National Bank and Federal Savings Association Premises, 7979-7986 [2020-29277]
Download as PDF
<![CDATA[
7979
Proposed Rules
Federal Register
Vol. 86, No. 21
Wednesday, February 3, 2021
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 7
[Docket No. OCC–2020–0045]
RIN 1557–AF07
National Bank and Federal Savings
Association Premises
Office of the Comptroller of the
Currency (OCC), Treasury.
ACTION: Notice of proposed rulemaking
with request for public comment.
AGENCY:
The OCC is inviting comment
on a proposed rule that would modify
the requirements for national bank and
Federal savings association premises.
DATES: Comments must be received by
March 22, 2021.
ADDRESSES: You may submit comments
to the OCC by any of the methods set
forth below. Commenters are
encouraged to submit comments
through the Federal eRulemaking Portal,
if possible. Please use the title ‘‘National
Bank and Federal Savings Association
Premises’’ to facilitate the organization
and distribution of the comments. You
may submit comments by any of the
following methods:
• Federal eRulemaking Portal—
‘‘Regulations.gov’’: Go to
www.regulations.gov. Enter ‘‘Docket ID
OCC–2020–0045’’ in the Search Box and
click ‘‘Search.’’ Click on ‘‘Comment
Now’’ to submit public comments.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov,
including instructions for submitting
public comments.
• 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.
jbell on DSKJLSW7X2PROD with PROPOSALS
SUMMARY:
VerDate Sep<11>2014
15:58 Feb 02, 2021
Jkt 253001
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2020–0045’’ in your comment.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2020–0045’’ 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, 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 the following
methods:
• Viewing Comments Electronically:
Go to www.regulations.gov. Enter
‘‘Docket ID OCC–2020–0045’’ 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.
FOR FURTHER INFORMATION CONTACT:
Matthew Tynan, Counsel; Sarah Turney,
Counsel; Henry Barkhausen, Counsel;
Chief Counsel’s Office (202) 649–5490;
Office of the Comptroller of the
Currency, 400 7th Street SW,
Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Office of the Comptroller of the
Currency (OCC) is issuing a notice of
proposed rulemaking to amend its
regulations on national bank or Federal
savings association ownership of real
property. The OCC also proposes to
consolidate 12 CFR 7.3001 on sharing
national bank or Federal savings
association space and employees with
PO 00000
Frm 00001
Fmt 4702
Sfmt 4702
the rule covering ownership of property.
The OCC proposes to continue to cover
the national bank and Federal savings
association charters under the same
regulation, but, because different
statutory regimes cover each charter, the
OCC seeks comment on whether to
apply different requirements to national
banks and Federal savings associations.
II. Background
The OCC periodically reviews its
regulations to eliminate outdated or
otherwise unnecessary regulatory
provisions and, where possible, to
clarify or revise requirements imposed
on national banks and Federal savings
associations. As part of the periodic
review that resulted in recent
amendments to 12 CFR part 7, which
take effect on April 1, 2021, the OCC
determined that it would propose
revisions to the rules governing national
bank and Federal savings association
premises currently codified at 12 CFR
7.1000, which the recent amendments to
12 CFR part 7 redesignated as to 12 CFR
7.1024.1 The OCC determined that the
regulation may need significant revision
and that such revisions may involve
significant policy considerations. To
consider the matter more fully and
ensure the greatest benefit from public
comment, the OCC chose to propose
revisions to redesignated 12 CFR 7.1024
separately from the revisions to 12 CFR
part 7 finalized in 2020.2 Because of the
redesignation of 12 CFR 7.1000 as 12
CFR 7.1024, this proposed rule refers to
12 CFR 7.1024.3
National bank ownership of real estate
is governed by 12 U.S.C. 29, an original
component of the National Bank Act.
Twelve U.S.C. 29 generally prohibits
national banks from purchasing,
holding, or conveying real estate except
for a list of four exclusive exceptions.
The first such purpose covers the
authority of a national bank to hold real
property ‘‘[s]uch as shall be necessary
for its accommodation in the transaction
of its business.’’ 4 As stated by the
1 85 FR 40794 (July 7, 2020). 12 CFR 7.1024 was
previously codified at 12 CFR 7.1000.
2 85 FR 83686 (December 22, 2020).
3 Because the redesignation of 12 CFR 7.1000 as
12 CFR 7.1024 takes effect on April 1, 2021, the
regulatory text of this proposed rule must reflect
this as an addition rather than an amendment. The
final rule will reflect the change as an amendment.
4 The other three purposes all relate to the
national bank authority to own property taken for
E:\FR\FM\03FEP1.SGM
Continued
03FEP1
7980
Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules
jbell on DSKJLSW7X2PROD with PROPOSALS
Supreme Court, this statute was
designed to promote the safety and
soundness of national banks by
discouraging real estate speculation, and
was also designed to protect the
national economy and consumers by
preventing banks from holding masses
of property for their own account.5
Consistent with the statutory
framework, a national bank investing in
property should be doing so ‘‘in good
faith, solely with a view of obtaining an
eligible location’’ and not for the
purpose of speculating or investing in
real estate as a landlord.6
Federal savings association ownership
of premises is governed by the Home
Owners Loan Act (HOLA). Although the
HOLA does not specifically address a
Federal savings association’s investment
in banking premises and there is no
prohibition in the HOLA similar to 12
U.S.C. 29, historically, the Federal
Home Loan Bank Board (FHLBB), the
Office of Thrift Supervision (OTS), and
the OCC have interpreted the HOLA to
permit Federal savings associations to
hold real estate only for their offices and
related facilities with permission to rent
or sell excess space in their offices and
facilities and the OCC has issued
regulations governing a Federal savings
association’s investment in banking
premises pursuant to general
supervisory and rulemaking authority
under the HOLA.7 After Title III of the
Dodd-Frank Wall Street Reform and
Consumer Protection Act 8 transferred to
the OCC all functions of the former OTS
and the Director of the OTS relating to
Federal savings associations, the OCC
began reviewing its rules governing
national banks and Federal savings
associations to determine which rules
were appropriate to integrate into a
single set of rules for both national
banks and savings associations.9 After
this review, the OCC did not find
substantive differences between the
then-banking premises rules and related
OTS guidance governing national banks
debts previously contracted and other such means
of securing debts. The proposed rule would not
affect the ability of national banks to rely on these
other purposes in 12 U.S.C. 29. The proposed rule
would only interpret and implement the meaning
of the first purpose (‘‘Such as shall be necessary for
its accommodation in the transaction of its
business’’).
5 Union National Bank v. Matthews, 98 U.S. 621,
626 (1878) (‘‘to keep the capital of the banks
flowing in the daily channels of commerce; to deter
them from embarking in hazardous real estate
speculations; and to prevent the accumulation of
large masses of such property in the banks’ hands,
to be held, as it were, in mortmain’’).
6 Brown v. Schleier, 118 F. 981, 984 (8th Cir.
1902), aff’d 194 U.S. 18 (1904).
7 80 FR 28346, 28377 (May 18, 2015).
8 Public Law 111–203, 124 Stat. 1376 (2010).
9 See footnote 7.
VerDate Sep<11>2014
15:58 Feb 02, 2021
Jkt 253001
and Federal savings associations and
determined that, as a supervisory
matter, it was appropriate to apply the
rule governing national banks to both
national banks and Federal savings
associations.10
The OCC implemented 12 CFR 7.1024
to cover national bank and Federal
savings association ownership of real
estate for their own use. However, 12
CFR 7.1024 does not provide a full set
of standards implementing the
requirements of 12 U.S.C. 29 and the
HOLA regarding national bank and
Federal savings association premises.
Rather, 12 CFR 7.1024 is an interpretive
rule that codifies specific OCC
interpretations of 12 U.S.C. 29. Thus,
although the rule contains a list of types
of real estate that the OCC has found
permissible for national bank and
Federal savings association ownership,
that list is not exhaustive. Moreover,
significant standards relating to the
permissibility of real estate ownership,
such as the minimum percentage of
bank occupancy required for a building
to qualify as premises, are not addressed
anywhere in OCC regulation.
Instead, the OCC has long deferred to
court cases and published OCC
precedent to cover the field of
requirements for national bank and
Federal savings association ownership
of premises. The OCC historically chose
not to define specific limitations for
standards, such as percentages of
occupancy,11 instead relying on
principles drawn from precedent to
preserve a flexible approach to new
national bank proposals while ensuring
those principles continue to reflect the
purposes behind 12 U.S.C. 29.12 The
10 Id.
11 OCC Interpretive Letter No. 1053 (Jan. 31, 2006)
(‘‘Neither the OCC nor the courts have established
a single occupancy percentage test . . .’’).
12 Outstanding precedent includes OCC
Interpretive Letter No. 1072 (Sept. 15, 2006)
(permitting a bank to lease out a portion of its
existing premises to retail businesses in
arrangements under which approximately 50
percent of the premises would be used by the bank
for its banking business); OCC Interpretive Letter
No. 1053 (Jan. 31, 2006) (describing OCC analysis
of permissibility of premises in OCC Interpretive
Letter No. 1045 and 1044); OCC Interpretive Letter
No. 1045 (Dec. 5, 2005) (permitting a national bank
to establish a hotel on its premises, of which the
bank intended to use more than 50 percent of the
occupancy for out-of-area bank employees,
members of the bank’s board of directors, and
selected vendors, shareholders, customers, and
other visitors on bank-related business); OCC
Interpretive Letter No. 1044 (Dec. 5, 2005)
(permitting a national bank to establish a mixed-use
office, hotel, and residences facility on its premises,
in which the bank would use less than 50 percent
of the premises for banking purposes); OCC
Interpretive Letter No. 1043 (July 8, 1993)
(permitting a national bank to lease to third parties
a bank condominium when it is not being used for
bank purposes); OCC Interpretive Letter No. 1042
PO 00000
Frm 00002
Fmt 4702
Sfmt 4702
OTS similarly did not set percentages of
occupancy within its premises
regulation for Federal savings
associations.13
Although this precedent-based
approach provides flexibility, it comes
with several limitations. First, since
precedent is necessarily responsive to
presented facts, reliance on precedent
means there is no clear rule to give
notice to banks or the public of what
forms of real estate ownership are
permissible for a bank. Published OCC
precedent by its nature typically
describes fact patterns found to be
permissible. Therefore, reliance on
precedent alone makes it difficult for
the industry and the public to
understand what set of facts would be
impermissible. Given the time and effort
often required to plan an investment in
premises, delays and uncertainty caused
by unclear legal standards can be
problematic.
Second, national bank premises
precedent was largely formed at a time
when the banking industry was different
than the one in existence today. Many
of the most important cases decided on
premises occurred at a time when most
banks operated entirely out of a single
headquarters. The principles drawn
from those cases remain relevant in the
present day, but the reality of a modern
large bank is very different than a bank
that existed prior to interstate
branching. Bank premises rules in the
present day must apply to both
(Jan. 21, 1993) (permitting a bank to retain a
condominium used only for bank purposes); OCC
Interpretive Letter No. 1034 (April 1, 2005)
(permitting a national bank to construct new
facilities on existing premises real estate, use less
than 50 percent of the premises for bank purposes,
and lease unused space as excess bank premises);
Conditional Approval No. 298 (Dec. 15, 1998)
(permitting a bank to use less than 50 percent of
office premises for its banking business);
Interpretive Letter No. 758 (April 5, 1996)
(permitting a national bank to lease out a portion
of its real estate held as premises for employee
recreation purposes to a third party to remove a hill
and mine granite deposits). As discussed below,
this proposed rule would supersede existing
precedent to the extent it is inconsistent with the
proposed rule. However, the proposed rule would
not necessarily supersede precedent that is
consistent with the requirements of the proposed
rule or precedent that addresses issues not covered
by the proposed rule. The OCC requests comment
on whether and how outstanding precedent should
be affected by the proposed rule.
13 Former 12 CFR 560.37. In 2011, the OCC
republished OTS regulations set out in Chapter V
of Title 12, including 12 CFR 560.37, with OCC part
numbers changing the ‘‘5’’ to a ‘‘1’’. 12 CFR 560.37
became 12 CFR 160.37. 76 FR 48950 (August 9,
2011). 12 CFR 160.37 was subsequently removed
when Federal savings associations were integrated
into the national bank rule. Prior OTS guidance
provided that a building would be a Federal savings
association’s premises if the association used 25
percent or more of the building. OTS Handbook,
Section 252, Fixed Assets, April 1999, p.31
(rescinded).
E:\FR\FM\03FEP1.SGM
03FEP1
jbell on DSKJLSW7X2PROD with PROPOSALS
Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules
community banks, some operating out
of a single building or few buildings,
and large banks with tens of thousands
of employees and operations in all fifty
states.
Finally, commercial real estate itself
has changed greatly in the past several
decades in ways that are difficult to
square with premises precedent. The
majority of OCC and OTS premises
precedent concerns either branches or
standalone office space, as those were
the typical premises arrangements for
banking operations in the 20th century.
Recent years have seen the growth of
mixed-use developments combining
office space with retail space,
residential space, and other uses not
typically found in a traditional office
building. Some industries have moved
towards a comprehensive campus
arrangement providing employees with
amenities and working arrangements
previously not present in an office
environment. Finally, with the
development of robust teleconferencing
and the arrival of the COVID–19
pandemic, many companies are moving
towards offsite, shared, or virtual work
spaces. It is increasingly difficult for
national banks and Federal savings
associations to rely on precedent
focusing on traditional office
arrangements to determine whether and
to what extent they may own mixed-use
developments, install amenities to
compete with those offered by other
industries (including technology
companies), or make use of alternative
work arrangements.
For these reasons, the OCC proposes
these revisions to 12 CFR 7.1024 to
codify and clarify a transparent and
consistent set of principles for national
bank and Federal savings association
premises. The OCC intends these
regulations to meet the needs of modern
national banks and Federal savings
associations while ensuring consistent
application of and adherence to the
limitations of 12 U.S.C. 29 and the
HOLA.
Question One: Although current OCC
regulations and the proposal cover both
the national bank and Federal savings
association charters in one section,
there are differences in the statutory
regimes covering each charter. Would it
be preferable to apply different
requirements to Federal savings
association premises? Specifically,
should the proposed rule apply only to
national banks? If so, what requirements
should apply to Federal savings
associations? Should the OCC continue
to apply the current requirements to
Federal savings associations even if it
adopts the proposed rule with respect to
national banks? Should the OCC adopt
VerDate Sep<11>2014
15:58 Feb 02, 2021
Jkt 253001
a requirement for Federal savings
associations that is similar to or
identical to the requirement in effect
before the integration of national bank
and Federal savings association
requirements? 14 Also, should the
proposed rule apply to federal branches
and agencies of foreign banks regulated
by the OCC? If so, should modified
requirements be applied to such
branches and agencies?
III. The Proposed Rule
The OCC is proposing to revise
§ 7.1024 to provide general standards
the OCC will use in determining
whether the acquisition and holding of
real estate is necessary for the
transaction of a national bank’s or
Federal savings association’s business.
Revisions include implementing an
occupancy test and excess capacity
standards that would allow national
banks and Federal savings associations
to ascertain better whether an
acquisition or holding of real estate is
permissible under 12 U.S.C. 29 or the
HOLA. The OCC has determined that
national banks and the public would
benefit from clear standards related to
the requirements and expectations for
real estate to be considered necessary
for the transaction of a national bank’s
or Federal savings association’s business
as required by 12 U.S.C. 29 or the
HOLA. Current § 7.1024 and various
legal interpretations provided examples
of permissible holdings, but the OCC
has determined that, for the reasons
articulated above, these examples do not
provide general principles national
banks could apply to new acquisitions.
Without clear principles, there is the
potential for inconsistent application of
12 U.S.C. 29, the HOLA, and 12 CFR
7.1024. The proposed revisions are
intended to provide for more consistent
application of 12 U.S.C. 29, the HOLA,
and 12 CFR 7.1024.
Definitions (§ 7.1024(a))
Proposed § 7.1024(a) provides certain
definitions used in the proposed rule.
Bank occupied office premises is
defined in proposed § 7.1024(a)(1) as
bank occupied premises containing
14 61 FR 66561, 66579 (Dec. 18, 1996) (‘‘A federal
savings association may invest in real estate
(improved or unimproved) to be used for office and
related facilities of the association, or for such office
and related facilities and for rental or sale, if such
investment is made and maintained under a
prudent program of property acquisition to meet the
federal savings association’s present needs or its
reasonable future needs for office and related
facilities. A federal savings association may not
make an investment that would cause the
outstanding book value of all such investments
(including investments under § 559.4(e)(2) of this
chapter) to exceed its total capital.’’).
PO 00000
Frm 00003
Fmt 4702
Sfmt 4702
7981
offices where professional or clerical
duties are performed.
Bank occupied premises is defined in
proposed § 7.1024(a)(2) as real estate
acquired and held in good faith in
which more than 50 percent of each
building or severable piece of land is
used by bank persons, including
facilities that may be operated by third
parties to provide amenities and
services to bank persons or otherwise
facilitate bank business operations. This
definition encompasses a variety of
factual situations, including a bank’s
acquisition of a single premises building
or a bank’s development of a premises
campus. As reflected in the above
definition, in any factual situation the
OCC would apply the 50 percent
occupancy standard to each building or
severable piece of land. In order for a
building or severable piece of land to be
considered bank occupied premises,
more than 50 percent of the space must
be used by, or for, bank persons to
facilitate bank business operations.
Space that facilitates bank business
operations would include facilities
operated by third parties to provide
amenities and services to bank persons
that facilitate bank business operations;
examples of such facilities include an
office gym, cafeteria, daycare, or
printing center. In calculating the
occupancy percentage, the national
bank or Federal savings association
would look at each building or severable
piece of land using the amount of space
that is used by or for bank persons as
the numerator and the overall space of
the building or severable piece of land
as the denominator. As an example, a
national bank or Federal savings
association that acquires and holds a
building in good faith and in which the
national bank or Federal savings
association uses 4,000 square feet of the
6,000 square foot building for a bank
branch, bank offices, gym for bank
persons’ use, and cafeteria for bank
persons’ use, the occupancy percentage
would be approximately 67 percent and
the national bank or Federal savings
association could rent the remaining
2,000 square feet of the building, for
example as ground floor retail space, in
order to avoid economic loss or waste in
the real estate consistent with
§ 7.1024(c).
Question Two: The OCC requests
comment on whether 50 percent is the
appropriate percentage for bank
occupied premises. Should the
percentage be higher, such as 75
percent, or lower, such as 25 percent?
The OCC requests comments on all
possible percentage limitations and
particularly the range of percentages
between 25 and 75. Why should the
E:\FR\FM\03FEP1.SGM
03FEP1
jbell on DSKJLSW7X2PROD with PROPOSALS
7982
Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules
percentage be higher or lower than 50
percent?
Question Three: The OCC requests
comment on whether ground floor retail
space rented to a third party should be
treated differently under the occupancy
percentage calculation. For example,
should ground floor retail space that is
intended primarily for bank persons use
be included in the numerator of the
calculation even if third parties
incidentally use the space? Should
‘‘primarily’’ be defined as more than 50
percent of use by bank persons? Or,
should ground floor retail space that is
not intended primarily for bank persons
be excluded entirely from the
occupancy percentage calculation as an
incident of sound facilities management
so that it would be included in neither
the numerator nor the denominator? Or
should retail space that is intended, but
not primarily intended, for bank persons
be excluded from the numerator but
included in the denominator? Should
other adjustments be made to the
calculation? Should unused or less-used
spaces (such as stairwells, lobbies, and
maintenance areas) be excluded from
the numerator, denominator, or both?
Question Four: How should land
obtained by a national bank or Federal
savings association as lessee be treated?
The proposed rule would treat all land
obtained by the bank through lease for
use as premises as subject to the rule
and its calculation requirements.
Should certain types of leases (e.g.,
operating leases or capital leases) be
treated differently or excluded from the
calculation?
Bank persons is defined in proposed
§ 7.1024(a)(3) as a national bank’s or
Federal savings association’s employees,
contractors, consultants, vendors, and
any other individuals who are engaged
in the national bank’s or Federal savings
association’s business.
Impermissible premises is defined in
proposed § 7.1024(a)(4) as real estate
that is not bank occupied premises or
that otherwise does not conform with
the requirements of this section.
Impermissible premises is any property
not expressly permitted under this
section, including real estate in which
the national bank or Federal savings
association uses 50 percent or less of the
building or severable piece of land for
bank persons or the facilitation of bank
business operations. Impermissible
premises would also include real estate
in which a national bank or Federal
savings association occupies 50 percent
or more but does not comply with the
excess space and capacity provisions of
proposed § 7.1024(c). Real estate held
under the transition provision in
VerDate Sep<11>2014
15:58 Feb 02, 2021
Jkt 253001
proposed § 7.1024(g) would not be
considered impermissible premises.
Shared space is defined in proposed
§ 7.1024(a)(5) as bank occupied office
premises that a national bank or Federal
savings association shares with a third
party to enhance the national bank’s or
Federal savings association’s business
operations. The OCC is proposing to
remove the shared space provisions
from 12 CFR 7.3001 and instead include
them in proposed § 7.1024(e) to
eliminate confusion regarding the
interaction of the shared space
provisions with the permissibility
provisions of 12 CFR 7.1024. These
proposed provisions are substantively
unchanged from the current rule.
Investments in Real Estate Necessary for
the Transaction of Business (§ 7.1024(b))
Proposed § 7.1024(b) provides that a
national bank or Federal savings
association may acquire, hold, or
convey real estate for use as bank
occupied premises.15 Under the
proposed rule, bank occupied premises
would be considered real estate
necessary for the transaction of a
national bank’s or Federal savings
association’s business, and thus a
national bank or Federal savings
association would be permitted to
acquire, hold, and convey real estate
that is included within the definition of
bank occupied premises.
Excess Space or Capacity (§ 7.1024(c))
Proposed § 7.1024(c) sets forth the
principles of the excess capacity
doctrine 16 recognizing national banks’
and Federal savings associations’ need
to optimize the value of bank property
by authorizing national banks and
15 12 U.S.C. 29 provides that national banks may
only ‘‘purchase, hold, and convey real estate’’ for
four specific purposes. The OCC interprets the
words ‘‘purchase, hold, and convey’’ to encompass
all forms of real estate acquisition, ownership, and
transfer. The proposed rule would use the words
‘‘acquire, hold, or convey’’ to make clear that all
forms of real estate acquisition and ownership
would be covered by the proposed rule. Depending
on the circumstances, the words ‘‘acquire, hold, or
convey’’ may include real estate obtained by a
national bank or Federal savings association via
lease.
16 The excess capacity doctrine holds that a bank
properly acquiring an asset to conduct its banking
business is permitted, under its incidental powers,
to make full economic use of the property if using
the property solely for banking purposes would
leave the property underutilized. See OCC
Conditional Approval No. 361 (Mar. 3, 2000). In
2002, the OCC distilled this doctrine in a regulation
that allowed national banks to sell excess electronic
capacity, including data processing services. 12
CFR 7.5004. This regulation relied on the previous
history of allowing the sale of excess real property.
67 FR 34992, 34995 (May 17, 2002). The current
proposal for the treatment of excess capacity in the
real estate context is consistent with the distillation
set forth in the electronic capacity rule.
PO 00000
Frm 00004
Fmt 4702
Sfmt 4702
Federal savings associations to sell or
lease excess space or capacity in that
property.17 Although national banks
and Federal savings associations may
sell or lease excess capacity or space in
property, the property must have been
legitimately acquired for banking
purposes, meaning the national bank or
Federal savings association must
acquire or hold such property because
of its suitability for use in banking
operations or by bank persons and not
as a means to invest the bank’s funds in
real property or to speculate in real
estate.18
Proposed § 7.1024(c)(1) provides that
a national bank or Federal savings
association may, in order to optimize
the use of bank occupied premises or
avoid economic loss or waste, permit
third parties to use excess space or
capacity in real estate legitimately
acquired or developed by the national
bank or Federal savings association for
its banking business. The proposal also
provides that such excess space or
capacity must have a nexus with the
transaction of bank business or bank
operations such that it is acquired or
held to provide the national bank or
Federal savings association with a
business location rather than as an
investment in real estate. A national
bank or Federal savings association
must be able to demonstrate a nexus
between its ownership of the property
and the transaction of its business or
bank operations. One way to
demonstrate such a nexus would be for
the national bank or Federal savings
association to show in its business plan
how the property supports its business.
Demonstrating that there is a nexus
between the ownership of property and
the transaction of its business allows the
national bank or Federal savings
association to demonstrate that such
property was acquired or developed in
good faith and not for a speculative
purpose, consistent with statutory
requirements. Although a national bank
or Federal savings association may sell
or lease excess space or capacity
legitimately acquired or developed, a
national bank or Federal savings
association acquiring or developing
17 See 12 U.S.C. 24 (Seventh) and 29; Perth
Amboy National Bank v. Brodsky, 207 F. Supp. 785,
788 (S.D.N.Y. 1962) (‘‘It is clear beyond cavil that
the statute [12 U.S.C. 29] permits a national bank
to lease or construct a building, in good faith, for
banking purposes, even though it intends to occupy
only a part thereof and to rent out a large part of
the building to others.’’).
18 Brown v. Schleier, 118 F. 981, 984 (8th Cir.
1902). (‘‘. . . provided, always, that it acts in good
faith, solely with a view of obtaining an eligible
location, and not with a view of investing its funds
in real property or embarking them in speculations
in real estate.’’).
E:\FR\FM\03FEP1.SGM
03FEP1
jbell on DSKJLSW7X2PROD with PROPOSALS
Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules
space in order to serve as a landlord to
tenants using space unrelated to the
transaction of its business or bank
operations (for example, a grocery store
or a branded hotel) would likely not
meet this requirement as the national
bank or Federal savings association
would not merely be avoiding economic
waste in acquiring or developing real
estate for such purposes but likely
actively investing in real estate for a
speculative non-banking purpose. In the
case of leasing space to tenants such as
a grocery store or a branded hotel, the
national bank or Federal savings
association would likely derive
significant revenue related to such
activity and would need to demonstrate
that the real estate was not acquired
primarily for its lease income but rather
because of its suitability for bank
purposes or use by bank persons. A
national bank or Federal savings
association can only lease legitimate
excess space or capacity, and if real
estate is acquired or developed in a
volume or manner that is not consistent
with the bank’s operations or business,
for example as set forth in its business
plan, such real estate was likely not
legitimately acquired or developed, and
thus would be impermissible.
Excess space is space in bank
occupied premises that is not being
used by bank persons or for bank
operations. Excess capacity in bank
occupied premises can be either
temporal or space-based. An example of
temporal excess capacity is a bank
auditorium that is used after bank
business hours by members of the local
community. An example of space-based
excess capacity is a call center in which
the bank needs space for 100 employees
during eight months of the year but only
needs space for 80 employees during the
remaining four months of the year. In
both examples, the space can be used by
non-bank persons as long as the space
was legitimately acquired or developed
by the bank for its operations or
business as required by § 7.1024(c)(1).
Proposed § 7.1024(c)(2) discusses
situations in which legitimate excess
space or capacity may be used by third
parties. Section § 7.1024(c)(2)(i) through
(iv) have analogous provisions in the
excess capacity provisions for electronic
activities located in 12 CFR 7.5004.
Section 7.1024(c)(2)(i) provides that
excess space or capacity can be used by
third parties to the extent that the real
estate acquired is consistent with the
real estate available in the market. For
example, if a national bank or Federal
savings association is located in an area
in which strip malls are the
predominant type of commercial real
estate, then a national bank or Federal
VerDate Sep<11>2014
15:58 Feb 02, 2021
Jkt 253001
savings association may be able to
acquire a strip mall if the national bank
or Federal savings association would
occupy greater than 50 percent of the
space and lease out the remaining space.
However, as the national bank or
Federal savings association must have
good faith and a non-speculative
purpose in order for real estate to be
legitimately acquired, a national bank or
Federal savings association would need
to analyze carefully whether this
requirement would be met if many
smaller strip malls than the one it
acquired were available or if there were
many free standing buildings more
appropriately sized for bank purposes
available in the market.
Section 7.1024(c)(2)(ii) provides that a
national bank or Federal savings
association may acquire and retain
additional space or capacity, beyond its
present needs, if it is reasonably
necessary for planned future expansion
or to meet the bank’s future expected
banking needs as long as the bank uses
the additional space or capacity in the
real estate acquired for future bank
expansion within five years. A national
bank or Federal savings association may
acquire real estate intended to be used
for future banking purposes and may
permit third parties to use this excess
space or capacity, but the national bank
or Federal savings association must use
this real estate for banking purposes
within five years of acquisition. The
OCC understands that it is prudent for
a national bank or Federal savings
association to plan for future expansion
and use, so a national bank or Federal
savings association may legitimately
acquire and develop real estate intended
for future use as long as that real estate
is used by the national bank or Federal
savings association within five years of
its acquisition or development. If the
property does not become bank
occupied premises within five years, it
will become Other Real Estate Owned
(OREO) and, subject to 12 U.S.C. 29 for
national banks and 12 CFR 34.82 for
national banks and Federal savings
associations, must be disposed of within
five years of becoming OREO, unless the
bank requests an extension of up to an
additional five years.
Proposed § 7.1024(c)(2)(iii) provides
that a national bank or Federal savings
association may lease excess capacity
resulting from a fluctuation caused by
the bank’s need to use the full capacity
of a space during peak periods but not
in other off-peak periods. This situation
is similar to the example discussed
above related to a call center which the
bank uses all 100 available seats during
eight months of the year but only used
80 during the other four months. The
PO 00000
Frm 00005
Fmt 4702
Sfmt 4702
7983
bank may allow third parties to use the
excess 20 seats in its call center
provided the capacity was legitimately
acquired for bank operations and does
not impede the safe and sound
operation of the bank.
Proposed § 7.1024(c)(2)(iv) provides
that a national bank or Federal savings
association may lease excess capacity or
space that is no longer needed due to a
decline in the level of banking
operations. In this situation, a bank
acquired real estate for use in its
banking operations and, based on a
decline in bank activity or operation, no
longer needs all of the space. The nexus
between national bank or Federal
savings association ownership of a
building and its banking operations
becomes clearer the closer the bank’s
occupancy approaches one hundred
percent. As with excess capacity in data
processing, the OCC presumes a certain
percentage of use of the property to be
permissible. The bank may allow third
parties to use the space provided the
bank still otherwise occupies more than
50 percent of the real estate as required
by § 7.1024(a)(2).
Question Five: Should the OCC permit
a national bank or Federal savings
association to lease out more than 50
percent of its premises on a temporary
basis, provided that the national bank
brings its percentage of occupancy back
to at least 50 percent by a certain time
period?
Question Six: Should the OCC impose
additional time-based limitations on a
bank’s ability to lease out excess space
or capacity? For example, should a bank
be permitted to lease out 50 percent of
its space for a limited period (for
example, five years) but be subject to a
higher usage requirement (for example,
75 percent) on an ongoing basis?
Question Seven: Should certain uses
be permissible but subject to a timebased limit?
Proposed § 7.1024(c)(2)(v) provides
that a national bank or Federal savings
association may permit third parties to
use bank occupied premises after bank
business hours.19 For example, a bank
may permit community members to use
a bank auditorium or conference center
after bank business hours. After hours
19 National banks and Federal savings
associations are often key anchors in a local
community and can be called on to play an
important role in life-cycle events, for example
supplying the use of a conference room or the
institution’s board room for a funeral viewing or
community celebration during business hours.
Occasional use of facilities for such purpose is
entirely consistent with the institution’s role in the
local community and is not inconsistent with
section 29 or 1464 and this proposed rule.
E:\FR\FM\03FEP1.SGM
03FEP1
7984
Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules
use by third parties will not affect the
bank occupied premises calculation.
The OCC recognizes that often
national banks and Federal savings
associations are asked or required by
outside parties, such as a local
government, to make commitments to
allow third party or public use in order
to acquire or hold real estate. When
such commitments are requested or
required, the national bank or Federal
savings association should inform the
appropriate OCC supervisory office of
such requests and share such
commitments and other relevant
information with the appropriate OCC
supervisory office.
jbell on DSKJLSW7X2PROD with PROPOSALS
Impermissible Premises (§ 7.1024(d))
Proposed § 7.1024(d) provides that a
national bank or Federal savings
association may not acquire or hold
impermissible premises. Proposed
§ 7.1024(a)(4) defines impermissible
premises as real estate that is not bank
occupied premises or that otherwise
does not conform with the requirements
of this section. If the real estate
acquisition or holding would not
conform with the requirements of
§ 7.1024, then it would be
impermissible.
Question Eight: Should the OCC
include specific examples in § 7.1024(d)
of impermissible premises? If so, what
examples should be included? Should
large retail operations, such as grocery
stores, be specifically impermissible?
Should commercial lodging (rental
apartments, branded hotels) be
specifically impermissible?
Question Nine: Courts have explained
that, under 12 U.S.C. 29, national banks
investing in property should be doing so
‘‘in good faith, solely with a view of
obtaining an eligible location’’ and not
for the purpose of speculating or
investing in real estate as a
landlord.20 Should the final rule retain
the good faith requirement to ensure
that national banks and Federal savings
associations are only permitted to
acquire additional real estate with the
intention of using it as premises?
Should the final rule make further
clarification that national banks and
Federal savings associations would not
be permitted to obtain real estate with
the intention of using part of the real
estate for a non-premises purpose on an
indefinite basis?
20 Brown v. Schleier, 118 F. 981, 984 (8th Cir.
1902), aff’d 194 U.S. 18 (1904).
VerDate Sep<11>2014
15:58 Feb 02, 2021
Jkt 253001
Sharing National Bank or Federal
Savings Association Space and
Employees in Jointly Held Bank
Occupied Premises (§ 7.1024(e))
Proposed § 7.1024(e) substantially
imports current 12 CFR 7.3001
concerning the sharing of national bank
or Federal savings association space and
employees in jointly held bank
occupied office premises covering
situations where a bank and another
business jointly hold and share the same
space as opposed to a bank leasing a
separate space within a building to a
third party. Proposed § 7.1024(e)
provides guidance on how to share
offices and employees in a manner that
protects customers and is consistent
with safe and sound banking practices.
The proposed rule would not alter or
affect existing precedent applicable to
12 CFR 7.3001. Proposed § 7.1024(e)(4),
like current 12 CFR 7.3001(d), provides
that in conducting sharing
arrangements, national banks and
Federal savings associations would be
required to ensure that each
arrangement complies with all
applicable laws or regulations. Proposed
§ 7.1024(e)(4), like current 12 CFR
7.3001(d), lists three requirements,
which are illustrative and not
exhaustive.
Permissible Means of Holding Real
Estate and Fixed Assets (§ 7.1024(f))
Proposed § 7.1024(f) provides
technical information related to
permissible means of holding real estate
and fixed assets. These provisions are
substantially similar to the provisions in
current 12 CFR 7.1024(a)(3), (b), and (c).
Transition (§ 7.1024(g))
Proposed § 7.1024(g) provides that as
of XX, 20XX, a national bank or Federal
savings association that holds an
investment in real estate, fixed assets,
banking premises, or other real property
that complies with the legal
requirements in effect prior to XX,
20XX, but would violate any provision
of proposed § 7.1024, would be
permitted to continue to hold the
investment in accordance with the prior
legal requirements. However, a national
bank or Federal savings association
holding such an investment cannot
modify, expand, or improve the
investment, except for routine
maintenance, without the prior approval
of the appropriate OCC supervisory
office. Proposed § 7.1024(g) grandfathers
national banks or Federal savings
associations that currently have
permissible real estate investments that
would no longer be permissible under
the proposed revisions. The proposed
PO 00000
Frm 00006
Fmt 4702
Sfmt 4702
rule would supersede outstanding OCC
precedent (and former OTS precedent)
in this area to the extent it is
inconsistent with the proposed rule.
While national banks and Federal
savings associations would be able to
continue to rely on this precedent,
including interpretive letters, with
respect to current real estate
investments, national banks and Federal
savings associations would not be able
to rely on this precedent with respect to
future real estate investments. The
proposed rule would not affect
outstanding precedent regarding 12 CFR
7.1000 or 12 CFR 7.3001.
Question Ten: The OCC requests
comment on the appropriate parameters
of a national bank or Federal savings
association’s ability to hold real estate
subject to the transition rule in
§ 7.1024(g). Specifically, should a
renewal, modification, or termination of
a lease constitute a ‘‘modification’’
subject to the transition rule? Should
other activities besides ‘‘routine
maintenance’’ be permitted under the
transition rule?
IV. Administrative Law Matters
Paperwork Reduction Act. In
accordance with the requirements of the
Paperwork Reduction Act of 1995
(PRA), 44 U.S.C. 3501 et seq., the OCC
may not conduct or sponsor, and
respondents are not required to respond
to, an information collection unless it
displays a currently valid Office of
Management and Budget (OMB) control
number. The OCC has reviewed the
notice of proposed rulemaking and
determined that it would not introduce
any new or revise any existing
collection of information pursuant to
the PRA. Therefore, no submission will
be made to OMB for review.
Regulatory Flexibility Act. The
Regulatory Flexibility Act (RFA), 5
U.S.C. 601 et seq., requires an agency,
in connection with a proposed rule, to
prepare an Initial Regulatory Flexibility
Analysis describing the impact of the
proposed 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 assets of $41.5 million of 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 745 small entities. The
OCC expects that all of these small
entities would be impacted by the
proposed rule. Because the proposed
rule applies to all OCC-supervised
depository institutions, the proposed
E:\FR\FM\03FEP1.SGM
03FEP1
jbell on DSKJLSW7X2PROD with PROPOSALS
Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules
rule would affect all small OCCsupervised entities, and thus a
substantial number of them.
Unfunded Mandates Reform Act.
Consistent with the Unfunded Mandates
Reform Act of 1995 (UMRA), 2 U.S.C.
1532, the OCC considers whether the
proposed rule includes a Federal
mandate that may result in the
expenditure by state, local, and tribal
governments, in the aggregate, or by the
private sector, of $100 million adjusted
for inflation (currently $157 million) in
any one year. The OCC estimates the
expenditures that may be associated
with compliance costs for this proposed
rule, if implemented, would be as much
as $412,000. The estimate for
expenditures is for modifying a bank’s
policies and procedures on premises.
However, it should be noted that the
proposed rule does not require banks to
modify their policies and procedures.
Therefore, the OCC concludes that
implementation of the proposed rule
would not result in an expenditure of
$157 million or more annually by state,
local, and tribal governments, or by the
private sector.
Riegle Community Development and
Regulatory Improvement Act. Pursuant
to section 302(a) of the Riegle
Community Development and
Regulatory Improvement Act of 1994
(RCDRIA), 12 U.S.C. 4802(a), in
determining the effective date and
administrative compliance requirements
for new regulations that impose
additional reporting, disclosure, or other
requirements on insured depository
institutions, the OCC must consider,
consistent with principles of safety and
soundness and the public interest, any
administrative burdens that such
regulations would place on depository
institutions, including small depository
institutions, and customers of
depository institutions, as well as the
benefits of such regulations. In addition,
section 302(b) of RCDRIA, 12 U.S.C.
4802(b), requires new regulations and
amendments to regulations that impose
additional reporting, disclosures, or
other new requirements on insured
depository institutions generally to take
effect on the first day of a calendar
quarter that begins on or after the date
on which the regulations are published
in final form. Although the proposed
rule does not impose additional
reporting, disclosures, or other new
requirements on insured depository
institutions, the OCC invites comments
that will inform its consideration of the
administrative burdens and the benefits
of its proposal, as well as the effective
date of the final rule.
VerDate Sep<11>2014
15:58 Feb 02, 2021
Jkt 253001
List of Subjects in 12 CFR Part 7
Computer technology, Credit,
Derivatives, Federal savings
associations, Insurance, Investments,
Metals, National banks, Reporting and
recordkeeping requirements, Securities,
Security bonds.
Authority and Issuance
For the reasons stated in the
preamble, the OCC proposes to amend
12 CFR part 7 as follows.
PART 7—ACTIVITIES AND
OPERATIONS
1. The authority citation for part 7
continues to read as follows:
■
Authority: 12 U.S.C. 1 et seq., 25b, 29, 71,
71a, 92, 92a, 93, 93a, 95(b)(1), 371, 371d, 481,
484, 1463, 1464, 1465, 1818, 1828(m) and
5412(b)(2)(B).
2. Amend Part 7 by adding § 7.1024 to
read as follows:
■
§ 7.1024 National bank or Federal savings
association ownership of property.
(a) Definitions.
(1) Bank occupied office premises
means bank occupied premises
containing offices where professional or
clerical duties are performed.
(2) Bank occupied premises means
real estate acquired and held in good
faith and in which more than 50 percent
of each building or severable piece of
land is, or consistent with paragraph
(c)(2)(ii) of this section—, will be used
by bank persons for the transaction of a
national bank’s or Federal savings
association’s business, including
facilities that may be operated by third
parties to provide amenities and
services to bank persons or otherwise
facilitate national bank or Federal
savings association business operations.
(3) Bank persons mean a national
bank or Federal savings association’s
employees, contractors, consultants,
vendors, and any other individuals who
are engaged in the national bank or
Federal savings association’s business.
(4) Impermissible premises means real
estate that is not bank occupied
premises or that otherwise does not
conform with the requirements of this
section.
(5) Shared space means bank
occupied office premises that a national
bank or Federal savings association
shares with a third party to enhance the
national bank’s business operations.
(b) Investment in real estate necessary
for the transaction of business. A
national bank or Federal savings
association may acquire, hold, or
convey real estate for use as bank
occupied premises.
(c) Excess space and capacity.
PO 00000
Frm 00007
Fmt 4702
Sfmt 4702
7985
(1) A national bank or Federal savings
association may, in order to optimize
the use of bank occupied premises or
avoid economic loss or waste, permit
third parties to use excess space or
capacity in real estate legitimately
acquired or developed by the national
bank or Federal savings association for
its banking business. Such excess space
or capacity must have a nexus with the
transaction of the bank’s business or
bank operations for the national bank or
Federal savings association such that it
is acquired or held to provide the bank
with a business location rather than as
an investment in real estate.
(2) With respect to bank occupied
premises, legitimate excess space or
capacity that may be used by third
parties can arise in a variety of
situations, including the following:
(i) Due to the characteristics of the
real estate available in the market, the
space or capacity to meet a national
bank or Federal savings association’s
requirements exceeds its present needs;
(ii) The acquisition and retention of
additional space or capacity, beyond
present needs, reasonably may be
necessary for planned future expansion
or to meet a national bank’s or Federal
savings association’s expected future
banking needs as long as the national
bank or Federal savings association uses
the additional capacity in the real estate
acquired for future national bank or
Federal savings association expansion
or banking needs within five years;
(iii) Requirements for capacity
fluctuate because a national bank or
Federal savings association may need to
use the full capacity of a space during
peak periods resulting in periods when
its capacity is underutilized;
(iv) After the initial acquisition of real
estate thought to be fully needed for
banking operations, a national bank or
Federal savings association experiences
a decline in the level of banking
operations or an increase in efficiency
resulting in underutilized space or
capacity; and
(v) A national bank or Federal savings
association has capacity to allow third
parties after-hours use of bank occupied
premises.
(d) Impermissible premises. A
national bank or Federal savings
association may not acquire, hold, or
convey impermissible premises, except
as otherwise permitted by 12 U.S.C. 29
or 1464, respectively, or other
applicable law.
(e) Sharing national bank space and
employees in jointly held bank occupied
office premises.
(1) Shared space. A national bank or
Federal savings association may share
space in bank occupied office premises
E:\FR\FM\03FEP1.SGM
03FEP1
jbell on DSKJLSW7X2PROD with PROPOSALS
7986
Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules
jointly held with one or more other
businesses.
(2) Shared employees. When sharing
space with other businesses as
described in paragraph (e)(1) of this
section, a national bank or Federal
savings association may provide, under
one or more written agreements between
the national bank or Federal savings
association, the other business, and
their employees, that:
(i) A national bank or Federal savings
association employee may act as agent
for the other business; or
(ii) An employee of the other business
may act as agent for the national bank
or Federal savings association.
(3) Supervisory conditions. When a
national bank or Federal savings
association engages in arrangements of
the types listed in paragraphs (e)(1) and
(2) of this section, the national bank or
Federal savings association must ensure:
(i) The other business is
conspicuously, accurately, and
separately identified;
(ii) Shared employees clearly and
fully disclose the nature of their agency
relationship to customers of the national
bank or Federal savings association and
of the other businesses so that
customers will know the identity of the
national bank, Federal savings
association, or other business that is
providing the product or service;
(iii) The arrangement does not
constitute a joint venture or partnership
with the other business under
applicable state law;
(iv) All aspects of the relationship
between the national bank or Federal
savings association and the other
business are conducted at arm’s length,
unless a special arrangement is
warranted because the other business is
a subsidiary of the national bank or
Federal savings association;
(v) Security issues arising from the
activities of the other business on the
premises are addressed;
(vi) The activities of the other
business do not adversely affect the
safety and soundness of the national
bank or Federal savings association;
(vii) The shared employees or the
entity for which they perform services
are duly licensed or meet qualification
requirements of applicable statutes and
regulations pertaining to agents or
employees of such other business; and
(viii) The assets and records of the
parties are segregated.
(4) Other legal requirements. When
entering into arrangements of the types
described in paragraphs (e)(1) and (2) of
this section, and in conducting
operations pursuant to those
arrangements, a national bank or
Federal savings association must ensure
VerDate Sep<11>2014
15:58 Feb 02, 2021
Jkt 253001
that each arrangement complies with all
applicable laws and regulations. If the
arrangement involves an affiliate or a
shareholder, director, officer, or
employee of the national bank or
Federal savings association:
(i) The national bank or Federal
savings association must ensure
compliance with all applicable statutory
and regulatory provisions governing
national bank or Federal savings
association transactions with these
persons or entities;
(ii) The parties must comply with all
applicable fiduciary duties; and
(iii) The parties, if they are in
competition with each other, must
consider limitations, if any, imposed by
applicable antitrust laws.
(f) Permissible means of holding real
estate and fixed assets.
(1) Permissible means of holding. A
national bank or Federal savings
association may acquire and hold real
estate under paragraph (b) of this
section by any reasonable and prudent
means, including ownership in fee, a
leasehold estate, or in an interest in a
cooperative. A national bank or Federal
savings association may hold this real
estate directly or through one or more
subsidiaries. A national bank or Federal
savings association may organize a bank
occupied premises subsidiary as a
corporation, partnership, limited
liability company, or any other similar
entity.
(2) Fixed assets. A national bank or
Federal savings association may own
fixed assets necessary for the transaction
of its business, such as fixtures,
furniture, and data processing
equipment.
(3) Investment in banking premises.
(i) Premises investment and approval.
A national bank or Federal savings
association must comply with the
investment and approval requirements
for investment in banking premises in
12 CFR 5.37(d).
(ii) Option to purchase. An
unexercised option to purchase banking
premises or stock in a corporation
holding banking premises is not an
investment in banking premises.
However, a national bank or Federal
savings association seeking to exercise
such an option must comply with the
requirements in 12 CFR 5.37(d).
(g) Transition. If, on XX, 20XX, a
national bank or Federal savings
association holds an investment in real
estate, fixed assets, banking premises, or
other real property that complies with
the legal requirements in effect prior to
XX, 20XX, but would violate any
provision of this section, the national
bank or Federal savings association may
continue to hold such investment in
PO 00000
Frm 00008
Fmt 4702
Sfmt 4702
accordance with the prior legal
requirements. However, a national bank
or Federal savings association that holds
such an investment may not modify,
expand, or improve this investment,
except for routine maintenance, without
the prior approval of the appropriate
OCC supervisory office.
§ 7.3001
■
[Removed]
3. Remove § 7.3001.
Brian P. Brooks,
Acting Comptroller of the Currency.
Editorial Note: This document was
received at the Office of the Federal Register
on December 31, 2020.
[FR Doc. 2020–29277 Filed 2–2–21; 8:45 am]
BILLING CODE 4810–33–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–119890–18]
RIN 1545–BP92
Section 42, Low-Income Housing
Credit Average Income Test
Regulations; Hearing
Internal Revenue Service (IRS),
Treasury.
ACTION: Proposed rule; notice of hearing.
AGENCY:
This document provides a
notice of public hearing on proposed
regulations setting forth guidance on the
average income test for purposes of the
low-income housing credit.
DATES: The public hearing is being held
on Wednesday, March 24, 2021 at 12
p.m. The IRS must receive speakers’
outlines of the topics to be discussed at
the public hearing by Friday, March 5,
2021. If no outlines are received by
March 5, 2021, the public hearing will
be cancelled.
ADDRESSES: The public hearing is being
held by teleconference. Individuals who
want to testify (by telephone) at the
public hearing must send an email to
publichearings@irs.gov to receive the
telephone number and access code for
the hearing. The subject line of the
email must contain the regulation
number [REG–119890–18] and the word
TESTIFY. For example, the subject line
may say: Request to TESTIFY at Hearing
for REG–119890–18. The email must
include the name(s) of the speaker(s)
and title(s). Send outline submissions
electronically via the Federal
eRulemaking Portal at
www.regulations.gov (IRS REG–119890–
18). The email must be received by
March 5, 2021.
SUMMARY:
E:\FR\FM\03FEP1.SGM
03FEP1
]]>Agencies
[Federal Register Volume 86, Number 21 (Wednesday, February 3, 2021)]
[Proposed Rules]
[Pages 7979-7986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-29277]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 /
Proposed Rules
[[Page 7979]]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 7
[Docket No. OCC-2020-0045]
RIN 1557-AF07
National Bank and Federal Savings Association Premises
AGENCY: Office of the Comptroller of the Currency (OCC), Treasury.
ACTION: Notice of proposed rulemaking with request for public comment.
-----------------------------------------------------------------------
SUMMARY: The OCC is inviting comment on a proposed rule that would
modify the requirements for national bank and Federal savings
association premises.
DATES: Comments must be received by March 22, 2021.
ADDRESSES: You may submit comments to the OCC by any of the methods set
forth below. Commenters are encouraged to submit comments through the
Federal eRulemaking Portal, if possible. Please use the title
``National Bank and Federal Savings Association Premises'' to
facilitate the organization and distribution of the comments. You may
submit comments by any of the following methods:
Federal eRulemaking Portal--``Regulations.gov'': Go to
www.regulations.gov. Enter ``Docket ID OCC-2020-0045'' in the Search
Box and click ``Search.'' Click on ``Comment Now'' to submit public
comments.
Click on the ``Help'' tab on the Regulations.gov home page
to get information on using Regulations.gov, including instructions for
submitting public comments.
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.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2020-0045'' in your comment.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2020-0045'' 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, 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 the following methods:
Viewing Comments Electronically: Go to
www.regulations.gov. Enter ``Docket ID OCC-2020-0045'' 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.
FOR FURTHER INFORMATION CONTACT: Matthew Tynan, Counsel; Sarah Turney,
Counsel; Henry Barkhausen, Counsel; Chief Counsel's Office (202) 649-
5490; Office of the Comptroller of the Currency, 400 7th Street SW,
Washington, DC 20219.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Office of the Comptroller of the Currency (OCC) is issuing a
notice of proposed rulemaking to amend its regulations on national bank
or Federal savings association ownership of real property. The OCC also
proposes to consolidate 12 CFR 7.3001 on sharing national bank or
Federal savings association space and employees with the rule covering
ownership of property. The OCC proposes to continue to cover the
national bank and Federal savings association charters under the same
regulation, but, because different statutory regimes cover each
charter, the OCC seeks comment on whether to apply different
requirements to national banks and Federal savings associations.
II. Background
The OCC periodically reviews its regulations to eliminate outdated
or otherwise unnecessary regulatory provisions and, where possible, to
clarify or revise requirements imposed on national banks and Federal
savings associations. As part of the periodic review that resulted in
recent amendments to 12 CFR part 7, which take effect on April 1, 2021,
the OCC determined that it would propose revisions to the rules
governing national bank and Federal savings association premises
currently codified at 12 CFR 7.1000, which the recent amendments to 12
CFR part 7 redesignated as to 12 CFR 7.1024.\1\ The OCC determined that
the regulation may need significant revision and that such revisions
may involve significant policy considerations. To consider the matter
more fully and ensure the greatest benefit from public comment, the OCC
chose to propose revisions to redesignated 12 CFR 7.1024 separately
from the revisions to 12 CFR part 7 finalized in 2020.\2\ Because of
the redesignation of 12 CFR 7.1000 as 12 CFR 7.1024, this proposed rule
refers to 12 CFR 7.1024.\3\
---------------------------------------------------------------------------
\1\ 85 FR 40794 (July 7, 2020). 12 CFR 7.1024 was previously
codified at 12 CFR 7.1000.
\2\ 85 FR 83686 (December 22, 2020).
\3\ Because the redesignation of 12 CFR 7.1000 as 12 CFR 7.1024
takes effect on April 1, 2021, the regulatory text of this proposed
rule must reflect this as an addition rather than an amendment. The
final rule will reflect the change as an amendment.
---------------------------------------------------------------------------
National bank ownership of real estate is governed by 12 U.S.C. 29,
an original component of the National Bank Act. Twelve U.S.C. 29
generally prohibits national banks from purchasing, holding, or
conveying real estate except for a list of four exclusive exceptions.
The first such purpose covers the authority of a national bank to hold
real property ``[s]uch as shall be necessary for its accommodation in
the transaction of its business.'' \4\ As stated by the
[[Page 7980]]
Supreme Court, this statute was designed to promote the safety and
soundness of national banks by discouraging real estate speculation,
and was also designed to protect the national economy and consumers by
preventing banks from holding masses of property for their own
account.\5\ Consistent with the statutory framework, a national bank
investing in property should be doing so ``in good faith, solely with a
view of obtaining an eligible location'' and not for the purpose of
speculating or investing in real estate as a landlord.\6\
---------------------------------------------------------------------------
\4\ The other three purposes all relate to the national bank
authority to own property taken for debts previously contracted and
other such means of securing debts. The proposed rule would not
affect the ability of national banks to rely on these other purposes
in 12 U.S.C. 29. The proposed rule would only interpret and
implement the meaning of the first purpose (``Such as shall be
necessary for its accommodation in the transaction of its
business'').
\5\ Union National Bank v. Matthews, 98 U.S. 621, 626 (1878)
(``to keep the capital of the banks flowing in the daily channels of
commerce; to deter them from embarking in hazardous real estate
speculations; and to prevent the accumulation of large masses of
such property in the banks' hands, to be held, as it were, in
mortmain'').
\6\ Brown v. Schleier, 118 F. 981, 984 (8th Cir. 1902), aff'd
194 U.S. 18 (1904).
---------------------------------------------------------------------------
Federal savings association ownership of premises is governed by
the Home Owners Loan Act (HOLA). Although the HOLA does not
specifically address a Federal savings association's investment in
banking premises and there is no prohibition in the HOLA similar to 12
U.S.C. 29, historically, the Federal Home Loan Bank Board (FHLBB), the
Office of Thrift Supervision (OTS), and the OCC have interpreted the
HOLA to permit Federal savings associations to hold real estate only
for their offices and related facilities with permission to rent or
sell excess space in their offices and facilities and the OCC has
issued regulations governing a Federal savings association's investment
in banking premises pursuant to general supervisory and rulemaking
authority under the HOLA.\7\ After Title III of the Dodd-Frank Wall
Street Reform and Consumer Protection Act \8\ transferred to the OCC
all functions of the former OTS and the Director of the OTS relating to
Federal savings associations, the OCC began reviewing its rules
governing national banks and Federal savings associations to determine
which rules were appropriate to integrate into a single set of rules
for both national banks and savings associations.\9\ After this review,
the OCC did not find substantive differences between the then-banking
premises rules and related OTS guidance governing national banks and
Federal savings associations and determined that, as a supervisory
matter, it was appropriate to apply the rule governing national banks
to both national banks and Federal savings associations.\10\
---------------------------------------------------------------------------
\7\ 80 FR 28346, 28377 (May 18, 2015).
\8\ Public Law 111-203, 124 Stat. 1376 (2010).
\9\ See footnote 7.
\10\ Id.
---------------------------------------------------------------------------
The OCC implemented 12 CFR 7.1024 to cover national bank and
Federal savings association ownership of real estate for their own use.
However, 12 CFR 7.1024 does not provide a full set of standards
implementing the requirements of 12 U.S.C. 29 and the HOLA regarding
national bank and Federal savings association premises. Rather, 12 CFR
7.1024 is an interpretive rule that codifies specific OCC
interpretations of 12 U.S.C. 29. Thus, although the rule contains a
list of types of real estate that the OCC has found permissible for
national bank and Federal savings association ownership, that list is
not exhaustive. Moreover, significant standards relating to the
permissibility of real estate ownership, such as the minimum percentage
of bank occupancy required for a building to qualify as premises, are
not addressed anywhere in OCC regulation.
Instead, the OCC has long deferred to court cases and published OCC
precedent to cover the field of requirements for national bank and
Federal savings association ownership of premises. The OCC historically
chose not to define specific limitations for standards, such as
percentages of occupancy,\11\ instead relying on principles drawn from
precedent to preserve a flexible approach to new national bank
proposals while ensuring those principles continue to reflect the
purposes behind 12 U.S.C. 29.\12\ The OTS similarly did not set
percentages of occupancy within its premises regulation for Federal
savings associations.\13\
---------------------------------------------------------------------------
\11\ OCC Interpretive Letter No. 1053 (Jan. 31, 2006) (``Neither
the OCC nor the courts have established a single occupancy
percentage test . . .'').
\12\ Outstanding precedent includes OCC Interpretive Letter No.
1072 (Sept. 15, 2006) (permitting a bank to lease out a portion of
its existing premises to retail businesses in arrangements under
which approximately 50 percent of the premises would be used by the
bank for its banking business); OCC Interpretive Letter No. 1053
(Jan. 31, 2006) (describing OCC analysis of permissibility of
premises in OCC Interpretive Letter No. 1045 and 1044); OCC
Interpretive Letter No. 1045 (Dec. 5, 2005) (permitting a national
bank to establish a hotel on its premises, of which the bank
intended to use more than 50 percent of the occupancy for out-of-
area bank employees, members of the bank's board of directors, and
selected vendors, shareholders, customers, and other visitors on
bank-related business); OCC Interpretive Letter No. 1044 (Dec. 5,
2005) (permitting a national bank to establish a mixed-use office,
hotel, and residences facility on its premises, in which the bank
would use less than 50 percent of the premises for banking
purposes); OCC Interpretive Letter No. 1043 (July 8, 1993)
(permitting a national bank to lease to third parties a bank
condominium when it is not being used for bank purposes); OCC
Interpretive Letter No. 1042 (Jan. 21, 1993) (permitting a bank to
retain a condominium used only for bank purposes); OCC Interpretive
Letter No. 1034 (April 1, 2005) (permitting a national bank to
construct new facilities on existing premises real estate, use less
than 50 percent of the premises for bank purposes, and lease unused
space as excess bank premises); Conditional Approval No. 298 (Dec.
15, 1998) (permitting a bank to use less than 50 percent of office
premises for its banking business); Interpretive Letter No. 758
(April 5, 1996) (permitting a national bank to lease out a portion
of its real estate held as premises for employee recreation purposes
to a third party to remove a hill and mine granite deposits). As
discussed below, this proposed rule would supersede existing
precedent to the extent it is inconsistent with the proposed rule.
However, the proposed rule would not necessarily supersede precedent
that is consistent with the requirements of the proposed rule or
precedent that addresses issues not covered by the proposed rule.
The OCC requests comment on whether and how outstanding precedent
should be affected by the proposed rule.
\13\ Former 12 CFR 560.37. In 2011, the OCC republished OTS
regulations set out in Chapter V of Title 12, including 12 CFR
560.37, with OCC part numbers changing the ``5'' to a ``1''. 12 CFR
560.37 became 12 CFR 160.37. 76 FR 48950 (August 9, 2011). 12 CFR
160.37 was subsequently removed when Federal savings associations
were integrated into the national bank rule. Prior OTS guidance
provided that a building would be a Federal savings association's
premises if the association used 25 percent or more of the building.
OTS Handbook, Section 252, Fixed Assets, April 1999, p.31
(rescinded).
---------------------------------------------------------------------------
Although this precedent-based approach provides flexibility, it
comes with several limitations. First, since precedent is necessarily
responsive to presented facts, reliance on precedent means there is no
clear rule to give notice to banks or the public of what forms of real
estate ownership are permissible for a bank. Published OCC precedent by
its nature typically describes fact patterns found to be permissible.
Therefore, reliance on precedent alone makes it difficult for the
industry and the public to understand what set of facts would be
impermissible. Given the time and effort often required to plan an
investment in premises, delays and uncertainty caused by unclear legal
standards can be problematic.
Second, national bank premises precedent was largely formed at a
time when the banking industry was different than the one in existence
today. Many of the most important cases decided on premises occurred at
a time when most banks operated entirely out of a single headquarters.
The principles drawn from those cases remain relevant in the present
day, but the reality of a modern large bank is very different than a
bank that existed prior to interstate branching. Bank premises rules in
the present day must apply to both
[[Page 7981]]
community banks, some operating out of a single building or few
buildings, and large banks with tens of thousands of employees and
operations in all fifty states.
Finally, commercial real estate itself has changed greatly in the
past several decades in ways that are difficult to square with premises
precedent. The majority of OCC and OTS premises precedent concerns
either branches or standalone office space, as those were the typical
premises arrangements for banking operations in the 20th century.
Recent years have seen the growth of mixed-use developments combining
office space with retail space, residential space, and other uses not
typically found in a traditional office building. Some industries have
moved towards a comprehensive campus arrangement providing employees
with amenities and working arrangements previously not present in an
office environment. Finally, with the development of robust
teleconferencing and the arrival of the COVID-19 pandemic, many
companies are moving towards offsite, shared, or virtual work spaces.
It is increasingly difficult for national banks and Federal savings
associations to rely on precedent focusing on traditional office
arrangements to determine whether and to what extent they may own
mixed-use developments, install amenities to compete with those offered
by other industries (including technology companies), or make use of
alternative work arrangements.
For these reasons, the OCC proposes these revisions to 12 CFR
7.1024 to codify and clarify a transparent and consistent set of
principles for national bank and Federal savings association premises.
The OCC intends these regulations to meet the needs of modern national
banks and Federal savings associations while ensuring consistent
application of and adherence to the limitations of 12 U.S.C. 29 and the
HOLA.
Question One: Although current OCC regulations and the proposal
cover both the national bank and Federal savings association charters
in one section, there are differences in the statutory regimes covering
each charter. Would it be preferable to apply different requirements to
Federal savings association premises? Specifically, should the proposed
rule apply only to national banks? If so, what requirements should
apply to Federal savings associations? Should the OCC continue to apply
the current requirements to Federal savings associations even if it
adopts the proposed rule with respect to national banks? Should the OCC
adopt a requirement for Federal savings associations that is similar to
or identical to the requirement in effect before the integration of
national bank and Federal savings association requirements? \14\ Also,
should the proposed rule apply to federal branches and agencies of
foreign banks regulated by the OCC? If so, should modified requirements
be applied to such branches and agencies?
---------------------------------------------------------------------------
\14\ 61 FR 66561, 66579 (Dec. 18, 1996) (``A federal savings
association may invest in real estate (improved or unimproved) to be
used for office and related facilities of the association, or for
such office and related facilities and for rental or sale, if such
investment is made and maintained under a prudent program of
property acquisition to meet the federal savings association's
present needs or its reasonable future needs for office and related
facilities. A federal savings association may not make an investment
that would cause the outstanding book value of all such investments
(including investments under Sec. 559.4(e)(2) of this chapter) to
exceed its total capital.'').
---------------------------------------------------------------------------
III. The Proposed Rule
The OCC is proposing to revise Sec. 7.1024 to provide general
standards the OCC will use in determining whether the acquisition and
holding of real estate is necessary for the transaction of a national
bank's or Federal savings association's business. Revisions include
implementing an occupancy test and excess capacity standards that would
allow national banks and Federal savings associations to ascertain
better whether an acquisition or holding of real estate is permissible
under 12 U.S.C. 29 or the HOLA. The OCC has determined that national
banks and the public would benefit from clear standards related to the
requirements and expectations for real estate to be considered
necessary for the transaction of a national bank's or Federal savings
association's business as required by 12 U.S.C. 29 or the HOLA. Current
Sec. 7.1024 and various legal interpretations provided examples of
permissible holdings, but the OCC has determined that, for the reasons
articulated above, these examples do not provide general principles
national banks could apply to new acquisitions. Without clear
principles, there is the potential for inconsistent application of 12
U.S.C. 29, the HOLA, and 12 CFR 7.1024. The proposed revisions are
intended to provide for more consistent application of 12 U.S.C. 29,
the HOLA, and 12 CFR 7.1024.
Definitions (Sec. 7.1024(a))
Proposed Sec. 7.1024(a) provides certain definitions used in the
proposed rule. Bank occupied office premises is defined in proposed
Sec. 7.1024(a)(1) as bank occupied premises containing offices where
professional or clerical duties are performed.
Bank occupied premises is defined in proposed Sec. 7.1024(a)(2) as
real estate acquired and held in good faith in which more than 50
percent of each building or severable piece of land is used by bank
persons, including facilities that may be operated by third parties to
provide amenities and services to bank persons or otherwise facilitate
bank business operations. This definition encompasses a variety of
factual situations, including a bank's acquisition of a single premises
building or a bank's development of a premises campus. As reflected in
the above definition, in any factual situation the OCC would apply the
50 percent occupancy standard to each building or severable piece of
land. In order for a building or severable piece of land to be
considered bank occupied premises, more than 50 percent of the space
must be used by, or for, bank persons to facilitate bank business
operations. Space that facilitates bank business operations would
include facilities operated by third parties to provide amenities and
services to bank persons that facilitate bank business operations;
examples of such facilities include an office gym, cafeteria, daycare,
or printing center. In calculating the occupancy percentage, the
national bank or Federal savings association would look at each
building or severable piece of land using the amount of space that is
used by or for bank persons as the numerator and the overall space of
the building or severable piece of land as the denominator. As an
example, a national bank or Federal savings association that acquires
and holds a building in good faith and in which the national bank or
Federal savings association uses 4,000 square feet of the 6,000 square
foot building for a bank branch, bank offices, gym for bank persons'
use, and cafeteria for bank persons' use, the occupancy percentage
would be approximately 67 percent and the national bank or Federal
savings association could rent the remaining 2,000 square feet of the
building, for example as ground floor retail space, in order to avoid
economic loss or waste in the real estate consistent with Sec.
7.1024(c).
Question Two: The OCC requests comment on whether 50 percent is the
appropriate percentage for bank occupied premises. Should the
percentage be higher, such as 75 percent, or lower, such as 25 percent?
The OCC requests comments on all possible percentage limitations and
particularly the range of percentages between 25 and 75. Why should the
[[Page 7982]]
percentage be higher or lower than 50 percent?
Question Three: The OCC requests comment on whether ground floor
retail space rented to a third party should be treated differently
under the occupancy percentage calculation. For example, should ground
floor retail space that is intended primarily for bank persons use be
included in the numerator of the calculation even if third parties
incidentally use the space? Should ``primarily'' be defined as more
than 50 percent of use by bank persons? Or, should ground floor retail
space that is not intended primarily for bank persons be excluded
entirely from the occupancy percentage calculation as an incident of
sound facilities management so that it would be included in neither the
numerator nor the denominator? Or should retail space that is intended,
but not primarily intended, for bank persons be excluded from the
numerator but included in the denominator? Should other adjustments be
made to the calculation? Should unused or less-used spaces (such as
stairwells, lobbies, and maintenance areas) be excluded from the
numerator, denominator, or both?
Question Four: How should land obtained by a national bank or
Federal savings association as lessee be treated? The proposed rule
would treat all land obtained by the bank through lease for use as
premises as subject to the rule and its calculation requirements.
Should certain types of leases (e.g., operating leases or capital
leases) be treated differently or excluded from the calculation?
Bank persons is defined in proposed Sec. 7.1024(a)(3) as a
national bank's or Federal savings association's employees,
contractors, consultants, vendors, and any other individuals who are
engaged in the national bank's or Federal savings association's
business.
Impermissible premises is defined in proposed Sec. 7.1024(a)(4) as
real estate that is not bank occupied premises or that otherwise does
not conform with the requirements of this section. Impermissible
premises is any property not expressly permitted under this section,
including real estate in which the national bank or Federal savings
association uses 50 percent or less of the building or severable piece
of land for bank persons or the facilitation of bank business
operations. Impermissible premises would also include real estate in
which a national bank or Federal savings association occupies 50
percent or more but does not comply with the excess space and capacity
provisions of proposed Sec. 7.1024(c). Real estate held under the
transition provision in proposed Sec. 7.1024(g) would not be
considered impermissible premises.
Shared space is defined in proposed Sec. 7.1024(a)(5) as bank
occupied office premises that a national bank or Federal savings
association shares with a third party to enhance the national bank's or
Federal savings association's business operations. The OCC is proposing
to remove the shared space provisions from 12 CFR 7.3001 and instead
include them in proposed Sec. 7.1024(e) to eliminate confusion
regarding the interaction of the shared space provisions with the
permissibility provisions of 12 CFR 7.1024. These proposed provisions
are substantively unchanged from the current rule.
Investments in Real Estate Necessary for the Transaction of Business
(Sec. 7.1024(b))
Proposed Sec. 7.1024(b) provides that a national bank or Federal
savings association may acquire, hold, or convey real estate for use as
bank occupied premises.\15\ Under the proposed rule, bank occupied
premises would be considered real estate necessary for the transaction
of a national bank's or Federal savings association's business, and
thus a national bank or Federal savings association would be permitted
to acquire, hold, and convey real estate that is included within the
definition of bank occupied premises.
---------------------------------------------------------------------------
\15\ 12 U.S.C. 29 provides that national banks may only
``purchase, hold, and convey real estate'' for four specific
purposes. The OCC interprets the words ``purchase, hold, and
convey'' to encompass all forms of real estate acquisition,
ownership, and transfer. The proposed rule would use the words
``acquire, hold, or convey'' to make clear that all forms of real
estate acquisition and ownership would be covered by the proposed
rule. Depending on the circumstances, the words ``acquire, hold, or
convey'' may include real estate obtained by a national bank or
Federal savings association via lease.
---------------------------------------------------------------------------
Excess Space or Capacity (Sec. 7.1024(c))
Proposed Sec. 7.1024(c) sets forth the principles of the excess
capacity doctrine \16\ recognizing national banks' and Federal savings
associations' need to optimize the value of bank property by
authorizing national banks and Federal savings associations to sell or
lease excess space or capacity in that property.\17\ Although national
banks and Federal savings associations may sell or lease excess
capacity or space in property, the property must have been legitimately
acquired for banking purposes, meaning the national bank or Federal
savings association must acquire or hold such property because of its
suitability for use in banking operations or by bank persons and not as
a means to invest the bank's funds in real property or to speculate in
real estate.\18\
---------------------------------------------------------------------------
\16\ The excess capacity doctrine holds that a bank properly
acquiring an asset to conduct its banking business is permitted,
under its incidental powers, to make full economic use of the
property if using the property solely for banking purposes would
leave the property underutilized. See OCC Conditional Approval No.
361 (Mar. 3, 2000). In 2002, the OCC distilled this doctrine in a
regulation that allowed national banks to sell excess electronic
capacity, including data processing services. 12 CFR 7.5004. This
regulation relied on the previous history of allowing the sale of
excess real property. 67 FR 34992, 34995 (May 17, 2002). The current
proposal for the treatment of excess capacity in the real estate
context is consistent with the distillation set forth in the
electronic capacity rule.
\17\ See 12 U.S.C. 24 (Seventh) and 29; Perth Amboy National
Bank v. Brodsky, 207 F. Supp. 785, 788 (S.D.N.Y. 1962) (``It is
clear beyond cavil that the statute [12 U.S.C. 29] permits a
national bank to lease or construct a building, in good faith, for
banking purposes, even though it intends to occupy only a part
thereof and to rent out a large part of the building to others.'').
\18\ Brown v. Schleier, 118 F. 981, 984 (8th Cir. 1902). (``. .
. provided, always, that it acts in good faith, solely with a view
of obtaining an eligible location, and not with a view of investing
its funds in real property or embarking them in speculations in real
estate.'').
---------------------------------------------------------------------------
Proposed Sec. 7.1024(c)(1) provides that a national bank or
Federal savings association may, in order to optimize the use of bank
occupied premises or avoid economic loss or waste, permit third parties
to use excess space or capacity in real estate legitimately acquired or
developed by the national bank or Federal savings association for its
banking business. The proposal also provides that such excess space or
capacity must have a nexus with the transaction of bank business or
bank operations such that it is acquired or held to provide the
national bank or Federal savings association with a business location
rather than as an investment in real estate. A national bank or Federal
savings association must be able to demonstrate a nexus between its
ownership of the property and the transaction of its business or bank
operations. One way to demonstrate such a nexus would be for the
national bank or Federal savings association to show in its business
plan how the property supports its business. Demonstrating that there
is a nexus between the ownership of property and the transaction of its
business allows the national bank or Federal savings association to
demonstrate that such property was acquired or developed in good faith
and not for a speculative purpose, consistent with statutory
requirements. Although a national bank or Federal savings association
may sell or lease excess space or capacity legitimately acquired or
developed, a national bank or Federal savings association acquiring or
developing
[[Page 7983]]
space in order to serve as a landlord to tenants using space unrelated
to the transaction of its business or bank operations (for example, a
grocery store or a branded hotel) would likely not meet this
requirement as the national bank or Federal savings association would
not merely be avoiding economic waste in acquiring or developing real
estate for such purposes but likely actively investing in real estate
for a speculative non-banking purpose. In the case of leasing space to
tenants such as a grocery store or a branded hotel, the national bank
or Federal savings association would likely derive significant revenue
related to such activity and would need to demonstrate that the real
estate was not acquired primarily for its lease income but rather
because of its suitability for bank purposes or use by bank persons. A
national bank or Federal savings association can only lease legitimate
excess space or capacity, and if real estate is acquired or developed
in a volume or manner that is not consistent with the bank's operations
or business, for example as set forth in its business plan, such real
estate was likely not legitimately acquired or developed, and thus
would be impermissible.
Excess space is space in bank occupied premises that is not being
used by bank persons or for bank operations. Excess capacity in bank
occupied premises can be either temporal or space-based. An example of
temporal excess capacity is a bank auditorium that is used after bank
business hours by members of the local community. An example of space-
based excess capacity is a call center in which the bank needs space
for 100 employees during eight months of the year but only needs space
for 80 employees during the remaining four months of the year. In both
examples, the space can be used by non-bank persons as long as the
space was legitimately acquired or developed by the bank for its
operations or business as required by Sec. 7.1024(c)(1).
Proposed Sec. 7.1024(c)(2) discusses situations in which
legitimate excess space or capacity may be used by third parties.
Section Sec. 7.1024(c)(2)(i) through (iv) have analogous provisions in
the excess capacity provisions for electronic activities located in 12
CFR 7.5004. Section 7.1024(c)(2)(i) provides that excess space or
capacity can be used by third parties to the extent that the real
estate acquired is consistent with the real estate available in the
market. For example, if a national bank or Federal savings association
is located in an area in which strip malls are the predominant type of
commercial real estate, then a national bank or Federal savings
association may be able to acquire a strip mall if the national bank or
Federal savings association would occupy greater than 50 percent of the
space and lease out the remaining space. However, as the national bank
or Federal savings association must have good faith and a non-
speculative purpose in order for real estate to be legitimately
acquired, a national bank or Federal savings association would need to
analyze carefully whether this requirement would be met if many smaller
strip malls than the one it acquired were available or if there were
many free standing buildings more appropriately sized for bank purposes
available in the market.
Section 7.1024(c)(2)(ii) provides that a national bank or Federal
savings association may acquire and retain additional space or
capacity, beyond its present needs, if it is reasonably necessary for
planned future expansion or to meet the bank's future expected banking
needs as long as the bank uses the additional space or capacity in the
real estate acquired for future bank expansion within five years. A
national bank or Federal savings association may acquire real estate
intended to be used for future banking purposes and may permit third
parties to use this excess space or capacity, but the national bank or
Federal savings association must use this real estate for banking
purposes within five years of acquisition. The OCC understands that it
is prudent for a national bank or Federal savings association to plan
for future expansion and use, so a national bank or Federal savings
association may legitimately acquire and develop real estate intended
for future use as long as that real estate is used by the national bank
or Federal savings association within five years of its acquisition or
development. If the property does not become bank occupied premises
within five years, it will become Other Real Estate Owned (OREO) and,
subject to 12 U.S.C. 29 for national banks and 12 CFR 34.82 for
national banks and Federal savings associations, must be disposed of
within five years of becoming OREO, unless the bank requests an
extension of up to an additional five years.
Proposed Sec. 7.1024(c)(2)(iii) provides that a national bank or
Federal savings association may lease excess capacity resulting from a
fluctuation caused by the bank's need to use the full capacity of a
space during peak periods but not in other off-peak periods. This
situation is similar to the example discussed above related to a call
center which the bank uses all 100 available seats during eight months
of the year but only used 80 during the other four months. The bank may
allow third parties to use the excess 20 seats in its call center
provided the capacity was legitimately acquired for bank operations and
does not impede the safe and sound operation of the bank.
Proposed Sec. 7.1024(c)(2)(iv) provides that a national bank or
Federal savings association may lease excess capacity or space that is
no longer needed due to a decline in the level of banking operations.
In this situation, a bank acquired real estate for use in its banking
operations and, based on a decline in bank activity or operation, no
longer needs all of the space. The nexus between national bank or
Federal savings association ownership of a building and its banking
operations becomes clearer the closer the bank's occupancy approaches
one hundred percent. As with excess capacity in data processing, the
OCC presumes a certain percentage of use of the property to be
permissible. The bank may allow third parties to use the space provided
the bank still otherwise occupies more than 50 percent of the real
estate as required by Sec. 7.1024(a)(2).
Question Five: Should the OCC permit a national bank or Federal
savings association to lease out more than 50 percent of its premises
on a temporary basis, provided that the national bank brings its
percentage of occupancy back to at least 50 percent by a certain time
period?
Question Six: Should the OCC impose additional time-based
limitations on a bank's ability to lease out excess space or capacity?
For example, should a bank be permitted to lease out 50 percent of its
space for a limited period (for example, five years) but be subject to
a higher usage requirement (for example, 75 percent) on an ongoing
basis?
Question Seven: Should certain uses be permissible but subject to a
time-based limit?
Proposed Sec. 7.1024(c)(2)(v) provides that a national bank or
Federal savings association may permit third parties to use bank
occupied premises after bank business hours.\19\ For example, a bank
may permit community members to use a bank auditorium or conference
center after bank business hours. After hours
[[Page 7984]]
use by third parties will not affect the bank occupied premises
calculation.
---------------------------------------------------------------------------
\19\ National banks and Federal savings associations are often
key anchors in a local community and can be called on to play an
important role in life-cycle events, for example supplying the use
of a conference room or the institution's board room for a funeral
viewing or community celebration during business hours. Occasional
use of facilities for such purpose is entirely consistent with the
institution's role in the local community and is not inconsistent
with section 29 or 1464 and this proposed rule.
---------------------------------------------------------------------------
The OCC recognizes that often national banks and Federal savings
associations are asked or required by outside parties, such as a local
government, to make commitments to allow third party or public use in
order to acquire or hold real estate. When such commitments are
requested or required, the national bank or Federal savings association
should inform the appropriate OCC supervisory office of such requests
and share such commitments and other relevant information with the
appropriate OCC supervisory office.
Impermissible Premises (Sec. 7.1024(d))
Proposed Sec. 7.1024(d) provides that a national bank or Federal
savings association may not acquire or hold impermissible premises.
Proposed Sec. 7.1024(a)(4) defines impermissible premises as real
estate that is not bank occupied premises or that otherwise does not
conform with the requirements of this section. If the real estate
acquisition or holding would not conform with the requirements of Sec.
7.1024, then it would be impermissible.
Question Eight: Should the OCC include specific examples in Sec.
7.1024(d) of impermissible premises? If so, what examples should be
included? Should large retail operations, such as grocery stores, be
specifically impermissible? Should commercial lodging (rental
apartments, branded hotels) be specifically impermissible?
Question Nine: Courts have explained that, under 12 U.S.C. 29,
national banks investing in property should be doing so ``in good
faith, solely with a view of obtaining an eligible location'' and not
for the purpose of speculating or investing in real estate as a
landlord.\20\ Should the final rule retain the good faith requirement
to ensure that national banks and Federal savings associations are only
permitted to acquire additional real estate with the intention of using
it as premises? Should the final rule make further clarification that
national banks and Federal savings associations would not be permitted
to obtain real estate with the intention of using part of the real
estate for a non-premises purpose on an indefinite basis?
---------------------------------------------------------------------------
\20\ Brown v. Schleier, 118 F. 981, 984 (8th Cir. 1902), aff'd
194 U.S. 18 (1904).
---------------------------------------------------------------------------
Sharing National Bank or Federal Savings Association Space and
Employees in Jointly Held Bank Occupied Premises (Sec. 7.1024(e))
Proposed Sec. 7.1024(e) substantially imports current 12 CFR
7.3001 concerning the sharing of national bank or Federal savings
association space and employees in jointly held bank occupied office
premises covering situations where a bank and another business jointly
hold and share the same space as opposed to a bank leasing a separate
space within a building to a third party. Proposed Sec. 7.1024(e)
provides guidance on how to share offices and employees in a manner
that protects customers and is consistent with safe and sound banking
practices. The proposed rule would not alter or affect existing
precedent applicable to 12 CFR 7.3001. Proposed Sec. 7.1024(e)(4),
like current 12 CFR 7.3001(d), provides that in conducting sharing
arrangements, national banks and Federal savings associations would be
required to ensure that each arrangement complies with all applicable
laws or regulations. Proposed Sec. 7.1024(e)(4), like current 12 CFR
7.3001(d), lists three requirements, which are illustrative and not
exhaustive.
Permissible Means of Holding Real Estate and Fixed Assets (Sec.
7.1024(f))
Proposed Sec. 7.1024(f) provides technical information related to
permissible means of holding real estate and fixed assets. These
provisions are substantially similar to the provisions in current 12
CFR 7.1024(a)(3), (b), and (c).
Transition (Sec. 7.1024(g))
Proposed Sec. 7.1024(g) provides that as of XX, 20XX, a national
bank or Federal savings association that holds an investment in real
estate, fixed assets, banking premises, or other real property that
complies with the legal requirements in effect prior to XX, 20XX, but
would violate any provision of proposed Sec. 7.1024, would be
permitted to continue to hold the investment in accordance with the
prior legal requirements. However, a national bank or Federal savings
association holding such an investment cannot modify, expand, or
improve the investment, except for routine maintenance, without the
prior approval of the appropriate OCC supervisory office. Proposed
Sec. 7.1024(g) grandfathers national banks or Federal savings
associations that currently have permissible real estate investments
that would no longer be permissible under the proposed revisions. The
proposed rule would supersede outstanding OCC precedent (and former OTS
precedent) in this area to the extent it is inconsistent with the
proposed rule. While national banks and Federal savings associations
would be able to continue to rely on this precedent, including
interpretive letters, with respect to current real estate investments,
national banks and Federal savings associations would not be able to
rely on this precedent with respect to future real estate investments.
The proposed rule would not affect outstanding precedent regarding 12
CFR 7.1000 or 12 CFR 7.3001.
Question Ten: The OCC requests comment on the appropriate
parameters of a national bank or Federal savings association's ability
to hold real estate subject to the transition rule in Sec. 7.1024(g).
Specifically, should a renewal, modification, or termination of a lease
constitute a ``modification'' subject to the transition rule? Should
other activities besides ``routine maintenance'' be permitted under the
transition rule?
IV. Administrative Law Matters
Paperwork Reduction Act. In accordance with the requirements of the
Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., the OCC
may not conduct or sponsor, and respondents are not required to respond
to, an information collection unless it displays a currently valid
Office of Management and Budget (OMB) control number. The OCC has
reviewed the notice of proposed rulemaking and determined that it would
not introduce any new or revise any existing collection of information
pursuant to the PRA. Therefore, no submission will be made to OMB for
review.
Regulatory Flexibility Act. The Regulatory Flexibility Act (RFA), 5
U.S.C. 601 et seq., requires an agency, in connection with a proposed
rule, to prepare an Initial Regulatory Flexibility Analysis describing
the impact of the proposed 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 assets of $41.5 million
of 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 745 small entities. The OCC
expects that all of these small entities would be impacted by the
proposed rule. Because the proposed rule applies to all OCC-supervised
depository institutions, the proposed
[[Page 7985]]
rule would affect all small OCC-supervised entities, and thus a
substantial number of them.
Unfunded Mandates Reform Act. Consistent with the Unfunded Mandates
Reform Act of 1995 (UMRA), 2 U.S.C. 1532, the OCC considers whether the
proposed rule includes a Federal mandate that may result in the
expenditure by state, local, and tribal governments, in the aggregate,
or by the private sector, of $100 million adjusted for inflation
(currently $157 million) in any one year. The OCC estimates the
expenditures that may be associated with compliance costs for this
proposed rule, if implemented, would be as much as $412,000. The
estimate for expenditures is for modifying a bank's policies and
procedures on premises. However, it should be noted that the proposed
rule does not require banks to modify their policies and procedures.
Therefore, the OCC concludes that implementation of the proposed rule
would not result in an expenditure of $157 million or more annually by
state, local, and tribal governments, or by the private sector.
Riegle Community Development and Regulatory Improvement Act.
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994 (RCDRIA), 12 U.S.C. 4802(a), in
determining the effective date and administrative compliance
requirements for new regulations that impose additional reporting,
disclosure, or other requirements on insured depository institutions,
the OCC must consider, consistent with principles of safety and
soundness and the public interest, any administrative burdens that such
regulations would place on depository institutions, including small
depository institutions, and customers of depository institutions, as
well as the benefits of such regulations. In addition, section 302(b)
of RCDRIA, 12 U.S.C. 4802(b), requires new regulations and amendments
to regulations that impose additional reporting, disclosures, or other
new requirements on insured depository institutions generally to take
effect on the first day of a calendar quarter that begins on or after
the date on which the regulations are published in final form. Although
the proposed rule does not impose additional reporting, disclosures, or
other new requirements on insured depository institutions, the OCC
invites comments that will inform its consideration of the
administrative burdens and the benefits of its proposal, as well as the
effective date of the final rule.
List of Subjects in 12 CFR Part 7
Computer technology, Credit, Derivatives, Federal savings
associations, Insurance, Investments, Metals, National banks, Reporting
and recordkeeping requirements, Securities, Security bonds.
Authority and Issuance
For the reasons stated in the preamble, the OCC proposes to amend
12 CFR part 7 as follows.
PART 7--ACTIVITIES AND OPERATIONS
0
1. The authority citation for part 7 continues to read as follows:
Authority: 12 U.S.C. 1 et seq., 25b, 29, 71, 71a, 92, 92a, 93,
93a, 95(b)(1), 371, 371d, 481, 484, 1463, 1464, 1465, 1818, 1828(m)
and 5412(b)(2)(B).
0
2. Amend Part 7 by adding Sec. 7.1024 to read as follows:
Sec. 7.1024 National bank or Federal savings association ownership of
property.
(a) Definitions.
(1) Bank occupied office premises means bank occupied premises
containing offices where professional or clerical duties are performed.
(2) Bank occupied premises means real estate acquired and held in
good faith and in which more than 50 percent of each building or
severable piece of land is, or consistent with paragraph (c)(2)(ii) of
this section--, will be used by bank persons for the transaction of a
national bank's or Federal savings association's business, including
facilities that may be operated by third parties to provide amenities
and services to bank persons or otherwise facilitate national bank or
Federal savings association business operations.
(3) Bank persons mean a national bank or Federal savings
association's employees, contractors, consultants, vendors, and any
other individuals who are engaged in the national bank or Federal
savings association's business.
(4) Impermissible premises means real estate that is not bank
occupied premises or that otherwise does not conform with the
requirements of this section.
(5) Shared space means bank occupied office premises that a
national bank or Federal savings association shares with a third party
to enhance the national bank's business operations.
(b) Investment in real estate necessary for the transaction of
business. A national bank or Federal savings association may acquire,
hold, or convey real estate for use as bank occupied premises.
(c) Excess space and capacity.
(1) A national bank or Federal savings association may, in order to
optimize the use of bank occupied premises or avoid economic loss or
waste, permit third parties to use excess space or capacity in real
estate legitimately acquired or developed by the national bank or
Federal savings association for its banking business. Such excess space
or capacity must have a nexus with the transaction of the bank's
business or bank operations for the national bank or Federal savings
association such that it is acquired or held to provide the bank with a
business location rather than as an investment in real estate.
(2) With respect to bank occupied premises, legitimate excess space
or capacity that may be used by third parties can arise in a variety of
situations, including the following:
(i) Due to the characteristics of the real estate available in the
market, the space or capacity to meet a national bank or Federal
savings association's requirements exceeds its present needs;
(ii) The acquisition and retention of additional space or capacity,
beyond present needs, reasonably may be necessary for planned future
expansion or to meet a national bank's or Federal savings association's
expected future banking needs as long as the national bank or Federal
savings association uses the additional capacity in the real estate
acquired for future national bank or Federal savings association
expansion or banking needs within five years;
(iii) Requirements for capacity fluctuate because a national bank
or Federal savings association may need to use the full capacity of a
space during peak periods resulting in periods when its capacity is
underutilized;
(iv) After the initial acquisition of real estate thought to be
fully needed for banking operations, a national bank or Federal savings
association experiences a decline in the level of banking operations or
an increase in efficiency resulting in underutilized space or capacity;
and
(v) A national bank or Federal savings association has capacity to
allow third parties after-hours use of bank occupied premises.
(d) Impermissible premises. A national bank or Federal savings
association may not acquire, hold, or convey impermissible premises,
except as otherwise permitted by 12 U.S.C. 29 or 1464, respectively, or
other applicable law.
(e) Sharing national bank space and employees in jointly held bank
occupied office premises.
(1) Shared space. A national bank or Federal savings association
may share space in bank occupied office premises
[[Page 7986]]
jointly held with one or more other businesses.
(2) Shared employees. When sharing space with other businesses as
described in paragraph (e)(1) of this section, a national bank or
Federal savings association may provide, under one or more written
agreements between the national bank or Federal savings association,
the other business, and their employees, that:
(i) A national bank or Federal savings association employee may act
as agent for the other business; or
(ii) An employee of the other business may act as agent for the
national bank or Federal savings association.
(3) Supervisory conditions. When a national bank or Federal savings
association engages in arrangements of the types listed in paragraphs
(e)(1) and (2) of this section, the national bank or Federal savings
association must ensure:
(i) The other business is conspicuously, accurately, and separately
identified;
(ii) Shared employees clearly and fully disclose the nature of
their agency relationship to customers of the national bank or Federal
savings association and of the other businesses so that customers will
know the identity of the national bank, Federal savings association, or
other business that is providing the product or service;
(iii) The arrangement does not constitute a joint venture or
partnership with the other business under applicable state law;
(iv) All aspects of the relationship between the national bank or
Federal savings association and the other business are conducted at
arm's length, unless a special arrangement is warranted because the
other business is a subsidiary of the national bank or Federal savings
association;
(v) Security issues arising from the activities of the other
business on the premises are addressed;
(vi) The activities of the other business do not adversely affect
the safety and soundness of the national bank or Federal savings
association;
(vii) The shared employees or the entity for which they perform
services are duly licensed or meet qualification requirements of
applicable statutes and regulations pertaining to agents or employees
of such other business; and
(viii) The assets and records of the parties are segregated.
(4) Other legal requirements. When entering into arrangements of
the types described in paragraphs (e)(1) and (2) of this section, and
in conducting operations pursuant to those arrangements, a national
bank or Federal savings association must ensure that each arrangement
complies with all applicable laws and regulations. If the arrangement
involves an affiliate or a shareholder, director, officer, or employee
of the national bank or Federal savings association:
(i) The national bank or Federal savings association must ensure
compliance with all applicable statutory and regulatory provisions
governing national bank or Federal savings association transactions
with these persons or entities;
(ii) The parties must comply with all applicable fiduciary duties;
and
(iii) The parties, if they are in competition with each other, must
consider limitations, if any, imposed by applicable antitrust laws.
(f) Permissible means of holding real estate and fixed assets.
(1) Permissible means of holding. A national bank or Federal
savings association may acquire and hold real estate under paragraph
(b) of this section by any reasonable and prudent means, including
ownership in fee, a leasehold estate, or in an interest in a
cooperative. A national bank or Federal savings association may hold
this real estate directly or through one or more subsidiaries. A
national bank or Federal savings association may organize a bank
occupied premises subsidiary as a corporation, partnership, limited
liability company, or any other similar entity.
(2) Fixed assets. A national bank or Federal savings association
may own fixed assets necessary for the transaction of its business,
such as fixtures, furniture, and data processing equipment.
(3) Investment in banking premises.
(i) Premises investment and approval. A national bank or Federal
savings association must comply with the investment and approval
requirements for investment in banking premises in 12 CFR 5.37(d).
(ii) Option to purchase. An unexercised option to purchase banking
premises or stock in a corporation holding banking premises is not an
investment in banking premises. However, a national bank or Federal
savings association seeking to exercise such an option must comply with
the requirements in 12 CFR 5.37(d).
(g) Transition. If, on XX, 20XX, a national bank or Federal savings
association holds an investment in real estate, fixed assets, banking
premises, or other real property that complies with the legal
requirements in effect prior to XX, 20XX, but would violate any
provision of this section, the national bank or Federal savings
association may continue to hold such investment in accordance with the
prior legal requirements. However, a national bank or Federal savings
association that holds such an investment may not modify, expand, or
improve this investment, except for routine maintenance, without the
prior approval of the appropriate OCC supervisory office.
Sec. 7.3001 [Removed]
0
3. Remove Sec. 7.3001.
Brian P. Brooks,
Acting Comptroller of the Currency.
Editorial Note: This document was received at the Office of the
Federal Register on December 31, 2020.
[FR Doc. 2020-29277 Filed 2-2-21; 8:45 am]
BILLING CODE 4810-33-P
