Current through September 9, 2024
(a) At the time of
conversion, the converting institution shall establish a liquidation account.
The initial balance of the liquidation account shall be the net worth of the
converting institution in the statement of financial condition included in the
final offering circular. The liquidation account shall be maintained for a
period of ten years subsequent to the conversion. The liquidation account shall
not affect the converted institution's net worth. The converting institution
shall maintain a sub-account to reflect the interest of each eligible account
holder or supplemental eligible account holder. Eligible account holders or
supplemental eligible account holders do not retain any voting rights based on
their liquidation sub-accounts.
(b)
If there is a complete liquidation of a converted bank not later than ten years
subsequent to the conversion, the converted institution shall give a
liquidation distribution to those eligible account holders and supplemental
eligible account holders who hold qualifying deposit accounts from the time of
conversion until liquidation. A merger, consolidation or similar combination or
transaction with another depository institution is not a liquidation. If the
converting institution is involved in such a transaction, the surviving
institution shall assume the liquidation account.
(c) The converting institution shall not
record the liquidation account in its financial statements and shall disclose
the liquidation account in the footnotes to the financial statements.
(d)
(1) The
converting institution shall determine the initial sub-account balance for a
qualifying deposit account held by an eligible account holder by multiplying
the initial balance of the liquidation account by the following fraction: The
numerator is the qualifying deposit in the qualifying deposit account expressed
in dollars on the eligibility record date. The denominator is total qualifying
deposits of all eligible account holders on that date.
(2) The converting institution shall
determine the initial sub-account balance for a qualifying deposit account held
by a supplemental eligible account holder by multiplying the initial balance of
the liquidation account by the following fraction: The numerator is the
qualifying deposit in the qualifying deposit account expressed in dollars on
the supplemental eligibility record date. The denominator is the total
qualifying deposits of all supplemental eligible account holders on that
date.
(3) If an account holder
holds a qualifying deposit account on the eligibility record date and a
separate qualifying deposit account on the supplemental eligibility record
date, the converting institution shall compute separate sub-accounts for the
qualifying deposits in the qualifying deposit account on each record
date.
(e) The converting
institution shall not increase the initial sub-account balances and shall
decrease the initial balance as depositors reduce or close their accounts as
follows:
(1) The converting institution shall
reduce the balance of an eligible account holder's or supplemental eligible
account holder's sub-account if the deposit balance in the account holder's
qualifying deposit account at the close of business on any annual closing date,
which for purposes of this section is the converting institution's fiscal year
end, after the relevant eligibility record date is less than (A) the deposit
balance in the account holder's qualifying deposit account at the close of
business on any other annual closing date after the relevant eligibility record
date; or (B) the qualifying deposits in the account holder's qualifying deposit
account on the relevant eligibility record date.
(2) The reduction shall be proportionate to
the reduction in the deposit balance.
(3) If the converting institution reduces the
balance of a liquidation sub-account, it shall not subsequently increase it if
the deposit balance increases.
(4)
The converting institution is not required to adjust the liquidation account
and sub-account balances at each annual closing date if it maintains sufficient
records to make the computations if a liquidation subsequently
occurs.
(5) During the period that
the converting institution is required to maintain a liquidation account, it
shall maintain the liquidation sub-account for each account holder as long as
the account holder maintains a qualifying deposit account with the same social
security number.
(6) If there is a
complete liquidation not later than ten years subsequent to the conversion, the
converting institution shall provide each account holder with a liquidation
distribution in the amount of the sub-account balance.
