[Federal Register: August 20, 1998 (Volume 63, Number 161)]
[Rules and Regulations]
[Page 44685-44751]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20au98-17]
[[Page 44685]]
_______________________________________________________________________
Part II
Federal Deposit Insurance Corporation
_______________________________________________________________________
12 CFR Part 303 et al.
Filing Procedures and Delegations of Authority; Unsafe and Unsound
Banking Practices; Registration of Transfer Agents; International
Banking; Management Official Interlocks; and Golden Parachutes and
Indemnification Payments; Final Rule
Applications for Deposit Insurance; Notice
Bank Merger Transactions; Notice
Liability of Commonly Controlled Depository Institutions; Notice
Applications to Establish a Domestic Branch (Includes Remote Service
Facilities); Rescission of Statement of Policy; Notice
Applications to Relocate Main Office or Branch (Includes Remote Service
Facilities); Rescission of Statement of Policy; Notice
[[Page 44686]]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Parts 303, 333, 337, 341, 347, and 359
RIN 3064-AC02
Filing Procedures and Delegations of Authority; Unsafe and
Unsound Banking Practices; Registration of Transfer Agents;
International Banking; Management Official Interlocks; and Golden
Parachutes and Indemnification Payments
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Final rule.
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SUMMARY: The FDIC is amending its regulations governing application,
notice and request procedures and delegations of authority by
streamlining, modernizing, and clarifying current policies and
practices. The final rule provides qualifying well-capitalized and
well-managed insured depository institutions and their holding
companies expedited processing procedures for several major types of
filings, including deposit insurance, branch, and merger applications.
The final rule also centralizes substantially all filing procedures
found throughout the FDIC's regulations within this rule for ease of
reference. It reorganizes the requirements of each major filing type
into a separate regulatory subpart that will contain all information
necessary to submit a filing to the agency, as well as any relevant
internal agency delegations of authority. In addition the rule
incorporates statutory changes to its application procedures made by
the Economic Growth and Regulatory Paperwork Reduction Act of 1996
(EGRPRA). Finally, technical changes are being made to related
regulations to conform to these changes.
This action is being taken in accordance with section 303(a) of the
Riegle Community Development and Regulatory Improvement Act of 1994
(CDRIA) which requires the federal banking agencies to review and
streamline their regulations and policies in order to improve
efficiency, reduce unnecessary regulatory burden, eliminate unwarranted
constraints on credit availability, and remove inconsistencies and
outmoded and duplicative requirements.
The final rule seeks to reduce burden on insured depository
institutions by imposing regulatory requirements only where needed to
address safety and soundness concerns or accomplish other statutory
responsibilities of the FDIC. The final rule also strives to more
closely align the FDIC's application processing regulations with those
of the other banking agencies.
DATES: These revisions are effective October 1, 1998. It is not
considered practicable to permit early compliance with these revisions.
FOR FURTHER INFORMATION CONTACT: Division of Supervision: Christie A.
Sciacca, Associate Director, (202) 898-3671; Mark S. Schmidt, Associate
Director, (202) 898-6918; Jesse G. Snyder, Assistant Director, (202)
898-6915; John M. Lane, Assistant Director, (202) 898-6771; Division of
Compliance and Consumer Affairs: Steven D. Fritts, Associate Director,
(202) 942-3454, and Louise N. Kotoshirodo, Review Examiner (202) 942-
3599. Legal Division: Susan van den Toorn, Counsel, Regulation and
Legislation Section (202) 898-8707, and Nancy Schucker Recchia,
Counsel, Regulation and Legislation Section (202) 898-8885. For
administrative enforcement issues: Grovetta N. Gardineer, Counsel,
Compliance and Enforcement Section (202) 898-3728, and Philip P. Houle,
Counsel, Compliance and Enforcement Section (202) 898-3722. For
international banking: Christopher Spoth, Assistant Director, Division
of Supervision, (202) 898-6611, and Jamey G. Basham, Counsel,
Regulation and Legislation Section, Legal Division (202) 898-7265,
Federal Deposit Insurance Corporation, 550 17th Street, NW, Washington,
DC 20429.
SUPPLEMENTARY INFORMATION:
I. Background
Part 303 of the FDIC's regulations (12 CFR part 303) generally
describes the procedures to be followed by both the FDIC and applicants
with respect to applications, notices, or requests (collectively
``filings'') required to be filed by statute or regulation. Additional
information concerning processing is contained in related FDIC
statements of policy. Part 303 also sets forth delegations of authority
from the FDIC's Board of Directors to the Directors of the Division of
Supervision (DOS), the Division of Compliance and Consumer Affairs
(DCA), the General Counsel, the Executive Secretary, and, in some
cases, their designees to act on certain filings and enforcement
matters.
The final rule makes comprehensive changes to part 303 as part of
the FDIC's systematic review of its regulations and policy statements
undertaken in accordance with section 303(a) of the CDRIA (12 U.S.C.
4803(a)). Section 303(a) of CDRIA requires the FDIC, the Office of the
Comptroller of the Currency, the Board of Governors of the Federal
Reserve System, and the Office of Thrift Supervision (federal banking
agencies) to streamline and modify their regulations and written
policies in order to improve efficiency, reduce unnecessary costs, and
eliminate unwarranted constraints of credit availability. The statute
also requires each of the federal banking agencies to remove
inconsistencies and outmoded and duplicative requirements from their
regulations and written policies and to work together to make uniform
regulations that implement common statutory or supervisory policies.
II. Discussion
The final rule accomplishes the goals of section 303(a) of the
CDRIA in several important ways.
New expedited processing procedures have been introduced
for certain well-capitalized and well-managed banks. Expedited
procedures will reduce processing time for applications submitted by
qualifying institutions and will add more certainty to the timing of
regulatory action. They will also allow the FDIC to focus its resources
on applications that do not fall within the new expedited review
procedure and therefore are more likely to present safety and soundness
risks or raise CRA or compliance concerns.
Some applications are processed as notices. For example,
applications to establish a branch or relocate a main office or a
branch processed under expedited procedures generally will be deemed
approved 21 days after receipt of a substantially complete application.
Regulations and guidelines issued by the federal banking
agencies implementing common statutes have been made more uniform. This
is particularly true of filings regarding merger transactions, changes
in bank control, and change in directors or senior executive officers.
Filing contents have been clarified and streamlined
wherever practical.
The procedural requirements for virtually all applications
and notices have been centralized in part 303.
Delegations of authority from the FDIC's Board of
Directors to the Directors of DOS and DCA, the General Counsel, and the
Executive Secretary to act on certain filings and enforcement matters
have been updated.
Duplicative and outdated material has been removed from
existing part 303. An example is the elimination of the requirement for
an application to establish or relocate a remote service facility
because a remote service facility is not a branch pursuant to section
2204 of the Economic Growth and Regulatory
[[Page 44687]]
Paperwork Reduction Act of 1996 (12 U.S.C. 36).
Concurrently with the adoption of this final rule, the FDIC is also
publishing elsewhere in today's Federal Register three revised
statements of policy relating to filing procedures. These statements of
policy pertain to Applications for Deposit Insurance, Bank Merger
Transactions, and Liability of Commonly Controlled Institutions.
Additionally, notices of rescission of the statements of policy on
Applications to Establish a Domestic Branch (includes Remote Service
Facilities) and Applications to Relocate Main Office or Branch
(includes Remote Service Facilities) are published elsewhere in today's
Federal Register.
III. General Discussion of Comments
The FDIC published in the Federal Register a notice soliciting
comment on proposed part 303, 62 FR 52810, October 9, 1997. In response
to that request, the FDIC received fifteen comment letters. Eight
comment letters were received from community groups, five from bank
trade associations, one from a law firm, and one from a bank holding
company. Fourteen comment letters were received regarding five notices
to amend, revise or rescind related statements of policy. These notices
were published elsewhere in the Federal Register of October 9, 1997. In
addition, one of the comment letters on part 303 contained comments on
four of the related statements of policy. Final action on the five
related statements of policy is published elsewhere in today's Federal
Register.
The FDIC carefully considered each of the comment letters and made
a number of changes to the final regulation in response to such
comments and suggestions. Virtually all the comments received on the
proposed regulation directly or indirectly addressed the concept of
expedited processing for well-managed and well-capitalized depository
institutions. While numerous commenters expressed strong support for
expedited processing, others expressed a concern that expediting the
application process would have an adverse effect on the enforcement of
the Community Reinvestment Act of 1977 (12 U.S.C. 1811 et seq.) (CRA).
The agency wishes to stress that it is neither the intent nor
effect of expedited processing to weaken review of an applicant's
performance under the CRA. In response to concerns expressed, the FDIC
has increased the period of time during which the public may comment on
an application for federal deposit insurance from 15 days to 30 days.
In addition, the FDIC is committed to placing a listing of all
applications for deposit facilities subject to public comment on the
agency's home page on the World Wide Web. The issues raised regarding
expedited processing are addressed in more detail in the discussion of
comments related to subpart A.
Several commenters suggested that timelines be established for
filings not eligible for expedited processing. On May 6, 1996, the FDIC
issued a Financial Institutions Letter (FIL-26-96) to all FDIC-insured
institutions listing target time frames for each type of filing. The
FDIC intends to monitor processing of applications that do not qualify
for expedited processing in accordance with these internal guidelines.
These guidelines, however, generally do not apply to filings that raise
novel legal or policy issues, are the subject of a CRA protest, or
involve a historic site. It is the intent of the FDIC to act on all
filings as promptly as resources and prudence permit.
The following subpart by subpart discussion identifies and
discusses comments and changes to the proposal that are being adopted.
A table summarizing the sections of chapter 12 that are changed by the
final rule is included at the end of this preamble.
IV. Final Rule
A. Subpart A--Rules of General Applicability
Subpart A of the proposal clarified and simplified the rules
generally applicable to the processing of filings required by
regulation or statute by reorganizing the general rules of procedure
into one subpart. Proposed subpart A explained the availability of
expedited processing by defining which depository institutions would be
eligible for such processing, setting forth the process itself, and the
criteria under which the FDIC might remove a filing from expedited
processing. Proposed subpart A also contained public notice
requirements, provisions for public access to filings, hearing
procedures, and appeals and nullification procedures. Additionally,
subpart A set forth general principles governing delegations of
authority from the Board of Directors to certain FDIC officials and
defined certain terms used throughout the proposed rule.
Definitions. Proposed Sec. 303.2 alphabetized the current
definitions and added several new definitions utilized elsewhere in the
proposal. With the exception of the comments discussed below regarding
the definition of ``eligible depository institution,'' no comments were
received on any of the definitions in proposed Sec. 303.2.
The proposal defined ``eligible depository institution'' to
establish criteria that institutions must meet to qualify for expedited
processing, as set forth in Sec. 303.11. Proposed Sec. 303.2(r) defined
the term ``eligible depository institution'' as a depository
institution that meets the following five criteria: (1) received an
FDIC-assigned composite rating of 1 or 2 under the Uniform Financial
Institutions Rating System (UFIRS) as a result of its most recent
federal or state examination;1 (2) received a satisfactory
or better CRA rating from its primary federal regulator at its most
recent examination; (3) received a compliance rating of 1 or 2 from its
primary federal regulator at its most recent examination; (4) is well-
capitalized as defined in the appropriate capital regulation and
guidance of the institution's primary federal regulator; and (5) is not
subject to a cease and desist order, consent order, prompt corrective
action directive, written agreement, memorandum of understanding, or
other administrative agreement with its primary federal regulator or
chartering authority. In the proposal the FDIC specifically sought
comment on whether the above eligibility standards are appropriate.
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\1\ An FDIC-assigned composite UFIRS rating may be based on the
FDIC's own examination or based on the review of examination reports
prepared by state banking authorities or the other federal banking
agencies.
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The FDIC received numerous comment letters on the definition of
``eligible depository institution.'' The commenters were divided in
their views as to the appropriateness of the eligibility criteria.
Commenters who supported the proposed definition and the concept of
expedited processing confirmed the FDIC's belief that the criteria for
eligibility are appropriate to ensure that only well-capitalized and
well-managed institutions that do not present any supervisory,
compliance or CRA concerns receive expedited processing.
A number of commenters expressed concern that by using CRA ratings
as one of the criteria for an eligible depository institution, the FDIC
was establishing a ``safe harbor'' against public challenge to an
applicant's CRA performance. The commenters were further concerned that
the FDIC's expedited processing of applications meeting the
definitional criteria would have an adverse impact on the CRA and its
enforcement. Two commenters opposing the use of CRA ratings as
eligibility criteria for expedited processing cited concerns that CRA
[[Page 44688]]
ratings are not a suitable criteria because the CRA evaluation
procedures are still being developed and are not yet uniformly
rigorous.
It is neither the purpose nor the effect of the eligible depository
institution concept to adversely affect enforcement of the CRA. In
fact, Sec. 303.11(c)(2) explicitly enables the FDIC to remove a filing
from expedited processing if, among other things, the FDIC receives a
CRA protest that warrants additional investigation or review, or the
appropriate regional director (DCA) determines that the filing presents
a significant CRA or compliance concern. Thus, as discussed in greater
detail below, Sec. 303.11(c)(2) provides that the FDIC will fully and
carefully consider all CRA protests and CRA or compliance concerns that
are determined to be significant.
The FDIC has taken a number of steps to promote consistent
application of the CRA, both internally and on an interagency basis.
Full implementation of the new CRA regulation was delayed for two years
in order to collect uniform lending data upon which to base the FDIC's
examination of large banks and thrifts. To familiarize examiners with
the new standards and to promote their consistent application, the
federal banking agencies conduct regular joint examiner training
sessions. In addition, the agencies have jointly developed written
guidance for examiners, financial institutions and the public. Further,
the agencies are currently initiating an interagency review of a sample
of each agency's CRA performance evaluations for large institutions and
the agencies will also examine a limited number of large institutions
using interagency teams of examiners.
Two other commenters expressed concern that the CRA rating is an
inappropriate criterion for determining the eligibility of a depository
institution for expedited processing for any filing that is not an
application for a deposit facility as defined by the CRA. The FDIC
reserves expedited processing for well-capitalized and well-managed
banks. An institution's performance under the CRA reflects on the
quality of its management. While an institution must have a
satisfactory or better CRA rating to be eligible for expedited
processing, regardless of the type of application being made, the FDIC
will not consider CRA performance in deciding upon the merits of an
application if such application is not for a deposit facility. Proposed
Sec. 303.5 sets forth those filings for which an institution's CRA
record will be taken into account in deciding upon the merits of the
application (deposit insurance, merger transactions, and establishment
or relocation of a branch or main office, including the relocation of
an insured branch of a foreign bank).
The FDIC recently published a final rule which revises and
consolidates its international banking regulations (12 CFR part 347)
and a proposed rule for comment that would revise its regulations
governing the activities and investments of insured state banks and
savings associations (12 CFR part 362). 63 FR 17056, April 8, 1998; 62
FR 47969, September 12, 1997. These rulemakings contain expedited
procedures and definitions of an ``eligible'' type of institution which
generally parallel proposed Sec. 303.2(r). One comment received on
proposed part 347 noted that although a bank must have a satisfactory
or better CRA rating in order to meet that part's definition of
eligibility, ``special purpose'' banks which are exempt from CRA are
not assigned CRA ratings. Under the FDIC's CRA regulations at 12 CFR
part 345, special purpose banks are not subject to examination under
the FDIC's CRA regulations (12 CFR 345.11(c)(3)). The FDIC does not
intend to apply the CRA element of the definition of an eligible
depository institution to a special purpose bank which is not subject
to examination under the FDIC's CRA regulations. Language to this
effect has been added to the definition of ``eligible depository
institution'' in Sec. 303.2 of the final rule.
In the final rule the FDIC includes the term ``organizer'' in the
proposed definition of ``insider,'' in Sec. 303.2(u) to make clear that
the FDIC considers organizers to be insiders, similar to incorporators.
This change is consistent with other provisions of part 303.
The FDIC adopts proposed Sec. 303.2 with the revisions to
Sec. 303.2 (r) and (u) indicated above.
General filing procedures. Proposed Sec. 303.3 set forth general
procedures for submitting filings under part 303, including where forms
may be obtained and to whom they should be sent. Procedures are also
designated for filing when no form is prescribed. Specific filing
requirements are set forth in the appropriate subparts of the rule.
No comments were received on this section. The FDIC adopts this
section as proposed with a minor stylistic change to make the meaning
of the section more clear.
Computation of time. Proposed Sec. 303.4 clarified that the FDIC
uses a calendar day rule and begins computing the relevant period on
the day after an event occurs (for example, the day after receipt of a
filing or newspaper publication).
No comments were received on this section. The FDIC adopts this
section as proposed.
Effect of CRA performance on filings. Proposed Sec. 303.5 stated
that CRA performance will be considered in connection with applications
to establish a domestic branch or relocate a domestic branch or main
office, merger applications, and deposit insurance applications, and
clarified that CRA applies to applications to relocate an insured
branch of a foreign bank. Although this information is currently
contained in 12 CFR Part 345 (Community Reinvestment Act), the FDIC
believes that an explicit statement concerning the filings covered by
CRA better serves the public and the banking industry than providing a
cross-reference.
The only specific comment received on proposed Sec. 303.5 found
that the information contained in proposal was useful information worth
highlighting in subpart A. The FDIC adopts this section as proposed.
Investigations and examinations. Proposed Sec. 303.6 made clear
that certain FDIC officials have general delegated authority to examine
or investigate and evaluate facts related to any filing under chapter
12. This provides needed flexibility to evaluate factual and legal
issues that arise during the course of a filing.
No comments were received on this section. The FDIC adopts this
section as proposed.
Public notice requirements. Proposed Sec. 303.7 set forth the
general requirements for providing notice of a filing to the public.
The proposal required an applicant to provide prior notice of, and the
opportunity to comment on, a filing to establish a domestic branch,
relocate a domestic branch or the main office, relocate an insured
branch of a foreign bank, engage in a merger transaction or other
business combination, initiate a change of control transaction, or
request deposit insurance. Where applicable, specific publication
requirements appear in the appropriate paragraphs of part 303.
No comments were received on proposed paragraphs (a), (b), (d) or
(e). The FDIC adopts these paragraphs as proposed with minor stylistic
changes to make the meaning of the paragraphs clearer. In particular,
Sec. 303.7(b) has been refined in the final rule to make clear that
where the notice of filing has been published prior to submission of
the filing to the FDIC, the applicant should include confirmation of
such publication with the filing. This will
[[Page 44689]]
further ensure that possible delays due to defective notices are
avoided.
Proposed Sec. 303.7(c) provided applicants with the choice of
giving public notice by using a sample notice or drafting a notice that
incorporates certain specified information and is tailored to the needs
of the institution. This choice was designed to reduce burden on the
banking industry by providing more flexibility in the required form of
notice while, at the same time, requiring all applicants to provide the
public with the same basic information.
Two comments were received on this paragraph, both of which were
generally favorable. Both commenters supported the flexibility that the
FDIC proposed to offer to banks to meet their notification
requirements. One of the commenters urged the FDIC to monitor the
notices being used to ensure that all parties operate on the same basis
and so there is no confusion about the content of the notice. The FDIC
seeks to ensure that applicants comply consistently with public notice
requirements by requiring each applicant to submit a copy of the public
notice for content verification.
The FDIC has made minor modifications to Sec. 303.7(c). The
language of the final rule clarifies that applications to relocate a
main office are included within the notice requirement. The language
has been further modified to make clear that the public notice must
state that photocopies of nonconfidential portions of an application
will be provided by the appropriate regional office upon request. This
requirement is included in current Sec. 303.6(f)(4).
The FDIC adopts proposed Sec. 303.7(c) with the revisions discussed
above.
The final rule includes a provision at Sec. 303.7(f) that was not
included in the proposal. Section 303.7(f) provides that where public
notice is required, the FDIC may determine on a case by case basis that
unusual circumstances surrounding a particular filing warrant
modification of publication requirements. This new provision was added
in response to a comment on subpart D, pertaining to merger
transactions. The comment suggested that the FDIC require notices
regarding merger transactions to be published in languages other than
English in communities with significant non-English speaking
populations.
The FDIC appreciates the concern reflected in this comment. Rather
than limit applicability to situations involving merger applications
and non-English publication, however, the FDIC has instead added a more
broadly-focused provision. Under the new Sec. 307.7(f) the FDIC may
determine on a case-by-case basis that unusual circumstances
surrounding a particular filing warrant modification of the publication
requirements. It is intended that this provision will be applied
sparingly and with the purpose of making publication more meaningful,
not as a means of altering the publication requirements to suit the
convenience of the parties or as a means of curing defective
publications.
Public Access to Filings. Proposed Sec. 303.8 set forth the
procedures by which the FDIC makes the non-confidential portions of
filings that are subject to a public notice requirement available to
the public. Under the proposed rule, the FDIC makes such portions
available for inspection upon request, not more than one business day
after the regional office receives such request.
A number of the commenters made specific suggestions as to how the
FDIC might make applications and filings more accessible to the public.
These suggestions included making a list of pending applications
available on the FDIC's World Wide Web page; providing copies of
filings within three days of receiving a request for filings; and
mailing notices of all pending applications to all individuals and
groups who request to be included on a mailing list.
The FDIC has adopted various of the commenters' suggestions for
expediting the public's receipt of information related to the filing of
applications. The FDIC currently has a World Wide Web site with
significant information of interest to the public. The FDIC will
include at its World Wide Web site a page that will provide the public
with prompt notice of all applications filed for deposit facilities
that are subject to public comment. This page will be available when
the final rule becomes effective and may be found at www.fdic.gov. In
addition, the FDIC is committed to mailing the public portions of an
application file to a requester within three business days of the
appropriate regional office's receipt of the request to view the file.
In some instances this may result in a filing becoming public prior to
the publication of notice required by Sec. 303.7.
The FDIC also will continue existing practices designed to provide
information to the public on applications that are subject to the CRA.
The FDIC will continue to provide updated lists of pending applications
on a regular basis to all individuals or groups who have submitted a
request to the appropriate regional director (DOS) to be included on
this mailing list. In addition, it will continue to be the policy of
the FDIC to provide the non-confidential portions of application files
for public inspection at the appropriate regional office. The final
rule adds language to clarify this latter policy. The FDIC believes
that these practices will facilitate the public's ability to provide
meaningful comments.
In addition, the final rule adds a reference to part 309 of the
FDIC rules and regulations. This regulation sets forth the FDIC's
procedures for processing requests for information pursuant to the
Freedom of Information Act (FOIA) (5 U.S.C. 552). Part 309 of the FDIC
rules and regulations was recently revised to reflect changes to the
FOIA as a result of the Electronic Freedom of Information Act
Amendments of 1996 (63 FR 29, January 2, 1998).
The FDIC believes that these changes to its procedures and
continued commitment to existing practices will greatly facilitate the
public's access to filings made to the FDIC and the public's ability to
consider and comment upon such filings.
Public comments. Currently, interested parties may comment on a
pending filing until the date of final disposition. Proposed
Sec. 303.9(a) provided that comments would be accepted only during a
defined comment period in order to add certainty to the filing process
for both the public and the applicant. The FDIC believes that closing
the comment period on a date certain eliminates the risk of final
action being delayed due to a late comment or of final action being
taken while a comment is being transmitted to the FDIC.
Currently, the only basis for extension of the comment period is
for ``good cause.'' In order to provide the public with adequate time
to submit meaningful comments, proposed Sec. 303.9(b)(2) granted the
appropriate regional director (DOS) three bases upon which to extend or
reopen the public comment period: (1) if the applicant failed to file
all required information on a timely basis to permit review by the
public or made a request for confidential treatment not granted by the
FDIC that delayed the public availability of that information; (2) if
any person requesting an extension of time satisfactorily demonstrated
to the FDIC that additional time was necessary to develop factual
information that might materially affect the application; or (3) for
good cause.
Further, proposed Sec. 303.9(b)(4) clarified that the FDIC will
provide copies of all comments to the applicant
[[Page 44690]]
and that the applicant will be given an opportunity to respond.
Several of the commenters fully supported the proposed defined
comment period because it will reduce the current level of uncertainty
that applicants face in making applications to the FDIC. Two of these
commenters suggested that the defined comment period in the proposal
would create a desirable shift of focus from enforcing CRA through the
applications process to enforcing CRA through the examination process.
One of these commenters believed that the ``good cause'' basis for an
extension of the comment period is unnecessary because the other
conditions for an extension are sufficiently comprehensive. Another
commenter recommended that the FDIC take all possible regulatory action
necessary to ensure that public notice is made so as to ensure that
public commenters cannot seek delay based upon allegations of
inadequate notice.
Other commenters were strongly opposed to the proposed defined
periods of time for comment. These commenters stated that the current
flexibility in comment periods has been important in allowing the
public to comment on applications covered by CRA. These commenters were
concerned that the streamlined process will not provide enough time and
opportunity to discover the filing of an application, conduct the
necessary analysis and research and to write and submit any comments to
the FDIC. They also question whether the FDIC's current decision making
process has been delayed because of open public comment periods. Some
of these commenters focused on the role that the applications process
plays in enforcing CRA and were concerned that the proposal would
weaken an enforcement tool that has been important to community groups.
The commenters were also divided on their beliefs as to whether the
actual periods of time permitted for public comment in the specific
subparts were adequate. The commenters who supported the proposed
revision generally believed that the comment periods provided for in
the various subparts were sufficient. The commenters who opposed
proposed Sec. 303.9 generally believed that the specific time periods
were too short.
The FDIC believes that proposed Sec. 303.9 strikes an appropriate
balance between providing more certainty and expediency in the
applications process and giving the public an opportunity to comment on
an institution's CRA performance. The public comment period prompted by
an application is not intended to be the exclusive opportunity for the
public to inform the FDIC of concerns. Comments may be submitted to the
FDIC at any time if an individual or a group has a concern about an
institution's CRA program. It is not necessary to wait for an
application to be filed. All CRA comments will be considered by DCA. By
closing the comment period, the FDIC will eliminate delaying final
action because of late comments. In addition, the DOS regional director
or deputy director may extend or reopen the comment period as discussed
above. The FDIC believes that this flexibility will enable it to
consider all relevant information as part of the decision making
process and to complete that process in a timely manner.
As discussed previously, the FDIC has adopted certain suggestions
of commenters to make filings and applications more accessible to the
public in a more expeditious manner. Listing applications on the FDIC's
World Wide Web site, providing access to public files within one day of
receipt of a request, and mailing copies of public files within three
days of receiving a request are all designed to make it easier for the
public to provide timely comments. The FDIC believes these measures
will help offset any adverse effect of defined comment periods.
The FDIC adopts this section as proposed with a minor stylistic
change to make the intent clear.
Hearings and other meetings. Proposed Sec. 303.10 simplified the
current rules concerning hearing procedures contained in Sec. 303.6
(h), (i), and (j) and updated those provisions to reflect current FDIC
practices. Proposed Sec. 303.10 (c) and (d) provided that the
appropriate regional director (DOS) may grant or deny a request for a
hearing and that the regional director's denial of such a request is a
final agency determination that is not appealable to the FDIC Board of
Directors.
One commenter endorsed the proposal to allow community groups to
request public hearings on pending applications because they afford
opportunities for public housing residents, persons with limited
literacy skills, and other citizens unlikely to submit written comments
to offer their views. This and another commenter suggested that FDIC
adopt a mandatory hearing procedure like that of the Office of Thrift
Supervision (OTS).
A third commenter appreciated the publication of procedures in
proposed Sec. 303.10 as a source of clarity for community groups and
other commenters. This commenter recognized that informal meeting
procedures might prove helpful in providing additional avenues for
commenters to pursue and hoped that the informal meetings would not
preclude the use of hearings. This commenter sought assurance that
hearings will serve the purpose of providing additional opportunity for
commenters to develop the record and insure that such venue is readily
accessible. This commenter opposed the preclusion of appeals of
decisions denying hearing requests, believing that the Board of
Directors is better suited to weigh competing issues, consider overall
public interest, and ensure that the standards for judging hearing
requests are consistently and fairly applied.
The FDIC believes that proposed Sec. 303.10 represents an equitable
and balanced approach because it continues to provide a basis for an
individual to request a hearing, but provides more clarity with respect
to the circumstances under which the FDIC will grant such a request.
Delegation of authority to the regional director (DOS) places the
authority to make decisions closer to the specific situation. The
regional director is the most senior-level regional official and will
have direct knowledge of the record of the institution or institutions
and communities involved. The FDIC believes the regional director (DOS)
is thus well suited to decide whether additional submissions would
benefit the decision making process. The OTS hearing procedure
emphasizes informal meetings as prerequisites to formal hearings. If
the issues are not resolved at such meetings OTS will conduct formal
meetings. The FDIC's procedure also provides for informal meetings. The
FDIC generally will grant a request for a hearing only if the FDIC
determines that written submissions would be insufficient or that a
hearing otherwise would be in the public interest.
Proposed Sec. 303.10 has been revised to specifically include
hearings and other proceedings in connection with nullification,
revocation, amendment, withdrawal, and suspension of decisions on
filings discussed below and in Sec. 303.11(g). Additionally, the final
rule makes clear that Legal Division consultation is required prior to
taking action on a hearing request pursuant to Sec. 303.10(c) or
denying a hearing request pursuant to Sec. 303.10(d). In addition,
Sec. 303.10(e)(2) has been modified slightly to clarify that the
presiding officer in a hearing under this section shall be the regional
director (DOS or DCA) or his or her designee or such other person as
may be named by the FDIC Board of Directors or the
[[Page 44691]]
Director (DOS or DCA). This restates the FDIC's current practice as set
forth in current part 303.
The FDIC adopts Sec. 303.10 as proposed with the revisions
discussed above and other minor stylistic changes to make the intent
clear.
Decisions on filings. Proposed Sec. 303.11 contained general
provisions governing the process of deciding upon filings made under
part 303, including the general procedures related to the decision
making process; the authority of the FDIC Board of Directors to modify
any of the procedures contained in part 303; and new provisions
concerning multiple transactions, abandonment of filings, and
nullification of decisions.
No comments were received on proposed Sec. 303.11 (a), (b), (d),
(e), (g). The FDIC adopts these paragraphs as proposed.
Proposed Sec. 303.11(c) set forth the general provisions pertaining
to expedited processing. Under the proposal, expedited processing is
automatically given to institutions meeting the definition of an
``eligible depository institution'' (with a few exceptions where other
conditions apply) unless the appropriate regional director or deputy
regional director (DOS) removes the filing from expedited processing.
Therefore, an applicant need not request expedited processing or even
identify itself as an eligible institution. A filing may be removed
from expedited processing pursuant to proposed Sec. 303.11(c)(2) if:
(1) for filings subject to public notice, an adverse comment is
received that warrants additional investigation or review; (2) for
filings subject to evaluation of CRA performance, a CRA protest is
received that warrants additional investigation or review, or the
appropriate regional director (DCA) determines that the filing presents
a significant CRA or compliance concern; (3) for any filing, the
appropriate regional director (DOS) determines that the filing presents
a significant supervisory concern, or raises a significant legal or
policy issue; or (4) for any filing, the appropriate regional director
(DOS) determines that other good cause exists for removal. Under the
proposal, if a filing is removed from expedited processing, the
applicant will be promptly informed in writing of the reason. With the
exception of filings made under subpart J (International Banking),
proposed Sec. 303.11(c)(1) provided that for filings where the
appropriate regional director has not been delegated approval
authority, the filing will generally be removed from expedited
processing.
As discussed above, the general concept of expedited processing
generated numerous comments both in support of the proposal and opposed
to it. The final rule is designed to balance the concerns of removing
undue delays from the application process with the need to assess
legitimate CRA concerns fairly.
One commenter recommended that the mandatory removal from expedited
processing of any application that is subject to a substantial CRA
protest or otherwise meets the standards of Sec. 303.11(c)(2). This
commenter also believed that the FDIC's clarification of ``significant
CRA protest'' in Sec. 303.11(c)(3) of the proposed rule established a
dual standard for distinguishing between areas in which the institution
seeks to expand and areas where it currently has a presence but is not
expanding. This commenter believed that if an institution's CRA
performance is less than satisfactory in any geographic area, that fact
alone should be grounds for its application to be removed from
expedited processing, not whether the application is for expansion in
that area or some other area.
It is the policy and practice of the FDIC to investigate all CRA
protests to the extent considered necessary. As a practical matter this
will require the majority of protested applications to be removed from
expedited processing. It may be possible to resolve some protests
during the expedited processing period. This is especially true of
applications for deposit insurance which have an expedited processing
period of sixty days. The FDIC provided guidance on what will
constitute a ``significant CRA concern'' under Sec. 303.11(c)(2) by way
of example. In that paragraph the FDIC recognized that an applicant's
overall CRA rating could be satisfactory, but the applicant could also
have a less than satisfactory rating or performance in the particular
geographic area to be affected by the filing. In such a circumstance
the FDIC might require additional time to fully and fairly evaluate the
filing and, if necessary, would remove the filing from expedited
processing. The FDIC believes that the proposal provided the
flexibility to fully evaluate local CRA concerns without undermining
the intent of expedited processing.
Two commenters recommended the proposed rule be revised to include
a requirement for an abbreviated CRA examination in the case of a CRA
protest.
The FDIC believes that the proposed regulation and FDIC practice
provides the FDIC with the flexibility to conduct a targeted CRA
examination if such is necessary or appropriate under the
circumstances. DCA's standard review of an applicant's record will
include a review of current and previous CRA examination reports, the
applicant's correspondence file, any complaints filed against the
applicant, and any other pertinent information available. In addition,
Sec. 303.6 allows the Board of Directors, the Director, Deputy
Director, associate directors, appropriate regional directors and
deputy regional directors (DOS and DCA) to examine or investigate and
evaluate facts related to any filings under this chapter to the extent
necessary to reach an informed decision.
The same two commenters that suggested an abbreviated CRA
examination also requested that the FDIC provide a detailed written
statement of the basis for acting on protested applications.
The FDIC included in the proposed rule several opportunities for
the applicant and the public to obtain written information regarding
disposition of a filing. Proposed Sec. 303.11(a) provided that the FDIC
will notify both the applicant and any person who makes a written
request of the final disposition of a filing. When the FDIC denies a
filing, proposed Sec. 303.11(a) provides that the FDIC will immediately
notify the applicant in writing of the reasons for the denial. This
written notification is placed in the public file and remains available
at the appropriate regional office for 180 days after the final
decision. For any filing covered by the hearing procedures of
Sec. 303.10, Sec. 303.10(k) requires the FDIC to notify the applicant
and all participants of the final disposition of a filing and provide a
statement of the reasons for the final disposition. By adopting these
provisions in the final rule, the FDIC believes it has appropriately
balanced the interests of those seeking information on filing
disposition with those who seek a streamlined process. Additionally, it
has been the FDIC's recent practice and will continue to be the
agency's practice to prepare an Order and Statement in conjunction with
the approval or denial of any application subject to an unresolved CRA
protest. Orders and Statements are available to the public as part of
the public file of an application and are available in the FDIC's
public reading room.
The FDIC adopts Sec. 303.11(c) as proposed with minor technical
changes to Sec. 303.11(c)(1) and (3) to clarify the intended meaning of
those paragraphs.
Appeals and requests for reconsideration. Proposed Sec. 303.11(f)
contained the FDIC's procedures governing petitions for reconsideration
of a denied filing. The proposal clarified
[[Page 44692]]
that these procedures cover only requests for reconsideration of
filings that do not otherwise have appeal procedures provided by other
regulation or written guidance, and that decisions to deny a hearing
request are nonappealable. No comments were received on proposed
Sec. 303.11(f).
The proposal modified the FDIC's appeals process. Under the
proposal, a regional director or deputy regional director (DOS or DCA)
could approve, but not deny, a petition for reconsideration. However,
the Director or Deputy Director (DOS or DCA) could approve or deny a
petition. If the petition were granted, the filing would be
reconsidered by the Board of Directors if the filing was originally
denied by the Board of Directors or denied by the Director, Deputy
Director, or an associate director (DOS or DCA). The Director or Deputy
Director (DOS or DCA) could reconsider the filing if the filing was
originally denied by a regional director or deputy regional director.
All decisions on requests for reconsideration and all reconsideration
of denied filings require consultation with or the concurrence of the
Legal Division. Proposed Sec. 303.11(f) also clarified that a decision
on a petition for reconsideration by the Director or Deputy Director
(DOS or DCA) is a final agency decision and is not appealable to the
Board of Directors.
The final rule changes the proposal regarding the FDIC officials
who will act upon requests for reconsideration that are granted.
Section 303.11(f)(5)(i) of the proposed rule provided that where
reconsideration was granted for a filing within the scope of
Sec. 303.11(f) that was originally denied by the Director, Deputy
Director or associate director (DOS or DCA), the appeal of the denial
would be decided by the Board of Directors. Section 303.11(f)(5)(ii) of
the final rule provides that such appeals will be decided by the FDIC's
Supervisory Appeals Review Committee (SARC). The SARC is an existing
committee established by the Board of Directors with delegated
authority to consider appeals of material supervisory determinations
such as examination ratings, material disputed asset classifications,
determinations regarding violations of laws and regulations, as set
forth in the Federal Register on March 25, 1995, 60 FR 15923. These
existing functions of the SARC continue unchanged by the revision to
Sec. 303.11(f).
The FDIC believes that the SARC is an appropriate body to
reconsider the original denial of a filing made by the Director, Deputy
Director or associate director (DOS or DCA). The SARC includes the
FDIC's most senior managers with expertise in the areas necessary to a
comprehensive understanding of the issues presented by the
reconsideration of denied filings. The SARC is comprised of the
following FDIC officials: Vice Chairperson of the Board of Directors,
the General Counsel, the Director of DOS, the Director of DCA, the
Director of the Division of Insurance, and the Ombudsman.
The proposed rule did not contain time frames within which the FDIC
should act on requests for reconsideration. Although no comments were
received that specifically raised this issue, the final rule includes
such time frames to assist applicants. Newly added Sec. 303.11(f)(6)
provides that the appropriate regional director (DOS or DCA) will
notify an applicant of the FDIC's decision to grant or deny a request
for reconsideration within 15 days of receipt of the request for
reconsideration. If the FDIC grants a request for reconsideration, it
will notify the applicant of its final decision within 60 days of the
receipt of the request for reconsideration.
The FDIC adopts Sec. 303.11(f) with revisions discussed above and
certain minor stylistic changes to the language to make the intent
clear.
Nullification, withdrawal, revocation, amendment, and suspensions
of decisions on filings. The FDIC received no comments on proposed
Sec. 303.11(g). The final rule has been modified to clarify the FDIC's
authority and procedures regarding nullification of decisions on
filings and related actions. These changes are a logical extension from
the proposed rule. The final rule clarifies the scope of the FDIC's
nullification authority to include the authority to withdraw, revoke,
amend, and suspend decisions on filings (collectively
``nullification'').
As proposed, Sec. 303.11(g) would have authorized the FDIC to
nullify a decision on a filing whenever: (a) the FDIC became aware of
any material misrepresentation or omission by an applicant after the
FDIC rendered a decision on a filing, (b) an applicant failed to inform
the FDIC of a material change in circumstances which arose after the
filing had been submitted to the FDIC and before the FDIC's decision on
it, or (c) a decision on a filing was contrary to law, regulation, or
FDIC policy, or was granted due to clerical or administrative error, or
to a material mistake of law or fact.
The final rule refines the substantive criteria necessary for the
FDIC to take one of these actions and states in more detail the
procedures to be followed. The substantive grounds have been refined by
eliminating matters contrary to ``FDIC policy'' and ``material mistakes
of law or fact'' from the final rule. The FDIC has determined that a
nullification should continue to extend to decisions on filings that
are contrary to law or regulation and that the latter is inclusive of
``material mistakes of law and fact.'' The FDIC has also clarified one
of the grounds for action contained in Sec. 303.11(g). The proposed
rule would have given the FDIC authority to issue a nullification on a
filing if the applicant failed to inform the FDIC of a material change
in circumstance which arose after the filing was submitted to the FDIC
and before the FDIC's decision on it. Under the final rule, the FDIC
may issue a nullification on a filing if at anytime the FDIC becomes
aware of any material misrepresentation or omission relating to the
filing, or of material change in circumstance that occurred prior to
the consummation of the transaction or commencement of the activity
authorized by the decision on the filing, or if the decision on the
filing is contrary to law or regulation or was granted due to clerical
or administrative error. The grounds for nullification are contained in
revised Sec. 303.11(g)(1).
The FDIC has added procedures for use in nullification actions in
Sec. 303.11(g)(2) and (3) to insure that the rights of the applicant
are protected in that the applicant will receive notice of the FDIC's
intent to nullify a decision on a filing and will have an opportunity
to respond to the notice. The final rule also details the manner in
which the FDIC would provide written notification of the proposed
action and the reason therefor to the applicant. Final
Sec. 303.11(g)(2) also provides that the FDIC may in certain cases
issue temporary orders without issuing a prior notice of intent to an
applicant. In such cases, the applicant is still provided an
opportunity to respond after issuance of the order.
Final Sec. 303.11(g)(3) has been redesignated ``Response to notice
of intent or temporary order.'' This section provides that an applicant
may file a written response to a notice of intent within 15 days of
service of the notice. A written response should include: (a) an
explanation as to why the proposed action is not warranted and (b) any
other relevant information, mitigating circumstances, documentation, or
other evidence. As a general rule, it is expected that these matters
will be resolved on written submissions. An applicant may request a
hearing with oral arguments and testimony under Sec. 303.10, although
such hearings will not usually be granted unless resolution on the
basis of written submissions is inadequate. Final Sec. 303.11(g)(3)
also
[[Page 44693]]
provides that an applicant's failure to file a written response within
the 15-day period constitutes a waiver of the opportunity to respond
and consent to the nullification, whether or not a temporary order had
been issued.
Final Sec. 303.11(g) did not discuss whether authority was to be
delegated in connection with the exercise of the authority to nullify
decisions on filings. In final Sec. 303.11(g)(5), the FDIC Board of
Directors retains the authority to issue a notice of intent to nullify
if the decision on the filing was originally made by the Board. For
decisions on filings under this Sec. 303.11(g) that were not originally
acted on by the Board, authority is delegated to the Director and
Deputy Director (DOS and DCA) and, where confirmed in writing by the
appropriate Director, to an associate director, to issue notices of
intent and temporary and final orders, after consultation with the
Legal Division. The appropriate Director may also designate regional
directors and deputy regional directors to issue notices of intent and
final orders. Delegated authority is to be exercised by the official
who acted on the original filing or by an official or equivalent or
higher authority.
General delegations of authority. Proposed Sec. 303.12 consolidated
the general principles governing delegations of authority from the
Board of Directors to FDIC officials. Specific delegations of authority
are contained in appropriate subparts.
No comments were received on this section. Changes were made to
proposed Sec. 303.12(a), (c), (e) to limit the application of
Sec. 303.12 to part 303 rather than to the entire chapter as proposed.
Section 303.12(e) of the proposal has been further modified slightly in
the final rule to make clear that actions taken by FDIC officials may
be relied upon by the public as actions authorized by the FDIC. The
FDIC adopts the remainder of the section as proposed.
Delegations of authority to DOS and DCA officials. Proposed
Sec. 303.13 contained delegations of authority to DOS and DCA officials
to enable them to carry out the FDIC's applications function in the
following areas: CRA protests, adequacy of filings, and the National
Historic Preservation Act of 1966, (16 U.S.C. 470 et seq.) (NHPA).
Where a CRA protest is filed and remains unresolved, proposed
Sec. 303.13(a) delegated authority to the regional director or deputy
regional director (DCA) to concur that approval of any filing subject
to CRA is consistent with the purposes of CRA. Previously, receipt of
any CRA protest caused a filing to be forwarded to DCA in Washington
for review. For purposes of determining when to commence processing of
a filing, proposed Sec. 303.13(b) delegated authority to DOS officials
to determine whether a filing is substantially complete. This provision
also clarified that the standard to initiate the processing period is
the receipt of a substantially complete filing.
Several commenters opposed the delegation of authority contained in
proposed Sec. 303.13(a) to make decisions and to act on CRA protested
applications. These commenters objected to the removal of such
authority from the presidentially appointed and accountable Board of
Directors who they believed are in a better position to weigh the
issues involved. These commenters were concerned that the CRA might not
be applied consistently by various FDIC offices and that the increasing
consolidation of the banking industry accompanied by interstate
expansion would result in decisions being made by regional directors
without complete understanding of a particular institution and its CRA
record.
The FDIC is committed to careful and conscientious fulfillment of
its CRA obligations. The FDIC believes there are adequate safeguards
and checks in place to ensure that it is deliberate and fair in its
actions involving consideration of CRA performance in the application
process and to ensure consistency among regional offices. Internal
procedures require regional offices to notify DCA in Washington of the
receipt of a protest within specific time frames. In addition, as
discussed below in the appropriate paragraphs, the FDIC has revised the
delegation of authority where a CRA protest is unresolved. Proposed
Secs. 303.26, 303.46 and 303.184 provided that where a CRA protest was
unresolved at the regional level, the Director or Deputy Director (DOS)
could approve the protested filing. The final rule makes clear that the
Director or Deputy Director (DOS) may approve such a filing only with
the concurrence of the Director or Deputy Director (DCA). This
clarification will ensure that those FDIC officials with relevant
expertise will act together to approve any application under this part
that is subject to an unresolved CRA protest. Moreover, under
Sec. 303.12(b)(1), the Board of Directors has not delegated the
authority to act upon filings involving significant policy concerns,
unique legal issues or other areas meriting special attention. Any
filings involving these concerns would have to be decided by the FDIC
Board of Directors.
Proposed Sec. 303.13(c) contained a delegation of authority
permitting DOS officials to enter into certain memoranda of agreement
to facilitate the FDIC's ability to comply with the National Historic
Preservation Act. No comments were received on this paragraph.
The final rule adds Sec. 303.13(d) to delegate the authority
necessary to modify publication requirements as set forth in
Sec. 303.7(f).
The FDIC adopts Sec. 303.13 as proposed with the addition of
Sec. 303.13(d).
B. Subpart B--Deposit Insurance
Subpart B of the proposal reorganized and clarified the filing and
processing procedures for an applicant to follow in applying for
deposit insurance for a proposed or existing noninsured depository
institution, for an interim depository institution (when required), and
for continuation of deposit insurance for a state bank upon withdrawing
from membership in the Federal Reserve System. Proposed subpart B
updated the regulation to reflect current statutory requirements and
current FDIC policy for processing such applications. Finally, subpart
B of the proposal set forth the delegations of authority and criteria
under which DOS may approve such applications. The final rule should be
read in conjunction with the FDIC's revised statement of policy on
Applications for Deposit Insurance found elsewhere in today's Federal
Register.
Four commenters submitted comments in response to subpart B of the
proposed rule. The FDIC has carefully considered these comments. The
comments are summarized below in the following discussion of
substantive changes to the regulatory text.
Filing procedures. Proposed Sec. 303.21 set forth general
procedures for filing applications for deposit insurance. No comments
were received on this section. The FDIC adopts this section as proposed
with minor changes to Sec. 303.21(b) to make clear that deposit
insurance applications for interim institutions are subject to the
provisions of subpart B and Sec. 303.62(b)(2), and to refine the
intended definition of ``interim institution.'' This change is
described more fully below and at Sec. 303.24.
Processing. Proposed Sec. 303.22(a) provided for the expedited
processing of applications for deposit insurance for proposed
depository institutions which will be subsidiaries of an ``eligible
depository institution'' or an ``eligible holding company.'' Proposed
Sec. 303.22(b) provided for standard processing for those applications
not
[[Page 44694]]
processed pursuant to expedited processing. Under expedited processing,
applications would be processed within 60 days of receipt of a
substantially complete application or 5 days after the expiration of
the comment period, whichever is later. Heretofore, the time period for
processing deposit insurance applications has generally been within 120
days. The proposal provided that final action may be withheld until the
FDIC has assurance that permission to reorganize the proposed
depository institution will be granted by the chartering authority. An
eligible depository institution is defined in Sec. 303.2(r) of the
proposal. An eligible holding company is defined in Sec. 303.22(a) of
the proposal as a bank or thrift holding company which has consolidated
assets of $150 million or more; has an assigned composite rating of 2
or better; and has at least 75 percent of its consolidated depository
institution assets in eligible depository institutions. The proposal
further provided that if the FDIC did not act within the expedited
processing period, such inaction would not constitute an automatic or
default approval.
Three commenters questioned the definition of an ``eligible holding
company.'' One commenter suggested that only the composite rating be
considered. Another commenter suggested that the size criteria be
lowered to $100 million. The FDIC intends to achieve the expedited
processing time frame for acting on applications for deposit insurance
by eligible holding companies by performing a more limited
investigation of the application than for those subject to standard
processing. In order to provide such treatment, the FDIC must be
confident that the sponsoring organization has sufficient financial and
management resources to justify streamlined processing. The composite
rating and size criteria as proposed are meant to be indicators of such
strength. Therefore, the final rule does not change this aspect of the
proposal. In addition, it should be noted that some applications that
appear to meet the expedited criteria as a matter of first impression
may be removed from expedited processing if sufficient management and
capital resources are not present to give the FDIC sufficient comfort
in utilizing expedited procedures. Likewise, the FDIC has the option of
processing an application within the expedited time frame, even if the
sponsor does not technically meet the eligibility definition. The FDIC
intends to process all applications as expeditiously as prudence and
its resources permit.
One commenter observed that it would be possible for an eligible
holding company to receive expedited treatment even if some of its
subsidiary institutions have less than satisfactory ratings. This is
correct; however, if the condition of any of the subsidiary banks
raises a safety or soundness, compliance or CRA concern, the regional
director has the option of removing the application from expedited
processing in accordance with the provisions of Sec. 303.11(c)(2).
One commenter pointed out that a company which does not already
control an insured depository institution cannot receive expedited
treatment. The FDIC does not believe it appropriate to grant expedited
treatment to applicants which do not have an established record of
successfully managing an insured depository institution.
One commenter suggested an expedited processing time of 120 days,
which has been the FDIC's internal time line for all deposit insurance
applications. The FDIC believes it is practical to process an
application from an eligible depository institution or eligible holding
company in 60 days. However, applications for deposit insurance are not
treated as notices, so they are not deemed to be approved by the
passage of time. As set forth in Sec. 303.11(c)(2) the FDIC can remove
an application from expedited processing for a variety of reasons,
including good cause. Removal of an application from expedited
processing enables the FDIC to take additional time to consider a
particular application that might present unique issues.
The FDIC adopts this section as proposed with a technical change to
conform to the longer comment period described below and at
Sec. 303.23.
Public notice and comment period. Proposed Sec. 303.23(a) provided
that notice shall be published as close as practicable to the filing
date but not more than five days before the filing date. This provided
assurance that the public portion of the application file will be
available for inspection during the comment period.
Under the proposal Sec. 303.23(a) would have required interested
parties to file comments with the appropriate regional director (DOS)
on or before the 15th day following the date of publication. Two of the
commenters believed that the proposed 15-day comment period was too
short. In response to this concern, the proposed comment period under
Sec. 303.23(a) has been increased to 30 days in the final rule.
Interested parties are required to file comments with the regional
director on or before the 30th day following the date of publication.
Also, the appropriate regional director (DOS) may extend or reopen the
comment period for good cause.
The FDIC adopts this section with the longer public comment period
discussed above.
Application for deposit insurance for an interim depository
institution. Proposed Sec. 303.24 defined an interim depository
institution as an institution formed or organized solely to facilitate
a merger transaction that would be reviewed by one of the four federal
banking agencies and that would not open for business. The proposal
described the requirements for a filing for deposit insurance for an
interim depository institution and indicated the intent of the FDIC to
take final action on such an application within 21 days after receipt
of a substantially complete application unless the applicant was
advised to the contrary.
No comments were received on this section.
Sections 303.21(b) and 303.24 have been revised in the final rule
to cross-reference appropriate provisions of subpart D (Merger
Transactions) of this part, Sec. 303.60 et. seq. An interim institution
is defined in Sec. 303.21(b) of the final rule as a state or federally
chartered depository institution that does not operate independently
but exists solely as a vehicle to accomplish a merger transaction. A
separate application for deposit insurance for an interim institution
is not required in connection with merger transactions that require
FDIC approval under subpart D. However, subject to the provisions of
Sec. 303.62(b)(2), a separate deposit insurance application is required
for a state chartered interim institution if the related merger
transaction is subject to approval by a federal banking agency other
than the FDIC. Federally chartered interim depository institutions are
deemed to be insured upon the issuance of a charter by the appropriate
federal banking agency and an application for deposit insurance with
the FDIC is not required. The FDIC believes that the changes to these
two sections will ensure consistency among subparts B and D.
The filing required by Sec. 303.24(b) of the final rule consists of
a brief letter application and a copy of the related merger
transaction. It is anticipated that the FDIC will consult with the
federal banking agency reviewing the merger application and that final
action on the deposit insurance application will be taken within 21
days after receipt of a substantially complete application. If
[[Page 44695]]
additional review by the FDIC is warranted, the applicant will be so
advised in writing.
Continuation of deposit insurance upon withdrawing from membership
in the Federal Reserve System. Proposed Sec. 303.25 set forth the
application procedure for the continuation of a state bank's deposit
insurance upon its withdrawal from membership in the Federal Reserve
System. No comments were received on this section. The FDIC adopts this
section as proposed with minor technical revisions to clarify that the
correspondence referred to in Sec. 303.25(a)(1), (2) is with the
appropriate Federal Reserve Bank.
Delegation of authority. Proposed Sec. 303.26 sets forth the
delegations of authority relevant to applications for deposit
insurance. The specific criteria that must be met before delegated
authority can be exercised, such as initial capitalization,
reasonableness of legal fees and other expenses, projected
profitability, investment in fixed assets and financial arrangements
involving insiders, including stock financing arrangements, were
updated to reflect current policy, and are discussed in the revised
statement of policy on Applications for Deposit Insurance published
elsewhere in today's Federal Register. The revised statement of policy
is cross-referenced in the final rule to avoid duplication.
Proposed Sec. 303.26(a)(1) delegated authority to the Director and
the Deputy Director (DOS), and where confirmed in writing, to an
associate director, and the appropriate regional director and deputy
regional director (DOS) to approve applications for deposit insurance
for proposed depository institutions subject to specified criteria. The
criteria set forth in paragraph (v) provided that an application could
be approved by the regional director or deputy regional director (DOS)
only where no CRA protest, as defined in Sec. 303.2(l), had been filed
which remained unresolved, or where such protest remained unresolved,
the appropriate DCA official concurred that approval would be
consistent with purposes of the CRA, and the applicant agreed in
writing to any conditions imposed regarding the CRA. Under the
proposal, where a protested application remained unresolved the
Director, Deputy Director or associate director (DOS) could approve the
application without DCA concurrence. While no commenters specifically
addressed this provision, several commenters raised general concerns
regarding the FDIC's delegation of authority to act upon CRA protested
applications. As discussed above, the FDIC believes that it is
desirable to vest authority to act on protested applications in
officials most likely to be personally familiar with the institution or
institutions and communities involved. Section 303.26(a)(1) has been
revised in the final rule to restrict the authority of the Director,
Deputy Director and associate director (DOS) to act upon CRA protested
applications by requiring them to obtain DCA concurrence before
approving such applications. The FDIC believes that this revision will
ensure that those FDIC officials with relevant expertise will act
together to approve any application under this section that is subject
to an unresolved CRA protest.
The FDIC adopts this section with the revisions discussed above.
Proposed Sec. 303.27 set forth authority retained by the Board of
Directors. No comments were received on this section. The FDIC adopts
this section as proposed.
C. Subpart C--Establishment and Relocation of Domestic Branches and
Offices
The proposal significantly revised the portion of part 303 that
implements section 18(d) of the FDI Act (12 U.S.C. 1828(d)) which
requires insured state nonmember banks to obtain the prior written
consent of the FDIC in order to establish a domestic branch, relocate
the main office, or relocate a branch. The major changes in the
proposal provided for expedited processing for eligible depository
institutions and new definitions for ``messenger service,'' ``mobile,''
``temporary,'' and ``seasonal'' branches. The proposal excluded remote
service units including automated teller machines and automated loan
machines from the definition of a branch. Requirements related to
interstate branching were also addressed in the proposal. Because of
the comprehensive treatment of branches, the proposal also recommended
rescinding the Statements of Policy regarding Applications to Relocate
a Main Office or Branch and Applications to Establish a Domestic
Branch. Both statements were considered obsolete and unnecessary
considering the revisions to subpart C and are rescinded elsewhere in
today's Federal Register.
The FDIC received three comments specifically on this subpart and
numerous comments addressing expedited processing, the public comment
period and the delegations of authority regarding CRA protested
applications. The FDIC carefully considered all the comments, and the
final rule reflects changes made in response to those comments as well
as technical changes to the proposal.
Definitions. Proposed Sec. 303.41(a) clarified that remote service
units, including automated loan machines, are not branches. These
exclusions are a result of statutory changes contained in section 2204
of EGRPRA (12 U.S.C. 36). Two commenters supported this change in the
definition.
With regard to the definition of ``branch relocation,'' two
commenters suggested that the FDIC explicitly make reference to the
Policy Statement Concerning Branch Closing Notices and Policies (2 FDIC
Law, Regulations and Related Acts 5391 (August 10,1993)) within the
definition of ``branch relocation'' in order to ensure that the new
definition is read as incorporating all of the guidance in the policy
statement. The FDIC agrees that it would be useful to make reference to
the policy statement and has provided the reference in the definition
of a branch relocation.
Filing procedures. The proposed regulation at Sec. 303.42(b)(2)
provided filing procedures for messenger services and mobile branches.
Specifically, the FDIC proposed that the geographic location for a
mobile branch be designated as to which community or communities are to
be served. The FDIC sought comment on whether such a designation is
appropriate but received no specific response. The FDIC is, however,
making a clarification in the final regulation to require that filings
specify the community or communities in which the vehicle will operate
and the manner in which it will be used.
One commenter recommended that applications for mobile branches be
subject to abbreviated FDIC review and public notice procedures because
of their unique characteristics and the substantial public convenience
offered by these facilities. The FDIC has carefully considered the
comment but believes that with the adoption of expedited processing for
eligible institutions that a special provision for a more limited
review is unnecessary.
In addition, proposed Sec. 303.42(b) has been modified to include
references to two FDIC statements of policy, one of which gives
guidance on the National Environmental Policy Act of 1969 (42 U.S.C
4321 et seq.) (NEPA) (2 FDIC Law, Regulations and Related Acts 5185,
March 31, 1980), and the other provides guidance on the NHPA (2 FDIC
Law, Regulations and Related Acts 5175 (March 31, 1980). The language
in Sec. 303.42(b)(5) has been modified to simply require a statement as
to whether or not the particular site for a branch or branch relocation
is included, or is eligible for inclusion, in the National Register of
Historic Places, including
[[Page 44696]]
documentation of consultation with the State Historic Preservation
Officer, as appropriate. The proposed regulation required a statement
as to whether or not the particular site is included in or is eligible
for inclusion in the National Register as well as a statement that
clearance has been or will be obtained from the State Historic
Preservation Officer. This change has been made in anticipation of a
programmatic agreement with the Advisory Council on Historic
Preservation and subsequent change in the FDIC's Statement of Policy on
NHPA to reflect exclusions of certain categories of properties from the
NHPA.
With regard to the establishment of certain interstate de novo
branches, the proposal at Sec. 303.42(b)(8) required the applicant to
provide a statement that the applicant has requested that the host
state provide to the appropriate regional director (DOS) written
confirmation that the applicant has complied with the state's filing
requirements and that the applicant has also submitted to the host
state bank supervisor a copy of the filing with the FDIC to establish
and operate a de novo branch. This requirement has been deleted in the
final regulation and the FDIC will make direct requests to the state
supervisor in those limited cases where such confirmation is required.
As a result of this deletion, the remainder of the section has been
renumbered.
Processing. The proposal at Sec. 303.43(a), provided expedited
processing for applications for the establishment and relocation of
domestic branches and offices for eligible depository institutions. The
expedited processing procedures were contained in Sec. 303.11(c), and
provided that an application submitted by an eligible depository
institution as defined in Sec. 303.2(r) will be acknowledged in writing
by the FDIC and receive expedited processing unless the FDIC removes
the application from expedited processing for any of the reasons set
forth in Sec. 303.11(c)(2). Section 303.43(a) provided that the FDIC
may remove an application from expedited processing at any time before
the approval date and will promptly notify the applicant in writing of
the reason for such action. Absent such removal, an application
processed under expedited processing will be deemed approved on the
latest of the following: (1) the 21st day after receipt of a
substantially complete application by the FDIC, (2) the 5th day after
expiration of the comment period described in Sec. 303.44, or (3) in
the case of an application to establish and operate a de novo branch in
a state that is not the applicant's home state and in which the
applicant does not maintain a branch, the 5th day after the FDIC
receives from the host state confirmation that the applicant has both
complied with the filing requirements of the host state and submitted a
copy to the host state bank supervisor of the application filed with
the FDIC. One commenter objected to the expedited processing
provisions, arguing that they treat such filings as notices and would
subvert the spirit of the CRA. The FDIC believes such concerns are
unwarranted since the FDIC intends to carefully review all applications
for CRA and other safety and soundness and compliance concerns
regardless of the expedited processing time frames. The FDIC has also
provided for provisions for removal from expedited processing in
certain circumstances as enumerated in Sec. 303.11(c)(2).
Public notice requirements. The public notice requirements of the
proposal required that to relocate a main office the applicant publish
notice in the community in which the main office is currently located
and in the community to which the main office proposes to relocate, and
that such notice be published at least once each week on the same day
for two consecutive weeks. The proposal provided that for the
relocation of branches, a notice shall be published once in a newspaper
in the community in which the branch is located. One commenter objected
to this provision and recommended that two newspaper publications be
required to conform with the requirement for main office relocation.
The FDIC believes that since a branch relocation can only occur in the
same immediate neighborhood, that only one publication in that
community is necessary. Furthermore, a single publication is consistent
with the requirements of the other federal banking agencies.
In order to eliminate the uncertainty regarding the close of the
comment period, proposed Sec. 303.44 provided that comments must be
received by the appropriate Regional Director (DOS) within 15 days
after the date of the last newspaper publication and proposed
Sec. 303.9 provided for extension or reopening of the comment period in
certain situations. The FDIC received numerous comments on the length
of the comment period. Several comments supported the comment period,
however, a number of commenters objected to the 15-day comment period.
Several commenters suggested that a public comment period of 30 days
after the last publication while one commenter suggested the FDIC adopt
a processing time frame of 45 days as provided in part 5 of the Office
of the Comptroller of the Currency's regulations. One commenter
suggested that the comment period should not commence until the FDIC
has received a complete application. One commenter thought that the
application and notice provisions were generally reasonable, but
suggested that the application review deadline be changed to 15 days
after receipt of a substantially complete application or five days
after the public comment period expires, whichever is later. The
commenter argued that branch applications and relocations are
relatively simple activities and should, therefore, be processed
quickly. On balance, the FDIC believes a 15-day comment period provides
adequate time for the public to comment on the establishment or
relocation of a branch. The regulation provides for two publications
and a 21-day comment period for a main office relocation. The FDIC also
commits to place all applications subject to the CRA on its World Wide
Web site within three days of receipt in order to provide prompt
notification of all filings. The FDIC has also given its regional
directors wide discretion to extend the comment periods in order to
provide the public with an adequate amount of time to submit a
meaningful analysis. With regard to the processing or review deadline
being changed to 15 days after receipt of a substantially complete
application, the FDIC believes the 21 day processing period is
responsive to the industry and that it is not feasible to commit to a
shorter time frame. For these reasons, the FDIC is adopting the
timeframes as proposed.
Special provisions. Section 303.45 of the proposed regulation added
several new provisions regarding procedures for opening temporary
branches in emergency or disaster situations, re-designating a main
office, and providing for the expiration of approved applications.
The proposed regulation at Sec. 303.45(a) clarified procedures for
establishing temporary branches in emergency or disaster situations.
The proposal provided that in the case of an emergency or disaster at a
main office or branch which requires that an office be immediately
relocated to a temporary location, the applicant notify the appropriate
regional director (DOS) within 3 days of such temporary location. In
such limited cases, the FDIC will accept initial notification by
whatever means appropriate. The FDIC is making this limited exception
to allow for the public's need to have uninterrupted access to banking
services. However, the final regulation
[[Page 44697]]
does require that, within 10 days of a such a temporary relocation, the
bank submit a written application to the appropriate regional director
(DOS). The FDIC received one comment specifically supporting the
inclusion of such temporary facilities since it will make it easier for
institutions to relocate a branch or main office in the event of an
emergency.
Proposed Sec. 303.45(b) regarding relocation of a main office and
simultaneous redesignation of an existing office as the main office has
been modified to make clear that in such circumstances only a single
application is required.
Proposed Sec. 303.45(c) provided that approval of an application
expires if a branch has not commenced business or if a relocation has
not been completed within 18 months of approval. One commenter
supported the expiration of the approval but suggested an extension
should be possible where extenuating circumstances warrant. The FDIC
has provided for such extension of time in subpart M of the final
regulation.
Delegation of Authority. Proposed Sec. 303.46 delegated authority
to the Director and Deputy Director, and where confirmed in writing, to
an associate director, and the appropriate regional director and deputy
regional director (DOS) to approve applications listed in this subpart
subject to specific criteria. The criteria set forth in paragraph
(c)(5) provided that an application could be approved by the regional
director or deputy regional director (DOS) only where no CRA protest as
defined in Sec. 303.2(l) had been filed which remained unresolved, or
where such protest remained unresolved, the appropriate DCA official
concurred that approval would be consistent with the purposes of the
CRA and the applicant agreed in writing to any conditions imposed
regarding the CRA. Under the proposal, where a protested application
remained unresolved the Director, Deputy Director or associate director
(DOS) could approve the application without DCA concurrence. While no
commenters specifically addressed this provision, several commenters
raised general concerns regarding the FDIC's delegation of authority to
act upon CRA protested applications. As discussed above, the FDIC
believes that it is desirable to vest authority to act on protested
applications in officials most likely to be personally familiar with
the institution or institutions and communities involved. Section
303.46(c)(5) has been revised in the final rule to restrict the
authority of the Director, Deputy Director and associate director (DOS)
to act upon CRA protested applications by requiring them to obtain DCA
concurrence before approving such an application. The FDIC believes
that this revision will ensure that those FDIC officials with relevant
expertise will act together to approve any application under this
subpart that is subject to an unresolved CRA protest.
Modification has been made to Sec. 303.46(c)(7) to reflect the
deletion of proposed Sec. 303.42(b)(8) which had required applicants to
request and provide a statement from the host state which provided
certain confirmations. As noted above, the FDIC will make such
inquiries.
After consideration of the comments, the FDIC adopts subpart C with
the above-noted modifications.
D. Subpart D--Merger Transactions
Proposed subpart D consolidated and reorganized the various
provisions of part 303 governing transactions subject to FDIC approval
under section 18(c) of the FDI Act (12 U.S.C. 1828(c)) (Bank Merger
Act). The primary changes reflected in the proposal were the addition
of an expedited processing procedure, the addition of various
definitions applicable to merger transactions, and the addition of
references to other statutory or regulatory provisions often applicable
to merger transactions.
The FDIC received three comments specifically addressing proposed
subpart D and numerous comments addressing expedited processing and the
delegations of authority regarding CRA protested applications. The FDIC
has carefully considered these comments. The comments are summarized
below in the following discussion of the regulatory text.
First, however, the FDIC notes that the title of this subpart has
been changed from ``Mergers'' to ``Merger Transactions.'' The use of
the term ``merger transaction'' is meant to be inclusive of all types
of transactions (including mergers, consolidations, and transfers of
deposit liabilities) covered by the Bank Merger Act. When the term
``merger'' is used in the regulation, it is used to reference only a
true merger.
Scope. Proposed Sec. 303.60 set forth the scope of the subpart. One
commenter suggested that a cross reference to the FDIC's Statement of
Policy on Bank Merger Transactions be added to the proposal. Section
303.60 of the final rule includes such a reference to the Statement of
Policy which is also published in today's issue of the Federal
Register. The FDIC adopts this section with the suggested reference.
Definitions. Proposed Sec. 303.61 added definitions regarding
merger transactions. No comments were received regarding the
definitions. The FDIC adopts this section as proposed, with minor,
nonsubstantive editorial changes.
Transactions requiring prior approval. Proposed Sec. 303.62
detailed the types of transactions requiring the prior written approval
of the FDIC under subpart D. No comments were received regarding the
transactions covered. The FDIC adopts this section as proposed with
minor editorial changes.
Filing procedures. Proposed Sec. 303.63 provided guidance regarding
the filing procedures for applications required under the subpart. No
comments were received on the filing procedures. The FDIC adopts this
section as proposed, with minor, nonsubstantive editorial changes.
Processing. Proposed Sec. 303.64 included the addition of an
expedited processing procedure. This procedure would be available when
all parties to a merger transaction are eligible depository
institutions (as defined in Sec. 303.2(r)), and the resulting
institution would be well-capitalized immediately after the merger
transaction.
One commenter suggested that the expedited processing period of 45
days be reduced to 30 days for smaller, less complex transactions where
the total assets of the resultant institution would be less than $500
million. Another commenter recommended that the expedited processing
period be increased to 60 days. The final rule retains the 45 day
processing time line. The FDIC believes that this provides sufficient
time to act on applications that do not raise unique issues or are not
subject to CRA protests. Protested applications or applications which
raise unique issues generally would be removed from expedited
processing. While it might be possible to resolve all relevant safety
and soundness issues arising in the context of smaller merger
transactions in less than 45 days, the statutory requirement of a 30
day publication period and the requirement to consult with the Attorney
General and other bank regulatory agencies regarding the competitive
factors does not make it feasible to establish a shorter time frame for
action.
One commenter generally supported the expedited processing proposal
but suggested that the eligibility criteria be expanded to include
otherwise eligible proposals where an ineligible target institution has
core deposits equal to 10 percent or less of the acquiror's core
deposits. In response to this comment, a provision has been added in
the final
[[Page 44698]]
rule that permits expedited processing for transactions involving an
eligible acquiror and an ineligible seller if the amount of total
assets to be transferred to the acquiror is no more than 10 percent of
the acquiror's total assets. The FDIC believes that, absent other
issues, such a transaction would be less likely than larger
acquisitions to raise safety and soundness concerns.
The FDIC adopts this section with the changes noted above, along
with limited minor changes.
Public notice requirements. Section 303.65 of the proposal set
forth the requirements for providing public notice of merger
transactions, the required content of such notices, and a predictable
period of 35 days during which the public may submit comments on
proposed non-emergency merger transactions. In addition, the proposal
permitted the initial public notice of a proposed transaction to be
published up to 5 days before the merger application is filed with the
FDIC. Under the existing regulations, the notice could not be published
until the application had been filed with the FDIC.
One commenter opposed the proposal to permit merger applicants to
publish notice of a proposed transaction before a completed application
has been filed with the FDIC. Another commenter generally supported the
proposal but objected to the 35 day comment period. One commenter also
suggested a shorter comment period for smaller and less complex
transactions, such as those resulting in an institution with less than
$500 million in combined assets. In contrast, another commenter urged a
longer comment period than that proposed. This commenter suggested that
the public comment period should extend through the fifth day prior to
FDIC action on the application (specifically, 5 days before the end of
the 60-day minimum processing period urged by the commenter).
The final rule continues to provide for a fixed comment period. The
FDIC believes this will provide prospective commenters the assurance
that they will have a definite number of days for submitting comments
after publication of the last notice of a proposed transaction. The
final regulation revises the length of the public comment period to a
30-day public comment period rather than the 35-day period proposed.
Upon reflection, the FDIC does not believe it is necessary to provide
for a longer comment period than required by the Bank Merger Act. The
final rule moves the last publication date for public notice of the
transaction from the 30th day after initial publication to the 25th
day. This ensures that prospective commenters will typically have 5
days after the last publication to express their views on a proposed
merger transaction. The FDIC notes that the final rule provides
flexibility for the FDIC to extend or reopen a comment period for
reasons specified in subpart A of the final rule.
Regarding the suggestion that the comment period be extended to 5
days before the end of the processing period, the FDIC notes that the
expedited processing period in Sec. 303.64(a) is a maximum period, not
a minimum. Thus, simple transactions requiring only the most cursory
review, for example, might be approved sooner than 45 days after the
date of the application. Because the processing time required for any
given application cannot be predicted in advance, the closing date for
comments on the application cannot both be predictable and end a
certain number of days before the FDIC makes a decision on the
application.
Proposed Sec. 303.65(a) provided generally that an applicant for a
merger transaction must publish notice of the proposed transaction on
at least three occasions at approximately two-week intervals. No
comments were received on this provision. The final rule revises this
requirement to provide that such notice must be published on at least
three occasions at approximately equal intervals. The FDIC makes this
change to conform with changing the date of the last publication to the
25th day after the initial publication, as discussed above.
Proposed Sec. 303.65(b)(1) set forth an exception to the
publication requirements where the FDIC determines that an emergency
requires expeditious action. This exception tracks a statutory
exception. Under this provision of the proposal, notice shall be
published twice, with the second of the two notices to be published on
the 10th day after the first publication. The final rule requires the
second notice to be published on the 7th day after the first
publication. Based upon the statutory 10-day processing period, this
change allows the public 3 days to comment after the second
publication.
One commenter suggested that the FDIC require notices regarding
merger transactions to be published in languages other than English in
communities with significant non-English speaking populations. Rather
than limit applicability to situations involving merger applications
and non-English publication, however, the FDIC has instead added a more
broadly-focused provision in subpart A. Specifically, under the new
Sec. 303.7(f) the FDIC may determine on a case-by-case basis that
unusual circumstances surrounding a particular filing warrant
modification of the publication requirements. It is intended that this
provision will be applied sparingly and with the purpose of making
publication more meaningful, not as a means of altering the publication
requirements to suit the convenience of the parties or as a means of
curing defective publications.
The FDIC adopts Sec. 303.65 with the modifications discussed above
and minor, non-substantive, editorial changes.
Delegations of authority. Proposed Sec. 303.66 set forth the
delegations of authority to designated FDIC officials to approve under
the Bank Merger Act any application filed under this subpart for
approval of a merger transaction for which the specified criteria are
satisfied. The specific criteria that must be met before delegated
authority can be exercised, such as capital requirements, competitive
effects and geographic markets were updated to reflect current FDIC
policy.
Proposed Sec. 303.66(b) delegated authority to the Director and
Deputy Director, and where confirmed in writing, to an associate
director, and the appropriate regional director and deputy regional
director (DOS) to approve merger applications, subject to specific
criteria. The criteria set forth in Sec. 303.66(b)(5) provided that an
application could be approved by the regional director or deputy
regional director (DOS) only where no CRA protest as defined in
Sec. 303.2(l) had been filed which remained unresolved, or where such
protest remained unresolved, the appropriate DCA official concurred
that approval would be consistent with the purposes of the CRA, and the
applicant agreed in writing to any conditions imposed regarding the
CRA. Under the proposal, where a CRA protest remained unresolved the
Director, Deputy Director or associate director (DOS) could approve the
application without DCA concurrence. While no commenters specifically
addressed this provision, several commenters raised general concerns
regarding the FDIC's delegation of authority to act upon CRA protested
applications. As discussed above, the FDIC believes that it is
desirable to vest authority to act on protested applications in
officials most likely to be personally familiar with the institution or
institutions and communities involved. Sections 303.66(c) and (d) have
been revised in the final rule to restrict the authority of the
Director, Deputy Director and associate director (DOS) to act upon CRA
protested applications by requiring
[[Page 44699]]
them to obtain DCA concurrence before approving such an application.
The FDIC believes that this revision will ensure that those FDIC
officials with relevant expertise will act together in deciding whether
to approve a merger application that is subject to an unresolved CRA
protest.
Regarding competitive effects which are considered under proposed
Secs. 303.66(f) and (g), one commenter urged that the regulation
provide guidance as to the composition of relevant geographic markets
to be used in analyzing competitive effects. The Statement of Policy on
Bank Merger Transactions (published elsewhere in today's Federal
Register), to which a cross reference has been added in new
Sec. 303.60, includes a discussion on relevant geographic markets.
Relevant geographic markets are best defined on a case-by-case basis,
considering such factors as the location of the offices of the
particular merging parties. Beyond the factors referred to in the
Statement of Policy, the FDIC does not believe that any more specific
factors can be identified that could be applied for all merger
transactions, successfully, accurately, and without undue burden. This
same commenter expressed concern that the benefits of expedited
processing might be undermined if the FDIC waited for the Attorney
General's competitive-factors reports before acting on a merger
application. In response, we note that the Bank Merger Act allows the
Attorney General 30 calendar days to provide a competitive factors
report. The report is commonly provided within or near this period
unless competition issues are raised that the Department of Justice
believes merit more extensive examination. If there are such issues, it
is likely that the application would be removed from expedited
processing.
One commenter further suggested that language be added to the final
rule that would preclude FDIC consideration of any factor unless that
factor is specifically referred to in the regulation. The FDIC believes
such a provision would be ill advised and not in the public interest.
General categories of considerations specified in the Bank Merger Act
and other relevant statutes are identified in the Statement of Policy
on Bank Merger Transactions (published elsewhere in today's Federal
Register). The necessity of expressly enumerating each and every factor
to be considered within these categories would result in a regulation
of unwieldy length.
Proposed Sec. 303.66(f) provided that if the Attorney General does
not provide a competitive factors report and certain delegation
criterion are satisfied, the appropriate regional director (DOS) may
request a written opinion from the FDIC's General Counsel or designee
as to whether the proposed merger might have a significantly adverse
effect on competition. Since the request for a written opinion was
permissive, the language has been deleted from the final rule. The FDIC
notes that nothing would prohibit a regional director from requesting
such an opinion.
The FDIC adopts this section with the revisions discussed above.
Authority retained by the FDIC Board of Directors. Proposed
Sec. 303.27 set forth authority retained by the Board of Directors. No
comments were received on this section. The FDIC adopts this section as
proposed.
E. Subpart E--Change in Bank Control
The proposal substantially reorganized, clarified, and simplified
the FDIC's regulation implementing the Change in Bank Control Act of
1978. The changes, developed in consultation with the other federal
banking agencies, harmonize the scope and procedural requirements of
the FDIC's regulation with those of the other federal banking agencies
and reduce unnecessary burden. In addition, a common form which may be
used to satisfy the notice requirements of the Change in Control Act
has been adopted by the four federal banking agencies and is available
from any FDIC regional office.
The proposal defined the previously undefined term ``acting in
concert'' to clarify the scope of the regulation. It also incorporated
the current FDIC position that the acquisition of a loan in default
that is secured by voting shares of an insured state nonmember bank is
presumed to be an acquisition of the underlying shares. Further, the
proposal lengthened the period of time for notifying the FDIC from 30
to 90 days for shares acquired in satisfaction of a debt previously
contracted in good faith or through testate or intestate succession or
a bona fide gift. In the case of shares acquired in satisfaction of a
debt previously contracted, the proposal added language that reflects
FDIC practice of requiring the acquiror of a defaulted loan secured by
a controlling amount of a state nonmember bank's voting securities to
file a notice before the loan is acquired.
The proposal also reduced regulatory burden on persons whose
ownership percentage increases as the result of a redemption of voting
shares by the issuing bank or the action of a third party not within
the acquiring person's control. In these situations, the proposal
permits the person affected by the bank or third party action to file a
notice within 90 calendar days after receiving notice of the
transaction. Currently, these persons must file notice under the Change
in Bank Control Act prior to the action that increases the person's
percentage ownership, and, because these persons cannot control the
third party action that causes the increased percentage ownership, they
are often put in violation of the Change in Bank Control Act and the
FDIC's Rules and Regulations.
The proposal provided more flexible timing for newspaper
announcements of filings under the Change in Bank Control Act by
permitting notificants to publish the announcement as close as
practicable to filing the notice of change in control. The proposal
removed the requirement that the notificant have confirmation that the
FDIC has accepted the notice before publishing the announcement.
The proposal deleted the provision governing notices filed in
contemplation of a public tender offer which permits an acquiror to
delay publication of the newspaper announcement. None of the other
federal banking agencies has such a provision.
The FDIC received two comments regarding the proposal. One
commenter supported the proposed changes to the regulation and the
other did not object to the changes proposed. The FDIC adopts this
section as proposed.
F. Subpart F--Change of Director or Senior Executive Officer
The proposed rule implemented the amendments to section 32 of the
FDI Act and set forth the circumstances under which an insured state
nonmember bank must give the FDIC prior notice of a change in any
member of its board of directors or any senior executive officer and
the procedures for filing such notice, as well as applicable
delegations of authority. The proposed rule also strived to harmonize
the procedural requirements of the FDIC's regulation with those of the
other federal banking agencies and to reduce any unnecessary regulatory
burden. In addition, a common application form providing the notice
requirements of section 32 has been adopted by the federal banking
agencies and is available from any FDIC regional office.
Section 2208 of EGRPRA (12 U.S.C. 1843) amended section 32 by
eliminating the prior notice requirement for institutions and holding
companies that are chartered for less than two years or that have
undergone a change in control within the preceding two years. However,
institutions and holding companies that are not in compliance with
minimum capital requirements or
[[Page 44700]]
are otherwise in ``troubled condition'' remain subject to the prior
notice requirement. In addition, EGRPRA provided that prior notice will
be required if the agency determines, in connection with its review of
a capital restoration plan required under section 38 of the FDI Act
(governing prompt corrective action) or otherwise, that such prior
notice is appropriate. Also, the EGRPRA amendments provided the
agencies with more latitude to determine the prior notice period and
allowed the agencies up to 90 days to issue a notice of disapproval.
Although the EGRPRA amendments provided the agencies with authority to
increase the prior notice period to 90 days, the proposed subpart F
retained the 30-day prior notice currently required but allowed the
agency to extend the time to act on a notice by up to an additional 60
days. The FDIC specifically sought public comment on the 30-day time
frame.
Two comments were received on the proposal. One commenter generally
supported the changes in the proposal. Another commenter suggested that
any extension of the 30 day processing period be limited to an
additional 30 days rather than 60 days.
The final rule retains the FDIC's ability to extend the 30 day
notice for up to an additional 60 days. The FDIC expects to act on the
vast majority of these cases within 30 days. It is anticipated that
this additional 60-day period would be used infrequently. In all such
cases, the notificant will be advised in writing prior to expiration of
the 30-day prior notice period of the reason the FDIC could not take
action and of the projected additional time needed.
The final rule adopts subpart F as proposed, with minor technical
changes.
G. Subpart G--Activities and Investments of Insured State Banks
The part 303 proposal reserved subpart G for filing procedures
related to activities and equity investments of insured state banks
which are currently contained in part 362 (12 CFR 362). Part 362
implements section 24 of the FDI Act (12 U.S.C. 1831a), which was
created by the Federal Deposit Insurance Corporation Improvement Act of
1991 (Pub. L. 102-242, 105 Stat. 2236), and governs the circumstances
in which insured state banks may engage in activities which are not
permissible for national banks.
The FDIC has an outstanding notice of proposed rulemaking to make
comprehensive revisions to part 362. 62 FR 47969, September 12, 1997.
In connection with these revisions, the FDIC proposes to eliminate
certain application procedures which are outdated, and also to
authorize certain activities to be approved by the FDIC on an expedited
basis. At the time the FDIC issued its part 303 proposal, the FDIC
could not determine whether its 362 proposal or its part 303 proposal
would be finalized first. In order to deal with this problem, the
application procedures which implement the proposed revisions to part
362 concerning state bank activities were issued in subpart E of the
part 362 proposal. The part 303 proposal advised members of the public
taking an interest in the FDIC's application procedures for the
activities of insured state banks under part 362 to review the part 362
proposal for the specifics of such application procedures. Both
proposals also advised the public that it is the FDIC's intent to place
the part 362 application procedures relating to state bank activities
in subpart G of part 303 at such time as both rules are final.
One commenter responding to the part 303 proposal addressed certain
substantive aspects of the part 362 proposal. The FDIC will take this
comment into consideration when the FDIC finalizes part 362.
The final rule for part 303 will continue to reserve subpart G.
When the FDIC issues the final rule for part 362, the final version of
the application procedures proposed in subpart E of the part 362
proposal will be issued as final rule amendments to subpart G of part
303. In the interim, insured state banks operating under the current
version of part 362 will continue to look to the current version of
part 362 itself for application procedures until the revisions to part
362 become effective.
H. Subpart H--Filings by Savings Associations
Subpart H of the proposal was reserved for filing procedures
related to activities of insured savings associations and subsidiaries
of insured savings associations that were, at the time of the proposal,
contained in Sec. 303.13 of part 303 (12 CFR 303.13). Section 303.13
implemented sections 28 and 18(m) of the FDI Act (12 U.S.C. 1831e and
12 U.S.C. 1828(m)) which were both enacted as part of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (Pub. L.
101-73, 103 Stat. 484). Provisions of Sec. 303.13 generally governed
the circumstances in which a state savings association could engage in
activities which are not permissible for a federal savings association,
and also required all insured savings associations to notify the FDIC
prior to establishing or acquiring a subsidiary or engaging in any new
activities through a subsidiary.
As part of the FDIC's currently outstanding notice of proposed
rulemaking to revise part 362, the FDIC proposed to address the
substantive issues covered by Sec. 303.13 as subparts C and D of the
revised part 362. 62 FR 47969, September 12, 1997. The part 362
proposal harmonizes, to the extent possible given the differences in
the underlying statutes, the treatment of activities of insured state
banks and the activities of insured state savings associations. In
addition, the proposal retains the statutory notice procedure for all
savings associations establishing or acquiring subsidiaries or engaging
in any new activities through a subsidiary. In connection with these
revisions, the FDIC proposed to eliminate certain one-time application
procedures that are outdated, and also to authorize certain activities
to be approved by the FDIC on an expedited basis. As noted above, at
the time that the FDIC issued its part 303 and part 362 proposals the
FDIC could not determine whether its part 362 proposal or its part 303
proposal would be finalized first. To compensate for this timing issue,
the application and notice procedures that implement the proposed
revisions to part 362 concerning savings associations were issued in
subpart F of the 362 proposal. The preamble to proposed part 303
advised readers to review the part 362 proposal for the specifics of
such application and notice procedures. Both proposals also advised the
public that it is the FDIC's intent to ultimately place the part 362
application and notice procedures relating to savings associations in
subpart H of part 303 at such time as both rules are final.
Since part 303 is now being finalized and part 362 will be
finalized at a later date, former Sec. 303.13 is being redesignated,
without substantive change, as subpart H of part 303. Savings
associations that were operating under former Sec. 303.13 will now look
to subpart H. At such time as part 362 is finalized, however, these
interim procedures will be replaced with the application procedures
adopted with part 362.
No comments were received regarding the reservation of subpart H.
Comments were received, however, on the proposed part 362, and those
comments are being considered in the course of the part 362 rulemaking.
The procedures being adopted at this time preserve without
substantive change the former Sec. 303.13, and redesignates it as
subpart H, Sec. 303.140 through Sec. 303.148. The subpart makes
[[Page 44701]]
several technical and format changes and deletes obsolete references.
First, it adds a Scope section describing the contents of subpart H.
Second, the final rule inserts subheadings in the text in order to
conform the format with the rest of the final part 303. Third, the
final rule removes obsolete references to filing deadlines that expired
years ago. Fourth, it makes certain technical changes throughout to
conform the terminology used in subpart H with that used in part 303.
For example, ``appropriate regional director (DOS)'' has been
substituted for ``(DOS) regional director for the region in which the
state savings association's principal office is located.''
The FDIC adopts this section with the above-referenced
modifications.
I. Subpart I--Mutual-to-Stock Conversions
Proposed Subpart I contained the procedures for filing and
processing the prior notice required of state-chartered mutual savings
banks that propose to convert to stock form. The proposed regulatory
text was almost identical to that contained in Sec. 303.15; however a
delegation of authority was added to allow the Director and Deputy
Director (DOS) to issue a notice of intent not to object to a proposed
conversion transaction that is determined not to pose a risk to the
institution's safety or soundness, violate any law or regulation,
present a breach of fiduciary duty, and or raise any unique legal or
policy issues. The proposal provided that the substantive regulation
regarding mutual-to-stock conversions remain in Sec. 333.4 of this
chapter (12 CFR Part 333).
The FDIC received three comments on proposed subpart I, which are
summarized below in the following discussion of substantive changes to
the regulatory text.
Filing procedures. As proposed, Sec. 303.161 only stated that a
notice shall provide a description of the proposed conversion and
include all materials that have been filed with any state or federal
banking regulator and any state or federal securities regulator. Copies
of all agreements entered into as part of the conversion process were
also required. An insured mutual savings bank chartered by a state that
does not require the filing of a conversion application was merely
required to notify the FDIC of the proposed conversion and provide any
materials requested by the FDIC. No further guidance was given to
institutions on what the notice should contain. One commenter believed
that FDIC's request of ``any'' materials from a state-chartered mutual
savings bank not required to file a state application is overly broad
and does not provide sufficient guidance. The commenter recommended
that the FDIC specify the types of materials the FDIC may request in
that situation. The FDIC believes the suggestion is well founded and,
upon reflection, believes that it is appropriate to specify the
required content of a notice whether or not a filing is being made with
the chartering authority. As a result, Sec. 303.161 has been expanded
to give more guidance with regard to the content of the filing.
New Sec. 303.161(c), ``Content of notice,'' provides a
comprehensive listing of the materials to be included in a complete
notice. The required contents include the plan of conversion, certified
board resolutions relating to the plan, a business plan, a description
of employee benefit plans, a proxy statement and offering circular, a
copy of the charter and bylaws, etc. The listing in no way expands on
the materials currently required and imposes no new requirements. It is
believed that this comprehensive listing of contents will better enable
applicants to file a substantially complete notice and make it less
likely that FDIC will find it necessary to request additional
information prior to acceptance of an application for processing. The
informational requirements in Sec. 333.4 of this chapter relating to
appraisal reports and business plans are incorporated into the listing.
To further clarify requirements, reference is made to the
possibility that related applications for deposit insurance and mergers
transactions may be required, depending upon how the transaction is
structured. Other editorial changes were made to clarify intent, but in
no way alter the substance of the requirements.
The FDIC adopts this section with the increased guidance as
discussed above.
Waiver from compliance. The proposed regulation did not contain
procedures for requesting a waiver from compliance with the substantive
requirements regarding conversions contained in Sec. 333.4 of this part
since such provisions were contained in Sec. 333.4 of this chapter. The
FDIC has decided to move these provisions relating to the procedural
requirements for requesting a waiver from compliance of the
requirements of Sec. 333.4 of this chapter and subpart I of this part
to the revised Sec. 303.162 so that all notice and waiver provisions
for mutual to stock conversions are contained in one subpart. No
substantive changes were made to the waiver procedures in the transfer
from Sec. 333.4 to Sec. 303.162.
Processing. Proposed Sec. 303.163 lists the factors to be
considered by the FDIC in evaluating the notice filed by an institution
seeking to convert from mutual to stock form.
With regard to processing procedures, two commenters believed that
the proposed 60-day notice processing period, as well as the 60-day
extension, should be shortened. One commenter suggested that the notice
period begin immediately upon filing of the notice.
The FDIC believes the existing 60-day notice period is appropriate.
For notices that involve significant legal or policy issues, a shorter
processing period is not practical. Likewise, the 60-day extension
period is viewed as appropriate; however, the FDIC anticipates that any
extension of the notice period will be only as long as necessary to
accomplish a complete review. The FDIC believes that conversion
transactions not involving significant legal or policy issues generally
can be reviewed by DOS within the initial 60-day period. Regarding
commencement of the 60-day notice period, the FDIC believes it is only
practical to begin the period when substantially all of the material
required to make a decision is readily available for review. The final
rule is modified to clarify that a notice will be accepted when it is
deemed ``substantially complete.''
One commenter suggested that the FDIC staff issue only one set of
written comments that would include comments from all FDIC staff
members reviewing the notice rather than forwarding comments from the
various reviewers as separate communications. The FDIC believes that
combining all the comments from the various offices within the FDIC
would neither expedite processing nor facilitate prompt resolution of
issues, but instead would slow the entire review process. Since a
notice may raise a number of different types of regulatory issues, FDIC
staff with varying areas of expertise are routinely called upon to
evaluate certain aspects of a notice. The current system allows the
notificant to receive comments on an on-going basis and thus begin to
cure any defects in the notice without undue delay.
The FDIC has replaced the term ``notice of intent not to object''
with the term ``letter of non-objection'' to better describe the final
nature of the action.
The FDIC adopts this section with the changes noted above and other
editorial changes to clarify intent.
Delegation of authority. Section Sec. 303.164 of the proposed rule
provided for delegation of authority to the Director (DOS) and the
Deputy Director
[[Page 44702]]
to issue non-objection letters when the proposed conversion is
determined not to pose a risk to the converting institution's safety
and soundness, violate any law or regulation, present a breach of
fiduciary duty, or raise any unique legal or policy issues. Two
commenters viewed the proposed delegation of authority as favorable and
agreed that the proposed delegation of authority would reduce notice
processing times. One of these commenters, however, recommended that
the FDIC provide guidelines in a statement of policy or financial
institution letter specifying what constitutes a ``routine
transaction'' eligible for non-objection under delegated authority. At
this time, the FDIC believes providing specific statements of policy or
financial institution letters on what constitutes a ``routine
transaction'' is not necessary; however, the Board may in the future
consider the issuance of a statement of policy addressing issues
relating to the mutual-to-stock conversion process.
A third commenter objected to any delegation of authority to issue
a letter of non-objection. The Board has acted on numerous conversion
notices over the last four years and has provided staff with
considerable guidance regarding the kinds of transaction that are not
objectionable. Cases which raise unique legal or policy issues or
otherwise do not meet the criteria outlined in the regulation will
continue to be reviewed by the Board.
After careful consideration of the comments, the FDIC is adopting
the delegation of authority as proposed.
J. Subpart J--International Banking
Subpart J centralizes application requirements relating to the
foreign activities of insured state nonmember banks and the U.S.
activities of insured branches of foreign banks.
Proposed Interim Application Procedures
The part 303 proposal contained four interim application
procedures.2 At the time the FDIC issued the part 303
proposal, the FDIC had an outstanding notice of proposed rulemaking to
revise the substantive rules underlying the interim procedures. 62 FR
37748, July 15, 1997 (part 347 proposal). The FDIC could not at that
time determine whether the part 303 proposal would be finalized before
the part 347 proposal, and the interim procedures would have been
necessary in that event. Subpart D of the part 347 proposal contained
the permanent versions of the four application procedures, designed to
work with the substantive revisions made to the FDIC's international
banking operations under the part 347 proposal. However, on April 8,
1998 the FDIC published the final rule for part 347, thus eliminating
the need for the interim procedures. 63 FR 17056, April 8, 1998. The
FDIC received no public comments on the interim procedures.
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\2\ These were procedures for: (1) establishing, moving, or
closing a foreign branch of a state nonmember bank, Sec. 303.182;
(2) investment by state nonmember banks in foreign organizations,
Sec. 303.183; (3) exemptions from the insurance requirement for a
state branch of a foreign bank, Sec. 303.186; and (4) approval for
an insured state branch of a foreign bank to conduct activities not
permissible for federal branches, Sec. 303.187.
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Transfer of Application Procedures from Part 347
The final rule for part 303 transfers the four application
procedures contained in subpart D of part 347 to subpart J of part 303.
Section 347.402 of this chapter, on establishing, moving or closing a
foreign branch of a state nonmember bank under Sec. 347.103 of this
chapter, has been transferred to Sec. 303.182. Section 347.403 of this
chapter, on investment by insured state nonmember banks in foreign
organizations under Sec. 347.108 of this chapter, has been transferred
to Sec. 303.183. Section 347.404 of this chapter, on exemptions from
the insurance requirement for a state branch of a foreign bank under
Sec. 347.306 of this chapter, has been transferred to Sec. 303.186.
Section 347.405, on approval for an insured state branch of a foreign
bank to conduct activities not permissible for federal branches under
Sec. 347.213 of this chapter, has been transferred to Sec. 303.187. The
FDIC has made certain technical changes to the language of the
procedures to integrate them with the rest of part 303, but these
changes in language have not changed the substance of the procedures.
In Sec. 303.183, setting out application procedures for investment
by insured state nonmember banks in foreign organizations under
Sec. 347.108 of this chapter, the FDIC has added one requirement. If an
insured state nonmember bank owns 50 percent or more of the voting
equity interests of a foreign organization or otherwise controls the
organization, and the insured state nonmember bank divests itself of
such ownership, the insured state nonmember bank is required to notify
the FDIC by letter within 30 days. This requirement has been added to
parallel the requirement for notice upon closure of a foreign branch
under Sec. 303.182(d).
In connection with the part 347 rulemaking, the FDIC received
public comments on the four application procedures contained in subpart
D of part 347. The preamble to the final rule for part 347 contains a
discussion of the FDIC's consideration of the comments and a
description of the application processes. 63 FR 17056 April 8, 1998.
Noninterim Application Procedures
Proposed part 303 also contained two application procedures which
are not of an interim nature: the procedure for moving an insured
branch of a foreign bank, and the procedure for merger transactions
involving an insured branch of a foreign bank. The definition of an
``eligible insured branch'' at Sec. 303.181(c)(2) has been modified to
make it consistent with Sec. 303.2(r)(2), clarifying that the CRA
rating requirement does not apply to institutions which are not subject
to CRA examinations.
Moving an Insured Branch of a Foreign Bank
Proposed Sec. 303.184 addressed applications by any insured branch
of a foreign bank which wishes to move from one location to another
under section 18(d)(1) of the FDI Act (12 U.S.C. 1828(d)). The FDIC
proposed that Sec. 303.184 parallel proposed subpart C, since the
FDIC's consent to these applications is legally subject to the same
statutory considerations as applications to establish or relocate a
domestic branch or to relocate the main office of an insured state
nonmember bank. This included expedited processing for an eligible
insured branch, and a definition of ``eligible insured branch'' which
paralleled the general Sec. 303.2(r) definition of ``eligible
depository institution,'' with appropriate changes to take into account
the different supervisory rating system and capital requirements
applicable to insured branches.
The FDIC received no comments on proposed Sec. 303.184.
The FDIC has made two changes to Sec. 303.184 in the final rule.
The language in Sec. 303.184(a)(2)(iv) has been modified to simply
require a statement as to whether or not a particular site for a branch
is included in or eligible for inclusion in the National Register of
Historic Places, including documentation of consultation with the State
Historic Preservation Officer as appropriate. Proposed Sec. 303.184(d)
delegated authority to the Director and Deputy Director, and where
confirmed in writing, to an associate director, and the appropriate
regional director and deputy regional director (DOS) to approve
applications to move an insured branch of a foreign bank, subject to
specific criteria. The criteria set forth
[[Page 44703]]
in paragraph 303.184(d)(1)(v) provided that an application could be
approved by the regional director or deputy regional director (DOS)
only where no CRA protest as defined in Sec. 303.2(l) had been filed
which remained unresolved, or where such protest remained unresolved,
the appropriate DCA official concurred that approval would be
consistent with the purposes of the CRA, and the applicant agreed in
writing to any conditions imposed regarding the CRA. Under the
proposal, where a protested application remained unresolved the
Director, Deputy Director or associate director (DOS) could approve the
application without DCA concurrence. While no commenters specifically
addressed this provision, several commenters raised general concerns
regarding the FDIC's delegation of authority to act upon CRA protested
applications. As discussed above, the FDIC believes that it is
desirable to vest authority to act on protested applications in
officials most likely to be personally familiar with the communities
involved. Section 303.184(d) has been revised in the final rule to
restrict the authority of the Director, Deputy Director and associate
director (DOS) to act upon CRA protested applications by requiring them
to obtain DCA concurrence before approving such an applications. The
FDIC believes that this revision will ensure that those FDIC officials
with relevant expertise will act together to approve any application
under this section that is subject to an unresolved CRA protest.
Merger Transactions Involving an Insured Branch of a Foreign Bank
An insured branch of a foreign bank meets the definition of an
insured depository institution under section 3 of the FDI Act (12
U.S.C. 1813) and is therefore subject to the Bank Merger Act. The FDIC
proposed Sec. 303.185, in order to give insured branches conducting
merger transactions which are subject to FDIC approval the benefit of
the same streamlined application processing proposed for domestic
institutions in subpart D of part 303. Proposed Sec. 303.185 clarified
that an eligible insured branch as defined in subpart J generally is
eligible for the expedited processing available to an eligible
depository institution in subpart D. Similarly, Sec. 303.185 clarifies
that a transaction in which an insured branch is merged with other
branches, agencies, or subsidiaries located in the United States of the
same foreign bank parent is eligible for disposition under the enhanced
delegations applicable to corporate reorganizations.3
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\3\ If the foreign bank parent itself is not primarily engaged
in business in the United States, and is involved in some merger
transaction or other combination outside the United States which
does not result in any corresponding merger transaction in the
United States with respect to an insured branch, section 18(c)(11)
of the FDI Act (12 U.S.C. 1828(c)) provides that no approval is
required, since no party to the transaction is primarily engaged in
business in the United States.
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Proposed Sec. 303.185 also incorporated a point explained in
Advisory Opinion FDIC-96-12 (May 13, 1996) concerning the treatment of
an insured branch under section 44 of the FDI Act (12 U.S.C. 1831u) as
added by section 102 of the Interstate Act. Section 44 permits the
responsible federal regulator to approve an interstate merger
transaction involving the acquisition of a branch of an insured bank
without the acquisition of the entire bank, but approval is possible
only if the state in which the branch is located expressly permits out-
of-state banks to acquire a branch of the bank without acquiring an
entire bank. In contrast, section 44 permits the responsible federal
regulator to approve an interstate merger transaction involving the
acquisition of an entire bank if the state in which the bank is located
has not adopted legislation to opt out of interstate merger
transactions. Proposed Sec. 303.185 treated interstate merger
transactions involving an insured branch under the latter approach.
Express state authority permitting out-of-state banks to acquire a
branch of the bank without acquiring the entire bank is required only
if a foreign bank has more than one insured branch in the affected
state and proposes to sell fewer than all of them to the same acquiror.
If such state authority does not exist, the FDIC requires the foreign
bank to sell all of its insured branches in that state to the same
affiliated or unaffiliated acquiror.
The FDIC received no comments on proposed Sec. 303.185.
In the final rule, the FDIC has made no changes to the above-
described portions of Sec. 303.185 governing merger transactions
involving insured branches of foreign banks. However, the FDIC has
added another subsection to the final version of Sec. 303.185. Section
303.185(b) of the final rule addresses certain transactions in which a
U.S. insured depository institution acquires deposits from a foreign
organization at a location in a foreign country, as described below.
The Bank Merger Act (12 U.S.C. 1828(c)) requires these transactions to
be reviewed and approved by the FDIC prior to consummation. Although
these transactions are likely to be rare, the FDIC has added section
303.185(b) to the final rule, highlighting the existence of the
statutory approval requirement in the interest of providing helpful
guidance to the industry. These transactions are subject to Bank Merger
Act approval in accordance with the procedures contained in subpart D
of part 303.
With one exception discussed in the following paragraphs, nothing
in the statutory language or legislative history of the Bank Merger Act
indicates that Congress intended the statute to apply to a U.S. insured
depository institution's acquisitions in foreign countries. The
competitive factors to be analyzed under the Act are by their terms
concerned solely with effects in the U.S. While the financial and
management factors could be germane, most foreign acquisitions are
already subject to approval by federal bank regulators, since section
25 of the Federal Reserve Act (12 U.S.C. 601) or section 18(l) of the
FDI Act requires banking agency approval before an insured bank may
acquire stock (or other evidences of ownership) of foreign banks or
organizations. While certain acquisitions structured as mergers or
purchase and assumption transactions do not involve stock acquisition
subject to approval under these statutes, the insured bank frequently
will establish a foreign branch office in the foreign country as part
of the transaction, requiring federal banking agency approval under
section 25 of the Federal Reserve Act or section 18(d)(2) of the FDI
Act.
Section 18(c)(1)(B) of the Bank Merger Act requires FDIC approval
whenever an insured depository institution assumes liability to pay any
deposits or similar liabilities of any noninsured bank or institution.
Section 18(c)(1)(B), in referring to an assumption of liability to pay
deposits, expressly includes a parenthetical reference to liabilities
which are ordinarily excluded from the statutory definition of a
``deposit'' in section 3(l) of the FDI Act under the proviso in section
3(l)(5) (12 U.S.C. 1813(l)(5)). This reference was added to the Bank
Merger Act in 1978, by the Financial Institutions Regulatory and
Interest Rate Control Act, Pub. L. 95-630 (FIRIRCA). The legislative
history of FIRIRCA states that the reference was added to make it clear
that the FDIC's approval is necessary in connection with an insured
bank's assumption of the deposit liabilities of a foreign noninsured
bank. S. Rep. No. 95-323, 95th Cong., 1st Sess. (1977) at 29; H.R. Rep.
No. 95-1383, 95th Cong., 1st Sess. (1977) at 45.
Section 3(l) defines the term ``deposit'' for purposes of the FDI
Act. At the time of the FIRIRCA amendment,
[[Page 44704]]
the section 3(l)(5) proviso stated that the definition of a deposit, or
an insured deposit, did not include any obligation of a bank which was
payable only at a bank office located in a foreign country. See 12
U.S.C.A. 1813(l)(5) (West 1980). Under the language of the proviso,
there was the potential for the liabilities of the FDIC's insurance
fund to be increased when a U.S. insured bank acquired deposit
liabilities from a foreign bank in a foreign country, such as by
assuming the deposits of a branch of a foreign bank in another country
in connection with acquiring the branch in that country. After the
deposits had been assumed by the U.S. insured bank, the depositors
might be heard to argue their deposits were payable at the insured
bank's home office in the U.S., since it would be unlikely that their
deposit agreements with the foreign bank, which had no U.S. offices,
had contained provisions prohibiting payment in the U.S. Absent the
parenthetical added to section 18(c)(1)(B) by FIRIRCA, these assumption
transactions were arguably not subject to review by the FDIC, since the
liabilities being assumed, in the hands of the foreign bank, did not
meet the deposit definition. The FDIC took the position that section
18(c)(1)(B) would apply, since the deposits might be within the section
3(l) definition upon consummation of the assumption, and Congress, in
an abundance of caution, added the parenthetical to clarify the issue.
By extension, a merger or consolidation resulting in a U.S. insured
bank's acquisition of deposit liabilities also required approval under
section 18(c)(1)(A).4 From approximately 1978 to 1994, the
FDIC gave Bank Merger Act approval to several insured bank acquisitions
abroad.
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\4\ This was because the parenthetical in section 18(c)(1)(B)
established that the term ``noninsured bank or institution'' in
section 18(c)(1)(B) included foreign organizations, and section
18(c)(1)(A) also covers mergers or consolidations with any
``noninsured bank or institution.''
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Subsequent additions to section 3(l)(5) have reduced the potential
for a foreign acquisition to directly increase the liability of the
deposit insurance funds. In 1994, section 326 of CDRIA amended section
3(l)(5), eliminating the proviso and adding a new statutory test. Any
obligation which is carried on the books of an institution's office in
a foreign country is excluded from the definition of deposit unless,
among other things, the contract evidencing the obligation provides by
express terms, and not by implication, that the deposit is payable at
an office in the U.S. See 12 U.S.C. 1813(l)(5)(A) (West Supp. 1998).
The addition of this express contractual element means that depositors
holding foreign bank deposits abroad, whose deposits are assumed by a
U.S. insured depository institution abroad, cannot argue that the
assumption, standing alone, qualifies their claims for treatment as
``deposits'' under the FDI Act. The U.S. insured depository institution
would have to enter into a new contract with the depositor containing
such a term. If a particular transaction involved a U.S. institution's
assumption of foreign bank deposit contracts which contained such a
term prior to the assumption, the deposits might satisfy the section
3(l) definition. But, given industry practices, this scenario is not
likely to arise, and even if it did, the issue would be clearly
apparent to the U.S. institution.
Although CDRIA eliminated the section 3(l)(5) proviso to which the
parenthetical in section 18(c)(1)(B) refers, and CDRIA's additions to
the deposit definition in section 3(l)(5) have narrowed the category of
acquisitions presenting the risk which the section 18(c)(1)(B)
parenthetical was designed to address, the parenthetical in section
18(c)(1)(B) still requires a Bank Merger Act application for any
assumption of foreign deposits from a noninsured foreign institution
which directly increases the potential insured deposit liabilities of
the deposit insurance funds. A merger or consolidation with a
noninsured foreign institution having the same effect also requires
FDIC approval under section 18(c)(1)(A), since section 18(c)(1)(A) uses
the same ``noninsured bank or institution'' language found in section
18(c)(1)(B). In order to highlight this statutory requirement for the
benefit of the industry, the FDIC has added Sec. 347.185(b). This
section states that the FDIC's Bank Merger Act approval is required for
any merger transaction in which an insured depository institution
becomes directly liable for obligations which will, after the merger
transaction, be treated as deposits under section 3(l)(5)(A)(i)-(ii) of
the FDI Act (12 U.S.C. 1813(l)(5)(A)(i)-(ii)), as a result of a merger
or consolidation with a foreign organization or an assumption of
liabilities of a foreign organization. As noted above, such merger
applications are to be submitted and processed under the procedures
contained in subpart D of part 303.
K. Subpart K--Prompt Corrective Action
Section 38 of the FDI Act (12 U.S.C. 1831o), which governs prompt
corrective action, restricts or prohibits certain activities based on
an institution's capital category, and requires an insured institution
to submit a capital restoration plan when it becomes undercapitalized.
Subpart K as proposed set forth procedures for making applications
under section 38.
The FDIC did not receive any comments specifically on subpart K.
The FDIC is adopting the subpart as proposed, with the exception of one
nonsubstantive change.
This change is to Sec. 303.207(b)(6), which requires critically
undercapitalized institutions to obtain the FDIC's approval before
paying excessive compensation or bonuses. The proposed regulatory
language mistakenly cross referenced part 359 of the FDIC's rules as
guidance for evaluating what compensation might be excessive, whereas
it is part 364 of the FDIC's rules that governs excessive compensation.
The final rule correctly cites part 364. The remainder of the paragraph
has been removed, because appropriate guidance is now contained in part
364. See 57 FR 44866, 44883, September 29, 1992.
L. Subpart L--Section 19 of the FDI Act (Consent to Service of Persons
Convicted of Certain Criminal Offenses)
Section 19 of the FDI Act (12 U.S.C. 1829) prohibits any person
convicted of any crime involving dishonesty, breach of trust, or money
laundering, or who has agreed to enter into a pretrial diversion or
similar program in connection with a prosecution for any such offense,
from (i) continuing as or becoming an institution-affiliated party,
(ii) owning or controlling directly or indirectly an insured depository
institution, or (iii) otherwise participating in the conduct of the
affairs of FDIC-insured depository institutions, without the FDIC's
prior written consent.
Proposed subpart L did not substantially amend current section 19
application procedures, but brought together all information on section
19 which was previously contained in various sections of old part 303.
Section 303.222 of the proposal clarified the FDIC's position that the
prior consent of the FDIC is required before a person approved under
section 19 to participate in the affairs of a particular institution
may participate in the affairs of another insured institution.
As stated in the proposal, on July 24, 1997, the FDIC Board of
Directors published for comment a proposed Statement of Policy on
Section 19 which contains interpretations of the statutory language (62
FR 39840). Section L should be read in conjunction with the proposed
policy statement for a more complete understanding of the FDIC's
[[Page 44705]]
position on section 19. When the final Statement of Policy is adopted,
the FDIC may find it necessary to revise subpart L accordingly.
The FDIC received no comments on the proposed subpart L and is
adopting the subpart as proposed.
M. Subpart M--Other Filings
As proposed, subpart M contained the procedural requirements and
delegations of authority for miscellaneous filings which did not
warrant treatment as separate subparts. Under the proposal, all
information relating to a particular filing is brought together in a
self-contained section under a standardized format. The proposal also
provided for new expedited review procedures for certain applications.
Proposed part 303 contemplated that the filing procedures for
requesting an exemption from the statutory bar on management interlocks
pursuant to the Depository Institutions Management Interlocks Act (12
U.S.C. 3207) and the FDI Act (12 U.S.C. 1823(k)) would continue to be
contained in part 348 of this chapter (12 CFR part 348). After further
consideration, and in the interest of placing all of the application
procedures in part 303 to the greatest extent possible, the FDIC has
decided to move the procedural requirements and delegation of authority
for filings for management official interlocks from part 348 to part
303. Such filing requirements are now found in new Sec. 303.250 and the
remainder of the subpart has been renumbered in light of this
additional provision. The inclusion of these filing procedures is
considered a technical change by the FDIC. No substantive changes have
been made to these procedures.
The FDIC and other federal banking agencies are engaged in a
rulemaking to amend their respective management official interlocks
regulations to conform to recent statutory changes, modernize and
clarify rules, and reduce unnecessary regulatory burden where feasible.
Once this rulemaking is completed, the applications procedures and
delegations of authority for management official interlocks will be
revised to bring them into conformity with the amended interlocks
regulations. This will be done subsequent to this part 303 rulemaking
by means of a final rule without notice and comment since such changes
are purely technical in nature.
Reduce or retire capital stock or capital debt instruments. Section
303.241 reorganized and clarified procedures for applications to reduce
or retire capital stock, notes or debentures pursuant to section
18(i)(1) of the FDI Act (12 U.S.C. 1828(i)(1)). The FDIC received one
comment specifically with regard to the expedited review procedures for
these types of applications. The commenter supported the eligibility of
these types of applications for expedited procedures. The FDIC is
adopting this section as proposed.
Exercise of trust powers. The FDIC proposed to amend part 303 to
create a new section relating to trust applications that brings
together all the trust application procedures as well as the related
delegations of authority into one centralized location. The FDIC
received one comment regarding this section which supported the
eligibility of trust applications for expedited procedures. The FDIC is
adopting this section as proposed.
Brokered deposit waivers. The proposal reorganized the regulations
regarding applications to accept brokered deposits by adequately
capitalized insured depository institutions. In the proposal, the
application procedures were placed in Sec. 303.243 and the substantive
rules regarding the acceptance of brokered deposits remained in
Sec. 337.6. The proposal retained expedited processing for brokered
deposit waivers yet modified it to parallel the requirements for an
``eligible depository institution'' in Sec. 303.2(r), with the
exception of the well-capitalized criteria. The FDIC received no
specific comments on this section and is adopting the section as
proposed.
Golden parachutes and severance plan payments. The proposal revised
the regulatory provisions regarding applications to make excess
nondiscriminatory severance plan payments and golden parachute payments
by insured depository institutions or depository institution holding
companies. The FDIC's regulations with respect to such payments are
codified at part 359. The FDIC received no specific comment on the
proposed changes and is adopting the section as proposed, with minor
technical changes.
Waiver of liability for commonly controlled depository
institutions. Proposed Sec. 303.245 provided application procedures for
an insured depository institution to request a waiver of liability
pursuant to section 5(e) of the FDI Act (12 U.S.C. 1815(e)). These
procedures were part of the FDIC's Statement of Policy Regarding
Liability of Commonly Controlled Depository Institutions, which
provided guidance to the industry as to the manner in which the FDIC
will administer the provisions of section 5(e) of the FDI Act. The FDIC
received no specific comments on this section and is adopting the
section as proposed.
The statement of policy is being revised elsewhere in today's
Federal Register to remove these procedures for requesting a
conditional waiver of the cross-guaranty liability from the statement
of policy and to indicate that they may be found in Sec. 303.245.
Insurance fund conversions. The proposal revised regulations
regarding filings for insurance fund conversions at Sec. 303.246 to
reformat the filing requirements and delete references to and
procedures regarding insurance fund conversions qualifying as
exceptions to the insurance fund conversion moratorium imposed in
section 5(d) of the FDI Act (12 U.S.C. 1815(d)(2)(A)(ii)). The FDIC
received no specific comments on this section and is adopting the
section as proposed.
Conversion with diminution of capital. Section 303.247 of the
proposal reorganized and clarified filing procedures pursuant to
section 18(i)(2) of the FDI Act (12 U.S.C. 1828(i)(2)) to convert from
an insured federal depository institution to a state nonmember bank
where the capital stock or surplus of the resulting bank will be less
than the capital stock or surplus, respectively, of the converting
institution at the time of the shareholder's meeting approving such
conversion. The FDIC received no specific comments on the section and
is adopting the section as proposed.
Continue or resume status as an insured institution following
termination under section 8 of the FDI Act. Proposed Sec. 303.248
pertains to applications by depository institutions for permission to
continue or resume their insured status after termination of insurance
under section 8 of the FDI Act (12 U.S.C. 1818). This section covers
institutions whose deposit insurance continues in effect for any
purpose or for any length of time under the terms of FDIC orders
terminating deposit insurance. However, it does not cover any operating
non-insured depository institutions which were previously insured by
the FDIC or any non-insured, non-operating depository institutions
whose charters have not been surrendered or revoked. Institutions not
covered by this section are required to file de novo applications for
FDIC insurance. The FDIC received no specific comments on this section
and is adopting the section as proposed.
Truth in Lending Act--Relief from reimbursement. Proposed
Sec. 303.249 established procedures for an initial request for relief
from reimbursement
[[Page 44706]]
pursuant to the Truth in Lending Act (15 U.S.C. 1601 et seq.) and
Regulation Z (12 CFR part 226) (Truth in Lending). The proposal set
forth new procedures specifically for Truth in Lending cases and
provided that applicants may file initial requests for relief within 60
days after receipt of the compliance report of examination containing
the request to conduct a file search and make restitution to affected
customers. The proposal provided that requests for reconsideration
would be handled under the FDIC's general petition for reconsideration
provision located at proposed Sec. 303.11(f). Specifically, the
proposal provided that if reconsideration of an initial denial of a
request for relief was granted, the merits of the request for relief
would have been reconsidered by the Board of Directors if the request
for relief was originally denied by the Director, Deputy Director or
associate director (DCA). Additionally, if the request for relief was
originally denied by a regional director or deputy regional director,
the merits of the request for relief would have been reconsidered by
the Director or Deputy Director (DCA).
No comments were received regarding this section.
To assist applicants, Sec. 303.249(d) of the final rule provides
that the FDIC will notify the applicant in writing of its determination
on the initial request for relief within 60 days of the FDIC's receipt
of such request. The FDIC adopts this section as proposed with this
modification.
Modifications of conditions. The proposal reorganized and clarified
the procedures for requests to modify a previously issued FDIC approval
of a filing. A new criteria for exercise of delegated authority by DOS
officials was added requiring Legal Division consultation to modify
conditions if Legal Division consultation was required in connection
with the original filing. In the final regulation, the section has been
redesignated as Sec. 303.251 as a result of an addition to the subpart
and the necessity to renumber certain sections. The FDIC is adopting
this section as proposed, with the section number modification.
Extensions of time. Proposed Sec. 303.251 reorganized and clarified
the procedures for requests seeking an extension of time to fulfill a
condition required in an approval issued by the FDIC, or to consummate
a transaction which was the subject of an approval by the FDIC.
The FDIC is making two changes to this section in the final
regulation. First, the FDIC is revising the proposal to make clear that
multiple extensions of time will be allowed. The FDIC does not believe
it is necessary to specify the exact number of extensions rather, the
final regulation provides that an extension of time may not exceed one
year; however, more than one extension may be granted regarding a
particular filing. Second the FDIC has changed the section designation
to Sec. 303.252 as a result of an addition to the subpart resulting in
the necessity to renumber certain sections. The FDIC is adopting this
section with the above-stated modifications.
N. Subpart N--Enforcement Delegations
Proposed subpart N contained several changes to the FDIC's
enforcement delegations of authority, which are discussed in detail in
the proposal (62 FR 52827, October 7, 1997). No comments were received
on the proposed subpart, therefore the FDIC adopts the subpart as
proposed, with certain minor technical revisions to conform the
language delegating authority with the delegations of authority in
other subparts of this part 303, and the following clarifications.
Civil money penalties. Proposed Sec. 303.269 provided delegation of
authority, with one exception, to the Director and Deputy Director
(DOS) and the Director and Deputy Director (DCA) to issue final orders
to pay civil money penalties, whether or not a notice of charges has
been issued in a case. The one exception was to delegate to the General
Counsel the authority to levy and enforce civil money penalties for the
late, inaccurate, false or misleading filing of Reports of Condition
and Income, Home Mortgage Disclosure Act Reports, CRA reports (see 12
CFR 345.42), and all other required reports. This exception has been
deleted in the final regulation as the Board believes that such
delegation to the General Counsel is not consistent with the other
delegations and that the decision to issue such orders should be vested
in the Directors and Deputy Director (DOS or DCA) with the concurrence
of the General Counsel.
Acceptance of written agreements. Proposed Sec. 303.274 continued
in effect FDIC delegations of authority to accept written agreements in
lieu of orders to terminate deposit insurance and to issue cease-and-
desist orders under sections 8(a) and (b) of the FDI Act (12 U.S.C.
1818(a) and (b)). Proposed Sec. 303.274(c) added a new provision giving
authority to the Director and Deputy Director (DOS and DCA) and, where
confirmed in writing by the appropriate Director, to an associate
director, or to the appropriate regional director or deputy regional
director to enter into written agreements with insured institutions and
institution-affiliated parties that contain conditions precedent to
FDIC's nonobjection to a filing. A clarification has been added to the
final regulation providing that an insured institution will not be
disqualified from being treated as ``well-capitalized'' for prompt
corrective action purposes because of having entered into a written
agreement with the FDIC or its primary federal regulator in conjunction
with a filing unless the written agreement expressly states to the
contrary.
Modification and termination of section 8(e) prohibition orders.
Proposed, Sec. 303.275(e) authorized modification or termination of
orders issued under section 8(e) of the Act (12 U.S.C. 1818(e)) if a
respondent established any one of the three factors listed in
Sec. 303.275(e). The use of the word ``or'' rather than ``and'' in
paragraph (2) was a clerical error and has been corrected in the final
regulation.
V. Other Regulatory Changes
A. Part 333--Extension of Corporate Powers
The FDIC is making technical revisions to Sec. 333.4 which governs
the substantive requirements for conversions of insured mutual state
savings banks to the stock form of ownership. Paragraph (b) of
Sec. 333.4 sets forth the procedural requirements for requesting any
waiver from compliance with the requirement of Sec. 333.4 due to
conflicts with state law. Paragraph (b) is deleted from Sec. 333.4 and
moved to Sec. 303.162 with two changes. The first change allows an
institution to file a written request for waiver of compliance with
Sec. 333.4 or subpart I of 12 CFR part 303. The second change provides
two circumstances for which a waiver may be sought: when compliance
would be in conflict with state law or for any other good cause shown.
Paragraphs (c)(4)(i) and (ii) are also deleted from Sec. 333.4 because
they are now included in Sec. 303.161, which sets forth the filing
procedures and the specific contents of the notice of intent to convert
to stock form. Paragraph (c)(4)(i) required the submission of a full
appraisal report on the value of the converting bank and the pricing of
the stock to be sold in the conversion. This requirement is now located
at Sec. 303.161(c)(6). The requirements in Sec. 333.4(c)(4)(i) fully
describing the manner in which an appraisal must be prepared have been
deleted as unnecessary because of the banking industry's knowledge of
acceptable valuation practices. In addition, the Office of Thrift
[[Page 44707]]
Supervision's regulations governing mutual to stock conversions set
forth in detail the requirements for an acceptable appraisal at 12 CFR
Sec. 563b.7(f), and may be used as guidance in this area. Paragraph
(c)(4)(ii) required the submission of a business plan and is now
located at Sec. 303.161.(3).
B. Part 337--Unsafe and Unsound Banking Practices
As part of the FDIC's effort to review and streamline its
regulations pursuant to Riegle Community Development and Regulatory
Improvement Act of 1994 (see Pub. L. 103-325, 108 Stat. 2160, section
337) (CDRIA), the FDIC proposed centralizing virtually all filing
procedures in part 303 of this chapter, including filing procedures for
brokered deposit waivers. 62 FR 52810, October 7, 1997. Specifically,
the proposal moved the procedures for an adequately capitalized insured
depository institution to obtain a waiver of the restrictions on
accepting or renewing brokered deposits from Sec. 337.6 (12 CFR part
337) to Sec. 303.243 (12 CFR part 303). At the same time, technical
amendments were proposed to part 337 to reflect these changes and to
reflect certain changes in the statutory definition of ``deposit
broker'' as a result of the CDRIA. Under the proposal, the amended
statutory language was incorporated in the FDIC's regulatory definition
of ``deposit broker'' at Sec. 337.6(a)(5)(iii). The FDIC received no
comments on these changes and is, therefore, adopting part 337 as
proposed.
C. Part 341--Registration of Transfer Agents
The FDIC proposed to place in a new Sec. 341.7 certain delegations
of authority to the DOS regarding the registration of transfer agents
subject to section 17A(c)(1) of the Securities Exchange Act of 1934 (15
U.S.C. 78q-1(c)(1)) (Exchange Act). 62 FR 52867, October 9, 1997. In
its proposed Sec. 341.7, authority is delegated to DOS to act on
disclosure matters regarding Sections 17 and 17A of the Exchange Act.
However, the FDIC proposed that the Board of Directors retain its
authority to act on disclosure matters when such matters involve
exemptions from registration requirements pursuant to section 17A(c)(1)
of the Exchange Act. No comments were received on proposed Sec. 341.7,
and the FDIC adopts this section as proposed.
D. Part 346--Foreign Banks
The FDIC proposed to relocate, from Sec. 303.8(f) of the current
rule to Sec. 346.19, a delegation of authority for DOS to accept the
pledge agreements by which insured branches of foreign banks pledge
assets for the benefit of the FDIC. The FDIC received no public
comments on the proposal. On April 8, 1998, the FDIC published a final
rule consolidating three parts of the FDIC's rules on international
operations, including part 346, into a single part 347. 63 FR 17056,
April 8, 1998. Section 347.210 of the new rule contains the delegation
in question, so the proposal to relocate Sec. 303.8(f) is no longer
necessary.
E. Part 347--International Banking
As discussed in connection with subpart J, the FDIC is transferring
four application procedures presently contained in part 347 to subpart
J of part 303. The amendments in this rulemaking delete the interim
application procedures from part 347.
F. Part 348--Management Official Interlocks
The FDIC proposed to place certain delegations of authority to DOS
related to management official interlocks in 12 CFR part 348, as a
result of the changes to be made in 12 CFR part 303. 62 FR 52867,
October 7, 1997. The FDIC received no public comment on the proposal.
The FDIC has determined, however, to place the proposed delegations in
subpart M of part 303, rather than part 348, as part of new filing
procedures for requesting an exemption from the statutory bar on
management interlocks. The delegation of authority is now contained in
Sec. 303.250(f).
G. Part 359--Golden Parachute and Indemnification Payments
Part 359 contains the rules regarding the making of excess
nondiscriminatory severance plan payments and golden parachute payments
by insured depository institutions or depository institution holding
companies. The proposal contemplated amending 12 CFR part 359 by moving
information regarding filing instructions from Sec. 359.6 to
Sec. 303.244 and providing appropriate cross references. In addition,
the proposal provided a listing of application contents. These elements
were expanded in the proposal to assist an applicant in preparing a
complete filing. No comments were received on these technical
amendments and the FDIC adopts this section as proposed.
VI. Regulatory Text Deleted From Part 303
As a result of the comprehensive revision of part 303, a number of
provisions currently found in part 303 are not being included in the
final part 303 because these matters are covered elsewhere or are no
longer needed. Those items are summarized below:
Section 303.2(c)--Special procedures for remote service facilities.
Notice procedures for remote service facilities, along with related
delegations of authority and the definition of ``remote service
facility'' have been deleted because EGRPRA excludes such facilities
from the definition of a branch.
Section 303.11(c)--Request for review. This section merely stated
that an aggrieved party may request the Board of Directors to review
any action taken under authority delegated under the former
Secs. 303.7, 303.8, and 303.9. Numerous avenues now exist for appeal,
such as those found under new Sec. 303.11(f) (Appeals and requests for
reconsideration) and part 308 (Uniform Rules of Practice and
Procedure). Broad authority to challenge delegations of authority is
unnecessary and is not in keeping with the Board's recent resolution on
delegations of authority which has been codified in part in Sec. 303.12
(General rules governing delegations of authority).
Section 303.12--OMB control number assigned pursuant to the
Paperwork Reduction Act. This section is deleted in its entirety
because this same material also appears in Sec. 304.7, Display of
control numbers, of this chapter.
Several delegations of authority are also being eliminated:
Section 303.8(b)--Disclosure laws and regulations. The delegations
related to part 335 (Securities of nonmember insured banks) are now
contained in part 335 of this chapter. The delegations to administer
part 341 (Registration of Securities Transfer Agents) are moved to part
341 of this chapter.
Section 303.8(c)--Security devices and procedures and bank service
arrangements. This delegation was to administer the provisions of part
326 (Minimum Security Devices and Procedures). There are no longer any
application procedures related to part 326, so therefore no delegations
of authority are required.
Section 303.8(d)--In emergencies. This was a delegation to staff to
manage the FDIC's affairs in the event an enemy attack renders the
Board of Directors unable to perform its normal management functions.
The Board has determined that no such delegation is necessary and has
deleted the provision.
Section 303.8(h)--Application or notices for membership or
resumption of business. This delegation permitted DOS officials to
provide comments to other federal regulators on applications
[[Page 44708]]
or notices for membership in the Federal Reserve System, or for
conversion of a state bank to a national bank. This delegation is being
deleted as unnecessary.
Section 303.8(i)--Depository Institutions Disaster Relief Act of
1992 (DIDRA). The provisions of DIDRA that were the subject of these
delegations have expired and thus the delegations are removed.
VII. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (44 U.S.C. 3501 et
seq.) the FDIC may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid Office of Management and Budget (``OMB'') control
number.
Collections approved as part of the Part 303 proposed rule. The
proposed rule invited public comment on two collections of information
contained that were submitted to the Office of Management and Budget
(OMB) for review. The first collection is located in Subpart C
(Establishment and Relocation of Domestic Branches and Offices) of the
regulation which sets forth the application requirements and procedures
for insured state nonmember banks to establish a branch, relocate a
main office, and relocate a branch subject to the approval by the FDIC.
The information collected is used by the FDIC to evaluate the factors
required by statute and to determine whether to grant consent. No
public comment was received about this collection. OMB approved this
collection under control number 3064-0070 through November 30, 2000.
The second collection is located in Subpart M (Other filings), Section
303.242 (Exercise of trust powers) which sets forth the application
procedures relating to the FDIC's approval to exercise trust powers.
Each application submitted by a bank is evaluated by the FDIC to verify
the qualifications of bank management to administer a trust department
to ensure that the bank's financial condition will not be jeopardized
as a result of trust operations. No public comment was received about
this collection. OMB approved this collection under control number
3064-0025 through November 30, 2000.
Other Collections of Information. The final part 303 also addresses
other collections of information for which public comment and OMB
approval were sought separate from the part 303 notice of proposed
rulemaking discussed above. Nothing in the final part 303 is intended
to change any of these collections. Specifically, Subpart B (Deposit
Insurance) addresses a collection approved by OMB under control number
3064-0001 which expires on July 31, 2000. Subpart D (Merger
Transactions) addresses a collection approved by OMB under control
number 3064-0015 which expires on September 30, 1998. The merger
application collection was the subject of an interagency solicitation
of public comment concerning the PRA aspects of a single, interagency
form for affiliated and nonaffiliated merger transactions. 63 Fed. Reg.
3182 (Jan. 21, 1998) and was submitted to OMB for review and further
public comment. Subpart E (Change in Bank Control) addresses a
collection approved by OMB under control number 3064-0019 which expires
on January 31, 2000. Subpart F (Change of Director or Senior Executive
Officer) addresses a collection approved by OMB under control number
3064-0097 which expires on January 31, 2000. Subpart G (Activities and
Investments of Insured State Banks), addresses a collection approved by
OMB under control number 3064-0111, and Subpart H (Filings by Savings
Associations), addresses a collection approved under control number
3064-0104, both of which expire on November 30, 2000.
Subpart I (Mutual-to-Stock Conversions) addresses a collection
approved by OMB under control number 3064-0117 which expires on July
31, 2000. Subpart J (International Banking) addresses two collections
approved by OMB under control numbers 3064-0114 and 3064-0125, both of
which expire on July 31, 2000. Subpart K (Prompt Corrective Action)
addresses a collection approved by OMB under control number 3064-0115
which expires on July 31, 1999. Subpart L (Section 19 of the FDIC Act--
Consent to service of persons convicted of certain criminal offenses)
addresses a collection approved by OMB under control number 3064-0018
which expires on July 31, 2000. Subpart M (Other Filings) Sec. 303.241
(Reduce or retire capital stock or capital debt instruments) addresses
a collection approved by OMB under control number 3064-0079 which
expires on November 30, 2000. Subpart M (Other Filings) Sec. 303.243
(Brokered deposits) addresses a collection approved by OMB under
control number 3064-0099 which expires on August 31, 1998.
Modification of collection: Title of the collection: The rule will
modify an information collection previously approved by OMB titled
``Foreign Branching and Investment by Insured State Nonmember Banks''
under control number 3064-0125.
Summary of the collection: The collection consists of applications
for establishing or closing a foreign branch, acquiring stock of a
foreign organization and records and reports which a state nonmember
bank must maintain after it has established a foreign branch or
organization.
Need and use of the information: The FDIC needs the additional
information required by this change, to better assess the condition,
management, and risk to the fund posed by institutions involved in
operating foreign organizations, and also for use in connection with
authorizing other institutions to conduct such operations under section
18(l) of the FDI Act (12 U.S.C. 1828(l)).
Changes to the collection: The rule will modify the collection by
adding, at Sec. 303.183(d), a requirement that, if an insured state
nonmember bank holding 50 percent or more of the voting equity
interests of a foreign organization or otherwise controlling the
foreign organization divests itself of such ownership or control, the
insured state nonmember bank shall file a notice, in the form of a
letter, including the name, location, and date of divestiture of the
foreign organization, with the appropriate DOS regional director no
later than 30 days after the divestiture.
Respondents: State nonmember banks.
Estimated annual burden:
Frequency of response: Occasional.
Number of responses: 2.
Average number of hours to prepare a response: 1.
Total annual burden: 2.
With respect to this modification of a collection, comment is
solicited on:
(i) Whether the collection of information is necessary for the
proper performance of the functions of the agency, including whether
the information will have practical utility;
(ii) The accuracy of the agency's estimate of the burden of the
collection of information, including the validity of the methodology
and assumptions used;
(iii) The quality, utility, and clarity of the information to be
collected; and
(iv) Ways to minimize the burden of the collection of information
on those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting
electronic submission of responses.
The collection of information contained at Sec. 303.183(d) of the
final rule and described above has been submitted to OMB for review.
Comments on the collection of information should be sent to the desk
[[Page 44709]]
officer for the FDIC: Alexander T. Hunt, Office of Information and
Regulatory Affairs, Office of Management and Budget, New Executive
Office Building, Room 3208, Washington, DC 20503. Copies of comments
should also be sent to: Steven F. Hanft, FDIC Clearance Officer, Office
of the Executive Secretary, Federal Deposit Insurance Corporation, 550
17th Street, NW, Washington, DC 20429, (202) 898-3907. Comments may be
hand-delivered to the guard station at the rear of the 17th Street
building (located on F Street) on business days between 7:00 a.m. and
5:00 p.m. [Fax number (202) 898-3838; Internet address:
COMMENTS@FDIC.GOV]. OMB will make a decision concerning the change in
the information collection between 30 and 60 days after the publication
of this document in the Federal Register. Therefore, a comment to OMB
is best assured of having its full effect if OMB receives it within 30
days of this publication. Unless the FDIC publishes a notice to the
contrary, the public may assume that the change in the collection was
approved within 60 days of this publication.
Ongoing review. Public comment and OMB review of all collections
contained in part 303 will occur as part of the regular cycle of review
under the PRA. Nonetheless, the FDIC welcomes comment about the PRA
aspects of this regulation. Comment specifically about PRA related
issues should identify the Paperwork Reduction Act and any particular
subpart and/or collection for which consideration is desired. Such
comments should be sent to Steven F. Hanft (FDIC) at the above address.
VIII. Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1966
(SBREFA) (Title II, Pub. L. 104-11) provides generally for agencies to
report rules to Congress for review. The reporting requirement is
triggered when a federal agency issues a final rule. Accordingly, the
FDIC will file the appropriate reports with Congress as required by
SBREFA.
The Office of Management and Budget has determined that this final
revision of part 303 does not constitute a ``major rule'' as defined by
SBREFA.
IX. Regulatory Flexibility Act
Pursuant to Section 605(b) of the Regulatory Flexibility Act (5
U.S.C. 601-612) (RFA) it is hereby certified that this final rule will
not have a significant adverse economic impact on a substantial number
of small entities. Accordingly, a final regulatory flexibility analysis
is not required. This regulation will reduce the regulatory burden on
the financial institutions to which this rule applies, regardless of
size, by consolidating, simplifying and clarifying existing regulatory
requirements. This regulation will not increase the burden on such
institutions.
The FDIC prepared and published an initial regulatory flexibility
analysis (IRFA) pursuant to Section 603 of the RFA as part of the
proposed rulemaking. In that analysis the FDIC estimated the number of
small entities to be affected by the proposal and stated its belief
that any economic impact on such small entities would be beneficial
because the rule serves to reduce regulatory burden. The proposal
specifically sought comment on that belief. No comments received
addressed the initial regulatory analysis. As discussed in the
``Supplementary Information'' section to this rule, many of the
commenters supported the provisions of this rule which streamline the
application process and make it less burdensome for the regulated
financial institutions. The FDIC has carefully considered all comments
received and adopts the final rule without amendments that would change
the belief stated in the IRFA.
X. Derivation Table
------------------------------------------------------------------------
Revised provision Original provision Comments
------------------------------------------------------------------------
303.0......................... ..................... Added.
303.1......................... 303.0(a)............. Revised.
303.2......................... 303.0(b)............. No change.
(a)........................... 303.0(b)(13)......... No change.
(b)........................... 303.0(b)(29)......... No change.
(c)........................... 303.0(b)(30)......... Revised.
(d)........................... 303.0(b)(25)......... No change.
(e)........................... ..................... Added.
(f)........................... ..................... Added.
(g)........................... 303.0(b)(12)......... Revised.
(h)........................... 303.0(b)(6).......... No change.
(I)........................... 303.0(b)(26)......... No change.
(j)........................... ..................... Added.
(k)........................... 303.0(b)(1).......... No change.
(l)........................... 303.0(b)(30)......... Revised.
(m)........................... ..................... Added.
(n)........................... 303.0(b)(8).......... Revised.
(o)........................... 303.0(b)(3).......... No change.
(p)........................... 303.0(b)(2).......... No change.
(q)........................... 303.0(b)(4),(5)...... No change.
(r)........................... ..................... Added.
(s)........................... ..................... Added.
(t)........................... ..................... Added.
(u)........................... ..................... Added.
(v)........................... 303.0(b)(14)......... No change.
(w)........................... ..................... Added.
(x)........................... ..................... Added.
(y)........................... ..................... Added.
(z)........................... 303.0(b)(24)......... No change.
(aa).......................... 303.0(b)(17)......... No change.
(bb).......................... 303.0(b)(15)......... No change.
(cc).......................... 303.0(b)(11)......... No change.
(dd).......................... 303.0(b)(7),(9)...... Revised.
[[Page 44710]]
(ee)(1)....................... 303.0(b)(16)......... No change.
(2)........................... 303.0(b)(18)......... No change.
(3)........................... 303.0(b)(19)......... No change.
(4)........................... 303.0(b)(20)......... No change.
(5)........................... 303.0(b)(21)......... No change.
(6)........................... 303.0(b)(22)......... No change.
(ff).......................... 303.0(b)(31)......... No change.
(gg).......................... 303.0(b)(27)......... Revised.
(hh).......................... 303.0(b)(28)......... Revised.
303.3......................... 303.0(a)............. Revised.
303.4......................... 303.6(1)............. Added.
303.5......................... ..................... Added.
303.6......................... 303.6(b)............. Revised.
303.7(a)...................... 303.6(a),(b)......... Revised.
(b)........................... 303.6(f)(1)(iii)..... Revised.
(c),(d),(e),(f)............... ..................... Added.
303.8(a)...................... 303.6(g)(1),(2)...... Revised.
(b)........................... 303.6(g)(3).......... Revised.
303.9(a)...................... 303.6(f)(3).......... Revised.
303.9(b)(1)................... ..................... Added.
(2)........................... 303.6(f)(4).......... Revised.
(3)........................... 303.6(f)(5).......... No change.
(4)........................... ..................... Added.
303.10(a)..................... ..................... Added.
(b),(c)....................... 303.6(h)............. Revised.
(d)........................... ..................... Added.
(e)........................... 303.6(i)............. Revised.
(f)........................... 303.6(i)(2).......... Revised.
(g)........................... 303.6(j)(5).......... Revised.
(h)........................... 303.6(j)(1-4)........ Revised.
(i)........................... 303.6(j)(6).......... Revised.
(j)........................... 303.6(h)(3).......... Revised.
(k)........................... 303.6(k)............. Revised.
(l)........................... 303.6(l)............. Revised.
(m)........................... 303.6(m)............. Revised.
303.11(a)..................... 303.6(d)............. Revised.
(b)........................... ..................... Added.
(c)........................... ..................... Added.
(d)........................... ..................... Added.
(e)........................... ..................... Added.
(f)........................... 303.6(e)............. Revised.
(g)........................... ..................... Added.
303.12(a)..................... 303.11(a)............ Revised.
(b)........................... ..................... Added.
(c),(d)....................... 303.10(a)............ Revised.
(e),(f)....................... 303.11(a)(1)......... Revised.
303.13........................ 303.8(g)............. No change.
303.13(a)..................... ..................... Added.
303.13(b)..................... ..................... Added.
303.13(c)..................... 303.8(g)(1).......... No change.
303.14(d)..................... ..................... Added.
303.20........................ 303.1................ Revised.
303.21........................ 303.1................ Revised.
303.22........................ ..................... Added.
303.23(a)..................... 303.6(f)(1).......... Revised.
(b)........................... 303.6(f)(1)(ii)...... No change.
303.24........................ ..................... Added.
303.25........................ ..................... Added.
303.26(a)(1).................. 303.7(d)(1).......... Revised.
303.26(a)(2).................. 303.7(f)(1)(vi)...... Revised.
303.26(b)..................... 303.7(d)(2).......... Revised.
(c)........................... 303.7(d)(3).......... Revised.
(d)........................... 303.7(b)(4).......... Revised.
303.27........................ 303.10(b)(2)......... Revised.
303.40(a)..................... 303.2................ Revised.
(b),(c),(d)................... ..................... Added.
303.41(a)..................... 303.2(a)(footnote 2). Revised.
(b)........................... 303.2(a)............. No change.
(c),(d),(e)................... ..................... Added.
303.42(a),(b),(c),(d)......... 303.2(a)............. Revised.
303.43(a),(b)................. ..................... Added.
303.44(a)..................... 303.6(f)(1).......... Revised.
(b)........................... 303.69(f)(3),(4)..... Revised.
(c)........................... 303.6(f)(2).......... Revised.
[[Page 44711]]
303.45(a),(b),(c)............. ..................... Added.
303.46(a),(b),(c)............. 303.7(a)............. Revised.
303.60........................ ..................... Added.
303.61(a)..................... 303.3(a),(b)......... Revised.
(b)........................... 303.7(f)(1)(v)....... Revised.
(c)........................... 303.7(f)(1)(v)....... Revised.
(d)........................... 303.3(d)............. Revised.
(e)........................... ..................... Added.
303.62(a)..................... 303.3................ Revised.
(b)........................... ..................... Added.
303.63(a)..................... 303.3(a),(e)......... Revised.
(b)........................... 303.3(a)............. Revised.
(c)........................... ..................... Added.
(d)........................... 303.3(d)............. Revised.
303.64........................ ..................... Added.
303.65........................ 303.6(f)(1),(3)...... Revised.
303.66(a)(1).................. 303.7(b),(f)......... Revised.
(2),(3)....................... ..................... Added.
(b)........................... 303.7(b)............. Revised.
(c)........................... 303.7(b)(2),(5)...... Revised.
(d)........................... 303.7(f)(1)(v),(vi).. Revised.
(e)........................... 303.10(b)(1)(i),(iii) Revised.
,(iv).
(f)........................... 303.7(b)(3).......... Revised.
(g)........................... 303.8(e)............. Revised.
303.67........................ 303.10(b)(1)......... Revised.
303.80........................ ..................... Added.
303.81(a)..................... 303.4(a)............. Revised.
(b)........................... ..................... Added.
(c)........................... 303.4(a) (footnote 3) No change.
(d)........................... 303.4(a) (footnote 4) No change.
303.82(a)..................... ..................... Added.
(b)........................... 303.4(a)............. Revised.
(c)........................... ..................... Added.
(d), (e)...................... 303.4(a)............. Revised.
303.83(a)(1) thru (b)(1)...... 303.4(c)............. Revised.
(b)(2), (3)................... ..................... Added.
303.84(a)..................... 303.4(b)(1).......... Revised.
(b)........................... 303.4(b)(5).......... No change.
303.85........................ ..................... Added.
303.86(a)(1), (2)............. 303.4(b)(2)(i)....... Revised.
(a)(3)........................ ..................... Added.
(a)(4), (5)................... 303.4(b)(3)(ii)...... Revised.
(a)(6)........................ 303.4(b)(6).......... Revised.
303.87........................ 303.7(c)............. Revised.
303.100....................... ..................... Added.
303.101(a).................... ..................... Added.
(b)........................... 303.14(a)(3)......... Revised.
(c)........................... 303.14(a)(4)......... Revised.
303.102(a), (b)............... 303.14(b)............ Revised.
(c), (d)...................... 303.14(c)(2)......... Revised.
303.103(a).................... 303.14(c)(1)......... Revised.
(b)........................... 303.14(c)(4)......... Revised.
(c)........................... 303.14(d)............ Revised.
303.104....................... 303.14(e)............ Revised.
303.140....................... ..................... Added
303.141....................... 303.13(a)............ No change.
303.142....................... 303.13(b)............ No change.
303.143....................... 303.13(c)............ No change.
303.144....................... 303.13(d)............ No change.
303.145....................... 303.13(e)............ No change.
303.146....................... 303.13(f)............ No change.
303.147....................... 303.13(g)............ No change.
303.148....................... 303.13(h)............ No change.
303.160....................... ..................... Added.
303.161(a), (b)............... 303.15(a)............ Revised.
303.161(c).................... 303.15(b)............ Revised.
303.161(d).................... 303.15(c)............ No change.
303.161(e).................... 303.15(d)............ No change.
303.161(f).................... ..................... Added.
303.162....................... ..................... Added.
303.163(a).................... 303.15(c)(1)......... No change.
303.163(b).................... 303.15(c)(2)......... No change.
303.163(c).................... 303.15(e)............ No change.
303.163(d).................... 303.15(e)............ No change.
[[Page 44712]]
303.163(e).................... 303.15(f)............ No change.
303.163(f).................... 303.15(g)............ No change.
303.164....................... ..................... Added.
303.180....................... ..................... Added.
303.181....................... ..................... Added.
303.182(a).................... ..................... Added.
303.182(b).................... 303.2(a)............. Revised.
303.182(c).................... ..................... Added.
303.182(d).................... 347.3(a)............. Revised.
303.182(e).................... 303.7(a)............. Revised.
303.183(a), (b), (c), (d)..... 303.5(d)............. Revised.
303.183(e).................... 303.7(f)(2)(ii)...... Revised.
303.184....................... 303.2, 303.6, 303.7.. Revised.
303.185....................... ..................... Added.
303.186....................... 346.6(b)............. Revised.
303.187....................... 346.101.............. Revised.
303.200....................... ..................... Added.
303.201....................... 303.5(e)............. No change.
303.202....................... 303.5(e)............. No change.
303.203....................... 303.5(e)(1).......... No change.
303.204....................... 303.5(e)(2).......... No change.
303.205....................... 303.5(e)(3).......... No change.
303.206....................... 303.5(e)(4).......... No change.
303.207....................... 303.5(e)(5).......... Revised.
303.208....................... 303.7(f)(1)(ix)...... No change.
303.220....................... ..................... Added.
303.221....................... ..................... Added.
303.222....................... ..................... Added.
303.223....................... ..................... Added.
303.224(a),(b),(c),(d)........ 303.7(e)............. Revised.
(e)........................... 303.10(b)(3)......... No change.
303.240....................... ..................... Added.
303.241(a).................... ..................... Added.
(b),(c),(d)................... 303.5(b)............. Revised.
(e),(f),(g)................... ..................... Added.
(h)........................... 303.7(f)(1)(iii)..... No change.
303.242(a).................... ..................... Added.
(b),(c),(d)................... 303.5(b)............. Revised.
(e),(f)....................... ..................... Added.
(g),(h)....................... 303.7(a)(2).......... No change.
303.243(a),(b),(c)............ 337.6(d),(e)......... No change.
(d),(e),(f)................... ..................... Added.
(g)........................... 337.6(c),(e)......... No change.
(h)........................... 337.6(e), Revised.
303.7(f)(1)(viii).
303.244(a),(b),(c),(d),(e).... 359.................. Revised.
(f)........................... 303.7(g)............. No change.
303.245....................... ..................... Added.
303.246(a),(b),(c),(d)........ 303.5(a)............. Revised.
(e)........................... ..................... Added.
(f)........................... 303.7(f)(4).......... Revised.
303.247....................... 303.3(c)............. Revised.
303.248....................... 303.5(c)............. Revised.
303.249....................... ..................... Added.
303.250....................... ..................... Added.
303.250(a),(b),(c),(d),(e).... ..................... Added.
(h)........................... 303.7(f)(1)(vii), Revised.
303.7(f)(2)(i).
303.251(a),(b),(c),(d),(e).... ..................... Added.
(f)........................... 303.7(f)(14)(iv)..... Revised.
303.252(a),(b),(c),(d),(e).... ..................... Added.
(f)........................... 303.8(a)............. No change.
303.260....................... ..................... Added.
303.261....................... 303.9(a)............. Revised.
303.262....................... ..................... Added.
303.263....................... 303.9(b)............. Revised.
303.264....................... 303.9(c)............. Revised.
303.265....................... 303.9(d)............. Revised.
303.266....................... 303.9(e)............. Revised.
303.267....................... 303.9(f)............. Revised.
303.268....................... ..................... Added.
303.269....................... 303.9(g)............. Revised.
303.270....................... ..................... Added.
303.271....................... 303.9(h)............. Revised.
303.272....................... 303.9(i)............. Revised.
303.273....................... 303.9(k)............. Revised.
[[Page 44713]]
303.274....................... 303.9(l)............. Revised.
303.275....................... 303.9(m)............. Revised.
303.276....................... 303.9(n)............. Revised.
303.277....................... 303.9(o)............. Revised.
03.278........................ 303.10(c)............ Revised.
------------------------------------------------------------------------
List of Subjects
12 CFR Part 303
Administrative practice and procedure, Authority delegations
(Government agencies), Bank deposit insurance, Banks, banking, Bank
merger, Branching, Foreign branches, Foreign investments, Golden
parachute payments, Insured branches, Interstate branching, Reporting
and recordkeeping requirements, Savings associations.
12 CFR Part 333
Banks, banking, Corporate powers.
12 CFR Part 337
Banks, banking, Reporting and recordkeeping requirements, Savings
associations, Securities.
12 CFR Part 341
Banks, banking, Reporting and recordkeeping requirements,
Securities.
12 CFR Part 347
Authority delegations (Governmental agencies), Bank deposit
insurance, Banks, banking, Credit, Foreign banking, Foreign
investments, Insured branches, Investments, Reporting and recordkeeping
requirements, United States investments abroad.
12 CFR Part 359
Bank deposit insurance, Banks, banking, Golden parachute payments,
Indemnity payments.
For the reasons set forth in the preamble and under the authority
of 12 U.S.C. 1819(a)(Tenth), the FDIC Board of Directors hereby amends
12 CFR chapter III as follows:
1. Part 303 is revised to read as follows:
PART 303--FILING PROCEDURES AND DELEGATIONS OF AUTHORITY
Sec.
303.0 Scope.
Subpart A--Rules of General Applicability
Sec.
303.1 Scope.
303.2 Definitions.
303.3 General filing procedures.
303.4 Computation of time.
303.5 Effect of Community Reinvestment Act performance on filings.
303.6 Investigations and examinations.
303.7 Public notice requirements.
303.8 Public access to filing.
303.9 Comments.
303.10 Hearings and other meetings.
303.11 Decisions.
303.12 General rules governing delegations of authority.
303.13 Delegations of authority to officials in the Division of
Supervision and the Division of Compliance and Consumer Affairs.
Subpart B--Deposit Insurance
303.20 Scope.
303.21 Filing procedures.
303.22 Processing.
303.23 Public notice requirements.
303.24 Application for deposit insurance for an interim
institution.
303.25 Continuation of deposit insurance upon withdrawing from
membership in the Federal Reserve System.
303.26 Delegation of authority.
303.27 Authority retained by the FDIC Board of Directors.
Subpart C--Establishment and Relocation of Domestic Branches and
Offices
303.40 Scope.
303.41 Definitions.
303.42 Filing procedures.
303.43 Processing.
303.44 Public notice requirements.
303.45 Special provisions.
303.46 Delegation of authority.
Subpart D--Merger Transactions
303.60 Scope.
303.61 Definitions.
303.62 Transactions requiring prior approval.
303.63 Filing procedures.
303.64 Processing.
303.65 Public notice requirements.
303.66 Delegation of authority.
303.67 Authority retained by the FDIC Board of Directors
Subpart E--Change in Bank Control
303.80 Scope.
303.81 Definitions.
303.82 Transactions requiring prior notice.
303.83 Transactions not requiring prior notice.
303.84 Filing procedures.
303.85 Processing.
303.86 Public notice requirements.
303.87 Delegation of authority.
Subpart F-- Change of Director or Senior Executive Officer
303.100 Scope.
303.101 Definitions.
303.102 Filing procedures and waiver of prior notice.
303.103 Processing.
303.104 Delegation of authority.
Subpart G--Activities and Investments of Insured State Banks [Reserved]
Subpart H--Filings by Savings Associations
303.140 Scope.
303.141 Definitions.
303.142 Engaging other than as an agent on behalf of customers in
activities not permissible for federal savings associations.
303.143 Engaging other than as agent on behalf of customers in
activities authorized for federal savings associations but to an
extent not so authorized.
303.144 Equity investments.
303.145 Corporate debt securities not of investment grade.
303.146 Notice of acquisition or establishment of a subsidiary or
the conduct of new activities through a subsidiary.
303.147 Notice by federal savings associations conducting
grandfathered activities.
303.148 Delegation of authority.
Subpart I--Mutual-to-Stock Conversions
303.160 Scope.
303.161 Filing procedures.
303.162 Waiver from compliance.
303.163 Processing.
303.164 Delegation of authority.
Subpart J--International Banking
303.180 Scope.
303.181 Definitions.
303.182 Establishing, moving or closing a foreign branch of a state
nonmember bank; Sec. 347.103.
303.183 Investment by insured state nonmember banks in foreign
organizations; Sec. 347.108.
303.184 Moving an insured branch of a foreign bank.
303.185 Mergers transactions involving foreign banks or foreign
organizations.
303.186 Exemptions from insurance requirement for a state branch of
a foreign bank; Sec. 347.206.
303.187 Approval for an insured state branch of a foreign bank to
conduct activities not permissible for federal branches;
Sec. 347.213 .
Subpart K--Prompt Corrective Action
303.200 Scope.
303.201 Filing procedures.
303.202 Processing.
303.203 Applications for capital distribution.
303.204 Applications for acquisitions, branching, and new lines of
business.
303.205 Applications for bonuses and increased compensation for
senior executive officers.
[[Page 44714]]
303.206 Application for payment of principal or interest on
subordinated debt.
303.207 Restricted activities for critically undercapitalized
institutions.
303.208 Delegation of authority.
Subpart L--Section 19 of the FDI Act (Consent to Service of Persons
Convicted of Certain Criminal Offenses)
303.220 Scope.
303.221 Filing procedures.
303.222 Service at another insured depository institution.
303.223 Applicant's right to hearing following denial.
303.224 Delegation of authority.
Subpart M--Other Filings
303.240 General.
303.241 Reduce or retire capital stock or capital debt instruments.
303.242 Exercise of trust powers.
303.243 Brokered deposit waivers.
303.244 Golden parachute and severance plan payments.
303.245 Waiver of liability for commonly controlled depository
institutions.
303.246 Insurance fund conversions.
303.247 Conversion with diminution of capital.
303.248 Continue or resume status as an insured institution
following termination under section 8 of the FDI Act.
303.249 Truth in Lending Act--relief from reimbursement.
303.250 Management official interlocks.
303.251 Modification of conditions.
303.252 Extension of time.
Subpart N--Enforcement Delegations
303.260 Scope.
303.261 Issuance of notification to primary regulator under section
8(a) of the FDI Act (12 U.S.C. 1818(a)).
303.262 Issuance of notice of intention to terminate insured status
under section 8(a) of the FDI Act (12 U.S.C. 1818(a)).
303.263 Cease-and-desist actions under section 8(b) of the FDI Act
(12 U.S.C. 1818(b)).
303.264 Temporary cease-and-desist orders under section 8(c) of the
FDI Act (12 U.S.C. 1818(c)).
303.265 Removal and prohibition actions under section 8(e) of the
FDI Act (12 U.S.C. 1818(e)).
303.266 Suspension and removal action under section 8(g) of the FDI
Act (12 U.S.C. 1818(g)).
303.267 Termination of insured status under section 8(p) of the FDI
Act (12 U.S.C. 1818(p)).
303.268 Termination of insured status under section 8(q) of the FDI
Act (12 U.S.C. 1818(q)).
303.269 Civil money penalties.
303.270 Notices of assessment under section 5(e) of the FDI Act (12
U.S.C. 1815(e)).
303.271 Prompt corrective action directives and capital plans under
section 38 of the FDI Act (12 U.S.C. 1831o) and part 325 of this
chapter.
303.272 Investigations under section 10(c) of the FDI Act (12
U.S.C. 1820(c)).
303.273 Unilateral settlement offers.
303.274 Acceptance of written agreements.
303.275 Modifications and terminations of enforcement actions and
orders.
303.276 Enforcement of outstanding enforcement orders.
303.277 Compliance plans under section 39 of the FDI Act (12 U.S.C.
1831p-1) (standards for safety and soundness) and part 308 of this
chapter.
303.278 Enforcement matters where authority is not delegated.
Authority: 12 U.S.C. 378, 1813, 1815, 1816, 1817, 1818, 1819,
(Seventh and Tenth), 1820, 1823, 1828, 1831e, 1831p-1, 1835a, 3104,
3105, 3108; 3207; 15 U.S.C. 1601-1607.
Sec. 303.0 Scope.
(a) This part describes the procedures to be followed by both the
FDIC and applicants with respect to applications, requests, or notices
(filings) required to be filed by statute or regulation. Additional
details concerning processing are explained in related FDIC statements
of policy. This part also sets forth delegations of authority from the
FDIC's Board of Directors to the Directors of the Division of
Supervision (DOS), the Division of Compliance and Consumer Affairs
(DCA), the General Counsel of the Legal Division, the Executive
Secretary, and, in some cases, their designees to act on certain
filings and enforcement matters.
(b) Additional application procedures may be found in the following
FDIC regulations:
(1) 12 CFR part 327--Assessments (Request for review of assessment
risk classification);
(2) 12 CFR part 328--Advertisement of Membership (Application for
temporary waiver of advertising requirements);
(3) 12 CFR part 345--Community Reinvestment (CRA strategic plans
and requests for designation as a wholesale or limited purpose
institution);
Subpart A--Rules of General Applicability
Sec. 303.1 Scope.
This subpart A prescribes the general procedures for submitting
filings to the FDIC which are required by statute or regulation. This
subpart also prescribes the procedures to be followed by the FDIC,
applicants and interested parties during the process of considering a
filing, including public notice and comment. This subpart explains the
availability of expedited processing for eligible depository
institutions (defined in Sec. 303.2(r)). Certain terms used throughout
this part are also defined in this subpart. Finally, this subpart sets
forth general principles governing delegations of authority by the
FDIC's Board of Directors.
Sec. 303.2 Definitions.
For purposes of this part:
(a) Act or FDI Act means the Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.).
(b) Adjusted part 325 total assets means adjusted 12 CFR part 325
total assets as calculated and reflected in the FDIC's Report of
Examination.
(c) Adverse comment means any objection, protest, or other adverse
written statement submitted by an interested party relative to a
filing. The term adverse comment shall not include any comment
concerning the Community Reinvestment Act (CRA), fair lending, consumer
protection, or civil rights that the appropriate regional director or
deputy regional director (DCA) determines to be frivolous (for example,
raising issues between the commenter and the applicant that have been
resolved). The term adverse comment also shall not include any other
comment that the appropriate regional director or deputy regional
director (DOS) determines to be frivolous (for example, a non-
substantive comment submitted primarily as a means of delaying action
on the filing).
(d) Amended order to pay means an order to forfeit and pay civil
money penalties, the amount of which has been changed from that
assessed in the original notice of assessment of civil money penalties.
(e) Applicant means a person or entity that submits a filing to the
FDIC.
(f) Application means a submission requesting FDIC approval to
engage in various corporate activities and transactions.
(g) Appropriate FDIC region, appropriate FDIC regional office,
appropriate regional director, appropriate deputy regional director,
appropriate regional counsel mean, respectively, the FDIC region, and
the FDIC regional office, regional director, deputy regional director,
and regional counsel, which the FDIC designates as follows:
(1) When an institution or proposed institution that is the subject
of a filing or administrative action is not and will not be part of a
group of related institutions, the appropriate region for the
institution and any individual associated with the institution is the
FDIC region in which the institution or proposed institution is or will
be located; or
(2) When an institution or proposed institution that is the subject
of a filing or administrative action is or will be part of a group of
related institutions, the appropriate region for the institution and
any individual associated with the
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institution is the FDIC region in which the group's major policy and
decision makers are located, or any other region the FDIC designates on
a case-by-case basis.
(h) Associate director means any associate director of the Division
of Supervision (DOS) or the Division of Compliance and Consumer Affairs
(DCA) or, in the event such titles become obsolete, any official of
equivalent authority within the respective divisions.
(i) Book capital means total equity capital which is comprised of
perpetual preferred stock, common stock, surplus, undivided profits and
capital reserves, as those items are defined in the instructions of the
Federal Financial Institutions Examination Council (FFIEC) for the
preparation of Consolidated Reports of Condition and Income for insured
banks.
(j) Comment means any written statement of fact or opinion
submitted by an interested party relative to a filing.
(k) Corporation or FDIC means the Federal Deposit Insurance
Corporation.
(l) CRA protest means any adverse comment from the public related
to a pending filing which raises a negative issue relative to the
Community Reinvestment Act (CRA) (12 U.S.C. 2901 et seq.), whether or
not it is labeled a protest and whether or not a hearing is requested.
(m) Deputy Director means the Deputy Director of the Division of
Supervision (DOS) or the Deputy Director of the Division of Compliance
and Consumer Affairs (DCA) or, in the event such titles become
obsolete, any official of equivalent or higher authority within the
respective divisions.
(n) Deputy regional director means any deputy regional director of
the Division of Supervision (DOS) or the Division of Compliance and
Consumer Affairs (DCA) or, in the event such titles become obsolete,
any official of equivalent authority within the same FDIC region of DOS
or DCA.
(o) DCA means the Division of Compliance and Consumer Affairs or,
in the event the Division of Compliance and Consumer Affairs is
reorganized, such successor division.
(p) DOS means the Division of Supervision or, in the event the
Division of Supervision is reorganized, such successor division.
(q) Director means the Director of the Division of Supervision
(DOS) or the Director of the Division of Compliance and Consumer
Affairs (DCA) or, in the event such titles become obsolete, any
official of equivalent or higher authority within the respective
divisions.
(r) Eligible depository institution means a depository institution
that meets the following criteria:
(1) Received an FDIC-assigned composite rating of 1 or 2 under the
Uniform Financial Institutions Rating System (UFIRS) as a result of its
most recent federal or state examination;
(2) Received a satisfactory or better Community Reinvestment Act
(CRA) rating from its primary federal regulator at its most recent
examination, if the depository institution is subject to examination
under part 345 of this chapter;
(3) Received a compliance rating of 1 or 2 from its primary federal
regulator at its most recent examination;
(4) Is well-capitalized as defined in the appropriate capital
regulation and guidance of the institution's primary federal regulator;
and
(5) Is not subject to a cease and desist order, consent order,
prompt corrective action directive, written agreement, memorandum of
understanding, or other administrative agreement with its primary
federal regulator or chartering authority.
(s) Filing means an application, notice or request submitted to the
FDIC under this part.
(t) General Counsel means the head of the Legal Division of the
FDIC or any official within the Legal Division exercising equivalent
authority for purposes of this part.
(u) Insider means a person who is or is proposed to be a director,
officer, organizer, or incorporator of an applicant; a shareholder who
directly or indirectly controls 10 percent or more of any class of the
applicant's outstanding voting stock; or the associates or interests of
any such person.
(v) Institution-affiliated party shall have the same meaning as
provided in section 3(u) of the Act (12 U.S.C. 1813(u)).
(w) NEPA means the National Environmental Policy Act of 1969 (42
U.S.C. 4321 et seq.).
(x) NHPA means the National Historic Preservation Act of 1966 (16
U.S.C. 470 et seq.).
(y) Notice means a submission notifying the FDIC that a depository
institution intends to engage in or has commenced certain corporate
activities or transactions.
(z) Notice of assessment of civil money penalties means a notice of
assessment of civil money penalties, findings of fact and conclusions
of law, and order to pay issued pursuant to sections 7(a)(1), 7(j)(15),
8(i) or 18(h) of the Act (12 U.S.C. 1817(a)(1), 1817(j)(15), 1818(i),
or 1828(h)), section 106(b) of the Bank Holding Company Act (12 U.S.C.
1972), section 910(d) of the International Lending Supervision Act of
1983 (12 U.S.C. 3909), or any other provision of law providing for the
assessment of civil money penalties by the FDIC.
(aa) Notice of charges means a notice of charges and of hearing
setting forth the allegations of unsafe or unsound practices or
violations and fixing the time and place of the hearing issued under
section 8(b) of the Act (12 U.S.C. 1818(b)).
(bb) Notice to primary regulator means the notice described in
section 8(a)(2)(A) of the Act concerning termination of deposit
insurance (12 U.S.C. 1818(a)(2)(A)).
(cc) Regional counsel means a regional counsel of the Legal
Division or, in the event the title becomes obsolete, any official of
equivalent authority within the Legal Division. The authority delegated
to a regional counsel may be exercised, when confirmed in writing by
the regional counsel, by a deputy regional counsel, or any official of
equivalent or higher authority in the Supervision and Legislation
Branch of the Legal Division.
(dd) Regional director means any regional director in the Division
of Supervision (DOS) or the Division of Compliance and Consumer Affairs
(DCA), or in the event such titles become obsolete, any official of
equivalent authority within the respective divisions.
(ee) Section 8 orders:
(1) Section 8(a) order means an order terminating the insured
status of a depository institution under section 8(a) of the Act (12
U.S.C. 1818(a)).
(2) Section 8(b) order, cease-and-desist order means a final order
to cease and desist issued under section 8(b) of the Act (12 U.S.C.
1818(b)).
(3) Section 8(c) order, temporary cease-and-desist order means a
temporary order to cease and desist issued under section 8(c) of the
Act (12 U.S.C. 1818(c)).
(4) Section 8(e) order means a final order of removal or
prohibition issued under section 8(e) of the Act (12 U.S.C. 1818(e)).
(5) Section 8(e)(3) order, temporary order of suspension means a
temporary order of suspension or prohibition issued under section
8(e)(3) of the Act (12 U.S.C. 1818(e)(3)).
(6) Section 8(g) order means an order of suspension or order of
prohibition issued under section 8(g) of the Act (12 U.S.C. 1818(g)).
(ff) Standard conditions means the conditions that any FDIC
official acting under delegated authority may impose as a routine
matter when approving a
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filing, whether or not the applicant has agreed to their inclusion. The
following conditions, or variations thereof, are standard conditions:
(1) That the applicant has obtained all necessary and final
approvals from the appropriate federal or state authority or other
appropriate authority;
(2) That if the transaction does not take effect within a specified
time period, or unless, in the meantime, a request for an extension of
time has been approved, the consent granted shall expire at the end of
the specified time period;
(3) That until the conditional commitment of the FDIC becomes
effective, the FDIC retains the right to alter, suspend or withdraw its
commitment should any interim development be deemed to warrant such
action; and
(4) In the case of a merger transaction (as defined in
Sec. 303.61(a)), including a corporate reorganization, that the
proposed transaction not be consummated before the 30th calendar day
(or shorter time period as may be prescribed by the FDIC with the
concurrence of the Attorney General) after the date of the order
approving the merger transaction.
(gg) Tier 1 capital shall have the same meaning as provided in
Sec. 325.2(t) of this chapter.
(hh) Total assets shall have the same meaning as provided in
Sec. 325.2(v) of this chapter.
Sec. 303.3 General filing procedures.
Unless stated otherwise, filings should be submitted to the
appropriate regional director (DOS). Forms and instructions for
submitting filings may be obtained from any FDIC regional office (DOS).
If no form is prescribed, the filing should be in writing; be signed by
the applicant or a duly authorized agent; and contain a concise
statement of the action requested. For specific filing and content
requirements, consult the appropriate subparts of this part. The FDIC
may require the applicant to submit additional information.
Sec. 303.4 Computation of time.
For purposes of this part, the FDIC begins computing the relevant
period on the day after an event occurs (e.g., the day after a
substantially complete filing is received by the FDIC or the day after
publication begins) through the last day of the relevant period. When
the last day is a Saturday, Sunday or federal holiday, the period runs
until the end of the next business day.
Sec. 303.5 Effect of Community Reinvestment Act performance on
filings.
Among other factors, the FDIC takes into account the record of
performance under the Community Reinvestment Act (CRA) of each
applicant in considering a filing for approval of:
(a) The establishment of a domestic branch;
(b) The relocation of the bank's main office or a domestic branch;
(c) The relocation of an insured branch of a foreign bank;
(d) A transaction subject to the Bank Merger Act; and
(e) Deposit insurance.
Sec. 303.6 Investigations and examinations.
The Board of Directors, Directors of (DOS) or (DCA), the associate
directors, or the appropriate regional director or appropriate deputy
regional director (DOS) or (DCA) acting under delegated authority may
examine or investigate and evaluate facts related to any filing under
this chapter to the extent necessary to reach an informed decision and
take any action necessary or appropriate under the circumstances.
Sec. 303.7 Public notice requirements.
(a) General. The public must be provided with prior notice of a
filing to establish a domestic branch, relocate a domestic branch or
the main office, relocate an insured branch of a foreign bank, engage
in a merger transaction, initiate a change of control transaction, or
request deposit insurance. The public has the right to comment on, or
to protest, these types of proposed transactions during the relevant
comment period. In order to fully apprise the public of this right, an
applicant shall publish a public notice of its filing in a newspaper of
general circulation. For specific publication requirements, consult
subparts B (Deposit Insurance), C (Branches and Relocations), D (Merger
Transactions), E (Change in Bank Control), and J (International
Banking) of this part.
(b) Confirmation of publication. The applicant shall mail or
otherwise deliver a copy of the newspaper notice to the appropriate
regional director (DOS) as part of its filing, or, if a copy is not
available at the time of filing, promptly after publication.
(c) Content of notice. (1) The public notice referred to in
paragraph (a) of this section shall consist of the following:
(i) Name and address of the applicant(s). In the case of an
application for deposit insurance for a de novo bank, include the names
of all organizers or incorporators. In the case of an application to
establish a branch, include the location of the proposed branch or, in
the case of an application to relocate a branch or main office, include
the current and proposed address of the office. In the case of a merger
application, include the names of all parties to the transaction. In
the case of a notice of acquisition of control, include the name(s) of
the acquiring parties. In the case of an application to relocate an
insured branch of a foreign bank, include the current and proposed
address of the branch;
(ii) Type of filing being made;
(iii) Name of the depository institution(s) that is the subject
matter of the filing;
(iv) That the public may submit comments to the appropriate FDIC
regional director (DOS);
(v) The address of the appropriate FDIC regional office (DOS) where
comments may be sent (the same location that where the filing will be
made);
(vi) The closing date of the public comment period as specified in
the appropriate subpart of this part; and
(vii) That the nonconfidential portions of the application are on
file in the regional office and are available for public inspection
during regular business hours; photocopies of the nonconfidential
portion of the application file will be made available upon request.
(2) The requirements of paragraphs (c)(1)(iv) through (vii) of this
section may be satisfied through use of the following notice:
Any person wishing to comment on this application may file his
or her comments in writing with the regional director (DOS) of the
Federal Deposit Insurance Corporation at its regional office [insert
address of regional office] not later than [insert closing date of
the public comment period specified in the appropriate subpart of
part 303]. The non-confidential portions of the application are on
file in the regional office and are available for public inspection
during regular business hours. Photocopies of the nonconfidential
portion of the application file will be made available upon request.
(d) Multiple transactions. The FDIC may consider more than one
transaction, or a series of transactions, to be a single filing for
purposes of the publication requirements of this section. When
publishing a single public notice for multiple transactions, the
applicant shall explain in the public notice how the transactions are
related. The closing date of the comment period shall be the closing
date of the longest public comment period that applies to any of the
related transactions.
(e) Joint public notices. For a transaction subject to public
notice requirements by the FDIC and another
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federal or state banking authority, the FDIC will accept publication of
a single joint notice containing all the information required by both
the FDIC and the other federal agency or state banking authority,
provided that the notice states that comments must be submitted to the
FDIC and, if applicable, the other federal or state banking authority.
(f) Where public notice is required, the FDIC may determine on a
case-by-case basis that unusual circumstances surrounding a particular
filing warrant modification of the publication requirements.
Sec. 303.8 Public access to filing.
(a) General. For filings subject to a public notice requirement,
any person may inspect or request a copy of the non-confidential
portions of a filing (the public file) until 180 days following final
disposition of a filing. Following the 180-day period, non-confidential
portions of an application file will be made available in accordance
with paragraph (c) of this section. The public file generally consists
of portions of the filing, supporting data, supplementary information,
and comments submitted by interested persons (if any) to the extent
that the documents have not been afforded confidential treatment. To
view or request photocopies of the public file, an oral or written
request should be submitted to the appropriate regional director (DOS).
The public file will be produced for review not more than one business
day after receipt by the regional office of the request (either written
or oral) to see the file. The FDIC may impose a fee for photocopying in
accordance with Sec. 309.5(c) of this chapter at the rates the FDIC
publishes annually in the Federal Register.
(b) Confidential treatment. (1) The applicant may request that
specific information be treated as confidential. The following
information generally is considered confidential:
(i) Personal information, the release of which would constitute a
clearly unwarranted invasion of privacy;
(ii) Commercial or financial information, the disclosure of which
could result in substantial competitive harm to the submitter; and
(iii) Information, the disclosure of which could seriously affect
the financial condition of any depository institution.
(2) If an applicant requests confidential treatment for information
that the FDIC does not consider to be confidential, the FDIC may
include that information in the public file after notifying the
applicant. On its own initiative, the FDIC may determine that certain
information should be treated as confidential and withhold that
information from the public file.
(c) FOIA requests. A written request for information withheld from
the public file, or copies of the public file following closure of the
file 180 days after final disposition, should be submitted pursuant to
the Freedom of Information Act (5 U.S.C. 552) and part 309 of this
chapter to the FDIC, Office of the Executive Secretary, 550 17th
Street, N.W., Washington, D.C. 20429.
Sec. 303.9 Comments.
(a) Submission of comments. For filings subject to a public notice
requirement, any person may submit comments to the appropriate FDIC
regional director (DOS) during the comment period.
(b) Comment period--(1) General. Consult appropriate subparts of
this part for the comment period applicable to a particular filing.
(2) Extension. The appropriate regional director or deputy regional
director (DOS) may extend or reopen the comment period if:
(i) The applicant fails to file all required information on a
timely basis to permit review by the public or makes a request for
confidential treatment not granted by the FDIC that delays the public
availability of that information;
(ii) Any person requesting an extension of time satisfactorily
demonstrates to the FDIC that additional time is necessary to develop
factual information that the FDIC determines may materially affect the
application; or
(iii) The appropriate regional director or deputy regional director
(DOS) determines that other good cause exists.
(3) Solicitation of comments. Whenever appropriate, the appropriate
regional director (DOS) may solicit comments from any person or
institution which might have an interest in or be affected by the
pending filing.
(4) Applicant response. The FDIC will provide copies of all
comments received to the applicant and may give the applicant an
opportunity to respond.
Sec. 303.10 Hearings and other meetings.
(a) Matters covered. This section covers hearings and other
proceedings in connection with filings and determinations for or by:
(1) Deposit insurance by a proposed new depository institution or
operating non-insured institution;
(2) An insured state nonmember bank to establish a domestic branch
or to relocate a main office or domestic branch;
(3) Relocation of an insured branch of a foreign bank;
(4)(i) Merger transaction which requires the FDIC's prior approval
under the Bank Merger Act (12 U.S.C. 1828(c));
(ii) Except as otherwise expressly provided, the provisions of this
section shall not be applicable to any proposed merger transaction
which the FDIC Board of Directors determines must be acted upon
immediately to prevent the probable failure of one of the institutions
involved, or must be handled with expeditious action due to an existing
emergency condition, as permitted by the Bank Merger Act (12 U.S.C.
1828(c)(6));
(5) Nullification of a decision on a filing; and
(6) Any other purpose or matter which the FDIC Board of Directors
in its sole discretion deems appropriate.
(b) Hearing requests. (1) Any person may submit a written request
for a hearing on a filing:
(i) To the appropriate regional director (DOS) before the end of
the comment period; or
(ii) To the appropriate regional director (DOS or DCA), pursuant to
a notice to nullify a decision on a filing issued pursuant to
Sec. 303.11(g)(2)(i) or (ii).
(2) The request must describe the nature of the issues or facts to
be presented and the reasons why written submissions would be
insufficient to make an adequate presentation of those issues or facts
to the FDIC. A person requesting a hearing shall simultaneously submit
a copy of the request to the applicant.
(c) Action on a hearing request. The appropriate regional director
(DOS or DCA), after consultation with the Legal Division, may grant or
deny a request for a hearing and may limit the issues that he or she
deems relevant or material. The FDIC generally grants a hearing request
only if it determines that written submissions would be insufficient or
that a hearing otherwise would be in the public interest.
(d) Denial of a hearing request. If the appropriate regional
director (DOS or DCA), after consultation with the Legal Division,
denies a hearing request, he or she shall notify the person requesting
the hearing of the reason for the denial. A decision to deny a hearing
request shall be a final agency determination and is not appealable.
(e) FDIC procedures prior to the hearing--(1) Notice of hearing.
The FDIC shall issue a notice of hearing if it grants a request for a
hearing or orders a hearing because it is in the public interest. The
notice of hearing shall state the subject and date of the filing, the
time and place of the hearing, and the issues to be addressed. The FDIC
shall
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send a copy of the notice of hearing to the applicant, to the person
requesting the hearing, and to anyone else requesting a copy.
(2) Presiding officer. The presiding officer shall be the Regional
Director (DOS or DCA) or his or her designee or such other person as
may be named by the Board or the Director (DOS or DCA). The presiding
officer is responsible for conducting the hearing and determining all
procedural questions not governed by this section.
(f) Participation in the hearing. Any person who wishes to appear
(participant) shall notify the appropriate regional director (DOS or
DCA) of his or her intent to participate in the hearing no later than
10 days from the date that the FDIC issues the Notice of Hearing. At
least 5 days before the hearing, each participant shall submit to the
appropriate regional director (DOS or DCA), as well as to the applicant
and any other person as required by the FDIC, the names of witnesses, a
statement describing the proposed testimony of each witness, and one
copy of each exhibit the participant intends to present.
(g) Transcripts. The FDIC shall arrange for a hearing transcript.
The person requesting the hearing and the applicant each shall bear the
cost of one copy of the transcript for his or her use unless such cost
is waived by the presiding officer and incurred by the FDIC.
(h) Conduct of the hearing.--(1) Presentations. Subject to the
rulings of the presiding officer, the applicant and participants may
make opening and closing statements and present and examine witnesses,
material, and data.
(2) Information submitted. Any person presenting material shall
furnish one copy to the FDIC, one copy to the applicant, and one copy
to each participant.
(3) Laws not applicable to hearings. The Administrative Procedure
Act (5 U.S.C. 551 et seq.), the Federal Rules of Evidence (28 U.S.C.
Appendix), the Federal Rules of Civil Procedure (28 U.S.C. Rule 1 et
seq.), and the FDIC's Rules of Practice and Procedure (12 CFR part 308)
do not govern hearings under this section.
(i) Closing the hearing record. At the applicant's or any
participant's request, or at the FDIC's discretion, the FDIC may keep
the hearing record open for up to 10 days following the FDIC's receipt
of the transcript. The FDIC shall resume processing the filing after
the record closes.
(j) Disposition and notice thereof. The presiding officer shall
make a recommendation to the FDIC within 20 days following the date the
hearing and record on the proceeding are closed. The FDIC shall notify
the applicant and all participants of the final disposition of a filing
and shall provide a statement of the reasons for the final disposition.
(k) Computation of time. In computing periods of time under this
section, the provisions of Sec. 308.12 of the FDIC's Rules of Practice
and Procedure (12 CFR 308.12) shall apply.
(l) Informal proceedings. The FDIC may arrange for an informal
proceeding with an applicant and other interested parties in connection
with a filing, either upon receipt of a written request for such a
meeting made during the comment period, or upon the FDIC's own
initiative. No later than 10 days prior to an informal proceeding, the
appropriate regional director (DOS or DCA) shall notify the applicant
and each person who requested a hearing or oral presentation of the
date, time, and place of the proceeding. The proceeding may assume any
form, including a meeting with FDIC representatives at which
participants will be asked to present their views orally. The
appropriate regional director (DOS or DCA) may hold separate meetings
with each of the participants.
(m) Authority retained by FDIC Board of Directors to modify
procedures. The FDIC Board of Directors may delegate authority by
resolution on a case-by-case basis to the presiding officer to adopt
different procedures in individual matters and on such terms and
conditions as the Board of Directors determines in its discretion. Such
resolution shall be made available for public inspection and copying in
the Office of the Executive Secretary under the Freedom of Information
Act (5 U.S.C. 552(a)(2)).
Sec. 303.11 Decisions.
(a) General procedures. The FDIC may approve, conditionally
approve, deny, or not object to a filing after appropriate review and
consideration of the record. The FDIC will promptly notify the
applicant and any person who makes a written request of the final
disposition of a filing. If the FDIC denies a filing, the FDIC will
immediately notify the applicant in writing of the reasons for the
denial.
(b) Authority retained by FDIC Board of Directors to modify
procedures. In acting on any filing under this part, the FDIC Board of
Directors may by resolution adopt procedures which differ from those
contained in this part when it deems it necessary or in the public
interest to do so. The resolution shall be made available for public
inspection and copying in the Office of the Executive Secretary under
the Freedom of Information Act (5 U.S.C. 552(a)(2)).
(c) Expedited processing. (1) A filing submitted by an eligible
depository institution as defined in Sec. 303.2(r) will receive
expedited processing as specified in the appropriate subparts of this
part unless the appropriate regional director or deputy regional
director (DOS) determines to remove the filing from expedited
processing for any of the reasons set forth in paragraph (c)(2) of this
section. Except for filings made pursuant to subpart J of this part
(International Banking), expedited processing will not be available for
any filing that the appropriate regional director (DOS) does not have
delegated authority to approve.
(2) Removal of filing from expedited processing. The appropriate
regional director or deputy regional director (DOS) may remove a filing
from expedited processing at any time prior to final disposition if:
(i) For filings subject to public notice under Sec. 303.7, an
adverse comment is received that warrants additional investigation or
review;
(ii) For filings subject to evaluation of CRA performance under
Sec. 303.5, a CRA protest is received that warrants additional
investigation or review, or the appropriate regional director (DCA)
determines that the filing presents a significant CRA or compliance
concern;
(iii) For any filing, the appropriate regional director (DOS)
determines that the filing presents a significant supervisory concern,
or raises a significant legal or policy issue; or
(iv) For any filing, the appropriate regional director (DOS)
determines that other good cause exists for removal.
(3) For purposes of this section, a significant CRA concern
includes, but is not limited to, a determination by the appropriate
regional director (DCA) that, although a depository institution may
have an institution-wide rating of satisfactory or better, a depository
institution's CRA rating is less than satisfactory in a state or multi-
state metropolitan statistical area, or a depository institution's CRA
performance is less than satisfactory in a metropolitan statistical
area as defined in 12 CFR 345.12 (MSA) or in the non-MSA portion of a
state in which it seeks to expand through approval of an application
for a deposit facility as defined in 12 U.S.C. 2902(3).
(4) If the FDIC determines that it is necessary to remove a filing
from expedited processing pursuant to paragraph (c)(2) of this section,
the FDIC promptly will provide the applicant with a written
explanation.
[[Page 44719]]
(d) Multiple transactions. If the FDIC is considering related
transactions, some or all of which have been granted expedited
processing, then the longest processing time for any of the related
transactions shall govern for purposes of approval.
(e) Abandonment of filing. A filing must contain all information
set forth in the applicable subpart of this part. To the extent
necessary to evaluate a filing, the FDIC may require an applicant to
provide additional information. If information requested by the FDIC is
not provided within the time period specified by the agency, the FDIC
may deem the filing abandoned and shall provide written notification to
the applicant and any interested parties that submitted comments to the
FDIC that the file has been closed.
(f) Appeals and requests for reconsideration.--(1) General. Appeal
procedures for a denial of a change in bank control (subpart E of this
part), change in senior executive officer or board of directors
(subpart F of this part) or denial of an application pursuant to
section 19 of the FDI Act (subpart L of this part) are contained in 12
CFR part 308, subparts D, L, and M, respectively. For all other filings
covered by this chapter for which appeal procedures are not provided by
regulation or other written guidance, the procedures specified in
paragraphs (f) (2) through (5) of this section shall apply. A decision
to deny a request for a hearing is a final agency determination and is
not appealable.
(2) Filing procedures. Within 15 days of receipt of notice from the
FDIC that its filing has been denied, any applicant may file a request
for reconsideration with the appropriate regional director (DOS), if
the filing initially was submitted to DOS, or the appropriate regional
director (DCA), if the filing initially was submitted to DCA.
(3) Content of filing. A request for reconsideration must contain
the following information:
(i) A resolution of the board of directors of the applicant
authorizing filing of the request if the applicant is a corporation, or
a letter signed by the individual(s) filing the request if the
applicant is not a corporation;
(ii) Relevant, substantive information that for good cause was not
previously set forth in the filing; and
(iii) Specific reasons why the FDIC should reconsider its prior
decision.
(4) Delegation of authority for requests for reconsideration. (i)
Authority is delegated to the Director and Deputy Director (DOS) and
(DCA), as appropriate and, where confirmed in writing by the
appropriate Director, to an associate director and the appropriate
regional director and deputy regional director, to grant a request for
reconsideration, after consultation with the Legal Division.
(ii) Authority is delegated to the Director and Deputy Director
(DOS) and (DCA), as appropriate and, where confirmed in writing, to an
associate director, to deny a request for reconsideration, after
consultation with the Legal Division. Such a denial is a final agency
decision and is not appealable.
(5) Reconsideration of the filing. If a request for reconsideration
is granted pursuant to this paragraph (f), the filing will be
reconsidered as follows:
(i) The Board of Directors will reconsider any such filing if the
filing was originally denied by the Board of Directors.
(ii) Authority is delegated to the FDIC's Supervisory Appeals
Review Committee to reconsider any such filing if the filing was
originally denied by the Director or Deputy Director or an associate
director (DOS) or (DCA), and to make the final agency decision on such
filing, after consultation with the Legal Division.
(iii) Authority is delegated to the Director or Deputy Director
(DOS) or (DCA), as appropriate, to reconsider any such filing that was
originally denied by a regional director or deputy regional director,
and to make the final agency decision on such filing, after
consultation with the Legal Division.
(iv) Notwithstanding paragraphs (f)(5)(ii) and (iii) of this
section, no reconsideration of a filing that originally required Legal
Division concurrence may be acted upon without Legal Division
concurrence.
(6) Processing. The appropriate regional director (DOS or DCA) will
notify the applicant whether reconsideration will be granted or denied
within 15 days of receipt of a request for reconsideration. If a
request for reconsideration is granted pursuant to this paragraph (f),
the FDIC will notify the applicant of the final agency decision on such
filing within 60 days of its receipt of the request for
reconsideration.
(g) Nullification, withdrawal, revocation, amendment, and
suspension of decisions on filings.--(1) Grounds for action. (i) Except
as otherwise provided by law or regulation, the FDIC may nullify,
withdraw, revoke, amend or suspend a decision on a filing if it becomes
aware at anytime:
(A) Of any material misrepresentation or omission related to the
filing or of any material change in circumstance that occurred prior to
the consummation of the transaction or commencement of the activity
authorized by the decision on the filing; or
(B) That the decision on the filing is contrary to law or
regulation or was granted due to clerical or administrative error.
(ii) Any person responsible for a material misrepresentation or
omission in a filing or supporting materials may be subject to an
enforcement action and other penalties, including criminal penalties
provided in Title 18 of the United States Code.
(2) Notice of intent and temporary order. (i) Except as provided in
paragraph (g)(2)(ii) of this section, before taking action under this
paragraph (g), the FDIC shall issue and serve on an applicant written
notice of its intent to take such action. A notice of intent to act on
a filing shall include:
(A) The reasons for the proposed action; and
(B) The date by which the applicant may file a written response
with the FDIC.
(ii) The FDIC may issue a temporary order on a decision on a filing
without providing an applicant a prior notice of intent if the FDIC
determines that:
(A) It is necessary to reevaluate the impact of a change in
circumstance prior to the consummation of the transaction or
commencement of the activity authorized by the decision on the filing;
or
(B) The activity authorized by the filing may pose a threat to the
interests of the depository institution's depositors or may threaten to
impair public confidence in the depository institution.
(iii) A temporary order shall provide the applicant with an
opportunity to make a written response in accordance with paragraph
(g)(3) of this section.
(3) Response to notice of intent or temporary order. An applicant
may file a written response to a notice of intent or a temporary order
within 15 days from the date of service of the notice or temporary
order. The written response should include:
(i) An explanation of why the proposed action or temporary order is
not warranted; and
(ii) Any other relevant information, mitigating circumstance,
documentation, or other evidence in support of the applicant's
position. An applicant may also request a hearing under Sec. 303.10.
Failure by an applicant to file a written response with the FDIC to a
notice of intent or a temporary order within the specified time period,
shall constitute a waiver of the opportunity to respond and shall
constitute consent to a final order under this paragraph (g).
[[Page 44720]]
(4) Effective date. All orders issued pursuant to this section
shall become effective immediately upon issuance unless otherwise
stated therein.
(5) Retained and delegated authority. The FDIC Board of Directors
retains authority to issue notices of intent and temporary and final
orders under this paragraph (g), as to any decision on a filing
originally acted on by the Board. For decisions on filings under this
paragraph (g) that were not originally acted on by the Board, authority
is delegated to the Director and Deputy Director (DOS and DCA) and,
where confirmed in writing by the appropriate Director, to an associate
director or the appropriate regional director or deputy regional
director, to issue notices of intent and final orders, after
consultation with the Legal Division. Authority is delegated to the
Director and Deputy Director (DOS and DCA) and, where confirmed in
writing by the appropriate Director, to an associate director, to issue
temporary orders under this paragraph (g), after consultation with the
Legal Division. This delegated authority may be exercised only by the
official who acted on the original filing or an official of equivalent
or higher authority.
Sec. 303.12 General rules governing delegations of authority.
(a) Scope. This section contains general rules governing the FDIC
Board of Director's delegations of authority under this part. These
principles are procedural in nature only and are not substantive
standards. All delegations of authority, confirmations, limitations,
revisions, and rescissions under this part must be in writing and
maintained with the Office of the Executive Secretary.
(b) Authority not delegated. Except as otherwise expressly
provided, the FDIC Board of Directors does not delegate its authority.
(1) The FDIC Board of Directors retains and does not delegate the
authority to act on agreements with foreign regulatory or supervisory
authorities, matters that would establish or change existing
Corporation policy, matters that might attract unusual attention or
publicity, or involve an issue of first impression notwithstanding any
existing delegation of authority.
(2) The FDIC Board of Directors retains the authority to act on any
filing or enforcement matter upon which any member of the Board of
Directors wishes to act, even if the authority to act on such filing or
enforcement matter has been delegated.
(c) Exercise of delegated authority not mandated. Any FDIC official
with delegated authority under this part may elect not to exercise that
authority.
(d) Action by FDIC officials. In matters where the FDIC Board of
Directors has neither specifically delegated nor retained authority,
FDIC officials may take action with respect to matters which generally
involve conditions or circumstances requiring prompt action to protect
the interests of the FDIC and to achieve flexibility in and expedite
its operations and the exercise of FDIC functions under this part.
(e) Construction. The delegations of authority contained in this
part are to be broadly construed in favor of the existence of authority
in FDIC officials who act under delegated authority. Any exercise of
authority under this part by an FDIC official is conclusive evidence of
that official's authority.
(f) Written confirmations, limitations, revisions or rescissions.
Where the FDIC Board of Directors has delegated authority to the
Director (DOS), Director (DCA) or the General Counsel, or their
respective designees, each shall have the right to confirm, limit,
revise, or rescind any delegation of authority issued or approved by
them, respectively, to any subordinate official(s).
Sec. 303.13 Delegations of authority to officials in the Division of
Supervision and the Division of Compliance and Consumer Affairs.
(a) CRA protests. Where a CRA protest is filed and remains
unresolved, authority is delegated to the Director and Deputy Director
(DCA) and, where confirmed in writing by the Director, to an associate
director or the appropriate regional director or deputy regional
director to concur that approval of any filing subject to CRA is
consistent with the purposes of CRA.
(b) Adequacy of filings. Authority is delegated to the Director and
Deputy Director (DOS) and, where confirmed in writing by the Director,
to an associate director and the appropriate regional director and
deputy regional director, to determine whether a filing is
substantially complete for purposes of commencing processing.
(c) National Historic Preservation Act. Authority is delegated to
the Director and Deputy Director (DOS) and, where confirmed in writing
by the Director, to an associate director and the appropriate regional
director and deputy regional director, to enter into memoranda of
agreement pursuant to regulations of the Advisory Council on Historic
Preservation which implement the National Historic Preservation Act of
1966 (16 U.S.C. 470).
(d) Modification of publication requirements. Authority is
delegated to the Director and Deputy Director (DOS) and, where
confirmed in writing by the Director, to an associate director and the
appropriate regional director and deputy regional director, to modify
the publication requirements for a particular filing where the unusual
circumstances surrounding the filing warrant such modification.
Subpart B--Deposit Insurance
Sec. 303.20 Scope.
This subpart sets forth the procedures for applying for deposit
insurance for a proposed depository institution or an operating
noninsured depository institution under section 5 of the FDI Act (12
U.S.C. 1815). It also sets forth the procedures for requesting
continuation of deposit insurance for a state-chartered bank
withdrawing from membership in the Federal Reserve System and for
interim institutions chartered to facilitate a merger transaction.
Related delegations of authority are also set forth.
Sec. 303.21 Filing procedures.
(a) Applications for deposit insurance shall be filed with the
appropriate regional director (DOS). The relevant application forms and
instructions for applying for deposit insurance for an existing or
proposed depository institution may be obtained from any FDIC regional
office (DOS).
(b) An application for deposit insurance for an interim depository
institution shall be filed and processed in accordance with the
procedures set forth in Sec. 303.24, subject to the provisions of
Sec. 303.62(b)(2) regarding deposit insurance for interim institutions.
An interim institution is defined as a state- or federally-chartered
depository institution that does not operate independently but exists
solely as a vehicle to accomplish a merger transaction.
(c) A request for continuation of deposit insurance upon
withdrawing from membership in the Federal Reserve System shall be in
letter form and shall provide the information prescribed in
Sec. 303.25.
Sec. 303.22 Processing.
(a) Expedited processing for proposed institutions. (1) An
application for deposit insurance for a proposed institution which will
be a subsidiary of an eligible depository institution as defined in
Sec. 303.2(r) or an eligible holding company will be acknowledged
[[Page 44721]]
in writing by the FDIC and will receive expedited processing unless the
applicant is notified in writing to the contrary and provided with the
basis for that decision. An eligible holding company is defined as a
bank or thrift holding company that has consolidated assets of $150
million or more, has an assigned composite rating of 2 or better, and
has at least 75 percent of its consolidated depository institution
assets comprised of eligible depository institutions. The FDIC may
remove an application from expedited processing for any of the reasons
set forth in Sec. 303.11(c)(2).
(2) Under expedited processing, the FDIC will take action on an
application within 60 days of receipt of a substantially complete
application or 5 days after the expiration of the comment period
described in Sec. 303.23, whichever is later. Final action may be
withheld until the FDIC has assurance that permission to organize the
proposed institution will be granted by the chartering authority.
Notwithstanding paragraph (a)(1) of this section, if the FDIC does not
act within the expedited processing period, it does not constitute an
automatic or default approval.
(b) Standard processing. For those applications that are not
processed pursuant to the expedited procedures, the FDIC will provide
the applicant with written notification of the final action when the
decision is rendered.
Sec. 303.23 Public notice requirements.
(a) De novo institutions and operating noninsured institutions. The
applicant shall publish a notice as prescribed in Sec. 303.7 in a
newspaper of general circulation in the community in which the main
office of the depository institution is or will be located. Notice
shall be published as close as practicable to, but no sooner than five
days before, the date the application is mailed or delivered to the
appropriate regional director (DOS). Comments by interested parties
must be received by the appropriate regional director (DOS) within 30
days following the date of publication, unless the comment period has
been extended or reopened in accordance with Sec. 303.9(b)(2).
(b) Exceptions to public notice requirements. No publication shall
be required in connection with the granting of insurance to a new
depository institution established pursuant to the resolution of a
depository institution in default, or to an interim depository
institution formed solely to facilitate a merger transaction, or for a
request for continuation of federal deposit insurance by a state-
chartered bank withdrawing from membership in the Federal Reserve
System.
Sec. 303.24 Application for deposit insurance for an interim
institution.
(a) Application required. Subject to Sec. 303.62(b)(2), a deposit
insurance application is required for a state-chartered interim
institution if the related merger transaction is subject to approval by
a federal banking agency other than the FDIC. A separate application
for deposit insurance for an interim institution is not required in
connection with any merger requiring FDIC approval pursuant to subpart
D of this part.
(b) Content of separate application. A letter application for
deposit insurance for an interim institution, accompanied by a copy of
the related merger application, shall be filed with the appropriate
regional director (DOS). The letter application shall briefly describe
the transaction and contain a statement that deposit insurance is being
requested for an interim institution that does not operate
independently but exists solely as a vehicle to accomplish a merger
transaction which will be reviewed by a federal banking agency other
than the FDIC.
(c) Processing. An application for deposit insurance for an interim
depository institution will be acknowledged in writing by the FDIC.
Final action will be taken within 21 days after receipt of a
substantially complete application, unless the applicant is notified in
writing that additional review is warranted. If the FDIC does not act
within the expedited processing period, it does not constitute an
automatic or default approval.
Sec. 303.25 Continuation of deposit insurance upon withdrawing from
membership in the Federal Reserve System.
(a) Content of application. To continue its insured status upon
withdrawal from membership in the Federal Reserve System, a state-
chartered bank shall submit a letter application to the appropriate
regional director (DOS). A complete application shall consist of the
following information:
(1) A copy of the letter, and any attachments thereto, sent to the
appropriate Federal Reserve Bank setting forth the bank's intention to
terminate its membership;
(2) A copy of the letter from the Federal Reserve Bank
acknowledging the bank's notice to terminate membership;
(3) A statement regarding any anticipated changes in the bank's
general business plan during the next 12-month period; and
(4)(i) A statement by the bank's management that there are no
outstanding or proposed corrective programs or supervisory agreements
with the Federal Reserve System.
(ii) If such programs or agreements exist, a statement by the
applicant that its Board of Directors is willing to enter into similar
programs or agreements with the FDIC which would become effective upon
withdrawal from the Federal Reserve System.
(b) Processing. An application for deposit insurance under this
section will be acknowledged in writing by the FDIC. The appropriate
regional director (DOS) shall notify the applicant, within 15 days of
receipt of a substantially complete application, either that federal
deposit insurance will continue upon termination of membership in the
Federal Reserve System or that additional review is warranted and the
applicant will be notified, in writing, of the FDIC's final decision
regarding continuation of deposit insurance. If the FDIC does not act
within the expedited processing period, it does not constitute an
automatic or default approval.
Sec. 303.26 Delegation of authority.
(a) Proposed depository institutions. (1) Authority is delegated to
the Director and the Deputy Director (DOS) and, where confirmed in
writing by the Director, to an associate director and the appropriate
regional director and deputy regional director, to approve applications
for deposit insurance for proposed depository institutions. For the
delegate to exercise this authority, the criteria in paragraphs
(a)(1)(i) through (a)(1)(v) of this section must be satisfied and the
applicant shall have agreed in writing to comply with any conditions
imposed by the delegate, other than those listed in paragraph (d) of
this section which may be imposed without the applicant's consent:
(i) The factors set forth in section 6 of the Act (12 U.S.C. 1816)
have been considered and favorably resolved;
(ii) No unresolved management interlocks, as prohibited by the
Depository Institution Management Interlocks Act (12 U.S.C. 3201 et
seq.), part 348 of this chapter or any other applicable implementing
regulation, exist;
(iii) The application is in conformity with the standards and
guidelines for the granting of deposit insurance established in the
FDIC statement of policy ``Applications for Deposit Insurance'' (2 FDIC
Law, Regulations and Related Acts (FDIC) 5349; see Sec. 309.4(a) and
(b) of this chapter for availability);
[[Page 44722]]
(iv) Compliance with the CRA, the NEPA, the NHPA and any applicable
related regulations, including 12 CFR part 345, has been considered and
favorably resolved; and
(v) No CRA protest as defined in Sec. 303.2(l) has been filed which
remains unresolved or, where such a protest has been filed and remains
unresolved, the Director (DCA), Deputy Director (DCA), an associate
director (DCA) or the appropriate regional director (DCA) or deputy
regional director (DCA) concurs that approval is consistent with the
purposes of the CRA and the applicant agrees in writing to any
conditions imposed regarding the CRA.
(2) Authority is delegated to the Director and Deputy Director
(DOS) and, where confirmed in writing by the Director, to an associate
director and the appropriate regional director and deputy regional
director, to approve applications for deposit insurance filed by or on
behalf of proposed interim depository institutions formed or organized
solely for the purpose of facilitating a merger transaction which will
be reviewed by a responsible agency as defined in section 18(c)(2) of
the FDI Act. For the delegate to exercise this authority, the criteria
in paragraphs (a)(1)(i) through (a)(1)(v) of this section must be
satisfied and the applicant must agree in writing to comply with any
conditions imposed by the delegate, other than those listed in
paragraph (d) of this section which may be imposed without the
applicant's consent.
(b) Operating noninsured depository institutions. Authority is
delegated to the Director and the Deputy Director (DOS) and, where
confirmed in writing by the Director, to an associate director and the
appropriate regional director and deputy regional director, to approve
applications for deposit insurance by operating noninsured depository
institutions. For the delegate to exercise this authority, the
following criteria must be satisfied and the applicant must have agreed
in writing to comply with any condition imposed by the delegate, other
than those listed in paragraph (d) of this section which may be imposed
without the applicant's consent:
(1) The applicant is determined to be eligible for federal deposit
insurance for the class of institution to which the applicant belongs
in the state (as defined in section 3(a) of the Act (12 U.S.C. 1813(a))
in which the applicant is located;
(2) The factors set forth in section 6 of the Act (12 U.S.C. 1816)
have been considered and favorably resolved;
(3) No unresolved management interlocks, as prohibited by the
Depository Institution Management Interlocks Act (12 U.S.C. 3201 et
seq.), part 348 of this chapter or any other applicable implementing
regulation, exist;
(4) The application is in conformity with the standards and
guidelines for the granting of deposit insurance to operating
noninsured depository institutions established in the FDIC statement of
policy ``Applications for Deposit Insurance'' (2 FDIC Law, Regulations
and Related Acts (FDIC) 5349);
(5) Compliance with the CRA, the NEPA, the NHPA, and any applicable
related regulations, including 12 CFR part 345, has been considered and
favorably resolved; and
(6) No CRA protest as defined in Sec. 303.2(l) has been filed which
remains unresolved or, where such a protest has been filed and remains
unresolved, the Director (DCA), Deputy Director (DCA), an associate
director (DCA) or the appropriate regional director (DCA) or deputy
regional director (DCA) concurs that approval is consistent with the
purposes of the CRA and the applicant agrees in writing to any
conditions imposed regarding the CRA.
(c) Continuation of deposit insurance upon withdrawing from
membership in the Federal Reserve System. Authority is delegated to the
Director and Deputy Director (DOS) and, where confirmed in writing by
the Director, to an associate director and the appropriate regional
director and deputy regional director to approve continuation of
federal deposit insurance where the applicant has agreed in writing to
comply with any conditions imposed by the delegate, other than the
standard conditions defined in Sec. 303.2(ff) which may be imposed
without the applicant's written consent.
(d) Conditions that may be imposed under delegated authority.
Following are conditions which may be imposed by a delegate in
approving applications for deposit insurance without affecting the
authority granted under paragraphs (a) and (b) of this section:
(1) The applicant will provide a specific amount of initial paid-in
capital;
(2) With respect to a proposed depository institution that has
applied for deposit insurance pursuant to this subpart, the Tier 1
capital to assets leverage ratio (as defined in the appropriate capital
regulation and guidance of the institution's primary federal regulator)
will be maintained at not less than eight percent throughout the first
three years of operation and that an adequate allowance for loan and
lease losses will be provided;
(3) Any changes in proposed management or proposed ownership to the
extent of 10 percent or more of stock, including new acquisitions of or
subscriptions to 10 percent or more of stock shall be approved by the
FDIC prior to the opening of the depository institution for business;
(4) The applicant will adopt an accrual accounting system for
maintaining the books of the depository institution;
(5) Where applicable, deposit insurance will not become effective
until the applicant has been granted a charter as a depository
institution, has authority to conduct a depository institution
business, and its establishment and operation as a depository
institution have been fully approved by the appropriate state and/or
federal supervisory authority;
(6) Where deposit insurance is granted to an interim institution
formed or organized solely to facilitate a related transaction, deposit
insurance will only become effective in conjunction with consummation
of the related transaction;
(7) Where applicable, a registered or proposed bank holding
company, or a registered or proposed thrift holding company, has
obtained approval of the Board of Governors of the Federal Reserve
System or the Office of Thrift Supervision to acquire voting stock
control of the proposed depository institution prior to its opening for
business;
(8) Where applicable, the applicant has submitted any proposed
contracts, leases, or agreements relating to construction or rental of
permanent quarters to the appropriate regional director for review and
comment;
(9) Where applicable, full disclosure has been made to all proposed
directors and stockholders of the facts concerning the interest of any
insider in any transactions being effected or then contemplated,
including the identity of the parties to the transaction and the terms
and costs involved. An insider is one who is or is proposed to be a
director, officer, or incorporator of an applicant; a shareholder who
directly or indirectly controls 10 or more percent of any class of the
applicant's outstanding voting stock; or the associates or interests of
any such person;
(10) The person(s) selected to serve as the principal operating
officer(s) shall be acceptable to the appropriate regional director
(DOS);
(11) The applicant will have adequate fidelity coverage;
(12) The depository institution will obtain an audit of its
financial statements by an independent public
[[Page 44723]]
accountant annually for at least the first three years after deposit
insurance is effective, furnish a copy of any reports by the
independent auditor (including any management letters) to the
appropriate FDIC regional office within 15 days after their receipt by
the depository institution and notify the appropriate FDIC regional
office within 15 days when a change in its independent auditor occurs;
and
(13) Any standard condition defined in Sec. 303.2(ff).
Sec. 303.27 Authority retained by the FDIC Board of Directors.
Without limiting the Board of Director's authority, the Board of
Directors retains authority to deny applications for deposit insurance
and approve applications for deposit insurance where the applicant does
not agree in writing to comply with any condition imposed by the FDIC,
other than the standard conditions listed in Secs. 303.2(ff) and
303.26(d), which may be imposed without the applicant's written
consent.
Subpart C--Establishment and Relocation of Domestic Branches and
Offices
Sec. 303.40 Scope.
(a) General. This subpart sets forth the application requirements,
procedures and the delegations of authority for insured state nonmember
banks to establish a branch, relocate a branch or main office, and
retain existing branches after the interstate relocation of the main
office subject to the approval by the FDIC pursuant to sections 13(f),
13(k), 18(d) and 44 of the FDI Act.
(b) Merger transaction. Applications for approval of the
acquisition and establishment of branches in connection with a merger
transaction under section 18(c) of the FDI Act (12 U.S.C. 1828(c)), are
processed in accordance with subpart D (Merger Transactions) of this
part.
(c) Insured branches of foreign banks and foreign branches of
domestic banks. Applications regarding insured branches of foreign
banks and foreign branches of domestic banks are processed in
accordance with subpart J (International Banking) of this part.
(d) Interstate acquisition of individual branch. Applications
requesting approval of the interstate acquisition of an individual
branch or branches located in a state other than the applicant's home
state without the acquisition of the whole bank are treated as
interstate bank merger transactions under section 44 of the FDI Act (12
U.S.C. 1831a(u)), and are processed in accordance with subpart D
(Merger Transactions) of this part.
Sec. 303.41 Definitions.
For purposes of this subpart:
(a) Branch includes any branch bank, branch office, additional
office, or any branch place of business located in any State of the
United States or in any territory of the United States, Puerto Rico,
Guam, American Samoa, the Trust Territory of the Pacific Islands, the
Virgin Islands, and the Northern Mariana Islands at which deposits are
received or checks paid or money lent. A branch does not include an
automated teller machine, an automated loan machine, or a remote
service unit. The term branch also includes the following:
(1) A messenger service that is operated by a bank or its affiliate
that picks up and delivers items relating to transactions in which
deposits are received or checks paid or money lent. A messenger service
established and operated by a non-affiliated third party generally does
not constitute a branch for purposes of this subpart. Banks contracting
with third parties to provide messenger services should consult with
the appropriate regional director (DOS) to determine if the messenger
service constitutes a branch.
(2) A mobile branch, other than a messenger service, that does not
have a single, permanent site and uses a vehicle that travels to
various locations to enable the public to conduct banking business. A
mobile branch may serve defined locations on a regular schedule or may
serve a defined area at varying times and locations.
(3) A temporary branch that operates for a limited period of time
not to exceed one year as a public service, such as during an emergency
or disaster situation.
(4) A seasonal branch that operates at various periodically
recurring intervals, such as during state and local fairs, college
registration periods, and other similar occasions.
(b) Branch relocation means a move within the same immediate
neighborhood of the existing branch that does not substantially affect
the nature of the business of the branch or the customers of the
branch. Moving a branch to a location outside its immediate
neighborhood is considered the closing of an existing branch and the
establishment of a new branch. Closing of a branch is covered in the
FDIC Statement of Policy Concerning Branch Closing Notices and Policies
(2 FDIC Law, Regulations, Related Acts 5391; see Sec. 309.4 (a) and (b)
of this chapter for availability).
(c) De novo branch means a branch of a bank which is established by
the bank as a branch and does not become a branch of such bank as a
result of:
(1) The acquisition by the bank of an insured depository
institution or a branch of an insured depository institution; or
(2) The conversion, merger, or consolidation of any such
institution or branch.
(d) Home state means the state by which the bank is chartered.
(e) Host state means a state, other than the home state of the
bank, in which the bank maintains, or seeks to establish and maintain,
a branch.
Sec. 303.42 Filing procedures.
(a) General. An applicant shall submit an application to the
appropriate regional director (DOS) on the date the notice required by
Sec. 303.44 is published, or within 5 days after the date of the last
required publication.
(b) Content of filing. A complete letter application shall include
the following information:
(1) A statement of intent to establish a branch, or to relocate the
main office or a branch;
(2) The exact location of the proposed site including the street
address. With regard to messenger services, specify the geographic area
in which the services will be available. With regard to a mobile branch
specify the community or communities in which the vehicle will operate
and the manner in which it will be used;
(3) Details concerning any involvement in the proposal by an
insider of the bank as defined in Sec. 303.2(u), including any
financial arrangements relating to fees, the acquisition of property,
leasing of property, and construction contracts;
(4) A statement on the impact of the proposal on the human
environment, including, information on compliance with local zoning
laws and regulations and the effect on traffic patterns for purposes of
complying with the applicable provisions of the NEPA and the FDIC
Statement of Policy on NEPA (2 FDIC Law, Regulations, Related Acts
5185; see Sec. 309.4 (a) and (b) of this chapter for availability);
(5) A statement as to whether or not the site is eligible for
inclusion in the National Register of Historic Places for purposes of
complying with applicable provisions of the NHPA and the FDIC Statement
of Policy on NHPA (2 FDIC Law, Regulations, Related Acts 5175; see
Sec. 309.4 (a) and (b) of this chapter for availability) including
documentation of consultation with the State Historic Preservation
Officer, as appropriate;
[[Page 44724]]
(6) Comments on any changes in services to be offered, the
community to be served, or any other effect the proposal may have on
the applicant's compliance with the CRA;
(7) A copy of each newspaper publication required by Sec. 303.44,
the name and address of the newspaper, and date of the publication;
(8) When an application is submitted to relocate the main office of
the applicant from one state to another, a statement of the applicant's
intent regarding retention of branches in the state where the main
office exists prior to relocation.
(c) Undercapitalized institutions. Applications to establish a
branch by applicants subject to section 38 of the FDI Act (12 U.S.C.
1831o) also should provide the information required by Sec. 303.204.
Applications pursuant to sections 38 and 18(d) of the FDI Act (12
U.S.C. 1831o and 1828(d)) may be filed concurrently or as a single
application.
(d) Additional information. The appropriate regional director (DOS)
may request additional information to complete processing.
Sec. 303.43 Processing.
(a) Expedited processing for eligible depository institutions. An
application filed under this subpart by an eligible depository
institution as defined in Sec. 303.2(r) will be acknowledged in writing
by the FDIC and will receive expedited processing, unless the applicant
is notified in writing to the contrary and provided with the basis for
that decision. The FDIC may remove an application from expedited
processing for any of the reasons set forth in Sec. 303.11(c)(2).
Absent such removal, an application processed under expedited
processing will be deemed approved on the latest of the following:
(1) The 21st day after receipt by the FDIC of a substantially
complete filing;
(2) The 5th day after expiration of the comment period described in
Sec. 303.44; or
(3) In the case of an application to establish and operate a de
novo branch in a state that is not the applicant's home state and in
which the applicant does not maintain a branch, the 5th day after the
FDIC receives confirmation from the host state that the applicant has
both complied with the filing requirements of the host state and
submitted a copy of the application with the FDIC to the host state
bank supervisor.
(b) Standard processing. For those applications which are not
processed pursuant to the expedited procedures, the FDIC will provide
the applicant with written notification of the final action when the
decision is rendered.
Sec. 303.44 Public notice requirements.
(a) Newspaper publications. For applications to establish or
relocate a branch, a notice as described in Sec. 303.7(b) shall be
published once in a newspaper of general circulation. For applications
to relocate a main office, notice shall be published at least once each
week on the same day for two consecutive weeks. The required
publication shall be made in the following communities:
(1) To establish a branch. In the community in which the main
office is located and in the communities to be served by the branch
(including messenger services and mobile branches).
(2) To relocate a main office. In the community in which the main
office is currently located and in the community to which it is
proposed the main office will relocate.
(3) To relocate a branch. In the community in which the branch is
located.
(b) Public comments. Comments by interested parties must be
received by the appropriate regional director (DOS) within 15 days
after the date of the last newspaper publication required by paragraph
(a) of this section, unless the comment period has been extended or
reopened in accordance with Sec. 303.9(b)(2).
(c) Lobby notices. In the case of applications to relocate a main
office or a branch, a copy of the required newspaper publication shall
be posted in the public lobby of the office to be relocated for at
least 15 days beginning on the date of the last published notice
required by paragraph (a) of this section.
Sec. 303.45 Special provisions.
(a) Emergency or disaster events. (1) In the case of an emergency
or disaster at a main office or a branch which requires that an office
be immediately relocated to a temporary location, applicants shall
notify the appropriate regional director (DOS) within 3 days of such
temporary relocation.
(2) Within 10 days of the temporary relocation resulting from an
emergency or disaster, the bank shall submit a written application to
the appropriate regional director (DOS), that identifies the nature of
the emergency or disaster, specifies the location of the temporary
branch, and provides an estimate of the duration the bank plans to
operate the temporary branch.
(3) As part of the review process, the appropriate regional
director (DOS) will determine on a case by case basis whether
additional information is necessary and may waive public notice
requirements.
(b) Redesignation of main office and existing branch. In cases
where an applicant desires to redesignate its main office as a branch
and redesignate an existing branch as the main office, a single
application shall be submitted. The appropriate regional director (DOS)
may waive the public notice requirements in instances where an
application presents no significant or novel policy, supervisory, CRA,
compliance or legal concerns. A waiver will be granted only to a
redesignation within the applicant's home state.
(c) Expiration of approval. Approval of an application expires if
within 18 months after the approval date a branch has not commenced
business or a relocation has not been completed.
Sec. 303.46 Delegation of authority.
(a) Approval of applications. (1) Where the applicant agrees in
writing to comply with any conditions imposed by the delegate, other
than the standard conditions defined in Sec. 303.2(ff) which may be
imposed without the applicant's written consent, authority is delegated
to the Director and Deputy Director (DOS) and, where confirmed in
writing by the Director, to an associate director and the appropriate
regional director and deputy regional director, to approve the
following applications:
(i) Establish a branch;
(ii) Establish and operate a de novo branch in a state that is not
the applicant's home state and in which the applicant does not maintain
a branch;
(iii) Relocate a main office (including an application to relocate
a main office to another state and retain existing branches); and
(iv) Relocate a branch.
(2) For the delegate to exercise this authority, the criteria in
paragraphs (c)(1) through (c)(7) of this section must be satisfied.
(3) Where the applicant does not agree in writing to comply with
any condition imposed by the delegate, authority is delegated to the
Director and Deputy Director (DOS) and, where confirmed in writing by
the Director, to an associate director to approve the applications
listed in paragraph (a)(1) of this section.
(b) Denial of applications. (1) Authority is delegated to the
Director and Deputy Director (DOS) and, where confirmed in writing by
the Director, to an associate director and the appropriate regional
director and deputy regional director, to deny an application to
establish a temporary branch.
[[Page 44725]]
(2) Authority is delegated to the Director and Deputy Director
(DOS) and, where confirmed in writing by the Director, to an associate
director to deny an application for consent to:
(i) Establish a branch;
(ii) Establish and operate a de novo branch in a state that is not
the applicant's home state and in which the applicant does not maintain
a branch;
(iii) Relocate a main office (including an application to relocate
a main office to another state and retain existing branches); and
(iv) Relocate a branch.
(c) Criteria for delegated authority. The following criteria must
be satisfied before the authority delegated in paragraph (a) of this
section may be exercised:
(1) The factors set forth in section 6 of the FDI Act (12 U.S.C.
1816) have been considered and favorably resolved except that this
criterion does not apply to applications to establish messenger
services and temporary branches;
(2) The applicant meets the capital requirements set forth in 12
CFR part 325 and the FDIC ``Statement of Policy on Capital Adequacy''
(12 CFR part 325, appendix B) or agrees in writing to increase capital
so as to be in compliance with the requirements of 12 CFR part 325
before or at the consummation of the transaction which is the subject
of the filing, except that this criterion does not apply to
applications to establish messenger services and temporary branches, or
to relocate branches or main offices;
(3) Any financial arrangements which have been made in connection
with the proposed branch or relocation and which involve the
applicant's insiders are fair and reasonable in comparison to similar
arrangements that could have been made with independent third parties;
(4) Compliance with the CRA, the NEPA, the NHPA, and any applicable
related regulations, including 12 CFR part 345, has been considered and
favorably resolved;
(5) No CRA protest as defined in Sec. 303.2(l) has been filed which
remains unresolved or, where such a protest has been filed and remains
unresolved, the Director (DCA), Deputy Director (DCA), an associate
director (DCA) or the appropriate regional director or deputy regional
director (DCA) concurs that approval is consistent with the purposes of
the CRA and the applicant agrees in writing to any conditions imposed
regarding the CRA;
(6) An applicant with one or more existing branches in a state
other than the applicant's home state has not failed the credit needs
test in a host state under section 109 of the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (12 U.S.C. 1835a);
(7) Additionally, for applications submitted to establish and
operate a de novo branch in a state that is not the applicant's home
state and in which the applicant does not maintain a branch:
(i) Confirmation by the appropriate regional director (DOS) that
the applicant has complied with that state's filing requirements and
that the applicant also has submitted to the host state bank supervisor
a copy of its FDIC filing to establish and operate a de novo branch;
(ii) Determination by the FDIC that the applicant is adequately
capitalized as of the date of the filing and will continue to be
adequately capitalized and adequately managed upon consummation of the
transaction;
(iii) Confirmation that the host state has in effect a law that
meets the requirements of section 18(d)(4)(A) of the FDI Act (12 U.S.C.
1828(d)(4)(A)); and
(iv) Compliance with section 44(b)(3) of the FDI Act (12 U.S.C.
1831u(b)(3)); and
(8) Additionally, for applications submitted to relocate a main
office from one state to another where the applicant seeks to retain
branches in the state where the applicant's main office exists prior to
an interstate relocation of the main office, confirmation that the
filing meets the requirements of section 18(d)(3)(B) of the FDI Act (12
U.S.C. 1828(d)(3)(B)).
Subpart D--Merger Transactions
Sec. 303.60 Scope.
This subpart sets forth the application requirements, procedures,
and delegations of authority for transactions subject to FDIC approval
under the Bank Merger Act, section 18(c) of the FDI Act (12 U.S.C.
1828(c)). Additional guidance is contained in the FDIC ``Statement of
Policy on Bank Merger Transactions'' (2 FDIC Law, Regulations, Related
Acts (FDIC) 5145; see Sec. 309.4 (a) and (b) of this chapter for
availability).
Sec. 303.61 Definitions.
For purposes of this subpart:
(a) Merger transaction includes any transaction:
(1) In which an insured depository institution merges or
consolidates with any other insured depository institution or, either
directly or indirectly, acquires the assets of, or assumes liability to
pay any deposits made in, any other insured depository institution; or
(2) In which an insured depository institution merges or
consolidates with any noninsured bank or institution or assumes
liability to pay any deposits made in, or similar liabilities of, any
noninsured bank or institution, or in which an insured depository
institution transfers assets to any noninsured bank or institution in
consideration of the assumption of any portion of the deposits made in
the insured depository institution.
(b) Corporate reorganization means a merger transaction between
commonly-owned institutions, between an insured depository institution
and its subsidiary, or between an insured depository institution and
its holding company, provided that the merger transaction would have no
effect on competition or otherwise have significance under the
statutory standards set forth in section 18(c) of the FDI Act (12
U.S.C. 1828(c)). For purposes of this paragraph, institutions are
commonly-owned if more than 50 percent of the voting stock of each of
the institutions is owned by the same company, individual, or group of
closely-related individuals acting in concert.
(c) Interim merger transaction means a merger transaction (other
than a purchase and assumption transaction) between an operating
depository institution and a newly-formed depository institution or
corporation that will not operate independently and that exists solely
for the purpose of facilitating a corporate reorganization.
(d) Optional conversion (Oakar transaction) means a merger
transaction in which an insured depository institution assumes deposit
liabilities insured by the deposit insurance fund (either the Bank
Insurance Fund (BIF) or the Savings Association Insurance Fund (SAIF))
of which that assuming institution is not a member, and elects not to
convert the insurance covering the assumed deposits. Such transactions
are covered by section 5(d)(3) of the FDI Act (12 U.S.C. 1815(d)(3)).
(e) Resulting institution refers to the acquiring, assuming or
resulting institution in a merger transaction.
Sec. 303.62 Transactions requiring prior approval.
(a) Merger transactions. The following merger transactions require
the prior written approval of the FDIC under this subpart:
(1) Any merger transaction, including any corporate reorganization,
interim merger transaction, or optional conversion, in which the
resulting institution is to be an insured state nonmember bank; and
(2) Any merger transaction, including any corporate reorganization
or interim
[[Page 44726]]
merger transaction, that involves an uninsured bank or institution.
(b) Related provisions. Transactions covered by this subpart also
may be subject to other provisions or application requirements,
including the following:
(1) Interstate merger transactions. Merger transactions between
insured banks that are chartered in different states are subject to the
provisions of section 44 of the FDI Act (12 U.S.C. 1831u). In the case
of a merger transaction that consists of the acquisition by an out of
state bank of a branch without acquisition of the bank, the branch is
treated for section 44 purposes as a bank whose home state is the state
in which the branch is located.
(2) Deposit insurance. An application for deposit insurance will be
required in connection with a merger transaction between a state-
chartered interim institution and an insured depository institution if
the related merger application is being acted upon by a federal banking
agency other than the FDIC. If the FDIC is the federal banking agency
responsible for acting on the related merger application, a separate
application for deposit insurance is not necessary. Procedures for
applying for deposit insurance are set forth in subpart B of this part.
An application for deposit insurance will not be required in connection
with a merger transaction (other than a purchase and assumption
transaction) of a federally-chartered interim institution and an
insured institution, even if the resulting institution is to operate
under the charter of the federal interim institution.
(3) Deposit insurance fund conversions. Procedures for conversion
transactions involving the transfer of deposits from BIF to SAIF or
from SAIF to BIF are set forth in subpart M of this part at
Sec. 303.246.
(4) Branch closings. Branch closings in connection with a merger
transaction are subject to the notice requirements of section 42 of the
FDI Act (12 U.S.C. 1831r-1), including requirements for notice to
customers. These requirements are addressed in the ``Interagency Policy
Statement Concerning Branch Closings Notices and Policies'' (2 FDIC
Law, Regulations, Related Acts (FDIC) 5391).
(5) Undercapitalized institutions. Applications for a merger
transaction by applicants subject to section 38 of the FDI Act (12
U.S.C. 1831o) should also provide the information required by
Sec. 303.204. Applications pursuant to sections 38 and 18(c) of the FDI
Act (12 U.S.C, 1831o and 1828(c)) may be filed concurrently or as a
single application.
(6) Certification of assumption of deposit liability. An insured
depository institution assuming deposit liabilities of another insured
institution must provide certification of assumption of deposit
liability to the FDIC in accordance with 12 CFR part 307.
Sec. 303.63 Filing procedures.
(a) General. Applications required under this subpart shall be
filed with the appropriate regional director (DOS). The appropriate
forms and instructions may be obtained upon request from any DOS
regional office.
(b) Merger transactions. Applications for approval of merger
transactions shall be accompanied by copies of all agreements or
proposed agreements relating to the merger transaction and any other
information requested by the FDIC.
(c) Interim merger transactions. Applications for approval of
interim merger transactions and any related deposit insurance
applications shall be made by filing the forms and other documents
required by paragraphs (a) and (b) of this section and such other
information as may be required by the FDIC for consideration of the
request for deposit insurance.
(d) Optional conversions. If the proposed merger transaction is an
optional conversion, the merger application shall include a statement
that the proposed merger transaction is a transaction covered by
section 5(d)(3) of the FDI Act (12 U.S.C. 1815(d)(3)).
Sec. 303.64 Processing.
(a) Expedited processing for eligible depository institutions.--(1)
General. An application filed under this subpart by an eligible
depository institution as defined in Sec. 303.2(r) and which meets the
additional criteria in paragraph (a)(4) of this section will be
acknowledged by the FDIC in writing and will receive expedited
processing, unless the applicant is notified in writing to the contrary
and provided with the basis for that decision. The FDIC may remove an
application from expedited processing for any of the reasons set forth
in Sec. 303.11(c)(2).
(2) Under expedited processing, the FDIC will take action on an
application by the date that is the latest of:
(i) 45 days after the date of the FDIC's receipt of a substantially
complete merger application; or
(ii) 10 days after the date of the last notice publication required
under Sec. 303.65; or
(iii) 5 days after receipt of the Attorney General's report on the
competitive factors involved in the proposed transaction; or
(iv) For an interstate merger transaction subject to the provisions
of section 44 of the FDI Act (12 U.S.C. 1831u), 5 days after the FDIC
receives confirmation from the host state (as defined in
Sec. 303.41(e)) that the applicant has both complied with the filing
requirements of the host state and submitted a copy of the FDIC merger
application to the host state's bank supervisor.
(3) Notwithstanding paragraph (a)(1) of this section, if the FDIC
does not act within the expedited processing period, it does not
constitute an automatic or default approval.
(4) Criteria. The FDIC will process an application using expedited
procedures if:
(i) Immediately following the merger transaction, the resulting
institution will be ``well-capitalized'' pursuant to subpart B of part
325 of this chapter; and
(ii)(A) All parties to the merger transaction are eligible
depository institutions as defined in Sec. 303.2(r); or
(B) The acquiring party is an eligible depository institution as
defined in Sec. 303.2(r) and the amount of the total assets to be
transferred does not exceed an amount equal to 10 percent of the
acquiring institution's total assets as reported in its report of
condition for the quarter immediately preceding the filing of the
merger application.
(b) Standard processing. For those applications not processed
pursuant to the expedited procedures, the FDIC will provide the
applicant with written notification of the final action taken by the
FDIC on the application when the decision is rendered.
Sec. 303.65 Public notice requirements.
(a) General. Except as provided in paragraph (b) of this section,
an applicant for approval of a merger transaction must publish notice
of the proposed transaction on at least three occasions at
approximately equal intervals in a newspaper of general circulation in
the community or communities where the main offices of the merging
institutions are located or, if there is no such newspaper in the
community, then in the newspaper of general circulation published
nearest thereto.
(1) First publication. The first publication of the notice should
be as close as practicable to the date on which the application is
filed with the FDIC, but no more than 5 days prior to the filing date.
(2) Last publication. The last publication of the notice shall be
on the 25th day after the first publication or, if the newspaper does
not publish on the 25th day, on the newspaper's
[[Page 44727]]
publication date that is closest to the 25th day.
(b) Exceptions.--(1) Emergency requiring expeditious action. If the
FDIC determines that an emergency exists requiring expeditious action,
notice shall be published twice. The first notice shall be published as
soon as possible after the FDIC notifies the applicant of such
determination. The second notice shall be published on the 7th day
after the first publication or, if the newspaper does not publish on
the 7th day, on the newspaper's publication date that is closest to the
7th day.
(2) Probable failure. If the FDIC determines that it must act
immediately to prevent the probable failure of one of the institutions
involved in a proposed merger transaction, publication is not required.
(c) Content of notice.--(1) General. The notice shall conform to
the public notice requirements set forth in Sec. 303.7.
(2) Branches. If it is contemplated that the resulting institution
will operate offices of the other institution(s) as branches, the
following statement shall be included in the notice required in
Sec. 303.7(b):
It is contemplated that all offices of the above-named
institutions will continue to be operated (with the exception of
[insert identity and location of each office that will not be
operated]).
(3) Emergency requiring expeditious action. If the FDIC determines
that an emergency exists requiring expeditious action, the notice shall
specify as the closing date of the public comment period the date that
is the 10th day after the date of the first publication.
(d) Public comments. Comments must be received by the appropriate
regional director (DOS) within 30 days after the first publication of
the notice, unless the comment period has been extended or reopened in
accordance with Sec. 303.9(b)(2). If the FDIC has determined that an
emergency exists requiring expeditious action, comments must be
received by the appropriate regional director within 10 days after the
first publication.
Sec. 303.66 Delegation of authority.
(a) General.--(1) Bank Merger Act approval. Subject to paragraphs
(a)(3) and (e) of this section, authority is delegated in paragraphs
(b), (c), and (d) of this section to the designated FDIC officials to
approve under the Bank Merger Act, 18(c) of the FDI Act (12 U.S.C.
1828(c)), applications filed under this subpart.
(2) Interstate merger approval. With respect to an interstate
merger transaction covered by section 44 of the FDI Act (12 U.S.C.
1831u), in addition to the authority delegated to any official in
paragraph (b), (c), or (d) of this section to approve the merger
transaction under the Bank Merger Act, authority is also delegated to
such official to approve the merger transaction under section 44. This
delegation is subject to paragraph (a)(3) of this section and to the
condition that the merger transaction is eligible for FDIC approval
under section 44.
(3) Combined approvals. The delegations in paragraphs (a)(2), (b),
(c), and (d) of this section do not apply to an interstate bank merger
transaction covered both by section 44 and by the Bank Merger Act
unless the merger transaction is being approved pursuant to delegated
authority under both section 44 and the Bank Merger Act.
(b) Basic delegation. Authority is delegated to the Director and
Deputy Director (DOS) and, where confirmed in writing by the Director,
to an associate director, and the appropriate regional director and
deputy regional director to approve applications under the Bank Merger
Act. For the delegate to exercise this authority, the following
criteria must be satisfied:
(1) The resulting institution would meet all applicable capital
requirements upon consummation of the transaction (or, where the
resulting entity is an insured branch of a foreign bank, would be in
compliance with 12 CFR 347.211 upon consummation of the transaction);
and
(2) The factors set forth in section 18(c)(5) of the Act (12 U.S.C.
1828(c)(5)) have been considered and favorably resolved; and
(3)(i) The merging institutions do not operate in the same relevant
geographic market(s); or
(ii) In each relevant geographic market in which more than one of
the merging institutions operate, the resulting institution upon
consummation of the merger transaction would hold no more than 15
percent of the total deposits held by banks and/or other depository
institutions (as appropriate) in the market; or
(iii) In each relevant geographic market in which more than one of
the merging institutions operate, the resulting institution upon
consummation of the merger transaction would hold no more than 25
percent of the total deposits held by banks and/or other depository
institutions (as appropriate) in the market, and the Attorney General
has notified the FDIC in writing that the proposed merger transaction
would not have a significantly adverse effect on competition; and
(4) Compliance with the CRA and any applicable related regulations,
including 12 CFR part 345, has been considered and favorably resolved;
and
(5) No CRA protest as defined in Sec. 303.2(l) has been filed which
remains unresolved or, where such a protest has been filed and remains
unresolved, the Director (DCA), Deputy Director (DCA), associate
director (DCA), the appropriate regional director (DCA), or deputy
regional director (DCA) concurs that approval is consistent with the
purposes of the CRA, and the applicant agrees in writing to any
conditions imposed regarding the CRA; and
(6) The applicant agrees in writing to comply with any conditions
imposed by the delegate, other than the standard conditions defined in
Sec. 303.2(ff), which may be imposed without the applicant's written
consent.
(c) Additional delegations. In addition to the delegations
otherwise provided for in this section, and subject to the criteria set
forth in paragraphs (b)(1), (2), (4), (5), and (6) of this section,
authority is delegated to the Director and to the Deputy Director (DOS)
and, where confirmed in writing by the Director, to an associate
director, to approve an application for a merger transaction upon the
consummation of which the resulting institution would hold not more
than 35 percent of the total deposits held by banks and/or other
depository institutions (as appropriate) in any relevant geographic
market in which more than one of the merging institutions operate, and
the Attorney General has notified the FDIC in writing that the merger
transaction would not have a significantly adverse effect on
competition.
(d) Corporate reorganizations; interim merger transactions. In
addition to the delegations otherwise provided for in this section,
authority is delegated to the Director and to the Deputy Director (DOS)
and, where confirmed in writing by the Director, to an associate
director and the appropriate regional director and deputy regional
director, to approve:
(1) An application for a corporate reorganization or an interim
merger transaction that satisfies the criteria set forth in paragraphs
(b)(5) and (6) of this section; and
(2) Any related application for deposit insurance.
(e) Limitations. The delegations in paragraphs (b) through (d) of
this section do not apply if:
(1) The Attorney General has determined that the merger transaction
would have a significantly adverse effect on competition; or
[[Page 44728]]
(2) The FDIC has made a determination pursuant to section 18 (c)(6)
of the FDI Act (12 U.S.C. 1828(c)(6)) that an emergency exists
requiring expeditious action or that the transaction must be
consummated immediately in order to avoid a probable failure.
(f) Review of competitive factors reports. In deciding whether to
approve a merger transaction under the authority delegated by this
section, the delegate shall review any reports provided by the Attorney
General, the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System, or the Director of the Office of Thrift
Supervision in response to a request by the FDIC for reports on the
competitive factors involved in the proposed merger transaction.
(g) Competitive factor reports provided by the FDIC. Authority is
delegated to the Director and the Deputy Director (DOS) and, where
confirmed in writing by the Director, to an associate director and the
appropriate regional director and deputy regional director, to furnish
requested reports to the Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, or the Director of the Office
of Thrift Supervision on the competitive factors involved in any merger
transaction subject to approval by one of those agencies, if the
delegate determines that the proposed merger transaction would not have
a substantially adverse effect on competition.
Sec. 303.67 Authority retained by the FDIC Board of Directors.
Without limiting the authority of the Board of Directors, the Board
of Directors retains authority to act on applications covered by this
subpart if the criteria or other conditions for delegation are not
satisfied. This includes the retention of authority to deny
applications for merger transactions. It further includes retention of
authority to approve applications for merger transactions where:
(a) The limitations specified in Sec. 303.66(e) preclude action
under delegated authority;
(b) The applicant does not agree in writing to comply with any
conditions imposed by the delegate, other than the standard conditions
defined in Sec. 303.2(ff), which may be imposed without the applicant's
written consent; or
(c) The resulting institution, upon consummation of a merger
transaction other than a corporate reorganization, would have more than
35 percent of the total deposits held by banks and/or other depository
institutions (as appropriate) in any relevant geographic market in
which more than one of the merging institutions operate.
Subpart E--Change in Bank Control
Sec. 303.80 Scope.
This subpart sets forth the procedures for submitting a notice to
acquire control of an insured state nonmember bank pursuant to the
Change in Bank Control Act of 1978, section 7(j) of the FDI Act (12
U.S.C. 1817(j)), and delegations of authority regarding such filings.
Sec. 303.81 Definitions.
For purposes of this subpart:
(a) Acquisition means a purchase, assignment, transfer, pledge or
other disposition of voting shares, or an increase in percentage
ownership of an insured state nonmember bank resulting from a
redemption of voting shares.
(b) Acting in concert means knowing participation in a joint
activity or parallel action towards a common goal of acquiring control
of an insured state nonmember bank, whether or not pursuant to an
express agreement.
(c) Control means the power, directly or indirectly, to direct the
management or policies of an insured bank or to vote 25 percent or more
of any class of voting shares of an insured bank.
(d) Person means an individual, corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, and any other form of entity; and a voting
trust, voting agreement, and any group of persons acting in concert.
Sec. 303.82 Transactions requiring prior notice.
(a) Prior notice requirement. Any person acting directly or
indirectly, or through or in concert with one or more persons, shall
give the FDIC 60 days prior written notice, as specified in
Sec. 303.84, before acquiring control of an insured state nonmember
bank, unless the acquisition is exempt under Sec. 303.83.
(b) Acquisitions requiring prior notice.--(1) Acquisition of
control. The acquisition of control, unless exempted, requires prior
notice to the FDIC.
(2) Rebuttable presumption of control. The FDIC presumes that an
acquisition of voting shares of an insured state nonmember bank
constitutes the acquisition of the power to direct the management or
policies of an insured bank requiring prior notice to the FDIC, if,
immediately after the transaction, the acquiring person (or persons
acting in concert) will own, control, or hold with power to vote 10
percent or more of any class of voting shares of the institution, and
if:
(i) The institution has registered shares under section 12 of the
Securities Exchange Act of 1934 (15 U.S.C. 78l); or
(ii) No other person will own, control or hold the power to vote a
greater percentage of that class of voting shares immediately after the
transaction. If two or more persons, not acting in concert, each
propose to acquire simultaneously equal percentages of 10 percent or
more of a class of voting shares of an insured state nonmember bank,
each such person shall file prior notice with the FDIC.
(c) Acquisitions of loans in default. The FDIC presumes an
acquisition of a loan in default that is secured by voting shares of an
insured state nonmember bank to be an acquisition of the underlying
shares for purposes of this section.
(d) Other transactions. Transactions other than those set forth in
paragraph (b)(2) of this section resulting in a person's control of
less than 25 percent of a class of voting shares of an insured state
nonmember bank are not deemed by the FDIC to constitute control for
purposes of the Change in Bank Control Act.
(e) Rebuttal of presumptions. Prior notice to the FDIC is not
required for any acquisition of voting shares under the presumption of
control set forth in this section, if the FDIC finds that the
acquisition will not result in control. The FDIC will afford any person
seeking to rebut a presumption in this section an opportunity to
present views in writing or, if appropriate, orally before its
designated representatives at an informal meeting.
Sec. 303.83 Transactions not requiring prior notice.
(a) Exempt transactions. The following transactions do not require
notice to the FDIC under this subpart:
(1) The acquisition of additional voting shares of an insured state
nonmember bank by a person who:
(i) Held the power to vote 25 percent or more of any class of
voting shares of that institution continuously since March 9, 1979, or
since that institution commenced business, whichever is later; or
(ii) Is presumed, under Sec. 303.82(b)(2), to have controlled the
institution continuously since March 9, 1979, if the aggregate amount
of voting shares held does not exceed 25 percent or more of any class
of voting shares of the institution or, in other cases, where the FDIC
determines that the person has
[[Page 44729]]
controlled the bank continuously since March 9, 1979;
(2) The acquisition of additional shares of a class of voting
shares of an insured state nonmember bank by any person (or persons
acting in concert) who has lawfully acquired and maintained control of
the institution (for purposes of Sec. 303.82) after complying with the
procedures of the Change in Bank Control Act to acquire voting shares
of the institution under this subpart;
(3) Acquisitions of voting shares subject to approval under section
3 of the Bank Holding Company Act (12 U.S.C. 1842(a)), section 18(c) of
the FDI Act (12 U.S.C. 1828(c)), or section 10 of the Home Owners' Loan
Act (12 U.S.C. 1467a);
(4) Transactions exempt under the Bank Holding Company Act:
foreclosures by institutional lenders, fiduciary acquisitions by banks,
and increases of majority holdings by bank holding companies described
in sections 2(a)(5), 3(a)(A), or 3(a)(B) respectively of the Bank
Holding Company Act (12 U.S.C. 1841(a)(5), 1842(a)(A), and 1842(a)(B));
(5) A customary one-time proxy solicitation;
(6) The receipt of voting shares of an insured state nonmember bank
through a pro rata stock dividend; and
(7) The acquisition of voting shares in a foreign bank, which has
an insured branch or branches in the United States. (This exemption
does not extend to the reports and information required under
paragraphs 9, 10, and 12 of the Change in Bank Control Act of 1978 (12
U.S.C. 1817(j) (9), (10), and (12)).
(b) Prior notice exemption. (1) The following acquisitions of
voting shares of an insured state nonmember bank, which otherwise would
require prior notice under this subpart, are not subject to the prior
notice requirements if the acquiring person notifies the appropriate
regional director (DOS) within 90 calendar days after the acquisition
and provides any relevant information requested by the regional
director (DOS):
(i) The acquisition of voting shares through inheritance;
(ii) The acquisition of voting shares as a bona fide gift; or
(iii) The acquisition of voting shares in satisfaction of a debt
previously contracted in good faith, except that the acquiror of a
defaulted loan secured by a controlling amount of a state nonmember
bank's voting securities shall file a notice before the loan is
acquired.
(2) The following acquisitions of voting shares of an insured state
nonmember bank, which otherwise would require prior notice under this
subpart, are not subject to the prior notice requirements if the
acquiring person notifies the appropriate regional director (DOS)
within 90 calendar days after receiving notice of the acquisition and
provides any relevant information requested by the regional director
(DOS):
(i) A percentage increase in ownership of voting shares resulting
from a redemption of voting shares by the issuing bank; or
(ii) The sale of shares by any shareholder that is not within the
control of a person resulting in that person becoming the largest
shareholder.
(3) Nothing in paragraph (b)(1) of this section limits the
authority of the FDIC to disapprove a notice pursuant to
Sec. 303.85(c).
Sec. 303.84 Filing procedures.
(a) Filing notice. (1) A notice required under this subpart shall
be filed with the appropriate regional director (DOS) and shall contain
all the information required by paragraph 6 of the Change in Bank
Control Act, section 7 (j) of the FDI Act, (12 U.S.C. 1817(j)(6)), or
prescribed in the designated interagency form which may be obtained
from any FDIC regional office.
(2) The FDIC may waive any of the informational requirements of the
notice if the FDIC determines that it is in the public interest.
(3) A notificant shall notify the appropriate regional director
(DOS) immediately of any material changes in a notice submitted to the
regional director (DOS), including changes in financial or other
conditions.
(4) When the acquiring person is an individual, or group of
individuals acting in concert, the requirement to provide personal
financial data may be satisfied by a current statement of assets and
liabilities and an income summary, as required in the designated
interagency form, together with a statement of any material changes
since the date of the statement or summary. The appropriate regional
director (DOS) may require additional information if appropriate.
(b) Other laws. Nothing in this subpart shall affect any obligation
which the acquiring person(s) may have to comply with the federal
securities laws or other laws.
Sec. 303.85 Processing.
(a) Acceptance of notice. The 60-day notice period specified in
Sec. 303.82 shall commence on the date of receipt of a substantially
complete notice. The regional director (DOS) shall notify the person or
persons submitting a notice under this subpart in writing of the date
the notice is accepted for processing. The FDIC may request additional
information at any time.
(b) Time period for FDIC action; consummation of acquisition. (1)
The notificant(s) may consummate the proposed acquisition 60 days after
submission to the regional director (DOS) of a substantially complete
notice under paragraph (a) of this section, unless within that period
the FDIC disapproves the proposed acquisition or extends the 60-day
period.
(2) The notificant(s) may consummate the proposed transaction
before the expiration of the 60-day period if the FDIC notifies the
notificant(s) in writing of its intention not to disapprove the
acquisition.
(c) Disapproval of acquisition of control. Subpart D of 12 CFR part
308 sets forth the rules of practice and procedure for a notice of
disapproval.
Sec. 303.86 Public notice requirements.
(a) Publication--(1) Newspaper announcement. Any person(s) filing a
notice under this subpart shall publish an announcement soliciting
public comment on the proposed acquisition. The announcement shall be
published in a newspaper of general circulation in the community in
which the home office of the state nonmember bank to be acquired is
located. The announcement shall be published as close as is practicable
to the date the notice is filed with the appropriate regional director
(DOS), but in no event more than 10 calendar days before or after the
filing date.
(2) Contents of newspaper announcement. The newspaper announcement
shall conform to the public notice requirements set forth in
Sec. 303.7.
(b) Delay of publication. The FDIC may permit delay in the
publication required by this section if the FDIC determines, for good
cause, that it is in the public interest to grant such a delay.
Requests for delay of publication may be submitted to the appropriate
regional director (DOS).
(c) Shortening or waiving notice. The FDIC may shorten the public
comment period to a period of not less than 10 days, or waive the
public comment or newspaper publication requirements of this paragraph,
or act on a notice before the expiration of a public comment period, if
it determines in writing either that an emergency exists or that
disclosure of the notice, solicitation of public comment, or delay
until expiration of the public comment period
[[Page 44730]]
would seriously threaten the safety or soundness of the bank to be
acquired.
(d) Consideration of public comments. In acting upon a notice filed
under this subpart, the FDIC shall consider all public comments
received in writing within 20 days following the required newspaper
publication or, if the FDIC has shortened the public comment period
pursuant to paragraph (c) of this section, within such shorter period.
(e) Publication if filing is subsequent to acquisition of control.
(1) Whenever a notice of a proposed acquisition of control is not filed
in accordance with the Change in Bank Control Act and these
regulations, the acquiring person(s) shall, within 10 days of being so
directed by the FDIC, publish an announcement of the acquisition of
control in a newspaper of general circulation in the community in which
the home office of the state nonmember bank to be acquired is located.
(2) The newspaper announcement shall contain the name(s) of the
acquiror(s), the name of the depository institution involved, and the
date of the acquisition of the stock. The announcement shall also
contain a statement indicating that the FDIC is currently reviewing the
acquisition of control. The announcement also shall state that any
person wishing to comment on the change in control may do so by
submitting written comments to the appropriate regional director (DOS)
of the FDIC (give address of regional office) within 20 days following
the required newspaper publication.
Sec. 303.87 Delegation of authority.
(a) Authority is delegated to the Director and the Deputy Director
(DOS) and, where confirmed in writing by the Director, to an associate
director and the appropriate regional director and deputy regional
director, to issue a written notice of the FDIC's intent not to
disapprove an acquisition of control of an insured state nonmember
bank.
(b) The authority delegated by paragraph (a) of this section shall
include the power to:
(1) Act in situations where information is submitted on
acquisitions arising out of events beyond the person's control, as set
forth in Sec. 303.83(b);
(2) Extend notice periods;
(3) Determine whether a notice should be filed under section 7(j)
of the Act (12 U.S.C. 1817(j)) by a person acquiring less than 25
percent of any class of voting shares of an insured state nonmember
bank; and
(4) Delay or waive publication, waive or shorten the public comment
period, or act on a proposed acquisition of control prior to the
expiration of the public comment period, as provided in
Secs. 303.86(a)(3) and (4).
(c) Authority is delegated to the Director and Deputy Director
(DOS) and, where confirmed in writing by the Director, to an associate
director, to disapprove an acquisition of control of an insured state
nonmember bank.
Subpart F--Change of Director or Senior Executive Officer
Sec. 303.100 Scope.
This subpart sets forth the circumstances under which an insured
state nonmember bank must notify the FDIC of a change in any member of
its board of directors or any senior executive officer and the
procedures for filing such notice, as well as applicable delegations of
authority. This subpart implements section 32 of the FDI Act (12 U.S.C.
1831i).
Sec. 303.101 Definitions.
For purposes of this subpart:
(a) Director means a person who serves on the board of directors or
board of trustees of an insured state nonmember bank, except that this
term does not include an advisory director who:
(1) Is not elected by the shareholders;
(2) Is not authorized to vote on any matters before the board of
directors or board of trustees or any committee thereof;
(3) Solely provides general policy advice to the board of directors
or board of trustees and any committee thereof; and
(4) Has not been identified by the FDIC as a person who performs
the functions of a director for purposes of this subpart.
(b) Senior executive officer means a person who holds the title of
president, chief executive officer, chief operating officer, chief
managing official (in an insured state branch of a foreign bank), chief
financial officer, chief lending officer, or chief investment officer,
or, without regard to title, salary, or compensation, performs the
function of one or more of these positions. Senior executive officer
also includes any other person identified by the FDIC, whether or not
hired as an employee, with significant influence over, or who
participates in, major policymaking decisions of the insured state
nonmember bank.
(c) Troubled condition means any insured state nonmember bank that:
(1) Has a composite rating, as determined in its most recent report
of examination of 4 or 5 under the Uniform Financial Institutions
Rating System (UFIRS), or in the case of an insured state branch of a
foreign bank, an equivalent rating; or
(2) Is subject to a proceeding initiated by the FDIC for
termination or suspension of deposit insurance; or
(3) Is subject to a cease-and-desist order or written agreement
issued by either the FDIC or the appropriate state banking authority
that requires action to improve the financial condition of the bank or
is subject to a proceeding initiated by the FDIC or state authority
which contemplates the issuance of an order that requires action to
improve the financial condition of the bank, unless otherwise informed
in writing by the FDIC; or
(4) Is informed in writing by the FDIC that it is in troubled
condition for purposes of the requirements of this subpart on the basis
of the bank's most recent report of condition or report of examination,
or other information available to the FDIC.
Sec. 303.102 Filing procedures and waiver of prior notice.
(a) Insured state nonmember banks. An insured state nonmember bank
shall give the FDIC written notice, as specified in paragraph (c)(1) of
this section, at least 30 days prior to adding or replacing any member
of its board of directors, employing any person as a senior executive
officer of the bank, or changing the responsibilities of any senior
executive officer so that the person would assume a different senior
executive officer position, if:
(1) The bank is not in compliance with all minimum capital
requirements applicable to the bank as determined on the basis of the
bank's most recent report of condition or report of examination;
(2) The bank is in troubled condition; or
(3) The FDIC determines, in connection with its review of a capital
restoration plan required under section 38(e)(2) of the FDI Act (12
U.S.C. 1831o(e)(2)) or otherwise, that such notice is appropriate.
(b) Insured branches of foreign banks. In the case of the addition
of a member of the board of directors or a change in senior executive
officer in a foreign bank having an insured state branch, the notice
requirement shall not apply to such additions and changes in the
foreign bank parent, but only to changes in senior executive officers
in the state branch.
(c) Waiver of prior notice--(1) Waiver requests. The FDIC may
permit an individual, upon petition by the bank to the appropriate
regional director (DOS), to serve as a senior executive officer or
[[Page 44731]]
director before filing the notice required under this subpart if the
FDIC finds that:
(i) Delay would threaten the safety or soundness of the bank;
(ii) Delay would not be in the public interest; or
(iii) Other extraordinary circumstances exist that justify waiver
of prior notice.
(2) Automatic waiver. In the case of the election of a new director
not proposed by management at a meeting of the shareholders of an
insured state nonmember bank, the prior 30-day notice is automatically
waived and the individual immediately may begin serving, provided that
a complete notice is filed with the appropriate regional director (DOS)
within two business days after the individual's election.
(3) Effect on disapproval authority. A waiver shall not affect the
authority of the FDIC to disapprove a notice within 30 days after a
waiver is granted under paragraph (c)(1) of this section or the
election of an individual who has filed a notice and is serving
pursuant to an automatic waiver under paragraph (c)(2) of this section.
(d)(1) Content of filing. The notice required by paragraph (a) of
this section shall be filed with the appropriate regional director
(DOS) and shall contain information pertaining to the competence,
experience, character, or integrity of the individual with respect to
whom the notice is submitted, as prescribed in the designated
interagency form which is available from any FDIC regional office. The
regional director or his or her designee may require additional
information.
(2) Modification. The FDIC may modify or accept other information
in place of the requirements of paragraph (d)(1) of this section for a
notice filed under this subpart.
Sec. 303.103 Processing.
(a) Processing. The 30-day notice period specified in
Sec. 303.102(a) shall begin on the date substantially all information
required to be submitted by the notificant pursuant to
Sec. 303.102(c)(1) is received by the appropriate regional director
(DOS). The regional director shall notify the bank submitting the
notice of the date on which the notice is accepted for processing and
of the date on which the 30-day notice period will expire. If
processing cannot be completed within 30 days, the notificant will be
advised in writing, prior to expiration of the 30-day period, of the
reason for the delay in processing and of the additional time period,
not to exceed 60 days, in which processing will be completed.
(b) Commencement of service--(1) At expiration of period. A
proposed director or senior executive officer may begin service after
the end of the 30-day period or any other additional period as provided
under paragraph (a) of this section, unless the FDIC disapproves the
notice before the end of the period.
(2) Prior to expiration of period. A proposed director or senior
executive officer may begin service before the end of the 30-day period
or any additional time period as provided under paragraph (a) of this
section, if the FDIC notifies the bank and the individual in writing of
the FDIC's intention not to disapprove the notice.
(c) Notice of disapproval. The FDIC may disapprove a notice filed
under Sec. 303.102 if the FDIC finds that the competence, experience,
character, or integrity of the individual with respect to whom the
notice is submitted indicates that it would not be in the best
interests of the depositors of the bank or in the best interests of the
public to permit the individual to be employed by, or associated with,
the bank. Subpart L of 12 CFR part 308 sets forth the rules of practice
and procedure for a notice of disapproval.
Sec. 303.104 Delegation of authority.
The following authority is delegated to the Director and Deputy
Director (DOS) and, where confirmed in writing by the Director, to an
associate director and the appropriate regional director or deputy
regional director to:
(a) Designate an insured state nonmember bank as being in troubled
condition;
(b) Grant waivers of the prior notice requirement;
(c) Extend the 30-day processing period for an additional period of
up to 60 days in the event of extenuating circumstances; and
(d) Issue notices of disapproval or notices of intent not to
disapprove under this subpart.
Subpart G--Activities and Investments of Insured State Banks
[Reserved]
Subpart H--Filings by Savings Associations
Sec. 303.140 Scope.
This subpart sets forth the notice and application procedures
necessary for a savings association to engage in certain activities, or
to acquire or retain certain investments, in a type or to an extent,
not authorized for federal savings associations, prohibits federal and
state savings associations from acquiring or retaining certain
corporate debt securities, sets forth the notice procedures for a
savings association to establish or acquire a subsidiary or conduct any
new activity through a subsidiary, sets forth the notice requirements
for a federal savings association conducting grandfathered activities,
and finally sets forth the delegations of authority with respect to
such activities and investments.
Sec. 303.141 Definitions.
For the purposes of this subpart, the following definitions apply:
(a) As used in Secs. 303.142 and 303.143, the term activity
includes acquiring or retaining any investment other than an equity
investment.
(b) Control means the power to vote, directly or indirectly, 25 per
cent or more of any class of the voting stock of a company, the ability
to control in any manner the election of a majority of a company's
directors or trustees, or the ability to exercise a controlling
influence over the management and policies of a company.
(c) Corporate debt securities not of investment grade refers to any
corporate debt security that when acquired was not rated among the four
highest rating categories by at least one nationally recognized
statistical rating organization. The term shall not include any
obligation issued or guaranteed by a corporation that may be held by a
federal savings association without limitation as to percentage of
assets under subparagraphs (D), (E), or (F) of section 5(c)(1) of the
Home Owners' Loan Act (12 U.S.C. 1464(c)(1)).
(d) Equity investment means any equity security as defined in this
section; any partnership interest; any equity interest in real estate
as defined in this section; and any transaction which in substance
falls into any of these categories, even though it may be structured as
some other form of business transaction.
(e) Equity interest in real estate means any form of direct or
indirect ownership of any interest in real property (whether in the
form of an equity interest, partnership, joint venture or other form)
which is accounted for as an investment in real estate or real estate
joint ventures under generally accepted accounting principles or is
otherwise determined to be an investment in a real estate venture under
Federal Financial Institutions Examination Council instructions for the
preparation of reports of condition. The term equity interest in real
estate shall not include:
(1) An interest in real property that is primarily used or intended
to be used for future expansion by a savings association, its
subsidiaries, or its
[[Page 44732]]
affiliates as offices or related facilities for the conduct of its
business;
(2) An interest in real property that is acquired in satisfaction
of a debt previously contracted in good faith, acquired by way of deed
in lieu of foreclosure, or acquired in sales under judgments, decrees,
or mortgages held by a savings association, provided that the property
is not intended to be held for real estate investment purposes but is
expected to be disposed of in a timely fashion as permitted by
applicable law; and
(3) Interests in real property that are primarily in the nature of
charitable contributions to community development.
(f) Equity security means any stock (other than adjustable rate
preferred stock and money market (auction rate) preferred stock),
certificate of interest or participation in any profit-sharing
agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, or voting-trust
certificate; any security immediately convertible at the option of the
holder without payment of substantial additional consideration into
such a security; any security carrying any warrant or right to
subscribe to or purchase any such security; and any certificate of
interest or participation in, temporary or interim certificate for, or
receipt for any of the foregoing. The term equity security does not
include any of the foregoing if it is acquired through foreclosure or
settlement in lieu of foreclosure.
(g) Qualified affiliate means, in the case of a stock savings
association, an affiliate other than a subsidiary or an insured
depository institution; and, in the case of a mutual savings
association, a subsidiary other than an insured depository institution,
so long as all of the savings association's investments in, and
extensions of credit to, the subsidiary are deducted from the savings
association's capital.
(h) The term service corporation means any corporation the capital
stock of which is available for purchase only by savings associations.
(i) A significant risk is understood to be present whenever there
is a high probability that any insurance fund administered by the FDIC
may suffer a loss.
(j) Subsidiary means any corporation, partnership, business trust,
association, joint venture, pool, syndicate or other similar business
organization directly or indirectly controlled by a savings
association. For the purposes of Sec. 303.146, the term does not
include an insured depository institution as that term is defined in
section 3(c)(2) of the FDI Act (12 U.S.C. 1813(c)(2)).
Sec. 303.142 Engaging other than as agent on behalf of customers in
activities not permissible for federal savings associations.
(a) General. After January 1, 1990, no state savings association
may directly engage, other than as agent on behalf of its customers, in
an activity that is not expressly authorized for federal savings
associations by the Home Owners' Loan Act (12 U.S.C. 1461 et seq.) or
any other statute, regulations issued by the Office of Thrift
Supervision (OTS) (12 CFR chapter V), official OTS Regulatory or Thrift
Bulletins, or any order or interpretation issued in writing by OTS
unless the state savings association obtains the approval of the FDIC.
(b) Filing procedures--(1) Where to file. Any state savings
association that wishes to obtain approval to initiate or continue such
an activity, as well as any state savings association that wishes to
make, or already has, nonresidential real property loans in an amount
exceeding that described in section 5(c)(2)(B) of ``HOLA'' (12 U.S.C.
1464(c)(2)(B)) must file a letter application with the appropriate
regional director (DOS).
(2) Content of filing. The letter application shall contain the
following information:
(i) A brief description of the activity and the manner in which it
is (or will be) conducted;
(ii) A copy, if available, of any feasibility study, management
plan, financial projections, business plan, or similar document
concerning the conduct of the activity;
(iii) An estimate of the present or expected dollar volume of the
activity;
(iv) Resolutions by the board of directors (or the board of
trustees in a mutual association) of the savings association
authorizing the conduct of such activity and the filing of this
submission;
(v) A current statement of the association's assets, liabilities,
and capital on both a consolidated and a non-consolidated basis,
respectively;
(vi) A discussion by management of its analysis regarding the
impact of the proposed activity on the association's earnings, capital
adequacy, and general condition;
(vii) A statement by the savings association of whether or not it
is in compliance with the fully phased-in capital standards prescribed
under section 5(t) of HOLA (12 U.S.C. 1464(t)), including a calculation
of the relevant capital ratio; and
(viii) A statement of the authority the savings association is
relying upon for the conduct of the activity in the amount set forth in
the letter application.
(3) Additional information. The appropriate regional director (DOS)
may request that the state savings association provide such other
information as the director deems appropriate.
(4) Processing. Approval will not be granted if it is determined by
the FDIC that engaging in the activity poses a significant risk to the
affected deposit insurance fund. Furthermore, no savings association
will be granted approval unless it is in compliance with the fully
phased-in capital standards prescribed in section 5(t) of HOLA.
Consequently, no application to engage in an activity after January 1,
1990 should be filed if a state association is not in compliance with
the fully phased-in capital requirements.
(5) Assets held prior to August 9, 1989. This section shall not be
read to require the divestiture by a state savings association of any
asset (including a nonresidential real estate loan) it had on its books
prior to August 9, 1989 despite the fact that such asset may be held in
connection with the conduct of an activity for which the state savings
association must obtain the FDIC's approval under this section. A
notice describing the activities and those assets is nevertheless
required by this section.
Sec. 303.143 Engaging other than as agent on behalf of customers in
activities authorized for federal savings associations but to an extent
not so authorized.
(a) Filing procedures--(1) Where and when to file. Any state
savings association that intends to directly engage, other than as
agent on behalf of its customers, in an activity expressly authorized
to all federal savings associations by statute or regulation adopted by
OTS, or an official OTS Regulatory or Thrift Bulletin interpreting such
statutes or regulations, in an amount in excess of that permitted for
federal savings associations, must file a notice, return receipt
requested, with the appropriate regional director (DOS) at least 60
days prior to the initiation of the level of the activity described in
the notice.
(2) Content of filing. The notice must contain the same information
required by Sec. 303.142(b)(2).
(3) Additional information. The appropriate regional director (DOS)
may request such other information as the appropriate regional director
(DOS) deems appropriate.
(b) Processing. A state savings association that files a 60-day
notice may initiate the level of activity as described in its notice 60
days after the
[[Page 44733]]
FDIC accepts the notice as complete, or 60 days after the FDIC accepts
as complete the additional information, if any, that has been requested
provided that the association is in compliance with the fully phased-in
capital standards prescribed in section 5(t) of HOLA and provided that
the FDIC does not, prior to that date, pose an objection to the
association doing so. A state savings association may initiate the
level of activity described in its notice prior to the expiration of
the 60-day period if so notified. The continued conduct of the
activities as described in the notice is conditioned upon the
association's continued compliance with the fully phased-in capital
standards and the FDIC's continued non-objection to those activities.
The 60-day period may be extended upon notice to the state savings
association if the notice as received is incomplete or the notice
raises issues that require additional information or time for analysis.
If the 60-day period is extended, the state savings association may
begin the conduct of the activities only upon receipt of written
notification to that effect. No state savings association will be
permitted to initiate activities subject to this paragraph if it is
determined that to do so would pose a significant risk to the affected
deposit insurance fund.
Sec. 303.144 Equity investments
(a) General. No state savings association may directly acquire or
retain any equity investment after August 9, 1989 of a type or in an
amount that is not expressly authorized for federal savings
associations by HOLA, regulations issued by OTS, official OTS
Regulatory or Thrift Bulletins, or any order or interpretation issued
in writing by OTS.
(b) Service corporations--(1) General. Paragraph (a) of this
section notwithstanding, a state savings association may acquire or
retain an equity investment in a service corporation, provided that the
service corporation's activities are limited solely to those expressly
authorized by HOLA or any other statute, regulations issued by OTS,
official OTS Regulatory or Thrift Bulletins, or any order or
interpretation issued in writing by OTS, for all service corporations
owned by federal savings associations and provided that the investment
in such service corporation does not exceed that permissible for a
federal savings association pursuant to statute or regulation of OTS.
(2) Filing procedure--(i) Where and when to file. If either of the
two conditions specified in paragraph (b)(1) of this section does not
exist, the state association must file a letter application under
paragraph (b)(2)(ii) of this section with the appropriate regional
director (DOS) requesting permission to acquire or retain the equity
investment in the service corporation in question.
(ii) Content and filing of application. The letter application
required hereby shall contain the information required by
Sec. 303.142(b)(2), as it relates both to the service corporation and
to its parent state savings association. In addition, the application
shall contain: A listing of the officers (contemplated officers) of the
service corporation, a listing of any other shareholders of the service
corporation (existing or prospective) and their respective holdings,
and a listing of the locations (expected locations) of all of the
offices of the service corporation.
(iii) Additional information. The appropriate regional director
(DOS) may request such other information as the appropriate regional
director (DOS) deems appropriate.
(3) Processing. Approval of the acquisition or retention of an
equity investment in a service corporation in which a federal
association could not invest will not be granted if the state
association is not in compliance with the fully phased-in capital
standards prescribed by section 5(t) of HOLA. Consequently, no
application to acquire or retain an equity investment in such a service
corporation should be filed if a state association is not in compliance
with these capital requirements. In addition, approval of the retention
or acquisition of such investments will not be granted if the
acquisition or retention is determined to pose a significant risk to
the affected deposit insurance fund. If an application to retain an
investment is denied, the state association must file a divestiture
plan with the appropriate regional director (DOS) requesting the FDIC's
permission to accomplish divestiture in accordance with said plan.
Sec. 303.145 Corporate debt securities not of investment grade.
Notwithstanding anything to the contrary in this subpart, no state
or federal savings association may, directly or through a subsidiary
(other than a subsidiary that is a qualified affiliate), acquire or
retain after August 9, 1989 any corporate debt security that is not of
investment grade.
Sec. 303.146 Notice of acquisition or establishment of a subsidiary or
the conduct of new activities through a subsidiary.
(a) General. No insured savings association may establish or
acquire a subsidiary, or conduct any new activity through a subsidiary,
without providing the appropriate regional director (DOS) prior notice
of the association's intent to do so.
(b) Filing procedure--(1) Where and when to file. Notice must be
sent return receipt requested and be received by the appropriate
regional director (DOS) at least 30 days prior to the establishment or
acquisition of the subsidiary or the commencement of the new activity.
(2) Content of filing. The notice shall contain the same
information required to be in a letter application filed pursuant to
Sec. 303.142(b)(2) plus the following:
(i) A description of how the activities of the subsidiary will be
funded;
(ii) The amount of the insured savings association's investment in
the subsidiary and the form of the investment;
(iii) The percentage ownership the insured savings association will
have in the subsidiary;
(iv) A listing of the other owners of the subsidiary if any; and
(v) In the case of the acquisition of an existing concern, the
terms and conditions of the acquisition including an appraisal,
assessment of value, or other substantiation of the purchase price and
operating statements for the previous three years (if applicable). If
the insured savings association's filing with the OTS under section
18(m)(1) of the FDI Act contains all of the information required, that
filing may be submitted to the FDIC in satisfaction of this provision.
(3) Additional information. In any case, the appropriate regional
director (DOS) may request such additional information as the
appropriate regional director (DOS) deems appropriate. In all such
cases, the 30-day period will not begin to run until the response to
the request for additional information is complete.
(c) Exception to filing requirement. Any Federal savings bank that
was chartered prior to October 15, 1982 as a savings bank under state
law, and any savings association that acquired its principal assets
from such an institution, is not required to file prior notice in
accordance with paragraph (a) of this section.
(d) Notice regarding certain subsidiaries holding certain real
property--(1) Where and when to file. Paragraph (a) of this section
notwithstanding, an insured savings association may establish or
acquire one or more subsidiaries whose sole purpose is to hold
interests in real property acquired by the savings association that fit
the description in Sec. 303.141(e)(2)
[[Page 44734]]
provided that the savings association files a written notice, return
receipt requested, with the appropriate regional director (DOS)
indicating that the association intends to establish or acquire one or
more subsidiaries that will be engaged solely in the disposition of
such property. Notice must be received by the appropriate regional
director (DOS) at least 30 days prior to the establishment or
acquisition of any such subsidiary.
(2) Where and when to file, and content of filing regarding
additional subsidiaries. An association that has filed a notice
pursuant to this paragraph (d) may thereafter establish or acquire
additional such subsidiaries provided that each time within 14 days
after doing so the association notifies the appropriate regional
director (DOS) in writing. The notice shall identify the savings
association, give the date of the initial notice, identify the new
subsidiary, and state the value of the property at the time it was
transferred to the subsidiary.
Sec. 303.147 Notice by federal savings associations conducting
grandfathered activities.
Any federal savings association authorized by section 5(i)(4) of
HOLA (12 U.S.C. 1464(i)(4)) to make any investment or engage in any
activity not otherwise generally authorized to federal savings
association by section 5 of HOLA must file a notice with the
appropriate regional director (DOS) within 30 days after December 29,
1989 or within 30 days after the date the federal savings association
is first able to rely upon section 5(i)(4) of HOLA as a result of the
acquisition of an association that is covered by such section. The
notice shall briefly describe the activity or investment.
Sec. 303.148 Delegation of authority.
Authority is delegated to the Director and Deputy Director (DOS),
and where confirmed in writing by the Director, to an associate
director and the appropriate regional director and deputy regional
director (DOS), to act on applications and notices filed pursuant to
this subpart, and to make any and all determinations called for in
regard to the same.
Subpart I--Mutual-to-Stock Conversions
Sec. 303.160 Scope.
This subpart sets forth the notice requirements, procedures, and
delegations of authority for the conversion of an insured mutual state-
chartered savings bank to the stock form of ownership. The substantive
requirements governing such conversions are contained in Sec. 333.4 of
this chapter.
Sec. 303.161 Filing procedures.
(a) Prior notice required. In addition to complying with the
substantive requirements in Sec. 333.4 of this chapter, an insured
state-chartered mutually owned savings bank that proposes to convert
from mutual to stock form shall file with the FDIC a notice of intent
to convert to stock form.
(b) General. (1) A notice required under this subpart shall be
filed in letter form with the appropriate regional director (DOS) at
the same time as required conversion application materials are filed
with the institution's state regulator.
(2) An insured mutual savings bank chartered by a state that does
not require the filing of a conversion application shall file a notice
in letter form with the appropriate regional director (DOS) as soon as
practicable after adoption of its plan of conversion.
(c) Content of notice. The notice shall provide a description of
the proposed conversion and include all materials that have been filed
with any state or federal banking regulator and any state or federal
securities regulator. At a minimum, the notice shall include, as
applicable, copies of:
(1) The plan of conversion, with specific information concerning
the record date used for determining eligible depositors and the
subscription offering priority established in connection with any
proposed stock offering;
(2) Certified board resolutions relating to the conversion;
(3) A business plan, including a detailed discussion of how the
capital acquired in the conversion will be used, expected earnings for
at least a three-year period following the conversion, and a
justification for any proposed stock repurchases;
(4) The charter and bylaws of the converted institution;
(5) The bylaws and operating plans of any other entities formed in
connection with the conversion transaction, such as a holding company
or charitable foundation;
(6) A full appraisal report, prepared by an independent appraiser,
of the value of the converting institution and the pricing of the stock
to be sold in the conversion transaction;
(7) Detailed descriptions of any proposed management or employee
stock benefit plans or employment agreements and a discussion of the
rationale for the level of benefits proposed, individually and by
participant group;
(8) Indemnification agreements;
(9) A preliminary proxy statement and sample proxy;
(10) Offering circular(s) and order form;
(11) All contracts or agreements relating to solicitation,
underwriting, market-making, or listing of conversion stock and any
agreements among members of a group regarding the purchase of
unsubscribed shares;
(12) A tax opinion concerning the federal income tax consequences
of the proposed conversion;
(13) Consents from experts to use their opinions as part of the
notice; and
(14) An estimate of conversion-related expenses.
(d) Additional information. The FDIC, in its discretion, may
request any additional information it deems necessary to evaluate the
proposed conversion. The institution proposing to convert from mutual
to stock form shall promptly provide such information to the FDIC.
(e) Acceptance of notice. The 60-day notice period specified in
Sec. 303.163 shall commence on the date of receipt of a substantially
complete notice. The appropriate regional director (DOS) shall notify
the institution proposing to convert in writing of the date the notice
is accepted.
(f) Related applications. Related applications that require FDIC
action may include:
(1) Applications for deposit insurance, as required by subpart B of
this part; and
(2) Applications for consent to merge, as required by subpart D of
this part.
Sec. 303.162 Waiver from compliance.
(a) General. An institution proposing to convert from mutual to
stock form may file with the appropriate regional director (DOS) a
letter requesting waiver of compliance with this subpart or Sec. 333.4
of this chapter:
(1) When compliance with any provision of this section or
Sec. 333.4 of this chapter would be inconsistent or in conflict with
applicable state law; or
(2) For any other good cause shown.
(b) Content of filing. In making a request for waiver under
paragraph (a) of this section, the institution shall demonstrate that
the requested waiver, if granted, would not result in any effects that
would be detrimental to the safety and soundness of the institution,
entail a breach of fiduciary duty on part of the institution's
management or otherwise be detrimental or inequitable to the
institution, its depositors, any other insured depository
institution(s),
[[Page 44735]]
the federal deposit insurance funds, or to the public interest.
Sec. 303.163 Processing.
(a) General considerations. The FDIC shall review the notice and
other materials submitted by the institution proposing to convert from
mutual to stock form, specifically considering the following factors:
(1) The proposed use of the proceeds from the sale of stock, as set
forth in the business plan;
(2) The adequacy of the disclosure materials;
(3) The participation of depositors in approving the transaction;
(4) The form of the proxy statement required for the vote of the
depositors/members on the conversion;
(5) Any proposed increased compensation and other remuneration
(including stock grants, stock option rights and other similar
benefits) to be granted to officers and directors/trustees of the bank
in connection with the conversion;
(6) The adequacy and independence of the appraisal of the value of
the mutual savings bank for purposes of determining the price of the
shares of stock to be sold;
(7) The process by which the bank's trustees approved the
appraisal, the pricing of the stock, and the proposed compensation
arrangements for insiders;
(8) The nature and apportionment of stock subscription rights; and
(9) The bank's plans to fulfill its commitment to serving the
convenience and needs of its community.
(b) Additional considerations. (1) In reviewing the notice and
other materials submitted under this subpart, the FDIC will take into
account the extent to which the proposed conversion transaction
conforms with the various provisions of the mutual-to-stock conversion
regulations of the Office of Thrift Supervision (OTS) (12 CFR part
563b), as currently in effect at the time the notice is submitted. Any
non-conformity with those provisions will be closely reviewed.
(2) Conformity with the OTS requirements will not be sufficient for
FDIC regulatory purposes if the FDIC determines that the proposed
conversion transaction would pose a risk to the bank's safety or
soundness, violate any law or regulation, or present a breach of
fiduciary duty.
(c) Notice period. (1) The period in which the FDIC may object to
the proposed conversion transaction shall be the later of:
(i) 60 days after receipt of a substantially complete notice of
proposed conversion; or
(ii) 20 days after the last applicable state or other federal
regulator has approved the proposed conversion.
(2) The FDIC may, in its discretion, extend the initial 60-day
period for up to an additional 60 days by providing written notice to
the institution.
(d) Letter of non-objection. If the FDIC determines, in its
discretion, that the proposed conversion transaction would not pose a
risk to the institution's safety or soundness, violate any law or
regulation, or present a breach of fiduciary duty, then the FDIC shall
issue to the institution proposing to convert a letter of non-objection
to the proposed conversion.
(e) Letter of objection. If the FDIC determines, in its discretion,
that the proposed conversion transaction poses a risk to the
institution's safety or soundness, violates any law or regulation, or
presents a breach of fiduciary duty, then the FDIC shall issue a letter
to the institution stating its objection(s) to the proposed conversion
and advising the institution not to consummate the proposed conversion
until such letter is rescinded. A copy of the letter of objection shall
be furnished to the institution's primary state regulator and any other
state or federal banking regulator and state or federal securities
regulator involved in the conversion.
(f) Consummation of the conversion. (1) An institution may
consummate the proposed conversion upon either:
(i) The receipt of a letter of non-objection; or
(ii) The expiration of the notice period.
(2) If a letter of objection is issued, then the institution shall
not consummate the proposed conversion until the FDIC rescinds such
letter.
Sec. 303.164 Delegation of authority.
(a) Authority is delegated to the Director and Deputy Director
(DOS) to issue a letter of non-objection to an institution proposing to
convert when the proposed conversion transaction is determined not to
pose a risk to the institution's safety or soundness, violate any law
or regulation, present a breach of fiduciary duty, and not to raise any
unique legal or policy issues. Such authority will be exercised in
accordance with the time periods contained in Sec. 303.163, unless the
institution proposing to convert agrees to a longer time period.
(b) Authority to approve or deny a waiver under Sec. 303.162 is
retained by the Board of Directors.
(c) Authority is delegated to the Director and Deputy Director
(DOS) and, where confirmed in writing by the Director, to an associate
director and the appropriate regional director and deputy regional
director to accept notices of intent to convert to stock form and to
extend the initial 60-day period within which FDIC may object by an
additional 60 days.
Subpart J--International Banking
Sec. 303.180 Scope.
This subpart sets forth procedures for complying with application
requirements relating to the foreign activities of insured state
nonmember banks, U.S. activities of insured branches of foreign banks,
and certain foreign mergers of insured depository institutions. Related
delegations of authority are also set forth in the subpart.
Sec. 303.181 Definitions.
For the purposes of this subpart, the following additional
definitions apply:
(a) Board of Governors means the Board of Governors of the Federal
Reserve System.
(b) Comptroller means the Office of the Comptroller of the
Currency.
(c) Eligible insured branch. An insured branch will be treated as
an eligible depository institution within the meaning of Sec. 303.2(r)
if the insured branch:
(1) Received an FDIC-assigned composite ROCA rating of 1 or 2 as a
result of its most recent federal or state examination, and the FDIC,
Comptroller, or Board of Governors have not expressed concern about the
condition or operations of the foreign banking organization or the
support it offers the branch;
(2) Received a satisfactory or better Community Reinvestment Act
(CRA) rating from its primary federal regulator at its most recent
examination, if the depository institution is subject to examination
under part 345 of this chapter;
(3) Received a compliance rating of 1 or 2 from its primary federal
regulator at its most recent examination;
(4) Is well-capitalized as defined in subpart B of part 325 of this
chapter; and
(5) Is not subject to a cease and desist order, consent order,
prompt corrective action directive, written agreement, memorandum of
understanding, or other administrative agreement with any U.S. bank
regulatory authority.
(d) Federal branch means a federal branch of a foreign bank as
defined by Sec. 347.202 of this chapter.
(e) Foreign bank means a foreign bank as defined by Sec. 347.202 of
this chapter.
(f) Foreign branch means a foreign branch of an insured state
nonmember
[[Page 44736]]
bank as defined by Sec. 347.102 of this chapter.
(g) Foreign organization means a foreign organization as defined by
Sec. 347.102 of this chapter.
(h) Insured branch means an insured branch of a foreign bank as
defined by Sec. 347.202 of this chapter.
(i) Noninsured branch means a noninsured branch of a foreign bank
as defined by Sec. 347.202 of this chapter.
(j) State branch means a state branch of a foreign bank as defined
by Sec. 347.202 of this chapter.
Sec. 303.182 Establishing, moving or closing a foreign branch of a
state nonmember bank; Sec. 347.103.
(a) Notice procedures for general consent. Notice in the form of a
letter from an eligible depository institution establishing or
relocating a foreign branch pursuant to Sec. 347.103(b) of this chapter
shall be provided to the appropriate regional director (DOS) no later
than 30 days after taking such action, and include the location of the
foreign branch, including a street address, and a statement that the
foreign branch has not been located on a site on the World Heritage
List or on the foreign country's equivalent of the National Register of
Historic Places (National Register), in accordance with section 402 of
the National Historic Preservation Act Amendments of 1980 (NHPA
Amendments Act) (16 U.S.C. 470a-2). The regional director will provide
written acknowledgment of receipt of the notice.
(b) Filing procedures for other branch establishments. (1) Where to
file. An applicant seeking to establish a foreign branch other than
under Sec. 347.103(b) of this chapter shall submit an application to
the appropriate regional director (DOS).
(2) Content of filing. A complete letter application shall include
the following information:
(i) The exact location of the proposed foreign branch, including
the street address, and a statement whether the foreign branch will be
located on a site on the World Heritage List or on the foreign
country's equivalent of the National Register, in accordance with
section 402 of the NHPA Amendments Act;
(ii) Details concerning any involvement in the proposal by an
insider of the applicant, as defined in Sec. 303.2(u), including any
financial arrangements relating to fees, the acquisition of property,
leasing of property, and construction contracts;
(iii) A brief description of the applicant's business plan with
respect to the foreign branch; and
(iv) A brief description of the activities of the branch, and to
the extent any activities are not authorized by Sec. 347.103(a) of this
chapter, the applicant's reasons why they should be approved.
(3) Additional information. The appropriate regional director (DOS)
may request additional information to complete processing.
(c) Processing--(1) Expedited processing for eligible depository
institutions. An application filed under Sec. 347.103(c) of this
chapter by an eligible depository institution as defined in
Sec. 303.2(r) seeking to establish a foreign branch by expedited
processing will be acknowledged in writing by the FDIC and will receive
expedited processing, unless the applicant is notified in writing to
the contrary and provided with the basis for that decision. The FDIC
may remove the application from expedited processing for any of the
reasons set forth in Sec. 303.11(c)(2). Absent such removal, an
application processed under expedited processing is deemed approved 45
days after receipt of a substantially complete application by the FDIC,
or on such earlier date authorized by the FDIC in writing.
(2) Standard processing. For those applications which are not
processed pursuant to the expedited procedures, the FDIC will provide
the applicant with written notification of the final action when the
decision is rendered.
(d) Closing. Notices of branch closing under Sec. 347.103(f) of
this chapter, in the form of a letter including the name, location, and
date of closing of the closed branch, shall be filed with the
appropriate regional director (DOS) no later than 30 days after the
branch is closed.
(e) Delegation of authority. Authority is delegated to the Director
and Deputy Director (DOS) and, if confirmed in writing by the Director,
to an associate director and the appropriate regional director and
deputy regional director to approve an application under paragraph (c)
of this section if the following criteria are satisfied:
(1) The requirements of section 402 the NHPA Amendments Act have
been favorably resolved;
(2) The applicant will only conduct activities authorized by
Sec. 347.103(a) of this chapter; and
(3) If the foreign branch will be located in a foreign country in
which applicable law or practice would limit the FDIC's access to
information for supervisory purposes, the delegate is satisfied that
adequate arrangements have been made (through conditions imposed in
connection with the approval and agreed to in writing by the applicant)
to ensure that the FDIC will have necessary access to information for
supervisory purposes.
Sec. 303.183 Investment by insured state nonmember banks in foreign
organizations; Sec. 347.108.
(a) Notice procedures for general consent. Notice in the form of a
letter from an eligible depository institution making direct or
indirect investments in a foreign organization pursuant to
Sec. 347.108(a) of this chapter shall be provided to the appropriate
regional director (DOS) no later than 30 days after taking such action.
The appropriate regional director will provide written acknowledgment
of receipt of the notice.
(b) Filing procedures for other investments. (1) Where to file. An
applicant seeking to make a foreign investment other than under
Sec. 347.108(a) of this chapter shall submit an application to the
appropriate regional director (DOS).
(2) Content of filing. A complete application shall include the
following information:
(i) Basic information about the terms of the proposed transaction,
the amount of the investment in the foreign organization and the
proportion of its ownership to be acquired;
(ii) Basic information about the foreign organization, its
financial position and income, including any available balance sheet
and income statement for the prior year, or financial projections for a
new foreign organization;
(iii) A listing of all shareholders known to hold ten percent or
more of any class of the foreign organization's stock or other evidence
of ownership, and the amount held by each;
(iv) A brief description of the applicant's business plan with
respect to the foreign organization;
(v) A brief description of any business or activities which the
foreign organization will conduct directly or indirectly in the United
States, and to the extent such activities are not authorized by subpart
A of part 347 of this chapter, the applicant's reasons why they should
be approved;
(vi) A brief description of the foreign organization's activities,
and to the extent such activities are not authorized by subpart A of
part 347 of this chapter, the applicant's reasons why they should be
approved; and
(vii) If the applicant seeks approval to engage in underwriting or
dealing activities, a description of the applicant's plans and
procedures to address all relevant risks.
[[Page 44737]]
(3) Additional information. The appropriate regional director (DOS)
may request additional information to complete processing.
(c) Processing.--(1) Expedited processing for eligible depository
institutions. An application filed under Sec. 347.108(b) of this
chapter by an eligible depository institution as defined in
Sec. 303.2(r) seeking to make direct or indirect investments in a
foreign organization by expedited processing will be acknowledged in
writing by the FDIC and will receive expedited processing, unless the
applicant is notified in writing to the contrary and provided with the
basis for that decision. The FDIC may remove the application from
expedited processing for any of the reasons set forth in
Sec. 303.11(c)(2). Absent such removal, an application processed under
expedited processing is deemed approved 45 days after receipt of a
complete application by the FDIC, or on such earlier date authorized by
the FDIC in writing.
(2) Standard processing. For those applications which are not
processed pursuant to the expedited procedures, the FDIC will provide
the applicant with written notification of the final action when the
decision is rendered.
(d) Divestiture. If an insured state nonmember bank holding 50
percent or more of the voting equity interests of a foreign
organization or otherwise controlling the foreign organization divests
itself of such ownership or control, the insured state nonmember bank
shall file a notice in the form of a letter, including the name,
location, and date of divestiture of the foreign organization, with the
appropriate regional director (DOS) no later than 30 days after the
divestiture.
(e) Delegations of authority. Authority is delegated to the
Director and Deputy Director (DOS) and, if confirmed in writing by the
Director, to an associate director and the appropriate regional
director and deputy regional director to approve applications under
paragraph (c) of this section so long as:
(1) The investment complies with the amount limits in Sec. 347.104
through Sec. 347.107 of this chapter and is in a foreign organization
which only conducts such activities as authorized thereunder; and
(2) For foreign investments resulting in the applicant holding 20
percent or more of the voting equity interests of the foreign
organization or controlling such organization, if the organization is
located in a foreign country in which applicable law or practice would
limit the FDIC's access to information for supervisory purposes, the
delegate is satisfied that adequate arrangements have been made
(through conditions imposed in connection with the approval and agreed
to in writing by the applicant) to ensure that the FDIC will have
necessary access to information for supervisory purposes.
Sec. 303.184 Moving an insured branch of a foreign bank.
(a) Filing procedures.--(1) Where and when to file. An application
by an insured branch of a foreign bank seeking the FDIC's consent to
move from one location to another, as required by section 18(d)(1) of
the FDI Act (12 U.S.C. 1828(d)(1)), shall be submitted in writing to
the appropriate regional director (DOS) on the date the notice required
by paragraph (c) of this section is published, or within 5 days after
the date of the last required publication.
(2) Content of filing. A complete letter application shall include
the following information:
(i) The exact location of the proposed site, including the street
address;
(ii) Details concerning any involvement in the proposal by an
insider of the applicant, as defined in Sec. 303.2(u), including any
financial arrangements relating to fees, the acquisition of property,
leasing of property, and construction contracts;
(iii) A statement of the impact of the proposal on the human
environment, including information on compliance with local zoning laws
and regulations and the effect on traffic patterns, for purposes of
complying with the applicable provisions of the NEPA, and the FDIC
``Statement Policy on NEPA'' (2 FDIC Law, Regulations, Related Acts
5185; see Sec. 309.4 (a) and (b) of this chapter for availability);
(iv) A statement as to whether or not the site is eligible for
inclusion in the National Register of Historic Places for purposes of
complying with the applicable provisions of the NHPA, and the FDIC
``Statement on NHPA'' (2 FDIC Law, Regulations, Related Acts 5175; see
Sec. 309.4 (a) and (b) of this chapter for availability), including
documentation of consultation with the State Historic Preservation
Officer, as appropriate;
(v) Comments on any changes in services to be offered, the
community to be served, or any other effect the proposal may have on
the applicant's compliance with the CRA; and
(vi) A copy of the newspaper publication required by paragraph (c)
of this section, as well as the name and address of the newspaper and
the date of the publication.
(3) Comptroller's application. If the applicant is filing an
application with the Comptroller which contains the information
required by paragraph (a)(2) of this section, the applicant may submit
a copy to the FDIC in lieu of a separate application.
(4) Additional information. The appropriate regional director (DOS)
may request additional information to complete processing.
(b) Processing.--(1) Expedited processing for eligible insured
branches. An application filed by an eligible insured branch as defined
in Sec. 303.181(c) will be acknowledged in writing by the FDIC and will
receive expedited processing, unless the applicant is notified to the
contrary and provided with the basis for that decision. The FDIC may
remove an application from expedited processing for any of the reasons
set forth in Sec. 303.11(c)(2). Absent such removal, an application
processed under expedited processing will be deemed approved on the
latest of the following:
(i) The 21st day after the FDIC's receipt of a substantially
complete application; or
(ii) The 5th day after expiration of the comment period described
in paragraph (c) of this section.
(2) Standard processing. For those applications that are not
processed pursuant to the expedited procedures, the FDIC will provide
the applicant with written notification of the final action as soon as
the decision is rendered.
(c) Publication requirement and comment period.--(1) Newspaper
publications. The applicant shall publish a notice of its proposal to
move from one location to another, as described in Sec. 303.7(b), in a
newspaper of general circulation in the community in which the insured
branch is located prior to its being moved and in the community to
which it is to be moved. The notice shall include the insured branch's
current and proposed addresses.
(2) Public comments. All public comments must be received by the
appropriate regional director (DOS) within 15 days after the date of
the last newspaper publication required by paragraph (c)(1) of this
section, unless the comment period has been extended or reopened in
accordance with Sec. 303.9(b)(2).
(3) Lobby notices. If the insured branch has a public lobby, a copy
of the newspaper publication shall be posted in the public lobby for at
least 15 days beginning on the date of the publication required by
paragraph (c)(1) of this section.
(d) Delegation of authority. (1) Authority is delegated to the
Director and Deputy Director (DOS) and, where confirmed in writing by
the Director, to
[[Page 44738]]
an associate director and the appropriate regional director and deputy
regional director to approve an application under this section. For the
delegate to exercise this authority, the criteria in paragraphs
(d)(1)(i) through (d)(1)(vi) of this section must be satisfied:
(i) The factors set forth in section 6 of the FDI Act (12 U.S.C.
1816) have been considered and favorably resolved;
(ii) The applicant is at least adequately capitalized as defined in
subpart B of part 325 of this chapter;
(iii) Any financial arrangements which have been made in connection
with the proposed relocation and which involve the applicant's
directors, officers, major shareholders, or their interests are fair
and reasonable in comparison to similar arrangements that could have
been made with independent third parties;
(iv) Compliance with the CRA, the NEPA, the NHPA and any applicable
related regulations, including 12 CFR part 345, has been considered and
favorably resolved;
(v) No CRA protest as defined in Sec. 303.2(l) has been filed which
remains unresolved or, where such a protest has been filed and remains
unresolved, the Director (DCA), Deputy Director (DCA), an associate
director (DCA) or the appropriate regional director or deputy regional
director (DCA) concurs that approval is consistent with the purposes of
the CRA and the applicant agrees in writing to any conditions imposed
regarding the CRA; and
(vi) The applicant agrees in writing to comply with any conditions
imposed by the delegate, other than the standard conditions defined in
Sec. 303.2(ff) which may be imposed without the applicant's written
consent.
(2) Authority is delegated to the Director and Deputy Director
(DOS) and, where confirmed in writing by the Director, to an associate
director, to approve applications under this section which meet all
criteria in paragraph (d)(1) of this section except that the applicant
does not agree in writing to comply with any condition imposed by the
delegate, other than the standard conditions defined in Sec. 303.2(ff)
which may be imposed without the applicant's written consent.
(3) Authority is delegated to the Director and Deputy Director
(DOS) and, where confirmed in writing by the Director, to an associate
director, to deny applications under this section.
Sec. 303.185 Merger transactions involving foreign banks or foreign
organizations.
(a) Merger transactions involving an insured branch of a foreign
bank. Merger transactions requiring the FDIC's prior approval as set
forth in Sec. 303.62 include any merger transaction in which the
resulting institution is an insured branch of a foreign bank which is
not a federal branch, or any merger transaction which involves any
insured branch and any uninsured institution. In such cases:
(1) References to an eligible depository institution in subpart D
of this part include an eligible insured branch as defined in
Sec. 303.181;
(2) The definition of a corporate reorganization in Sec. 303.61(b)
includes a merger transaction between an insured branch and other
branches, agencies, or subsidiaries in the United States of the same
foreign bank; and
(3) For the purposes of Sec. 303.62(b)(1) on interstate mergers, a
merger transaction involving an insured branch is one involving the
acquisition of a branch of an insured bank without the acquisition of
the bank for purposes of section 44 of the FDI Act (12 U.S.C. 1831u)
only when the merger transaction involves fewer than all the insured
branches of the same foreign bank in the same state.
(b) Certain merger transactions with foreign organizations outside
any State. Merger transactions requiring the FDIC's prior approval as
set forth in Sec. 303.62 include any merger transaction in which an
insured depository institution becomes directly liable for obligations
which will, after the merger transaction, be treated as deposits under
section 3(l)(5)(A)(i)-(ii) of the FDI Act (12 U.S.C. 1813(l)(5)(A)(i)-
(ii)), as a result of a merger or consolidation with a foreign
organization or an assumption of liabilities of a foreign organization.
Sec. 303.186 Exemptions from insurance requirement for a state branch
of a foreign bank; Sec. 347.206.
(a) Filing procedures.--(1) Where to file. An application by a
state branch for consent to operate as a noninsured state branch, as
permitted by Sec. 347.206(b) of this chapter, shall be submitted in
writing to the appropriate regional director (DOS).
(2) Content of filing. A complete letter application shall include
the following information:
(i) The kinds of deposit activities in which the state branch
proposes to engage;
(ii) The expected source of deposits;
(iii) The manner in which deposits will be solicited;
(iv) How the activity will maintain or improve the availability of
credit to all sectors of the United States economy, including the
international trade finance sector;
(v) That the activity will not give the foreign bank an unfair
competitive advantage over United States banking organizations; and
(vi) A resolution by the applicant's board of directors, or
evidence of approval by senior management if a resolution is not
required pursuant to the applicant's organizational documents,
authorizing the filing of the application.
(2) Additional information. The appropriate regional director (DOS)
may request additional information to complete processing.
(b) Processing. The FDIC will provide the applicant with written
notification of the final action taken.
Sec. 303.187 Approval for an insured state branch of a foreign bank to
conduct activities not permissible for federal branches; Sec. 347.213.
(a) Filing procedures.--(1) Where to file. An application by an
insured state branch seeking approval to conduct activities not
permissible for a federal branch, as required by Sec. 347.213(a) of
this chapter, shall be submitted in writing to the appropriate regional
director (DOS).
(2) Content of filing. A complete letter application shall include
the following information:
(i) A brief description of the activity, including the manner in
which it will be conducted and an estimate of the expected dollar
volume associated with the activity;
(ii) An analysis of the impact of the proposed activity on the
condition of the United States operations of the foreign bank in
general and of the branch in particular, including a copy of the
feasibility study, management plan, financial projections, business
plan, or similar document concerning the conduct of the activity;
(iii) A resolution by the applicant's board of directors, or
evidence of approval by senior management if a resolution is not
required pursuant to the applicant's organizational documents,
authorizing the filing of the application;
(iv) A statement by the applicant of whether it is in compliance
with Secs. 347.210 and 347.211 of this chapter, Pledge of assets and
Asset maintenance, respectively;
(v) A statement by the applicant that it has complied with all
requirements of the Board of Governors concerning applications to
conduct the activity in question and the status of each such
application, including a copy of the Board of Governors' disposition of
such application, if applicable; and
[[Page 44739]]
(vi) A statement of why the activity will pose no significant risk
to the Bank Insurance Fund.
(3) Board of Governors application. If the application to the Board
of Governors contains the information required by paragraph (a) of this
section, the applicant may submit a copy to the FDIC in lieu of a
separate letter application.
(4) Additional information. The appropriate regional director (DOS)
may request additional information to complete processing.
(b) Divestiture or cessation.--(1) Where to file. Divestiture plans
necessitated by a change in law or other authority, as required by
Sec. 347.213(e) of this chapter, shall be submitted in writing to the
appropriate regional director (DOS).
(2) Content of filing. A complete letter application shall include
the following information:
(i) A detailed description of the manner in which the applicant
proposes to divest itself of or cease the activity in question; and
(ii) A projected timetable describing how long the divestiture or
cessation is expected to take.
(3) Additional information. The appropriate regional director (DOS)
may request additional information to complete processing.
(c) Delegation of authority. Authority is delegated to the Director
and Deputy Director (DOS) and, where confirmed in writing by the
Director, to an associate director and the appropriate regional
director and deputy regional director, to approve plans of divestiture
and cessation submitted pursuant to paragraph (b) of this section.
Subpart K--Prompt Corrective Action
Sec. 303.200 Scope.
(a) General. (1) This subpart covers applications filed pursuant to
section 38 of the FDI Act (12 U.S.C. 1831o), which requires insured
depository institutions that are not adequately capitalized to receive
approval prior to engaging in certain activities. Section 38 restricts
or prohibits certain activities and requires an insured depository
institution to submit a capital restoration plan when it becomes
undercapitalized. The restrictions and prohibitions become more severe
as an institution's capital level declines.
(2) Definitions of the capital categories referenced in this Prompt
Corrective Action subpart may be found in subpart B of part 325 of this
chapter, Sec. 325.103(b) for state nonmember banks and Sec. 325.103(c)
for insured branches of foreign banks.
(b) Institutions covered. Restrictions and prohibitions contained
in subpart B of part 325 of this chapter apply primarily to insured
state nonmember banks and insured branches of foreign banks, as well as
to directors and senior executive officers of those institutions.
Portions of subpart B of part 325 of this chapter also apply to all
insured depository institutions that are deemed to be critically
undercapitalized.
Sec. 303.201 Filing procedures.
Applications shall be filed with the appropriate regional director
(DOS). The application shall contain the information specified in each
respective section of this subpart, and shall be in letter form as
prescribed in Sec. 303.3. Additional information may be requested by
the FDIC. Such letter shall be signed by the president, senior officer
or a duly authorized agent of the insured depository institution and be
accompanied by a certified copy of a resolution adopted by the
institution's board of directors or trustees authorizing the
application.
Sec. 303.202 Processing.
The FDIC will provide the applicant with a subsequent written
notification of the final action taken as soon as the decision is
rendered.
Sec. 303.203 Applications for capital distributions.
(a) Scope. An insured state nonmember bank and any insured branch
of a foreign bank shall submit an application for capital distribution
if, after having made a capital distribution, the institution would be
undercapitalized, significantly undercapitalized, or critically
undercapitalized.
(b) Content of filing. An application to repurchase, redeem, retire
or otherwise acquire shares or ownership interests of the insured
depository institution shall describe the proposal, the shares or
obligations which are the subject thereof, and the additional shares or
obligations of the institution which will be issued in at least an
amount equivalent to the distribution. The application also shall
explain how the proposal will reduce the institution's financial
obligations or otherwise improve its financial condition. If the
proposed action also requires an application under section 18(i) of the
FDI Act (12 U.S.C. 1828(i)) as implemented by Sec. 303.241 regarding
prior consent to retire capital, such application should be filed
concurrently with, or made a part of, the application filed pursuant to
section 38 of the FDI Act (12 U.S.C. 1831o).
Sec. 303.204 Applications for acquisitions, branching, and new lines
of business.
(a) Scope. (1) Any insured state nonmember bank and any insured
branch of a foreign bank which is undercapitalized or significantly
undercapitalized, and any insured depository institution which is
critically undercapitalized, shall submit an application to engage in
acquisitions, branching or new lines of business.
(2) A new line of business will include any new activity exercised
which, although it may be permissible, has not been exercised by the
institution.
(b) Content of filing. Applications shall describe the proposal,
state the date the institution's capital restoration plan was accepted
by its primary federal regulator, describe the institution's status in
implementing the plan, and explain how the proposed action is
consistent with and will further the achievement of the plan or
otherwise further the purposes of section 38 of the FDI Act. If the
FDIC is not the applicant's primary federal regulator, the application
also should state whether approval has been requested from the
applicant's primary federal regulator, the date of such request and the
disposition of the request, if any. If the proposed action also
requires applications pursuant to section 18 (c) or (d) of the FDI Act
(mergers and branches) (12 U.S.C. 1828 (c) or (d)), such applications
should be filed concurrently with, or made a part of, the application
filed pursuant to section 38 of the FDI Act (12 U.S.C. 1831o).
Sec. 303.205 Applications for bonuses and increased compensation for
senior executive officers.
(a) Scope. Any insured state nonmember bank or insured branch of a
foreign bank that is significantly or critically undercapitalized, or
any insured state nonmember bank or any insured branch of a foreign
bank that is undercapitalized and which has failed to submit or
implement in any material respect an acceptable capital restoration
plan, shall submit an application to pay a bonus or increase
compensation for any senior executive officer.
(b) Content of filing. Applications shall list each proposed bonus
or increase in compensation, and for the latter shall identify
compensation for each of the twelve calendar months preceding the
calendar month in which the institution became undercapitalized.
Applications also shall state the date the institution's capital
restoration plan was accepted by the FDIC, and describe any progress
made in implementing the plan.
[[Page 44740]]
Sec. 303.206 Application for payment of principal or interest on
subordinated debt.
(a) Scope. Any critically undercapitalized insured depository
institution shall submit an application to pay principal or interest on
subordinated debt.
(b) Content of filing. Applications shall describe the proposed
payment and provide an explanation of action taken under section
38(h)(3)(A)(ii) of the FDI Act (action other than receivership or
conservatorship). The application also shall explain how such payments
would further the purposes of section 38 of the FDI Act (12 U.S.C.
1831o). Existing approvals pursuant to requests filed under section
18(i)(1) of the FDI Act (12 U.S.C. 1828(i)(1)) (capital stock
reductions or retirements) shall not be deemed to be the permission
needed pursuant to section 38.
Sec. 303.207 Restricted activities for critically undercapitalized
institutions.
(a) Scope. Any critically undercapitalized insured depository
institution shall submit an application to engage in certain restricted
activities.
(b) Content of filing. Applications to engage in any of the
following activities, as set forth in sections 38(i)(2) (A) through (G)
of the FDI Act, shall describe the proposed activity and explain how
the activity would further the purposes of section 38 of the FDI Act
(12 U.S.C. 1831o):
(1) Enter into any material transaction other than in the usual
course of business including any action with respect to which the
institution is required to provide notice to the appropriate federal
banking agency. Materiality will be determined on a case-by-case basis;
(2) Extend credit for any highly leveraged transaction (as defined
in part 325 of this chapter);
(3) Amend the institution's charter or bylaws, except to the extent
necessary to carry out any other requirement of any law, regulation, or
order;
(4) Make any material change in accounting methods;
(5) Engage in any covered transaction (as defined in section 23A(b)
of the Federal Reserve Act (12 U.S.C. 371c(b));
(6) Pay excessive compensation or bonuses. Part 364 of this chapter
provides guidance for determining excessive compensation; or
(7) Pay interest on new or renewed liabilities at a rate that would
increase the institution's weighted average cost of funds to a level
significantly exceeding the prevailing rates of interest on insured
deposits in the institution's normal market area. Section 337.6 of this
chapter (Brokered deposits) provides guidance for defining the relevant
terms of this provision; however this provision does not supersede the
general prohibitions contained in Sec. 337.6 of this chapter.
Sec. 303.208 Delegation of authority.
Authority is delegated to the Director and Deputy Director (DOS)
and, where confirmed in writing by the Director, to an associate
director and the appropriate regional director and deputy regional
director, to approve or deny the following applications, requests or
petitions submitted pursuant to this subpart:
(a) Applications filed pursuant to section 38 of the FDI Act (12
U.S.C. 1831o) (prompt corrective action), including applications to
make a capital distribution;
(b) Applications for acquisitions, branching, and new lines of
business (except that the delegation is limited to the authority as
delegated to approve or deny any concurrent application filed pursuant
to section 18 (c) or (d) of the FDI Act (12 U.S.C. 1828 (c) or (d));
(c) Applications to pay a bonus or increase compensation;
(d) Applications for an exception to pay principal or interest on
subordinated debt; and
(e) Applications by critically undercapitalized insured depository
institutions to engage in any restricted activity listed in this
subpart.
Subpart L--Section 19 of the FDI Act (Consent to Service of Persons
Convicted of Certain Criminal Offenses)
Sec. 303.220 Scope.
This subpart covers applications under section 19 of the FDI Act
(12 U.S.C. 1829). Pursuant to section 19, any person who has been
convicted of any criminal offense involving dishonesty, breach of
trust, or money laundering, or has agreed to enter into a pretrial
diversion or similar program in connection with a prosecution for such
offense, may not become, or continue as, an institution-affiliated
party of an insured depository institution; own or control, directly or
indirectly, any insured depository institution; or otherwise
participate, directly or indirectly, in the conduct of the affairs of
any insured depository institution without the prior written consent of
the FDIC.
Sec. 303.221 Filing procedures.
(a) Regional office. An application under section 19 shall be filed
with the appropriate regional director (DOS).
(b) Contents of filing. Application forms may be obtained from any
FDIC regional office. The FDIC may require additional information
beyond that sought in the form, as warranted, in individual cases.
Sec. 303.222 Service at another insured depository institution.
In the case of a person who has already been approved by the FDIC
under this subpart or section 19 of the FDI Act in connection with a
particular insured depository institution, such person may not become
an institution affiliated party, or own or control directly or
indirectly another insured depository institution, or participate in
the conduct of the affairs of another insured depository institution,
without the prior written consent of the FDIC.
Sec. 303.223 Applicant's right to hearing following denial.
An applicant may request a hearing following a denial of an
application in accordance with the provisions of part 308 of this
chapter.
Sec. 303.224 Delegation of authority.
(a) Approvals. Authority is delegated to the Director and Deputy
Director (DOS) and, where confirmed in writing by the Director, to an
associate director or to the appropriate regional director and deputy
regional director, to approve applications made by insured depository
institutions pursuant to section 19 of the FDI Act, after consultation
with the Legal Division; provided however, that authority may not be
delegated to the regional director or deputy regional director where
the applicant's primary supervisory authority interposes any objection
to such application.
(b) Denials. Authority is delegated to the Director and Deputy
Director (DOS) and, where confirmed in writing by the Director, to an
associate director, to deny applications made by insured depository
institutions pursuant to section 19 of the FDI Act.
(c) Concurrent legal certification. The authority to deny
applications delegated under this section shall be exercised only upon
the concurrent certification by the General Counsel and, where
confirmed in writing by the General Counsel, his or her designee, that
the action taken is not inconsistent with section 19 of the FDI Act.
(d) Conditions on application approvals. Regional directors and
deputy regional directors acting under delegated authority under this
subpart may impose any of the following conditions on the approval of
applications, as appropriate in individual cases:
(1) A participant or institution-affiliated party of an institution
shall be
[[Page 44741]]
bonded to the same extent as others in similar positions; and/or
(2) When deemed necessary, the prior consent of the appropriate
regional director (DOS) shall be required for any proposed significant
changes in duties and/or responsibilities of the person who is the
subject of the application.
(e) Authority not delegated by FDIC Board of Directors. The FDIC
Board of Directors has not delegated its authority to consider and act
upon an application under section 19 of the FDI Act after a hearing
held in accordance with the provisions of part 308 of this chapter.
Subpart M--Other Filings
Sec. 303.240 General.
This subpart sets forth the filing procedures to be followed when
seeking the FDIC's consent to engage in certain activities or
accomplish other matters as specified in the individual sections
contained herein. For those matters covered by this subpart that also
have substantive FDIC regulations or related statements of policy,
references to the relevant regulations or statements of policy are
contained in the specific sections.
303.241 Reduce or retire capital stock or capital debt instruments.
(a) Scope. This section contains the procedures to be followed by
an insured state nonmember bank to seek the prior approval of the FDIC
to reduce the amount or retire any part of its common or preferred
stock, or to retire any part of its capital notes or debentures
pursuant to section 18(i)(1) of the Act (12 U.S.C. 1828(i)(1)).
(b) Filing procedures. Applicants shall submit a letter application
to the appropriate regional director (DOS).
(c) Content of filing. The application shall contain the following:
(1) The type and amount of the proposed change to the capital
structure and the reason for the change;
(2) A schedule detailing the present and proposed capital
structure;
(3) The time period that the proposal will encompass;
(4) If the proposal involves a series of transactions affecting
Tier 1 capital components which will be consummated over a period of
time which shall not exceed twelve months, the application shall
certify that the insured depository institution will maintain itself as
a well-capitalized institution as defined in part 325 of this chapter,
both before and after each of the proposed transactions;
(5) If the proposal involves the repurchase of capital instruments,
the amount of the repurchase price and the basis for establishing the
fair market value of the repurchase price;
(6) A statement that the proposal will be available to all holders
of a particular class of outstanding capital instruments on an equal
basis, and if not, the details of any restrictions; and
(7) The date that the applicant's board of directors approved the
proposal.
(d) Additional information. The FDIC may request additional
information at any time during processing of the application.
(e) Undercapitalized institutions. Procedures regarding
applications by an undercapitalized insured depository institution to
retire capital stock or capital debt instruments pursuant to section 38
of the FDI Act (12 U.S.C. 1831o) are set forth in subpart K of this
part (Prompt Corrective Action), Sec. 303.203. Applications pursuant to
sections 38 and 18(i) may be filed concurrently, or as a single
application.
(f) Expedited processing for eligible depository institutions. An
application filed under this section by an eligible depository
institution as defined in Sec. 303.2(r) will be acknowledged in writing
by the FDIC and will receive expedited processing, unless the applicant
is notified in writing to the contrary and provided with the basis for
that decision. The FDIC may remove an application from expedited
processing for any of the reasons set forth in Sec. 303.11(c)(2).
Absent such removal, an application processed under expedited
processing will be deemed approved 20 days after the FDIC's receipt of
a substantially complete application.
(g) Standard processing. For those applications that are not
processed pursuant to expedited procedures, the FDIC will provide the
applicant with written notification of the final action as soon as the
decision is rendered.
(h) Delegation of authority. Authority is delegated to the Director
and Deputy Director (DOS) and, where confirmed in writing by the
Director, to an associate director and the appropriate regional
director and deputy regional director, to approve or deny an
application pursuant to section 18(i)(1) of the FDI Act (12 U.S.C.
1828(i)) to reduce the amount or retire any part of common or preferred
capital stock, or to retire any part of capital notes or debentures.
Sec. 303.242 Exercise of trust powers.
(a) Scope. This section contains the procedures to be followed by a
state nonmember bank to seek the FDIC's prior consent to exercise trust
powers. The FDIC's prior consent to exercise trust powers is not
required in the following circumstances:
(1) Where a state nonmember bank received authority to exercise
trust powers from its chartering authority prior to December 1, 1950;
or
(2) Where an insured depository institution continues to conduct
trust activities pursuant to authority granted by its chartering
authority subsequent to a charter conversion or withdrawal from
membership in the Federal Reserve System.
(b) Filing procedures. Applicants shall submit to the appropriate
regional director (DOS) a completed form, ``Application for Consent To
Exercise Trust Powers.'' This form may be obtained from any FDIC
regional office.
(c) Content of filing. The filing shall consist of the completed
trust application form.
(d) Additional information. The FDIC may request additional
information at any time during processing of the filing.
(e) Expedited processing for eligible depository institutions. An
application filed under this section by an eligible depository
institution as defined in Sec. 303.2(r) will be acknowledged in writing
by the FDIC and will receive expedited processing, unless the applicant
is notified in writing to the contrary and provided with the basis for
that decision. The FDIC may remove an application from expedited
processing for any of the reasons set forth in Sec. 303.11(c)(2).
Absent such removal, an application processed under expedited
procedures will be deemed approved 30 days after the FDIC's receipt of
a substantially complete application.
(f) Standard processing. For those applications that are not
processed pursuant to the expedited procedures, the FDIC will provide
the applicant with written notification of the final action when the
decision is rendered.
(g) Delegation of authority. (1) Where the criteria listed in
paragraph (g)(2) of this section are satisfied and the applicant agrees
in writing to comply with any conditions imposed by the approving FDIC
official, other than the standard conditions defined in Sec. 303.2(ff),
which may be imposed without the applicant's written consent, authority
is delegated to the Director and Deputy Director (DOS) and, where
confirmed in writing by the Director, to an associate director and the
appropriate regional director and deputy regional director, to approve
applications for the FDIC's consent to exercise trust powers.
(2) The following criteria must be satisfied before the authority
delegated in paragraph (g)(1) of this section may be exercised:
[[Page 44742]]
(i) The factors set forth in section 6 of the FDI Act (12 U.S.C.
1816) have been considered and favorably resolved;
(ii) The proposed management of the trust business is determined to
be capable of satisfactorily handling the anticipated business; and
(iii) The applicant's board of directors formally has adopted the
FDIC Statement of Principles of Trust Department Management available
from any FDIC regional office.
(h) Denials and certain conditional approvals. Authority is
delegated to the Director and Deputy Director (DOS) and, where
confirmed in writing by the Director, to an associate director to:
(1) Deny applications for trust powers; and
(2) Approve applications for trust powers where the criteria listed
in paragraph (g)(2) of this section are satisfied but the applicant
does not agree in writing to comply with any condition imposed by the
delegate, other than the standard conditions defined in Sec. 303.2(ff)
which may be imposed without the applicant's written consent.
Sec. 303.243 Brokered deposit waivers.
(a) Scope. Pursuant to section 29 of the FDI Act (12 U.S.C. 1831f)
and part 337 of this chapter, an adequately capitalized insured
depository institution may not accept, renew or roll over any brokered
deposits unless it has obtained a waiver from the FDIC. A well-
capitalized insured depository institution may accept brokered deposits
without a waiver, and an undercapitalized insured depository
institution may not accept, renew or roll over any brokered deposits
under any circumstances. This section contains the procedures to be
followed to file with the FDIC for a brokered deposit waiver. The FDIC
will provide notice to the depository institution's appropriate federal
banking agency and any state regulatory agency, as appropriate, that a
request for a waiver has been filed and will consult with such agency
or agencies, prior to taking action on the institution's request for a
waiver. Prior notice and/or consultation shall not be required in any
particular case if the FDIC determines that the circumstances require
it to take action without giving such notice and opportunity for
consultation.
(b) Filing procedures. Applicants shall submit a letter application
to the appropriate regional director (DOS).
(c) Content of filing. The application shall contain the following:
(1) The time period for which the waiver is requested;
(2) A statement of the policy governing the use of brokered
deposits in the institution's overall funding and liquidity management
program;
(3) The volume, rates and maturities of the brokered deposits held
currently and anticipated during the waiver period sought, including
any internal limits placed on the terms, solicitation and use of
brokered deposits;
(4) How brokered deposits are costed and compared to other funding
alternatives and how they are used in the institution's lending and
investment activities, including a detailed discussion of asset growth
plans;
(5) Procedures and practices used to solicit brokered deposits,
including an identification of the principal sources of such deposits;
(6) Management systems overseeing the solicitation, acceptance and
use of brokered deposits;
(7) A recent consolidated financial statement with balance sheet
and income statements; and
(8) The reasons the institution believes its acceptance, renewal or
rollover of brokered deposits would pose no undue risk.
(d) Additional information. The FDIC may request additional
information at any time during processing of the application.
(e) Expedited processing for eligible depository institutions. An
application filed under this section by an eligible depository
institution as defined in this Sec. 303.243(e) will be acknowledged in
writing by the FDIC and will receive expedited processing, unless the
applicant is notified in writing to the contrary and provided with the
basis for that decision. For the purpose of this section, an applicant
will be deemed an eligible depository institution if it satisfies all
of the criteria contained in Sec. 303.2(r) except that the applicant
may be adequately capitalized rather than well-capitalized. The FDIC
may remove an application from expedited processing for any of the
reasons set forth in Sec. 303.11(c)(2). Absent such removal, an
application processed under expedited procedures will be deemed
approved 21 days after the FDIC's receipt of a substantially complete
application.
(f) Standard processing. For those filings which are not processed
pursuant to the expedited procedures, the FDIC will provide the
applicant with written notification of the final action as soon as the
decision is rendered.
(g) Conditions for approval. A waiver issued pursuant to this
section shall:
(1) Be for a fixed period, generally no longer than two years, but
may be extended upon refiling; and
(2) May be revoked by the FDIC at any time by written notice to the
institution.
(h) Delegation of authority. Authority is delegated to the Director
and Deputy Director (DOS) and, where confirmed in writing by the
Director, to an associate director and the appropriate regional
director and deputy regional director, to approve or deny brokered
deposit waiver applications. Based upon a preliminary review, any
delegate may grant a temporary waiver for a short period in order to
facilitate the orderly processing of a filing for a waiver.
Sec. 303.244 Golden parachute and severance plan payments.
(a) Scope. Pursuant to section 18(k) of the FDI Act (12 U.S.C.
1828(k)) and part 359 of this chapter, an insured depository
institution or depository institution holding company may not make
golden parachute payments or excess nondiscriminatory severance plan
payments unless the depository institution or holding company obtains
permission to make such payments in accordance with the rules contained
in part 359 of this chapter. This section contains the procedures to
file for the FDIC's consent when such consent is necessary under part
359 of this chapter.
(1) Golden parachute payments. A troubled insured depository
institution or a troubled depository institution holding company is
prohibited from making golden parachute payments (as defined in
Sec. 359.1(f)(1) of this chapter) unless it obtains the consent of the
appropriate federal banking agency and the written concurrence of the
FDIC. Therefore, in the case of golden parachute payments, the
procedures in this section apply to all troubled insured depository
institutions and troubled depository institution holding companies.
(2) Excess nondiscriminatory severance plan payments. In the case
of excess nondiscriminatory severance plan payments as provided by
Sec. 359.1(f)(2)(v) of this chapter, the FDIC's consent is necessary
for state nonmember banks that meet the criteria set forth in
Sec. 359.1(f)(1)(ii) of this chapter. In addition, the FDIC's consent
is required for all insured depository institutions or depository
institution holding companies that meet the same criteria and seek to
make payments in excess of the 12-month amount specified in
Sec. 359.1(f)(2)(v) of this chapter.
(b) Filing procedures. Applicants shall submit a letter application
to the
[[Page 44743]]
appropriate FDIC regional director (DOS).
(c) Content of filing. The application shall contain the following:
(1) The reasons why the applicant seeks to make the payment;
(2) An identification of the institution-affiliated party who will
receive the payment;
(3) A copy of any contract or agreement regarding the subject
matter of the filing;
(4) The cost of the proposed payment and its impact on the
institution's capital and earnings; and
(5) The reasons why consent to the payment should be granted.
(d) Additional information. The FDIC may request additional
information at any time during processing of the filing.
(e) Processing. The FDIC will provide the applicant with a
subsequent written notification of the final action taken as soon as
the decision is rendered.
(f) Delegation of authority. Authority is delegated to the Director
and Deputy Director (DOS) and, where confirmed in writing by the
Director, to an associate director and the appropriate regional
director and deputy regional director, to approve or to deny filings to
make:
(1) Excess nondiscriminatory severance plan payments as provided by
12 CFR 359.1(f)(2)(v); and
(2) Golden parachute payments permitted by 12 CFR 359.4.
Sec. 303.245 Waiver of liability for commonly controlled depository
institutions.
(a) Scope. Section 5(e) of the FDI Act (12 U.S.C. 1815(e)) creates
liability for commonly controlled insured depository institutions for
losses incurred or anticipated to be incurred by the FDIC in connection
with the default of a commonly controlled insured depository
institution or any assistance provided by the FDIC to any commonly
controlled insured depository institution in danger of default. In
addition to certain statutory exceptions and exclusions contained in
sections 5(e)(6), (7) and (8), the FDI Act also permits the FDIC, in
its discretion, to exempt any insured depository institution from this
liability if it determines that such exemption is in the best interests
of the Bank Insurance Fund (BIF) or the Savings Association Insurance
Fund (SAIF). This section describes procedures to request a conditional
waiver of liability pursuant to section 5 of the FDI Act (12 U.S.C.
1815(e)(5)(A)).
(b) Definition. Conditional waiver of liability means an exemption
from liability pursuant to section 5(e) of the FDI Act (12 U.S.C.
1815(e)) subject to terms and conditions.
(c) Filing procedures. Applicants shall submit a letter application
to the appropriate regional director (DOS).
(d) Content of filing. The application shall contain the following
information:
(1) The basis for requesting a waiver;
(2) The existence of any significant events (e.g., change in
control, capital injection, etc.) that may have an impact upon the
applicant and/or any potentially liable institution;
(3) Current, and if applicable, pro forma financial information
regarding the applicant and potentially liable institution(s); and
(4) The benefits to the appropriate FDIC insurance fund resulting
from the waiver and any related events.
(e) Additional information. The FDIC may request additional
information at any time during the processing of the filing.
(f) Processing. The FDIC will provide the applicant with written
notification of the final action as soon as the decision is rendered.
(g) Failure to comply with terms of conditional waiver. In the
event a conditional waiver of liability is issued, failure to comply
with the terms specified therein may result in the termination of the
conditional waiver of liability. The FDIC reserves the right to revoke
the conditional waiver of liability after giving the applicant written
notice of such revocation and a reasonable opportunity to be heard on
the matter pursuant to Sec. 303.10.
(h) Authority retained by FDIC Board of Directors. The FDIC Board
of Directors retains the authority to act on any application for waiver
of liability of commonly controlled depository institutions.
Sec. 303.246 Insurance fund conversions.
(a) Scope. This section contains the procedures to be followed by
an insured depository institution to seek the FDIC's prior approval to
engage in an insurance fund conversion that involves the transfer of
deposits between the SAIF and the BIF. Optional conversion
transactions, commonly referred to as Oakar transactions, pursuant to
section 5(d)(3) of the FDI Act (12 U.S.C. 1815(d)(3)), which do not
involve the transfer of deposits between the SAIF and the BIF, are
governed by the procedures set forth in subpart D (Merger Transactions)
of this part.
(b) Filing procedures. Applicants shall submit a letter application
to the appropriate FDIC regional director (DOS). The filing shall be
signed by representatives of each institution participating in the
transaction. Insurance fund conversions which are proposed in
conjunction with a merger application filed by a state nonmember bank
pursuant to section 18(c) of the FDI Act (12 U.S.C. 1828(c)) should be
included with that filing.
(c) Content of filing. The application shall include the following
information:
(1) A description of the transaction;
(2) The amount of deposits involved in the conversion transaction;
(3) A pro forma balance sheet and income statement for each
institution upon consummation of the transaction; and
(4) Certification by each party to the transaction that applicable
entrance and exit fees will be paid pursuant to part 312 of this
chapter.
(d) Additional information. The FDIC may request additional
information at any time during processing of the filing.
(e) Processing. The FDIC will provide the applicant with written
notification of the final action as soon as the decision is rendered.
(f) Delegation of authority. Authority is delegated to the Director
and Deputy Director (DOS) and, where confirmed in writing by the
Director, to an associate director and the appropriate regional
director and deputy regional director, to approve or deny filings for
insurance fund conversions involving the transfers of deposits between
the SAIF and the BIF.
Sec. 303.247 Conversion with diminution of capital.
(a) Scope. This section contains the procedures to be followed by
an insured federal depository institution seeking the prior written
consent of the FDIC pursuant to section 18(i)(2) of the FDI Act (12
U.S.C. 1828(i)(2)) to convert from an insured federal depository
institution to an insured state nonmember bank (except a District bank)
where the capital stock or surplus of the resulting bank will be less
than the capital stock or surplus, respectively, of the converting
institution at the time of the shareholders' meeting approving such
conversion.
(b) Filing procedures. Applicants shall submit a letter application
to the appropriate regional director (DOS).
(c) Content of filing. The application shall contain the following
information:
(1) A description of the proposed transaction;
(2) A schedule detailing the present and proposed capital
structure; and
(3) A copy of any documents submitted to the state chartering
authority with respect to the charter conversion.
(d) Additional information. The FDIC may request additional
information at any time during the processing.
[[Page 44744]]
(e) Processing. The FDIC will provide the applicant with written
notification of the final action when the decision is rendered.
(f) Delegation of authority.--(1) Approvals. Authority is delegated
to the Director and Deputy Director (DOS) and, where confirmed in
writing by the Director, to an associate director and the appropriate
regional director and deputy regional director, to approve applications
to convert with diminution of capital.
(2) Denials. Authority is delegated to the Director and Deputy
Director (DOS) and, where confirmed in writing by the Director, to an
associate director to deny applications to convert with diminution of
capital.
Sec. 303.248 Continue or resume status as an insured institution
following termination under section 8 of the FDI Act.
(a) Scope. This section relates to an application by a depository
institution whose insured status has been terminated under section 8 of
the FDI Act (12 U.S.C. 1818) for permission to continue or resume its
status as an insured depository institution. This section covers
institutions whose deposit insurance continues in effect for any
purpose or for any length of time under the terms of an FDIC order
terminating deposit insurance, but does not cover operating non-insured
depository institutions which were previously insured by the FDIC, or
any non-insured, non-operating depository institution whose charter has
not been surrendered or revoked.
(b) Filing procedures. Applicants shall submit a letter application
to the appropriate regional director (DOS).
(c) Content of filing. The filing shall contain the following
information:
(1) A complete statement of the action requested, all relevant
facts, and the reason for such requested action; and
(2) A certified copy of the resolution of the depository
institution's board of directors authorizing submission of the filing.
(d) Additional information. The FDIC may request additional
information at any time during processing of the filing.
(e) Processing. The FDIC will provide the applicant with written
notification of the final action as soon as the decision is rendered.
(f) Authority retained by FDIC Board of Directors. The FDIC Board
of Directors retains the authority to act on any application to
continue or resume status as an insured institution following
termination under section 8 of the FDI Act (12 U.S.C. 1818).
Sec. 303.249 Truth in Lending Act--relief from reimbursement.
(a) Scope. This section applies to requests for relief from
reimbursement pursuant to the Truth in Lending Act (15 U.S.C. 1601 et
seq.) and Regulation Z (12 CFR part 226). Related delegations of
authority are also set forth.
(b) Procedures to be followed in filing initial requests for
relief. Requests for relief from reimbursement shall be filed with the
appropriate regional director (DCA) within 60 days after receipt of the
compliance report of examination containing the request to conduct a
file search and make restitution to affected customers. The filing
shall contain a complete and concise statement of the action requested,
all relevant facts, the reasons and analysis relied upon as the basis
for such requested action, and all supporting documentation.
(c) Additional information. The FDIC may request additional
information at any time during processing of any such requests.
(d) Processing. The FDIC will acknowledge receipt of the request
and provide the applicant with written notification of its
determination within 60 days of its receipt of the request.
(e) Delegation of authority.--(1) Denial of initial requests for
relief. Authority is delegated to the Director and Deputy Director
(DCA), and where confirmed in writing by the Director, to an associate
director, or to the appropriate regional director or deputy regional
director, to deny initial requests for relief from the requirement for
reimbursement under section 608(a)(2) of the Truth in Lending
Simplification and Reform Act (15 U.S.C. 1607(e)(2)); provided,
however, that a regional director or deputy regional director is not
authorized to deny any request where the estimated amount of
reimbursement is greater than $25,000.
(2) Approval of initial requests for relief. Authority is delegated
to the Director and Deputy Director (DCA), and where confirmed in
writing by the director, to an associate director, to approve requests
for relief from the requirement for reimbursement under section
608(a)(2) of the Truth in Lending Simplification and Reform Act (15
U.S.C. 1607(a)(2)).
(f) Legal concurrence. The authority delegated under this section
shall be exercised only upon concurrent certification by the General
Counsel or, where confirmed in writing by the General Counsel, by his
or her designee, or, in cases where a regional director or deputy
regional director denies requests for relief, by the appropriate
regional counsel, that the action taken is not inconsistent with the
Truth in Lending Simplification and Reform Act.
(g) Procedures to be followed in filing requests for
reconsideration. Within 15 days of receipt of written notice that its
request for relief has been denied, the requestor may petition the
appropriate regional director (DCA) for reconsideration of such request
in accordance with the procedures set forth in Sec. 303.11(f).
Sec. 303.250 Management official interlocks.
(a) Scope. This section contains the procedures to be followed by
an insured state nonmember bank to seek the approval of FDIC to
establish an interlock pursuant to the Depository Institutions
Management Interlocks Act (12 U.S.C. 3207), section 13 of the FDI Act
(12 U.S.C. 1823(k)) and part 348 of this chapter.
(b) Filing procedures. Applicants shall submit a letter application
to the appropriate regional director (DOS).
(c) Content of filing. The application shall contain the following:
(1) A description of the proposed interlock;
(2) A statement of reason as to why the interlock will not result
in a monopoly or a substantial lessening of competition; and
(3) If the applicant is seeking an exemption set forth in
Sec. 348.5 or Sec. 348.6 of this chapter, a description of the
particular exemption which is being requested and a statement of
reasons as to why the exemption is applicable.
(d) Additional information. The FDIC may request additional
information at any time during processing of the filing.
(e) Processing. The FDIC will provide the applicant with written
notification of the final action when the decision is rendered.
(f) Delegation of authority. Authority is delegated to the Director
and Deputy Director (DOS), and where confirmed in writing by the
Director, to an associate director and the appropriate regional
director, deputy regional director, to approve or deny a request to
establish a management official interlock pursuant to Sec. 348.5 or
Sec. 348.6 of this chapter or section 205(8) of the Depository
Institutions Management Interlocks Act (12 U.S.C. 3207, 12 U.S.C.
1823(k)).
Sec. 303.251 Modification of conditions.
(a) Scope. This section contains the procedures to be followed by
an insured depository institution to seek the prior consent of the FDIC
to modify the requirement of a prior approval of a filing issued by the
FDIC.
(b) Filing procedures. Applicants should submit a letter
application to the
[[Page 44745]]
appropriate FDIC regional director (DOS).
(c) Content of filing. The application should contain the following
information:
(1) A description of the original approved application;
(2) A description of the modification requested; and
(3) The reason for the request.
(d) Additional information. The FDIC may request additional
information at any time during processing of the filing.
(e) Processing. The FDIC will provide the applicant with a written
notification of the final action as soon as the decision is rendered.
(f) Delegation of authority. Authority is delegated to the Director
and Deputy Director (DOS) and, where confirmed in writing by the
Director, to an associate director and the appropriate regional
director and deputy regional director, to approve or deny requests to
modify the requirements of a prior approval of a filing issued by the
FDIC subject to the following criteria;
(1) The Legal Division is consulted to the same extent as was
required for approval of the original filing; and
(2) The approving delegate had the authority to approve the
original filing.
Sec. 303.252 Extension of time.
(a) Scope. This section contains the procedures to be followed by
an insured depository institution to seek the prior consent of the FDIC
for additional time to fulfill a condition required in an approval of a
filing issued by the FDIC or to consummate a transaction which was the
subject of an approval by the FDIC.
(b) Filing procedures. Applicants shall submit a letter application
to the appropriate regional director (DOS).
(c) Content of filing. The application shall contain the following
information:
(1) A description of the original approved application;
(2) Identification of the original time limitation;
(3) The additional time period requested; and
(4) The reason for the request.
(d) Additional information. The FDIC may request additional
information at any time during processing of the filing.
(e) Processing. The FDIC will provide the applicant with written
notification of the final action as soon as the decision is rendered.
(f) Delegation of authority. (1) Except as provided in paragraph
(f)(2) of this section, authority is delegated to the Director and
Deputy Director (DOS) and, where confirmed in writing by the Director,
to an associate director and the appropriate regional director and
deputy regional director, to approve or deny requests for extensions of
time within which to perform acts or fulfill conditions required by a
prior FDIC action on a filing of the insured depository institution.
(2) Limits on exercise of delegated authority. (i) An extension of
time may not exceed one year; however, more than one extension may be
granted regarding a particular filing.
(ii) Notwithstanding the delegations in paragraph (f)(1) of this
section, no delegate shall have the authority to deny an extension of
time request unless that delegate has the authority under this part to
deny the original filing upon which the extension of time is
predicated.
Subpart N--Enforcement Delegations
Sec. 303.260 Scope.
This subpart contains delegations of authority relating to the
initiation, prosecution, and settlement of administrative enforcement
actions under the FDI Act and other laws and regulations enforced by
the FDIC, including investigations and subpoenas.
Sec. 303.261 Issuance of notification to primary regulator under
section 8(a) of the FDI Act (12 U.S.C. 1818(a)).
(a) Book capital less than 2 percent. Authority is delegated to the
Director and Deputy Director (DOS), and where confirmed in writing by
the Director, to an associate director and to the appropriate regional
director and deputy regional director, to issue notifications to
primary regulator when the respondent depository institution's book
capital is less than 2 percent of total assets; provided that authority
may not be delegated to the regional director or deputy regional
director whenever the respondent depository institution has issued any
mandatory convertible debt or any form of Tier 2 capital (such as
limited life preferred stock, subordinated notes and debentures).
(b) Tier 1 capital less than 2 percent. Authority is delegated to
the Director and Deputy Director (DOS) and, where confirmed in writing
by the Director, to an associate director, to issue notifications to
primary regulator when the respondent depository institution's adjusted
Tier 1 capital is less than 2 percent of adjusted part 325 total assets
as defined in Sec. 303.2(b).
(c) Legal concurrence. The authority delegated under this section
shall be exercised only upon concurrent certification by the General
Counsel or, where confirmed in writing by the General Counsel, by his
or her designee, or, in cases where a regional director or deputy
regional director issues notifications to primary regulator, by the
appropriate regional counsel, that the allegations contained in the
findings of violations of law or regulation and/or unsafe or unsound
practices and/or unsafe or unsound condition, if proven, constitute a
basis for the issuance of a notification to primary regulator pursuant
to section 8(a) of the FDI Act (12 U.S.C. 1818(a)).
Sec. 303.262 Issuance of notice of intention to terminate insured
status under section 8(a) of the FDI Act (12 U.S.C. 1818(a)).
(a) General. Authority is delegated to the Director and Deputy
Director (DOS), and where confirmed in writing by the Director, to an
associate director, to issue notices of intent to terminate insured
status when the respondent depository institution has failed to correct
any violations of law or regulation and/or unsafe or unsound practices
and/or unsafe or unsound condition as specified in the relevant
notification to primary regulator.
(b) Legal concurrence. The authority delegated under this section
shall be exercised only upon concurrent certification by the General
Counsel or, where confirmed in writing by the General Counsel, by his
or her designee, that the allegations contained in the findings in the
notice of intention to terminate insured status of violations of law or
regulation and/or unsafe or unsound practices and/or unsafe or unsound
condition, if proven, constitute a basis for termination of the insured
status of the respondent depository institution pursuant to section
8(a) of the FDI Act (12 U.S.C. 1818(a)).
Sec. 303.263 Cease-and-desist actions under section 8(b) of the FDI
Act (12 U.S.C. 1818(b)).
(a) General. Authority is delegated to the Director and Deputy
Director (DOS), to the Director and Deputy Director (DCA), and where
confirmed in writing by the appropriate Director, to an associate
director and to the appropriate regional director and deputy regional
director to issue:
(1) Notices of charges; and
(2) Cease-and-desist orders (with or without a prior notice of
charges) where the respondent depository institution or individual
respondent consents to the issuance of the cease-and-desist order prior
to the filing by an administrative law judge of proposed findings of
fact, conclusions of law and recommended decision with the Executive
Secretary of the FDIC.
(b) Joint DOS-DCA action. The Director (DOS) and the Director (DCA)
may issue a joint notice of charges or
[[Page 44746]]
cease-and-desist order under this section, where such notice or order
addresses both safety and soundness and consumer compliance matters. A
joint notice or order will require the signatures of both Directors or
their Deputy Directors or associate directors, appropriate regional
directors or deputy regional directors.
(c) Legal concurrence. The authority delegated under this section
shall be exercised only upon concurrent certification by the General
Counsel or, where confirmed in writing by the General Counsel, by his
or her designee, or, in cases where a regional director or deputy
regional director issues the notice of charges or the stipulated cease-
and-desist order, by the appropriate regional counsel, that the
allegations contained in the notice of charges, if proven, constitute a
basis for the issuance of a section 8(b) order, or that the stipulated
cease-and-desist order is authorized under section 8(b) of the FDI Act,
and, upon its effective date, shall be a cease-and-desist order which
has become final for purposes of enforcement pursuant to the FDI Act.
Sec. 303.264 Temporary cease-and-desist orders under section 8(c) of
the FDI Act (12 U.S.C. 1818(c)).
(a) General. Authority is delegated to the Director and Deputy
Director (DOS) and to the Director and Deputy Director (DCA), and where
confirmed in writing by the appropriate Director, to an associate
director, to issue temporary cease-and-desist orders.
(b) Joint DOS-DCA action. The Director (DOS) and the Director (DCA)
may issue a joint temporary cease-and-desist order where such order
addresses both safety and soundness and consumer compliance matters. A
joint notice or order will require the signatures of both Directors or
their Deputy Directors or associate directors.
(c) Legal concurrence. The authority delegated under this section
shall be exercised only upon concurrent certification by the General
Counsel or, where confirmed in writing by the General Counsel, by his
or her designee, that the action is not inconsistent with section 8(c)
of the FDI Act (12 U.S.C. 1818(c)) and the temporary cease-and-desist
order is enforceable in a United States District Court.
Sec. 303.265 Removal and prohibition actions under section 8(e) of the
FDI Act (12 U.S.C. 1818(e)).
(a) General. Authority is delegated to the Director and Deputy
Director (DOS) or the Director and Deputy Director (DCA) and, where
confirmed in writing by the appropriate Director, to an associate
director, to issue:
(1) Notices of intention to remove an institution-affiliated party
from office or to prohibit an institution-affiliated party from further
participation in the conduct of the affairs of an insured depository
institution pursuant to sections 8(e) (1) and (2) of the FDI Act (12
U.S.C. 1818(e) (1) and (2)), and temporary orders of suspension
pursuant to section 8(e)(3) of the FDI Act (12 U.S.C. 1818(e)(3)); and
(2) Orders of removal, suspension or prohibition from participation
in the conduct of the affairs of an insured depository institution
where the institution-affiliated party consents to the issuance of such
orders prior to the filing by an administrative law judge of proposed
findings of fact, conclusions of law and a recommended decision with
the Executive Secretary of the FDIC.
(b) Joint DOS-DCA action. The Director (DOS) and the Director (DCA)
may issue joint notices and orders pursuant to this section where such
notice or order addresses both safety and soundness and consumer
compliance matters. A joint notice or order will require the signatures
of both directors or their deputy directors or associate directors.
(c) Legal concurrence. The authority delegated under this section
shall be exercised only upon concurrent certification by the General
Counsel or, where confirmed in writing by the General Counsel, by his
or her designee, that the allegations contained in the notice of
intent, if proven, constitute a basis for the issuance of a notice of
intent pursuant to section 8(e) of the FDI Act, or that the stipulated
section 8(e) order is not inconsistent with section 8(e) of the FDI
Act, and, upon issuance, shall be an order which has become final for
purposes of enforcement pursuant to the FDI Act.
Sec. 303.266 Suspension and removal action under section 8(g) of the
FDI Act (12 U.S.C. 1818(g)).
(a) General. Authority is delegated to the Director and Deputy
Director (DOS), to the Director and Deputy Director (DCA), and where
confirmed in writing by the appropriate Director, to an associate
director, to issue orders of suspension or prohibition to an
institution-affiliated party who is charged in any information,
indictment, or complaint, or who is convicted of or enters a pretrial
diversion or similar program, as to any criminal offense cited in or
covered by section 8(g) of the FDI Act, when such institution-
affiliated party consents to the suspension or prohibition.
(b) Delegation of authority where suspension or prohibition
mandated. Authority is delegated to the Director and Deputy Director
(DOS), to the Director and Deputy Director (DCA), and where confirmed
in writing by the appropriate Director, to an associate director, to
issue orders of suspension and prohibition to any institution-
affiliated party who is charged in any information, indictment, or
complaint, or who is convicted or enters a pretrial diversion or
similar program, as to any criminal offense involving mandatory
suspension or prohibition under sections 8(g)(1) (A)(ii) and (C)(ii) of
the FDI Act (12 U.S.C. 1818(g)(1) (A)(ii) and (C)(ii)), whether or not
such institution-affiliated party consents to the suspension or
prohibition.
(c) Joint DOS-DCA action. The Director (DOS) and the Director (DCA)
may issue joint orders pursuant to this section where such order
addresses both safety and soundness and consumer compliance matters. A
joint order will require the signatures of both Directors or their
Deputy Directors or associate directors.
(d) Legal concurrence. The authority delegated under this section
shall be exercised only upon concurrent certification by the General
Counsel or, where confirmed in writing by the General Counsel, by his
or her designee, that the action taken is not inconsistent with section
8(g) of the FDI Act (12 U.S.C. 1818(g)) and the order is enforceable in
a United States District Court pursuant to sections 8(i) and 8(j) of
the FDI Act (12 U.S.C. 1818 (i) and (j)).
Sec. 303.267 Termination of insured status under section 8(p) of the
FDI Act (12 U.S.C. 1818(p)).
(a) General. Authority is delegated to the Executive Secretary to
issue consent orders terminating the insured status of insured
depository institutions that have ceased to engage in the business of
receiving deposits other than trust funds pursuant to section 8(p) of
the FDI Act (12 U.S.C. 1818(p)).
(b) DOS and legal concurrence. The authority delegated under this
section shall be exercised only upon the recommendation and concurrence
of the Director or Deputy Director (DOS) and, when confirmed in writing
by the Director, an associate director, and upon the certification of
the General Counsel and, where confirmed in writing by the General
Counsel, by his or her designee, that the action taken is not
inconsistent with section 8(p) of the FDI Act (12 U.S.C. 1818(p)).
[[Page 44747]]
Sec. 303.268 Termination of insured status under section 8(q) of the
FDI Act (12 U.S.C. 1818(q)).
(a) General. Authority is delegated to the Executive Secretary to
issue consent orders terminating the insured status of an insured
depository institution where the liabilities of the insured institution
for deposits shall have been assumed by another insured depository
institution or depository institutions, whether by way of merger,
consolidation, or other statutory assumption, or pursuant to contract,
pursuant to section 8(q) of the FDI Act (12 U.S.C. 1818(q)).
(b) DOS and legal concurrence. The authority delegated under this
section shall be exercised only upon the recommendation and concurrence
of the Director or Deputy Director (DOS) or, when confirmed in writing
by the Director, an associate director, and upon the certification of
the General Counsel or, where confirmed in writing by the General
Counsel, by his or her designee, that the action taken is not
inconsistent with section 8(q) of the FDI Act (12 U.S.C. 1818(q)).
Sec. 303.269 Civil money penalties.
(a) General. Authority is delegated to the Director and Deputy
Director (DOS), to the Director and Deputy Director (DCA), and where
confirmed in writing by the appropriate Director, to an associate
director, to issue:
(1) Notice of assessment of civil money penalties; and
(2) Final orders to pay (with or without a prior notice of
assessment of civil money penalty) where the insured depository
institution or institution-affiliated party consents to the issuance of
the order to pay and waives, as applicable, receipt of a notice of
assessment of civil money penalty and the right to an administrative
hearing.
(b) Legal concurrence. The authority delegated under paragraph (a)
of this section shall be exercised only upon concurrent certification
by the General Counsel or, where confirmed in writing by the General
Counsel, by his or her designee, that the allegations contained in the
notice of assessment, if proven, constitute a basis for assessment of
civil money penalties, or that the stipulated final order to pay is
authorized under the FDI Act, and upon its effective date, shall be an
order to pay which has become final for purposes of enforcement
pursuant to the FDI Act.
(c) Joint DOS-DCA action. The Director (DOS) and the Director (DCA)
may issue joint notices pursuant to paragraph (a) of this section where
such notice addresses both safety and soundness and consumer compliance
matters. A joint notice will require the signatures of both Directors
or their Deputy Directors or associate directors.
(d) Prosecution of civil money penalty actions and collection of
civil money penalties. Authority is delegated to the General Counsel
or, where confirmed in writing, to his or her designee, to prosecute
administrative civil money penalty actions and to collect civil money
penalties under this section.
Sec. 303.270 Notices of assessment under section 5(e) of the FDI Act
(12 U.S.C. 1815(e)).
(a) General. Authority is delegated to the Director and Deputy
Director (DOS), and where confirmed in writing by the Director, to an
associate director, to issue notices of assessment of liability to
commonly controlled insured depository institutions for the estimated
amount of loss to the deposit insurance funds.
(b) Legal concurrence. The authority delegated under this section
shall be exercised only upon concurrent certification by the General
Counsel or, where confirmed in writing by the General Counsel, by his
or her designee, that the action taken is not inconsistent with section
5(e) of the FDI Act (12 U.S.C. 1815(e)).
Sec. 303.271 Prompt corrective action directives and capital plans
under section 38 of the FDI Act (12 U.S.C. 1831o) and part 325 of this
chapter.
(a) General--notices, directives and orders. Authority is delegated
to the Director and Deputy Director (DOS), and where confirmed in
writing by the Director, to an associate director, and to the
appropriate regional director and deputy regional director, to accept,
reject, require new or revised capital restoration plans, or make any
other determinations with respect to the implementation of capital
restoration plans and, in accordance with subpart Q of part 308 of this
chapter, to issue:
(1) Notices of intent to issue capital directives;
(2) Directives to insured state nonmember banks that fail to
maintain capital in accordance with the requirements contained in part
325 of this chapter;
(3) Notices of intent to issue prompt corrective action directives,
except directives issued pursuant to section 38(f)(2)(F)(ii) of the FDI
Act (12 U.S.C. 1831(f)(2)(F)(ii));
(4) Directives to insured depository institutions pursuant to
section 38 of the FDI Act (12 U.S.C. 1831o), with or without the
consent of the respondent bank to the issuance of the directive, except
directives issued pursuant to section 38(f)(2)(F)(ii) of the FDI Act
(12 U.S.C. 1831o(f)(2)(F)(ii));
(5) Directives to insured depository institutions requiring
immediate action or imposing proscriptions pursuant to section 38 of
the FDI Act (12 U.S.C. 1831o) and part 325 of this chapter, and in
accordance with the requirements contained in Sec. 308.201(a)(2) of
this chapter;
(6) Notices of intent to reclassify insured banks pursuant to
Secs. 325.103(d) and 308.202 of this chapter;
(7) Directives to reclassify insured banks pursuant to
Secs. 325.103(d) and 308.202 of this chapter with the consent of the
respondent bank to the issuance of the directive; and
(8) Orders on request for informal hearings to reconsider
reclassifications and designate the presiding officer at the hearing
pursuant to Sec. 308.202 of this chapter.
(b) Notices--dismissal of director and officer. Authority is
delegated to the Director and Deputy Director (DOS) and, where
confirmed in writing by the Director, to an associate director, to:
(1) Issue notices of intent to issue a prompt corrective action
directive ordering the dismissal from office of a director or senior
executive officer pursuant to section 38(f)(2)(F)(ii) of the FDI Act
(12 U.S.C. 1831o(f)(2)(F)(ii)) and in accordance with the requirements
contained in Sec. 308.203 of this chapter;
(2) Issue directives ordering the dismissal from office of a
director or senior executive officer pursuant to section
38(f)(2)(F)(ii) of the FDI Act (12 U.S.C. 1831o(f)(2)(F)(ii)); and
(3) Issue orders of dismissal from office of a director or senior
executive officer pursuant to section 38(f)(2)(F)(ii) of the FDI Act
(12 U.S.C. 1831o(f)(2)(F)(ii)) where the individual consents to the
issuance of such order prior to the filing of a recommendation by the
presiding officer with the FDIC.
(c) Reclassification of institution other than on basis of capital.
Authority is delegated to the Director and Deputy Director (DOS), and
where confirmed in writing by the Director, to an associate director,
to:
(1) Act on recommended decisions of presiding officers pursuant to
a request for reconsideration of a reclassification in accordance with
the requirements contained in Sec. 308.202 of this chapter; and
(2) Act on requests for rescission of a reclassification.
(d) Appeals of immediately effective PCA directives. Authority is
delegated to the Director and Deputy Director (DOS), and where
confirmed in writing by the Director, to an associate director, to act
on appeals from immediately effective directives issued pursuant to
section 38
[[Page 44748]]
of the FDI Act (12 U.S.C. 1831o) and Sec. 308.201 of this chapter.
(e) Informal hearings. Authority is delegated to the Executive
Secretary of the FDIC to issue orders for informal hearings and
designate presiding officers on directives issued pursuant to section
38(f)(2)(F)(ii) of the FDI Act (12 U.S.C. 1831o(f)(2)(F)(ii)).
(f) Legal concurrence. The authority delegated under this section
shall be exercised only upon the concurrent certification by the
General Counsel or, where confirmed in writing by the General Counsel,
by his or her designee, or, in cases where a regional director or
deputy regional director issues a notice, directive, or order, by the
appropriate regional counsel, that the action taken is not inconsistent
with section 38 of the FDI Act (12 U.S.C. 1831o) and part 325 of this
chapter.
Sec. 303.272 Investigations under section 10(c) of the FDI Act (12
U.S.C. 1820(c)).
(a) Authority of division directors. Authority is delegated to the
Director and Deputy Director (DOS), to the Director and Deputy Director
(DCA), to the Director and Deputy Director of the Division of
Resolutions and Receiverships, and where confirmed in writing by the
appropriate Director, to an associate director, and to the appropriate
regional director and deputy regional director, to issue an order of
investigation pursuant to section 10(c) of the FDI Act (12 U.S.C.
1820(c)) and subpart K of part 308 of this chapter.
(b) Authority of General Counsel. Authority is delegated to the
General Counsel, and where confirmed in writing by the General Counsel,
to his or her designee, to issue an order of investigation pursuant to
sections 8 through 13 of the FDI Act (12 U.S.C. 1818-1823), as
appropriate, and subpart K of part 308 of this chapter.
(c) Concurrence in certain situations. In issuing an order of
investigation that pertains to an open insured depository institution
or an institution making application to become an insured depository
institution, or a post-conservatorship or post-receivership order of
investigation, the authority delegated under this section shall be
exercised only upon the concurrent execution of the order of
investigation by the Director or Deputy Director (DOS), or the Director
or Deputy Director (DCA), or the Director or Deputy Director of the
Division of Resolutions and Receiverships, their respective associate
directors, and the General Counsel or his or her designee. In the case
of a joint order of investigation, such authority shall be exercised
only upon the concurrent execution of the order of investigation by
both Directors or Deputy Directors, or their associate directors, and
upon the certification and execution of the order by the General
Counsel or his or her designee.
Sec. 303.273 Unilateral settlement offers.
(a) General. Authority is delegated to the Director and Deputy
Director (DOS), to the Director and Deputy Director (DCA), and where
confirmed in writing by the appropriate Director, to an associate
director, to accept, deny or enter into negotiations for or regarding
settlement and settlement offers with insured depository institutions,
or with an institution-affiliated party, pertaining to or arising in
connection with a proceeding under part 308 of this chapter. In cases
where a proceeding under part 308 of this chapter was issued jointly by
DOS and DCA, both Directors or Deputy Directors, or their associate
directors, must agree to accept, deny or enter into negotiations
regarding settlement and settlement offers with insured depository
institutions or with an institution-affiliated party.
(b) Legal concurrence. The authority delegated under this section
shall be exercised only upon concurrent certification by the General
Counsel or, where confirmed in writing by the General Counsel, by his
or her designee, that the action taken is not inconsistent with the FDI
Act.
Sec. 303.274 Acceptance of written agreements.
(a) Written agreements under section 8(a) of the FDI Act. Authority
is delegated to the Director and Deputy Director (DOS), and where
confirmed in writing by the Director, to an associate director, to
accept or enter into any written agreements with insured depository
institutions, or any institution-affiliated party pertaining to any
matter which may be addressed by the FDIC pursuant to section 8(a) of
the FDI Act (12 U.S.C. 1818(a)).
(b) Written agreements in lieu of cease-and-desist orders.
Authority is delegated to the Director and Deputy Director (DOS) and to
the Director and Deputy Director (DCA), and where confirmed in writing
by the appropriate Director, to an associate director, to accept or
enter into any written agreements with insured depository institutions,
or any institution-affiliated party pertaining to any safety and
soundness or consumer compliance matter which may be addressed by the
FDIC pursuant to section 8(b) of the FDI Act (12 U.S.C. 1818(b)) or any
other provision of the FDI Act which addresses safety and soundness or
consumer compliance matters. In cases which would address both safety
and soundness and consumer compliance matters, the Directors, or their
designees, may accept or enter into joint written agreements with
insured depository institutions or any institution-affiliated party.
(c) Written agreements as condition attendant to FDIC filings
contained in this part. Authority is delegated to the Director and
Deputy Director (DOS), and to the Director and Deputy Director (DCA),
as appropriate, and, where confirmed in writing by the appropriate
Director, to an associate director, and to the appropriate regional
director and deputy regional director, to accept or enter into any
written agreements with any insured depository institution, any
institution-affiliated party or any other petitioner which contains
conditions precedent to the FDIC's non-objection to a filing pursuant
to this part. A written agreement under this paragraph (c) shall not
affect an institution's rating for prompt corrective action purposes,
unless the written agreement expressly provides to the contrary.
(d) Legal concurrence. The authority delegated under this section
shall be exercised only upon concurrent certification by the General
Counsel or, where confirmed in writing by the General Counsel, by his
or her designee, that the action taken is not inconsistent with the FDI
Act.
Sec. 303.275 Modifications and terminations of enforcement actions and
orders.
(a) Termination of section 8(a) (12 U.S.C. 1818(a)) orders and
agreements. Authority is delegated to the Director and Deputy Director
(DOS) and, where confirmed in writing by the Director, to an associate
director, and to the appropriate regional director and deputy regional
director, to terminate outstanding section 8(a) orders and agreements
and to terminate actions and agreements which are pending pursuant to
section 8(a) of the FDI Act when the depository institution is closed
by a federal or state authority or merges into another institution.
(b) Termination of section 8(a) (12 U.S.C. 1818(a)) notification to
primary regulator issued by Board of Directors. Authority is delegated
to the Director and Deputy Director (DOS), and where confirmed in
writing by the Director, to an associate director, and to the
appropriate regional director and deputy regional director, to
terminate notifications to primary regulator issued by the Board of
Directors pursuant to section 8(a) of the FDI Act where the
[[Page 44749]]
respondent depository institution is in material compliance with such
notification or for good cause shown.
(c) Termination of section 8(a) (12 U.S.C. 1818(a)) notice of
intent to terminate insured status. In cases where the Board of
Directors has issued a notice of intent to terminate insured status
pursuant to section 8(a) of the FDI Act, authority is delegated to the
Director and Deputy Director (DOS) and, where confirmed in writing by
the Director, to an associate director, and to the appropriate regional
director and deputy regional director, to terminate the actions pending
pursuant to such notice of intent to terminate insured status where the
respondent depository institution is in material compliance with the
applicable notification to primary regulator or for good cause shown.
(d) Sections 8(b) and 8(c)(12 U.S.C. 1818(b) and (c)) actions and
orders. (1) Authority is delegated to the Director and Deputy Director
(DOS) and to the Director and Deputy Director (DCA), as appropriate
and, where confirmed in writing by the appropriate Director, to an
associate director, and to the appropriate regional director and deputy
regional director, to terminate outstanding section 8(b) and section
8(c) orders and agreements and to terminate actions and agreements
which are pending pursuant to sections 8(b) and 8(c) of the FDI Act
when the depository institution is closed by a federal or state
authority or merges into another institution. In cases where a joint
order was issued by DOS and DCA, both Directors, or their Deputy
Directors or associate directors, or the appropriate regional directors
or deputy regional directors, must execute the order of termination.
(2) Authority is delegated to the Director and Deputy Director
(DOS) and to the Director and Deputy Director (DCA), as appropriate,
and where confirmed in writing by the appropriate Director, to an
associate director, and to the appropriate regional director and deputy
regional director, to terminate outstanding section 8(b) orders issued
by the Board of Directors either where material compliance with the
section 8(b) order has been achieved by the respondent depository
institution or individual respondent or for good cause shown. In cases
where an order issued by the Board of Directors addresses both safety
and soundness and consumer compliance matters, both Directors or Deputy
Director, or the designees of the Directors, must execute the order of
termination.
(e) Modification and termination of section 8(e) (12 U.S.C.
1818(e)) orders and actions. Authority is delegated to the Director and
Deputy Director (DOS) and the Director and Deputy Director (DCA), as
appropriate, and where confirmed in writing by the appropriate
Director, to an associate director, to modify or terminate outstanding
section 8(e) orders and pending actions and to grant consent under
section 8(e)(7)(B) of the Act (12 U.S.C. 1818(e)(7)(B)) for the
modification or termination of an outstanding section 8(e) order issued
by another Federal financial institution regulatory agency where:
(1) The respondent has demonstrated his or her fitness to
participate in any manner in the conduct of the affairs of an insured
depository institution; and
(2) The respondent has shown that his or her participation would
not pose a risk to the institution's safety and soundness; and
(3) The respondent has proven that his or her participation would
not erode public confidence in the institution.
(f) Modification and termination of section 8(g) (12 U.S.C.
1818(g)) orders and actions. Pursuant to section 8(j) of the FDI Act
(12 U.S.C. 1818(j)), authority is delegated to the Director and Deputy
Director (DOS) and the Director and Deputy Director (DCA), as
appropriate, and where confirmed in writing by the appropriate
Director, to an associate director, to approve requests for
modifications or terminations of section 8(g) orders issued by either
the Board of Directors or under delegated authority.
(g) Other matters not specifically addressed. For all outstanding
or pending notices, actions, orders, directives and agreements not
specifically addressed in this subpart, the delegations of authority
contained in this subpart shall include the authority to modify or
terminate any outstanding or pending notice, order, directive or
agreement issued pursuant to delegated authority, as may be
appropriate.
(h) Termination of pending actions--general. Any pending
enforcement action may be dismissed or terminated by the Director or
Deputy Director of DOS or DCA, as appropriate, at any time prior to the
commencement of a hearing on the merits by an administrative law judge.
Once a hearing on the merits has been convened by an administrative law
judge, a pending enforcement action may be dismissed or terminated by
stipulation or consent of the affected parties no later than 14 days
after the administrative law judge has closed the record of the
hearing. Only the FDIC Board of Directors may terminate or dismiss an
enforcement action more than 14 days after the record has been closed
by an administrative law judge.
(i) Legal concurrence. Any dismissals, modifications or
terminations pursuant to this section shall be exercised only upon
concurrent certification by the General Counsel or, where confirmed in
writing by the General Counsel, by his or her designee, or, in cases
where a regional director or deputy regional director acts under
delegated authority, by the appropriate regional counsel, that the
action taken is not inconsistent with the FDI Act.
Sec. 303.276 Enforcement of outstanding enforcement orders.
After consultation with the Director (DOS) or the Director (DCA),
or a Deputy Director or an associate director, or the appropriate
regional director or deputy regional director, as may be appropriate,
the General Counsel or designee is authorized to initiate and prosecute
any action to enforce any effective and outstanding order or temporary
order issued under 12 U.S.C. 1817, 1818, 1820, 1828, 1829, 1831l,
1831o, 1972, or 3909, or any provision thereof, in the appropriate
United States District Court.
Sec. 303.277 Compliance plans under section 39 of the FDI Act (12
U.S.C. 1831p-1) (standards for safety and soundness) and part 308 of
this chapter.
(a) Compliance plans. Authority is delegated to the Director and
Deputy Director (DOS), and where confirmed in writing by the Director,
to an associate director, and to the appropriate regional director and
deputy regional director, to accept, to reject, to require new or
revised compliance plans, or to make any other determinations with
respect to the implementation of compliance plans pursuant to subpart R
of part 308 of this chapter.
(b) Notices, orders, and other action. Authority is delegated to
the Director and Deputy Director (DOS) and, where confirmed in writing
by the Director, to an associate director, to:
(1) Issue notices of intent to issue an order requiring the bank to
correct a safety and soundness deficiency or to take or refrain from
taking other actions pursuant to section 39 of the FDI Act (12 U.S.C.
1831p-1) and in accordance with the requirements contained in
Sec. 308.304(a)(1) of this chapter;
(2) Issue an order requiring the bank immediately to correct a
safety and soundness deficiency or to take or refrain from taking other
actions pursuant to section 39 of the FDI Act (12 U.S.C. 1831p-1) and
in accordance with the requirements contained in Sec. 308.304(a)(2) of
this chapter; and
(3) Act on requests for modification or rescission of an order.
[[Page 44750]]
(c) Legal concurrence--compliance plans. The authority delegated
under this section as to compliance plans shall be exercised only upon
the concurrent certification by the General Counsel or, where confirmed
in writing by the General Counsel, by his or her designee, or, in cases
where a regional director or deputy regional director accepts, rejects
or requires new or revised compliance plans or makes any other
determinations with respect to compliance plans, by the appropriate
regional counsel, that the action taken is not inconsistent with the
FDI Act.
(d) Legal concurrence--notices and orders. The authority delegated
under this section as to notices and orders shall be exercised only
upon the concurrent certification by the General Counsel or, where
confirmed in writing by the General Counsel, by his or her designee
that the allegations contained in the notice of intent, if proven,
constitute a basis for the issuance of a final order pursuant to
section 39 of the FDI Act or that the issuance of a final order is not
inconsistent with section 39 of the FDI Act or that the stipulated
section 39 order is not inconsistent with section 39 of the FDI Act and
is an order which has become final for purposes of enforcement pursuant
to the FDI Act.
Sec. 303.278 Enforcement matters where authority is not delegated.
Without limiting the Board of Directors' authority, the Board of
Directors has retained the authority to act upon the following
enforcement matters:
(a) Notifications to primary regulator under section 8(a) of the
FDI Act (12 U.S.C. 1818(a)) when the respondent bank's book capital is
at or above 2 percent of total assets and adjusted Tier 1 capital is at
or above 2 percent of adjusted part 325 total assets as defined in
Sec. 303.2(b);
(b) Orders terminating insured status under section 8(a) of the FDI
Act (12 U.S.C. 1818(a));
(c) Cease-and-desist orders under section 8(b) of the FDI Act (12
U.S.C. 1818(b)) when the respondent depository institution or
individual does not consent to the issuance of such orders;
(d) Temporary orders of suspension and prohibition under section
8(e) of the FDI Act (12 U.S.C. 1818(e));
(e) Orders of removal, suspension or prohibition from participation
in the conduct of the affairs of an insured depository institution
under section 8(e) of the FDI Act (12 U.S.C. 1818(e)) when the
individual does not consent to the issuance of such orders;
(f) Orders of suspension or prohibition to an indicted director,
officer or person participating in the conduct of the affairs of an
insured depository institution and orders of removal or prohibition to
a convicted director, officer or person participating in the conduct of
the affairs of an insured depository institution under section 8(g) of
the FDI Act (12 U.S.C. 1818(g)) when such director, officer or person
does not consent to the suspension or removal;
(g) Final orders to pay civil money penalties where respondents do
not consent to the assessment of civil money penalties and hearings
have been held;
(h) Denials of requests for modifications or terminations of orders
issued pursuant to section 8(g) of the FDI Act;
(i) Grants or denials of requests for reinstatement to office,
whether or not an informal hearing has been requested, pursuant to
Sec. 308.203 of this chapter; and
(j) Grants or denials of requests for waivers of liability of
commonly controlled insured depository institutions as to assessments
under section 5(e) of the FDI Act (12 U.S.C. 1815(e)).
PART 333--EXTENSION OF CORPORATE POWERS
2. The authority citation for part 333 continues to read as
follows:
Authority: 12 U.S.C. 1816, 1818, 1819 (``Seventh'', ``Eighth''
and ``Tenth''), 1828, 1828(m), 1831p-1(c).
3. Section 333.4 is amended by adding the word ``and'' at the end
of paragraph (d)(2), by removing the words ``; and'' at the end of
paragraph (d)(3) and adding a period in their place, by revising the
last sentence of paragraph (a), removing paragraphs (b) and (d)(4), and
redesignating paragraphs (c), (d), (e) and (f) as paragraphs (b), (c),
(d) and (e) respectively, to read as follows:
Sec. 333.4 Conversions from mutual to stock form.
(a) * * * As provided in Sec. 303.162 of this chapter, the Board of
Directors of the FDIC may grant a waiver in writing from any
requirement of this section for good cause shown.
* * * * *
PART 337--UNSAFE AND UNSOUND BANKING PRACTICES
4. The authority citation for part 337 is revised to read as
follows:
Authority: 12 U.S.C. 375a(4), 375b, 1816, 1818(a), 1818(b),
1819, 1820(d)(10), 1821f, 1828(j)(2), 1831, 1831f-l.
5. Section 337.6 is amended by revising paragraph (a)(5)(iii),
adding a sentence at the end of paragraph (c), removing paragraphs (d),
(e), and (f) and redesignating paragraphs (g) and (h) as paragraphs (d)
and (e), respectively, to read as follows:
Sec. 337.6 Brokered deposits.
(a) * * *
(5) * * *
(iii) Notwithstanding paragraph (a)(5)(ii) of this section, the
term deposit broker includes any insured depository institution that is
not well-capitalized, and any employee of any such insured depository
institution, which engages, directly or indirectly, in the solicitation
of deposits by offering rates of interest (with respect to such
deposits) which are significantly higher than the prevailing rates of
interest on deposits offered by other insured depository institutions
in such depository institution's normal market area.
* * * * *
(c) * * * For filing requirements, consult 12 CFR 303.243.
* * * * * *
PART 341--REGISTRATION OF SECURITIES TRANSFER AGENTS
6. The authority citation for part 341 continues to read as
follows:
Authority: Secs. 2, 3, 17, 17A and 23(a), Securities Exchange
Act of 1934, as amended (15 U.S.C. 78b, 78c, 78q, 78q-1 and 78w(a)).
7. Section 341.7 is added to read as follows:
Sec. 341.7 Delegation of authority.
(a) Except as provided in paragraph (b) of this section, authority
is delegated to the Director and Deputy Director (DOS) and, where
confirmed in writing by the Director, to an associate director and the
appropriate regional director and deputy regional director, to act on
disclosure matters under and pursuant to sections 17 and 17A of the
Securities Exchange Act of 1934 (15 U.S.C. 78).
(b) Authority to act on disclosure matters is retained by the Board
of Directors when such matters involve exemption from registration
requirements pursuant to section 17A(c)(1) of the Securities Exchange
Act of 1934 (15 U.S.C. 78q-1(c)(1)).
PART 347--INTERNATIONAL BANKING
8. The authority to citation for part 347 continues to read as
follows:
Authority: 12 U.S.C. 1813, 1815, 1817, 1819, 1820, 1828, 3103,
3104, 3105, 3108; Title IX, Pub. L. 98-181, 97 Stat. 1153.
[[Page 44751]]
Subpart D [Removed]
9. In part 347, subpart D is removed.
PART 359--GOLDEN PARACHUTE AND INDEMNIFICATION PAYMENTS
10. The authority citation for part 359 continues to read as
follows:
Authority: 12 U.S.C. 1828(k).
11. Section 359.6 is revised to read as follows:
Sec. 359.6 Filing instructions.
Requests to make excess nondiscriminatory severance plan payments
pursuant to Sec. 359.1(f)(2)(v) and golden parachute payments permitted
by Sec. 359.4 shall be submitted in writing to the appropriate regional
director (DOS). For filing requirements, consult 12 CFR 303.244. In the
event that the consent of the institution's primary federal regulator
is required in addition to that of the FDIC, the requesting party shall
submit a copy of its letter to the FDIC to the institution's primary
federal regulator. In the case of national banks, such written requests
shall be submitted to the OCC. In the case of state member banks and
bank holding companies, such written requests shall be submitted to the
Federal Reserve district bank where the institution or holding company,
respectively, is located. In the case of savings associations and
savings association holding companies, such written requests shall be
submitted to the OTS regional office where the institution or holding
company, respectively, is located. In cases where only the prior
consent of the institution's primary federal regulator is required and
that agency is not the FDIC, a written request satisfying the
requirements of this section shall be submitted to the primary federal
regulator as described in this section.
By order of the Board of Directors.
Dated at Washington, D.C., this 7th day of July, 1998.
Federal Deposit Insurance Corporation.
James LaPierre,
Deputy Executive Secretary.
[FR Doc. 98-21487 Filed 8-19-98; 8:45 am]
BILLING CODE 6714-01-P
[Federal Register: August 20, 1998 (Volume 63, Number 161)]
[Notices]
[Page 44752-44761]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20au98-115]
[[Page 44752]]
FEDERAL DEPOSIT INSURANCE CORPORATION
Applications for Deposit Insurance
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Statement of policy.
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SUMMARY: As part of the FDIC's systematic review of its regulations and
written policies under section 303(a) of the Riegle Community
Development and Regulatory Improvement Act of 1994, the FDIC is
revising its Statement of Policy on ``Applications for Deposit
Insurance.'' These revisions include changes to the FDIC's policies
regarding initial capitalization when a de novo bank is organized by
certain well managed and well capitalized holding companies. Policies
regarding stock benefit plans are amended and regional directors are
given more discretion to act under delegated authority. Changes are
also made to provide guidance for proposed depository institutions
which would be owned by domestic governmental units, to eliminate
outdated information, and to reflect current polices and practices that
have not previously been incorporated into the Statement of Policy.
EFFECTIVE DATE: October 1, 1998.
FOR FURTHER INFORMATION CONTACT: Christie A. Sciacca, Associate
Director, Division of Bank Supervision, (202) 898-3671; Jesse G.
Snyder, Assistant Director, Division of Supervision, (202) 898-6915;
Mark S. Schmidt, Associate Director, Division of Supervision, (202)
898-6918; John M. Lane, Assistant Director, Division of Supervision,
(202) 898-6771; Marc J. Goldstrom, Counsel, Regulation and Legislation
Section, Legal Division, (202) 898-8807; or Mark Mellon, Counsel,
Regulation and Legislation Section, Legal Division, (202) 898-3854,
FDIC, 550 17th Street, N.W., Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION: This Statement of Policy is a revision of
the FDIC's Statement of Policy Regarding Applications for Deposit
Insurance adopted on April 13, 1992 (57 FR 12822) (the ``1992 Statement
of Policy''). Section 303(a) of the Riegle Community Development and
Regulatory Improvement Act of 1994 (CDRIA) (12 U.S.C. 4803(a)) requires
the FDIC to streamline and modify its regulations and written policies
in order to improve efficiency, reduce unnecessary costs, and eliminate
unwarranted constraints on credit availability. Section 303(a) also
requires the FDIC to remove inconsistencies and outmoded and
duplicative requirements from its regulations and written policies.
Pursuant to this statute, the FDIC published a proposed Statement of
Policy on ``Applications for Deposit Insurance'' in the Federal
Register on October 9, 1997 (62 FR 52869). The proposed Statement of
Policy was published in conjunction with a notice of proposed
rulemaking in the Federal Register on October 9, 1997 (62 FR 52810)
which would amend 12 CFR part 303 (and other FDIC regulations),
including subpart B, concerning the procedures for an applicant to
follow in applying for deposit insurance. In connection with the
publication of this Statement of Policy, the FDIC has published a final
rule amending part 303 (and other FDIC regulations) elsewhere in
today's Federal Register.
Eleven commenters submitted comments in response to the proposal.
The FDIC has carefully considered these comments. The comments are
summarized below in the discussion of significant changes to the
Statement of Policy.
Initial Offering of Stock
The proposed Statement of Policy provided that all stock of a
particular class in the initial offering should be sold at the same
price and have the same voting rights. Insiders are generally not
permitted to acquire a separate class of stock with greater voting
rights. Moreover, insiders should not be offered stock at a price more
favorable than the price for other subscribers.
One commenter objected to these provisions on the basis that
potential investors are adequately protected by the disclosure
provisions of the federal securities laws and the ``fairness''
provisions of state securities laws. Moreover, the commenter argued
that such unnecessary restrictions discourage investment in new
depository institutions.
The FDIC continues to believe that these restrictions are
appropriate. Price disparities or greater voting rights provide
insiders with a means to gain control disproportionate to their
investments. Furthermore, allowing insiders to purchase stock at a
discount provides an immediate appreciation of the insiders'
investments resulting from the mere establishment of the depository
institution without regard to the institution's financial success and
without greater risk to the insider than that borne by other investors.
Such arrangements may encourage the formation of depository
institutions for speculative purposes. The Statement of Policy
specifically discusses the use of options as a means of compensating
insiders for money placed at risk during the organization phase, as
compensation for services rendered, and as a reward for contributions
to the success of the enterprise. Such arrangements differ
significantly from ``cheap stock'' in that an individual will benefit
from options granted with a strike price of fair market value at the
time of issuance only if the institution is financially successful.
Therefore, these provisions have been adopted as proposed.
Wholly Owned Subsidiary of a Holding Company
The 1992 Statement of Policy required an initial capitalization in
an amount that is sufficient to provide at least an 8% Tier 1 leverage
capital to total assets ratio at the end of the third year of
operation. The proposed Statement of Policy provided that, in certain
circumstances, the amount of the initial capital injection for a de
novo institution may be reduced to a minimum of $2 million or an amount
that is sufficient to provide an 8% Tier 1 leverage capital ratio at
the end of the first year of operation, or sufficient to meet any
minimum standards established by the chartering authority, whichever is
greater. This option would be available when the proposed depository
institution is to be formed as a wholly owned subsidiary of a holding
company which meets the standards established for an ``eligible holding
company,'' as set forth in Sec. 303.22 of the FDIC's regulations. The
holding company would also be required to provide a written commitment
to maintain the proposed depository institution's Tier 1 leverage
capital ratio at no less than 8% throughout the first three years of
operation. This revision would allow a well-managed holding company to
provide less initial capital than would have been required under the
former standard. This change is considered appropriate in recognition
of the FDIC's ability to reasonably quantify the financial capacity of
the parent organization, and to allow the holding company to more
efficiently allocate the resources of the entire organization. This
amendment will permit the appropriate FDIC regional director (DOS) to
act on proposals that contain these provisions when the other factors
necessary for delegated authority have been met.
One commenter suggested that the required capital level for a de
novo institution be well capitalized, rather than an 8% Tier 1 leverage
capital ratio, with the agency retaining authority to require a higher
amount. The FDIC believes that a de novo institution requires a higher
level of capitalization during its formative years than does a
[[Page 44753]]
mature institution with an established record of sound performance.
Accordingly, the FDIC has not adopted the commenter's suggestion and
these provisions have been adopted as proposed.
Operating Insured Offices
In certain instances, the proposal allowed the applicant to request
that the benchmark for evaluating the adequacy of capital be such that
the proposed depository institution would be classified as well
capitalized, as defined by its primary federal regulator. This option
would be available when the proposal involves the formation of a
depository institution through the acquisition of an existing insured
operating office (or offices). Criteria established for this lower
initial capital benchmark are that the acquisition involves
substantially all of the assets and liabilities of the operating
insured office, that the applicant provides reasonable evidence that
the de novo institution's operations will be stabilized at inception,
and that the proponent for the applicant is either an eligible holding
company or an established banking group. The proposed Statement of
Policy used an identified chain banking group as an example of one type
of ``established banking group.'' The term also is intended to cover a
group of individuals who have served as directors or officers of an
operating insured depository institution. For either a chain banking
group or a group of individuals to be considered an established group,
the association must be in existence for at least three years. This
provision had been added in recognition that deposit insurance for a
depository institution being established from operating offices does
not present the same risks to the insurance funds as does the
chartering of a true de novo institution. This provision sought to
remove capital requirement inequities that may have existed under prior
procedures with respect to certain corporate reorganization activities.
This amendment would also permit the appropriate FDIC regional director
(DOS) to act on proposals that contain these provisions when the other
factors necessary for delegated authority have been met. Two commenters
stated that they did not object to this provision and it has been
adopted without change from the proposal.
Stock Financing by Directors, Officers, and 10% Shareholders
The proposal revised guidelines for borrowing limitations by
directors, officers, and 10% shareholders to finance their purchases of
stock in the proposed institution. The 1992 Statement of Policy
provided that direct or indirect borrowings by an individual insider of
more than 75% of the purchase price of the stock subscribed, or more
than 50% of the purchase price of the aggregate stock subscribed by
directors, officers, and 10% shareholders as a group, is presumed to be
excessive. The 1992 Statement of Policy has been amended by deleting
the statement that borrowing arrangements in excess of the referenced
percentage limits will ordinarily be presumed to be excessive; however,
borrowing arrangements would still be carefully reviewed. The burden of
providing appropriate information supporting borrowing arrangements
will remain with the affected insiders. This amendment would permit the
appropriate FDIC regional director (DOS) to evaluate all insider
borrowing arrangements on their own merits, without having a set limit
for those that will be considered excessive or otherwise inappropriate.
This amendment also would permit the appropriate FDIC regional director
(DOS) to act on the proposal when insider borrowing arrangements are
not detrimental to the institution if the other factors necessary for
delegated authority have also been met.
Similarly, borrowings by a holding company to capitalize a proposed
depository institution would be evaluated in the context of the holding
company's consolidated operations, rather than basing such evaluation
on a 50% limit of the total initial capital of the proposed depository
institution. The borrowing arrangement would need to meet any leverage
guidelines established by the holding company's primary federal
regulator and be reasonable. This amendment will permit the appropriate
FDIC regional director (DOS) to act on a proposal that involves holding
company debt financing of more than 50% when the other factors
necessary for delegated authority have been met. Three commenters
specifically endorsed this portion of the proposal and the FDIC adopts
these provisions as proposed.
Stock Benefit Plans
The proposed Statement of Policy recognized that it is becoming
increasingly common for organizers of de novo depository institutions
to propose stock benefit plans. Such plans often include not only
active officers, but also directors and, in some cases, incorporators
or organizers (collectively, ``incorporators''). The proposed Statement
of Policy provided for participation of active officers, outside
directors, and incorporators in stock benefit plans.
The proposal provided that stock benefit plans must be fully
disclosed to all potential subscribers and a description of any such
plans must be included in an application for deposit insurance. Stock
benefit plans should encourage the continued involvement of the
participants and serve as an incentive for the successful operation of
the institution. The proposed Statement of Policy further indicated
that stock benefit plans should contain no feature that would encourage
speculative or high risk activities, or serve as an obstacle to or
otherwise impede the sale of additional stock to the public.
Guidelines were included in the proposed Statement of Policy as
standards to be used in evaluating the appropriateness of stock benefit
plans. These guidelines were intended to provide the applicant with
basic guidance and to promote consistency within the FDIC itself. Some
concepts were retained from the 1992 Statement of Policy, such as a
maximum 10-year limit on options. The FDIC's practice of requiring that
the exercise price be established at no less than fair market value at
the time of the grant was explicitly stated. New concepts were added
which emphasize that the plan should encourage the continued
involvement of the proposed management. A vesting period covering the
first three years of operation would be appropriate to assure continued
involvement. A three-year vesting period was selected based on the
FDIC's experience that a three-year period provides reasonable
assurance that the business plan will have been fully implemented and
stabilized operations achieved. An additional requirement was that a
stock benefit plan provide for an exercise or forfeiture clause which
may be invoked by the depository institution's primary federal
regulator in the event the capital falls below minimum requirements.
This was considered necessary to ensure that the dilutive effects of
outstanding stock options will not make it unduly difficult for
institutions in need of additional capital to increase capitalization
in a timely manner.
The proposed Statement of Policy indicated that the FDIC will
separately review stock benefit plans established to compensate
incorporators who have placed personal funds at risk to finance the
organization of the institution or who have provided professional
services in conjunction with the organization. Since these plans were
envisioned as compensating
[[Page 44754]]
incorporators for services already rendered, vesting or restrictions on
transferability were not required.
The proposed Statement of Policy also provided that stock
appreciation rights and similar plans that involve a cash payment based
directly on the market value of the depository institution's stock are
specifically identified as objectionable. These types of plans can
result in an expense which would reduce the depository institution's
capital. Such compensation plans cannot be quantified in relation to
the capital adequacy factor and could be detrimental to the overall
capital of a depository institution, particularly in its formative
years. The proposed Statement of Policy also provided that stock
benefit plans offered by de novo holding companies in conjunction of a
new depository institution will be reviewed in the same manner as if
the plan were being established by the proposed depository institution.
The FDIC received five comments in response to the stock benefit
plan provisions of the Statement of Policy. The comments were generally
supportive of the changes. However, three commenters raised specific
concerns.
Stock appreciation rights and similar plans that involve a cash
payment based directly on the market value of the depository
institution's stock were deemed to be unacceptable. Two of the
commenters questioned this prohibition. The FDIC continues to believe
that these types of plans tend to reduce the depository institution's
capital in contrast to option plans which infuse capital into the
institution. This is particularly objectionable in the formative years
of a new depository institution when there is often a need to preserve
capital during a period of rapid growth and operating losses. One
commenter suggested that there could be a requirement to reinvest all
cash received in new stock. The FDIC believes this would be the
functional equivalent of a grant of stock and has not adopted the
suggestion or changed the proposal with respect to this issue.
One commenter questioned the FDIC's authority to impose the
criteria concerning stock benefit plans upon a proposed de novo holding
company. The FDIC believes it has such authority under section 6 of the
Act, 12 U.S.C. 1816, which authorizes the FDIC to consider the general
character and fitness of the management of the depository institution.
Good management will not commit the depository institution, directly or
indirectly, to excessive compensation of insiders. Many de novo
institutions are organized as subsidiaries of holding companies whose
only substantive function is to own the stock of the proposed
institution. Without the ability to set standards for stock benefit
plans sponsored by de novo holding companies, the FDIC's requirements
concerning stock benefit plans could easily be avoided by organizing a
holding company. The FDIC has adopted this aspect of the proposal
without change.
The proposed Statement of Policy did not place limits on the volume
of options or warrants that could be issued to directors, officers or
incorporators. The Statement of Policy contemplated the FDIC reviewing
the volume of options or warrants granted on a case-by-case basis. The
FDIC received no comments on this matter. However, since the
publication of the proposed Statement of Policy, the FDIC has received
a number of applications for deposit insurance contemplating stock
benefit plans in which the volume of options granted to organizers went
well beyond what the FDIC believed was reasonable. In light of this
recent experience, the FDIC now believes that guidance should be
provided regarding how the FDIC will determine if the volume of options
or warrants granted is acceptable.
The FDIC has now adopted the following standards in the Statement
of Policy for evaluating the volume of options or warrants to be
granted:
Stock benefit plans granted to active officers and
directors will be reviewed as part of the total compensation package.
The Statement of Policy does not place definite limits on stock benefit
plans for such individuals.
In reviewing stock benefit plans granted to incorporators,
FDIC will review the individual's financial commitment, time,
expertise, and continuing involvement in the management of the proposed
financial institution. Plans to compensate incorporators that provide
for more than one option or warrant for each share subscribed will
generally be considered excessive. It is further expected that
incorporators granted options or warrants at or near this level will
actively participate in the management of the depository institution as
an executive officer or director. On a case-by-case basis, the FDIC may
not object to additional options being granted to an incorporator who
will also be a senior executive officer.
In those limited situations where individuals who
substantially contribute to the organization of a new depository
institution do not intend to serve as an active officer or director
after the institution opens for business, the FDIC will generally not
object to such individuals receiving stock options or warrants under
certain circumstances. Specifically, organizers who agree to accept
shares of bank stock as payment for funds placed at risk during the
organization phase or in payment for professional services rendered may
receive options or warrants of up to an equal number of shares
received. When continuing service is not contemplated, the FDIC will
not require vesting or restrictions on transferability, but will review
the duration of the rights, exercise price, and exercise or forfeiture
clauses.
It is believed that these standards allow incorporators of de novo
institutions flexibility to design reasonable compensation programs to
reward those who have placed money at risk and to incent directors and
officers to promote the best interests of the institution, consistent
with safe and sound banking practices.
Applicants Owned by Domestic Governmental Units
The FDIC specifically solicited comment in the proposal on whether
deposit insurance should be conferred upon certain applicants that are
owned or controlled by public entities, specifically domestic
governmental units. The FDIC stated in the proposal that it was
concerned that due to their ownership by a governmental unit, such
depository institutions presented unique supervisory concerns that do
not exist with privately owned depository institutions. The FDIC noted
its uncertainty about such an institution's ability to operate
independently of the political process, the institution's ability and
willingness to raise capital in the equity markets, management
stability and business purpose. The FDIC stated that in light of these
concerns, the agency would review an application for deposit insurance
filed by a domestic governmental unit very closely and that the FDIC
was unlikely to resolve favorably all of the statutory factors which
must be considered under the FDIC's implementing statute.1
See 62 FR at 52871 (October 9, 1997).
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\1\ A distinction was made, however, for banks owned by foreign
governments and their subdivisions and banks owned and controlled by
Native American tribes or bands. Banks that are owned by foreign
governments and their subdivisions are entitled to ``national
treatment.'' (See International Banking Act of 1978, 12 U.S.C. 3101
et seq.). National treatment requires that all foreign depository
institutions, whether publicly- or privately-owned, receive
consistent treatment with domestic entities when operating in the
United States. This includes eligibility for deposit insurance which
is often a condition of either a state or federal charter. Native
American tribes or bands that own or control depository institutions
can also be distinguished from a conventional governmental unit that
seeks to open or acquire a depository institution. This is because
under federal law, Native American tribes and bands function as both
governmental and economic, for-profit entities. The Indian
Reorganization Act of 1934 (the IRA) (25 U.S.C. 461 et seq.)
authorizes not only the creation of tribal governments (see section
16 of the IRA, 12 U.S.C. 476), but also provides for the creation of
tribal business corporations pursuant to section 17 of the IRA (25
U.S.C. 477). At the same time, however, a tribal government
organized under section 16 of the IRA is not precluded from engaging
in business activities. See S. Unique Ltd. v. Gila River Pima-
Maricopa Indian Community, 138 Ariz. 384, 674 P.2d 1376 (Ct. App.
1984). These legal and policy considerations unique to these two
categories of insurance applicants outweigh any concerns that the
FDIC may have regarding the ownership of such depository
institutions by governmental entities.
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[[Page 44755]]
The FDIC received seven comments in response. Three were from
organizations (both public and private) that provide low- and moderate-
income housing in various areas of the country; two were from banking
trade associations; one was from the trade association for local
housing finance agencies; and one was from a member of the U.S. House
of Representatives. Five commenters were opposed to the addition of
language to the statement of policy concerning deposit insurance
applications from a domestic governmental unit. The two other
commenters agreed that the FDIC has legitimate concerns about providing
deposit insurance to depository institutions owned by governmental
units, but argued that it would still be best to have one application
procedure for all applicants.
One of the most common criticisms of the positions taken in the
preamble to the proposal is that it amounts to ``effective preclusion
of ownership and operation of a depository institution by a public
entity.'' The commenters further argued that a bank owned by a
governmental unit seeking deposit insurance from the FDIC presents the
same issues as any other applicant for deposit insurance. They noted
that the criteria for the review of a deposit insurance application are
specified by the FDIC's implementing statute and that the FDIC may not
exceed those criteria or apply them differently to an applicant owned
by a governmental unit.
Two commenters agreed with the FDIC that applications from
depository institutions owned by public entities pose special concerns
and should be carefully scrutinized. They recommended that notices of
such applications be published in the Federal Register to ensure that a
broad audience has the opportunity to comment on these applications.
In response to the comments on the positions taken in the preamble
to the proposal, the FDIC emphasizes that it has no intention of
exceeding the enumerated statutory criteria for evaluation of a deposit
insurance application, nor does the agency propose to apply different
standards among deposit insurance applicants. However, the FDIC notes
that because of their ultimate control by the political process, such
institutions could raise special concerns relating to management
stability, their business purpose, and their ability and willingness to
raise capital (particularly in the form of true equity rather than
governmental transfers). On the other hand, such institutions may be
particularly likely to meet the convenience and needs of their local
community, particularly if the local community is currently un- or
under-served by depository institutions. In view of such considerations
and the policy issues they embody, the FDIC will closely evaluate such
applications to ensure that the required statutory factors are met.
With respect to the recommendation from commenters that notices of
deposit insurance applications from institutions which would be owned
by governmental entities be published in the Federal Register for
comment, the FDIC notes that all applications which are subject to the
requirements of the CRA (this includes deposit insurance applications)
will be listed on the FDIC's Internet home page. In addition, the FDIC
is considering whether to specifically solicit comment on such matters
as insurance applications from institutions which would be owned by
governmental entities, either on the Internet or by publication in the
Federal Register.
Other Changes
Other changes from the 1992 Statement of Policy included in the
proposal are as follows:
In conjunction with the FDIC's recent rescission of its
Statement of Policy regarding Applications, Legal Fees, and Other
Expenses (62 FR 15479, April 1, 1997), the proposal included comments
relative to fees incident to an application.
The proposed Statement of Policy replaced the requirement
that ``no dividends are to be paid until all initial losses have been
recaptured . . .'' with ``during the first three years of operation,
cash dividends shall be paid only from net operating income (after tax)
. . .'' The proposed Statement of Policy also retained the requirement
that no dividends be paid until an appropriate allowance for loan and
lease losses has been established and overall capital is adequate. This
amendment was designed to provide reasonable accommodation to possible
Subchapter S corporation applicants.
The 1992 Statement of Policy was revised to authorize the
appropriate FDIC regional director (DOS) to waive submission of
financial information for proposed officers and directors when the
proposed depository institution is being formed as a wholly owned
subsidiary of a holding company. This was proposed in recognition that,
when the proposed depository institution is being formed as a wholly
owned subsidiary of a holding company, personal financial information
may not be meaningful.
The 1992 Statement of Policy was also amended by deleting
the statement that the chief executive officer is expected to be a
qualified and experienced lending officer. It is expected that a
qualified lending officer will be provided for in the management
structure; however, the chief executive officer need not be that
person.
The proposal deleted the requirement that a majority of
the proposed directors will reside within, or have significant business
interests within 100 miles of the proposed depository institution.
While the FDIC encourages local involvement in proposed depository
institutions, a specific residency requirement was not considered
necessary.
The 1992 Statement of Policy was also revised to require
that the applicant commit the depository institution to obtain an audit
by an independent public accountant annually for only a three-year
period, rather than the first five years.
No commenters objected to these provisions and they have been
adopted as proposed.
An additional minor change, not included in the proposal, has been
added to the Statement of Policy. Under the discussion of the statutory
factor ``Consistency of Corporate Powers with the Purposes of the Act''
a statement has been added which indicates that generally the FDIC will
presume that a proposed national bank's or federal savings
association's corporate powers are consistent with the purposes of the
Act. The 1992 Statement of Policy and the proposal only addressed this
statutory factor as it applied to insured state banks and state savings
associations. The added provisions clarify the FDIC's position with
respect to national banks and federal savings associations.
This Statement of Policy is applicable only to applications for
deposit
[[Page 44756]]
insurance, and it is not intended to establish policy for other
applications or actions undertaken by established operating insured
depository institutions.
The Board of Directors of the FDIC has adopted the following
Statement of Policy on Applications for Deposit Insurance:
FDIC Statement of Policy on Applications for Deposit Insurance
Introduction
The Board of Directors of the FDIC is charged by statute with the
responsibility of acting on applications for federal deposit insurance
by all depository institutions 1 including any national
bank, district bank, state bank, federal savings association, state
savings association, savings bank, or trust company. In addition, the
Board of Directors also will act on applications for federal deposit
insurance by an industrial bank (or similar depository institution
which the Board of Directors finds to be operating substantially in the
same manner as an industrial bank), or any other depository institution
which is engaged in the business of receiving deposits, other than
trust funds.
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\1\ Certain exceptions to the statutory requirement that deposit
insurance for all depository institutions be acted on by the FDIC
are identified in section 5 of the Act, 12 U.S.C 1815. For example,
federally-chartered interim institutions are deemed to be insured
depository institutions upon the issuance of the institution's
charter by the appropriate federal agency. Under section 5(a)(2) a
federally-chartered interim institution is a federally-chartered
depository institution that will not open for business. An
application for federal deposit insurance generally is not required
for such an institution even if the federal interim institution is
the surviving charter of a merger with another insured depository
institution. See 12 CFR 303.62(b)(2) and the FDIC's Statement of
Policy on Bank Merger Transactions (section 4.2). Additionally, any
depository institution whose insured status is continued pursuant to
section 4 of the Federal Deposit Insurance Act is not required to
apply to continue its insured status. 12 U.S.C. 1815, 1814.
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An insured depository institution which wishes to continue its
insured status after withdrawing from the Federal Reserve System, or
when converting from a mutual to a stock form of ownership by the
chartering of an interim savings association under the provisions of
section 10(o) of the Home Owners Loan Act, also must file an
application with the FDIC for deposit insurance.
Procedures
Forms and instructions for applying for deposit insurance may be
obtained from any regional office of the FDIC Division of Supervision
(DOS). Completed applications should be filed with the appropriate
regional office as that term is defined in Sec. 303.2(g) of the FDIC's
rules and regulations. Organizers and incorporators (collectively,
``incorporators'') of proposed new depository institutions should file
their applications with the FDIC and the appropriate chartering
authority at the same time. Information provided to the chartering
authority that is also needed as part of the deposit insurance
application may be provided to the FDIC by appending a copy of the
information to the FDIC application. Use of the FDIC application form
is optional; however, the material submitted to the FDIC must contain
all information requested in the FDIC application form, unless the FDIC
otherwise indicates. In addition, all incorporators must sign and
submit the signature page of the FDIC's deposit insurance application
form, even if the application itself is not being used. It is strongly
recommended that a representative(s) of the organizing group meet with
the chartering authority and the FDIC prior to filing an application to
reach an understanding of the information requirements of each agency.
This practice typically facilitates processing and eliminate
unnecessary delays. Information requirements may not be as extensive
for applications sponsored by existing holding companies or other well
established banking groups. The FDIC may take final action prior to
final action by other regulatory authorities in cases in which the FDIC
has determined that there is no material disagreement on the action to
be taken.
The procedures governing the administrative processing of an
application for deposit insurance are contained in part 303, subpart B,
of the FDIC's rules and regulations (12 CFR part 303). Processing of an
application will not commence until the application is deemed
substantially complete. An incomplete application may be returned to
the applicant. The applicant must satisfy all terms of a conditional
approval prior to deposit insurance becoming effective.
These policies apply to all proposed de novo depository
institutions and operating institutions applying for deposit insurance,
with the exception of applications submitted for the sole purpose of
acquiring assets and assuming liabilities of an insured institution in
default. Policies are modified in those situations to reflect the
urgent nature of the transaction. Guidance for those situations is
contained in a separate section of this Policy Statement.
Subpart B of part 303 contains special filing and processing
procedures for a state member bank which seeks to continue its insured
status upon termination of membership in the Federal Reserve System and
for interim institutions chartered to facilitate mergers.
Proposed Depository Institutions
In considering applications for deposit insurance for a proposed
depository institution, the FDIC must evaluate each application in
relation to the factors prescribed in section 6 of the Federal Deposit
Insurance Act (hereafter the Act) (12 U.S.C. 1816). Those factors are:
The financial history and condition of the depository
institution;
The adequacy of its capital structure;
Its future earnings prospects;
The general character and fitness of its management;
The risk presented by such depository institution to the
deposit insurance fund;
The convenience and needs of the community to be served by
the depository institution; and
Whether its corporate powers are consistent with the
purposes of the Act.
In general, the applicant will receive deposit insurance if all of
these statutory factors plus the considerations required by the
National Historic Preservation Act and the National Environmental
Policy Act of 1969 are resolved favorably. Additional guidance
regarding the National Historic Preservation Act and the National
Environmental Policy Act may be found in the respective FDIC Statements
of Policy for each of these statutes.
If the proposal contemplates the simultaneous establishment of a
holding company, the application should disclose and discuss the
proposed activities of the parent holding company, as well as those of
the proposed depository institution.
Where the proposed depository institution will be a subsidiary of
an existing bank or thrift holding company, the FDIC will consider the
financial and managerial resources of the parent organization in
assessing the overall proposal and in evaluating the statutory factors
prescribed in section 6 of the Act. In such circumstances, the
application for deposit insurance should contain a copy of any
information submitted to the holding company's primary federal
regulator. Subpart B of part 303 of the FDIC's regulations (12 CFR
303.20-303.27) discusses certain expedited procedures that may be
available to eligible depository institutions or eligible holding
[[Page 44757]]
companies (as those terms are defined in the regulation).
The FDIC may conduct examinations and/or investigations to develop
essential information with respect to deposit insurance applications.
The appropriate regional director (DOS) will determine the need to
conduct an investigation and its scope. Every effort will be made to
coordinate any FDIC investigation with any investigations conducted by
other regulators.
The FDIC has formulated guidelines for evaluating deposit insurance
applications which are designed to ease administration, prevent
arbitrary judgment, and assure uniform and fair treatment of all
applicants. A discussion of these guidelines follows.
Statutory Factors
1. Financial History and Condition
Proposed and newly organized depository institutions have no
financial history to serve as a basis for determining qualifications
for deposit insurance. Thus, the primary areas of consideration under
this statutory factor are the ability of proponents to provide
financial support to the new institution, investment in fixed assets,
including lease obligations, and insider transactions. Lease
transactions shall be reported in accordance with Financial Accounting
Standards Board Statement 13 (Accounting for Leases). Applicants are
expected to provide procedures, security devices, and safeguards at
least equivalent to the minimums specified in the Bank Protection Act
of 1968 (12 U.S.C. 1881-1884).
(a) Investment in fixed assets and leases--The applicant's
aggregate direct and indirect fixed asset investment, including lease
obligations, must be reasonable in relation to its projected earnings
capacity, capital, and other pertinent matters of consideration.
Applicants are cautioned against purchasing any fixed assets or
entering into any noncancelable construction contracts, leases, or
other binding arrangements related to the proposal unless and until the
FDIC approves the application.
(b) Insider transactions--Any financial arrangement or transaction
involving the applicant and an insider(s) should be documented by the
applicant to demonstrate that: (1) the proposed transaction with
insiders is made on substantially the same terms as those prevailing at
the time for comparable transactions with non-insiders, and does not
involve more than normal risk or present other unfavorable features to
the applicant depository institution; and (2) the proposed transaction
must be approved in advance by a majority of the depository
institution's incorporators. In addition, full disclosure of any
arrangements with an insider must be made to all proposed directors and
prospective shareholders. An insider means a person who is proposed to
be a director, officer, or incorporator of an applicant; a shareholder
who directly or indirectly controls 10% or more of a class of the
applicant's outstanding voting stock; or the associates or interests of
any such person.
2. Adequacy of the Capital Structure
Normally, the initial capital of a proposed depository institution
should be sufficient to provide a Tier 1 capital to assets leverage
ratio (as defined in the appropriate capital regulation of the
institution's primary federal regulator) of not less than 8.0%
throughout the first three years of operation. In addition, the
depository institution must maintain an adequate allowance for loan and
lease losses.
The adequacy of the capital structure of a newly organized
depository institution is closely related to its deposit volume, fixed
asset investment and the anticipated future growth in liabilities.
Deposit projections made by the applicant must, therefore, be fully
supported and documented. Projections should be based on established
growth patterns in the specific market, and initial capitalization
should be provided accordingly. Special purpose depository institutions
(such as credit card banks) should provide projections based on the
type of business to be conducted and the potential for growth of that
business. Initial capital should normally be in excess of $2 million
net of any pre-opening expenses that will be charged to the
institution's capital after it commences business.
(a) Initial offering of stock--All stock of a particular class in
the initial offering should be sold at the same price, and have the
same voting rights. Proposals which allow the insiders to acquire a
separate class of stock with greater voting rights are generally
unacceptable. Insiders should not be offered stock at a price more
favorable than the price for other subscribers. Price disparities
provide insiders with a means to gain control disproportionate to their
investments.
When securities are sold to the public, the disclosure of all
material facts is essential. The FDIC's Statement of Policy regarding
use of Offering Circulars in connection with Public Distribution of
Bank Securities (61 FR 46808, September 5, 1996) provides additional
guidance. A copy of the offering circular prepared by the applicant,
the stock solicitation material and the subscription agreement should
be submitted to the FDIC when they become available.
(b) Wholly owned subsidiary of a holding company--If the applicant
is being established as a wholly owned subsidiary of an eligible
holding company (as defined in part 303, subpart B), the FDIC will
consider the financial resources of the parent organization as a factor
in assessing the adequacy of the proposed initial capital injection. In
such cases, the appropriate regional director (DOS) may find favorably
with respect to the adequacy of capital factor, when the initial
capital injection is sufficient to provide for a Tier 1 leverage
capital ratio of at least 8% at the end of the first year of operation,
based on a realistic business plan, or the initial capital injection
meets the $2 million minimum capital standard set forth in this
Statement of Policy, or any minimum standards established by the
chartering authority, whichever is greater. The holding company shall
also provide a written commitment to maintain the proposed
institution's Tier 1 leverage capital ratio at no less than 8 %
throughout the first three years of operation.
(c) Operating insured offices--If the proposal involves the
acquisition of an insured operating office or offices, the applicant
may request that the benchmark for evaluating the adequacy of capital
be an amount necessary for the newly chartered institution to be
classified as well capitalized, as defined by its primary federal
regulator. In such cases, the appropriate regional director (DOS) may
find favorably with respect to the capital factor based on a favorable
finding with respect to the following:
There is a realistic three-year business plan which
evidences stabilized operations at inception;
The proposal involves substantially all assets and
deposits attributable to the respective insured operating office(s);
and
The proponent is either an eligible holding company (as
defined in part 303, subpart B) or is a banking group that has, as
determined by the FDIC, demonstrated its ability to successfully manage
an insured depository institution. (A qualified banking group should
have an established association of at least three years. A chain
banking group which is recognized as such by the FDIC is one type of
banking group that is contemplated in this paragraph.)
(d) Stock financing by proposed officers, directors, and 10%
shareholders--Financing arrangements by proposed officers, directors,
and 10%
[[Page 44758]]
shareholders of their investments in stock of the proposed depository
institution will also be carefully reviewed. Such financing will be
considered acceptable only if the party financing the stock can
demonstrate the ability to service the debt without reliance on
dividends or other forms of compensation from the applicant. When stock
financing arrangements of proposed officers, directors, and 10%
shareholders are anticipated, information should be submitted with the
application demonstrating that adequate alternative independent sources
of debt servicing are available. Direct or indirect financing by
proposed officers, directors, and 10% shareholders of more than 75% of
the purchase price of the stock subscribed by any individual, or more
than 50% of the purchase price of the aggregate stock subscribed by the
proposed officers, directors, and 10% shareholders as a group, will
require supporting justification in the application regarding the
reason that the financing arrangements should be considered acceptable.
If the proposed financing arrangements are not considered appropriate,
the FDIC may find unfavorably on the adequacy of the capital structure.
When the proposed depository institution is being established as a
subsidiary of an existing holding company, the funding source being
utilized by the holding company for its capital contribution will be
evaluated in the context of the holding company's consolidated
operations. In such cases, the holding company's proposed leverage must
be in accordance with the guidelines of its primary federal regulator.
Loans made to purchase the stock of the proposed institution are
not to be refinanced by the newly established institution. Deposits or
other funds of the institution at correspondent banks are not to be
used as compensating balances for loans to insiders. During the first
three years of operation, cash dividends shall be paid only from net
operating income, and shall not be paid until an appropriate allowance
for loan and lease losses has been established and overall capital is
adequate.
3. Future Earnings Prospects
Before approving an application for deposit insurance, the FDIC
must have reasonable assurance that the new institution can be operated
profitably. Therefore, the incorporators will need to demonstrate
through realistic and supportable estimates that, within a reasonable
period (normally three years), the earnings of the applicant will be
sufficient to provide an adequate profit.
The applicant must also maintain its books and records in
accordance with the principles of accrual accounting.
4. General Character and Fitness of the Management
To satisfy this factor, the evidence must support a management
rating which, in an operating institution, would be equivalent to a
rating of 2 or better under the Uniform Financial Institution Rating
System.2 Since in most instances the management of a
proposed depository institution will not have an operating record, the
individual directors and officers will be evaluated largely on the
basis of the following:
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\2\ A 2 rating under the Uniform Financial Institution System is
generally indicative of a satisfactory record of performance in
light of the institution's particular circumstances.
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Financial institution and other business experience;
Duties and responsibilities in the proposed depository
institution;
Personal and professional financial responsibility;
Reputation for honesty and integrity; and
Familiarity with the economy, financial needs, and general
character of the community in which the depository institution will
operate.
All proposed depository institutions shall provide at least a five
member board of directors. The identity and qualifications of the
proposed full-time chief executive officer should be made known to the
FDIC as soon as possible, preferably when the application is filed with
the appropriate FDIC regional director (DOS). Prior to the opening of
the institution, proponents must advise the FDIC in writing of any
change in the directorate, senior active management, or a change in the
ownership of stock which would result in a shareholder owning 10% or
more of the total shares of either the depository institution or its
holding company.
(a) Fees and expenses--The commitment to pay or payment of
unreasonable or excessive fees and other expenses incident to an
application will reflect adversely upon the management of the applicant
institution. Fees and other organizational expenses incurred or
committed to should be fully supported.
Expenses for professional or other services rendered by insiders
will receive special review for any indication of self-dealing to the
detriment of the institution and its other shareholders. As a matter of
practice, the FDIC expects full disclosure to all directors and
shareholders of any arrangement with an insider.
In no case will a deposit insurance application be approved where
the payment of a fee, in whole or in part, is contingent upon any act
or forbearance by the FDIC or by any other federal or state agency or
official.
(b) Stock benefit plans--Stock benefit plans, including stock
options, stock warrants, and other similar stock based compensation
plans will be reviewed by the FDIC and must be fully disclosed to all
potential subscribers. Participants in stock benefit plans may include
incorporators, directors, and officers. A description of any such plans
proposed must be included in the application submitted to the
appropriate regional director (DOS). The structure of stock benefit
plans should encourage the continued involvement of the participants
and serve as an incentive for the successful operation of the
institution. Stock benefit plans should contain no feature that would
encourage speculative or high risk activities or serve as an obstacle
to or otherwise impede the sale of additional stock to the general
public.
Listed below are factors that the FDIC will consider in reviewing
stock benefit plans:
The duration of rights granted should be limited, and in
no event should the exercise period exceed ten years;
Rights granted should encourage the recipient to remain
involved in the proposed depository institution. For example, a vesting
period of approximately equal percentages each year over the initial
three years of operation is a type of provision that would be
appropriate to ensure continued involvement. This requirement may be
waived for participants awarded only a nominal number of shares;
Rights granted should not be transferable by the
participant;
The exercise price of stock rights shall not be less than
the fair market value of the stock at the time that the rights are
granted;
Rights under the plan must be exercised or expire within a
reasonable time after termination as an active officer, employee or
director; and
Stock benefit plans should contain a provision allowing
the institution's primary federal regulator to direct the institution
to require plan participants to exercise or forfeit their stock rights
if the institution's capital falls below the minimum requirements, as
determined by its state or primary federal regulator.
Stock benefit plans provided to directors and officers will be
reviewed
[[Page 44759]]
as a part of the total compensation package offered to such
individuals.
The FDIC will closely review stock benefit plans established to
compensate incorporators. In reviewing such plans, the FDIC will
consider the individual's time, expertise, financial commitment, and
continuing involvement in the management of the proposed institution.
The FDIC will also consider the amount and basis of any cash payments
which will be made to the incorporator for services rendered or as a
return on funds placed at risk. Plans to compensate incorporators that
provide for more than one option or warrant for each share subscribed
will generally be considered excessive. It is further expected that
incorporators granted options or warrants at or near this level will
actively participate in the management of the depository institution as
an executive officer or director. On a case-by-case basis, the FDIC may
not object to additional options being granted to an incorporator who
will also be a senior executive officer.
The FDIC recognizes that there will be limited instances where
individuals who substantially contribute to the organization of a new
depository institution do not intend to serve as an active officer or
director after the institution opens for business. The FDIC generally
will not object to awarding warrants or options to incorporators who
agree to accept shares of stock in lieu of cash payment for funds
placed at risk or for professional services rendered. In such
instances, the FDIC defines funds placed at risk to include ``seed
money'' actually paid into the organizational fund and the value of
professional services rendered as the market value of legal, accounting
and other professional services rendered. Generally, warrants or
options for organizers who will not participate in the management of
the institution will be considered excessive if the amount of options
or warrants to be granted exceeds the number of shares of stock
received in repayment for funds placed at risk and/or for professional
services rendered. The granting of options to incorporators who
guarantee loans to finance an institution's organization generally
would not be objectionable, but options granted should be limited so
that the market value of the stock subject to option does not exceed
the amount of the loan guarantees (although guarantees exceeding the
amount drawn or expected to be drawn will not be considered). When
continuing service is not contemplated, the FDIC will not require
vesting or restrictions on transferability, but will review the
duration of the rights, exercise price, and exercise or forfeiture
clauses in the same manner as discussed above.
In evaluating benefit and compensation plans for insiders, the FDIC
will look to the substance of the proposal. Those proposals that are
determined to be substantially stock based plans will be evaluated
based on the foregoing stock benefit plan criteria. Stock appreciation
rights and similar plans that include a cash payment to the recipient
based directly on the market value of the depository institution's
stock are unacceptable.
If the proposal involves the formation of a de novo holding company
and a stock benefit plan is being proposed at the holding company
level, that stock benefit plan will be reviewed by the FDIC in the same
manner as a plan involving stock issued by the proposed depository
institution.
In some instances, the exercise of rights granted by a stock
benefit plan will trigger the requirements of the Change in Bank
Control Act of 1978, section 7(j) of the FDI Act (12 U.S.C. 1817(j)).
The approval of an Application for Deposit Insurance which includes a
description of stock benefit plans does not satisfy the prior notice
requirements of the Change in Bank Control Act, if the exercise of
rights would trigger the prior notice requirement.
(c) Background and biographical information--Proposed directors,
officers, and 10% shareholders must file financial and biographical
information in connection with the deposit insurance application. The
FDIC may request a report from the Federal Bureau of Investigation or
other investigatory agencies on these individuals. Fingerprinting of
individuals may be required. Background checks and fingerprinting may
be waived by the appropriate FDIC regional director (DOS) for
individuals who are currently associated with, or have had a recent
past association with, an insured depository institution. When the
proposed depository institution is being established as a wholly owned
subsidiary of an eligible holding company, the appropriate FDIC
regional director (DOS) may waive financial information for those
persons who are being proposed as directors or officers of the
applicant. Background checks conducted by other federal financial
institution regulators in connection with charter applications are
generally adequate for the FDIC if the other regulators agree to notify
the FDIC of instances in which further investigation is warranted.
In the event any present or prospective director, officer,
employee, controlling stockholder, or agent of the applicant has been
convicted of any criminal offense involving dishonesty, breach of
trust, or money laundering, or has agreed to enter into a pretrial
diversion or similar program in connection with a prosecution of such
offense, the applicant must obtain the FDIC's written consent under
section 19 of the Act (12 U.S.C. 1829), before any such person may
serve in one or more of those capacities. Guidelines regarding section
19 applications may be obtained from the appropriate FDIC regional
office (DOS).
Proponents should be aware of the prohibitions against interlocking
management officials which are applicable to depository institutions
and depository institution holding companies and which are contained in
the Depository Institution Management Interlocks Act (12 U.S.C. 3201).
(d) Fidelity insurance, policies, and audit coverage--An insured
depository institution should maintain sufficient fidelity bond
coverage on its active officers and employees to conform with generally
accepted industry practices. Primary coverage of no less than $1
million is ordinarily expected. Approval of the application may be
conditioned upon acquisition of adequate fidelity coverage prior to
opening for business.
Applicants are expected to develop appropriate written investment,
loan, funds management and liquidity policies. Establishment of an
acceptable audit program is required for proposed depository
institutions. Applicants for deposit insurance coverage are expected to
commit the depository institution to obtain an audit by an independent
public accountant annually for at least the first three years of
operation. The FDIC may determine,3 on a case-by-case basis,
that a separate audit is unnecessary where the applicant is owned by a
holding company and the proposed depository institution will undergo an
audit performed by an independent public accountant as part of an audit
of the consolidated financial statements of its parent company.
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\3\ ln a situation in which the FDIC is not to be the primary
federal regulator, these determinations will be made in consultation
with the primary federal regulator.
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5. Risk Presented to the Bank Insurance Fund or Savings Association
Insurance Fund
In order to resolve this factor favorably, the FDIC must be assured
that the proposed institution does not present an undue risk to the
Bank Insurance Fund or the Savings Association Insurance Fund. As a
[[Page 44760]]
general matter, the FDIC interprets this factor very broadly. In making
its determination, the FDIC will rely on any information available to
it, including, but not limited to the applicant's business plan. The
FDIC expects that an applicant will submit a business plan commensurate
with the capabilities of its management and the financial commitment of
the incorporators.4 Submission of an unsound business plan
will unfavorably impact the finding concerning this factor. An
applicant's business plan should demonstrate the following:
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\4\ Any significant deviation from the business plan within the
first three years of operation must be reported by the insured
depository institution to the primary federal regulator before
consummation of the change.
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Adequate policies, procedures, and management expertise to
operate the proposed depository institution in a safe and sound manner;
Ability to achieve a reasonable market share;
Reasonable earnings prospects;
Ability to attract and maintain adequate capital; and
Responsiveness to community needs.
Operating plans that rely on high risk lending, a special purpose
market, or significant funding from sources other than core deposits,
or that otherwise diverge from conventional bank related financial
services will require specific documentation as to the suitability of
the proposed activities for an insured institution. Similarly,
additional documentation of plans is required where markets to be
entered are intensely competitive or economic conditions are marginal.
6. Convenience and Needs of the Community to be Served
The essential considerations in evaluating this factor are the
deposit and credit needs of the community to be served, the nature and
extent of the opportunity available to the applicant in that location,
and the willingness and ability of the applicant to serve those
financial needs.
The applicant must clearly define the community it intends to serve
and provide information on that community, including economic and
demographic data and a description of the competitive environment. The
applicant should also define the services to be offered in relation to
the needs of the community. The proposed depository institution's
Community Reinvestment Act documentation, including any applicable
public file information, prepared in accordance with the requirements
of the institution's primary federal regulator, is an important part of
the FDIC's evaluation of the convenience and needs of the community to
be served.
7. Consistency of Corporate Powers with the Purposes of the Act
(a) National banks and Federal savings associations--Generally the
FDIC will presume that a proposed national bank's or federal savings
association's corporate powers are consistent with the purposes of the
Act.
(b) Insured state banks and state savings associations--Pursuant to
section 24 of the Act (12 U.S.C. 1831a), no insured state bank may
engage as principal in any type of activity that is not permissible for
a national bank, unless the FDIC has determined that the activity would
pose no significant risk to the appropriate deposit insurance fund and
the state bank is, and continues to be, in compliance with applicable
capital standards prescribed by its primary federal regulator.
Similarly, section 28 of the Act (12 U.S.C. 1831e) provides that a
state chartered savings association may not engage in any type of
activity that is not permissible for a federal savings association,
unless the FDIC has determined that the activity would pose no
significant risk to the affected deposit insurance fund and the savings
association is, and continues to be, in compliance with the capital
standards for the association. Applicants shall agree in the
application not to engage in any prohibited activities after deposit
insurance has been granted.
State nonmember banks may not exercise trust powers without the
prior written approval of the FDIC.
Operating Noninsured Institutions
This section discusses the evaluation of applications for deposit
insurance submitted by operating noninsured institutions. The FDIC's
criteria for evaluating applications submitted by operating
institutions are generally the same as those for proposed depository
institutions.
The FDIC must consider the seven factors found in section 6 of the
Act, which are discussed above.
The condition of an applicant institution will be determined from
all available information and will generally include an on-site
examination as part of the investigation process. Results of the
examination should reflect an institution that is fundamentally sound,
although some modest weaknesses may exist. The nature and severity of
deficiencies found should not be material, and the institution must be
stable and able to withstand business fluctuations.
Capital ratios will be calculated using financial statements
prepared in accordance with the ``Instructions-Consolidated Reports of
Condition and Income'' or ``Thrift Financial Reports'' in use for
insured institutions at the time. An applicant's capital adequacy will
be measured in relation to the capital ratios established in the
capital regulations of the institution's primary federal regulator.
Based on an analysis of the type and quality of the institution's
assets, the kind of powers exercised, the institution's funding
sources, or other factors, an initial capital level higher than the
minimum levels prescribed may be required. The analysis will include
consideration of such matters as whether the applicant is relatively
new,5 has embarked upon a substantive change in powers
exercised, or has experienced erratic growth patterns in recent years.
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\5\ This Statement of Policy provides that the initial capital
for a proposed depository institution should be sufficient to
provide a leverage ratio of Tier I capital to total estimated assets
of at least 8% throughout the first three years of operation. This
standard shall also be applied to a recently organized institution
applying for deposit insurance.
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As part of the application investigation process, the FDIC will
discuss with the applicant its future operating intentions. If any
change in its kind or level of activity is expected following, or as a
result of, the approval by the FDIC of deposit insurance, the applicant
may be requested to submit a plan for maintaining adequate capital in
the future.
Unless waived in writing by the FDIC, an applicant shall have a
full scope audit conducted by an independent public accountant prior to
submitting an application and shall submit a copy of the auditor's
report as part of the application.
Section 24 of the Act (12 U.S.C. 1831a) limits the powers of
insured state banks, and section 28 of the Act (12 U.S.C. 1831e) limits
the powers of state chartered savings associations. If the institution
is exercising any powers not authorized under the applicable statute,
the application should contain an agreement and plan for eliminating
the activity as soon as possible, or a separate application should be
submitted seeking the FDIC's consent to continue the activity.
Deposit Insurance Applications From Proposed Publicly Owned
Depository Institutions
An application for deposit insurance for a proposed depository
institution
[[Page 44761]]
which would be owned or controlled by a domestic governmental entity
(such as, for example, a state, county or a municipality) will be
reviewed very closely.6 The FDIC is of the opinion that due
to their public ownership, such depository institutions present unique
supervisory concerns that do not exist with privately owned depository
institutions. For example, because of their ultimate control by the
political process, such institutions could raise special concerns
relating to management stability, their business purpose, and their
ability and willingness to raise capital (particularly in the form of
true equity rather than governmental transfers). On the other hand,
such institutions may be particularly likely to meet the convenience
and needs of their local community, particularly if the local community
is currently un- or under-served by depository institutions. In view of
such considerations and the policy issues they embody, the FDIC will
closely evaluate such applications to ensure that the required
statutory factors are met.
---------------------------------------------------------------------------
\6\ Banks that are owned by foreign governments and their
subdivisions and banks that are owned or controlled by Native
American tribes or bands are distinguished from conventional
governmental units and will continue to be reviewed in the same
manner as in the past. Banks that are owned by foreign governments
and their subdivisions are entitled to ``national treatment.'' (See
International Banking Act of 1978, 12 U.S.C. 3101 et seq.). National
treatment requires that all foreign depository institutions, whether
publicly- or privately-owned, receive consistent treatment with
domestic entities when operating in the United States. This includes
eligibility for deposit insurance which is often a condition of
either a state or federal charter. Native American tribes or bands
that own or control depository institutions can also be
distinguished from a conventional governmental unit that seeks to
open or acquire a depository institution. This is because under
federal law, Native American tribes and bands function as both
governmental and economic, for-profit entities. The Indian
Reorganization Act of 1934 (the IRA) (25 U.S.C. 461 et seq.)
authorizes not only the creation of tribal governments (see section
16 of the IRA, 12 U.S.C. 476), but also provides for the creation of
tribal business corporations pursuant to section 17 of the IRA (25
U.S.C. 477). At the same time, however, a tribal government
organized under section 16 of the IRA is not precluded from engaging
in business activities. See S. Unique Ltd. v. Gila River Pima-
Maricopa Indian Community, 138 Ariz. 384, 674 P.2d 1376 (Ct. App.
1984). These legal and policy considerations unique to these two
categories of insurance applicants outweigh any concerns that the
FDIC may have regarding the ownership of such depository
institutions by governmental entities.
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Proposed Depository Institutions Formed for the Sole Purpose of
Acquiring Assets and Assuming Liabilities of an Insured Institution
in Default
Because of the urgent nature of this type of transaction, the
procedures described above for insuring proposed depository
institutions are modified when the institution is being formed for the
sole purpose of acquiring assets and assuming liabilities of an
institution in default. Such institutions are approved based on the
statutory factors contained in section 6 of the Act; however, the
procedures for resolving these factors are modified significantly.
The evaluation of the statutory factor ``financial history and
condition'' will be based to a great extent on the quality of assets
purchased and the types of liabilities assumed in the transaction.
The minimum capital requirement for these transactions is such that
the acquiring depository institution would be ``adequately
capitalized,'' as defined in the capital regulations of its primary
federal regulator, which should be augmented by an adequate allowance
for loan and lease losses. It is emphasized that this is a minimum
standard, and a higher capital level may be required. The initial
capital requirements may be based on a realistic projection of the
estimated retained deposits. However, the proposed depository
institution will be required to provide a written commitment to achieve
the minimum capital position shortly after consummation if the volume
of deposits is underestimated.
Proponents should contact the appropriate FDIC regional office
(DOS) as soon as possible if they are interested in acquiring assets
and/or assuming liabilities of an institution in default. Due to the
time constraints involved with this type of transaction, information
submissions and applications will be abbreviated. Generally, a letter
request accompanied by copies of applications filed with other federal
or state regulatory authorities will be sufficient. Other information
will be requested only as needed by the appropriate FDIC official.
Relationships With Other Federal Regulators
Nothing in these guidelines is intended to relieve the applicant of
any requirements imposed by a depository institution's primary federal
regulator. Any differences in requirements of the FDIC and the
institution's primary federal regulator will be resolved during the
investigation process.
By order of the Board of Directors.
Dated at Washington, D.C., this 7th day of July, 1998.
Federal Deposit Insurance Corporation.
James LaPierre,
Deputy Executive Secretary.
[FR Doc. 98-21488 Filed 8-19-98; 8:45 am]
BILLING CODE 6714-01-P
______________________________________________________________________________
[Federal Register: August 20, 1998 (Volume 63, Number 161)]
[Notices]
[Page 44761-44764]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20au98-116]
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FEDERAL DEPOSIT INSURANCE CORPORATION
Bank Merger Transactions
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Statement of policy.
-----------------------------------------------------------------------
SUMMARY: The FDIC is revising its Statement of Policy on Bank Merger
Transactions (Statement of Policy) by updating it to reflect
legislative and other developments that have occurred since the
Statement of Policy was last revised in 1989. The revision also gives
added guidance by including new provisions and clarifying some existing
provisions. The revision is a part of the FDIC's systematic review of
its regulations and written policies under the Riegle Community
Development and Regulatory Improvement Act of 1994. The revised
Statement of Policy is intended to be read in conjunction with the
merger provisions of the FDIC's revised regulations governing
applications filed with the FDIC, which also appear in this issue of
the Federal Register.
EFFECTIVE DATE: October 1, 1998.
FOR FURTHER INFORMATION CONTACT: Kevin W. Hodson, Review Examiner,
Division of Supervision, (202) 898-6919; Martha Coulter, Counsel, Legal
Division, (202) 898-7348, Federal Deposit Insurance Corporation,
Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION: On October 9, 1997, the FDIC issued for a
public comment a proposal to revise the existing Statement of Policy
(62 FR 52877). The proposal was issued in connection with section
303(a) of the Riegle Community Development and Regulatory Improvement
Act of 1994 (CDRI Act), 12 U.S.C. 4803(a), which required that each of
the federal banking agencies conduct a review of its regulations and
written policies, for two general purposes. These purposes were: (1) To
streamline and modify the regulations and policies in order to improve
efficiency, reduce unnecessary costs, and eliminate unwarranted
constraints on credit availability; and (2) to remove inconsistencies
and outmoded and duplicative requirements.
As part of this review, the FDIC determined that the Statement of
Policy should be revised. The primary purpose of the revision was to
update the Statement of Policy to reflect statutory changes and other
developments since its last revision in 1989. In addition, certain
clarifications and refinements were proposed, as well as new provisions
intended to give guidance in
[[Page 44762]]
areas not addressed by the existing Statement of Policy.
The recent developments reflected in the proposed revisions
included those resulting from statutory changes, such as changes made
by the CDRI Act; the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994; and the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.1 Changes in each of
those statutes caused related references in the existing Statement of
Policy to become out-dated or incomplete.
---------------------------------------------------------------------------
\1\ The citations for these statutes are, respectively, Pub. L.
103-325, 108 Stat. 2160; Pub. L. 103-328, 108 Stat. 2338; and Pub.
L. 101-73, 103 Stat. 183.
---------------------------------------------------------------------------
Also reflected in the proposed revision were such other
developments as the discontinuation of FDIC collection of data on
``IPC'' deposits (deposits of individuals, partnerships, and
corporations), previously used as a measure in FDIC merger analysis.
The proposal also reflected amendments to certain FDIC regulations,
such as the 1995 amendment of the FDIC's regulations implementing the
Community Reinvestment Act (see 60 FR 22156 (May 4, 1995)) and, more
recently, the proposed amendments to the FDIC's regulations governing
merger applications (see 62 FR 52810 (October 9, 1997)).
In addition to the updates discussed above, the proposed revision
expanded the Statement of Policy to include elements not previously
covered, such as references to optional conversion transactions, branch
closings in connection with merger transactions, and interstate and
interim merger transactions. The proposed Statement of Policy also
included a number of clarifications and refinements, such as a
clarification that transactions that do not involve a transfer of
deposit liabilities typically do not require prior FDIC approval under
the Bank Merger Act, unless the transaction involves the acquisition of
all or substantially all of an institution's assets.
The FDIC received two letters specifically commenting on the
proposed revisions. Both letters were from depository institution trade
associations and both expressed support for the revisions. No
unfavorable comments were received. No changes were made as a result of
comments received; however, a reference to the recently adopted
Interagency Statement on Branch Names was added to the section
discussing related considerations. The Interagency Statement, which
addresses the potential for customer confusion about deposit insurance
when an insured institution operates a branch under a trade name
different from that of the institution, was adopted May 1, 1998, with
an effective date of July 1, 1998. See FDIC, Financial Institution
Letter 46-98: Inactive Financial Institution Letters: (May 1, 1998).
With this exception, and with the exception of a few minor
editorial changes, the Board is adopting the revised Statement of
Policy as proposed. The revised Statement of Policy is intended to be
read in conjunction with the revised merger provisions of newly-amended
part 303 (Applications) of the FDIC's regulations, which is published
elsewhere in this issue of the Federal Register.
The Statement of Policy is revised by the Board to read as follows:
FDIC Statement of Policy on Bank Merger Transactions
I. Introduction
Section 18(c) of the Federal Deposit Insurance Act (12 U.S.C.
1828(c)), popularly known as the ``Bank Merger Act,'' requires the
prior written approval of the FDIC before any insured depository
institution may:
(1) Merge or consolidate with, purchase or otherwise acquire the
assets of, or assume any deposit liabilities of, another insured
depository institution if the resulting institution is to be a state
nonmember bank, or
(2) Merge or consolidate with, assume liability to pay any deposits
or similar liabilities of, or transfer assets and deposits to, a
noninsured bank or institution.
Institutions undertaking one of the above described ``merger
transactions'' must file an application with the FDIC. Transactions
that do not involve a transfer of deposit liabilities typically do not
require prior FDIC approval under the Bank Merger Act, unless the
transaction involves the acquisition of all or substantially all of an
institution's assets.
The Bank Merger Act prohibits the FDIC from approving any proposed
merger transaction that would result in a monopoly, or would further a
combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States. Similarly, the
Bank Merger Act prohibits the FDIC from approving a proposed merger
transaction whose effect in any section of the country may be
substantially to lessen competition, or which in any other manner would
be in restraint of trade. An exception may be made in the case of a
merger transaction whose effect would be to substantially lessen
competition, tend to create a monopoly, or otherwise restrain trade, if
the FDIC finds that the anticompetitive effects of the proposed
transaction are clearly outweighed in the public interest. For example,
the FDIC may approve a merger transaction to prevent the probable
failure of one of the institutions involved.
In every proposed merger transaction, the FDIC must also consider
the financial and managerial resources and future prospects of the
existing and proposed institutions, and the convenience and needs of
the community to be served.
II. Application Procedures
1. Application filing. Application forms and instructions may be
obtained from any FDIC Division of Supervision (DOS) regional office.
Completed applications and any other pertinent materials should be
filed with the appropriate regional director as specified in
Sec. 303.2(g) of the FDIC rules and regulations (12 CFR 303.2(g)). The
application and related materials will be reviewed by regional office
staff for compliance with applicable laws and FDIC rules and
regulations. When all necessary information has been received, the
application will be processed and a decision rendered by the regional
director pursuant to the delegations of authority set forth in
Sec. 303.66 of the FDIC rules and regulations (12 CFR 303.66) or the
application will be forwarded to the FDIC's Washington office for
processing and decision.
2. Expedited processing. Section 303.64 of the FDIC rules and
regulations (12 CFR 303.64) provides for expedited processing, which
the FDIC will grant to eligible applicants. In addition to the eligible
institution criteria provided for in Sec. 303.2 (12 CFR 303.2),
Sec. 303.64 provides expedited processing criteria specifically
applicable to proposed merger transactions.
3. Publication of notice. The FDIC will not take final action on a
merger application until notice of the proposed merger transaction is
published in a newspaper or newspapers of general circulation in
accordance with the requirements of section 18(c)(3) of the Federal
Deposit Insurance Act. See Sec. 303.65 of the FDIC rules and
regulations (12 CFR 303.65). The applicant must furnish evidence of
publication of the notice to the appropriate regional director (DOS)
following compliance with the publication requirement. See
Sec. 303.7(b) of the FDIC rules and regulations (12 CFR 303.7(b)).
4. Reports on competitive factors. As required by law, the FDIC
will request
[[Page 44763]]
reports on the competitive factors involved in a proposed merger
transaction from the Attorney General, the Comptroller of the Currency,
the Board of Governors of the Federal Reserve System, and the Director
of the Office of Thrift Supervision. These reports must ordinarily be
furnished within 30 days, and the applicant upon request will be given
an opportunity to submit comments to the FDIC on the contents of the
competitive factors reports.
5. Notification of the Attorney General. After the FDIC approves
any merger transaction, the FDIC will immediately notify the Attorney
General. Generally, unless it involves a probable failure or an
emergency exists requiring expeditious action, a merger transaction may
not be consummated until 30 calendar days after the date of the FDIC's
approval. However, the FDIC may prescribe a 15-day period, provided the
Attorney General concurs with the shorter period.
6. Merger decisions available. Applicants for consent to engage in
a merger transaction may find additional guidance in the reported bases
for FDIC approval or denial in prior merger transaction cases compiled
in the FDIC's annual ``Merger Decisions'' report. Reports may be
obtained from the FDIC Office of Corporate Communications, Room 100,
801 17th Street N.W., Washington, D.C. 20434.
III. Evaluation of Merger Applications
The FDIC's intent and purpose is to foster and maintain a safe,
efficient, and competitive banking system that meets the needs of the
communities served. With these broad goals in mind, the FDIC will apply
the specific standards outlined in this Statement of Policy when
evaluating and acting on proposed merger transactions.
Competitive Factors
In deciding the competitive effects of a proposed merger
transaction, the FDIC will consider the extent of existing competition
between and among the merging institutions, other depository
institutions, and other providers of similar or equivalent services in
the relevant product market(s) within the relevant geographic
market(s).
1. Relevant geographic market. The relevant geographic market(s)
includes the areas in which the offices to be acquired are located and
the areas from which those offices derive the predominant portion of
their loans, deposits, or other business. The relevant geographic
market also includes the areas where existing and potential customers
impacted by the proposed merger transaction may practically turn for
alternative sources of banking services. In delineating the relevant
geographic market, the FDIC will also consider the location of the
acquiring institution's offices in relation to the offices to be
acquired.
2. Relevant product market. The relevant product market(s) includes
the banking services currently offered by the merging institutions and
to be offered by the resulting institution. In addition, the product
market may also include the functional equivalent of such services
offered by other types of competitors, including other depository
institutions, securities firms, or finance companies. For example,
share draft accounts offered by credit unions may be the functional
equivalent of demand deposit accounts. Similarly, captive finance
companies of automobile manufacturers may compete directly with
depository institutions for automobile loans, and mortgage bankers may
compete directly with depository institutions for real estate loans.
3. Analysis of competitive effects. In its analysis of the
competitive effects of a proposed merger transaction, the FDIC will
focus particularly on the type and extent of competition that exists
and that will be eliminated, reduced, or enhanced by the proposed
merger transaction. The FDIC will also consider the competitive impact
of providers located outside a relevant geographic market where it is
shown that such providers individually or collectively influence
materially the nature, pricing, or quality of services offered by the
providers currently operating within the geographic market.
The FDIC's analysis will focus primarily on those services that
constitute the largest part of the businesses of the merging
institutions. In its analysis, the FDIC will use whatever analytical
proxies are available that reasonably reflect the dynamics of the
market, including deposit and loan totals, the number and volume of
transactions, contributions to net income, or other measures.
Initially, the FDIC will focus on the respective shares of total
deposits 1 held by the merging institutions and the various
other participants with offices in the relevant geographic market(s),
unless the other participants' loan, deposit, or other business varies
markedly from that of the merging institutions. Where it is clear,
based on market share considerations alone, that the proposed merger
transaction would not significantly increase concentration in an
unconcentrated market, a favorable finding will be made on the
competitive factor.
---------------------------------------------------------------------------
\1\ In many cases, total deposits will adequately serve as a
proxy for overall share of the banking business in the relevant
geographic market(s); however, the FDIC may also consider other
analytical proxies.
---------------------------------------------------------------------------
Where the market shares of the merging institutions are not clearly
insignificant, the FDIC will also consider the degree of concentration
within the relevant geographic market(s) using the Herfindahl-Hirschman
Index (HHI) 2 as a primary measure of market concentration.
For purposes of this test, a reasonable approximation for the relevant
geographic market(s) consisting of one or more predefined areas may be
used. Examples of such predefined areas include counties, the Bureau of
the Census Metropolitan-Statistical Areas (MSAs), or Rand-McNally
Ranally Metro Areas (RMAs).
---------------------------------------------------------------------------
\2\ The HHI is a statistical measure of market concentration and
is also used as the principal measure of market concentration in the
Department of Justice's Merger Guidelines. The HHI for a given
market is calculated by squaring each individual competitor's share
of total deposits within the market and then summing the squared
market share products. For example, the HHI for a market with a
single competitor would be: 100\2\ = 10,000; for a market with five
competitors with equal market shares, the HHI would be: 20\2\ +
20\2\ + 20\2\ + 20\2\ + 20\2\ = 2,000.
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The FDIC normally will not deny a proposed merger transaction on
antitrust grounds (absent objection from the Department of Justice)
where the post-merger HHI in the relevant geographic market(s) is 1,800
points or less or, if it is more than 1,800, it reflects an increase of
less than 200 points from the pre-merger HHI. Where a proposed merger
transaction fails this initial concentration test, the FDIC will
consider more closely the various competitive dynamics at work in the
market, taking into account a variety of factors that may be especially
relevant and important in a particular proposal, including:
The number, size, financial strength, quality of
management, and aggressiveness of the various participants in the
market;
The likelihood of new participants entering the market
based on its attractiveness in terms of population, income levels,
economic growth, and other features;
Any legal impediments to entry or expansion; and
Definite entry plans by specifically identified entities.
In addition, the FDIC will consider the likelihood that new
entrants might enter the market by less direct means; for example,
electronic banking with local advertisement of the availability of such
services. This consideration will be particularly important where there
is
[[Page 44764]]
evidence that the mere possibility of such entry tends to encourage
competitive pricing and to maintain the quality of services offered by
the existing competitors in the market.
The FDIC will also consider the extent to which the proposed merger
transaction likely would create a stronger, more efficient institution
able to compete more vigorously in the relevant geographic markets.
4. Consideration of the public interest. The FDIC will deny any
proposed merger transaction whose overall effect likely would be to
reduce existing competition substantially by limiting the service and
price options available to the public in the relevant geographic
market(s), unless the anticompetitive effects of the proposed merger
transaction are clearly outweighed in the public interest by the
convenience and needs of the community to be served. For this purpose,
the applicant must show by clear and convincing evidence that any
claimed public benefits would be both substantial and incremental and
generally available to seekers of banking services in the relevant
geographic market(s) and that the expected benefits cannot reasonably
be achieved through other, less anticompetitive means.
Where a proposed merger transaction is the only reasonable
alternative to the probable failure of an insured depository
institution, the FDIC may approve an otherwise anticompetitive merger
transaction. The FDIC usually will not consider a less anticompetitive
alternative that is substantially more costly to the FDIC to be a
reasonable alternative, unless the potential costs to the public of
approving the anticompetitive merger transaction are clearly greater
than those costs likely to be saved by the FDIC.
Prudential Factors
The FDIC does not wish to create larger weak institutions or to
debilitate existing institutions whose overall condition, including
capital, management, and earnings, is generally satisfactory.
Consequently, apart from competitive considerations, the FDIC normally
will not approve a proposed merger transaction where the resulting
institution would fail to meet existing capital standards, continue
with weak or unsatisfactory management, or whose earnings prospects,
both in terms of quantity and quality, are weak, suspect, or doubtful.
In assessing capital adequacy and earnings prospects, particular
attention will be paid to the adequacy of the allowance for loan and
lease losses. In evaluating management, the FDIC will rely to a great
extent on the supervisory histories of the institutions involved and of
the executive officers and directors that are proposed for the
resultant institution. In addition, the FDIC may review the adequacy of
management's disclosure to shareholders of the material aspects of the
merger transaction to ensure that management has properly fulfilled its
fiduciary duties.
Convenience and Needs Factor
In assessing the convenience and needs of the community to be
served, the FDIC will consider such elements as the extent to which the
proposed merger transaction is likely to benefit the general public
through higher lending limits, new or expanded services, reduced
prices, increased convenience in utilizing the services and facilities
of the resulting institution, or other means. The FDIC, as required by
the Community Reinvestment Act, will also note and consider each
institution's Community Reinvestment Act performance evaluation record.
An unsatisfactory record may form the basis for denial or conditional
approval of an application.
IV. Related Considerations
1. Interstate bank merger transactions. Where a proposed
transaction is an interstate merger transaction between insured banks,
the FDIC will consider the additional factors provided for in section
44 of the Federal Deposit Insurance Act, 12 U.S.C. 1831u.
2. Interim merger transactions. An interim institution is a state-
or federally-chartered institution that does not operate independently,
but exists, normally for a very short period of time, solely as a
vehicle to accomplish a merger transaction. In cases where the
establishment of a new or interim institution is contemplated in
connection with a proposed merger transaction, the applicant should
contact the FDIC to discuss any relevant deposit insurance
requirements. In general, a merger transaction (other than a purchase
and assumption) involving an insured depository institution and a
federal interim depository institution will not require an application
for deposit insurance, even if the federal interim depository
institution will be the surviving institution.
3. Optional conversion. Section 5(d)(3) of the Federal Deposit
Insurance Act, 12 U.S.C. 1815(d)(3), provides for ``optional
conversions'' (commonly known as Oakar transactions) which, in general,
are merger transactions that involve a member of the Bank Insurance
Fund and a member of the Savings Association Insurance Fund. These
transactions are subject to specific rules regarding deposit insurance
coverage and premiums. Applicants may find additional guidance in
Sec. 327.31 of the FDIC rules and regulations (12 CFR 327.31).
4. Branch closings. Where banking offices are to be closed in
connection with the proposed merger transaction, the FDIC will review
the merging institutions' conformance to any applicable requirements of
section 42 of the FDI Act concerning notice of branch closings as
reflected in the Interagency Policy Statement Concerning Branch Closing
Notices and Policies. See 2 FDIC Law, Regulations, Related Acts 5391.
5. Legal fees and other expenses. The commitment to pay or payment
of unreasonable or excessive fees and other expenses incident to an
application reflects adversely upon the management of the applicant
institution. The FDIC will closely review expenses for professional or
other services rendered by present or prospective board members, major
shareholders, or other insiders for any indication of self-dealing to
the detriment of the institution. As a matter of practice, the FDIC
expects full disclosure to all directors and shareholders of any
arrangement with an insider. In no case will the FDIC approve an
application where the payment of a fee, in whole or in part, is
contingent upon any act or forbearance by the FDIC or by any other
federal or state agency or official.
6. Trade names. Where an acquired bank or branch is to be operated
under a different trade name than the acquiring bank, the FDIC will
review the adequacy of the steps taken to minimize the potential for
customer confusion about deposit insurance coverage. Applicants may
refer to the Interagency Statement on Branch Names for additional
guidance. See FDIC, Financial Institution Letter, 46-98 (May 1, 1998).
By order of the Board of Directors.
Dated at Washington, D.C., this 7th day of July, 1998.
Federal Deposit Insurance Corporation.
James LaPierre,
Deputy Executive Secretary.
[FR Doc. 98-21489 Filed 8-19-98; 8:45 am]
BILLING CODE 6714-01-P
_____________________________________________________________________________
[Federal Register: August 20, 1998 (Volume 63, Number 161)]
[Notices]
[Page 44764-44766]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20au98-117]
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FEDERAL DEPOSIT INSURANCE CORPORATION
Liability of Commonly Controlled Depository Institutions
AGENCY: Federal Deposit Insurance Corporation (FDIC).
[[Page 44765]]
ACTION: Statement of policy.
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SUMMARY: The FDIC is revising its Statement of Policy on Liability of
Commonly Controlled Depository Institutions (Statement of Policy) which
sets forth the procedures and guidelines the FDIC uses in assessing or
waiving liability against commonly controlled depository institutions
under section 5(e) of the Federal Deposit Insurance Act. The revised
Statement of Policy removes the application procedures for requesting a
conditional waiver of the cross-guaranty liability from the Statement
of Policy and incorporates those same procedures into Sec. 303.245 of
the FDIC's Rules published elsewhere in today's Federal Register.
EFFECTIVE DATE: October 1, 1998.
FOR FURTHER INFORMATION CONTACT: Jesse G. Snyder, Assistant Director,
Division of Supervision (202) 898-6915, or Grovetta N. Gardineer,
Counsel, Legal Division, (202) 898-3728, Federal Deposit Insurance
Corporation, 550 17th Street, N.W., Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION: In accordance with section 303(a) of the
Riegle Community Development and Regulatory Improvement Act of 1994 (12
U.S.C. 4803(a)), the FDIC conducted a systematic review of its
regulations and written policies and determined that it was appropriate
to revise the Statement of Policy. As a result of this review, the
Board of Directors of the FDIC revised the Statement of Policy
Regarding Liability of Commonly Controlled Depository Institutions to
move the application procedures for requesting a conditional waiver of
cross guaranty liability from the Statement of Policy to part 303 (12
CFR part 303). Specifically, the contents of an application for
requesting a conditional waiver of liability will be located in
Sec. 303.245. The purpose of this revision is to place virtually all of
FDIC's application procedures into one regulation to facilitate ease of
use.
The FDIC received two comments regarding the revision to the
Statement of Policy. Both of the commenters supported the FDIC's
proposal to revise the Statement of Policy.
For the above reasons, the FDIC is adopting the following revision
to the Statement of Policy:
Liability of Commonly Controlled Depository Institutions
Introduction
Section 5(e) of the Federal Deposit Insurance Act (12 U.S.C.
1815(e)), as added by section 206(a)(7) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, creates liability for
commonly controlled insured depository institutions for losses incurred
or reasonably anticipated by the Federal Deposit Insurance Corporation
(FDIC) in connection with (i) the default of a commonly controlled
insured depository institution; or (ii) any assistance provided by the
FDIC to any commonly controlled insured depository institution in
danger of default. In addition to certain statutory exceptions and
exclusions contained in sections 5(e)(6), (7) and (8), the FDI Act also
permits the FDIC, in its discretion, to exempt any insured depository
institution from this liability if it determines that such exemption is
in the ``best interests of the Bank Insurance Fund or the Savings
Association Insurance Fund.''
The liability of an insured depository institution attaches at the
time of default of a commonly controlled institution. It is completely
within the discretion of the FDIC whether or not to issue a notice of
assessment to the liable institution for the estimated amount of the
loss incurred or reasonably anticipated to be incurred by the FDIC.
Guidelines for Conditional Waiver of Liability
The FDIC may, in its discretion, choose not to assess liability
based upon analysis of a particular situation, and it may entertain
requests for waivers from affiliated or unaffiliated parties of an
institution in default or in danger of default. The determination of
whether an exemption is in the best interests of either insurance fund
rests solely with the Board of Directors of the FDIC (Board). Should
the Board make such a determination, a waiver will be issued setting
forth terms and conditions that must be met in order to receive an
exemption from liability (conditional waiver of liability). The
following guidelines apply to conditional waivers of liability under
the provisions of this section:
(1) A conditional waiver of liability will be considered in those
cases where the waiver facilitates an alternative that would be in the
best interests of the FDIC. For example, a conditional waiver may be
granted when requisite additional capital and managerial resources are
_____________________________________________________________________________
[Federal Register: August 20, 1998 (Volume 63, Number 161)]
[Notices]
[Page 44766-44767]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20au98-119]
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FEDERAL DEPOSIT INSURANCE CORPORATION
Applications to Relocate Main Office or Branch (Includes Remote
Service Facilities); Rescission of Statement of Policy
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Rescission of statement of policy.
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SUMMARY: The FDIC is rescinding its Statement of Policy ``Applications
to Relocate a Main Office or Branch (Includes Remote Service
Facilities)'' (Statement of Policy). The Statement of Policy provides
information and guidance to state nonmember banks planning to relocate
a bank's main office or a branch. The information and guidance is out-
of-date.
This action is being taken as part of the FDIC's systematic review
of its regulations and written policies under section 303(a) of the
Riegle Community Development and Regulatory Improvement Act of 1994
(CDRIA), which requires the federal bank and thrift regulatory agencies
to review and streamline their regulations and policies in order to
improve efficiency, reduce unnecessary costs, eliminate unwarranted
constraints on credit availability, and remove inconsistencies and
outmoded and duplicative requirements.
The FDIC is rescinding the Statement of Policy because the
revisions to its applications regulation published elsewhere in today's
Federal Register update the requirements and sufficiently address all
required application procedures to relocate a main office or a branch.
EFFECTIVE DATE: October 1, 1998.
FOR FURTHER INFORMATION CONTACT: Jesse G. Snyder, Assistant Director,
(202)898-6915, Division of Supervision; Susan van den Toorn, Counsel,
(202)898-8707) Legal Division, FDIC, 550 17th Street, N.W., Washington,
D.C. 20429.
SUPPLEMENTARY INFORMATION: In accordance with section 303(a) of the
CDRIA (12 U.S.C. 4803(a)), the FDIC conducted a systematic review of
its regulations and written policies and determined that it was
appropriate to rescind the Statement of Policy. A notice of proposed
rescission of this
[[Page 44767]]
Statement of Policy was published on October 9, 1997 (62 FR 52886).
The FDIC developed the Statement of Policy to provide general
supervisory information and guidance to state nonmember banks relative
to the application process and the evaluation of statutory factors in
relocating main office or branches. The FDIC last amended the Statement
of Policy September 8, 1980. 2 FDIC Law, Regulations, and Related Acts
5125.
Since the Statement of Policy was last amended, the application
process for relocating branches and main offices has changed
significantly. As a result, the supervisory information and guidance
contained in the Policy Statement are now out-of-date.
As part of the FDIC's comprehensive review of its applications
process the FDIC is amending part 303 of its regulations elsewhere in
today's Federal Register. The revisions to part 303 cover the
relocation of main offices and branches in sufficient detail so as to
address the required application procedures.
The FDIC received three comments regarding the rescission of the
Statement of Policy. Two commenters supported the FDIC's proposal to
rescind the Statement of Policy and one offered no objection.
For the above reasons, the FDIC rescinds the Statement of Policy on
Applications to Relocate Main Office or Branch (Includes Remote Service
Facilities).
By order of the Board of Directors.
Dated at Washington, D.C. this 7th day of July, 1998.
Federal Deposit Insurance Corporation
James LaPierre,
Deputy Executive Secretary.
[FR Doc. 98-21554 Filed 8-19-98; 8:45 am]
BILLING CODE 6714-01-P
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