Employment Contracts, Mutual to Stock Conversions, Technical Amendments, 1052-1081 [2019-28074]

Download as PDF 1052 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Parts 3, 4, 11, 16, 19, 23, 26, 32, 108, 112, 141, 160, 161, 163, and 192 [Docket ID OCC–2018–0041] RIN 1557–AE21 Employment Contracts, Mutual to Stock Conversions, Technical Amendments Office of the Comptroller of the Currency (OCC), Treasury. ACTION: Notice of proposed rulemaking. AGENCY: The OCC seeks comment on a proposed rule that would implement changes recommended in the March 2017 Economic Growth and Regulatory Paperwork Reduction Act report, including the repeal of the OCC’s employment contract rule for Federal savings associations, and amend the OCC’s fiduciary rules. The proposed rule also would amend the OCC’s rule for conversions from mutual to stock form of a savings association to reduce burden, increase flexibility, and update cross-references. Additionally, the proposed rule would update crossreferences to repealed and integrated rules, remove unnecessary definitions, and make technical changes to other OCC rules. DATES: Comments must be received on or before March 9, 2020. ADDRESSES: Commenters are encouraged to submit comments through the Federal eRulemaking Portal or email, if possible. Please use the title ‘‘Employment Contracts, Mutual to Stock Conversions, Technical Amendments’’ to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods: • Federal eRulemaking Portal— Regulations.gov Classic or Regulations.gov Beta. Regulations.gov Classic: go to https:// www.regulations.gov/. Enter ‘‘Docket ID OCC–2018–0041’’ in the Search Box and click ‘‘Search.’’ Click on ‘‘Comment Now’’ to submit public comments. For help with submitting effective comments please click on ‘‘View Commenter’s Checklist.’’ Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for submitting public comments. Regulations.gov Beta: go to https:// beta.regulations.gov/ or click ‘‘Visit New Regulations.gov Site’’ from the Regulations.gov Classic homepage. jbell on DSKJLSW7X2PROD with PROPOSALS4 SUMMARY: VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 Enter ‘‘Docket ID OCC–2018–0041’’ in the Search Box and click ‘‘Search.’’ Public comments can be submitted via the ‘‘Comment’’ box below the displayed document information or by clicking on the document title and then clicking the ‘‘Comment’’ box on the topleft side of the screen. For help with submitting effective comments please click on ‘‘Commenter’s Checklist.’’ For assistance with the Regulations.gov Beta site, please call (877)-378–5457 (toll free) or (703) 454–9859 Monday-Friday, 9am-5pm ET or email regulations@ erulemakinghelpdesk.com. • Email: regs.comments@ occ.treas.gov. • Mail: Chief Counsel’s Office, Attention: Comment Processing, Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E–218, Washington, DC 20219. • Hand Delivery/Courier: 400 7th Street SW, Suite 3E–218, Washington, DC 20219. • Fax: (571) 465–4326. Instructions: You must include ‘‘OCC’’ as the agency name and ‘‘Docket ID OCC–2018–0041’’ in your comment. In general, the OCC will enter all comments received into the docket and publish the comments on the Regulations.gov website without change, including any business or personal information provided such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. You may review comments and other related materials that pertain to this rulemaking action by any of the following methods: • Viewing Comments Electronically— Regulations.gov Classic or Regulations.gov Beta: Regulations.gov Classic: Go to https:// www.regulations.gov/. Enter ‘‘Docket ID OCC–2018–0041’’ in the Search box and click ‘‘Search.’’ Click on ‘‘Open Docket Folder’’ on the right side of the screen. Comments and supporting materials can be viewed and filtered by clicking on ‘‘View all documents and comments in this docket’’ and then using the filtering tools on the left side of the screen. Click on the ‘‘Help’’ tab on the Regulations.gov home page to get information on using Regulations.gov. The docket may be viewed after the close of the comment period in the same manner as during the comment period. PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 Regulations.gov Beta: Go to https:// beta.regulations.gov/ or click ‘‘Visit New Regulations.gov Site’’ from the Regulations.gov Classic homepage. Enter ‘‘Docket ID OCC–2018–0041’’ in the Search Box and click ‘‘Search.’’ Click on the ‘‘Comments’’ tab. Comments can be viewed and filtered by clicking on the ‘‘Sort By’’ drop-down on the right side of the screen or the ‘‘Refine Results’’ options on the left side of the screen. Supporting materials can be viewed by clicking on the ‘‘Documents’’ tab and filtered by clicking on the ‘‘Sort By’’ drop-down on the right side of the screen or the ‘‘Refine Results’’ options on the left side of the screen.’’ For assistance with the Regulations.gov Beta site please call (877) 378–5457 (toll free) or (703) 454– 9859 Monday–Friday, 9am–5pm ET or email regulations@ erulemakinghelpdesk.com. The docket may be viewed after the close of the comment period in the same manner as during the comment period. • Viewing Comments Personally: You may personally inspect comments at the OCC, 400 7th Street SW, Washington, DC 20219. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 649–6700 or, for persons who are deaf or hearing impaired, TTY, (202) 649–5597. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to security screening in order to inspect comments. FOR FURTHER INFORMATION CONTACT: For additional information, contact Charlotte Bahin, Senior Advisor for Thrift Supervision, (202) 649–6281, Marta Stewart-Bates, Senior Attorney, (202) 649–5490, Chief Counsel’s Office, for persons who are deaf or hearing impaired, TTY, (202) 649–5597, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. SUPPLEMENTARY INFORMATION: I. Background The OCC continually reviews its regulations with the goal of updating them to reduce burden, increase flexibility, and provide clarity where possible. Section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA) requires that, at least once every 10 years, the Federal Financial Institutions Examination Council (FFIEC) and each appropriate Federal banking agency (Agencies) represented on the FFIEC (the OCC, the Federal Deposit Insurance Corporation (FDIC), and the Board of Governors of the Federal Reserve System (Federal Reserve Board)) E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules jbell on DSKJLSW7X2PROD with PROPOSALS4 conduct a review of their regulations.1 The purpose of this review is to identify outdated or otherwise unnecessary regulatory requirements imposed on insured depository institutions. Specifically, EGRPRA requires the Agencies to categorize and publish their regulations for comment, requesting commenters to identify areas of the regulations that are outdated, unnecessary, or unduly burdensome, and eliminate unnecessary regulations to the extent that such action is appropriate. The Agencies completed their second EGRPRA review on March 30, 2017, and published a Report to Congress in the Federal Register.2 The OCC seeks comment on a proposed rule that addresses recommendations from the March 2017 EGRPRA report, including the repeal of 12 CFR 163.39 (Federal savings association employment contracts) and possible amendments to 12 CFR 9.8 and 150.420 (fiduciary recordkeeping) and 9.10 and 150.320 (acceptable collateral for fiduciary funds awaiting investment or distribution).3 The proposed rule would amend part 192 (Federal savings association conversions from mutual to stock form) to reduce burden, increase flexibility, and replace cross-references to repealed 12 CFR 197 (Securities offerings rules for Federal savings associations) with cross-references to part 16 (Securities offering disclosure rules). The proposed amendments would clarify which forms and accounting standards savings associations must use in connection with a part 192 conversion. The proposed rule also would increase flexibility and reduce burden for Federal savings associations by encouraging electronic filing, electronic meetings, and notice by email and by reducing the number of copies of proxy materials that must be filed with the OCC. Finally, the proposed rule contains various technical and clarifying amendments to parts 3, 4, 11, 16, 19, 23, 26, 32, 108, 112, 141, 160, 161, and 163. II. Description of the Proposal Employment Contracts for Federal Savings Associations. Twelve CFR 163.39 sets forth requirements for Federal savings associations that enter into employment contracts with their officers and employees. Section 163.39(a) requires a Federal savings association’s board of 1 Section 2222 of EGRPRA is codified at 12 U.S.C. 3311(b). 2 82 FR 15900 (March 30, 2017). 3 See FFIEC Joint Report to Congress (March 2017), available at https://www.ffiec.gov/pdf/2017_ FFIEC_EGRPRA_Joint-Report_to_Congress.pdf. VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 directors to approve all employment contracts with its officers and other employees and for those employment contracts to be in writing. Section 163.39(a) also prohibits a Federal savings association from entering into an employment contract with any of its officers or other employees if the employment contract would constitute an unsafe or unsound practice. Section 163.39(b) sets forth provisions that a Federal savings association must include in the contract, including the Federal savings association’s right to terminate the employee at will. There are no similar requirements for national banks. In March 2017, the FFIEC made its Joint Report to Congress under EGRPRA. One EGRPRA commenter recommended that the OCC eliminate § 163.39 in its entirety because the regulation only applies to Federal savings associations and there is no reason to distinguish Federal savings associations from national banks. Additionally, the commenter stated that it is unnecessary to require board approval of all employment contracts because there are comprehensive safety and soundness standards and interagency guidance on compensation. In the EGRPRA report, the OCC described the plan to limit the requirement for board approval of employment contracts to senior executive officers rather than all employees. Instead of limiting the scope of § 163.39 in the proposed rule to senior executive officers, the OCC proposes to eliminate § 163.39 in its entirety. This approach would provide for consistent treatment of Federal savings associations and national banks with respect to employment contracts and compensation. The OCC believes that the current framework of rules and guidance on compensation and employment contracts, independent of § 163.39, is adequate to address and safeguard against unsafe and unsound employment and compensation practices for Federal savings associations. Federal savings associations, like national banks, are subject to the safety and soundness standards of 12 U.S.C. 1818; 12 CFR part 30, the prohibition on unsafe and unsound compensation in appendix A to part 30; the prompt corrective action restrictions on compensation to senior executive officers in 12 CFR 6.6(a)(3) and section 38 of the Federal Deposit Insurance Act (FDIA); and are informed by the 2010 Interagency Guidance on Sound Incentive Compensation Policies. Moreover, the boards of directors at national banks and Federal savings associations have oversight PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 1053 responsibilities for compensation, benefits arrangements, and employment contracts for their executive officers and employees. The proposed rule also would reduce burden and increase flexibility for Federal savings associations by eliminating the requirement for written contracts that must be approved by the board of directors, although Federal savings associations would not be prohibited from voluntarily using those procedures for their employment contracts. It is a good corporate governance practice to have agreements relating to employment and compensation in writing and that the board, or committee thereof, review and approve those agreements. The proposed repeal of § 163.39 would not alter any other obligation with regard to employment agreements entered into by a Federal savings association. For example, if there are other laws and regulations that apply to Federal savings associations regarding employment contracts, the repeal of § 163.39 does not affect the application of those laws. The OCC invites comment on whether the OCC should repeal all of § 163.39 or whether there are advantages to retaining the provisions of the rule that provide that an officer or employee has no right to receive compensation or other benefits after termination for cause. Do the safety and soundness standards in part 30, the prohibition on unsafe and unsound compensation in appendix A to part 30, the 2010 Interagency Guidance on Sound Incentive Compensation Policies, board of directors’ oversight, and the prompt corrective action restrictions on compensation to senior executive officers provide appropriate safeguards regarding employment and compensation for the officers and employees of Federal savings associations? Would the repeal of § 163.39 reduce burden for Federal savings associations by removing the requirement that employment contracts be in writing and approved by the board? Would the repeal of § 163.39 reduce burden or provide flexibility for Federal savings associations for other reasons? Fiduciary Recordkeeping. Part 9 sets forth the standards that apply to the fiduciary activities of national banks. Part 150 sets forth the standards that apply to the fiduciary activities of Federal savings associations. Sections 9.8 and 150.420 contain requirements for the documentation and retention of records for fiduciary accounts at national banks and Federal savings associations, respectively. Sections 9.8(b) and E:\FR\FM\08JAP4.SGM 08JAP4 jbell on DSKJLSW7X2PROD with PROPOSALS4 1054 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules 150.420 require a national bank and Federal savings association to retain fiduciary account records for a period of three years from the later of the termination of the account or the termination of any litigation relating to the account. An EGRPRA commenter recommended that the OCC amend 12 CFR 9.8(b) to require the retention of documents for a ‘‘necessary period’’ or to refer to applicable State law on the retention of documents, instead of the current three-year requirement. The commenter explained that three years may be inadequate to protect beneficiaries in some situations, such as a suit filed by a beneficiary against a predecessor trustee more than three years after an account is closed but before a State statute of limitations has run. In the EGRPRA report, the OCC agreed to consider aligning this retention requirement with State statutes of limitation.4 To address this comment, one option would be to amend §§ 9.8(b) and 150.420 to require a national bank or Federal savings association to retain fiduciary account records for the later of three years from the termination of an account, three years from the termination of any litigation relating to the account, or the minimum period required by applicable fiduciary State law. A concern with this approach is that it would impose additional burden on national banks and Federal savings associations if it increases the number of years an institution would be required to retain records and may also require institutions to monitor changes to states’ fiduciary laws. Another option would be to decline to amend §§ 9.8(b) and 150.420, after having considered the burden related to aligning this regulation’s existing threeyear documentation and record retention requirement with applicable State fiduciary law. The OCC notes that nothing in §§ 9.8(b) or 150.420 prohibits financial institutions from holding fiduciary account records longer than the three-year period in order to comply with State law. The OCC invites comment on these options for §§ 9.8(b) and 150.420. Acceptable Collateral for SelfDeposited Trust Funds. Under 12 U.S.C. 92a(d) and 12 CFR 9.10(b)(1), a national bank may deposit trust funds awaiting investment or distribution in the commercial, savings, or other department of the bank, unless prohibited by applicable law. To the extent the funds are not insured by the 4 EGRPRA Joint Report to Congress at p. 71, available at https://www.ffiec.gov/pdf/2017_FFIEC_ EGRPRA_Joint-Report_to_Congress.pdf. VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 Federal Deposit Insurance Corporation (FDIC), the national bank must set aside U.S. bonds or other securities and assets designated by the OCC as collateral for the deposit. Sections 9.10(b)(2) and 150.320 list acceptable collateral types for national banks and Federal savings associations, respectively. During the notice and comment period for the EGRPRA report, one commenter suggested an expansion of the § 9.10(b)(2) list of acceptable collateral for fiduciary funds to allow for other instruments that provide similar protection from loss. In response to this comment, the OCC is contemplating expanding the list of acceptable collateral. The OCC requests comment on whether to expand the list of acceptable collateral in §§ 9.10(b)(2) and 150.320 to include additional types of instruments. What other instruments should qualify as acceptable collateral and why? Do these instruments provide sufficient protection from loss to qualify as acceptable collateral under § 9.10(b)(2) and 150.320? Amendments to securities offering disclosure rules. Twelve CFR 16.8 provides an exemption from the registration and prospectus requirements for offers and sales of national bank- or Federal savings association-issued securities that satisfy the requirements of SEC Regulation A (17 CFR part 230) (General rules and regulations, Securities Act of 1933). The SEC’s Form 1–A, the offering statement required by Regulation A, requires audited financial statements for certain offerings. However, a national bank or Federal savings association in organization does not have an operating history and cannot generate detailed financial statements that require an audit. The audited financial statements of a national bank or Federal savings association in organization typically do not add materially to the information already available to the OCC through the chartering process. Therefore, the OCC is proposing to revise § 16.15(e) to clarify that a national bank or Federal savings association in organization is not required to include audited financial statements as part of its offering statement for the issuance of securities pursuant to § 16.8, unless the OCC determines otherwise. Twelve CFR 16.17 sets forth the filing requirements and inspection of documents for securities offerings. The OCC is proposing to add a sentence to § 16.17(b) to clarify that all registration statements, offering documents, amendments, notices, or other documents relating to a mutual to stock conversion pursuant to 12 CFR part 192 PO 00000 Frm 00004 Fmt 4701 Sfmt 4702 must be filed with the appropriate OCC Licensing office and not the Securities and Corporate Practices Division of the OCC. Removal, suspension, or debarment of independent public accountants. Section 36(g)(4)(A) of the FDIA (12 U.S.C. 1831m(g)(4)(A)) provides that the FDIC or an appropriate Federal banking agency may remove, suspend, or bar an independent public accountant, upon a showing of good cause, from performing audit services required by section 36. The OCC’s implementing rules for insured national banks and insured Federal branches of foreign banks are set forth in subpart P to 12 CFR part 19. The former OTS implemented section 36(g)(4) with respect to insured savings associations at 12 CFR 513.8, and these rules are substantively identical to subpart P. However, when republishing the former OTS rules as OCC rules pursuant to Title III of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the OCC inadvertently did not republish 12 CFR 513.8 nor amend subpart P of part 19 to apply to Federal savings associations. This proposed amendment would correct that error by amending subpart P to also apply to insured Federal savings associations. The OCC also proposes clarifying amendments to subpart P. First, the proposal would make a clarifying change to § 19.243(b)(2), which provides that hearings will be conducted in the same manner as other hearings under the Uniform Rules of Practice and Procedure (12 CFR part 19, subpart A), by adding a cross-reference to the specific rules and limitations for subpart P hearings set forth in § 19.243(c)(4). Second, the OCC proposes a clarifying change to § 19.243(c)(3), which currently states that an accountant or firm immediately suspended from performing audit services may, within 10 calendar days after service of the notice of immediate suspension, file a stay of the immediate suspension with the OCC, and that if no petition is filed, the immediate suspension will remain in effect. The proposed amendment would clarify that if the accountant or firm has not filed a petition within 10 calendar days, they have waived their right to file a petition. The proposal also would add a cross-reference to § 19.243(c)(2) in § 19.243(c)(3), which sets forth the rules for when the OCC may lift a suspension. Third, the OCC proposes to amend § 19.243(c)(4), which provides that upon request of a stay petition, the Comptroller must designate a presiding officer who must fix a place and time for the hearing that is not more than 10 calendar days after receipt of E:\FR\FM\08JAP4.SGM 08JAP4 jbell on DSKJLSW7X2PROD with PROPOSALS4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules the petition, unless extended by the OCC at the request of petitioner. The proposed amendment would provide that a later hearing date may occur only if permitted by the OCC, and, therefore, the request for an extension would not receive automatic approval. This change would allow the OCC some discretion as to how far into the future a hearing may take place. Fourth, the proposal would clarify that subpart P to part 19 applies only to insured Federal branches by adding ‘‘insured Federal branches of foreign banks’’ where appropriate and removing references to Federal ‘‘agencies.’’ Section 36(g)(4) of the FDIA only applies to insured depository institutions and no insured Federal agencies exist. Finally, the proposed rule would replace the word ‘‘shall’’ with ‘‘must,’’ ‘‘will,’’ or other appropriate language, which is the recommended drafting style of the Federal Register. Definitions of small business loans and small farm loans in lending limits rules. The OCC is proposing revised definitions of ‘‘small business loans’’ and ‘‘small farm loans or extensions of credit’’ in 12 CFR 32.2(cc) and (dd) of the lending limits rule to align the definitions with the language of the Call Report instructions. The revisions to § 32.2(dd) will clarify that the $500,000 limit contained within the ‘‘loans to small farms’’ definition in the Call Report instructions does not apply for purposes of the supplemental lending limit program. Savings Association Conversions from Mutual to Stock Form. The OCC is proposing amendments to 12 CFR part 192, which governs how a savings association may convert from mutual to stock form of ownership under standard and voluntary supervisory conversions. The proposed amendments would reduce burden and increase flexibility for savings associations and would make a number of technical and clarifying amendments. Unless otherwise noted, part 192 applies to both Federal and State savings associations. Forms. The proposed rule would amend § 192.5(b) to clarify that a savings association must use the forms prescribed under part 192 and 12 CFR part 16 (the securities offering disclosure rules for Federal savings associations and national banks), including the applicable form for a registration statement under § 16.15. Use of the registration forms required by § 16.15 is the standard industry practice, and the proposed amendment is intended to clarify the use of such forms and, therefore, generally would not VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 increase burden on savings associations. The OCC also is proposing to clarify the accounting guidance and requirements that should be used in the preparation and filing of these forms, financial statements, and related financial data under part 192. The accounting guidance and requirements which applied to part 192 conversions and proxy materials were repealed in 2017.5 New § 192.5(d) would provide that the institution must prepare and present the form and content of financial statements and related financial data in a filing under part 192 in accordance with U.S. Generally Accepted Accounting Principles (GAAP), pursuant to 12 U.S.C. 1463(b)(2)(A), and other applicable accounting guidance and requirements as specified by the OCC in the relevant mutual to stock conversion forms required under § 192.5(b). The OCC notes that it is currently revising its forms under part 192, including Form AC (Application for Conversion); Form PS (Proxy Statement); Form OC (Offering Circular); and Form OF (Order Form), to conform with these proposed amendments to part 192. The proposed rule also would make a technical change to this section by defining ‘‘OCC’’ as the Office of the Comptroller of the Currency in the text of § 192.5(b). Electronic filing and computation of time. The OCC is proposing to add a new § 192.7 to encourage the electronic filing of all part 192 applications, notices, or other documents through http://www.banknet.gov, consistent with other licensing-related filings.6 The OCC also is proposing a new § 192.8 to clarify the computation of time under part 192 when the last day of a time period falls on a Saturday, Sunday, or Federal holiday. Specifically, in computing the time period, the OCC would exclude the day of the act or event (e.g., the date an application is received by the OCC) from when the period begins to run. When the last day of a time period is a Saturday, Sunday, or Federal holiday, the time period would run until the end of the next day that is not a Saturday, Sunday, or Federal holiday. This amendment would make the computation of time under part 192 consistent with the computation of time rule that applies to corporate activities and transactions pursuant to 12 CFR part 5.7 Definitions. In § 192.25, the OCC is proposing to add definitions of ‘‘community offering,’’ ‘‘offering circular,’’ and ‘‘voluntary supervisory 5 See 82 FR 8082 (January 23, 2017). 12 CFR 5.2(d). 7 See 12 CFR 5.12. 6 See PO 00000 Frm 00005 Fmt 4701 Sfmt 4702 1055 conversion,’’ as these terms are currently undefined in part 192. The proposal defines ‘‘community offering’’ as the offering to sell to members of the general public in the savings association’s community the securities not subscribed for in the subscription offering and provides that the community offering may occur concurrently with the subscription offering and any syndicated community offering or upon conclusion of the subscription offering. The proposal defines ‘‘offering circular’’ as the securities offering materials for the conversion. The proposal defines ‘‘voluntary supervisory conversion’’ as a mutual to stock conversion for a savings association that is unable to complete a standard mutual to stock conversion under subpart A to part 192 and that meets the eligibility requirements of § 192.625. The proposed rule would also add a number of definitions to § 192.25 that are currently included in 12 CFR part 141 (Definition for regulations affecting Federal savings associations), and 12 CFR part 161 (Definitions for regulations affecting all savings associations). Although the definitions in parts 141 and 161 apply to part 192, the OCC believes that it is more appropriate to include these definitions in part 192 than in a separate rule. Specifically, the proposal would add the definition of: (1) ‘‘appropriate Federal banking agency’’ from § 161.7, which is defined as in section 3 of the FDIA (12 U.S.C. 1813(q)); (2) ‘‘demand accounts’’ from § 161.16, which means non-interestbearing demand deposits that are subject to check or to withdrawal or transfer on negotiable or transferable order to the savings association and that are permitted to be issued by statute, regulation, or otherwise and are payable on demand; (3) ‘‘Federal savings association’’ from § 141.11, which means a Federal savings association or Federal savings bank chartered under section 5 of the Home Owners’ Loan Act (HOLA) (12 U.S.C. 1464); (4) ‘‘savings account’’ from § 161.42, which means any withdrawable account, including a demand account, except this term does not mean a tax and loan account, a note account, a United States Treasury general account, or a United States Treasury time deposit-open account; and (5) ‘‘savings association’’ from § 161.43, which means a savings association as defined in section 3 of the FDIA (12 U.S.C. 1813(b)(1)). In addition, the proposed rule would add the definition of ‘‘state’’ to mean any State of the United States, the District of Columbia, any territory of the United E:\FR\FM\08JAP4.SGM 08JAP4 jbell on DSKJLSW7X2PROD with PROPOSALS4 1056 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands. This definition would be the same as the definition in § 161.50 as amended by this proposed rule, discussed below. Finally, the proposed rule would add the definition of ‘‘state savings association,’’ defined to have the same definition as in section 3 of the FDIA (12 U.S.C. 1813(b)(3)). This definition is not included in parts 141 or 161. However, the OCC believes it would be helpful to define this term in part 192 because the proposed rule adds the definitions of other related terms. Prior to conversion. Twelve CFR 192.100 (Preparing for a conversion) requires that a savings association’s board, or subcommittee of the board, meet with the appropriate Federal banking agency before adopting its plan of conversion. The OCC is proposing to increase flexibility by allowing in person or electronic board meetings for purposes of § 192.100. The OCC also proposes to amend § 192.115 (Review of business plan by the appropriate Federal banking agency) to clarify that the business plan must be filed as a confidential exhibit to Form AC (Application for Conversion). Plan of conversion. Twelve CFR 192.135 (Notifying members of plan of conversion) requires that a savings association promptly notify its members that its board of directors adopted a plan of conversion and that a copy of the plan is available for the members’ inspection in its home office and its branch offices. The savings association must make this notice by mailing a letter to each member or by publishing a notice in the local newspaper in every local community where the savings association has an office. The savings association may also issue a press release. The OCC proposes to increase flexibility and reduce burden by allowing a savings association to email a letter with a notification of the plan of conversion instead of mailing a letter to its members who receive electronic communication. The proposal also would allow a savings association to make the press release available on its website. Rejection of application for conversion. Twelve CFR 192.150 (Information required in an application for conversion) provides that the appropriate Federal banking agency will not accept for filing, and will return, any application for conversion that is executed improperly, materially deficient, substantially incomplete, or that provides for unreasonable conversion expenses. The OCC proposes VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 to amend § 192.150(b) to permit, rather than require, the appropriate Federal banking agency to return any application for conversion that is executed improperly, materially deficient, substantially incomplete, or that provides for unreasonable conversion expenses. A materially deficient or substantially incomplete application may not always be returned, especially if it is submitted electronically as a PDF document or if there are supervisory or enforcement reasons to retain the application. Notice of filing of application and comment process. Twelve CFR 192.185 sets forth the process for commenters to submit public comments on an application for conversion. Section 192.185 currently requires a commenter to file the original and one copy of any comments on an application for conversion with the appropriate OCC licensing office. The OCC proposes to amend § 192.185 to require the commenter to file only one copy of the comment instead of both an original and copy of any comments with the appropriate OCC licensing office. Proxy solicitation. Twelve CFR 192.275 requires a savings association to file seven copies of its revised proxy materials and related documents as an amendment to its application for conversion. The OCC proposes to revise § 192.275 to reduce burden for savings associations by requiring the filing of only one copy of these materials with the OCC. The OCC also proposes to amend § 192.275(c) to remove the requirement that four copies of the revised proxy solicitation materials be marked to clearly indicate the changes from the prior filing. Instead, the savings association would need to file only one copy of the revised proxy solicitation materials that clearly indicates the changes. Offering circular requirements. Twelve CFR 192.300 currently requires that a Federal savings association file its offering circular with the Securities and Corporate Practices Division of the OCC and that a State savings association file its offering circular with the appropriate FDIC region in compliance with part 192 and Form OC, and, where applicable, part 197. The OCC proposes to amend § 192.300 to replace the crossreference to repealed part 197 with a more specific cross-reference to the applicable SEC registration statement form required under 12 CFR 16.15. Additionally, the OCC is clarifying that a Federal savings association must file its offering circular with the appropriate OCC Licensing office, not the Securities and Corporate Practices Division. PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 As a corresponding change, the OCC is proposing to amend § 16.17 (Filing requirements and inspection of documents) to clarify that all registration statements, offering documents, amendments, notices, or other documents relating to a mutual to stock conversion pursuant to part 192 must be filed with the appropriate OCC Licensing office. The proposal would amend §§ 192.305(b) and (c), 192.310(a), and 192.310(b) to clarify that the SEC, not the ‘‘appropriate Federal banking agency,’’ declares Federal savings association holding company offering circulars effective in mutual to stock conversions under part 192. Offers and sales of stock. Section 192.340(d) states that any person who is found to have violated the restrictions in § 192.340(b) may face prosecution or other legal action. To clarify and make consistent the actions that may result from engaging in any of the prohibited activities listed in all of § 192.340, the OCC is proposing to amend § 192.340(d) to state that persons engaged in any of the activities listed in § 192.340(a) and all of § 192.340(b) may be subject to enforcement actions, civil money penalties, or criminal prosecution. Priority of accounts. Twelve CFR 192.430 describes the requirements for charter amendments, charter cancellations, and new charters that apply to a savings association conducting a conversion under part 192. The OCC proposes to add a new paragraph in § 192.430 to require that, in any conversion pursuant to this section that involves a mutual holding company, the charter of each resulting subsidiary savings association of the holding company must contain a provision, specified in § 192.430(d), indicating that the claims of depositors of the savings association have the same priority as the claims of general creditors of the savings association not having priority (other than any priority arising or resulting from consensual subordination) over other general creditors of the association. The former OTS regulation for mutual holding companies, 12 CFR 575.9(b) (2011), originally required the inclusion of a similar priority of accounts provision in the charters of subsidiary savings associations of mutual holding companies, regardless of whether the subsidiary had a State or Federal charter. When promulgating 12 CFR 575.9(b), the OTS stated that the purpose of the priority of accounts provision was to ensure that claims of depositors of the insured institution were not relegated to a lower priority due to the fact that the deposits confer E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules membership rights in the association’s mutual holding company.8 However, after the enactment of the Dodd-Frank Act, which transferred the holding company regulations of the former OTS to the Federal Reserve Board,9 the Federal Reserve Board republished 12 CFR 575.9(b) as a Federal Reserve Board regulation without including this charter requirement because it related to savings associations and not mutual holding companies.10 The OCC believes that the priority of accounts provision in the former OTS regulation protected member rights, and the proposed amendment reinstates this charter requirement for all savings association subsidiaries of a mutual holding company.11 However, notwithstanding this provision, if a savings association is placed in conservatorship or receivership, its assets would be distributed in accordance with the FDIA, 12 U.S.C. 1811, et seq., and the depositor preference provisions of section 11(d)(11) of the FDIA, 12 U.S.C. 1821(d)(11). Liquidation account. Twelve CFR 192.460 sets forth how a savings association determines the initial balances of liquidation sub-accounts. The OCC proposes to revise § 192.460(a)(1) to provide that a savings association must calculate the initial liquidation sub-account balance of each eligible and supplemental eligible account holder at the time of the conversion. Because the current § 192.460 does not explain when a savings association must perform the calculation, this amendment would clarify that the initial liquidation subaccounts must be calculated at the time of the conversion. Section 192.460(a)(1) provides the calculation for a savings account held by an eligible account holder, which is to multiply the initial balance of the liquidation account by a fraction that has as its numerator the qualifying deposit in the savings account expressed in dollars on the eligibility record date and as its denominator the total qualifying deposits of all eligible account holders on the eligibility record date. Section 192.460(a)(2) provides the same calculation for a savings account held by a supplemental eligible account 8 See 56 FR 1126, 1133 (January 11, 1991). 312(b)(1), Public Law 111–203. 121 Stat. 1376 (July 21, 2010). 10 See 76 FR 56508, 56523 (September 13, 2011) (‘‘[This section] contains the provisions from section 575.9 concerning charters, as revised to delete unnecessary provisions specific to savings associations and to reflect the change in supervisory authority.’’) See also, 12 CFR 239.13. 11 Twelve CFR 5.21 requires all Federal mutual savings association charters to include this priority of accounts provision. jbell on DSKJLSW7X2PROD with PROPOSALS4 9 Section VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 holder, except that the eligibility record date is replaced with the supplemental eligibility record date. However, the denominator used for the calculation of the initial sub-account balances for both eligible account holders and supplemental eligible account holders is incorrect because the denominator in the current regulation does not include both the deposits of eligible account holders and the deposits of the supplemental eligible account holders. This results in both eligible account holders and supplemental account holders having a greater claim than their appropriate portion of the liquidation account. The proposed amendments would correct this error by inserting language in § 192.460 similar to that in the previous OTS regulation, renumbering the § 192.460(a)(1) and (2) calculations to be in § 192.460(a)(2) and (3), making the denominator in the fractions in § 192.460(a)(2) and (3) the total subaccount balances of eligible account holders and supplemental eligible account holders as calculated in proposed revised § 192.460(a)(5). As proposed, § 192.460(a)(5) provides that the denominator for calculating the initial sub-account balance of each eligible and supplemental eligible account holder is the sum of the numerator calculations in § 192.460(a)(2) through (4). These proposed changes would make clear that the eligible account holders and the supplemental eligible account holders would be allocated their proportionate shares of the liquidation account (the association’s net worth, as defined in 12 CFR 192.455). In addition, the 2002 OTS amendments to the liquidation account provision inadvertently removed language that addressed savings accounts that increased in value between the eligible record date and the supplemental eligibility record date.12 As a result, the current regulation does not address accounts that increased in size between the two dates. Therefore, 12 See 67 FR 52009 (August 9, 2002). The pre2002 OTS regulation at 12 CFR 563b.3(f)(4) stated ‘‘The initial subaccount balance for a savings account held by an eligible account holder and/or supplemental eligible account holder shall be determined by multiplying the opening balance in the liquidation account by a fraction of which the numerator is the amount of qualifying deposits in such savings account on the eligibility record date and/or the supplemental eligibility record date and the denominator is the total amount of qualifying deposits of all eligible account holders and supplemental eligible account holders in the converting savings association on such dates. For savings accounts in existence at both dates, separate subaccounts shall be determined on the basis of the qualifying deposits in such saving accounts on such record dates.’’ PO 00000 Frm 00007 Fmt 4701 Sfmt 4702 1057 the OCC proposes to add language in § 192.460(a)(4) providing that for a savings account held on both the eligibility record date and the supplemental eligibility record date, the amount of the qualifying deposit for calculating the sub-account is the higher account balance of the savings account on either the eligibility record date or the supplemental eligibility record date. The initial sub-account is calculated by multiplying the liquidation account balance by the following fraction: The numerator is the higher amount of the qualifying deposit in the savings account on either the eligibility record date or the supplemental eligibility record date and the denominator is the calculation in proposed added § 192.460(a)(5). The OCC invites comment on whether the proposed changes to § 192.460 help to clarify the computation of liquidation sub-account balances. Do commenters have any alternative methods for clarifying these computations? Contributions to charitable organizations. Twelve CFR 192.550 permits a savings association to contribute some of its conversion shares or proceeds to a charitable organization, provided certain requirements are met. One of these requirements, set forth at 12 CFR 192.575(a)(3), is that the charitable organization must annually provide the appropriate Federal banking agency with a copy of the annual report that it submitted to the IRS. The OCC proposes to remove this requirement because is often not used and, if necessary, the OCC may obtain it from the IRS or request it directly from the charitable organization. Prohibition on self-dealing for charitable organizations. 12 CFR 192.575 (Other requirements for charitable organizations) provides that a charitable organization may not engage in self-dealing. The OCC proposes to amend § 192.575(a) to provide that a charitable organization must not engage in self-dealing, in order to emphasize the prohibition on self-dealing. The OCC also proposes to move the requirement that the charitable organization comply with all laws necessary to maintain its tax-exempt status under the Internal Revenue Code to a new paragraph (a)(5) in § 192.575. Voluntary supervisory conversions. Section 192.600 describes the purposes of subpart B to part 192, which governs voluntary supervisory mutual to stock conversions. A voluntary supervisory conversion is a transaction to recapitalize an eligible mutual savings association where the association’s members have no rights of approval or participation and no rights to the E:\FR\FM\08JAP4.SGM 08JAP4 jbell on DSKJLSW7X2PROD with PROPOSALS4 1058 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules continuance of any legal or beneficial ownership interest in the converted association pursuant to a plan of voluntary supervisory conversion approved by a majority of the board of directors of the converting savings association. The OCC proposes new language in § 192.600 to clarify that a voluntary supervisory mutual to stock conversion would be appropriate when the appropriate Federal banking agency and, in the case of a State-chartered savings association, the appropriate State banking regulator, determines that the savings association has demonstrated that it is unable to complete a standard mutual to stock conversion under subpart A to part 192. Section 192.650 sets forth the information required to be included in a plan of voluntary supervisory conversion. Among other things, current § 192.650 requires the savings association’s name and address; the name, address, date and place of birth, and social security number of each proposed purchaser of conversion shares. The OCC proposes to remove the personal identifying information from the plan of voluntary supervisory conversion (i.e., the name, address, date and place of birth, and social security number of each proposed purchaser of conversion shares) as the OCC does not believe the inclusion of such information is necessary or appropriate. The plan is a publicly available document and the OCC believes that requiring this information raises privacy concerns. The OCC also proposes to amend § 192.650 to remove from the plan of voluntary supervisory conversion the title, per-unit par value, number, and per-unit and aggregate offering price of shares that the savings association will issue; and the number and percentage of shares that each investor will purchase. The OCC does not find this information to be necessary in the plan of voluntary supervisory conversion. In addition, the OCC proposes to move the information required in the plan by § 192.650(e) (the aggregate number and percentage of shares that each director, officer, and any affiliates or associates of the director or officer will purchase) to the application for voluntary supervisory conversion in § 192.660(d)(5). The OCC believes this information more appropriately belongs in the application, rather than the plan, because the OCC reviews these proposed purchases during the application review process and because the proposed purchases may change during the review of the application. As a result, under revised § 192.650, a plan VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 for voluntary supervisory conversion would be required to contain a complete description of the proposed voluntary supervisory conversion that also describes plans for any liquidation account and certified copies of all resolutions relating to the conversion adopted by the savings association’s board of directors. Twelve CFR 192.660 specifies the information a savings association must include in its application for voluntary supervisory conversion. To assist in its review of these applications, the proposal would require the application to contain some additional information. As described in the preceding paragraph, the proposal would relocate the information contained in current § 192.650(e) (the aggregate number and percentage of shares that each director, officer, and any affiliates or associates of the director or officer will purchase) to § 192.660(d)(5). The proposal would add a new § 192.660(e)(3) to require that the voluntary supervisory conversion application include any securities offering circular and other securities disclosure materials that the savings association has prepared to use in connection with the proposed voluntary supervisory conversion. In addition, the proposal would require that the application include a statement indicating the role in the successor savings association each director, officer, and affiliate of the savings association or associate of the director or officer will have after the conversion. The OCC finds that information on the role that each director, officer, affiliate, and associate will have after the conversion to be necessary for consideration of the decision factors in § 192.670(c) and (d).13 Finally, the proposal would require as part of this application any other information requested by the OCC, as authorized by law. Federal Home Loan Bank (FHLB) membership. The proposal would remove the references to FHLB membership in §§ 192.135(b)(12) and 192.660(g)(4) because Federal savings associations are no longer required to be members of the FHLB System.14 The 13 Under § 192.670(c) and (d), the appropriate Federal banking agency will generally approve a voluntary supervisory conversion application unless it determines the savings association or its acquiror, or the controlling parties or directors and officers of the savings association or its acquiror, have engaged in unsafe or unsound practices in connection with the voluntary supervisory conversion, or the savings association fails to justify an employment contract incidental to the conversion, or the employment contract will be an unsafe or unsound practice or represent a sale of control. 14 In 1999, HOLA was amended to no longer require Federal savings associations to become PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 existing provisions of part 192 that reference FHLB membership were drafted when FHLB System membership was required for Federal savings associations. Whether the Federal savings association retains FHLB membership has no impact on the OCC’s consideration of an application for a voluntary supervisory conversion in § 192.660(g)(4), nor would it be of interest to members as part of the notice in § 192.135(b)(12). Technical amendments. The proposal would make several global technical changes to part 192. First, the proposed rule would change the text of part 192 from the OTS question and answer format to the standard format of the national bank rules in 12 CFR parts 1 through 50. Second, the proposed rule would add paragraph headings in compliance with Federal Register guidelines. Third, the proposed rule would clarify that calendar days are used for computations of time under part 192. Finally, the proposed rule replaces cross-references to the repealed 12 CFR part 197 (2017) (Securities offering disclosure rules) with crossreferences to the OCC rule that now applies to Federal savings associations, 12 CFR part 16. Furthermore, the proposed rule would make a number of technical changes to specific sections of part 192. First, the proposed rule would amend § 192.200 to remove the cross-reference to the FDIC’s repealed capital rules in subpart Z to part 390. In addition, the proposed rule would remove from § 192.520(b) the cross-reference to part 167 and replace it with a cross-reference to integrated part 3. Finally, the proposed rule would amend § 192.660 by replacing an outdated cross-reference to the Thrift Financial Report with the Call Report. Miscellaneous technical amendments. The proposal would amend subpart J to 12 CFR part 3 to correct an out-of-date cross-reference. Currently, at 12 CFR 3.601(b), OCC regulations provide, in part, that a capital directive (i.e., an order issued by the OCC to a national bank or Federal savings association to take certain actions to achieve and/or maintain a specified capital ratio) is enforceable in the same manner and to the same extent as a final cease and desist order as defined under 12 U.S.C. 1818(k). Because section 1818(k) has been repealed, the OCC is amending this provision to provide instead that a capital directive is enforceable under section 1818(i) in the same manner and to the same extent as an effective and FHLB members. See 12 U.S.C. 1464(f); Public Law 106–102 section 603 (1999). E:\FR\FM\08JAP4.SGM 08JAP4 jbell on DSKJLSW7X2PROD with PROPOSALS4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules outstanding cease and desist order issued pursuant to section 1818(b) that has become final. This revision is consistent with the OCC’s existing authority as set forth under the International Lending Supervision Act at 12 U.S.C. 3907(b) and is not intended to have any substantive impact on the procedures for the enforcement of a capital directive. The proposal would amend 12 CFR 4.14(a)(9) to remove cross-references to 12 CFR parts 194 (2017) and 197, which have been repealed. The requirements in former parts 194 and 197 have been added to parts 11 and 16, respectively, and the cross-references to those parts have been added to § 4.14(a)(9) accordingly. The proposal would amend 12 CFR 4.34(c)(2), 4.37(a)(2)(ii), 108.6(d), 108.7(c) and (d), and 112.4 to change ‘‘the OCC’s Enforcement and Compliance Division’’ to ‘‘the OCC’s Law Department.’’ Similarly, the proposal would amend 12 CFR 11.3(a), 16.17(a) and (f), and 16.30(a) by removing the phrase ‘‘the OCC’s Securities and Corporate Practices Division’’ and replacing it with ‘‘the OCC’s Law Department.’’ The proposal would amend 12 CFR 23.6 to change an incorrect singular subject and verb to the correct plural subject and verb. The proposal would amend 12 CFR 26.6(b)(4) to correct a cross-reference. The cross-reference to § 5.51(c)(6) is incorrect; the correct cross-reference is § 5.51(c)(7). The proposal also removes a number of definitions in the OCC’s rules for Federal and State savings associations that are no longer necessary. These definitions are currently included in 12 CFR part 141 (Definition for regulations affecting Federal savings associations) and 12 CFR part 161 (Definitions for regulations affecting all savings associations). These definitions apply only to the OCC’s rules in parts 100 through 195, which the former OTS originally issued and the OCC republished as OCC rules pursuant to the Dodd-Frank Act. Because the OCC has integrated and amended a number of these rules, many of the terms defined in parts 141 and 161 are no longer used in parts 100 through 195 and, therefore, these definitions are no longer necessary. Specifically, the OCC proposes to remove the definitions of ‘‘Act,’’ ‘‘debit card,’’ ‘‘improved nonresidential real estate,’’ ‘‘improved residential real estate,’’ ‘‘interim Federal savings association,’’ ‘‘interim state savings association,’’ ‘‘unimproved real estate,’’ ‘‘withdrawal value of a savings account,’’ ‘‘accountholder,’’ ‘‘audit VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 period,’’ ‘‘land loan,’’ ‘‘low-rent housing,’’ ‘‘Money Market Deposit Accounts,’’ ‘‘Negotiable Order of Withdrawal (NOW) accounts,’’ ’’ nonresidential construction loan,’’ ‘‘nonwithdrawable account,’’ ‘‘parent company,’’ ‘‘principal office,’’ ‘‘service corporation,’’ and ‘‘subordinated debt security.’’ The OCC also proposes to amend the definition of ‘‘state’’ in § 161.50 so that it is identical to the definition of this term in section 3 of the FDIA (12 U.S.C. 1813(a)(3)). Specifically, the proposed definition would include any territory of the United States, American Samoa, the Trust Territory of the Pacific Islands, and the Northern Mariana Islands, in addition to a State, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands. The proposal would amend 12 CFR 160.60(b)(3) to remove a cross-reference to the repealed § 163.43 and replace with § 31.2. The proposed rule also would amend parts 160 and 163 to define ‘‘OCC’’ as the Office of the Comptroller of the Currency in the text of §§ 160.1 and 163.47, and to define ‘‘FDIC’’ as the Federal Deposit Insurance Corporation in § 163.80. Finally, the OCC proposes to update the authority citation for 12 CFR 195.11(a) to include a citation to section 312 of the Dodd-Frank Act (12 U.S.C. 5412(b)(2)(B)). III. Request for Comments The OCC encourages comment on any aspect of this proposal and especially on those issues noted in this preamble. IV. Regulatory Analysis Regulatory Flexibility Act The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., (RFA), requires an agency, in connection with a proposed rule, to prepare an Initial Regulatory Flexibility Analysis describing the impact of the rule on small entities (defined by the Small Business Administration (SBA) for purposes of the RFA to include commercial banks and savings institutions with total assets of $600 million or less and trust companies with total revenue of $41.5 million or less) or to certify that the proposed rule would not have a significant economic impact on a substantial number of small entities. The OCC currently supervises approximately 886 small entities, of which 258 are Federal savings associations.15 The proposed rule would 15 The OCC bases its estimate of the number of small entities on the SBA’s size thresholds for commercial banks and savings institutions, and trust companies, which are $600 million and $41.5 PO 00000 Frm 00009 Fmt 4701 Sfmt 4702 1059 place one new mandate on Federal savings associations to submit additional information to the OCC as part of their voluntary supervisory conversion applications to convert from mutual to stock form pursuant to 12 CFR 192.660. Because the additional reporting requirement for Federal savings associations that are converting from mutual to stock form through a voluntary supervisory conversion would likely require minimal additional effort relative to the overall conversion application, the additional cost of collecting this additional information would likely be de minimis. Therefore, the OCC certifies that the proposed rule, if implemented, would not have a significant economic impact on a substantial number of OCC-supervised small entities. Unfunded Mandates Reform Act of 1995 Consistent with the Unfunded Mandates Reform Act, the OCC’s review considers whether the mandates imposed by the proposed rule may result in an expenditure of $100 million or more (adjusted for inflation) by state, local, and tribal governments, or by the private sector, in any one year. The proposed rule would place one new mandate on Federal savings associations to submit additional information to the OCC as part of their voluntary supervisory conversion applications to convert from mutual to stock form pursuant to 12 CFR 192.660. This additional requirement for Federal savings associations to submit additional information to the OCC would likely result in a de minimis increase in costs. Therefore, we conclude that the proposed rule would not result in the expenditure of $100 million or more annually (adjusted for inflation) by state, local, and tribal governments, or by the private sector. Paperwork Reduction Act Under the Paperwork Reduction Act of 1995,16 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 OMB control number. The OCC has submitted the information million, respectively. Consistent with the General Principles of Affiliation 13 CFR 121.103(a), the OCC counts the assets of affiliated financial institutions when determining if we should classify an OCCsupervised institution a small entity. The OCC uses December 31, 2017, 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. 16 44 U.S.C. 3501 et seq. E:\FR\FM\08JAP4.SGM 08JAP4 1060 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules collection requirements imposed by this proposal to OMB for review. The proposal would add a new § 192.660(e)(3) to require that the voluntary supervisory conversion application include a statement indicating the role in the successor savings association each director, officer, and affiliate of the savings association or associate of the director or officer will have after the conversion. This burden for this requirement will be added to the existing information collection for OCC’s Licensing Manual. Title: Voluntary Supervisory Conversion Application: Successor Savings Association Roles. OMB Control No.: 1557–NEW. Frequency of Response: On occasion. Affected Public: Businesses or other for-profit organizations. Estimated Number of Respondents: 1. Estimated Burden per Respondent: 2 hours. Estimated Total Annual Burden: 2 hours. Please submit comments using the instructions in the ADDRESSES section of this document. Comments are invited on: (a) Whether the collections of information are necessary for the proper performance of the functions of the OCC, including whether the information has practical utility; (b) The accuracy of the OCC’s estimates of the burden of the collections of information; (c) Ways to enhance the quality, utility, and clarity of the information to be collected; (d) Ways to minimize the burden of the collections on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. List of Subjects 12 CFR Part 3 jbell on DSKJLSW7X2PROD with PROPOSALS4 Administrative practice and procedure, Banks, banking, Federal Reserve System, Investments, National banks. 12 CFR Part 4 Administrative practice and procedure, Freedom of Information, Individuals with disabilities, Minority businesses, Organization and functions (Government agencies), Reporting and recordkeeping requirements, Women. VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 12 CFR Part 11 Business information, National banks, Reporting and recordkeeping requirements, Securities. Authority: 12 U.S.C. 93a, 161, 1462, 1462a, 1463, 1464, 1818, 1828(n), 1828 note, 1831n note, 1835, 3907, 3909, and 5412(b)(2)(B). 12 CFR Part 16 National banks, Reporting and recordkeeping requirements, Securities. ■ 12 CFR Part 19 Crime, Equal access to justice, Investigations, National banks, Penalties, Securities. 12 CFR Part 23 Banks, Banking, National banks, Reporting and recordkeeping requirements. 12 CFR Part 26 Antitrust, Holding companies, National banks. 12 CFR Part 32 National banks, Reporting and recordkeeping requirements. 12 CFR Part 108 Administrative practice and procedure, Crime, Savings associations. 12 CFR Part 112 Administrative practice and procedure, Investigations. 12 CFR Part 141 Reporting and recordkeeping requirements, Savings associations. 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. § 3.2 [Amended] 2. Section 3.2 is amended in the definition of Qualifying master netting agreement in paragraph (2)(i)(A) by removing ‘‘; or’’ and adding a period in its place. ■ 3. Section 3.601 is amended by revising paragraph (b) to read as follows: § 3.601 Purpose and Scope. * * * * * (b) A directive issued under this rule, including a plan submitted under a directive, is enforceable under the provisions of 12 U.S.C. 1818(i) in the same manner and to the same extent as an effective and outstanding cease and desist order issued pursuant to 12 U.S.C. 1818(b) that has become final. Violation of a directive may result in assessment of civil money penalties in accordance with 12 U.S.C. 3909(d). PART 4—ORGANIZATION AND FUNCTIONS, AVAILABILITY AND RELEASE OF INFORMATION, CONTRACTING OUTREACH PROGRAM, POST-EMPLOYMENT RESTRICTIONS FOR SENIOR EXAMINERS 4. The authority citation for part 4 continues to read as follows: ■ Authority: 5 U.S.C. 301, 552; 12 U.S.C. 1, 93a, 161, 481, 482, 484(a), 1442, 1462a, 1463, 1464 1817(a), 1818, 1820, 1821, 1831m, 1831p–1, 1831o, 1833e, 1867, 1951 et seq., 2601 et seq., 2801 et seq., 2901 et seq., 3101 et seq., 3401 et seq., 5321, 5412, 5414; 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; E.O. 12600 (3 CFR, 1987 Comp., p. 235). § 4.14 [Amended] 5. Section 4.14 is amended in paragraph (a)(9) by removing the phrase ‘‘parts 11, 16, 194 or 197 of this chapter’’ and adding in its place ‘‘part 11 or 16 of this chapter’’. 12 CFR Part 163 Accounting, Administrative practice and procedure, Advertising, Crime, Currency, Investments, Mortgages, Reporting and recordkeeping requirements, Savings associations. ■ 12 CFR Part 192 Reporting and recordkeeping requirements, Savings associations, Securities. Accordingly, the Office of the Comptroller of the Currency proposes to amend 12 CFR chapter I as follows: ■ PART 3—CAPITAL ADEQUACY STANDARDS PART 11—SECURITIES EXCHANGE ACT DISCLOSURE RULES 1. The authority citation for part 3 continues to read as follows: ■ ■ PO 00000 Frm 00010 Fmt 4701 Sfmt 4702 § 4.34 [Amended] 6. Section 4.34 is amended in paragraph (c)(2) by removing the phrase ‘‘and Compliance’’. § 4.37 [Amended] 7. Section 4.37 is amended in paragraph (a)(2)(ii) by removing the phrase ‘‘and Compliance’’. ■ 8. The authority citation for part 11 continues to read as follows: E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules Authority: 12 U.S.C. 93a, 1462a, 1463, 1464 and 5412(b)(2)(B); 15 U.S.C. 78j–1(m), 78m, 78n, 78p, 78w, 78l, 7241, 7242, 7243, 7244, 7261, 7262, 7264, and 7265. § 11.3 [Amended] 9. Section 11.3 is amended: a. In paragraph (a)(1)(i) and the second sentence of paragraph (a)(1)(ii) by removing the phrase ‘‘the Securities and Corporate Practices Division’’ and by adding the phrase ‘‘the OCC’s Law Department in its place; and ■ b. In the first sentence of paragraph (a)(1)(ii) by removing the phrase ‘‘the OCC’s Securities and Corporate Practices Division’’ and by adding the phrase ‘‘the OCC’s Law Department’’ in its place. ■ ■ PART 16—SECURITIES OFFERING DISCLOSURE RULES 10. The authority citation for part 16 continues to read as follows: ■ Authority: 12 U.S.C. 1 et seq., 93a, 1462a, 1463, 1464, and 5412(b)(2)(B). § 16.15 [Amended] 11. Section 16.15 is amended in paragraph (e) by adding the phrase ‘‘or as part of its offering statement for the offer and sale of its securities pursuant to 12 CFR 16.8,’’ after ‘‘registration statement for the offer and sale of its securities,’’. ■ 12. Section 16.17 is amended by: ■ a. Removing the phrase ‘‘the OCC’s Securities and Corporate Practices Division’’ and by adding the phrase ‘‘the OCC’s Law Department’’ in its place in paragraph (a); ■ b. Adding a sentence at the end of paragraph (b); and ■ c. Removing the phrase ‘‘the OCC’s Securities and Corporate Practices Division’’ and by adding the phrase ‘‘the OCC’s Law Department’’ in its place in the first and second sentences of paragraph (f). The addition reads as follows: ■ § 16.17 Filing requirements and inspection of documents. * * * * (b) * * * All registration statements, offering documents, amendments, notices, or other documents relating to a mutual to stock conversion pursuant to 12 CFR part 192 must be filed with the appropriate OCC Licensing office at http://www.banknet.gov/. * * * * * jbell on DSKJLSW7X2PROD with PROPOSALS4 * § 16.30 [Amended] 13. Section 16.30 is amended in paragraph (a) by removing the phrase ‘‘the OCC’s Securities and Corporate Practices Division’’ and by adding the phrase ‘‘the OCC’s Law Department’’ in its place. ■ VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 PART 19—RULES OF PRACTICE AND PROCEDURE 14. The authority citation for part 19 continues to read as follows: ■ Authority: 5 U.S.C. 504, 554–557; 12 U.S.C. 93(b), 93a, 164, 481, 504, 1817, 1818, 1820, 1831m, 1831o, 1832, 1884, 1972, 3102, 3108(a), 3110, 3909, and 4717; 15 U.S.C. 78(h) and (i), 78o–4(c), 78o–5, 78q–1, 78s, 78u, 78u–2, 78u–3, 78w, and 1639e; 28 U.S.C. 2461 note; 31 U.S.C. 330 and 5321; and 42 U.S.C. 4012a. § 19.241 [Amended] 15. Section 19.241 is amended in paragraph (a) by: ■ a. Removing the phrase ‘‘Federal Deposit Insurance Act (FDI Act)’’ and adding in its place ‘‘FDIA’’; ■ b. Removing the phrase ‘‘section 36 of the FDI Act’’ and adding in its place ‘‘section 36 of the FDIA’’; and ■ c. Removing the phrase ‘‘insured national banks and Federal branches and agencies of foreign banks’’ and adding in its place the phrase ‘‘insured national banks, insured Federal savings associations, and insured Federal branches of foreign banks’’. ■ § 19.242 [Amended] 16. Section 19.242 is amended by: a. Removing the word ‘‘shall’’ in the introductory text; and ■ b. Adding the phrase ‘‘(12 U.S.C. 1831m)’’ after the phrase ‘‘section 36 of the FDIA’’ in paragraph (b). ■ 17. Section 19.243 is amended by: ■ a. Adding ‘‘(12 U.S.C. 1831m)’’ after ‘‘section 36 of the FDIA’’ in paragraph (a)(1) introductory text; ■ b. Adding the phrase ‘‘, insured Federal savings associations, or insured Federal branches of foreign banks’’ after the phrase ‘‘national banks’’ in paragraph (a)(1) introductory text; ■ c. Removing the phrase ‘‘particular national bank or class of national banks’’ and adding in its place the phrase ‘‘particular insured national bank, insured Federal savings association, or insured Federal branch of a foreign bank, or class of insured national banks, insured Federal savings associations, or insured Federal branches of foreign banks’’ in paragraph (a)(3); ■ d. In paragraph (b)(2): ■ i. Removing the word ‘‘shall’’ and adding in its place the word ‘‘will’’; and ■ ii. Adding the phrase ‘‘, subject to the limitations in § 19.243(c)(4)’’ at the end of the second sentence; ■ e. Adding the phrase ‘‘, insured Federal savings associations, or insured Federal branches of foreign banks’’ after the phrase ‘‘national banks’’ in paragraph (c)(1) introductory text; ■ f. Revising the last sentence of paragraph (c)(3); ■ ■ PO 00000 Frm 00011 Fmt 4701 Sfmt 4702 1061 g. In paragraph (c)(4): i. Removing the phrase ‘‘who shall fix a place’’ in the first sentence and adding in its place the phrase ‘‘who will fix a place’’; ■ ii. Removing the phrase ‘‘unless extended’’ in the first sentence and adding in its place the phrase ‘‘unless further time is allowed by the presiding officer’’; ■ iii. Removing the phrase ‘‘there shall be no discovery’’ in the last sentence and adding in its place the phrase ‘‘there will be no discovery’’; and ■ iv. Removing the phrase ‘‘of this part shall apply’’ and adding in its place ‘‘of this part apply’’; ■ h. Removing the word ‘‘shall’’ in the first sentence and adding in its place the word ‘‘will’’ in paragraph (c)(5); and ■ i. Removing the word ‘‘shall’’ each time that it appears and adding in its place the word ‘‘will’’ in paragraph (c)(6). The revision reads as follows: ■ ■ § 19.243 Removal, suspension, or debarment. * * * * * (c) * * * (3) * * * If no petition is filed within 10 calendar days, the right to a petition is waived and the immediate suspension remains in effect pursuant to paragraph (c)(2). * * * * * ■ 18. Section 19.244 is amended by: ■ a. Revising the section heading; ■ b. Adding the phrase ‘‘, insured Federal savings associations, or insured Federal branches of foreign banks’’ after the phrase ‘‘national banks’’ in paragraph (a) introductory text; ■ b. In paragraph (a)(1): ■ i. Adding the word ‘‘former’’ before the phrase ‘‘Office of Thrift Supervision’’; and ■ ii. Adding ‘‘(12 U.S.C. 1831m)’’ after the phrase ‘‘section 36 of the FDIA’’; ■ c. In paragraph (b): ■ i. Adding the word ‘‘insured’’ before the phrase ‘‘national banks’’; ■ ii. Adding the phrase ‘‘, insured Federal savings associations, or insured Federal branches of foreign banks’’ after the phrase ‘‘national banks’’; and ■ iii. Removing the word ‘‘shall’’ and adding in its place the word ‘‘must’’. The revision reads as follows: § 19.244 Automatic removal, suspension, or debarment. * * § 19.245 * * * [Amended] 19. Section 19.245 is amended by: a. Adding a comma after the word ‘‘suspension’’ in the section heading; ■ b. Removing the word ‘‘shall’’ and adding in its place the word ‘‘will’’ in paragraph (a); ■ ■ E:\FR\FM\08JAP4.SGM 08JAP4 1062 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules c. In paragraph (b) introductory text: i. Adding the word ‘‘insured’’ before the phrase ‘‘national bank ’’; and ■ ii. Adding the phrase ‘‘, insured Federal savings association, or insured Federal branch of a foreign bank’’ after the phrase ‘‘national bank’’; ■ d. Removing the phrase ‘‘SarbanesOxley Act)’’ and adding in its place the phrase ‘‘Sarbanes-Oxley Act’’ in paragraph (b)(2); and ■ e. Removing the word ‘‘shall’’ and adding in its place the word ‘‘must’’ in paragraph (c). ■ ■ § 19.246 [Amended] 20. Section 19.246 is amended by: a. Removing the word ‘‘shall’’ and adding in its place the word ‘‘must’’ in paragraph (a); ■ b. In paragraph (b): ■ i. Removing the phrase ‘‘shall bear’’ each time it appears and adding in its place the word ‘‘bears’’; and ■ ii. In the penultimate and last sentences, removing the word ‘‘shall’’ and adding in its place the word ‘‘will’’. ■ ■ 21. The authority citation for part 23 continues to read as follows: ■ Authority: 12 U.S.C. 1 et seq., 24(Seventh), 24(Tenth), and 93a. [Amended] 22. Section 23.6 is amended by: a. Removing the word ‘‘lease’’ before the phrase ‘‘entered into pursuant to this part’’ and adding in its place the word ‘‘leases’’; and ■ b. Removing the word ‘‘is’’ before the phrase ‘‘subject to the lending limits prescribed’’ and adding in its place the word ‘‘are’’. ■ ■ PART 26—MANAGEMENT INTERLOCKS 23. The authority citation for part 26 continues to read as follows: ■ § 32.7 [Amended] 27. Section 32.7 is amended in paragraph (d) by removing the phrase ‘‘Federal banking agency’’ each time it appears and adding in its place ‘‘supervisory office’’. ■ 28. The authority citation for part 108 continues to read as follows: ■ Authority: 12 U.S.C. 1464, 1818, 5412(b)(2)(B). § 108.6 [Amended] 29. Section 108.6 is amended in paragraph (d) by removing the phrase ‘‘and Compliance’’. ■ § 108.7 [Amended] 30. Section 108.7 is amended in the first sentence of paragraph (c) and in paragraph (d) by removing the phrase ‘‘and Compliance’’. ■ [Amended] PART 112—RULES FOR INVESTIGATIVE PROCEEDINGS AND FORMAL EXAMINATION PROCEEDINGS PART 32—LENDING LIMITS ■ 32. The authority citation for part 112 continues to read as follows: 25. The authority citation for part 32 continues 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. 26. Section 32.2 is amended by revising paragraphs (cc) and (dd) to read as follows: ■ VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 34. The authority citation for part 141 continues to read as follows: ■ Authority: 12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B). §§ 141.2, 141.8, 141.15, 141.16, 141.18, 141.19, 141.27, 141.28 [Removed and Reserved] 35. Sections 141.2, 141.8, 141.15, 141.16, 141.18, 141.19, 141.27, and 141.28 are removed and reserved. ■ PART 160—LENDING AND INVESTMENT 36. The authority for part 160 continues to read as follows: ■ Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1701j–3, 1828, 3803, 3806, 5412(b)(2)(B); 42 U.S.C. 4106. § 160.1 [Amended] 37. Section 160.1 is amended in paragraph (a) by removing ‘‘OCC’’ and adding in its place the phrase ‘‘Office of the Comptroller of the Currency (OCC)’’. ■ § 160.60 [Amended] 38. Section 160.60 is amended in paragraph (b)(3) by removing the phrase ‘‘12 CFR part 32 and § 163.43 of this chapter’’ and adding in its place ‘‘12 CFR 31.2 and part 32 of this chapter’’. Authority: 12 U.S.C. 1462a, 1463, 1464, 1467, 1467a, 1813, 1817(j), 1818(n), 1820(c), 5412(b)(2)(B); 15 U.S.C. 78l. § 112.4 [Amended] 33. Section 112.4 is amended in the second sentence by removing the phrase ‘‘and Compliance’’. ■ PO 00000 Frm 00012 Fmt 4701 PART 161—DEFINITIONS FOR REGULATIONS AFFECTING All SAVINGS ASSOCIATIONS 39. The authority citation for part 161 continues to read as follows: ■ Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 5412(b)(2)(B). §§ 161.3, 161.6, 161.26, 161.27, 161.28. 161.29, 161.30, and 161.31 [Removed and Reserved] 40. Sections 161.3, 161.6, 161.26, 161.27, 161.28, 161.29, 161.30, and 161.31 are removed and reserved. ■ 31. Section 108.13 is amended in paragraph (c) by removing the phrase ‘‘and Compliance’’. ■ 24. Section 26.6 is amended in paragraph (b)(4) by removing ‘‘5.51(c)(6)’’ and adding in its place ‘‘5.51(c)(7)’’. ■ PART 141—DEFINITIONS FOR REGULATIONS AFFECTING FEDERAL SAVINGS ASSOCIATIONS ■ [Amended] ■ jbell on DSKJLSW7X2PROD with PROPOSALS4 * * * * (cc) Small business loans means loans or extensions of credit ‘‘secured by nonfarm nonresidential properties’’ or ‘‘commercial and industrial loans’’ as defined in the instructions for preparation of the Consolidated Report of Condition and Income. (dd) Small farm loans or extensions of credit means ‘‘loans secured by farmland’’ or ‘‘loans to finance agricultural production and other loans to farmers’’ as defined in the instructions for preparation of the Consolidated Report of Condition and Income. * * * * * § 108.13 Authority: 12 U.S.C. 1, 93a, 1462a, 1463, 1464, 3201–3208, 5412(b)(2)(B). § 26.6 Definitions. * PART 108—REMOVALS, SUSPENSIONS, AND PROHIBITIONS WHERE A CRIME IS CHARGED OR PROVEN PART 23—LEASING § 23.6 § 32.2 Sfmt 4702 § 161.37 [Amended] 41. Section 161.37 is amended by removing the first sentence. ■ §§ 161.39 and 161.45 Reserved] [Removed and 42. Sections 161.39 and 161.45 are removed and reserved. ■ 43. Section 161.50 is revised to read as follows: ■ § 161.50 State. The term ‘‘State’’ means any State of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules Islands, the Virgin Islands, and the Northern Mariana Islands. Subpart A—Standard Conversions § 161.51 192.100 Preparing for a conversion. 192.105 Information required in business plan. 192.110 Review of business plan by chief executive officer and board of directors. 192.115 Review of business plan by the appropriate Federal banking agency. 192.120 Confidentiality of conversion information. Prior to Conversion [Removed and Reserved] 44. Section 161.51 is removed and reserved. ■ PART 163—SAVINGS ASSOCIATIONS—OPERATIONS 45. The authority for part 163 continues 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. § 163.39 [Removed and Reserved] 46. Section 163.39 is removed and reserved. ■ § 163.47 [Amended] 47. Section 163.47 is amended in paragraph (d) by removing ‘‘OCC’’ and adding in its place the phrase ‘‘Office of the Comptroller of the Currency (OCC)’’. ■ § 163.76 [Amended] 48. Section 163.76 is amended: a. In paragraph (b), by removing the phrase ‘‘§ 197.10 of this chapter’’ and adding in its place ‘‘§ 16.32 of this chapter’’; and ■ b. In paragraph (c), in the second paragraph of the Form of Certification, by removing ‘‘]’’ after ‘‘I should call the Office of the Comptroller of the Currency’’. ■ ■ § 163.80 [Amended] 49. Section 163.80 is amended in paragraph (c) by removing the phrase ‘‘FDIC’’ and adding in its place the phrase ‘‘Federal Deposit Insurance Corporation (FDIC)’’. ■ § 163.180 50. In section 163.180, remove the first paragraph (d)(12)(i)(A) paragraph designation and subject heading ‘‘(A) General rule’’ and redesignate the paragraph as paragraph (d)(12)(i) introductory text. ■ 51. Part 192 is revised to read as follows: jbell on DSKJLSW7X2PROD with PROPOSALS4 192.150 Information required in an application for conversion. 192.155 Filing an application for conversion. 192.160 Request for confidential treatment. 192.165 Amendments to an application for conversion. Notice of Filing of Application and Comment Process 192.180 Public notice of an application for conversion. 192.185 Public comment on application for conversion. Agency Review of the Application for Conversion 192.200 Review, approval, or denial of application for conversion. 192.205 Court review of final action on application for conversion. Proxy Solicitation PART 192—CONVERSIONS FROM MUTUAL TO STOCK FORM Sec. 192.5 Purpose, prescribed forms, waiver. 192.7 Electronic filing. 192.8 Computation of time. 192.10 Forming a holding company upon conversion. 192.15 Forming a charitable organization upon conversion. 192.20 Acquiring another insured depository institution upon conversion. 192.25 Definitions. Jkt 250001 Filing Requirements 192.225 Approval of plan of conversion by members. 192.230 Members’ voting eligibility. 192.235 Notice of members’ meeting. 192.240 Submission of documents to the appropriate Federal banking agency after the members’ meeting. ■ 19:02 Jan 07, 2020 192.125 Adoption of plan of conversion by board of directors. 192.130 Information required in plan of conversion. 192.135 Notifying members of adopted plan of conversion. 192.140 Amendments to plan of conversion. Vote by Members [Amended] VerDate Sep<11>2014 Plan of Conversion 192.250 Compliance with proxy solicitation provisions. 192.255 Form of proxy requirements. 192.260 Previously executed proxies. 192.265 Proxies executed under this part. 192.270 Proxy statement requirements. 192.275 Filing revised proxy materials. 192.280 Mailing member’s proxy solicitation materials. 192.285 Prohibited solicitations. 192.290 Remedial measures for prohibited solicitations. 192.295 Re-solicitation of proxies. Offering Circular 192.300 Offering circular requirements. 192.305 Distribution of offering circular. 192.310 Filing a post-effective amendment to an offering circular. PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 1063 Offers and Sales of Stock 192.320 Order of priority to purchase conversion shares. 192.325 Timing of offer to sell conversion shares. 192.330 Pricing of conversion shares. 192.335 Procedures for the sale of conversion shares. 192.340 Prohibited sales practices. 192.345 Permissible forms of subscriber payment. 192.350 Interest on payments for conversion shares. 192.355 Subscription rights for eligible account holders and supplemental eligible account holders. 192.360 Officers, directors, and associates as eligible account holders. 192.365 Purchase of conversion shares by other voting members. 192.370 Limits on aggregate purchases by officers, directors, and associates. 192.375 Allocation of oversubscribed conversion shares. 192.380 Purchase of conversion shares by employee stock ownership plan. 192.385 Purchase limitations. 192.390 Community offering of conversion shares. 192.395 Other conditions for community and public offerings. Completion of the Offering 192.400 Time period for completion of sale of stock. 192.405 Extension of the offering period. Completion of the Conversion 192.420 Time period for completion of the conversion. 192.425 Termination of conversion. 192.430 Charter amendments. 192.435 Corporate existence after conversion. 192.440 Stockholder voting rights after conversion. 192.445 Savings account holder’s account after conversion. Liquidation Account 192.450 Liquidation accounts. 192.455 Initial balance of liquidation account. 192.460 Initial balance of liquidation subaccount. 192.465 Retention of voting rights based on liquidation sub-accounts. 192.470 Required adjustments to liquidation sub-accounts. 192.475 Definition of liquidation. 192.480 Effect of liquidation account on net worth. 192.485 Required liquidation account provision in new Federal charter. Post-Conversion 192.500 Possible management stock benefit plans after conversion. 192.505 Restrictions on the trading of shares by directors, officers, and associates. 192.510 Repurchase of shares after conversion. 192.515 Information to be filed with Federal banking agency prior to repurchase of shares. E:\FR\FM\08JAP4.SGM 08JAP4 1064 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules 192.520 Declaring and paying dividends after the conversion. 192.525 Restrictions on acquisition of shares after conversion. 192.530 Other post-conversion requirements. Contributions to Charitable Organizations 192.550 Donating conversion shares or conversion proceeds to a charitable organization. 192.555 Member approval of charitable contributions. 192.560 Limitations on charitable contributions. 192.565 Contents of organizational documents of charitable organization. 192.570 Conflicts of interest among directors. 192.575 Other requirements for charitable organizations. Subpart B—Voluntary Supervisory Conversions 192.600 Voluntary supervisory conversions. 192.605 Conducting a voluntary supervisory conversion. 192.610 Member rights in a voluntary supervisory conversion. Eligibility 192.625 Eligibility for a voluntary supervisory conversion. 192.630 Eligibility of State-chartered savings bank for voluntary supervisory conversion. Plan of Supervisory Conversion 192.650 Contents of plan of voluntary supervisory conversion. Voluntary Supervisory Conversion Application 192.660 Contents of voluntary supervisory conversion application. Appropriate Federal Banking Agency Review of the Voluntary Supervisory Conversion Application 192.670 Approval of voluntary supervisory conversion application. 192.675 Conditions imposed upon approval of voluntary supervisory conversion application. Offers and Sales of Stock 192.680 Offer and sale of shares in a voluntary supervisory conversion. § 192.7 Post-Conversion 192.690 Restrictions on acquisition of additional shares after voluntary supervisory conversion. Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 2901 et seq., 5412(b)(2)(B); 15 U.S.C. 78c, 78l, 78m, 78n, 78w. jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.5 Purpose, prescribed forms, waiver. (a) General. This part governs how a savings association may convert from the mutual to the stock form of ownership. Subpart A of this part governs standard mutual-to-stock conversions. Subpart B of this part governs voluntary supervisory mutualto-stock conversions. This part VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 supersedes all inconsistent charter and bylaw provisions of Federal savings associations converting to stock form. (b) Prescribed forms. A savings association must use the forms prescribed under this part and part 16 and provide such information as the appropriate Federal banking agency may require under the forms and by regulation. The forms required under this part include: Form AC (Application for Conversion); Form PS (Proxy Statement); Form OC (Offering Circular); Form OF (Order Form); and the applicable form for a registration statement under 12 CFR 16.15. Forms AC, PS, OC, and OF are available on the website of the Office of the Comptroller of the Currency (OCC) at http:// www.occ.gov. (c) Waivers. The appropriate Federal banking agency may waive any requirement of this part or a provision in any prescribed form. To obtain a waiver, a savings association must file a written request with the appropriate Federal banking agency that: (1) Specifies the requirement(s) or provision(s) the savings association wants the appropriate Federal banking agency to waive; (2) Demonstrates that the waiver is equitable; is not detrimental to the savings association, its account holders, or other savings associations; and is not contrary to the public interest; and (3) Includes an opinion of counsel demonstrating that applicable law does not conflict with the waiver of the requirement or provision. (d) Financial statements. The form and content of financial statements and related financial data in a filing under this part must be prepared and presented in accordance with U. S. generally accepted accounting principles and other applicable accounting guidance and requirements as specified by the OCC in the forms required under paragraph (b) of this section. Electronic filing. For Federal savings associations, the OCC encourages the electronic filing of all applications, notices, or other documents required by this part through http://www.banknet.gov/. The Comptroller’s Licensing Manual describes the OCC’s electronic filing procedures. § 192.8 Computation of time. In computing the period of days, the OCC excludes the day of the act or event (e.g., the date an application is received by the OCC) from when the period begins to run. When the last day of a time period is a Saturday, Sunday, or PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 Federal holiday, the time period runs until the end of the next day that is not a Saturday, Sunday, or Federal holiday. § 192.10 Forming a holding company upon conversion. A savings association may convert to the stock form of ownership as part of a transaction where the savings association organizes a holding company to acquire all of the savings association’s shares upon their issuance. In this transaction, the savings association’s holding company will offer rights to purchase its shares instead of the savings association’s shares. Regulations of the Board of Governors of the Federal Reserve System address holding company application requirements. § 192.15 Forming a charitable organization upon conversion. When a savings association converts to the stock form, it may form a charitable organization. A savings association’s contributions to the charitable organization are governed by the requirements of §§ 192.550 through 192.575. § 192.20 Acquiring another insured depository institution upon conversion. When a savings association converts to stock form, it may acquire for cash or stock another insured depository institution that is already in the stock form of ownership. § 192.25 Definitions. The following definitions apply to this part and the forms prescribed under this part: Acting in concert has the same meaning as in 12 CFR 5.50(d)(2). The rebuttable presumptions of 12 CFR 5.50(f)(2), other than 12 CFR 5.50(f)(2)(ii)(A) and (B), apply to the share purchase limitations at §§ 192.355 through 192.395. Affiliate of, or a person affiliated with, a specified person is a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the specified person. Appropriate Federal banking agency means appropriate Federal banking agency as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)). Associate of a person is: (1) A corporation or organization (other than a savings association or its majority-owned subsidiaries), if the person is a senior officer or partner, or beneficially owns, directly or indirectly, 10 percent or more of any class of equity securities of the corporation or organization. E:\FR\FM\08JAP4.SGM 08JAP4 jbell on DSKJLSW7X2PROD with PROPOSALS4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules (2) A trust or other estate, if the person has a substantial beneficial interest in the trust or estate or is a trustee or fiduciary of the trust or estate. For purposes of §§ 192.370 through 192.395 and 192.505, a person who has a substantial beneficial interest in a savings association’s tax-qualified or non-tax-qualified employee stock benefit plan, or who is a trustee or a fiduciary of the plan, is not an associate of the plan. For the purposes of § 192.370, a savings association’s taxqualified employee stock benefit plan is not an associate of a person. (3) Any person who is related by blood or marriage to such person and: (i) Who lives in the same home as the person; or (ii) Who is the saving association’s director or senior officer, or a director or senior officer of the saving association’s holding company or its subsidiary. Association members or members are persons who, under applicable law, are eligible to vote at the meeting on conversion. Community offering means the offer to sell to the members of the general public in the savings association’s community the securities not subscribed for in the subscription offering. The community offering may occur concurrently with the subscription offering and any syndicated community offering, or upon conclusion of the subscription offering. Control (including controlling, controlled by, and under common control with) means the direct or indirect power to direct or exercise a controlling influence over the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise as described in 12 CFR 5.50. Demand accounts means non-interestbearing demand deposits that are subject to check or to withdrawal or transfer on negotiable or transferable order to the savings association and that are permitted to be issued by statute, regulation, or otherwise and are payable on demand. Eligibility record date is the date for determining eligible account holders. The eligibility record date must be at least one year before the date a savings association’s board of directors adopts the plan of conversion. Eligible account holders are any persons holding qualifying deposits on the eligibility record date. Federal savings association means a Federal savings association or Federal savings bank chartered under section 5 of the Home Owners’ Loan Act (HOLA) (12 U.S.C. 1464). IRS is the Internal Revenue Service. VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 Local community includes: (1) Every county, parish, or similar governmental subdivision in which a savings association has a home or branch office; (2) Each county’s, parish’s, or subdivision’s metropolitan statistical area; (3) All zip code areas in a savings association’s Community Reinvestment Act assessment area; and (4) Any other area or category that a savings association sets out in its plan of conversion, as approved by the appropriate Federal banking agency. Offer, offer to sell, or offer for sale is an attempt or offer to dispose of, or a solicitation of an offer to buy, a security or interest in a security for value. Preliminary negotiations or agreements with an underwriter, or among underwriters who are or will be in privity of contract with a savings association, are not offers, offers to sell, or offers for sale. Offering circular means the securities offering materials for the conversion. Person is an individual, a corporation, a partnership, an association, a jointstock company, a limited liability company, a trust, an unincorporated organization, or a government or political subdivision of a government. Proxy soliciting material includes a proxy statement, form of proxy, or other written or oral communication regarding the conversion. Purchase or buy includes every contract to acquire a security or interest in a security for value. Qualifying deposit is the total balance in an account holder’s savings accounts at the close of business on the eligibility or supplemental eligibility record date. A savings association’s plan of conversion may provide that only savings accounts with total deposit balances of $50 or more will qualify. Sale or sell includes every contract to dispose of a security or interest in a security for value. An exchange of securities in a merger or acquisition approved by the appropriate Federal banking agency is not a sale. Savings account means any withdrawable account, including a demand account, except this term does not mean a tax and loan account, a note account, a United States Treasury general account, or a United States Treasury time deposit-open account. Savings association means a savings association as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(1)). Solicitation and solicit is a request for a proxy, whether or not accompanied by or included in a form of proxy; a request to execute, not execute, or revoke a PO 00000 Frm 00015 Fmt 4701 Sfmt 4702 1065 proxy; or the furnishing of a form of proxy or other communication reasonably calculated to cause a savings association’s members to procure, withhold, or revoke a proxy. Solicitation or solicit does not include providing a form of proxy at the unsolicited request of a member, the acts required to mail communications for members, or ministerial acts performed on behalf of a person soliciting a proxy. State means any State of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands. State savings association means a State savings association as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(3)). Subscription offering is the offering of shares through nontransferable subscription rights to: (1) Eligible account holders under § 192.355; (2) Tax-qualified employee stock ownership plans under § 192.380; (3) Supplemental eligible account holders under § 192.355; and (4) Other voting members under § 192.365. Supplemental eligibility record date is the date for determining supplemental eligible account holders. The supplemental eligibility record date is the last day of the calendar quarter before the appropriate Federal banking agency approves a savings association’s conversion and will only occur if such agency has not approved such conversion within 15 months after the eligibility record date. Supplemental eligible account holders are any persons, except a savings association’s officers, directors, and their associates, holding qualifying deposits on the supplemental eligibility record date. Tax-qualified employee stock benefit plan is any defined benefit plan or defined contribution plan, such as an employee stock ownership plan, stock bonus plan, profit-sharing plan, or other plan, and a related trust, that is qualified under section 401 of the Internal Revenue Code (26 U.S.C. 401). Underwriter is any person who purchases any securities from a savings association with a view to distributing the securities, offers or sells securities for a savings association in connection with the securities’ distribution, or participates or has a direct or indirect participation in the direct or indirect underwriting of any such undertaking. Underwriter does not include a person whose interest is limited to a usual and E:\FR\FM\08JAP4.SGM 08JAP4 1066 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules customary distributor’s or seller’s commission from an underwriter or dealer. Voluntary supervisory conversion is a mutual to stock conversion for a savings association that is unable to complete a standard mutual to stock conversion under part 192, subpart A, and that meets the eligibility requirements of § 192.625. Subpart A—Standard Conversions Prior to Conversion § 192.100 Preparing for a conversion. (a) Meeting with appropriate Federal banking agency prior to passing plan. A savings association’s board, or a subcommittee of its board, must meet, in person or electronically, with the appropriate Federal banking agency before the savings association passes its plan of conversion. At this meeting the savings association must provide the appropriate Federal banking agency with a written strategic plan that outlines the objectives of the proposed conversion and the intended use of the conversion proceeds. (b) Consultation with appropriate Federal banking agency before filing application. A savings association also should consult with the appropriate Federal banking agency before filing its application for conversion. The appropriate Federal banking agency will discuss the information that the savings association must include in the application for conversion, general issues that it may confront in the conversion process, and any other pertinent issues. jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.105 plan. Information required in business (a) Minimum requirements. Prior to filing an application for conversion, a savings association must adopt a business plan reflecting its intended plans for deployment of the proposed conversion proceeds. The savings association’s business plan is required, under § 192.150, to be included in its application for conversion. At a minimum, the business plan must address: (1) The savings association’s projected operations and activities for three years following the conversion. These projections must include how the savings association will accomplish the following by the final year of the business plan: (i) Deploy the conversion proceeds at the converted savings association (and holding company, if applicable); (ii) What opportunities are available to reasonably achieve its planned VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 deployment of conversion proceeds in the proposed market areas; and (iii) How the deployment will provide a reasonable return on investment commensurate with investment risk, investor expectations, and industry norms. The savings association must include three years of projected financial statements. The business plan must provide that the converted savings association must retain at least 50 percent of the net conversion proceeds. The appropriate Federal banking agency may require that a larger percentage of proceeds remain in the institution. (2) The savings association’s plan for deploying conversion proceeds to meet credit and lending needs in the proposed market areas. The appropriate Federal banking agencies strongly discourage business plans that provide for a substantial investment in mortgage securities or other securities, except as an interim measure to facilitate orderly, prudent deployment of proceeds during the three years following the conversion or as part of a properly managed leverage strategy. (3) The risks associated with the saving association’s plan for deployment of conversion proceeds, and the effect of this plan on management resources, staffing, and facilities. (4) The expertise of the savings association’s management and board of directors, or plans for adequate staffing and controls to prudently manage the growth, expansion, new investment, and other operations and activities proposed in the business plan. (b) Prohibited information. The savings association may not project returns of capital or special dividends in any part of the business plan. A newly converted company may not plan on stock repurchases in the first year of the business plan. § 192.110 Review of business plan by chief executive officer and board of directors. (a) Review and approval. A savings association’s chief executive officer and members of the board of directors must review, and at least two-thirds of the board of directors must approve, the business plan. (b) Certification. A savings association’s chief executive officer and at least two-thirds of the board of directors must certify that the business plan accurately reflects the intended plans for deployment of conversion proceeds, and that any new initiatives reflected in the business plan are reasonably achievable. The savings association must submit these certifications with its business plan, as part of its application for conversion under § 192.150. PO 00000 Frm 00016 Fmt 4701 Sfmt 4702 § 192.115 Review of business plan by the appropriate Federal banking agency. (a) Agency review. The appropriate Federal banking agency will review the savings association’s business plan to determine that it demonstrates a safe and sound deployment of conversion proceeds, as part of its review of the application for conversion. In making its determination, the appropriate Federal banking agency will consider how the savings association has addressed the applicable factors of § 192.105. No single factor will be determinative. (b) Filing of business plan. A savings association must file its business plan as a separate confidential exhibit to the Form AC with the appropriate OCC licensing office if it is a Federal savings association, or with the appropriate Federal Deposit Insurance Corporation (FDIC) region if it is a State savings association. The appropriate Federal banking agency may request additional information, if necessary, to support its determination under paragraph (a) of this section. (c) Operation within business plan. If the appropriate Federal banking agency approves a savings association’s application for conversion and the conversion is completed, the savings association must operate within the parameters of its business plan. The savings association must obtain the prior written approval of the appropriate Federal banking agency for any material deviations from its business plan. § 192.120 Confidentiality of conversion information. (a) Permitted disclosure. A savings association may discuss information about its conversion with individuals that the savings association authorizes to prepare documents for its conversion. (b) Confidential information. Except as permitted under paragraph (a) of this section, a savings association must keep all information about its conversion confidential until its board of directors adopts the plan of conversion. (c) Violations of confidentiality. If a savings association violates this section, the appropriate Federal banking agency may require the savings association to take remedial action. For example, the appropriate Federal banking agency may require the savings association to take any or all of the following actions: (1) Publicly announce that the savings association is considering a conversion; (2) Set an eligibility record date acceptable to the appropriate Federal banking agency; (3) Limit the subscription rights of any person who violates or aids a violation of this section; or E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules (4) Any other action to assure that the conversion is fair and equitable. Plan of Conversion § 192.125 Adoption of plan of conversion by board of directors. Prior to filing an application for conversion, a savings association’s board of directors must adopt a plan of conversion that conforms to §§ 192.320 through 192.485 and 192.505. The savings association’s board of directors must adopt the plan by at least a twothirds vote. Pursuant to § 192.150, the savings association must include the plan of conversion in the application for conversion. § 192.130 Information required in plan of conversion. A savings association must include the information included in §§ 192.320 through 192.485 and 192.505 in its plan of conversion. The appropriate Federal banking agency may require the savings association to delete or revise any provision in its plan of conversion if it determines the provision is inequitable; is detrimental to the savings association, its account holders, or other savings associations; or is contrary to public interest. jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.135 Notifying members of adopted plan of conversion. (a) Notice. A savings association must promptly notify its members that the board of directors adopted a plan of conversion and that a copy of the plan is available for the members’ inspection in the savings association’s home office and in its branch offices. The savings association must provide this notice by sending to each member a letter, through the mail or electronically if the member receives electronic communication, or by publishing a notice in the local newspaper in every local community where the savings association has an office. The savings association also may issue a press release and may make this notice available on its website. The appropriate Federal banking agency may require broader publication, if necessary, to ensure adequate notice to the savings association’s members. (b) Contents of notice. The savings association may include only the following statements and descriptions in the letter, notice, or press release. (1) The savings association’s board of directors adopted a proposed plan to convert from a mutual to a stock savings institution. (2) The savings association will send its members a proxy statement with detailed information on the proposed conversion before the savings VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 association convenes a members’ meeting to vote on the conversion. (3) The savings association’s members will have an opportunity to approve or disapprove the proposed conversion at a meeting. A majority of the eligible votes must approve the conversion. (4) The savings association will not vote existing proxies to approve or disapprove the conversion. The savings association will solicit new proxies for voting on the proposed conversion. (5) The appropriate Federal banking agency, and in the case of a Statechartered savings association, the appropriate State regulator, must approve the conversion before the conversion will be effective. The savings association’s members will have an opportunity to file written comments, including objections and materials supporting the objections, with the appropriate Federal banking agency. (6) The IRS must issue a favorable tax ruling, or a tax expert must issue an appropriate tax opinion, on the tax consequences of the savings association’s conversion before the appropriate Federal banking agency will approve the conversion. The ruling or opinion must indicate the conversion will be a tax-free reorganization. (7) The appropriate Federal banking agency, and in the case of a Statechartered savings association, the appropriate State regulator, might not approve the conversion, and the IRS or a tax expert might not issue a favorable tax ruling or tax opinion. (8) Savings account holders will continue to hold accounts in the converted savings association with the same dollar amounts, rates of return, and general terms as existing deposits. The FDIC will continue to insure the accounts. (9) The savings association’s conversion will not affect borrowers’ loans, including the amount, rate, maturity, security, and other contractual terms. (10) The savings association’s business of accepting deposits and making loans will continue without interruption. (11) The savings association’s current management and staff will continue to conduct current services for depositors and borrowers under current policies and in existing offices. (12) The savings association may substantively amend its proposed plan of conversion before the members’ meeting. (13) The savings association may terminate the proposed conversion. (14) After the appropriate Federal banking agency, and in the case of a State-chartered savings association, the PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 1067 appropriate State regulator, approves the proposed conversion, the savings association will send proxy materials providing additional information. After the savings association sends proxy materials, members may telephone or write to the savings association with additional questions. (15) The proposed record date for determining the eligible account holders who are entitled to receive subscription rights to purchase the savings association’s shares. (16) A brief description of the circumstances under which supplemental eligible account holders will receive subscription rights to purchase the savings association’s shares. (17) A brief description of how voting members may participate in the conversion. (18) A brief description of how directors, officers, and employees will participate in the conversion. (19) A brief description of the proposed plan of conversion. (20) The par value (if any) and approximate number of shares the savings association will issue and sell in the conversion. (c) Other requirements. (1) The savings association may not solicit proxies, provide financial statements, describe the benefits of conversion, or estimate the value of its shares upon conversion in the letter, notice, or press release. (2) If the savings association responds to inquiries about the conversion, it may address only the matters listed in paragraph (b) of this section. § 192.140 Amendments to plan of conversion. A savings association may amend its plan of conversion before it solicits proxies. After the savings association solicits proxies, it may amend the plan of conversion only if the appropriate Federal banking agency concurs. Filing Requirements § 192.150 Information required in an application for conversion. (a) Required information. A savings association’s application for conversion must include all of the following information. (1) The savings association’s plan of conversion. (2) Pricing materials meeting the requirements of § 192.200(b). (3) Proxy soliciting materials under § 192.270, including: (i) A preliminary proxy statement with signed financial statements; (ii) A form of proxy meeting the requirements of § 192.255; and E:\FR\FM\08JAP4.SGM 08JAP4 1068 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules (iii) Any additional proxy soliciting materials, including press releases, personal solicitation instructions, radio or television scripts that the savings association plans to use or furnish to its members, and a legal opinion indicating that any marketing materials comply with all applicable securities laws. (4) An offering circular described in § 192.300. (5) The documents and information required by Form AC. The savings association may obtain Form AC from the appropriate Federal banking agency. (6) Where indicated, written consents, signed and dated, of any accountant, attorney, investment banker, appraiser, or other professional who prepared, reviewed, passed upon, or certified any statement, report, or valuation for use. See Form AC, instructions. (7) The savings association’s business plan, submitted as a separately bound, confidential exhibit. See § 192.160. (8) Any additional information that the appropriate Federal banking agency requests. (b) Rejection of filing. The appropriate Federal banking agency will not accept for filing, and may return, any application for conversion that is executed improperly, materially deficient, substantially incomplete, or that provides for unreasonable conversion expenses. § 192.155 Filing an application for conversion. A Federal savings association must file Form AC with the appropriate OCC licensing office. A State savings association must file its application with the appropriate FDIC region. jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.160 Request for confidential treatment. (a) In general. The appropriate Federal banking agency makes all filings under this part available to the public, but may keep portions of the application for conversion confidential under paragraph (b) of this section. (b) Requests for confidential treatment. A savings association may request that the appropriate Federal banking agency keep portions of the savings association’s application confidential. To make this request, the savings association must clearly designate as ‘‘confidential’’ any portion of its application for conversion that it deems confidential. The savings association must provide a written statement specifying the grounds supporting its request for confidentiality. The appropriate Federal banking agency will not treat as confidential the portion of a savings association’s application describing how VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 it plans to meet Community Reinvestment Act (CRA) objectives. The CRA portion of a savings association’s application may not incorporate by reference information contained in the confidential portion of the application. (c) Determination of confidential treatment. The appropriate Federal banking agency will determine whether confidential information must be made available to the public under 5 U.S.C. 552 and 12 CFR part 4 or 12 CFR part 309, as appropriate. The appropriate Federal banking agency will advise the savings association before it makes information designated as ‘‘confidential’’ available to the public. § 192.165 Amendments to an application for conversion. To amend its application for conversion, a savings association must: (a) File an amendment with an appropriate facing sheet; (b) Number each amendment consecutively; (c) Respond to all issues raised by the appropriate Federal banking agency; and (d) Demonstrate that the amendment conforms to all applicable regulations. Notice of Filing of Application and Comment Process § 192.180 Public notice of an application for conversion. (a) In general. A Federal savings association must publish a public notice of the application in accordance with the procedures in 12 CFR 5.8. The Federal savings association must simultaneously prominently post the notice in its home office and all branch offices and may also make this notice available on its website. (b) Additional notice. If the appropriate Federal banking agency does not accept a savings association’s application for conversion under § 192.200 and requires the savings association to file a new application, the savings association must publish and post a new notice and allow an additional 30 calendar days for comment. § 192.185 Public comment on application for conversion. Commenters may submit comments on a Federal savings association’s application in accordance with the procedures in 12 CFR 5.10. Agency Review of the Application for Conversion § 192.200 Review, approval, or denial of application for conversion. (a) Standards for review of application. The appropriate Federal PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 banking agency may approve an application for conversion only if: (1) The conversion complies with this part; (2) The savings association will meet its regulatory capital requirements under 12 CFR part 3 or part 324, as applicable, after the conversion; and (3) The conversion will not result in a taxable reorganization under the Internal Revenue Code of 1986, as amended. (b) Standards for review of appraisal. The appropriate Federal banking agency will review the appraisal required by § 192.150(a)(2) in determining whether to approve the application. The appropriate Federal banking agency will review the appraisal under the following requirements. (1) Independent persons experienced and expert in corporate appraisal, and acceptable to the appropriate Federal banking agency, must prepare the appraisal report. (2) An affiliate of the appraiser may serve as an underwriter or selling agent, if the savings association ensures that the appraiser is separate from the underwriter or selling agent affiliate and the underwriter or selling agent affiliate does not make recommendations or affect the appraisal. (3) The appraiser may not receive any fee in connection with the conversion other than for appraisal services. (4) The appraisal report must include a complete and detailed description of the elements of the appraisal, a justification for the appraisal methodology, and sufficient support for the conclusions. (5) If the appraisal is based on a capitalization of the savings association’s pro forma income, it must indicate the basis for determining the income to be derived from the sale of shares, and demonstrate that the earnings multiple used is appropriate, including future earnings growth assumptions. (6) If the appraisal is based on a comparison of the savings association’s shares with outstanding shares of existing stock associations, the existing stock associations must be reasonably comparable in size, market area, competitive conditions, risk profile, profit history, and expected future earnings. (7) The appropriate Federal banking agency may decline to process the application for conversion and deem it materially deficient or substantially incomplete if the initial appraisal report is materially deficient or substantially incomplete. (8) A savings association may not represent or imply that the appropriate E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules Federal banking agency approved the appraisal. (c) Compliance with the Community Reinvestment Act. The appropriate Federal banking agency will review the savings association’s compliance record under 12 CFR part 195 and its business plan to determine how the savings association will serve the convenience and needs of its communities after the conversion. (1) Based on this review, the appropriate Federal banking agency may approve the application, deny the application, or approve the application on the condition that the savings association will improve its CRA performance or that the savings association will address the particular credit or lending needs of the communities that it will serve. (2) The appropriate Federal banking agency may deny the application if the savings association’s business plan does not demonstrate that its proposed use of conversion proceeds will help the savings association to meet the credit and lending needs of the communities that it will serve. (d) Additional information. The appropriate Federal banking agency may request that a savings association amend its application if further explanation is necessary, material is missing, or material needs correction. (e) Denial of application. The appropriate Federal banking agency will deny an application if the application does not meet the requirements of this subpart, unless the appropriate Federal banking agency waives the requirement under § 192.5(c). jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.205 Court review of final action on application for conversion. (a) In general. Any person aggrieved by the appropriate Federal banking agency’s final action on a savings association’s application for conversion may ask the court of appeals of the United States for the circuit in which the principal office or residence of such person is located, or the U.S. Court of Appeals for the District of Columbia Circuit, to review the action under 12 U.S.C. 1464(i)(2)(B). (b) Filing procedures. To obtain court review of the action, this statute requires the aggrieved person to file a written petition requesting that the court modify, terminate, or set aside the final appropriate Federal banking agency action. The aggrieved person must file the petition with the court within the later of 30 calendar days after the appropriate Federal agency publishes notice of its final action in the Federal Register or 30 calendar days after the savings association mails the VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 proxy statement to its members under § 192.235. Vote by Members § 192.225 Approval of plan of conversion by members. (a) In general. After the appropriate Federal banking agency approves a plan of conversion, the savings association must submit the plan of conversion to its members for approval. The savings association must obtain this approval at a meeting of its members, which may be a special or annual meeting, unless the savings association is State-chartered and State law requires approval via an annual meeting. (b) Approval. The savings association’s members must approve the plan of conversion by a majority of the total outstanding votes, unless the savings association is State-chartered and State law prescribes a higher percentage. (c) Voting method. Savings association members may vote in person or by proxy. (d) Notification to non-voting members. The savings association may notify eligible account holders or supplemental eligible account holders who are not voting members of its proposed conversion. The savings association may include only the information in § 192.135 in its notice. § 192.230 Members’ voting eligibility. A savings association determines members’ eligibility to vote by setting a voting record date. The savings association must set a voting record date that is not more than 60 calendar days nor less than 20 calendar days before its meeting, unless the savings association is State-chartered and State law requires a different voting record date. § 192.235 Notice of members’ meeting. (a) In general. A savings association must notify its members of the meeting to consider its conversion by sending the members a proxy statement cleared by the appropriate Federal banking agency. (b) Timing of notice. The savings association must notify its members 20 to 45 calendar days before the meeting, unless the savings association is Statechartered and State law requires a different notice period. (c) Notice to beneficial account holders. The savings association must also notify each beneficial holder of an account held in a fiduciary capacity: (1) If the savings association is a Federal savings association, and the name of the beneficial holder is disclosed on the savings association’s records; or PO 00000 Frm 00019 Fmt 4701 Sfmt 4702 1069 (2) If the savings association is a Statechartered savings association and the beneficial holder possesses voting rights under State law. § 192.240 Submission of documents to the appropriate Federal banking agency after the members’ meeting. (a) Filings after members’ meeting. Promptly after the members’ meeting, a savings association must file all of the following information with the appropriate OCC licensing office, if the savings association is Federallychartered, and with the appropriate FDIC region if the savings association is State-chartered. (1) A certified copy of each adopted resolution on the conversion. (2) The total votes eligible to be cast. (3) The total votes represented in person or by proxy. (4) The total votes cast in favor of and against each matter. (5) The percentage of votes necessary to approve each matter. (6) An opinion of counsel that the savings association conducted the members’ meeting in compliance with all applicable State or Federal laws and regulations. (b) Filing after conversion. Promptly after completion of the conversion, the savings association must submit an opinion of counsel that it complied with all laws applicable to the conversion. Proxy Solicitation § 192.250 Compliance with proxy solicitation provisions. (a) Savings association compliance. A savings association must comply with these proxy solicitation provisions when it provides proxy solicitation material to members for the meeting to vote on the plan of conversion. (b) Member compliance. Members of the savings association must comply with these proxy solicitation provisions when they provide proxy solicitation materials to members for the meeting to vote on the conversion, pursuant to § 192.280, except where: (1) The member solicits 50 people or fewer and does not solicit proxies on the savings association’s behalf; or (2) The member solicits proxies through newspaper advertisements after the savings association’s board of directors adopts the plan of conversion. Any newspaper advertisements may include only the following information: (i) The name of the savings association; (ii) The reason for the advertisement; (iii) The proposal or proposals to be voted upon; (iv) Where a member may obtain a copy of the proxy solicitation material; and E:\FR\FM\08JAP4.SGM 08JAP4 1070 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules (v) A request for the savings association’s members to vote at the meeting. § 192.255 Form of proxy requirements. The form of proxy must include all of the following: (a) A statement in bold face type stating that management is soliciting the proxy. (b) Blank spaces where the member must date and sign the proxy. (c) Clear and impartial identification of each matter or group of related matters that members will vote upon. The savings association must include any proposed charitable contribution as an item to be voted on separately. (d) The phrase ‘‘Revocable Proxy’’ in bold face type (at least 18 point). (e) A description of any charter or State law requirement that restricts or conditions votes by proxy. (f) An acknowledgment that the member received a proxy statement before he or she signed the form of proxy. (g) The date, time, and the place of the meeting, when available. (h) A way for the member to specify by ballot whether he or she approves or disapproves of each matter that members will vote upon. (i) A statement that management will vote the proxy in accordance with the member’s specifications. (j) A statement in bold face type indicating how management will vote the proxy if the member does not specify a choice for a matter. § 192.275 Filing revised proxy materials. A savings association may not use previously executed proxies for the plan of conversion vote. If members consider the plan of conversion at an annual meeting, the savings association may vote proxies obtained through other proxy solicitations only on matters not related to the plan of conversion. (a) In general. A savings association must file revised proxy solicitation materials as an amendment to its application for conversion. The proxy solicitation materials must be in the form in which it furnished the materials to its members. (b) Content of filing. To revise its proxy solicitation materials, the savings association must file: (1) Its revised proxy materials as required by Form PS; (2) Its revised form of proxy, if applicable; (3) Any additional proxy solicitation material subject to § 192.270; and (4) A copy of the revised proxy solicitation materials marked to clearly indicate changes from the prior filing. (c) When to file. The savings association must file no later than the date that it sends or gives the proxy solicitation material to its members. The savings association must indicate the date that it will release the materials. (d) Material not required to be filed. Unless requested by the appropriate Federal banking agency, the savings association does not have to file copies of replies to inquiries from its members or copies of communications that merely request members to sign and return proxy forms. § 192.265 part. § 192.280 Mailing member’s proxy solicitation materials. § 192.260 Previously executed proxies. Proxies executed under this A savings association may vote a proxy obtained under this part on matters that are incidental to the conduct of the meeting. The savings association may not vote a proxy obtained under this subpart at any meeting other than the meeting (or any adjournment of the meeting) to vote on the plan of conversion. jbell on DSKJLSW7X2PROD with PROPOSALS4 review the proxy solicitation material when it reviews the application for conversion and will clear the proxy solicitation material. (2) The savings association must provide a cleared written proxy statement to its members before or at the same time it provides any other soliciting material. The savings association must mail cleared proxy solicitation material to its members within 10 calendar days after the appropriate Federal banking agency clears the solicitation. § 192.270 Proxy statement requirements. (a) Content requirements. A savings association must prepare its proxy statement in compliance with this part and Form PS. (b) Other requirements. (1) The appropriate Federal banking agency will VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 (a) In general. A savings association must mail the member’s cleared proxy solicitation material if: (1) The savings association’s board of directors adopted a plan of conversion; (2) A member requests in writing that the savings association mail the proxy solicitation material; (3) The appropriate Federal banking agency has cleared the member’s proxy solicitation; and (4) The member agrees to defray the savings association’s reasonable expenses. (b) Required information. As soon as practicable after the savings association receives a request under paragraph (a) of PO 00000 Frm 00020 Fmt 4701 Sfmt 4702 this section, it must mail or otherwise furnish the following information to the member: (1) The approximate number of members that the savings association solicited or will solicit, or the approximate number of members of any group of account holders that the member designates; and (2) The estimated cost of mailing the proxy solicitation material for the member. (c) Timing. The savings association must mail cleared proxy solicitation material to the designated members promptly after the member furnishes the materials, envelopes (or other containers), and postage (or payment for postage) to the savings association. (d) Content. The savings association is not responsible for the content of a member’s proxy solicitation material. (e) Sharing of proxy material. A member may furnish other members its own proxy solicitation material, cleared by the appropriate Federal banking agency, subject to the rules in this section. § 192.285 Prohibited solicitations. (a) False or misleading statements. (1) No one may use proxy solicitation material for the members’ meeting if the material contains any statement which, considering the time and the circumstances of the statement: (i) Is false or misleading with respect to any material fact; (ii) Omits any material fact that is necessary to make the statements not false or misleading; or (iii) Omits any material fact that is necessary to correct a statement in an earlier communication that has become false or misleading. (2) No one may represent or imply that the appropriate Federal banking agency determined that the proxy solicitation material is accurate, complete, not false or not misleading, or passed upon the merits of or approved any proposal. (b) Other prohibited solicitations. No person may solicit: (1) An undated or post-dated proxy; (2) A proxy that states it will be dated after the date it is signed by a member; (3) A proxy that is not revocable at will by the member; or (4) A proxy that is part of another document or instrument. § 192.290 Remedial measures for prohibited solicitations. (a) In general. If a solicitation violates § 192.285, the appropriate Federal banking agency may require remedial measures, including: (1) Correction of the violation by a retraction and a new solicitation; E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules (2) Rescheduling the members’ meeting; or (3) Any other actions necessary to ensure a fair vote. (b) Other action. The appropriate Federal banking agency also may bring an enforcement action against the violator. § 192.295 Re-solicitation of proxies. If a savings association amends its application for conversion, the appropriate Federal banking agency may require the savings association to resolicit proxies for its members’ meeting as a condition of approval of the amendment. Offering Circular jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.300 Offering circular requirements. (a) Content and filing requirements. A savings association must prepare and file its offering circular in compliance with this part, Form OC, and the applicable SEC registration statement form required under 12 CFR 16.15. A Federal savings association must file its offering circular with the appropriate OCC licensing office and a State savings association must file its offering circular with the appropriate FDIC region. If filing an amendment, the savings association also must comply with §§ 192.155 and 192.165. (b) Member approval. A savings association must condition its stock offering upon member approval of its plan of conversion. (c) Agency review. The appropriate Federal banking agency will review the offering circular and may comment on the included disclosures and financial statements. The appropriate Federal banking agency will not approve the adequacy or accuracy of the offering circular or the disclosures. (d) Revised filings. A savings association must file any revised offering circular, final offering circular, and any post-effective amendment to the final offering circular in accordance with the procedures in §§ 192.155 and 192.165. (e) Request for effectiveness. After a savings association satisfactorily addresses the appropriate Federal banking agency’s comments, the savings association must request that the appropriate Federal banking agency declare the offering circular effective for a time period. The time period may not exceed the maximum time period for the completion of the sale of all of the savings association’s shares under § 192.400. § 192.305 Distribution of offering circular. (a) Preliminary offering circular. A savings association may distribute a VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 preliminary offering circular at the same time as or after it mails the proxy statement to its members. (b) Early distribution prohibited. A savings association may not distribute a final offering circular for stock issued in the transaction until after the appropriate Federal banking agency declares the offering circular effective or the Securities and Exchange Commission declares the registration statement for the offering circular effective. The savings association must have the offering circular delivered in accordance with this part. (c) Effective offering circular. A savings association must distribute a final offering circular for stock issued in the transaction to persons listed in its plan of conversion within 10 calendar days after the appropriate Federal banking agency declares the offering circular effective or the Securities and Exchange Commission declares the registration statement for the offering circular effective. § 192.310 Filing a post-effective amendment to an offering circular. (a) In general. A savings association must file a post-effective amendment to the offering circular with the appropriate Federal banking agency or have its proposed stock holding company file a post-effective amendment to its registration statement for the offering circular with the Securities and Exchange Commission, when a material event or change of circumstances occurs. (b) Timing of delivery. After the appropriate Federal banking agency or the Securities and Exchange Commission declares the post-effective amendment effective, the savings association must immediately have the amendment to the offering circular delivered to each person who subscribed for or ordered shares in the offering. (c) Content. The post-effective amendment must indicate that each person may increase, decrease, or rescind their subscription or order. (d) Post-effective offering period. The post-effective offering period must remain open no less than 10 calendar days nor more than 20 calendar days, unless the appropriate Federal banking agency approves a longer rescission period. Offers and Sales of Stock § 192.320 Order of priority to purchase conversion shares. A savings association must offer to sell its shares in the following order: (a) Eligible account holders. PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 1071 (b) Tax-qualified employee stock ownership plans. (c) Supplemental eligible account holders. (d) Other voting members who have subscription rights. (e) The savings association’s community, its community and the general public, or the general public. § 192.325 Timing of offer to sell conversion shares. (a) In general. A savings association may offer to sell its conversion shares after the appropriate Federal banking agency approves the conversion, clears the proxy statement, and declares the offering circular effective. (b) Timing. The offer may commence at the same time the savings association starts the proxy solicitation of its members. § 192.330 Pricing of conversion shares. (a) In general. A savings association must sell its conversion shares at a uniform price per share and at a total price that is equal to the estimated pro forma market value of its shares after the conversion. (b) Maximum price. The maximum price must be no more than 15 percent above the midpoint of the estimated price range in the savings association’s offering circular. (c) Minimum price. The minimum price must be no more than 15 percent below the midpoint of the estimated price range in the savings association’s offering circular. (d) Increase in price. If the appropriate Federal banking agency permits, the savings association may increase the maximum price of conversion shares sold. The maximum price, as adjusted, must be no more than 15 percent above the maximum price computed under paragraph (b) of this section. (e) Price range. The maximum price must be between $5 and $50 per share. (f) Inclusion in preliminary offering circular. The savings association must include the estimated price in any preliminary offering circular. § 192.335 Procedures for the sale of conversion shares. (a) Distribution of order forms. A savings association must distribute order forms to all eligible account holders, supplemental eligible account holders, and other voting members to enable them to subscribe for the conversion shares they are permitted under the plan of conversion. The savings association may either send the order forms with its offering circular or after the savings association distributes its offering circular. E:\FR\FM\08JAP4.SGM 08JAP4 1072 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules (b) Sale of shares. A savings association may sell its conversion shares in a community offering, a public offering, or both. The savings association may begin the community offering, the public offering, or both at any time during the subscription offering or upon conclusion of the subscription offering. (c) Underwriting commissions and fees. A savings association may pay underwriting commissions (including underwriting discounts). The appropriate Federal banking agency may object to the payment of unreasonable commissions. The savings association may reimburse an underwriter for accountable expenses in a subscription offering if the public offering is limited. If no public offering occurs, the savings association may pay an underwriter a consulting fee. The appropriate Federal banking agency may object to the payment of unreasonable consulting fees. (d) Sequence of order fulfillment. If a savings association conducts the community offering, the public offering, or both at the same time as the subscription offering, the savings association must fill all subscription orders first. (e) Preparation of order form. A savings association must prepare its order form in compliance with this part and Form OF. jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.340 Prohibited sales practices. (a) Offers, sales, or purchases of conversion shares. In connection with offers, sales, or purchases of conversion shares under this part, a savings association and its directors, officers, agents, or employees may not: (1) Employ any device, scheme, or artifice to defraud; (2) Obtain money or property by means of any untrue statement of a material fact or any omission of a material fact necessary to make the statements, in light of the circumstances under which they were made, not misleading; or (3) Engage in any act, transaction, practice, or course of business that operates or would operate as a fraud or deceit upon a purchaser or seller. (b) Conversion. During the conversion, no person may: (1) Transfer, or enter into any agreement or understanding to transfer, the legal or beneficial ownership of subscription rights for the savings association’s conversion shares or the underlying securities to the account of another; (2) Make any offer, or any announcement of an offer, to purchase any of the savings association’s VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 conversion shares from anyone but the savings association; or (3) Knowingly acquire more than the maximum purchase allowable under the savings association’s plan of conversion. (c) Exceptions. The restrictions in paragraphs (b)(1) and (2) of this section do not apply to offers for more than 10 percent of any class of conversion shares by: (1) An underwriter or a selling group, acting on the savings association’s behalf, that makes the offer with a view toward public resale; or (2) One or more of the savings association’s tax-qualified employee stock ownership plans so long as the plan or plans do not beneficially own more than 25 percent of any class of the savings association’s equity securities in the aggregate. (d) Violations. Any person found to have violated the restrictions in paragraphs (a) or (b) of this section may become subject to an enforcement action, civil money penalties, criminal prosecution, or other legal action. § 192.345 Permissible forms of subscriber payment. (a) In general. A subscriber may purchase conversion shares with cash, by a withdrawal from a savings account, or a withdrawal from a certificate of deposit. If a subscriber purchases shares by a withdrawal from a certificate of deposit, the savings association may not assess a penalty for the withdrawal. (b) Prohibition. A savings association may not extend credit to any person to purchase the savings association’s conversion shares. § 192.350 Interest on payments for conversion shares. (a) In general. A savings association must pay interest from the date the savings association receives a payment for conversion shares until the date the savings association completes or terminates the conversion. The savings association must pay interest at no less than its passbook rate for amounts paid in cash, check, or money order. (b) Interest on withdrawals from savings accounts. If a subscriber withdraws money from a savings account to purchase conversion shares, the savings association must pay interest on the payment until the savings association completes or terminates the conversion as if the withdrawn amount remained in the account. (c) Interest on withdrawals from certificates of deposit. If a depositor fails to maintain the applicable minimum balance requirement because he or she withdraws money from a certificate of PO 00000 Frm 00022 Fmt 4701 Sfmt 4702 deposit to purchase conversion shares, the savings association may cancel the certificate and pay interest at no less than its passbook rate on any remaining balance. § 192.355 Subscription rights for eligible account holders and supplemental eligible account holders. (a) Eligible account holders. A savings association must give each eligible account holder subscription rights to purchase conversion shares in an amount equal to the greater of: (1) The maximum purchase limitation established for the community offering or the public offering under § 192.395; (2) One-tenth of one percent of the total stock offering; or (3) Fifteen times the following number: The total number of conversion shares that the savings association will issue, multiplied by the following fraction. The numerator is the total qualifying deposit of the eligible account holder. The denominator is the total qualifying deposits of all eligible account holders. The savings association must round down the product of this multiplied fraction to the next whole number. (b) Supplemental eligible account holders. The savings association must give subscription rights to purchase shares to each supplemental eligible account holder in the same amount as described in paragraph (a) of this section, except that the savings association must compute the fraction described in paragraph (a)(3) of this section as follows: The numerator is the total qualifying deposit of the supplemental eligible account holder. The denominator is the total qualifying deposits of all supplemental eligible account holders. § 192.360 Officers, directors, and associates as eligible account holders. A savings association’s officers, directors, and their associates may be eligible account holders. However, if an officer, director, or his or her associate receives subscription rights based on increased deposits in the year before the eligibility record date, the savings association must subordinate subscription rights for these deposits to subscription rights exercised by other eligible account holders. § 192.365 Purchase of conversion shares by other voting members. (a) In general. A savings association must give rights to purchase its conversion shares in the conversion to voting members who are neither eligible account holders nor supplemental eligible account holders. The savings association must allocate rights to each E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules voting member that are equal to the greater of: (1) The maximum purchase limitation established for the community offering and the public offering under § 192.395; or (2) One-tenth of one percent of the total stock offering. (b) Subordination of voting rights. The savings association must subordinate the voting members’ rights to the rights of eligible account holders, tax-qualified employee stock ownership plans, and supplemental eligible account holders. § 192.370 Limits on aggregate purchases by officers, directors, and associates. (a) In general. When a savings association converts, its officers, directors, and their associates may not purchase, in the aggregate, more than the following percentage of the savings association’s total stock offering: Officer and director purchases (percent) Institution size $50,000,000 or less .................... $50,000,001–100,000,000 .......... $100,000,001–150,000,000 ........ $150,000,001–200,000,000 ........ $200,000,001–250,000,000 ........ $250,000,001–300,000,000 ........ $300,000,001–350,000,000 ........ $350,000,001–400,000,000 ........ $400,000,001–450,000,000 ........ $450,000,001–500,000,000 ........ Over $500,000,000 ..................... 35 34 33 32 31 30 29 28 27 26 25 (b) Exception. The purchase limitations in this section do not apply to shares held in tax-qualified employee stock benefit plans that are attributable to the savings association’s officers, directors, and their associates. jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.375 Allocation of oversubscribed conversion shares. (a) Eligible account holders. If a savings association’s conversion shares are oversubscribed by its eligible account holders, the savings association must allocate shares among the eligible account holders so that each, to the extent possible, may purchase 100 shares. (b) Supplemental eligible account holders. If a savings association’s conversion shares are oversubscribed by its supplemental eligible account holders, the savings association must allocate shares among the supplemental eligible account holders so that each, to the extent possible, may purchase 100 shares. (c) Eligible and supplemental eligible account holders. If a person is an eligible account holder and a supplemental eligible account holder, VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 the savings association must include the eligible account holder’s allocation in determining the number of conversion shares that the savings association may allocate to the person as a supplemental eligible account holder. (d) Additional allocations. For conversion shares that the savings association does not allocate under paragraphs (a) and (b) of this section, the savings association must allocate the shares among the eligible or supplemental eligible account holders equitably, based on the amounts of qualifying deposits. The savings association must describe this method of allocation in its plan of conversion. (e) Oversubscription. If shares remain after the savings association has allocated shares as provided in paragraphs (a) and (b) of this section, and if the savings association’s voting members oversubscribe, the savings association must allocate its conversion shares among those members equitably. The savings association must describe the method of allocation in its plan of conversion. § 192.380 Purchase of conversion shares by employee stock ownership plan. (a) In general. A savings association’s tax-qualified employee stock ownership plan may purchase up to 10 percent of the total offering of the savings association’s conversion shares. (b) Revised stock valuation range. If the appropriate Federal banking agency approves a revised stock valuation range as described in § 192.330(e), and the final conversion stock valuation range exceeds the former maximum stock offering range, a savings association may allocate conversion shares to its taxqualified employee stock ownership plan, up to the 10 percent limit in paragraph (a) of this section. (c) Open market purchase. If a savings association’s tax-qualified employee stock ownership plan is not able to or chooses not to purchase stock in the offering, it may, with prior appropriate Federal banking agency approval and appropriate disclosure in the savings association’s offering circular, purchase stock in the open market, or purchase authorized but unissued conversion shares. (d) Charitable organizations. A savings association may include stock contributed to a charitable organization in the conversion in the calculation of the total offering of conversion shares under paragraphs (a) and (b) of this section, unless the appropriate Federal banking agency objects on supervisory grounds. PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 § 192.385 1073 Purchase limitations. (a) In general. A savings association may limit the number of shares that any person, group of associated persons, or persons otherwise acting in concert, may subscribe to up to five percent of the total stock sold. (b) Modification of purchase limit. If a savings association sets a limit of five percent under paragraph (a) of this section, the savings association may modify that limit with appropriate Federal banking agency approval to provide that any person, group of associated persons, or persons otherwise acting in concert subscribing for five percent, may purchase between five and 10 percent as long as the aggregate amount that the subscribers purchase does not exceed 10 percent of the total stock offering. (c) Minimum purchase. A savings association may require persons exercising subscription rights to purchase a minimum number of conversion shares. The minimum number of shares must equal the lesser of the number of shares obtained by a $500 subscription or 25 shares. (d) Aggregation. In setting purchase limitations under this section, a savings association may not aggregate conversion shares attributed to a person in the savings association’s tax-qualified employee stock ownership plan with shares purchased directly by, or otherwise attributable to, that person. § 192.390 Community offering of conversion shares. (a) Purchase preference in subscription offering. In a subscription offering, a savings association may give a purchase preference to eligible account holders, supplemental eligible account holders, and voting members residing in its local community. (b) Purchase preference in community offering. In a community offering, a savings association must give a purchase preference to natural persons residing in its local community. § 192.395 Other conditions for community and public offerings. A savings association must offer and sell its stock to achieve a widespread distribution of the stock. If a savings association offers shares in a community offering, a public offering, or both, it must first fill orders for its stock up to a maximum of two percent of the conversion stock on a basis that will promote a widespread distribution of stock. The savings association must allocate any remaining shares on an equal number of shares per order basis until it fills all orders. E:\FR\FM\08JAP4.SGM 08JAP4 1074 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules Completion of the Offering § 192.400 Time period for completion of sale of stock. A savings association must complete all sales of its stock within 45 calendar days after the last day of the subscription period, unless the offering is extended under § 192.405. § 192.405 Extension of the offering period. (a) In general. A savings association must submit a request in writing to the appropriate Federal banking agency for an extension of any offering period. The appropriate Federal banking agency will not grant any single extension of more than 90 calendar days. (b) Post-effective amendment to offering circular. If the appropriate Federal banking agency grants a savings association’s request for an extension of time, the savings association must provide a post-effective amendment to the offering circular under § 192.310 to each person who subscribed for or ordered stock. The amendment must indicate that the appropriate Federal banking agency extended the offering period and that each person who subscribed for or ordered stock may increase, decrease, or rescind their subscription or order within the time remaining in the extension period. Completion of the Conversion § 192.420 Time period for completion of conversion. In its plan of conversion, a savings association must set a date by which the conversion must be completed. This date must not be more than 24 months from the date that the savings association’s members approve the plan of conversion. The date, once set, may not be extended by the savings association or by the appropriate Federal banking agency. The savings association must terminate the conversion if it is not completed by that date. The conversion is complete on the date that the savings association accepts the offers for its stock. jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.425 Termination of conversion. A conversion may be terminated by: (a) A savings association’s members failing to approve the conversion at its members’ meeting; (b) A savings association before its members’ meeting; or (c) A savings association after the members’ meeting, but only if the appropriate Federal banking agency concurs. § 192.430 Charter amendments. (a) Conversion from Federallychartered mutual savings association or VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 savings bank to Federally-chartered stock savings association or savings bank. If the savings association is a Federally-chartered mutual savings association or savings bank and it converts to a Federally-chartered stock savings association or savings bank, it must apply to the OCC to amend its charter and bylaws consistent with 12 CFR 5.22, as part of the savings association’s application for conversion. The savings association may only include OCC pre-approved anti-takeover provisions in its amended charter and bylaws. See 12 CFR 5.22(g)(7). (b) Conversion from Federallychartered mutual savings association or savings bank to State-chartered stock savings association or savings bank. If the savings association is a Federallychartered mutual savings association or savings bank and is converting to a State-chartered stock savings association under this part, the savings association must surrender its charter to the OCC for cancellation promptly after the State issues its new State stock charter. The savings association must promptly file a copy of its new State stock charter with the FDIC. (c) Conversion from State-chartered mutual savings association or savings bank to Federally State-chartered stock savings association or savings bank. If the savings association is a Statechartered mutual savings association or savings bank, and is converting to a Federally chartered stock savings association or savings bank, it must apply to the OCC for a new charter and bylaws consistent with 12 CFR 5.22. The savings association may only include OCC pre-approved anti-takeover provisions in its charter and bylaws. See 12 CFR 5.22(g)(7). (d) Priority of accounts. In any conversion described in this section that involves a mutual holding company, the charter of each resulting subsidiary savings association of the holding company must contain the following provision: In any situation in which the priority of the accounts of the association is in controversy, all such accounts must, to the extent of their withdrawable 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. (e) Liquidation account. The savings association’s new or amended charter must require the savings association to establish and maintain a liquidation account for eligible and supplemental eligible account holders under § 192.450. PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 § 192.435 Corporate existence after conversion. A savings association’s corporate existence will continue following its conversion, unless it converts to a Statechartered stock savings association and State law prescribes otherwise. § 192.440 Stockholder voting rights after conversion. A savings association must provide its stockholders with exclusive voting rights, except as provided in § 192.445(c). § 192.445 Savings account holder’s account after conversion. (a) In general. The savings association must provide each savings account holder, without payment, a withdrawable savings account or accounts in the same amount and under the same terms and conditions as their accounts before the conversion. (b) Liquidation account. The savings association must provide a liquidation account for each eligible and supplemental eligible account holder under § 192.450. (c) Voting rights. If the savings association is State-chartered and State law requires the savings association to provide voting rights to savings account holders or borrowers, the charter must: (1) Limit these voting rights to the minimum required by State law; and (2) Require the savings association to solicit proxies from the savings account holders and borrowers in the same manner that the savings association solicits proxies from its stockholders. Liquidation Account § 192.450 Liquidation accounts. (a) In general. A liquidation account represents the potential interest of eligible account holders and supplemental eligible account holders in the savings association’s net worth at the time of conversion. A savings association must maintain a sub-account to reflect the interest of each account holder. (b) Distribution of liquidation. Before a savings association may provide a liquidation distribution to common stockholders, it must give a liquidation distribution to those eligible account holders and supplemental eligible account holders who hold savings accounts from the time of conversion until liquidation. (c) Recording of liquidation account in financial statements. A savings association may not record the liquidation account in its financial statements. The savings association must disclose the liquidation account in E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules the footnotes to the savings association’s financial statements. § 192.455 account. Initial balance of liquidation The initial balance of the liquidation account is the savings association’s net worth in the statement of financial condition included in the final offering circular. jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.460 account. Initial balance of liquidation sub- (a) General rule. (1) A savings association must calculate the initial liquidation sub-account balance of each eligible and supplemental eligible account holder at the time of the conversion. (2) The initial liquidation sub-account balance for a savings account held by an eligible account holder, for a savings account not held by the eligible account holder on the supplemental eligibility record date, is calculated by multiplying the initial liquidation account balance by the following fraction: The numerator is the qualifying deposit in the savings account on the eligibility record date and the denominator is the calculation in paragraph (a)(5) of this section. (3) The initial liquidation sub-account balance for a savings account held by a supplemental eligible account holder, for a savings account not held by the supplemental eligible account holder on the eligibility record date, is calculated by multiplying the initial liquidation account balance by the following fraction: The numerator is the qualifying deposit in the savings account on the supplemental eligibility record date and the denominator is the calculation in paragraph (a)(5) of this section. (4) For a savings account held on both the eligibility record date and the supplemental eligibility record date, the amount of the qualifying deposit for calculating the initial liquidation subaccount is the higher account balance of the savings account on either the eligibility record date or the supplemental eligibility record date. The initial liquidation sub-account balance is calculated by multiplying the liquidation account balance by the following fraction: The numerator is the higher amount of the qualifying deposit in the savings account on either the eligibility record date or the supplemental eligibility record date and the denominator is the calculation in paragraph (a)(5) of this section. (5) The denominator for calculating the initial liquidation sub-account balance of each eligible and supplemental eligible account holder is the sum of the numerator calculations in VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 paragraphs (a)(2) through (4) of this section. (b) Balance increases and decreases. A savings association must not increase the initial liquidation and sub-account balances. It must decrease the initial liquidation account and the sub-account balances under § 192.470 as depositors reduce or close their savings accounts. § 192.465 Retention of voting rights based on liquidation sub-accounts. Eligible account holders or supplemental eligible account holders do not retain any voting rights based on their liquidation sub-accounts. § 192.470 Required adjustments to liquidation sub-accounts. (a) Reductions. (1) A savings association must reduce the balance of an eligible account holder’s or supplemental eligible account holder’s sub-account if the deposit balance in the account holder’s savings account at the close of business on any annual closing date, which for purposes of this section is the savings association’s fiscal year end, after the relevant eligibility record dates is less than: (i) The deposit balance in the account holder’s savings account at the close of business on any other annual closing date after the relevant eligibility record date; or (ii) The qualifying deposits in the account holder’s savings account on the relevant eligibility record date. (2) The reduction must be proportionate to the reduction in the deposit balance. (b) Prohibition on increases. If a savings association reduces the balance of a liquidation sub-account, it may not subsequently increase it if the deposit balance increases. (c) Liquidation account adjustments. A savings association is not required to adjust the liquidation account and subaccount balances at each annual closing date if the savings association maintains sufficient records to make the computations if a liquidation subsequently occurs. (d) Maintenance of liquidation subaccount. A savings association must maintain the liquidation sub-account for each account holder as long as the account holder maintains an account with the same social security number. (e) Complete liquidation. If there is a complete liquidation, the savings association must provide each account holder with a liquidation distribution in the amount of the sub-account balance. § 192.475 Definition of liquidation. (a) In general. A liquidation is a sale of a saving association’s assets and PO 00000 Frm 00025 Fmt 4701 Sfmt 4702 1075 settlement of its liabilities with the intent to cease operations and close. Upon liquidation, a savings association must return its charter to the governmental agency that issued it. The government agency must cancel the savings association’s charter. (b) Other transactions. A merger, consolidation, or similar combination or transaction with another depository institution, is not a liquidation. If a savings association is involved in such a transaction, the surviving institution must assume the liquidation account. § 192.480 Effect of liquidation account on net worth. The liquidation account does not affect a saving association’s net worth. § 192.485 Required liquidation account provision in new Federal charter. If a savings association converts to Federal stock form, it must include the following provision in its new charter: ‘‘Liquidation Account. Under appropriate Federal banking agency regulations, the association must establish and maintain a liquidation account for the benefit of its savings account holders as of ll. If the association undergoes a complete liquidation, it must comply with appropriate Federal banking agency regulations with respect to the amount and priorities on liquidation of each of the savings account holder’s interests in the liquidation account. A savings account holder’s interest in the liquidation account does not entitle the savings account holder to any voting rights.’’ Post-Conversion § 192.500 Permissible management stock benefit plans after conversion. (a) In general. During the 12 months after its conversion, a savings association may implement a stock option plan (Option Plan), an employee stock ownership plan or other taxqualified employee stock benefit plan (collectively, ESOP), and a management recognition plan (MRP), provided that the savings association meets all of the following requirements: (1) The savings association discloses the plans in its proxy statement and offering circular and indicates in its offering circular that there will be a separate shareholder vote on the Option Plan and the MRP at least six months after the conversion. No shareholder vote is required to implement the ESOP. The savings association’s ESOP must be tax-qualified. (2) The savings association’s Option Plan does not encompass more than 10 percent of the number of shares that the E:\FR\FM\08JAP4.SGM 08JAP4 jbell on DSKJLSW7X2PROD with PROPOSALS4 1076 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules savings association issued in the conversion. (3)(i) The savings association’s ESOP and MRP do not encompass, in the aggregate, more than 10 percent of the number of shares that the savings association issued in the conversion. If the savings association has tangible capital of 10 percent or more following the conversion, the appropriate Federal banking agency may permit the ESOP and MRP to encompass, in the aggregate, up to 12 percent of the number of shares issued in the conversion; and (ii) The savings association’s MRP does not encompass more than three percent of the number of shares that the savings association issued in the conversion. If the savings association has tangible capital of 10 percent or more after the conversion, the appropriate Federal banking agency may permit the MRP to encompass up to four percent of the number of shares that the savings association issued in the conversion. (4) No individual receives more than 25 percent of the shares under any plan. (5) The savings association’s directors who are not officers of the savings association do not receive more than five percent of the shares of the MRP or Option Plan individually, or 30 percent of any such plan in the aggregate. (6) The savings association’s shareholders approve each of the Option Plan and the MRP by a majority of the total votes eligible to be cast at a duly called meeting before the savings association establishes or implements the plan. The savings association may not hold this meeting until six months after its conversion. (7) When the savings association distributes proxies or related material to shareholders in connection with the vote on a plan, the savings association states that the plan complies with the appropriate Federal banking agency’s regulations and that the appropriate Federal banking agency does not endorse or approve the plan in any way. The savings association may not make any written or oral representations to the contrary. (8) The savings association does not grant stock options at less than the market price at the time of grant. (9) The savings association does not fund the Option Plan or the MRP at the time of the conversion. (10) The savings association’s plan does not begin to vest earlier than one year after shareholders approve the plan, and does not vest at a rate exceeding 20 percent per year. (11) The savings association’s plan permits accelerated vesting only for VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 disability or death, or if the savings association undergoes a change of control. (12) The saving association’s plan provides that its executive officers or directors must exercise or forfeit their options in the event the institution becomes critically undercapitalized (as defined in 12 CFR 6.4 or 324.403, as applicable), is subject to appropriate Federal banking agency enforcement action, or receives a capital directive under 12 CFR part 6, subpart B or 12 CFR 308.201, as applicable. (13) The savings association files a copy of the proposed Option Plan or MRP with the appropriate Federal banking agency and certify to such agency that the plan approved by the shareholders is the same plan that the savings association filed with, and disclosed in, the proxy materials distributed to shareholders in connection with the vote on the plan. (14) The savings association files the plan and the certification with the appropriate Federal banking agency within five calendar days after its shareholders approve the plan. (b) Stock splits or other adjustments. The savings association may provide dividend equivalent rights or dividend adjustment rights to allow for stock splits or other adjustments to its stock in the ESOP, MRP, and Option Plan. (c) Plans implemented more than 12 months after conversion. The restrictions in paragraph (a) of this section do not apply to plans implemented more than 12 months after the conversion, provided that materials pertaining to any shareholder vote regarding such plans are not distributed within the 12 months after the conversion. If a plan adopted in conformity with paragraph (a) of this section is amended more than 12 months following the conversion, shareholders must ratify any material deviations to the requirements in paragraph (a). § 192.505 Restrictions on the trading of shares by directors, officers, and associates. (a) Sales restriction. Directors and officers who purchase conversion shares may not sell the shares for one year after the date of purchase, except that in the event of the death of the officer or director, the successor in interest may sell the shares. (b) Notice of sales restriction on stock certificate. The savings association must include notice of the restriction described in paragraph (a) of this section on each certificate of stock that a director or officer purchases during the conversion or receives in connection PO 00000 Frm 00026 Fmt 4701 Sfmt 4702 with a stock dividend, stock split, or otherwise with respect to such restricted shares. (c) Stock purchase restrictions. For three years after the conversion, the savings association’s officers, directors, and their associates may purchase the savings association’s stock only from a broker or dealer registered with the Securities and Exchange Commission. However, the savings association’s officers, directors, and their associates may engage in a negotiated transaction involving more than one percent of the savings association’s outstanding stock, and may purchase stock through any of the savings association’s management or employee stock benefit plans. (d) Communication of restrictions with transfer agent. The savings association must instruct its stock transfer agent about the transfer restrictions in this section. § 192.510 Repurchase of shares after conversion. (a) Repurchases during first year after conversion. A savings association may not repurchase its shares in the first year after the conversion except: (1) In extraordinary circumstances, a savings association may make open market repurchases of up to five percent of its outstanding stock in the first year after the conversion if the savings association files a notice under § 192.515(a) and the appropriate Federal banking agency does not disapprove the repurchase. The appropriate Federal banking agency will not approve such repurchases unless the repurchase meets the standards in § 192.515(c), and the repurchase is consistent with paragraph (c) of this section. (2) A savings association may repurchase qualifying shares of a director or conduct an appropriate Federal banking agency-approved repurchase pursuant to an offer made to all shareholders of the savings association. (3) Repurchases to fund management recognition plans that have been ratified by shareholders do not count toward the repurchase limitations in this section. Repurchases in the first year to fund such plans require prior written notification to the appropriate Federal banking agency. (4) Purchases to fund tax qualified employee stock benefit plans do not count toward the repurchase limitations in this section. (b) Repurchases following first year after conversion. After the first year, a savings association may repurchase its shares, subject to all other applicable regulatory and supervisory restrictions and paragraph (c) of this section. E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules (c) Restrictions on all repurchases. All stock repurchases are subject to the following restrictions. (1) A savings association may not repurchase its shares if the repurchase will reduce the savings association’s regulatory capital below the amount required for its liquidation account under § 192.450. The savings association must comply with the capital distribution requirements at 12 CFR 5.55. (2) The restrictions on share repurchases apply to a charitable organization under § 192.550. A savings association must aggregate purchases of shares by the charitable organization with the savings association’s repurchases. jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.515 Information to be filed with Federal banking agency prior to repurchase of shares. (a) Notice requirement. To repurchase stock in the first year following conversion, other than repurchases under § 192.510(a)(3) or (4), a savings association must file a written notice with the appropriate OCC licensing office if Federally chartered, and with the appropriate FDIC region if Statechartered. The savings association must provide the following information: (1) The proposed repurchase program; (2) The effect of the repurchases on the savings association’s regulatory capital; and (3) The purpose of the repurchases and, if applicable, an explanation of the extraordinary circumstances necessitating the repurchases. (b) Filing of notice. A Federal savings association must file its notice with the appropriate OCC licensing office, and a State savings association must file its notice with the appropriate regional director of the FDIC, at least 10 calendar days before the savings association begins its repurchase program. (c) Agency review. A savings association may not repurchase its shares if the appropriate Federal banking agency objects to the repurchase program. The appropriate Federal banking agency will not object to a repurchase program if: (1) The repurchase program will not adversely affect the savings association’s financial condition; (2) The savings association submits sufficient information to evaluate the proposed repurchases; (3) The savings association demonstrates extraordinary circumstances and a compelling and valid business purpose for the share repurchases; and (4) The repurchase program would not be contrary to other applicable regulations. VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 § 192.520 Declaring and paying dividends after the conversion. A savings association may declare or pay a dividend on its shares after the conversion if: (a) The dividend will not reduce the savings association’s regulatory capital below the amount required for the liquidation account under § 192.450; (b) The savings association complies with all capital requirements under 12 CFR part 3 after it declares or pays dividends; (c) The savings association complies with the capital distribution requirements under 12 CFR 5.55; and (d) The savings association does not return any capital, other than ordinary dividends, to purchasers during the term of the business plan submitted with the conversion. § 192.525 Restrictions on acquisition of shares after conversion. (a) Prior agency approval. For three years after conversion, no person may, directly or indirectly, acquire or offer to acquire the beneficial ownership of more than 10 percent of any class of the savings association’s equity securities without the appropriate Federal banking agency’s prior written approval. If a person violates this prohibition, the savings association may not permit the person to vote shares in excess of 10 percent, and may not count the shares in excess of 10 percent in any shareholder vote. (b) Beneficial ownership. A person acquires beneficial ownership of more than 10 percent of a class of shares when he or she holds any combination of the savings association’s stock or revocable or irrevocable proxies under circumstances that give rise to a conclusive control determination or rebuttable control determination under 12 CFR 5.50. The appropriate Federal banking agency will presume that a person has acquired shares if the acquiror entered into a binding written agreement for the transfer of shares. For purposes of this section, an offer is made when it is communicated. An offer does not include non-binding expressions of understanding or letters of intent regarding the terms of a potential acquisition. (c) Exceptions. Notwithstanding the restrictions in this section: (1) Paragraphs (a) and (b) of this section do not apply to any offer with a view toward public resale made exclusively to the savings association, to the underwriters, or to a selling group acting on the savings association’s behalf. (2) Unless the appropriate Federal banking agency objects in writing, any PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 1077 person may offer or announce an offer to acquire up to one percent of any class of shares. In computing the one percent limit, the person must include all of his or her acquisitions of the same class of shares during the prior 12 months. (3) A corporation whose ownership is, or will be, substantially the same as the savings association’s ownership may acquire or offer to acquire more than 10 percent of the savings association’s common stock, if it makes the offer or acquisition more than one year after the saving association’s conversion. (4) One or more of the savings association’s tax-qualified employee stock benefit plans may acquire the savings association’s shares, if the plan or plans do not beneficially own more than 25 percent of any class of the savings association’s shares in the aggregate. (5) An acquiror does not have to file a separate application to obtain the appropriate Federal banking agency’s approval under paragraph (a) of this section if the acquiror files an application under 12 CFR 5.50 that specifically addresses the criteria listed under paragraph (d) of this section and the savings association does not oppose the proposed acquisition. (d) Factors for agency denial. The appropriate Federal banking agency may deny an application under paragraph (a) of this section if the proposed acquisition: (1) Is contrary to the purposes of this part; (2) Is manipulative or deceptive; (3) Subverts the fairness of the conversion; (4) Is likely to injure the savings association; (5) Is inconsistent with the savings association’s plan to meet the credit and lending needs of its proposed market area; (6) Otherwise violates laws or regulations; or (7) Does not prudently deploy the savings association’s conversion proceeds. § 192.530 Other post-conversion requirements. After a savings association converts, it must: (a) Promptly register its shares under the Securities Exchange Act of 1934 (15 U.S.C. 78a–78jj, as amended). The savings association may not deregister the shares for three years. (b) Encourage and assist a market maker to establish and to maintain a market for its shares. A market maker for a security is a dealer who: (1) Regularly publishes bona fide competitive bid and offer quotations for E:\FR\FM\08JAP4.SGM 08JAP4 1078 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules the security in a recognized inter-dealer quotation system; (2) Furnishes bona fide competitive bid and offer quotations for the security on request; or (3) May effect transactions for the security in reasonable quantities at quoted prices with other brokers or dealers. (c) Use its best efforts to list its shares on a national or regional securities exchange or on the National Association of Securities Dealers Automated Quotation system. (d) File all post-conversion reports that the appropriate Federal banking agency requires. Contributions to Charitable Organizations § 192.550 Donating conversion shares or conversion proceeds to a charitable organization. A savings association may contribute some of its conversion shares or proceeds to a charitable organization if: (a) The savings association’s plan of conversion provides for the proposed contribution; (b) The savings association’s members approve the proposed contribution; and (c) The IRS either has approved, or approves within two years after formation, the charitable organization as a tax-exempt charitable organization under the Internal Revenue Code. § 192.555 Member approval of charitable contributions. At the meeting to consider the conversion, a savings association’s members must separately approve, by a majority of the total eligible votes, a charitable contribution of conversion shares or proceeds. If the savings association is in mutual holding company form and adding a charitable contribution as part of a second step stock conversion, the savings association must also have its minority shareholders separately approve the charitable contribution by a majority of their total eligible votes. jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.560 Limitations on charitable contributions. A savings association may contribute a reasonable amount of conversion shares or proceeds to a charitable organization if such contribution will not exceed limits for charitable deductions under the Internal Revenue Code and the appropriate Federal banking agency does not object on supervisory grounds. If the savings association is well-capitalized, the appropriate Federal banking agency generally will not object if the savings association contributes an aggregate VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 amount of eight percent or less of the conversion shares or proceeds. § 192.565 Contents of organizational documents of charitable organization. The charitable organization’s charter (or trust agreement) and gift instrument must provide that: (a) The charitable organization’s primary purpose is to serve and make grants in the savings association’s local community; (b) As long as the charitable organization controls shares, it must vote those shares in the same ratio as all other shares voted on each proposal considered by the savings association’s shareholders; (c) For at least five years after its organization, one seat on the charitable organization’s board of directors (or board of trustees) is reserved for an independent director (or trustee) from the savings association’s local community. This director may not be an officer, director, or employee of the savings association or of an affiliate of the savings association, and should have experience with local community charitable organizations and grant making; and (d) For at least five years after its organization, one seat on the charitable organization’s board of directors (or board of trustees) is reserved for a director from the savings association’s board of directors or the board of directors of an acquiror or resulting institution in the event of a merger or acquisition of the savings association. § 192.570 Conflicts of interest among directors. (a) In general. A person is subject to 12 CFR 163.200 if that person: (1) Is a director, officer, or employee of the savings association; has the power to direct the savings association’s management or policies; or otherwise owes a fiduciary duty to the savings association (for example, holding company directors); and (2) Will serve as an officer, director, or employee of the charitable organization. See Form AC for further information on operating plans and conflict of interest plans. (b) Identification and recusal of directors. Before the savings association’s board of directors may adopt a plan of conversion that includes a charitable organization, the savings association must identify its directors that will serve on the charitable organization’s board. These directors may not participate in the board’s discussions concerning contributions to the charitable organization, and may not vote on the matter. PO 00000 Frm 00028 Fmt 4701 Sfmt 4702 § 192.575 Other requirements for charitable organizations. (a) Charter and gift instrument requirements. The charitable organization’s charter (or trust agreement) and the gift instrument for the contribution must provide that: (1) The appropriate Federal banking agency may examine the charitable organization at the charitable organization’s expense; (2) The charitable organization must comply with all supervisory directives that the appropriate Federal banking agency imposes; (3) The charitable organization must operate according to written policies adopted by its board of directors (or board of trustees), including a conflict of interest policy; (4) The charitable organization must not engage in self-dealing; and (5) The charitable organization must comply with all laws necessary to maintain its tax-exempt status under the Internal Revenue Code. (b) Stock certificate requirement. The savings association must include the following legend in the stock certificates of shares that the savings association contributes to the charitable organization or that the charitable organization otherwise acquires: ‘‘The board of directors must consider the shares that this stock certificate represents as voted in the same ratio as all other shares voted on each proposal considered by the shareholders, as long as the shares are controlled by the charitable organization.’’ (c) Voting ratio. As long as the charitable organization controls shares, the savings association must consider those shares as voted in the same ratio as all of the shares voted on each proposal considered by the savings association’s shareholders. (d) Filing requirement. After the savings association completes its stock offering, it must submit copies of the following documents to the appropriate OCC licensing office if it is a Federal savings association or with the appropriate FDIC region if it is a State savings association: (1) The charitable organization’s charter and bylaws (or trust agreement); (2) The charitable organization’s operating plan (within six months after the savings association’s stock offering); (3) The charitable organization’s conflict of interest policy; and (4) The gift instrument for the contributions of either stock or cash to the charitable organization. E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules Subpart B—Voluntary Supervisory Conversions § 192.600 Voluntary supervisory conversions. (a) In general. A savings association must comply with this subpart and part 16 to engage in a voluntary supervisory conversion. This subpart applies to all voluntary supervisory conversions under sections 5(i)(1), (i)(2), and (p) of HOLA, 12 U.S.C. 1464(i)(1), (i)(2), and (p). (b) Application of subpart A. Subpart A of this part also applies to a voluntary supervisory conversion, unless a requirement is clearly inapplicable. § 192.605 Conducting a voluntary supervisory conversion. A savings association may conduct a voluntary supervisory conversion through one of the following methods: (a) A savings association may sell its shares or the shares of a holding company to the public under the requirements of subpart A of this part. (b) A savings association may convert to stock form by merging into an interim Federal- or State-chartered stock association. (c) A savings association may sell its shares directly to an acquiror, who may be a person, company, depository institution, or depository institution holding company. (d) A savings association may merge or consolidate with an existing or newly created depository institution. The merger or consolidation must be authorized by, and is subject to, other applicable laws and regulations. § 192.610 Member rights in a voluntary supervisory conversion. Savings association members do not have the right to approve or participate in a voluntary supervisory conversion, and will not have any legal or beneficial ownership interests in the converted association, unless the appropriate Federal banking agency provides otherwise. Savings association members may have interests in a liquidation account, if one is established. Eligibility jbell on DSKJLSW7X2PROD with PROPOSALS4 § 192.625 Eligibility for a voluntary supervisory conversion. (a) Eligibility. An insured savings association may be eligible to convert under this subpart B if: (1) The savings association is significantly undercapitalized (or undercapitalized and a standard conversion that would make the savings association adequately capitalized is not feasible) and the savings association will be a viable entity following the conversion; VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 (2) Severe financial conditions threaten the savings association’s stability and a conversion is likely to improve its financial condition; (3) The FDIC will assist the savings association under section 13 of the Federal Deposit Insurance Act, 12 U.S.C. 1823; or (4) The savings association is in receivership and a conversion will assist the savings association. (b) Requirements for viability after conversion. The savings association will be a viable entity following the conversion if it satisfies all of the following: (1) The savings association will be adequately capitalized as a result of the conversion; (2) The savings association, its proposed conversion, and its acquiror(s) comply with applicable supervisory policies; (3) The transaction is in the savings association’s best interest, and the best interest of the Deposit Insurance Fund and the public; and (4) The transaction will not injure or be detrimental to the savings association, the Deposit Insurance Fund, or the public interest. § 192.630 Eligibility of State-chartered savings bank for voluntary supervisory conversion. A State-chartered savings bank may be eligible to convert to a Federal stock savings bank under this subpart if: (a) The FDIC certifies under section 5(o)(2)(C) of the HOLA that severe financial conditions threaten the savings bank’s stability and that the voluntary supervisory conversion is likely to improve its financial condition; or (b) The savings bank meet the following conditions: (1) The savings bank’s liabilities exceed its assets, as calculated under generally accepted accounting principles, assuming the savings bank is a going concern; and (2) The savings bank will issue a sufficient amount of permanent capital stock to meet its applicable FDIC capital requirement immediately upon completion of the conversion, or the FDIC determines that the savings bank will achieve an acceptable capital level within an acceptable time period. Plan of Supervisory Conversion § 192.650 Contents of plan of voluntary supervisory conversion. A majority of the board of directors of the savings association must adopt a plan of voluntary supervisory conversion. The savings association must include all of the following information in its plan of voluntary supervisory conversion. PO 00000 Frm 00029 Fmt 4701 Sfmt 4702 1079 (a) The savings association’s name and address. (b) A complete description of the proposed voluntary supervisory conversion transaction that also describes plans for any liquidation account. (c) Certified copies of all resolutions relating to the conversion adopted by the board of directors of the savings association. Voluntary Supervisory Conversion Application § 192.660 Contents of voluntary supervisory conversion application. A savings association must include all of the following information and documents in a voluntary supervisory conversion application to the appropriate OCC licensing office if it is a Federal savings association and to the appropriate FDIC region if it is a State savings association under this subpart: (a) Eligibility. (1) Evidence establishing that the savings association meets the eligibility requirements under § 192.625 or § 192.630. (2) An opinion of qualified, independent counsel or an independent, certified public accountant regarding the tax consequences of the conversion, or an IRS ruling indicating that the transaction qualifies as a tax-free reorganization. (3) An opinion of independent counsel indicating that applicable State law authorizes the voluntary supervisory conversion, if the conversion involves a State-chartered savings association converting to State stock form. (b) Plan of conversion. A plan of voluntary supervisory conversion that complies with § 192.650. (c) Business plan. A business plan that complies with § 192.105, when required by the appropriate Federal banking agency. (d) Financial data. (1) The savings association’s most recent audited financial statements and Consolidated Reports of Condition and Income or Call Report, as appropriate. The savings association must explain how its current capital levels make the savings association eligible to engage in a voluntary supervisory conversion under § 192.625 or § 192.630. (2) A description of the savings association’s estimated conversion expenses. (3) Evidence supporting the value of any non-cash asset contributions. Appraisals must be acceptable to the appropriate Federal banking agency and the non-cash assets must meet all other appropriate Federal banking agency policy guidelines. E:\FR\FM\08JAP4.SGM 08JAP4 jbell on DSKJLSW7X2PROD with PROPOSALS4 1080 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules (4) Pro forma financial statements that reflect the effects of the transaction. The savings association must identify its tangible, core, and risk-based capital levels and show the adjustments necessary to compute the capital levels. The savings association must prepare its pro forma statements in conformance with the appropriate Federal banking agency’s regulations and the applicable accounting requirements. (5) A statement describing the aggregate number and percentage of shares that each director, officer, and any affiliates or associates of the director or officer will purchase. (e) Proposed documents. (1) The savings association’s proposed charter and bylaws. (2) The savings association’s proposed stock certificate form. (3) Any securities offering circular and other securities disclosure materials to be used in connection with the proposed voluntary supervisory conversion. (f) Agreements. (1) A copy of any agreements between the savings association and proposed purchasers. (2) A copy and description of all existing and proposed employment contracts. The savings association must describe the term, salary, and severance provisions of the contract, the identity and background of the officer or employee to be employed, and the amount of any conversion shares to be purchased by the officer or employee or his or her affiliates or associates. (g) Related filings and applications. (1) All filings required under the securities offering rules of 12 CFR parts 16 and 192. (2) Any required Change in Bank Control Act notice and rebuttal of control submissions under 12 U.S.C. 1817(j) and 12 CFR 5.50, or copies of any Holding Company Act applications, including prior-conduct certifications listed under the appropriate Federal banking agency’s regulatory guidance. (3) A subordinated debt application, if applicable. (4) Applications for permission to organize a stock association and for approval of a merger, if applicable, and a copy of any application for FDIC insurance of accounts, if applicable. (5) A statement describing any other applications required under Federal or State banking laws for all transactions related to the conversion, copies of all dispositive documents issued by regulatory authorities relating to the applications, and, if requested by the appropriate Federal banking agency, copies of the applications and related documents. VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 (h) Other information. (1) A statement indicating the role each director, officer, and affiliate of the savings association or associate of the director or officer will have after the conversion. (2) Any additional information requested by the OCC, as authorized by law. (i) Waiver request. A description of any of the features of the savings association’s application that do not conform to the requirements of this subpart, including any request for waiver of these requirements. Appropriate Federal Banking Agency Review of the Voluntary Supervisory Conversion Application § 192.670 Approval of voluntary supervisory conversion application. The appropriate Federal banking agency will generally approve a savings association’s application to engage in a voluntary supervisory conversion unless it determines: (a) The savings association does not meet the eligibility requirements for a voluntary supervisory conversion under § 192.625 or § 192.630 or because the proceeds from the sale of conversion stock, less the expenses of the conversion, would be insufficient to satisfy any applicable viability requirement; (b) The transaction is detrimental to or would cause potential injury to the savings association or the Deposit Insurance Fund or is contrary to the public interest; (c) The savings association or its acquiror, or the controlling parties or directors and officers of the savings association or its acquiror, have engaged in unsafe or unsound practices in connection with the voluntary supervisory conversion; or (d) The savings association fails to justify an employment contract incidental to the conversion, or the employment contract will be an unsafe or unsound practice or represent a sale of control. In a voluntary supervisory conversion, the appropriate Federal banking agency generally will not approve employment contracts of more than one year for existing management. § 192.675 Conditions imposed upon approval of voluntary supervisory conversion application. (a) Required condition. The appropriate Federal banking agency will condition approval of a voluntary supervisory conversion application on all of the following. (1) The savings association must complete the conversion stock sale within three months after the appropriate Federal banking agency PO 00000 Frm 00030 Fmt 4701 Sfmt 4702 approves the application. The appropriate Federal banking agency may grant an extension for good cause. (2) The savings association must comply with all filing requirements of this part, and 12 CFR part 16. (3) The savings association must submit an opinion of independent legal counsel indicating that the sale of its shares complies with all applicable State securities law requirements. (4) The savings association must comply with all applicable laws, rules, and regulations. (5) The savings association must satisfy any other requirements or conditions the appropriate Federal banking agency may impose. (b) Discretionary conditions. The appropriate Federal banking agency may condition approval of a voluntary supervisory application for conversion on either of the following: (1) The savings association must satisfy any conditions and restrictions the appropriate Federal banking agency imposes to prevent unsafe or unsound practices, to protect the Deposit Insurance Fund and the public interest, and to prevent potential injury or detriment to the savings association before and after the conversion. The appropriate Federal banking agency may impose these conditions and restrictions on the savings association (before and after the conversion) or, as appropriate, the savings association’s acquiror, controlling parties, or its directors and officers; or (2) The savings association must infuse a larger amount of capital, if necessary, for safety and soundness reasons. Offers and Sales of Stock § 192.680 Offer and sale of shares in a voluntary supervisory conversion. If a savings association converts under this subpart, it must offer and sell its shares in accordance with the applicable requirements of 12 CFR parts 16 and 192. Post-Conversion § 192.690 Restrictions on acquisition of additional shares after voluntary supervisory conversion. For three years after the completion of a voluntary supervisory conversion, neither the savings association nor its controlling shareholder(s) may acquire shares from minority shareholders without the appropriate Federal banking agency’s prior approval. E:\FR\FM\08JAP4.SGM 08JAP4 Federal Register / Vol. 85, No. 5 / Wednesday, January 8, 2020 / Proposed Rules § 195.11 PART 195—COMMUNITY REINVESTMENT 52. The authority citation for part 195 continues to read as follows: ■ Authority: 12 U.S.C. 1462a, 1463, 1464, 1814, 1816, 1828(c), 2901 through 2908, and 5412(b)(2)(B). 53. Section 195.11 is amended by revising paragraph (a) to read as follows: jbell on DSKJLSW7X2PROD with PROPOSALS4 ■ VerDate Sep<11>2014 19:02 Jan 07, 2020 Jkt 250001 Authority, purposes, and scope. (a) Authority. This part is issued under the Community Reinvestment Act of 1977 (CRA), as amended (12 U.S.C. 2901 et seq.); section 5, as amended, and sections 3, and 4, as added, of the Home Owners’ Loan Act of 1933 (12 U.S.C. 1462a, 1463, and 1464); sections 4, 6, and 18(c), as amended of the Federal Deposit Insurance Act (12 U.S.C. 1814, 1816, 1828(c)); and section 312 of the PO 00000 Frm 00031 Fmt 4701 Sfmt 9990 1081 Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5412(b)(2)(B)). * * * * * Dated: December 20, 2019. Morris R. Morgan, First Deputy Comptroller, Comptroller of the Currency. [FR Doc. 2019–28074 Filed 1–7–20; 8:45 am] BILLING CODE 4810–33–P E:\FR\FM\08JAP4.SGM 08JAP4

Agencies

[Federal Register Volume 85, Number 5 (Wednesday, January 8, 2020)]
[Proposed Rules]
[Pages 1052-1081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28074]



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Vol. 85

Wednesday,

No. 5

January 8, 2020

Part IV





Department of Treasury





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Office of the Comptroller of the Currency





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12 CFR Parts 3, 4, 11, et al.





Replica Motor Vehicles; Vehicle Identification Number (VIN) 
Requirements; Manufacturer Identification; Certification; Proposed Rule

Federal Register / Vol. 85 , No. 5 / Wednesday, January 8, 2020 / 
Proposed Rules

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 3, 4, 11, 16, 19, 23, 26, 32, 108, 112, 141, 160, 161, 
163, and 192

[Docket ID OCC-2018-0041]
RIN 1557-AE21


Employment Contracts, Mutual to Stock Conversions, Technical 
Amendments

AGENCY: Office of the Comptroller of the Currency (OCC), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The OCC seeks comment on a proposed rule that would implement 
changes recommended in the March 2017 Economic Growth and Regulatory 
Paperwork Reduction Act report, including the repeal of the OCC's 
employment contract rule for Federal savings associations, and amend 
the OCC's fiduciary rules. The proposed rule also would amend the OCC's 
rule for conversions from mutual to stock form of a savings association 
to reduce burden, increase flexibility, and update cross-references. 
Additionally, the proposed rule would update cross-references to 
repealed and integrated rules, remove unnecessary definitions, and make 
technical changes to other OCC rules.

DATES: Comments must be received on or before March 9, 2020.

ADDRESSES: Commenters are encouraged to submit comments through the 
Federal eRulemaking Portal or email, if possible. Please use the title 
``Employment Contracts, Mutual to Stock Conversions, Technical 
Amendments'' to facilitate the organization and distribution of the 
comments. You may submit comments by any of the following methods:
     Federal eRulemaking Portal--Regulations.gov Classic or 
Regulations.gov Beta.
    Regulations.gov Classic: go to https://www.regulations.gov/. Enter 
``Docket ID OCC-2018-0041'' in the Search Box and click ``Search.'' 
Click on ``Comment Now'' to submit public comments. For help with 
submitting effective comments please click on ``View Commenter's 
Checklist.'' Click on the ``Help'' tab on the Regulations.gov home page 
to get information on using Regulations.gov, including instructions for 
submitting public comments.
    Regulations.gov Beta: go to https://beta.regulations.gov/ or click 
``Visit New Regulations.gov Site'' from the Regulations.gov Classic 
homepage. Enter ``Docket ID OCC-2018-0041'' in the Search Box and click 
``Search.'' Public comments can be submitted via the ``Comment'' box 
below the displayed document information or by clicking on the document 
title and then clicking the ``Comment'' box on the top-left side of the 
screen. For help with submitting effective comments please click on 
``Commenter's Checklist.'' For assistance with the Regulations.gov Beta 
site, please call (877)-378-5457 (toll free) or (703) 454-9859 Monday-
Friday, 9am-5pm ET or email [email protected].
     Email: [email protected].
     Mail: Chief Counsel's Office, Attention: Comment 
Processing, Office of the Comptroller of the Currency, 400 7th Street 
SW, Suite 3E-218, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218, 
Washington, DC 20219.
     Fax: (571) 465-4326.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2018-0041'' in your comment. In general, the OCC will 
enter all comments received into the docket and publish the comments on 
the Regulations.gov website without change, including any business or 
personal information provided such as name and address information, 
email addresses, or phone numbers. Comments received, including 
attachments and other supporting materials, are part of the public 
record and subject to public disclosure. Do not include any information 
in your comment or supporting materials that you consider confidential 
or inappropriate for public disclosure.
    You may review comments and other related materials that pertain to 
this rulemaking action by any of the following methods:
     Viewing Comments Electronically--Regulations.gov Classic 
or Regulations.gov Beta:
    Regulations.gov Classic: Go to https://www.regulations.gov/. Enter 
``Docket ID OCC-2018-0041'' in the Search box and click ``Search.'' 
Click on ``Open Docket Folder'' on the right side of the screen. 
Comments and supporting materials can be viewed and filtered by 
clicking on ``View all documents and comments in this docket'' and then 
using the filtering tools on the left side of the screen. Click on the 
``Help'' tab on the Regulations.gov home page to get information on 
using Regulations.gov. The docket may be viewed after the close of the 
comment period in the same manner as during the comment period.
    Regulations.gov Beta: Go to https://beta.regulations.gov/ or click 
``Visit New Regulations.gov Site'' from the Regulations.gov Classic 
homepage. Enter ``Docket ID OCC-2018-0041'' in the Search Box and click 
``Search.'' Click on the ``Comments'' tab. Comments can be viewed and 
filtered by clicking on the ``Sort By'' drop-down on the right side of 
the screen or the ``Refine Results'' options on the left side of the 
screen. Supporting materials can be viewed by clicking on the 
``Documents'' tab and filtered by clicking on the ``Sort By'' drop-down 
on the right side of the screen or the ``Refine Results'' options on 
the left side of the screen.'' For assistance with the Regulations.gov 
Beta site please call (877) 378-5457 (toll free) or (703) 454-9859 
Monday-Friday, 9am-5pm ET or email [email protected].
    The docket may be viewed after the close of the comment period in 
the same manner as during the comment period.
     Viewing Comments Personally: You may personally inspect 
comments at the OCC, 400 7th Street SW, Washington, DC 20219. For 
security reasons, the OCC requires that visitors make an appointment to 
inspect comments. You may do so by calling (202) 649-6700 or, for 
persons who are deaf or hearing impaired, TTY, (202) 649-5597. Upon 
arrival, visitors will be required to present valid government-issued 
photo identification and submit to security screening in order to 
inspect comments.

FOR FURTHER INFORMATION CONTACT: For additional information, contact 
Charlotte Bahin, Senior Advisor for Thrift Supervision, (202) 649-6281, 
Marta Stewart-Bates, Senior Attorney, (202) 649-5490, Chief Counsel's 
Office, for persons who are deaf or hearing impaired, TTY, (202) 649-
5597, Office of the Comptroller of the Currency, 400 7th Street SW, 
Washington, DC 20219.

SUPPLEMENTARY INFORMATION: 

I. Background

    The OCC continually reviews its regulations with the goal of 
updating them to reduce burden, increase flexibility, and provide 
clarity where possible. Section 2222 of the Economic Growth and 
Regulatory Paperwork Reduction Act of 1996 (EGRPRA) requires that, at 
least once every 10 years, the Federal Financial Institutions 
Examination Council (FFIEC) and each appropriate Federal banking agency 
(Agencies) represented on the FFIEC (the OCC, the Federal Deposit 
Insurance Corporation (FDIC), and the Board of Governors of the Federal 
Reserve System (Federal Reserve Board))

[[Page 1053]]

conduct a review of their regulations.\1\ The purpose of this review is 
to identify outdated or otherwise unnecessary regulatory requirements 
imposed on insured depository institutions. Specifically, EGRPRA 
requires the Agencies to categorize and publish their regulations for 
comment, requesting commenters to identify areas of the regulations 
that are outdated, unnecessary, or unduly burdensome, and eliminate 
unnecessary regulations to the extent that such action is appropriate. 
The Agencies completed their second EGRPRA review on March 30, 2017, 
and published a Report to Congress in the Federal Register.\2\ The OCC 
seeks comment on a proposed rule that addresses recommendations from 
the March 2017 EGRPRA report, including the repeal of 12 CFR 163.39 
(Federal savings association employment contracts) and possible 
amendments to 12 CFR 9.8 and 150.420 (fiduciary recordkeeping) and 9.10 
and 150.320 (acceptable collateral for fiduciary funds awaiting 
investment or distribution).\3\
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    \1\ Section 2222 of EGRPRA is codified at 12 U.S.C. 3311(b).
    \2\ 82 FR 15900 (March 30, 2017).
    \3\ See FFIEC Joint Report to Congress (March 2017), available 
at https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf.
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    The proposed rule would amend part 192 (Federal savings association 
conversions from mutual to stock form) to reduce burden, increase 
flexibility, and replace cross-references to repealed 12 CFR 197 
(Securities offerings rules for Federal savings associations) with 
cross-references to part 16 (Securities offering disclosure rules). The 
proposed amendments would clarify which forms and accounting standards 
savings associations must use in connection with a part 192 conversion. 
The proposed rule also would increase flexibility and reduce burden for 
Federal savings associations by encouraging electronic filing, 
electronic meetings, and notice by email and by reducing the number of 
copies of proxy materials that must be filed with the OCC.
    Finally, the proposed rule contains various technical and 
clarifying amendments to parts 3, 4, 11, 16, 19, 23, 26, 32, 108, 112, 
141, 160, 161, and 163.

II. Description of the Proposal

    Employment Contracts for Federal Savings Associations.
    Twelve CFR 163.39 sets forth requirements for Federal savings 
associations that enter into employment contracts with their officers 
and employees. Section 163.39(a) requires a Federal savings 
association's board of directors to approve all employment contracts 
with its officers and other employees and for those employment 
contracts to be in writing. Section 163.39(a) also prohibits a Federal 
savings association from entering into an employment contract with any 
of its officers or other employees if the employment contract would 
constitute an unsafe or unsound practice. Section 163.39(b) sets forth 
provisions that a Federal savings association must include in the 
contract, including the Federal savings association's right to 
terminate the employee at will. There are no similar requirements for 
national banks.
    In March 2017, the FFIEC made its Joint Report to Congress under 
EGRPRA. One EGRPRA commenter recommended that the OCC eliminate Sec.  
163.39 in its entirety because the regulation only applies to Federal 
savings associations and there is no reason to distinguish Federal 
savings associations from national banks. Additionally, the commenter 
stated that it is unnecessary to require board approval of all 
employment contracts because there are comprehensive safety and 
soundness standards and interagency guidance on compensation. In the 
EGRPRA report, the OCC described the plan to limit the requirement for 
board approval of employment contracts to senior executive officers 
rather than all employees.
    Instead of limiting the scope of Sec.  163.39 in the proposed rule 
to senior executive officers, the OCC proposes to eliminate Sec.  
163.39 in its entirety. This approach would provide for consistent 
treatment of Federal savings associations and national banks with 
respect to employment contracts and compensation. The OCC believes that 
the current framework of rules and guidance on compensation and 
employment contracts, independent of Sec.  163.39, is adequate to 
address and safeguard against unsafe and unsound employment and 
compensation practices for Federal savings associations. Federal 
savings associations, like national banks, are subject to the safety 
and soundness standards of 12 U.S.C. 1818; 12 CFR part 30, the 
prohibition on unsafe and unsound compensation in appendix A to part 
30; the prompt corrective action restrictions on compensation to senior 
executive officers in 12 CFR 6.6(a)(3) and section 38 of the Federal 
Deposit Insurance Act (FDIA); and are informed by the 2010 Interagency 
Guidance on Sound Incentive Compensation Policies. Moreover, the boards 
of directors at national banks and Federal savings associations have 
oversight responsibilities for compensation, benefits arrangements, and 
employment contracts for their executive officers and employees.
    The proposed rule also would reduce burden and increase flexibility 
for Federal savings associations by eliminating the requirement for 
written contracts that must be approved by the board of directors, 
although Federal savings associations would not be prohibited from 
voluntarily using those procedures for their employment contracts. It 
is a good corporate governance practice to have agreements relating to 
employment and compensation in writing and that the board, or committee 
thereof, review and approve those agreements. The proposed repeal of 
Sec.  163.39 would not alter any other obligation with regard to 
employment agreements entered into by a Federal savings association. 
For example, if there are other laws and regulations that apply to 
Federal savings associations regarding employment contracts, the repeal 
of Sec.  163.39 does not affect the application of those laws.
    The OCC invites comment on whether the OCC should repeal all of 
Sec.  163.39 or whether there are advantages to retaining the 
provisions of the rule that provide that an officer or employee has no 
right to receive compensation or other benefits after termination for 
cause. Do the safety and soundness standards in part 30, the 
prohibition on unsafe and unsound compensation in appendix A to part 
30, the 2010 Interagency Guidance on Sound Incentive Compensation 
Policies, board of directors' oversight, and the prompt corrective 
action restrictions on compensation to senior executive officers 
provide appropriate safeguards regarding employment and compensation 
for the officers and employees of Federal savings associations? Would 
the repeal of Sec.  163.39 reduce burden for Federal savings 
associations by removing the requirement that employment contracts be 
in writing and approved by the board? Would the repeal of Sec.  163.39 
reduce burden or provide flexibility for Federal savings associations 
for other reasons?
    Fiduciary Recordkeeping.
    Part 9 sets forth the standards that apply to the fiduciary 
activities of national banks. Part 150 sets forth the standards that 
apply to the fiduciary activities of Federal savings associations. 
Sections 9.8 and 150.420 contain requirements for the documentation and 
retention of records for fiduciary accounts at national banks and 
Federal savings associations, respectively. Sections 9.8(b) and

[[Page 1054]]

150.420 require a national bank and Federal savings association to 
retain fiduciary account records for a period of three years from the 
later of the termination of the account or the termination of any 
litigation relating to the account. An EGRPRA commenter recommended 
that the OCC amend 12 CFR 9.8(b) to require the retention of documents 
for a ``necessary period'' or to refer to applicable State law on the 
retention of documents, instead of the current three-year requirement. 
The commenter explained that three years may be inadequate to protect 
beneficiaries in some situations, such as a suit filed by a beneficiary 
against a predecessor trustee more than three years after an account is 
closed but before a State statute of limitations has run. In the EGRPRA 
report, the OCC agreed to consider aligning this retention requirement 
with State statutes of limitation.\4\
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    \4\ EGRPRA Joint Report to Congress at p. 71, available at 
https://www.ffiec.gov/pdf/2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf.
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    To address this comment, one option would be to amend Sec. Sec.  
9.8(b) and 150.420 to require a national bank or Federal savings 
association to retain fiduciary account records for the later of three 
years from the termination of an account, three years from the 
termination of any litigation relating to the account, or the minimum 
period required by applicable fiduciary State law. A concern with this 
approach is that it would impose additional burden on national banks 
and Federal savings associations if it increases the number of years an 
institution would be required to retain records and may also require 
institutions to monitor changes to states' fiduciary laws.
    Another option would be to decline to amend Sec. Sec.  9.8(b) and 
150.420, after having considered the burden related to aligning this 
regulation's existing three-year documentation and record retention 
requirement with applicable State fiduciary law. The OCC notes that 
nothing in Sec. Sec.  9.8(b) or 150.420 prohibits financial 
institutions from holding fiduciary account records longer than the 
three-year period in order to comply with State law. The OCC invites 
comment on these options for Sec. Sec.  9.8(b) and 150.420.
    Acceptable Collateral for Self-Deposited Trust Funds.
    Under 12 U.S.C. 92a(d) and 12 CFR 9.10(b)(1), a national bank may 
deposit trust funds awaiting investment or distribution in the 
commercial, savings, or other department of the bank, unless prohibited 
by applicable law. To the extent the funds are not insured by the 
Federal Deposit Insurance Corporation (FDIC), the national bank must 
set aside U.S. bonds or other securities and assets designated by the 
OCC as collateral for the deposit. Sections 9.10(b)(2) and 150.320 list 
acceptable collateral types for national banks and Federal savings 
associations, respectively. During the notice and comment period for 
the EGRPRA report, one commenter suggested an expansion of the Sec.  
9.10(b)(2) list of acceptable collateral for fiduciary funds to allow 
for other instruments that provide similar protection from loss. In 
response to this comment, the OCC is contemplating expanding the list 
of acceptable collateral.
    The OCC requests comment on whether to expand the list of 
acceptable collateral in Sec. Sec.  9.10(b)(2) and 150.320 to include 
additional types of instruments. What other instruments should qualify 
as acceptable collateral and why? Do these instruments provide 
sufficient protection from loss to qualify as acceptable collateral 
under Sec.  9.10(b)(2) and 150.320?
    Amendments to securities offering disclosure rules.
    Twelve CFR 16.8 provides an exemption from the registration and 
prospectus requirements for offers and sales of national bank- or 
Federal savings association-issued securities that satisfy the 
requirements of SEC Regulation A (17 CFR part 230) (General rules and 
regulations, Securities Act of 1933). The SEC's Form 1-A, the offering 
statement required by Regulation A, requires audited financial 
statements for certain offerings. However, a national bank or Federal 
savings association in organization does not have an operating history 
and cannot generate detailed financial statements that require an 
audit. The audited financial statements of a national bank or Federal 
savings association in organization typically do not add materially to 
the information already available to the OCC through the chartering 
process. Therefore, the OCC is proposing to revise Sec.  16.15(e) to 
clarify that a national bank or Federal savings association in 
organization is not required to include audited financial statements as 
part of its offering statement for the issuance of securities pursuant 
to Sec.  16.8, unless the OCC determines otherwise.
    Twelve CFR 16.17 sets forth the filing requirements and inspection 
of documents for securities offerings. The OCC is proposing to add a 
sentence to Sec.  16.17(b) to clarify that all registration statements, 
offering documents, amendments, notices, or other documents relating to 
a mutual to stock conversion pursuant to 12 CFR part 192 must be filed 
with the appropriate OCC Licensing office and not the Securities and 
Corporate Practices Division of the OCC.
    Removal, suspension, or debarment of independent public 
accountants.
    Section 36(g)(4)(A) of the FDIA (12 U.S.C. 1831m(g)(4)(A)) provides 
that the FDIC or an appropriate Federal banking agency may remove, 
suspend, or bar an independent public accountant, upon a showing of 
good cause, from performing audit services required by section 36. The 
OCC's implementing rules for insured national banks and insured Federal 
branches of foreign banks are set forth in subpart P to 12 CFR part 19. 
The former OTS implemented section 36(g)(4) with respect to insured 
savings associations at 12 CFR 513.8, and these rules are substantively 
identical to subpart P. However, when republishing the former OTS rules 
as OCC rules pursuant to Title III of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (Dodd-Frank Act), the OCC inadvertently did 
not republish 12 CFR 513.8 nor amend subpart P of part 19 to apply to 
Federal savings associations. This proposed amendment would correct 
that error by amending subpart P to also apply to insured Federal 
savings associations.
    The OCC also proposes clarifying amendments to subpart P. First, 
the proposal would make a clarifying change to Sec.  19.243(b)(2), 
which provides that hearings will be conducted in the same manner as 
other hearings under the Uniform Rules of Practice and Procedure (12 
CFR part 19, subpart A), by adding a cross-reference to the specific 
rules and limitations for subpart P hearings set forth in Sec.  
19.243(c)(4). Second, the OCC proposes a clarifying change to Sec.  
19.243(c)(3), which currently states that an accountant or firm 
immediately suspended from performing audit services may, within 10 
calendar days after service of the notice of immediate suspension, file 
a stay of the immediate suspension with the OCC, and that if no 
petition is filed, the immediate suspension will remain in effect. The 
proposed amendment would clarify that if the accountant or firm has not 
filed a petition within 10 calendar days, they have waived their right 
to file a petition. The proposal also would add a cross-reference to 
Sec.  19.243(c)(2) in Sec.  19.243(c)(3), which sets forth the rules 
for when the OCC may lift a suspension. Third, the OCC proposes to 
amend Sec.  19.243(c)(4), which provides that upon request of a stay 
petition, the Comptroller must designate a presiding officer who must 
fix a place and time for the hearing that is not more than 10 calendar 
days after receipt of

[[Page 1055]]

the petition, unless extended by the OCC at the request of petitioner. 
The proposed amendment would provide that a later hearing date may 
occur only if permitted by the OCC, and, therefore, the request for an 
extension would not receive automatic approval. This change would allow 
the OCC some discretion as to how far into the future a hearing may 
take place. Fourth, the proposal would clarify that subpart P to part 
19 applies only to insured Federal branches by adding ``insured Federal 
branches of foreign banks'' where appropriate and removing references 
to Federal ``agencies.'' Section 36(g)(4) of the FDIA only applies to 
insured depository institutions and no insured Federal agencies exist. 
Finally, the proposed rule would replace the word ``shall'' with 
``must,'' ``will,'' or other appropriate language, which is the 
recommended drafting style of the Federal Register.
    Definitions of small business loans and small farm loans in lending 
limits rules.
    The OCC is proposing revised definitions of ``small business 
loans'' and ``small farm loans or extensions of credit'' in 12 CFR 
32.2(cc) and (dd) of the lending limits rule to align the definitions 
with the language of the Call Report instructions. The revisions to 
Sec.  32.2(dd) will clarify that the $500,000 limit contained within 
the ``loans to small farms'' definition in the Call Report instructions 
does not apply for purposes of the supplemental lending limit program.
    Savings Association Conversions from Mutual to Stock Form.
    The OCC is proposing amendments to 12 CFR part 192, which governs 
how a savings association may convert from mutual to stock form of 
ownership under standard and voluntary supervisory conversions. The 
proposed amendments would reduce burden and increase flexibility for 
savings associations and would make a number of technical and 
clarifying amendments. Unless otherwise noted, part 192 applies to both 
Federal and State savings associations.
    Forms. The proposed rule would amend Sec.  192.5(b) to clarify that 
a savings association must use the forms prescribed under part 192 and 
12 CFR part 16 (the securities offering disclosure rules for Federal 
savings associations and national banks), including the applicable form 
for a registration statement under Sec.  16.15. Use of the registration 
forms required by Sec.  16.15 is the standard industry practice, and 
the proposed amendment is intended to clarify the use of such forms 
and, therefore, generally would not increase burden on savings 
associations. The OCC also is proposing to clarify the accounting 
guidance and requirements that should be used in the preparation and 
filing of these forms, financial statements, and related financial data 
under part 192. The accounting guidance and requirements which applied 
to part 192 conversions and proxy materials were repealed in 2017.\5\ 
New Sec.  192.5(d) would provide that the institution must prepare and 
present the form and content of financial statements and related 
financial data in a filing under part 192 in accordance with U.S. 
Generally Accepted Accounting Principles (GAAP), pursuant to 12 U.S.C. 
1463(b)(2)(A), and other applicable accounting guidance and 
requirements as specified by the OCC in the relevant mutual to stock 
conversion forms required under Sec.  192.5(b). The OCC notes that it 
is currently revising its forms under part 192, including Form AC 
(Application for Conversion); Form PS (Proxy Statement); Form OC 
(Offering Circular); and Form OF (Order Form), to conform with these 
proposed amendments to part 192.
---------------------------------------------------------------------------

    \5\ See 82 FR 8082 (January 23, 2017).
---------------------------------------------------------------------------

    The proposed rule also would make a technical change to this 
section by defining ``OCC'' as the Office of the Comptroller of the 
Currency in the text of Sec.  192.5(b).
    Electronic filing and computation of time. The OCC is proposing to 
add a new Sec.  192.7 to encourage the electronic filing of all part 
192 applications, notices, or other documents through http://www.banknet.gov, consistent with other licensing-related filings.\6\ 
The OCC also is proposing a new Sec.  192.8 to clarify the computation 
of time under part 192 when the last day of a time period falls on a 
Saturday, Sunday, or Federal holiday. Specifically, in computing the 
time period, the OCC would exclude the day of the act or event (e.g., 
the date an application is received by the OCC) from when the period 
begins to run. When the last day of a time period is a Saturday, 
Sunday, or Federal holiday, the time period would run until the end of 
the next day that is not a Saturday, Sunday, or Federal holiday. This 
amendment would make the computation of time under part 192 consistent 
with the computation of time rule that applies to corporate activities 
and transactions pursuant to 12 CFR part 5.\7\
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    \6\ See 12 CFR 5.2(d).
    \7\ See 12 CFR 5.12.
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    Definitions. In Sec.  192.25, the OCC is proposing to add 
definitions of ``community offering,'' ``offering circular,'' and 
``voluntary supervisory conversion,'' as these terms are currently 
undefined in part 192. The proposal defines ``community offering'' as 
the offering to sell to members of the general public in the savings 
association's community the securities not subscribed for in the 
subscription offering and provides that the community offering may 
occur concurrently with the subscription offering and any syndicated 
community offering or upon conclusion of the subscription offering. The 
proposal defines ``offering circular'' as the securities offering 
materials for the conversion. The proposal defines ``voluntary 
supervisory conversion'' as a mutual to stock conversion for a savings 
association that is unable to complete a standard mutual to stock 
conversion under subpart A to part 192 and that meets the eligibility 
requirements of Sec.  192.625.
    The proposed rule would also add a number of definitions to Sec.  
192.25 that are currently included in 12 CFR part 141 (Definition for 
regulations affecting Federal savings associations), and 12 CFR part 
161 (Definitions for regulations affecting all savings associations). 
Although the definitions in parts 141 and 161 apply to part 192, the 
OCC believes that it is more appropriate to include these definitions 
in part 192 than in a separate rule. Specifically, the proposal would 
add the definition of: (1) ``appropriate Federal banking agency'' from 
Sec.  161.7, which is defined as in section 3 of the FDIA (12 U.S.C. 
1813(q)); (2) ``demand accounts'' from Sec.  161.16, which means non-
interest-bearing demand deposits that are subject to check or to 
withdrawal or transfer on negotiable or transferable order to the 
savings association and that are permitted to be issued by statute, 
regulation, or otherwise and are payable on demand; (3) ``Federal 
savings association'' from Sec.  141.11, which means a Federal savings 
association or Federal savings bank chartered under section 5 of the 
Home Owners' Loan Act (HOLA) (12 U.S.C. 1464); (4) ``savings account'' 
from Sec.  161.42, which means any withdrawable account, including a 
demand account, except this term does not mean a tax and loan account, 
a note account, a United States Treasury general account, or a United 
States Treasury time deposit-open account; and (5) ``savings 
association'' from Sec.  161.43, which means a savings association as 
defined in section 3 of the FDIA (12 U.S.C. 1813(b)(1)). In addition, 
the proposed rule would add the definition of ``state'' to mean any 
State of the United States, the District of Columbia, any territory of 
the United

[[Page 1056]]

States, Puerto Rico, Guam, American Samoa, the Trust Territory of the 
Pacific Islands, the Virgin Islands, and the Northern Mariana Islands. 
This definition would be the same as the definition in Sec.  161.50 as 
amended by this proposed rule, discussed below.
    Finally, the proposed rule would add the definition of ``state 
savings association,'' defined to have the same definition as in 
section 3 of the FDIA (12 U.S.C. 1813(b)(3)). This definition is not 
included in parts 141 or 161. However, the OCC believes it would be 
helpful to define this term in part 192 because the proposed rule adds 
the definitions of other related terms.
    Prior to conversion. Twelve CFR 192.100 (Preparing for a 
conversion) requires that a savings association's board, or 
subcommittee of the board, meet with the appropriate Federal banking 
agency before adopting its plan of conversion. The OCC is proposing to 
increase flexibility by allowing in person or electronic board meetings 
for purposes of Sec.  192.100. The OCC also proposes to amend Sec.  
192.115 (Review of business plan by the appropriate Federal banking 
agency) to clarify that the business plan must be filed as a 
confidential exhibit to Form AC (Application for Conversion).
    Plan of conversion. Twelve CFR 192.135 (Notifying members of plan 
of conversion) requires that a savings association promptly notify its 
members that its board of directors adopted a plan of conversion and 
that a copy of the plan is available for the members' inspection in its 
home office and its branch offices. The savings association must make 
this notice by mailing a letter to each member or by publishing a 
notice in the local newspaper in every local community where the 
savings association has an office. The savings association may also 
issue a press release. The OCC proposes to increase flexibility and 
reduce burden by allowing a savings association to email a letter with 
a notification of the plan of conversion instead of mailing a letter to 
its members who receive electronic communication. The proposal also 
would allow a savings association to make the press release available 
on its website.
    Rejection of application for conversion. Twelve CFR 192.150 
(Information required in an application for conversion) provides that 
the appropriate Federal banking agency will not accept for filing, and 
will return, any application for conversion that is executed 
improperly, materially deficient, substantially incomplete, or that 
provides for unreasonable conversion expenses. The OCC proposes to 
amend Sec.  192.150(b) to permit, rather than require, the appropriate 
Federal banking agency to return any application for conversion that is 
executed improperly, materially deficient, substantially incomplete, or 
that provides for unreasonable conversion expenses. A materially 
deficient or substantially incomplete application may not always be 
returned, especially if it is submitted electronically as a PDF 
document or if there are supervisory or enforcement reasons to retain 
the application.
    Notice of filing of application and comment process. Twelve CFR 
192.185 sets forth the process for commenters to submit public comments 
on an application for conversion. Section 192.185 currently requires a 
commenter to file the original and one copy of any comments on an 
application for conversion with the appropriate OCC licensing office. 
The OCC proposes to amend Sec.  192.185 to require the commenter to 
file only one copy of the comment instead of both an original and copy 
of any comments with the appropriate OCC licensing office.
    Proxy solicitation. Twelve CFR 192.275 requires a savings 
association to file seven copies of its revised proxy materials and 
related documents as an amendment to its application for conversion. 
The OCC proposes to revise Sec.  192.275 to reduce burden for savings 
associations by requiring the filing of only one copy of these 
materials with the OCC. The OCC also proposes to amend Sec.  192.275(c) 
to remove the requirement that four copies of the revised proxy 
solicitation materials be marked to clearly indicate the changes from 
the prior filing. Instead, the savings association would need to file 
only one copy of the revised proxy solicitation materials that clearly 
indicates the changes.
    Offering circular requirements. Twelve CFR 192.300 currently 
requires that a Federal savings association file its offering circular 
with the Securities and Corporate Practices Division of the OCC and 
that a State savings association file its offering circular with the 
appropriate FDIC region in compliance with part 192 and Form OC, and, 
where applicable, part 197. The OCC proposes to amend Sec.  192.300 to 
replace the cross-reference to repealed part 197 with a more specific 
cross-reference to the applicable SEC registration statement form 
required under 12 CFR 16.15. Additionally, the OCC is clarifying that a 
Federal savings association must file its offering circular with the 
appropriate OCC Licensing office, not the Securities and Corporate 
Practices Division.
    As a corresponding change, the OCC is proposing to amend Sec.  
16.17 (Filing requirements and inspection of documents) to clarify that 
all registration statements, offering documents, amendments, notices, 
or other documents relating to a mutual to stock conversion pursuant to 
part 192 must be filed with the appropriate OCC Licensing office.
    The proposal would amend Sec. Sec.  192.305(b) and (c), 192.310(a), 
and 192.310(b) to clarify that the SEC, not the ``appropriate Federal 
banking agency,'' declares Federal savings association holding company 
offering circulars effective in mutual to stock conversions under part 
192.
    Offers and sales of stock. Section 192.340(d) states that any 
person who is found to have violated the restrictions in Sec.  
192.340(b) may face prosecution or other legal action. To clarify and 
make consistent the actions that may result from engaging in any of the 
prohibited activities listed in all of Sec.  192.340, the OCC is 
proposing to amend Sec.  192.340(d) to state that persons engaged in 
any of the activities listed in Sec.  192.340(a) and all of Sec.  
192.340(b) may be subject to enforcement actions, civil money 
penalties, or criminal prosecution.
    Priority of accounts. Twelve CFR 192.430 describes the requirements 
for charter amendments, charter cancellations, and new charters that 
apply to a savings association conducting a conversion under part 192. 
The OCC proposes to add a new paragraph in Sec.  192.430 to require 
that, in any conversion pursuant to this section that involves a mutual 
holding company, the charter of each resulting subsidiary savings 
association of the holding company must contain a provision, specified 
in Sec.  192.430(d), indicating that the claims of depositors of the 
savings association have the same priority as the claims of general 
creditors of the savings association not having priority (other than 
any priority arising or resulting from consensual subordination) over 
other general creditors of the association. The former OTS regulation 
for mutual holding companies, 12 CFR 575.9(b) (2011), originally 
required the inclusion of a similar priority of accounts provision in 
the charters of subsidiary savings associations of mutual holding 
companies, regardless of whether the subsidiary had a State or Federal 
charter. When promulgating 12 CFR 575.9(b), the OTS stated that the 
purpose of the priority of accounts provision was to ensure that claims 
of depositors of the insured institution were not relegated to a lower 
priority due to the fact that the deposits confer

[[Page 1057]]

membership rights in the association's mutual holding company.\8\ 
However, after the enactment of the Dodd-Frank Act, which transferred 
the holding company regulations of the former OTS to the Federal 
Reserve Board,\9\ the Federal Reserve Board republished 12 CFR 575.9(b) 
as a Federal Reserve Board regulation without including this charter 
requirement because it related to savings associations and not mutual 
holding companies.\10\ The OCC believes that the priority of accounts 
provision in the former OTS regulation protected member rights, and the 
proposed amendment reinstates this charter requirement for all savings 
association subsidiaries of a mutual holding company.\11\ However, 
notwithstanding this provision, if a savings association is placed in 
conservatorship or receivership, its assets would be distributed in 
accordance with the FDIA, 12 U.S.C. 1811, et seq., and the depositor 
preference provisions of section 11(d)(11) of the FDIA, 12 U.S.C. 
1821(d)(11).
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    \8\ See 56 FR 1126, 1133 (January 11, 1991).
    \9\ Section 312(b)(1), Public Law 111-203. 121 Stat. 1376 (July 
21, 2010).
    \10\ See 76 FR 56508, 56523 (September 13, 2011) (``[This 
section] contains the provisions from section 575.9 concerning 
charters, as revised to delete unnecessary provisions specific to 
savings associations and to reflect the change in supervisory 
authority.'') See also, 12 CFR 239.13.
    \11\ Twelve CFR 5.21 requires all Federal mutual savings 
association charters to include this priority of accounts provision.
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    Liquidation account. Twelve CFR 192.460 sets forth how a savings 
association determines the initial balances of liquidation sub-
accounts. The OCC proposes to revise Sec.  192.460(a)(1) to provide 
that a savings association must calculate the initial liquidation sub-
account balance of each eligible and supplemental eligible account 
holder at the time of the conversion. Because the current Sec.  192.460 
does not explain when a savings association must perform the 
calculation, this amendment would clarify that the initial liquidation 
sub-accounts must be calculated at the time of the conversion.
    Section 192.460(a)(1) provides the calculation for a savings 
account held by an eligible account holder, which is to multiply the 
initial balance of the liquidation account by a fraction that has as 
its numerator the qualifying deposit in the savings account expressed 
in dollars on the eligibility record date and as its denominator the 
total qualifying deposits of all eligible account holders on the 
eligibility record date. Section 192.460(a)(2) provides the same 
calculation for a savings account held by a supplemental eligible 
account holder, except that the eligibility record date is replaced 
with the supplemental eligibility record date. However, the denominator 
used for the calculation of the initial sub-account balances for both 
eligible account holders and supplemental eligible account holders is 
incorrect because the denominator in the current regulation does not 
include both the deposits of eligible account holders and the deposits 
of the supplemental eligible account holders. This results in both 
eligible account holders and supplemental account holders having a 
greater claim than their appropriate portion of the liquidation 
account.
    The proposed amendments would correct this error by inserting 
language in Sec.  192.460 similar to that in the previous OTS 
regulation, renumbering the Sec.  192.460(a)(1) and (2) calculations to 
be in Sec.  192.460(a)(2) and (3), making the denominator in the 
fractions in Sec.  192.460(a)(2) and (3) the total sub-account balances 
of eligible account holders and supplemental eligible account holders 
as calculated in proposed revised Sec.  192.460(a)(5). As proposed, 
Sec.  192.460(a)(5) provides that the denominator for calculating the 
initial sub-account balance of each eligible and supplemental eligible 
account holder is the sum of the numerator calculations in Sec.  
192.460(a)(2) through (4). These proposed changes would make clear that 
the eligible account holders and the supplemental eligible account 
holders would be allocated their proportionate shares of the 
liquidation account (the association's net worth, as defined in 12 CFR 
192.455).
    In addition, the 2002 OTS amendments to the liquidation account 
provision inadvertently removed language that addressed savings 
accounts that increased in value between the eligible record date and 
the supplemental eligibility record date.\12\ As a result, the current 
regulation does not address accounts that increased in size between the 
two dates. Therefore, the OCC proposes to add language in Sec.  
192.460(a)(4) providing that for a savings account held on both the 
eligibility record date and the supplemental eligibility record date, 
the amount of the qualifying deposit for calculating the sub-account is 
the higher account balance of the savings account on either the 
eligibility record date or the supplemental eligibility record date. 
The initial sub-account is calculated by multiplying the liquidation 
account balance by the following fraction: The numerator is the higher 
amount of the qualifying deposit in the savings account on either the 
eligibility record date or the supplemental eligibility record date and 
the denominator is the calculation in proposed added Sec.  
192.460(a)(5).
---------------------------------------------------------------------------

    \12\ See 67 FR 52009 (August 9, 2002). The pre-2002 OTS 
regulation at 12 CFR 563b.3(f)(4) stated ``The initial subaccount 
balance for a savings account held by an eligible account holder 
and/or supplemental eligible account holder shall be determined by 
multiplying the opening balance in the liquidation account by a 
fraction of which the numerator is the amount of qualifying deposits 
in such savings account on the eligibility record date and/or the 
supplemental eligibility record date and the denominator is the 
total amount of qualifying deposits of all eligible account holders 
and supplemental eligible account holders in the converting savings 
association on such dates. For savings accounts in existence at both 
dates, separate subaccounts shall be determined on the basis of the 
qualifying deposits in such saving accounts on such record dates.''
---------------------------------------------------------------------------

    The OCC invites comment on whether the proposed changes to Sec.  
192.460 help to clarify the computation of liquidation sub-account 
balances. Do commenters have any alternative methods for clarifying 
these computations?
    Contributions to charitable organizations. Twelve CFR 192.550 
permits a savings association to contribute some of its conversion 
shares or proceeds to a charitable organization, provided certain 
requirements are met. One of these requirements, set forth at 12 CFR 
192.575(a)(3), is that the charitable organization must annually 
provide the appropriate Federal banking agency with a copy of the 
annual report that it submitted to the IRS. The OCC proposes to remove 
this requirement because is often not used and, if necessary, the OCC 
may obtain it from the IRS or request it directly from the charitable 
organization.
    Prohibition on self-dealing for charitable organizations. 12 CFR 
192.575 (Other requirements for charitable organizations) provides that 
a charitable organization may not engage in self-dealing. The OCC 
proposes to amend Sec.  192.575(a) to provide that a charitable 
organization must not engage in self-dealing, in order to emphasize the 
prohibition on self-dealing. The OCC also proposes to move the 
requirement that the charitable organization comply with all laws 
necessary to maintain its tax-exempt status under the Internal Revenue 
Code to a new paragraph (a)(5) in Sec.  192.575.
    Voluntary supervisory conversions. Section 192.600 describes the 
purposes of subpart B to part 192, which governs voluntary supervisory 
mutual to stock conversions. A voluntary supervisory conversion is a 
transaction to recapitalize an eligible mutual savings association 
where the association's members have no rights of approval or 
participation and no rights to the

[[Page 1058]]

continuance of any legal or beneficial ownership interest in the 
converted association pursuant to a plan of voluntary supervisory 
conversion approved by a majority of the board of directors of the 
converting savings association. The OCC proposes new language in Sec.  
192.600 to clarify that a voluntary supervisory mutual to stock 
conversion would be appropriate when the appropriate Federal banking 
agency and, in the case of a State-chartered savings association, the 
appropriate State banking regulator, determines that the savings 
association has demonstrated that it is unable to complete a standard 
mutual to stock conversion under subpart A to part 192.
    Section 192.650 sets forth the information required to be included 
in a plan of voluntary supervisory conversion. Among other things, 
current Sec.  192.650 requires the savings association's name and 
address; the name, address, date and place of birth, and social 
security number of each proposed purchaser of conversion shares. The 
OCC proposes to remove the personal identifying information from the 
plan of voluntary supervisory conversion (i.e., the name, address, date 
and place of birth, and social security number of each proposed 
purchaser of conversion shares) as the OCC does not believe the 
inclusion of such information is necessary or appropriate. The plan is 
a publicly available document and the OCC believes that requiring this 
information raises privacy concerns. The OCC also proposes to amend 
Sec.  192.650 to remove from the plan of voluntary supervisory 
conversion the title, per-unit par value, number, and per-unit and 
aggregate offering price of shares that the savings association will 
issue; and the number and percentage of shares that each investor will 
purchase. The OCC does not find this information to be necessary in the 
plan of voluntary supervisory conversion. In addition, the OCC proposes 
to move the information required in the plan by Sec.  192.650(e) (the 
aggregate number and percentage of shares that each director, officer, 
and any affiliates or associates of the director or officer will 
purchase) to the application for voluntary supervisory conversion in 
Sec.  192.660(d)(5). The OCC believes this information more 
appropriately belongs in the application, rather than the plan, because 
the OCC reviews these proposed purchases during the application review 
process and because the proposed purchases may change during the review 
of the application. As a result, under revised Sec.  192.650, a plan 
for voluntary supervisory conversion would be required to contain a 
complete description of the proposed voluntary supervisory conversion 
that also describes plans for any liquidation account and certified 
copies of all resolutions relating to the conversion adopted by the 
savings association's board of directors.
    Twelve CFR 192.660 specifies the information a savings association 
must include in its application for voluntary supervisory conversion. 
To assist in its review of these applications, the proposal would 
require the application to contain some additional information. As 
described in the preceding paragraph, the proposal would relocate the 
information contained in current Sec.  192.650(e) (the aggregate number 
and percentage of shares that each director, officer, and any 
affiliates or associates of the director or officer will purchase) to 
Sec.  192.660(d)(5). The proposal would add a new Sec.  192.660(e)(3) 
to require that the voluntary supervisory conversion application 
include any securities offering circular and other securities 
disclosure materials that the savings association has prepared to use 
in connection with the proposed voluntary supervisory conversion. In 
addition, the proposal would require that the application include a 
statement indicating the role in the successor savings association each 
director, officer, and affiliate of the savings association or 
associate of the director or officer will have after the conversion. 
The OCC finds that information on the role that each director, officer, 
affiliate, and associate will have after the conversion to be necessary 
for consideration of the decision factors in Sec.  192.670(c) and 
(d).\13\ Finally, the proposal would require as part of this 
application any other information requested by the OCC, as authorized 
by law.
---------------------------------------------------------------------------

    \13\ Under Sec.  192.670(c) and (d), the appropriate Federal 
banking agency will generally approve a voluntary supervisory 
conversion application unless it determines the savings association 
or its acquiror, or the controlling parties or directors and 
officers of the savings association or its acquiror, have engaged in 
unsafe or unsound practices in connection with the voluntary 
supervisory conversion, or the savings association fails to justify 
an employment contract incidental to the conversion, or the 
employment contract will be an unsafe or unsound practice or 
represent a sale of control.
---------------------------------------------------------------------------

    Federal Home Loan Bank (FHLB) membership. The proposal would remove 
the references to FHLB membership in Sec. Sec.  192.135(b)(12) and 
192.660(g)(4) because Federal savings associations are no longer 
required to be members of the FHLB System.\14\ The existing provisions 
of part 192 that reference FHLB membership were drafted when FHLB 
System membership was required for Federal savings associations. 
Whether the Federal savings association retains FHLB membership has no 
impact on the OCC's consideration of an application for a voluntary 
supervisory conversion in Sec.  192.660(g)(4), nor would it be of 
interest to members as part of the notice in Sec.  192.135(b)(12).
---------------------------------------------------------------------------

    \14\ In 1999, HOLA was amended to no longer require Federal 
savings associations to become FHLB members. See 12 U.S.C. 1464(f); 
Public Law 106-102 section 603 (1999).
---------------------------------------------------------------------------

    Technical amendments. The proposal would make several global 
technical changes to part 192. First, the proposed rule would change 
the text of part 192 from the OTS question and answer format to the 
standard format of the national bank rules in 12 CFR parts 1 through 
50. Second, the proposed rule would add paragraph headings in 
compliance with Federal Register guidelines. Third, the proposed rule 
would clarify that calendar days are used for computations of time 
under part 192. Finally, the proposed rule replaces cross-references to 
the repealed 12 CFR part 197 (2017) (Securities offering disclosure 
rules) with cross-references to the OCC rule that now applies to 
Federal savings associations, 12 CFR part 16.
    Furthermore, the proposed rule would make a number of technical 
changes to specific sections of part 192. First, the proposed rule 
would amend Sec.  192.200 to remove the cross-reference to the FDIC's 
repealed capital rules in subpart Z to part 390. In addition, the 
proposed rule would remove from Sec.  192.520(b) the cross-reference to 
part 167 and replace it with a cross-reference to integrated part 3. 
Finally, the proposed rule would amend Sec.  192.660 by replacing an 
outdated cross-reference to the Thrift Financial Report with the Call 
Report.
    Miscellaneous technical amendments. The proposal would amend 
subpart J to 12 CFR part 3 to correct an out-of-date cross-reference. 
Currently, at 12 CFR 3.601(b), OCC regulations provide, in part, that a 
capital directive (i.e., an order issued by the OCC to a national bank 
or Federal savings association to take certain actions to achieve and/
or maintain a specified capital ratio) is enforceable in the same 
manner and to the same extent as a final cease and desist order as 
defined under 12 U.S.C. 1818(k). Because section 1818(k) has been 
repealed, the OCC is amending this provision to provide instead that a 
capital directive is enforceable under section 1818(i) in the same 
manner and to the same extent as an effective and

[[Page 1059]]

outstanding cease and desist order issued pursuant to section 1818(b) 
that has become final. This revision is consistent with the OCC's 
existing authority as set forth under the International Lending 
Supervision Act at 12 U.S.C. 3907(b) and is not intended to have any 
substantive impact on the procedures for the enforcement of a capital 
directive.
    The proposal would amend 12 CFR 4.14(a)(9) to remove cross-
references to 12 CFR parts 194 (2017) and 197, which have been 
repealed. The requirements in former parts 194 and 197 have been added 
to parts 11 and 16, respectively, and the cross-references to those 
parts have been added to Sec.  4.14(a)(9) accordingly.
    The proposal would amend 12 CFR 4.34(c)(2), 4.37(a)(2)(ii), 
108.6(d), 108.7(c) and (d), and 112.4 to change ``the OCC's Enforcement 
and Compliance Division'' to ``the OCC's Law Department.'' Similarly, 
the proposal would amend 12 CFR 11.3(a), 16.17(a) and (f), and 16.30(a) 
by removing the phrase ``the OCC's Securities and Corporate Practices 
Division'' and replacing it with ``the OCC's Law Department.''
    The proposal would amend 12 CFR 23.6 to change an incorrect 
singular subject and verb to the correct plural subject and verb.
    The proposal would amend 12 CFR 26.6(b)(4) to correct a cross-
reference. The cross-reference to Sec.  5.51(c)(6) is incorrect; the 
correct cross-reference is Sec.  5.51(c)(7).
    The proposal also removes a number of definitions in the OCC's 
rules for Federal and State savings associations that are no longer 
necessary. These definitions are currently included in 12 CFR part 141 
(Definition for regulations affecting Federal savings associations) and 
12 CFR part 161 (Definitions for regulations affecting all savings 
associations). These definitions apply only to the OCC's rules in parts 
100 through 195, which the former OTS originally issued and the OCC 
republished as OCC rules pursuant to the Dodd-Frank Act. Because the 
OCC has integrated and amended a number of these rules, many of the 
terms defined in parts 141 and 161 are no longer used in parts 100 
through 195 and, therefore, these definitions are no longer necessary. 
Specifically, the OCC proposes to remove the definitions of ``Act,'' 
``debit card,'' ``improved nonresidential real estate,'' ``improved 
residential real estate,'' ``interim Federal savings association,'' 
``interim state savings association,'' ``unimproved real estate,'' 
``withdrawal value of a savings account,'' ``accountholder,'' ``audit 
period,'' ``land loan,'' ``low-rent housing,'' ``Money Market Deposit 
Accounts,'' ``Negotiable Order of Withdrawal (NOW) accounts,'' '' 
nonresidential construction loan,'' ``nonwithdrawable account,'' 
``parent company,'' ``principal office,'' ``service corporation,'' and 
``subordinated debt security.''
    The OCC also proposes to amend the definition of ``state'' in Sec.  
161.50 so that it is identical to the definition of this term in 
section 3 of the FDIA (12 U.S.C. 1813(a)(3)). Specifically, the 
proposed definition would include any territory of the United States, 
American Samoa, the Trust Territory of the Pacific Islands, and the 
Northern Mariana Islands, in addition to a State, the District of 
Columbia, Guam, Puerto Rico, and the Virgin Islands.
    The proposal would amend 12 CFR 160.60(b)(3) to remove a cross-
reference to the repealed Sec.  163.43 and replace with Sec.  31.2. The 
proposed rule also would amend parts 160 and 163 to define ``OCC'' as 
the Office of the Comptroller of the Currency in the text of Sec. Sec.  
160.1 and 163.47, and to define ``FDIC'' as the Federal Deposit 
Insurance Corporation in Sec.  163.80.
    Finally, the OCC proposes to update the authority citation for 12 
CFR 195.11(a) to include a citation to section 312 of the Dodd-Frank 
Act (12 U.S.C. 5412(b)(2)(B)).

III. Request for Comments

    The OCC encourages comment on any aspect of this proposal and 
especially on those issues noted in this preamble.

IV. Regulatory Analysis

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., (RFA), 
requires an agency, in connection with a proposed rule, to prepare an 
Initial Regulatory Flexibility Analysis describing the impact of the 
rule on small entities (defined by the Small Business Administration 
(SBA) for purposes of the RFA to include commercial banks and savings 
institutions with total assets of $600 million or less and trust 
companies with total revenue of $41.5 million or less) or to certify 
that the proposed rule would not have a significant economic impact on 
a substantial number of small entities. The OCC currently supervises 
approximately 886 small entities, of which 258 are Federal savings 
associations.\15\ The proposed rule would place one new mandate on 
Federal savings associations to submit additional information to the 
OCC as part of their voluntary supervisory conversion applications to 
convert from mutual to stock form pursuant to 12 CFR 192.660. Because 
the additional reporting requirement for Federal savings associations 
that are converting from mutual to stock form through a voluntary 
supervisory conversion would likely require minimal additional effort 
relative to the overall conversion application, the additional cost of 
collecting this additional information would likely be de minimis. 
Therefore, the OCC certifies that the proposed rule, if implemented, 
would not have a significant economic impact on a substantial number of 
OCC-supervised small entities.
---------------------------------------------------------------------------

    \15\ The OCC bases its estimate of the number of small entities 
on the SBA's size thresholds for commercial banks and savings 
institutions, and trust companies, which are $600 million and $41.5 
million, respectively. Consistent with the General Principles of 
Affiliation 13 CFR 121.103(a), the OCC counts the assets of 
affiliated financial institutions when determining if we should 
classify an OCC-supervised institution a small entity. The OCC uses 
December 31, 2017, 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.
---------------------------------------------------------------------------

Unfunded Mandates Reform Act of 1995

    Consistent with the Unfunded Mandates Reform Act, the OCC's review 
considers whether the mandates imposed by the proposed rule may result 
in an expenditure of $100 million or more (adjusted for inflation) by 
state, local, and tribal governments, or by the private sector, in any 
one year. The proposed rule would place one new mandate on Federal 
savings associations to submit additional information to the OCC as 
part of their voluntary supervisory conversion applications to convert 
from mutual to stock form pursuant to 12 CFR 192.660. This additional 
requirement for Federal savings associations to submit additional 
information to the OCC would likely result in a de minimis increase in 
costs. Therefore, we conclude that the proposed rule would not result 
in the expenditure of $100 million or more annually (adjusted for 
inflation) by state, local, and tribal governments, or by the private 
sector.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995,\16\ 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 OMB control number. The OCC has submitted the information

[[Page 1060]]

collection requirements imposed by this proposal to OMB for review.
---------------------------------------------------------------------------

    \16\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The proposal would add a new Sec.  192.660(e)(3) to require that 
the voluntary supervisory conversion application include a statement 
indicating the role in the successor savings association each director, 
officer, and affiliate of the savings association or associate of the 
director or officer will have after the conversion. This burden for 
this requirement will be added to the existing information collection 
for OCC's Licensing Manual.
    Title: Voluntary Supervisory Conversion Application: Successor 
Savings Association Roles.
    OMB Control No.: 1557-NEW.
    Frequency of Response: On occasion.
    Affected Public: Businesses or other for-profit organizations.
    Estimated Number of Respondents: 1.
    Estimated Burden per Respondent: 2 hours.
    Estimated Total Annual Burden: 2 hours.
    Please submit comments using the instructions in the ADDRESSES 
section of this document. Comments are invited on:
    (a) Whether the collections of information are necessary for the 
proper performance of the functions of the OCC, including whether the 
information has practical utility;
    (b) The accuracy of the OCC's estimates of the burden of the 
collections of information;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of the collections on respondents, 
including through the use of automated collection techniques or other 
forms of information technology; and
    (e) Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.

List of Subjects

12 CFR Part 3

    Administrative practice and procedure, Banks, banking, Federal 
Reserve System, Investments, National banks.

12 CFR Part 4

    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 11

    Business information, National banks, Reporting and recordkeeping 
requirements, Securities.

12 CFR Part 16

    National banks, Reporting and recordkeeping requirements, 
Securities.

12 CFR Part 19

    Crime, Equal access to justice, Investigations, National banks, 
Penalties, Securities.

12 CFR Part 23

    Banks, Banking, National banks, Reporting and recordkeeping 
requirements.

12 CFR Part 26

    Antitrust, Holding companies, National banks.

12 CFR Part 32

    National banks, Reporting and recordkeeping requirements.

12 CFR Part 108

    Administrative practice and procedure, Crime, Savings associations.

12 CFR Part 112

    Administrative practice and procedure, Investigations.

12 CFR Part 141

    Reporting and recordkeeping requirements, Savings associations.

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 163

    Accounting, Administrative practice and procedure, Advertising, 
Crime, Currency, Investments, Mortgages, Reporting and recordkeeping 
requirements, Savings associations.

12 CFR Part 192

    Reporting and recordkeeping requirements, Savings associations, 
Securities.

    Accordingly, the Office of the Comptroller of the Currency proposes 
to amend 12 CFR chapter I as follows:

PART 3--CAPITAL ADEQUACY STANDARDS

0
1. The authority citation for part 3 continues to read as follows:

    Authority: 12 U.S.C. 93a, 161, 1462, 1462a, 1463, 1464, 1818, 
1828(n), 1828 note, 1831n note, 1835, 3907, 3909, and 5412(b)(2)(B).


Sec.  3.2   [Amended]

0
2. Section 3.2 is amended in the definition of Qualifying master 
netting agreement in paragraph (2)(i)(A) by removing ``; or'' and 
adding a period in its place.
0
3. Section 3.601 is amended by revising paragraph (b) to read as 
follows:


Sec.  3.601   Purpose and Scope.

* * * * *
    (b) A directive issued under this rule, including a plan submitted 
under a directive, is enforceable under the provisions of 12 U.S.C. 
1818(i) in the same manner and to the same extent as an effective and 
outstanding cease and desist order issued pursuant to 12 U.S.C. 1818(b) 
that has become final. Violation of a directive may result in 
assessment of civil money penalties in accordance with 12 U.S.C. 
3909(d).

PART 4--ORGANIZATION AND FUNCTIONS, AVAILABILITY AND RELEASE OF 
INFORMATION, CONTRACTING OUTREACH PROGRAM, POST-EMPLOYMENT 
RESTRICTIONS FOR SENIOR EXAMINERS

0
4. The authority citation for part 4 continues to read as follows:

    Authority:  5 U.S.C. 301, 552; 12 U.S.C. 1, 93a, 161, 481, 482, 
484(a), 1442, 1462a, 1463, 1464 1817(a), 1818, 1820, 1821, 1831m, 
1831p-1, 1831o, 1833e, 1867, 1951 et seq., 2601 et seq., 2801 et 
seq., 2901 et seq., 3101 et seq., 3401 et seq., 5321, 5412, 5414; 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; E.O. 12600 (3 CFR, 1987 Comp., p. 235).


Sec.  4.14   [Amended]

0
5. Section 4.14 is amended in paragraph (a)(9) by removing the phrase 
``parts 11, 16, 194 or 197 of this chapter'' and adding in its place 
``part 11 or 16 of this chapter''.


Sec.  4.34   [Amended]

0
6. Section 4.34 is amended in paragraph (c)(2) by removing the phrase 
``and Compliance''.


Sec.  4.37   [Amended]

0
7. Section 4.37 is amended in paragraph (a)(2)(ii) by removing the 
phrase ``and Compliance''.

PART 11--SECURITIES EXCHANGE ACT DISCLOSURE RULES

0
8. The authority citation for part 11 continues to read as follows:


[[Page 1061]]


    Authority:  12 U.S.C. 93a, 1462a, 1463, 1464 and 5412(b)(2)(B); 
15 U.S.C. 78j-1(m), 78m, 78n, 78p, 78w, 78l, 7241, 7242, 7243, 7244, 
7261, 7262, 7264, and 7265.


Sec.  11.3   [Amended]

0
9. Section 11.3 is amended:
0
a. In paragraph (a)(1)(i) and the second sentence of paragraph 
(a)(1)(ii) by removing the phrase ``the Securities and Corporate 
Practices Division'' and by adding the phrase ``the OCC's Law 
Department in its place; and
0
b. In the first sentence of paragraph (a)(1)(ii) by removing the phrase 
``the OCC's Securities and Corporate Practices Division'' and by adding 
the phrase ``the OCC's Law Department'' in its place.

PART 16--SECURITIES OFFERING DISCLOSURE RULES

0
10. The authority citation for part 16 continues to read as follows:

    Authority:  12 U.S.C. 1 et seq., 93a, 1462a, 1463, 1464, and 
5412(b)(2)(B).


Sec.  16.15   [Amended]

0
11. Section 16.15 is amended in paragraph (e) by adding the phrase ``or 
as part of its offering statement for the offer and sale of its 
securities pursuant to 12 CFR 16.8,'' after ``registration statement 
for the offer and sale of its securities,''.
0
12. Section 16.17 is amended by:
0
a. Removing the phrase ``the OCC's Securities and Corporate Practices 
Division'' and by adding the phrase ``the OCC's Law Department'' in its 
place in paragraph (a);
0
b. Adding a sentence at the end of paragraph (b); and
0
c. Removing the phrase ``the OCC's Securities and Corporate Practices 
Division'' and by adding the phrase ``the OCC's Law Department'' in its 
place in the first and second sentences of paragraph (f).
    The addition reads as follows:


Sec.  16.17  Filing requirements and inspection of documents.

* * * * *
    (b) * * * All registration statements, offering documents, 
amendments, notices, or other documents relating to a mutual to stock 
conversion pursuant to 12 CFR part 192 must be filed with the 
appropriate OCC Licensing office at http://www.banknet.gov/.
* * * * *


Sec.  16.30   [Amended]

0
13. Section 16.30 is amended in paragraph (a) by removing the phrase 
``the OCC's Securities and Corporate Practices Division'' and by adding 
the phrase ``the OCC's Law Department'' in its place.

PART 19--RULES OF PRACTICE AND PROCEDURE

0
14. The authority citation for part 19 continues to read as follows:

    Authority:  5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 93a, 164, 
481, 504, 1817, 1818, 1820, 1831m, 1831o, 1832, 1884, 1972, 3102, 
3108(a), 3110, 3909, and 4717; 15 U.S.C. 78(h) and (i), 78o-4(c), 
78o-5, 78q-1, 78s, 78u, 78u-2, 78u-3, 78w, and 1639e; 28 U.S.C. 2461 
note; 31 U.S.C. 330 and 5321; and 42 U.S.C. 4012a.


Sec.  19.241   [Amended]

0
15. Section 19.241 is amended in paragraph (a) by:
0
a. Removing the phrase ``Federal Deposit Insurance Act (FDI Act)'' and 
adding in its place ``FDIA'';
0
b. Removing the phrase ``section 36 of the FDI Act'' and adding in its 
place ``section 36 of the FDIA''; and
0
c. Removing the phrase ``insured national banks and Federal branches 
and agencies of foreign banks'' and adding in its place the phrase 
``insured national banks, insured Federal savings associations, and 
insured Federal branches of foreign banks''.


Sec.  19.242   [Amended]

0
16. Section 19.242 is amended by:
0
a. Removing the word ``shall'' in the introductory text; and
0
b. Adding the phrase ``(12 U.S.C. 1831m)'' after the phrase ``section 
36 of the FDIA'' in paragraph (b).
0
17. Section 19.243 is amended by:
0
a. Adding ``(12 U.S.C. 1831m)'' after ``section 36 of the FDIA'' in 
paragraph (a)(1) introductory text;
0
b. Adding the phrase ``, insured Federal savings associations, or 
insured Federal branches of foreign banks'' after the phrase ``national 
banks'' in paragraph (a)(1) introductory text;
0
c. Removing the phrase ``particular national bank or class of national 
banks'' and adding in its place the phrase ``particular insured 
national bank, insured Federal savings association, or insured Federal 
branch of a foreign bank, or class of insured national banks, insured 
Federal savings associations, or insured Federal branches of foreign 
banks'' in paragraph (a)(3);
0
d. In paragraph (b)(2):
0
i. Removing the word ``shall'' and adding in its place the word 
``will''; and
0
ii. Adding the phrase ``, subject to the limitations in Sec.  
19.243(c)(4)'' at the end of the second sentence;
0
e. Adding the phrase ``, insured Federal savings associations, or 
insured Federal branches of foreign banks'' after the phrase ``national 
banks'' in paragraph (c)(1) introductory text;
0
f. Revising the last sentence of paragraph (c)(3);
0
g. In paragraph (c)(4):
0
i. Removing the phrase ``who shall fix a place'' in the first sentence 
and adding in its place the phrase ``who will fix a place'';
0
ii. Removing the phrase ``unless extended'' in the first sentence and 
adding in its place the phrase ``unless further time is allowed by the 
presiding officer'';
0
iii. Removing the phrase ``there shall be no discovery'' in the last 
sentence and adding in its place the phrase ``there will be no 
discovery''; and
0
iv. Removing the phrase ``of this part shall apply'' and adding in its 
place ``of this part apply'';
0
h. Removing the word ``shall'' in the first sentence and adding in its 
place the word ``will'' in paragraph (c)(5); and
0
i. Removing the word ``shall'' each time that it appears and adding in 
its place the word ``will'' in paragraph (c)(6).
    The revision reads as follows:


Sec.  19.243   Removal, suspension, or debarment.

* * * * *
    (c) * * *
    (3) * * * If no petition is filed within 10 calendar days, the 
right to a petition is waived and the immediate suspension remains in 
effect pursuant to paragraph (c)(2).
* * * * *
0
18. Section 19.244 is amended by:
0
a. Revising the section heading;
0
b. Adding the phrase ``, insured Federal savings associations, or 
insured Federal branches of foreign banks'' after the phrase ``national 
banks'' in paragraph (a) introductory text;
0
b. In paragraph (a)(1):
0
i. Adding the word ``former'' before the phrase ``Office of Thrift 
Supervision''; and
0
ii. Adding ``(12 U.S.C. 1831m)'' after the phrase ``section 36 of the 
FDIA'';
0
c. In paragraph (b):
0
i. Adding the word ``insured'' before the phrase ``national banks'';
0
ii. Adding the phrase ``, insured Federal savings associations, or 
insured Federal branches of foreign banks'' after the phrase ``national 
banks''; and
0
iii. Removing the word ``shall'' and adding in its place the word 
``must''.
    The revision reads as follows:


Sec.  19.244   Automatic removal, suspension, or debarment.

* * * * *


Sec.  19.245   [Amended]

0
19. Section 19.245 is amended by:
0
a. Adding a comma after the word ``suspension'' in the section heading;
0
b. Removing the word ``shall'' and adding in its place the word 
``will'' in paragraph (a);

[[Page 1062]]

0
c. In paragraph (b) introductory text:
0
i. Adding the word ``insured'' before the phrase ``national bank ''; 
and
0
ii. Adding the phrase ``, insured Federal savings association, or 
insured Federal branch of a foreign bank'' after the phrase ``national 
bank'';
0
d. Removing the phrase ``Sarbanes-Oxley Act)'' and adding in its place 
the phrase ``Sarbanes-Oxley Act'' in paragraph (b)(2); and
0
e. Removing the word ``shall'' and adding in its place the word 
``must'' in paragraph (c).


Sec.  19.246   [Amended]

0
20. Section 19.246 is amended by:
0
a. Removing the word ``shall'' and adding in its place the word 
``must'' in paragraph (a);
0
b. In paragraph (b):
0
i. Removing the phrase ``shall bear'' each time it appears and adding 
in its place the word ``bears''; and
0
ii. In the penultimate and last sentences, removing the word ``shall'' 
and adding in its place the word ``will''.

PART 23--LEASING

0
21. The authority citation for part 23 continues to read as follows:

    Authority: 12 U.S.C. 1 et seq., 24(Seventh), 24(Tenth), and 93a.


Sec.  23.6   [Amended]

0
22. Section 23.6 is amended by:
0
a. Removing the word ``lease'' before the phrase ``entered into 
pursuant to this part'' and adding in its place the word ``leases''; 
and
0
b. Removing the word ``is'' before the phrase ``subject to the lending 
limits prescribed'' and adding in its place the word ``are''.

PART 26--MANAGEMENT INTERLOCKS

0
23. The authority citation for part 26 continues to read as follows:

    Authority:  12 U.S.C. 1, 93a, 1462a, 1463, 1464, 3201-3208, 
5412(b)(2)(B).


Sec.  26.6   [Amended]

0
24. Section 26.6 is amended in paragraph (b)(4) by removing 
``5.51(c)(6)'' and adding in its place ``5.51(c)(7)''.

PART 32--LENDING LIMITS

0
25. The authority citation for part 32 continues 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.

0
26. Section 32.2 is amended by revising paragraphs (cc) and (dd) to 
read as follows:


Sec.  32.2   Definitions.

* * * * *
    (cc) Small business loans means loans or extensions of credit 
``secured by nonfarm nonresidential properties'' or ``commercial and 
industrial loans'' as defined in the instructions for preparation of 
the Consolidated Report of Condition and Income.
    (dd) Small farm loans or extensions of credit means ``loans secured 
by farmland'' or ``loans to finance agricultural production and other 
loans to farmers'' as defined in the instructions for preparation of 
the Consolidated Report of Condition and Income.
* * * * *


Sec.  32.7   [Amended]

0
27. Section 32.7 is amended in paragraph (d) by removing the phrase 
``Federal banking agency'' each time it appears and adding in its place 
``supervisory office''.

PART 108--REMOVALS, SUSPENSIONS, AND PROHIBITIONS WHERE A CRIME IS 
CHARGED OR PROVEN

0
28. The authority citation for part 108 continues to read as follows:

    Authority: 12 U.S.C. 1464, 1818, 5412(b)(2)(B).


Sec.  108.6   [Amended]

0
29. Section 108.6 is amended in paragraph (d) by removing the phrase 
``and Compliance''.


Sec.  108.7   [Amended]

0
30. Section 108.7 is amended in the first sentence of paragraph (c) and 
in paragraph (d) by removing the phrase ``and Compliance''.


Sec.  108.13   [Amended]

0
31. Section 108.13 is amended in paragraph (c) by removing the phrase 
``and Compliance''.

PART 112--RULES FOR INVESTIGATIVE PROCEEDINGS AND FORMAL 
EXAMINATION PROCEEDINGS

0
32. The authority citation for part 112 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467, 1467a, 1813, 
1817(j), 1818(n), 1820(c), 5412(b)(2)(B); 15 U.S.C. 78l.


Sec.  112.4   [Amended]

0
33. Section 112.4 is amended in the second sentence by removing the 
phrase ``and Compliance''.

PART 141--DEFINITIONS FOR REGULATIONS AFFECTING FEDERAL SAVINGS 
ASSOCIATIONS

0
34. The authority citation for part 141 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B).


Sec. Sec.  141.2, 141.8, 141.15, 141.16, 141.18, 141.19, 141.27, 
141.28   [Removed and Reserved]

0
35. Sections 141.2, 141.8, 141.15, 141.16, 141.18, 141.19, 141.27, and 
141.28 are removed and reserved.

PART 160--LENDING AND INVESTMENT

0
36. The authority for part 160 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1701j-3, 1828, 
3803, 3806, 5412(b)(2)(B); 42 U.S.C. 4106.


Sec.  160.1   [Amended]

0
37. Section 160.1 is amended in paragraph (a) by removing ``OCC'' and 
adding in its place the phrase ``Office of the Comptroller of the 
Currency (OCC)''.


Sec.  160.60   [Amended]

0
38. Section 160.60 is amended in paragraph (b)(3) by removing the 
phrase ``12 CFR part 32 and Sec.  163.43 of this chapter'' and adding 
in its place ``12 CFR 31.2 and part 32 of this chapter''.

PART 161--DEFINITIONS FOR REGULATIONS AFFECTING All SAVINGS 
ASSOCIATIONS

0
39. The authority citation for part 161 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 5412(b)(2)(B).


Sec. Sec.  161.3, 161.6, 161.26, 161.27, 161.28. 161.29, 161.30, and 
161.31   [Removed and Reserved]

0
40. Sections 161.3, 161.6, 161.26, 161.27, 161.28, 161.29, 161.30, and 
161.31 are removed and reserved.


Sec.  161.37   [Amended]

0
41. Section 161.37 is amended by removing the first sentence.


Sec. Sec.  161.39 and 161.45   [Removed and Reserved]

0
42. Sections 161.39 and 161.45 are removed and reserved.
0
43. Section 161.50 is revised to read as follows:


Sec.  161.50   State.

    The term ``State'' means any State of the United States, the 
District of Columbia, any territory of the United States, Puerto Rico, 
Guam, American Samoa, the Trust Territory of the Pacific

[[Page 1063]]

Islands, the Virgin Islands, and the Northern Mariana Islands.


Sec.  161.51   [Removed and Reserved]

0
44. Section 161.51 is removed and reserved.

PART 163--SAVINGS ASSOCIATIONS--OPERATIONS

0
45. The authority for part 163 continues 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.


Sec.  163.39   [Removed and Reserved]

0
46. Section 163.39 is removed and reserved.


Sec.  163.47   [Amended]

0
47. Section 163.47 is amended in paragraph (d) by removing ``OCC'' and 
adding in its place the phrase ``Office of the Comptroller of the 
Currency (OCC)''.


Sec.  163.76   [Amended]

0
48. Section 163.76 is amended:
0
a. In paragraph (b), by removing the phrase ``Sec.  197.10 of this 
chapter'' and adding in its place ``Sec.  16.32 of this chapter''; and
0
b. In paragraph (c), in the second paragraph of the Form of 
Certification, by removing ``]'' after ``I should call the Office of 
the Comptroller of the Currency''.


Sec.  163.80   [Amended]

0
49. Section 163.80 is amended in paragraph (c) by removing the phrase 
``FDIC'' and adding in its place the phrase ``Federal Deposit Insurance 
Corporation (FDIC)''.


Sec.  163.180   [Amended]

0
50. In section 163.180, remove the first paragraph (d)(12)(i)(A) 
paragraph designation and subject heading ``(A) General rule'' and 
redesignate the paragraph as paragraph (d)(12)(i) introductory text.
0
51. Part 192 is revised to read as follows:

PART 192--CONVERSIONS FROM MUTUAL TO STOCK FORM

Sec.
192.5 Purpose, prescribed forms, waiver.
192.7 Electronic filing.
192.8 Computation of time.
192.10 Forming a holding company upon conversion.
192.15 Forming a charitable organization upon conversion.
192.20 Acquiring another insured depository institution upon 
conversion.
192.25 Definitions.
Subpart A--Standard Conversions

Prior to Conversion

192.100 Preparing for a conversion.
192.105 Information required in business plan.
192.110 Review of business plan by chief executive officer and board 
of directors.
192.115 Review of business plan by the appropriate Federal banking 
agency.
192.120 Confidentiality of conversion information.

Plan of Conversion

192.125 Adoption of plan of conversion by board of directors.
192.130 Information required in plan of conversion.
192.135 Notifying members of adopted plan of conversion.
192.140 Amendments to plan of conversion.

Filing Requirements

192.150 Information required in an application for conversion.
192.155 Filing an application for conversion.
192.160 Request for confidential treatment.
192.165 Amendments to an application for conversion.

Notice of Filing of Application and Comment Process

192.180 Public notice of an application for conversion.
192.185 Public comment on application for conversion.

Agency Review of the Application for Conversion

192.200 Review, approval, or denial of application for conversion.
192.205 Court review of final action on application for conversion.

Vote by Members

192.225 Approval of plan of conversion by members.
192.230 Members' voting eligibility.
192.235 Notice of members' meeting.
192.240 Submission of documents to the appropriate Federal banking 
agency after the members' meeting.

Proxy Solicitation

192.250 Compliance with proxy solicitation provisions.
192.255 Form of proxy requirements.
192.260 Previously executed proxies.
192.265 Proxies executed under this part.
192.270 Proxy statement requirements.
192.275 Filing revised proxy materials.
192.280 Mailing member's proxy solicitation materials.
192.285 Prohibited solicitations.
192.290 Remedial measures for prohibited solicitations.
192.295 Re-solicitation of proxies.

Offering Circular

192.300 Offering circular requirements.
192.305 Distribution of offering circular.
192.310 Filing a post-effective amendment to an offering circular.

Offers and Sales of Stock

192.320 Order of priority to purchase conversion shares.
192.325 Timing of offer to sell conversion shares.
192.330 Pricing of conversion shares.
192.335 Procedures for the sale of conversion shares.
192.340 Prohibited sales practices.
192.345 Permissible forms of subscriber payment.
192.350 Interest on payments for conversion shares.
192.355 Subscription rights for eligible account holders and 
supplemental eligible account holders.
192.360 Officers, directors, and associates as eligible account 
holders.
192.365 Purchase of conversion shares by other voting members.
192.370 Limits on aggregate purchases by officers, directors, and 
associates.
192.375 Allocation of oversubscribed conversion shares.
192.380 Purchase of conversion shares by employee stock ownership 
plan.
192.385 Purchase limitations.
192.390 Community offering of conversion shares.
192.395 Other conditions for community and public offerings.

Completion of the Offering

192.400 Time period for completion of sale of stock.
192.405 Extension of the offering period.

Completion of the Conversion

192.420 Time period for completion of the conversion.
192.425 Termination of conversion.
192.430 Charter amendments.
192.435 Corporate existence after conversion.
192.440 Stockholder voting rights after conversion.
192.445 Savings account holder's account after conversion.

Liquidation Account

192.450 Liquidation accounts.
192.455 Initial balance of liquidation account.
192.460 Initial balance of liquidation sub-account.
192.465 Retention of voting rights based on liquidation sub-
accounts.
192.470 Required adjustments to liquidation sub-accounts.
192.475 Definition of liquidation.
192.480 Effect of liquidation account on net worth.
192.485 Required liquidation account provision in new Federal 
charter.

Post-Conversion

192.500 Possible management stock benefit plans after conversion.
192.505 Restrictions on the trading of shares by directors, 
officers, and associates.
192.510 Repurchase of shares after conversion.
192.515 Information to be filed with Federal banking agency prior to 
repurchase of shares.

[[Page 1064]]

192.520 Declaring and paying dividends after the conversion.
192.525 Restrictions on acquisition of shares after conversion.
192.530 Other post-conversion requirements.

Contributions to Charitable Organizations

192.550 Donating conversion shares or conversion proceeds to a 
charitable organization.
192.555 Member approval of charitable contributions.
192.560 Limitations on charitable contributions.
192.565 Contents of organizational documents of charitable 
organization.
192.570 Conflicts of interest among directors.
192.575 Other requirements for charitable organizations.
Subpart B--Voluntary Supervisory Conversions
192.600 Voluntary supervisory conversions.
192.605 Conducting a voluntary supervisory conversion.
192.610 Member rights in a voluntary supervisory conversion.

Eligibility

192.625 Eligibility for a voluntary supervisory conversion.
192.630 Eligibility of State-chartered savings bank for voluntary 
supervisory conversion.

Plan of Supervisory Conversion

192.650 Contents of plan of voluntary supervisory conversion.

Voluntary Supervisory Conversion Application

192.660 Contents of voluntary supervisory conversion application.

Appropriate Federal Banking Agency Review of the Voluntary Supervisory 
Conversion Application

192.670 Approval of voluntary supervisory conversion application.
192.675 Conditions imposed upon approval of voluntary supervisory 
conversion application.

Offers and Sales of Stock

192.680 Offer and sale of shares in a voluntary supervisory 
conversion.

Post-Conversion

192.690 Restrictions on acquisition of additional shares after 
voluntary supervisory conversion.

    Authority:  12 U.S.C. 1462a, 1463, 1464, 1467a, 2901 et seq., 
5412(b)(2)(B); 15 U.S.C. 78c, 78l, 78m, 78n, 78w.


Sec.  192.5   Purpose, prescribed forms, waiver.

    (a) General. This part governs how a savings association may 
convert from the mutual to the stock form of ownership. Subpart A of 
this part governs standard mutual-to-stock conversions. Subpart B of 
this part governs voluntary supervisory mutual-to-stock conversions. 
This part supersedes all inconsistent charter and bylaw provisions of 
Federal savings associations converting to stock form.
    (b) Prescribed forms. A savings association must use the forms 
prescribed under this part and part 16 and provide such information as 
the appropriate Federal banking agency may require under the forms and 
by regulation. The forms required under this part include: Form AC 
(Application for Conversion); Form PS (Proxy Statement); Form OC 
(Offering Circular); Form OF (Order Form); and the applicable form for 
a registration statement under 12 CFR 16.15. Forms AC, PS, OC, and OF 
are available on the website of the Office of the Comptroller of the 
Currency (OCC) at http://www.occ.gov.
    (c) Waivers. The appropriate Federal banking agency may waive any 
requirement of this part or a provision in any prescribed form. To 
obtain a waiver, a savings association must file a written request with 
the appropriate Federal banking agency that:
    (1) Specifies the requirement(s) or provision(s) the savings 
association wants the appropriate Federal banking agency to waive;
    (2) Demonstrates that the waiver is equitable; is not detrimental 
to the savings association, its account holders, or other savings 
associations; and is not contrary to the public interest; and
    (3) Includes an opinion of counsel demonstrating that applicable 
law does not conflict with the waiver of the requirement or provision.
    (d) Financial statements. The form and content of financial 
statements and related financial data in a filing under this part must 
be prepared and presented in accordance with U. S. generally accepted 
accounting principles and other applicable accounting guidance and 
requirements as specified by the OCC in the forms required under 
paragraph (b) of this section.


Sec.  192.7   Electronic filing.

    For Federal savings associations, the OCC encourages the electronic 
filing of all applications, notices, or other documents required by 
this part through http://www.banknet.gov/. The Comptroller's Licensing 
Manual describes the OCC's electronic filing procedures.


Sec.  192.8   Computation of time.

    In computing the period of days, the OCC excludes the day of the 
act or event (e.g., the date an application is received by the OCC) 
from when 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.


Sec.  192.10   Forming a holding company upon conversion.

    A savings association may convert to the stock form of ownership as 
part of a transaction where the savings association organizes a holding 
company to acquire all of the savings association's shares upon their 
issuance. In this transaction, the savings association's holding 
company will offer rights to purchase its shares instead of the savings 
association's shares. Regulations of the Board of Governors of the 
Federal Reserve System address holding company application 
requirements.


Sec.  192.15   Forming a charitable organization upon conversion.

    When a savings association converts to the stock form, it may form 
a charitable organization. A savings association's contributions to the 
charitable organization are governed by the requirements of Sec. Sec.  
192.550 through 192.575.


Sec.  192.20   Acquiring another insured depository institution upon 
conversion.

    When a savings association converts to stock form, it may acquire 
for cash or stock another insured depository institution that is 
already in the stock form of ownership.


Sec.  192.25   Definitions.

    The following definitions apply to this part and the forms 
prescribed under this part:
    Acting in concert has the same meaning as in 12 CFR 5.50(d)(2). The 
rebuttable presumptions of 12 CFR 5.50(f)(2), other than 12 CFR 
5.50(f)(2)(ii)(A) and (B), apply to the share purchase limitations at 
Sec. Sec.  192.355 through 192.395.
    Affiliate of, or a person affiliated with, a specified person is a 
person that directly or indirectly, through one or more intermediaries, 
controls, is controlled by, or is under common control with the 
specified person.
    Appropriate Federal banking agency means appropriate Federal 
banking agency as defined in section 3 of the Federal Deposit Insurance 
Act (12 U.S.C. 1813(q)).
    Associate of a person is:
    (1) A corporation or organization (other than a savings association 
or its majority-owned subsidiaries), if the person is a senior officer 
or partner, or beneficially owns, directly or indirectly, 10 percent or 
more of any class of equity securities of the corporation or 
organization.

[[Page 1065]]

    (2) A trust or other estate, if the person has a substantial 
beneficial interest in the trust or estate or is a trustee or fiduciary 
of the trust or estate. For purposes of Sec. Sec.  192.370 through 
192.395 and 192.505, a person who has a substantial beneficial interest 
in a savings association's tax-qualified or non-tax-qualified employee 
stock benefit plan, or who is a trustee or a fiduciary of the plan, is 
not an associate of the plan. For the purposes of Sec.  192.370, a 
savings association's tax-qualified employee stock benefit plan is not 
an associate of a person.
    (3) Any person who is related by blood or marriage to such person 
and:
    (i) Who lives in the same home as the person; or
    (ii) Who is the saving association's director or senior officer, or 
a director or senior officer of the saving association's holding 
company or its subsidiary.
    Association members or members are persons who, under applicable 
law, are eligible to vote at the meeting on conversion.
    Community offering means the offer to sell to the members of the 
general public in the savings association's community the securities 
not subscribed for in the subscription offering. The community offering 
may occur concurrently with the subscription offering and any 
syndicated community offering, or upon conclusion of the subscription 
offering.
    Control (including controlling, controlled by, and under common 
control with) means the direct or indirect power to direct or exercise 
a controlling influence over the management and policies of a person, 
whether through the ownership of voting securities, by contract, or 
otherwise as described in 12 CFR 5.50.
    Demand accounts means non-interest-bearing demand deposits that are 
subject to check or to withdrawal or transfer on negotiable or 
transferable order to the savings association and that are permitted to 
be issued by statute, regulation, or otherwise and are payable on 
demand.
    Eligibility record date is the date for determining eligible 
account holders. The eligibility record date must be at least one year 
before the date a savings association's board of directors adopts the 
plan of conversion.
    Eligible account holders are any persons holding qualifying 
deposits on the eligibility record date.
    Federal savings association means a Federal savings association or 
Federal savings bank chartered under section 5 of the Home Owners' Loan 
Act (HOLA) (12 U.S.C. 1464).
    IRS is the Internal Revenue Service.
    Local community includes:
    (1) Every county, parish, or similar governmental subdivision in 
which a savings association has a home or branch office;
    (2) Each county's, parish's, or subdivision's metropolitan 
statistical area;
    (3) All zip code areas in a savings association's Community 
Reinvestment Act assessment area; and
    (4) Any other area or category that a savings association sets out 
in its plan of conversion, as approved by the appropriate Federal 
banking agency.
    Offer, offer to sell, or offer for sale is an attempt or offer to 
dispose of, or a solicitation of an offer to buy, a security or 
interest in a security for value. Preliminary negotiations or 
agreements with an underwriter, or among underwriters who are or will 
be in privity of contract with a savings association, are not offers, 
offers to sell, or offers for sale.
    Offering circular means the securities offering materials for the 
conversion.
    Person is an individual, a corporation, a partnership, an 
association, a joint-stock company, a limited liability company, a 
trust, an unincorporated organization, or a government or political 
subdivision of a government.
    Proxy soliciting material includes a proxy statement, form of 
proxy, or other written or oral communication regarding the conversion.
    Purchase or buy includes every contract to acquire a security or 
interest in a security for value.
    Qualifying deposit is the total balance in an account holder's 
savings accounts at the close of business on the eligibility or 
supplemental eligibility record date. A savings association's plan of 
conversion may provide that only savings accounts with total deposit 
balances of $50 or more will qualify.
    Sale or sell includes every contract to dispose of a security or 
interest in a security for value. An exchange of securities in a merger 
or acquisition approved by the appropriate Federal banking agency is 
not a sale.
    Savings account means any withdrawable account, including a demand 
account, except this term does not mean a tax and loan account, a note 
account, a United States Treasury general account, or a United States 
Treasury time deposit-open account.
    Savings association means a savings association as defined in 
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(1)).
    Solicitation and solicit is a request for a proxy, whether or not 
accompanied by or included in a form of proxy; a request to execute, 
not execute, or revoke a proxy; or the furnishing of a form of proxy or 
other communication reasonably calculated to cause a savings 
association's members to procure, withhold, or revoke a proxy. 
Solicitation or solicit does not include providing a form of proxy at 
the unsolicited request of a member, the acts required to mail 
communications for members, or ministerial acts performed on behalf of 
a person soliciting a proxy.
    State means any State of the United States, the District of 
Columbia, any territory of the United States, Puerto Rico, Guam, 
American Samoa, the Trust Territory of the Pacific Islands, the Virgin 
Islands, and the Northern Mariana Islands.
    State savings association means a State savings association as 
defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
1813(b)(3)).
    Subscription offering is the offering of shares through 
nontransferable subscription rights to:
    (1) Eligible account holders under Sec.  192.355;
    (2) Tax-qualified employee stock ownership plans under Sec.  
192.380;
    (3) Supplemental eligible account holders under Sec.  192.355; and
    (4) Other voting members under Sec.  192.365.
    Supplemental eligibility record date is the date for determining 
supplemental eligible account holders. The supplemental eligibility 
record date is the last day of the calendar quarter before the 
appropriate Federal banking agency approves a savings association's 
conversion and will only occur if such agency has not approved such 
conversion within 15 months after the eligibility record date.
    Supplemental eligible account holders are any persons, except a 
savings association's officers, directors, and their associates, 
holding qualifying deposits on the supplemental eligibility record 
date.
    Tax-qualified employee stock benefit plan is any defined benefit 
plan or defined contribution plan, such as an employee stock ownership 
plan, stock bonus plan, profit-sharing plan, or other plan, and a 
related trust, that is qualified under section 401 of the Internal 
Revenue Code (26 U.S.C. 401).
    Underwriter is any person who purchases any securities from a 
savings association with a view to distributing the securities, offers 
or sells securities for a savings association in connection with the 
securities' distribution, or participates or has a direct or indirect 
participation in the direct or indirect underwriting of any such 
undertaking. Underwriter does not include a person whose interest is 
limited to a usual and

[[Page 1066]]

customary distributor's or seller's commission from an underwriter or 
dealer.
    Voluntary supervisory conversion is a mutual to stock conversion 
for a savings association that is unable to complete a standard mutual 
to stock conversion under part 192, subpart A, and that meets the 
eligibility requirements of Sec.  192.625.

Subpart A--Standard Conversions

Prior to Conversion


Sec.  192.100   Preparing for a conversion.

    (a) Meeting with appropriate Federal banking agency prior to 
passing plan. A savings association's board, or a subcommittee of its 
board, must meet, in person or electronically, with the appropriate 
Federal banking agency before the savings association passes its plan 
of conversion. At this meeting the savings association must provide the 
appropriate Federal banking agency with a written strategic plan that 
outlines the objectives of the proposed conversion and the intended use 
of the conversion proceeds.
    (b) Consultation with appropriate Federal banking agency before 
filing application. A savings association also should consult with the 
appropriate Federal banking agency before filing its application for 
conversion. The appropriate Federal banking agency will discuss the 
information that the savings association must include in the 
application for conversion, general issues that it may confront in the 
conversion process, and any other pertinent issues.


Sec.  192.105   Information required in business plan.

    (a) Minimum requirements. Prior to filing an application for 
conversion, a savings association must adopt a business plan reflecting 
its intended plans for deployment of the proposed conversion proceeds. 
The savings association's business plan is required, under Sec.  
192.150, to be included in its application for conversion. At a 
minimum, the business plan must address:
    (1) The savings association's projected operations and activities 
for three years following the conversion. These projections must 
include how the savings association will accomplish the following by 
the final year of the business plan:
    (i) Deploy the conversion proceeds at the converted savings 
association (and holding company, if applicable);
    (ii) What opportunities are available to reasonably achieve its 
planned deployment of conversion proceeds in the proposed market areas; 
and
    (iii) How the deployment will provide a reasonable return on 
investment commensurate with investment risk, investor expectations, 
and industry norms. The savings association must include three years of 
projected financial statements. The business plan must provide that the 
converted savings association must retain at least 50 percent of the 
net conversion proceeds. The appropriate Federal banking agency may 
require that a larger percentage of proceeds remain in the institution.
    (2) The savings association's plan for deploying conversion 
proceeds to meet credit and lending needs in the proposed market areas. 
The appropriate Federal banking agencies strongly discourage business 
plans that provide for a substantial investment in mortgage securities 
or other securities, except as an interim measure to facilitate 
orderly, prudent deployment of proceeds during the three years 
following the conversion or as part of a properly managed leverage 
strategy.
    (3) The risks associated with the saving association's plan for 
deployment of conversion proceeds, and the effect of this plan on 
management resources, staffing, and facilities.
    (4) The expertise of the savings association's management and board 
of directors, or plans for adequate staffing and controls to prudently 
manage the growth, expansion, new investment, and other operations and 
activities proposed in the business plan.
    (b) Prohibited information. The savings association may not project 
returns of capital or special dividends in any part of the business 
plan. A newly converted company may not plan on stock repurchases in 
the first year of the business plan.


Sec.  192.110   Review of business plan by chief executive officer and 
board of directors.

    (a) Review and approval. A savings association's chief executive 
officer and members of the board of directors must review, and at least 
two-thirds of the board of directors must approve, the business plan.
    (b) Certification. A savings association's chief executive officer 
and at least two-thirds of the board of directors must certify that the 
business plan accurately reflects the intended plans for deployment of 
conversion proceeds, and that any new initiatives reflected in the 
business plan are reasonably achievable. The savings association must 
submit these certifications with its business plan, as part of its 
application for conversion under Sec.  192.150.


Sec.  192.115   Review of business plan by the appropriate Federal 
banking agency.

    (a) Agency review. The appropriate Federal banking agency will 
review the savings association's business plan to determine that it 
demonstrates a safe and sound deployment of conversion proceeds, as 
part of its review of the application for conversion. In making its 
determination, the appropriate Federal banking agency will consider how 
the savings association has addressed the applicable factors of Sec.  
192.105. No single factor will be determinative.
    (b) Filing of business plan. A savings association must file its 
business plan as a separate confidential exhibit to the Form AC with 
the appropriate OCC licensing office if it is a Federal savings 
association, or with the appropriate Federal Deposit Insurance 
Corporation (FDIC) region if it is a State savings association. The 
appropriate Federal banking agency may request additional information, 
if necessary, to support its determination under paragraph (a) of this 
section.
    (c) Operation within business plan. If the appropriate Federal 
banking agency approves a savings association's application for 
conversion and the conversion is completed, the savings association 
must operate within the parameters of its business plan. The savings 
association must obtain the prior written approval of the appropriate 
Federal banking agency for any material deviations from its business 
plan.


Sec.  192.120   Confidentiality of conversion information.

    (a) Permitted disclosure. A savings association may discuss 
information about its conversion with individuals that the savings 
association authorizes to prepare documents for its conversion.
    (b) Confidential information. Except as permitted under paragraph 
(a) of this section, a savings association must keep all information 
about its conversion confidential until its board of directors adopts 
the plan of conversion.
    (c) Violations of confidentiality. If a savings association 
violates this section, the appropriate Federal banking agency may 
require the savings association to take remedial action. For example, 
the appropriate Federal banking agency may require the savings 
association to take any or all of the following actions:
    (1) Publicly announce that the savings association is considering a 
conversion;
    (2) Set an eligibility record date acceptable to the appropriate 
Federal banking agency;
    (3) Limit the subscription rights of any person who violates or 
aids a violation of this section; or

[[Page 1067]]

    (4) Any other action to assure that the conversion is fair and 
equitable.

Plan of Conversion


Sec.  192.125   Adoption of plan of conversion by board of directors.

    Prior to filing an application for conversion, a savings 
association's board of directors must adopt a plan of conversion that 
conforms to Sec. Sec.  192.320 through 192.485 and 192.505. The savings 
association's board of directors must adopt the plan by at least a two-
thirds vote. Pursuant to Sec.  192.150, the savings association must 
include the plan of conversion in the application for conversion.


Sec.  192.130   Information required in plan of conversion.

    A savings association must include the information included in 
Sec. Sec.  192.320 through 192.485 and 192.505 in its plan of 
conversion. The appropriate Federal banking agency may require the 
savings association to delete or revise any provision in its plan of 
conversion if it determines the provision is inequitable; is 
detrimental to the savings association, its account holders, or other 
savings associations; or is contrary to public interest.


Sec.  192.135   Notifying members of adopted plan of conversion.

    (a) Notice. A savings association must promptly notify its members 
that the board of directors adopted a plan of conversion and that a 
copy of the plan is available for the members' inspection in the 
savings association's home office and in its branch offices. The 
savings association must provide this notice by sending to each member 
a letter, through the mail or electronically if the member receives 
electronic communication, or by publishing a notice in the local 
newspaper in every local community where the savings association has an 
office. The savings association also may issue a press release and may 
make this notice available on its website. The appropriate Federal 
banking agency may require broader publication, if necessary, to ensure 
adequate notice to the savings association's members.
    (b) Contents of notice. The savings association may include only 
the following statements and descriptions in the letter, notice, or 
press release.
    (1) The savings association's board of directors adopted a proposed 
plan to convert from a mutual to a stock savings institution.
    (2) The savings association will send its members a proxy statement 
with detailed information on the proposed conversion before the savings 
association convenes a members' meeting to vote on the conversion.
    (3) The savings association's members will have an opportunity to 
approve or disapprove the proposed conversion at a meeting. A majority 
of the eligible votes must approve the conversion.
    (4) The savings association will not vote existing proxies to 
approve or disapprove the conversion. The savings association will 
solicit new proxies for voting on the proposed conversion.
    (5) The appropriate Federal banking agency, and in the case of a 
State-chartered savings association, the appropriate State regulator, 
must approve the conversion before the conversion will be effective. 
The savings association's members will have an opportunity to file 
written comments, including objections and materials supporting the 
objections, with the appropriate Federal banking agency.
    (6) The IRS must issue a favorable tax ruling, or a tax expert must 
issue an appropriate tax opinion, on the tax consequences of the 
savings association's conversion before the appropriate Federal banking 
agency will approve the conversion. The ruling or opinion must indicate 
the conversion will be a tax-free reorganization.
    (7) The appropriate Federal banking agency, and in the case of a 
State-chartered savings association, the appropriate State regulator, 
might not approve the conversion, and the IRS or a tax expert might not 
issue a favorable tax ruling or tax opinion.
    (8) Savings account holders will continue to hold accounts in the 
converted savings association with the same dollar amounts, rates of 
return, and general terms as existing deposits. The FDIC will continue 
to insure the accounts.
    (9) The savings association's conversion will not affect borrowers' 
loans, including the amount, rate, maturity, security, and other 
contractual terms.
    (10) The savings association's business of accepting deposits and 
making loans will continue without interruption.
    (11) The savings association's current management and staff will 
continue to conduct current services for depositors and borrowers under 
current policies and in existing offices.
    (12) The savings association may substantively amend its proposed 
plan of conversion before the members' meeting.
    (13) The savings association may terminate the proposed conversion.
    (14) After the appropriate Federal banking agency, and in the case 
of a State-chartered savings association, the appropriate State 
regulator, approves the proposed conversion, the savings association 
will send proxy materials providing additional information. After the 
savings association sends proxy materials, members may telephone or 
write to the savings association with additional questions.
    (15) The proposed record date for determining the eligible account 
holders who are entitled to receive subscription rights to purchase the 
savings association's shares.
    (16) A brief description of the circumstances under which 
supplemental eligible account holders will receive subscription rights 
to purchase the savings association's shares.
    (17) A brief description of how voting members may participate in 
the conversion.
    (18) A brief description of how directors, officers, and employees 
will participate in the conversion.
    (19) A brief description of the proposed plan of conversion.
    (20) The par value (if any) and approximate number of shares the 
savings association will issue and sell in the conversion.
    (c) Other requirements. (1) The savings association may not solicit 
proxies, provide financial statements, describe the benefits of 
conversion, or estimate the value of its shares upon conversion in the 
letter, notice, or press release.
    (2) If the savings association responds to inquiries about the 
conversion, it may address only the matters listed in paragraph (b) of 
this section.


Sec.  192.140   Amendments to plan of conversion.

    A savings association may amend its plan of conversion before it 
solicits proxies. After the savings association solicits proxies, it 
may amend the plan of conversion only if the appropriate Federal 
banking agency concurs.

Filing Requirements


Sec.  192.150   Information required in an application for conversion.

    (a) Required information. A savings association's application for 
conversion must include all of the following information.
    (1) The savings association's plan of conversion.
    (2) Pricing materials meeting the requirements of Sec.  192.200(b).
    (3) Proxy soliciting materials under Sec.  192.270, including:
    (i) A preliminary proxy statement with signed financial statements;
    (ii) A form of proxy meeting the requirements of Sec.  192.255; and

[[Page 1068]]

    (iii) Any additional proxy soliciting materials, including press 
releases, personal solicitation instructions, radio or television 
scripts that the savings association plans to use or furnish to its 
members, and a legal opinion indicating that any marketing materials 
comply with all applicable securities laws.
    (4) An offering circular described in Sec.  192.300.
    (5) The documents and information required by Form AC. The savings 
association may obtain Form AC from the appropriate Federal banking 
agency.
    (6) Where indicated, written consents, signed and dated, of any 
accountant, attorney, investment banker, appraiser, or other 
professional who prepared, reviewed, passed upon, or certified any 
statement, report, or valuation for use. See Form AC, instructions.
    (7) The savings association's business plan, submitted as a 
separately bound, confidential exhibit. See Sec.  192.160.
    (8) Any additional information that the appropriate Federal banking 
agency requests.
    (b) Rejection of filing. The appropriate Federal banking agency 
will not accept for filing, and may return, any application for 
conversion that is executed improperly, materially deficient, 
substantially incomplete, or that provides for unreasonable conversion 
expenses.


Sec.  192.155   Filing an application for conversion.

    A Federal savings association must file Form AC with the 
appropriate OCC licensing office. A State savings association must file 
its application with the appropriate FDIC region.


Sec.  192.160   Request for confidential treatment.

    (a) In general. The appropriate Federal banking agency makes all 
filings under this part available to the public, but may keep portions 
of the application for conversion confidential under paragraph (b) of 
this section.
    (b) Requests for confidential treatment. A savings association may 
request that the appropriate Federal banking agency keep portions of 
the savings association's application confidential. To make this 
request, the savings association must clearly designate as 
``confidential'' any portion of its application for conversion that it 
deems confidential. The savings association must provide a written 
statement specifying the grounds supporting its request for 
confidentiality. The appropriate Federal banking agency will not treat 
as confidential the portion of a savings association's application 
describing how it plans to meet Community Reinvestment Act (CRA) 
objectives. The CRA portion of a savings association's application may 
not incorporate by reference information contained in the confidential 
portion of the application.
    (c) Determination of confidential treatment. The appropriate 
Federal banking agency will determine whether confidential information 
must be made available to the public under 5 U.S.C. 552 and 12 CFR part 
4 or 12 CFR part 309, as appropriate. The appropriate Federal banking 
agency will advise the savings association before it makes information 
designated as ``confidential'' available to the public.


Sec.  192.165   Amendments to an application for conversion.

    To amend its application for conversion, a savings association 
must:
    (a) File an amendment with an appropriate facing sheet;
    (b) Number each amendment consecutively;
    (c) Respond to all issues raised by the appropriate Federal banking 
agency; and
    (d) Demonstrate that the amendment conforms to all applicable 
regulations.

Notice of Filing of Application and Comment Process


Sec.  192.180   Public notice of an application for conversion.

    (a) In general. A Federal savings association must publish a public 
notice of the application in accordance with the procedures in 12 CFR 
5.8. The Federal savings association must simultaneously prominently 
post the notice in its home office and all branch offices and may also 
make this notice available on its website.
    (b) Additional notice. If the appropriate Federal banking agency 
does not accept a savings association's application for conversion 
under Sec.  192.200 and requires the savings association to file a new 
application, the savings association must publish and post a new notice 
and allow an additional 30 calendar days for comment.


Sec.  192.185   Public comment on application for conversion.

    Commenters may submit comments on a Federal savings association's 
application in accordance with the procedures in 12 CFR 5.10.

Agency Review of the Application for Conversion


Sec.  192.200   Review, approval, or denial of application for 
conversion.

    (a) Standards for review of application. The appropriate Federal 
banking agency may approve an application for conversion only if:
    (1) The conversion complies with this part;
    (2) The savings association will meet its regulatory capital 
requirements under 12 CFR part 3 or part 324, as applicable, after the 
conversion; and
    (3) The conversion will not result in a taxable reorganization 
under the Internal Revenue Code of 1986, as amended.
    (b) Standards for review of appraisal. The appropriate Federal 
banking agency will review the appraisal required by Sec.  
192.150(a)(2) in determining whether to approve the application. The 
appropriate Federal banking agency will review the appraisal under the 
following requirements.
    (1) Independent persons experienced and expert in corporate 
appraisal, and acceptable to the appropriate Federal banking agency, 
must prepare the appraisal report.
    (2) An affiliate of the appraiser may serve as an underwriter or 
selling agent, if the savings association ensures that the appraiser is 
separate from the underwriter or selling agent affiliate and the 
underwriter or selling agent affiliate does not make recommendations or 
affect the appraisal.
    (3) The appraiser may not receive any fee in connection with the 
conversion other than for appraisal services.
    (4) The appraisal report must include a complete and detailed 
description of the elements of the appraisal, a justification for the 
appraisal methodology, and sufficient support for the conclusions.
    (5) If the appraisal is based on a capitalization of the savings 
association's pro forma income, it must indicate the basis for 
determining the income to be derived from the sale of shares, and 
demonstrate that the earnings multiple used is appropriate, including 
future earnings growth assumptions.
    (6) If the appraisal is based on a comparison of the savings 
association's shares with outstanding shares of existing stock 
associations, the existing stock associations must be reasonably 
comparable in size, market area, competitive conditions, risk profile, 
profit history, and expected future earnings.
    (7) The appropriate Federal banking agency may decline to process 
the application for conversion and deem it materially deficient or 
substantially incomplete if the initial appraisal report is materially 
deficient or substantially incomplete.
    (8) A savings association may not represent or imply that the 
appropriate

[[Page 1069]]

Federal banking agency approved the appraisal.
    (c) Compliance with the Community Reinvestment Act. The appropriate 
Federal banking agency will review the savings association's compliance 
record under 12 CFR part 195 and its business plan to determine how the 
savings association will serve the convenience and needs of its 
communities after the conversion.
    (1) Based on this review, the appropriate Federal banking agency 
may approve the application, deny the application, or approve the 
application on the condition that the savings association will improve 
its CRA performance or that the savings association will address the 
particular credit or lending needs of the communities that it will 
serve.
    (2) The appropriate Federal banking agency may deny the application 
if the savings association's business plan does not demonstrate that 
its proposed use of conversion proceeds will help the savings 
association to meet the credit and lending needs of the communities 
that it will serve.
    (d) Additional information. The appropriate Federal banking agency 
may request that a savings association amend its application if further 
explanation is necessary, material is missing, or material needs 
correction.
    (e) Denial of application. The appropriate Federal banking agency 
will deny an application if the application does not meet the 
requirements of this subpart, unless the appropriate Federal banking 
agency waives the requirement under Sec.  192.5(c).


Sec.  192.205   Court review of final action on application for 
conversion.

    (a) In general. Any person aggrieved by the appropriate Federal 
banking agency's final action on a savings association's application 
for conversion may ask the court of appeals of the United States for 
the circuit in which the principal office or residence of such person 
is located, or the U.S. Court of Appeals for the District of Columbia 
Circuit, to review the action under 12 U.S.C. 1464(i)(2)(B).
    (b) Filing procedures. To obtain court review of the action, this 
statute requires the aggrieved person to file a written petition 
requesting that the court modify, terminate, or set aside the final 
appropriate Federal banking agency action. The aggrieved person must 
file the petition with the court within the later of 30 calendar days 
after the appropriate Federal agency publishes notice of its final 
action in the Federal Register or 30 calendar days after the savings 
association mails the proxy statement to its members under Sec.  
192.235.

Vote by Members


Sec.  192.225   Approval of plan of conversion by members.

    (a) In general. After the appropriate Federal banking agency 
approves a plan of conversion, the savings association must submit the 
plan of conversion to its members for approval. The savings association 
must obtain this approval at a meeting of its members, which may be a 
special or annual meeting, unless the savings association is State-
chartered and State law requires approval via an annual meeting.
    (b) Approval. The savings association's members must approve the 
plan of conversion by a majority of the total outstanding votes, unless 
the savings association is State-chartered and State law prescribes a 
higher percentage.
    (c) Voting method. Savings association members may vote in person 
or by proxy.
    (d) Notification to non-voting members. The savings association may 
notify eligible account holders or supplemental eligible account 
holders who are not voting members of its proposed conversion. The 
savings association may include only the information in Sec.  192.135 
in its notice.


Sec.  192.230   Members' voting eligibility.

    A savings association determines members' eligibility to vote by 
setting a voting record date. The savings association must set a voting 
record date that is not more than 60 calendar days nor less than 20 
calendar days before its meeting, unless the savings association is 
State-chartered and State law requires a different voting record date.


Sec.  192.235   Notice of members' meeting.

    (a) In general. A savings association must notify its members of 
the meeting to consider its conversion by sending the members a proxy 
statement cleared by the appropriate Federal banking agency.
    (b) Timing of notice. The savings association must notify its 
members 20 to 45 calendar days before the meeting, unless the savings 
association is State-chartered and State law requires a different 
notice period.
    (c) Notice to beneficial account holders. The savings association 
must also notify each beneficial holder of an account held in a 
fiduciary capacity:
    (1) If the savings association is a Federal savings association, 
and the name of the beneficial holder is disclosed on the savings 
association's records; or
    (2) If the savings association is a State-chartered savings 
association and the beneficial holder possesses voting rights under 
State law.


Sec.  192.240   Submission of documents to the appropriate Federal 
banking agency after the members' meeting.

    (a) Filings after members' meeting. Promptly after the members' 
meeting, a savings association must file all of the following 
information with the appropriate OCC licensing office, if the savings 
association is Federally-chartered, and with the appropriate FDIC 
region if the savings association is State-chartered.
    (1) A certified copy of each adopted resolution on the conversion.
    (2) The total votes eligible to be cast.
    (3) The total votes represented in person or by proxy.
    (4) The total votes cast in favor of and against each matter.
    (5) The percentage of votes necessary to approve each matter.
    (6) An opinion of counsel that the savings association conducted 
the members' meeting in compliance with all applicable State or Federal 
laws and regulations.
    (b) Filing after conversion. Promptly after completion of the 
conversion, the savings association must submit an opinion of counsel 
that it complied with all laws applicable to the conversion.

Proxy Solicitation


Sec.  192.250  Compliance with proxy solicitation provisions.

    (a) Savings association compliance. A savings association must 
comply with these proxy solicitation provisions when it provides proxy 
solicitation material to members for the meeting to vote on the plan of 
conversion.
    (b) Member compliance. Members of the savings association must 
comply with these proxy solicitation provisions when they provide proxy 
solicitation materials to members for the meeting to vote on the 
conversion, pursuant to Sec.  192.280, except where:
    (1) The member solicits 50 people or fewer and does not solicit 
proxies on the savings association's behalf; or
    (2) The member solicits proxies through newspaper advertisements 
after the savings association's board of directors adopts the plan of 
conversion. Any newspaper advertisements may include only the following 
information:
    (i) The name of the savings association;
    (ii) The reason for the advertisement;
    (iii) The proposal or proposals to be voted upon;
    (iv) Where a member may obtain a copy of the proxy solicitation 
material; and

[[Page 1070]]

    (v) A request for the savings association's members to vote at the 
meeting.


Sec.  192.255  Form of proxy requirements.

    The form of proxy must include all of the following:
    (a) A statement in bold face type stating that management is 
soliciting the proxy.
    (b) Blank spaces where the member must date and sign the proxy.
    (c) Clear and impartial identification of each matter or group of 
related matters that members will vote upon. The savings association 
must include any proposed charitable contribution as an item to be 
voted on separately.
    (d) The phrase ``Revocable Proxy'' in bold face type (at least 18 
point).
    (e) A description of any charter or State law requirement that 
restricts or conditions votes by proxy.
    (f) An acknowledgment that the member received a proxy statement 
before he or she signed the form of proxy.
    (g) The date, time, and the place of the meeting, when available.
    (h) A way for the member to specify by ballot whether he or she 
approves or disapproves of each matter that members will vote upon.
    (i) A statement that management will vote the proxy in accordance 
with the member's specifications.
    (j) A statement in bold face type indicating how management will 
vote the proxy if the member does not specify a choice for a matter.


Sec.  192.260  Previously executed proxies.

    A savings association may not use previously executed proxies for 
the plan of conversion vote. If members consider the plan of conversion 
at an annual meeting, the savings association may vote proxies obtained 
through other proxy solicitations only on matters not related to the 
plan of conversion.


Sec.  192.265  Proxies executed under this part.

    A savings association may vote a proxy obtained under this part on 
matters that are incidental to the conduct of the meeting. The savings 
association may not vote a proxy obtained under this subpart at any 
meeting other than the meeting (or any adjournment of the meeting) to 
vote on the plan of conversion.


Sec.  192.270  Proxy statement requirements.

    (a) Content requirements. A savings association must prepare its 
proxy statement in compliance with this part and Form PS.
    (b) Other requirements. (1) The appropriate Federal banking agency 
will review the proxy solicitation material when it reviews the 
application for conversion and will clear the proxy solicitation 
material.
    (2) The savings association must provide a cleared written proxy 
statement to its members before or at the same time it provides any 
other soliciting material. The savings association must mail cleared 
proxy solicitation material to its members within 10 calendar days 
after the appropriate Federal banking agency clears the solicitation.


Sec.  192.275  Filing revised proxy materials.

    (a) In general. A savings association must file revised proxy 
solicitation materials as an amendment to its application for 
conversion. The proxy solicitation materials must be in the form in 
which it furnished the materials to its members.
    (b) Content of filing. To revise its proxy solicitation materials, 
the savings association must file:
    (1) Its revised proxy materials as required by Form PS;
    (2) Its revised form of proxy, if applicable;
    (3) Any additional proxy solicitation material subject to Sec.  
192.270; and
    (4) A copy of the revised proxy solicitation materials marked to 
clearly indicate changes from the prior filing.
    (c) When to file. The savings association must file no later than 
the date that it sends or gives the proxy solicitation material to its 
members. The savings association must indicate the date that it will 
release the materials.
    (d) Material not required to be filed. Unless requested by the 
appropriate Federal banking agency, the savings association does not 
have to file copies of replies to inquiries from its members or copies 
of communications that merely request members to sign and return proxy 
forms.


Sec.  192.280  Mailing member's proxy solicitation materials.

    (a) In general. A savings association must mail the member's 
cleared proxy solicitation material if:
    (1) The savings association's board of directors adopted a plan of 
conversion;
    (2) A member requests in writing that the savings association mail 
the proxy solicitation material;
    (3) The appropriate Federal banking agency has cleared the member's 
proxy solicitation; and
    (4) The member agrees to defray the savings association's 
reasonable expenses.
    (b) Required information. As soon as practicable after the savings 
association receives a request under paragraph (a) of this section, it 
must mail or otherwise furnish the following information to the member:
    (1) The approximate number of members that the savings association 
solicited or will solicit, or the approximate number of members of any 
group of account holders that the member designates; and
    (2) The estimated cost of mailing the proxy solicitation material 
for the member.
    (c) Timing. The savings association must mail cleared proxy 
solicitation material to the designated members promptly after the 
member furnishes the materials, envelopes (or other containers), and 
postage (or payment for postage) to the savings association.
    (d) Content. The savings association is not responsible for the 
content of a member's proxy solicitation material.
    (e) Sharing of proxy material. A member may furnish other members 
its own proxy solicitation material, cleared by the appropriate Federal 
banking agency, subject to the rules in this section.


Sec.  192.285   Prohibited solicitations.

    (a) False or misleading statements. (1) No one may use proxy 
solicitation material for the members' meeting if the material contains 
any statement which, considering the time and the circumstances of the 
statement:
    (i) Is false or misleading with respect to any material fact;
    (ii) Omits any material fact that is necessary to make the 
statements not false or misleading; or
    (iii) Omits any material fact that is necessary to correct a 
statement in an earlier communication that has become false or 
misleading.
    (2) No one may represent or imply that the appropriate Federal 
banking agency determined that the proxy solicitation material is 
accurate, complete, not false or not misleading, or passed upon the 
merits of or approved any proposal.
    (b) Other prohibited solicitations. No person may solicit:
    (1) An undated or post-dated proxy;
    (2) A proxy that states it will be dated after the date it is 
signed by a member;
    (3) A proxy that is not revocable at will by the member; or
    (4) A proxy that is part of another document or instrument.


Sec.  192.290   Remedial measures for prohibited solicitations.

    (a) In general. If a solicitation violates Sec.  192.285, the 
appropriate Federal banking agency may require remedial measures, 
including:
    (1) Correction of the violation by a retraction and a new 
solicitation;

[[Page 1071]]

    (2) Rescheduling the members' meeting; or
    (3) Any other actions necessary to ensure a fair vote.
    (b) Other action. The appropriate Federal banking agency also may 
bring an enforcement action against the violator.


Sec.  192.295   Re-solicitation of proxies.

    If a savings association amends its application for conversion, the 
appropriate Federal banking agency may require the savings association 
to re-solicit proxies for its members' meeting as a condition of 
approval of the amendment.

Offering Circular


Sec.  192.300   Offering circular requirements.

    (a) Content and filing requirements. A savings association must 
prepare and file its offering circular in compliance with this part, 
Form OC, and the applicable SEC registration statement form required 
under 12 CFR 16.15. A Federal savings association must file its 
offering circular with the appropriate OCC licensing office and a State 
savings association must file its offering circular with the 
appropriate FDIC region. If filing an amendment, the savings 
association also must comply with Sec. Sec.  192.155 and 192.165.
    (b) Member approval. A savings association must condition its stock 
offering upon member approval of its plan of conversion.
    (c) Agency review. The appropriate Federal banking agency will 
review the offering circular and may comment on the included 
disclosures and financial statements. The appropriate Federal banking 
agency will not approve the adequacy or accuracy of the offering 
circular or the disclosures.
    (d) Revised filings. A savings association must file any revised 
offering circular, final offering circular, and any post-effective 
amendment to the final offering circular in accordance with the 
procedures in Sec. Sec.  192.155 and 192.165.
    (e) Request for effectiveness. After a savings association 
satisfactorily addresses the appropriate Federal banking agency's 
comments, the savings association must request that the appropriate 
Federal banking agency declare the offering circular effective for a 
time period. The time period may not exceed the maximum time period for 
the completion of the sale of all of the savings association's shares 
under Sec.  192.400.


Sec.  192.305   Distribution of offering circular.

    (a) Preliminary offering circular. A savings association may 
distribute a preliminary offering circular at the same time as or after 
it mails the proxy statement to its members.
    (b) Early distribution prohibited. A savings association may not 
distribute a final offering circular for stock issued in the 
transaction until after the appropriate Federal banking agency declares 
the offering circular effective or the Securities and Exchange 
Commission declares the registration statement for the offering 
circular effective. The savings association must have the offering 
circular delivered in accordance with this part.
    (c) Effective offering circular. A savings association must 
distribute a final offering circular for stock issued in the 
transaction to persons listed in its plan of conversion within 10 
calendar days after the appropriate Federal banking agency declares the 
offering circular effective or the Securities and Exchange Commission 
declares the registration statement for the offering circular 
effective.


Sec.  192.310   Filing a post-effective amendment to an offering 
circular.

    (a) In general. A savings association must file a post-effective 
amendment to the offering circular with the appropriate Federal banking 
agency or have its proposed stock holding company file a post-effective 
amendment to its registration statement for the offering circular with 
the Securities and Exchange Commission, when a material event or change 
of circumstances occurs.
    (b) Timing of delivery. After the appropriate Federal banking 
agency or the Securities and Exchange Commission declares the post-
effective amendment effective, the savings association must immediately 
have the amendment to the offering circular delivered to each person 
who subscribed for or ordered shares in the offering.
    (c) Content. The post-effective amendment must indicate that each 
person may increase, decrease, or rescind their subscription or order.
    (d) Post-effective offering period. The post-effective offering 
period must remain open no less than 10 calendar days nor more than 20 
calendar days, unless the appropriate Federal banking agency approves a 
longer rescission period.

Offers and Sales of Stock


Sec.  192.320  Order of priority to purchase conversion shares.

    A savings association must offer to sell its shares in the 
following order:
    (a) Eligible account holders.
    (b) Tax-qualified employee stock ownership plans.
    (c) Supplemental eligible account holders.
    (d) Other voting members who have subscription rights.
    (e) The savings association's community, its community and the 
general public, or the general public.


Sec.  192.325  Timing of offer to sell conversion shares.

    (a) In general. A savings association may offer to sell its 
conversion shares after the appropriate Federal banking agency approves 
the conversion, clears the proxy statement, and declares the offering 
circular effective.
    (b) Timing. The offer may commence at the same time the savings 
association starts the proxy solicitation of its members.


Sec.  192.330  Pricing of conversion shares.

    (a) In general. A savings association must sell its conversion 
shares at a uniform price per share and at a total price that is equal 
to the estimated pro forma market value of its shares after the 
conversion.
    (b) Maximum price. The maximum price must be no more than 15 
percent above the midpoint of the estimated price range in the savings 
association's offering circular.
    (c) Minimum price. The minimum price must be no more than 15 
percent below the midpoint of the estimated price range in the savings 
association's offering circular.
    (d) Increase in price. If the appropriate Federal banking agency 
permits, the savings association may increase the maximum price of 
conversion shares sold. The maximum price, as adjusted, must be no more 
than 15 percent above the maximum price computed under paragraph (b) of 
this section.
    (e) Price range. The maximum price must be between $5 and $50 per 
share.
    (f) Inclusion in preliminary offering circular. The savings 
association must include the estimated price in any preliminary 
offering circular.


Sec.  192.335  Procedures for the sale of conversion shares.

    (a) Distribution of order forms. A savings association must 
distribute order forms to all eligible account holders, supplemental 
eligible account holders, and other voting members to enable them to 
subscribe for the conversion shares they are permitted under the plan 
of conversion. The savings association may either send the order forms 
with its offering circular or after the savings association distributes 
its offering circular.

[[Page 1072]]

    (b) Sale of shares. A savings association may sell its conversion 
shares in a community offering, a public offering, or both. The savings 
association may begin the community offering, the public offering, or 
both at any time during the subscription offering or upon conclusion of 
the subscription offering.
    (c) Underwriting commissions and fees. A savings association may 
pay underwriting commissions (including underwriting discounts). The 
appropriate Federal banking agency may object to the payment of 
unreasonable commissions. The savings association may reimburse an 
underwriter for accountable expenses in a subscription offering if the 
public offering is limited. If no public offering occurs, the savings 
association may pay an underwriter a consulting fee. The appropriate 
Federal banking agency may object to the payment of unreasonable 
consulting fees.
    (d) Sequence of order fulfillment. If a savings association 
conducts the community offering, the public offering, or both at the 
same time as the subscription offering, the savings association must 
fill all subscription orders first.
    (e) Preparation of order form. A savings association must prepare 
its order form in compliance with this part and Form OF.


Sec.  192.340  Prohibited sales practices.

    (a) Offers, sales, or purchases of conversion shares. In connection 
with offers, sales, or purchases of conversion shares under this part, 
a savings association and its directors, officers, agents, or employees 
may not:
    (1) Employ any device, scheme, or artifice to defraud;
    (2) Obtain money or property by means of any untrue statement of a 
material fact or any omission of a material fact necessary to make the 
statements, in light of the circumstances under which they were made, 
not misleading; or
    (3) Engage in any act, transaction, practice, or course of business 
that operates or would operate as a fraud or deceit upon a purchaser or 
seller.
    (b) Conversion. During the conversion, no person may:
    (1) Transfer, or enter into any agreement or understanding to 
transfer, the legal or beneficial ownership of subscription rights for 
the savings association's conversion shares or the underlying 
securities to the account of another;
    (2) Make any offer, or any announcement of an offer, to purchase 
any of the savings association's conversion shares from anyone but the 
savings association; or
    (3) Knowingly acquire more than the maximum purchase allowable 
under the savings association's plan of conversion.
    (c) Exceptions. The restrictions in paragraphs (b)(1) and (2) of 
this section do not apply to offers for more than 10 percent of any 
class of conversion shares by:
    (1) An underwriter or a selling group, acting on the savings 
association's behalf, that makes the offer with a view toward public 
resale; or
    (2) One or more of the savings association's tax-qualified employee 
stock ownership plans so long as the plan or plans do not beneficially 
own more than 25 percent of any class of the savings association's 
equity securities in the aggregate.
    (d) Violations. Any person found to have violated the restrictions 
in paragraphs (a) or (b) of this section may become subject to an 
enforcement action, civil money penalties, criminal prosecution, or 
other legal action.


Sec.  192.345  Permissible forms of subscriber payment.

    (a) In general. A subscriber may purchase conversion shares with 
cash, by a withdrawal from a savings account, or a withdrawal from a 
certificate of deposit. If a subscriber purchases shares by a 
withdrawal from a certificate of deposit, the savings association may 
not assess a penalty for the withdrawal.
    (b) Prohibition. A savings association may not extend credit to any 
person to purchase the savings association's conversion shares.


Sec.  192.350   Interest on payments for conversion shares.

    (a) In general. A savings association must pay interest from the 
date the savings association receives a payment for conversion shares 
until the date the savings association completes or terminates the 
conversion. The savings association must pay interest at no less than 
its passbook rate for amounts paid in cash, check, or money order.
    (b) Interest on withdrawals from savings accounts. If a subscriber 
withdraws money from a savings account to purchase conversion shares, 
the savings association must pay interest on the payment until the 
savings association completes or terminates the conversion as if the 
withdrawn amount remained in the account.
    (c) Interest on withdrawals from certificates of deposit. If a 
depositor fails to maintain the applicable minimum balance requirement 
because he or she withdraws money from a certificate of deposit to 
purchase conversion shares, the savings association may cancel the 
certificate and pay interest at no less than its passbook rate on any 
remaining balance.


Sec.  192.355   Subscription rights for eligible account holders and 
supplemental eligible account holders.

    (a) Eligible account holders. A savings association must give each 
eligible account holder subscription rights to purchase conversion 
shares in an amount equal to the greater of:
    (1) The maximum purchase limitation established for the community 
offering or the public offering under Sec.  192.395;
    (2) One-tenth of one percent of the total stock offering; or
    (3) Fifteen times the following number: The total number of 
conversion shares that the savings association will issue, multiplied 
by the following fraction. The numerator is the total qualifying 
deposit of the eligible account holder. The denominator is the total 
qualifying deposits of all eligible account holders. The savings 
association must round down the product of this multiplied fraction to 
the next whole number.
    (b) Supplemental eligible account holders. The savings association 
must give subscription rights to purchase shares to each supplemental 
eligible account holder in the same amount as described in paragraph 
(a) of this section, except that the savings association must compute 
the fraction described in paragraph (a)(3) of this section as follows: 
The numerator is the total qualifying deposit of the supplemental 
eligible account holder. The denominator is the total qualifying 
deposits of all supplemental eligible account holders.


Sec.  192.360   Officers, directors, and associates as eligible account 
holders.

    A savings association's officers, directors, and their associates 
may be eligible account holders. However, if an officer, director, or 
his or her associate receives subscription rights based on increased 
deposits in the year before the eligibility record date, the savings 
association must subordinate subscription rights for these deposits to 
subscription rights exercised by other eligible account holders.


Sec.  192.365   Purchase of conversion shares by other voting members.

    (a) In general. A savings association must give rights to purchase 
its conversion shares in the conversion to voting members who are 
neither eligible account holders nor supplemental eligible account 
holders. The savings association must allocate rights to each

[[Page 1073]]

voting member that are equal to the greater of:
    (1) The maximum purchase limitation established for the community 
offering and the public offering under Sec.  192.395; or
    (2) One-tenth of one percent of the total stock offering.
    (b) Subordination of voting rights. The savings association must 
subordinate the voting members' rights to the rights of eligible 
account holders, tax-qualified employee stock ownership plans, and 
supplemental eligible account holders.


Sec.  192.370   Limits on aggregate purchases by officers, directors, 
and associates.

    (a) In general. When a savings association converts, its officers, 
directors, and their associates may not purchase, in the aggregate, 
more than the following percentage of the savings association's total 
stock offering:

------------------------------------------------------------------------
                                                                Officer
                                                                  and
                      Institution size                         director
                                                               purchases
                                                               (percent)
------------------------------------------------------------------------
$50,000,000 or less.........................................          35
$50,000,001-100,000,000.....................................          34
$100,000,001-150,000,000....................................          33
$150,000,001-200,000,000....................................          32
$200,000,001-250,000,000....................................          31
$250,000,001-300,000,000....................................          30
$300,000,001-350,000,000....................................          29
$350,000,001-400,000,000....................................          28
$400,000,001-450,000,000....................................          27
$450,000,001-500,000,000....................................          26
Over $500,000,000...........................................          25
------------------------------------------------------------------------

    (b) Exception. The purchase limitations in this section do not 
apply to shares held in tax-qualified employee stock benefit plans that 
are attributable to the savings association's officers, directors, and 
their associates.


Sec.  192.375  Allocation of oversubscribed conversion shares.

    (a) Eligible account holders. If a savings association's conversion 
shares are oversubscribed by its eligible account holders, the savings 
association must allocate shares among the eligible account holders so 
that each, to the extent possible, may purchase 100 shares.
    (b) Supplemental eligible account holders. If a savings 
association's conversion shares are oversubscribed by its supplemental 
eligible account holders, the savings association must allocate shares 
among the supplemental eligible account holders so that each, to the 
extent possible, may purchase 100 shares.
    (c) Eligible and supplemental eligible account holders. If a person 
is an eligible account holder and a supplemental eligible account 
holder, the savings association must include the eligible account 
holder's allocation in determining the number of conversion shares that 
the savings association may allocate to the person as a supplemental 
eligible account holder.
    (d) Additional allocations. For conversion shares that the savings 
association does not allocate under paragraphs (a) and (b) of this 
section, the savings association must allocate the shares among the 
eligible or supplemental eligible account holders equitably, based on 
the amounts of qualifying deposits. The savings association must 
describe this method of allocation in its plan of conversion.
    (e) Oversubscription. If shares remain after the savings 
association has allocated shares as provided in paragraphs (a) and (b) 
of this section, and if the savings association's voting members 
oversubscribe, the savings association must allocate its conversion 
shares among those members equitably. The savings association must 
describe the method of allocation in its plan of conversion.


Sec.  192.380  Purchase of conversion shares by employee stock 
ownership plan.

    (a) In general. A savings association's tax-qualified employee 
stock ownership plan may purchase up to 10 percent of the total 
offering of the savings association's conversion shares.
    (b) Revised stock valuation range. If the appropriate Federal 
banking agency approves a revised stock valuation range as described in 
Sec.  192.330(e), and the final conversion stock valuation range 
exceeds the former maximum stock offering range, a savings association 
may allocate conversion shares to its tax-qualified employee stock 
ownership plan, up to the 10 percent limit in paragraph (a) of this 
section.
    (c) Open market purchase. If a savings association's tax-qualified 
employee stock ownership plan is not able to or chooses not to purchase 
stock in the offering, it may, with prior appropriate Federal banking 
agency approval and appropriate disclosure in the savings association's 
offering circular, purchase stock in the open market, or purchase 
authorized but unissued conversion shares.
    (d) Charitable organizations. A savings association may include 
stock contributed to a charitable organization in the conversion in the 
calculation of the total offering of conversion shares under paragraphs 
(a) and (b) of this section, unless the appropriate Federal banking 
agency objects on supervisory grounds.


Sec.  192.385  Purchase limitations.

    (a) In general. A savings association may limit the number of 
shares that any person, group of associated persons, or persons 
otherwise acting in concert, may subscribe to up to five percent of the 
total stock sold.
    (b) Modification of purchase limit. If a savings association sets a 
limit of five percent under paragraph (a) of this section, the savings 
association may modify that limit with appropriate Federal banking 
agency approval to provide that any person, group of associated 
persons, or persons otherwise acting in concert subscribing for five 
percent, may purchase between five and 10 percent as long as the 
aggregate amount that the subscribers purchase does not exceed 10 
percent of the total stock offering.
    (c) Minimum purchase. A savings association may require persons 
exercising subscription rights to purchase a minimum number of 
conversion shares. The minimum number of shares must equal the lesser 
of the number of shares obtained by a $500 subscription or 25 shares.
    (d) Aggregation. In setting purchase limitations under this 
section, a savings association may not aggregate conversion shares 
attributed to a person in the savings association's tax-qualified 
employee stock ownership plan with shares purchased directly by, or 
otherwise attributable to, that person.


Sec.  192.390  Community offering of conversion shares.

    (a) Purchase preference in subscription offering. In a subscription 
offering, a savings association may give a purchase preference to 
eligible account holders, supplemental eligible account holders, and 
voting members residing in its local community.
    (b) Purchase preference in community offering. In a community 
offering, a savings association must give a purchase preference to 
natural persons residing in its local community.


Sec.  192.395  Other conditions for community and public offerings.

    A savings association must offer and sell its stock to achieve a 
widespread distribution of the stock. If a savings association offers 
shares in a community offering, a public offering, or both, it must 
first fill orders for its stock up to a maximum of two percent of the 
conversion stock on a basis that will promote a widespread distribution 
of stock. The savings association must allocate any remaining shares on 
an equal number of shares per order basis until it fills all orders.

[[Page 1074]]

Completion of the Offering


Sec.  192.400  Time period for completion of sale of stock.

    A savings association must complete all sales of its stock within 
45 calendar days after the last day of the subscription period, unless 
the offering is extended under Sec.  192.405.


Sec.  192.405  Extension of the offering period.

    (a) In general. A savings association must submit a request in 
writing to the appropriate Federal banking agency for an extension of 
any offering period. The appropriate Federal banking agency will not 
grant any single extension of more than 90 calendar days.
    (b) Post-effective amendment to offering circular. If the 
appropriate Federal banking agency grants a savings association's 
request for an extension of time, the savings association must provide 
a post-effective amendment to the offering circular under Sec.  192.310 
to each person who subscribed for or ordered stock. The amendment must 
indicate that the appropriate Federal banking agency extended the 
offering period and that each person who subscribed for or ordered 
stock may increase, decrease, or rescind their subscription or order 
within the time remaining in the extension period.

Completion of the Conversion


Sec.  192.420  Time period for completion of conversion.

    In its plan of conversion, a savings association must set a date by 
which the conversion must be completed. This date must not be more than 
24 months from the date that the savings association's members approve 
the plan of conversion. The date, once set, may not be extended by the 
savings association or by the appropriate Federal banking agency. The 
savings association must terminate the conversion if it is not 
completed by that date. The conversion is complete on the date that the 
savings association accepts the offers for its stock.


Sec.  192.425  Termination of conversion.

    A conversion may be terminated by:
    (a) A savings association's members failing to approve the 
conversion at its members' meeting;
    (b) A savings association before its members' meeting; or
    (c) A savings association after the members' meeting, but only if 
the appropriate Federal banking agency concurs.


Sec.  192.430  Charter amendments.

    (a) Conversion from Federally-chartered mutual savings association 
or savings bank to Federally-chartered stock savings association or 
savings bank. If the savings association is a Federally-chartered 
mutual savings association or savings bank and it converts to a 
Federally-chartered stock savings association or savings bank, it must 
apply to the OCC to amend its charter and bylaws consistent with 12 CFR 
5.22, as part of the savings association's application for conversion. 
The savings association may only include OCC pre-approved anti-takeover 
provisions in its amended charter and bylaws. See 12 CFR 5.22(g)(7).
    (b) Conversion from Federally-chartered mutual savings association 
or savings bank to State-chartered stock savings association or savings 
bank. If the savings association is a Federally-chartered mutual 
savings association or savings bank and is converting to a State-
chartered stock savings association under this part, the savings 
association must surrender its charter to the OCC for cancellation 
promptly after the State issues its new State stock charter. The 
savings association must promptly file a copy of its new State stock 
charter with the FDIC.
    (c) Conversion from State-chartered mutual savings association or 
savings bank to Federally State-chartered stock savings association or 
savings bank. If the savings association is a State-chartered mutual 
savings association or savings bank, and is converting to a Federally 
chartered stock savings association or savings bank, it must apply to 
the OCC for a new charter and bylaws consistent with 12 CFR 5.22. The 
savings association may only include OCC pre-approved anti-takeover 
provisions in its charter and bylaws. See 12 CFR 5.22(g)(7).
    (d) Priority of accounts. In any conversion described in this 
section that involves a mutual holding company, the charter of each 
resulting subsidiary savings association of the holding company must 
contain the following provision:

    In any situation in which the priority of the accounts of the 
association is in controversy, all such accounts must, to the extent 
of their withdrawable 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.

    (e) Liquidation account. The savings association's new or amended 
charter must require the savings association to establish and maintain 
a liquidation account for eligible and supplemental eligible account 
holders under Sec.  192.450.


Sec.  192.435  Corporate existence after conversion.

    A savings association's corporate existence will continue following 
its conversion, unless it converts to a State-chartered stock savings 
association and State law prescribes otherwise.


Sec.  192.440  Stockholder voting rights after conversion.

    A savings association must provide its stockholders with exclusive 
voting rights, except as provided in Sec.  192.445(c).


Sec.  192.445  Savings account holder's account after conversion.

    (a) In general. The savings association must provide each savings 
account holder, without payment, a withdrawable savings account or 
accounts in the same amount and under the same terms and conditions as 
their accounts before the conversion.
    (b) Liquidation account. The savings association must provide a 
liquidation account for each eligible and supplemental eligible account 
holder under Sec.  192.450.
    (c) Voting rights. If the savings association is State-chartered 
and State law requires the savings association to provide voting rights 
to savings account holders or borrowers, the charter must:
    (1) Limit these voting rights to the minimum required by State law; 
and
    (2) Require the savings association to solicit proxies from the 
savings account holders and borrowers in the same manner that the 
savings association solicits proxies from its stockholders.

Liquidation Account


Sec.  192.450  Liquidation accounts.

    (a) In general. A liquidation account represents the potential 
interest of eligible account holders and supplemental eligible account 
holders in the savings association's net worth at the time of 
conversion. A savings association must maintain a sub-account to 
reflect the interest of each account holder.
    (b) Distribution of liquidation. Before a savings association may 
provide a liquidation distribution to common stockholders, it must give 
a liquidation distribution to those eligible account holders and 
supplemental eligible account holders who hold savings accounts from 
the time of conversion until liquidation.
    (c) Recording of liquidation account in financial statements. A 
savings association may not record the liquidation account in its 
financial statements. The savings association must disclose the 
liquidation account in

[[Page 1075]]

the footnotes to the savings association's financial statements.


Sec.  192.455  Initial balance of liquidation account.

    The initial balance of the liquidation account is the savings 
association's net worth in the statement of financial condition 
included in the final offering circular.


Sec.  192.460  Initial balance of liquidation sub-account.

    (a) General rule. (1) A savings association must calculate the 
initial liquidation sub-account balance of each eligible and 
supplemental eligible account holder at the time of the conversion.
    (2) The initial liquidation sub-account balance for a savings 
account held by an eligible account holder, for a savings account not 
held by the eligible account holder on the supplemental eligibility 
record date, is calculated by multiplying the initial liquidation 
account balance by the following fraction: The numerator is the 
qualifying deposit in the savings account on the eligibility record 
date and the denominator is the calculation in paragraph (a)(5) of this 
section.
    (3) The initial liquidation sub-account balance for a savings 
account held by a supplemental eligible account holder, for a savings 
account not held by the supplemental eligible account holder on the 
eligibility record date, is calculated by multiplying the initial 
liquidation account balance by the following fraction: The numerator is 
the qualifying deposit in the savings account on the supplemental 
eligibility record date and the denominator is the calculation in 
paragraph (a)(5) of this section.
    (4) For a savings account held on both the eligibility record date 
and the supplemental eligibility record date, the amount of the 
qualifying deposit for calculating the initial liquidation sub-account 
is the higher account balance of the savings account on either the 
eligibility record date or the supplemental eligibility record date. 
The initial liquidation sub-account balance is calculated by 
multiplying the liquidation account balance by the following fraction: 
The numerator is the higher amount of the qualifying deposit in the 
savings account on either the eligibility record date or the 
supplemental eligibility record date and the denominator is the 
calculation in paragraph (a)(5) of this section.
    (5) The denominator for calculating the initial liquidation sub-
account balance of each eligible and supplemental eligible account 
holder is the sum of the numerator calculations in paragraphs (a)(2) 
through (4) of this section.
    (b) Balance increases and decreases. A savings association must not 
increase the initial liquidation and sub-account balances. It must 
decrease the initial liquidation account and the sub-account balances 
under Sec.  192.470 as depositors reduce or close their savings 
accounts.


Sec.  192.465  Retention of voting rights based on liquidation sub-
accounts.

    Eligible account holders or supplemental eligible account holders 
do not retain any voting rights based on their liquidation sub-
accounts.


Sec.  192.470  Required adjustments to liquidation sub-accounts.

    (a) Reductions. (1) A savings association must reduce the balance 
of an eligible account holder's or supplemental eligible account 
holder's sub-account if the deposit balance in the account holder's 
savings account at the close of business on any annual closing date, 
which for purposes of this section is the savings association's fiscal 
year end, after the relevant eligibility record dates is less than:
    (i) The deposit balance in the account holder's savings account at 
the close of business on any other annual closing date after the 
relevant eligibility record date; or
    (ii) The qualifying deposits in the account holder's savings 
account on the relevant eligibility record date.
    (2) The reduction must be proportionate to the reduction in the 
deposit balance.
    (b) Prohibition on increases. If a savings association reduces the 
balance of a liquidation sub-account, it may not subsequently increase 
it if the deposit balance increases.
    (c) Liquidation account adjustments. A savings association is not 
required to adjust the liquidation account and sub-account balances at 
each annual closing date if the savings association maintains 
sufficient records to make the computations if a liquidation 
subsequently occurs.
    (d) Maintenance of liquidation sub-account. A savings association 
must maintain the liquidation sub-account for each account holder as 
long as the account holder maintains an account with the same social 
security number.
    (e) Complete liquidation. If there is a complete liquidation, the 
savings association must provide each account holder with a liquidation 
distribution in the amount of the sub-account balance.


Sec.  192.475  Definition of liquidation.

    (a) In general. A liquidation is a sale of a saving association's 
assets and settlement of its liabilities with the intent to cease 
operations and close. Upon liquidation, a savings association must 
return its charter to the governmental agency that issued it. The 
government agency must cancel the savings association's charter.
    (b) Other transactions. A merger, consolidation, or similar 
combination or transaction with another depository institution, is not 
a liquidation. If a savings association is involved in such a 
transaction, the surviving institution must assume the liquidation 
account.


Sec.  192.480  Effect of liquidation account on net worth.

    The liquidation account does not affect a saving association's net 
worth.


Sec.  192.485  Required liquidation account provision in new Federal 
charter.

    If a savings association converts to Federal stock form, it must 
include the following provision in its new charter: ``Liquidation 
Account. Under appropriate Federal banking agency regulations, the 
association must establish and maintain a liquidation account for the 
benefit of its savings account holders as of __. If the association 
undergoes a complete liquidation, it must comply with appropriate 
Federal banking agency regulations with respect to the amount and 
priorities on liquidation of each of the savings account holder's 
interests in the liquidation account. A savings account holder's 
interest in the liquidation account does not entitle the savings 
account holder to any voting rights.''

Post-Conversion


Sec.  192.500  Permissible management stock benefit plans after 
conversion.

    (a) In general. During the 12 months after its conversion, a 
savings association may implement a stock option plan (Option Plan), an 
employee stock ownership plan or other tax-qualified employee stock 
benefit plan (collectively, ESOP), and a management recognition plan 
(MRP), provided that the savings association meets all of the following 
requirements:
    (1) The savings association discloses the plans in its proxy 
statement and offering circular and indicates in its offering circular 
that there will be a separate shareholder vote on the Option Plan and 
the MRP at least six months after the conversion. No shareholder vote 
is required to implement the ESOP. The savings association's ESOP must 
be tax-qualified.
    (2) The savings association's Option Plan does not encompass more 
than 10 percent of the number of shares that the

[[Page 1076]]

savings association issued in the conversion.
    (3)(i) The savings association's ESOP and MRP do not encompass, in 
the aggregate, more than 10 percent of the number of shares that the 
savings association issued in the conversion. If the savings 
association has tangible capital of 10 percent or more following the 
conversion, the appropriate Federal banking agency may permit the ESOP 
and MRP to encompass, in the aggregate, up to 12 percent of the number 
of shares issued in the conversion; and
    (ii) The savings association's MRP does not encompass more than 
three percent of the number of shares that the savings association 
issued in the conversion. If the savings association has tangible 
capital of 10 percent or more after the conversion, the appropriate 
Federal banking agency may permit the MRP to encompass up to four 
percent of the number of shares that the savings association issued in 
the conversion.
    (4) No individual receives more than 25 percent of the shares under 
any plan.
    (5) The savings association's directors who are not officers of the 
savings association do not receive more than five percent of the shares 
of the MRP or Option Plan individually, or 30 percent of any such plan 
in the aggregate.
    (6) The savings association's shareholders approve each of the 
Option Plan and the MRP by a majority of the total votes eligible to be 
cast at a duly called meeting before the savings association 
establishes or implements the plan. The savings association may not 
hold this meeting until six months after its conversion.
    (7) When the savings association distributes proxies or related 
material to shareholders in connection with the vote on a plan, the 
savings association states that the plan complies with the appropriate 
Federal banking agency's regulations and that the appropriate Federal 
banking agency does not endorse or approve the plan in any way. The 
savings association may not make any written or oral representations to 
the contrary.
    (8) The savings association does not grant stock options at less 
than the market price at the time of grant.
    (9) The savings association does not fund the Option Plan or the 
MRP at the time of the conversion.
    (10) The savings association's plan does not begin to vest earlier 
than one year after shareholders approve the plan, and does not vest at 
a rate exceeding 20 percent per year.
    (11) The savings association's plan permits accelerated vesting 
only for disability or death, or if the savings association undergoes a 
change of control.
    (12) The saving association's plan provides that its executive 
officers or directors must exercise or forfeit their options in the 
event the institution becomes critically undercapitalized (as defined 
in 12 CFR 6.4 or 324.403, as applicable), is subject to appropriate 
Federal banking agency enforcement action, or receives a capital 
directive under 12 CFR part 6, subpart B or 12 CFR 308.201, as 
applicable.
    (13) The savings association files a copy of the proposed Option 
Plan or MRP with the appropriate Federal banking agency and certify to 
such agency that the plan approved by the shareholders is the same plan 
that the savings association filed with, and disclosed in, the proxy 
materials distributed to shareholders in connection with the vote on 
the plan.
    (14) The savings association files the plan and the certification 
with the appropriate Federal banking agency within five calendar days 
after its shareholders approve the plan.
    (b) Stock splits or other adjustments. The savings association may 
provide dividend equivalent rights or dividend adjustment rights to 
allow for stock splits or other adjustments to its stock in the ESOP, 
MRP, and Option Plan.
    (c) Plans implemented more than 12 months after conversion. The 
restrictions in paragraph (a) of this section do not apply to plans 
implemented more than 12 months after the conversion, provided that 
materials pertaining to any shareholder vote regarding such plans are 
not distributed within the 12 months after the conversion. If a plan 
adopted in conformity with paragraph (a) of this section is amended 
more than 12 months following the conversion, shareholders must ratify 
any material deviations to the requirements in paragraph (a).


Sec.  192.505   Restrictions on the trading of shares by directors, 
officers, and associates.

    (a) Sales restriction. Directors and officers who purchase 
conversion shares may not sell the shares for one year after the date 
of purchase, except that in the event of the death of the officer or 
director, the successor in interest may sell the shares.
    (b) Notice of sales restriction on stock certificate. The savings 
association must include notice of the restriction described in 
paragraph (a) of this section on each certificate of stock that a 
director or officer purchases during the conversion or receives in 
connection with a stock dividend, stock split, or otherwise with 
respect to such restricted shares.
    (c) Stock purchase restrictions. For three years after the 
conversion, the savings association's officers, directors, and their 
associates may purchase the savings association's stock only from a 
broker or dealer registered with the Securities and Exchange 
Commission. However, the savings association's officers, directors, and 
their associates may engage in a negotiated transaction involving more 
than one percent of the savings association's outstanding stock, and 
may purchase stock through any of the savings association's management 
or employee stock benefit plans.
    (d) Communication of restrictions with transfer agent. The savings 
association must instruct its stock transfer agent about the transfer 
restrictions in this section.


Sec.  192.510   Repurchase of shares after conversion.

    (a) Repurchases during first year after conversion. A savings 
association may not repurchase its shares in the first year after the 
conversion except:
    (1) In extraordinary circumstances, a savings association may make 
open market repurchases of up to five percent of its outstanding stock 
in the first year after the conversion if the savings association files 
a notice under Sec.  192.515(a) and the appropriate Federal banking 
agency does not disapprove the repurchase. The appropriate Federal 
banking agency will not approve such repurchases unless the repurchase 
meets the standards in Sec.  192.515(c), and the repurchase is 
consistent with paragraph (c) of this section.
    (2) A savings association may repurchase qualifying shares of a 
director or conduct an appropriate Federal banking agency-approved 
repurchase pursuant to an offer made to all shareholders of the savings 
association.
    (3) Repurchases to fund management recognition plans that have been 
ratified by shareholders do not count toward the repurchase limitations 
in this section. Repurchases in the first year to fund such plans 
require prior written notification to the appropriate Federal banking 
agency.
    (4) Purchases to fund tax qualified employee stock benefit plans do 
not count toward the repurchase limitations in this section.
    (b) Repurchases following first year after conversion. After the 
first year, a savings association may repurchase its shares, subject to 
all other applicable regulatory and supervisory restrictions and 
paragraph (c) of this section.

[[Page 1077]]

    (c) Restrictions on all repurchases. All stock repurchases are 
subject to the following restrictions.
    (1) A savings association may not repurchase its shares if the 
repurchase will reduce the savings association's regulatory capital 
below the amount required for its liquidation account under Sec.  
192.450. The savings association must comply with the capital 
distribution requirements at 12 CFR 5.55.
    (2) The restrictions on share repurchases apply to a charitable 
organization under Sec.  192.550. A savings association must aggregate 
purchases of shares by the charitable organization with the savings 
association's repurchases.


Sec.  192.515   Information to be filed with Federal banking agency 
prior to repurchase of shares.

    (a) Notice requirement. To repurchase stock in the first year 
following conversion, other than repurchases under Sec.  192.510(a)(3) 
or (4), a savings association must file a written notice with the 
appropriate OCC licensing office if Federally chartered, and with the 
appropriate FDIC region if State-chartered. The savings association 
must provide the following information:
    (1) The proposed repurchase program;
    (2) The effect of the repurchases on the savings association's 
regulatory capital; and
    (3) The purpose of the repurchases and, if applicable, an 
explanation of the extraordinary circumstances necessitating the 
repurchases.
    (b) Filing of notice. A Federal savings association must file its 
notice with the appropriate OCC licensing office, and a State savings 
association must file its notice with the appropriate regional director 
of the FDIC, at least 10 calendar days before the savings association 
begins its repurchase program.
    (c) Agency review. A savings association may not repurchase its 
shares if the appropriate Federal banking agency objects to the 
repurchase program. The appropriate Federal banking agency will not 
object to a repurchase program if:
    (1) The repurchase program will not adversely affect the savings 
association's financial condition;
    (2) The savings association submits sufficient information to 
evaluate the proposed repurchases;
    (3) The savings association demonstrates extraordinary 
circumstances and a compelling and valid business purpose for the share 
repurchases; and
    (4) The repurchase program would not be contrary to other 
applicable regulations.


Sec.  192.520   Declaring and paying dividends after the conversion.

    A savings association may declare or pay a dividend on its shares 
after the conversion if:
    (a) The dividend will not reduce the savings association's 
regulatory capital below the amount required for the liquidation 
account under Sec.  192.450;
    (b) The savings association complies with all capital requirements 
under 12 CFR part 3 after it declares or pays dividends;
    (c) The savings association complies with the capital distribution 
requirements under 12 CFR 5.55; and
    (d) The savings association does not return any capital, other than 
ordinary dividends, to purchasers during the term of the business plan 
submitted with the conversion.


Sec.  192.525   Restrictions on acquisition of shares after conversion.

    (a) Prior agency approval. For three years after conversion, no 
person may, directly or indirectly, acquire or offer to acquire the 
beneficial ownership of more than 10 percent of any class of the 
savings association's equity securities without the appropriate Federal 
banking agency's prior written approval. If a person violates this 
prohibition, the savings association may not permit the person to vote 
shares in excess of 10 percent, and may not count the shares in excess 
of 10 percent in any shareholder vote.
    (b) Beneficial ownership. A person acquires beneficial ownership of 
more than 10 percent of a class of shares when he or she holds any 
combination of the savings association's stock or revocable or 
irrevocable proxies under circumstances that give rise to a conclusive 
control determination or rebuttable control determination under 12 CFR 
5.50. The appropriate Federal banking agency will presume that a person 
has acquired shares if the acquiror entered into a binding written 
agreement for the transfer of shares. For purposes of this section, an 
offer is made when it is communicated. An offer does not include non-
binding expressions of understanding or letters of intent regarding the 
terms of a potential acquisition.
    (c) Exceptions. Notwithstanding the restrictions in this section:
    (1) Paragraphs (a) and (b) of this section do not apply to any 
offer with a view toward public resale made exclusively to the savings 
association, to the underwriters, or to a selling group acting on the 
savings association's behalf.
    (2) Unless the appropriate Federal banking agency objects in 
writing, any person may offer or announce an offer to acquire up to one 
percent of any class of shares. In computing the one percent limit, the 
person must include all of his or her acquisitions of the same class of 
shares during the prior 12 months.
    (3) A corporation whose ownership is, or will be, substantially the 
same as the savings association's ownership may acquire or offer to 
acquire more than 10 percent of the savings association's common stock, 
if it makes the offer or acquisition more than one year after the 
saving association's conversion.
    (4) One or more of the savings association's tax-qualified employee 
stock benefit plans may acquire the savings association's shares, if 
the plan or plans do not beneficially own more than 25 percent of any 
class of the savings association's shares in the aggregate.
    (5) An acquiror does not have to file a separate application to 
obtain the appropriate Federal banking agency's approval under 
paragraph (a) of this section if the acquiror files an application 
under 12 CFR 5.50 that specifically addresses the criteria listed under 
paragraph (d) of this section and the savings association does not 
oppose the proposed acquisition.
    (d) Factors for agency denial. The appropriate Federal banking 
agency may deny an application under paragraph (a) of this section if 
the proposed acquisition:
    (1) Is contrary to the purposes of this part;
    (2) Is manipulative or deceptive;
    (3) Subverts the fairness of the conversion;
    (4) Is likely to injure the savings association;
    (5) Is inconsistent with the savings association's plan to meet the 
credit and lending needs of its proposed market area;
    (6) Otherwise violates laws or regulations; or
    (7) Does not prudently deploy the savings association's conversion 
proceeds.


Sec.  192.530   Other post-conversion requirements.

    After a savings association converts, it must:
    (a) Promptly register its shares under the Securities Exchange Act 
of 1934 (15 U.S.C. 78a-78jj, as amended). The savings association may 
not deregister the shares for three years.
    (b) Encourage and assist a market maker to establish and to 
maintain a market for its shares. A market maker for a security is a 
dealer who:
    (1) Regularly publishes bona fide competitive bid and offer 
quotations for

[[Page 1078]]

the security in a recognized inter-dealer quotation system;
    (2) Furnishes bona fide competitive bid and offer quotations for 
the security on request; or
    (3) May effect transactions for the security in reasonable 
quantities at quoted prices with other brokers or dealers.
    (c) Use its best efforts to list its shares on a national or 
regional securities exchange or on the National Association of 
Securities Dealers Automated Quotation system.
    (d) File all post-conversion reports that the appropriate Federal 
banking agency requires.

Contributions to Charitable Organizations


Sec.  192.550   Donating conversion shares or conversion proceeds to a 
charitable organization.

    A savings association may contribute some of its conversion shares 
or proceeds to a charitable organization if:
    (a) The savings association's plan of conversion provides for the 
proposed contribution;
    (b) The savings association's members approve the proposed 
contribution; and
    (c) The IRS either has approved, or approves within two years after 
formation, the charitable organization as a tax-exempt charitable 
organization under the Internal Revenue Code.


Sec.  192.555   Member approval of charitable contributions.

    At the meeting to consider the conversion, a savings association's 
members must separately approve, by a majority of the total eligible 
votes, a charitable contribution of conversion shares or proceeds. If 
the savings association is in mutual holding company form and adding a 
charitable contribution as part of a second step stock conversion, the 
savings association must also have its minority shareholders separately 
approve the charitable contribution by a majority of their total 
eligible votes.


Sec.  192.560   Limitations on charitable contributions.

    A savings association may contribute a reasonable amount of 
conversion shares or proceeds to a charitable organization if such 
contribution will not exceed limits for charitable deductions under the 
Internal Revenue Code and the appropriate Federal banking agency does 
not object on supervisory grounds. If the savings association is well-
capitalized, the appropriate Federal banking agency generally will not 
object if the savings association contributes an aggregate amount of 
eight percent or less of the conversion shares or proceeds.


Sec.  192.565   Contents of organizational documents of charitable 
organization.

    The charitable organization's charter (or trust agreement) and gift 
instrument must provide that:
    (a) The charitable organization's primary purpose is to serve and 
make grants in the savings association's local community;
    (b) As long as the charitable organization controls shares, it must 
vote those shares in the same ratio as all other shares voted on each 
proposal considered by the savings association's shareholders;
    (c) For at least five years after its organization, one seat on the 
charitable organization's board of directors (or board of trustees) is 
reserved for an independent director (or trustee) from the savings 
association's local community. This director may not be an officer, 
director, or employee of the savings association or of an affiliate of 
the savings association, and should have experience with local 
community charitable organizations and grant making; and
    (d) For at least five years after its organization, one seat on the 
charitable organization's board of directors (or board of trustees) is 
reserved for a director from the savings association's board of 
directors or the board of directors of an acquiror or resulting 
institution in the event of a merger or acquisition of the savings 
association.


Sec.  192.570   Conflicts of interest among directors.

    (a) In general. A person is subject to 12 CFR 163.200 if that 
person:
    (1) Is a director, officer, or employee of the savings association; 
has the power to direct the savings association's management or 
policies; or otherwise owes a fiduciary duty to the savings association 
(for example, holding company directors); and
    (2) Will serve as an officer, director, or employee of the 
charitable organization. See Form AC for further information on 
operating plans and conflict of interest plans.
    (b) Identification and recusal of directors. Before the savings 
association's board of directors may adopt a plan of conversion that 
includes a charitable organization, the savings association must 
identify its directors that will serve on the charitable organization's 
board. These directors may not participate in the board's discussions 
concerning contributions to the charitable organization, and may not 
vote on the matter.


Sec.  192.575   Other requirements for charitable organizations.

    (a) Charter and gift instrument requirements. The charitable 
organization's charter (or trust agreement) and the gift instrument for 
the contribution must provide that:
    (1) The appropriate Federal banking agency may examine the 
charitable organization at the charitable organization's expense;
    (2) The charitable organization must comply with all supervisory 
directives that the appropriate Federal banking agency imposes;
    (3) The charitable organization must operate according to written 
policies adopted by its board of directors (or board of trustees), 
including a conflict of interest policy;
    (4) The charitable organization must not engage in self-dealing; 
and
    (5) The charitable organization must comply with all laws necessary 
to maintain its tax-exempt status under the Internal Revenue Code.
    (b) Stock certificate requirement. The savings association must 
include the following legend in the stock certificates of shares that 
the savings association contributes to the charitable organization or 
that the charitable organization otherwise acquires: ``The board of 
directors must consider the shares that this stock certificate 
represents as voted in the same ratio as all other shares voted on each 
proposal considered by the shareholders, as long as the shares are 
controlled by the charitable organization.''
    (c) Voting ratio. As long as the charitable organization controls 
shares, the savings association must consider those shares as voted in 
the same ratio as all of the shares voted on each proposal considered 
by the savings association's shareholders.
    (d) Filing requirement. After the savings association completes its 
stock offering, it must submit copies of the following documents to the 
appropriate OCC licensing office if it is a Federal savings association 
or with the appropriate FDIC region if it is a State savings 
association:
    (1) The charitable organization's charter and bylaws (or trust 
agreement);
    (2) The charitable organization's operating plan (within six months 
after the savings association's stock offering);
    (3) The charitable organization's conflict of interest policy; and
    (4) The gift instrument for the contributions of either stock or 
cash to the charitable organization.

[[Page 1079]]

Subpart B--Voluntary Supervisory Conversions


Sec.  192.600   Voluntary supervisory conversions.

    (a) In general. A savings association must comply with this subpart 
and part 16 to engage in a voluntary supervisory conversion. This 
subpart applies to all voluntary supervisory conversions under sections 
5(i)(1), (i)(2), and (p) of HOLA, 12 U.S.C. 1464(i)(1), (i)(2), and 
(p).
    (b) Application of subpart A. Subpart A of this part also applies 
to a voluntary supervisory conversion, unless a requirement is clearly 
inapplicable.


Sec.  192.605   Conducting a voluntary supervisory conversion.

    A savings association may conduct a voluntary supervisory 
conversion through one of the following methods:
    (a) A savings association may sell its shares or the shares of a 
holding company to the public under the requirements of subpart A of 
this part.
    (b) A savings association may convert to stock form by merging into 
an interim Federal- or State-chartered stock association.
    (c) A savings association may sell its shares directly to an 
acquiror, who may be a person, company, depository institution, or 
depository institution holding company.
    (d) A savings association may merge or consolidate with an existing 
or newly created depository institution. The merger or consolidation 
must be authorized by, and is subject to, other applicable laws and 
regulations.


Sec.  192.610   Member rights in a voluntary supervisory conversion.

    Savings association members do not have the right to approve or 
participate in a voluntary supervisory conversion, and will not have 
any legal or beneficial ownership interests in the converted 
association, unless the appropriate Federal banking agency provides 
otherwise. Savings association members may have interests in a 
liquidation account, if one is established.

Eligibility


Sec.  192.625   Eligibility for a voluntary supervisory conversion.

    (a) Eligibility. An insured savings association may be eligible to 
convert under this subpart B if:
    (1) The savings association is significantly undercapitalized (or 
undercapitalized and a standard conversion that would make the savings 
association adequately capitalized is not feasible) and the savings 
association will be a viable entity following the conversion;
    (2) Severe financial conditions threaten the savings association's 
stability and a conversion is likely to improve its financial 
condition;
    (3) The FDIC will assist the savings association under section 13 
of the Federal Deposit Insurance Act, 12 U.S.C. 1823; or
    (4) The savings association is in receivership and a conversion 
will assist the savings association.
    (b) Requirements for viability after conversion. The savings 
association will be a viable entity following the conversion if it 
satisfies all of the following:
    (1) The savings association will be adequately capitalized as a 
result of the conversion;
    (2) The savings association, its proposed conversion, and its 
acquiror(s) comply with applicable supervisory policies;
    (3) The transaction is in the savings association's best interest, 
and the best interest of the Deposit Insurance Fund and the public; and
    (4) The transaction will not injure or be detrimental to the 
savings association, the Deposit Insurance Fund, or the public 
interest.


Sec.  192.630   Eligibility of State-chartered savings bank for 
voluntary supervisory conversion.

    A State-chartered savings bank may be eligible to convert to a 
Federal stock savings bank under this subpart if:
    (a) The FDIC certifies under section 5(o)(2)(C) of the HOLA that 
severe financial conditions threaten the savings bank's stability and 
that the voluntary supervisory conversion is likely to improve its 
financial condition; or
    (b) The savings bank meet the following conditions:
    (1) The savings bank's liabilities exceed its assets, as calculated 
under generally accepted accounting principles, assuming the savings 
bank is a going concern; and
    (2) The savings bank will issue a sufficient amount of permanent 
capital stock to meet its applicable FDIC capital requirement 
immediately upon completion of the conversion, or the FDIC determines 
that the savings bank will achieve an acceptable capital level within 
an acceptable time period.

Plan of Supervisory Conversion


Sec.  192.650   Contents of plan of voluntary supervisory conversion.

    A majority of the board of directors of the savings association 
must adopt a plan of voluntary supervisory conversion. The savings 
association must include all of the following information in its plan 
of voluntary supervisory conversion.
    (a) The savings association's name and address.
    (b) A complete description of the proposed voluntary supervisory 
conversion transaction that also describes plans for any liquidation 
account.
    (c) Certified copies of all resolutions relating to the conversion 
adopted by the board of directors of the savings association.

Voluntary Supervisory Conversion Application


Sec.  192.660   Contents of voluntary supervisory conversion 
application.

    A savings association must include all of the following information 
and documents in a voluntary supervisory conversion application to the 
appropriate OCC licensing office if it is a Federal savings association 
and to the appropriate FDIC region if it is a State savings association 
under this subpart:
    (a) Eligibility. (1) Evidence establishing that the savings 
association meets the eligibility requirements under Sec.  192.625 or 
Sec.  192.630.
    (2) An opinion of qualified, independent counsel or an independent, 
certified public accountant regarding the tax consequences of the 
conversion, or an IRS ruling indicating that the transaction qualifies 
as a tax-free reorganization.
    (3) An opinion of independent counsel indicating that applicable 
State law authorizes the voluntary supervisory conversion, if the 
conversion involves a State-chartered savings association converting to 
State stock form.
    (b) Plan of conversion. A plan of voluntary supervisory conversion 
that complies with Sec.  192.650.
    (c) Business plan. A business plan that complies with Sec.  
192.105, when required by the appropriate Federal banking agency.
    (d) Financial data. (1) The savings association's most recent 
audited financial statements and Consolidated Reports of Condition and 
Income or Call Report, as appropriate. The savings association must 
explain how its current capital levels make the savings association 
eligible to engage in a voluntary supervisory conversion under Sec.  
192.625 or Sec.  192.630.
    (2) A description of the savings association's estimated conversion 
expenses.
    (3) Evidence supporting the value of any non-cash asset 
contributions. Appraisals must be acceptable to the appropriate Federal 
banking agency and the non-cash assets must meet all other appropriate 
Federal banking agency policy guidelines.

[[Page 1080]]

    (4) Pro forma financial statements that reflect the effects of the 
transaction. The savings association must identify its tangible, core, 
and risk-based capital levels and show the adjustments necessary to 
compute the capital levels. The savings association must prepare its 
pro forma statements in conformance with the appropriate Federal 
banking agency's regulations and the applicable accounting 
requirements.
    (5) A statement describing the aggregate number and percentage of 
shares that each director, officer, and any affiliates or associates of 
the director or officer will purchase.
    (e) Proposed documents. (1) The savings association's proposed 
charter and bylaws.
    (2) The savings association's proposed stock certificate form.
    (3) Any securities offering circular and other securities 
disclosure materials to be used in connection with the proposed 
voluntary supervisory conversion.
    (f) Agreements. (1) A copy of any agreements between the savings 
association and proposed purchasers.
    (2) A copy and description of all existing and proposed employment 
contracts. The savings association must describe the term, salary, and 
severance provisions of the contract, the identity and background of 
the officer or employee to be employed, and the amount of any 
conversion shares to be purchased by the officer or employee or his or 
her affiliates or associates.
    (g) Related filings and applications. (1) All filings required 
under the securities offering rules of 12 CFR parts 16 and 192.
    (2) Any required Change in Bank Control Act notice and rebuttal of 
control submissions under 12 U.S.C. 1817(j) and 12 CFR 5.50, or copies 
of any Holding Company Act applications, including prior-conduct 
certifications listed under the appropriate Federal banking agency's 
regulatory guidance.
    (3) A subordinated debt application, if applicable.
    (4) Applications for permission to organize a stock association and 
for approval of a merger, if applicable, and a copy of any application 
for FDIC insurance of accounts, if applicable.
    (5) A statement describing any other applications required under 
Federal or State banking laws for all transactions related to the 
conversion, copies of all dispositive documents issued by regulatory 
authorities relating to the applications, and, if requested by the 
appropriate Federal banking agency, copies of the applications and 
related documents.
    (h) Other information. (1) A statement indicating the role each 
director, officer, and affiliate of the savings association or 
associate of the director or officer will have after the conversion.
    (2) Any additional information requested by the OCC, as authorized 
by law.
    (i) Waiver request. A description of any of the features of the 
savings association's application that do not conform to the 
requirements of this subpart, including any request for waiver of these 
requirements.

Appropriate Federal Banking Agency Review of the Voluntary Supervisory 
Conversion Application


Sec.  192.670   Approval of voluntary supervisory conversion 
application.

    The appropriate Federal banking agency will generally approve a 
savings association's application to engage in a voluntary supervisory 
conversion unless it determines:
    (a) The savings association does not meet the eligibility 
requirements for a voluntary supervisory conversion under Sec.  192.625 
or Sec.  192.630 or because the proceeds from the sale of conversion 
stock, less the expenses of the conversion, would be insufficient to 
satisfy any applicable viability requirement;
    (b) The transaction is detrimental to or would cause potential 
injury to the savings association or the Deposit Insurance Fund or is 
contrary to the public interest;
    (c) The savings association or its acquiror, or the controlling 
parties or directors and officers of the savings association or its 
acquiror, have engaged in unsafe or unsound practices in connection 
with the voluntary supervisory conversion; or
    (d) The savings association fails to justify an employment contract 
incidental to the conversion, or the employment contract will be an 
unsafe or unsound practice or represent a sale of control. In a 
voluntary supervisory conversion, the appropriate Federal banking 
agency generally will not approve employment contracts of more than one 
year for existing management.


Sec.  192.675   Conditions imposed upon approval of voluntary 
supervisory conversion application.

    (a) Required condition. The appropriate Federal banking agency will 
condition approval of a voluntary supervisory conversion application on 
all of the following.
    (1) The savings association must complete the conversion stock sale 
within three months after the appropriate Federal banking agency 
approves the application. The appropriate Federal banking agency may 
grant an extension for good cause.
    (2) The savings association must comply with all filing 
requirements of this part, and 12 CFR part 16.
    (3) The savings association must submit an opinion of independent 
legal counsel indicating that the sale of its shares complies with all 
applicable State securities law requirements.
    (4) The savings association must comply with all applicable laws, 
rules, and regulations.
    (5) The savings association must satisfy any other requirements or 
conditions the appropriate Federal banking agency may impose.
    (b) Discretionary conditions. The appropriate Federal banking 
agency may condition approval of a voluntary supervisory application 
for conversion on either of the following:
    (1) The savings association must satisfy any conditions and 
restrictions the appropriate Federal banking agency imposes to prevent 
unsafe or unsound practices, to protect the Deposit Insurance Fund and 
the public interest, and to prevent potential injury or detriment to 
the savings association before and after the conversion. The 
appropriate Federal banking agency may impose these conditions and 
restrictions on the savings association (before and after the 
conversion) or, as appropriate, the savings association's acquiror, 
controlling parties, or its directors and officers; or
    (2) The savings association must infuse a larger amount of capital, 
if necessary, for safety and soundness reasons.

Offers and Sales of Stock


Sec.  192.680   Offer and sale of shares in a voluntary supervisory 
conversion.

    If a savings association converts under this subpart, it must offer 
and sell its shares in accordance with the applicable requirements of 
12 CFR parts 16 and 192.

Post-Conversion


Sec.  192.690   Restrictions on acquisition of additional shares after 
voluntary supervisory conversion.

    For three years after the completion of a voluntary supervisory 
conversion, neither the savings association nor its controlling 
shareholder(s) may acquire shares from minority shareholders without 
the appropriate Federal banking agency's prior approval.

[[Page 1081]]

PART 195--COMMUNITY REINVESTMENT

0
52. The authority citation for part 195 continues to read as follows:

    Authority:  12 U.S.C. 1462a, 1463, 1464, 1814, 1816, 1828(c), 
2901 through 2908, and 5412(b)(2)(B).

0
53. Section 195.11 is amended by revising paragraph (a) to read as 
follows:


Sec.  195.11   Authority, purposes, and scope.

    (a) Authority. This part is issued under the Community Reinvestment 
Act of 1977 (CRA), as amended (12 U.S.C. 2901 et seq.); section 5, as 
amended, and sections 3, and 4, as added, of the Home Owners' Loan Act 
of 1933 (12 U.S.C. 1462a, 1463, and 1464); sections 4, 6, and 18(c), as 
amended of the Federal Deposit Insurance Act (12 U.S.C. 1814, 1816, 
1828(c)); and section 312 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (12 U.S.C. 5412(b)(2)(B)).
* * * * *

    Dated: December 20, 2019.
Morris R. Morgan,
First Deputy Comptroller, Comptroller of the Currency.
[FR Doc. 2019-28074 Filed 1-7-20; 8:45 am]
 BILLING CODE 4810-33-P