—(1) Main office or home
office relocation to an authorized
branch location within city, town, or
village limits. A national bank or
Federal savings association may change
the location of its main office or home
office, as applicable, to an authorized
branch location (approved or existing
branch site) within the limits of the
same city, town, or village. The national
bank or Federal savings association
shall give prior notice to the appropriate
OCC licensing office before the
relocation. The notice must include the
new address of the main office or home
office, as applicable, and the effective
date of the relocation.
(2) To any other location—(i) National
banks. A national bank shall submit an
application to the appropriate OCC
licensing office and obtain prior OCC
approval to relocate its main office to
any other location in the city, town, or
village in which the main office of the
bank is located other than an authorized
branch location or to any other location
within 30 miles of the limits of such
city, town, or village. If relocating the
main office outside the limits of its city,
town, or village, a national bank shall
also obtain the approval of shareholders
owning two-thirds of the voting stock of
the bank and shall amend its articles of
association.
(ii) Federal savings associations. A
Federal savings association shall submit
3 A national bank’s main office is the place
identified in the bank’s original organization
certificate under 12 U.S.C. 22 or the subsequent
location to which the main office has been changed
under this § 5.40, 12 U.S.C. 30(b), or other
applicable law, as reflected in the national bank’s
amended articles of association. A Federal savings
association’s home office is the office identified as
such in the savings association’s original charter or
the subsequent location to which the home office
has been changed under this § 5.40, or other
applicable law, as reflected in the savings
association’s amended charter. These terms are
functionally the same but are used in our
regulations in order to be consistent with the
relevant statutes that govern national banks and
Federal savings associations, respectively.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
an application to the appropriate OCC
licensing office and obtain prior OCC
approval to relocate its home office to
any location other than an authorized
branch location within the city, town, or
village in which the home office of the
savings association is located. If
relocating the home office outside the
limits of its city, town, or village, a
Federal savings association shall obtain
any shareholder approval required
under its charter for such relocation and
shall amend its charter.
(3) Establishment of a branch at site
of former main office or home office. A
national bank or Federal savings
association desiring to establish a
branch at its former main office or home
office location, as applicable, shall
follow the provisions of § 5.30 or § 5.31,
respectively.
(4) Expedited review. A main office or
home office relocation application
submitted by an eligible national bank
or eligible Federal savings association
under paragraph (c)(2) of this section is
deemed approved by the OCC as of the
15th day after the close of the public
comment period or the 45th day after
the filing is received by the OCC (or in
the case of a short-distance relocation
the 30th day after the filing is received
by the OCC), whichever is later, unless
the OCC notifies the bank or savings
association prior to that time that the
filing is not eligible for expedited
review, or the expedited review period
is extended, under § 5.13(a)(2).
(5) Exceptions to rules of general
applicability. (i) Sections 5.8, 5.9, 5.10,
and 5.11 do not apply to a main office
or home office relocation to an
authorized branch location within the
limits of the city, town, or village as
described in paragraph (c)(1) of this
section. However, if the OCC concludes
that the notice under paragraph (c)(1) of
this section presents a significant or
novel policy, supervisory, or legal issue,
the OCC may determine that any or all
parts of §§ 5.8, 5.9, 5.10, and 5.11 apply.
(ii) The comment period on any
application filed under paragraph (c)(2)
of this section to engage in a shortdistance relocation of a main office or
home office is 15 days.
(d) Expiration of approval. Approval
expires if the national bank or Federal
savings association has not opened its
main office or home office, as
applicable, at the relocated site within
18 months of the date of approval,
unless the OCC grants an extension.
25. Section 5.42 is revised to read as
follows:
■
PO 00000
Frm 00109
Fmt 4701
Sfmt 4700
28453
§ 5.42 Corporate title of a national bank or
Federal savings association.
(a) Authority. 12 U.S.C. 21a, 30, 93a,
1462a, 1463, 1464, 1467a, 2901 et. seq.
and, 5412(b)(2)(B).
(b) Scope. This section describes the
method by which a national bank or
Federal savings association may change
its corporate title.
(c) Standards. (1) A national bank or
Federal savings association may change
its corporate title provided that the new
title complies with applicable laws,
including 18 U.S.C. 709, regarding false
advertising and the misuse of names to
indicate a Federal agency, and any
applicable OCC guidance.
(2) For a national bank, the new title
must include the word ‘‘national.’’
(d) Procedures—(1) Notice process. A
national bank or Federal savings
association shall promptly notify the
appropriate OCC licensing office if it
changes its corporate title. The notice
must contain the old and new titles and
the effective date of the change.
(2) Amendment to articles of
association. A national bank whose
corporate title is specified in its articles
of association shall amend its articles, in
accordance with the procedures of 12
U.S.C. 21a, to change its title.
(3) Amendment to charter. A Federal
savings association shall change its title
by amending its charter in accordance
with 12 CFR 5.21 or 5.22, as applicable.
(4) Exceptions to rules of general
applicability. Sections 5.8, 5.9, 5.10,
5.11, and 5.13(a) do not apply to a
national bank or Federal savings
association’s change of corporate title.
However, if the OCC concludes that the
application presents a significant or
novel policy, supervisory, or legal issue,
the OCC may determine that any or all
parts of §§ 5.8, 5.9, 5.10, 5.11, and
5.13(a) apply.
■ 26. Section 5.45 is added to read as
follows:
§ 5.45 Increases in permanent capital of a
Federal stock savings association.
(a) Authority. 12 U.S.C. 1462a, 1463,
1464, 1467a, 1831o and 5412(b)(2)(B).
(b) Licensing requirements. Generally
a Federal savings association is not
required to apply for an increase in
capital unless the method of increase
itself requires a filing (such as issuance
of a new class of stock). However, in
certain circumstances, a Federal stock
savings association is required to submit
an application and obtain OCC
approval.
(c) Scope. This section describes
procedures and standards relating to a
transaction resulting in an increase in a
Federal stock savings association’s
permanent capital.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28454
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(d) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to increases in a
Federal stock savings association’s
permanent capital.
(e) Definitions. For the purposes of
this section the following definitions
apply:
(1) Capital plan means a plan
describing the manner and schedule by
which a Federal savings association will
attain specified capital levels or ratios
and a capital restoration plan filed with
the OCC under 12 U.S.C. 1831o and 12
CFR 6.5.
(2) Capital stock means the total
amount of common stock and preferred
stock.
(3) Capital surplus means the total of:
(i) The amount paid in on capital
stock in excess of the par or stated
value;
(ii) Direct capital contributions
representing the amounts paid in to the
Federal stock savings association other
than for capital stock;
(iii) The amount transferred from
retained net income; and
(iv) The amount transferred from
retained net income reflecting stock
dividends.
(4) Permanent capital means the sum
of capital stock and capital surplus.
(5) Retained net income means the net
income of a specified period less the
amount of all dividends and other
capital distributions declared in that
period.
(f) Policy. In determining whether to
approve a proposed increase in a
Federal stock savings association’s
permanent capital, the OCC considers
whether the change is:
(1) Consistent with law, regulation,
and OCC policy thereunder;
(2) Provides an adequate capital
structure; and
(3) If appropriate, complies with the
savings association’s capital plan.
(g) Procedures—(1) When prior
approval is required. A Federal stock
savings association must submit an
application to the appropriate OCC
licensing office and obtain prior OCC
approval to increase its permanent
capital if the savings association is:
(i) Required to receive OCC approval
pursuant to letter, order, directive,
written agreement or otherwise;
(ii) Selling common or preferred stock
for consideration other than cash; or
(iii) Receiving a material noncash
contribution to capital surplus.
(2) Content of application. The
application must:
(i) Describe the type and amount of
the proposed change in permanent
capital and explain the reason for the
change;
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(ii) In the case of a material noncash
contribution to capital, provide a
description of the method of valuing the
contribution; and
(iii) State if the savings association is
subject to a capital plan with the OCC
and how the proposed change would
conform to a capital plan or if a capital
plan is otherwise required in connection
with the proposed change in permanent
capital.
(3) Expedited review. An eligible
savings association’s application is
deemed approved by the OCC 15 days
after the date the OCC receives the
application, unless the OCC notifies the
savings association prior to that date
that the application is not eligible for
expedited review, or the expedited
review process is extended, under
§ 5.13(a)(2).
(4) Notice of increase. (i) After a
savings association completes an
increase in capital it shall submit a
notice to the appropriate OCC licensing
office. The notice must contain:
(A) The amount, including the par
value of the stock, and effective date of
the increase;
(B) A certification that the funds have
been paid in, if applicable; and
(C) A statement that the savings
association has complied with all laws,
regulations and conditions imposed by
the OCC.
(5) Expiration of approval. Approval
expires if a Federal savings association
has not completed its change in
permanent capital within one year of
the date of approval.
(h) Offers and sales of stock. A
savings association shall comply with
the Securities Offering Disclosure Rules
in 12 CFR part 197 for offers and sales
of common and preferred stock.
(i) Shareholder approval. A savings
association shall obtain the necessary
shareholder approval required by statute
for any change in its permanent capital.
■ 27. Section 5.46 is revised to read as
follows:
§ 5.46 Changes in permanent capital of a
national bank.
(a) Authority. 12 U.S.C. 21a, 51a, 51b,
51b–1, 52, 56, 57, 59, 60, and 93a.
(b) Licensing requirements. A national
bank shall submit an application and
obtain OCC approval to decrease its
permanent capital. Generally, a national
bank need only submit a notice to
increase its permanent capital, although,
in certain circumstances, a national
bank shall be required to submit an
application and obtain OCC approval.
(c) Scope. This section describes
procedures and standards relating to a
transaction resulting in a change in a
national bank’s permanent capital.
PO 00000
Frm 00110
Fmt 4701
Sfmt 4700
(d) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to changes in a
national bank’s permanent capital.
(e) Definitions. For the purposes of
this section the following definitions
apply:
(1) Capital plan means a plan
describing the manner and schedule by
which a national bank will attain
specified capital levels or ratios and a
capital restoration plan filed with the
OCC under 12 U.S.C. 1831o and 12 CFR
6.5.
(2) Capital stock means the total
amount of common stock and preferred
stock.
(3) Capital surplus means the total of:
(i) The amount paid in on capital
stock in excess of the par or stated
value;
(ii) Direct capital contributions
representing the amounts paid in to the
national bank other than for capital
stock;
(iii) The amount transferred from
undivided profits; and
(iv) The amount transferred from
undivided profits reflecting stock
dividends.
(4) Permanent capital means the sum
of capital stock and capital surplus.
(f) Policy. In determining whether to
approve a proposed change to a national
bank’s permanent capital, the OCC
considers whether the change is:
(1) Consistent with law, regulation,
and OCC policy thereunder;
(2) Provides an adequate capital
structure; and
(3) If appropriate, complies with the
bank’s capital plan.
(g) Increases in permanent capital—
(1) Approval—(i) Prior approval not
required. If a national bank is not
required to file an application and
obtain prior approval under paragraph
(g)(1)(ii) of this section, the bank need
not submit an application. It must
submit the notice of capital increase
under paragraph (i)(3) of this section.
The increase in capital is deemed
approved by the OCC as of the date the
increase was made, once the bank has
filed the notice of capital increase and
the OCC certifies the increase, as
provided in paragraph (i)(3).
(ii) Prior approval required. A
national bank must submit an
application under paragraph (i)(1) of
this section and obtain prior OCC
approval to increase its permanent
capital if the bank is:
(A) Required to receive OCC approval
pursuant to letter, order, directive,
written agreement or otherwise;
(B) Selling common or preferred stock
for consideration other than cash; or
(C) Receiving a material noncash
contribution to capital surplus. The
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
bank also must submit the notice of
capital increase under paragraph (i)(3)
of this section.
(2) Preferred stock. Notwithstanding
paragraph (g)(1)(i) of this section, in the
case of a sale of preferred stock, the
national bank shall also submit
provisions in the articles of association
concerning preferred stock dividends,
voting and conversion rights, retirement
of the stock, and rights to exercise
control over management to the
appropriate OCC licensing office prior
to the sale of the preferred stock. The
provisions will be deemed approved by
the OCC within 15 days of its receipt,
unless the OCC notifies the applicant
otherwise, including a statement of the
reason for the delay.
(h) Decreases in permanent capital. A
national bank shall submit an
application and obtain prior approval
under paragraph (i)(1) or (i)(2) of this
section for any reduction of its
permanent capital.
(i) Procedures—(1) Prior approval. A
national bank proposing to make a
change in its permanent capital that
requires prior OCC approval under
paragraphs (g) or (h) of this section shall
submit an application to the appropriate
OCC licensing office. The application
must:
(i) Describe the type and amount of
the proposed change in permanent
capital and explain the reason for the
change;
(ii) In the case of a reduction in
capital, provide a schedule detailing the
present and proposed capital structure;
(iii) In the case of a material noncash
contribution to capital, provide a
description of the method of valuing the
contribution; and
(iv) State if the bank is subject to a
capital plan with the OCC and how the
proposed change would conform to a
capital plan or if a capital plan is
otherwise required in connection with
the proposed change in permanent
capital.
(2) Expedited review. An eligible
bank’s application is deemed approved
by the OCC 15 days after the date the
OCC receives the application described
in paragraph (i)(1) of this section, unless
the OCC notifies the bank prior to that
date that the application is not eligible
for expedited review, or the expedited
review process is extended, under
§ 5.13(a)(2). An eligible bank seeking to
decrease its capital may request OCC
approval for up to four consecutive
quarters. An eligible bank may decrease
its capital pursuant to such a plan only
if the bank maintains its eligible bank
status before and after each decrease in
its capital.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(3) Notice of increase. (i) After a bank
completes an increase in capital it shall
submit a notice to the appropriate OCC
licensing office. The notice must be
acknowledged before a notary public by
the bank’s president, vice president, or
cashier and contain:
(A) A description of the transaction,
unless already provided pursuant to
paragraph (i)(1) of this section;
(B) The amount, including the par
value of the stock, and effective date of
the increase;
(C) A certification that the funds have
been paid in, if applicable;
(D) A certified copy of the amendment
to the articles of association, if required;
and
(E) A statement that the bank has
complied with all laws, regulations and
conditions imposed by the OCC.
(ii) After it receives the notice of
capital increase, the OCC issues a
certification specifying the amount of
the increase and the effective date (i.e.,
the date on which the increase
occurred). In the case of a capital
increase for which prior approval was
not required pursuant to paragraph
(g)(1)(i), the increase is deemed certified
by the OCC seven days after receipt of
the notice if the OCC has not issued a
certification prior to that date.
(4) Notice of decrease. A national
bank that decreases its capital in
accordance with paragraphs (i)(1) or
(i)(2) of this section shall notify the
appropriate OCC licensing office
following the completion of the
transaction.
(5) Expiration of approval. Approval
expires if a national bank has not
completed its change in permanent
capital within one year of the date of
approval.
(j) Offers and sales of stock. A
national bank shall comply with the
Securities Offering Disclosure Rules in
12 CFR part 16 for offers and sales of
common and preferred stock.
(k) Shareholder approval. A national
bank shall obtain the necessary
shareholder approval required by statute
for any change in its permanent capital.
§ 5.47
[Amended]
28. Section 5.47 is amended in
paragraph (g)(2)(ii) by redesignating
footnote 2 as footnote 4.
■ 29. Section 5.48 is revised to read as
follows:
■
§ 5.48 Voluntary liquidation of a national
bank or Federal savings association.
(a) Authority. 12 U.S.C. 93a, 181, 182,
1463, 1464, and 5412(b)(1)(B).
(b) Licensing requirements. A national
bank or a Federal savings association
considering going into voluntary
PO 00000
Frm 00111
Fmt 4701
Sfmt 4700
28455
liquidation shall provide preliminary
notice to the OCC. The bank or savings
association shall also file a notice with
the OCC once a liquidation plan is
definite. The bank or savings association
may not begin liquidation unless the
OCC has notified it that the OCC does
not object to the liquidation plan.
(c) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to a voluntary
liquidation. However, if the OCC
concludes that the notice presents
significant or novel policy, supervisory
or legal issues, the OCC may determine
that any or all parts of §§ 5.8, 5.10, and
5.11 apply.
(d) Standards—(1) In general. In
reviewing a proposed liquidation plan,
the OCC will consider:
(i) The purpose of the liquidation;
(ii) Its impact on the safety and
soundness of the national bank or
Federal savings association; and
(iii) Its impact on the bank’s or
savings association’s depositors, other
creditors, and customers.
(2) National banks. For national
banks, the OCC also will review
liquidation plans for compliance with
12 U.S.C. 181 and 182.
(3) Federal mutual savings
associations. For Federal mutual savings
associations, the OCC also will assess
the advisability of, and alternatives to,
liquidation and the effect of liquidation
on all concerned.
(e) Procedure—(1) Preliminary notice
of voluntary liquidation. A national
bank or Federal savings association that
is considering going into voluntary
liquidation shall provide preliminary
notice to the appropriate OCC licensing
office.
(2) Submission of liquidation plan
and nonobjection. (i) After a national
bank or Federal savings association
provides preliminary notice under
paragraph (e)(1) of this section, if the
bank or savings association plans to
proceed with liquidation, it shall submit
a voluntary liquidation plan to the OCC.
A liquidation plan may be effected in
whole or part through purchase and
assumption transactions.
(ii) The national bank or Federal
savings association must receive the
OCC’s supervisory non-objection to the
liquidation plan before beginning the
liquidation.
(3) Notice upon commencing
liquidation—(i) In general. When the
board of directors and the shareholders
of a solvent national bank or Federal
savings association, or in the case of a
Federal mutual savings association, the
board of directors and the members,
have voted to voluntarily liquidate, the
bank or savings association shall:
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28456
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(A) File a notice with the appropriate
OCC licensing office; and
(B) provide notice to depositors, other
known creditors, and known claimants
of the bank or savings association.
(ii) National banks. A vote to
liquidate a national bank must comply
with 12 U.S.C. 181. In addition, a
national bank shall publish notice in
accordance with 12 U.S.C. 182.
(iii) Federal savings associations. A
Federal savings association shall
publish public notice if so directed by
the OCC.
(4) Report of condition. The national
bank’s or Federal savings association’s
liquidating agent or committee shall
submit a report to the appropriate OCC
licensing office at the start of liquidation
showing the bank’s or savings
association’s balance sheet as of the start
of liquidation. The liquidating national
bank or Federal savings association
shall submit reports of the condition of
its commercial, trust, and other
departments to the appropriate OCC
licensing office by filing the quarterly
Consolidated Reports of Condition and
Income (Call Reports).
(5) Report of progress. The national
bank’s or Federal savings association’s
liquidating agent or committee shall
submit a ‘‘Report of Progress of
Liquidation’’ annually to the
appropriate OCC licensing office until
the liquidation is complete.
(6) Final report. The national bank’s
or Federal savings association’s
liquidating agent or committee shall
submit a final report at the conclusion
of liquidation showing that all creditors
have been satisfied, remaining assets
have been distributed to shareholders,
resolutions to dissolve the bank or
savings association have been adopted,
and the bank or savings association has
been dissolved. The national bank or
Federal savings association also shall
return its charter certificate to the OCC.
(f) Expedited liquidations in
connection with acquisitions—(1) In
general. When an acquiring depository
institution in a business combination
purchases all the assets, and assumes all
the liabilities, including all contingent
liabilities, of a target national bank or
Federal savings association, the target
national bank or Federal savings
association may be dissolved
immediately after the combination.
However, if any liabilities will remain
in the target national bank or Federal
savings association, then the standard
liquidation procedures apply. This
paragraph (f) does not apply to
dissolutions of Federal mutual savings
associations, which are subject to the
standard liquidation procedures.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(2) Procedure. After its board of
directors and shareholders have voted to
liquidate and the national bank or
Federal savings association has notified
the appropriate OCC licensing office of
its plans, the bank or savings association
may surrender its charter and dissolve
immediately, if:
(i) The acquiring depository
institution certifies to the OCC that it
has purchased all the assets and
assumed all the liabilities, including all
contingent liabilities, of the national
bank or Federal savings association in
liquidation; and
(ii) The acquiring depository
institution and the national bank or
Federal savings association in
liquidation have published notice that
the bank or savings association will
dissolve after the purchase and
assumption to the acquiror. This notice
shall be included in the notice and
publication for the purchase and
assumption required under the Bank
Merger Act, 12 U.S.C. 1828(c).
■ 30. Section 5.50 is revised to read as
follows:
§ 5.50 Change in control of a national bank
or Federal savings association; reporting of
stock loans.
(a) Authority. 12 U.S.C. 93a, 1817(j),
and 1831aa.
(b) Licensing requirements. Any
person seeking to acquire control of a
national bank or Federal savings
association shall provide 60 days prior
written notice of a change in control to
the OCC, except where otherwise
provided in this section.
(c) Scope—(1) In general. This section
describes the procedures and standards
governing OCC review of notices for a
change in control of a national bank or
Federal savings association and reports
of stock loans.
(2) Exempt transactions. The
following transactions are not subject to
the requirements of this section:
(i) The acquisition of additional
shares of a national bank or Federal
savings association by a person who:
(A) Has, continuously since March 9,
1979, (or since that institution
commenced business, if later) held
power to vote 25 percent or more of the
voting securities of that bank or Federal
savings association; or
(B) Under paragraph (f)(2)(ii) of this
section, would be presumed to have
controlled that bank or Federal savings
association continuously since March 9,
1979, if the transaction will not result in
that person’s direct or indirect
ownership or power to vote 25 percent
or more of any class of voting securities
of the national bank or Federal savings
association; or, in other cases, where the
PO 00000
Frm 00112
Fmt 4701
Sfmt 4700
OCC determines that the person has
controlled the bank or savings
association continuously since March 9,
1979;
(ii) Unless the OCC otherwise
provides in writing, the acquisition of
additional shares of a national bank or
Federal savings association by a person
who has lawfully acquired and
maintained continuous control of the
bank or Federal savings association
under paragraph (f) of this section after
complying with the procedures and
filing the notice required by this section;
(iii) A transaction subject to approval
under section 3 of the Bank Holding
Company Act, 12 U.S.C. 1842, section
18(c) of Federal Deposit Insurance Act,
12 U.S.C. 1828(c), or section 10 of the
Home Owners’ Loan Act (HOLA), 12
U.S.C. 1467a;
(iv) Any transaction described in
section 2(a)(5) or 3(a) (A) or (B) of the
Bank Holding Company Act, 12 U.S.C.
1841(a)(5) and 1842(a) (A) and (B), by a
person described in those provisions;
(v) A customary one-time proxy
solicitation or receipt of pro rata stock
dividends; and
(vi) The acquisition of shares of a
foreign bank that has a Federally
licensed branch in the United States.
This exemption does not extend to the
reports and information required under
paragraph (i) of this section.
(3) Prior notice exemption. The
following transactions are not subject to
the prior notice requirements of this
section but are otherwise subject to this
section, including filing a notice and
paying the appropriate filing fee, within
90 calendar days after the transaction
occurs:
(i) The acquisition of control as a
result of acquisition of voting shares of
a national bank or Federal savings
association through testate or intestate
succession;
(ii) The acquisition of control as a
result of acquisition of voting shares of
a national bank or Federal savings
association as a bona fide gift;
(iii) The acquisition of voting shares
of a national bank or Federal savings
association resulting from a redemption
of voting securities;
(iv) The acquisition of control of a
national bank or Federal savings
association as a result of actions by third
parties (including the sale of securities)
that are not within the control of the
acquiror; and
(v) The acquisition of control as a
result of the acquisition of voting shares
of a national bank or Federal savings
association in satisfaction of a debt
previously contracted in good faith.
(A) ‘‘Good faith’’ means that a person
must either make, renew, or acquire a
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
loan secured by voting securities of a
national bank or Federal savings
association in advance of any
knowledge of a default or of the
substantial likelihood that a default is
forthcoming. A person who purchases a
previously defaulted loan, or a loan for
which there is a substantial likelihood
of default, secured by voting securities
of a national bank or Federal savings
association may not rely on this
paragraph (c)(3)(v) to foreclose on that
loan, seize or purchase the underlying
collateral, and acquire control of the
national bank or Federal savings
association without complying with the
prior notice requirements of this
section.
(B) To ensure compliance with this
section, the acquiror of a defaulted loan
secured by a controlling amount of a
national bank’s or a Federal savings
association’s voting securities shall file
a notice prior to the time the loan is
acquired unless the acquiror can
demonstrate to the satisfaction of the
OCC that the voting securities are not
the anticipated source of repayment for
the loan.
(d) Definitions. As used in this
section:
(1) Acquire when used in connection
with the acquisition of stock of a
national bank or Federal savings
association means obtaining ownership,
control, power to vote, or sole power of
disposition of stock, directly or
indirectly or through one or more
transactions or subsidiaries, through
purchase, assignment, transfer, pledge,
exchange, succession, or other
disposition of voting stock, including:
(i) An increase in percentage
ownership resulting from a redemption,
repurchase, reverse stock split or a
similar transaction involving other
securities of the same class, and
(ii) The acquisition of stock by a
group of persons and/or companies
acting in concert, which shall be
deemed to occur upon formation of such
group.
(2) Acting in concert means:
(i) Knowing participation in a joint
activity or parallel action towards a
common goal of acquiring control
whether or not pursuant to an express
agreement; or
(ii) A combination or pooling of
voting or other interests in the securities
of an issuer for a common purpose
pursuant to any contract,
understanding, relationship, agreement,
or other arrangement, whether written
or otherwise.
(3) Company means any corporation,
partnership, trust, association, joint
venture, pool, syndicate,
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
unincorporated organization, joint-stock
company or similar organization.
(4) Control means the power, directly
or indirectly, to direct the management
or policies of a national bank or Federal
savings association or to vote 25 percent
or more of any class of voting securities
of a national bank or Federal savings
association.
(5) Controlling shareholder means any
person who directly or indirectly or
acting in concert with one or more
persons or companies, or together with
members of his or her immediate family,
owns, controls, or holds with power to
vote 10 percent or more of the voting
stock of a company or controls in any
manner the election or appointment of
a majority of the company’s board of
directors.
(6) Federal savings association means
a Federal savings association or a
Federal savings bank chartered under
section 5 of the HOLA.
(7) Immediate family includes a
person’s spouse, father, mother,
stepfather, stepmother, brother, sister,
stepbrother, stepsister, children,
stepchildren, grandparent,
grandchildren, father-in-law, mother-inlaw, brother-in-law, sister-in-law, sonin-law, daughter-in-law, and the spouse
of any of the forgoing.
(8) Insured depository institution
means an insured depository institution
as defined in 12 U.S.C. 1813(c)(2).
(9) Management official means any
president, chief executive officer, chief
operating officer, vice president,
director, partner, or trustee, or any other
person who performs or has a
representative or nominee performing
similar policymaking functions,
including executive officers of principal
business units or divisions or
subsidiaries who perform policymaking
functions, for a national bank, savings
association, or a company, whether or
not incorporated.
(10) Notice means a filing by a person
in accordance with paragraph (f) of this
section.
(11) Person means an individual or a
corporation, partnership, trust,
association, joint venture, pool,
syndicate, sole proprietorship,
unincorporated organization, or any
other form of entity, and includes voting
trusts and voting agreements and any
group of persons acting in concert.
(12) Similar organization for purposes
of paragraph (d)(3) of this section means
a combination of parties with the
potential for or practical likelihood of
continuing rather than temporary
existence, where the parties thereto
have knowingly and voluntarily
associated for a common purpose
pursuant to identifiable and binding
PO 00000
Frm 00113
Fmt 4701
Sfmt 4700
28457
relationships which govern the parties
with respect to either:
(i) The transferability and voting of
any stock or other indicia of
participation in another entity, or
(ii) Achievement of a common or
shared objective, such as to collectively
manage or control another entity.
(13) Stock means common or
preferred stock, general or limited
partnership shares or interests, or
similar interests.
(14) Voting securities means:
(i) Shares of stock, if the shares or
interests, by statute, charter, or in any
manner, allow the holder to vote for or
select directors (or persons exercising
similar functions) of the issuing national
bank or Federal savings association, or
to vote on or to direct the conduct of the
operations or other significant policies
of the issuing national bank or Federal
savings association. However, preferred
stock or similar interests are not voting
securities if:
(A) Any voting rights associated with
the shares or interests are limited solely
to voting rights customarily provided by
statute regarding matters that would
significantly affect the rights or
preference of the security or other
interest. This includes the issuance of
additional amounts of classes of senior
securities, the modification of the terms
of the security or interest, the
dissolution of the issuing national bank,
or the payment of dividends by the
issuing national bank or Federal savings
association when preferred dividends
are in arrears;
(B) The shares or interests are a
passive investment or financing device
and do not otherwise provide the holder
with control over the issuing national
bank or Federal savings association; and
(C) The shares or interests do not
allow the holder by statute, charter, or
in any manner, to select or to vote for
the selection of directors (or persons
exercising similar functions) of the
issuing national bank or Federal savings
association.
(ii) Securities, other instruments, or
similar interests that are immediately
convertible, at the option of the owner
or holder thereof, into voting securities.
(e) Policy—(1) In general. The OCC
seeks to enhance and maintain public
confidence in the banking system by
preventing a change in control of a
national bank or Federal savings
association that could have serious
adverse effects on a national bank’s or
Federal savings association’s financial
stability or management resources, the
interests of the bank’s or Federal savings
association’s customers, the Deposit
Insurance Fund, or competition.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28458
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(2) Acquisitions subject to the Bank
Holding Company Act. (i) If
corporations, partnerships, certain
trusts, associations, and similar
organizations, that are not already bank
holding companies, are not required to
secure prior Federal Reserve Board
approval to acquire control of a bank
under section 3 of the Bank Holding
Company Act, 12 U.S.C. 1842, other
than indirectly through the acquisition
of shares of a bank holding company,
they are subject to the notice
requirements of this section.
(ii) Certain transactions, including
foreclosures by depository institutions
and other institutional lenders,
fiduciary acquisitions by depository
institutions, and increases of majority
holdings by bank holding companies,
are described in sections 2(a)(5)(D) and
3(a) (A) and (B) of the Bank Holding
Company Act, 12 U.S.C. 1841(a)(5)(D)
and 12 U.S.C. 1842(a) (A) and (B), but
do not require the Federal Reserve
Board’s prior approval. For purposes of
this section, they are considered subject
to section 3 of the Bank Holding
Company Act, 12 U.S.C. 1842, and do
not require either a prior or subsequent
notice to the OCC under this section.
(3) Assessing financial condition. In
assessing the financial condition of the
acquiring person, the OCC weighs any
debt servicing requirements in light of
the acquiring person’s overall financial
strength; the institution’s earnings
performance, asset condition, capital
adequacy, and future prospects; and the
likelihood of the acquiring party making
unreasonable demands on the resources
of the institution.
(f) Procedures—(1) Exceptions to rules
of general applicability. Sections 5.8(a),
5.9, 5.10, 5.11, and 5.13(a) through (f) do
not apply to filings under this section.
When complying with § 5.8(b) no
address is required for a notice filed by
one or more individuals under this
section.
(2) Who must file. (i) Any person
seeking to acquire the power, directly or
indirectly, to direct the management or
policies, or to vote 25 percent or more
of a class of voting securities of a
national bank or Federal savings
association, shall file a notice with the
OCC 60 days prior to the proposed
acquisition, unless the acquisition is
exempt under paragraph (c)(2) of this
section.
(ii) The following persons shall be
presumed to be acting in concert for
purposes of this section:
(A) A company and any controlling
shareholder, partner, trustee or
management official of such company if
both the company and the person own
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
stock in the national bank or Federal
savings association;
(B) A person and the members of the
person’s immediate family;
(C) Companies under common
control;
(D) Persons that have made, or
propose to make, a joint filing under
section 13 or 14 of the Securities
Exchange Act of 1934, and the rules
thereunder promulgated by the
Securities and Exchange Commission;
(E) A person or company will be
presumed to be acting in concert with
any trust for which such person or
company serves as trustee, except that a
tax-qualified employee stock benefit
plan as defined in § 192.2(a)(39) of this
chapter shall not be presumed to be
acting in concert with its trustee or
person acting in a similar fiduciary
capacity solely for the purposes of
determining whether to combine the
holdings of a plan and its trustee or
fiduciary; and
(F) Persons that are parties to any
agreement, contract, understanding,
relationship, or other arrangement,
whether written or otherwise, regarding
the acquisition, voting or transfer of
control of voting securities of a national
bank or Federal savings association,
other than through a revocable proxy in
connection with a proxy solicitation for
the purposes of conducting business at
a regular or special meeting of the
institution, if the proxy terminates
within a reasonable period after the
meeting.
(iii) The OCC presumes, unless
rebutted, that an acquisition or other
disposition of voting securities through
which any person proposes to acquire
ownership of, or the power to vote, 10
percent or more of a class of voting
securities of a national bank or Federal
savings association is an acquisition by
a person of the power to direct the
bank’s or savings association’s
management or policies if:
(A) The securities to be acquired or
voted are subject to the registration
requirements of section 12 of the
Securities Exchange Act of 1934, 15
U.S.C. 78l; or
(B) Immediately after the transaction
no other person will own or have the
power to vote a greater proportion of
that class of voting securities.
(iv) The OCC will consider a rebuttal
of the presumption of control where the
person or company intends to have no
more than one representative on the
board of directors of the national bank
or Federal savings association.
(v) The presumption of control may
not be rebutted if the total equity
investment by the person or company in
the national bank or Federal savings
PO 00000
Frm 00114
Fmt 4701
Sfmt 4700
association, including 15 percent or
more of any class of voting securities,
equals or exceeds one third of the total
equity of the national bank or Federal
savings association.
(vi) Other transactions resulting in a
person’s control of less than 25 percent
of a class of voting securities of a
national bank or Federal savings
association are not deemed by the OCC
to result in control for purposes of this
section.
(vii) If two or more persons, not acting
in concert, each propose to acquire
simultaneously equal percentages of 10
percent or more of a class of a national
bank’s or Federal savings association’s
voting securities, and either the
acquisitions are of a class of securities
subject to the registration requirements
of section 12 of the Securities Exchange
Act of 1934, 15 U.S.C. 78l, or
immediately after the transaction no
other shareholder of the national bank
or Federal savings association would
own or have the power to vote a greater
percentage of the class, each of the
acquiring persons shall either file a
notice or rebut the presumption of
control.
(viii) An acquiring person may seek to
rebut a presumption established in
paragraph (f)(2)(ii) or (iii) of this section
by presenting relevant information in
writing to the appropriate OCC licensing
office. The OCC shall respond in writing
to any person that seeks to rebut the
presumption of control or the
presumption of concerted action. No
rebuttal filing is effective unless the
OCC indicates in writing that the
information submitted has been found
to be sufficient to rebut the presumption
of control.
(3) Filings. (i) The OCC does not
accept a notice of a change in control
unless it is technically complete, i.e.,
the information provided is responsive
to every item listed in the notice form
and is accompanied by the appropriate
fee.
(A) The notice must contain the
information required under 12 U.S.C.
1817(j)(6)(A), and the information
prescribed in the Interagency
Biographical and Financial Report. This
form is available on the OCC’s Internet
Web page, www.occ.gov. The OCC may
waive any of the informational
requirements of the notice if the OCC
determines that it is in the public
interest.
(B) When the acquiring person is an
individual, or group of individuals
acting in concert, the requirement to
provide personal financial data may be
satisfied with a current statement of
assets and liabilities and an income
summary, together with a statement of
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
any material changes since the date of
the statement or summary. However, the
OCC may require additional
information, if appropriate.
(ii) The OCC has 60 days from the
date it declares the notice to be
technically complete to review the
notice.
(A) When the OCC declares a notice
technically complete, the appropriate
OCC licensing office sends a letter of
acknowledgment to the applicant
indicating the technically complete
date.
(B) As set forth in paragraph (g) of this
section, the applicant shall publish an
announcement within 10 days of filing
the notice with the OCC. The
publication of the announcement
triggers a 20-day public comment
period. The OCC may waive or shorten
the public comment period if an
emergency exists. The OCC also may
shorten the comment period for other
good cause. The OCC may act on a
proposed change in control prior to the
expiration of the public comment period
if the OCC makes a written
determination that an emergency exists.
(C) An applicant shall notify the OCC
immediately of any material changes in
a notice submitted to the OCC,
including changes in financial or other
conditions that may affect the OCC’s
decision on the filing.
(iii) Within the 60-day period, the
OCC may inform the applicant that the
acquisition has been disapproved, has
not been disapproved, or that the OCC
will extend the 60-day review period for
up to an additional 30 days. The period
or the OCC’s review of a notice may be
further extended not to exceed two
additional times for not more than 45
days each time if:
(A) The OCC determines that any
acquiring party has not furnished all the
information required under this part;
(B) In the OCC’s judgment, any
material information submitted is
substantially inaccurate;
(C) The OCC has been unable to
complete an investigation of each
acquirer because of any delay caused by,
or the inadequate cooperation of, such
acquirer; or
(D) The OCC determines that
additional time is needed to investigate
and determine that no acquiring party
has a record of failing to comply with
the requirements of subchapter II of
chapter 53 of title 31 of the United
States Code.
(iv) The applicant may request a
hearing by the OCC within 10 days of
receipt of a disapproval (see 12 CFR part
19, subpart H, for hearing initiation
procedures). Following final agency
action under 12 CFR part 19, further
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
review by the courts is available. (See 12
U.S.C. 1817(j)(5).)
(4) Conditional actions. The OCC may
impose conditions on its action not to
disapprove a notice to assure
satisfaction of the relevant statutory
criteria for non-objection to a notice.
(5) Disapproval of notice. The OCC
may disapprove a notice if it finds that
any of the following factors exist:
(i) The proposed acquisition of
control would result in a monopoly or
would be in furtherance of any
combination or conspiracy to
monopolize or to attempt to monopolize
the business of banking in any part of
the United States;
(ii) The effect of the proposed
acquisition of control in any section of
the country may be substantially to
lessen competition or to tend to create
a monopoly or the proposed acquisition
of control would in any other manner be
in restraint of trade, and the
anticompetitive effects of the proposed
acquisition of control are not clearly
outweighed in the public interest by the
probable effect of the transaction in
meeting the convenience and needs of
the community to be served;
(iii) Either the financial condition of
any acquiring person or the future
prospects of the institution is such as
might jeopardize the financial stability
of the bank or Federal savings
association or prejudice the interests of
the depositors of the bank or Federal
savings association;
(iv) The competence, experience, or
integrity of any acquiring person, or of
any of the proposed management
personnel, indicates that it would not be
in the interest of the depositors of the
bank or Federal savings association, or
in the interest of the public, to permit
that person to control the bank or
Federal savings association;
(v) An acquiring person neglects, fails,
or refuses to furnish the OCC all the
information it requires; or
(vi) The OCC determines that the
proposed transaction would result in an
adverse effect on the Deposit Insurance
Fund.
(6) Disapproval notification. If the
OCC disapproves a notice, it will notify
the proposed acquiring person in
writing within three days after the
decision containing a statement of the
basis for disapproval.
(g) Disclosure—(1) Announcement.
The applicant shall publish an
announcement in a newspaper of
general circulation in the community
where the affected national bank or
Federal savings association is located
within 10 days of filing. The OCC may
authorize a delayed announcement if an
PO 00000
Frm 00115
Fmt 4701
Sfmt 4700
28459
immediate announcement would not be
in the public interest.
(i) In addition to the information
required by § 5.8(b), the announcement
must include the name of the national
bank or Federal savings association
named in the notice and the comment
period (i.e., 20 days from the date of the
announcement). The announcement
also must state that the public portion
of the notice is available upon request.
(ii) Notwithstanding any other
provisions of this paragraph (g), if the
OCC determines in writing that an
emergency exists and that the
announcement requirements of this
paragraph (g) would seriously threaten
the safety and soundness of the national
bank or Federal savings association to
be acquired, including situations where
the OCC must act immediately in order
to prevent the probable failure of a
national bank or Federal savings
association, the OCC may waive or
shorten the publication requirement.
(2) Release of information. (i) Upon
the request of any person, the OCC
releases the information provided in the
public portion of the notice and makes
it available for public inspection and
copying as soon as possible after a
notice has been filed. In certain
circumstances the OCC may determine
that the release of the information
would not be in the public interest. In
addition, the OCC makes a public
announcement of a technically complete
notice, the disposition of the notice, and
the consummation date of the
transaction, if applicable, in the OCC’s
‘‘Weekly Bulletin.’’
(ii) The OCC handles requests for the
non-public portion of the notice as
requests under the Freedom of
Information Act, 5 U.S.C. 552, and other
applicable law.
(h) Reporting requirement. After the
consummation of the change in control,
the national bank or Federal savings
association shall notify the OCC in
writing of any changes or replacements
of its chief executive officer or of any
director occurring during the 12-month
period beginning on the date of
consummation. This notice must be
filed within 10 days of such change or
replacement and must include a
statement of the past and current
business and professional affiliations of
the new chief executive officers or
directors.
(i) Reporting of stock loans—(1)
Requirements. (i) Any foreign bank, or
any affiliate thereof, shall file a
consolidated report with the appropriate
OCC supervisory office of the national
bank or Federal savings association if
the foreign bank or any affiliate thereof,
has credit outstanding to any person or
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28460
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
group of persons that, in the aggregate,
is secured, directly or indirectly, by 25
percent or more of any class of voting
securities of the same national bank or
Federal savings association.
(ii) The foreign bank, or any affiliate
thereof, shall also file a copy of the
report with its appropriate OCC
supervisory office if that office is
different from the national bank’s or
Federal savings association’s
appropriate OCC supervisory office. If
the foreign bank, or any affiliate thereof,
is not supervised by the OCC, it shall
file a copy of the report filed with the
OCC with its appropriate Federal
banking agency.
(iii) Any shares of the national bank
or Federal savings association held by
the foreign bank, or any affiliate thereof,
as principal must be included in the
calculation of the number of shares in
which the foreign bank or any affiliate
thereof has a security interest for
purposes of paragraph (h)(1)(i) of this
section.
(2) Definitions. For purposes of this
paragraph (i):
(i) Foreign bank and affiliate have the
same meanings as in section 1 of the
International Banking Act of 1978, 12
U.S.C. 3101.
(ii) Credit outstanding includes any
loan or extension of credit; the issuance
of a guarantee, acceptance, or letter of
credit, including an endorsement or
standby letter of credit; and any other
type of transaction that extends credit or
financing to a person or group of
persons.
(iii) Group of persons includes any
number of persons that a foreign bank,
or an affiliate thereof, has reason to
believe:
(A) Are acting together, in concert, or
with one another to acquire or control
shares of the same insured national
bank or Federal savings association,
including an acquisition of shares of the
same national bank or Federal savings
association at approximately the same
time under substantially the same terms;
or
(B) Have made, or propose to make, a
joint filing under 15 U.S.C. 78m
regarding ownership of the shares of the
same depository institution.
(3) Exceptions. Compliance with
paragraph (i)(1) of this section is not
required if:
(i) The person or group of persons
referred to in paragraph (h)(1) of this
section has disclosed the amount
borrowed and the security interest
therein to the appropriate OCC licensing
office in connection with a notice filed
under this section or any other
application filed with the appropriate
OCC licensing office as a substitute for
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
a notice under this section, such as for
a national bank or Federal savings
association charter; or
(ii) The transaction involves a person
or group of persons that has been the
owner or owners of record of the stock
for a period of one year or more or, if
the transaction involves stock issued by
a newly chartered bank or Federal
savings association, before the bank’s or
Federal savings association’s opening.
(4) Report requirements. (i) The
consolidated report must indicate the
number and percentage of shares
securing each applicable extension of
credit, the identity of the borrower, and
the number of shares held as principal
by the foreign bank and any affiliate
thereof.
(ii) The foreign bank and all affiliates
thereof shall file the consolidated report
in writing within 30 days of the date on
which the foreign bank or affiliate
thereof first believes that the security for
any outstanding credit consists of 25
percent or more of any class of voting
securities of a national bank or Federal
savings association.
(5) Other reporting requirements. A
foreign bank or any affiliate thereof,
supervised by the OCC and required to
report credit outstanding secured by the
shares of a depository institution to
another Federal banking agency also
shall file a copy of the report with its
appropriate OCC supervisory office.
■ 31. Section 5.51 is revised to read as
follows:
§ 5.51 Changes in directors and senior
executive officers of a national bank or
Federal savings association.
(a) Authority. 12 U.S.C. 1831i and 12
U.S.C. 5412(b)(2)(B).
(b) Scope. This section describes the
circumstances when a national bank or
a Federal savings association must
notify the OCC of a change in its
directors and senior executive officers,
and the OCC’s authority to disapprove
those notices.
(c) Definitions—(1) Director means an
individual who serves on the board of
directors of a national bank or a Federal
savings association, except:
(i) A director of a foreign bank that
operates a Federal branch; and
(ii) An advisory director who does not
have the authority to vote on matters
before the board of directors or any
committee of the board of directors and
provides solely general policy advice to
the board of directors or any committee.
(2) Federal savings association means
a Federal savings association or Federal
savings bank chartered under 12 U.S.C.
1464.
(3) National bank includes a Federal
branch for purposes of this section only.
PO 00000
Frm 00116
Fmt 4701
Sfmt 4700
(4) Senior executive officer means the
president, chief executive officer, chief
operating officer, chief financial officer,
chief lending officer, chief investment
officer, and any other individual the
OCC identifies in writing to the national
bank or Federal savings association who
exercises significant influence over, or
participates in, major policy making
decisions of the national bank or
Federal savings association without
regard to title, salary, or compensation.
The term also includes employees of
entities retained by a national bank or
Federal savings association to perform
such functions in lieu of directly hiring
the individuals, and, with respect to a
Federal branch operated by a foreign
bank, the individual functioning as the
chief managing official of the Federal
branch.
(5) Technically complete notice
means a notice that provides all the
information requested in paragraph
(e)(2) of this section, including complete
explanations where material issues arise
regarding the competence, experience,
character, or integrity of proposed
directors or senior executive officers,
and any additional information that the
OCC may request following a
determination that the notice was not
technically complete.
(6) Technically complete notice date
means the date on which the OCC has
received a technically complete notice.
(7) Troubled condition means a
national bank or Federal savings
association that
(i) Has a composite rating of 4 or 5
under the Uniform Financial
Institutions Rating System (CAMELS);
(ii) Is subject to a cease and desist
order, a consent order, or a formal
written agreement, unless otherwise
informed in writing by the OCC; or
(iii) Is informed in writing by the OCC
that, based on information pertaining to
such national bank or Federal savings
association, it has been designated in
‘‘troubled condition’’ for purposes of
this section.
(d) Prior notice. A national bank or
Federal savings association shall
provide written notice to the OCC at
least 90 calendar days before adding or
replacing any member of its board of
directors, employing any individual as a
senior executive officer of the national
bank or Federal savings association, or
changing the responsibilities of any
senior executive officer so that the
individual would assume a different
senior executive officer position, if:
(1) The national bank or Federal
savings association is not in compliance
with minimum capital requirements, as
prescribed in 12 CFR part 3 or is
otherwise in troubled condition; or
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(2) The OCC determines, in writing, in
connection with the review by the
agency of the plan required under
section 38 of the Federal Deposit
Insurance Act (12 U.S.C. 1831o), or
otherwise, that such prior notice is
appropriate.
(e) Procedures—(1) Filing notice. A
national bank or Federal savings
association shall file a notice with its
appropriate supervisory office. When a
national bank or Federal savings
association files a notice, the individual
to whom the filing pertains shall attest
to the validity of the information
pertaining to that individual. The 90day review period begins on the
technically complete notice date.
(2) Content of notice. (i) The notice
must include:
(A) The information required under
12 U.S.C. 1817(j)(6)(A), and the
information prescribed in the
Interagency Notice of Change in Director
or Senior Executive Officer, the
biographical and certification portions
of the Interagency Biographical and
Financial Report (‘‘IBFR’’), and unless
otherwise determined by the OCC in
writing, the financial portion of the
IBFR. These forms are available from the
OCC;
(B) Legible fingerprints of the
individual, except that fingerprints are
not required for any individual who,
within the three years immediately
preceding the initial submission date of
the notice currently under review, has
been the subject of a notice filed with
the OCC or the OTS pursuant to 12
U.S.C. 1831i, or this section, and has
previously submitted fingerprints; and
(C) Such other information required
by the OCC.
(ii) Modification of content
requirements. The OCC may require or
accept other information in place of the
content requirements in paragraph
(e)(2)(i) of this section.
(3) Requests for additional
information. (i) Following receipt of a
technically complete notice, the OCC
may request additional information.
Such request must be in writing, must
explain why the information is needed,
and must specify a time period during
which the information must be
provided.
(ii) If the national bank or Federal
savings association cannot provide the
information requested by the OCC
within the time specified in paragraph
(e)(3)(i) of this section, the national bank
or Federal savings association may
request in writing that the OCC suspend
processing of the notice. The OCC will
advise the national bank or Federal
savings association in writing whether
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
the suspension request is granted and, if
granted, the length of the suspension.
(iii) If the national bank or Federal
savings association fails to provide the
requested information within the time
specified in paragraphs (e)(3)(i) or (ii) of
this section, the OCC may deem the
filing abandoned under § 5.13(c) or may
review the notice based on the
information provided.
(4) Notice of disapproval. The OCC
may disapprove an individual proposed
as a member of the board of directors or
as a senior executive officer if the OCC
determines on the basis of the
individual’s competence, experience,
character, or integrity that it would not
be in the best interests of the depositors
of the national bank or Federal savings
association or the public to permit the
individual to be employed by, or
associated with, the national bank or
Federal savings association. The OCC
must send a written notice of
disapproval to both the national bank or
Federal savings association and the
individual stating the basis for
disapproval.
(5) Notice of intent not to disapprove.
An individual proposed as a member of
the board of directors or as a senior
executive officer may begin service
before the expiration of the review
period if the OCC notifies the individual
and the national bank or Federal savings
association in writing that the OCC does
not disapprove the proposed director or
senior executive officer and all other
applicable legal requirements are
satisfied.
(6) Waiver of prior notice—(i) Waiver
request. (A) A national bank or Federal
savings association may send a letter to
the appropriate supervisory office
requesting a waiver of the prior notice
requirement.
(B) The OCC may grant the waiver if
it issues a written finding that:
(1) Delay could adversely affect the
safety and soundness of the national
bank or Federal savings association;
(2) Delay would not be in the public
interest; or
(3) Other extraordinary circumstances
justify waiver of prior notice.
(C) The OCC will determine the
length of the waiver on a case-by-case
basis. All waivers that the OCC grants
under this paragraph (e)(6) are subject to
the condition that the national bank or
Federal savings association shall file a
technically complete notice under this
section within the time period specified
by the OCC.
(D) Subject to paragraph (e)(6)(i)(C) of
this section, the proposed individual
may assume the position on an interim
basis until the earliest of the following
events:
PO 00000
Frm 00117
Fmt 4701
Sfmt 4700
28461
(1) The individual and the national
bank or the Federal savings association
receive a notice of intent not to
disapprove, at which time the
individual may assume the position on
a permanent basis, provided all other
applicable legal requirements are
satisfied;
(2) The individual and the national
bank or the Federal savings association
receive a notice of disapproval within
90 calendar days after the submission of
a technically complete notice. In this
event the individual shall immediately
resign from the position upon receipt of
the notice of disapproval and may
assume the position on a permanent
basis only if the notice of disapproval is
reversed on appeal and all other
applicable legal requirements are
satisfied; or
(3) The OCC does not act within 90
calendar days after the submission of a
technically complete notice. In this
event, the individual may assume the
position on a permanent basis 91
calendar days after the submission of a
technically complete notice.
(E) If the technically complete notice
is not filed within the time period
specified in the waiver, the proposed
individual shall immediately resign his
or her position. Thereafter, the
individual may assume the position
only after a technically complete notice
has been filed, all other applicable
requirements are satisfied, and:
(1) The national bank or the Federal
savings association receives a notice of
intent not to disapprove;
(2) The review period expires; or
(3) A notice of disapproval has been
overturned on appeal as set forth in
paragraph (f) of this section.
(F) Notwithstanding the grant of a
waiver, the OCC has authority to issue
a notice of disapproval within 30 days
of the expiration of such waiver.
(ii) Automatic waiver. An individual
who has been elected to the board of
directors of a national bank or Federal
savings association may serve as a
director on an interim basis before a
notice has been filed under this section,
provided the individual was not
nominated by management, and the
national bank or Federal savings
association submits a notice under this
section not later than seven days after
the individual has been notified of the
election. The individual may serve on
an interim basis until the occurrence of
the earliest of the events described in
paragraphs (e)(6)(i)(D)(1), (2), or (3) of
this section.
(7) Commencement of service. An
individual proposed as a member of the
board of directors or as a senior
executive officer who satisfies all other
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28462
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
applicable legal requirements may
assume the office on a permanent basis:
(i) Prior to the expiration of the
review period, only if the OCC notifies
the national bank or Federal savings
association in writing that the OCC does
not disapprove the proposed director or
senior executive officer pursuant to
paragraph (e)(5) of this section; or
(ii) Following the expiration of the
review period, unless:
(A) The OCC issues a written notice
of disapproval during the review period;
or
(B) The national bank or Federal
savings association does not provide
additional information within the time
period required by the OCC pursuant to
paragraph (e)(3) of this section and the
OCC deems the notice to be abandoned
pursuant to § 5.13(c).
(8) Exceptions to rules of general
applicability. Sections 5.8, 5.10, 5.11,
and 5.13(a) through (f) do not apply to
a notice for a change in directors and
senior executive officers, except that
§ 5.13(c) shall apply to the extent
provided for in paragraphs (e)(3)(iii) and
(e)(7) of this section.
(f) Appeal. (1) If the national bank or
Federal savings association, the
proposed individual, or both, disagree
with a disapproval, they may seek
review by appealing the disapproval to
the Comptroller, or an authorized
delegate, within 15 days of the receipt
of the notice of disapproval. The
national bank or Federal savings
association or the individual may
appeal on the grounds that the reasons
for disapproval are contrary to fact or
insufficient to justify disapproval. The
appellant shall submit all documents
and written arguments that the
appellant wishes to be considered in
support of the appeal.
(2) The Comptroller, or an authorized
delegate, may designate an appellate
official who was not previously
involved in the decision leading to the
appeal at issue. The Comptroller, an
authorized delegate, or the appellate
official considers all information
submitted with the original notice, the
material before the OCC official who
made the initial decision, and any
information submitted by the appellant
at the time of the appeal.
(3) The Comptroller, an authorized
delegate, or the appellate official shall
independently determine whether the
reasons given for the disapproval are
contrary to fact or insufficient to justify
the disapproval. If either is determined
to be the case, the Comptroller, an
authorized delegate, or the appellate
official may reverse the disapproval.
(4) Upon completion of the review,
the Comptroller, an authorized delegate,
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
or the appellate official shall notify the
appellant in writing of the decision. If
the original decision is reversed, the
individual may assume the position in
the national bank or Federal savings
association for which he or she was
proposed.
■ 32. Section 5.52 is revised to read as
follows:
§ 5.52 Change of address of a national
bank or Federal savings association.
(a) Authority. 12 U.S.C. 93a, 161, 481,
1462a, 1463, 1464 and 5412(b)(2)(B).
(b) Scope. This section describes the
obligation of a national bank or a
Federal savings association to notify the
OCC of any change in its address.
(c) Notice process. (1) Any national
bank with a change in the address of its
main office or in its post office box or
a Federal savings association with a
change in the address of its home office
or post office box shall send a written
notice to the appropriate OCC licensing
office.
(2) No notice is required if the change
in address results from a transaction
approved under this part or if notice has
been provided pursuant to § 5.40(b)
with respect to the relocation of a main
office or home office to a branch
location in the same city, town or
village.
(d) Exceptions to rules of general
applicability. Sections 5.8, 5.9, 5.10,
5.11, and 5.13 do not apply to changes
in a national bank’s or Federal savings
association’s address.
■ 33. Section 5.53 is revised to read as
follows:
§ 5.53 Substantial asset change by a
national bank or Federal savings
association.
(a) Authority. 12 U.S.C. 93a, 1818,
1462a, 1463, 1464, 1467a, and
5412(b)(2)(B).
(b) Scope. This section requires a
national bank or a Federal savings
association to obtain the approval of the
OCC for a substantial asset change.
(c) Definition—(1) In general. Except
as provide in paragraph (c)(2) of this
section, substantial asset change means:
(i) The sale or other disposition of all,
or substantially all, of the national
bank’s or Federal savings association’s
assets in a transaction or a series of
transactions;
(ii) After having sold or disposed of
all, or substantially all, of its assets,
subsequent purchases or other
acquisitions or other expansions of the
national bank’s or Federal savings
association’s operations;
(iii) Any other purchases, acquisitions
or other expansions of operations that
are part of a plan to increase the size of
PO 00000
Frm 00118
Fmt 4701
Sfmt 4700
the national bank or Federal savings
association by more than 25 percent in
a one year period; or
(iv) Any other material increase or
decrease in the size of the national bank
or Federal savings association or a
material alteration in the composition of
the types of assets or liabilities of the
national bank or Federal savings
association (including the entry or exit
of business lines), on a case-by-case
basis, as determined by the OCC.
(2) Exceptions. The term ‘‘substantial
asset change’’ does not include, and this
section does not apply, to a change in
composition of all, or substantially all,
of a bank’s or savings association’s
assets:
(i) That the bank or savings
association undertakes in response to
direction from the OCC (e.g., in an
enforcement action pursuant to 12
U.S.C. 1818);
(ii) That is part of a voluntary
liquidation under 12 CFR 5.48, if the
bank or savings association in
liquidation has obtained the OCC’s nonobjection to its plan of liquidation under
12 CFR 5.48 and has stipulated in its
notice of liquidation to the OCC that its
liquidation will be completed, the bank
or savings association dissolved and its
charter returned to the OCC within one
year of the date it filed the notice of
liquidation, unless the OCC extends the
time period;
(iii) That occurs as a result of a bank’s
or savings association’s ordinary and
ongoing business of originating and
securitizing loans; or
(iv) That are subject to OCC approval
under another application to the OCC.
(d) Procedures—(1) Consultation. A
national bank or Federal savings
association considering a transaction or
series of transactions that may
constitute a material change under
paragraph (c)(1)(iv) of this section must
consult with the appropriate OCC
supervisory office for a determination
whether the OCC will require an
application under this section. In
determining whether to require an
application, the OCC considers the size
and nature of the transaction and the
condition of the institutions involved.
(2) Approval requirement. A national
bank or Federal savings association
must file an application and obtain the
prior written approval of the OCC before
engaging in a substantial asset change.
(3) Factors—(i) In general. (A) In
determining whether to approve an
application under paragraph (d)(1) of
this section, the OCC considers the
following factors:
(1) The capital level of any resulting
national bank or Federal savings
association;
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(2) The conformity of the transaction
to applicable law, regulation, and
supervisory policies;
(3) The purpose of the transaction;
(4) The impact of the transaction on
safety and soundness of the national
bank or Federal savings association; and
(5) The effect of the transaction on the
national bank or Federal savings
association’s shareholders, depositors,
other creditors, and customers.
(B) The OCC may deny the
application if the transaction would
have a negative effect in any of these
respects.
(ii) Additional factors. The OCC’s
review of any substantial asset change
that involves the purchase or other
acquisition or other expansions of the
bank’s or savings association’s
operations will include, in addition to
the foregoing factors, the factors
governing the organization of a bank or
savings association under § 5.20.
(e) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply with respect to
applications filed pursuant to this
section. However, if the OCC concludes
that an application presents significant
or novel policy, supervisory, or legal
issues, the OCC may determine that
some or all of the provisions of §§ 5.8,
5.10, and 5.11 apply.
■ 34. Section 5.55 is added to subpart D
to read as follows:
asabaliauskas on DSK5VPTVN1PROD with RULES
§ 5.55 Capital distributions by Federal
savings associations.
(a) Authority. 12 U.S.C. 1462a, 1463,
1464, 1467a, 1831o, and 5412(b)(2)(B).
(b) Licensing requirements. A Federal
savings association must file an
application or notice before making a
capital distribution, as provided in this
section.
(c) Scope. This section applies to all
capital distributions by a Federal
savings association and sets forth the
procedures and standards relating to a
capital distribution.
(d) Definitions. The following
definitions apply to this section:
(1) Affiliate means an affiliate, as
defined under regulations of the Board
of Governors of the Federal Reserve
System regarding transactions with
affiliates, 12 CFR part 223 (Regulation
W).
(2) Capital means total capital, as
computed under 12 CFR part 3.
(3) Capital distribution means:
(i) A distribution of cash or other
property to owners of a Federal savings
association made on account of their
ownership, but excludes:
(A) Any dividend consisting only of
the shares of the savings association or
rights to purchase the shares; or
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(B) If the savings association is a
Federal mutual savings association, any
payment that the savings association is
required to make under the terms of a
deposit instrument and any other
amount paid on deposits that the OCC
determines is not a distribution for the
purposes of this section;
(ii) A Federal savings association’s
payment to repurchase, redeem, retire or
otherwise acquire any of its shares or
other ownership interests; any payment
to repurchase, redeem, retire, or
otherwise acquire debt instruments
included in its total capital under 12
CFR part 3; and any extension of credit
to finance an affiliate’s acquisition of
the savings association’s shares or
interests;
(iii) Any direct or indirect payment of
cash or other property to owners or
affiliates made in connection with a
corporate restructuring. This includes
the Federal savings association’s
payment of cash or property to
shareholders of another association or to
shareholders of its holding company to
acquire ownership in that association,
other than by a distribution of shares;
(iv) Any other distribution charged
against a Federal savings association’s
capital accounts if the savings
association would not be well
capitalized, as set forth in 12 CFR 6.4,
following the distribution; and
(v) Any transaction that the OCC
determines, by order or regulation, to be
in substance a distribution of capital.
(4) Net income means a Federal
savings association’s net income
computed in accordance with generally
accepted accounting principles (GAAP).
(5) Retained net income means a
Federal savings association’s net income
for a specified period less total capital
distributions declared in that period.
(6) Shares means common and
preferred stock, and any options,
warrants, or other rights for the
acquisition of such stock. The term
‘‘share’’ also includes convertible
securities upon their conversion into
common or preferred stock. The term
does not include convertible debt
securities prior to their conversion into
common or preferred stock or other
securities that are not equity securities
at the time of a capital distribution.
(e) Filing requirements—(1)
Application required. A Federal savings
association must file an application
with the OCC if:
(i) The savings association is not an
eligible savings association;
(ii) The total amount of all of the
savings association’s capital
distributions (including the proposed
capital distribution) for the applicable
calendar year exceeds its net income for
PO 00000
Frm 00119
Fmt 4701
Sfmt 4700
28463
that year to date plus retained net
income for the preceding two years;
(iii) The savings association would
not be at least adequately capitalized, as
set forth in 12 CFR 6.4, following the
distribution; or
(iv) The savings association’s
proposed capital distribution would
violate a prohibition contained in any
applicable statute, regulation, or
agreement between the savings
association and the OCC or the OTS, or
violate a condition imposed on the
savings association in an application or
notice approved by the OCC or the OTS.
(2) Notice required. Unless it is
required to file an application under
paragraph (e)(1) of this section, a
Federal savings association that is an
eligible savings association must file a
notice with the OCC if:
(i) The savings association would not
remain well capitalized, as set forth
under 12 CFR 6.4, or would otherwise
not remain an eligible savings
association following the distribution;
(ii) The savings association’s
proposed capital distribution would
reduce the amount of or retire any part
of its common or preferred stock or
retire any part of debt instruments such
as notes or debentures included in
capital under 12 CFR part 3 (other than
regular payments required under a debt
instrument approved under § 5.56);
(iii) The savings association’s
proposed capital distribution is payable
in property other than cash;
(iv) The savings association is a direct
or indirect subsidiary of a mutual
savings and loan holding company; or
(v) The savings association is a direct
or indirect subsidiary of a company that
is not a savings and loan holding
company.
(3) No prior notice required. A Federal
savings association does not need to file
a notice or an application with the OCC
before making a capital distribution if
the Federal savings association is not
required to file an application under
paragraph (e)(1) or a notice under
paragraph (e)(2) of this section.
(4) Informational copy of notice
required. If the Federal savings
association is a subsidiary of a savings
and loan holding company that is filing
a notice with the Board of Governors of
the Federal Reserve System (Board) for
a dividend solely under 12 U.S.C.
1467a(f) and not also under 12 U.S.C.
1467a(o)(11), and neither an application
under paragraph (e)(1) nor a notice
under paragraph (e)(2) of this section is
required, then the savings association
must provide an informational copy to
the OCC of the notice filed with the
Board, at the same time the notice is
filed with the Board.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28464
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(f) Filing format—(1) Contents. The
notice or application must:
(i) Be in narrative form;
(ii) Include all relevant information
concerning the proposed capital
distribution, including the amount,
timing, and type of distribution; and
(iii) Demonstrate compliance with
paragraph (h) of this section.
(2) Schedules. The notice or
application may include a schedule
proposing capital distributions over a
specified period, not to exceed 12
months.
(3) Combined filings. A Federal
savings association may combine the
notice or application required under
paragraph (e) of this section with any
other notice or application, if the capital
distribution is a part of, or is proposed
in connection with, another transaction
requiring a notice or application under
this chapter. If submitting a combined
filing, the Federal savings association
must state that the related notice or
application is intended to serve as a
notice or application under this section.
(g) Filing procedures—(1)
Application. When a Federal savings
association is required to file an
application under paragraph (e)(1) of
this section, it must file the application
at least 30 days before the proposed
declaration of dividend or approval of
the proposed capital distribution by its
board of directors. The Federal savings
association shall not effect the proposed
declaration of dividend or approval of
the proposed capital distribution unless
it has received prior written approval of
the OCC.
(2) Prior notice with expedited review.
A Federal savings association that is an
eligible savings association and that is
required to file a notice under paragraph
(e)(2) must file the notice at least 30
days before the proposed declaration of
dividend or approval of the proposed
capital distribution by its board of
directors. The notice is deemed
approved by the OCC upon the
expiration of 30 days after the filing date
of the notice unless, before the
expiration of that time period, the OCC
notifies the Federal savings association
that:
(i) Additional information is required
to supplement the notice;
(ii) The notice is not eligible for
expedited review, or the expedited
reviewed process is extended, under
5.13(a)(2); or
(iii) The notice is disapproved.
(h) OCC review of capital
distributions. The OCC reviews
applications and notices submitted
pursuant to paragraphs (g)(1) and (g)(2)
of this section. The OCC may
disapprove the notice or deny the
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
application in whole or in part, if it
makes any of the following
determinations:
(1) The Federal savings association
will be undercapitalized, significantly
undercapitalized, or critically
undercapitalized as set forth in 12 CFR
6.4, as applicable, following the capital
distribution. If so, the OCC will
determine if the capital distribution is
permitted under 12 U.S.C.
1831o(d)(1)(B).
(2) The proposed capital distribution
raises safety or soundness concerns.
(3) The proposed capital distribution
violates a prohibition contained in any
statute, regulation, agreement between
the Federal savings association and the
OCC or the OTS, or a condition imposed
on the Federal savings association in an
application or notice approved by the
OCC or the OTS. If so, the OCC will
determine whether it may permit the
capital distribution notwithstanding the
prohibition or condition.
(i) Exceptions to rules of general
applicability. Sections 5.8, 5.10, and
5.11 do not apply to capital
distributions made by Federal savings
associations.
■ 35. Section 5.56 is added to subpart D
to read as follows:
§ 5.56 Inclusion of subordinated debt
securities and mandatorily redeemable
preferred stock as Federal savings
association supplementary (tier 2) capital.
(a) Scope and definitions. (1) A
Federal savings association must
comply with this section in order to
include subordinated debt securities or
mandatorily redeemable preferred stock
(‘‘covered securities’’) in tier 2 capital
under 12 CFR 3.20(d) and to prepay
covered securities included in tier 2
capital. A savings association that does
not include covered securities in tier 2
capital is not required to comply with
this section. Covered securities not
included in tier 2 capital are subject to
the requirements of § 163.80 of this
chapter.
(2) For purposes of this section,
mandatorily redeemable preferred stock
means mandatorily redeemable
preferred stock that was issued before
July 23, 1985 or issued pursuant to
regulations and memoranda of the
Federal Home Loan Bank Board and
approved in writing by the Federal
Savings and Loan Insurance Corporation
for inclusion as regulatory capital before
or after issuance.
(b) Application and notice
procedures—(1) Application or notice to
include covered securities in tier 2
capital—(i) Application. Unless a
Federal savings association is an eligible
savings association filing a notice under
PO 00000
Frm 00120
Fmt 4701
Sfmt 4700
paragraph (b)(1)(ii) of this section, it
must file an application seeking the
OCC’s approval of the inclusion of
covered securities in tier 2 capital. The
savings association may file its
application before or after it issues
covered securities, but may not include
covered securities in tier 2 capital until
the OCC approves the application.
(ii) Notice with expedited review. An
eligible savings association must file a
notice seeking the OCC’s approval of the
inclusion of covered securities in tier 2
capital. The savings association may file
its notice before or after it issues
covered securities, but may not include
covered securities in tier 2 capital until
the OCC approves the notice. The OCC
is deemed to have approved the notice
upon the expiration of 30 days after the
filing date of the notice unless, before
the expiration of that time period, the
OCC notifies the Federal savings
association that
(A) Additional information is required
to supplement the notice;
(B) The notice is not eligible for
expedited review, or the expedited
reviewed process is extended, under
§ 5.13(a)(2); or
(C) The OCC denies the notice.
(iii) Securities offering rules. A
savings association also must comply
with the securities offering rules at 12
CFR part 197 by filing an offering
circular for a proposed issuance of
covered securities, unless the offering
qualifies for an exemption under that
part.
(2) Application required to prepay
covered securities included in tier 2
capital—(i) In general. A Federal
savings association must file an
application to, and receive prior
approval from, the OCC before
prepaying covered securities included
in tier 2 capital. For purposes of this
requirement, prepayment includes
acceleration of a covered security,
repurchase of a covered security,
redemption of a covered security prior
to maturity, and exercising a call option
in connection with a covered security.
(ii) Prepayment in the form of a call
option. (A) If the prepayment will be in
the form of a call option, the application
must include:
(1) A statement explaining why the
Federal savings association believes that
following the proposed prepayment the
savings association would continue to
hold an amount of capital
commensurate with its risk; or
(2) A description of the replacement
capital instrument that meets the
criteria for tier 1 or tier 2 capital under
12 CFR 3.20, including the amount of
such instrument, and the time frame for
issuance.
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(B) Notwithstanding paragraph
(b)(1)(ii) of this section, if the OCC
conditions approval of prepayment in
the form of a call option on a
requirement that a Federal savings
association must replace the covered
security with a covered security of an
equivalent amount that satisfies the
requirements for a tier 1 or tier 2
instrument, the savings association must
file an application to issue the
replacement covered security and must
receive prior OCC approval.
(c) General requirements. A covered
security issued under this section must
satisfy the requirements for tier 2 capital
in 12 CFR 3.20(d).
(d) Securities requirements for
inclusion in tier 2 capital. To be
included in tier 2 capital, covered
securities must satisfy the requirements
in 12 CFR 3.20(d). In addition, such
covered securities must meet the
following requirements:
(1) Form. (i) Each certificate
evidencing a covered security must:
(A) Bear the following legend on its
face, in bold type: ‘‘This security is not
a savings account or deposit and it is
not insured by the United States or any
agency or fund of the United States;’’
(B) State that the security is
subordinated on liquidation, as to
principal, interest, and premium, to all
claims against the savings association
that have the same priority as savings
accounts or a higher priority;
(C) State that the security is not
secured by the savings association’s
assets or the assets of any affiliate of the
savings association. An affiliate means
any person or company that controls, is
controlled by, or is under common
control with the savings association;
(D) State that the security is not
eligible collateral for a loan by the
savings association;
(E) State the prohibition on the
payment of dividends or interest at 12
U.S.C. 1828(b) and, in the case of
subordinated debt securities, state the
prohibition on the payment of principal
and interest at 12 U.S.C. 1831o(h), 12
CFR 3.11, and any other relevant
restrictions;
(F) For subordinated debt securities,
state or refer to a document stating the
terms under which the savings
association may prepay the obligation;
and
(G) Where applicable, state or refer to
a document stating that the savings
association must obtain OCC’s prior
approval before the acceleration of
payment of principal or interest on
subordinated debt securities,
redemption of subordinated debt
securities prior to maturity, repurchase
of subordinated debt securities, or
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
exercising a call option in connection
with a subordinated debt security.
(ii) A Federal savings association
must include such additional statements
as the OCC may prescribe for
certificates, purchase agreements,
indentures, and other related
documents.
(2) Indenture. (i) Except as provided
in paragraph (d)(2)(ii) of this section, a
Federal savings association must use an
indenture for subordinated debt
securities. If the aggregate amount of
subordinated debt securities publicly
offered (excluding sales in a non-public
offering as defined in 12 CFR 197.4) and
sold in any consecutive 12-month or 36month period exceeds $5,000,000 or
$10,000,000 respectively (or such lesser
amount that the Securities and
Exchange Commission shall establish by
rule or regulation under 15 U.S.C.
77ddd), the indenture must provide for
the appointment of a trustee other than
the savings association or an affiliate of
the savings association (as defined in
paragraph (d)(1)(i)(C) of this section)
and for collective enforcement of the
security holders’ rights and remedies.
(ii) A Federal savings association is
not required to use an indenture if the
subordinated debt securities are sold
only to accredited investors, as that term
is defined in 15 U.S.C. 77d(6). A savings
association must have an indenture that
meets the requirements of paragraph
(d)(2)(i) of this section in place before
any debt securities for which an
exemption from the indenture
requirement is claimed, are transferred
to any non-accredited investor. If a
savings association relies on this
exemption from the indenture
requirement, it must place a legend on
the debt securities indicating that an
indenture must be in place before the
debt securities are transferred to any
non-accredited investor.
(e) Review by the OCC. (1) In
reviewing notices and applications
under this section, the OCC will
consider whether:
(i) The issuance of the covered
securities is authorized under
applicable laws and regulations and is
consistent with the savings association’s
charter and bylaws;
(ii) The savings association is at least
adequately capitalized under 12 CFR 6.4
and meets the regulatory capital
requirements at 12 CFR 3.10;
(iii) The savings association is or will
be able to service the covered securities;
(iv) The covered securities are
consistent with the requirements of this
section;
(v) The covered securities and related
transactions sufficiently transfer risk
from the Deposit Insurance Fund; and
PO 00000
Frm 00121
Fmt 4701
Sfmt 4700
28465
(vi) The OCC has no objection to the
issuance based on the savings
association’s overall policies, condition,
and operations.
(2) The OCC’s approval is conditioned
upon no material changes to the
information disclosed in the application
or notice submitted to the OCC. The
OCC may impose such additional
requirements or conditions as it may
deem necessary to protect purchasers,
the savings association, the OCC, or the
Deposit Insurance Fund.
(f) Amendments. If a Federal savings
association amends the covered
securities or related documents
following the completion of the OCC’s
review, it must obtain the OCC’s
approval under this section before it
may include the amended securities in
tier 2 capital.
(g) Sale of covered securities. The
Federal savings association must
complete the sale of covered securities
within one year after the OCC’s
approval under this section. A savings
association may request an extension of
the offering period by filing a written
request with the OCC. The savings
association must demonstrate good
cause for the extension and file the
request at least 30 days before the
expiration of the offering period or any
extension of the offering period.
(h) Issuance of a replacement
regulatory capital instrument in
connection with exercising a call option.
Pursuant to 12 CFR 3.20(d)(1)(v)(C), the
OCC may require a Federal savings
association seeking prior approval to
exercise a call option in connection
with a covered security included in tier
2 capital to issue a replacement covered
security of an equivalent amount that
qualifies as tier 1 or tier 2 capital under
12 CFR 3.20. If the OCC imposes such
a requirement, the savings association
must complete the sale of such covered
prior to, or immediately after, the
prepayment.5
(i) Reports. A Federal savings
association must file the following
information with the OCC within 30
days after the savings association
completes the sale of covered securities
includable as tier 2 capital. If the
savings association filed its application
or notice following the completion of
the sale, it must submit this information
with its application or notice:
(1) A written report indicating the
number of purchasers, the total dollar
amount of securities sold, the net
proceeds received by the savings
association from the issuance, and the
5 A Federal savings association may replace tier
2 capital instruments concurrent with the
redemption of existing tier 2 capital instruments.
E:\FR\FM\18MYR2.SGM
18MYR2
28466
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
amount of covered securities, net of all
expenses, to be included as tier 2
capital;
(2) Three copies of an executed form
of the securities and a copy of any
related documents governing the
issuance or administration of the
securities; and
(3) A certification by the appropriate
executive officer indicating that the
savings association complied with all
applicable laws and regulations in
connection with the offering, issuance,
and sale of the securities.
■ 36. Section 5.58 is added to subpart D
to read as follows:
asabaliauskas on DSK5VPTVN1PROD with RULES
§ 5.58 Pass-through investments by a
Federal savings association.
(a) Authority. 12 U.S.C. 1462a, 1463,
1464, 1828, 5412(b)(2)(B).
(b) Scope. Federal savings
associations are permitted to make
various types of equity investments
pursuant to 12 U.S.C. 1464 and other
statutes, including pass-through
investments authorized under 12 CFR
160.32(a). These investments are in
addition to those subject to §§ 5.35,
5.37, 5.38, and 5.59. This section
describes the procedure governing the
filing of the application or notice that
the OCC requires in connection with
certain of these investments. The OCC
may review other permissible equity
investments on a case-by-case basis.
(c) Licensing requirements. A Federal
savings association must file a notice or
application as prescribed in this section
to make a pass-through investment
authorized under 12 CFR 160.32(a).
(d) Definitions. For purposes of this
section:
(1) Enterprise means any corporation,
limited liability company, partnership,
trust, or similar business entity.
(2) Well capitalized means the capital
level described in 12 CFR 6.4.
(3) Well managed has the meaning set
forth in § 5.38(d)(2) for Federal savings
associations.
(e) Pass-through investments; notice
procedure. A Federal savings
association may make a pass-through
investment, directly or through its
operating subsidiary, in an enterprise
that engages in the activities described
in paragraph (e)(2) of this section by
filing a written notice. The Federal
savings association must file this
written notice with the appropriate OCC
licensing office no later than 10 days
after making the investment. The
written notice must:
(1) Describe the structure of the
investment and the activity or activities
conducted by the enterprise in which
the Federal savings association is
investing. To the extent the notice
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
relates to the initial affiliation of the
Federal savings association with a
company engaged in insurance
activities, the savings association should
describe the type of insurance activity
that the company is engaged in and has
present plans to conduct. The Federal
savings association must also list for
each state the lines of business for
which the company holds, or will hold,
an insurance license, indicating the
state where the company holds a
resident license or charter, as
applicable;
(2) State:
(i) Which paragraphs of § 5.38(e)(5)(v)
describe the activity; or
(ii) State that, and describe how, the
activity is substantively the same as that
contained in published OCC precedent
for Federal savings associations,
including published former OTS
precedent, approving a pass-through
investment by a Federal savings
association or its operating subsidiary,
state that the activity will be conducted
in accordance with the same terms and
conditions applicable to the activity
covered by the precedent, and provide
the citation to the applicable precedent;
(3) Certify that the Federal savings
association is well managed and well
capitalized at the time of the
investment;
(4) Describe how the Federal savings
association has the ability to prevent the
enterprise from engaging in an activity
that is not set forth in § 5.38(e)(5)(v) or
not contained in published OCC
precedent for Federal savings
associations, including published
former OTS precedent, approving a
pass-through investment by a Federal
savings association or its operating
subsidiary, or how the savings
association otherwise has the ability to
withdraw its investment;
(5) Describe how the investment is
convenient and useful to the Federal
savings association in carrying out its
business and not a mere passive
investment unrelated to the savings
association’s banking business;
(6) Certify that the Federal savings
association’s loss exposure is limited as
a legal matter and that the savings
association does not have unlimited
liability for the obligations of the
enterprise; and
(7) Certify that the enterprise in which
the Federal savings association is
investing agrees to be subject to OCC
supervision and examination, subject to
the limitations and requirements of
section 45 of the Federal Deposit
Insurance Act (12 U.S.C. 1831v) and
section 115 of the Gramm-Leach-Bliley
Act (12 U.S.C. 1820a).
PO 00000
Frm 00122
Fmt 4701
Sfmt 4700
(f) Pass-through investments;
application procedure—(1) Investments
not qualifying for notice procedure. A
Federal savings association must file an
application and obtain prior approval
before making or acquiring, either
directly or through an operating
subsidiary, a pass-through investment in
an enterprise if the pass-through
investment does not qualify for the
notice procedure set forth in paragraph
(e) of this section because the savings
association is unable to make the
representation required by paragraph
(e)(2) or the certification required by
paragraph (e)(3) of this section. The
application must include the
information required in paragraphs
(e)(1) and (e)(4) through (e)(7) of this
section and paragraphs (e)(2) or (e)(3) of
this section, as appropriate. If the
Federal savings association is unable to
make the representation set forth in
paragraph (e)(2) of this section, the
savings association’s application must
explain why the activity in which the
enterprise engages is a permissible
activity for a Federal savings association
and why the applicant should be
permitted to hold a pass-through
investment in an enterprise engaged in
that activity. A Federal savings
association may not make a passthrough investment if it is unable to
make the representations and
certifications specified in paragraphs
(e)(1) and (e)(4) through (e)(7) of this
section.
(2) Investments requiring a filing
under 12 U.S.C. 1828(m).
Notwithstanding any other provision in
this section, if an enterprise in which a
Federal savings association proposes to
invest would be a subsidiary of the
Federal savings association for purposes
of 12 U.S.C. 1828(m) and the enterprise
would not be an operating subsidiary or
a service corporation, the Federal
savings association must file an
application with the OCC under this
paragraph (f)(2) at least 30 days prior to
making the investment and obtain prior
approval from the OCC before making
the investment. The application must
include the information required in
paragraphs (e)(1) and (e)(4) through
(e)(7) of this section and paragraphs
(e)(2) or (e)(3) of this section, if
applicable. If the Federal savings
association is unable to make the
representation set forth in paragraph
(e)(2) of this section, the savings
association’s application must explain
why the activity in which the enterprise
engages is a permissible activity for a
Federal savings association and why the
applicant should be permitted to hold a
pass-through investment in an
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
enterprise engaged in that activity. A
Federal savings association may not
make a pass-through investment if it is
unable to make the representations and
certifications specified in paragraphs
(e)(1) and (e)(4) through (e)(7) of this
section.
(g) Pass-through investments in
entities holding assets in satisfaction of
debts previously contracted. Certain
pass-through investments may be
eligible for expedited treatment where
the Federal savings association’s
investment is in an entity holding assets
in satisfaction of debts previously
contracted or the savings association
acquires shares of a company in
satisfaction of debts previously
contracted.
(1) Notice required. A Federal savings
association that is well capitalized and
well managed may acquire a passthrough investment, directly or through
its operating subsidiary, in an enterprise
that engages in the activities of holding
and managing assets acquired by the
parent savings association through
foreclosure or otherwise in good faith to
compromise a doubtful claim, or in the
ordinary course of collecting a debt
previously contracted, by filing a
written notice in accordance with this
paragraph (g)(1)(i). The activities of the
enterprise must be conducted pursuant
to the same terms and conditions as
would be applicable if the activity were
conducted directly by a Federal savings
association. The Federal savings
association must file the written notice
with the appropriate OCC licensing
office no later than 10 days after making
the pass-through investment. This
notice must include a complete
description of the Federal savings
association’s investment in the
enterprise and the activities conducted,
a description of how the savings
association plans to divest the passthrough investment or the underlying
assets within applicable statutory time
frames, and a representation and
undertaking that the savings association
will conduct the activities in accordance
with OCC policies contained in
guidance issued by the OCC regarding
the activities. Any Federal savings
association receiving approval under
this paragraph (g)(1)(i) is deemed to
have agreed that the enterprise will
conduct the activity in a manner
consistent with published OCC
guidance.
(2) No notice or application required.
A Federal savings association is not
required to file a notice or application
under this § 5.58 if it acquires a noncontrolling investment in shares of a
company through foreclosure or
otherwise in good faith to compromise
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
a doubtful claim, or in the ordinary
course of collecting a debt previously
contracted.
(h) Additional exception to filing
requirement. A Federal savings
association may make a pass-through
investment without filing a notice or
application to the OCC if all of the
following conditions are met:
(1) The investment is in an
investment company the portfolio of
which consists exclusively of assets that
the Federal savings association may
hold directly;
(2) The Federal savings association is
not investing more than 10 percent of its
total capital in one company;
(3) The book value of the Federal
savings association’s aggregate noncontrolling investments does not exceed
25 percent of its total capital after
making the investment;
(4) The investment would not give
Federal savings association direct or
indirect control of the company; and
(5) The Federal savings association’s
liability is limited to the amount of its
investment.
(i) Exceptions to rules of general
applicability. Sections 5.8, 5.9, 5.10, and
5.11 of this part do not apply to filings
for pass-through investments.
■ 37. Section 5.59 is added to subpart D
to read as follows:
§ 5.59 Service corporations of Federal
savings associations.
(a) Authority. 12 U.S.C. 1462a, 1463,
1464, 1828, 5412(b)(2)(B).
(b) Licensing requirements. When
required by section 18(m) of the Federal
Deposit Insurance Act, a Federal savings
association must file an application as
prescribed in this section to:
(1) Acquire or establish a service
corporation; or
(2) Commence a new activity in an
existing service corporation subsidiary.
(c) Scope. This section sets forth the
OCC’s requirements regarding service
corporations of Federal savings
associations, and sets forth procedures
governing OCC review and approval of
filings by Federal savings associations to
establish or acquire service corporations
and filings by Federal savings
associations to conduct new activities in
existing service corporation
subsidiaries, pursuant to the authority
provided in section 5(c)(4)(B) of the
Home Owners’ Loan Act, 12 U.S.C.
1464(c)(4)(B).
(d) Definitions—(1) Control has the
meaning set forth at 12 U.S.C. 1841 and
the Federal Reserve Board’s regulations
thereunder, at 12 CFR part 225.
(2) GAAP-consolidated subsidiary
means a service corporation in which a
Federal savings association has a direct
PO 00000
Frm 00123
Fmt 4701
Sfmt 4700
28467
or indirect ownership interest and
whose assets are consolidated with
those of the savings association for
purposes of reporting under generally
accepted accounting principles (GAAP).
(3) Ownership interest means any
equity interest in a business
organization, including stock, limited or
general partnership interests, or shares
in a limited liability company.
(4) Service corporation means any
entity that satisfies all of the
requirements for service corporations in
12 U.S.C. 1464(c)(4)(B) and this part,
and that is designated by the investing
Federal savings association as a service
corporation pursuant to this section. A
service corporation may be a first-tier
service corporation of a Federal savings
association or may be a lower-tier
service corporation.
(5) Service corporation subsidiary
means a service corporation of a Federal
savings association that is controlled by
that savings association.
(e) Standards and requirements—(1)
Ownership. Only Federal or statechartered savings associations with
home offices in the state where the
relevant Federal savings association has
its home office may have an ownership
interest in a first-tier service
corporation. A Federal savings
association need not have any minimum
percentage ownership interest or have
control of a service corporation in order
to designate an entity as a service
corporation.
(2) Geographic restrictions. A first-tier
service corporation must be organized
under the laws of the state where the
relevant Federal savings association’s
home office is located.
(3) Authorized activities. A service
corporation may engage in any of the
designated permissible service
corporation activities listed in
paragraph (f) of this section, subject to
any applicable filing requirement under
paragraph (h) of this section. In
addition, a Federal savings association
may request OCC approval for a service
corporation to engage in any other
activity reasonably related to the
activities of financial institutions.
(4) Investment limitations. A Federal
savings association’s investment in
service corporations is subject to the
limitations set forth in paragraph (g) of
this section. The assets of a Federal
savings association’s service
corporations are not subject to the
investment limitations applicable to the
savings association under section 5(c) of
the HOLA.
(5) Form of organization. A service
corporation may be organized as a
corporation, or may be organized in any
other organizational form that provides
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
28468
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
the same protections as the corporate
form of organization, including limited
liability.
(6) Qualified thrift lender test. In
accordance with 12 U.S.C. 1467a(m)(5),
a Federal savings association may
determine whether to consolidate the
assets of a particular service corporation
for purposes of calculating qualified
thrift investments. If a service
corporation’s assets are not consolidated
with the assets of the Federal savings
association for that purpose, the savings
association’s investment in the service
corporation will be considered in
calculating the savings association’s
qualified thrift investments.
(7) Supervisory, legal or safety or
soundness considerations. (i) Each
service corporation must be well
managed and operate safely and
soundly. In addition, each service
corporation must pursue financial
policies that are safe and consistent
with the purposes of savings
associations. Each service corporation
must maintain sufficient liquidity to
ensure its safe and sound operation.
(ii) The OCC may, at any time, limit
a Federal savings association’s
investment in a service corporation, or
limit or refuse to permit any activity of
a service corporation, for supervisory,
legal, or safety or soundness reasons.
(8) Separate corporate identity.
Federal savings associations and service
corporations thereof must be operated in
a manner that demonstrates to the
public that each maintains a separate
corporate existence. Each must operate
so that:
(i) Their respective business
transactions, accounts, and records are
not intermingled;
(ii) Each observes the formalities of
their separate corporate procedures;
(iii) Each is held out to the public as
a separate enterprise; and
(iv) Unless the parent Federal savings
association has guaranteed a loan to the
service corporation, all borrowings by
the service corporation indicate that the
savings association is not liable.
(9) Issuances of securities by service
corporations. A service corporation
shall not state or imply that the
securities it issues are covered by
Federal deposit insurance. A service
corporation subsidiary shall not issue
any security the payment, maturity, or
redemption of which may be accelerated
upon the condition that the controlling
Federal savings association is insolvent
or has been placed into receivership.
For as long as any securities are
outstanding, the controlling Federal
savings association must maintain all
records generated through each
securities issuance in the ordinary
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
course of business, including but not
limited to a copy of the prospectus,
offering circular, or similar document
concerning such issuance, and make
such records available for examination
by the OCC.
(10) Certain pre-existing noncontrolling investments. A Federal
savings association that made a noncontrolling investment in a service
corporation before May 18, 2015, but
did not submit a filing under 12 U.S.C.
1828(m) with respect to such service
corporation investment, is not required
to file a service corporation application
with respect to such investment
pursuant to paragraph (b), provided that
the Federal savings association does not
acquire additional stock or similar
interests in the service corporation, and
the service corporation does not engage
in any activities in which it was not
engaged as of May 18, 2015.
(f) Authorized service corporation
activities. Subject to the prior filing
requirements set forth in paragraph (h)
of this section and the provisions of
paragraph (e)(3) of this section, a service
corporation may engage in the following
activities:
(1) Any activity that all Federal
savings associations may conduct
directly.
(2) Business and professional services.
Service corporations may engage in the
following activities only when such
activities are limited to financial
documents or financial clients or are
generally finance-related:
(i) Accounting or internal audit;
(ii) Advertising, market research and
other marketing;
(iii) Clerical;
(iv) Consulting;
(v) Courier;
(vi) Data processing;
(vii) Data storage facilities operation
and related services;
(viii) Office supplies, furniture, and
equipment purchasing and distribution;
(ix) Personnel benefit program
development or administration;
(x) Printing and selling forms that
require Magnetic Ink Character
Recognition (MICR) encoding;
(xi) Relocation of personnel;
(xii) Research studies and surveys;
(xiii) Software development and
systems integration; and
(xiv) Remote service unit operation,
leasing, ownership or establishment.
(3) Credit-related activities. (i)
Abstracting;
(ii) Acquiring and leasing personal
property;
(iii) Appraising;
(iv) Collection agency;
(v) Credit analysis;
(vi) Check or credit card guaranty and
verification;
PO 00000
Frm 00124
Fmt 4701
Sfmt 4700
(vii) Escrow agent or trustee (under
deeds of trust, including executing and
delivery of conveyances, reconveyances
and transfers of title); and
(viii) Loan inspection.
(4) Consumer services. (i) Financial
advice or consulting;
(ii) Foreign currency exchange;
(iii) Home ownership counseling;
(iv) Income tax return preparation;
(v) Postal services;
(vi) Stored value instrument sales;
(vii) Welfare benefit distribution;
(viii) Check printing and related
services; and
(ix) Remote service unit operation,
leasing, ownership, or establishment.
(5) Real estate related services. (i)
Acquiring real estate for prompt
development or subdivision, for
construction of improvements, for resale
or leasing to others for such
construction, or for use as manufactured
home sites, in accordance with a
prudent program of property
development;
(ii) Acquiring improved real estate or
manufactured homes to be held for
rental or resale, for remodeling,
renovating or demolishing and
rebuilding for resale or rental, or to be
used for offices and related facilities of
a stockholder of the service corporation;
(iii) Maintaining and managing real
estate; and
(iv) Real estate brokerage for property
owned by a savings association that
owns capital stock of the service
corporation, or a lower-tier service
corporation in which the service
corporation invests.
(6) Securities activities, liquidity
management, and coins. (i) Execution of
transactions in securities on an agency
or riskless principal basis solely upon
the order and for the account of
customers or the provision of
investment advice. The service
corporation must register with the
Securities and Exchange Commission
and state securities regulators, as
required by applicable Federal and state
law and regulations;
(ii) Liquidity management;
(iii) Issuing notes, bonds, debentures,
or other obligations or securities; and
(iv) Purchase or sale of coins issued
by the U.S. Treasury.
(7) Investments. (i) Tax-exempt bonds
used to finance residential real property
for family units;
(ii) Tax-exempt obligations of public
housing agencies used to finance
housing projects with rental assistance
subsidies;
(iii) Small business investment
companies and new markets venture
capital companies licensed by the U.S.
Small Business Administration;
E:\FR\FM\18MYR2.SGM
18MYR2
asabaliauskas on DSK5VPTVN1PROD with RULES
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(iv) Rural business investment
companies licensed by the U.S.
Department of Agriculture; and
(v) Investing in savings accounts of an
investing thrift.
(8) Community development
investments. Community and economic
development or public welfare
investments that are permissible under
part 24 of this chapter.
(9) Charitable activities. Establishing
or acquiring a corporation that is
recognized by the Internal Revenue
Service as organized for charitable
purposes under 26 U.S.C. 501(c)(3) of
the Internal Revenue Code and making
a reasonable contribution to capitalize
it, provided that the corporation engages
exclusively in activities designed to
promote the well-being of communities
in which the owners of the service
corporation operate.
(10) Activities conducted as agent.
Activities conducted on behalf of a
customer on other than an ‘‘as
principal’’ basis.
(11) Incidental activities. Activities
reasonably incident to those listed in
paragraphs (f)(1) through (f)(10) of this
section if the service corporation
engages in those activities.
(g) Limitations on investments in
service corporations—(1) In general.
Under the authority of section 5(c)(4)(B)
of the HOLA, a Federal savings
association may invest up to 3 percent
of its assets in the capital stock,
obligations, and other securities of
service corporations. Any investment
that would cause a Federal savings
association’s investment in service
corporations, in the aggregate, to exceed
2 percent of assets, or made while the
savings association’s investments in
service corporations exceeds 2 percent
of assets, must serve primarily
community, inner city, or community
and economic development or public
welfare purposes consistent with § 24.6
of this chapter. A Federal savings
association must designate the
investments serving those purposes.
(2) Loans. In addition to the amounts
that a Federal savings association may
invest under paragraph (g)(1) of this
section, and to the extent that a Federal
savings association has authority under
other provisions of section 5(c) of the
HOLA and parts 5 and 160 of this
chapter, and available capacity within
any applicable investment limits, a
Federal savings association may make
loans to any service corporation subject
to the following conditions:
(i) Loans to service corporations other
than a GAAP-consolidated subsidiary
are subject to the lending limits in part
32 of this chapter.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
(ii) The OCC may limit the amount of
loans to any service corporation where
safety and soundness considerations
warrant such action.
(3) Definition. For purposes of this
paragraph, the terms ‘‘loans’’ and
‘‘obligations’’ include all loans and
other debt instruments (except accounts
payable incurred in the ordinary course
of business and paid within 60 days)
and all guarantees or take-out
commitments of such loans or debt
instruments.
(4) GAAP-consolidated subsidiaries.
Both debt and equity investments in
service corporations that are GAAPconsolidated subsidiaries are considered
investments in subsidiaries for purposes
of 12 CFR part 3.
(h) Filing requirements—(1)
Application. (i) When required by
section 18(m) of the Federal Deposit
Insurance Act, a Federal savings
association must file an application at
least 30 days before:
(A) Acquiring or establishing a service
corporation; or
(B) Commencing a new activity in an
existing service corporation subsidiary.
(ii) The application must include a
complete description of the savings
association’s investment in the service
corporation, the proposed activities of
the service corporation, the
organizational structure and
management of the service corporation,
the relations between the savings
association and the service corporation,
and other information necessary to
adequately describe the proposal. If the
service corporation proposes to engage
in insurance activities, the savings
association must describe the type of
insurance activity in which the service
corporation proposes to engage. The
savings association must also list for
each state the lines of business for
which the company holds, or will hold,
an insurance license, indicating the
state where the service corporation
holds a resident license or charter, as
applicable. The OCC may require an
applicant to submit a legal analysis if
the proposal is novel, unusually
complex, or raises substantial
unresolved legal issues. In these cases,
the OCC encourages applicants to have
a prefiling meeting with the OCC. Any
savings association receiving approval
under this paragraph is deemed to have
agreed that the service corporation will
conduct the activity in a manner
consistent with published OCC
guidance.
(2) Expedited review. (i) An
application to establish or acquire a
service corporation, or to perform a new
activity in an existing service
corporation subsidiary, that meets the
PO 00000
Frm 00125
Fmt 4701
Sfmt 4700
28469
requirements of this paragraph is
deemed approved by the OCC as of the
30th day after the filing is received by
the OCC, unless the OCC notifies the
applicant prior to that date that the
filing is not eligible for expedited
review under 5.13(a)(2). Any savings
association receiving approval under
this paragraph is deemed to have agreed
that the service corporation will
conduct the activity in a manner
consistent with published OCC
guidance.
(ii) An application is eligible for
expedited review if the following
requirements are met:
(A) The savings association is ‘‘well
capitalized’’ and ‘‘well managed’’; and
(B) The service corporation engages
only in one or more of the preapproved
activities listed in § 5.59(f).
(3) OCC review and approval. The
OCC reviews a Federal savings
association’s application to determine
whether the proposal is legally
permissible and to ensure that the
proposal is consistent with the
requirements of this section, safe and
sound banking practices and OCC
policy and does not endanger the safety
or soundness of the parent Federal
savings association. As part of this
process, the OCC may request additional
information and analysis from the
applicant.
(4) Redesignation. A Federal savings
association that proposes to redesignate
an operating subsidiary as a service
corporation must submit a notification
to the OCC at least 30 days prior to the
redesignation date. The notification
must include a description of how the
redesignated entity will meet all of the
requirements of this section, a
resolution of the savings association’s
board of directors approving the
redesignation, and the proposed
effective date of the redesignation. The
savings association may effect the
redesignation on the proposed date
unless the OCC notifies the savings
association otherwise prior to that date.
The OCC may require an application if
the redesignation presents policy,
supervisory, or legal issues.
(5) Exception to rules of general
applicability. Sections 5.8, 5.10 and 5.11
do not apply to this section. However,
if the OCC concludes that an application
presents significant or novel policy,
supervisory, or legal issues, the OCC
may determine that some or all
provisions in §§ 5.8, 5.10, and 5.11
apply.
(i) Exercise of salvage powers through
service corporations. (1) In accordance
with this section, a Federal savings
association may exercise its salvage
power to make a contribution or a loan
E:\FR\FM\18MYR2.SGM
18MYR2
28470
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(including a guarantee of a loan made by
any other person) to a service
corporation (‘‘salvage investment’’) that
exceeds the maximum amount
otherwise permitted under law or
regulation. A Federal savings
association must notify the appropriate
supervisory office at least 30 days before
making such a salvage investment. The
notification must demonstrate:
(i) The salvage investment protects
the savings association’s interest in the
service corporation;
(ii) The salvage investment is
consistent with safety and soundness;
and
(iii) The savings association
considered alternatives to the salvage
investment and determined that such
alternatives would not adequately
satisfy paragraphs (i)(1)(i) and (ii) of this
section.
(2) If the OCC notifies the Federal
savings association within 30 days of
the filing of the notification that the
notification presents supervisory
concerns, or raises significant issues of
law or policy, the Federal savings
association must apply for and receive
the OCC’s prior written approval before
making the salvage investment.
(3) If a service corporation is a GAAPconsolidated subsidiary, the salvage
investment will be considered an
investment in a subsidiary for purposes
of 12 CFR part 3.
(j) Failure to comply with the
requirements applicable to service
corporations. If a service corporation
fails to meet any of the requirements of
this section, the Federal savings
association must notify the appropriate
OCC licensing office. Unless the Federal
savings association is otherwise advised
by the OCC, if the service corporation
cannot comply with the requirements of
this section within 90 days of failing to
meet such requirements, or otherwise
resolve such failure to comply with this
section, the Federal savings association
must promptly dispose of its investment
in the service corporation.
38. The heading of subpart E of part
5 is revised to read as follows:
asabaliauskas on DSK5VPTVN1PROD with RULES
■
Subpart E—Payment of Dividends by
National Banks
§ 5.64
[Amended]
39. Paragraph (c)(3) of § 5.64 is
amended by removing the phrase ‘‘the
appropriate district office’’ and adding
in its place the phrase ‘‘the appropriate
OCC supervisory office’’.
■
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
PART 7—ACTIVITIES AND
OPERATIONS
40. The authority citation for part 7 is
revised as set forth below.
■
Authority: 12 U.S.C. 1 et seq., 25b, 29, 71,
71a, 92, 92a, 93, 93a, 371, 371d, 481, 484,
1818, 1464(a), 1464(c)(4)(B), 1828(m), and
5412(b)(2)(B).
41. The heading of part 7 is revised to
read as set forth above.
■ 42. The heading of subpart A to part
7 is revised to read as follows:
■
Subpart A—National Bank and Federal
Savings Association Powers
43. Section 7.1000 is revised to read
as follows:
■
§ 7.1000 National bank or Federal savings
association ownership of property.
(a) Investment in real estate necessary
for the transaction of business—(1) In
general. A national bank or Federal
savings association may invest in real
estate that is necessary for the
transaction of its business.
(2) Type of real estate. Real estate
investments permissible under this
section include:
(i) Premises that are owned and
occupied (or to be occupied, if under
construction) by the national bank or
Federal savings association, or its
respective branches or consolidated
subsidiaries;
(ii) Real estate acquired and intended,
in good faith, for use in future
expansion;
(iii) Parking facilities that are used by
customers or employees of the national
bank or Federal savings association, or
its respective branches or consolidated
subsidiaries;
(iv) Residential property for the use of
officers or employees of the national
bank or Federal savings association who
are:
(A) Located in remote areas where
suitable housing at a reasonable price is
not readily available; or
(B) Temporarily assigned to a foreign
country, including foreign nationals
temporarily assigned to the United
States; and
(v) Property for the use of national
bank or Federal savings association
officers, employees, or customers, or for
the temporary lodging of such persons
in areas where suitable commercial
lodging is not readily available,
provided that the purchase and
operation of the property qualifies as a
deductible business expense for Federal
tax purposes.
(3) Permissible means of holding. (i) A
national bank or Federal savings
association may acquire and hold real
PO 00000
Frm 00126
Fmt 4701
Sfmt 4700
estate under this paragraph (a) by any
reasonable and prudent means,
including ownership in fee, a leasehold
estate, or in an interest in a cooperative.
The national bank or Federal savings
association may hold this real estate
directly or through one or more
subsidiaries. The national bank or
Federal savings association may
organize a banking premises subsidiary
as a corporation, partnership, or similar
entity (e.g., a limited liability company).
(ii) A Federal savings association also
may acquire and hold banking premises
through a service corporation in
accordance with 12 CFR 5.59.
(b) Fixed assets. A national bank or
Federal savings association may own
fixed assets necessary for the transaction
of its business, such as fixtures,
furniture, and data processing
equipment.
(c) Investment in banking premises—
(1) Investment limitation. Twelve CFR
5.37(d)(1)(i) and (d)(3)(i) provide
quantitative investment limitations that
govern when OCC approval is required
for a national bank or Federal savings
association to invest in banking
premises.
(2) Premises approval. (i) A national
bank or Federal savings association
shall seek approval from the OCC in
accordance with 12 CFR 5.37(d).
(ii) A Federal savings association that
invests in banking premises through a
service corporation shall comply with
the quantitative limitations in 12 CFR
5.37(d) and, to the extent applicable, 12
CFR 5.59.
(3) Option to purchase. An
unexercised option to purchase banking
premises or stock in a corporation
holding banking premises is not an
investment in banking premises.
However, a national bank or Federal
savings association seeking to exercise
such an option must comply with the
requirements in 12 CFR 5.37(d).
(d) Future national bank or Federal
savings association expansion. A
national bank or Federal savings
association normally should use real
estate acquired for future national bank
or Federal savings association
expansion within five years. After
holding such real estate for one year, the
national bank or Federal savings
association shall state, by resolution of
its board of directors or an appropriately
authorized bank or savings association
official or subcommittee of the board,
definite plans for its use. The resolution
or other official action must be available
for inspection by OCC examiners.
(e) Transition. If, on May 18, 2015, a
Federal savings association holds an
investment in real estate, fixed assets,
banking premises, or other real property
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
that complies with the legal
requirements in effect prior to May 18,
2015, but would violate any provision of
this section or § 5.37, the savings
association may continue to hold such
investment in accordance with the prior
legal requirements. However, a Federal
savings association that holds such an
investment shall not modify, expand or
improve this investment, except for
routine maintenance, without the prior
approval of the appropriate OCC
supervisory office.
■ 44. The section heading for § 7.1003 is
revised to read as follows:
§ 7.1003 Money lent by a national bank at
banking offices or at facilities other than
banking offices.
*
*
*
*
*
45. The section heading for § 7.1004 is
revised to read as follows:
53. The section heading for § 7.1016 is
revised to read as follows:
■
§ 7.1016 Independent undertakings issued
by a national bank to pay against
documents.
*
*
*
*
*
54. The section heading for § 7.1018 is
revised to read as follows:
■
§ 7.1018 National bank automatic payment
plan accounts.
*
*
*
*
*
55. The section heading for § 7.1020 is
revised to read as follows:
■
§ 7.1020 Purchase of open accounts by a
national bank.
*
*
*
*
*
56. The heading of subpart B of part
7 is revised to read as follows:
■
■
§ 7.1004 Loans originating at facilities
other than banking offices of a national
bank.
Subpart B—National Bank Corporate
Practices
§ 7.2000
[Amended]
57. Footnote 2 in § 7.2000 is amended
by removing ‘‘(202) 874–4700’’ and
adding in its place ‘‘(202) 649–6700’’.
■ 58. The heading of subpart C of part
7 is revised to read as follows:
■
*
*
*
*
*
■ 46. The section heading for § 7.1005 is
revised to read as follows:
§ 7.1005 Credit decisions at other than
banking offices of a national bank.
Subpart C—Operations
*
*
*
*
*
■ 47. The section heading for § 7.1006 is
revised to read as follows:
59. The section heading for § 7.3000 is
revised to read as follows:
■
§ 7.3000 National bank hours and
closings.
§ 7.1006 Loan agreement providing for a
national bank share in profits, income, or
earnings or for stock warrants.
*
*
*
*
*
60. Section 7.3001 is revised to read
as follows:
*
*
*
*
■ 48. The section heading for § 7.1007 is
revised to read as follows:
■
§ 7.1007
(a) Sharing space. A national bank or
Federal savings association may:
(1) Lease excess space on national
bank or Federal savings association
premises to one or more other
businesses (including other financial
institutions);
(2) Share space jointly held with one
or more other businesses; or
(3) Offer its services in space owned
by or leased to other businesses.
(b) Sharing employees. When sharing
space with other businesses as
described in paragraph (a) of this
section, a national bank or Federal
savings association may provide, under
one or more written agreements between
the national bank or Federal savings
association, the other businesses, and
their employees, that:
(1) A national bank or Federal savings
association employee may act as agent
for the other business; or
(2) An employee of the other business
may act as agent for the national bank
or Federal savings association.
*
National Bank Acceptances.
*
*
*
*
*
■ 49. The section heading for § 7.1008 is
revised to read as follows:
§ 7.1008 Preparation by a national bank of
income tax returns for customers or public.
*
*
*
*
*
50. The section heading for § 7.1012 is
revised to read as follows:
■
§ 7.1012 Establishment, operation, or use
of a messenger service by a national bank.
*
*
*
*
*
51. The section heading for § 7.1014 is
revised to read as follows:
asabaliauskas on DSK5VPTVN1PROD with RULES
■
§ 7.1014 Sale of money orders at
nonbanking outlets by a national bank.
*
*
*
*
*
52. The section heading for § 7.1015 is
revised to read as follows:
■
§ 7.1015 National bank receipt of stock
from a small business investment company.
*
*
*
VerDate Sep<11>2014
*
*
19:17 May 15, 2015
Jkt 235001
§ 7.3001 Sharing national bank or Federal
association space and employees.
PO 00000
Frm 00127
Fmt 4701
Sfmt 4700
28471
(c) Supervisory conditions. When a
national bank or Federal savings
association engages in arrangements of
the types listed in paragraphs (a) and (b)
of this section, the national bank or
Federal savings association shall ensure
that:
(1) The other business is
conspicuously, accurately, and
separately identified;
(2) Shared employees clearly and
fully disclose the nature of their agency
relationship to customers of the national
bank or Federal savings association and
of the other businesses so that
customers will know the identity of the
national bank, Federal savings
association, or other business that is
providing the product or service;
(3) The arrangement does not
constitute a joint venture or partnership
with the other business under
applicable state law;
(4) All aspects of the relationship
between the national bank or Federal
savings association and the other
business are conducted at arm’s length,
unless a special arrangement is
warranted because the other business is
a subsidiary of the national bank or
Federal savings association;
(5) Security issues arising from the
activities of the other business on the
premises are addressed;
(6) The activities of the other business
do not adversely affect the safety and
soundness of the national bank or
Federal savings association;
(7) The shared employees or the entity
for which they perform services are duly
licensed or meet qualification
requirements of applicable statutes and
regulations pertaining to agents or
employees of such other business; and
(8) The assets and records of the
parties are segregated.
(d) Other legal requirements. When
entering into arrangements of the types
described in paragraphs (a) and (b) of
this section, and in conducting
operations pursuant to those
arrangements, a national bank or
Federal savings association must ensure
that each arrangement complies with all
applicable laws and regulations. If the
arrangement involves an affiliate or a
shareholder, director, officer or
employee of the national bank or
Federal savings association:
(1) The national bank or Federal
savings association must ensure
compliance with all applicable statutory
and regulatory provisions governing
national bank or Federal savings
association transactions with these
persons or entities;
(2) The parties must comply with all
applicable fiduciary duties; and
E:\FR\FM\18MYR2.SGM
18MYR2
28472
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
(3) The parties, if they are in
competition with each other, must
consider limitations, if any, imposed by
applicable antitrust laws.
(e) Transition. If, on May 18, 2015, a
Federal savings association shares space
or employees with another business
under an agreement that complies with
the legal requirements that were in
effect prior to May 18, 2015, but which
would violate any provision of this
section, the Federal savings association
may continue sharing under the existing
agreement but it may not amend, renew,
or extend the agreement without prior
approval of the appropriate OCC
supervisory office.
61. The section heading for § 7.4000 is
revised to read as follows:
■
§ 7.4000 Visitorial powers with respect to
national banks.
*
*
*
*
62. The section heading for § 7.4001 is
revised to read as follows:
§ 7.4001 Charging interest by national
banks at rates permitted competing
institutions; charging interest to corporate
borrowers.
*
§ 7.4003
asabaliauskas on DSK5VPTVN1PROD with RULES
■
*
*
*
[Amended]
19:17 May 15, 2015
Authority: 12 U.S.C. 1 et seq., 24(Seventh),
92, 93a, 1462a, 1463, 1464, 1818, 1831x, and
5412(b)(2)(B).
69. Section 14.10(b) is amended by
removing the phrase ‘‘§ 159.3(h) of this
chapter’’ and adding in its place the
phrase ‘‘§ 5.38(e)(3) of this chapter’’.
■
PART 24—COMMUNITY AND
ECONOMIC DEVELOPMENT ENTITIES,
COMMUNITY DEVELOPMENT
PROJECTS, AND OTHER PUBLIC
WELFARE INVESTMENTS
*
*
*
*
*
65. The section heading for § 7.4007 is
revised to read as follows:
■
§ 7.4007
Authority: 12 U.S.C. 24 (Eleventh), 93a,
481, and 1818.
■
Deposit-taking by national banks.
*
*
*
*
*
■ 66. The section heading for § 7.4008 is
revised to read as follows:
Lending by national banks.
*
*
*
*
*
67. The heading of subpart E to part
7 is revised to read as follows:
■
Subpart E—National Bank Electronic
Activities
PART 14—CONSUMER PROTECTION
IN SALES OF INSURANCE
70. The authority citation for part 24
continues to read as follows:
§ 24.5
[Amended]
71. Section 24.5(a)(2) is amended by
removing ‘‘(202) 874–4652’’ and adding
in its place ‘‘(202) 649–5709 ’’.
■ 72. Appendix 1 to part 24 is revised
to read as follows:
■
Appendix 1 to Part 24—CD–1—
National Bank Community
Development (Part 24) Investments
BILLING CODE 4810–33–P
68. The authority citation for part 14
continues to read as follows:
■
63. Section 7.4003 is amended by:
VerDate Sep<11>2014
§ 7.4005 Combination of national bank
loan production office, deposit production
office, and remote service unit.
§ 7.4008
*
■
*
a. Removing the word ‘‘and’’ before
the phrase ‘‘automated device for
receiving deposits’’; and
■ b. Adding the phrase ‘‘, personal
computer, telephone, and other similar
electronic devices’’ after the phrase
‘‘automated device for receiving
deposits’’.
■ 64. The section heading for § 7.4005 is
revised to read as follows:
■
Jkt 235001
PO 00000
Frm 00128
Fmt 4701
Sfmt 4700
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
()
Comptroller of the Currency
Administrator of National Banks
28473
For Official Use Only
CD-1 - National Bank Community
Development (Part 24) Investments
OMB Number
1557-0194
A national bank or national bank subsidiary may make an investment directly or in directly designed primarily to promote the
public welfare under the community development investment authority in 12 USC 24(Eieventh) and its implementing regulation
12 CFR 24 (Part 24). Part 24 contains the OCC standards for determining whether an investment is designed to promote the
public welfare and procedures that apply to those investments. National banks must submit the completed form to provide an
after-the-fact notice or to request prior approval of a public welfare investment to the Community Affairs Department, Office of
the Comptroller of the Currency, Washington, DC 20219. Please contact the Community Affairs Department at (202) 649-6420
or CommunityAffairs@occ.treas.gov for more information.
PLEASE PROVIDE THE FOLLOWING INFORMATION ABOUT THE INVESTING BANK
Bank name:
Mailing address (street or P.O. box):
Bank charter number:
City, State, ZIP Code:
Telephone number:
Fax number:
E-mail address:
URL:
CONTACT FOR INFORMATION:
Name of bank contact responsible for form's information:
Name of bank contact responsible for CD investment (if
different):
Mailing address (street or P.O. box):
Mailing address (street or P.O. box):
City, State, ZIP Code:
City, State, ZIP Code:
Telephone number:
Telephone number:
Fax number:
Fax number:
E-mail address:
E-mail address:
PLEASE INDICATE THE PROCESS THE BANK REQUESTS BY CHECKING THE APPROPRIATE BOX, BELOW.
Prior approval (12 CFR 24.5(b))- complete section 2.
D
D
CD-1 (Expiration Date: 07/31/2016)
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
PO 00000
Frm 00129
Fmt 4701
Sfmt 4725
E:\FR\FM\18MYR2.SGM
18MYR2
ER18MY15.000
asabaliauskas on DSK5VPTVN1PROD with RULES
After-the-fact notice (12 CFR 24.5(a))- complete sections 1 and 2.
28474
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Form Part24
Abankm
responds
The bank is "well-capitalized," as defined in 12 CFR 24.2(i).
Yes D
NoD
The bank has a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System.
Yes D
NoD
The bank's most recent Community Reinvestment Act rating is satisfactory or outstanding.
Yes D
NoD
The bank is not under a cease and desist order, consent order, formal written agreement, or Prompt Corrective Action directive.
Yes D
NoD
Including this investment, the bank's aggregate outstanding investments and commitments under Part 24 do not exceed 5
of its capital and surplus, unless the OCC has provided written approval of a written request by the bank allowing the
provide after-the-fact notices for investments that would raise the aggregate amount of the bank's Part 24 investments beyond 5
percent of its capital and surplus.
Yes D
NoD
The investment does not involve properties carried on the bank's books as "other real estate owned."
Yes D
NoD
The OCC has not determined, in published guidance, that the investment is inappropriate for the after-the-fact notification.
Yes D
NoD
Has the bank responded affirmatively to all of the above requirements in order to
an after-the-fact
notice of its Part 24 investment? [The OCC may have provided written notification
the bank may submit Part
24 after-the-fact notices. If so, please provide the date or a copy of the OCC's written notification.]
Yes D
No
D
(The bank may make an investment authorized by 12 USC 24(Eieventh) and this part and notify the OCC within 10
working days by submitting a completed after-the-fact notice.)
bank must seek prior OCC approval of its investment and submit a completed investment proposal before making
investment.)
VerDate Sep<11>2014
19:30 May 15, 2015
Jkt 235001
PO 00000
Frm 00130
Fmt 4701
Sfmt 4725
E:\FR\FM\18MYR2.SGM
18MYR2
ER18MY15.001
asabaliauskas on DSK5VPTVN1PROD with RULES
CD-1 (Expiration Date: 0713112016)
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Form Part 24
28475
Page 3
Section 2 -All Requests
1.
Please indicate how the bank's investment is consistent with Part 24 requirements for public welfare
investments, under 12 CFR 24.3.
a.
Check at least one of the following that applies to the bank's investment:
The investment primarily benefits low- and moderate-income individuals.
The investment primarily benefits low- and moderate-income areas .
D
The investment primarily benefits other areas targeted by a governmental entity for redevelopment.
D
The investment would receive consideration under 12 CFR 25.23 as a "qualified investment"
for purposes of the Community Reinvestment Act.
2.
D
D
Please indicate how the bank's investment is consistent with Part 24
requirements for investment limits under 12 CFR 24.4 by responding to
the following questions.
a.
Dollar amount of the bank's investment that is the subject of this submission : - - - - - - - - - - -
b.
Percentage of the bank's capital and surplus represented by the bank's investment that is the subject of this
submission:
%.
c.
Percentage of the bank's capital and surplus represented by the aggregate outstanding Part 24 investments and
commitments, including this investment:
%.
d.
Does this investment expose the bank to unlimited liability?
Yes
No
3.
0
0
(This investment cannot be made under Part 24 .)
Please attach a brief description ofthe bank's investment. (See 12 CFR
24.5(q)f$)(i) and (li)(2)(i)J. Include the following information in the
descnptwn.
a.
The name of the community and economic development entity (CEDE) into which the bank's investment has
been (or will be) made.
b.
The type of bank investment (equity, debt, or other) .
c.
The activity or activities of the CEDE in which the bank has invested (or will invest). (See examples of qualifying
investment activities described in 12 CFR 24.6 (a) , (b) , (c) , and (d) .)
d.
How the investment is structured so that it does not expose the bank to unlimited liability, such as by describing
the structure of the CEDE (e.g., CDC subsidiary, multi-bank CDC , multi-investor CDC, limited partnership ,
limited liability company, community development bank, community development financial institution, community
development entity, community development venture capital fund, community development lending consortia,
community development closed-end mutual funds , non-diversified closed-end investment companies , or any
other CEDE) and by providing any other relevant information.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
PO 00000
Frm 00131
Fmt 4701
Sfmt 4725
E:\FR\FM\18MYR2.SGM
18MYR2
ER18MY15.002
asabaliauskas on DSK5VPTVN1PROD with RULES
CD-1 (Expiration Date: 07/31/2016)
28476
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Form Part 24
Page 4
e.
The geographic area served by the CEDE.
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
PO 00000
Frm 00132
Fmt 4701
Sfmt 4725
E:\FR\FM\18MYR2.SGM
18MYR2
ER18MY15.003
asabaliauskas on DSK5VPTVN1PROD with RULES
CD-1 (Expiration Date: 07/31/2016)
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
Form Part 24
Page 5
f.
The total funding or other support by community development partners involved in the project (e .g., government
or public agencies, nonprofits, other investors), if known .
g.
4.
28477
Supplemental information (e.g., prospectus, annual report, Web address that contains information about the
CEDE in which the investment is or will be made) , if available.
Evidence of qualification is readily available for examination purposes.
The bank maintains information concerning this investment in a form readily accessible and available for examination
that supports the certifications contained in this form and demonstrates that the investment meets the standards set out
in 12 CFR 24 .3, including, where applicable, the criteria of 12 CFR 25.23.
Yes
5.
0
No
0
Certification
The undersigned hereby certifies that the foregoing information in this form is accurate and complete. It is further certified
that the undersigned is authorized to file this form on Part 24 investments for the bank.
Name: ----------------------------------------------Title: --------------------------------------------Signature: ----------------------------------------------Date : -----------------------------------------------
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
PO 00000
Frm 00133
Fmt 4701
Sfmt 4725
E:\FR\FM\18MYR2.SGM
18MYR2
ER18MY15.004
asabaliauskas on DSK5VPTVN1PROD with RULES
CD-1 (Expiration Date: 07/31 /2016)
28478
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
PO 00000
Frm 00134
Fmt 4701
Sfmt 4700
E:\FR\FM\18MYR2.SGM
18MYR2
ER18MY15.005
asabaliauskas on DSK5VPTVN1PROD with RULES
THE SPACE BELOW MAY BE USED TO DESCRIBE THE BANK'S CD
INVESTMENT AS REOUESTED IN SECTION 2, OUEST/ON 3
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
BILLING CODE 4810–33–C
PART 32—LENDING LIMITS
§ 32.1
Authority, purpose and scope.
73. The authority citation for part 32
is revised to read as follows:
■
Authority: 12 U.S.C. 1 et seq., 12 U.S.C.
84, 93a, 1462a, 1463, 1464(u), 5412(b)(2)(B),
and 15 U.S.C. 1639h.
§ 32.2
[Amended]
74. Section 32.2(g)(1)(iv) is amended
by removing ‘‘paragraph (cc)’’ and
adding in its place ‘‘paragraph (ee)’’.
■ 75. Section 32.3(d)(2) is revised to
read as follows:
■
§ 32.3
Lending limits.
asabaliauskas on DSK5VPTVN1PROD with RULES
*
*
*
*
*
(d) * * *
(2) Loans by savings associations to
develop domestic residential housing
units. (i) Subject to paragraph (d)(2)(ii)
of this section, a savings association
may make loans to one borrower to
develop domestic residential housing
units, not to exceed the lesser of
$30,000,000 or 30 percent of the savings
association’s unimpaired capital and
unimpaired surplus, including all loans
and extensions of credit subject to
paragraph (a) of this section, provided
that:
(A) The savings association is, and
continues to be, in compliance with 12
CFR part 3, part 390, subpart Z, or part
324, as applicable;
(B) Upon application by a savings
association under paragraph (d)(2)(iv) of
this section, the appropriate Federal
banking agency permits, subject to
conditions it may impose, the savings
association to use the higher limit set
forth under this paragraph (d)(2)(i);
(C) The loans and extensions of credit
made under this paragraph (d)(2)(i) to
all borrowers do not, in aggregate,
exceed 150 percent of the savings
association’s unimpaired capital and
unimpaired surplus; and
(D) The loans and extensions of credit
made under this paragraph (d)(2)(i)
comply with the applicable loan-tovalue requirements.
(ii) The authority of a savings
association to make a loan or extension
of credit under the exception in
paragraph (d)(2)(i) of this section ceases
immediately upon the association’s
failure to comply with any one of the
requirements set forth in paragraph
(d)(2)(i) of this section or any
condition(s) set forth in an order issued
by the appropriate Federal banking
agency under paragraphs (d)(2)(i)(B) and
(d)(2)(iv) of this section.
(iii) As used in this section, the term
‘‘to develop’’ includes each of the
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
various phases necessary to produce
housing units as an end product, such
as acquisition, development and
construction; development and
construction; construction;
rehabilitation; and conversion; and the
term ‘‘domestic’’ includes units within
the fifty states, the District of Columbia,
Puerto Rico, the Virgin Islands, Guam,
and the Pacific Islands;
(iv) Procedures—(A) Federal savings
associations. (1) Application. A Federal
savings association must submit an
application to, and receive approval
from, the appropriate OCC supervisory
office before using the higher limit set
forth under paragraph (d)(2)(i) of this
section. The supervisory office may
approve a completed application if it
finds that approval is consistent with
safety and soundness. To be deemed
complete, the application must include:
(i) If applicable, certification that the
savings association is an ‘‘eligible
savings association’’;
(ii) A demonstration that the savings
association meets the requirements of
paragraphs (d)(2)(i)(A), (C), and (D) of
this section;
(iii) A copy of a written resolution by
a majority of the savings association’s
board of directors approving the use of
the limits provided in paragraphs
(d)(2)(i) of this section, and confirming
the terms and conditions for use of this
lending authority; and
(iv) A description of how the board
will exercise its continuing
responsibility to oversee the use of this
lending authority.
(2) Expedited review. An application
by an eligible savings association is
deemed approved as of the 30th day
after the application is received by the
OCC, unless before that date the OCC
informs the savings association it must
obtain prior written approval from the
OCC.
(B) State savings associations. A state
savings association shall seek approval
to use the higher limit set forth under
paragraph (d)(2)(i) of this section from
its appropriate Federal banking agency,
under the rules and procedures
established by the appropriate Federal
banking agency.
*
*
*
*
*
§ 32.7
[Amended]
76. Section 32.7(b) introductory text is
amended by removing the phrase ‘‘An
eligible bank or eligible savings
association’’ and adding in its place the
phrase ‘‘An eligible national bank or
eligible savings association’’.
■
PO 00000
Frm 00135
Fmt 4701
Sfmt 4700
28479
PART 34—REAL ESTATE LENDING
AND APPRAISALS
77. The authority citation for part 34
continues to read as follows:
■
Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a,
371, 1462a, 1463, 1464, 1465, 1701j–3,
1828(o), 3331 et seq., and 5412(b)(2)(B).
§ 34.84
■
[Removed]
78. Section 34.84 is removed.
PART 100—RULES APPLICABLE TO
SAVINGS ASSOCIATIONS
79. The authority citation for part 100
continues to read as follows:
■
Authority: 12 U.S.C. 1462a, 1463,
5412(b)(2)(B), 5414(b)(2).
§ 100.1
[Amended]
80. Section 100.1 is amended by
removing the phrase ‘‘The regulations
set forth in parts 100 through 197 of this
chapter I’’ and adding in its place the
phrase ‘‘The regulations set forth in
parts 1 through 197 of this chapter I’’.
■
§ 100.2
[Amended]
81. Section 100.2 is amended by
removing the phrase ‘‘any provision of
parts 100 through 197’’ and adding in its
place the phrase ‘‘any provision of parts
1 through 197 of this chapter I, as
applicable, with respect to Federal
savings associations’’.
■
PART 116—[REMOVED]
■
82. Part 116 is removed.
PART 143—FEDERAL SAVINGS
ASSOCIATIONS—GRANDFATHERED
AUTHORITY
83. The authority citation for part 143
is revised to read as follows:
■
Authority: 12 U.S.C. 1462a, 1463, 1464,
1467a, 2901 et seq., 5412(b)(2)(B).
84. The heading of part 143 is revised
to read as set forth above.
■
§§ 143.1 through 143.11 and 143.14
[Removed]
85. Sections 143.1 through 143.11 are
removed.
■
§ 143.14
■
[Removed]
86. Section 143.14 is removed.
PART 144—FEDERAL MUTUAL
SAVINGS ASSOCIATIONS—
COMMUNICATION BETWEEN
MEMBERS
87. The authority citation for part 144
is revised to read as follows:
■
Authority: 12 U.S.C. 1462a, 1463, 1464,
1467a, 2901 et seq., 5412(b)(2)(B).
E:\FR\FM\18MYR2.SGM
18MYR2
28480
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
■
88. The heading of part 144 is revised
to read as set forth above.
place the phrase ‘‘in § 5.26 of this
chapter’’.
PART 162—REGULATORY
REPORTING STANDARDS
§§ 144.1, 144.2, 144 through 144.7, and Part
144 Undesignated Center Headings
[Removed]
PART 152—[REMOVED]
■
■
108. The authority citation for part
162 continues to read as follows:
99. Part 152 is removed.
Authority: 12 U.S.C. 1463, 5412(b)(2)(B).
89. Sections 144.1, 144.2, 144.4
through 144.7, and the undesignated
center headings ‘‘Charter’’, ‘‘Bylaws’’,
and ‘‘Availability’’ are removed.
■
PART 145—FEDERAL SAVINGS
ASSOCIATIONS—OPERATIONS
PART 160—LENDING AND
INVESTMENT
■
90. The authority citation for part 145
continues to read as follows:
■
Authority: 12 U.S.C. 1462a, 1463, 1464,
1828. 5412(b)(2)(B).
Authority: 12 U.S.C. 1462a, 1463, 1464,
1467a, 1701j–3, 1828, 3803, 3806,
5412(b)(2)(B); 42 U.S.C. 4106
■
§ 145.91
■
PART 159—[REMOVED]
[Removed]
§ 145.92
[Amended]
92. Section 145.92(b) is amended by
removing the phrase ‘‘at §§ 145.93 and
145.95 of this chapter’’ and adding in its
place the phrase ‘‘at § 5.31 of this
chapter’’.
[Removed]
93. Sections 145.93, 145.95 and
145.96 are removed.
101. The authority citation for part
160 continues to read as follows:
[Amended]
102. Footnote 16 to § 160.30 is
amended by removing the phrase ‘‘part
159 of this chapter’’ and adding in its
place ‘‘§ 5.59 of this chapter’’.
■ 103. Section 160.32 is amended by:
■ a. Revising paragraph (b); and
■ b. Removing paragraph (c).
The revision reads as follows:
■
§ 160.32
■
*
*
*
*
(b) Your pass-through investments are
subject to the requirements and filing
procedures of 12 CFR 5.58.
94. Part 146 is removed.
PART 150—FIDUCIARY POWERS OF
FEDERAL SAVINGS ASSOCIATIONS
95. The authority citation for part 150
continues to read as follows:
§ 160.35
Adjustments to home loans.
*
Authority: 12 U.S.C. 1462a, 1463, 1464,
5412(b)(2)(B).
96. Section 150.70 is revised to read
as follows:
■
§ 150.70 Must I obtain OCC approval or file
a notice before I exercise fiduciary powers?
Except for fiduciary activities subject
solely to subpart E, you should refer to
12 CFR 5.26 to determine if you must
obtain OCC approval or file a notice
with the OCC before you exercise
fiduciary powers. A Federal savings
association may not exercise fiduciary
powers unless it obtains prior approval
from the OCC to the extent required
under 12 CFR 5.26.
asabaliauskas on DSK5VPTVN1PROD with RULES
104. Section 160.35(d)(3) is amended
by revising the second sentence to read
as follows:
■
■
*
*
*
*
(d) * * *
(3) * * * If the OCC provides such
notice to the Federal savings
association, the Federal savings
association may not use that index
unless it applies for and receives the
OCC’s prior written approval.
§ 160.37
■
105. Section 160.37 is removed.
PART 161—DEFINITIONS FOR
REGULATIONS AFFECTING ALL
SAVINGS ASSOCIATIONS
106. The authority citation for part
161 is revised to read as follows:
■
Authority: 12 U.S.C. 1462a, 1463, 1464,
1467a, 5412(b)(2)(B).
97. Sections 150.80, 150.90, 150.100,
150.110, 150.120, and 150.125 are
removed.
■
§ 150.130
§ 161.45
■
98. Paragraph (a) of § 150.130 is
amended by removing the phrase ‘‘in
subpart A of this part’’ and adding in its
■
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
107. Section 161.45 is revised to read
as follows:
Authority: 12 U.S.C. 1462a, 1463, 1464,
1467a, 1817, 1820, 1828, 1831o, 3806, 5101
et seq., 5412(b)(2)(B); 31 U.S.C. 5318; 42
U.S.C. 4106.
§ 163.1
■
[Removed]
111. Section 163.1 is removed.
§ 163.22
■
[Removed]
112. Section 163.22 is removed.
Frm 00136
Fmt 4701
§ 163.81
■
[Removed]
113. Section 163.81 is removed.
Subpart E—[Removed and Reserved]
114. Subpart E of part 163 is removed
and reserved.
■
Subpart H—[Removed]
■
115. Subpart H of part 163 is removed.
PART 174—[REMOVED]
■
116. Part 174 is removed.
PART 192—CONVERSIONS FROM
MUTUAL TO STOCK FORM
117. The authority citation for part
192 is revised to read as follows:
Sfmt 4700
Authority: 12 U.S.C. 1462a, 1463, 1464,
1467a, 2901, 5412(b)(2)(B); 15 U.S.C. 78c,
78l, 78m, 78n, 78w.
118. Section 192.25 is amended by:
a. Revising the definition of Acting in
concert; and
■ b. Amending the definition of Control
by removing the phrase ‘‘in part 174 of
this chapter’’ and adding in its place the
phrase ‘‘in § 5.50 of this chapter’’.
The revision reads as follows:
■
■
§ 192.25
part?
Service corporation.
The term service corporation has the
meaning set forth in § 5.59(d)(4) of this
chapter.
PO 00000
110. The authority citation for part
163 continues to read as follows:
■
■
[Removed]
§§ 150.80, 150.90, 150.100, 150.110, 150.120,
and 150.125 [Removed]
[Amended]
PART 163—SAVINGS
ASSOCIATIONS—OPERATIONS
Pass-through investments.
*
PART 146—[REMOVED]
[Amended]
109. Section 162.4(b) is amended by
removing the phrase ‘‘, as defined at
§ 116.5(c) of this chapter’’ and adding in
its place the phrase ‘‘under the Uniform
Financial Institutions Rating System’’.
■
■
■
§§ 145.93, 145.95 and 145.96
100. Part 159 is removed.
§ 160.30
91. Section 145.91 is removed.
§ 162.4
What definitions apply to this
*
*
*
*
*
Acting in concert has the same
meaning as in § 5.50(d)(2) of this
E:\FR\FM\18MYR2.SGM
18MYR2
Federal Register / Vol. 80, No. 95 / Monday, May 18, 2015 / Rules and Regulations
chapter. The rebuttable presumptions of
§ 5.50(f)(2) of this chapter, other than
§ 5.50(f)(2)(ii)(A) and (B) of this chapter,
apply to the share purchase limitations
at §§ 192.355 through 192.395.
*
*
*
*
*
§ 192.180
[Amended]
119. Section § 192.180 is amended in
paragraph (a) by removing the phrase
‘‘in subpart B of part 116 of this
chapter’’ and adding in its place ‘‘in
§ 5.8 of this chapter’’.
■
§ 192.185
[Amended]
120. Section 192.185 is amended by
removing the phrase ‘‘in subpart C of
part 116 of this chapter’’ and adding in
its place ‘‘in § 5.10 of this chapter’’.
■
§ 192.430
[Amended]
121. Section 192.430 is amended in
paragraphs (a) and (c) by:
■ a. Removing the phrase ‘‘part 152 of
this chapter’’ and adding in its place
‘‘§ 5.22 of this chapter’’; and
asabaliauskas on DSK5VPTVN1PROD with RULES
■
VerDate Sep<11>2014
19:17 May 15, 2015
Jkt 235001
b. Removing the sentence ‘‘See 12
CFR 152.4(b)(8).’’ and adding in its
place ‘‘See § 5.22(g)(7).’’.
■
§ 192.510
[Amended]
122. Paragraph (c)(1) of § 192.510, is
amended by removing the phrase ‘‘at
part 163, subpart E of this chapter’’ and
adding in its place ‘‘at § 5.55 of this
chapter’’.
■
§ 192.520
[Amended]
Fmt 4701
PART 193—ACCOUNTING
REQUIREMENTS
Authority: 12 U.S.C. 1462a, 1463, 1464,
5412(b)(2)(B); 15 U.S.C. 78c(b), 78m, 78n,
78w.
§ 193.101
[Amended]
127. In paragraph (c) of § 193.101,
remove the phrase ‘‘and § 163.81 of this
chapter’’ and add in its place the phrase
‘‘and § 5.56 of this chapter’’.
■
124. Section 192.525 is amended by:
a. In paragraph (b), removing the
phrase ‘‘under §§ 174.4(a) and (b) of this
chapter’’ and adding in its place ’’ under
§ 5.50 of this chapter’’; and
■ b. In paragraph (c)(5), removing the
phrase ‘‘under part 174 of this chapter’’
and adding in its place ‘‘under § 5.50 of
this chapter’’.
■
■
Frm 00137
125. Paragraph (g)(2) of § 192.660 is
amended by removing the phrase
‘‘under part 174 of this chapter’’ and
adding in its place ‘‘under § 5.50 of this
chapter’’.
■
126. The authority citation for part
193 continues to read as follows:
123. Paragraph (c) of § 192.520, is
amended by removing the phrase
‘‘under part 163, subpart E of this
chapter’’ and adding in its place ‘‘under
§ 5.55 of this chapter’’.
PO 00000
[Amended]
■
[Amended]
■
§ 192.525
§ 192.660
28481
Sfmt 9990
Dated: May 5, 2015.
Thomas J. Curry,
Comptroller of the Currency.
[FR Doc. 2015–11229 Filed 5–15–15; 8:45 am]
BILLING CODE 4810–33–P
E:\FR\FM\18MYR2.SGM
18MYR2
Agencies
[Federal Register Volume 80, Number 95 (Monday, May 18, 2015)]
[Rules and Regulations]
[Pages 28345-28481]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-11229]
[[Page 28345]]
Vol. 80
Monday,
No. 95
May 18, 2015
Part II
Department of the Treasury
-----------------------------------------------------------------------
Office of the Comptroller of the Currency
-----------------------------------------------------------------------
12 CFR Parts 4, 5, 7, et al.
Integration of National Bank and Federal Savings Association
Regulations: Licensing Rules; Final Rule
Federal Register / Vol. 80 , No. 95 / Monday, May 18, 2015 / Rules
and Regulations
[[Page 28346]]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Parts 4, 5, 7, 14, 24, 32, 34, 100, 116, 143, 144, 145, 146,
150, 152, 159, 160, 161, 162, 163, 174, 192, 193
[Docket ID OCC-2014-0007]
RIN 1557-AD80
Integration of National Bank and Federal Savings Association
Regulations: Licensing Rules
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Office of the Comptroller of the Currency (OCC) is
adopting a final rule to integrate its rules relating to policies and
procedures for corporate activities and transactions involving national
banks and Federal savings associations, to revise some of these rules
in order to eliminate unnecessary requirements consistent with safety
and soundness and to promote fairness in supervision, and to make other
technical and conforming changes. The OCC also is adopting amendments
to update its rules for agency organization and function.
DATES: This final rule is effective July 1, 2015.
FOR FURTHER INFORMATION CONTACT: For additional information, contact
Heidi Thomas, Special Counsel; Melissa Lisenbee, Attorney; or Stuart
Feldstein, Director, Legislative and Regulatory Activities Division,
(202) 649-5490, for persons who are deaf or hard of hearing, TTY, (202)
649-5597; Kevin Corcoran, Assistant Director, or Richard Cleva, Senior
Counsel, Bank Activities and Structure, (202) 649-5500; or Stephen
Lybarger, Deputy Comptroller for Licensing, (202) 649-6319, Office of
the Comptroller of the Currency, 400 7th Street SW., Washington, DC
20219.
SUPPLEMENTARY INFORMATION:
I. Background
Title III of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act),\1\ transferred to the OCC all
functions of the former Office of Thrift Supervision (OTS) and the
Director of the OTS relating to Federal savings associations.\2\ As a
result, the OCC is now responsible for the ongoing examination,
supervision, and regulation of Federal savings associations, in
addition to national banks and Federal branches and agencies. With some
exceptions, the OCC has one set of rules applicable to national banks
and another set of rules applicable to Federal savings associations,
or, where appropriate, to all savings associations.\3\
---------------------------------------------------------------------------
\1\ Public Law 111-203, 124 Stat. 1376 (2010).
\2\ Title III of the Dodd-Frank Act transferred the functions of
the former OTS relating to state savings associations to the Federal
Deposit Insurance Corporation (FDIC). Dodd-Frank Act, section
312(b)(2)(C), 12 U.S.C. 5412(b)(2)(C). The Dodd-Frank Act also
transferred to the OCC the rulemaking authority of the OTS relating
to all savings associations, both state and Federal, unless
rulemaking authority is provided to another agency by a specific
statute. See Dodd-Frank Act, section 312(b)(2)(B)(i)(II), 12 U.S.C.
5412(b)(2)(B)(i)(II). On July 21, 2011, the OCC issued an interim
final rule and request for comments that restated the former OTS
regulations as 12 CFR parts 100 through 197, with nomenclature and
other technical changes. See 76 FR 48950 (Aug. 9, 2011). The FDIC
has identified a number of independent bases for rulemaking
authority for state savings associations in some cases. Where there
is no such independent rulemaking authority, the FDIC will enforce
applicable OCC regulations for state savings associations.
\3\ The OCC previously has issued rulemakings that integrated,
or proposed to integrate, its rules for national banks and Federal
savings associations relating to lending limits, capital, flood
insurance, and safety and soundness standards. See 78 FR 37930 (June
25, 2013), 78 FR 62018 (Oct. 11, 2013), 78 FR 65108 (October 30,
2013), and 79 FR 54518 (September 11, 2014), respectively.
Furthermore, the OCC has integrated its rules relating to consumer
protection in insurance sales, Bank Secrecy Act compliance,
management interlocks, appraisals, disclosure and reporting of
Community Reinvestment Act (CRA)-related agreements, and the Fair
Credit Reporting Act. See 79 FR 28393 (May 16, 2014).
---------------------------------------------------------------------------
The OCC is in the process of reviewing its rules to determine
whether it is appropriate to integrate them into a single set of rules
for both national banks and savings associations, taking into account
consistency with the underlying statutes that apply to each type of
institution. The key objectives of this review are to reduce regulatory
duplication, promote fairness in supervision, eliminate unnecessary
burden consistent with safety and soundness, and create efficiencies
for both national banks and savings associations, as well as the
OCC.\4\
---------------------------------------------------------------------------
\4\ Concurrent with our integration of national bank and Federal
savings association rules, the OCC also is reviewing OTS-issued
supervisory policies to integrate them into the OCC's policy
framework and to rescind any issuances that are duplicative,
outdated, or replaced by other supervisory guidance. Our goal is to
produce uniform policies for national banks and Federal savings
associations, while recognizing differences that exist in statute.
This policy review is occurring in conjunction with this integration
rulemaking project. Many OTS-issued supervisory policies already
have been integrated, rescinded, or replaced by new or existing OCC
guidance. We will update this policy guidance, as appropriate, to
reflect the integration of OCC rules as of the effective date of the
final rules. Until that time, the Dodd-Frank Act provides that all
such OTS issuances continue in effect until modified, terminated,
set aside, or superseded. See Dodd-Frank Act section 316(b)(2) (12
U.S.C. 5414(b)(2)); OCC Bulletins 2011-47 (Dec. 11, 2011), 2012-2
(Jan. 6, 2012), 2012-3 (Jan. 6, 2012), 2012-15 (May 17, 2012), 2013-
34 (Nov. 20, 2013), and 2014-49 (Oct. 1, 2014); and www.occ.gov/publications/publications-by-type/comptrollers-handbook/index-comptrollers-handbook.html.
---------------------------------------------------------------------------
As part of this review of our national bank and savings association
rules, the OCC published in the Federal Register \5\ on June 10, 2014,
a proposal to integrate its rules relating to corporate activities and
transactions involving national banks and Federal savings associations
(licensing rules). One of the objectives of this rulemaking is to
create, where possible, filing parity for all activities and
transactions addressed in the OCC's licensing rules. The OCC believes
that it is more equitable and efficient to have a single filing and
review process for corporate activities and transactions of national
banks and Federal savings associations. In addition, the OCC is in the
latter stages of developing an electronic applications filing system
capable of handling applications and other filings from both national
banks and Federal savings associations. Accordingly, another important
objective of this rulemaking is to complete the integration of our
licensing rules expeditiously so that we can include these integrated
rules in this new applications system.
---------------------------------------------------------------------------
\5\ 79 FR 33260.
---------------------------------------------------------------------------
Concurrently, the OCC also is participating in an interagency
review of regulations pursuant to section 2222 of the Economic Growth
and Regulatory Paperwork Reduction Act of 1996 (EGRPRA).\6\ The EGRPRA
requires the Federal Financial Institutions Examination Council (FFIEC)
and the OCC, the FDIC, and the Board of Governors of the Federal
Reserve System (Federal Reserve Board) (collectively, the Agencies) to
conduct a review of all their regulations to identify outdated,
unnecessary, or unduly burdensome regulations applicable to insured
depository institutions. The FFIEC and the Agencies must conduct this
review at least once every 10 years, and the next review must be
completed by December 31, 2016. Over the next two years the OCC, FDIC
and Federal Reserve Board will issue joint notices requesting comments
on their rules pursuant to the EGRPRA. The EGRPRA contemplates that the
Agencies will initiate appropriate rulemakings to change or eliminate
outdated, unnecessary, or unduly burdensome rules, as appropriate,
based on the comments received.
---------------------------------------------------------------------------
\6\ 12 U.S.C. 3311.
---------------------------------------------------------------------------
The Agencies published the first EGRPRA notice on June 4, 2014,\7\
and requested comments on three categories
[[Page 28347]]
of rules, including the Agencies' licensing rules.\8\ The licensing
Notice of Proposed Rulemaking (NPRM or proposed rule) indicated that
the OCC would consider comments received in response to both the EGRPRA
notice and the NPRM when finalizing its licensing integration rule. We
received eight comment letters on our licensing rules and our licensing
proposed rule in response to our first EGRPRA notice, and this final
rule reflects these comments.
---------------------------------------------------------------------------
\7\ 79 FR 32172.
\8\ The OCC issued its second EGRPRA notice, requesting review
of banking operations, capital, and the Community Reinvestment Act
regulations, on February 13, 2015, 80 FR 7980.
---------------------------------------------------------------------------
As part of this EGRPRA review, the Agencies also are holding a
number of outreach meetings to provide interested parties with an
opportunity to comment on regulatory burden reduction in our
regulations. This preamble discusses relevant comments received at
outreach meetings held on December 2, 2014, in Los Angeles, Calif., and
February 4, 2015 in Dallas, Texas, to the extent they relate to OCC
licensing rules.
II. Overview of the Final Rule
Twelve CFR part 5 sets forth the OCC's rules, policies and
procedures for national bank corporate activities and transactions.
Subpart A sets forth the generally applicable rules and procedures,
while subparts B through D contain the rules for national bank initial
activities, the expansion of activities, and other changes in
activities and operations. Subpart E addresses a national bank's
payment of dividends, and subpart F addresses Federal branches and
agencies. The OCC's equivalent rules, policies and procedures for
Federal savings associations are dispersed throughout parts 100-199
with the generally applicable rules and procedures in part 116. This
final rule revises part 5 to make it applicable to both national banks
and Federal savings associations and, to the extent appropriate,
deletes the corresponding provisions found in parts 100 through 199.
Specifically, the final rule consolidates most licensing provisions
for Federal savings associations into the existing national bank rule
in part 5 and eliminates parts 116, 146, 152, 159, 174 and the
corresponding provision in parts 143, 144, 145, 150, 160, and 163.
These combined rules are as follows:
Rules of general applicability (subpart A)
Organizing a national bank or Federal savings association
(Sec. 5.20)
Conversion from a national bank or Federal savings
association to a state bank or state savings association (Sec. 5.25)
Fiduciary powers of national banks or Federal savings
associations (Sec. 5.26)
Business combinations involving a national bank or Federal
savings association (Sec. 5.33)
Bank service company investments of a national bank or
Federal savings association (Sec. 5.35)
Investment in national bank or Federal savings association
premises (Sec. 5.37)
Change in location of a main office of a national bank or
home office of a Federal savings association (Sec. 5.40)
Corporate title of a national bank or Federal savings
association (Sec. 5.42)
Voluntary liquidation of a national bank or Federal
savings association (Sec. 5.48)
Change in control of a national bank or Federal savings
association; reporting of stock loans (Sec. 5.50)
Changes in directors and senior executive officers of a
national bank or Federal savings association (Sec. 5.51)
Change of address of a national bank or Federal savings
association (Sec. 5.52)
Substantial asset change by a national bank or Federal
savings association (Sec. 5.53)
In other cases, this final rule retains separate rules for national
banks and Federal savings association in part 5 because the rules do
not apply to both charters, are better organized as separate rules, or
their differences and complexity make integration difficult. The new
Federal savings association rules are as follows:
Federal mutual savings association charters and bylaws
(Sec. 5.21)
Federal stock savings association charters and bylaws
(Sec. 5.22)
Conversion to become a Federal savings association (Sec.
5.23)
Establishment, acquisition, and relocation of a branch and
establishment of an agency office of a Federal savings association
(Sec. 5.31)
Operating subsidiaries of a Federal savings association
(Sec. 5.38)
Increases in permanent capital of a Federal stock savings
association (Sec. 5.45)
Capital distributions by a Federal savings association
(Sec. 5.55)
Inclusion of subordinated debt securities and mandatorily
redeemable preferred stock as supplementary (tier 2) capital (Sec.
5.56)
Pass-through investments by a Federal savings association
(Sec. 5.58)
Service corporations of Federal savings associations
(Sec. 5.59)
The remaining rules in part 5 continue to be applicable only to
national banks, with the exception of subpart E. (Subpart E applies
only to Federal branches and agencies, and we did not propose to amend
it in the NPRM.) We are amending some of these rules to be consistent
with the changes for Federal savings associations, revising the titles
of some of these rules to reflect the inclusion of rules applicable to
Federal savings associations in part 5, and making other technical
changes. These national bank-only rules are as follows:
Conversion to become a national bank (Sec. 5.24)
Establishment, acquisition, and relocation of a branch of
a national bank (Sec. 5.30)
Expedited procedures for certain reorganizations of a
national bank (Sec. 5.32)
Operating subsidiaries of a national bank (Sec. 5.34)
Other equity investments by a national bank (Sec. 5.36)
Financial subsidiaries of a national bank (Sec. 5.39)
Changes in permanent capital of a national bank (Sec.
5.46)
Subordinated debt issued by a national bank (Sec. 5.47)
Payment of dividends by national banks (Subpart E)
In addition to the placement and integration of Federal savings
association rules, the final rule makes substantive changes to the
OCC's licensing rules to eliminate unnecessary requirements and to
further the safe and sound operation of the institutions the OCC
supervises. Furthermore, the final rule makes conforming and technical
changes to the rules in parts 5, 7, and 34 and in various provisions of
parts 100 through 199 to reflect the movement of the licensing rules
for savings associations to part 5, to adjust section titles, and to
conform cross-references. In particular, the final rule replaces, where
appropriate, references to ``bank'' with ``national bank,'' because it
better parallels the term ``Federal savings association.'' Finally, the
rulemaking amends the OCC's licensing rules to make consistent the OCC
office to which a national bank or Federal savings association must
file its notice or application. Specifically, the final rule amends
each rule in part 5 to direct such filings to the institution's
appropriate OCC licensing office or appropriate OCC supervisory office,
as applicable, and, in clarifying amendments, updates the description
of the OCC's supervisory structure in part 4.
A description of amendments made by this final rule, the comments
received on the proposed rule, relevant comments received in response
to the June 2014 EGRPRA notice, and
[[Page 28348]]
licensing-related comments made at the EGRPRA outreach meetings held in
Los Angeles, California and Dallas, Texas appears in the section-by-
section description of the final rule set forth below in Section III of
this preamble. Section IV of the preamble summarizes the significant
changes for national banks and Federal savings associations resulting
from this final rule. Section VI of the preamble contains a
redesignation table that indicates changes in the numbering of the
rules as a result of this final rule. Sections IV and VI may be used as
a quick-reference guide to our rulemaking and are intended to assist
national banks and Federal savings associations, especially community
institutions, in understanding the changes made by this rulemaking.
III. Description of the Final Rule and Public Comments
The OCC received one comment in response to the proposed rule, and
that comment referred the OCC to a comment received in connection with
the June 2014 EGRPRA notice. The OCC also received 48 public comments
in response to the June 2014 EGRPRA notice, seven of which addressed
issues related to licensing rule integration. These comments, the
provisions they address, and the resulting changes to the OCC's rules
are discussed below.
A. Part 4--District Offices (Sec. 4.5)
Part 4 covers several areas, including regulations pertaining to
the OCC's organizational structure. Section 4.4 describes the role of
the OCC's Washington, DC office. Section 4.5 describes the role of the
OCC's district and field offices and sets forth the address of, and the
geographical area covered by, each district office. However, Sec. Sec.
4.4 and 4.5 do not completely describe all of the OCC's supervisory
offices. We proposed to amend 12 CFR 4.5 to reflect more accurately the
current supervisory structure for national banks and Federal savings
associations. Specifically, we proposed to revise Sec. 4.5 to include
a description and address of the OCC's Midsize Bank Supervision
program, and to provide that the district offices supervise community
banks not otherwise supervised by the Washington office or Midsize Bank
Supervision. The NPRM also proposed to replace the outdated reference
to ``duty stations'' with the currently used term ``field office.'' We
received no public comments on the proposed Sec. 4.5 amendments and
adopt them as proposed with some technical changes. First, the final
rule adds American Samoa to the list of territories in Sec. 4.5(b)(1).
It was inadvertently left out of the proposed rule. Second, the final
rule replaces the term ``field office satellite offices'' with ``other
supervisory offices'' in Sec. 4.5(b)(2), and makes changes to
paragraph headings.
B. Part 5--Rules, Policies, and Procedures for Corporate Activities
General Comments
A number of public commenters made general comments regarding the
OCC's licensing rule integration effort. One commenter, a banking trade
association, supported the OCC's efforts to integrate its licensing
rules as a starting point for a more efficient and streamlined
regulatory regime for both national banks and Federal savings
associations. However, this commenter stated that, by including a
number of new substantive requirements and amendments, this rulemaking
will increase burden on the industry, and is therefore inconsistent
with the stated purpose of the EGRPRA process. This commenter requested
that the OCC issue a separate proposed rule for any substantive changes
that create burdens greater than those imposed by existing rules.
We note that the OCC has taken several considerations into account
in integrating the national bank and Federal savings association rules.
As stated in the preamble to the proposal, the key objective of this
rulemaking is to integrate the national bank and Federal savings
association rules in a way that promotes fairness in supervision,
reduces regulatory duplication, eliminates unnecessary burden
consistent with safety and soundness, and creates efficiencies for both
national banks and savings associations, as well as the OCC. The final
rule reflects a balance of these considerations.
In addition, this commenter stated that the OCC should have
conducted industry outreach in advance of proposing the integration of
national bank and Federal savings association licensing rules and
should create a plan for outreach and the education of institutions on
the proposed changes going forward. We note that we do intend to engage
in efforts to educate the industry on the final rule, including
discussing these changes in meetings with bankers, trade groups, and
other interested parties, as appropriate, and providing summaries of
the changes on the OCC's Internet Web page, www.occ.gov. In addition,
we note that OCC staff is available to provide assistance to
institutions planning a filing under the revised rules, as needed.
Furthermore, the Comptroller's Licensing Manual provides applicants
with more detailed explanations of the requirements and procedures for
licensing filings with the OCC. The OCC is in the process of revising
the Comptroller's Licensing Manual to reflect the changes made by this
final rule. We will post the individual booklets of the Manual to the
OCC Web site as they are finalized.
Another trade association commenter requested that the OCC provide
tiered regulation that would provide different treatment for large
banks and community banks. The OCC is committed to finding ways to
reduce burden on community banks without negatively affecting the
safety and soundness of those institutions, including applying less
burdensome regulatory requirements where permissible and appropriate.
However, we note that tiered regulation based on asset-size is not
always appropriate in the licensing context because many of the
application requirements are mandated by statutes that do not authorize
the OCC to differentiate among institutions based on size or status as
a community bank.
Rules of General Applicability (Part 5, Subpart A)
Twelve CFR part 5, subpart A, and 12 CFR part 116 set forth the
OCC's generally applicable rules and procedures for processing filings
\9\ related to corporate activities and transactions of national banks
and Federal savings associations. Both sets of regulations include
filing requirements and explain where and how to file. We believe that
it is more efficient to have a single filing process for national banks
and Federal savings associations, where possible. As proposed, this
final rule amends subpart A to apply to both national banks and Federal
savings associations, to make additional substantive and technical
changes to subpart A, and to remove part 116 in its entirety.
---------------------------------------------------------------------------
\9\ Current rules use slightly different terminology for
national banks and Federal savings associations. Under 12 CFR
5.3(i), a ``filing'' is an application or notice submitted under
part 5. Twelve CFR 116.1(a) uses the word ``application'' to mean an
application, notice, or filing related to a Federal savings
association. In this preamble, when it is not necessary to
distinguish among the three, we use the word ``filing'' to refer to
an application, notice, or other filing.
---------------------------------------------------------------------------
Section 5.2 Rules of General Applicability. Current rules differ
with respect to the scope and applicability of the generally applicable
licensing procedures for national banks and Federal savings
associations. The national bank rule at 12 CFR 5.2(a) states that the
subpart A procedures
[[Page 28349]]
apply to all part 5 filings, unless otherwise stated.\10\ Section
5.2(b) states that the OCC may adopt materially different procedures if
it provides notice to affected parties. In contrast, the Federal
savings association rule at Sec. 116.1 states that the part 116
prefiling and filing procedures and the rules for OCC review apply to
all required filings related to Federal savings associations, but that
the publication requirements and the comment and meeting procedures
apply only when an OCC regulation specifically incorporates these
procedures or the OCC otherwise requires. Section 116.1(b) also
specifies that part 116 does not apply to filings related to
transactions under sections 13(c) or (k) of the Federal Deposit
Insurance Act (FDI Act); \11\ certain final agency action requests;
certain requests related to litigation, enforcement proceedings, or
supervisory directives or agreements; or applications filed under an
OCC regulation that prescribes other application processing procedures
and time frames.
---------------------------------------------------------------------------
\10\ Certain substantive activity or transaction rules in part 5
specify that one or more of the procedures in subpart A do not
apply. In some cases, the rule specifies other procedures.
\11\ 12 U.S.C. 1823(c) and (k).
---------------------------------------------------------------------------
We proposed to apply all subpart A procedures to all part 5 OCC
filings, unless the substantive rule specifically exempts the filing or
the OCC states otherwise. We received no comments on this provision and
adopt the procedures as proposed. This change creates more parity for
national banks and Federal savings associations when filing an
application for activities and transactions addressed in part 5.
Section 5.2(c) also states that the Comptroller's Licensing Manual
provides additional filing information and is available on-line and,
for a fee, in print. We proposed to revise this provision to state only
that the Manual is available on-line. This proposed revision reflected
the OCC's decision to stop printing the Manual in hard copy, to reduce
paper consumption and to ensure that the public receives only the most
up-to-date information. The OCC also is in the process of updating the
Manual, as well as filing forms, to contain information on both
national bank and Federal savings association filings. As indicated
earlier in this preamble discussion, we are updating our electronic
filing system so that a single system will receive filings from both
national banks and Federal savings associations.
Additionally, Sec. 5.2(d) states that the OCC may permit
electronic filing for any class of filings. In order to reflect the
agency's move toward the more efficient and less costly electronic
filings, we proposed to revise this provision to state that the OCC
encourages all filings to be made electronically. We received one
comment on the Sec. 5.2 filing procedures, which requested that the
OCC make electronic submission available for all forms and reporting
requirements. Currently, certain OCC licensing forms can be filled and
submitted electronically, e.g., branch establishment. Furthermore, the
modifications the OCC is currently making to its electronic filing
system, as discussed above, will permit national banks and Federal
savings associations to submit all filings electronically. No changes
are needed to our proposed rule to incorporate this comment, and we
therefore adopt Sec. 5.2(d) as proposed.
Section 5.3 Definitions. Section 5.3 contains definitions of terms
used throughout part 5. We proposed to amend many of these definitions
so that they would apply to both national bank and Federal savings
association filings in part 5. For example, we proposed to amend the
definition of ``capital and surplus'' to include reference to Federal
savings associations.\12\
---------------------------------------------------------------------------
\12\ We note that the OCC issued a final rule on October 11,
2013 that, among other things, integrates the OCC's national bank
and Federal savings association capital rules. See 78 FR 62018. The
OCC issued an interim final rule on Feb. 28, 2014, that amends the
OCC's rules, including part 5, to reflect this integr