[Title 12 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2001 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

                    12


          Parts 300 to 499

                         Revised as of January 1, 2001

Banks and Banking





          Containing a codification of documents of general 
          applicability and future effect
          As of January 1, 2001
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

A Special Edition of the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2001



  For sale by the Superintendent of Documents, U.S. Government Printing 
                                  Office
 Internet: bookstore.gpo.gov    Phone: (202) 512-1800    Fax: (202) 512-
                                   2250
                Mail: Stop SSOP, Washington, DC 20402-0001



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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 12:
          Chapter III--Federal Deposit Insurance Corporation         3
          Chapter IV--Export-Import Bank of the United States      455
  Finding Aids:
      Table of CFR Titles and Chapters........................     509
      Alphabetical List of Agencies Appearing in the CFR......     527
      Redesignation Tables....................................     537
      List of CFR Sections Affected--Transferred Regulations 
        Formerly Appearing in Title 12 CFR, Chapter V.........     543
      List of CFR Sections Affected...........................     545



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                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  12 CFR 303.0 refers 
                       to title 12, part 303, 
                       section 0.

                     ----------------------------

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2001), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

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Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
info@fedreg.nara.gov.

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ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public papers, Weekly Compilation of Presidential 
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free). E-mail, gpoaccess@gpo.gov.

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    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
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site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 2001.



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                               THIS TITLE

    Title 12--Banks and Banking is composed of six volumes. The parts in 
these volumes are arranged in the following order: parts 1-199, 200-219, 
220-299, 300-499, 500-599, and part 600-end. The first volume containing 
parts 1-199 is comprised of chapter I--Comptroller of the Currency, 
Department of the Treasury. The second and third volumes containing 
parts 200-299 are comprised of chapter II--Federal Reserve System. The 
fourth volume containing parts 300-499 is comprised of chapter III--
Federal Deposit Insurance Corporation and chapter IV--Export-Import Bank 
of the United States. The fifth volume containing parts 500-599 is 
comprised of chapter V--Office of Thrift Supervision, Department of the 
Treasury. The sixth volume containing part 600-end is comprised of 
chapter VI--Farm Credit Administration, chapter VII--National Credit 
Union Administration, chapter VIII--Federal Financing Bank, chapter IX--
Federal Housing Finance Board, chapter XI--Federal Financial 
Institutions Examination Council, chapter XIV--Farm Credit System 
Insurance Corporation, chapter XV--Department of the Treasury, chapter 
XVII--Office of Federal Housing Enterprise Oversight, Department of 
Housing and Urban Development and chapter XVIII--Community Development 
Financial Institutions Fund, Department of the Treasury. The contents of 
these volumes represent all of the current regulations codified under 
this title of the CFR as of January 1, 2001.

    Redesignation tables appear in the volumes containing parts 1-199, 
parts 300-499, parts 500-599, and part 600-end.

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                       TITLE 12--BANKS AND BANKING




                  (This book contains parts 300 to 499)

  --------------------------------------------------------------------
                                                                    Part

chapter iii--Federal Deposit Insurance Corporation..........         303


chapter iv--Export-Import Bank of the United States.........         400

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           CHAPTER III--FEDERAL DEPOSIT INSURANCE CORPORATION




  --------------------------------------------------------------------

              SUBCHAPTER A--PROCEDURE AND RULES OF PRACTICE
Part                                                                Page
300-302         [Reserved]

303             Filing procedures and delegations of 
                    authority...............................           5
304             Forms, instructions and reports.............          68
305-306         [Reserved]

307             Notification of changes of insured status...          72
308             Rules of practice and procedure.............          73
309             Disclosure of information...................         135
310             Privacy Act regulations.....................         148
311             Rules governing public observation of 
                    meetings of the Corporation's Board of 
                    Directors...............................         153
312             Assessment of fees upon entrance to or exit 
                    from the Bank Insurance Fund or the 
                    Savings Association Insurance Fund......         158
       SUBCHAPTER B--REGULATIONS AND STATEMENTS OF GENERAL POLICY
323             Appraisals..................................         164
324             [Reserved]

325             Capital maintenance.........................         168
326             Minimum security devices and procedures and 
                    Bank Secrecy Act compliance.............         214
327             Assessments.................................         216
328             Advertisement of membership.................         234
329             Interest on deposits........................         238
330             Deposit insurance coverage..................         241
331             [Reserved]

332             Privacy of consumer financial information...         255
333             Extension of corporate powers...............         272
334             [Reserved]

335             Securities of nonmember insured banks.......         274
336             FDIC employees..............................         280
337             Unsafe and unsound banking practices........         284
338             Fair housing................................         296
339             Loans in areas having special flood hazards.         300

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340             Restrictions on sale of assets by the 
                    Federal Deposit Insurance Corporation...         304
341             Registration of securities transfer agents..         306
342             [Reserved]

343             Consumer Protection in Sales of Insurance...         309
344             Recordkeeping and confirmation requirements 
                    for securities transactions.............         312
345             Community reinvestment......................         320
346             [Reserved]

347             International banking.......................         339
348             Management official interlocks..............         361
349             Reports and public disclosure of 
                    indebtedness of executive officers and 
                    principal shareholders to a State 
                    nonmember bank and its correspondent 
                    banks...................................         365
350             Disclosure of financial and other 
                    information by FDIC-insured State 
                    nonmember banks.........................         368
351             [Reserved]

352             Nondiscrimination on the basis of handicap..         370
353             Suspicious activity reports.................         375
357             Determination of economically depressed 
                    regions.................................         377
359             Golden parachute and indemnification 
                    payments................................         378
360             Resolution and receivership rules...........         385
361             Minority and Women Outreach Program 
                    Contracting.............................         390
362             Activities of insured State banks and 
                    insured savings associations............         391
363             Annual independent audits and reporting 
                    requirements............................         414
364             Standards for Safety and Soundness..........         423
365             Real Estate Lending Standards...............         428
366             Contractor conflicts of interest............         433
367             Suspension and exclusion of contractor and 
                    termination of contracts................         440
368             Government securities sales practices.......         448
369             Prohibition against use of interstate 
                    branches primarily for deposit 
                    production..............................         451

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              SUBCHAPTER A--PROCEDURE AND RULES OF PRACTICE



                        PARTS 300-302  [RESERVED]



PART 303--FILING PROCEDURES AND DELEGATIONS OF AUTHORITY--Table of Contents




Sec.
303.0  Scope.

                Subpart A--Rules of General Applicability

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 of Insured State Banks

303.120  Scope.
303.121  Filing procedures.
303.122  Processing.
303.123  Delegation of authority.

          subpart H--Activities of Insured Savings Associations

303.140  Scope.
303.141  Filing procedures.
303.142  Processing.
303.143  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.

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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.
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, 1828a, 1831a, 1831e, 1831o, 
1831p-1, 1831w, 1835a, 1843(l), 3104, 3105, 3108; 3207; 15 U.S.C. 1601-
1607.

    Source: 63 FR 44713, Aug. 20, 1998, unless otherwise noted.



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

[[Page 7]]

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 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,

[[Page 8]]

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.).

[[Page 9]]

    (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 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.

[[Page 10]]



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);

[[Page 11]]

    (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 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

[[Page 12]]

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

[[Page 13]]

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 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

[[Page 14]]

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.
    (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

[[Page 15]]

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

[[Page 16]]

on such filing within 60 days of its receipt of the request for 
reconsideration.
    (g) Nullification, withdrawal, revocation, amendment, and suspension 
of decisions on filing.--(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).
    (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.

[[Page 17]]



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.

[[Page 18]]



                      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 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

[[Page 19]]

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

[[Page 20]]

(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);
    (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)

[[Page 21]]

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 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

[[Page 22]]

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.

[[Page 23]]

    (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;
    (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

[[Page 24]]

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

[[Page 25]]

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.
    (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

[[Page 26]]

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

[[Page 27]]

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 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

[[Page 28]]

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

[[Page 29]]

day, on the newspaper's 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

[[Page 30]]

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
    (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

[[Page 31]]

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

[[Page 32]]

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 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

[[Page 33]]

    (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

[[Page 34]]

(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 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

[[Page 35]]

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 director 
before filing the notice required under this subpart if the FDIC finds 
that:

[[Page 36]]

    (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.

[[Page 37]]



              Subpart G--Activities of Insured State Banks

    Source: 63 FR 66325, Dec. 1, 1998, unless otherwise noted.



Sec. 303.120  Scope.

    This subpart sets forth procedures for complying with notice and 
application requirements contained in subpart A of part 362 of this 
chapter, governing insured state banks and their subsidiaries engaging 
in activities which are not permissible for national banks and their 
subsidiaries. This subpart sets forth procedures for complying with 
notice and application requirements contained in subpart B of part 362 
of this chapter, governing certain activities of insured state nonmember 
banks, their subsidiaries, and certain affiliates. This subpart also 
sets forth procedures for complying with the notice requirements 
contained in subpart E of part 362 of this chapter, governing 
subsidiaries of insured state nonmember banks engaging in certain 
financial activities.

[65 FR 15529, Mar. 23, 2000]



Sec. 303.121  Filing procedures.

    (a) Where to file. A notice or application required by subparts A, B 
or E of part 362 of this chapter shall be submitted in writing to the 
appropriate regional director (DOS).
    (b) Contents of filing. A complete letter notice or letter 
application shall include the following information:
    (1) Filings generally.--(i) A brief description of the activity and 
the manner in which it will be conducted;
    (ii) The amount of the bank's existing or proposed direct or 
indirect investment in the activity as well as calculations sufficient 
to indicate compliance with any specific capital ratio or investment 
percentage limitation detailed in subparts A, B or E of part 362 of this 
chapter;
    (iii) A copy of the bank's business plan regarding the conduct of 
the activity;
    (iv) A citation to the state statutory or regulatory authority for 
the conduct of the activity;
    (v) A copy of the order or other document from the appropriate 
regulatory authority granting approval for the bank to conduct the 
activity if such approval is necessary and has already been granted;
    (vi) A brief description of the bank's policy and practice with 
regard to any anticipated involvement in the activity by a director, 
executive office or principal shareholder of the bank or any related 
interest of such a person; and
    (vii) A description of the bank's expertise in the activity.
    (2) [Reserved]
    (3) Copy of application or notice filed with another agency. If an 
insured state bank has filed an application or notice with another 
federal or state regulatory authority which contains all of the 
information required by paragraph (b) (1) of this section, the insured 
state bank may submit a copy to the FDIC in lieu of a separate filing.
    (4) Additional information. The appropriate regional director (DOS) 
may request additional information to complete processing.

[65 FR 15529, Mar. 23, 2000]



Sec. 303.122  Processing.

    (a) Expedited processing. A notice filed by an insured state bank 
seeking to commence or continue an activity under Sec. 362.4(b)(3)(i), 
Sec. 362.4(b)(5), Sec. 362.8, or Sec. 362.18(a) of this chapter 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 a basis for that decision. The FDIC may remove the notice 
from expedited processing for any of the reasons set forth in 
Sec. 303.11(c)(2). Absent such removal, a notice processed under 
expedited processing is deemed approved 30 days after receipt of a 
complete notice by the FDIC (subject to extension for an additional 15 
days upon written notice to the bank) or on such earlier date authorized 
by the FDIC in writing.
    (b) Standard processing for applications and notices that have been 
removed from expedited processing. For an application filed by an 
insured State bank seeking to commence or continue an activity under 
Sec. 362.3(a)(2)(iii)(A), Sec. 362.3(b)(2)(i), Sec. 362.3(b)(2)(ii)(A), 
Sec. 362.3(b)(2)(ii)(C), Sec. 362.4(b)(1), Sec. 362.4(b)(2), 
Sec. 362.4(b)(4), Sec. 362.5(b)(2), Sec. 362.8(a)(2), or Sec. 362.8(b) 
of

[[Page 38]]

this chapter or for notices which are not processed pursuant to the 
expedited processing procedures, the FDIC will provide the insured State 
bank with written notification of the final action as soon as the 
decision is rendered. The FDIC will normally review and act in such 
cases within 60 days after receipt of a completed application or notice 
(subject to extension for an additional 30 days upon written notice to 
the bank), but failure of the FDIC to act prior to the expiration of 
these periods does not constitute approval.

[63 FR 66325, Dec. 1, 1998, as amended at 65 FR 15530, Mar. 23, 2000]



Sec. 303.123  Delegations of authority.

    (a) Instruments having the character of debt securities. Authority 
is delegated to the Director (DOS) to make determinations contemplated 
under Secs. 362.2(h) and 362.3(b)(2)(iii)(B) of this chapter.
    (b) Other applications, notices, and actions. The authority to 
review and act upon applications and notices filed pursuant to this 
subpart G and to take any other action authorized by this subpart G or 
subparts A, B and E of part 362 of this chapter is delegated to the 
Director (DOS), and except as limited by paragraph (a) of this section, 
to the Deputy Director and where confirmed in writing by the Director to 
an associate director and the appropriate regional director and deputy 
regional director.

[63 FR 66325, Dec. 1, 1998, as amended at 65 FR 15530, Mar. 23, 2000]



          Subpart H--Activities of Insured Savings Associations

    Source: 63 FR 66325, Dec. 1, 1998, unless otherwise noted.



Sec. 303.140  Scope.

    This subpart sets forth procedures for complying with the notice and 
application requirements contained in subpart C of part 362 of this 
chapter, governing insured state savings associations and their service 
corporations engaging in activities which are not permissible for 
federal savings associations and their service corporations. This 
subpart also sets forth procedures for complying with the notice 
requirements contained in subpart D of part 362 of this chapter, 
governing insured savings associations which establish or engage in new 
activities through a subsidiary.



Sec. 303.141  Filing procedures.

    (a) Where to file. All applications and notices required by subpart 
C or subpart D of part 362 of this chapter are to be in writing and 
filed with the appropriate regional director.
    (b) Contents of filing--(1) Filings generally. A complete letter 
notice or letter application shall include the following information:
    (i) A brief description of the activity and the manner in which it 
will be conducted;
    (ii) The amount of the association's existing or proposed direct or 
indirect investment in the activity as well as calculations sufficient 
to indicate compliance with any specific capital ratio or investment 
percentage limitation detailed in subpart C or D of this chapter;
    (iii) A copy of the association's business plan regarding the 
conduct of the activity;
    (iv) A citation to the state statutory or regulatory authority for 
the conduct of the activity;
    (v) A copy of the order or other document from the appropriate 
regulatory authority granting approval for the association to conduct 
the activity if such approval is necessary and has already been granted;
    (vi) A brief description of the association's policy and practice 
with regard to any anticipated involvement in the activity by a 
director, executive officer or principal shareholder of the association 
or any related interest of such a person; and
    (vii) A description of the association's expertise in the activity.
    (2) [Reserved]
    (3) Copy of application or notice filed with another agency. If an 
insured savings association has filed an application or notice with 
another federal or state regulatory authority which contains all of the 
information required by paragraph (b) (1) of this section, the insured 
state bank may submit a copy to the FDIC in lieu of a separate filing.

[[Page 39]]

    (4) Additional information. The appropriate regional director (DOS) 
may request additional information to complete processing.



Sec. 303.142  Processing.

    (a) Expedited processing. A notice filed by an insured state savings 
association seeking to commence or continue an activity under 
Sec. 362.11(b)(2)(i), Sec. 362.12(b)(2)(i), or Sec. 362.12(b)(4) of this 
chapter 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 a basis for that decision. The FDIC may remove the 
notice from expedited processing for any of the reasons set forth in 
Sec. 303.11(c)(2). Absent such removal, a notice processed under 
expedited processing is deemed approved 30 days after receipt of a 
complete notice by the FDIC (subject to extension for an additional 15 
days upon written notice to the bank) or on such earlier date authorized 
by the FDIC in writing.
    (b) Standard processing for applications and notices that have been 
removed from expedited processing. For an application filed by an 
insured state savings association seeking to commence or continue an 
activity under Sec. 362.11(a)(2), Sec. 362.11(b)(2), Sec. 362.12(b)(1) 
of this chapter or for notices which are not processed pursuant to the 
expedited processing procedures, the FDIC will provide the insured state 
savings association with written notification of the final action as 
soon as the decision is rendered. The FDIC will normally review and act 
in such cases within 60 days after receipt of a completed application or 
notice (subject to extension for an additional 30 days upon written 
notice to the bank), but failure of the FDIC to act prior to the 
expiration of these periods does not constitute approval.
    (c) Notices of activities in excess of an amount permissible for a 
federal savings association; subsidiary notices. Receipt of a notice 
filed by an insured state savings association as required by 
Sec. 362.11(b)(3) or Sec. 362.15 of this chapter will be acknowledged in 
writing by the appropriate regional director (DOS). The notice will be 
reviewed at the appropriate regional office, which will take such action 
as it deems necessary and appropriate.



Sec. 303.143  Delegations of authority.

    (a) Instruments having the character of debt securities. Authority 
is delegated to the Director (DOS) to make determinations contemplated 
under Secs. 362.2(h) and 362.3(b)(2)(iii)(B) of this chapter.
    (b) Other applications, notices, and actions. The authority to 
review and act upon applications and notices filed pursuant to this 
subpart H and to take any other action authorized by this subpart H or 
subparts C and D of part 362 of this chapter is delegated to the 
Director (DOS), and except as limited by paragraph (a) of this section, 
to the Deputy Director and where confirmed in writing by the Director to 
an associate director and the appropriate regional director and deputy 
regional director.



                 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

[[Page 40]]

(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), the federal deposit insurance funds, or to the public 
interest.

[[Page 41]]



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

[[Page 42]]

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 act on a waiver under Sec. 303.162 is retained by 
the Board of Directors, except for requests to waive the depositor vote 
requirements in Sec. 333.4(c)(2) of this chapter when the requests are 
based on the need for the bank to comply with applicable state law in 
effect as of January 1, 1999, that provides for voting by corporators as 
the only depositor voting mechanism for state-chartered, mutual savings 
banks, or prohibits depositors of state-chartered, cooperative savings 
banks in mutual form from voting by proxy. Authority is delegated to the 
Director and Deputy Director (DOS) to act on such waiver requests.
    (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.

[63 FR 44713, Aug. 20, 1998, as amended at 64 FR 20142, Apr. 26, 1999]



                    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 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.

[[Page 43]]

    (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

[[Page 44]]

    (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.
    (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

[[Page 45]]

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

[[Page 46]]

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 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

[[Page 47]]

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

[[Page 48]]

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
    (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.

[[Page 49]]



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.



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

[[Page 50]]

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

[[Page 51]]

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 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

[[Page 52]]

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

[[Page 53]]

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:
    (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

[[Page 54]]

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

[[Page 55]]

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 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

[[Page 56]]

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.

[[Page 57]]

    (d) Additional information. The FDIC may request additional 
information at any time during the processing.
    (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

[[Page 58]]

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 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

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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).

[[Page 60]]

    (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 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

[[Page 61]]

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.

[[Page 62]]

    (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)).



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

[[Page 63]]

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

[[Page 64]]

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 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,

[[Page 65]]

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 respondent depository 
institution is in material compliance with such notification or for good 
cause shown.

[[Page 66]]

    (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.

[[Page 67]]

    (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.
    (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

[[Page 68]]

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 304--FORMS, INSTRUCTIONS AND REPORTS--Table of Contents




Sec.
304.1  Purpose and scope.
304.2  Forms and instructions--general.
304.3  Certified statements.
304.4  Reports of condition and income.
304.5  Other forms.
304.6  [Reserved]
304.7  Display of control numbers.

Appendix A to Part 304--List of Forms

    Authority: 5 U.S.C. 552; 12 U.S.C. 1817, 1818, 1819, 1820; Public 
Law 102-242, 105 Stat. 2251 (12 U.S.C. 1817 note).

    Source: 51 FR 36684, Oct. 15, 1986, unless otherwise noted.



Sec. 304.1  Purpose and scope.

    This part is issued under section 552 of title 5 of the United 
States Code (5 U.S.C. 552), which requires that each agency shall make 
available to the public information pertaining to the description of 
forms available or the places at which forms may be obtained, and 
instructions as to the scope and content of reports and other 
submittals. The forms mentioned in this part are limited to those which 
are not already mentioned elsewhere within the rules and regulations of 
the Federal Deposit Insurance Corporation. However, appendix A to this 
part lists forms required by the FDIC and identifies the sections of 
FDIC's regulations where the forms are referenced.

[51 FR 36684, Oct. 15, 1986, as amended at 62 FR 4896, Feb. 3, 1997]



Sec. 304.2  Forms and instructions--general.

    Necessary forms with their related instructions to be used in 
connection with applications, reports, and other submittals can be 
obtained from FDIC regional offices--Division of Supervision. The FDIC 
regional offices are

[[Page 69]]

listed in the directory of the FDIC Law, Regulations and Related Acts 
looseleaf service, published by the FDIC. A listing of FDIC forms can 
also be obtained by writing to the FDIC, Division of Supervision, 550 
17th Street, NW, Washington, D.C. 20429. The forms are also available in 
the FDIC Public Information Center at 801 17th Street, NW, Washington, 
D.C. 20429.

[62 FR 4896, Feb. 3, 1997]



Sec. 304.3  Certified statements.

    The certified statements required to be filed by insured 
institutions under the provisions of section 7 of the Federal Deposit 
Insurance Act (12 U.S.C. 1817), as amended, shall be filed in accordance 
with part 327 of this chapter. The applicable forms are Form 6420/07A--
Form 6420/07H which show the computation of the semiannual assessment 
due to the Corporation from an insured depository institution. As 
provided for in part 327 of this chapter, the forms will be furnished to 
insured depository institutions by the Corporation twice each calendar 
year and the completed statement must be returned to the Corporation by 
each institution.

[62 FR 4896, Feb. 3, 1997]



Sec. 304.4  Reports of condition and income.

    (a) Description. Forms FFIEC 031, 032, 033, and 034, Consolidated 
Reports of Condition and Income, are quarterly reports for insured state 
nonmember banks (except District banks) of different asset sizes or with 
foreign offices, as appropriate, that are required to be prepared as of 
the close of business on the following report dates: March 31, June 30, 
September 30, and December 31. These reports are also known as the 
``Call Report.'' The Call Report includes a balance sheet, an income 
statement, and a statement of changes in equity capital of the reporting 
bank. Supporting schedules request additional detail with respect to 
charge-offs and recoveries, income from international operations, 
specific asset and liability accounts, off-balance sheet items, past due 
and nonaccrual assets, information for assessment purposes, and 
regulatory capital. All assets and liabilities, including contingent 
assets and liabilities, must be reported in, or otherwise taken into 
account in the preparation of, the Call Report. Reporting banks must 
also submit annually such information on small business and small farm 
lending as the FDIC may need to assess the availability of credit to 
these sectors of the economy. Call Reports must be prepared in 
accordance with the appropriate instructions contained in the Federal 
Financial Institutions Examination Council booklet entitled 
``Instructions--Consolidated Reports of Condition and Income''. The 
report forms, the instructions for completing the reports, and the 
accompanying materials will be furnished to all insured state nonmember 
banks (except District banks) by, or may be obtained upon request from, 
the Call Reports Analysis Unit, Division of Supervision, FDIC, 
Washington, D.C. 20429.
    (b) Submission of reports. All insured state nonmember banks (except 
District banks) shall file their completed reports by the method and 
with the appropriate collection agent for the FDIC as designated in the 
materials accompanying the report forms each quarter. Completed reports 
must be received no more than 30 calendar days after the report date, 
subject to the timely filing provisions set forth in the 
``Instructions--Consolidated Reports of Condition and Income'' and in 
the materials accompanying the report forms each quarter. Any bank which 
has or has had more than one foreign office, other than a shell branch 
or an International Banking Facility, may take an additional 15 calendar 
days to submit its Call Reports. A bank using any of these additional 15 
calendar days to complete its reports is required to submit its reports 
electronically.

[62 FR 4896, Feb. 3, 1997]



Sec. 304.5  Other forms.

    The forms described in this section have been prepared for the use 
of banks.
    (a) Form 8020/05: Summary of Deposits. Form 8020/05 is a report on 
the amount of deposits for each authorized office of an insured bank 
with branches; unit banks do not report. Reports as of June 30 of each 
year must be submitted no later than the immediately succeeding

[[Page 70]]

July 31. The report is filed with the appropriate collection agent for 
the FDIC as designated in the materials accompanying the survey forms 
each year. The report forms and the instructions for completing the 
reports will be furnished to all such banks by, or may be obtained upon 
request from the Trust and Survey Group, Division of Supervision, FDIC, 
550 17th Street, NW, Washington, D.C. 20429.
    (b) Form 6120/06: Notification of Performance of Bank Services. Form 
6120/06 may be used to satisfy the notice requirement for bank service 
arrangements that is contained in section 7 of the Bank Service 
Corporation Act (12 U.S.C. 1867), as amended. In lieu of the form, a 
bank may satisfy the requirement by submitting a letter stating: The 
name of the servicer; the address at which the service is performed; the 
service being performed; and the date the service commenced. Either the 
form or the letter containing the notice information must be submitted 
to the regional director--Division of Supervision of the region in which 
the bank's main office is located within 30 days of the making of the 
bank service contract or the performance of the bank service, whichever 
occurs first.
    (c) Form FFIEC 001: Annual Report of Trust Assets. This report must 
be filed by all insured state nonmember commercial and savings banks 
operating trust departments or banks granted consent by the Corporation 
to exercise trust powers, and their trust subsidiaries. The report must 
be filed no later than February 15th of each year. When circumstances 
necessitate, additional information may be required about certain 
operations of the trust department. The report must be prepared and 
submitted in accordance with the appropriate instructions. The report is 
filed with the appropriate collection agent for the FDIC as designated 
in the report form and instructions. The report forms and instructions 
for completing the report will be furnished automatically to all such 
banks by, or may be obtained upon request from the Trust and Survey 
Group, Division of Supervision, FDIC, 550 17th Street, NW, Washington, 
D.C. 20429.
    (d) Form FFIEC 002: Report of Assets and Liabilities of U.S. 
Branches and Agencies of Foreign Banks. Form FFIEC 002 is a report in 
the form of a statement of the assets and liabilities of U.S. branches 
and agencies of foreign banks together with supporting schedules that 
request additional detail with respect to selected assets and 
liabilities, off-balance sheet items, and, in the case of insured 
branches, information for assessment purposes. All assets and 
liabilities, including contingent assets and liabilities, must be 
reported in, or otherwise taken into account in the preparation of, this 
report. Insured branches must also submit annually such information on 
small business and small farm lending as the FDIC may need to assess the 
availability of credit to these sectors of the economy. The report must 
be prepared in accordance with the instructions contained in the 
instruction booklet for the report, copies of which are furnished to all 
U.S. branches and agencies of foreign banks by the Federal Reserve 
System. The Board of Governors of the Federal Reserve System collects 
and processes the report on behalf of FDIC-supervised branches. The 
report is submitted quarterly to the appropriate Federal Reserve 
district bank.
    (e) Form FFIEC 004: Report on Indebtedness of Executive Officers and 
Principal Shareholders and their Related Interests to Correspondent 
Banks. Form FFIEC 004 is a recommended form that may be used by the 
executive officers and principal shareholders of an insured state 
nonmember bank to report to the board of directors of their bank on 
their indebtedness (and that of their related interests) to 
correspondent banks, as required by part 349 of this chapter. The 
reports or any form containing identical information must be submitted 
to the bank's board of directors by January 31 of each year and cover 
indebtedness to correspondent banks during the preceding calendar year. 
Form FFIEC 004 is mailed annually by the FDIC to each insured state 
nonmember bank.

[62 FR 4897, Feb. 3, 1997]

[[Page 71]]



Sec. 304.6  [Reserved]



Sec. 304.7  Display of control numbers.

    The following sections of this part of FDIC's regulations containing 
collection of information requirements are listed with the control 
numbers assigned by the Office of Management and Budget:

------------------------------------------------------------------------
                                                             Currently
               Section of 12 CFR Part 304                  Assigned OMB
                                                            Control No.
------------------------------------------------------------------------
304.3...................................................       3064-0057
304.4(a)................................................       3064-0052
304.4(b)................................................       3064-0054
304.5(a)................................................       3064-0061
304.5(b)................................................       3064-0029
304.5(c)................................................       3064-0024
304.5(d)................................................       7100-0032
304.5(e)................................................       3064-0023
------------------------------------------------------------------------

                  Appendix A to Part 304--List of Forms
    Note: See footnotes at end of table.

----------------------------------------------------------------------------------------------------------------
                                                                            Section of FDICs
                                                                           regulations (12 CFR
                 Form                                Title               chapter III) where the       OMB No.
                                                                           form is referenced
----------------------------------------------------------------------------------------------------------------
FDIC 6112/01..........................  Initial Statement of            335.413.................       3064-0030
                                         Beneficial Ownership of
                                         Equity Securities (Form F-7).
FDIC 6112/02..........................  Statement of Changes in         335.414.................       3064-0030
                                         Beneficial Ownership of
                                         Equity Securities (Form F-8).
FDIC 6120/06..........................  Notification of Bank Services.  304.5(b)................       3064-0029
FDIC 6200/05..........................  Application for Federal         303.1...................       3064-0001
                                         Deposit Insurance (Commercial
                                         Banks).
FDIC 6200/06..........................  Financial Report..............  (\1\)...................       3064-0006
FDIC 6200/07..........................  Application for Federal         303.1...................       3064-0069
                                         Deposit Insurance for
                                         Operating Noninsured
                                         Institutions.
FDIC 6200/09..........................  Application for Consent to      (\2\)...................       3064-0025
                                         Exercise Trust Powers.
FDIC 6220/01..........................  Application for a Merger or     303.3...................       3064-0016
                                         Other Transaction Pursuant to
                                         Section 19(c) of the Federal
                                         Deposit Insurance Act.
FDIC 6220/07..........................  Application for a Merger or     303.7(b)(1) and 303.3...       3064-0015
                                         Other Transaction Pursuant to
                                         Section 18(c) of the Federal
                                         Deposit Insurance Act
                                         (Phantom or Corporate
                                         Reorganization).
FDIC 6342/12..........................  Request for Deregistration      341.5...................       3064-0027
                                         Registered Transfer Agent.
FDIC 6420/07..........................  Certified Statement...........  304.3(a)................       3064-0057
FDIC 6440/12..........................  Loan/Application Register.....  338.8(\3\)..............       7100-0247
FDIC 6710/06..........................  Suspicious Activity Report....  353.1...................       3064-0077
FDIC 6710/07..........................  Application Pursuant to         (\4\)...................       3064-0018
                                         Section 19 of the Federal
                                         Deposit Insurance Act.
FDIC 6810/01..........................  Notification of Addition of a   333.2...................       3064-0097
                                         Director or Employment of a
                                         Senior Executive Officer.
FDIC 6822/01..........................  Notice of Acquisition of        303.4(b)................       3064-0019
                                         Control.
FDIC 8020/05..........................  Summary of Deposits...........  304.5(a)................       3064-0061
FFIEC 001.............................  Annual Report of Trust Assets.  304.5(c)................       3064-0024
FFIEC 002.............................  Report of Assets and            304.5(d)................       7100-0032
                                         Liabilities of U.S. Branches
                                         and Agencies of Foreign Banks.
FFIEC 004.............................  Report on Indebtedness of       304.5(e)................       3064-0023
                                         Executive Officers and
                                         Principal Shareholders and
                                         their Related Interests to
                                         Correspondent Banks.
FFIEC 009.............................  Country Exposure Report.......  351.3(b)................       3064-0017
FFIEC 009a............................  Country Exposure Information    351.3...................       3064-0017
                                         Report.
FFIEC 019.............................  Country Exposure Report for     (\5\)...................       3064-0017
                                         U.S. Branches and Agencies of
                                         Foreign Banks.
FFIEC 030.............................  Foreign Branch Report of        347.6(b)................       3064-0011
                                         Condition.
FFIEC 031.............................  Consolidated Reports of         304.4...................       3064-0052
                                         Condition and Income for a
                                         Bank with Domestic and
                                         Foreign Offices.
FFIEC 032.............................  Consolidated Reports of         304.4...................       3064-0052
                                         Condition and Income for a
                                         Bank with Domestic Offices
                                         Only and Total Assets of $300
                                         Million or More.
FFIEC 033.............................  Consolidated Reports of         304.4...................       3064-0052
                                         Condition and Income for a
                                         Bank with Domestic Offices
                                         Only and Total Assets of $100
                                         Million or More But Less Than
                                         $300 Million.
FFIEC 034.............................  Consolidated Reports of         304.4...................       3064-0052
                                         Condition and Income for a
                                         Bank with Domestic Offices
                                         Only and Total Assets of Less
                                         than $100 Million.
FFIEC 035.............................  Monthly Consolidated Foreign    (\6\)...................       1557-0156
                                         Currency Report of Banks in
                                         the United States.

[[Page 72]]

 
GFIN..................................  Notice of Government            (\7\)...................       1535-0089
                                         Securities Broker or
                                         Government Securities Dealer
                                         Activities to be Filed by a
                                         Financial Institution Under
                                         Section 15C(a)(1)(B).
GFIN-W................................  Notice by Financial             (\7\)...................       7100-0224
                                         Institutions of Termination
                                         of Activities as a Government
                                         Securities Broker or
                                         Government Securities Dealer.
GFIN-4................................  Disclosure Form for Person      (\7\)...................       1535-0089
                                         Associated With a Financial
                                         Institution Government
                                         Securities Broker or Dealer.
GFIN-5................................  Uniform Termination Notice for  (\7\)...................       1535-0089
                                         Person Associated With a
                                         Financial Institution
                                         Government Securities Broker
                                         or Dealer.
MSD 4.................................  Uniform Application for         343.3...................       3064-0022
                                         Municipal Securities
                                         Principal or Municipal
                                         Securities Representative
                                         Associated With a Bank
                                         Municipal Securities Dealer.
MSD 5.................................  Uniform Termination for         343.3...................       3064-0022
                                         Municipal Securities
                                         Principal or Municipal
                                         Securities Representative
                                         Associated With a Bank
                                         Municipal Securities Dealer.
TA-1..................................  Transfer Agent Registration     341.6...................       3064-0026
                                         and Amendment Form.
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Not referenced in 12 CFR chapter III. The report form is submitted by each individual director or officer of
  a proposed or operating bank applying to the FDIC for federal deposit insurance as a state nonmember bank, or
  by a person proposing to acquire ownership or control of an insured state nonmember bank.
\2\ The report form can be obtained from the HMDA Assistance line by telephoning (202) 452-2016.
\3\ Not referenced in 12 CFR chapter III. The application form is submitted by insured state nonmember banks
  applying for FDIC consent to exercise trust powers.
\4\ Not referenced in 12 CFR chapter III. The application form is submitted by FDIC-insured banks applying for
  FDIC consent to employ persons who have been convicted of crimes involving dishonesty or breach of trust.
\5\ Not referenced in 12 CFR chapter III. The report form is submitted by state chartered and federally-licensed
  branches and agencies of foreign banks in the U.S. with $30 million or more in total direct claims on foreign
  residents. The Federal Reserve Board collects and processes the report on behalf of FDIC-supervised branches.
  The report is submitted quarterly to the appropriate Federal Reserve district bank.
\6\ Not referenced in 12 CFR chapter III. The report form is submitted by banks (other than savings banks) and
  bank holding companies with a dollar equivalent of $100 million or more in assets, liabilities, foreign
  exchange contracts bought and foreign exchange contracts sold in any six specific foreign currencies as of the
  end of a month. The Office of the Comptroller of the Currency collects and processes this monthly report on
  behalf of insured state nonmember banks.
\7\ Not referenced in 12 CFR chapter III. The report form is submitted by banks or persons associated with banks
  required to file under section 15C of the Securities and Exchange Act of 1934.


[62 FR 4897, Feb. 3, 1997]

                        PARTS 305-306  [RESERVED]



PART 307--NOTIFICATION OF CHANGES OF INSURED STATUS--Table of Contents




Sec.
307.1  Certification of assumption of deposit liabilities.
307.2  Notice to be given when deposit liabilities are not assumed.

    Authority: Sec. 2, Pub. L. 797, 64 Stat. 879, 880 as amended by 
secs. 202, 204, Pub. L. 89-694, 80 Stat. 1046, 1054, and sec. 6(c)(14), 
Pub. L. 95-369, 92 Stat. 618 (12 U.S.C. 1818(a), 1818(o)); sec. 304, 
Pub. L. 95-630, 92 Stat. 3676 (12 U.S.C. 1818(q); sec. 9, Pub. L. 797, 
64 Stat. 881 (12 U.S.C. 1819).



Sec. 307.1  Certification of assumption of deposit liabilities.

    Whenever the deposit liabilities of an insured bank or insured 
branch of a foreign bank are assumed by another insured bank (whether by 
merger, consolidation, or other statutory assumption, or by contract), 
the assuming or resulting bank shall certify to the FDIC that it has 
agreed to assume the deposit liabilities of the bank whose deposits were 
assumed. The certification shall be made within 30 days after the 
assumption takes effect and shall state the date the assumption took 
effect. This certification shall be considered satisfactory evidence of 
the assumption.

[48 FR 24031, May 31, 1983]



Sec. 307.2  Notice to be given when deposit liabilities are not assumed.

    Any insured bank or insured branch of a foreign bank whose insured 
status is voluntarily terminated, but whose deposit liabilities are not 
assumed shall give notice to each of its depositors of the date of the 
termination of its insured status under the Federal Deposit Insurance 
Act. The notice to depositors shall be given in a form, in

[[Page 73]]

a manner and at a time approved by the appropriate FDIC Regional 
Director. The FDIC may require the bank to take other steps that it 
considers necessary for the protection of depositors.

[48 FR 24031, May 31, 1983]



PART 308--RULES OF PRACTICE AND PROCEDURE--Table of Contents




           Subpart A--Uniform Rules of Practice and Procedure

Sec.
308.1  Scope.
308.2  Rules of construction.
308.3  Definitions.
308.4  Authority of Board of Directors.
308.5  Authority of the administrative law judge.
308.6  Appearance and practice in adjudicatory proceedings.
308.7  Good faith certification.
308.8  Conflicts of interest.
308.9  Ex parte communications.
308.10  Filing of papers.
308.11  Service of papers.
308.12  Construction of time limits.
308.13  Change of time limits.
308.14  Witness fees and expenses.
308.15  Opportunity for informal settlement.
308.16  FDIC's right to conduct examination.
308.17  Collateral attacks on adjudicatory proceeding.
308.18  Commencement of proceeding and contents of notice.
308.19  Answer.
308.20  Amended pleadings.
308.21  Failure to appear.
308.22  Consolidation and severance of actions.
308.23  Motions.
308.24  Scope of document discovery.
308.25  Request for document discovery from parties.
308.26  Document subpoenas to nonparties.
308.27  Deposition of witness unavailable for hearing.
308.28  Interlocutory review.
308.29  Summary disposition.
308.30  Partial summary disposition.
308.31  Scheduling and prehearing conferences.
308.32  Prehearing submissions.
308.33  Public hearings.
308.34  Hearing subpoenas.
308.35  Conduct of hearings.
308.36  Evidence.
308.37  Post-hearing filings.
308.38  Recommended decision and filing of record.
308.39  Exceptions to recommended decision.
308.40  Review by Board of Directors.
308.41  Stays pending judicial review.

                  Subpart B--General Rules of Procedure

308.101  Scope of Local Rules.
308.102  Authority of Board of Directors and Executive Secretary.
308.103  Appointment of administrative law judge.
308.104  Filings with the Board of Directors.
308.105  Custodian of the record.
308.106  Written testimony in lieu of oral hearing.
308.107  Document discovery.

  Subpart C--Rules of Practice Before the FDIC and Standards of Conduct

308.108  Sanctions.
308.109  Suspension and disbarment.

 Subpart D--Rules and Procedures Applicable to Proceedings Relating to 
                  Disapproval of Acquisition of Control

308.110  Scope.
308.111  Grounds for disapproval.
308.112  Notice of disapproval.
308.113  Answer to notice of disapproval.
308.114  Burden of proof.

 Subpart E--Rules and Procedures Applicable to Proceedings Relating to 
 Assessment of Civil Penalties for Willful Violations of the Change in 
                            Bank Control Act

308.115  Scope.
308.116  Assessment of penalties.
308.117  Effective date of, and payment under, an order to pay.
308.118  Collection of penalties.

     Subpart F--Rules and Procedures Applicable to Proceedings for 
                Involuntary Termination of Insured Status

308.119  Scope.
308.120  Grounds for termination of insurance.
308.121  Notification to primary regulator.
308.122  Notice of intent to terminate.
308.123  Notice to depositors.
308.124  Involuntary termination of insured status for failure to 
          receive deposits.
308.125  Temporary suspension of deposit insurance.
308.126  Special supervisory associations.

 Subpart G--Rules and Procedures Applicable to Proceedings Relating to 
                         Cease-and-Desist Orders

308.127  Scope.
308.128  Grounds for cease-and-desist orders.
308.129  Notice to state supervisory authority.
308.130  Effective date of order and service on bank.
308.131  Temporary cease-and-desist order.

[[Page 74]]

 Subpart H--Rules and Procedures Applicable to Proceedings Relating to
 
  Assessment and Collection of Civil Money Penalties for Violation of
 
Cease-and-Desist Orders and of Certain Federal Statutes, Including Call 
                            Report Penalties

308.132  Assessment of penalties.
308.133  Effective date of, and payment under, an order to pay.

    Subpart I--Rules and Procedures for Imposition of Sanctions Upon 
    Municipal Securities Dealers or Persons Associated With Them and 
                  Clearing Agencies or Transfer Agents

308.134  Scope.
308.135  Grounds for imposition of sanctions.
308.136  Notice to and consultation with the Securities and Exchange 
          Commission.
308.137  Effective date of order imposing sanctions.

Subpart J--Rules and Procedures Relating to Exemption Proceedings Under 
          Section 12(h) of the Securities Exchange Act of 1934

308.138  Scope.
308.139  Application for exemption.
308.140  Newspaper notice.
308.141  Notice of hearing.
308.142  Hearing.
308.143  Decision of Board of Directors.

 Subpart K--Procedures Applicable to Investigations Pursuant to Section 
                            10(c) of the FDIA

308.144  Scope.
308.145  Conduct of investigation.
308.146  Powers of person conducting investigation.
308.147  Investigations confidential.
308.148  Rights of witnesses.
308.149  Service of subpoena.
308.150  Transcripts.

Subpart L--Procedures and Standards Applicable to a Notice of Change in 
 Senior Executive Officer or Director Pursuant to Section 32 of the FDIA

308.151  Scope.
308.152  Grounds for disapproval of notice.
308.153  Procedures where notice of disapproval issues pursuant to 
          Sec. 303.103(c) of this chapter.
308.154  Decision on review.
308.155  Hearing.

    Subpart M--Procedures and Standards Applicable to an Application 
                   Pursuant to Section 19 of the FDIA

308.156  Scope.
308.157  Relevant considerations.
308.158  Filing papers and effective date.
308.159  Denial of applications.
308.160  Hearings.

 Subpart N--Rules and Procedures Applicable to Proceedings Relating to 
     Suspension, Removal, and Prohibition Where a Felony Is Charged

308.161  Scope.
308.162  Relevant considerations.
308.163  Notice of suspension, and orders of removal or prohibition.
308.164  Hearings.

   Subpart O--Liability of Commonly Controlled Depository Institutions

308.165  Scope.
308.166  Grounds for assessment of liability.
308.167  Notice of assessment of liability.
308.168  Effective date of and payment under an order to pay.

  Subpart P--Rules and Procedures Relating to the Recovery of Attorney 
                         Fees and Other Expenses

308.169  Scope.
308.170  Filing, content, and service of documents.
308.171  Responses to application.   
308.172  Eligibility of applicants.
308.173  Prevailing party.
308.174  Standards for awards.
308.175  Measure of awards.
308.176  Application for awards.
308.177  Statement of net worth.
308.178  Statement of fees and expenses.
308.179  Settlement negotiations.
308.180  Further proceedings.
308.181  Recommended decision.
308.182  Board of Directors action.
308.183  Payment of awards.

    Subpart Q--Issuance and Review of Orders Pursuant to the Prompt 
    Corrective Action Provisions of the Federal Deposit Insurance Act

308.200  Scope.
308.201  Directives to take prompt corrective action.
308.202  Procedures for reclassifying a bank based on criteria other 
          than capital.
308.203  Order to dismiss a director or senior executive officer.
308.204  Enforcement of directives.

[[Page 75]]

  Subpart R--Submission and Review of Safety and Soundness Compliance 
      Plans and Issuance of Orders To Correct Safety and Soundness 
                              Deficiencies

308.300  Scope.
308.301  Purpose.
308.302  Determination and notification of failure to meet a safety and 
          soundness standard and request for compliance plan.
308.303  Filing of safety and soundness compliance plan.
308.304  Issuance of orders to correct deficiencies and to take or 
          refrain from taking other actions.
308.305  Enforcement of orders.

Subpart S--Applications for a Stay or Review of Actions of Bank Clearing 
                                Agencies

308.400  Scope.
308.401  Applications for stays of disciplinary sanctions or summary 
          suspensions by a bank clearing agency.
308.402  Applications for review of final disciplinary sanctions, 
          denials of participation, or prohibitions or limitations of 
          access to services imposed by bank clearing agencies.

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505, 
1815(e), 1817, 1818, 1820, 1828, 1829, 1829b, 1831i, 1831o, 1831p-1, 
1832(c), 1884(b), 1972, 3102, 3108(a), 3349, 3909, 4717; 15 U.S.C. 78 
(h) and (i), 78o-4(c), 78o-5, 78q-1, 78s 78u, 78u-2, 78u-3 and 78w; 28 
U.S.C. 2461 note; 31 U.S.C. 330, 5321; 42 U.S.C. 4012a; sec. 31001(s), 
Pub. L. 104-134, 110 Stat. 1321-358.

    Source: 56 FR 37975, Aug. 9, 1991, unless otherwise noted.



           Subpart A--Uniform Rules of Practice and Procedure



Sec. 308.1  Scope.

    This subpart prescribes rules of practice and procedure applicable 
to adjudicatory proceedings as to which hearings on the record are 
provided for by the following statutory provisions:
    (a) Cease-and-desist proceedings under section 8(b) of the Federal 
Deposit Insurance Act (``FDIA'') (12 U.S.C. 1818(b));
    (b) Removal and prohibition proceedings under section 8(e) of the 
FDIA (12 U.S.C. 1818(e));
    (c) Change-in-control proceedings under section 7(j)(4) of the FDIA 
(12 U.S.C. 1817(j)(4)) to determine whether the Federal Deposit 
Insurance Corporation (``FDIC''), should issue an order to approve or 
disapprove a person's proposed acquisition of an institution and/or 
institution holding company;
    (d) Proceedings under section 15C(c)(2) of the Securities Exchange 
Act of 1934 (``Exchange Act'') (15 U.S.C. 78o-5), to impose sanctions 
upon any government securities broker or dealer or upon any person 
associated or seeking to become associated with a government securities 
broker or dealer for which the FDIC is the appropriate regulatory 
agency;
    (e) Assessment of civil money penalties by the FDIC against 
institutions, institution-affiliated parties, and certain other persons 
for which it is the appropriate regulatory agency for any violation of:
    (1) Sections 22(h) and 23 of the Federal Reserve Act (``FRA''), or 
any regulation issued thereunder, and certain unsafe or unsound 
practices or breaches of fiduciary duty, pursuant to 12 U.S.C. 1828(j);
    (2) Section 106(b) of the Bank Holding Company Act Amendments of 
1970 (``BHCA Amendments of 1970''), and certain unsafe or unsound 
practices or breaches of fiduciary duty, pursuant to 12 U.S.C. 
1972(2)(F);
    (3) Any provision of the Change in Bank Control Act of 1978, as 
amended (the ``CBCA''), or any regulation or order issued thereunder, 
and certain unsafe or unsound practices, or breaches of fiduciary duty, 
pursuant to 12 U.S.C. 1817(j)(16);
    (4) Section 7(a)(1) of the FDIA, pursuant to 12 U.S.C. 1817(a)(1);
    (5) Any provision of the International Lending Supervision Act of 
1983 (``ILSA''), or any rule, regulation or order issued thereunder, 
pursuant to 12 U.S.C. 3909;
    (6) Any provision of the International Banking Act of 1978 
(``IBA''), or any rule, regulation or order issued thereunder, pursuant 
to 12 U.S.C. 3108;
    (7) Certain provisions of the Exchange Act, pursuant to section 21B 
of the Exchange Act (15 U.S.C. 78u-2);
    (8) Section 1120 of the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 (``FIRREA'') (12 U.S.C. 3349), or any order or 
regulation issued thereunder;

[[Page 76]]

    (9) The terms of any final or temporary order issued under section 8 
of the FDIA or of any written agreement executed by the FDIC, the terms 
of any condition imposed in writing by the FDIC in connection with the 
grant of an application or request, certain unsafe or unsound practices 
or breaches of fiduciary duty, or any law or regulation not otherwise 
provided herein pursuant to 12 U.S.C. 1818(i)(2);
    (10) Any provision of law referenced in section 102(f) of the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)) or any order or 
regulation issued thereunder; and
    (11) Any provision of law referenced in 31 U.S.C. 5321 or any order 
or regulation issued thereunder;
    (f) Remedial action under section 102(g) of the Flood Disaster 
Protection Act of 1973 (42 U.S.C. 4012a(g)); and
    (g) This subpart also applies to all other adjudications required by 
statute to be determined on the record after opportunity for an agency 
hearing, unless otherwise specifically provided for in the Local Rules.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]



Sec. 308.2  Rules of construction.

    For purposes of this subpart:
    (a) Any term in the singular includes the plural, and the plural 
includes the singular, if such use would be appropriate;
    (b) Any use of a masculine, feminine, or neuter gender encompasses 
all three, if such use would be appropriate;
    (c) The term counsel includes a non-attorney representative; and
    (d) Unless the context requires otherwise, a party's counsel of 
record, if any, may, on behalf of that party, take any action required 
to be taken by the party.



Sec. 308.3  Definitions.

    For purposes of this subpart, unless explicitly stated to the 
contrary:
    (a) Administrative law judge means one who presides at an 
administrative hearing under authority set forth at 5 U.S.C. 556.
    (b) Adjudicatory proceeding means a proceeding conducted pursuant to 
these rules and leading to the formulation of a final order other than a 
regulation.
    (c) Board of Directors or Board means the Board of Directors of the 
Federal Deposit Insurance Corporation or its designee.
    (d) Decisional employee means any member of the Federal Deposit 
Insurance Corporation's or administrative law judge's staff who has not 
engaged in an investigative or prosecutorial role in a proceeding and 
who may assist the Board of Directors or the administrative law judge, 
respectively, in preparing orders, recommended decisions, decisions, and 
other documents under the Uniform Rules.
    (e) Designee of the Board of Directors means officers or officials 
of the Federal Deposit Insurance Corporation acting pursuant to 
authority delegated by the Board of Directors as provided in 12 CFR part 
303 of this chapter or by specific resolution of the Board of Directors.
    (f) Enforcement Counsel means any individual who files a notice of 
appearance as counsel on behalf of the FDIC in an adjudicatory 
proceeding.
    (g) Executive Secretary means the Executive Secretary of the Federal 
Deposit Insurance Corporation or his or her designee.
    (h) FDIC means the Federal Deposit Insurance Corporation.
    (i) Final order means an order issued by the FDIC with or without 
the consent of the affected institution or the institution-affiliated 
party, that has become final, without regard to the pendency of any 
petition for reconsideration or review.
    (j) Institution includes:
    (1) Any bank as that term is defined in section 3(a) of the FDIA (12 
U.S.C. 1813(a));
    (2) Any bank holding company or any subsidiary (other than a bank) 
of a bank holding company as those terms are defined in the BHCA (12 
U.S.C. 1841 et seq.);
    (3) Any savings association as that term is defined in section 3(b) 
of the FDIA (12 U.S.C. 1813(b)), any savings and loan holding company or 
any subsidiary thereof (other than a bank) as those terms are defined in 
section 10(a) of the HOLA (12 U.S.C. 1467(a));

[[Page 77]]

    (4) Any organization operating under section 25 of the FRA (12 
U.S.C. 601 et seq.);
    (5) Any foreign bank or company to which section 8 of the IBA (12 
U.S.C. 3106), applies or any subsidiary (other than a bank) thereof; and
    (6) Any federal agency as that term is defined in section 1(b) of 
the IBA (12 U.S.C. 3101(5)).
    (k) Institution-affiliated party means any institution-affiliated 
party as that term is defined in section 3(u) of the FDIA (12 U.S.C. 
1813(u)).
    (l) Local Rules means those rules promulgated by the FDIC in those 
subparts of this part other than subpart A.
    (m) Office of Financial Institution Adjudication (``OFIA'') means 
the executive body charged with overseeing the administration of 
administrative enforcement proceedings of the Office of the Comptroller 
of the Currency (``OCC''), the Board of Governors of the Federal Reserve 
Board (``FRB''), the FDIC, the Office of Thrift Supervision (``OTS'') 
and the National Credit Union Administration (``NCUA'').
    (n) Party means the FDIC and any person named as a party in any 
notice.
    (o) Person means an individual, sole proprietor, partnership, 
corporation, unincorporated association, trust, joint venture, pool, 
syndicate, agency or other entity or organization, including an 
institution as defined in paragraph (j) of this section.
    (p) Respondent means any party other than the FDIC.
    (q) Uniform Rules means those rules in subpart A of this part that 
pertain to the types of formal administrative enforcement actions set 
forth at Sec. 308.01 and as specified in subparts B through P of this 
part.
    (r) Violation includes any action (alone or with another or others) 
for or toward causing, bringing about, participating in, counseling, or 
aiding or abetting a violation.



Sec. 308.4  Authority of Board of Directors.

    The Board of Directors may, at any time during the pendency of a 
proceeding, perform, direct the performance of, or waive performance of, 
any act which could be done or ordered by the administrative law judge.



Sec. 308.5  Authority of the administrative law judge.

    (a) General rule. All proceedings governed by this part shall be 
conducted in accordance with the provisions of chapter 5 of title 5 of 
the United States Code. The administrative law judge shall have all 
powers necessary to conduct a proceeding in a fair and impartial manner 
and to avoid unnecessary delay.
    (b) Powers. The administrative law judge shall have all powers 
necessary to conduct the proceeding in accordance with paragraph (a) of 
this section, including the following powers:
    (1) To administer oaths and affirmations;
    (2) To issue subpoenas, subpoenas duces tecum, and protective 
orders, as authorized by this part, and to quash or modify any such 
subpoenas and orders;
    (3) To receive relevant evidence and to rule upon the admission of 
evidence and offers of proof;
    (4) To take or cause depositions to be taken as authorized by this 
subpart;
    (5) To regulate the course of the hearing and the conduct of the 
parties and their counsel;
    (6) To hold scheduling and/or pre-hearing conferences as set forth 
in Sec. 308.31;
    (7) To consider and rule upon all procedural and other motions 
appropriate in an adjudicatory proceeding, provided that only the Board 
of Directors shall have the power to grant any motion to dismiss the 
proceeding or to decide any other motion that results in a final 
determination of the merits of the proceeding;
    (8) To prepare and present to the Board of Directors a recommended 
decision as provided herein;
    (9) To recuse himself or herself by motion made by a party or on his 
or her own motion;
    (10) To establish time, place and manner limitations on the 
attendance of the public and the media for any public hearing; and
    (11) To do all other things necessary and appropriate to discharge 
the duties of a presiding officer.

[[Page 78]]



Sec. 308.6  Appearance and practice in adjudicatory proceedings.

    (a) Appearance before the FDIC or an administrative law judge--(1) 
By attorneys. Any member in good standing of the bar of the highest 
court of any state, commonwealth, possession, territory of the United 
States, or the District of Columbia may represent others before the FDIC 
if such attorney is not currently suspended or debarred from practice 
before the FDIC.
    (2) By non-attorneys. An individual may appear on his or her own 
behalf; a member of a partnership may represent the partnership; a duly 
authorized officer, director, or employee of any government unit, 
agency, institution, corporation or authority may represent that unit, 
agency, institution, corporation or authority if such officer; director, 
or employee is not currently suspended or debarred from practice before 
the FDIC.
    (3) Notice of appearance. Any individual acting as counsel on behalf 
of a party, including the FDIC, shall file a notice of appearance with 
OFIA at or before the time that individual submits papers or otherwise 
appears on behalf of a party in the adjudicatory proceeding. The notice 
of appearance must include a written declaration that the individual is 
currently qualified as provided in paragraph (a)(1) or (a)(2) of this 
section and is authorized to represent the particular party. By filing a 
notice of appearance on behalf of a party in an adjudicatory proceeding, 
the counsel agrees and represents that he or she is authorized to accept 
service on behalf of the represented party and that, in the event of 
withdrawal from representation, he or she will, if required by the 
administrative law judge, continue to accept service until new counsel 
has filed a notice of appearance or until the represented party 
indicates that he or she will proceed on a pro se basis.
    (b) Sanctions. Dilatory, obstructionist, egregious, contemptuous or 
contumacious conduct at any phase of any adjudicatory proceeding may be 
grounds for exclusion or suspension of counsel from the proceeding.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]



Sec. 308.7  Good faith certification.

    (a) General requirement. Every filing or submission of record 
following the issuance of a notice shall be signed by at least one 
counsel of record in his or her individual name and shall state that 
counsel's address and telephone number. A party who acts as his or her 
own counsel shall sign his or her individual name and state his or her 
address and telephone number on every filing or submission of record.
    (b) Effect of signature. (1) The signature of counsel or a party 
shall constitute a certification that: The counsel or party has read the 
filing or submission of record; to the best of his or her knowledge, 
information, and belief formed after reasonable inquiry, the filing or 
submission of record is well-grounded in fact and is warranted by 
existing law or a good faith argument for the extension, modification, 
or reversal of existing law; and the filing or submission of record is 
not made for any improper purpose, such as to harass or to cause 
unnecessary delay or needless increase in the cost of litigation.
    (2) If a filing or submission of record is not signed, the 
administrative law judge shall strike the filing or submission of 
record, unless it is signed promptly after the omission is called to the 
attention of the pleader or movant.
    (c) Effect of making oral motion or argument. The act of making any 
oral motion or oral argument by any counsel or party constitutes a 
certification that to the best of his or her knowledge, information, and 
belief formed after reasonable inquiry, his or her statements are well-
grounded in fact and are warranted by existing law or a good faith 
argument for the extension, modification, or reversal of existing law, 
and are not made for any improper purpose, such as to harass or to cause 
unnecessary delay or needless increase in the cost of litigation.



Sec. 308.8  Conflicts of interest.

    (a) Conflict of interest in representation. No person shall appear 
as counsel for another person in an adjudicatory proceeding if it 
reasonably appears

[[Page 79]]

that such representation may be materially limited by that counsel's 
responsibilities to a third person or by the counsel's own interests. 
The administrative law judge may take corrective measures at any stage 
of a proceeding to cure a conflict of interest in representation, 
including the issuance of an order limiting the scope of representation 
or disqualifying an individual from appearing in a representative 
capacity for the duration of the proceeding.
    (b) Certification and waiver. If any person appearing as counsel 
represents two or more parties to an adjudicatory proceeding or also 
represents a non-party on a matter relevant to an issue in the 
proceeding, counsel must certify in writing at the time of filing the 
notice of appearance required by Sec. 308.6(a):
    (1) That the counsel has personally and fully discussed the 
possibility of conflicts of interest with each such party and non-party; 
and
    (2) That each such party and non-party waives any right it might 
otherwise have had to assert any known conflicts of interest or to 
assert any non-material conflicts of interest during the course of the 
proceeding.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]



Sec. 308.9  Ex parte communications.

    (a) Definition--(1) Ex parte communication means any material oral 
or written communication relevant to the merits of an adjudicatory 
proceeding that was neither on the record nor on reasonable prior notice 
to all parties that takes place between:
    (i) An interested person outside the FDIC (including such person's 
counsel); and
    (ii) The administrative law judge handling that proceeding, the 
Board of Directors, or a decisional employee.
    (2) Exception. A request for status of the proceeding does not 
constitute an ex parte communication.
    (b) Prohibition of ex parte communications. From the time the notice 
is issued by the FDIC until the date that the Board of Directors issues 
its final decision pursuant to Sec. 308.40(c):
    (1) No interested person outside the FDIC shall make or knowingly 
cause to be made an ex parte communication to any member of the Board of 
Directors, the administrative law judge, or a decisional employee; and
    (2) No member of the Board of Directors, no administrative law 
judge, or decisional employee shall make or knowingly cause to be made 
to any interested person outside the FDIC any ex parte communication.
    (c) Procedure upon occurrence of ex parte communication. If an ex 
parte communication is received by the administrative law judge, any 
member of the Board of Directors or other person identified in paragraph 
(a) of this section, that person shall cause all such written 
communications (or, if the communication is oral, a memorandum stating 
the substance of the communication) to be placed on the record of the 
proceeding and served on all parties. All other parties to the 
proceeding shall have an opportunity, within ten days of receipt of 
service of the ex parte communication, to file responses thereto and to 
recommend any sanctions that they believe to be appropriate under the 
circumstances. The administrative law judge or the Board of Directors 
shall then determine whether any action should be taken concerning the 
ex parte communication in accordance with paragraph (d) of this section.
    (d) Sanctions. Any party or his or her counsel who makes a 
prohibited ex parte communication, or who encourages or solicits another 
to make any such communication, may be subject to any appropriate 
sanction or sanctions imposed by the Board of Directors or the 
administrative law judge including, but not limited to, exclusion from 
the proceedings and an adverse ruling on the issue which is the subject 
of the prohibited communication.
    (e) Separation of functions. Except to the extent required for the 
disposition of ex parte matters as authorized by law, the administrative 
law judge may not consult a person or party on any matter relevant to 
the merits of the adjudication, unless on notice and opportunity for all 
parties to participate. An employee or agent engaged in the performance 
of investigative or prosecuting functions for the FDIC in a case may 
not, in that or a factually related case, participate or advise in the

[[Page 80]]

decision, recommended decision, or agency review of the recommended 
decision under Sec. 308.40 except as witness or counsel in public 
proceedings.

[56 FR 37975, Aug. 9, 1991, as amended at 60 FR 24762, May 10, 1995]



Sec. 308.10  Filing of papers.

    (a) Filing. Any papers required to be filed, excluding documents 
produced in response to a discovery request pursuant to Secs. 308.25 and 
308.26, shall be filed with the OFIA, except as otherwise provided.
    (b) Manner of filing. Unless otherwise specified by the Board of 
Directors or the administrative law judge, filing may be accomplished 
by:
    (1) Personal service;
    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery;
    (3) Mailing the papers by first class, registered, or certified 
mail; or
    (4) Transmission by electronic media, only if expressly authorized, 
and upon any conditions specified, by the Board of Directors or the 
administrative law judge. All papers filed by electronic media shall 
also concurrently be filed in accordance with paragraph (c) of this 
section.
    (c) Formal requirements as to papers filed--(1) Form. All papers 
filed must set forth the name, address, and telephone number of the 
counsel or party making the filing and must be accompanied by a 
certification setting forth when and how service has been made on all 
other parties. All papers filed must be double-spaced and printed or 
typewritten on 8\1/2\ x 11 inch paper, and must be clear and legible.
    (2) Signature. All papers must be dated and signed as provided in 
Sec. 308.7.
    (3) Caption. All papers filed must include at the head thereof, or 
on a title page, the name of the FDIC and of the filing party, the title 
and docket number of the proceeding, and the subject of the particular 
paper.
    (4) Number of copies. Unless otherwise specified by the Board of 
Directors, or the administrative law judge, an original and one copy of 
all documents and papers shall be filed, except that only one copy of 
transcripts of testimony and exhibits shall be filed.



Sec. 308.11  Service of papers.

    (a) By the parties. Except as otherwise provided, a party filing 
papers shall serve a copy upon the counsel of record for all other 
parties to the proceeding so represented, and upon any party not so 
represented.
    (b) Method of service. Except as provided in paragraphs (c)(2) and 
(d) of this section, a serving party shall use one or more of the 
following methods of service:
    (1) Personal service;
    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery;
    (3) Mailing the papers by first class, registered, or certified 
mail; or
    (4) Transmission by electronic media, only if the parties mutually 
agree. Any papers served by electronic media shall also concurrently be 
served in accordance with the requirements of Sec. 308.10(c).
    (c) By the Board of Directors. (1) All papers required to be served 
by the Board of Directors or the administrative law judge upon a party 
who has appeared in the proceeding in accordance with Sec. 308.6, shall 
be served by any means specified in paragraph (b) of this section.
    (2) If a party has not appeared in the proceeding in accordance with 
Sec. 308.6, the Board of Directors or the administrative law judge shall 
make service by any of the following methods:
    (i) By personal service;
    (ii) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (iii) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or to 
any other agent authorized by appointment or by law to receive service 
and, if the agent is one authorized by statute to receive service and 
the statute so requires, by also mailing a copy to the party;
    (iv) By registered or certified mail addressed to the party's last 
known address; or
    (v) By any other method reasonably calculated to give actual notice.

[[Page 81]]

    (d) Subpoenas. Service of a subpoena may be made:
    (1) By personal service;
    (2) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (3) By delivery to an agent which, in the case of a corporation or 
other association, is delivery to an officer, managing or general agent, 
or to any other agent authorized by appointment or by law to receive 
service and, if the agent is one authorized by statute to receive 
service and the statute so requires, by also mailing a copy to the 
party;
    (4) By registered or certified mail addressed to the person's last 
known address; or
    (5) In such other manner as is reasonably calculated to give actual 
notice.
    (e) Area of service. Service in any state, territory, possession of 
the United States, or the District of Columbia, on any person or company 
doing business in any state, territory, possession of the United States, 
or the District of Columbia, or on any person as otherwise provided by 
law, is effective without regard to the place where the hearing is held, 
provided that if service is made on a foreign bank in connection with an 
action or proceeding involving one or more of its branches or agencies 
located in any state, territory, possession of the United States, or the 
District of Columbia, service shall be made on at least one branch or 
agency so involved.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20347, May 6, 1996]



Sec. 308.12  Construction of time limits.

    (a) General rule. In computing any period of time prescribed by this 
subpart, the date of the act or event that commences the designated 
period of time is not included. The last day so computed is included 
unless it is a Saturday, Sunday, or Federal holiday. When the last day 
is a Saturday, Sunday, or Federal holiday, the period runs until the end 
of the next day that is not a Saturday, Sunday, or Federal holiday. 
Intermediate Saturdays, Sundays, and Federal holidays are included in 
the computation of time. However, when the time period within which an 
act is to be performed is ten days or less, not including any additional 
time allowed for in paragraph (c) of this section, intermediate 
Saturdays, Sundays, and Federal holidays are not included.
    (b) When papers are deemed to be filed or served. (1) Filing and 
service are deemed to be effective:
    (i) In the case of personal service or same day commercial courier 
delivery, upon actual service;
    (ii) In the case of overnight commercial delivery service, U.S. 
Express Mail delivery, or first class, registered, or certified mail, 
upon deposit in or delivery to an appropriate point of collection;
    (iii) In the case of transmission by electronic media, as specified 
by the authority receiving the filing, in the case of filing, and as 
agreed among the parties, in the case of service.
    (2) The effective filing and service dates specified in paragraph 
(b) (1) of this section may be modified by the Board of Directors or 
administrative law judge in the case of filing or by agreement of the 
parties in the case of service.
    (c) Calculation of time for service and filing of responsive papers. 
Whenever a time limit is measured by a prescribed period from the 
service of any notice or paper, the applicable time limits are 
calculated as follows:
    (1) If service is made by first class, registered, or certified 
mail, add three calendar days to the prescribed period;
    (2) If service is made by express mail or overnight delivery 
service, add one calendar day to the prescribed period; or
    (3) If service is made by electronic media transmission, add one 
calendar day to the prescribed period, unless otherwise determined by 
the Board of Directors or the administrative law judge in the case of 
filing, or by agreement among the parties in the case of service.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20348, May 6, 1996]



Sec. 308.13  Change of time limits.

    Except as otherwise provided by law, the administrative law judge 
may, for good cause shown, extend the time limits prescribed by the 
Uniform Rules or by any notice or order issued in the

[[Page 82]]

proceedings. After the referral of the case to the Board of Directors 
pursuant to Sec. 308.38, the Board of Directors may grant extensions of 
the time limits for good cause shown. Extensions may be granted at the 
motion of a party or of the Board of Directors after notice and 
opportunity to respond is afforded all non-moving parties, or on the 
administrative law judge's own motion.



Sec. 308.14  Witness fees and expenses.

    Witnesses subpoenaed for testimony or depositions shall be paid the 
same fees for attendance and mileage as are paid in the United States 
district courts in proceedings in which the United States is a party, 
provided that, in the case of a discovery subpoena addressed to a party, 
no witness fees or mileage need be paid. Fees for witnesses shall be 
tendered in advance by the party requesting the subpoena, except that 
fees and mileage need not be tendered in advance where the FDIC is the 
party requesting the subpoena. The FDIC shall not be required to pay any 
fees to, or expenses of, any witness not subpoenaed by the FDIC.



Sec. 308.15  Opportunity for informal settlement.

    Any respondent may, at any time in the proceeding, unilaterally 
submit to Enforcement Counsel written offers or proposals for settlement 
of a proceeding, without prejudice to the rights of any of the parties. 
No such offer or proposal shall be made to any FDIC representative other 
than Enforcement Counsel. Submission of a written settlement offer does 
not provide a basis for adjourning or otherwise delaying all or any 
portion of a proceeding under this part. No settlement offer or 
proposal, or any subsequent negotiation or resolution, is admissible as 
evidence in any proceeding.



Sec. 308.16  FDIC's right to conduct examination.

    Nothing contained in this subpart limits in any manner the right of 
the FDIC to conduct any examination, inspection, or visitation of any 
institution or institution-affiliated party, or the right of the FDIC to 
conduct or continue any form of investigation authorized by law.



Sec. 308.17  Collateral attacks on adjudicatory proceeding.

    If an interlocutory appeal or collateral attack is brought in any 
court concerning all or any part of an adjudicatory proceeding, the 
challenged adjudicatory proceeding shall continue without regard to the 
pendency of that court proceeding. No default or other failure to act as 
directed in the adjudicatory proceeding within the times prescribed in 
this subpart shall be excused based on the pendency before any court of 
any interlocutory appeal or collateral attack.



Sec. 308.18  Commencement of proceeding and contents of notice.

    (a) Commencement of proceeding. (1)(i) Except for change-in-control 
proceedings under section 7(j)(4) of the FDIA (12 U.S.C. 1817(j)(4)), a 
proceeding governed by this subpart is commenced by issuance of a notice 
by the FDIC.
    (ii) The notice must be served by the Executive Secretary upon the 
respondent and given to any other appropriate financial institution 
supervisory authority where required by law.
    (iii) The notice must be filed with the OFIA.
    (2) Change-in-control proceedings under section 7(j)(4) of the FDIA 
(12 U.S.C. 1817(j)(4)) commence with the issuance of an order by the 
FDIC.
    (b) Contents of notice. The notice must set forth:
    (1) The legal authority for the proceeding and for the FDIC's 
jurisdiction over the proceeding;
    (2) A statement of the matters of fact or law showing that the FDIC 
is entitled to relief;
    (3) A proposed order or prayer for an order granting the requested 
relief;
    (4) The time, place, and nature of the hearing as required by law or 
regulation;
    (5) The time within which to file an answer as required by law or 
regulation;
    (6) The time within which to request a hearing as required by law or 
regulation; and
    (7) That the answer and/or request for a hearing shall be filed with 
OFIA.

[[Page 83]]



Sec. 308.19  Answer.

    (a) When. Within 20 days of service of the notice, respondent shall 
file an answer as designated in the notice. In a civil money penalty 
proceeding, respondent shall also file a request for a hearing within 20 
days of service of the notice.
    (b) Content of answer. An answer must specifically respond to each 
paragraph or allegation of fact contained in the notice and must admit, 
deny, or state that the party lacks sufficient information to admit or 
deny each allegation of fact. A statement of lack of information has the 
effect of a denial. Denials must fairly meet the substance of each 
allegation of fact denied; general denials are not permitted. When a 
respondent denies part of an allegation, that part must be denied and 
the remainder specifically admitted. Any allegation of fact in the 
notice which is not denied in the answer must be deemed admitted for 
purposes of the proceeding. A respondent is not required to respond to 
the portion of a notice that constitutes the prayer for relief or 
proposed order. The answer must set forth affirmative defenses, if any, 
asserted by the respondent.
    (c) Default--(1) Effect of failure to answer. Failure of a 
respondent to file an answer required by this section within the time 
provided constitutes a waiver of his or her right to appear and contest 
the allegations in the notice. If no timely answer is filed, Enforcement 
Counsel may file a motion for entry of an order of default. Upon a 
finding that no good cause has been shown for the failure to file a 
timely answer, the administrative law judge shall file with the Board of 
Directors a recommended decision containing the findings and the relief 
sought in the notice. Any final order issued by the Board of Directors 
based upon a respondent's failure to answer is deemed to be an order 
issued upon consent.
    (2) Effect of failure to request a hearing in civil money penalty 
proceedings. If respondent fails to request a hearing as required by law 
within the time provided, the notice of assessment constitutes a final 
and unappealable order.



Sec. 308.20  Amended pleadings.

    (a) Amendments. The notice or answer may be amended or supplemented 
at any stage of the proceeding. The respondent must answer an amended 
notice within the time remaining for the respondent's answer to the 
original notice, or within ten days after service of the amended notice, 
whichever period is longer, unless the Board of Directors or 
administrative law judge orders otherwise for good cause.
    (b) Amendments to conform to the evidence. When issues not raised in 
the notice or answer are tried at the hearing by express or implied 
consent of the parties, they will be treated in all respects as if they 
had been raised in the notice or answer, and no formal amendments are 
required. If evidence is objected to at the hearing on the ground that 
it is not within the issues raised by the notice or answer, the 
administrative law judge may admit the evidence when admission is likely 
to assist in adjudicating the merits of the action and the objecting 
party fails to satisfy the administrative law judge that the admission 
of such evidence would unfairly prejudice that party's action or defense 
upon the merits. The administrative law judge may grant a continuance to 
enable the objecting party to meet such evidence.

[61 FR 20348, May 6, 1996]



Sec. 308.21  Failure to appear.

    Failure of a respondent to appear in person at the hearing or by a 
duly authorized counsel constitutes a waiver of respondent's right to a 
hearing and is deemed an admission of the facts as alleged and consent 
to the relief sought in the notice. Without further proceedings or 
notice to the respondent, the administrative law judge shall file with 
the Board of Directors a recommended decision containing the findings 
and the relief sought in the notice.



Sec. 308.22  Consolidation and severance of actions.

    (a) Consolidation. (1) On the motion of any party, or on the 
administrative law judge's own motion, the administrative law judge may 
consolidate, for some or all purposes, any two or more

[[Page 84]]

proceedings, if each such proceeding involves or arises out of the same 
transaction, occurrence or series of transactions or occurrences, or 
involves at least one common respondent or a material common question of 
law or fact, unless such consolidation would cause unreasonable delay or 
injustice.
    (2) In the event of consolidation under paragraph (a)(1) of this 
section, appropriate adjustment to the prehearing schedule must be made 
to avoid unnecessary expense, inconvenience, or delay.
    (b) Severance. The administrative law judge may, upon the motion of 
any party, sever the proceeding for separate resolution of the matter as 
to any respondent only if the administrative law judge finds that:
    (1) Undue prejudice or injustice to the moving party would result 
from not severing the proceeding; and
    (2) Such undue prejudice or injustice would outweigh the interests 
of judicial economy and expedition in the complete and final resolution 
of the proceeding.



Sec. 308.23  Motions.

    (a) In writing. (1) Except as otherwise provided herein, an 
application or request for an order or ruling must be made by written 
motion.
    (2) All written motions must state with particularity the relief 
sought and must be accompanied by a proposed order.
    (3) No oral argument may be held on written motions except as 
otherwise directed by the administrative law judge. Written memoranda, 
briefs, affidavits or other relevant material or documents may be filed 
in support of or in opposition to a motion.
    (b) Oral motions. A motion may be made orally on the record unless 
the administrative law judge directs that such motion be reduced to 
writing.
    (c) Filing of motions. Motions must be filed with the administrative 
law judge, except that following the filing of the recommended decision, 
motions must be filed with the Executive Secretary for disposition by 
the Board of Directors.
    (d) Responses. (1) Except as otherwise provided herein, within ten 
days after service of any written motion, or within such other period of 
time as may be established by the administrative law judge or the 
Executive Secretary, any party may file a written response to a motion. 
The administrative law judge shall not rule on any oral or written 
motion before each party has had an opportunity to file a response.
    (2) The failure of a party to oppose a written motion or an oral 
motion made on the record is deemed a consent by that party to the entry 
of an order substantially in the form of the order accompanying the 
motion.
    (e) Dilatory motions. Frivolous, dilatory or repetitive motions are 
prohibited. The filing of such motions may form the basis for sanctions.
    (f) Dispositive motions. Dispositive motions are governed by 
Secs. 308.29 and 308.30.



Sec. 308.24  Scope of document discovery.

    (a) Limits on discovery. (1) Subject to the limitations set out in 
paragraphs (b), (c), and (d) of this section, a party to a proceeding 
under this subpart may obtain document discovery by serving a written 
request to produce documents. For purposes of a request to produce 
documents, the term ``documents'' may be defined to include drawings, 
graphs, charts, photographs, recordings, data stored in electronic form, 
and other data compilations from which information can be obtained, or 
translated, if necessary, by the parties through detection devices into 
reasonably usable form, as well as written material of all kinds.
    (2) Discovery by use of deposition is governed by subpart I of this 
part.
    (3) Discovery by use of interrogatories is not permitted.
    (b) Relevance. A party may obtain document discovery regarding any 
matter, not privileged, that has material relevance to the merits of the 
pending action. Any request to produce documents that calls for 
irrelevant material, that is unreasonable, oppressive, excessive in 
scope, unduly burdensome, or repetitive of previous requests, or that 
seeks to obtain privileged documents will be denied or modified. A 
request is unreasonable, oppressive, excessive in scope or unduly 
burdensome if, among other things, it fails to include justifiable 
limitations on the

[[Page 85]]

time period covered and the geographic locations to be searched, the 
time provided to respond in the request is inadequate, or the request 
calls for copies of documents to be delivered to the requesting party 
and fails to include the requestor's written agreement to pay in advance 
for the copying, in accordance with Sec. 308.25.
    (c) Privileged matter. Privileged documents are not discoverable. 
Privileges include the attorney-client privilege, work-product 
privilege, any government's or government agency's deliberative-process 
privilege, and any other privileges the Constitution, any applicable act 
of Congress, or the principles of common law provide.
    (d) Time limits. All discovery, including all responses to discovery 
requests, shall be completed at least 20 days prior to the date 
scheduled for the commencement of the hearing. No exceptions to this 
time limit shall be permitted, unless the administrative law judge finds 
on the record that good cause exists for waiving the requirements of 
this paragraph.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20348, May 6, 1996]



Sec. 308.25  Request for document discovery from parties.

    (a) General rule. Any party may serve on any other party a request 
to produce for inspection any discoverable documents that are in the 
possession, custody, or control of the party upon whom the request is 
served. The request must identify the documents to be produced either by 
individual item or by category, and must describe each item and category 
with reasonable particularity. Documents must be produced as they are 
kept in the usual course of business or must be organized to correspond 
with the categories in the request.
    (b) Production or copying. The request must specify a reasonable 
time, place, and manner for production and performing any related acts. 
In lieu of inspecting the documents, the requesting party may specify 
that all or some of the responsive documents be copied and the copies 
delivered to the requesting party. If copying of fewer than 250 pages is 
requested, the party to whom the request is addressed shall bear the 
cost of copying and shipping charges. If a party requests 250 pages or 
more of copying, the requesting party shall pay for the copying and 
shipping charges. Copying charges are the current per-page copying rate 
imposed by 12 CFR part 310 implementing the Freedom of Information Act 
(5 U.S.C. 552). The party to whom the request is addressed may require 
payment in advance before producing the documents.
    (c) Obligation to update responses. A party who has responded to a 
discovery request with a response that was complete when made is not 
required to supplement the response to include documents thereafter 
acquired, unless the responding party learns that:
    (1) The response was materially incorrect when made; or
    (2) The response, though correct when made, is no longer true and a 
failure to amend the response is, in substance, a knowing concealment.
    (d) Motions to limit discovery. (1) Any party that objects to a 
discovery request may, within ten days of being served with such 
request, file a motion in accordance with the provisions of Sec. 308.23 
to strike or otherwise limit the request. If an objection is made to 
only a portion of an item or category in a request, the portion objected 
to shall be specified. Any objections not made in accordance with this 
paragraph and Sec. 308.23 are waived.
    (2) The party who served the request that is the subject of a motion 
to strike or limit may file a written response within five days of 
service of the motion. No other party may file a response.
    (e) Privilege. At the time other documents are produced, the 
producing party must reasonably identify all documents withheld on the 
grounds of privilege and must produce a statement of the basis for the 
assertion of privilege. When similar documents that are protected by 
deliberative process, attorney-work-product, or attorney-client 
privilege are voluminous, these documents may be identified by category 
instead of by individual document. The administrative law judge retains 
discretion to determine when the identification by category is 
insufficient.

[[Page 86]]

    (f) Motions to compel production. (1) If a party withholds any 
documents as privileged or fails to comply fully with a discovery 
request, the requesting party may, within ten days of the assertion of 
privilege or of the time the failure to comply becomes known to the 
requesting party, file a motion in accordance with the provisions of 
Sec. 308.23 for the issuance of a subpoena compelling production.
    (2) The party who asserted the privilege or failed to comply with 
the request may file a written response to a motion to compel within 
five days of service of the motion. No other party may file a response.
    (g) Ruling on motions. After the time for filing responses pursuant 
to this section has expired, the administrative law judge shall rule 
promptly on all motions filed pursuant to this section. If the 
administrative law judge determines that a discovery request, or any of 
its terms, calls for irrelevant material, is unreasonable, oppressive, 
excessive in scope, unduly burdensome, or repetitive of previous 
requests, or seeks to obtain privileged documents, he or she may deny or 
modify the request, and may issue appropriate protective orders, upon 
such conditions as justice may require. The pendency of a motion to 
strike or limit discovery or to compel production is not a basis for 
staying or continuing the proceeding, unless otherwise ordered by the 
administrative law judge. Notwithstanding any other provision in this 
part, the administrative law judge may not release, or order a party to 
produce, documents withheld on grounds of privilege if the party has 
stated to the administrative law judge its intention to file a timely 
motion for interlocutory review of the administrative law judge's order 
to produce the documents, and until the motion for interlocutory review 
has been decided.
    (h) Enforcing discovery subpoenas. If the administrative law judge 
issues a subpoena compelling production of documents by a party, the 
subpoenaing party may, in the event of noncompliance and to the extent 
authorized by applicable law, apply to any appropriate United States 
district court for an order requiring compliance with the subpoena. A 
party's right to seek court enforcement of a subpoena shall not in any 
manner limit the sanctions that may be imposed by the administrative law 
judge against a party who fails to produce subpoenaed documents.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20348, May 6, 1996]



Sec. 308.26  Document subpoenas to nonparties.

    (a) General rules. (1) Any party may apply to the administrative law 
judge for the issuance of a document discovery subpoena addressed to any 
person who is not a party to the proceeding. The application must 
contain a proposed document subpoena and a brief statement showing the 
general relevance and reasonableness of the scope of documents sought. 
The subpoenaing party shall specify a reasonable time, place, and manner 
for making production in response to the document subpoena.
    (2) A party shall only apply for a document subpoena under this 
section within the time period during which such party could serve a 
discovery request under Sec. 308.24(d). The party obtaining the document 
subpoena is responsible for serving it on the subpoenaed person and for 
serving copies on all parties. Document subpoenas may be served in any 
state, territory, or possession of the United States, the District of 
Columbia, or as otherwise provided by law.
    (3) The administrative law judge shall promptly issue any document 
subpoena requested pursuant to this section. If the administrative law 
judge determines that the application does not set forth a valid basis 
for the issuance of the subpoena, or that any of its terms are 
unreasonable, oppressive, excessive in scope, or unduly burdensome, he 
or she may refuse to issue the subpoena or may issue it in a modified 
form upon such conditions as may be consistent with the Uniform Rules.
    (b) Motion to quash or modify. (1) Any person to whom a document 
subpoena is directed may file a motion to quash or modify such subpoena, 
accompanied by a statement of the basis for quashing or modifying the 
subpoena. The movant shall serve the motion on all parties, and any 
party may respond to

[[Page 87]]

such motion within ten days of service of the motion.
    (2) Any motion to quash or modify a document subpoena must be filed 
on the same basis, including the assertion of privilege, upon which a 
party could object to a discovery request under Sec. 308.25(d), and 
during the same time limits during which such an objection could be 
filed.
    (c) Enforcing document subpoenas. If a subpoenaed person fails to 
comply with any subpoena issued pursuant to this section or any order of 
the administrative law judge which directs compliance with all or any 
portion of a document subpoena, the subpoenaing party or any other 
aggrieved party may, to the extent authorized by applicable law, apply 
to an appropriate United States district court for an order requiring 
compliance with so much of the document subpoena as the administrative 
law judge has not quashed or modified. A party's right to seek court 
enforcement of a document subpoena shall in no way limit the sanctions 
that may be imposed by the administrative law judge on a party who 
induces a failure to comply with subpoenas issued under this section.



Sec. 308.27  Deposition of witness unavailable for hearing.

    (a) General rules. (1) If a witness will not be available for the 
hearing, a party desiring to preserve that witness' testimony for the 
record may apply in accordance with the procedures set forth in 
paragraph (a)(2) of this section, to the administrative law judge for 
the issuance of a subpoena, including a subpoena duces tecum, requiring 
the attendance of the witness at a deposition. The administrative law 
judge may issue a deposition subpoena under this section upon showing 
that:
    (i) The witness will be unable to attend or may be prevented from 
attending the hearing because of age, sickness or infirmity, or will 
otherwise be unavailable;
    (ii) The witness' unavailability was not procured or caused by the 
subpoenaing party;
    (iii) The testimony is reasonably expected to be material; and
    (iv) Taking the deposition will not result in any undue burden to 
any other party and will not cause undue delay of the proceeding.
    (2) The application must contain a proposed deposition subpoena and 
a brief statement of the reasons for the issuance of the subpoena. The 
subpoena must name the witness whose deposition is to be taken and 
specify the time and place for taking the deposition. A deposition 
subpoena may require the witness to be deposed at any place within the 
country in which that witness resides or has a regular place of 
employment or such other convenient place as the administrative law 
judge shall fix.
    (3) Any requested subpoena that sets forth a valid basis for its 
issuance must be promptly issued, unless the administrative law judge on 
his or her own motion, requires a written response or requires 
attendance at a conference concerning whether the requested subpoena 
should be issued.
    (4) The party obtaining a deposition subpoena is responsible for 
serving it on the witness and for serving copies on all parties. Unless 
the administrative law judge orders otherwise, no deposition under this 
section shall be taken on fewer than ten days' notice to the witness and 
all parties. Deposition subpoenas may be served in any state, territory, 
possession of the United States, or the District of Columbia, on any 
person or company doing business in any state, territory, possession of 
the United States, or the District of Columbia, or as otherwise 
permitted by law.
    (b) Objections to deposition subpoenas. (1) The witness and any 
party who has not had an opportunity to oppose a deposition subpoena 
issued under this section may file a motion with the administrative law 
judge to quash or modify the subpoena prior to the time for compliance 
specified in the subpoena, but not more than ten days after service of 
the subpoena.
    (2) A statement of the basis for the motion to quash or modify a 
subpoena issued under this section must accompany the motion. The motion 
must be served on all parties.
    (c) Procedure upon deposition. (1) Each witness testifying pursuant 
to a deposition subpoena must be duly sworn, and

[[Page 88]]

each party shall have the right to examine the witness. Objections to 
questions or documents must be in short form, stating the grounds for 
the objection. Failure to object to questions or documents is not deemed 
a waiver except where the ground for the objection might have been 
avoided if the objection had been timely presented. All questions, 
answers, and objections must be recorded.
    (2) Any party may move before the administrative law judge for an 
order compelling the witness to answer any questions the witness has 
refused to answer or submit any evidence the witness has refused to 
submit during the deposition.
    (3) The deposition must be subscribed by the witness, unless the 
parties and the witness, by stipulation, have waived the signing, or the 
witness is ill, cannot be found, or has refused to sign. If the 
deposition is not subscribed by the witness, the court reporter taking 
the deposition shall certify that the transcript is a true and complete 
transcript of the deposition.
    (d) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any order of the administrative law judge which directs compliance with 
all or any portion of a deposition subpoena under paragraph (b) or 
(c)(3) of this section, the subpoenaing party or other aggrieved party 
may, to the extent authorized by applicable law, apply to an appropriate 
United States district court for an order requiring compliance with the 
portions of the subpoena that the administrative law judge has ordered 
enforced. A party's right to seek court enforcement of a deposition 
subpoena in no way limits the sanctions that may be imposed by the 
administrative law judge on a party who fails to comply with, or 
procures a failure to comply with, a subpoena issued under this section.



Sec. 308.28  Interlocutory review.

    (a) General rule. The Board of Directors may review a ruling of the 
administrative law judge prior to the certification of the record to the 
Board of Directors only in accordance with the procedures set forth in 
this section and Sec. 308.23.
    (b) Scope of review. The Board of Directors may exercise 
interlocutory review of a ruling of, the administrative law judge if the 
Board of Directors finds that:
    (1) The ruling involves a controlling question of law or policy as 
to which substantial grounds exist for a difference of opinion;
    (2) Immediate review of the ruling may materially advance the 
ultimate termination of the proceeding;
    (3) Subsequent modification of the ruling at the conclusion of the 
proceeding would be an inadequate remedy; or
    (4) Subsequent modification of the ruling would cause unusual delay 
or expense.
    (c) Procedure. Any request for interlocutory review shall be filed 
by a party with the administrative law judge within ten days of his or 
her ruling and shall otherwise comply with Sec. 308.23. Any party may 
file a response to a request for interlocutory review in accordance with 
Sec. 308.23(d). Upon the expiration of the time for filing all 
responses, the administrative law judge shall refer the matter to the 
Board of Directors for final disposition.
    (d) Suspension of proceeding. Neither a request for interlocutory 
review nor any disposition of such a request by the Board of Directors 
under this section suspends or stays the proceeding unless otherwise 
ordered by the administrative law judge or the Board of Directors.



Sec. 308.29  Summary disposition.

    (a) In general. The administrative law judge shall recommend that 
the Board of Directors issue a final order granting a motion for summary 
disposition if the undisputed pleaded facts, admissions, affidavits, 
stipulations, documentary evidence, matters as to which official notice 
may be taken, and any other evidentiary materials properly submitted in 
connection with a motion for summary disposition show that:
    (1) There is no genuine issue as to any material fact; and
    (2) The moving party is entitled to a decision in its favor as a 
matter of law.
    (b) Filing of motions and responses. (1) Any party who believes that 
there is no

[[Page 89]]

genuine issue of material fact to be determined and that he or she is 
entitled to a decision as a matter of law may move at any time for 
summary disposition in its favor of all or any part of the proceeding. 
Any party, within 20 days after service of such a motion, or within such 
time period as allowed by the administrative law judge, may file a 
response to such motion.
    (2) A motion for summary disposition must be accompanied by a 
statement of the material facts as to which the moving party contends 
there is no genuine issue. Such motion must be supported by documentary 
evidence, which may take the form of admissions in pleadings, 
stipulations, depositions, investigatory depositions, transcripts, 
affidavits and any other evidentiary materials that the moving party 
contends support his or her position. The motion must also be 
accompanied by a brief containing the points and authorities in support 
of the contention of the moving party. Any party opposing a motion for 
summary disposition must file a statement setting forth those material 
facts as to which he or she contends a genuine dispute exists. Such 
opposition must be supported by evidence of the same type as that 
submitted with the motion for summary disposition and a brief containing 
the points and authorities in support of the contention that summary 
disposition would be inappropriate.
    (c) Hearing on motion. At the request of any party or on his or her 
own motion, the administrative law judge may hear oral argument on the 
motion for summary disposition.
    (d) Decision on motion. Following receipt of a motion for summary 
disposition and all responses thereto, the administrative law judge 
shall determine whether the moving party is entitled to summary 
disposition. If the administrative law judge determines that summary 
disposition is warranted, the administrative law judge shall submit a 
recommended decision to that effect to the Board of Directors. If the 
administrative law judge finds that no party is entitled to summary 
disposition, he or she shall make a ruling denying the motion.



Sec. 308.30  Partial summary disposition.

    If the administrative law judge determines that a party is entitled 
to summary disposition as to certain claims only, he or she shall defer 
submitting a recommended decision as to those claims. A hearing on the 
remaining issues must be ordered. Those claims for which the 
administrative law judge has determined that summary disposition is 
warranted will be addressed in the recommended decision filed at the 
conclusion of the hearing.



Sec. 308.31  Scheduling and prehearing conferences.

    (a) Scheduling conference. Within 30 days of service of the notice 
or order commencing a proceeding or such other time as parties may 
agree, the administrative law judge shall direct counsel for all parties 
to meet with him or her in person at a specified time and place prior to 
the hearing or to confer by telephone for the purpose of scheduling the 
course and conduct of the proceeding. This meeting or telephone 
conference is called a ``scheduling conference.'' The identification of 
potential witnesses, the time for and manner of discovery, and the 
exchange of any prehearing materials including witness lists, statements 
of issues, stipulations, exhibits and any other materials may also be 
determined at the scheduling conference.
    (b) Prehearing conferences. The administrative law judge may, in 
addition to the scheduling conference, on his or her own motion or at 
the request of any party, direct counsel for the parties to meet with 
him or her (in person or by telephone) at a prehearing conference to 
address any or all of the following:
    (1) Simplification and clarification of the issues;
    (2) Stipulations, admissions of fact, and the contents, authenticity 
and admissibility into evidence of documents;
    (3) Matters of which official notice may be taken;
    (4) Limitation of the number of witnesses;
    (5) Summary disposition of any or all issues;
    (6) Resolution of discovery issues or disputes;
    (7) Amendments to pleadings; and

[[Page 90]]

    (8) Such other matters as may aid in the orderly disposition of the 
proceeding.
    (c) Transcript. The administrative law judge, in his or her 
discretion, may require that a scheduling or prehearing conference be 
recorded by a court reporter. A transcript of the conference and any 
materials filed, including orders, becomes part of the record of the 
proceeding. A party may obtain a copy of the transcript at his or her 
expense.
    (d) Scheduling or prehearing orders. At or within a reasonable time 
following the conclusion of the scheduling conference or any prehearing 
conference, the administrative law judge shall serve on each party an 
order setting forth any agreements reached and any procedural 
determinations made.



Sec. 308.32  Prehearing submissions.

    (a) Within the time set by the administrative law judge, but in no 
case later than 14 days before the start of the hearing, each party 
shall serve on every other party, his or her:
    (1) Prehearing statement;
    (2) Final list of witnesses to be called to testify at the hearing, 
including name and address of each witness and a short summary of the 
expected testimony of each witness;
    (3) List of the exhibits to be introduced at the hearing along with 
a copy of each exhibit; and
    (4) Stipulations of fact, if any.
    (b) Effect of failure to comply. No witness may testify and no 
exhibits may be introduced at the hearing if such witness or exhibit is 
not listed in the prehearing submissions pursuant to paragraph (a) of 
this section, except for good cause shown.



Sec. 308.33  Public hearings.

    (a) General rule. All hearings shall be open to the public, unless 
the FDIC, in its discretion, determines that holding an open hearing 
would be contrary to the public interest. Within 20 days of service of 
the notice or, in the case of change-in-control proceedings under 
section 7(j)(4) of the FDIA (12 U.S.C. 1817(j)(4)), within 20 days from 
service of the hearing order, any respondent may file with the Executive 
Secretary a request for a private hearing, and any party may file a 
reply to such a request. A party must serve on the administrative law 
judge a copy of any request or reply the party files with the Executive 
Secretary. The form of, and procedure for, these requests and replies 
are governed by Sec. 308.23. A party's failure to file a request or a 
reply constitutes a waiver of any objections regarding whether the 
hearing will be public or private.
    (b) Filing document under seal. Enforcement Counsel, in his or her 
discretion, may file any document or part of a document under seal if 
disclosure of the document would be contrary to the public interest. The 
administrative law judge shall take all appropriate steps to preserve 
the confidentiality of such documents or parts thereof, including 
closing portions of the hearing to the public.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec. 308.34  Hearing subpoenas.

    (a) Issuance. (1) Upon application of a party showing general 
relevance and reasonableness of scope of the testimony or other evidence 
sought, the administrative law judge may issue a subpoena or a subpoena 
duces tecum requiring the attendance of a witness at the hearing or the 
production of documentary or physical evidence at the hearing. The 
application for a hearing subpoena must also contain a proposed subpoena 
specifying the attendance of a witness or the production of evidence 
from any state, territory, or possession of the United States, the 
District of Columbia, or as otherwise provided by law at any designated 
place where the hearing is being conducted. The party making the 
application shall serve a copy of the application and the proposed 
subpoena on every other party.
    (2) A party may apply for a hearing subpoena at any time before the 
commencement of a hearing. During a hearing, a party may make an 
application for a subpoena orally on the record before the 
administrative law judge.
    (3) The administrative law judge shall promptly issue any hearing 
subpoena requested pursuant to this section. If the administrative law 
judge determines that the application does not set forth a valid basis 
for the

[[Page 91]]

issuance of the subpoena, or that any of its terms are unreasonable, 
oppressive, excessive in scope, or unduly burdensome, he or she may 
refuse to issue the subpoena or may issue it in a modified form upon any 
conditions consistent with this subpart. Upon issuance by the 
administrative law judge, the party making the application shall serve 
the subpoena on the person named in the subpoena and on each party.
    (b) Motion to quash or modify. (1) Any person to whom a hearing 
subpoena is directed or any party may file a motion to quash or modify 
the subpoena, accompanied by a statement of the basis for quashing or 
modifying the subpoena. The movant must serve the motion on each party 
and on the person named in the subpoena. Any party may respond to the 
motion within ten days of service of the motion.
    (2) Any motion to quash or modify a hearing subpoena must be filed 
prior to the time specified in the subpoena for compliance, but not more 
than ten days after the date of service of the subpoena upon the movant.
    (c) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any subpoena issued pursuant to this section or any order of the 
administrative law judge which directs compliance with all or any 
portion of a document subpoena, the subpoenaing party or any other 
aggrieved party may seek enforcement of the subpoena pursuant to 
Sec. 308.26(c).

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec. 308.35  Conduct of hearings.

    (a) General rules. (1) Hearings shall be conducted so as to provide 
a fair and expeditious presentation of the relevant disputed issues. 
Each party has the right to present its case or defense by oral and 
documentary evidence and to conduct such cross examination as may be 
required for full disclosure of the facts.
    (2) Order of hearing. Enforcement Counsel shall present its case-in-
chief first, unless otherwise ordered by the administrative law judge, 
or unless otherwise expressly specified by law or regulation. 
Enforcement Counsel shall be the first party to present an opening 
statement and a closing statement, and may make a rebuttal statement 
after the respondent's closing statement. If there are multiple 
respondents, respondents may agree among themselves as to their order of 
presentation of their cases, but if they do not agree the administrative 
law judge shall fix the order.
    (3) Examination of witnesses. Only one counsel for each party may 
conduct an examination of a witness, except that in the case of 
extensive direct examination, the administrative law judge may permit 
more than one counsel for the party presenting the witness to conduct 
the examination. A party may have one counsel conduct the direct 
examination and another counsel conduct re-direct examination of a 
witness, or may have one counsel conduct the cross examination of a 
witness and another counsel conduct the re-cross examination of a 
witness.
    (4) Stipulations. Unless the administrative law judge directs 
otherwise, all stipulations of fact and law previously agreed upon by 
the parties, and all documents, the admissibility of which have been 
previously stipulated, will be admitted into evidence upon commencement 
of the hearing.
    (b) Transcript. The hearing must be recorded and transcribed. The 
reporter will make the transcript available to any party upon payment by 
that party to the reporter of the cost of the transcript. The 
administrative law judge may order the record corrected, either upon 
motion to correct, upon stipulation of the parties, or following notice 
to the parties upon the administrative law judge's own motion.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec. 308.36  Evidence.

    (a) Admissibility. (1) Except as is otherwise set forth in this 
section, relevant, material, and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act and other applicable law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence is admissible in a proceeding conducted pursuant to this 
subpart.

[[Page 92]]

    (3) Evidence that would be inadmissible under the Federal Rules of 
Evidence may not be deemed or ruled to be inadmissible in a proceeding 
conducted pursuant to this subpart if such evidence is relevant, 
material, reliable and not unduly repetitive.
    (b) Official notice. (1) Official notice may be taken of any 
material fact which may be judicially noticed by a United States 
district court and any material information in the official public 
records of any Federal or state government agency.
    (2) All matters officially noticed by the administrative law judge 
or Board of Directors shall appear on the record.
    (3) If official notice is requested or taken of any material fact, 
the parties, upon timely request, shall be afforded an opportunity to 
object.
    (c) Documents. (1) A duplicate copy of a document is admissible to 
the same extent as the original, unless a genuine issue is raised as to 
whether the copy is in some material respect not a true and legible copy 
of the original.
    (2) Subject to the requirements of paragraph (a) of this section, 
any document, including a report of examination, supervisory activity, 
inspection or visitation, prepared by an appropriate Federal financial 
institution regulatory agency or state regulatory agency, is admissible 
either with or without a sponsoring witness.
    (3) Witnesses may use existing or newly created charts, exhibits, 
calendars, calculations, outlines or other graphic material to 
summarize, illustrate, or simplify the presentation of testimony. Such 
materials may, subject to the administrative law judge's discretion, be 
used with or without being admitted into evidence.
    (d) Objections. (1) Objections to the admissibility of evidence must 
be timely made and rulings on all objections must appear on the record.
    (2) When an objection to a question or line of questioning 
propounded to a witness is sustained, the examining counsel may make a 
specific proffer on the record of what he or she expected to prove by 
the expected testimony of the witness, either by representation of 
counsel or by direct interrogation of the witness.
    (3) The administrative law judge shall retain rejected exhibits, 
adequately marked for identification, for the record, and transmit such 
exhibits to the Board of Directors.
    (4) Failure to object to admission of evidence or to any ruling 
constitutes a waiver of the objection.
    (e) Stipulations. The parties may stipulate as to any relevant 
matters of fact or the authentication of any relevant documents. Such 
stipulations must be received in evidence at a hearing, and are binding 
on the parties with respect to the matters therein stipulated.
    (f) Depositions of unavailable witnesses. (1) If a witness is 
unavailable to testify at a hearing, and that witness has testified in a 
deposition to which all parties in a proceeding had notice and an 
opportunity to participate, a party may offer as evidence all or any 
part of the transcript of the deposition, including deposition exhibits, 
if any.
    (2) Such deposition transcript is admissible to the same extent that 
testimony would have been admissible had that person testified at the 
hearing, provided that if a witness refused to answer proper questions 
during the depositions, the administrative law judge may, on that basis, 
limit the admissibility of the deposition in any manner that justice 
requires.
    (3) Only those portions of a deposition received in evidence at the 
hearing constitute a part of the record.



Sec. 308.37  Post-hearing filings.

    (a) Proposed findings and conclusions and supporting briefs. (1) 
Using the same method of service for each party, the administrative law 
judge shall serve notice upon each party, that the certified transcript, 
together with all hearing exhibits and exhibits introduced but not 
admitted into evidence at the hearing, has been filed. Any party may 
file with the administrative law judge proposed findings of fact, 
proposed conclusions of law, and a proposed order within 30 days 
following service of this notice by the administrative law judge or 
within such longer period as may be ordered by the administrative law 
judge.
    (2) Proposed findings and conclusions must be supported by citation 
to any

[[Page 93]]

relevant authorities and by page references to any relevant portions of 
the record. A post-hearing brief may be filed in support of proposed 
findings and conclusions, either as part of the same document or in a 
separate document. Any party who fails to file timely with the 
administrative law judge any proposed finding or conclusion is deemed to 
have waived the right to raise in any subsequent filing or submission 
any issue not addressed in such party's proposed finding or conclusion.
    (b) Reply briefs. Reply briefs may be filed within 15 days after the 
date on which the parties' proposed findings, conclusions, and order are 
due. Reply briefs must be strictly limited to responding to new matters, 
issues, or arguments raised in another party's papers. A party who has 
not filed proposed findings of fact and conclusions of law or a post-
hearing brief may not file a reply brief.
    (c) Simultaneous filing required. The administrative law judge shall 
not order the filing by any party of any brief or reply brief in advance 
of the other party's filing of its brief.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 20349, May 6, 1996]



Sec. 308.38  Recommended decision and filing of record.

    (a) Filing of recommended decision and record. Within 45 days after 
expiration of the time allowed for filing reply briefs under 
Sec. 308.37(b), the administrative law judge shall file with and certify 
to the Executive Secretary, for decision, the record of the proceeding. 
The record must include the administrative law judge's recommended 
decision, recommended findings of fact, recommended conclusions of law, 
and proposed order; all prehearing and hearing transcripts, exhibits, 
and rulings; and the motions, briefs, memoranda, and other supporting 
papers filed in connection with the hearing. The administrative law 
judge shall serve upon each party the recommended decision, findings, 
conclusions, and proposed order.
    (b) Filing of index. At the same time the administrative law judge 
files with and certifies to the Executive Secretary for final 
determination the record of the proceeding, the administrative law judge 
shall furnish to the Executive Secretary a certified index of the entire 
record of the proceeding. The certified index shall include, at a 
minimum, an entry for each paper, document or motion filed with the 
administrative law judge in the proceeding, the date of the filing, and 
the identity of the filer. The certified index shall also include an 
exhibit index containing, at a minimum, an entry consisting of exhibit 
number and title or description for: Each exhibit introduced and 
admitted into evidence at the hearing; each exhibit introduced but not 
admitted into evidence at the hearing; each exhibit introduced and 
admitted into evidence after the completion of the hearing; and each 
exhibit introduced but not admitted into evidence after the completion 
of the hearing.

[61 FR 20350, May 6, 1996]



Sec. 308.39  Exceptions to recommended decision.

    (a) Filing exceptions. Within 30 days after service of the 
recommended decision, findings, conclusions, and proposed order under 
Sec. 308.38, a party may file with the Executive Secretary written 
exceptions to the administrative law judge's recommended decision, 
findings, conclusions or proposed order, to the admission or exclusion 
of evidence, or to the failure of the administrative law judge to make a 
ruling proposed by a party. A supporting brief may be filed at the time 
the exceptions are filed, either as part of the same document or in a 
separate document.
    (b) Effect of failure to file or raise exceptions. (1) Failure of a 
party to file exceptions to those matters specified in paragraph (a) of 
this section within the time prescribed is deemed a waiver of objection 
thereto.
    (2) No exception need be considered by the Board of Directors if the 
party taking exception had an opportunity to raise the same objection, 
issue, or argument before the administrative law judge and failed to do 
so.
    (c) Contents. (1) All exceptions and briefs in support of such 
exceptions must be confined to the particular

[[Page 94]]

matters in, or omissions from, the administrative law judge's 
recommendations to which that party takes exception.
    (2) All exceptions and briefs in support of exceptions must set 
forth page or paragraph references to the specific parts of the 
administrative law judge's recommendations to which exception is taken, 
the page or paragraph references to those portions of the record relied 
upon to support each exception, and the legal authority relied upon to 
support each exception.



Sec. 308.40  Review by Board of Directors.

    (a) Notice of submission to Board of Directors. When the Executive 
Secretary determines that the record in the proceeding is complete, the 
Executive Secretary shall serve notice upon the parties that the 
proceeding has been submitted to the Board of Directors for final 
decision.
    (b) Oral argument before the Board of Directors. Upon the initiative 
of the Board of Directors or on the written request of any party filed 
with the Executive Secretary within the time for filing exceptions, the 
Board of Directors may order and hear oral argument on the recommended 
findings, conclusions, decision, and order of the administrative law 
judge. A written request by a party must show good cause for oral 
argument and state reasons why arguments cannot be presented adequately 
in writing. A denial of a request for oral argument may be set forth in 
the Board of Directors' final decision. Oral argument before the Board 
of Directors must be on the record.
    (c) Final decision. (1) Decisional employees may advise and assist 
the Board of Directors in the consideration and disposition of the case. 
The final decision of the Board of Directors will be based upon review 
of the entire record of the proceeding, except that the Board of 
Directors may limit the issues to be reviewed to those findings and 
conclusions to which opposing arguments or exceptions have been filed by 
the parties.
    (2) The Board of Directors shall render a final decision within 90 
days after notification of the parties that the case has been submitted 
for final decision, or 90 days after oral argument, whichever is later, 
unless the Board of Directors orders that the action or any aspect 
thereof be remanded to the administrative law judge for further 
proceedings. Copies of the final decision and order of the Board of 
Directors shall be served upon each party to the proceeding, upon other 
persons required by statute, and, if directed by the Board of Directors 
or required by statute, upon any appropriate state or Federal 
supervisory authority.



Sec. 308.41  Stays pending judicial review.

    The commencement of proceedings for judicial review of a final 
decision and order of the FDIC may not, unless specifically ordered by 
the Board of Directors or a reviewing court, operate as a stay of any 
order issued by the FDIC. The Board of Directors may, in its discretion, 
and on such terms as it finds just, stay the effectiveness of all or any 
part of its order pending a final decision on a petition for review of 
that order.



                  Subpart B--General Rules of Procedure



Sec. 308.101  Scope of Local Rules.

    (a) Subparts B and C of the Local Rules prescribe rules of practice 
and procedure to be followed in the administrative enforcement 
proceedings initiated by the FDIC as set forth in Sec. 308.01 of the 
Uniform Rules.
    (b) Except as otherwise specifically provided, the Uniform Rules and 
subpart B of the Local Rules shall not apply to subparts D through S of 
the Local Rules.
    (c) Subpart C of the Local Rules shall apply to any administrative 
proceeding initiated by the FDIC.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62100, Nov. 16, 1999]



Sec. 308.102  Authority of Board of Directors and Executive Secretary.

    (a) The Board of Directors. (1) The Board of Directors may, at any 
time during the pendency of a proceeding, perform, direct the 
performance of, or waive performance of, any act which could be done or 
ordered by the Executive Secretary.

[[Page 95]]

    (2) Nothing contained in this part 308 shall be construed to limit 
the power of the Board of Directors granted by applicable statutes or 
regulations.
    (b) The Executive Secretary. (1) When no administrative law judge 
has jurisdiction over a proceeding, the Executive Secretary may act in 
place of, and with the same authority as, an administrative law judge, 
except that the Executive Secretary may not hear a case on the merits or 
make a recommended decision on the merits to the Board of Directors.
    (2) Pursuant to authority delegated by the Board of Directors, the 
Executive Secretary, Deputy Executive Secretary or the Assistant 
Executive Secretary (Operations), upon the advice and recommendation of 
the Deputy General Counsel for Litigation or, in his absence, the 
Assistant General Counsel, Trial Litigation Section, may issue rulings 
in proceedings under sections 7(j), 8, 18(j), 19, 32 and 38 of the FDIA 
(12 USC 1817(j), 1818, 1828(j), 1829, 1831i and 1831o concerning:
    (i) Denials of requests for private hearing;
    (ii) Interlocutory appeals;
    (iii) Stays pending judicial review;
    (iv) Reopenings of the record and/or remands of the record to the 
ALJ;
    (v) Supplementation of the evidence in the record;
    (vi) All remands from the courts of appeals not involving 
substantive issues;
    (vii) Extensions of stays of orders terminating deposit insurance; 
and
    (viii) All matters, including final decisions, in proceedings under 
section 8(g) of the FDIA (12 U.S.C. 1818(g)).

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62100, Nov. 16, 1999]



Sec. 308.103  Appointment of administrative law judge.

    (a) Appointment. Unless otherwise directed by the Board of Directors 
or as otherwise provided in the Local Rules, a hearing within the scope 
of this part 308 shall be held before an administrative law judge of the 
Office of Financial Institution Adjudication (``OFIA'').
    (b) Procedures. (1) The Executive Secretary shall promptly after 
issuance of the notice refer the matter to the OFIA which shall secure 
the appointment of an administrative law judge to hear the proceeding.
    (2) OFIA shall advise the parties, in writing, that an 
administrative law judge has been appointed.



Sec. 308.104  Filings with the Board of Directors.

    (a) General rule. All materials required to be filed with or 
referred to the Board of Directors in any proceedings under this part 
308 shall be filed with the Executive Secretary, Federal Deposit 
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.
    (b) Scope. Filings to be made with the Executive Secretary include 
pleadings and motions filed during the proceeding; the record filed by 
the administrative law judge after the issuance of a recommended 
decision; the recommended decision filed by the administrative law judge 
following a motion for summary disposition; referrals by the 
administrative law judge of motions for interlocutory review; motions 
and responses to motions filed by the parties after the record has been 
certified to the Board of Directors; exceptions and requests for oral 
argument; and any other papers required to be filed with the Board of 
Directors under this part 308.



Sec. 308.105  Custodian of the record.

    The Executive Secretary is the official custodian of the record when 
no administrative law judge has jurisdiction over the proceeding. As the 
official custodian, the Executive Secretary shall maintain the official 
record of all papers filed in each proceeding.



Sec. 308.106  Written testimony in lieu of oral hearing.

    (a) General rule. (1) At any time more than fifteen days before the 
hearing is to commence, on the motion of any party or on his or her own 
motion, the administrative law judge may order that the parties present 
part or all of their case-in-chief and, if ordered, their rebuttal, in 
the form of exhibits and written statements sworn to by the witness 
offering such statements as evidence, provided that if any party 
objects, the administrative law judge shall not require such a format if 
that

[[Page 96]]

format would violate the objecting party's right under the 
Administrative Procedure Act, or other applicable law, or would 
otherwise unfairly prejudice that party.
    (2) Any such order shall provide that each party shall, upon 
request, have the same right of oral cross-examination (or redirect 
examination) as would exist had the witness testified orally rather than 
through a written statement. Such order shall also provide that any 
party has a right to call any hostile witness or adverse party to 
testify orally.
    (b) Scheduling of submission of written testimony. (1) If written 
direct testimony and exhibits are ordered under paragraph (a) of this 
section, the administrative law judge shall require that it be filed 
within the time period for commencement of the hearing, and the hearing 
shall be deemed to have commenced on the day such testimony is due.
    (2) Absent good cause shown, written rebuttal, if any, shall be 
submitted and the oral portion of the hearing begun within 30 days of 
the date set for filing written direct testimony.
    (3) The administrative law judge shall direct, unless good cause 
requires otherwise, that--
    (i) All parties shall simultaneously file any exhibits and written 
direct testimony required under paragraph (b)(1) of this section; and
    (ii) All parties shall simultaneously file any exhibits and written 
rebuttal required under paragraph (b)(2) of this section.
    (c) Failure to comply with order to file written testimony. (1) The 
failure of any party to comply with an order to file written testimony 
or exhibits at the time and in the manner required under this section 
shall be deemed a waiver of that party's right to present any evidence, 
except testimony of a previously identified adverse party or hostile 
witness. Failure to file written testimony or exhibits is, however, not 
a waiver of that party's right of cross-examination or a waiver of the 
right to present rebuttal evidence that was not required to be submitted 
in written form.
    (2) Late filings of papers under this section may be allowed and 
accepted only upon good cause shown.



Sec. 308.107  Document discovery.

    (a) Parties to proceedings set forth at Sec. 308.01 of the Uniform 
Rules and as provided in the Local Rules may obtain discovery only 
through the production of documents. No other form of discovery shall be 
allowed.
    (b) Any questioning at a deposition of a person producing documents 
pursuant to a document subpoena shall be strictly limited to the 
identification of documents produced by that person and a reasonable 
examination to determine whether the subpoenaed person made an adequate 
search for, and has produced, all subpoenaed documents.



  Subpart C--Rules of Practice Before the FDIC and Standards of Conduct



Sec. 308.108  Sanctions.

    (a) General rule. Appropriate sanctions may be imposed when any 
counsel or party has acted, or failed to act, in a manner required by 
applicable statute, regulations, or order, and that act or failure to 
act:
    (1) Constitutes contemptuous conduct;
    (2) Has in a material way injured or prejudiced some other party in 
terms of substantive injury, incurring additional expenses including 
attorney's fees, prejudicial delay, or otherwise;
    (3) Is a clear and unexcused violation of an applicable statute, 
regulation, or order; or
    (4) Has unduly delayed the proceeding.
    (b) Sanctions. Sanctions which may be imposed include any one or 
more of the following:
    (1) Issuing an order against the party;
    (2) Rejecting or striking any testimony or documentary evidence 
offered, or other papers filed, by the party;
    (3) Precluding the party from contesting specific issues or 
findings;
    (4) Precluding the party from offering certain evidence or from 
challenging or contesting certain evidence offered by another party;
    (5) Precluding the party from making a late filing or conditioning a 
late filing on any terms that are just; and

[[Page 97]]

    (6) Assessing reasonable expenses, including attorney's fees, 
incurred by any other party as a result of the improper action or 
failure to act.
    (c) Limits on dismissal as a sanction. No recommendation of 
dismissal shall be made by the administrative law judge or granted by 
the Board of Directors based on the failure to hold a hearing within the 
time period called for in this part 308, or on the failure of an 
administrative law judge to render a recommended decision within the 
time period called for in this part 308, absent a finding:
    (1) That the delay resulted solely or principally from the conduct 
of the FDIC enforcement counsel;
    (2) That the conduct of the FDIC enforcement counsel is unexcused;
    (3) That the moving respondent took all reasonable steps to oppose 
and prevent the subject delay;
    (4) That the moving respondent has been materially prejudiced or 
injured; and
    (5) That no lesser or different sanction is adequate.
    (d) Procedure for imposition of sanctions. (1) The administrative 
law judge, upon the request of any party, or on his or her own motion, 
may impose sanctions in accordance with this section, provided that the 
administrative law judge may only recommend to the Board of Directors 
the sanction of entering a final order determining the case on the 
merits.
    (2) No sanction, other than refusing to accept late papers, 
authorized by this section shall be imposed without prior notice to all 
parties and an opportunity for any counsel or party against whom 
sanctions would be imposed to be heard. Such opportunity to be heard may 
be on such notice, and the response may be in such form, as the 
administrative law judge directs. The opportunity to be heard may be 
limited to an opportunity to respond orally immediately after the act or 
inaction covered by this section is noted by the administrative law 
judge.
    (3) Requests for the imposition of sanctions by any party, and the 
imposition of sanctions, shall be treated for interlocutory review 
purposes in the same manner as any other ruling by the administrative 
law judge.
    (4) Section not exclusive. Nothing in this section shall be read as 
precluding the administrative law judge or the Board of Directors from 
taking any other action, or imposing any restriction or sanction, 
authorized by applicable statute or regulation.



Sec. 308.109  Suspension and disbarment.

    (a) Discretionary suspension and disbarment. (1) The Board of 
Directors may suspend or revoke the privilege of any counsel to appear 
or practice before the FDIC if, after notice of and opportunity for 
hearing in the matter, that counsel is found by the Board of Directors:
    (i) Not to possess the requisite qualifications to represent others;
    (ii) To be seriously lacking in character or integrity or to have 
engaged in material unethical or improper professional conduct;
    (iii) To have engaged in, or aided and abetted, a material and 
knowing violation of the FDIA; or
    (iv) To have engaged in contemptuous conduct before the FDIC. 
Suspension or revocation on the grounds set forth in paragraphs (a)(1) 
(ii), (iii), and (iv) of this section shall only be ordered upon a 
further finding that the counsel's conduct or character was sufficiently 
egregious as to justify suspension or revocation.
    (2) Unless otherwise ordered by the Board of Directors, an 
application for reinstatement by a person suspended or disbarred under 
paragraph (a)(1) of this section may be made in writing at any time more 
than three years after the effective date of the suspension or 
disbarment and, thereafter, at any time more than one year after the 
person's most recent application for reinstatement. The suspension or 
disbarment shall continue until the applicant has been reinstated by the 
Board of Directors for good cause shown or until, in the case of a 
suspension, the suspension period has expired. An applicant for 
reinstatement under this provision may, in the Board of Directors' sole 
discretion, be afforded a hearing.
    (b) Mandatory suspension and disbarment. (1) Any counsel who has 
been and remains suspended or disbarred by a court of the United States 
or of any

[[Page 98]]

state, territory, district, commonwealth, or possession; or any person 
who has been and remains suspended or barred from practice before the 
OCC, Board of Governors, the OTS, the NCUA, the Securities and Exchange 
Commission, or the Commodity Futures Trading Commission; or any person 
who has been convicted of a felony, or of a misdemeanor involving moral 
turpitude, within the last ten years, shall be suspended automatically 
from appearing or practicing before the FDIC. A disbarment, suspension, 
or conviction within the meaning of this paragraph (b) shall be deemed 
to have occurred when the disbarring, suspending, or convicting agency 
or tribunal enters its judgment or order, regardless of whether an 
appeal is pending or could be taken, and includes a judgment or an order 
on a plea of nolo contendere or on consent, regardless of whether a 
violation is admitted in the consent.
    (2) Any person appearing or practicing before the FDIC who is the 
subject of an order, judgment, decree, or finding of the types set forth 
in paragraph (b)(1) of this section shall promptly file with the 
Executive Secretary a copy thereof, together with any related opinion or 
statement of the agency or tribunal involved. Failure to file any such 
paper shall not impair the operation of any other provision of this 
section.
    (3) A suspension or disbarment under paragraph (b)(1) of this 
section from practice before the FDIC shall continue until the applicant 
has been reinstated by the Board of Directors for good cause shown, 
provided that any person suspended or disbarred under paragraph (b)(1) 
of this section shall be automatically reinstated by the Executive 
Secretary, upon appropriate application, if all the grounds for 
suspension or disbarment under paragraph (b)(1) of this section are 
subsequently removed by a reversal of the conviction (or the passage of 
time since the conviction) or termination of the underlying suspension 
or disbarment. An application for reinstatement on any other grounds by 
any person suspended or disbarred under paragraph (b)(1) of this section 
may be filed no sooner than one year after the suspension or disbarment, 
and thereafter, a new request for reinstatement may be made no sooner 
than one year after the counsel's most recent reinstatement application. 
An applicant for reinstatement under this provision may, in the Board of 
Directors' sole discretion, be afforded a hearing.
    (c) Hearings under this section. Hearings conducted under this 
section shall be conducted in substantially the same manner as other 
hearings under the Uniform Rules, provided that in proceedings to 
terminate an existing FDIC suspension or disbarment order, the person 
seeking the termination of the order shall bear the burden of going 
forward with an application and with the burden of proving the grounds 
supporting the application, and that the Board of Directors may, in its 
sole discretion, direct that any proceeding to terminate an existing 
suspension or disbarment by the FDIC be limited to written submissions.
    (d) Summary suspension for contemptuous conduct. A finding by the 
administrative law judge of contemptuous conduct during the course of 
any proceeding shall be grounds for summary suspension by the 
administrative law judge of a counsel or other representative from any 
further participation in that proceeding for the duration of that 
proceeding.
    (e) Practice defined. Unless the Board of Directors orders 
otherwise, for the purposes of this section, practicing before the FDIC 
includes, but is not limited to, transacting any business with the FDIC 
as counsel or agent for any other person and the preparation of any 
statement, opinion, or other paper by a counsel, which statement, 
opinion, or paper is filed with the FDIC in any registration statement, 
notification, application, report, or other document, with the consent 
of such counsel.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62100, Nov. 16, 1999]



 Subpart D--Rules and Procedures Applicable to Proceedings Relating to 
                  Disapproval of Acquisition of Control



Sec. 308.110  Scope.

    Except as specifically indicated in this subpart, the rules and 
procedures

[[Page 99]]

in this subpart, subpart B of the Local Rules, and the Uniform Rules 
shall apply to proceedings in connection with the disapproval by the 
Board of Directors or its designee of a proposed acquisition of control 
of an insured nonmember bank.



Sec. 308.111  Grounds for disapproval.

    The following are grounds for disapproval of a proposed acquisition 
of control of an insured nonmember bank:
    (a) The proposed acquisition of control would result in a monopoly 
or would be in furtherance of any combination or conspiracy to 
monopolize or attempt to monopolize the banking business in any part of 
the United States;
    (b) The effect of the proposed acquisition of control in any section 
of the United States may be to substantially lessen competition or to 
tend to create a monopoly or would in any other manner be in restraint 
of trade, and the anticompetitive effects of the proposed acquisition of 
control are not clearly outweighed in the public interest by the 
probable effect of the transaction in meeting the convenience and needs 
of the community to be served;
    (c) The financial condition of any acquiring person might jeopardize 
the financial stability of the bank or prejudice the interests of the 
depositors of the bank;
    (d) The competence, experience, or integrity of any acquiring person 
or of any of the proposed management personnel indicates that it would 
not be in the interest of the depositors of the bank, or in the interest 
of the public, to permit such person to control the bank;
    (e) Any acquiring person neglects, fails, or refuses to furnish to 
the FDIC all the information required by the FDIC; or
    (f) The FDIC determines that the proposed acquisition would result 
in an adverse effect on the Bank Insurance Fund or the Savings 
Association Insurance Fund.



Sec. 308.112  Notice of disapproval.

    (a) General rule. (1) Within three days of the decision by the Board 
of Directors or its designee to disapprove a proposed acquisition of 
control of an insured nonmember bank, a written notice of disapproval 
shall be mailed by first class mail to, or otherwise served upon, the 
party seeking acquire control.
    (2) The notice of disapproval shall:
    (i) Contain a statement of the basis for the disapproval; and
    (ii) Indicate that a hearing may be requested by filing a written 
request with the Executive Secretary within ten days after service of 
the notice of disapproval; and if a hearing is requested, that an answer 
to the notice of disapproval, as required by Sec. 308.113, must be filed 
within 20 days after service of the notice of disapproval.
    (b) Waiver of hearing. Failure to request a hearing pursuant to this 
section shall constitute a waiver of the opportunity for a hearing and 
the notice of disapproval shall constitute a final and unappealable 
order.
    (c) Section 308.18(b) of the Uniform Rules shall not apply to the 
content of the Notice of Disapproval.



Sec. 308.113  Answer to notice of disapproval.

    (a) Contents. (1) An answer to the notice of disapproval of a 
proposed acquisition of control shall be filed within 20 days after 
service of the notice of disapproval and shall specifically deny those 
portions of the notice of disapproval which are disputed. Those portions 
of the notice of disapproval which are not specifically denied are 
deemed admitted by the applicant.
    (2) Any hearing under this subpart shall be limited to those parts 
of the notice of disapproval that are specifically denied.
    (b) Failure to answer. Failure of a respondent to file an answer 
required by this section within the time provided constitutes a waiver 
of his or her right to appear and contest the allegations in the notice 
of disapproval. If no timely answer is filed, Enforcement Counsel may 
file a motion for entry of an order of default. Upon a finding that no 
good cause has been shown for the failure to file a timely answer, the 
administrative law judge shall file a recommended decision containing 
the findings and relief sought in the notice. A final order issued by 
the Board of Directors based upon a respondent's failure to answer

[[Page 100]]

is deemed to be an order issued upon consent.



Sec. 308.114  Burden of proof.

    The ultimate burden of proof shall be upon the person proposing to 
acquire a depository institution. The burden of going forward with a 
prima facie case shall be upon the FDIC.



 Subpart E--Rules and Procedures Applicable to Proceedings Relating to 
 Assessment of Civil Penalties for Willful Violations of the Change in 
                            Bank Control Act



Sec. 308.115  Scope.

    The rules and procedures of this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings to assess civil 
penalties against any person for willful violation of the Change in Bank 
Control Act of 1978 (12 U.S.C. 1817(j)), or any regulation or order 
issued pursuant thereto, in connection with the affairs of an insured 
nonmember bank.



Sec. 308.116  Assessment of penalties.

    (a) In general. The civil money penalty shall be assessed upon the 
service of a Notice of Assessment which shall become final and 
unappealable unless the respondent requests a hearing pursuant to 
Sec. 308.19(c)(2).
    (b) Amount. (1) Any person who violates any provision of the Change 
in Bank Control Act or any rule, regulation, or order issued by the FDIC 
pursuant thereto, shall forfeit and pay a civil money penalty of not 
more than $5,000 for each day the violation continues.
    (2) Any person who violates any provision of the Change in Bank 
Control Act or any rule, regulation, or order issued by the FDIC 
pursuant thereto; or recklessly engages in any unsafe or unsound 
practice in conducting the affairs of a depository institution; or 
breaches any fiduciary duty; which violation, practice or breach is part 
of a pattern of misconduct; or causes or is likely to cause more than a 
minimal loss to such institution; or results in pecuniary gain or other 
benefit to such person, shall forfeit and pay a civil money penalty of 
not more than $25,000 for each day such violation, practice or breach 
continues.
    (3) Any person who knowingly violates any provision of the Change in 
Bank Control Act or any rule, regulation, or order issued by the FDIC 
pursuant thereto; or engages in any unsafe or unsound practice in 
conducting the affairs of a depository institution; or breaches any 
fiduciary duty; and knowingly or recklessly causes a substantial loss to 
such institution or a substantial pecuniary gain or other benefit to 
such institution or a substantial pecuniary gain or other benefit to 
such person by reason of such violation, practice or breach, shall 
forfeit and pay a civil money penalty not to exceed:
    (i) In the case of a person other than a depository institution--
$1,000,000 per day for each day the violation, practice or breach 
continues; or
    (ii) In the case of a depository institution--an amount not to 
exceed the lesser of $1,000,000 or one percent of the total assets of 
such institution for each day the violation, practice or breach 
continues.
    (4) Adjustment of civil money penalties by the rate of inflation 
pursuant to section 31001(s) of the Debt Collection Improvement Act. 
After November 12, 1996:
    (i) Any person who engages in a violation as set forth in paragraph 
(b)(1) of this section shall forfeit and pay a civil money penalty of 
not more than $5,500 for each day the violation continues.
    (ii) Any person who engages in a violation, unsafe or unsound 
practice or breach of fiduciary duty, as set forth in paragraph (b)(2) 
of this section, shall forfeit and pay a civil money penalty of not more 
than $27,500 for each day such violation, practice or breach continues.
    (iii) Any person who knowingly engages in a violation, unsafe or 
unsound practice or breach of fiduciary duty, as set forth in paragraph 
(b)(3) of this section, shall forfeit and pay a civil money penalty not 
to exceed:
    (A) In the case of a person other than a depository institution--
$1,175,000 per day for each day the violation, practice or breach 
continues; or
    (B) In the case of a depository institution--an amount not to exceed 
the lesser of $1,175,000 or one percent of the total assets of such 
institution for each

[[Page 101]]

day the violation, practice or breach continues.
    (c) Mitigating factors. In assessing the amount of the penalty, the 
Board of Directors or its designee shall consider the gravity of the 
violation, the history of previous violations, respondent's financial 
resources, good faith, and any other matters as justice may require.
    (d) Failure to answer. Failure of a respondent to file an answer 
required by this section within the time provided constitutes a waiver 
of his or her right to appear and contest the allegations in the notice 
of disapproval. If no timely answer is filed, Enforcement Counsel may 
file a motion for entry of an order of default. Upon a finding that no 
good cause has been shown for the failure to file a timely answer, the 
administrative law judge shall file a recommended decision containing 
the findings and relief sought in the notice. A final order issued by 
the Board of Directors based upon a respondent's failure to answer is 
deemed to be an order issued upon consent.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 57990, Nov. 12, 1996; 65 
FR 64887, Oct. 31, 2000]



Sec. 308.117  Effective date of, and payment under, an order to pay.

    If the respondent both requests a hearing and serves an answer, 
civil penalties assessed pursuant to this subpart are due and payable 60 
days after an order to pay, issued after the hearing or upon default, is 
served upon the respondent, unless the order provides for a different 
period of payment. Civil penalties assessed pursuant to an order to pay 
issued upon consent are due and payable within the time specified 
therein.



Sec. 308.118  Collection of penalties.

    The FDIC may collect any civil penalty assessed pursuant to this 
subpart by agreement with the respondent, or the FDIC may bring an 
action against the respondent to recover the penalty amount in the 
appropriate United States district court. All penalties collected under 
this section shall be paid over to the Treasury of the United States.



     Subpart F--Rules and Procedures Applicable to Proceedings for 
                Involuntary Termination of Insured Status



Sec. 308.119  Scope.

    (a) Involuntary termination of insurance pursuant to section 8(a) of 
the FDIA. The rules and procedures in this subpart, subpart B of the 
Local Rules and the Uniform Rules shall apply to proceedings in 
connection with the involuntary termination of the insured status of an 
insured bank depository institution or an insured branch of a foreign 
bank pursuant to section 8(a) of the FDIA (12 U.S.C. 1818(a)), except 
that the Uniform Rules and subpart B of the Local Rules shall not apply 
to the temporary suspension of insurance pursuant to section 8(a)(8) of 
the FDIA (12 U.S.C. 1818(a)(8)).
    (b) Involuntary termination of insurance pursuant to section 8(p) of 
the Act. The rules and procedures in Sec. 308.124 of this subpart F 
shall apply to proceedings in connection with the involuntary 
termination of the insured status of an insured depository institution 
or an insured branch of a foreign bank pursuant to section 8(p) of the 
FDIA (12 U.S.C. 1818(p)). The Uniform Rules shall not apply to 
proceedings under section 8(p) of the FDIA.



Sec. 308.120  Grounds for termination of insurance.

    (a) General rule. The following are grounds for involuntary 
termination of insurance pursuant to section 8(a) of the FDIA:
    (1) An insured depository institution or its directors or trustees 
have engaged or are engaging in unsafe or unsound practices in 
conducting the business of such depository institution;
    (2) An insured depository institution is in an unsafe or unsound 
condition such that it should not continue operations as an insured 
depository institution; or
    (3) An insured depository institution or its directors or trustees 
have violated an applicable law, rule, regulation, order, condition 
imposed in writing by the FDIC in connection with the granting of any 
application or other request by the insured depository institution or 
have violated any written

[[Page 102]]

agreement entered into between the insured depository institution and 
the FDIC.
    (b) Extraterritorial acts of foreign banks. An act or practice 
committed outside the United States by a foreign bank or its directors 
or trustees which would otherwise be a ground for termination of insured 
status under this section shall be a ground for termination if the Board 
of Directors finds:
    (1) The act or practice has been, is, or is likely to be a cause of, 
or carried on in connection with or in furtherance of, an act or 
practice committed within any state, territory, or possession of the 
United States or the District of Columbia that, in and of itself, would 
be an appropriate basis for action by the FDIC; or
    (2) The act or practice committed outside the United States, if 
proven, would adversely affect the insurance risk of the FDIC.
    (c) Failure of foreign bank to secure removal of personnel. The 
failure of a foreign bank to comply with any order of removal or 
prohibition issued by the Board of Directors or the failure of any 
person associated with a foreign bank to appear promptly as a party to a 
proceeding pursuant to section 8(e) of the FDIA (12 U.S.C. 1818(e)), 
shall be a ground for termination of insurance of deposits in any branch 
of the bank.



Sec. 308.121  Notification to primary regulator.

    (a) Service of notification. (1) Upon a determination by the Board 
of Directors or its designee pursuant to Sec. 308.120 of an unsafe or 
unsound practice or condition or of a violation, a notification shall be 
served upon the appropriate Federal banking agency of the insured 
depository institution, or the State banking supervisor if the FDIC is 
the appropriate Federal banking agency.


The notification shall be served not less than 30 days before the Notice 
of Intent to Terminate Insured Status required by section 8(a)(2)(B) of 
the FDIA (12 U.S.C. 1818(a)(2)(B)), and Sec. 308.122, except that this 
period for notification may be reduced or eliminated with the agreement 
of the appropriate Federal banking agency.
    (2) Appropriate Federal banking agency shall have the meaning given 
that term in section 3(q) of the FDIA (12 U.S.C. 1813(q)), and shall be 
the OCC in the case of a national bank, a District bank or an insured 
Federal branch of a foreign bank; the FDIC in the case of an insured 
nonmember bank, including an insured State branch of a foreign bank; the 
Board of Governors in the case of a state member bank; or the OTS in the 
case of an insured Federal or state savings association.
    (3) In the case of a state nonmember bank, insured Federal branch of 
a foreign bank, or state member bank, in addition to service of the 
notification upon the appropriate Federal banking agency, a copy of the 
notification shall be sent to the appropriate State banking supervisor.
    (4) In instances in which a Temporary Order Suspending Insurance is 
issued pursuant to section 8(a)(8) of the FDIA (12 U.S.C. 1818(a)(8)), 
the notification may be served concurrently with such order.
    (b) Contents of notification. The notification shall contain the 
FDIC's determination, and the facts and circumstances upon which such 
determination is based, for the purpose of securing correction of such 
practice, condition, or violation.



Sec. 308.122  Notice of intent to terminate.

    (a) If, after serving the notification under Sec. 308.121, the Board 
of Directors determines that any unsafe or unsound practices, condition, 
or violation, specified in the notification, requires the termination of 
the insured status of the insured depository institution, the Board of 
Directors or its designee, if it determines to proceed further, shall 
cause to be served upon the insured depository institution a notice of 
its intention to terminate insured status not less than 30 days after 
service of the notification, unless a shorter time period has been 
agreed upon by the appropriate Federal banking agency.
    (b) The Board of Directors or its designee shall cause a copy of the 
notice to be sent to the appropriate Federal banking agency and to the 
appropriate state banking supervisor, if any.

[[Page 103]]



Sec. 308.123  Notice to depositors.

    If the Board of Directors enters an order terminating the insured 
status of an insured depository institution or branch, the insured 
depository institution shall, on the day that order becomes final, or on 
such other day as that order prescribes, mail a notification of 
termination of insured status to each depositor at the depositor's last 
address of record on the books of the insured depository institution or 
branch. The insured depository institution shall also publish the 
notification in two issues of a local newspaper of general circulation 
and shall furnish the FDIC with proof of such publications. The 
notification to depositors shall include information provided in 
substantially the following form:

                                 Notice

    (Date)__________.
    1. The status of the __________, as an (insured depository 
institution) (insured branch) under the provisions of the Federal 
Deposit Insurance Act, will terminate as of the close of business on the 
________ day of____________, 19____.
    2. Any deposits made by you after that date, either new deposits or 
additions to existing deposits, will not be insured by the Federal 
Deposit Insurance Corporation.
    3. Insured deposits in the (depository institution) (branch) on the 
________ day of____________, 19____, will continue to be insured, as 
provided by Federal Deposit Insurance Act, for 2 years after the close 
of business on the ________ day of ____________, 19____. Provided, 
however, that any withdrawals after the close of business on the 
________ day of ____________, 19____, will reduce the insurance coverage 
by the amount of such withdrawals.
_______________________________________________________________________
(Name of (depository institution or branch)
_______________________________________________________________________
(Address)

The notification may include any additional information the depository 
institution deems advisable, provided that the information required by 
this section shall be set forth in a conspicuous manner on the first 
page of the notification.



Sec. 308.124  Involuntary termination of insured status for failure to receive deposits.

    (a) Notice to show cause. When the Board of Directors or its 
designee has evidence that an insured depository institution is not 
engaged in the business of receiving deposits, other than trust funds, 
the Board of Directors or its designee shall give written notice of this 
evidence to the depository institution and shall direct the depository 
institution to show cause why its insured status should not be 
terminated under the provisions of section 8(p) of the FDIA (12 U.S.C. 
1818(p)). The insured depository institution shall have 30 days after 
receipt of the notice, or such longer period as is prescribed in the 
notice, to submit affidavits, other written proof, and any legal 
arguments that it is engaged in the business of receiving deposits other 
than trust funds.
    (b) Notice of termination date. If, upon consideration of the 
affidavits, other written proof, and legal arguments, the Board of 
Directors determines that the depository institution is not engaged in 
the business of receiving deposits, other than trust funds, the finding 
shall be conclusive and the Board of Directors shall notify the 
depository institution that its insured status will terminate at the 
expiration of the first full semiannual assessment period following 
issuance of that notification.
    (c) Notification to depositors of termination of insured status. 
Within the time specified by the Board of Directors and prior to the 
date of termination of its insured status, the depository institution 
shall mail a notification of termination of insured status to each 
depositor at the depositor's last address of record on the books of the 
depository institution. The depository institution shall also publish 
the notification in two issues of a local newspaper of general 
circulation and shall furnish the FDIC with proof of such publications. 
The notification to depositors shall include information provided in 
substantially the following form:

                                 Notice

    (Date)__________.
    The status of the __________, as an (insured depository institution) 
(insured branch) under the Federal Deposit Insurance Act, will terminate 
on the ________ day of____________, 19____, and its deposits will 
thereupon cease to be insured.
_______________________________________________________________________
(Name of depository institution or branch)
_______________________________________________________________________
(Address)


[[Page 104]]



The notification may include any additional information the depository 
institution deems advisable, provided that the information required by 
this section shall be set forth in a conspicuous manner on the first 
page of the notification.



Sec. 308.125  Temporary suspension of deposit insurance.

    (a) If, while an action is pending under section 8(a)(2) of the FDIA 
(12 U.S.C. 1818(a)(2)), the Board of Directors, after consultation with 
the appropriate Federal banking agency, finds that an insured depository 
institution (other than a special supervisory association to which 
Sec. 308.126 of this subpart applies) has no tangible capital under the 
capital guidelines or regulations of the appropriate Federal banking 
agency, the Board of Directors may issue a Temporary Order Suspending 
Deposit Insurance, pending completion of the proceedings under section 
8(a)(2) of the FDIA (12 U.S.C. 1818(a)(2)).
    (b) The temporary order shall be served upon the insured institution 
and a copy sent to the appropriate Federal banking agency and to the 
appropriate State banking supervisor.
    (c) The temporary order shall become effective ten days from the 
date of service upon the insured depository institution. Unless set 
aside, limited, or suspended in proceedings under section 8(a)(8)(D) of 
the FDIA (12 U.S.C. 1818 (a)(8)(D)), the temporary order shall remain 
effective and enforceable until an order terminating the insured status 
of the institution is entered by the Board of Directors and becomes 
final, or the Board of Directors dismisses the proceedings.
    (d) Notification to depositors of suspension of insured status. 
Within the time specified by the Board of Directors and prior to the 
suspension of insured status, the depository institution shall mail a 
notification of suspension of insured status to each depositor at the 
depositor's last address of record on the books of the depository 
institution. The depository institution shall also publish the 
notification in two issues of a local newspaper of general circulation 
and shall furnish the FDIC with proof of such publications. The 
notification to depositors shall include information provided in 
substantially the following form:

                                 Notice

    (Date)____________.
    1. The status of the __________, as an (insured depository 
institution) (insured branch) under the provisions of the Federal 
Deposit Insurance Act, will be suspended as of the close of business on 
the ________ day of ____________, 19____, pending the completion of 
administrative proceedings under section 8(a) of the Federal Deposit 
Insurance Act.
    2. Any deposits made by you after that date, either new deposits or 
additions to existing deposits, will not be insured by the Federal 
Deposit Insurance Corporation.
    3. Insured deposits in the (depository institution) (branch) on the 
________ day of ____________, 19____, will continue to be insured for 
____________ after the close of business on the__________ day of 
__________, 19____. Provided, however, that any withdrawals after the 
close of business on the ________ day of____________, 19____, will 
reduce the insurance coverage by the amount of such withdrawals.
_______________________________________________________________________
(Name of depository institution or branch)
_______________________________________________________________________
(Address)


The notification may include any additional information the depository 
institution deems advisable, provided that the information required by 
this section shall be set forth in a conspicuous manner on the first 
page of the notification.



Sec. 308.126  Special supervisory associations.

    If the Board of Directors finds that a savings association is a 
special supervisory association under the provisions of section 
8(a)(8)(B) of the FDIA (12 U.S.C. 1818(a)(8)(B)) for purposes of 
temporary suspension of insured status, the Board of Directors shall 
serve upon the association its findings with regard to the determination 
that the capital of the association, as computed using applicable 
accounting standards, has suffered a material decline; that such 
association or its directors or officers, is engaging in an unsafe or 
unsound practice in conducting the business of the association; that 
such association is in an unsafe or unsound condition to continue 
operating as an insured association; or that such association or its 
directors or officers, has violated any law, rule, regulation, order,

[[Page 105]]

condition imposed in writing by any Federal banking agency, or any 
written agreement, or that the association failed to enter into a 
capital improvement plan acceptable to the Corporation prior to January, 
1990.



 Subpart G--Rules and Procedures Applicable to Proceedings Relating to 
                         Cease-and-Desist Orders



Sec. 308.127  Scope.

    (a) Cease-and-desist proceedings under section 8 of the FDIA. The 
rules and procedures of this subpart, subpart B of the Local Rules and 
the Uniform Rules shall apply to proceedings to order an insured 
nonmember bank or an institution-affiliated party to cease and desist 
from practices and violations described in section 8(b) of the FDIA, 12 
U.S.C. 1818(b).
    (b) Proceedings under the Securities Exchange Act of 1934. (1) The 
rules and procedures of this subpart, subpart B of the Local Rules and 
the Uniform Rules shall apply to proceedings by the Board of Directors 
to order a municipal securities dealer to cease and desist from any 
violation of law or regulation specified in section 15B(c)(5) of the 
Securities Exchange Act, as amended (15 U.S.C. 78o-4(c)(5)) where the 
municipal securities dealer is an insured nonmember bank or a subsidiary 
thereof.
    (2) The rules and procedures of this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings by the Board of 
Directors to order a clearing agency or transfer agent to cease and 
desist from failure to comply with the applicable provisions of section 
17, 17A and 19 of the Securities Exchange Act of 1934, as amended (15 
U.S.C. 78q, 78q-l, 78s), and the applicable rules and regulations 
thereunder, where the clearing agency or transfer agent is an insured 
nonmember bank or a subsidiary thereof.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62100, Nov. 16, 1999]



Sec. 308.128  Grounds for cease-and-desist orders.

    (a) General rule. The Board of Directors or its designee may issue 
and have served upon any insured nonmember bank or an institution-
affiliated party a notice, as set forth in Sec. 308.18 of the Uniform 
Rules for practices and violations as described in Sec. 308.127.
    (b) Extraterritorial acts of foreign banks. An act, violation or 
practice committed outside the United States by a foreign bank or an 
institution-affiliated party that would otherwise be a ground for 
issuing a cease-and-desist order under paragraph (a) of this section or 
a temporary cease-and-desist order under Sec. 308.131 of this subpart, 
shall be a ground for an order if the Board of Directors or its designee 
finds that:
    (1) The act, violation or practice has been, is, or is likely to be 
a cause of, or carried on in connection with or in furtherance of, an 
act, violation or practice committed within any state, territory, or 
possession of the United States or the District of Columbia which act, 
violation or practice, in and of itself, would be an appropriate basis 
for action by the FDIC; or
    (2) The act, violation or practice, if proven, would adversely 
affect the insurance risk of the FDIC.



Sec. 308.129  Notice to state supervisory authority.

    The Board of Directors or its designee shall give the appropriate 
state supervisory authority notification of its intent to institute a 
proceeding pursuant to subpart G of this part, and the grounds thereof. 
Any proceedings shall be conducted according to subpart G of this part, 
unless, within the time period specified in such notification, the state 
supervisory authority has effected satisfactory corrective action. No 
insured institution or other party who is the subject of any notice or 
order issued by the FDIC under this section shall have standing to raise 
the requirements of this subpart as grounds for attacking the validity 
of any such notice or order.



Sec. 308.130  Effective date of order and service on bank.

    (a) Effective date. A cease-and-desist order issued by the Board of 
Directors after a hearing, and a cease-and-desist order issued based 
upon a default, shall become effective at the expiration of 30 days 
after the service of the order upon

[[Page 106]]

the bank or its official. A cease-and-desist order issued upon consent 
shall become effective at the time specified therein. All cease-and-
desist orders shall remain effective and enforceable, except to the 
extent they are stayed, modified, terminated, or set aside by the Board 
of Directors or its designee or by a reviewing court.
    (b) Service on banks. In cases where the bank is not the respondent, 
the cease-and-desist order shall also be served upon the bank.



Sec. 308.131  Temporary cease-and-desist order.

    (a) Issuance. (1) When the Board of Directors or its designee 
determines that the violation, or the unsafe or unsound practice, as 
specified in the notice, or the continuation thereof, is likely to cause 
insolvency or significant dissipation of assets or earnings of the bank, 
or is likely to weaken the condition of the bank or otherwise prejudice 
the interests of its depositors prior to the completion of the 
proceedings under section 8(b) of the FDIA (12 U.S.C. 1818(b)) and 
Sec. 308.128 of this subpart, the Board of Directors or its designee may 
issue a temporary order requiring the bank or an institution-affiliated 
party to immediately cease and desist from any such violation, practice 
or to take affirmative action to prevent such insolvency, dissipation, 
condition or prejudice pending completion of the proceedings under 
section 8(b) of the FDIA (12 U.S.C. 1818(b)).
    (2) When the Board of Directors or its designee issues a Notice of 
charges pursuant to 12 U.S.C. 1818(b)(1) which specifies on the basis of 
particular facts and circumstances that a bank's books and records are 
so incomplete or inaccurate that the FDIC is unable, through the normal 
supervisory process, to determine the financial condition of the bank or 
the details or purpose of any transaction or transactions that may have 
a material effect on the financial condition of the bank, then the Board 
of Directors or its designee may issue a temporary order requiring:
    (i) The cessation of any activity or practice which gave rise, 
whether in whole or in part, to the incomplete or inaccurate state of 
the books or records; or
    (ii) Affirmative action to restore such books or records to a 
complete and accurate state, until the completion of the proceedings 
under section 8(b) of the FDIA (12 U.S.C. 1818(b)).
    (3) The temporary order shall be served upon the bank or the 
institution-affiliated party named therein and shall also be served upon 
the bank in the case where the temporary order applies only to an 
institution-affiliated party.
    (b) Effective date. A temporary order shall become effective when 
served upon the bank or the institution-affiliated party. Unless the 
temporary order is set aside, limited, or suspended by a court in 
proceedings authorized under section 8(c)(2) of the FDIA (12 U.S.C. 
1818(c)(2)), the temporary order shall remain effective and enforceable 
pending completion of administrative proceedings pursuant to section 
8(b) of the FDIA (12 U.S.C. 1818(b)) and entry of an order which has 
become final, or with respect to paragraph (a)(2) of this section the 
FDIC determines by examination or otherwise that the bank's books and 
records are accurate and reflect the financial condition of the bank.
    (c) Uniform Rules do not apply. The Uniform Rules and subpart B of 
the Local Rules shall not apply to the issuance of temporary orders 
under this section.



 Subpart H--Rules and Procedures Applicable to Proceedings Relating to
 
  Assessment and Collection of Civil Money Penalties for Violation of
 
Cease-and-Desist Orders and of Certain Federal Statutes, Including Call 
                            Report Penalties



Sec. 308.132  Assessment of penalties.

    (a) Scope. The rules and procedures of this subpart, subpart B of 
the Local Rules, and the Uniform Rules shall apply to proceedings to 
assess and collect civil money penalties, including civil money 
penalties for violation of section 7(a) of the FDIA (12 U.S.C. 1817(a)).
    (b) Relevant considerations. In determining the amount of the civil 
penalty to be assessed, the Board of Directors

[[Page 107]]

or its designee shall consider the financial resources and good faith of 
the bank or official, the gravity of the violation, the history of 
previous violations, and any such other matters as justice may require.
    (c) Amount. (1) The Board of Directors or its designee may assess 
civil money penalties pursuant to section 8(i) of the FDIA (12 U.S.C. 
1818(i)), and Sec. 308.01(e)(1) of the Uniform Rules.
    (2) The Board of Directors or its designee may assess civil money 
penalties pursuant to section 7(a) of the FDIA (12 U.S.C. 1817(a)) as 
follows:
    (i) Late filing--Tier One penalties. In cases in which a bank fails 
to make or publish its Report of Condition and Income (Call Report) 
within the appropriate time periods, a civil money penalty of not more 
than $2,200 per day may be assessed where the bank maintains procedures 
in place reasonably adapted to avoid inadvertent error and the late 
filing occurred unintentionally and as a result of such error; or the 
bank inadvertently transmitted a Call Report which is minimally late.
    (A) First offense. Generally, in such cases, the amount assessed 
shall be $300 per day for each of the first 15 days for which the 
failure continues, and $600 per day for each subsequent day the failure 
continues, beginning on the sixteenth day. For banks with less than 
$25,000,000 in assets, the amount assessed shall be the greater of $100 
per day or \1/1000\th of the bank's total assets (\1/10\th of a basis 
point) for each of the first 15 days for which the failure continues, 
and $200 or \1/500\th of the bank's total assets, \1/5\ of a basis 
point) for each subsequent day the failure continues, beginning on the 
sixteenth day.
    (B) Second offense. Where the bank has been delinquent in making or 
publishing its Call Report within the preceding five quarters, the 
amount assessed for the most current failure shall generally be $500 per 
day for each of the first 15 days for which the failure continues, and 
$1,000 per day for each subsequent day the failure continues, beginning 
on the sixteenth day. For banks with less than $25,000,000 in assets, 
those amounts, respectively, shall be \1/500\th of the bank's total 
assets and \1/250\th of the bank's total assets.
    (C) Mitigating factors. The amounts set forth in paragraph 
(c)(2)(i)(A) of this section may be reduced based upon the factors set 
forth in paragraph (b) of this section.
    (D) Lengthy or repeated violations. The amounts set forth in this 
paragraph (c)(2)(i) will be assessed on a case-by-case basis where the 
amount of time of the bank's delinquency is lengthy or the bank has been 
delinquent repeatedly in making or publishing its Call Reports.
    (E) Waiver. Absent extraordinary circumstances outside the control 
of the bank, penalties assessed for late filing shall not be waived.
    (ii) Late filing--Tier Two penalties. Where a bank fails to make or 
publish its Call Report within the appropriate time period, the Board of 
Directors or its designee may assess a civil money penalty of not more 
than $20,000 per day for each day the failure continues. Pursuant to the 
Debt Collection Improvement Act of 1996, for violations which occur 
after November 12, 1996, the maximum Tier Two penalty amount will 
increase to $22,000 per day for each day the failure continues.
    (iii) False or misleading reports or information--(A) Tier One 
penalties. In cases in which a bank submits or publishes any false or 
misleading Call Report or information, the Board of Directors or its 
designee may assess a civil money penalty of not more than $2,200 per 
day for each day the information is not corrected, where the bank 
maintains procedures in place reasonably adapted to avoid inadvertent 
error and the violation occurred unintentionally and as a result of such 
error; or the bank inadvertently transmits a Call Report or information 
which is false or misleading.
    (B) Tier Two penalties. Where a bank submits or publishes any false 
or misleading Call Report or other information, the Board of Directors 
or its designee may assess a civil money penalty of not more than 
$20,000 per day for each day the information is not corrected. Pursuant 
to the Debt Collection Improvement Act of 1996, for violations which 
occur after November 12, 1996, the maximum Tier Two penalty amount will 
increase to $22,000 per day

[[Page 108]]

for each day the information is not corrected.
    (C) Tier Three penalties. Where a bank knowingly or with reckless 
disregard for the accuracy of any Call Report or information submits or 
publishes any false or misleading Call Report or other information, the 
Board of Directors or its designee may assess a civil money penalty of 
not more than the lesser of $1,175,000 or 1 percent of the bank's total 
assets per day for each day the information is not corrected. Pursuant 
to the Debt Collection Improvement Act of 1996, for violations which 
occur after November 12, 1996, the maximum Tier Three penalty amount 
will increase to the lesser of $1,175,000 per day or 1 percent of the 
bank's total assets per day for each day the information is not 
corrected.
    (D) Mitigating factors. The amounts set forth in this paragraph 
(c)(2) may be reduced based upon the factors set forth in paragraph (b) 
of this section.
    (3) Adjustment of civil money penalties by the rate of inflation 
pursuant to section 31001(s) of the Debt Collection Improvement Act. 
Pursuant to section 31001(s) of the Debt Collection Improvement Act, for 
violations which occur after November 12, 1996, the Board of Directors 
or its designee may assess civil money penalties in the maximum amounts 
as follows:
    (i) Civil money penalties assessed pursuant to section 8(i)(2) of 
the FDIA. Tier One civil money penalties may be assessed pursuant to 
section 8(i)(2)(A) of the FDIA (12 U.S.C. 1818(i)(2)(A)) in an amount 
not to exceed $5,500 for each day during which the violation continues. 
Tier Two civil money penalties may be assessed pursuant to section 
8(i)(2)(B) of the FDIA (12 U.S.C. 1818(i)(2)(B)) in an amount not to 
exceed $27,500 for each day during which the violation, practice or 
breach continues. Tier Three civil money penalties may be assessed 
pursuant to section 8(i)(2)(C)(12 U.S.C. 1818(i)(2)(C)) in an amount not 
to exceed, in the case of any person other than an insured depository 
institution $1,175,000 or, in the case of any insured depository 
institution, an amount not to exceed the lesser of $1,175,000 or 1 
percent of the total assets of such institution for each day during 
which the violation, practice, or breach continues.
    (A) Civil money penalties may be assessed pursuant to section 
8(i)(2) of the FDIA in the amounts set forth in this paragraph (c)(3)(i) 
for violations of various consumer laws, including, the Home Mortgage 
Disclosure Act (12 U.S.C. 2804 et seq. and 12 CFR 203.6), the Expedited 
Funds Availability Act (12 U.S.C. 4001 et seq.), the Truth in Savings 
Act (12 U.S.C. 4301 et seq.), the Real Estate Settlement Procedures Act 
(12 U.S.C. 2601 et seq. and 12 CFR part 3500), the Truth in Lending Act 
(15 U.S.C. 1601 et seq.), the Fair Credit Reporting Act (15 U.S.C. 1681 
et seq.), the Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) the 
Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.), the 
Electronic Funds Transfer Act (15 U.S.C. 1693 et seq.) and the Fair 
Housing Act (42 U.S.C. 3601 et seq.) in the amounts set forth in 
paragraphs (c)(3)(i) through (c)(3)(iii) of this section.
    (ii) Civil money penalties assessed pursuant to section 7(c) of the 
FDIA for late filing or the submission false or misleading certified 
statements. Tier One civil money penalties may be assessed pursuant to 
section 7(c)(4)(A) of the FDIA (12 U.S.C. 1817(c)(4)(A)) in an amount 
not to exceed 2,200 for each day during which the failure to file 
continues or the false or misleading information is not corrected. Tier 
Two civil money penalties may be assessed pursuant to section 7(c)(4)(B) 
of the FDIA (12 U.S.C. 1817(c)(4)(B)) in an amount not to exceed $22,000 
for each day during which the failure to file continues or the false or 
misleading information is not corrected. Tier Three civil money 
penalties may be assessed pursuant to section 7(c)(4)(C) in an amount 
not to exceed the lesser of $1,100,000 or 1 percent of the total assets 
of the institution for each day during which the failure to file 
continues or the false or misleading information is not corrected.
    (iii) Civil money penalties assessed pursuant to section 10(e)(4) of 
the FDIA for refusal to allow examination or to provide required 
information during an examination. Pursuant to section 10(e)(4) of the 
FDIA (12 U.S.C. 1820(e)(4)), civil money penalties may be assessed 
against any

[[Page 109]]

affiliate of an insured depository institution which refuses to permit a 
duly-appointed examiner to conduct an examination or to provide 
information during the course of an examination as set forth in section 
20(b) of the FDIA (12 U.S.C. 1820(b)), in an amount not to exceed $5,500 
for each day the refusal continues.
    (iv) Civil money penalties assessed pursuant to section 18(a)(3) of 
the FDIA for incorrect display of insurance logo. Pursuant to section 
18(a)(3) of the FDIA (12 U.S.C. 1828(a)(3)), civil money penalties may 
be assessed against an insured depository institution which fails to 
correctly display its insurance logo pursuant to that section, in an 
amount not to exceed $110 for each day the violation continues.
    (v) Civil money penalties assessed pursuant to section 18(h) of the 
FDIA for failure to file a certified statement or to pay assessment. 
Pursuant to section 18(h) of the FDIA (12 U.S.C. 1828(h)), a civil money 
penalty may be assessed against an insured depository institution which 
wilfully fails or refuses to file a certified statement or pay any 
assessment required under the FDIA in an amount not to exceed $110 for 
each day the violation continues.
    (vi) Civil money penalties assessed pursuant to section 19b(j) of 
the FDIA for recordkeeping violations. Pursuant to section 19b(j) of the 
FDIA (12 U.S.C. 1829b(j)), civil money penalties may be assessed against 
an insured depository institution and any director, officer or employee 
thereof who wilfully or through gross negligence violates or causes a 
violation of the recordkeeping requirements of that section or its 
implementing regulations in an amount not to exceed $11,000 per 
violation.
    (vii) Civil fine pursuant to 12 U.S.C. 1832(c) for violation of 
provisions forbidding interest-bearing demand deposit accounts. Pursuant 
to 12 U.S.C. 1832(c), any depository institution which violates the 
prohibition on deposit or withdrawal from interest-bearing accounts via 
negotiable or transferable instruments payable to third parties shall be 
subject to a fine of $1,100 per violation.
    (viii) Civil penalties for violations of security measure 
requirements under 12 U.S.C. 1884. Pursuant to 12 U.S.C. 1884, an 
institution which violates a rule establishing minimum security 
requirements as set forth in 12 U.S.C. 1882, shall be subject to a civil 
penalty not to exceed $110 for each day of the violation.
    (ix) Civil money penalties assessed pursuant to the Bank Holding 
Company Act of 1970 for prohibited tying arrangements. Pursuant to the 
Bank Holding Company Act of 1970, Tier One civil money penalties may be 
assessed pursuant to 12 U.S.C. 1972(2)(F)(i) in an amount not to exceed 
$5,500 for each day during which the violation continues. Tier Two civil 
money penalties may be assessed pursuant to 12 U.S.C. 1972(2)(F)(ii) in 
an amount not to exceed $27,500 for each day during which the violation, 
practice or breach continues. Tier Three civil money penalties may be 
assessed pursuant to 12 U.S.C. 1972(2)(F)(iii) in an amount not to 
exceed, in the case of any person other than an insured depository 
institution $1,175,000 for each day during which the violation, 
practice, or breach continues or, in the case of any insured depository 
institution, an amount not to exceed the lesser of $1,175,000 or 1 
percent of the total assets of such institution for each day during 
which the violation, practice, or breach continues.
    (x) Civil money penalties assessed pursuant to the International 
Banking Act of 1978. Pursuant to the International Banking Act of 1978 
(IBA) (12 U.S.C. 3108(b)), civil money penalties may be assessed for 
failure to comply with the requirements of the IBA pursuant to section 
8(i)(2) of the FDIA (12 U.S.C. 1818(i)(2)), in the amounts set forth in 
paragraph (c)(3)(i) of this section.
    (xi) Civil money penalties assessed for appraisal violations. 
Pursuant to 12 U.S.C. 3349(b), where a financial institution seeks, 
obtains, or gives any other thing of value in exchange for the 
performance of an appraisal by a person that the institution knows is 
not a state certified or licensed appraiser in connection with a 
federally related transaction, a civil money penalty may be assessed 
pursuant to section 8(i)(2) of the FDIA (12 U.S.C. 1818(i)(2)) in the 
amounts set forth in paragraph (c)(3)(i) of this section.

[[Page 110]]

    (xii) Civil money penalties assessed pursuant to International 
Lending Supervision Act. Pursuant to the International Lending 
Supervision Act (ILSA) (12 U.S.C. 3909(d)), the CMP that may be assessed 
against any banking institution or any officer, director, employee, 
agent or other person participating in the conduct of the affairs of 
such banking institution is amount not to exceed $1,100 for each day a 
violation of the ILSA or any rule, regulation or order issued pursuant 
to ILSA continues.
    (xiii) Civil money penalties assessed for violations of the 
Community Development Banking and Financial Institution Act. Pursuant to 
the Community Development Banking and Financial Institution Act 
(Community Development Banking Act) (12 U.S.C. 4717(b)) a civil money 
penalty may be assessed for violations of the Community Development 
Banking Act pursuant to section 8(i)(2) of the FDIA (12 U.S.C. 
1818(i)(2)), in the amounts set forth in paragraph (c)(3)(i) of this 
section.
    (xiv) Civil money penalties assessed for violations of the 
Securities Exchange Act of 1934. Pursuant to section 21B of the 
Securities Exchange Act of 1934 (Exchange Act) (15 U.S.C. 78u-2), civil 
money penalties may be assessed for violations of certain provisions of 
the Exchange Act, where such penalties are in the public interest. Tier 
One civil money penalties may be assessed pursuant to 15 U.S.C. 78u-
2(b)(1) in an amount not to exceed $5,500 for a natural person or 
$60,000 for any other person for violations set forth in 15 U.S.C. 78u-
2(a). Tier Two civil money penalties may be assessed pursuant to 15 
U.S.C. 78u-2(b)(2) in an amount not to exceed--for each violation set 
forth in 15 U.S.C. 78u-2(a)--$60,000 for a natural person or $300,000 
for any other person if the act or omission involved fraud, deceit, 
manipulation, or deliberate or reckless disregard of a regulatory 
requirement. Tier Three civil money penalties may be assessed pursuant 
to 15 U.S.C. 78u-2(b)(3) for each violation set forth in 15 U.S.C. 78u-
2(a), in an amount not to exceed $120,000 for a natural person or 
$575,000 for any other person, if the act or omission involved fraud, 
deceit, manipulation, or deliberate or reckless disregard of a 
regulatory requirement; and such act or omission directly or indirectly 
resulted in substantial losses, or created a significant risk of 
substantial losses to other persons or resulted in substantial pecuniary 
gain to the person who committed the act or omission.
    (xv) Civil money penalties assessed for false claims and statements 
pursuant to the Program Fraud Civil Remedies Act. Pursuant to the 
Program Fraud Civil Remedies Act (31 U.S.C. 3802), civil money penalties 
of not more than $5,500 per day may be assessed for violations involving 
false claims and statements.
    (xvi) Civil money penalties assessed for violations of the Flood 
Disaster Protection Act. Pursuant to the Flood Disaster Protection Act 
(FDPA)(42 U.S.C. 4012a(f)), civil money penalties may be assessed 
against any regulated lending institution that engages in a pattern or 
practice of violations of the FDPA in an amount not to exceed $350 per 
violation, and not to exceed a total of $115,000 annually.

[56 FR 37975, Aug. 9, 1991, as amended at 61 FR 57991, Nov. 12, 1996; 64 
FR 62100, Nov. 16, 1999; 65 FR 64887, Oct. 31, 2000]



Sec. 308.133  Effective date of, and payment under, an order to pay.

    (a) Effective date. (1) Unless otherwise provided in the Notice, 
except in situations covered by paragraph (a)(2) of this section, civil 
penalties assessed pursuant to this subpart are due and payable 60 days 
after the Notice is served upon the respondent.
    (2) If the respondent both requests a hearing and serves an answer, 
civil penalties assessed pursuant to this subpart are due and payable 60 
days after an order to pay, issued after the hearing or upon default, is 
served upon the respondent, unless the order provides for a different 
period of payment. Civil penalties assessed pursuant to an order to pay 
issued upon consent are due and payable within the time specified 
therein.
    (b) Payment. All penalties collected under this section shall be 
paid over to the Treasury of the United States.

[[Page 111]]



    Subpart I--Rules and Procedures for Imposition of Sanctions Upon 
    Municipal Securities Dealers or Persons Associated With Them and 
                  Clearing Agencies or Transfer Agents



Sec. 308.134  Scope.

    The rules and procedures in this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings by the Board of 
Directors or its designee:
    (a) To censure, limit the activities of, suspend, or revoke the 
registration of, any municipal securities dealer for which the FDIC is 
the appropriate regulatory agency;
    (b) To censure, suspend, or bar from being associated with such a 
municipal securities dealer, any person associated with such a municipal 
securities dealer; and
    (c) To deny registration, to censure limit the activities of, 
suspend, or revoke the registration of, any transfer agent or clearing 
agency for which the FDIC is the appropriate regulatory agency. This 
subpart and the Uniform Rules shall not apply to proceedings to postpone 
or suspend registration of a transfer agent or clearing agency pending 
final determination of denial or revocation of registration.



Sec. 308.135  Grounds for imposition of sanctions.

    (a) Action under section 15(b)(4) of the Exchange Act. The Board of 
Directors or its designee may issue and have served upon any municipal 
securities dealer for which the FDIC is the appropriate regulatory 
agency, or any person associated or seeking to become associated with a 
municipal securities dealer for which the FDIC is the appropriate 
regulatory agency, a written notice of its intention to censure, limit 
the activities or functions or operations of, suspend, or revoke the 
registration of, such municipal securities dealer, or to censure, 
suspend, or bar the person from being associated with the municipal 
securities dealer, when the Board of Directors or its designee 
determines:
    (1) That such municipal securities dealer or such person
    (i) Has committed any prohibited act or omitted any required act 
specified in subparagraph (A), (D), or (E) of section 15(b)(4) of the 
Exchange Act, as amended (15 U.S.C. 78o);
    (ii) Has been convicted of any offense specified in section 
15(b)(4)(B) of the Exchange Act within ten years of commencement of 
proceedings under this subpart; or
    (iii) Is enjoined from any act, conduct, or practice specified in 
section 15(b)(4)(C) of the Exchange Act; and
    (2) That it is in the public interest to impose any of the sanctions 
set forth in paragraph (a) of this section.
    (b) Action under sections 17 and 17A of the Exchange Act. The Board 
of Directors or its designee may issue, and have served upon any 
transfer agent or clearing agency for which the FDIC is the appropriate 
regulatory agency, a written Notice of its intention to deny 
registration to, censure, place limitations on the activities or 
function or operations of, suspend, or revoke the registration of, the 
transfer agent or clearing agency, when the Board of Directors or its 
designee determines:
    (1) That the transfer agent or clearing agency has willfully 
violated, or is unable to comply with, any applicable provision of 
section 17 or 17A of the Exchange Act, as amended, or any applicable 
rule or regulation issued pursuant thereto; and
    (2) That it is in the public interest to impose any of the sanctions 
set forth in paragraph (b) of this section.



Sec. 308.136  Notice to and consultation with the Securities and Exchange Commission.

    Before initiating any proceedings under Sec. 308.135, the FDIC 
shall:
    (a) Notify the Securities and Exchange Commission of the identity of 
the municipal securities dealer or associated person against whom 
proceedings are to be initiated, and the nature of and basis for the 
proposed action; and
    (b) Consult with the Commission concerning the effect of the 
proposed action on the protection of investors and the possibility of 
coordinating the action with any proceeding by the Commission against 
the municipal securities dealer or associated person.

[[Page 112]]



Sec. 308.137  Effective date of order imposing sanctions.

    An order issued by the Board of Directors after a hearing or an 
order issued upon default shall become effective at the expiration of 30 
days after the service of the order, except that an order of censure, 
denial, or revocation of registration is effective when served. An order 
issued upon consent shall become effective at the time specified 
therein. All orders shall remain effective and enforceable except to the 
extent they are stayed, modified, terminated, or set aside by the Board 
of Directors, its designee, or a reviewing court, provided that orders 
of suspension shall continue in effect no longer than 12 months.



Subpart J--Rules and Procedures Relating to Exemption Proceedings Under 
          Section 12(h) of the Securities Exchange Act of 1934



Sec. 308.138  Scope.

    The rules and procedures of this subpart J shall apply to 
proceedings by the Board of Directors or its designee to exempt, in 
whole or in part, an issuer of securities from the provisions of 
sections 12(g), 13, 14(a), 14(c), 14(d), or 14(f) of the Exchange Act, 
as amended (15 U.S.C. 781, 78m, 78n (a), (c) (d) or (f)), or to exempt 
an officer or a director or beneficial owner of securities of such an 
issuer from the provisions of section 16 of the Exchange Act (15 U.S.C. 
78p).



Sec. 308.139  Application for exemption.

    Any interested person may file a written application for an 
exemption under this subpart with the Executive Secretary, Federal 
Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 
20429. The application shall specify the exemption sought and the reason 
therefor, and shall include a statement indicating why the exemption 
would be consistent with the public interest or the protection of 
investors.



Sec. 308.140  Newspaper notice.

    (a) General rule. If the Board of Directors or its designee, in its 
sole discretion, decides to further consider an application for 
exemption, there shall be served upon the applicant instructions to 
publish one notification in a newspaper of general circulation in the 
community where the main office of the issuer is located. The applicant 
shall furnish proof of such publication to the Executive Secretary or 
such other person as may be directed in the instructions.
    (b) Contents. The notification shall contain the name and address of 
the issuer and the name and title of the applicant, the exemption 
sought, a statement that a hearing will be held, and a statement that 
within 30 days of publication of the newspaper notice, interested 
persons may submit to the FDIC written comments on the application for 
exemption and a written request for an opportunity to be heard. The 
address of the FDIC must appear in the notice.



Sec. 308.141  Notice of hearing.

    Within ten days after expiration of the period for receipt of 
comments pursuant to Sec. 308.140, the Executive Secretary shall serve 
upon the applicant and any person who has requested an opportunity to be 
heard written notification indicating the place and time of the hearing. 
The hearing shall be held not later than 30 days after service of the 
notification of hearing. The notification shall contain the name and 
address of the presiding officer designated by the Executive Secretary 
and a statement of the matters to be considered.



Sec. 308.142  Hearing.

    (a) Proceedings are informal. Formal rules of evidence, the 
adjudicative procedures of the APA (5 U.S.C. 554-557), the Uniform Rules 
and Sec. 308.108 of subpart B of the Local Rules shall not apply to 
hearings under this subpart.
    (b) Hearing Procedure. (1) Parties to the hearing may appear 
personally or through counsel and shall have the right to introduce 
relevant and material documents and to make an oral statement.
    (2) There shall be no discovery in proceeding under this subpart J.
    (3) The presiding officer shall have discretion to permit 
presentation of

[[Page 113]]

witnesses within specified time limits, provided that a list of 
witnesses is furnished to the presiding officer prior to the hearing. 
Witnesses shall be sworn, unless otherwise directed by the presiding 
officer. The presiding officer may ask questions of any witness and each 
party may cross-examine any witness presented by an opposing party.
    (4) The proceedings shall be on the record and the transcript shall 
be promptly submitted to the Board of Directors. The presiding officer 
shall make recommendations to the Board of Directors, unless the Board 
of Directors, in its sole discretion, directs otherwise.



Sec. 308.143  Decision of Board of Directors.

    Following submission of the hearing transcript to the Board of 
Directors, the Board of Directors may grant the exemption where it 
determines, by reason of the number of public investors, the amount of 
trading interest in the securities, the nature and extent of the 
issuer's activities, the issuer's income or assets, or otherwise, that 
the exemption is consistent with the public interest or the protection 
of investors. Any exemption shall be set forth in an order specifying 
the terms of the exemption, the person to whom it is granted, and the 
period for which it is granted. A copy of the order shall be served upon 
each party to the proceeding.



 Subpart K--Procedures Applicable to Investigations Pursuant to Section 
                            10(c) of the FDIA



Sec. 308.144  Scope.

    The procedures of this subpart shall be followed when an 
investigation is instituted and conducted in connection with any open or 
failed insured depository institution, any institutions making 
application to become insured depository institutions, and affiliates 
thereof, or with other types of investigations to determine compliance 
with applicable law and regulations, pursuant to section 10(c) of the 
FDIA (12 U.S.C. 1820(c)). The Uniform Rules and subpart B of the Local 
Rules shall not apply to investigations under this subpart.



Sec. 308.145  Conduct of investigation.

    An investigation conducted pursuant to section 10(c) of the FDIA 
shall be initiated only upon issuance of an order by the Board of 
Directors; or by the General Counsel, the Director of the Division of 
Supervision, the Director of the Division of Depositor and Asset 
Services, or their respective designees as set forth at Sec. 303.272 of 
this chapter. The order shall indicate the purpose of the investigation 
and designate FDIC's representative(s) to direct the conduct of the 
investigation. Upon application and for good cause shown, the persons 
who issue the order of investigation may limit, quash, modify, or 
withdraw it. Upon the conclusion of the investigation, an order of 
termination of the investigation shall be issued by the persons issuing 
the order of investigation.

[56 FR 37975, Aug. 9, 1991, as amended at 60 FR 31384, June 15, 1995; 64 
FR 62100, Nov. 16, 1999]



Sec. 308.146  Powers of person conducting investigation.

    The person designated to conduct a section 10(c) investigation shall 
have the power, among other things, to administer oaths and 
affirmations, to take and preserve testimony under oath, to issue 
subpoenas and subpoenas duces tecum and to apply for their enforcement 
to the United States District Court for the judicial district or the 
United States court in any territory in which the main office of the 
bank, institution, or affiliate is located or in which the witness 
resides or conducts business. The person conducting the investigation 
may obtain the assistance of counsel or others from both within and 
outside the FDIC. The persons who issue the order of investigation may 
limit, quash, or modify any subpoena or subpoena duces tecum, upon 
application and for good cause shown. The person conducting an 
investigation may report to the Board of Directors any instance where 
any attorney has been guilty of contemptuous conduct. The Board of 
Directors, upon motion of the person conducting the investigation, or on 
its own motion, may make a finding of contempt and may then summarily 
suspend,

[[Page 114]]

without a hearing, any attorney representing a witness from further 
participation in the investigation.



Sec. 308.147  Investigations confidential.

    lnvestigations conducted pursuant to section 10(c) shall be 
confidential. Information and documents obtained by the FDIC in the 
course of such investigations shall not be disclosed, except as provided 
in part 309 of this chapter and as otherwise required by law.



Sec. 308.148  Rights of witnesses.

    In an investigation pursuant to section 10(c):
    (a) Any person compelled or requested to furnish testimony, 
documentary evidence, or other information, shall upon request be shown 
and provided with a copy of the order initiating the proceeding;
    (b) Any person compelled or requested to provide testimony as a 
witness or to furnish documentary evidence may be represented by a 
counsel who meets the requirements of Sec. 308.6 of the Uniform Rules. 
That counsel may be present and may:
    (1) Advise the witness before, during, and after such testimony;
    (2) Briefly question the witness at the conclusion of such testimony 
for clarification purposes; and
    (3) Make summary notes during such testimony solely for the use and 
benefit of the witness;
    (c) All persons testifying shall be sequestered. Such persons and 
their counsel shall not be present during the testimony of any other 
person, unless permitted in the discretion of the person conducting the 
investigation;
    (d) In cases of a perceived or actual conflict of interest arising 
out of an attorney's or law firm's representation of multiple witnesses, 
the person conducting the investigation may require the attorney to 
comply with the provisions of Sec. 308.8 of the Uniform Rules; and
    (e) Witness fees shall be paid in accordance with Sec. 308.14 of the 
Uniform Rules.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62100, Nov. 16, 1999]



Sec. 308.149  Service of subpoena.

    Service of a subpoena shall be accomplished in accordance with 
Sec. 308.11 of the Uniform Rules.



Sec. 308.150  Transcripts.

    (a) General rule. Transcripts of testimony, if any, in an 
investigation pursuant to section 10(c) shall be recorded by an official 
reporter, or by any other person or means designated by the person 
conducting the investigation. A witness may, solely for the use and 
benefit of the witness, obtain a copy of the transcript of his or her 
testimony at the conclusion of the investigation or, at the discretion 
of the person conducting the investigation, at an earlier time, provided 
the transcript is available. The witness requesting a copy of his or her 
testimony shall bear the cost thereof.
    (b) Subscription by witness. The transcript of testimony shall be 
subscribed by the witness, unless the person conducting the 
investigation and the witness, by stipulation, have waived the signing, 
or the witness is ill, cannot be found, or has refused to sign. If the 
transcript of the testimony is not subscribed by the witness, the 
official reporter taking the testimony shall certify that the transcript 
is a true and complete transcript of the testimony.



Subpart L--Procedures and Standards Applicable to a Notice of Change in 
 Senior Executive Officer or Director Pursuant to Section 32 of the FDIA



Sec. 308.151  Scope.

    The rules and procedures set forth in this subpart shall apply to 
the notice filed by a state nonmember bank pursuant to section 32 of the 
FDIA (12 U.S.C. 1831i) and Sec. 303.102 of this chapter for the consent 
of the FDIC to add or replace an individual on the Board of Directors, 
or to employ any individual as a senior executive officer, or change the 
responsibilities of any individual to a position of senior executive 
officer where:
    (a) The bank is not in compliance with all minimum capital 
requirements applicable to it as determined

[[Page 115]]

by the FDIC on the basis of such institution's most recent report of 
condition or report of examination or inspection;
    (b) The bank is in a troubled condition as defined in 
Sec. 303.101(c) of this chapter; or
    (c) The FDIC determines, in connection with the review of a capital 
restoration plan required under section 38(e)(2) of the FDIA (12 U.S.C. 
1831o(e)(2)) or otherwise, that such prior notice is appropriate.

[64 FR 62100, Nov. 16, 1999]



Sec. 308.152  Grounds for disapproval of notice.

    The Board of Directors or its designee may issue a notice of 
disapproval with respect to a notice submitted by a state nonmember bank 
pursuant to section 32 of the FDIA (12 U.S.C. 1831i) where:
    (a) The competence, experience, character, or integrity of the 
individual with respect to whom such notice is submitted indicates that 
it would not be in the best interests of the depositors of the state 
nonmember bank to permit the individual to be employed by or associated 
with such bank; or
    (b) The competence, experience, character, or integrity of the 
individual with respect to whom such notice is submitted indicates that 
it would not be in the best interests of the public to permit the 
individual to be employed by, or associated with, the state nonmember 
bank.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



Sec. 308.153  Procedures where notice of disapproval issues pursuant to Sec. 303.103(c) of this chapter.

    (a) The Notice of Disapproval shall be served upon the insured state 
nonmember bank and the candidate for director or senior executive 
officer. The Notice of Disapproval shall:
    (1) Summarize or cite the relevant considerations specified in 
Sec. 308.152;
    (2) Inform the individual and the bank that a request for review of 
the disapproval may be filed within fifteen days of receipt of the 
Notice of Disapproval; and
    (3) Specify that additional information, if any, must be contained 
in the request for review.
    (b) The request for review must be filed at the appropriate regional 
office.
    (c) The request for review must be in writing and should:
    (1) Specify the reasons why the FDIC should reconsider its 
disapproval; and
    (2) Set forth relevant, substantive and material documents, if any, 
that for good cause were not previously set forth in the notice required 
to be filed pursuant to section 32 of the FDIA (12 U.S.C. 1831i).

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



Sec. 308.154  Decision on review.

    (a) Within 30 days of receipt of the request for review, the Board 
of Directors or its designee, shall notify the bank and/or the 
individual filing the reconsideration (hereafter ``petitioner'') of the 
FDIC's decision on review.
    (b) If the decision is to grant the review and approve the notice, 
the bank and the individual involved shall be so notified.
    (c) A denial of the request for review pursuant to section 32 of the 
FDIA shall:
    (1) Inform the petitioner that a written request for a hearing, 
stating the relief desired and the grounds therefore, may be filed with 
the Executive Secretary within 15 days after the receipt of the denial; 
and
    (2) Summarize or cite the relevant considerations specified in 
Sec. 308.152.
    (d) If a decision is not rendered within 30 days, the petitioner may 
file a request for a hearing within fifteen days from the date of 
expiration.



Sec. 308.155  Hearing.

    (a) Hearing dates. The Executive Secretary shall order a hearing to 
be commenced within 30 days after receipt of a request for a hearing 
filed pursuant to Sec. 308.154. Upon request of the petitioner or the 
FDIC, the presiding officer or the Executive Secretary may order a later 
hearing date.
    (b) Burden of proof. The ultimate burden of proof shall be upon the 
candidate for director or senior executive officer. The burden of going 
forward

[[Page 116]]

with a prima facie case shall be upon the FDIC.
    (c) Hearing procedure. (1) The hearing shall be held in Washington, 
DC or at another designated place, before a presiding officer designated 
by the Executive Secretary.
    (2) The provisions of Secs. 308.6 through 308.12, 308.16, and 308.21 
of the Uniform Rules and Secs. 308.101 through 308.102, and 308.104 
through 308.106 of subpart B of the Local Rules shall apply to hearings 
held pursuant to this subpart.
    (3) The petitioner may appear at the hearing and shall have the 
right to introduce relevant and material documents and make an oral 
presentation. Members of the FDIC enforcement staff may attend the 
hearing and participate as representatives of the FDIC enforcement 
staff.
    (4) There shall be no discovery in proceedings under this subpart.
    (5) At the discretion of the presiding officer, witnesses may be 
presented within specified time limits, provided that a list of 
witnesses is furnished to the presiding officer and to all other parties 
prior to the hearing. Witnesses shall be sworn, unless otherwise 
directed by the presiding officer. The presiding officer may ask 
questions of any witness. Each party shall have the opportunity to 
cross-examine any witness presented by an opposing party. The transcript 
of the proceedings shall be furnished, upon request and payment of the 
cost thereof, to the petitioner afforded the hearing.
    (6) In the course of or in connection with any hearing under 
paragraph (c) of this section the presiding officer shall have the power 
to administer oaths and affirmations, to take or cause to be taken 
depositions of unavailable witnesses, and to issue, revoke, quash, or 
modify subpoenas and subpoenas duces tecum. Where the presentation of 
witnesses is permitted, the presiding officer may require the attendance 
of witnesses from any state, territory, or other place subject to the 
jurisdiction of the United States at any location where the proceeding 
is being conducted. Witness fees shall be paid in accordance with 
Sec. 308.14 of the Uniform Rules.
    (7) Upon the request of the applicant afforded the hearing, or the 
members of the FDIC enforcement staff, the record shall remain open for 
five business days following the hearing for the parties to make 
additional submissions to the record.
    (8) The presiding officer shall make recommendations to the Board of 
Directors or its designee, where possible, within fifteen days after the 
last day for the parties to submit additions to the record.
    (9) The presiding officer shall forward his or her recommendation to 
the Executive Secretary who shall promptly certify the entire record, 
including the recommendation to the Board of Directors or its designee. 
The Executive Secretary's certification shall close the record.
    (d) Written submissions in lieu of hearing. The petitioner may in 
writing waive a hearing and elect to have the matter determined on the 
basis of written submissions.
    (e) Failure to request or appear at hearing. Failure to request a 
hearing shall constitute a waiver of the opportunity for a hearing. 
Failure to appear at a hearing in person or through an authorized 
representative shall constitute a waiver of hearing. If a hearing is 
waived, the order shall be final and unappealable, and shall remain in 
full force and effect.
    (f) Decision by Board of Directors or its designee. Within 45 days 
following the Executive Secretary's certification of the record to the 
Board of Directors or its designee, the Board of Directors or its 
designee shall notify the affected individual whether the denial of the 
notice will be continued, terminated, or otherwise modified. The 
notification shall state the basis for any decision of the Board of 
Directors or its designee that is adverse to the petitioner. The Board 
of Directors or its designee shall promptly rescind or modify the denial 
where the decision is favorable to the petitioner.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]

[[Page 117]]



    Subpart M--Procedures and Standards Applicable to an Application 
                   Pursuant to Section 19 of the FDIA



Sec. 308.156  Scope.

    The rules and procedures set forth in this subpart shall apply to an 
application filed pursuant to section 19 of the FDIA (12 U.S.C. 1829) by 
an insured depository institution and/or an individual, who has been 
convicted of any criminal offense involving dishonesty or a breach of 
trust or money laundering or who has agreed to enter into a pretrial 
diversion or similar program in connection with the prosecution of such 
offense, to seek the prior written consent of the FDIC to become or 
continue as an institution-affiliated party with respect to an insured 
depository institution; to own or control directly or indirectly an 
insured depository institution; or to participate directly or indirectly 
in any manner in the conduct of the affairs of an insured depository 
institution.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999; 64 
FR 72913, Dec. 29, 1999]



Sec. 308.157  Relevant considerations.

    (a) In proceedings under Sec. 308.156 on an application to become or 
continue as an institution-affiliated party with respect to an insured 
depository institution; to own or control directly or indirectly an 
insured depository institution; or to participate directly or indirectly 
in any manner in the conduct of the affairs of an insured depository 
institution, the following shall be considered:
    (1) Whether the conviction or entry into a pretrial diversion or 
similar program is for a criminal offense involving dishonesty or breach 
of trust or money laundering;
    (2) Whether participation directly or indirectly by the person in 
any manner in the conduct of the affairs of the insured depository 
institution constitutes a threat to the safety or soundness of the 
insured depository institution or the interests of its depositors, or 
threatens to impair public confidence in the insured depository 
institution;
    (3) Evidence of the applicant's rehabilitation;
    (4) The position to be held by the applicant;
    (5) The amount of influence and control the applicant will be able 
to exercise over the affairs and operations of the insured depository 
institution;
    (6) The ability of the management at the insured depository 
institution to supervise and control the activities of the applicant;
    (7) The level of ownership which the applicant will have at the 
insured depository institution;
    (8) Applicable fidelity bond coverage for the applicant; and
    (9) Additional factors in the specific case that appear relevant.
    (b) The question of whether a person, who was convicted of a crime 
or who agreed to enter a pretrial diversion or similar program, was 
guilty of that crime shall not be at issue in a proceeding under this 
subpart.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



Sec. 308.158  Filing papers and effective date.

    (a) Filing with the regional office. Applications pursuant to 
section 19 shall be filed by in the appropriate regional office. Unless 
a waiver has been granted pursuant to paragraph (c) of this section, 
only an insured depository institution may file an application. Persons 
meeting the de minimis criteria set forth in the FDIC's Statement of 
Policy on Section 19 of the FDIA (63 FR 66177 (1998)) need not file an 
application.
    (b) Effective date. An application pursuant to section 19 may be 
made in writing at any time more than one year after the issuance of a 
decision denying an application pursuant to section 19. The removal and/
or prohibition pursuant to section 19 shall continue until the 
individual has been reinstated by the Board of Directors or its designee 
for good cause shown.
    (c) Waiver applications. If an institution does not file an 
application regarding an individual, the individual may file a request 
for a waiver of the

[[Page 118]]

institution filing requirement for section 19 of the FDIA. Such a waiver 
application shall be filed with the appropriate regional office and 
shall set forth substantial good cause why the application should be 
granted. The Director of the Division of Supervision and, where 
confirmed in writing by the director, a deputy director or an associate 
director may grant or deny applications requesting waivers of the 
institution filing requirement. The authority delegated under this 
section shall be exercised only upon the concurrent certification of the 
General Counsel or his designee that the action to be taken is not 
inconsistent with section 19 of the FDIA.

[64 FR 62101, Nov. 16, 1999]



Sec. 308.159  Denial of applications.

    A denial of an application pursuant to section 19 shall:
    (a) Inform the applicant that a written request for a hearing, 
stating the relief desired and the grounds therefor and any supporting 
evidence, may be filed with the Executive Secretary within 60 days after 
the denial; and
    (b) Summarize or cite the relevant considerations specified in 
Sec. 308.157 of this subpart.



Sec. 308.160  Hearings.

    (a) Hearing dates. The Executive Secretary shall order a hearing to 
be commenced within 60 days after receipt of a request for hearing on an 
application filed pursuant to Sec. 308.159. Upon the request of the 
applicant or FDIC enforcement counsel, the presiding officer or the 
Executive Secretary may order a later hearing date.
    (b) Burden of proof. The ultimate burden of proof shall be upon the 
person proposing to become or continue as an institution-affiliated 
party with respect to an insured depository institution; to own or 
control directly or indirectly an insured depository institution; or to 
participate directly or indirectly in any manner in the conduct of the 
affairs of an insured depository institution. The burden of going 
forward with a prima facie case shall be upon the FDIC.
    (c) Hearing procedure. (1) The hearing shall be held in Washington, 
DC, or at another designated place, before a presiding officer 
designated by the Executive Secretary.
    (2) The provisions of Secs. 308.6 through 308.12, 308.16, and 308.21 
of the Uniform Rules and Secs. 308.101 through 308.102 and 308.104 
through 308.106 of subpart B of the Local Rules shall apply to hearings 
held pursuant to this subpart.
    (3) The applicant may appear at the hearing and shall have the right 
to introduce relevant and material documents and oral argument. Members 
of the FDIC enforcement staff may attend the hearing and participate as 
a party.
    (4) There shall be no discovery in proceedings under this subpart.
    (5) At the discretion of the presiding officer, witnesses may be 
presented within specified time limits, provided that a list of 
witnesses is furnished to the presiding officer and to all other parties 
prior to the hearing. Witnesses shall be sworn, unless otherwise 
directed by the presiding officer. The presiding officer may ask 
questions of any witness. Each party shall have the opportunity to 
cross-examine any witness presented by an opposing party. The transcript 
of the proceedings shall be furnished, upon request and payment of the 
cost thereof, to the applicant afforded the hearing.
    (6) In the course of or in connection with any hearing under this 
subsection, the presiding officer shall have the power to administer 
oaths and affirmations, to take or cause to be taken depositions of 
unavailable witnesses, and to issue, revoke, quash, or modify subpoenas 
and subpoenas duces tecum. Where the presentation of witnesses is 
permitted, the presiding officer may require the attendance of witnesses 
from any state, territory, or other place subject to the jurisdiction of 
the United States at any location where the proceeding is being 
conducted. Witness fees shall be paid in accordance with Sec. 308.14 of 
the Uniform Rules.
    (7) Upon the request of the applicant afforded the hearing, or FDIC 
enforcement staff, the record shall remain open for five business days 
following the hearing for the parties to make additional submissions to 
the record.
    (8) The presiding officer shall make recommendations to the Board of 
Directors, where possible, within 20 days

[[Page 119]]

after the last day for the parties to submit additions to the record.
    (9) The presiding officer shall forward his or her recommendation to 
the Executive Secretary who shall promptly certify the entire record, 
including the recommendation to the Board of Directors or its designee. 
The Executive Secretary's certification shall close the record.
    (d) Written submissions in lieu of hearing. The applicant or the 
bank may in writing waive a hearing and elect to have the matter 
determined on the basis of written submissions.
    (e) Failure to request or appear at hearing. Failure to request a 
hearing shall constitute a waiver of the opportunity for a hearing. 
Failure to appear at a hearing in person or through an authorized 
representative shall constitute a waiver of hearing. If a hearing is 
waived, the person shall remain barred under section 19.
    (f) Decision by Board of Directors or its designee. Within 60 days 
following the Executive Secretary's certification of the record to the 
Board of Directors or its designee, the Board of Directors or its 
designee shall notify the affected person whether the person shall 
remain barred under section 19. The notification shall state the basis 
for any decision of the Board of Directors or its designee that is 
adverse to the applicant.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



 Subpart N--Rules and Procedures Applicable to Proceedings Relating to 
     Suspension, Removal, and Prohibition Where a Felony ls Charged



Sec. 308.161  Scope.

    The rules and procedures set forth in this subpart shall apply to 
the following:
    (a) Proceedings to suspend an institution-affiliated party of an 
insured state nonmember bank, or to prohibit such party from further 
participation in the conduct of the affairs of the bank, if continued 
service or participation by such party poses a threat to the interests 
of the bank's depositors or threatens to impair public confidence in the 
depository institution, where the individual is charged in any state or 
federal information, indictment, or complaint, with the commission of, 
or participation in:
    (1) A crime involving dishonesty or breach of trust punishable by 
imprisonment exceeding one year under state or federal law; or (2) A 
criminal violation of section 1956, 1957, or 1960 of Title 18 or section 
5322 or 5324 of Title 31.
    (b) Proceedings to remove from office or to prohibit an institution-
affiliated party from further participation in the conduct of the 
affairs of the bank without the consent of the Board of Directors or its 
designee where:
    (1) A judgment of conviction or an agreement to enter a pre-trial 
diversion or other similar program has been entered against such party 
in connection with a crime described in paragraph (a)(1) of this section 
that is not subject to further appellate review, if continued service or 
participation by such party poses a threat to the interests of the 
bank's depositors or threatens to impair public confidence in the 
depository institution; or
    (2) A judgment of conviction or an agreement to enter a pre-trial 
diversion or other similar program has been entered against such party 
in connection with a crime described in paragraph (a)(2) of this 
section.

[64 FR 62101, Nov. 16, 1999]



Sec. 308.162  Relevant considerations.

    (a)(1) In proceedings under Sec. 308.161 (a) and (b) for a 
suspension, removal or prohibition order, the following shall be 
considered:
    (i) Whether the alleged offense is a crime which is punishable by 
imprisonment for a term exceeding one year under state or federal law 
and which involves dishonesty or breach of trust; and
    (ii) Whether the alleged offense is a criminal violation of section 
1956, 1957, or 1960 of Title 18 or section 5322 or 5324 of Title 31; and
    (iii) Whether continued service or participation by the institution-
affiliated party may pose a threat to the interest of the bank's 
depositors, or threatens to impair public confidence in the bank.

[[Page 120]]

    (b) The question of whether an institution-affiliated party charged 
with a crime is guilty of the crime charged shall not be tried or 
considered in a proceeding under this subpart.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



Sec. 308.163  Notice of suspension, and orders of removal or prohibition.

    (a) Notice of suspension or prohibition. (1) The Board of Directors 
or its designee may suspend or prohibit from further participation in 
the conduct of the affairs of the bank an institution-affiliated party 
by written notice of suspension or prohibition upon a determination by 
the Board of Directors or its designee that the grounds for such 
suspension or prohibition exist. The written notice of suspension or 
prohibition shall be served upon the institution-affiliated party and 
the bank.
    (2) The written notice of suspension shall:
    (i) Inform the institution-affiliated party that a written request 
for a hearing, stating the relief desired and grounds therefore, and any 
supporting evidence, may be filed with the Executive Secretary within 30 
days after receipt of the written notice; and
    (ii) Summarize or cite to the relevant considerations specified in 
Sec. 308.162 of this subpart.
    (3) The suspension or prohibition shall be effective immediately 
upon service on the institution-affiliated party, and shall remain in 
effect until final disposition of the information, indictment, 
complaint, or until it is terminated by the Board of Directors or its 
designee under the provisions of Sec. 308.164 or otherwise.
    (b) Order of removal or prohibition. (1) The Board of Directors or 
its designee may issue an order removing or prohibiting from further 
participation in the conduct of the affairs of the bank an institution-
affiliated party, when a final judgment of conviction not subject to 
further appellate review is entered against the individual for a crime 
referred to in Sec. 308.161(a)(1) and continued service or participation 
by such party poses a threat to the interests of the bank's depositors 
or threatens to impair public confidence in the depository institution.
    (2) An order of removal or prohibition shall be entered if a 
judgment of conviction is entered against the individual for a crime 
described in Sec. 308.161(a)(ii).

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62101, Nov. 16, 1999]



Sec. 308.164  Hearings.

    (a) Hearing dates. The Executive Secretary shall order a hearing to 
be commenced within 30 days after receipt of a request for hearing on an 
application filed pursuant to Sec. 308.163. Upon the request of the 
applicant, the presiding officer or the Executive Secretary may order a 
later hearing date.
    (b) Hearing procedure. (1) The hearing shall be held in Washington, 
DC, or at another designated place, before a presiding officer 
designated by the Executive Secretary.
    (2) The provisions of Secs. 308.6 through 308.12, 308.16, and 308.21 
of the Uniform Rules and Secs. 308.101 through 308.102 and 308.104 
through 308.106 of subpart B of the Local Rules shall apply to hearings 
held pursuant to this subpart.
    (3) The applicant may appear at the hearing and shall have the right 
to introduce relevant and material documents and oral argument. Members 
of the FDIC enforcement staff may attend the hearing and participate as 
representatives of the FDIC enforcement staff.
    (4) There shall be no discovery in proceedings under this subpart.
    (5) At the discretion of the presiding officer, witnesses may be 
presented within specified time limits, provided that a list of 
witnesses is furnished to the presiding officer and to all other parties 
prior to the hearing. Witnesses shall be sworn, unless otherwise 
directed by the presiding officer. The presiding officer may ask 
questions of any witness. Each party shall have the opportunity to 
cross-examine any witness presented by an opposing party. The transcript 
of the proceedings shall be furnished, upon request and payment of the 
cost thereof, to the applicant afforded the hearing.
    (6) In the course of or in connection with any hearing under 
paragraph (b) of this section, the presiding officer shall have the 
power to administer oaths and affirmations, to take or

[[Page 121]]

cause to be taken depositions of unavailable witnesses, and to issue, 
revoke, quash, or modify subpoenas and subpoenas duces tecum. Where the 
presentation of witnesses is permitted, the presiding officer may 
require the attendance of witnesses from any state, territory, or other 
place subject to the jurisdiction of the United States at any location 
where the proceeding is being conducted. Witness fees shall be paid in 
accordance with Sec. 308.14 of the Uniform Rules.
    (7) Upon the request of the applicant afforded the hearing, or the 
members of the FDIC enforcement staff, the record shall remain open for 
five business days following the hearing for the parties to make 
additional submissions to the record.
    (8) The presiding officer shall make recommendations to the Board of 
Directors, where possible, within ten days after the last day for the 
parties to submit additions to the record.
    (9) The presiding officer shall forward his or her recommendation to 
the Executive Secretary who shall promptly certify the entire record, 
including the recommendation to the Board of Directors. The Executive 
Secretary's certification shall close the record.
    (c) Written submissions in lieu of hearing. The applicant or the 
bank may in writing waive a hearing and elect to have the matter 
determined on the basis of written submissions.
    (d) Failure to request or appear at hearing. Failure to request a 
hearing shall constitute a waiver of the opportunity for a hearing. 
Failure to appear at a hearing in person or through an authorized 
representative shall constitute a waiver of hearing. If a hearing is 
waived, the order shall be final and unappealable, and shall remain in 
full force and effect pursuant to Sec. 308.163.
    (e) Decision by Board of Directors or its designee. Within 60 days 
following the Executive Secretary's certification of the record to the 
Board of Directors or its designee, the Board of Directors or its 
designee shall notify the affected individual whether the order of 
removal or prohibition will be continued, terminated, or otherwise 
modified. The notification shall state the basis for any decision of the 
Board of Directors or its designee that is adverse to the applicant. The 
Board of Directors or its designee shall promptly rescind or modify an 
order of removal or prohibition where the decision is favorable to the 
applicant.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



   Subpart O--Liability of Commonly Controlled Depository Institutions



Sec. 308.165  Scope.

    The rules and procedures in this subpart, subpart B of the Local 
Rules and the Uniform Rules shall apply to proceedings in connection 
with the assessment of cross-guaranty liability against commonly 
controlled depository institutions.



Sec. 308.166  Grounds for assessment of liability.

    Any insured depository institution shall be liable for any loss 
incurred or reasonably anticipated to be incurred by the corporation, 
subsequent to August 9, 1989, in connection with the default of a 
commonly controlled insured depository institution, or any loss incurred 
or reasonably anticipated to be incurred in connection with any 
assistance provided by the Corporation to any commonly controlled 
depository institution in danger of default.



Sec. 308.167  Notice of assessment of liability.

    (a) The amount of liability shall be assessed upon service of a 
Notice of Assessment of Liability upon the liable depository 
institution, within two years of the date the Corporation incurred the 
loss.
    (b) Contents of Notice. (1) The Notice of Assessment of Liability 
shall set forth:
    (i) The basis for the FDIC's jurisdiction over the proceeding;
    (ii) A statement of the Corporation's good faith estimate of the 
amount of loss it has incurred or anticipates incurring;
    (iii) A statement of the method by which the estimated loss was 
calculated;
    (iv) A proposed order directing payment by the liable institution of 
the FDIC's estimated amount of loss, and

[[Page 122]]

the schedule under which the payment will be due;
    (v) In cases involving more than one liable institution, the 
estimated amount of each institution's share of the liability.
    (2) The Notice of Assessment of Liability shall advise the liable 
institution(s):
    (i) That an answer must be filed within 20 days after service of the 
Notice;
    (ii) That, if a hearing is requested, a request for a hearing must 
be filed within 20 days after service of the Notice;
    (iii) That if a hearing is requested, such hearing will be held 
within the judicial district in which the liable institution is found, 
or, in cases involving more than one liable institution, within a 
judicial district in which at least one liable institution is found;
    (iv) That, unless the administrative law judge sets a different 
date, the hearing will commence 120 days after service of the Notice of 
Assessment of Liability; and
    (v) That failure to request a hearing shall render the Notice of 
Assessment a final and unappealable order.



Sec. 308.168  Effective date of and payment under an order to pay.

    (a) Unless otherwise provided in the Notice of Assessment of 
Liability, payment of the assessment shall be due on or before the 21st 
day after service of the Assessment of Liability, under the terms of the 
schedule for payment set forth therein.
    (b) All payments collected shall be paid to the Corporation.
    (c) Failure to request a hearing as prescribed herein shall render 
the order to pay final and unappealable.



  Subpart P--Rules and Procedures Relating to the Recovery of Attorney 
                         Fees and Other Expenses



Sec. 308.169  Scope.

    This subpart, and the Equal Access to Justice Act (5 U.S.C. 504), 
which it implements, apply to adversary adjudications before the FDIC. 
The types of adjudication covered by this subpart are those listed in 
Sec. 308.01 of the Uniform Rules. The Uniform Rules and subpart B of the 
Local Rules apply to any proceedings to recover fees and expenses under 
this subpart.



Sec. 308.170  Filing, content, and service of documents.

    (a) Time to file. An application and any other pleading or document 
related to the application shall be filed with the Executive Secretary 
within 30 days after service of the final order of the Board of 
Directors in disposition of the proceeding whenever:
    (1) The applicant seeks an award pursuant to 5 U.S.C. 504(a)(1) as 
the prevailing party in the adversary adjudication or in a discrete 
significant substantive portion of the proceeding; or
    (2) The applicant, in an adversary adjudication arising from an 
action to enforce compliance with a statutory or regulatory requirement, 
asserts pursuant to 5 U.S.C. 504(a)(4) that the demand by the FDIC is 
substantially in excess of the decision of the administrative law judge 
and is unreasonable when compared with such decision under the facts and 
circumstances of the case.
    (b) Content. The application and related documents shall conform to 
the requirements of Sec. 308.10(b) and (c) of the Uniform Rules.
    (c) Service. The application and related documents shall be served 
on all parties to the adversary adjudication in accordance with 
Sec. 308.11 of the Uniform Rules, except that statements of net worth 
shall be served only on counsel for the FDIC.
    (d) Upon receipt of an application, the Executive Secretary shall 
refer the matter to the administrative law judge who heard the 
underlying adversary proceeding, provided that if the original 
administrative law judge is unavailable, or the Executive Secretary 
determines, in his or her sole discretion, that there is cause to refer 
the matter to a different administrative law judge, the matter shall be 
referred to a different administrative law judge.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]

[[Page 123]]



Sec. 308.171  Responses to application.

    (a) By FDIC. (1) Within 20 days after service of an application, 
counsel for the FDIC may file with the Executive Secretary and serve on 
all parties an answer to the application. Unless counsel for the FDIC 
requests and is granted an extension of time for filing or files a 
statement of intent to negotiate under Sec. 308.179 of this subpart, 
failure to file an answer within the 20-day period will be treated as a 
consent to the award requested.
    (2) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of the FDIC's 
position. If the answer is based on any alleged facts not already in the 
record of the proceeding, the answer shall include either supporting 
affidavits or a request for further proceedings under Sec. 308.180.
    (b) Reply to answer. The applicant may file a reply with regard to 
an application filed pursuant to 5 U.S.C. 504 (a)(1), if the FDIC has 
addressed in its answer any of the following issues: that the position 
of the FDIC was substantially justified, that the applicant unduly 
protracted the proceedings, or that special circumstances make an award 
unjust. The applicant may file a reply with regard to an application 
filed pursuant to 5 U.S.C. 504 (a)(4), if the FDIC has addressed in its 
answer any of the following issues: that the applicant has committed a 
willful violation of law or otherwise acted in bad faith, that the 
FDIC's demand is reasonable when compared to the decision of the 
administrative law judge or that special circumstances make an award 
unjust. The reply shall be filed within 15 days after service of the 
answer. If the reply is based on any alleged facts not already in the 
record of the proceeding, the reply shall include either supporting 
affidavits or a request for further proceedings under Sec. 308.180.
    (c) By other parties. Any party to the adversary adjudication, other 
than the applicant and the FDIC, may file comments on an application 
within 20 days after service of the application. If the applicant is 
entitled to file a reply to the FDIC's answer under paragraph (b) of 
this section, another party may file comments on the answer within 15 
days after service of the answer. A commenting party may not participate 
in any further proceedings on the application unless the administrative 
law judge determines that the public interest requires such 
participation in order to permit additional exploration of matters 
raised in the comments.
    (d) Additional response. Additional filings in the nature of 
pleadings may be submitted only by leave of the administrative law 
judge.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec. 308.172  Eligibility of applicants.

    (a) Genera1 rule. To be eligible for an award under this subpart, an 
applicant must have been named or admitted as a party to the proceeding. 
In addition, the applicant must show that it meets all other conditions 
of eligibility set out in paragraph (b) of this section.
    (b) Types of eligible applicant. The types of eligible applicant 
are:
    (1) An individual with a net worth of not more than $2,000,000 at 
the time the adversary adjudication was initiated; or
    (2) Any owner of an unincorporated business, or any partnership, 
corporation, associations, unit of local government or organization, the 
net worth of which did not exceed $7,000,000 and which did not have more 
than 500 employees at the time the adversary adjudication was initiated.
    (3) For purposes of an application filed pursuant to 5 U.S.C. 
504(a)(4), a small entity as defined in 5 U.S.C. 601.
    (c) Factors to be considered. In determining the types of eligible 
applicants:
    (1) An applicant who owns an unincorporated business shall be 
considered as an individual rather than a sole owner of an 
unincorporated business if the issues on which he or she prevails are 
related to personal interests rather than to business interests.
    (2) An applicant's net worth includes the value of any assets 
disposed of for the purpose of meeting an eligibility standard and 
excludes the value of any obligations incurred for this purpose. 
Transfers of assets or obligations incurred for less than reasonably 
equivalent value will be presumed to have been made for this purpose.

[[Page 124]]

    (3) The net worth of a bank shall be established by the net worth 
information reported in conformity with applicable instructions and 
guidelines on the bank's Consolidated Report of Condition and Income 
filed for the last reporting date before the initiation of the adversary 
adjudication.
    (4) The employees of an applicant include all those persons who were 
regularly providing services for remuneration for the applicant, under 
its direction and control, on the date the adversary adjudication was 
initiated. Part-time employees are included as though they were full-
time employees.
    (5) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. The 
aggregated net worth shall be adjusted if necessary to avoid counting 
the net worth of any entity twice. As used in this subpart, affiliates 
are individuals, corporations, and entities that directly or indirectly 
or acting through one or more entities control a majority of the voting 
shares of the applicant; and corporations and entities of which the 
applicant directly or indirectly owns or controls a majority of the 
voting shares. The Board of Directors may, however, on the 
recommendation of the administrative law judge, or otherwise, determine 
that such aggregation with regard to one or more of the applicant's 
affiliates would be unjust and contrary to the purposes of this subpart 
in light of the actual relationship between the affiliated entities. In 
such a case the net worth and employees of the relevant affiliate or 
affiliates will not be aggregated with those of the applicant. In 
addition, the Board of Directors may determine that financial 
relationships of the applicant other than those described in this 
paragraph constitute special circumstances that would make an award 
unjust.
    (6) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec. 308.173  Prevailing party.

    (a) General rule. An eligible applicant who, following an adversary 
adjudication has gained victory on the merits in the proceeding is a 
``prevailing party''. An eligible applicant may be a ``prevailing 
party'' if a settlement of the proceeding was effected on terms 
favorable to it or if the proceeding against it has been dismissed. In 
appropriate situations an applicant may also have prevailed if the 
outcome of the proceeding has substantially vindicated the applicant's 
position on the significant substantive matters at issue, even though 
the applicant has not totally avoided adverse final action.
    (b) Segregation of costs. When a proceeding has presented a number 
of discrete substantive issues, an applicant may have prevailed even 
though all the issues were not resolved in its favor. If such an 
applicant is deemed to have prevailed, any award shall be based on the 
fees and expenses incurred in connection with the discrete significant 
substantive issue or issues on which the applicant's position has been 
upheld. If such segregation of costs is not practicable, the award may 
be based on a fair proration of those fees and expenses incurred in the 
entire proceeding which would be recoverable under Sec. 308.175 if 
proration were not performed, whether separate or prorated treatment is 
appropriate, and the appropriate proration percentage, shall be 
determined on the facts of the particular case. Attention shall be given 
to the significance and nature of the respective issues and their 
separability and interrelationship.



Sec. 308.174  Standards for awards.

    (a) For applications filed pursuant to 5 U.S.C. 504(a)(1), a 
prevailing applicant may receive an award for fees and expenses unless 
the position of the FDIC during the proceeding was substantially 
justified or special circumstances make the award unjust. An award will 
be reduced or denied if the applicant has unduly or unreasonably 
protracted the proceedings. Awards for fees and expenses incurred before 
the date on which the adversary adjudication was initiated are allowable 
if their incurrence was necessary to prepare for the proceeding.

[[Page 125]]

    (b) For applications filed pursuant to 5 U.S.C. 504(a)(4), an 
applicant may receive an award unless the demand by the FDIC was 
reasonable when compared with the decision of the administrative law 
judge, the applicant has committed a willful violation of law or 
otherwise acted in bad faith, or special circumstances make an award 
unjust.

[64 FR 62102, Nov. 16, 1999]



Sec. 308.175  Measure of awards.

    (a) General rule. Awards will be based on rates customarily charged 
by persons engaged in the business of acting as attorneys, agents, and 
expert witnesses, even if the services were made available without 
charge or at a reduced rate, provided that no award under this subpart 
for the fee of an attorney or agent may exceed $125 per hour. No award 
to compensate an expert witness may exceed the highest rate at which the 
FDIC pays expert witnesses. An award may include the reasonable expenses 
of the attorney, agent, or expert witness as a separate item, if the 
attorney, agent, or expert witness ordinarily charges clients separately 
for such expenses. Fees and expenses awarded under 5 U.S.C. 504(a)(4) 
related to defending against an excessive demand shall be paid only as a 
consequence of appropriations paid in advance.
    (b) Determination of reasonableness of fees. In determining the 
reasonableness of the fee sought for an attorney, agent, or expert 
witness, the administrative law judge shall consider the following:
    (1) If the attorney, agent, or expert witness is in private 
practice, his or her customary fee for like services, or, if he or she 
is an employee of the applicant, the fully allocated cost of the 
services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent, or expert witness ordinarily performs 
services;
    (3) The time actually spent in the representation of the applicant;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the proceeding; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (c) Awards for studies. The reasonable cost of any study, analysis, 
test, project, or similar matter prepared on behalf of an applicant may 
be awarded to the extent that the charge for the service does not exceed 
the prevailing rate payable for similar services, and the study or other 
matter was necessary for preparation of the applicant's case and not 
otherwise required by law or sound business or financial practice.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec. 308.176  Application for awards.

    (a) Contents. An application for an award of fees and expenses under 
this subpart shall contain:
    (1) The name of the applicant and an identification of the 
proceeding;
    (2) For applications filed pursuant to 5 U.S.C. 504(a)(1), a showing 
that the applicant has prevailed, and an identification of each issue 
with regard to which the applicant believes that the position of the 
FDIC in the proceeding was not substantially justified;
    (3) For applications filed pursuant to 5 U.S.C. 504(a)(4), a showing 
that the demand by the FDIC is substantially in excess of the decision 
of the administrative law judge and is unreasonable when compared with 
such decision under the facts and circumstances of the case;
    (4) A statement of the amount of fees and expenses for which an 
award is sought;
    (5) For applications filed pursuant to 5 U.S.C. 504(a)(4), a 
statement of the amount of fees and expenses which constitute 
appropriations paid in advance;
    (6) If the applicant is not an individual, a statement of the number 
of its employees on the date the proceeding was initiated;
    (7) A description of any affiliated individuals or entities, as 
defined in Sec. 308.172(c)(5), or a statement that none exist;
    (8) A declaration that the applicant, together with any affiliates, 
had a net worth not more than the ceiling established for it by 
Sec. 308.172(b) as of the date the proceeding was initiated;
    (9) For applications filed pursuant to 5 U.S.C. 504(a)(1), a 
statement whether

[[Page 126]]

the applicant is a small entity as defined in 5 U.S.C. 601; and
    (10) Any other matters that the applicant wishes the FDIC to 
consider in determining whether and in what amount an award should be 
made.
    (b) Verification. The application shall be signed by the applicant 
or an authorized officer or attorney of the applicant. It shall also 
contain or be accompanied by a written verification under oath or under 
penalty of perjury that the information provided in the application and 
supporting documents is true and correct.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec. 308.177  Statement of net worth.

    (a) General rule. A statement of net worth must be filed with the 
application for an award of fees. The statement shall reflect the net 
worth of the applicant and all affiliates of the applicant.
    (b) Contents. (1) The statement of net worth may be in any form 
convenient to the applicant which fully discloses all the assets and 
liabilities of the applicant and all the assets and liabilities of its 
affiliates, as of the time of the initiation of the adversary 
adjudication. Unaudited financial statements are acceptable unless the 
administrative law judge or the Board of Directors otherwise requires. 
Financial statements or reports to a Federal or state agency, prepared 
before the initiation of the adversary adjudication for other purposes, 
and accurate as of a date not more than three months prior to the 
initiation of the proceeding, are acceptable in establishing net worth 
as of the time of the initiation of the proceeding, unless the 
administrative law judge or the Board of Directors otherwise requires.
    (2) In the case of applicants or affiliates that are not banks, net 
worth shall be considered for the purposes of this subpart to be the 
excess of total assets over total liabilities, as of the date the 
underlying proceeding was initiated, except as adjusted under 
Sec. 308.172(c)(2). Assets and liabilities of individuals shall include 
those beneficially owned within the meaning of the FDIC's rules and 
regulations.
    (3) If the applicant or any of its affiliates is a bank, the portion 
of the statement of net worth which relates to the bank shall consist of 
a copy of the bank's last Consolidated Report of Condition and Income 
filed before the initiation of the adversary adjudication. In all cases 
the administrative law judge or the Board of Directors may call for 
additional information needed to establish the applicant's net worth as 
of the initiation of the proceeding. Except as adjusted by additional 
information that was called for under the preceding sentence, net worth 
shall be considered for the purposes of this subpart to be the total 
equity capital (or, in the case of mutual savings banks, the total 
surplus accounts) as reported, in conformity with applicable 
instructions and guidelines, on the bank's Consolidated Report of 
Condition and Income filed for the last reporting date before the 
initiation of the proceeding.
    (c) Statement confidential. Unless otherwise ordered by the Board of 
Directors or required by law, the statement of net worth shall be for 
the confidential use of counsel for the FDIC, the Board of Directors, 
and the administrative law judge.



Sec. 308.178  Statement of fees and expenses.

    The application shall be accompanied by a statement fully 
documenting the fees and expenses for which an award is sought. A 
separate itemized statement shall be submitted for each professional 
firm or individual whose services are covered by the application, 
showing the hours spent in work in connection with the proceeding by 
each individual, a description of the specific services performed, the 
rate at which each fee has been computed, any expenses for which 
reimbursement is sought, the total amount claimed, and the total amount 
paid or payable by the applicant or by any other person or entity for 
the services performed. The administrative law judge or the Board of 
Directors may require the applicant to provide vouchers, receipts, or 
other substantiation for any expenses claimed.

[[Page 127]]



Sec. 308.179  Settlement negotiations.

    If counsel for the FDIC and the applicant believe that the issues in 
a fee application can be settled, they may jointly file with the 
Executive Secretary with a copy to the administrative law judge a 
statement of their intent to negotiate a settlement. The filing of this 
statement shall extend the time for filing an answer under Sec. 308.171 
for an additional 30 days, and further extensions may be granted by the 
administrative law judge upon the joint request of counsel for the FDIC 
and the applicant.

[56 FR 37975, Aug. 9, 1991, as amended at 64 FR 62102, Nov. 16, 1999]



Sec. 308.180  Further proceedings.

    (a) General rule. Ordinarily, the determination of a recommended 
award will be made by the administrative law judge on the basis of the 
written record. However, on request of either the applicant or the FDIC, 
or on his or her own initiative, the administrative law judge may order 
further proceedings such as an informal conference, oral argument, 
additional written submissions, or an evidentiary hearing. Such further 
proceedings will be held only when necessary for full and fair 
resolution of the issues arising from the application and will be 
conducted promptly and expeditiously.
    (b) Request for further proceedings. A request for further 
proceedings under this section shall specifically identify the 
information sought or the issues in dispute and shall explain why 
additional proceedings are necessary.
    (c) Hearing. Ordinarily, the administrative law judge shall hold an 
oral evidentiary hearing only on disputed issues of material fact which 
cannot be adequately resolved through written submissions.



Sec. 308.181  Recommended decision.

    The administrative law judge shall file with the Executive Secretary 
a recommended decision on the fee application not later than 90 days 
after the filing of the application or 30 days after the conclusion of 
the hearing, whichever is later. The recommended decision shall include 
written proposed findings and conclusions on the applicant's eligibility 
and its status as a prevailing party and an explanation of the reasons 
for any difference between the amount requested and the amount of the 
recommended award. The recommended decision shall also include, if at 
issue, proposed findings on whether the FDIC's position was 
substantially justified, whether the applicant unduly protracted the 
proceedings, or whether special circumstances make an award unjust. The 
administrative law judge shall file the record of the proceeding on the 
fee application and, at the same time, serve upon each party a copy of 
the recommended decision, findings, conclusions, and proposed order.



Sec. 308.182  Board of Directors action.

    (a) Exceptions to recommended decision. Within 20 days after service 
of the recommended decision, findings, conclusions, and proposed order, 
the applicant or counsel for the FDIC may file with the Executive 
Secretary written exceptions thereto. A supporting brief may also be 
filed.
    (b) Decision of Board of Directors. The Board of Directors shall 
render its decision within 60 days after the matter is submitted to it 
by the Executive Secretary. The Executive Secretary shall furnish copies 
of the decision and order of the Board of Directors to the parties. 
Judicial review of the decision and order may be obtained as provided in 
5 U.S.C. 504(c)(2).



Sec. 308.183  Payment of awards.

    An applicant seeking payment of an award made by the Board of 
Directors shall submit to the Executive Secretary a statement that the 
applicant will not seek judicial review of the decision and order or 
that the time for seeking further review has passed and no further 
review has been sought. The FDIC will pay the amount awarded within 30 
days after receiving the applicant's statement, unless judicial review 
of the award or of the underlying decision of the adversary adjudication 
has been sought by the applicant or any other party to the proceeding.

[[Page 128]]



    Subpart Q--Issuance and Review of Orders Pursuant to the Prompt 
    Corrective Action Provisions of the Federal Deposit Insurance Act

    Source: 57 FR 44897, Sept. 29, 1992, unless otherwise noted.



Sec. 308.200  Scope.

    The rules and procedures set forth in this subpart apply to banks, 
insured branches of foreign banks and senior executive officers and 
directors of banks that are subject to the provisions of section 38 of 
the Federal Deposit Insurance Act (section 38) (12 U.S.C. 1831o) and 
subpart B of part 325 of this chapter.

[57 FR 44897, Sept. 29, 1992; 57 FR 48426, Oct. 23, 1992]



Sec. 308.201  Directives to take prompt corrective action.

    (a) Notice of intent to issue directive--(1) In general. The FDIC 
shall provide an undercapitalized, significantly undercapitalized, or 
critically undercapitalized bank prior written notice of the FDIC's 
intention to issue a directive requiring such bank to take actions or to 
follow proscriptions described in section 38 that are within the FDIC's 
discretion to require or impose under section 38 of the FDI Act, 
including sections 38 (e)(5), (f)(2), (f)(3), or (f)(5). The bank shall 
have such time to respond to a proposed directive as provided by the 
FDIC under paragraph (c) of this section.
    (2) Immediate issuance of final directive. If the FDIC finds it 
necessary in order to carry out the purposes of section 38 of the FDI 
Act, the FDIC may, without providing the notice prescribed in paragraph 
(a)(1) of this section, issue a directive requiring a bank immediately 
to take actions or to follow proscriptions described in section 38 that 
are within the FDIC's discretion to require or impose under section 38 
of the FDI Act, including section 38 (e)(5), (f)(2), (f)(3), or (f)(5). 
A bank that is subject to such an immediately effective directive may 
submit a written appeal of the directive to the FDIC. Such an appeal 
must be received by the FDIC within 14 calendar days of the issuance of 
the directive, unless the FDIC permits a longer period. The FDIC shall 
consider any such appeal, if filed in a timely matter, within 60 days of 
receiving the appeal. During such period of review, the directive shall 
remain in effect unless the FDIC, in its sole discretion, stays the 
effectiveness of the directive.
    (b) Contents of notice. A notice of intention to issue a directive 
shall include:
    (1) A statement of the bank's capital measures and capital levels;
    (2) A description of the restrictions, prohibitions or affirmative 
actions that the FDIC proposes to impose or require;
    (3) The proposed date when such restrictions or prohibitions would 
be effective or the proposed date for completion of such affirmative 
actions; and
    (4) The date by which the bank subject to the directive may file 
with the FDIC a written response to the notice.
    (c) Response to notice--(1) Time for response. A bank may file a 
written response to a notice of intent to issue a directive within the 
time period set by the FDIC. The date shall be at least 14 calendar days 
from the date of the notice unless the FDIC determines that a shorter 
period is appropriate in light of the financial condition of the bank or 
other relevant circumstances.
    (2) Content of response. The response should include:
    (i) An explanation why the action proposed by the FDIC is not an 
appropriate exercise of discretion under section 38;
    (ii) Any recommended modification of the proposed directive; and
    (iii) Any other relevant information, mitigating circumstances, 
documentation, or other evidence in support of the position of the bank 
regarding the proposed directive.
    (d) FDIC consideration of response. After considering the response, 
the FDIC may:
    (1) Issue the directive as proposed or in modified form;
    (2) Determine not to issue the directive and so notify the bank; or
    (3) Seek additional information or clarification of the response 
from the bank or any other relevant source.

[[Page 129]]

    (e) Failure to file response. Failure by a bank to file with the 
FDIC, within the specified time period, a written response to a proposed 
directive shall constitute a waiver of the opportunity to respond and 
shall constitute consent to the issuance of the directive.
    (f) Request for modification or rescission of directive. Any bank 
that is subject to a directive under this subpart may, upon a change in 
circumstances, request in writing that the FDIC reconsider the terms of 
the directive, and may propose that the directive be rescinded or 
modified. Unless otherwise ordered by the FDIC, the directive shall 
continue in place while such request is pending before the FDIC.



Sec. 308.202  Procedures for reclassifying a bank based on criteria other than capital.

    (a) Reclassification based on unsafe or unsound condition or 
practice--(1) Issuance of notice of proposed reclassification--(i) 
Grounds for reclassification. (A) Pursuant to Sec. 325.103(d) of this 
chapter, the FDIC may reclassify a well capitalized bank as adequately 
capitalized or subject an adequately capitalized or undercapitalized 
institution to the supervisory actions applicable to the next lower 
capital category if:
    (1) The FDIC determines that the bank is in unsafe or unsound 
condition; or
    (2) The FDIC, pursuant to section 8(b)(8) of the FDI Act (12 U.S.C. 
1818(b)(8)), deems the bank to be engaged in an unsafe or unsound 
practice and not to have corrected the deficiency.
    (B) Any action pursuant to this paragraph (a)(1)(i) shall 
hereinafter be referred to as reclassification.
    (ii) Prior notice to institution. Prior to taking action pursuant to 
Sec. 325.103(d) of this chapter, the FDIC shall issue and serve on the 
bank a written notice of the FDIC's intention to reclassify the bank.
    (2) Contents of notice. A notice of intention to reclassify a bank 
based on unsafe or unsound condition shall include:
    (i) A statement of the bank's capital measures and capital levels 
and the category to which the bank would be reclassified;
    (ii) The reasons for reclassification of the bank;
    (iii) The date by which the bank subject to the notice of 
reclassification may file with the FDIC a written appeal of the proposed 
reclassification and a request for a hearing, which shall be at least 14 
calendar days from the date of service of the notice unless the FDIC 
determines that a shorter period is appropriate in light of the 
financial condition of the bank or other relevant circumstances.
    (3) Response to notice of proposed reclassification. A bank may file 
a written response to a notice of proposed reclassification within the 
time period set by the FDIC. The response should include:
    (i) An explanation of why the bank is not in an unsafe or unsound 
condition or otherwise should not be reclassified; and
    (ii) Any other relevant information, mitigating circumstances, 
documentation, or other evidence in support of the position of the bank 
regarding the reclassification.
    (4) Failure to file response. Failure by a bank to file, within the 
specified time period, a written response with the FDIC to a notice of 
proposed reclassification shall constitute a waiver of the opportunity 
to respond and shall constitute consent to the reclassification.
    (5) Request for hearing and presentation of oral testimony or 
witnesses. The response may include a request for an informal hearing 
before the FDIC under this section. If the bank desires to present oral 
testimony or witnesses at the hearing, the bank shall include a request 
to do so with the request for an informal hearing. A request to present 
oral testimony or witnesses shall specify the names of the witnesses and 
the general nature of their expected testimony. Failure to request a 
hearing shall constitute a waiver of any right to a hearing, and failure 
to request the opportunity to present oral testimony or witnesses shall 
constitute a waiver of any right to present oral testimony or witnesses.
    (6) Order for informal hearing. Upon receipt of a timely written 
request that includes a request for a hearing, the FDIC shall issue an 
order directing an informal hearing to commence no later

[[Page 130]]

than 30 days after receipt of the request, unless the bank requests a 
later date. The hearing shall be held in Washington, DC or at such other 
place as may be designated by the FDIC, before a presiding officer(s) 
designated by the FDIC to conduct the hearing.
    (7) Hearing procedures. (i) The bank shall have the right to 
introduce relevant written materials and to present oral argument at the 
hearing. The bank may introduce oral testimony and present witnesses 
only if expressly authorized by the FDIC or the presiding officer(s). 
Neither the provisions of the Administrative Procedure Act (5 U.S.C. 
554-557) governing adjudications required by statute to be determined on 
the record nor the Uniform Rules of Practice and Procedure in this part 
apply to an informal hearing under this section unless the FDIC orders 
that such procedures shall apply.
    (ii) The informal hearing shall be recorded, and a transcript shall 
be furnished to the bank upon request and payment of the cost thereof. 
Witnesses need not be sworn, unless specifically requested by a party or 
the presiding officer(s). The presiding officer(s) may ask questions of 
any witness.
    (iii) The presiding officer(s) may order that the hearing be 
continued for a reasonable period (normally five business days) 
following completion of oral testimony or argument to allow additional 
written submissions to the hearing record.
    (8) Recommendation of presiding officers. Within 20 calendar days 
following the date the hearing and the record on the proceeding are 
closed, the presiding officer(s) shall make a recommendation to the FDIC 
on the reclassification.
    (9) Time for decision. Not later than 60 calendar days after the 
date the record is closed or the date of the response in a case where no 
hearing was requested, the FDIC will decide whether to reclassify the 
bank and notify the bank of the FDIC's decision.
    (b) Request for rescission of reclassification. Any bank that has 
been reclassified under this section, may, upon a change in 
circumstances, request in writing that the FDIC reconsider the 
reclassification, and may propose that the reclassification be rescinded 
and that any directives issued in connection with the reclassification 
be modified, rescinded, or removed. Unless otherwise ordered by the 
FDIC, the bank shall remain subject to the reclassification and to any 
directives issued in connection with that reclassification while such 
request is pending before the FDIC.



Sec. 308.203  Order to dismiss a director or senior executive officer.

    (a) Service of notice. When the FDIC issues and serves a directive 
on a bank pursuant to Sec. 308.201 of this part requiring the bank to 
dismiss from office any director or senior executive officer under 
Sec. 38(f)(2)(F)(ii) of the FDI Act, the FDIC shall also serve a copy of 
the directive, or the relevant portions of the directive where 
appropriate, upon the person to be dismissed.
    (b) Response to directive--(1) Request for reinstatement. A director 
or senior executive officer who has been served with a directive under 
paragraph (a) of this section (Respondent) may file a written request 
for reinstatement. The request for reinstatement shall be filed within 
10 calendar days of the receipt of the directive by the Respondent, 
unless further time is allowed by the FDIC at the request of the 
Respondent.
    (2) Contents of request; informal hearing. The request for 
reinstatement shall include reasons why the Respondent should be 
reinstated, and may include a request for an informal hearing before the 
FDIC under this section. If the Respondent desires to present oral 
testimony or witnesses at the hearing, the Respondent shall include a 
request to do so with the request for an informal hearing. The request 
to present oral testimony or witnesses shall specify the names of the 
witnesses and the general nature of their expected testimony. Failure to 
request a hearing shall constitute a waiver of any right to a hearing 
and failure to request the opportunity to present oral testimony or 
witnesses shall constitute a waiver of any right or opportunity to 
present oral testimony or witnesses.
    (3) Effective date. Unless otherwise ordered by the FDIC, the 
dismissal shall remain in effect while a request for reinstatement is 
pending.

[[Page 131]]

    (c) Order for informal hearing. Upon receipt of a timely written 
request from a Respondent for an informal hearing on the portion of a 
directive requiring a bank to dismiss from office any director or senior 
executive officer, the FDIC shall issue an order directing an informal 
hearing to commence no later than 30 days after receipt of the request, 
unless the Respondent requests a later date. The hearing shall be held 
in Washington, DC, or at such other place as may be designated by the 
FDIC, before a presiding officer(s) designated by the FDIC to conduct 
the hearing.
    (d) Hearing procedures. (1) A Respondent may appear at the hearing 
personally or through counsel. A Respondent shall have the right to 
introduce relevant written materials and to present oral argument. A 
Respondent may introduce oral testimony and present witnesses only if 
expressly authorized by the FDIC or the presiding officer(s). Neither 
the provisions of the Administrative Procedure Act governing 
adjudications required by statute to be determined on the record nor the 
Uniform Rules of Practice and Procedure in this part apply to an 
informal hearing under this section unless the FDIC orders that such 
procedures shall apply.
    (2) The informal hearing shall be recorded, and a transcript shall 
be furnished to the Respondent upon request and payment of the cost 
thereof. Witnesses need not be sworn, unless specifically requested by a 
party or the presiding officer(s). The presiding officer(s) may ask 
questions of any witness.
    (3) The presiding officer(s) may order that the hearing be continued 
for a reasonable period (normally five business days) following 
completion of oral testimony or argument to allow additional written 
submissions to the hearing record.
    (e) Standard for review. A Respondent shall bear the burden of 
demonstrating that his or her continued employment by or service with 
the bank would materially strengthen the bank's ability:
    (1) To become adequately capitalized, to the extent that the 
directive was issued as a result of the bank's capital level or failure 
to submit or implement a capital restoration plan; and
    (2) To correct the unsafe or unsound condition or unsafe or unsound 
practice, to the extent that the directive was issued as a result of 
classification of the bank based on supervisory criteria other than 
capital, pursuant to section 38(g) of the FDI Act.
    (f) Recommendation of presiding officers. Within 20 calendar days 
following the date the hearing and the record on the proceeding are 
closed, the presiding officer(s) shall make a recommendation to the FDIC 
concerning the Respondent's request for reinstatement with the bank.
    (g) Time for decision. Not later than 60 calendar days after the 
date the record is closed or the date of the response in a case where no 
hearing was requested, the FDIC shall grant or deny the request for 
reinstatement and notify the Respondent of the FDIC's decision. If the 
FDIC denies the request for reinstatement, the FDIC shall set forth in 
the notification the reasons for the FDIC's action.



Sec. 308.204  Enforcement of directives.

    (a) Judicial remedies. Whenever a bank fails to comply with a 
directive issued under section 38, the FDIC may seek enforcement of the 
directive in the appropriate United States district court pursuant to 
section 8(i)(1) of the FDI Act (12 U.S.C. 1818(i)(1)).
    (b) Administrative remedies--(1) Failure to comply with directive. 
Pursuant to section 8(i)(2)(A) of the FDI Act, the FDIC may assess a 
civil money penalty against any bank that violates or otherwise fails to 
comply with any final directive issued under section 38 and against any 
institution-affiliated party who participates in such violation or 
noncompliance.
    (2) Failure to implement capital restoration plan. The failure of a 
bank to implement a capital restoration plan required under section 38, 
or subpart B of part 325 of this chapter, or the failure of a company 
having control of a bank to fulfill a guarantee of a capital restoration 
plan made pursuant to section 38(e)(2) of the FDI Act shall subject the 
bank to the assessment of civil money penalties pursuant to section 
8(i)(2)(A) of the FDI Act.

[[Page 132]]

    (c) Other enforcement action. In addition to the actions described 
in paragraphs (a) and (b) of this section, the FDIC may seek enforcement 
of the provisions of section 38 or subpart B of part 325 of this chapter 
through any other judicial or administrative proceeding authorized by 
law.

[57 FR 44897, Sept. 29, 1992; 57 FR 48426, Oct. 23, 1992]



  Subpart R--Submission and Review of Safety and Soundness Compliance 
      Plans and Issuance of Orders To Correct Safety and Soundness 
                              Deficiencies

    Source: 60 FR 35684, July 10, 1995, unless otherwise noted.



Sec. 308.300  Scope.

    The rules and procedures set forth in this subpart apply to insured 
state nonmember banks and to state-licensed insured branches of foreign 
banks, that are subject to the provisions of section 39 of the Federal 
Deposit Insurance Act (section 39) (12 U.S.C. 1831p-1).



Sec. 308.301  Purpose.

    Section 39 of the FDI Act requires the FDIC to establish safety and 
soundness standards. Pursuant to section 39, a bank may be required to 
submit a compliance plan if it is not in compliance with a safety and 
soundness standard established by guideline under section 39(a) or (b). 
An enforceable order under section 8 of the FDI Act may be issued if, 
after being notified that it is in violation of a safety and soundness 
standard established under section 39, the bank fails to submit an 
acceptable compliance plan or fails in any material respect to implement 
an accepted plan. This subpart establishes procedures for requiring 
submission of a compliance plan and issuing an enforceable order 
pursuant to section 39.



Sec. 308.302  Determination and notification of failure to meet a safety and soundness standard and request for compliance plan.

    (a) Determination. The FDIC may, based upon an examination, 
inspection, or any other information that becomes available to the FDIC, 
determine that a bank has failed to satisfy the safety and soundness 
standards set out in part 364 of this chapter and in the Interagency 
Guidelines Establishing Standards for Safety and Soundness set forth in 
appendix A to part 364 of this chapter.
    (b) Request for compliance plan. If the FDIC determines that a bank 
has failed a safety and soundness standard pursuant to paragraph (a) of 
this section, the FDIC may request, by letter or through a report of 
examination, the submission of a compliance plan and the bank shall be 
deemed to have notice of the request three days after mailing of the 
letter by the FDIC or delivery of the report of examination.



Sec. 308.303  Filing of safety and soundness compliance plan.

    (a) Schedule for filing compliance plan--(1) In general. A bank 
shall file a written safety and soundness compliance plan with the FDIC 
within 30 days of receiving a request for a compliance plan pursuant to 
Sec. 308.302(b), unless the FDIC notifies the bank in writing that the 
plan is to be filed within a different period.
    (2) Other plans. If a bank is obligated to file, or is currently 
operating under, a capital restoration plan submitted pursuant to 
section 38 of the FDI Act (12 U.S.C. 1831o), a cease-and-desist order 
entered into pursuant to section 8 of the FDI Act, a formal or informal 
agreement, or a response to a report of examination or report of 
inspection, it may, with the permission of the FDIC, submit a compliance 
plan under this section as part of that plan, order, agreement, or 
response, subject to the deadline provided in paragraph (a)(1) of this 
section.
    (b) Contents of plan. The compliance plan shall include a 
description of the steps the bank will take to correct the deficiency 
and the time within which those steps will be taken.
    (c) Review of safety and soundness compliance plans. Within 30 days 
after receiving a safety and soundness compliance plan under this 
subpart, the FDIC shall provide written notice to the bank of whether 
the plan has been approved or seek additional information

[[Page 133]]

from the bank regarding the plan. The FDIC may extend the time within 
which notice regarding approval of a plan will be provided.
    (d) Failure to submit or implement a compliance plan--(1) 
Supervisory actions. If a bank fails to submit an acceptable plan within 
the time specified by the FDIC or fails in any material respect to 
implement a compliance plan, then the FDIC shall, by order, require the 
bank to correct the deficiency and may take further actions provided in 
section 39(e)(2)(B). Pursuant to section 39(e)(3), the FDIC may be 
required to take certain actions if the bank commenced operations or 
experienced a change in control within the previous 24-month period, or 
the bank experienced extraordinary growth during the previous 18-month 
period.
    (2) Extraordinary growth. For purposes of paragraph (d)(1) of this 
section, extraordinary growth means an increase in assets of more than 
7.5 percent during any quarter within the 18-month period preceding the 
issuance of a request for submission of a compliance plan, by a bank 
that is not well capitalized for purposes of section 38 of the FDI Act. 
For purposes of calculating an increase in assets, assets acquired 
through merger or acquisition approved pursuant to the Bank Merger Act 
(12 U.S.C. 1828(c)) will be excluded.
    (e) Amendment of compliance plan. A bank that has filed an approved 
compliance plan may, after prior written notice to and approval by the 
FDIC, amend the plan to reflect a change in circumstance. Until such 
time as a proposed amendment has been approved, the bank shall implement 
the compliance plan as previously approved.



Sec. 308.304  Issuance of orders to correct deficiencies and to take or refrain from taking other actions.

    (a) Notice of intent to issue order--(1) In general. The FDIC shall 
provide a bank prior written notice of the FDIC's intention 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. The bank shall have such time to respond to a proposed 
order as provided by the FDIC under paragraph (c) of this section.
    (2) Immediate issuance of final order. If the FDIC finds it 
necessary in order to carry out the purposes of section 39 of the FDI 
Act, the FDIC may, without providing the notice prescribed in paragraph 
(a)(1) of this section, issue an order requiring a bank immediately to 
take actions to correct a safety and soundness deficiency or take or 
refrain from taking other actions pursuant to section 39. A bank that is 
subject to such an immediately effective order may submit a written 
appeal of the order to the FDIC. Such an appeal must be received by the 
FDIC within 14 calendar days of the issuance of the order, unless the 
FDIC permits a longer period. The FDIC shall consider any such appeal, 
if filed in a timely matter, within 60 days of receiving the appeal. 
During such period of review, the order shall remain in effect unless 
the FDIC, in its sole discretion, stays the effectiveness of the order.
    (b) Contents of notice. A notice of intent to issue an order shall 
include:
    (1) A statement of the safety and soundness deficiency or 
deficiencies that have been identified at the bank;
    (2) A description of any restrictions, prohibitions, or affirmative 
actions that the FDIC proposes to impose or require;
    (3) The proposed date when such restrictions or prohibitions would 
be effective or the proposed date for completion of any required action; 
and
    (4) The date by which the bank subject to the order may file with 
the FDIC a written response to the notice.
    (c) Response to notice--(1) Time for response. A bank may file a 
written response to a notice of intent to issue an order within the time 
period set by the FDIC. Such a response must be received by the FDIC 
within 14 calendar days from the date of the notice unless the FDIC 
determines that a different period is appropriate in light of the safety 
and soundness of the bank or other relevant circumstances.
    (2) Contents of response. The response should include:
    (i) An explanation why the action proposed by the FDIC is not an 
appropriate exercise of discretion under section 39;
    (ii) Any recommended modification of the proposed order; and

[[Page 134]]

    (iii) Any other relevant information, mitigating circumstances, 
documentation, or other evidence in support of the position of the bank 
regarding the proposed order.
    (d) Agency consideration of response. After considering the 
response, the FDIC may:
    (1) Issue the order as proposed or in modified form;
    (2) Determine not to issue the order and so notify the bank; or
    (3) Seek additional information or clarification of the response 
from the bank, or any other relevant source.
    (e) Failure to file response. Failure by a bank to file with the 
FDIC, within the specified time period, a written response to a proposed 
order shall constitute a waiver of the opportunity to respond and shall 
constitute consent to the issuance of the order.
    (f) Request for modification or rescission of order. Any bank that 
is subject to an order under this subpart may, upon a change in 
circumstances, request in writing that the FDIC reconsider the terms of 
the order, and may propose that the order be rescinded or modified. 
Unless otherwise ordered by the FDIC, the order shall continue in place 
while such request is pending before the FDIC.



Sec. 308.305  Enforcement of orders.

    (a) Judicial remedies. Whenever a bank fails to comply with an order 
issued under section 39, the FDIC may seek enforcement of the order in 
the appropriate United States district court pursuant to section 8(i)(1) 
of the FDI Act.
    (b) Failure to comply with order. Pursuant to section 8(i)(2)(A) of 
the FDI Act, the FDIC may assess a civil money penalty against any bank 
that violates or otherwise fails to comply with any final order issued 
under section 39 and against any institution-affiliated party who 
participates in such violation or noncompliance.
    (c) Other enforcement action. In addition to the actions described 
in paragraphs (a) and (b) of this section, the FDIC may seek enforcement 
of the provisions of section 39 or this part through any other judicial 
or administrative proceeding authorized by law.



Subpart S--Applications for a Stay or Review of Actions of Bank Clearing 
                                Agencies

    Source: 61 FR 48403, Sept. 11, 1996, unless otherwise noted.



Sec. 308.400  Scope.

    This subpart is issued by the Corporation pursuant to sections 
17A(b)(3)(g), 17A(b)(5)(C), 19 and 23 of the Securities Exchange Act of 
1934 (Exchange Act), as amended (15 U.S.C. 78q-1 (b)(3)(g), (b)(5)(C), 
78s, 78w). It applies to applications by banks insured by the 
Corporation (other than members of the Federal Reserve System) for a 
stay or review of certain actions by clearing agencies registered under 
the Exchange Act, for which the Securities and Exchange Commission 
(Commission) is not the appropriate regulatory agency under section 
3(a)(34)(B) of the Exchange Act (bank clearing agencies).



Sec. 308.401  Applications for stays of disciplinary sanctions or summary suspensions by a bank clearing agency.

    Applications to the Corporation for a stay of disciplinary action 
imposed by registered clearing agencies pursuant to section 17(b)(3)(G) 
of the Exchange Act, or summary suspension or limitation or prohibition 
of access under section 17(b)(5)(C) of the Exchange Act shall be made 
according to the rules adopted by the Commission (17 CFR 240.19d-2). 
References to the ``Commission'' in 17 CFR 240.19d-2 are deemed to refer 
to the ``Corporation.''



Sec. 308.402  Applications for review of final disciplinary sanctions, denials of participation, or prohibitions or limitations of access to services imposed by bank clearing agencies.

    Proceedings on an application to the Corporation under section 
19(d)(2) of the Exchange Act for review of any final disciplinary 
sanctions, denials of participation, or prohibitions or limitations of 
access to services imposed by bank clearing agencies shall be conducted 
according to the procedures set forth in rules adopted by the Commission 
(17 CFR 240.19d-3). References to the ``Commission'' in 17 CFR 240.19d-3 
are deemed to refer to the ``Corporation.''

[[Page 135]]



PART 309--DISCLOSURE OF INFORMATION--Table of Contents




Sec.
309.1  Purpose and scope.
309.2  Definitions.
309.3  Federal Register publication.
309.4  Publicly available records.
309.5  Procedures for requesting records.
309.6  Disclosure of exempt records.
309.7  Service of process.

    Authority: 5 U.S.C. 552; 12 U.S.C. 1819 ``Seventh'' and ``Tenth.''

    Source: 60 FR 61465, Nov. 30, 1995, unless otherwise noted.



Sec. 309.1  Purpose and scope.

    This part sets forth the basic policies of the Federal Deposit 
Insurance Corporation regarding information it maintains and the 
procedures for obtaining access to such information. Section 309.2 sets 
forth definitions applicable to this part 309. Section 309.3 describes 
the types of information and documents typically published in the 
Federal Register. Section 309.4 explains how to access public records 
maintained on the Federal Deposit Insurance Corporation's World Wide Web 
page and in the Federal Deposit Insurance Corporation's Public 
Information Center or ``PIC'', and describes the categories of records 
generally found there. Section 309.5 implements the Freedom of 
Information Act (5 U.S.C. 552). Section 309.6 authorizes the 
discretionary disclosure of exempt records under certain limited 
circumstances. Section 309.7 outlines procedures for serving a subpoena 
or other legal process to obtain information maintained by the FDIC.

[63 FR 16404, Apr. 3, 1998]



Sec. 309.2  Definitions.

    For purposes of this part:
    (a) The term depository institution, as used in Sec. 309.6, includes 
depository institutions that have applied to the Corporation for federal 
deposit insurance, closed depository institutions, presently operating 
federally insured depository institutions, foreign banks, branches of 
foreign banks, and all affiliates of any of the foregoing.
    (b) The terms Corporation or FDIC mean the Federal Deposit Insurance 
Corporation.
    (c) The words disclose or disclosure, as used in Sec. 309.6, mean to 
give access to a record, whether by producing the written record or by 
oral discussion of its contents. Where the Corporation employee 
authorized to release Corporation documents makes a determination that 
furnishing copies of the documents is necessary, the words disclose or 
disclosure include the furnishing of copies of documents or records. In 
addition, disclose or disclosure as used in Sec. 309.6 is synonymous 
with the term transfer as used in the Right to Financial Privacy Act of 
1978 (12 U.S.C. 3401 et seq.).
    (d) The term examination includes, but is not limited to, formal and 
informal investigations of irregularities involving suspected violations 
of federal or state civil or criminal laws, or unsafe and unsound 
practices as well as such other investigations as may be conducted 
pursuant to law.
    (e) The term record includes records, files, documents, reports, 
correspondence, books, and accounts, or any portion thereof, in any form 
the FDIC regularly maintains them.
    (f) The term report of examination includes, but is not limited to, 
examination reports resulting from examinations of depository 
institutions conducted jointly by Corporation examiners and state 
banking authority examiners or other federal financial institution 
examiners, as well as reports resulting from examinations conducted 
solely by Corporation examiners. The term also includes compliance 
examination reports.
    (g) The term customer financial records, as used in Sec. 309.6, 
means an original of, a copy of, or information known to have been 
derived from, any record held by a depository institution pertaining to 
a customer's relationship with the depository institution but does not 
include any record that contains information not identified with or 
identifiable as being derived from the financial records of a particular 
customer. The term customer as used in Sec. 309.6 refers to individuals 
or partnerships of five or fewer persons.
    (h) The term Director of the Division having primary authority 
includes Deputies to the Chairman and directors of FDIC Divisions and 
Offices that create,

[[Page 136]]

maintain custody, or otherwise have primary responsibility for the 
handling of FDIC records or information.

[60 FR 61465, Nov. 30, 1995, as amended at 63 FR 16404, Apr. 3, 1998]



Sec. 309.3  Federal Register publication.

    The FDIC publishes the following information in the Federal Register 
for the guidance of the public:
    (a) Descriptions of its central and field organization and the 
established places at which, the officers from whom, and the methods 
whereby, the public may secure information, make submittals or requests, 
or obtain decisions;
    (b) Statements of the general course and method by which its 
functions are channeled and determined, including the nature and 
requirements of all formal and informal procedures available;
    (c) Rules of procedure, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports or examinations;
    (d) Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by the FDIC;
    (e) Every amendment, revision or repeal of the foregoing; and
    (f) General notices of proposed rule-making.



Sec. 309.4  Publicly available records.

    (a) Records available on the FDIC's World Wide Web page--(1) 
Discretionary release of documents. The FDIC encourages the public to 
explore the wealth of resources available on the FDIC's World Wide Web 
page, located at: http://www.fdic.gov. The FDIC has elected to publish a 
broad range of materials on its World Wide Web page, including consumer 
guides; financial and statistical information of interest to the banking 
industry; and information concerning the FDIC's responsibilities and 
structure.
    (2) Documents required to be made available via computer 
telecommunications. (i) The following types of documents created on or 
after November 1, 1996, and required to be made available through 
computer telecommunications, may be found on the FDIC's World Wide Web 
page located at: http://www.fdic.gov:
    (A) Final opinions, including concurring and dissenting opinions, as 
well as final orders and written agreements, made in the adjudication of 
cases;
    (B) Statements of policy and interpretations adopted by the Board of 
Directors that are not published in the Federal Register;
    (C) Administrative staff manuals and instructions to staff that 
affect the public;
    (D) Copies of all records released to any person under Sec. 309.5 
that, because of the nature of their subject matter, the FDIC has 
determined are likely to be the subject of subsequent requests;
    (E) A general index of the records referred to in paragraph 
(a)(2)(i)(D) of this section.
    (ii) To the extent permitted by law, the FDIC may delete identifying 
details when it makes available or publishes a final opinion, final 
order, statement of policy, interpretation or staff manual or 
instruction. If redaction is necessary, the FDIC will, to the extent 
technically feasible, indicate the amount of material deleted at the 
place in the record where such deletion is made unless that indication 
in and of itself will jeopardize the purpose for the redaction.
    (b) Public Information Center. The FDIC maintains a Public 
Information Center or ``PIC'' that contains Corporate records that the 
Freedom of Information Act requires be made available for regular 
inspection and copying, as well as any records or information the FDIC, 
in its discretion, has regularly made available to the public. The PIC 
has extensive materials of interest to the public, including many 
Reports, Summaries and Manuals used or published by the Corporation that 
are available for inspection and copying. The PIC is open from 9:00 AM 
to 5:00 PM, Monday through Friday, excepting federal holidays. It is 
located at 801 17th Street, NW., Washington, DC 20006. The PIC may be 
reached during business hours by calling (800) 276-6003.
    (c) Applicable fees. (i) If applicable, fees for furnishing records 
under this

[[Page 137]]

section are as set forth in Sec. 309.5(f) except that all categories of 
requesters shall be charged duplication costs.
    (ii) Information on the FDIC's World Wide Web page is available to 
the public without charge. If, however, information available on the 
FDIC's World Wide Web page is provided pursuant to a Freedom of 
Information Act request processed under Sec. 309.5, then fees apply and 
will be assessed pursuant to Sec. 309.5(f).

[63 FR 16404, Apr. 3, 1998]



Sec. 309.5  Procedures for requesting records.

    (a) Definitions. For purposes of this section:
    (1) Commercial use request means a request from or on behalf of a 
requester who seeks records for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person on 
whose behalf the request is made. In determining whether a request falls 
within this category, the FDIC will determine the use to which a 
requester will put the records requested and seek additional information 
as it deems necessary.
    (2) Direct costs means those expenditures the FDIC actually incurs 
in searching for, duplicating, and, in the case of commercial 
requesters, reviewing records in response to a request for records.
    (3) Duplication means the process of making a copy of a record 
necessary to respond to a request for records or for inspection of 
original records that contain exempt material or that cannot otherwise 
be directly inspected. Such copies can take the form of paper copy, 
microfilm, audiovisual records, or machine readable records (e.g., 
magnetic tape or computer disk).
    (4) Educational institution means a preschool, a public or private 
elementary or secondary school, an institution of undergraduate or 
graduate higher education, an institution of professional education, and 
an institution of vocational education, which operates a program or 
programs of scholarly research.
    (5) Noncommercial scientific institution means an institution that 
is not operated on a commercial basis as that term is defined in 
paragraph (a)(1) of this section, and which is operated solely for the 
purpose of conducting scientific research, the results of which are not 
intended to promote any particular product or industry.
    (6) Representative of the news media means any person primarily 
engaged in gathering news for, or a free-lance journalist who can 
demonstrate a reasonable expectation of having his or her work product 
published or broadcast by, an entity that is organized and operated to 
publish or broadcast news to the public. The term news means information 
that is about current events or that would be of current interest to the 
general public.
    (7) Review means the process of examining records located in 
response to a request for records to determine whether any portion of 
any record is permitted to be withheld as exempt information. It 
includes processing any record for disclosure, e.g., doing all that is 
necessary to excise them or otherwise prepare them for release.
    (8) Search includes all time spent looking for material that is 
responsive to a request, including page-by-page or line-by-line 
identification of material within records. Searches may be done manually 
and/or by computer using existing programming.
    (b) Making a request for records. (1) The request shall be submitted 
in writing to the Office of the Executive Secretary:
    (i) By completing the online request form located on the FDIC's 
World Wide Web page, found at: http://www.fdic.gov;
    (ii) By facsimile clearly marked Freedom of Information Act Request 
to (202) 898-8778; or
    (iii) By sending a letter to the Office of the Executive Secretary, 
ATTN: FOIA/PA Unit, 550 17th Street, NW., Washington, DC 20429.
    (2) The request shall contain the following information:
    (i) The name and address of the requester, an electronic mail 
address, if available, and the telephone number at which the requester 
may be reached during normal business hours;
    (ii) Whether the requester is an educational institution, 
noncommercial scientific institution, or news media representative;

[[Page 138]]

    (iii) A statement agreeing to pay the applicable fees, or a 
statement identifying a maximum fee that is acceptable to the requester, 
or a request for a waiver or reduction of fees that satisfies paragraph 
(f)(1)(x) of this section; and
    (iv) The preferred form and format of any responsive information 
requested, if other than paper copies.
    (3) A request for identifiable records shall reasonably describe the 
records in a way that enables the FDIC's staff to identify and produce 
the records with reasonable effort and without unduly burdening or 
significantly interfering with any of the FDIC's operations.
    (c) Defective requests. The FDIC need not accept or process a 
request that does not reasonably describe the records requested or that 
does not otherwise comply with the requirements of this part. The FDIC 
may return a defective request, specifying the deficiency. The requester 
may submit a corrected request, which will be treated as a new request.
    (d) Processing requests--(1) Receipt of requests. Upon receipt of 
any request that satisfies paragraph (b) of this section, the FOIA/PA 
Unit, Office of the Executive Secretary, shall assign the request to the 
appropriate processing track pursuant to this section. The date of 
receipt for any request, including one that is addressed incorrectly or 
that is referred by another agency, is the date the Office of the 
Executive Secretary actually receives the request.
    (2) Multitrack processing. (i) The FDIC provides different levels of 
processing for categories of requests under this part. Requests for 
records that are readily identifiable by the Office of the Executive 
Secretary and that have already been cleared for public release may 
qualify for fast-track processing. All other requests shall be handled 
under normal processing procedures, unless expedited processing has been 
granted pursuant to paragraph (d)(3) of this section.
    (ii) The FDIC will make the determination whether a request 
qualifies for fast-track processing. A requester may contact the FOIA/PA 
Unit to learn whether a particular request has been assigned to fast-
track processing. If the request has not qualified for fast-track 
processing, the requester will be given an opportunity to refine the 
request in order to qualify for fast-track processing. Changes made to 
requests to obtain faster processing must be in writing.
    (3) Expedited processing. (i) Where a person requesting expedited 
access to records has demonstrated a compelling need for the records, or 
where the FDIC has determined to expedite the response, the FDIC shall 
process the request as soon as practicable. To show a compelling need 
for expedited processing, the requester shall provide a statement 
demonstrating that:
    (A) The failure to obtain the records on an expedited basis could 
reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual; or
    (B) The requester can establish that they are primarily engaged in 
information dissemination as their main professional occupation or 
activity, and there is urgency to inform the public of the government 
activity involved in the request; and
    (C) The requester's statement must be certified to be true and 
correct to the best of the person's knowledge and belief and explain in 
detail the basis for requesting expedited processing.
    (ii) The formality of the certification required to obtain expedited 
treatment may be waived by the FDIC as a matter of administrative 
discretion.
    (4) A requester seeking expedited processing will be notified 
whether expedited processing has been granted within ten (10) working 
days of the receipt of the request. If the request for expedited 
processing is denied, the requester may file an appeal pursuant to the 
procedures set forth in paragraph (h) of this section, and the FDIC 
shall respond to the appeal within ten (10) working days after receipt 
of the appeal.
    (5) Priority of responses. Consistent with sound administrative 
process the FDIC processes requests in the order they are received in 
the separate processing tracks. However, in the agency's discretion, or 
upon a court order in a matter to which the FDIC is a party, a 
particular request may be processed out of turn.

[[Page 139]]

    (6) Notification. (i) The time for response to requests will be 
twenty (20) working days except:
    (A) In the case of expedited treatment under paragraph (d)(3) of 
this section;
    (B) Where the running of such time is suspended for the calculation 
of a cost estimate for the requester if the FDIC determines that the 
processing of the request may exceed the requester's maximum fee 
provision or if the charges are likely to exceed $250 as provided for in 
paragraph (f)(1)(v) of this section;
    (C) Where the running of such time is suspended for the payment of 
fees pursuant to the paragraphs (d)(6)(i)(B) and (f)(1) of this section; 
or
    (D) In unusual circumstances, as defined in 5 U.S.C. 552(a)(6)(B) 
and further described in paragraph (d)(6)(iii) of this section.
    (ii) In unusual circumstances as referred to in paragraph 
(d)(6)(i)(D) of this section, the time limit may be extended for a 
period of:
    (A) Ten (10) working days as provided by written notice to the 
requester, setting forth the reasons for the extension and the date on 
which a determination is expected to be dispatched; or
    (B) Such alternative time period as agreed to by the requester or as 
reasonably determined by the FDIC when the FDIC notifies the requester 
that the request cannot be processed in the specified time limit.
    (iii) Unusual circumstances may arise when:
    (A) The records are in facilities, such as field offices or storage 
centers, that are not located at the FDIC's Washington office;
    (B) The records requested are voluminous or are not in close 
proximity to one another; or
    (C) There is a need to consult with another agency or among two or 
more components of the FDIC having a substantial interest in the 
determination.
    (7) Response to request. In response to a request that satisfies the 
requirements of paragraph (b) of this section, a search shall be 
conducted of records maintained by the FDIC in existence on the date of 
receipt of the request, and a review made of any responsive information 
located. The FDIC shall notify the requester of:
    (i) The FDIC's determination of the request;
    (ii) The reasons for the determination;
    (iii) If the response is a denial of an initial request or if any 
information is withheld, the FDIC will advise the requester in writing:
    (A) If the denial is in part or in whole;
    (B) The name and title of each person responsible for the denial 
(when other than the person signing the notification);
    (C) The exemptions relied on for the denial; and
    (D) The right of the requester to appeal the denial to the FDIC's 
General Counsel within 30 business days following receipt of the 
notification, as specified in paragraph (h) of this section.
    (e) Providing responsive records. (1) Copies of requested records 
shall be sent to the requester by regular U.S. mail to the address 
indicated in the request, unless the requester elects to take delivery 
of the documents at the FDIC or makes other acceptable arrangements, or 
the FDIC deems it appropriate to send the documents by another means.
    (2) The FDIC shall provide a copy of the record in any form or 
format requested if the record is readily reproducible by the FDIC in 
that form or format, but the FDIC need not provide more than one copy of 
any record to a requester.
    (3) By arrangement with the requester, the FDIC may elect to send 
the responsive records electronically if a substantial portion of the 
request is in electronic format. If the information requested is made 
pursuant to the Privacy Act of 1974, 5 U.S.C. 552a, it will not be sent 
by electronic means unless reasonable security measures can be provided.
    (f) Fees--(1) General rules. (i) Persons requesting records of the 
FDIC shall be charged for the direct costs of search, duplication, and 
review as set forth in paragraphs (f)(2) and (f)(3) of this section, 
unless such costs are less than the FDIC's cost of processing the 
requester's remittance.

[[Page 140]]

    (ii) Requesters will be charged for search and review costs even if 
responsive records are not located or, if located, are determined to be 
exempt from disclosure.
    (iii) Multiple requests seeking similar or related records from the 
same requester or group of requesters will be aggregated for the 
purposes of this section.
    (iv) If the FDIC determines that the estimated costs of search, 
duplication, or review of requested records will exceed the dollar 
amount specified in the request, or if no dollar amount is specified, 
the FDIC will advise the requester of the estimated costs (if greater 
than the FDIC's cost of processing the requester's remittance). The 
requester must agree in writing to pay the costs of search, duplication, 
and review prior to the FDIC initiating any records search.
    (v) If the FDIC estimates that its search, duplication, and review 
costs will exceed $250.00, the requester must pay an amount equal to 20 
percent of the estimated costs prior to the FDIC initiating any records 
search.
    (vi) The FDIC shall ordinarily collect all applicable fees under the 
final invoice before releasing copies of requested records to the 
requester.
    (vii) The FDIC may require any requester who has previously failed 
to pay the charges under this section within 30 calendar days of mailing 
of the invoice to pay in advance the total estimated costs of search, 
duplication, and review. The FDIC may also require a requester who has 
any charges outstanding in excess of 30 calendar days following mailing 
of the invoice to pay the full amount due, or demonstrate that the fee 
has been paid in full, prior to the FDIC initiating any additional 
records search.
    (viii) The FDIC may begin assessing interest charges on unpaid bills 
on the 31st day following the day on which the invoice was sent. 
Interest will be at the rate prescribed in section 3717 of title 31 of 
the United States Code and will accrue from the date of the invoice.
    (ix) The time limit for the FDIC to respond to a request will not 
begin to run until the FDIC has received the requester's written 
agreement under paragraph (f)(1)(iv) of this section, and advance 
payment under paragraph (f)(1) (v) or (vii) of this section, or payment 
of outstanding charges under paragraph (f)(1)(vii) or (viii) of this 
section.
    (x) As part of the initial request, a requester may ask that the 
FDIC waive or reduce fees if disclosure of the records is in the public 
interest because it is likely to contribute significantly to public 
understanding of the operations or activities of the government and is 
not primarily in the commercial interest of the requester. 
Determinations as to a waiver or reduction of fees will be made by the 
Executive Secretary (or designee) and the requester will be notified in 
writing of his/her determination. A determination not to grant a request 
for a waiver or reduction of fees under this paragraph may be appealed 
to the FDIC's General Counsel (or designee) pursuant to the procedure 
set forth in paragraph (h) of this section.
    (2) Chargeable fees by category of requester. (i) Commercial use 
requesters shall be charged search, duplication and review costs.
    (ii) Educational institutions, non-commercial scientific 
institutions and news media representatives shall be charged duplication 
costs, except for the first 100 pages.
    (iii) Requesters not described in paragraph (f)(2) (i) or (ii) of 
this section shall be charged the full reasonable direct cost of search 
and duplication, except for the first two hours of search time and first 
100 pages of duplication.
    (3) Fee schedule. The dollar amount of fees which the FDIC may 
charge to records requesters will be established by the Chief Financial 
Officer of the FDIC (or designee). The FDIC may charge fees that recoup 
the full allowable direct costs it incurs. Fees are subject to change as 
costs change.
    (i) Manual searches for records. The FDIC will charge for manual 
searches for records at the basic rate of pay of the employee making the 
search plus 16 percent to cover employee benefit costs. Where a single 
class of personnel (e.g., all clerical, all professional, or all 
executive) is used exclusively, the FDIC, at its discretion, may 
establish and charge an average rate for the range of grades typically 
involved.

[[Page 141]]

    (ii) Computer searches for records. The fee for searches of 
computerized records is the actual direct cost of the search, including 
computer time, computer runs, and the operator's time apportioned to the 
search. The fee for a computer printout is the actual cost. The fees for 
computer supplies are the actual costs. The FDIC may, at its discretion, 
establish and charge a fee for computer searches based upon a reasonable 
FDIC-wide average rate for central processing unit operating costs and 
the operator's basic rate of pay plus 16 percent to cover employee 
benefit costs.
    (iii) Duplication of records. (A) The per-page fee for paper copy 
reproduction of documents is the average FDIC-wide cost based upon the 
reasonable direct costs of making such copies.
    (B) For other methods of reproduction or duplication, the FDIC will 
charge the actual direct costs of reproducing or duplicating the 
documents.
    (iv) Review of records. The FDIC will charge commercial use 
requesters for the review of records at the time of processing the 
initial request to determine whether they are exempt from mandatory 
disclosure at the basic rate of pay of the employee making the search 
plus 16 percent to cover employee benefit costs. Where a single class of 
personnel (e.g., all clerical, all professional, or all executive) is 
used exclusively, the FDIC, at its discretion, may establish and charge 
an average rate for the range of grades typically involved. The FDIC 
will not charge at the administrative appeal level for review of an 
exemption already applied. When records or portions of records are 
withheld in full under an exemption which is subsequently determined not 
to apply, the FDIC may charge for a subsequent review to determine the 
applicability of other exemptions not previously considered.
    (v) Other services. Complying with requests for special services, 
other than a readily produced electronic form or format, is at the 
FDIC's discretion. The FDIC may recover the full costs of providing such 
services to the requester.
    (4) Publication of fee schedule and effective date of changes. (i) 
The fee schedule is made available on the FDIC's World Wide Web page, 
found at http://www.fdic.gov.
    (ii) The fee schedule will be set forth in the ``Notice of Federal 
Deposit Insurance Corporation Records Fees'' issued in December of each 
year or in such ``Interim Notice of Federal Deposit Insurance 
Corporation Records Fees'' as may be issued. Copies of such notices may 
be obtained at no charge from the Office of the Executive Secretary, 
FOIA/PA Unit, 550 17th Street NW., Washington, DC 20429, and are 
available on the FDIC's World Wide Web page as noted in paragraph 
(f)(4)(i) of this section.
    (iii) The fees implemented in the December or Interim Notice will be 
effective 30 days after issuance.
    (5) Use of contractors. The FDIC may contract with independent 
contractors to locate, reproduce, and/or disseminate records; provided, 
however, that the FDIC has determined that the ultimate cost to the 
requester will be no greater than it would be if the FDIC performed 
these tasks itself. In no case will the FDIC contract out 
responsibilities which the Freedom of Information Act (FOIA) (5 U.S.C. 
552) provides that the FDIC alone may discharge, such as determining the 
applicability of an exemption or whether to waive or reduce fees.
    (g) Exempt information. A request for records may be denied if the 
requested record contains information which falls into one or more of 
the following categories.\1\ If the requested record contains both 
exempt and nonexempt information, the nonexempt portions which may 
reasonably be segregated from the exempt portions will be released to 
the requester. If redaction is necessary, the FDIC will, to the extent 
technically feasible, indicate the amount of material deleted at the 
place in the record where such deletion is made unless that indication 
in and of

[[Page 142]]

itself will jeopardize the purpose for the redaction. The categories of 
exempt records are as follows:
---------------------------------------------------------------------------

    \1\ Classification of a record as exempt from disclosure under the 
provisions of this paragraph (g) shall not be construed as authority to 
withhold the record if it is otherwise subject to disclosure under the 
Privacy Act of 1974 (5 U.S.C. 552a) or other federal statute, any 
applicable regulation of FDIC or any other federal agency having 
jurisdiction thereof, or any directive or order of any court of 
competent jurisdiction.
---------------------------------------------------------------------------

    (1) Records that are specifically authorized under criteria 
established by an Executive Order to be kept secret in the interest of 
national defense or foreign policy and are in fact properly classified 
pursuant to such Executive Order;
    (2) Records related solely to the internal personnel rules and 
practices of the FDIC;
    (3) Records specifically exempted from disclosure by statute, 
provided that such statute:
    (i) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue; or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (4) Trade secrets and commercial or financial information obtained 
from a person that is privileged or confidential;
    (5) Interagency or intra-agency memoranda or letters that would not 
be available by law to a private party in litigation with the FDIC;
    (6) Personnel, medical, and similar files (including financial 
files) the disclosure of which would constitute a clearly unwarranted 
invasion of personal privacy;
    (7) Records compiled for law enforcement purposes, but only to the 
extent that the production of such law enforcement records:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trial or an 
impartial adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a state, local, or foreign agency or 
authority or any private institution which furnished records on a 
confidential basis;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual;
    (8) Records that are contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the FDIC or any agency responsible for the regulation or 
supervision of financial institutions; or
    (9) geological and geophysical information and data, including maps, 
concerning wells.
    (h) Appeals. (1) Appeals should be addressed to the Office of the 
Executive Secretary, FDIC, 550 17th Street, NW., Washington, DC 20429.
    (2) A person whose initial request for records under this section, 
or whose request for a waiver of fees under paragraph (f)(1)(x) of this 
section, has been denied, either in part or in whole, has the right to 
appeal the denial to the FDIC's General Counsel (or designee) within 30 
business days after receipt of notification of the denial. Appeals of 
denials of initial requests or for a waiver of fees must be in writing 
and include any additional information relevant to consideration of the 
appeal.
    (3) Except in the case of an appeal for expedited treatment under 
paragraph (d)(3) of this section, the FDIC will notify the appellant in 
writing within 20 business days after receipt of the appeal and will 
state:
    (i) Whether it is granted or denied in whole or in part;
    (ii) The name and title of each person responsible for the denial 
(if other than the person signing the notification);
    (iii) The exemptions relied upon for the denial in the case of 
initial requests for records; and
    (iv) The right to judicial review of the denial under the FOIA.
    (4) If a requester is appealing for denial of expedited treatment, 
the FDIC will notify the appellant within 10 business days after receipt 
of the appeal of the FDIC's disposition.
    (5) Complete payment of any outstanding fee invoice will be required 
before an appeal is processed.

[[Page 143]]

    (i) Records of another agency. If a requested record is the property 
of another federal agency or department, and that agency or department, 
either in writing or by regulation, expressly retains ownership of such 
record, upon receipt of a request for the record the FDIC will promptly 
inform the requester of this ownership and immediately shall forward the 
request to the proprietary agency or department either for processing in 
accordance with the latter's regulations or for guidance with respect to 
disposition.

[63 FR 16404, Apr. 3, 1998]



Sec. 309.6  Disclosure of exempt records.

    (a) Disclosure prohibited. Except as provided in paragraph (b) of 
this section or by 12 CFR part 310,\2\ no person shall disclose or 
permit the disclosure of any exempt records, or information contained 
therein, to any persons other than those officers, directors, employees, 
or agents of the Corporation who have a need for such records in the 
performance of their official duties. In any instance in which any 
person has possession, custody or control of FDIC exempt records or 
information contained therein, all copies of such records shall remain 
the property of the Corporation and under no circumstances shall any 
person, entity or agency disclose or make public in any manner the 
exempt records or information without written authorization from the 
Director of the Corporation's Division having primary authority over the 
records or information as provided in this section.
---------------------------------------------------------------------------

    \2\ The procedures for disclosing records under the Privacy Act are 
separately set forth in 12 CFR part 310.
---------------------------------------------------------------------------

    (b) Disclosure authorized. Exempt records or information of the 
Corporation may be disclosed only in accordance with the conditions and 
requirements set forth in this paragraph (b). Requests for discretionary 
disclosure of exempt records or information pursuant to this paragraph 
(b) may be submitted directly to the Division having primary authority 
over the exempt records or information or to the Office of Executive 
Secretary for forwarding to the appropriate Division having primary 
authority over the records sought. Such administrative request must 
clearly state that it seeks discretionary disclosure of exempt records, 
clearly identify the records sought, provide sufficient information for 
the Corporation to evaluate whether there is good cause for disclosure, 
and meet all other conditions set forth in paragraph (b)(1) through (10) 
of this section. Information regarding the appropriate FDIC Division 
having primary authority over a particular record or records may be 
obtained from the Office of Executive Secretary. Authority to disclose 
or authorize disclosure of exempt records of the Corporation is 
delegated as follows:
    (1) Disclosure to depository institutions. The Director of the 
Corporation's Division having primary authority over the exempt records, 
or designee, may disclose to any director or authorized officer, 
employee or agent of any depository institution, information contained 
in, or copies of, exempt records pertaining to that depository 
institution.
    (2) Disclosure to state banking agencies. The Director of the 
Corporation's Division having primary authority over the exempt records, 
or designee, may in his or her discretion and for good cause, disclose 
to any authorized officer or employee of any state banking or securities 
department or agency, copies of any exempt records to the extent the 
records pertain to a state-chartered depository institution supervised 
by the agency or authority, or where the exempt records are requested in 
writing for a legitimate depository institution supervisory or 
regulatory purpose.
    (3) Disclosure to federal financial institutions supervisory 
agencies and certain other agencies. The Director of the Corporation's 
Division having primary authority over the exempt records, or designee, 
may in his or her discretion and for good cause, disclose to any 
authorized officer or employee of any federal financial institution 
supervisory agency including the Comptroller of the Currency, the Board 
of Governors of the Federal Reserve System, the Office of Thrift 
Supervision, the Securities and Exchange Commission, the National Credit 
Union Administration, or any other agency included in section 1101(7) of 
the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et. seq.)

[[Page 144]]

(RFPA), any exempt records for a legitimate depository institution 
supervisory or regulatory purpose. The Director, or designee, may in his 
or her discretion and for good cause, disclose exempt records, including 
customer financial records, to certain other federal agencies as 
referenced in section 1113 of the RFPA for the purposes and to the 
extent permitted therein, or to any foreign bank regulatory or 
supervisory authority as provided, and to the extent permitted, by 
section 206 of the Federal Deposit Insurance Corporation Improvement Act 
of 1991 (12 U.S.C. 3109).
    (4) Disclosure to prosecuting or investigatory agencies or 
authorities. (i) Reports of Apparent Crime pertaining to suspected 
violations of law, which may contain customer financial records, may be 
disclosed to federal or state prosecuting or investigatory authorities 
without giving notice to the customer, as permitted in the relevant 
exceptions of the RFPA.
    (ii) The Director of the Corporation's Division having primary 
authority over the exempt records, or designee, may disclose to the 
proper federal or state prosecuting or investigatory authorities, or to 
any authorized officer or employee of such authority, copies of exempt 
records pertaining to irregularities discovered in depository 
institutions which are believed to constitute violations of any federal 
or state civil or criminal law, or unsafe or unsound banking practices, 
provided that customer financial records may be disclosed without giving 
notice to the customer, only as permitted by the relevant exceptions of 
the RFPA. Unless such disclosure is initiated by the FDIC, customer 
financial records shall be disclosed only in response to a written 
request which:
    (A) Is signed by an authorized official of the agency making the 
request;
    (B) Identifies the record or records to which access is requested; 
and
    (C) Gives the reasons for the request.
    (iii) When notice to the customer is required to be given under the 
RFPA, the Director of the Corporation's Division having primary 
authority over the exempt records, or designee, may disclose customer 
financial records to any federal or state prosecuting or investigatory 
agency or authority, provided, that:
    (A) The General Counsel, or designee, has determined that disclosure 
is authorized or required by law; or
    (B) Disclosure is pursuant to a written request that indicates the 
information is relevant to a legitimate law enforcement inquiry within 
the jurisdiction of the requesting agency and:
    (1) The Director of the Corporation's Division having primary 
authority over the exempt records, or designee, certifies pursuant to 
section 1112(a) \3\ of the RFPA that the records are believed relevant 
to a legitimate law enforcement inquiry within the jurisdiction of the 
receiving agency; and
---------------------------------------------------------------------------

    \3\ The form of certification generally is as follows. Additional 
information may be added:
    Pursuant to section 1112(a) of the Right to Financial Privacy Act of 
1978 (12 U.S.C. 3412), I, ______ [name and appropriate title] hereby 
certify that the financial records described below were transferred to 
(agency or department) in the belief that they were relevant to a 
legitimate law enforcement inquiry, within the jurisdiction of the 
receiving agency.
---------------------------------------------------------------------------

    (2) A copy of such certification and the notice required by section 
1112(b) \4\ of the RFPA is sent within fourteen days of the disclosure 
to the customer whose records are disclosed.\5\
---------------------------------------------------------------------------

    \4\ The form of notice generally is as follows. Additional 
information may be added:
    Dear Mr./Ms. ______:
    Copies of, or information contained in, your financial records 
lawfully in the possession of the Federal Deposit Insurance Corporation 
have been furnished to (agency or department) pursuant to the Right to 
Financial Privacy Act of 1978 for the following purpose: ______. If you 
believe that this transfer has not been made to further a legitimate law 
enforcement inquiry, you may have legal rights under the Right to 
Financial Privacy Act of 1978 or the Privacy Act of 1974.
    \5\ Whenever the Corporation is subject to a court-ordered delay of 
the customer notice, the notice shall be sent immediately upon the 
expiration of the court-ordered delay.
---------------------------------------------------------------------------

    (5) Disclosure to servicers and serviced institutions. The Director 
of the Corporation's Division having primary authority over the exempt 
records, or designee, may disclose copies of any exempt record related 
to a bank data center, a depository institution service corporation or 
any other data center

[[Page 145]]

that provides data processing or related services to an insured 
institution (hereinafter referred to as ``data center'') to:
    (i) The examined data center;
    (ii) Any insured institution that receives data processing or 
related services from the examined data center;
    (iii) Any state agency or authority which exercises general 
supervision over an institution serviced by the examined data center; 
and
    (iv) Any federal financial institution supervisory agency which 
exercises general supervision over an institution serviced by the 
examined data center. The federal supervisory agency may disclose any 
such examination report received from the Corporation to an insured 
institution over which it exercises general supervision and which is 
serviced by the examined data center.
    (6) Disclosure to third parties. (i) Except as otherwise provided in 
paragraphs (c) (1) through (5) of this section, the Director of the 
Corporation's Division having primary authority over the exempt records, 
or designee, may in his or her discretion and for good cause, disclose 
copies of any exempt records to any third party where requested to do so 
in writing. Any such written request shall:
    (A) Specify, with reasonable particularity, the record or records to 
which access is requested; and
    (B) Give the reasons for the request.
    (ii) Either prior to or at the time of any disclosure, the Director 
or designee shall require such terms and conditions as he deems 
necessary to protect the confidential nature of the record, the 
financial integrity of any depository institution to which the record 
relates, and the legitimate privacy interests of any individual named in 
such records.
    (7) Authorization for disclosure by depository institutions or other 
third parties. (i) The Director of the Corporation's Division having 
primary authority over the exempt records, or designee, may, in his or 
her discretion and for good cause, authorize any director, officer, 
employee, or agent of a depository institution to disclose copies of any 
exempt record in his custody to anyone who is not a director, officer or 
employee of the depository institution. Such authorization must be in 
response to a written request from the party seeking the record or from 
management of the depository institution to which the report or record 
pertains. Any such request shall specify, with reasonable particularity, 
the record sought, the party's interest therein, and the party's 
relationship to the depository institution to which the record relates.
    (ii) The Director of the Corporation's Division having primary 
authority over the exempt records, or designee, may, in his or her 
discretion and for good cause, authorize any third party, including a 
federal or state agency, that has received a copy of a Corporation 
exempt record, to disclose such exempt record to another party or 
agency. Such authorization must be in response to a written request from 
the party that has custody of the copy of the exempt record. Any such 
request shall specify the record sought to be disclosed and the reasons 
why disclosure is necessary.
    (iii) Any subsidiary depository institution of a bank holding 
company or a savings and loan holding company may reproduce and furnish 
a copy of any report of examination of the subsidiary depository 
institution to the parent holding company without prior approval of the 
Director of the Division having primary authority over the exempt 
records and any depository institution may reproduce and furnish a copy 
of any report of examination of the disclosing depository institution to 
a majority shareholder if the following conditions are met:
    (A) The parent holding company or shareholder owns in excess of 50% 
of the voting stock of the depository institution or subsidiary 
depository institution;
    (B) The board of directors of the depository institution or 
subsidiary depository institution at least annually by resolution 
authorizes the reproduction and furnishing of reports of examination 
(the resolution shall specifically name the shareholder or parent 
holding company, state the address to which the reports are to be sent, 
and indicate that all reports furnished pursuant to the resolution 
remain the

[[Page 146]]

property of the Federal Deposit Insurance Corporation and are not to be 
disclosed or made public in any manner without the prior written 
approval of the Director of the Corporation's Division having primary 
authority over the exempt records as provided in paragraph (b) of this 
section;
    (C) A copy of the resolution authorizing disclosure of the reports 
is sent to the shareholder or parent holding company; and
    (D) The minutes of the board of directors of the depository 
institution or subsidiary depository institution for the meeting 
immediately following disclosure of a report state:
    (1) That disclosure was made;
    (2) The date of the report which was disclosed;
    (3) To whom the report was sent; and
    (4) The date the report was disclosed.
    (iv) With respect to any disclosure that is authorized under this 
paragraph (b)(7), the Director of the Corporation's Division having 
primary authority over the exempt records, or designee, shall only 
permit disclosure of records upon determining that good cause exists. If 
the exempt record contains information derived from depository 
institution customer financial records, disclosure is to be authorized 
only upon the condition that the requesting party and the party 
releasing the records comply with any applicable provision of the RFPA. 
Before authorizing the disclosure, the Director (or designee) may 
require that both the party having custody of a copy of a Corporation 
exempt record and the party seeking access to the record agree to such 
limitations as the Director (or designee) deems necessary to protect the 
confidential nature of the record, the financial integrity of any 
depository institution to which the record relates and the legitimate 
privacy interests of any persons named in such record.
    (8) Disclosure by General Counsel. (i) The Corporation's General 
Counsel, or designee, may disclose or authorize the disclosure of any 
exempt record in response to a valid judicial subpoena, court order, or 
other legal process, and authorize any current or former officer, 
director, employee, agent of the Corporation, or third party, to appear 
and testify regarding an exempt record or any information obtained in 
the performance of such person's official duties, at any administrative 
or judicial hearing or proceeding where such person has been served with 
a valid subpoena, court order, or other legal process requiring him or 
her to testify. The General Counsel shall consider the relevancy of such 
exempt records or testimony to the litigation, and the interests of 
justice, in determining whether to disclose such records or testimony. 
Third parties seeking disclosure of exempt records or testimony in 
litigation to which the FDIC is not a party shall submit a request for 
discretionary disclosure directly to the General Counsel.\6\ Such 
request shall specify the information sought with reasonable 
particularity and shall be accompanied by a statement with supporting 
documentation showing in detail the relevance of such exempt information 
to the litigation, justifying good cause for disclosure, and a 
commitment to be bound by a protective order. Failure to exhaust such 
administrative request prior to service of a subpoena or other legal 
process may, in the General Counsel's discretion, serve as a basis for 
objection to such subpoena or legal process. Customer financial records 
may not be disclosed to any federal agency that is not a federal 
financial supervisory agency pursuant to this paragraph unless notice to 
the customer and certification as required by the RFPA have been given 
except where disclosure is subject to the relevant exceptions set forth 
in the RFPA.
---------------------------------------------------------------------------

    \6\ This administrative requirement does not apply to subpoenas, 
court orders or other legal process issued for records of depository 
institutions held by the FDIC as Receiver or Conservator. Subpoenas, 
court orders or other legal process issued for such records will be 
processed in accordance with State and Federal law, regulations, rules 
and privileges applicable to FDIC as Receiver or Conservator.
---------------------------------------------------------------------------

    (ii) The General Counsel, or designee, may in his or her discretion 
and for

[[Page 147]]

good cause, disclose or authorize disclosure of any exempt record or 
testimony by a current or former officer, director, employee, agent of 
the Corporation, or third party, sought in connection with any civil or 
criminal hearing, proceeding or investigation without the service of a 
judicial subpoena, or other legal process requiring such disclosure or 
testimony, if he or she determines that the records or testimony are 
relevant to the hearing, proceeding or investigation and that disclosure 
is in the best interests of justice and not otherwise prohibited by 
Federal statute. Customer financial records shall not be disclosed to 
any federal agency pursuant to this paragraph that is not a federal 
financial supervisory agency, unless the records are sought under the 
Federal Rules of Civil Procedure (28 U.S.C. appendix) or the Federal 
Rules of Criminal Procedure (18 U.S.C. appendix) or comparable rules of 
other courts and in connection with litigation to which the receiving 
federal agency, employee, officer, director, or agent, and the customer 
are parties, or disclosure is otherwise subject to the relevant 
exceptions in the RFPA. Where the General Counsel or designee authorizes 
a current or former officer, director, employee or agent of the 
Corporation to testify or disclose exempt records pursuant to this 
paragraph (b)(8), he or she may, in his or her discretion, limit the 
authorization to so much of the record or testimony as is relevant to 
the issues at such hearing, proceeding or investigation, and he or she 
shall give authorization only upon fulfillment of such conditions as he 
or she deems necessary and practicable to protect the confidential 
nature of such records or testimony.
    (9) Authorization for disclosure by the Chairman of the 
Corporation's Board of Directors. Except where expressly prohibited by 
law, the Chairman of the Corporation's Board of Directors may in his or 
her discretion, authorize the disclosure of any Corporation records. 
Except where disclosure is required by law, the Chairman may direct any 
current or former officer, director, employee or agent of the 
Corporation to refuse to disclose any record or to give testimony if the 
Chairman determines, in his or her discretion, that refusal to permit 
such disclosure is in the public interest.
    (10) Limitations on disclosure. All steps practicable shall be taken 
to protect the confidentiality of exempt records and information. Any 
disclosure permitted by paragraph (b) of this section is discretionary 
and nothing in paragraph (b) of this section shall be construed as 
requiring the disclosure of information. Further, nothing in paragraph 
(b) of this section shall be construed as restricting, in any manner, 
the authority of the Board of Directors, the Chairman of the Board of 
Directors, the Director of the Corporation's Division having primary 
authority over the exempt records, the Corporation's General Counsel, or 
their designees, or any other Corporation Division or Office head, in 
their discretion and in light of the facts and circumstances attendant 
in any given case, to require conditions upon and to limit the form, 
manner, and extent of any disclosure permitted by this section. Wherever 
practicable, disclosure of exempt records shall be made pursuant to a 
protective order and redacted to exclude all irrelevant or non-
responsive exempt information.

[60 FR 61465, Nov. 30, 1995, as amended at 63 FR 16408, Apr. 3, 1998]



Sec. 309.7  Service of process.

    (a) Service. Any subpoena or other legal process to obtain 
information maintained by the FDIC shall be duly issued by a court 
having jurisdiction over the FDIC, and served upon either the Executive 
Secretary (or designee), FDIC, 550 17th Street, NW., Washington, DC 
20429, or the Regional Director or Regional Manager of the FDIC region 
where the legal action from which the subpoena or process was issued is 
pending. A list of the FDIC's regional offices is available from the 
Office of Corporate Communications, FDIC, 550 17th Street, NW., 
Washington, DC 20429 (telephone 202-898-6996). Where the FDIC is named 
as a party, service of process shall be made pursuant to the Federal 
Rules of Civil Procedure, and upon the Executive Secretary (or 
designee), FDIC, 550 17th Street NW., Washington, DC 20429, or upon the 
agent designated to receive

[[Page 148]]

service of process in the state, territory, or jurisdiction in which any 
insured depository institution is located. Identification of the 
designated agent in the state, territory, or jurisdiction may be 
obtained from the Office of the Executive Secretary or from the Office 
of the General Counsel, FDIC, 550 17th Street NW., Washington, DC 20429. 
The Executive Secretary (or designee), Regional Director or designated 
agent shall immediately forward any subpoena, court order or legal 
process to the General Counsel. The Corporation may require the payment 
of fees, in accordance with the fee schedule referred to in 
Sec. 309.5(c)(3), prior to the release of any records requested pursuant 
to any subpoena or other legal process.
    (b) Notification by person served. If any current or former officer, 
director, employee or agent of the Corporation, or any other person who 
has custody of records belonging to the FDIC, is served with a subpoena, 
court order, or other process requiring that person's attendance as a 
witness concerning any matter related to official duties, or the 
production of any exempt record of the Corporation, such person shall 
promptly advise the Office of the Corporation's General Counsel of such 
service, of the testimony and records described in the subpoena, and of 
all relevant facts which may be of assistance to the General Counsel in 
determining whether the individual in question should be authorized to 
testify or the records should be produced. Such person should also 
inform the court or tribunal which issued the process and the attorney 
for the party upon whose application the process was issued, if known, 
of the substance of this section.
    (c) Appearance by person served. Absent the written authorization of 
the Corporation's General Counsel, or designee, to disclose the 
requested information, any current or former officer, director, 
employee, or agent of the Corporation, and any other person having 
custody of records of the Corporation, who is required to respond to a 
subpoena or other legal process, shall attend at the time and place 
therein specified and respectfully decline to produce any such record or 
give any testimony with respect thereto, basing such refusal on this 
section.



PART 310--PRIVACY ACT REGULATIONS--Table of Contents




Sec.
310.1  Purpose and scope.
310.2  Definitions.
310.3  Procedures for requests pertaining to individual records in a 
          system of records.
310.4  Times, places, and requirements for identification of individuals 
          making requests.
310.5  Disclosure of requested information to individuals.
310.6  Special procedures: Medical records.
310.7  Request for amendment of record.
310.8  Agency review of request for amendment of record.
310.9  Appeal of adverse initial agency determination on access or 
          amendment.
310.10  Disclosure of record to person other than the individual to whom 
          it pertains.
310.11  Fees.
310.12  Penalties.
310.13  Exemptions.

    Authority: 5 U.S.C. 552a.

    Source: 40 FR 46274, Oct. 6, 1975, unless otherwise noted.



Sec. 310.1  Purpose and scope.

    The purpose of this part is to establish regulations implementing 
the Privacy Act of 1974, 5 U.S.C. 552a. These regulations delineate the 
procedures that an individual must follow in exercising his or her 
access or amendment rights under the Privacy Act to records maintained 
by the Corporation in systems of records.

[61 FR 43419, Aug. 23, 1996]



Sec. 310.2  Definitions.

    For purposes of this part:
    (a) The term Corporation means the Federal Deposit Insurance 
Corporation;
    (b) The term individual means a natural person who is either a 
citizen of the United States or an alien lawfully admitted for permanent 
residence;
    (c) The term maintain includes maintain, collect, use, disseminate, 
or control;
    (d) The term record means any item, collection or grouping of 
information about an individual that contains his/her name, or the 
identifying number, symbol, or other identifying particular assigned to 
the individual;
    (e) The term system of records means a group of any records under 
the control

[[Page 149]]

of the Corporation from which information is retrieved by the name of 
the individual or some identifying number, symbol or other identifying 
particular assigned to the individual;
    (f) The term designated system of records means a system of records 
which has been listed and summarized in the Federal Register pursuant to 
the requirements of 5 U.S.C. 552a(e);
    (g) The term routine use means, with respect to disclosure of a 
record, the use of such record for a purpose which is compatible with 
the purpose for which it was created;
    (h) The terms amend or amendment mean any correction, addition to or 
deletion from a record; and
    (i) The term system manager means the agency official responsible 
for a designated system of records, as denominated in the Federal 
Register publication of ``Systems of Records Maintained by the Federal 
Deposit Insurance Corporation.''

[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977]



Sec. 310.3  Procedures for requests pertaining to individual records in a system of records.

    (a) Any present or former employee of the Corporation seeking access 
to, or amendment of, his/her official personnel records maintained by 
the Corporation shall submit his/her request in such manner as is 
prescribed by the United States Office of Personnel Management in part 
297 of its rules and regulations (5 CFR part 297). For access to, or 
amendment of, other government-wide records systems maintained by the 
Corporation, the procedures prescribed in the respective Federal 
Register Privacy Act system notice shall be followed.
    (b) Requests by individuals for access to records pertaining to them 
and maintained within one of the Corporation's designated systems of 
records should be submitted in writing to the Office of the Executive 
Secretary, FOIA/PA Unit, Federal Deposit Insurance Corporation, 
Washington, DC 20429. Each such request should contain a reasonable 
description of the records sought, the system or systems in which such 
record may be contained, and any additional identifying information, as 
specified in the Corporation's Federal Register ``Notice of Systems of 
Records'' for that particular system, copies of which are available upon 
request from the FOIA/PA Unit, Office of the Executive Secretary.

[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977; 61 
FR 43419, Aug. 23, 1996]



Sec. 310.4  Times, places, and requirements for identification of individuals making requests.

    (a) Individuals may request access to records pertaining to 
themselves by submitting a written request as provided in Sec. 310.3 of 
these regulations, or by appearing in person on weekdays, other than 
official holidays, at the Office of the Executive Secretary, Records 
Unit, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429, between the hours of 8:30 a.m. and 5 p.m.
    (b) Individuals appearing in person at the Corporation seeking 
access to or amendment of their records shall present two forms of 
reasonable identification, such as employment identification cards, 
driver's licenses, or other identification cards or documents typically 
used for identification purposes.
    (c) Except for records that must be publicly disclosed pursuant to 
the Freedom of Information Act, 5 U.S.C. 552, where the Corporation 
determines it to be necessary for the individual's protection, a 
certification of a duly commissioned notary public, of any state or 
territory, attesting to the requesting individual's identity, or an 
unsworn declaration subscribed to as true under the penalty of perjury 
under the laws of the United States of America, at the election of the 
individual, may be required before a written request seeking access to 
or amendment of a record will be honored. The Corporation may also 
require that individuals provide minimal identifying data such as full 
name, date and place of birth, or other personal information necessary 
to ensure proper identity before processing requests for records.

[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977; 61 
FR 43419, Aug. 23, 1996]

[[Page 150]]



Sec. 310.5  Disclosure of requested information to individuals.

    (a) Except to the extent that Corporation records pertaining to an 
individual:
    (1) Are exempt from disclosure under Secs. 310.6 and 310.13 of this 
part, or
    (2) Were compiled in reasonable anticipation of a civil action or 
proceeding, the Corporation will make such records available upon 
request for purposes of inspection and copying by the individual (after 
proper identity verification as provided in Sec. 310.4) and, upon the 
individual's request and written authorization, by another person of the 
individual's own choosing.
    (b) The Executive Secretary will notify, in writing, the individual 
making a request, whenever practicable within ten business days 
following receipt of the request, whether any specified designated 
system of records maintained by the Corporation contains a record 
pertaining to the individual. Where such a record does exist, the 
Executive Secretary also will inform the individual of the system 
manager's decision whether to grant or deny the request for access. In 
the event existing records are determined not to be disclosable, the 
notification will inform the individual of the reasons for which 
disclosure will not be made and will provide a description of the 
individual's right to appeal the denial, as more fully set forth in 
Sec. 310.9. Where access is to be granted, the notification will specify 
the procedures for verifying the individual's identity, as set forth in 
Sec. 310.4.
    (c) Individuals will be granted access to records disclosable under 
this part 310 as soon as is practicable. The Executive Secretary will 
give written notification of a reasonable period within which 
individuals may inspect disclosable records pertaining to themselves at 
the Office of the Executive Secretary during normal business hours. 
Alternatively, individuals granted access to records under this part may 
request that copies of such records be forwarded to them. Fees for 
copying such records will be assessed as provided in Sec. 310.11.

[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977]



Sec. 310.6  Special procedures: Medical records.

    Medical records shall be disclosed on request to the individuals to 
whom they pertain, except, if in the judgment of the Corporation, the 
transmission of the medical information directly to the requesting 
individual could have an adverse effect upon such individual. In the 
event medical information is withheld from a requesting individual due 
to any possible adverse effect such information may have upon the 
individual, the Corporation shall transmit such information to a medical 
doctor named by the requesting individual for release of the patient.

[40 FR 46274, Oct. 6, 1975, as amended at 61 FR 43420, Aug. 23, 1996]



Sec. 310.7  Request for amendment of record.

    The Corporation will maintain all records it uses in making any 
determination about any individual with such accuracy, relevance, 
timeliness and completeness as is reasonably necessary to assure 
fairness to the individual in the determination. An individual may 
request that the Corporation amend any portion of a record pertaining to 
that individual which the Corporation maintains in a designated system 
of records. Such a request should be submitted in writing to the Office 
of the Executive Secretary, Records Unit, Federal Deposit Insurance 
Corporation, Washington, DC 20429 and should contain the individual's 
reason for requesting the amendment and a description of the record 
(including the name of the appropriate designated system and category 
thereof) sufficient to enable the Corporation to identify the particular 
record or portion thereof with respect to which amendment is sought.



Sec. 310.8  Agency review of request for amendment of record.

    (a) Requests by individuals for the amendment of records will be 
acknowledged by the Executive Secretary of the Corporation, and referred 
to the system manager of the system of records in which the record is 
contained for determination, within ten business days following receipt 
of such requests. Promptly thereafter, the Executive

[[Page 151]]

Secretary will notify the individual of the system manager's decision to 
grant or deny the request to amend.
    (b) If the system manager denies a request to amend a record, the 
notification of such denial shall contain the reason for the denial and 
a description of the individual's right to appeal the denial as more 
fully set forth in Sec. 310.9.

[40 FR 46274, Oct. 6, 1975, as amended at 42 FR 6796, Feb. 4, 1977]



Sec. 310.9  Appeal of adverse initial agency determination on access or amendment.

    (a) A system manager's denial of an individual's request for access 
to or amendment of a record pertaining to him/her may be appealed in 
writing to the Corporation's General Counsel (or designee) within 30 
business days following receipt of notification of the denial. Such an 
appeal should be addressed to the Office of the Executive Secretary, 
FDIC, 550 17th Street NW., Washington, DC 20429, and contain all the 
information specified for requests for access in Sec. 310.3 or for 
initial requests to amend in Sec. 310.7, as well as any other additional 
information the individual deems relevant for the consideration by the 
General Counsel (or designee) of the appeal.
    (b) The General Counsel (or designee) will normally make a final 
determination with respect to an appeal made under this part within 30 
business days following receipt by the Office of the Executive Secretary 
of the appeal. The General Counsel (or designee) may, however, extend 
this 30-day time period for good cause. Where such an extension is 
required, the individual making the appeal will be notified of the 
reason for the extension and the expected date upon which a final 
decision will be given.
    (c) If the General Counsel (or designee) affirms the initial denial 
of a request for access or to amend, he or she will inform the 
individual affected of the decision, the reason therefor, and the right 
of judicial review of the decision. In addition, as pertains to a 
request for amendment, the individual may at that point submit to the 
Corporation a concise statement setting forth his or her reasons for 
disagreeing with the Corporation's refusal to amend.
    (d) Any statement of disagreement with the Corporation's refusal to 
amend, filed with the Corporation by an individual pursuant to 
Sec. 310.9(c), will be included in the disclosure of any records under 
the authority of Sec. 310.10(b). The Corporation may in its discretion 
also include a copy of a concise statement of its reasons for not making 
the requested amendment.
    (e) The General Counsel (or designee) may on his or her own motion 
refer an appeal to the Board of Directors for a determination, and the 
Board of Directors on its own motion may consider an appeal.

[52 FR 34290, Sept. 10, 1987, as amended at 61 FR 43420, Aug. 23, 1996]



Sec. 310.10  Disclosure of record to person other than the individual to whom it pertains.

    (a) Except as provided in paragraph (b) of this section, the 
Corporation will not disclose any record contained in a designated 
system of records to any person or agency except with the prior written 
consent of the individual to whom the record pertains.
    (b) The restrictions on disclosure in paragraph (a) of this section 
do not apply to any of the following disclosures:
    (1) To those officers and employees of the Corporation who have a 
need for the record in the performance of their duties;
    (2) Which is required under the Freedom of Information Act (5 U.S.C. 
552);
    (3) For a routine use listed with respect to a designated system of 
records;
    (4) To the Bureau of the Census for purposes of planning or carrying 
out a census or survey or related activity pursuant to the provisions of 
title 13 U.S.C.;
    (5) To a recipient who has provided the Corporation with advance 
adequate written assurance that the record will be used solely as a 
statistical research or reporting record, and the record is to be 
transferred in a form that is not individually identifiable;
    (6) To the National Archives and Records Administration as a record 
which has sufficient historical or other

[[Page 152]]

value to warrant its continued preservation by the United States 
Government, or for evaluation by the Archivist of the United States or 
his or her designee to determine whether the record has such value;
    (7) To another agency or to an instrumentality of any governmental 
jurisdiction within or under the control of the United States for a 
civil or criminal law enforcement activity if the activity is authorized 
by law, and if the head of the agency or instrumentality has made a 
written request to the Corporation specifying the particular portion 
desired and the law enforcement activity for which the record is sought;
    (8) To a person pursuant to a showing of compelling circumstances 
affecting the health or safety of an individual if, upon such 
disclosure, notification is transmitted to the last known address of 
such individual;
    (9) To either House of Congress, or, to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, any joint 
committee of Congress or subcommittee of any such joint committee;
    (10) To the Comptroller General, or any of his or her authorized 
representatives, in the course of the performance of the duties of the 
General Accounting Office;
    (11) Pursuant to the order of a court of competent jurisdiction.
    (12) To a consumer reporting agency in accordance with section 
3711(f) of Title 31.
    (c) The Corporation will adhere to the following procedures in the 
case of disclosure of any record pursuant to the authority of paragraphs 
(b)(3) through (b)(12) of this section.
    (1) The Corporation will keep a record of the date, nature and 
purpose of each such disclosure, as well as the name and address of the 
person or agency to whom such disclosure is made; and
    (2) The Corporation will retain and, with the exception of 
disclosures made pursuant to paragraph (b)(7) of this section, make 
available to the individual named in the record for the greater of five 
years or the life of the record all material compiled under paragraph 
(d)(1) of this section with respect to disclosure of such record.
    (d) Whenever a record which has been disclosed by the Corporation 
under authority of paragraph (b) of this section is, within a reasonable 
amount of time after such disclosure, either amended by the Corporation 
or the subject of a statement of disagreement, the Corporation will 
transmit such additional information to any person or agency to whom the 
record was disclosed, if such disclosure was subject to the accounting 
requirements of paragraph (c)(1) of this section.

[40 FR 46274, Oct. 6, 1975, as amended at 61 FR 43420, Aug. 23, 1996]



Sec. 310.11  Fees.

    The Corporation, upon a request for records disclosable pursuant to 
the Privacy Act of 1974 (5 U.S.C. 552a), shall charge a fee of $0.10 per 
page for duplicating, except as follows:
    (a) If the Corporation determines that it can grant access to a 
record only by providing a copy of the record, no fee will be charged 
for providing the first copy of the record or any portion thereof;
    (b) Whenever the aggregate fees computed under this section do not 
exceed $10 for any one request, the fee will be deemed waived by the 
Corporation; or
    (c) Whenever the Corporation determines that a reduction or waiver 
is warranted, it may reduce or waive any fees imposed for furnishing 
requested information pursuant to this section.

[40 FR 46274, Oct. 6, 1975, as amended at 61 FR 43420, Aug. 23, 1996]



Sec. 310.12  Penalties.

    Subsection (i)(3) of the Privacy Act of 1974 (5 U.S.C. 552a(i)(3)) 
imposes criminal penalties for obtaining Corporation records on 
individuals under false pretenses. The subsection provides as follows:

    Any person who knowingly and willfully requests or obtains any 
record concerning an individual from an agency under false pretenses 
shall be guilty of a misdemeanor and fined not more than $5,000.



Sec. 310.13  Exemptions.

    The following systems of records are exempt from Secs. 310.3 through 
310.9 and Sec. 310.10(c)(2) of these rules:

[[Page 153]]

    (a) Investigatory material compiled for law enforcement purposes in 
the following systems of records is exempt from Secs. 310.3 through 
310.9 and Sec. 310.10(c)(2) of these rules;

    Provided, however, That if any individual is denied any right, 
privilege, or benefit to which he/she would otherwise be entitled under 
Federal law, or for which he/she would otherwise be eligible, as a 
result of the maintenance of such material, such material shall be 
disclosed to such individual, except to the extent that the disclosure 
of such material would reveal the identity of a source who furnished 
information to the Government under an express promise that the identity 
of the source would be held in confidence, or, prior to September 27, 
1975, under an implied promise that the identity of the source would be 
held in confidence:

    30-64-0002--Financial institutions investigative and enforcement 
records system.
    30-64-0010--Investigative files and records.

    (b) Investigatory material compiled solely for the purpose of 
determining suitability, eligibility, or qualifications for Corporation 
employment to the extent that disclosure of such material would reveal 
the identity of a source who furnished information to the Corporation 
under an express promise that the identity of the source would be held 
in confidence, or, prior to September 27, 1975, under an implied promise 
that the identity of the source would be held in confidence, in the 
following systems of records, is exempt from Secs. 310.3 through 310.9 
and Sec. 310.10(c)(2) of these rules:

    30-64-0001--Attorney-legal intern applicant system.
    30-64-0010--Investigative files and records.

    (c) Testing or examination material used solely to determine or 
assess individual qualifications for appointment or promotion in the 
Corporation's service, the disclosure of which would compromise the 
objectivity or fairness of the testing, evaluation, or examination 
process in the following system of records, is exempt from Secs. 310.3 
through 310.9 and Sec. 310.10(c)(2) of these rules:

30-64-0009--Examiner training and education records.

[42 FR 6797, Feb. 4, 1977, as amended at 42 FR 33720, July 1, 1977; 54 
FR 38507, Sept. 19, 1989; 61 FR 43420, Aug. 23, 1996]



PART 311--RULES GOVERNING PUBLIC OBSERVATION OF MEETINGS OF THE CORPORATION'S BOARD OF DIRECTORS--Table of Contents




Sec.
311.1  Purpose.
311.2  Definitions.
311.3  Meetings.
311.4  Procedures for announcing meetings.
311.5  Regular procedure for closing meetings.
311.6  Expedited procedure for announcing and closing certain meetings.
311.7  General Counsel certification.
311.8  Transcripts and minutes of meetings.

    Authority: 5 U.S.C. 552b and 12 U.S.C. 1819.

    Source: 42 FR 14675, Mar. 16, 1977, unless otherwise noted.



Sec. 311.1  Purpose.

    This part implements the policy of the ``Government in the Sunshine 
Act'', section 552b of title 5 U.S.C., which is to provide the public 
with as much information as possible regarding the decision making 
process of certain Federal agencies, including the Federal Deposit 
Insurance Corporation, while preserving the rights of individuals and 
the ability of the agency to carry out its responsibilities.



Sec. 311.2  Definitions.

    For purposes of this part:
    (a) Board means Board of Directors of the Federal Deposit Insurance 
Corporation and includes any subdivision of the Board authorized to act 
on behalf of the Corporation.
    (b) Meeting means the deliberations (including those conducted by 
conference telephone call, or by any other method) of at least three 
members where such deliberations determine or result in the joint 
conduct or disposition of agency business but does not include:
    (1) Deliberations to determine whether meetings will be open or 
closed or whether information pertaining to closed meetings will be 
withheld;

[[Page 154]]

    (2) Informal background discussions among Board members and staff 
which clarify issues and expose varying views;
    (3) Decision-making by circulating written material to individual 
Board members;
    (4) Sessions with individuals from outside the Corporation where 
Board members listen to a presentation and may elicit additional 
information.
    (c) Member means a member of the Board.
    (d) Open to public observation and open to the public mean that 
individuals may witness the meeting, but not participate in the 
deliberations. The meeting may be recorded, photographed, or otherwise 
reproduced if the reproduction does not disturb the meeting.
    (e) Public announcement and publicly announce mean making reasonable 
effort under the particular circumstances of each case to fully inform 
the public. This may include posting notice on the Corporation's public 
notice bulletin board maintained in the lobby of its offices located at 
550 17th Street, NW., Washington, DC 20429, issuing a press release and 
employing other methods of notification that may be desirable in a 
particular situation.

[42 FR 14675, Mar. 16, 1977, as amended at 42 FR 59494, Nov. 18, 1977; 
54 FR 38965, Sept. 22, 1989; 61 FR 38357, July 24, 1996]



Sec. 311.3  Meetings.

    (a) Open meetings. Except as provided in paragraph (b) of this 
section, every portion of every meeting of the Corporation's Board will 
be open to public observation. Board members will not jointly conduct or 
dispose of Corporation business other than in accordance with this part.
    (b) When meetings may be closed and announcements and disclosures 
withheld. Except where the Board finds that the public interest requires 
otherwise, a meeting or portion thereof may be closed, and announcements 
and disclosure pertaining thereto may be withheld when the Board 
determines that such meeting or portion of the meeting or the disclosure 
of such information is likely to:
    (1) Disclose matters that are: (i) Specifically authorized under 
criteria established by an Executive order to be kept secret in the 
interests of national defense or foreign policy and (ii) in fact 
properly classified pursuant to such Executive order;
    (2) Relate solely to the internal personnel rules and practices of 
the Corporation;
    (3) Disclose matters specifically exempted from disclosure by 
statute (other than the Freedom of Information Act, 5 U.S.C. 552): 
Provided, That such statute: (i) Requires that the matters be withheld 
from the public in such a manner as to leave no discretion on the issue, 
or (ii) establishes particular types of matters to be withheld;
    (4) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential;
    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would: (i) Interfere with enforcement proceedings, (ii) 
deprive a person of a right to a fair trial or an impartial 
adjudication, (iii) constitute an unwarranted invasion of personal 
privacy, (iv) disclose the identity of a confidential source, (v) 
disclose investigative techniques and procedures, or (vi) endanger the 
life or physical safety of law enforcement personnel;
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of the Corporation or any other agency responsible for the 
supervision of financial institutions;
    (9) Disclose information the premature disclosure of which would be 
likely to:
    (i)(A) Lead to significant financial speculation in currencies, 
securities, or commodities, or
    (B) Significantly endanger the stability of any financial 
institution; or

[[Page 155]]

    (ii) Significantly frustrate implementation of a proposed 
Corporation action, except that this paragraph (b)(9)(ii) shall not 
apply in any instance where the Corporation has already disclosed to the 
public the content or nature of its proposed action, or where the 
Corporation is required by law to make such disclosure on its own 
initiative prior to taking final action on such proposal; or
    (10) Specifically concern the Corporation's issuance of a subpoena, 
or the Corporation's participation in a civil action or proceeding, an 
action in a foreign court or international tribunal, or an arbitration, 
or the initiation, conduct, or disposition by the Corporation of a 
particular case of formal agency adjudication pursuant to the procedures 
in 5 U.S.C. 554 or otherwise involving a determination on the record 
after opportunity for a hearing.



Sec. 311.4  Procedures for announcing meetings.

    (a) Scope. Except to the extent that such announcements are exempt 
from disclosure under Sec. 311.3(b), announcements relating to open 
meetings, and meetings closed under the regular closing procedures of 
Sec. 311.5, will be made in the manner set forth in this section.
    (b) Time and content of announcement. The Corporation will make 
public announcement at least seven days before the meeting of the time, 
place, and subject matter of the meeting, whether it is to be open or 
closed to the public, and the name and telephone number of the official 
designated by the Corporation to respond to requests for information 
about the meeting. This announcement will be made unless a majority of 
the Board determines by a recorded vote that Corporation business 
requires that a meeting be called on lesser notice. In such cases, the 
Corporation will make public announcement of the time, place, and 
subject matter of the meeting, and whether it is open or closed to the 
public, at the earliest practicable time, which may be later than the 
commencement of the meeting.
    (c) Changing time or place of meeting. The time or place of a 
meeting may be changed following the public announcement required by 
paragraph (b) of this section only if the Corporation publicly announces 
the change at the earliest practicable time, which may be later than the 
commencement of the meeting.
    (d) Changing subject matter or nature of meeting. The subject matter 
of a meeting, or the determination to open or close a meeting or a 
portion of a meeting, may be changed following the public announcement 
only if:
    (1) A majority of the entire Board determines by recorded vote that 
agency business so requires and that no earlier announcement of the 
change was possible; and,
    (2) The Corporation publicly announces the change and the vote of 
each member upon such change at the earliest practicable time, which may 
be later than the commencement of the meeting.
    (e) Publication of announcements in Federal Register. Immediately 
following each public announcement under this section, such announcement 
will be submitted for publication in the Federal Register by the Office 
of the Executive Secretary.



Sec. 311.5  Regular procedure for closing meetings.

    (a) Scope. Unless Sec. 311.6 is applicable, the procedures for 
closing meetings will be those set forth in this section.
    (b) Procedure. (1) A decision to close a meeting or portion of a 
meeting will be taken only when a majority of the entire Board votes to 
take such action. In deciding whether to close a meeting or portion of a 
meeting, the Board will consider whether the public interest requires an 
open meeting. A separate vote of the Board will be taken with respect to 
each meeting which is proposed to be closed in whole or in part to the 
public. A single vote may be taken with respect to a series of meetings 
which are proposed to be closed in whole or in part to the public, or 
with respect to any information concerning such series of meetings, so 
long as each meeting in the series involves the same particular matters 
and is scheduled to be held no more than thirty days after the initial 
meeting in the series. The vote of each Board member will be recorded 
and no proxies will be allowed.

[[Page 156]]

    (2) Any individual whose interests may be directly affected may 
request that the Corporation close any portion of a meeting for any of 
the reasons referred to in paragraph (b) (5), (6), or (b)(7) of 
Sec. 311.3. Requests should be directed to the Office of the Executive 
Secretary, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429. After receiving notice that an individual desires 
a portion of a meeting to be closed, the Board, upon request of any one 
of its members, will vote by recorded vote whether to close the relevant 
portion of the meeting. This procedure will apply even if the 
individual's request is made subsequent to the announcement of a 
decision to hold an open meeting.
    (3) The Corporation's General Counsel will make the public 
certification required by Sec. 311.7.
    (4) Within 1 day after any vote taken pursuant to paragraphs (b)(1) 
or (2) of this section, the Corporation will make publicly available a 
written copy of the vote, reflecting the vote of each Board member. 
Except to the extent that such information is exempt from disclosure, if 
a meeting or portion of a meeting is to be closed to the public, the 
Corporation will make publicly available within 1 day after the required 
vote a full written explanation of its action, together with a list of 
all persons expected to attend the meeting and their affiliation.
    (5) The Corporation will publicly announce the time, place, and 
subject matter of the meeting, with determinations as to open and closed 
portions, in the manner and within the time limits prescribed in 
Sec. 311.4.

[42 FR 14675, Mar. 16, 1977; 42 FR 16616, Mar. 29, 1977, as amended at 
42 FR 59494, Nov. 18, 1977]



Sec. 311.6  Expedited procedure for announcing and closing certain meetings.

    (a) Scope. Since a majority of its meetings may properly be closed 
pursuant to paragraph (b)(4), (8), (9)(i), or (b)(10) of Sec. 311.3, 
subsection (d)(4) of the Government in the Sunshine Act (5 U.S.C. 552b) 
allows the Corporation to use expedited procedures in closing meetings 
under these four subparagraphs. Absent a compelling public interest to 
the contrary, meetings or portions of meetings that can be expected to 
be closed using these procedures include, but are not limited to: 
Administrative enforcement proceedings under section 8 of the Federal 
Deposit Insurance Act (12 U.S.C. 1818); appointment of the Corporation 
as conservator of a depository institution, or as receiver, liquidator 
or liquidating agent of a closed depository institution or a depository 
institution in danger of closing; and certain management and liquidation 
activities pursuant to such appointments; possible financial assistance 
by the Corporation under section 13 of the Federal Deposit Insurance Act 
(12 U.S.C. 1823); certain depository institution applications including 
applications to establish or move branches, applications to merge, and 
applications for insurance; and investigatory activity under section 
10(c) of the Federal Deposit Insurance Act (12 U.S.C. 1820(c)). In 
announcing and closing meetings or portions of meetings under this 
section, the following procedures will be observed.
    (b) Announcement. Except to the extent that such information is 
exempt from disclosure under the provisions of Sec. 311.3(b) the 
Corporation will make public announcement of the time, place and subject 
matter of the meeting and of each portion thereof at the earliest 
practicable time. This announcement will be published in the Federal 
Register if publication can be effected at least 1 day prior to the 
scheduled date of the meeting.
    (c) Procedure for closing. (1) The Corporation's General Counsel 
will make the public certification required by Sec. 311.7.
    (2) At the beginning of a meeting or portion of a meeting to be 
closed under this section, a recorded vote of the Board will be taken. 
The Board will determine by its vote whether to proceed with the 
closing. If a majority of the entire Board votes to close, the meeting 
will be closed to public observation. Even though a meeting or portion 
thereof could properly be closed under this section, a majority of the 
entire Board may find that the public interest

[[Page 157]]

requires an open session and vote, reflecting the vote of each Board 
member, will be made available to the public.

[42 FR 14675, Mar. 16, 1977; 42 FR 16616, Mar. 29, 1977, as amended at 
54 FR 38965, Sept. 22, 1989]



Sec. 311.7  General Counsel certification.

    For every meeting or portion thereof closed under Sec. 311.5 or 
Sec. 311.6, the Corporation's General Counsel will publicly certify 
that, in the opinion of such General Counsel, the meeting may be closed 
to the public and will state each relevant exemptive provision. In the 
absence of the General Counsel, the next ranking official in the Legal 
Division may perform the certification. If the General Counsel and such 
next ranking official in the Legal Division are both absent, the 
official in the Legal Division who is then next in rank may provide the 
required certification. A copy of this certification, together with a 
statement from the presiding officer of the meeting setting forth the 
time and place of the meeting, and the persons present, will be retained 
in the Board's permanent files.

[42 FR 14675, Mar. 16, 1977, as amended at 61 FR 38357, July 24, 1996]



Sec. 311.8  Transcripts and minutes of meetings.

    (a) When required. The Corporation will maintain a complete 
transcript, identifying each speaker, to record fully the proceedings of 
each meeting or portion of a meeting closed to the public, except that 
in the case of a meeting or portions of a meeting closed to the public 
pursuant to paragraph (b)(8), (9)(i), or (10) of Sec. 311.3, the 
Corporation may, in lieu of a transcript, maintain a set of minutes.
    (b) Content of minutes. If minutes are maintained, they will fully 
and clearly describe all matters discussed and will provide a full and 
accurate summary of any actions taken, and the reasons for taking such 
action. Minutes will also include a description of each of the views 
expressed by each person in attendance on any item and the record of any 
roll call vote, reflecting the vote of each member. All documents 
considered in connection with any action will be identified in the 
minutes.
    (c) Available material. The Corporation will maintain a complete 
verbatim copy of the transcript or minutes of each meeting or portion of 
a meeting closed to the public for a period of at least 2 years after 
the meeting, or until 1 year after the conclusion of any proceeding with 
respect to which the meeting or portion was held, whichever occurs 
later. The Corporation will make promptly available to the public the 
transcript, identifying each speaker, or minutes of items on the agenda 
or testimony of any witness received at the closed meeting except that 
in cases where the Privacy Act of 1974 (5 U.S.C. 552a) does not apply, 
the Corporation may withhold information exempt from disclosure under 
Sec. 311.3(b). For the convenience of members of the public who may be 
unable to attend open meetings of the Board, the Corporation will 
maintain for at least 2 years a set of minutes of each meeting of the 
Board or portion thereof open to public observation.
    (d) Procedures for inspecting or copying available material. (1) An 
individual may inspect materials made available under paragraph (c) of 
this section at the Office of the Executive Secretary, Federal Deposit 
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429, 
during normal business hours. If the individual desires a copy of such 
material, the Corporation will furnish copies at a cost of 10 cents per 
page. Whenever the Corporation determines that in the public interest a 
reduction or waiver is warranted, it may reduce or waive any fees 
imposed under this section.
    (2) An individual may also submit a written request for transcripts 
or minutes, reasonably identifying the records sought, to the Office of 
the Executive Secretary, Federal Deposit Insurance Corporation, 550 17th 
Street, NW., Washington, DC 20429.
    (e) Procedures for obtaining documents identified in minutes. Copies 
of documents identified in minutes or considered by the Board in 
connection with any action identified in the minutes may be made 
available to the public upon request, to the extent permitted by the 
Freedom of Information Act,

[[Page 158]]

under the provisions of 12 CFR part 309, Disclosure of Information.

[42 FR 14675, Mar. 16, 1977, as amended at 61 FR 38357, July 24, 1996]



PART 312--ASSESSMENT OF FEES UPON ENTRANCE TO OR EXIT FROM THE BANK INSURANCE FUND OR THE SAVINGS ASSOCIATION INSURANCE FUND--Table of Contents




Sec.
312.1  Definitions.
312.2  Bank Insurance Fund reserve ratio.
312.3  Savings Association Insurance Fund reserve ratio.
312.4  Entrance fees assessed in connection with conversion transactions 
          from the Savings Association Insurance Fund to the Bank 
          Insurance Fund.
312.5  Exit fees assessed in connection with conversion transactions 
          from the Savings Association Insurance Fund to the Bank 
          Insurance Fund.
312.6  Entrance fees assessed in connection with conversion transactions 
          from the Bank Insurance Fund to the Savings Association 
          Insurance Fund.
312.7  Exit fees assessed in connection with conversion transactions 
          from the Bank Insurance Fund to the Savings Association 
          Insurance Fund.
312.8  Entrance and exit fees assessed in connection with insured 
          deposit transfers from the Savings Association Insurance Fund 
          to the Bank Insurance Fund.
312.9  Entrance and exit fees assessed in connection with insured 
          deposit transfers from the Bank Insurance Fund to the Savings 
          Association Insurance Fund.
312.10  Payment of entrance and exit fees.

    Authority: 12 U.S.C. 1815(d); 12 U.S.C. 1819.

    Source: 54 FR 40380, Oct. 2, 1989, unless otherwise noted.



Sec. 312.1  Definitions.

    For purposes of this part:
    (a) The term Bank Insurance Fund shall mean the fund established by 
section 11(a)(5) of the Federal Deposit Insurance Act, 12 U.S.C. 
1821(a)(5). The term Savings Association Insurance Fund shall mean the 
fund established by section 11(a)(6) of the Federal Deposit Insurance 
Act, 12 U.S.C. 1821(a)(6).
    (b) The terms Bank Insurance Fund member and Savings Association 
Insurance Fund member shall have the meanings given them in sections 
7(l) (4) and (5) of the Federal Deposit Insurance Act, 12 U.S.C. 1817(l) 
(4), (5), respectively.
    (c) The term Bank Insurance Fund reserve ratio shall mean the ratio 
of the net worth of the Bank Insurance Fund to the value of the 
aggregate total domestic deposits held in all Bank Insurance Fund 
members. The term ``Savings Association Insurance Fund reserve ratio'' 
shall mean the ratio of the value of the net worth of the Savings 
Association Insurance Fund to the value of the aggregate total domestic 
deposits held in all Savings Association Insurance Fund members.
    (d) The term conversion transaction shall have the meaning given it 
in section 5(d)(2)(B) of the Federal Deposit Insurance Act, 12 U.S.C. 
1815(d)(2)(B).
    (e) The terms default and in danger of default shall have the 
meanings given them in section 3(x) of the Federal Deposit Insurance 
Act, 12 U.S.C. 1813(x).
    (f) The term deposit broker shall have the meaning given it in 
section 29 of the Federal Deposit Insurance Act, 12 U.S.C. 1831f.
    (g) The term entrance fee deposit base generally refers to those 
deposits which the Federal Deposit Insurance Corporation, in its 
discretion, estimates to have a high probability of remaining with the 
acquiring or resulting depository institution for a reasonable period of 
time following the acquisition, in excess of those deposits that would 
have remained in the insurance fund of the depository institution in 
default or in danger of default had such institution been resolved by 
means of an insured deposit transfer. The estimated dollar amount of the 
entrance fee deposit base shall be determined on a case-by-case basis by 
the Federal Deposit Insurance Corporation at the time offers to acquire 
an insured depository institution (or any part thereof) are solicited by 
the Federal Deposit Insurance Corporation or the Resolution Trust 
Corporation.
    (h) The term insured deposit transfer shall mean a transaction 
wherein the insured deposits of an insured depository institution in 
default or in danger of default, are paid by means of a

[[Page 159]]

transferred deposit pursuant to a written agreement between the Federal 
Deposit Insurance Corporation or the Resolution Trust Corporation and an 
insured depository institution. The term transferred deposit shall have 
the meaning given it in section 3(n) of the Federal Deposit Insurance 
Act, 12 U.S.C. 1813 (n).
    (i) The term premium shall mean the amount paid by an insured 
depository institution in consideration for the right to enter into an 
insured deposit transfer agreement. The premium shall not include the 
amount of any transferred deposits, nor shall the premium include any 
amount paid for the purchase of assets or the right to purchase assets 
of a depository institution in default or in danger of default.
    (j) The term retained deposit base shall mean the total deposits 
transferred from a Savings Association Insurance Fund Member to a Bank 
Insurance Fund Member, or from a Bank Insurance Fund member to a Savings 
Association Insurance Fund member, less the following deposits:
    (1) Any deposit acquired, directly or indirectly, by or through any 
deposit broker; and
    (2) Any portion of any deposit account exceeding $80,000.

[54 FR 40380, Oct. 2, 1989; 54 FR 43521, Oct. 25, 1989, as amended at 55 
FR 10412, Mar. 21, 1990]



Sec. 312.2  Bank Insurance Fund reserve ratio.

    The Bank Insurance Fund reserve ratio to be used in computing the 
entrance fee under this part with respect to any particular conversion 
transaction shall be the most recent Bank Insurance Fund reserve ratio 
calculated quarterly by the Federal Deposit Insurance Corporation prior 
to the date on which deposit liabilities are transferred from a Savings 
Association Insurance Fund member to a Bank Insurance Fund member in 
connection with that conversion transaction.

[56 FR 29895, July 1, 1991]



Sec. 312.3  Savings Association Insurance Fund reserve ratio.

    The Savings Association Insurance Fund reserve ratio to be used in 
computing the entrance fee under this part with respect to any 
particular conversion transaction shall be the most recent Savings 
Association Insurance Fund reserve ratio calculated quarterly by the 
Federal Deposit Insurance Corporation prior to the date on which deposit 
liabilities are transferred from a Bank Insurance Fund member to a 
Savings Association Insurance Fund member in connection with that 
conversion transaction.

[56 FR 29895, July 1, 1991]



Sec. 312.4  Entrance fees assessed in connection with conversion transactions from the Savings Association Insurance Fund to the Bank Insurance Fund.

    (a) Each insured depository institution participating in a 
conversion transaction as a result of which insured deposits are 
transferred from a Savings Association Insurance Fund member to a Bank 
Insurance Fund member shall pay an entrance fee to the Bank Insurance 
Fund.
    (b) The entrance fee shall be the product derived by multiplying the 
dollar amount of total deposits transferred from the Savings Association 
Insurance Fund member to the Bank Insurance Fund member by the Bank 
Insurance Fund reserve ratio.
    (c) Notwithstanding paragraph (b) of this section, the entrance fee 
to be assessed against an insured depository institution participating 
in a conversion transaction:
    (1) Occurring in connection with the acquisition of a Savings 
Association Insurance Fund member in default or in danger of default, or
    (2) Otherwise arranged by the Federal Deposit Insurance Corporation 
in its capacity as exclusive manager of the Resolution Trust 
Corporation, shall be the product derived by multiplying the dollar 
amount of the entrance fee deposit base transferred from the Savings 
Association Insurance Fund member to the Bank Insurance Fund member by 
the Bank Insurance Fund ratio.

[55 FR 10413, Mar. 21, 1990]

[[Page 160]]



Sec. 312.5  Exit fees assessed in connection with conversion transactions from the Savings Association Insurance Fund to the Bank Insurance Fund.

    (a) Each insured depository institution participating in a 
conversion transaction as a result of which insured deposits are 
transferred from a Savings Association Insurance Fund member to a Bank 
Insurance Fund member shall pay an exit fee.
    (b) The exit fee shall be the product derived by multiplying the 
dollar amount of total deposits transferred from the Savings Association 
Insurance Fund member to the Bank Insurance Fund member by 0.90 percent 
(0.0090).
    (c) Notwithstanding paragraph (b) of this section, the exit fee to 
be assessed against an insured depository institution participating in a 
conversion transaction:
    (1) Occurring in connection with the acquisition of a Savings 
Association Insurance Fund member in default or in danger of default, or
    (2) Otherwise arranged by the Federal Deposit Insurance Corporation 
in its capacity as exclusive manager of the Resolution Trust 
Corporation, shall be the product derived by multiplying the dollar 
amount of the retained deposit base transferred from the Savings 
Association Insurance Fund member to the Bank Insurance Fund member by 
0.90 percent (0.0090).
    (d) The exit fee required to be paid by this section shall be paid 
to the Savings Association Insurance Fund or, if the Secretary of the 
Treasury determines that the Financing Corporation has exhausted all 
other sources of funding for interest payments on the obligations of the 
Financing Corporation and orders that such exit fee be paid to the 
Financing Corporation.
    (e) Exit fees paid to the Savings Association Insurance Fund 
pursuant to paragraph (d) of this section shall be held in a reserve 
account until such time as the Federal Deposit Insurance Corporation and 
the Secretary of the Treasury determine that it is not necessary to 
reserve such funds for the payment of interest on the obligations of the 
Financing Corporation.
    (f) Before January 1, 1997, amendments to this section shall be 
determined jointly by the Federal Deposit Insurance Corporation and the 
Secretary of the Treasury.

[55 FR 10413, Mar. 21, 1990]



Sec. 312.6  Entrance fees assessed in connection with conversion transactions from the Bank Insurance Fund to the Savings Association Insurance Fund.

    (a) Each insured depository institution participating in a 
conversion transaction as a result of which insured deposits are 
transferred from a Bank Insurance Fund member to a Savings Association 
Insurance Fund member shall pay an entrance fee to the Savings 
Association Insurance Fund.
    (b) The entrance fee shall be the product derived by multiplying the 
dollar amount of total deposits transferred from the Bank Insurance Fund 
member to the Savings Association Insurance Fund member by the Savings 
Association Insurance Fund reserve ratio, or by .01 percent (0.0001), 
whichever is greater.
    (c) Notwithstanding paragraph (b) of this section, the entrance fee 
to be assessed against an insured depository institution participating 
in a conversion transaction occurring in connection with the acquisition 
of a Bank Insurance Fund member in default or in danger of default shall 
be the product derived by multiplying the dollar amount of the entrance 
fee deposit base transferred from the Bank Insurance Fund member to the 
Savings Association Insurance Fund member by the Savings Association 
Insurance Fund reserve ratio, or by .01 percent (0.0001), whichever is 
greater.
    (d) Interim entrance fee until initial calculation of Savings 
Association Insurance Fund reserve ratio. Notwithstanding paragraphs (b) 
and (c) of this section, until such time as the Savings Association 
Insurance Fund reserve ratio is initially calculated and made publicly 
available, the entrance fee for all conversions from the Bank Insurance 
Fund to the Savings Association Insurance Fund shall be the product 
derived by multiplying the dollar amount of total deposits transferred 
from the Bank Insurance Fund member to the Savings Association Insurance 
Fund member by

[[Page 161]]

.01 percent (0.0001), unless the conversion transaction is occurring in 
connection with the acquisition of a Bank Insurance Fund member in 
default or in danger of default, where it shall be the product derived 
by multiplying the dollar amount of the entrance fee deposit base 
transferred from the Bank Insurance Fund member to the Savings 
Association Insurance Fund member by 0.01 percent (0.0001).

[55 FR 10413, Mar. 21, 1990]



Sec. 312.7  Exit fees assessed in connection with conversion transactions from the Bank Insurance Fund to the Savings Association Insurance Fund.

    (a) Each insured depository institution participating in a 
conversion transaction as a result of which insured deposits are 
transferred from a Bank Insurance Fund member to a Savings Association 
Insurance Fund member shall pay an exit fee to the Bank Insurance Fund.
    (b) The exit fee shall be the product derived by multiplying the 
dollar amount of total deposits transferred from the Bank Insurance Fund 
member to the Savings Association Insurance Fund member by .01 percent 
(0.0001).
    (c) Notwithstanding paragraph (b) of this section, the exit fee to 
be assessed against an insured depository institution participating in a 
conversion transaction occurring in connection with the acquisition of a 
Bank Insurance Fund member in default or in danger of default shall be 
the product derived by multiplying the dollar amount of the retained 
deposit base transferred from the Bank Insurance Fund member to the 
Savings Association Insurance Fund member by 0.01 percent (0.0001).

[55 FR 10413, Mar. 21, 1990]



Sec. 312.8  Entrance and exit fees assessed in connection with insured deposit transfers from the Savings Association Insurance Fund to the Bank Insurance Fund.

    (a) Insured deposit transfers resulting in a transfer of insured 
deposits from a Savings Association Insurance Fund member to a Bank 
Insurance Fund member, shall be subject to an entrance fee and an exit 
fee.
    (b) The entrance fee shall be the product derived by multiplying the 
dollar amount of the retained deposit base of the Savings Association 
Insurance Fund member in default or in danger of default by the Bank 
Insurance Fund ratio.
    (c) The exit fee shall be the product derived by multiplying the 
dollar amount of the retained deposit base of the Savings Association 
Insurance Fund member in default or in danger of default by 0.90 percent 
(0.0090).
    (d) Notwithstanding paragraphs (a), (b), and (c) of this section, 
the sum total of the entrance fee and the exit fee required by this 
section shall in no event exceed the amount of the premium.
    (e) The entrance and exit fees required by this section shall be 
paid by the acquiring institution from the premium as follows. First, 
the premium shall be allocated in payment of the exit fee to one-third 
of the premium received. Second, the remaining premium shall be 
allocated to the entrance fee. Third, if any premium remains, it shall 
be applied to the remaining balance (if any) owing on the exit fee. 
Fourth, any amount remaining after application pursuant to steps one 
through three shall be allocated to the Resolution Trust Corporation.
    (f) The entrance fee required by this section shall be paid to the 
Bank Insurance Fund. The exit fee required by this section shall be paid 
to the Savings Association Insurance Fund or, if the Secretary of the 
Treasury determines that the Financing Corporaiton has exhausted all 
other sources of funding for interest payments on the obligations of the 
Financing Corporation and orders that such exit fee be paid to the 
Financing Corporation.
    (g) Exit fees paid to the Savings Association Insurance Fund 
pursuant to paragraph (f) of this section shall be held in a reserve 
account until such time as the Federal Deposit Insurance Corporation and 
the Secretary of the Treasury determine that it is not necessary to 
reserve such funds for the payment of interest on the obligations of the 
Financing Corporation.
    (h) Insured deposit transfers occurring before March 21, 1990 shall 
not be

[[Page 162]]

subject to the assessment of entrance or exit fees.
    (i) Before January 1, 1997, amendments to this section concerning 
exit fees assessed in connection with insured deposit transfers from the 
Savings Association Insurance Fund to the Bank Insurance Fund shall be 
determined jointly by the Federal Deposit Insurance Corporation and the 
Secretary of the Treasury.

[55 FR 10414, Mar. 21, 1990]



Sec. 312.9  Entrance and exit fees assessed in connection with insured deposit transfers from the Bank Insurance Fund to the Savings Association Insurance Fund.

    (a) Insured deposit transfers resulting in a transfer of insured 
deposits from a Bank Insurance Fund member to a Savings Association 
Insurance Fund member, shall be subject to an entrance fee and in exit 
fee.
    (b) The entrance fee shall be the product derived by multiplying the 
dollar amount of the retained deposit base of the Bank Insurance Fund 
member in default or in danger of default by the Savings Association 
Insurance Fund ratio or by .01 percent (0.0001), whichever is greater.
    (c) The exit fee shall be the product derived by multiplying the 
dollar amount of the retained deposit base of the Bank Insurance Fund 
member by 0.01 percent (0.0001).
    (d) Notwithstanding paragraphs (a), (b), and (c) of this section, 
the sum total of the entrance fee and the exit fee required by this 
section shall in no event exceed the amount of the premium.
    (e) The entrance and exit fees required by this section shall be 
paid by the acquiring institution from the premium as follows. First, 
the premium shall be allocated in payment of the exit fee to one-third 
of the premium received. Second, the remaining premium will be allocated 
to the entrance fee. Third, if any premium remains, it shall be applied 
to the remaining balance (if any) owing on the exit fee. Fourth, any 
amount remaining after application pursuant to steps one through three 
shall be allocated to the Federal Deposit Insurance Corporation.
    (f) The entrance fee required by this section shall be paid to the 
Savings Association Insurance Fund. The exit fee required by this 
section shall be paid to the Bank Insurance Fund.
    (g) Insured deposit transfers occurring before March 21, 1990 shall 
not be subject to the assessment of entrance or exit fees.

[55 FR 10414, Mar. 21, 1990]



Sec. 312.10  Payment of entrance and exit fees.

    (a) A resulting or acquiring depository institution shall be liable 
for the payment of the entrance and exit fees required by this part.
    (b) Notwithstanding paragraph (a) of this section, an acquiring 
depository institution participating in an insured deposit transfer 
pursuant to Sec. 312.8 or Sec. 312.9 of this part shall pay the entrance 
and exit fees from the premium, and in any event, shall not be liable 
for the payment of that portion of the entrance and exit fees that 
exceeds the premium paid by such acquiring depository institution.
    (c) The ``conversion transaction payment date'' shall be either 
March 31st or September 30th, whichever occurs first following the 
expiration of 30 days from the date the deposits are transferred.
    (d) A resulting or acquiring depository institution shall pay the 
entrance and exit fees required by this part on the conversion 
transaction payment date.
    (e) Notwithstanding paragraph (d) of this section, where the sum of 
the entrance and exit fees required to be paid by an insured depository 
institution pursuant to Secs. 312.4, 312.5, 312.6, or 312.7 of this part 
exceeds $5,000, a resulting or acquiring depository institution may, at 
its option, and upon notification to the Federal Deposit Insurance 
Corporation, pay the entrance and exit fees in equal annual 
installments, interest-free, over a period of not more than five years. 
The first such installment shall be paid on the date described in 
paragraph (c) of this section.
    (f) Entrance and exit fees required to be paid by an insured 
depository institution as the result of an insured deposit transfer 
pursuant to Secs. 312.8 or 312.9 of this part shall be paid on the

[[Page 163]]

conversion transaction payment date described in paragraph (c) of this 
section.

[55 FR 10414, Mar. 21, 1990]

[[Page 164]]





       SUBCHAPTER B--REGULATIONS AND STATEMENTS OF GENERAL POLICY


PART 323--APPRAISALS--Table of Contents




Sec.
323.1  Authority, purpose, and scope.
323.2  Definitions.
323.3  Appraisals required; transactions requiring a State certified or 
          licensed appraiser.
323.4  Minimum appraisal standards.
323.5  Appraiser independence.
323.6  Professional association membership; competency.
323.7  Enforcement.

    Authority: 12 U.S.C. 1818, 1819 [``Seventh'' and ``Tenth''], and 
3331-3352.

    Source: 55 FR 33888, Aug. 20, 1990, unless otherwise noted.



Sec. 323.1  Authority, purpose, and scope.

    (a) Authority. This part is issued under 12 U.S.C. 1818, 1819 
[``Seventh'' and ``Tenth''] and title XI of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (``FIRREA'') (Pub. L. 101-
73, 103 Stat. 183, 12 U.S.C. 3331 et seq. (1989)).
    (b) Purpose and scope. (1) Title XI provides protection for federal 
financial and public policy interests in real estate related 
transactions by requiring real estate appraisals used in connection with 
federally related transactions to be performed in writing, in accordance 
with uniform standards, by appraisers whose competency has been 
demonstrated and whose professional conduct will be subject to effective 
supervision. This part implements the requirements of title XI and 
applies to all federally related transactions entered into by the FDIC 
or by institutions regulated by the FDIC (regulated institutions).
    (2) This part: (i) Identifies which real estate-related financial 
transactions require the services of an appraiser;
    (ii) Prescribes which categories of federally related transactions 
shall be appraised by a State certified appraiser and which by a State 
licensed appraiser; and
    (iii) Prescribes minimum standards for the performance of real 
estate appraisals in connection with federally related transactions 
under the jurisdiction of the FDIC.



Sec. 323.2  Definitions.

    (a) Appraisal means a written statement independently and 
impartially prepared by a qualified appraiser setting forth an opinion 
as to the market value of an adequately described property as of a 
specific date(s), supported by the presentation and analysis of relevant 
market information.
    (b) Appraisal Foundation means the Appraisal Foundation established 
on November 30, 1987, as a not-for-profit corporation under the laws of 
Illinois.
    (c) Appraisal Subcommittee means the Appraisal Subcommittee of the 
Federal Financial Institutions Examination Council.
    (d) Business loan means a loan or extension of credit to any 
corporation, general or limited partnership, business trust, joint 
venture, pool, syndicate, sole proprietorship, or other business entity.
    (e) Complex 1-to-4 family residential property appraisal means one 
in which the property to be appraised, the form of ownership, or market 
conditions are atypical.
    (f) Federally related transaction means any real estate-related 
financial transactions entered into after the effective date hereof 
that:
    (1) The FDIC or any regulated institution engages in or contracts 
for; and
    (2) Requires the services of an appraiser.
    (g) Market value means the most probable price which a property 
should bring in a competitive and open market under all conditions 
requisite to a fair sale, the buyer and seller each acting prudently and 
knowledgeably, and assuming the price is not affected by undue stimulus. 
Implicit in this definition is the consummation of a sale as of a 
specified date and the passing of title from seller to buyer under 
conditions whereby:
    (1) Buyer and seller are typically motivated;

[[Page 165]]

    (2) Both parties are well informed or well advised, and acting in 
what they consider their own best interests;
    (3) A reasonable time is allowed for exposure in the open market;
    (4) Payment is made in terms of cash in U.S. dollars or in terms of 
financial arrangements comparable thereto; and
    (5) The price represents the normal consideration for the property 
sold unaffected by special or creative financing or sales concessions 
granted by anyone associated with the sale.
    (h) Real estate or real property means an identified parcel or tract 
of land, with improvements, and includes easements, rights of way, 
undivided or future interests and similar rights in a tract of land, but 
does not include mineral rights, timber rights, growing crops, water 
rights and similar interests severable from the land when the 
transaction does not involve the associated parcel or tract of land.
    (i) Real estate-related financial transaction means any transaction 
involving:
    (1) The sale, lease, purchase, investment in or exchange of real 
property, including interests in property, or the financing thereof; or
    (2) The refinancing of real property or interests in real property; 
or
    (3) The use of real property or interests in property as security 
for a loan or investment, including mortgage-backed securities.
    (j) State certified appraiser means any individual who has satisfied 
the requirements for certification in a State or territory whose 
criteria for certification as a real estate appraiser currently meet the 
minimum criteria for certification issued by the Appraiser 
Qualifications Board of the Appraisal Foundation. No individual shall be 
a State certified appraiser unless such individual has achieved a 
passing grade upon a suitable examination administered by a State or 
territory that is consistent with and equivalent to the Uniform State 
Certification Examination issued or endorsed by the Appraiser 
Qualifications Board. In addition, the Appraisal Subcommittee must not 
have issued a finding that the policies, practices, or procedures of a 
State or territory are inconsistent with title XI of FIRREA. The FDIC 
may, from time to time, impose additional qualification criteria for 
certified appraisers performing appraisals in connection with federally 
related transactions within its jurisdiction.
    (k) State licensed appraiser means any individual who has satisfied 
the requirements for licensing in a State or territory where the 
licensing procedures comply with title XI of FIRREA and where the 
Appraisal Subcommittee has not issued a finding that the policies, 
practices, or procedures of the State or territory are inconsistent with 
title XI. The FDIC may, from time to time, impose additional 
qualification criteria for licensed appraisers performing appraisals in 
connection with federally related transactions within its jurisdiction.
    (l) Tract development means a project of five units or more that is 
constructed or is to be constructed as a single development.
    (m) Transaction value means: (1) For loans or other extensions of 
credit, the amount of the loan or extension of credit;
    (2) For sales, leases, purchases, and investments in or exchanges of 
real property, the market value of the real property interest involved; 
and
    (3) For the pooling of loans or interests in real property for 
resale or purchase, the amount of the loan or market value of the real 
property calculated with respect to each such loan or interest in real 
property.

[55 FR 33888, Aug. 20, 1990, as amended at 57 FR 9049, Mar. 16, 1992; 59 
FR 29501, June 7, 1994]



Sec. 323.3  Appraisals required; transactions requiring a State certified or licensed appraiser.

    (a) Appraisals required. An appraisal performed by a State certified 
or licensed appraiser is required for all real estate-related financial 
transactions except those in which:
    (1) The transaction value is $250,000 or less;
    (2) A lien on real estate has been taken as collateral in an 
abundance of caution;
    (3) The transaction is not secured by real estate;

[[Page 166]]

    (4) A lien on real estate has been taken for purposes other than the 
real estate's value;
    (5) The transaction is a business loan that:
    (i) Has a transaction value of $1 million or less; and
    (ii) Is not dependent on the sale of, or rental income derived from, 
real estate as the primary source of repayment;
    (6) A lease of real estate is entered into, unless the lease is the 
economic equivalent of a purchase or sale of the leased real estate;
    (7) The transaction involves an existing extension of credit at the 
lending institution, provided that:
    (i) There has been no obvious and material change in market 
conditions or physical aspects of the property that threatens the 
adequacy of the institution's real estate collateral protection after 
the transaction, even with the advancement of new monies; or
    (ii) There is no advancement of new monies, other than funds 
necessary to cover reasonable closing costs;
    (8) The transaction involves the purchase, sale, investment in, 
exchange of, or extension of credit secured by, a loan or interest in a 
loan, pooled loans, or interests in real property, including mortgaged-
backed securities, and each loan or interest in a loan, pooled loan, or 
real property interest met FDIC regulatory requirements for appraisals 
at the time of origination;
    (9) The transaction is wholly or partially insured or guaranteed by 
a United States government agency or United States government sponsored 
agency;
    (10) The transaction either:
    (i) Qualifies for sale to a United States government agency or 
United States government sponsored agency; or
    (ii) Involves a residential real estate transaction in which the 
appraisal conforms to the Federal National Mortgage Association or 
Federal Home Loan Mortgage Corporation appraisal standards applicable to 
that category of real estate;
    (11) The regulated institution is acting in a fiduciary capacity and 
is not required to obtain an appraisal under other law; or
    (12) The FDIC determines that the services of an appraiser are not 
necessary in order to protect Federal financial and public policy 
interests in real estate-related financial transactions or to protect 
the safety and soundness of the institution.
    (b) Evaluations required. For a transaction that does not require 
the services of a State certified or licensed appraiser under paragraph 
(a)(1), (a)(5) or (a)(7) of this section, the institution shall obtain 
an appropriate evaluation of real property collateral that is consistent 
with safe and sound banking practices.
    (c) Appraisals to address safety and soundness concerns. The FDIC 
reserves the right to require an appraisal under this part whenever the 
agency believes it is necessary to address safety and soundness 
concerns.
    (d) Transactions requiring a State certified appraiser--(1) All 
transactions of $1,000,000 or more. All federally related transactions 
having a transaction value of $1,000,000 or more shall require an 
appraisal prepared by a State certified appraiser.
    (2) Nonresidential transactions of $250,000 or more. All federally 
related transactions having a transaction value of $250,000 or more, 
other than those involving appraisals of 1-to-4 family residential 
properties, shall require an appraisal prepared by a State certified 
appraiser.
    (3) Complex residential transactions of $250,000 or more. All 
complex 1-to-4 family residential property appraisals rendered in 
connection with federally related transactions shall require a State 
certified appraiser if the transaction value is $250,000 or more. A 
regulated institution may presume that appraisals of 1-to-4 family 
residential properties are not complex, unless the institution has 
readily available information that a given appraisal will be complex. 
The regulated institution shall be responsible for making the final 
determination of whether the appraisal is complex. If during the course 
of the appraisal a licensed appraiser identifies factors that would 
result in the property, form of ownership, or market conditions being 
considered atypical, then either:

[[Page 167]]

    (i) The regulated institution may ask the licensed appraiser to 
complete the appraisal and have a certified appraiser approve and co-
sign the appraisal; or
    (ii) The institution may engage a certified appraiser to complete 
the appraisal.
    (e) Transactions requiring either a State certified or licensed 
appraiser. All appraisals for federally related transactions not 
requiring the services of a State certified appraiser shall be prepared 
by either a State certified appraiser or a State licensed appraiser.
    (f) Effective date. Regulated institutions are required to use state 
certified or licensed appraisers as set forth in this section no later 
than December 31, 1992, unless otherwise required by law.

[55 FR 33888, Aug. 20, 1990, as amended at 57 FR 9050, Mar. 16, 1992; 59 
FR 29501, June 7, 1994]



Sec. 323.4  Minimum appraisal standards.

    For federally related transactions, all appraisals shall, at a 
minimum:
    (a) Conform to generally accepted appraisal standards as evidenced 
by the Uniform Standards of Professional Appraisal Practice (USPAP) 
promulgated by the Appraisal Standards Board of the Appraisal 
Foundation, 1029 Vermont Ave., NW., Washington, DC 20005, unless 
principles of safe and sound banking require compliance with stricter 
standards;
    (b) Be written and contain sufficient information and analysis to 
support the institution's decision to engage in the transaction;
    (c) Analyze and report appropriate deductions and discounts for 
proposed construction or renovation, partially leased buildings, non-
market lease terms, and tract developments with unsold units;
    (d) Be based upon the definition of market value as set forth in 
this part; and
    (e) Be performed by State licensed or certified appraisers in 
accordance with requirements set forth in this part.

[59 FR 29502, June 7, 1994]



Sec. 323.5  Appraiser independence.

    (a) Staff appraisers. If an appraisal is prepared by a staff 
appraiser, that appraiser must be independent of the lending, 
investment, and collection functions and not involved, except as an 
appraiser, in the federally related transaction, and have no direct or 
indirect interest, financial or otherwise, in the property. If the only 
qualified persons available to perform an appraisal are involved in the 
lending, investment, or collection functions of the regulated 
institution, the regulated institution shall take appropriate steps to 
ensure that the appraisers exercise independent judgment and that the 
appraisal is adequate. Such steps include, but are not limited to, 
prohibiting an individual from performing appraisals in connection with 
federally related transactions in which the appraiser is otherwise 
involved and prohibiting directors and officers from participating in 
any vote or approval involving assets on which they performed an 
appraisal.
    (b) Fee appraisers. (1) If an appraisal is prepared by a fee 
appraiser, the appraiser shall be engaged directly by the regulated 
institution or its agent, and have no direct or indirect interest, 
financial or otherwise, in the property or the transaction.
    (2) A regulated institution also may accept an appraisal that was 
prepared by an appraiser engaged directly by another financial services 
institution, if:
    (i) The appraiser has no direct or indirect interest, financial or 
otherwise, in the property or the transaction; and
    (ii) The regulated institution determines that the appraisal 
conforms to the requirements of this part and is otherwise acceptable.

[55 FR 33888, Aug. 20, 1990, as amended by 59 FR 29502, June 7, 1994]



Sec. 323.6  Professional association membership; competency.

    (a) Membership in appraisal organizations. A State certified 
appraiser or a State licensed appraiser may not be excluded from 
consideration for an assignment for a federally related transaction 
solely by virtue of membership or lack of membership in any particular 
appraisal organization.
    (b) Competency. All staff and fee appraisers performing appraisals 
in connection with federally related transactions must be State 
certified or licensed, as appropriate. However, a

[[Page 168]]

State certified or licensed appraiser may not be considered competent 
solely by virtue of being certified or licensed. Any determination of 
competency shall be based upon the individual's experience and 
educational background as they relate to the particular appraisal 
assignment for which he or she is being considered.



Sec. 323.7  Enforcement.

    Institutions and institution-affiliated parties, including staff 
appraisers and fee appraisers, may be subject to removal and/or 
prohibition orders, cease and desist orders, and the imposition of civil 
money penalties pursuant to the Federal Deposit Insurance Act, 12 U.S.C. 
1811 et seq., as amended, or other applicable law.

                          PART 324  [RESERVED]



PART 325--CAPITAL MAINTENANCE--Table of Contents




                 Subpart A--Minimum Capital Requirements

Sec.
325.1  Scope.
325.2  Definitions.
325.3  Minimum leverage capital requirement.
325.4  Inadequate capital as an unsafe or unsound practice or condition.
325.5  Miscellaneous.
325.6  Issuance of directives.

                   Subpart B--Prompt Corrective Action

325.101  Authority, purpose, scope, other supervisory authority, and 
          disclosure of capital categories.
325.102  Notice of capital category.
325.103  Capital measures and capital category definitions.
325.104  Capital restoration plans.
325.105  Mandatory and discretionary supervisory actions under section 
          38.

Appendix A to Part 325--Statement of Policy on Risk-Based Capital
Appendix B to Part 325--Statement of Policy on Capital Adequacy
Appendix C to Part 325--Risk-Based Capital for State Non-Member Banks: 
          Market Risk

    Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 
1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 
1828(o), 1831o, 1835, 3907, 3909, 4808; Pub. L. 102-233, 105 Stat. 1761, 
1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102-242, 105 Stat. 2236, 
2355, as amended by Pub. L. 103-325, 108 Stat. 2160, 2233 (12 U.S.C. 
1828 note); Pub. L. 102-242, 105 Stat. 2236, 2386, as amended by Pub. L. 
102-550, 106 Stat. 3672, 4089 (12 U.S.C. 1828 note).



                 Subpart A--Minimum Capital Requirements



Sec. 325.1  Scope.

    The provisions of this subpart A apply to those circumstances for 
which the Federal Deposit Insurance Act or this chapter requires an 
evaluation of the adequacy of an insured depository institution's 
capital structure. The FDIC is required to evaluate capital before 
approving various applications by insured depository institutions. The 
FDIC also must evaluate capital, as an essential component, in 
determining the safety and soundness of state nonmember banks it insures 
and supervises and in determining whether depository institutions are in 
an unsafe or unsound condition. This subpart A establishes the criteria 
and standards the FDIC will use in calculating the minimum leverage 
capital requirement and in determining capital adequacy. In addition, 
appendix A to this subpart sets forth the FDIC's risk-based capital 
policy statement and appendix B to this subpart includes a statement of 
policy on capital adequacy that provides interpretational guidance as to 
how this subpart will be administered and enforced. In accordance with 
subpart B of part 325, the FDIC also must evaluate an institution's 
capital for purposes of determining whether the institution is subject 
to the prompt corrective action provisions set forth in section 38 of 
the Federal Deposit Insurance Act (12 U.S.C. 1831o).

[58 FR 8219, Feb. 12, 1993]



Sec. 325.2  Definitions.

    (a) Allowance for loan and lease losses means those general 
valuation allowances that have been established through charges against 
earnings to absorb losses on loans and lease financing receivables. 
Allowances for loan and lease losses exclude allocated transfer risk 
reserves established pursuant to 12 U.S.C. 3904 and specific reserves 
created against identified losses.
    (b) Assets classified loss means:
    (1) When measured as of the date of examination of an insured 
depository

[[Page 169]]

institution, those assets that have been determined by an evaluation 
made by a state or federal examiner as of that date to be a loss; and
    (2) When measured as of any other date, those assets:
    (i) That have been determined--
    (A) By an evaluation made by a state or federal examiner at the most 
recent examination of an insured depository institution to be a loss; or
    (B) By evaluations made by the insured depository institution since 
its most recent examination to be a loss; and
    (ii) That have not been charged off from the insured depository 
institution's books or collected.
    (c) Bank means an FDIC-insured, state-chartered commercial or 
savings bank that is not a member of the Federal Reserve System and for 
which the FDIC is the appropriate federal banking agency pursuant to 
section 3(q) of the FDI Act (12 U.S.C. 1813(q)).
    (d) Common stockholders' equity means the sum of common stock and 
related surplus, undivided profits, disclosed capital reserves that 
represent a segregation of undivided profits, and foreign currency 
translation adjustments, less net unrealized holding losses on 
available-for-sale equity securities with readily determinable fair 
values.
    (e)(1) Control has the same meaning assigned to it in section 2 of 
the Bank Holding Company Act (12 U.S.C. 1841), and the term controlled 
shall be construed consistently with the term control.
    (2) Exclusion for fiduciary ownership. No insured depository 
institution or company controls another insured depository institution 
or company by virtue of its ownership or control of shares in a 
fiduciary capacity. Shares shall not be deemed to have been acquired in 
a fiduciary capacity if the acquiring insured depository institution or 
company has sole discretionary authority to exercise voting rights with 
respect thereto.
    (3) Exclusion for debts previously contracted. No insured depository 
institution or company controls another insured depository institution 
or company by virtue of its ownership or control of shares acquired in 
securing or collecting a debt previously contracted in good faith, until 
two years after the date of acquisition. The two-year period may be 
extended at the discretion of the appropriate federal banking agency for 
up to three one-year periods.
    (f) Controlling person means any person having control of an insured 
depository institution and any company controlled by that person.
    (g)(1) Highly leveraged transaction means an extension of credit to 
or investment in a business by an insured depository institution where 
the financing transaction involves a buyout, acquisition, or 
recapitalization of an existing business and one of the following 
criteria is met:
    (i) The transaction results in a liabilities-to-assets leverage 
ratio higher than 75 percent; or
    (ii) The transaction at least doubles the subject company's 
liabilities and results in a liabilities-to-assets leverage ratio higher 
than 50 percent; or
    (iii) The transaction is designated an HLT by a syndication agent or 
a federal bank regulator.
    (2) Notwithstanding paragraph (g)(1) of this section, loans and 
exposures to any obligor in which the total financing package, including 
all obligations held by all participants is $20 million or more, or such 
lower level as the FDIC may establish by order on a case-by-case basis, 
will be excluded from this definition.
    (h) Identified losses means:
    (1) When measured as of the date of examination of an insured 
depository institution, those items that have been determined by an 
evaluation made by a state or federal examiner as of that date to be 
chargeable against income, capital and/or general valuation allowances 
such as the allowance for loan and lease losses (examples of identified 
losses would be assets classified loss, off-balance sheet items 
classified loss, any provision expenses that are necessary for the 
institution to record in order to replenish its general valuation 
allowances to an adequate level, liabilities not shown on the 
institution's books, estimated losses in contingent liabilities, and 
differences in accounts which represent shortages); and
    (2) When measured as of any other date, those items:

[[Page 170]]

    (i) That have been determined--
    (A) By an evaluation made by a state or federal examiner at the most 
recent examination of an insured depository institution to be chargeable 
against income, capital and/or general valuation allowances; or
    (B) By evaluations made by the insured depository institution since 
its most recent examination to be chargeable against income, capital 
and/or general valuation allowances; and
    (ii) For which the appropriate accounting entries to recognize the 
loss have not yet been made on the insured depository institution's 
books nor has the item been collected or otherwise settled.
    (i) Insured depository institution means any depository institution 
(except for a foreign bank having an insured branch) the deposits of 
which are insured in accordance with the provisions of the Federal 
Deposit Insurance Act (12 U.S.C. 1811 et seq.)
    (j) Intangible assets means those assets that are required to be 
reported as intangible assets in a banking institution's ``Reports of 
Condition and Income'' (Call Report) or in a savings association's 
``Thrift Financial Report.''
    (k) Leverage ratio means the ratio of Tier 1 capital to total 
assets, as calculated under this part.
    (l) Management fee means any payment of money or provision of any 
other thing of value to a company or individual for the provision of 
management services or advice to the bank or related overhead expenses, 
including payments related to supervisory, executive, managerial, or 
policymaking functions, other than compensation to an individual in the 
individual's capacity as an officer or employee of the bank.
    (m) Minority interests in consolidated subsidiaries means minority 
interests in equity capital accounts of those subsidiaries that have 
been consolidated for the purpose of computing regulatory capital under 
this part, except that minority interests which fail to provide 
meaningful capital support are excluded from this definition.
    (n) Mortgage servicing assets means those assets (net of any related 
valuation allowances) that result from contracts to service loans 
secured by real estate (that have been securitized or are owned by 
others) for which the benefits of servicing are expected to more than 
adequately compensate the servicer for performing the servicing. For 
purposes of determining regulatory capital under this part, mortgage 
servicing assets will be recognized only to the extent that the assets 
meet the conditions, limitations, and restrictions described in 
Sec. 325.5 (f).
    (o) Noncumulative perpetual preferred stock means perpetual 
preferred stock (and related surplus) where the issuer has the option to 
waive payment of dividends and where the dividends so waived do not 
accumulate to future periods nor do they represent a contingent claim on 
the issuer. Preferred stock issues where the dividend is reset 
periodically based, in whole or in part, upon the bank's current credit 
standing, including but not limited to, auction rate, money market and 
remarketable preferred stock, are excluded from this definition of 
noncumulative perpetual preferred stock, regardless of whether the 
dividends are cumulative or noncumulative.
    (p) Perpetual preferred stock means a preferred stock that does not 
have a maturity date, that cannot be redeemed at the option of the 
holder, and that has no other provisions that will require future 
redemption of the issue. It includes those issues of preferred stock 
that automatically convert into common stock at a stated date. It 
excludes those issues, the rate on which increases, or can increase, in 
such a manner that would effectively require the issuer to redeem the 
issue.
    (q) Risk-weighted assets means total risk-weighted assets, as 
calculated in accordance with the FDIC's Statement of Policy on Risk-
Based Capital (appendix A to part 325).
    (r) Savings association means any federally-chartered savings 
association, any state-chartered savings association, and any 
corporation (other than a bank) that the Board of Directors of the FDIC 
and the Director of the Office of Thrift Supervision jointly determine 
to be operating in substantially the same manner as a savings 
association.
    (s) Tangible equity means the amount of core capital elements as 
defined in Section I.A.1. of the FDIC's Statement

[[Page 171]]

of Policy on Risk-Based Capital (appendix A to this Part 325), plus the 
amount of outstanding cumulative perpetual preferred stock (including 
related surplus), minus all intangible assets except mortgage servicing 
assets to the extent that the FDIC determines pursuant to Sec. 325.5(f) 
of this part that mortgage servicing assets may be included in 
calculating the bank's Tier 1 capital.
    (t) Tier 1 capital or core capital means the sum of common 
stockholders' equity, noncumulative perpetual preferred stock (including 
any related surplus), and minority interests in consolidated 
subsidiaries, minus all intangible assets (other than mortgage servicing 
assets, nonmortgage servicing assets, and purchased credit card 
relationships eligible for inclusion in core capital pursuant to 
Sec. 325.5(f) and qualifying supervisory goodwill eligible for inclusion 
in core capital pursuant to 12 CFR part 567), minus deferred tax assets 
in excess of the limit set forth in Sec. 325.5(g), minus identified 
losses, (to the extent that Tier 1 capital would have been reduced if 
the appropriate accounting entries to reflect the identified losses had 
been recorded on the insured depository institution's books) and minus 
investments in securities subsidiaries subject to 12 CFR 337.4.
    (u) Tier 1 risk-based capital ratio means the ratio of Tier 1 
capital to risk-weighted assets, as calculated in accordance with the 
FDIC's Statement of Policy on Risk-Based Capital (appendix A to part 
325).
    (v) Total assets means the average of total assets required to be 
included in a banking institution's ``Reports of Condition and Income'' 
(Call Report) or, for savings associations, the consolidated total 
assets required to be included in the ``Thrift Financial Report,'' as 
these reports may from time to time be revised, as of the most recent 
report date (and after making any necessary subsidiary adjustments for 
state nonmember banks as described in Secs. 325.5(c) and 325.5(d) of 
this part), minus intangible assets (other than mortgage servicing 
assets, nonmortgage servicing assets, and purchased credit card 
relationships eligible for inclusion in core capital pursuant to 
Sec. 325.5(f) and qualifying supervisory goodwill eligible for inclusion 
in core capital pursuant to 12 CFR part 567), minus deferred tax assets 
in excess of the limit set forth in 325.5(g), and minus assets 
classified loss and any other assets that are deducted in determining 
Tier 1 capital. For banking institutions, the average of total assets is 
found in the Call Report schedule of quarterly averages. For savings 
associations, the consolidated total assets figure is found in Schedule 
CSC of the Thrift Financial Report.
    (w) Total risk-based capital ratio means the ratio of qualifying 
total capital to risk-weighted assets, as calculated in accordance with 
the FDIC's Statement of Policy on Risk-Based Capital (appendix A to part 
325).
    (x) Written agreement means an agreement in writing executed by 
authorized representatives entered into with the FDIC by an insured 
depository institution which is enforceable by an action under section 
8(a) and/or section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. 
1818 (a), (b)).

[56 FR 10160, Mar. 11, 1991, as amended at 57 FR 44899, Sept. 29, 1992; 
58 FR 6368, 6369, Jan. 28, 1993; 58 FR 8219, Feb. 12, 1993; 58 FR 60103, 
Nov. 15, 1993; 59 FR 66666, Dec. 28, 1994; 60 FR 8187, Feb. 13, 1995; 60 
FR 39232, Aug. 1, 1995; 63 FR 42677, Aug. 10, 1998]



Sec. 325.3  Minimum leverage capital requirement.

    (a) General. Banks must maintain at least the minimum leverage 
capital requirement set forth in this section. The capital standards in 
this part are the minimum acceptable for banks whose overall financial 
condition is fundamentally sound, which are well-managed and which have 
no material or significant financial weaknesses. Thus, the FDIC is not 
precluded from requiring an institution to maintain a higher capital 
level based on the institution's particular risk profile. Where the FDIC 
determines that the financial history or condition, managerial resources 
and/or the future earnings prospects of a bank are not adequate, or 
where a bank has sizable off-balance sheet or funding risks, significant 
risks from concentrations of credit or nontraditional activities, 
excessive interest rate risk exposure, or a significant volume of assets 
classified substandard, doubtful or loss

[[Page 172]]

or otherwise criticized, the FDIC will take these other factors into 
account in analyzing the bank's capital adequacy and may determine that 
the minimum amount of capital for that bank is greater than the minimum 
standards stated in this section. These same criteria will apply to any 
insured depository institution making an application to the FDIC that 
requires the FDIC to consider the adequacy of the institution's capital 
structure.
    (b) Minimum leverage capital requirement. (1) The minimum leverage 
capital requirement for a bank (or an insured depository institution 
making application to the FDIC) shall consist of a ratio of Tier 1 
capital to total assets of not less than 3 percent if the FDIC 
determines that the institution is not anticipating or experiencing 
significant growth and has well-diversified risk, including no undue 
interest rate risk exposure, excellent asset quality, high liquidity, 
good earnings and in general is considered a strong banking 
organization, rated composite 1 under the Uniform Financial Institutions 
Rating System (the CAMEL rating system) established by the Federal 
Financial Institutions Examination Council.
    (2) For all but the most highly-rated institutions meeting the 
conditions set forth in paragraph (b)(1) of this section, the minimum 
leverage capital requirement for a bank (or for an insured depository 
institution making an application to the FDIC) shall consist of a ratio 
of Tier 1 capital to total assets of not less than 4 percent.
    (c) Insured depository institutions with less than the minimum 
leverage capital requirement. (1) A bank (or an insured depository 
institution making an application to the FDIC) operating with less than 
the minimum leverage capital requirement does not have adequate capital 
and therefore has inadequate financial resources.
    (2) Any insured depository institution operating with an inadequate 
capital structure, and therefore inadequate financial resources, will 
not receive approval for an application requiring the FDIC to consider 
the adequacy of its capital structure or its financial resources.
    (3) As required under Sec. 325.104(a)(1) of this part, a bank must 
file a written capital restoration plan with the appropriate FDIC 
regional director within 45 days of the date that the bank receives 
notice or is deemed to have notice that the bank is undercapitalized, 
significantly undercapitalized or critically undercapitalized, unless 
the FDIC notifies the bank in writing that the plan is to be filed 
within a different period.
    (4) In any merger, acquisition or other type of business combination 
where the FDIC must give its approval, where it is required to consider 
the adequacy of the financial resources of the existing and proposed 
institutions, and where the resulting entity is either insured by the 
FDIC or not otherwise federally insured, approval will not be granted 
when the resulting entity does not meet the minimum leverage capital 
requirement.
    (d) Exceptions. Notwithstanding the provisions of paragraphs (a), 
(b) and (c) of this section:
    (1) The FDIC, in its discretion, may approve an application pursuant 
to the Federal Deposit Insurance Act where it is required to consider 
the adequacy of capital if it finds that such approval must be taken to 
prevent the closing of a depository institution or to facilitate the 
acquisition of a closed depository institution, or, when severe 
financial conditions exist which threaten the stability of an insured 
depository institution or of a significant number of depository 
institutions insured by the FDIC or of insured depository institutions 
possessing significant financial resources, such action is taken to 
lessen the risk to the FDIC posed by an insured depository institution 
under such threat of instability.
    (2) The FDIC, in its discretion, may approve an application pursuant 
to the Federal Deposit Insurance Act where it is required to consider 
the adequacy of capital or the financial resources of the insured 
depository institution where it finds that the applicant has committed

[[Page 173]]

to and is in compliance with a reasonable plan to meet its minimum 
leverage capital requirements within a reasonable period of time.

(Approved by the Office of Management and Budget under control number 
3064-0075 for use through December 31, 1993)

[56 FR 10162, Mar. 11, 1991, as amended at 58 FR 8219, Feb. 12, 1993; 59 
FR 64564, Dec. 15, 1994; 60 FR 45609, Aug. 31, 1995; 62 FR 55493, Oct. 
24, 1997; 64 FR 10200, Mar. 2, 1999]



Sec. 325.4  Inadequate capital as an unsafe or unsound practice or condition.

    (a) General. As a condition of federal deposit insurance, all 
insured depository institutions must remain in a safe and sound 
condition.
    (b) Unsafe or unsound practice. Any bank which has less than its 
minimum leverage capital requirement is deemed to be engaged in an 
unsafe or unsound practice pursuant to section 8(b)(1) and/or 8(c) of 
the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(1) and/or 1818(c)). 
Except that such a bank which has entered into and is in compliance with 
a written agreement with the FDIC or has submitted to the FDIC and is in 
compliance with a plan approved by the FDIC to increase its Tier 1 
leverage capital ratio to such level as the FDIC deems appropriate and 
to take such other action as may be necessary for the bank to be 
operated so as not to be engaged in such an unsafe or unsound practice 
will not be deemed to be engaged in an unsafe or unsound practice 
pursuant to section 8(b)(1) and/or 8(c) of the Federal Deposit Insurance 
Act (12 U.S.C. 1818(b)(1) and/or 1818(c)) on account of its capital 
ratios. The FDIC is not precluded from taking section 8(b)(1), section 
8(c) or any other enforcement action against a bank with capital above 
the minimum requirement if the specific circumstances deem such action 
to be appropriate. Under the conditions set forth in section 8(t) of the 
Federal Deposit Insurance Act (12 U.S.C. 1818(t)), the FDIC also may 
take section 8(b)(1) and/or 8(c) enforcement action against any savings 
association that is deemed to be engaged in an unsafe or unsound 
practice on account of its inadequate capital structure.
    (c) Unsafe or unsound condition. Any insured depository institution 
with a ratio of Tier 1 capital to total assets that is less than two 
percent is deemed to be operating in an unsafe or unsound condition 
pursuant to section 8(a) of the Federal Deposit Insurance Act (12 U.S.C. 
1818(a)).
    (1) A bank with a ratio of Tier 1 capital to total assets of less 
than two percent which has entered into and is in compliance with a 
written agreement with the FDIC (or any other insured depository 
institution with a ratio of Tier 1 capital to total assets of less than 
two percent which has entered into and is in compliance with a written 
agreement with its primary federal regulator and to which agreement the 
FDIC is a party) to increase its Tier 1 leverage capital ratio to such 
level as the FDIC deems appropriate and to take such other action as may 
be necessary for the insured depository institution to be operated in a 
safe and sound manner, will not be subject to a proceeding by the FDIC 
pursuant to 12 U.S.C. 1818(a) on account of its capital ratios.
    (2) An insured depository institution with a ratio of Tier 1 capital 
to total assets that is equal to or greater than two percent may be 
operating in an unsafe or unsound condition. The FDIC is not precluded 
from bringing an action pursuant to 12 U.S.C. 1818(a) where an insured 
depository institution has a ratio of Tier 1 capital to total assets 
that is equal to or greater than two percent.

[56 FR 10162, Mar. 11, 1991]



Sec. 325.5  Miscellaneous.

    (a) Intangible assets. Any intangible assets that were explicitly 
approved by the FDIC as part of the bank's regulatory capital on a 
specific case basis will be included in capital under the terms and 
conditions that were approved by the FDIC, provided that the intangible 
asset is being amortized over a period not to exceed 15 years or its 
estimated useful life, whichever is shorter. However, pursuant to 
section 18(n) of the Federal Deposit Insurance Act (12 U.S.C. 1828(n)), 
an unidentifiable intangible asset such as goodwill, if acquired after 
April 12, 1989, cannot be included in calculating regulatory capital 
under this part.

[[Page 174]]

    (b) Reservation of authority. Notwithstanding the definition of Tier 
1 capital in Sec. 325.2(t) of this subpart and the risk-based capital 
definitions of Tier 1 and Tier 2 capital in appendix A to this subpart, 
the Director of the Division of Supervision may, if the Director finds a 
newly developed or modified capital instrument or a particular balance 
sheet entry or account to be the functional equivalent of a component of 
Tier 1 or Tier 2 capital, permit one or more insured depository 
institutions to include all or a portion of such instrument, entry, or 
account as Tier 1 or Tier 2 capital, permanently, or on a temporary 
basis, for purposes of this part. Similarly, the Director of the 
Division of Supervision may, if the Director finds that a particular 
Tier 1 or Tier 2 capital component or balance sheet entry or account has 
characteristics or terms that diminish its contribution to an insured 
depository institution's ability to absorb losses, require the deduction 
of all or a portion of such component, entry, or account from Tier 1 or 
Tier 2 capital.
    (c) Securities subsidiary. For purposes of this part, any securities 
subsidiary subject to 12 CFR 337.4 shall not be consolidated with its 
bank parent and any investment therein shall be deducted from the bank 
parent's Tier 1 capital and total assets.
    (d) Depository institution subsidiary. Any domestic depository 
institution subsidiary that is not consolidated in the ``Reports of 
Condition and Income'' (Call Report) of its insured parent bank shall be 
consolidated with the insured parent bank for purposes of this part. The 
financial statements of the subsidiary that are to be used for this 
consolidation must be prepared in the same manner as the ``Reports of 
Condition and Income'' (Call Report). A domestic depository institution 
subsidiary of a savings association shall be consolidated for purposes 
of this part if such consolidation also is required pursuant to the 
capital requirements of the association's primary federal regulator.
    (e) Restrictions relating to capital components. To qualify as Tier 
1 capital under this part or Tier 1 or Tier 2 capital under appendix A 
to this part, a capital instrument must not contain or be subject to any 
conditions, covenants, terms, restrictions, or provisions that are 
inconsistent with safe and sound banking practices. A condition, 
covenant, term, restriction, or provision is inconsistent with safe and 
sound banking practices if it:
    (1) Unduly interferes with the ability of the issuer to conduct 
normal banking operations;
    (2) Results in significantly higher dividends or interest payments 
in the event of deterioration in the financial condition of the issuer;
    (3) Impairs the ability of the issuer to comply with statutory or 
regulatory requirements regarding the disposition of assets or 
incurrence of additional debt; or
    (4) Limits the ability of the FDIC or a similar regulatory authority 
to take any necessary action to resolve a problem bank or failing bank 
situation.

Other conditions and covenants that are not expressly listed in 
paragraphs (e)(1) through (e)(4) of this section also may be 
inconsistent with safe and sound banking practices.
    (f) Treatment of mortgage servicing assets, purchased credit card 
relationships, and nonmortgage servicing assets. For purposes of 
determining Tier 1 capital under this part, mortgage servicing assets, 
purchased credit card relationships, and nonmortgage servicing assets 
will be deducted from assets and from common stockholders' equity to the 
extent that these items do not meet the conditions, limitations, and 
restrictions described in this section. Banks may elect to deduct 
disallowed servicing assets on a basis that is net of any associated 
deferred tax liability. Any deferred tax liability netted in this manner 
cannot also be netted against deferred tax assets when determining the 
amount of deferred tax assets that are dependent upon future taxable 
income and calculating the maximum allowable amount of these assets 
under paragraph (g) of this section.
    (1) Valuation. The fair value of mortgage servicing assets, 
purchased credit card relationships, and nonmortgage servicing assets 
shall be estimated at least quarterly. The quarterly fair value estimate 
shall include adjustments for any significant changes in

[[Page 175]]

the original valuation assumptions, including changes in prepayment 
estimates or attrition rates. The FDIC in its discretion may require 
independent fair value estimates on a case-by-case basis where it is 
deemed appropriate for safety and soundness purposes.
    (2) Fair value limitation. For purposes of calculating Tier 1 
capital under this part (but not for financial statement purposes), the 
balance sheet assets for mortgage servicing assets, purchased credit 
card relationships, and nonmortgage servicing assets will each be 
reduced to an amount equal to the lesser of:
    (i) 90 percent of the fair value of these assets, determined in 
accordance with paragraph (f)(1) of this section; or
    (ii) 100 percent of the remaining unamortized book value of these 
assets (net of any related valuation allowances), determined in 
accordance with the instructions for the preparation of the Consolidated 
Reports of Income and Condition (Call Reports).
    (3) Tier 1 capital limitation. The maximum allowable amount of 
mortgage servicing assets, purchased credit card relationships, and 
nonmortgage servicing assets, in the aggregate, will be limited to the 
lesser of:
    (i) 100 percent of the amount of Tier 1 capital that exists before 
the deduction of any disallowed mortgage servicing assets, any 
disallowed purchased credit card relationships, any disallowed 
nonmortgage servicing assets, and any disallowed deferred tax assets; or
    (ii) The sum of the amounts of mortgage servicing assets, purchased 
credit card relationships, and nonmortgage servicing assets determined 
in accordance with paragraph (f)(2) of this section.
    (4) Tier 1 capital sublimit. In addition to the aggregate limitation 
on mortgage servicing assets, purchased credit card relationships, and 
nonmortgage servicing assets set forth in paragraph (f)(3) of this 
section, a sublimit will apply to purchased credit card relationships 
and nonmortgage servicing assets. The maximum allowable amount of 
purchased credit card relationships and nonmortgage servicing assets, in 
the aggregate, will be limited to the lesser of:
    (i) Twenty-five percent of the amount of Tier 1 capital that exists 
before the deduction of any disallowed mortgage servicing assets, any 
disallowed purchased credit card relationships, any disallowed 
nonmortgage servicing assets, and any disallowed deferred tax assets; or
    (ii) The sum of the amounts of purchased credit card relationships 
and nonmortgage servicing assets, determined in accordance with 
paragraph (f)(2) of this section.
    (g) Treatment of deferred tax assets. For purposes of calculating 
Tier 1 capital under this part (but not for financial statement 
purposes), deferred tax assets are subject to the conditions, 
limitations, and restrictions described in this section.
    (1) Deferred tax assets that are dependent upon future taxable 
income. These assets are:
    (i) Deferred tax assets arising from deductible temporary 
differences that exceed the amount of taxes previously paid that could 
be recovered through loss carrybacks if existing temporary differences 
(both deductible and taxable and regardless of where the related 
deferred tax effects are reported on the balance sheet) fully reverse at 
the calendar quarter-end date; and
    (ii) Deferred tax assets arising from operating loss and tax credit 
carryforwards.
    (2) Tier 1 capital limitations. (i) The maximum allowable amount of 
deferred tax assets that are dependent upon future taxable income, net 
of any valuation allowance for deferred tax assets, will be limited to 
the lesser of:
    (A) The amount of deferred tax assets that are dependent upon future 
taxable income that is expected to be realized within one year of the 
calendar quarter-end date, based on projected future taxable income for 
that year; or
    (B) Ten percent of the amount of Tier 1 capital that exists before 
the deduction of any disallowed mortgage servicing assets, any 
disallowed nonmortgage servicing assets, any disallowed purchased credit 
card relationships, and any disallowed deferred tax assets.
    (ii) For purposes of this limitation, all existing temporary 
differences should be assumed to fully reverse at

[[Page 176]]

the calendar quarter-end date. The recorded amount of deferred tax 
assets that are dependent upon future taxable income, net of any 
valuation allowance for deferred tax assets, in excess of this 
limitation will be deducted from assets and from equity capital for 
purposes of determining Tier 1 capital under this part. The amount of 
deferred tax assets that can be realized from taxes paid in prior 
carryback years and from the reversal of existing taxable temporary 
differences generally would not be deducted from assets and from equity 
capital. However, notwithstanding the above, the amount of carryback 
potential that may be considered in calculating the amount of deferred 
tax assets that a member of a consolidated group (for tax purposes) may 
include in Tier 1 capital may not exceed the amount which the member 
could reasonably expect to have refunded by its parent.
    (3) Projected future taxable income. Projected future taxable income 
should not include net operating loss carryforwards to be used within 
one year of the most recent calendar quarter-end date or the amount of 
existing temporary differences expected to reverse within that year. 
Projected future taxable income should include the estimated effect of 
tax planning strategies that are expected to be implemented to realize 
tax carryforwards that will otherwise expire during that year. Future 
taxable income projections for the current fiscal year (adjusted for any 
significant changes that have occurred or are expected to occur) may be 
used when applying the capital limit at an interim calendar quarter-end 
date rather then preparing a new projection each quarter.
    (4) Unrealized holding gains and losses on available-for-sale debt 
securities. The deferred tax effects of any unrealized holding gains and 
losses on available-for-sale debt securities may be excluded from the 
determination of the amount of deferred tax assets that are dependent 
upon future taxable income and the calculation of the maximum allowable 
amount of such assets. If these deferred tax effects are excluded, this 
treatment must be followed consistently over time.
    (5) Intangible assets acquired in nontaxable purchase business 
combinations. A deferred tax liability that is specifically related to 
an intangible asset (other than mortgage servicing assets, nonmortgage 
servicing assets, and purchased credit card relationships) acquired in a 
nontaxable purchase business combination may be netted against this 
intangible asset. Only the net amount of the intangible asset must be 
deducted from Tier 1 capital. When a deferred tax liability is netted in 
this manner, the taxable temporary difference that gives rise to this 
deferred tax liability must be excluded from existing taxable temporary 
differences when determining the amount of deferred tax assets that are 
dependent upon future taxable income and calculating the maximum 
allowable amount of such assets.

[56 FR 10163, Mar. 11, 1991, as amended at 57 FR 7647, Mar. 4, 1992; 58 
FR 6369, Jan. 28, 1993; 58 FR 8219, Feb. 12, 1993; 60 FR 8187, Feb. 13, 
1995; 60 FR 39232, Aug. 1, 1995; 63 FR 42677, Aug. 10, 1998]



Sec. 325.6  Issuance of directives.

    (a) General. A directive is a final order issued to a bank that 
fails to maintain capital at or above the minimum leverage capital 
requirement as set forth in Secs. 325.3 and 325.4. A directive issued 
pursuant to this section, including a plan submitted under a directive, 
is enforceable in the same manner and to the same extent as a final 
cease-and-desist order issued under 12 U.S.C. 1818(b).
    (b) Issuance of directives. If a bank is operating with less than 
the minimum leverage capital requirement established by this regulation, 
the Board of Directors, or its designee(s), may issue and serve upon any 
insured state nonmember bank a directive requiring the bank to restore 
its capital to the minimum leverage capital requirement within a 
specified time period. The directive may require the bank to submit to 
the appropriate FDIC regional director, or other specified official, for 
review and approval, a plan describing the means and timing by which the 
bank shall achieve the minimum leverage capital requirement. After the 
FDIC has approved the plan, the bank may be required under the terms of 
the

[[Page 177]]

directive to adhere to and monitor compliance with the plan. The 
directive may be issued during the course of an examination of the bank, 
or at any other time that the FDIC deems appropriate, if the bank is 
found to be operating with less than the minimum leverage capital 
requirement.
    (c) Notice and opportunity to respond to issuance of a directive. 
(1) If the FDIC makes an initial determination that a directive should 
be issued to a bank pursuant to paragraph (b) of this section, the FDIC, 
through the appropriate designated official(s), shall serve written 
notification upon the bank of its intent to issue a directive. The 
notice shall include the current Tier 1 leverage capital ratio, the 
basis upon which said ratio was calculated, the proposed capital 
injection, the proposed date for achieving the minimum leverage capital 
requirement and any other relevant information concerning the decision 
to issue a directive. When deemed appropriate, specific requirements of 
a proposed plan for meeting the minimum leverage capital requirement may 
be included in the notice.
    (2) Within 14 days of receipt of notification, the bank may file 
with the appropriate designated FDIC official(s) a written response, 
explaining why the directive should not be issued, seeking modification 
of its terms, or other appropriate relief. The bank's response shall 
include any information, mitigating circumstances, documentation or 
other relevant evidence which supports its position, and may include a 
plan for attaining the minimum leverage capital requirement.
    (3) After considering the bank's response, the appropriate 
designated FDIC official(s) shall serve upon the bank a written 
determination addressing the bank's response and setting forth the 
FDIC's findings and conclusions in support of any decision to issue or 
not to issue a directive. The directive may be issued as originally 
proposed or in modified form. The directive may order the bank to:
    (i) Achieve the minimum leverage capital requirement established by 
this regulation by a certain date;
    (ii) Submit for approval and adhere to a plan for achieving the 
minimum leverage capital requirement;
    (iii) Take other action as is necessary to achieve the minimum 
leverage capital requirement; or
    (iv) A combination of the above actions.

If a directive is to be issued, it may be served upon the bank along 
with the final determination.
    (4) Any bank, upon a change in circumstances, may request the FDIC 
to reconsider the terms of a directive and may propose changes in the 
plan under which it is operating to meet the minimum leverage capital 
requirement. The directive and plan continue in effect while such 
request is pending before the FDIC.
    (5) All papers filed with the FDIC must be postmarked or received by 
the appropriate designated FDIC official(s) within the prescribed time 
limit for filing.
    (6) Failure by the bank to file a written response to notification 
of intent to issue a directive within the specified time period shall 
constitute consent to the issuance of such directive.
    (d) Enforcement of a directive. (1) Whenever a bank fails to follow 
the directive or to submit or adhere to its capital adequacy plan, the 
FDIC may seek enforcement of the directive in the appropriate United 
States district court, pursuant to 12 U.S.C. 3907(b)(2)(B)(ii), in the 
same manner and to the same extent as if the directive were a final 
cease-and-desist order. In addition to enforcement of the directive, the 
FDIC may seek assessment of civil money penalties for violation of the 
directive against any bank, any officer, director, employee, agent, or 
other person participating in the conduct of the affairs of the bank, 
pursuant to 12 U.S.C. 3909(d).
    (2) The directive may be issued separately, in conjunction with, or 
in addition to, any other enforcement mechanisms available to the FDIC, 
including cease-and-desist orders, orders of correction, the approval or 
denial of applications, or any other actions authorized by law. In 
addition to addressing a bank's minimum leverage capital requirement, 
the capital directive may

[[Page 178]]

also address minimum risk-based capital requirements that are to be 
maintained and calculated in accordance with appendix A to this part.

[56 FR 10164, Mar. 11, 1991]



                   Subpart B--Prompt Corrective Action

    Source: 57 FR 44900, Sept. 29, 1992, unless otherwise noted.



Sec. 325.101  Authority, purpose, scope, other supervisory authority, and disclosure of capital categories.

    (a) Authority. This subpart is issued by the FDIC pursuant to 
section 38 (section 38) of the Federal Deposit Insurance Act (FDI Act), 
as added by section 131 of the Federal Deposit Insurance Corporation 
Improvement Act of 1991 (Pub. L. 102-242, 105 Stat. 2236 (1991)) (12 
U.S.C. 1831o).
    (b) Purpose. Section 38 of the FDI Act establishes a framework of 
supervisory actions for insured depository institutions that are not 
adequately capitalized. The principal purpose of this subpart is to 
define, for FDIC-insured state-chartered nonmember banks, the capital 
measures and capital levels, and for insured branches of foreign banks, 
comparable asset-based measures and levels, that are used for 
determining the supervisory actions authorized under section 38 of the 
FDI Act. This subpart also establishes procedures for submission and 
review of capital restoration plans and for issuance and review of 
directives and orders pursuant to section 38.
    (c) Scope. This subpart implements the provisions of section 38 of 
the FDI Act as they apply to FDIC-insured state-chartered nonmember 
banks and insured branches of foreign banks for which the FDIC is the 
appropriate Federal banking agency. Certain of these provisions also 
apply to officers, directors and employees of those insured 
institutions. In addition, certain provisions of this subpart apply to 
all insured depository institutions that are deemed critically 
undercapitalized.
    (d) Other supervisory authority. Neither section 38 nor this subpart 
in any way limits the authority of the FDIC under any other provision of 
law to take supervisory actions to address unsafe or unsound practices, 
deficient capital levels, violations of law, unsafe or unsound 
conditions, or other practices. Action under section 38 of the FDI Act 
and this subpart may be taken independently of, in conjunction with, or 
in addition to any other enforcement action available to the FDIC, 
including issuance of cease and desist orders, capital directives, 
approval or denial of applications or notices, assessment of civil money 
penalties, or any other actions authorized by law.
    (e) Disclosure of capital categories. The assignment of a bank or 
insured branch under this subpart within a particular capital category 
is for purposes of implementing and applying the provisions of section 
38. Unless permitted by the FDIC or otherwise required by law, no bank 
may state in any advertisement or promotional material its capital 
category under this subpart or that the FDIC or any other federal 
banking agency has assigned the bank to a particular capital category.



Sec. 325.102  Notice of capital category.

    (a) Effective date of determination of capital category. A bank 
shall be deemed to be within a given capital category for purposes of 
section 38 of the FDI Act and this subpart as of the date the bank is 
notified of, or is deemed to have notice of, its capital category, 
pursuant to paragraph (b) of this section.
    (b) Notice of capital category. A bank shall be deemed to have been 
notified of its capital levels and its capital category as of the most 
recent date:
    (1) A Consolidated Report of Condition and Income (Call Report) is 
required to be filed with the FDIC;
    (2) A final report of examination is delivered to the bank; or
    (3) Written notice is provided by the FDIC to the bank of its 
capital category for purposes of section 38 of the FDI Act and this 
subpart or that the bank's capital category has changed as provided in 
Sec. 325.103(d).
    (c) Adjustments to reported capital levels and capital category--(1) 
Notice of adjustment by bank. A bank shall provide the appropriate FDIC 
regional director with written notice that an adjustment to the bank's 
capital category may

[[Page 179]]

have occurred no later than 15 calendar days following the date that any 
material event has occurred that would cause the bank to be placed in a 
lower capital category from the category assigned to the bank for 
purposes of section 38 and this subpart on the basis of the bank's most 
recent Call Report or report of examination.
    (2) Determination by the FDIC to change capital category. After 
receiving notice pursuant to paragraph (c)(1) of this section, the FDIC 
shall determine whether to change the capital category of the bank and 
shall notify the bank of the FDIC's determination.



Sec. 325.103  Capital measures and capital category definitions.

    (a) Capital measures. For purposes of section 38 and this subpart, 
the relevant capital measures shall be:
    (1) The total risk-based capital ratio;
    (2) The Tier 1 risk-based capital ratio; and
    (3) The leverage ratio.
    (b) Capital categories. For purposes of section 38 and this subpart, 
a bank shall be deemed to be:
    (1) Well capitalized if the bank:
    (i) Has a total risk-based capital ratio of 10.0 percent or greater; 
and
    (ii) Has a Tier 1 risk-based capital ratio of 6.0 percent or 
greater; and
    (iii) Has a leverage ratio of 5.0 percent or greater; and
    (iv) Is not subject to any written agreement, order, capital 
directive, or prompt corrective action directive issued by the FDIC 
pursuant to section 8 of the FDI Act (12 U.S.C. 1818), the International 
Lending Supervision Act of 1983 (12 U.S.C. 3907), or section 38 of the 
FDI Act (12 U.S.C. 1831o), or any regulation thereunder, to meet and 
maintain a specific capital level for any capital measure.
    (2) Adequately capitalized if the bank:
    (i) Has a total risk-based capital ratio of 8.0 percent or greater; 
and
    (ii) Has a Tier 1 risk-based capital ratio of 4.0 percent or 
greater; and
    (iii) Has:
    (A) A leverage ratio of 4.0 percent or greater; or
    (B) A leverage ratio of 3.0 percent or greater if the bank is rated 
composite 1 under the CAMEL rating system in the most recent examination 
of the bank and is not experiencing or anticipating significant growth; 
and
    (iv) Does not meet the definition of a well capitalized bank.
    (3) Undercapitalized if the bank:
    (i) Has a total risk-based capital ratio that is less than 8.0 
percent; or
    (ii) Has a Tier 1 risk-based capital ratio that is less than 4.0 
percent; or
    (iii)(A) Except as provided in paragraph (b)(3)(iii)(B) of this 
section, has a leverage ratio that is less than 4.0 percent; or
    (B) Has a leverage ratio that is less than 3.0 percent if the bank 
is rated composite 1 under the CAMEL rating system in the most recent 
examination of the bank and is not experiencing or anticipating 
significant growth.
    (4) Significantly undercapitalized if the bank has:
    (i) A total risk-based capital ratio that is less than 6.0 percent; 
or
    (ii) A Tier 1 risk-based capital ratio that is less than 3.0 
percent; or
    (iii) A leverage ratio that is less than 3.0 percent.
    (5) Critically undercapitalized if the insured depository 
institution has a ratio of tangible equity to total assets that is equal 
to or less than 2.0 percent.
    (c) Capital categories for insured branches of foreign banks. For 
purposes of the provisions of section 38 and this subpart, an insured 
branch of a foreign bank shall be deemed to be:
    (1) Well capitalized if the insured branch:
    (i) Maintains the pledge of assets required under Sec. 347.210 of 
this chapter; and
    (ii) Maintains the eligible assets prescribed under Sec. 347.211 of 
this chapter at 108 percent or more of the preceding quarter's average 
book value of the insured branch's third-party liabilities; and
    (iii) Has not received written notification from:
    (A) The OCC to increase its capital equivalency deposit pursuant to 
12 CFR 28.15(b), or to comply with asset maintenance requirements 
pursuant to 12 CFR 28.20; or
    (B) The FDIC to pledge additional assets pursuant to Sec. 347.210 of 
this chapter or to maintain a higher ratio of eligible assets pursuant 
to Sec. 347.211 of this chapter.

[[Page 180]]

    (2) Adequately capitalized if the insured branch:
    (i) Maintains the pledge of assets required under Sec. 347.210 of 
this chapter; and
    (ii) Maintains the eligible assets prescribed under Sec. 347.211 of 
this chapter at 106 percent or more of the preceding quarter's average 
book value of the insured branch's third-party liabilities; and
    (iii) Does not meet the definition of a well capitalized insured 
branch.
    (3) Undercapitalized if the insured branch:
    (i) Fails to maintain the pledge of assets required under 
Sec. 347.210 of this chapter; or
    (ii) Fails to maintain the eligible assets prescribed under 
Sec. 347.211 of this chapter at 106 percent or more of the preceding 
quarter's average book value of the insured branch's third-party 
liabilities.
    (4) Significantly undercapitalized if it fails to maintain the 
eligible assets prescribed under Sec. 347.211 of this chapter at 104 
percent or more of the preceding quarter's average book value of the 
insured branch's third-party liabilities.
    (5) Critically undercapitalized if it fails to maintain the eligible 
assets prescribed under Sec. 347.211 of this chapter at 102 percent or 
more of the preceding quarter's average book value of the insured 
branch's third-party liabilities.
    (d) Reclassifications based on supervisory criteria other than 
capital. The FDIC may reclassify a well capitalized bank as adequately 
capitalized and may require an adequately capitalized bank or an 
undercapitalized bank to comply with certain mandatory or discretionary 
supervisory actions as if the bank were in the next lower capital 
category (except that the FDIC may not reclassify a significantly 
undercapitalized bank as critically undercapitalized) (each of these 
actions are hereinafter referred to generally as ``reclassifications'') 
in the following circumstances:
    (1) Unsafe or unsound condition. The FDIC has determined, after 
notice and opportunity for hearing pursuant to Sec. 308.202(a) of this 
chapter, that the bank is in unsafe or unsound condition; or
    (2) Unsafe or unsound practice. The FDIC has determined, after 
notice and opportunity for hearing pursuant to Sec. 308.202(a) of this 
chapter, that, in the most recent examination of the bank, the bank 
received and has not corrected a less-than-satisfactory rating for any 
of the categories of asset quality, management, earnings, or liquidity.

[57 FR 44900, Sept. 29, 1992, as amended at 63 FR 17074, Apr. 8, 1998]



Sec. 325.104  Capital restoration plans.

    (a) Schedule for filing plan--(1) In general. A bank shall file a 
written capital restoration plan with the appropriate FDIC regional 
director within 45 days of the date that the bank receives notice or is 
deemed to have notice that the bank is undercapitalized, significantly 
undercapitalized, or critically undercapitalized, unless the FDIC 
notifies the bank in writing that the plan is to be filed within a 
different period. An adequately capitalized bank that has been required 
pursuant to Sec. 325.103(d) of this subpart to comply with supervisory 
actions as if the bank were undercapitalized is not required to submit a 
capital restoration plan solely by virtue of the reclassification.
    (2) Additional capital restoration plans. Notwithstanding paragraph 
(a)(1) of this section, a bank that has already submitted and is 
operating under a capital restoration plan approved under section 38 and 
this subpart is not required to submit an additional capital restoration 
plan based on a revised calculation of its capital measures or a 
reclassification of the institution under Sec. 325.103 unless the FDIC 
notifies the bank that it must submit a new or revised capital plan. A 
bank that is notified that it must submit a new or revised capital 
restoration plan shall file the plan in writing with the appropriate 
FDIC regional director within 45 days of receiving such notice, unless 
the FDIC notifies the bank in writing that the plan must be filed within 
a different period.
    (b) Contents of plan. All financial data submitted in connection 
with a capital restoration plan shall be prepared in accordance with the 
instructions provided on the Call Report, unless the FDIC instructs 
otherwise. The capital

[[Page 181]]

restoration plan shall include all of the information required to be 
filed under section 38(e)(2) of the FDI Act. A bank that is required to 
submit a capital restoration plan as a result of a reclassification of 
the bank pursuant to Sec. 325.103(d) of this subpart shall include a 
description of the steps the bank will take to correct the unsafe or 
unsound condition or practice. No plan shall be accepted unless it 
includes any performance guarantee described in section 38(e)(2)(C) of 
the FDI Act by each company that controls the bank.
    (c) Review of capital restoration plans. Within 60 days after 
receiving a capital restoration plan under this subpart, the FDIC shall 
provide written notice to the bank of whether the plan has been 
approved. The FDIC may extend the time within which notice regarding 
approval of a plan shall be provided.
    (d) Disapproval of capital plan. If a capital restoration plan is 
not approved by the FDIC, the bank shall submit a revised capital 
restoration plan within the time specified by the FDIC. Upon receiving 
notice that its capital restoration plan has not been approved, any 
undercapitalized bank (as defined in Sec. 325.103(b) of this subpart) 
shall be subject to all of the provisions of section 38 and this subpart 
applicable to significantly undercapitalized institutions. These 
provisions shall be applicable until such time as a new or revised 
capital restoration plan submitted by the bank has been approved by the 
FDIC.
    (e) Failure to submit capital restoration plan. A bank that is 
undercapitalized (as defined in Sec. 325.103(b) of this subpart) and 
that fails to submit a written capital restoration plan within the 
period provided in this section shall, upon the expiration of that 
period, be subject to all of the provisions of section 38 and this 
subpart applicable to significantly undercapitalized institutions.
    (f) Failure to implement capital restoration plan. Any 
undercapitalized bank that fails in any material respect to implement a 
capital restoration plan shall be subject to all of the provisions of 
section 38 and this subpart applicable to significantly undercapitalized 
institutions.
    (g) Amendment of capital restoration plan. A bank that has filed an 
approved capital restoration plan may, after prior written notice to and 
approval by the FDIC, amend the plan to reflect a change in 
circumstance. Until such time as a proposed amendment has been approved, 
the bank shall implement the capital restoration plan as approved prior 
to the proposed amendment.
    (h) Performance guarantee by companies that control a bank--(1) 
Limitation on liability--(i) Amount limitation. The aggregate liability 
under the guarantee provided under section 38 and this subpart for all 
companies that control a specific bank that is required to submit a 
capital restoration plan under this subpart shall be limited to the 
lesser of:
    (A) An amount equal to 5.0 percent of the bank's total assets at the 
time the bank was notified or deemed to have notice that the bank was 
undercapitalized; or
    (B) The amount necessary to restore the relevant capital measures of 
the bank to the levels required for the bank to be classified as 
adequately capitalized, as those capital measures and levels are defined 
at the time that the bank initially fails to comply with a capital 
restoration plan under this subpart.
    (ii) Limit on duration. The guarantee and limit of liability under 
section 38 and this subpart shall expire after the FDIC notifies the 
bank that it has remained adequately capitalized for each of four 
consecutive calendar quarters. The expiration or fulfillment by a 
company of a guarantee of a capital restoration plan shall not limit the 
liability of the company under any guarantee required or provided in 
connection with any capital restoration plan filed by the same bank 
after expiration of the first guarantee.
    (iii) Collection on guarantee. Each company that controls a given 
bank shall be jointly and severally liable for the guarantee for such 
bank as required under section 38 and this subpart, and the FDIC may 
require and collect payment of the full amount of that guarantee from 
any or all of the companies issuing the guarantee.

[[Page 182]]

    (2) Failure to provide guarantee. In the event that a bank that is 
controlled by any company submits a capital restoration plan that does 
not contain the guarantee required under section 38(e)(2) of the FDI 
Act, the bank shall, upon submission of the plan, be subject to the 
provisions of section 38 and this subpart that are applicable to banks 
that have not submitted an acceptable capital restoration plan.
    (3) Failure to perform guarantee. Failure by any company that 
controls a bank to perform fully its guarantee of any capital plan shall 
constitute a material failure to implement the plan for purposes of 
section 38(f) of the FDI Act. Upon such failure, the bank shall be 
subject to the provisions of section 38 and this subpart that are 
applicable to banks that have failed in a material respect to implement 
a capital restoration plan.



Sec. 325.105  Mandatory and discretionary supervisory actions under section 38.

    (a) Mandatory supervisory actions--(1) Provisions applicable to all 
banks. All banks are subject to the restrictions contained in section 
38(d) of the FDI Act on payment of capital distributions and management 
fees.
    (2) Provisions applicable to undercapitalized, significantly 
undercapitalized, and critically undercapitalized banks. Immediately 
upon receiving notice or being deemed to have notice, as provided in 
Sec. 325.102 of this subpart, that the bank is undercapitalized, 
significantly undercapitalized, or critically undercapitalized, the bank 
shall become subject to the provisions of section 38 of the FDI Act:
    (i) Restricting payment of capital distributions and management fees 
(section 38(d));
    (ii) Requiring that the FDIC monitor the condition of the bank 
(section 38(e)(1));
    (iii) Requiring submission of a capital restoration plan within the 
schedule established in this subpart (section 38(e)(2));
    (iv) Restricting the growth of the bank's assets (section 38(e)(3)); 
and
    (v) Requiring prior approval of certain expansion proposals (section 
38(e)(4)).
    (3) Additional provisions applicable to significantly 
undercapitalized, and critically undercapitalized banks. In addition to 
the provisions of section 38 of the FDI Act described in paragraph 
(a)(2) of this section, immediately upon receiving notice or being 
deemed to have notice, as provided in Sec. 325.102 of this subpart, that 
the bank is significantly undercapitalized, or critically 
undercapitalized, or that the bank is subject to the provisions 
applicable to institutions that are significantly undercapitalized 
because the bank failed to submit or implement in any material respect 
an acceptable capital restoration plan, the bank shall become subject to 
the provisions of section 38 of the FDI Act that restrict compensation 
paid to senior executive officers of the institution (section 38(f)(4)).
    (4) Additional provisions applicable to critically undercapitalized 
institutions. (i) In addition to the provisions of section 38 of the FDI 
Act described in paragraphs (a)(2) and (a)(3) of this section, 
immediately upon receiving notice or being deemed to have notice, as 
provided in Sec. 325.102 of this subpart, that the insured depository 
institution is critically undercapitalized, the institution is 
prohibited from doing any of the following without the FDIC's prior 
written approval:
    (A) Entering into any material transaction other than in the usual 
course of business, including any investment, expansion, acquisition, 
sale of assets, or other similar action with respect to which the 
depository institution is required to provide notice to the appropriate 
Federal banking agency;
    (B) Extending credit for any highly leveraged transaction;
    (C) Amending the institution's charter or bylaws, except to the 
extent necessary to carry out any other requirement of any law, 
regulation, or order;
    (D) Making any material change in accounting methods;
    (E) Engaging in any covered transaction (as defined in section 
23A(b) of the Federal Reserve Act (12 U.S.C. 371c(b));
    (F) Paying excessive compensation or bonuses;
    (G) Paying interest on new or renewed liabilities at a rate that 
would

[[Page 183]]

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 areas; and
    (H) Making any principal or interest payment on subordinated debt 
beginning 60 days after becoming critically undercapitalized except that 
this restriction shall not apply, until July 15, 1996, with respect to 
any subordinated debt outstanding on July 15, 1991, and not extended or 
otherwise renegotiated after July 15, 1991.
    (ii) In addition, the FDIC may further restrict the activities of 
any critically undercapitalized institution to carry out the purposes of 
section 38 of the FDI Act.
    (5) Exception for certain savings associations. The restrictions in 
paragraph (a)(4) of this section shall not apply, before July 1, 1994, 
to any insured savings association if:
    (i) The savings association had submitted a plan meeting the 
requirements of section 5(t)(6)(A)(ii) of the Home Owners' Loan Act (12 
U.S.C. 1464(t)(6)(A)(ii)) prior to December 19, 1991;
    (ii) The Director of OTS had accepted the plan prior to December 19, 
1991; and
    (iii) The savings association remains in compliance with the plan or 
is operating under a written agreement with the appropriate federal 
banking agency.
    (b) Discretionary supervisory actions. In taking any action under 
section 38 that is within the FDIC's discretion to take in connection 
with:
    (1) An insured depository institution that is deemed to be 
undercapitalized, significantly undercapitalized, or critically 
undercapitalized, or has been reclassified as undercapitalized, or 
significantly undercapitalized; or
    (2) An officer or director of such institution, the FDIC shall 
follow the procedures for issuing directives under Secs. 308.201 and 
308.203 of this chapter, unless otherwise provided in section 38 or this 
subpart.

    Appendix A to Part 325--Statement of Policy on Risk-Based Capital

    Capital adequacy is one of the critical factors that the FDIC is 
required to analyze when taking action on various types of applications 
and when conducting supervisory activities related to the safety and 
soundness of individual banks and the banking system. In view of this, 
the FDIC's Board of Directors has adopted part 325 of its regulations, 
which sets forth (1) minimum standards of capital adequacy for insured 
state nonmember banks and (2) standards for determining when an insured 
bank is in an unsafe or unsound condition by reason of the amount of its 
capital.
    This capital maintenance regulation was designed to establish, in 
conjunction with other Federal bank regulatory agencies, uniform capital 
standards for all federally-regulated banking organizations, regardless 
of size. The uniform capital standards were based on ratios of capital 
to total assets. While those leverage ratios have served as a useful 
tool for assessing capital adequacy, the FDIC believes there is a need 
for a capital measure that is more explicitly and systematically 
sensitive to the risk profiles of individual banks. As a result, the 
FDIC's Board of Directors has adopted this Statement of Policy on Risk-
Based Capital to supplement the part 325 regulation. This statement of 
policy does not replace or eliminate the existing part 325 capital-to-
total assets leverage ratios. Once the risk-based capital framework is 
implemented, the FDIC will consider whether the part 325 definitions of 
capital for leverage purposes and the minimum leverage ratios should be 
amended.
    The framework set forth in this statement of policy consists of (1) 
a definition of capital for risk-based capital purposes, (2) a system 
for calculating risk-weighted assets by assigning assets and off-balance 
sheet items to broad risk categories, and (3) a schedule, which includes 
transitional arrangements during a phase-in period, for achieving a 
minimum supervisory ratio of capital to risk weighted assets. A bank's 
risk-based capital ratio is calculated by dividing its qualifying total 
capital base (the numerator of the ratio) by its risk-weighted assets 
(the denominator).\1\ Table I outlines the definition of capital and 
provides a general explanation of how the risk-based capital ratio is 
calculated, Table II summarizes the risk weights and risk categories, 
and Table III sets forth the credit conversation factors for off-balance 
sheet items. Additional explanations of the capital definitions, the 
risk-weighted asset calculations, and the minimum risk-based capital 
ratio guidelines are provided in Sections I, II and III of this 
statement of policy.
---------------------------------------------------------------------------

    \1\ Period-end amounts, rather than average balances, normally will 
be used when calculating risk-based capital ratios. However, on a case-
by-case basis, ratios based on average balances may also be required if 
supervisory concerns render it appropriate.

---------------------------------------------------------------------------

[[Page 184]]

    In addition, when certain banks that engage in trading activities 
calculate their risk-based capital ratio under this appendix A, they 
must also refer to appendix C of this part, which incorporates capital 
charges for certain market risks into the risk-based capital ratio. When 
calculating their risk-based capital ratio under this appendix A, such 
banks are required to refer to appendix C of this part for supplemental 
rules to determine qualifying and excess capital, calculate risk-
weighted assets, calculate market risk equivalent assets and add them to 
risk-weighted assets, and calculate risk-based capital ratios as 
adjusted for market risk.
    This statement of policy applies to all FDIC-insured state-chartered 
banks (excluding insured branches of foreign banks) that are not members 
of the Federal Reserve System, hereafter referred to as state nonmember 
banks, regardless of size, and to all circumstances in which the FDIC is 
required to evaluate the capital of a banking organization. Therefore, 
the risk-based capital framework set forth in this statement of policy 
will be used in the examination and supervisory process as well as in 
the analysis of applications that the FDIC is required to act upon.
    The risk-based capital ratio focuses principally on broad categories 
of credit risk, however, the ratio does not take account of many other 
factors that can affect a bank's financial condition. These factors 
include overall interest rate risk exposure, liquidity, funding and 
market risks; the quality and level of earnings; investment, loan 
portfolio, and other concentrations of credit risk, certain risks 
arising from nontraditional activities; the quality of loans and 
investments; the effectiveness of loan and investment policies; and 
management's overall ability to monitor and control financial and 
operating risks, including the risk presented by concentrations of 
credit and nontraditional activities. In addition to evaluating capital 
ratios, an overall assessment of capital adequacy must take account of 
each of these other factors, including, in particular, the level and 
severity of problem and adversely classified assets as well as a bank's 
interest rate risk as measured by the bank's exposure to declines in the 
economic value of its capital due to changes in interest rates. For this 
reason, the final supervisory judgment on a bank's capital adequacy may 
differ significantly from the conclusions that might be drawn solely 
from the absolute level of the bank's risk-based capital ratio.
    In light of these other considerations, banks generally are expected 
to operate above the minimum risk-based capital ratio. Banks 
contemplating significant expansion plans, as well as those institutions 
with high or inordinate levels of risk, should hold capital commensurate 
with the level and nature of the risks to which they are exposed.

        I. Definition of Capital for the Risk-Based Capital Ratio

    A bank's qualifying total capital base consists of two types of 
capital elements: core capital elements (Tier 1) and supplementary 
capital elements (Tier 2). To qualify as an element of Tier 1 or Tier 2 
capital, a capital instrument should not contain or be subject to any 
conditions, covenants, terms, restrictions, or provisions that are 
inconsistent with safe and sound banking practices.

          A. The Components of Qualifying Capital (see Table I)

    1. Core capital elements (Tier 1) consists of:
--Common stockholders' equity capital (includes common stock and related 
surplus, undivided profits, disclosed capital reserves that represent a 
segregation of undivided profits, and foreign currency translation 
adjustments, less net unrealized holding losses on available-for-sale 
equity securities with readily determinable fair values);
--Noncumulative perpetual preferred stock,\2\ including any related 
surplus; and
---------------------------------------------------------------------------

    \2\ Preferred stock issues where the dividend is reset periodically 
based, in whole or in part, upon the bank's current credit standing, 
including but not limited to, auction rate, money market or remarketable 
preferred stock, are assigned to Tier 2 capital, regardless of whether 
the dividends are cumulative or noncumulative.
---------------------------------------------------------------------------

--Minority interests in the equity capital accounts of consolidated 
subsidiaries.

    At least 50 percent of the qualifying total capital base should 
consist of Tier 1 capital. Core (Tier 1) capital is defined as the sum 
of core capital elements \3\ minus all intangible assets other than 
mortgage servicing assets, nonmortgage servicing assets and purchased 
credit card relationships \4\ and minus any disallowed deferred tax 
assets.
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    \3\ In addition to the core capital elements, Tier 1 may also 
include certain supplementary capital elements during the transition 
period subject to certain limitations set forth in section III of this 
statement of policy.
    \4\ An exception is allowed for intangible assets that are 
explicitly approved by the FDIC as part of the bank's regulatory capital 
on a specific case basis. These intangibles will be included in capital 
for risk-based capital purposes under the terms and conditions that are 
specifically approved by the FDIC.
---------------------------------------------------------------------------

    Although nonvoting common stock noncumulative perpetual preferred 
stock, and minority interests in the equity capital accounts of 
consolidated subsidiaries are normally included in Tier 1 capital, 
voting common stockholders' equity generally will be expected to be the 
dominant form of Tier 1

[[Page 185]]

capital. Thus, banks should avoid undue reliance on nonvoting equity, 
preferred stock and minority interests.
    Although minority interests in consolidated subsidiaries are 
generally included in regulatory capital, exceptions to this general 
rule will be made if the minority interests fail to provide meaningful 
capital support to the consolidated bank. Such a situation could arise 
if the minority interests are entitled to a preferred claim on 
essentially low risk assets of the subsidiary. Similarly, although 
intangible assets in the form of mortgage servicing assets, nonmortgage 
servicing assets and purchased credit card relationships are generally 
recognized for risk-based capital purposes, the deduction of part or all 
of the mortgage servicing assets, nonmortgage servicing assets and 
purchased credit card relationships may be required if the carrying 
amounts of these rights are excessive in relation to their market value 
or the level of the bank's capital accounts. Mortgage servicing assets, 
nonmortgage servicing assets and purchased credit card relationships 
that do not meet the conditions, limitations and restrictions described 
in 12 CFR 325.5(f) will not be recognized for risk-based capital 
purposes.
    2. Supplementary capital elements (Tier 2) consist of:
    i. Allowance for loan and lease losses, up to a maximum of 1.25 
percent of risk-weighted assets;
    ii. Cumulative perpetual preferred stock, long-term preferred stock 
(original maturity of at least 20 years), and any related surplus;
    iii. Perpetual preferred stock (and any related surplus) where the 
dividend is reset periodically based, in whole or part, on the bank's 
current credit standing, regardless of whether the dividends are 
cumulative or noncumulative;
    iv. Hybrid capital instruments, including mandatory convertible debt 
securities;
    v. Term subordinated debt and intermediate-term preferred stock 
(original average maturity of five years or more) and any related 
surplus; and
    vi. Net unrealized holding gains on equity securities (subject to 
the limitations discussed in paragraph I.A.2.(f) of this section).
    The maximum amount of Tier 2 capital that may be recognized for 
risk-based capital purposes is limited to 100 percent of Tier 1 capital 
(after any deductions for disallowed intangibles and disallowed deferred 
tax assets). In addition, the combined amount of term subordinated debt 
and intermediate-term preferred stock that may be treated as part of 
Tier 2 capital for risk-based capital purposes is limited to 50 percent 
of Tier 1 capital. Amounts in excess of these limits may be issued but 
are not included in the calculation of the risk-based capital ratio.
    (a) Allowance for loan and lease losses. Allowances for loan and 
lease losses are reserves that have been established through a charge 
against earnings to absorb future losses on loans or lease financing 
receivables. Allowances for loan and lease losses exclude allocated 
transfer risk reserves, \5\ and reserves created against identified 
losses.
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    \5\ Allocated transfer risk reserves are reserves that have been 
established in accordance with section 905(a) of the International 
Lending Supervision Act of 1983 against certain assets whose value has 
been found by the U.S. supervisory authorities to have been 
significantly impaired by protracted transfer risk problems.
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    This risk-based capital framework provides a phasedown during the 
transition period of the extent to which the allowance for loan and 
lease losses may be included in an institution's capital base. By year-
end 1990, the allowance for loan and lease losses, as an element of 
supplementary capital, may constitute no more than 1.5 percent of risk-
weighted assets and, by year-end 1992, no more than 1.25 percent of 
risk-weighted assets.\6\
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    \6\ The amount of the allowance for loan and lease losses that may 
be included as a supplementary capital element is based on a percentage 
of gross risk-weighted assets. A bank may deduct reserves for loan and 
lease losses that are in excess of the amount permitted to be included 
in capital, as well as allocated transfer risk reserves, from gross 
risk-weighted assets when computing the denominator of the risk-based 
capital ratio.
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    (b) Preferred stock. Perpetual preferred stock is defined as 
preferred stock that does not have a maturity date, that cannot be 
redeemed at the option of the holder, and that has no other provisions 
that will require future redemption of the issue. Long-term preferred 
stock includes limited-life preferred stock with an original maturity of 
20 years or more, provided that the stock cannot be redeemed at the 
option of the holder prior to maturity, except with the prior approval 
of the FDIC.
    Cumulative perpetual preferred stock and long-term preferred stock 
qualify for inclusion in supplementary capital provided that the 
instruments can absorb losses while the issuer operates as a going 
concern (a fundamental characteristic of equity capital) and provided 
the issuer has the option to defer payment of dividends on these 
instruments. Given these conditions, and the perpetual or long-term 
nature of the intruments, there is no limit on the amount of these 
preferred stock instruments that may be included with Tier 2 capital.
    Noncumulative perpetual preferred stock where the dividend is reset 
periodically based, in whole or in part, on the bank's current credit 
standing, including auction rate, money market, or remarketable 
preferred

[[Page 186]]

stock, are also assigned to Tier 2 capital without limit, provided the 
above conditions are met.
    (c) Hybrid capital instruments. Hybrid capital instruments include 
instruments that have certain characteristics of both debt and equity. 
In order to be included as supplementary capital elements, these 
instruments should meet the following criteria:
    (1) The instrument should be unsecured, subordinated to the claims 
of depositors and general creditors, and fully paid-up.
    (2) The instrument should not be redeemable at the option of the 
holder prior to maturity, except with the prior approval of the FDIC. 
This requirement implies that holders of such instruments may not 
accelerate the payment of principal except in the event of bankruptcy, 
insolvency, or reorganization.
    (3) The instrument should be available to participate in losses 
while the issuer is operating as a going concern. (Term subordinated 
debt would not meet this requirement.) To satisfy this requirement, the 
instrument should convert to common or perpetual preferred stock in the 
event that the sum of the undivided profits and capital surplus accounts 
of the issuer results in a negative balance.
    (4) The instrument should provide the option for the issuer to defer 
principal and interest payments if: (a) The issuer does not report a 
profit in the preceding annual period, defined as combined profits 
(i.e., net income) for the most recent four quarters, and (b) the issuer 
eliminates cash dividends on its common and preferred stock.
    Mandatory convertible debt securities, which are subordinated debt 
instruments that require the issuer to convert such instruments into 
common or perpetual preferred stock by a date at or before the maturity 
of the debt instruments, will qualify as hybrid capital instruments 
provided the maturity of these instruments is 12 years or less and the 
instruments meet the criteria set forth below for ``term subordinated 
debt.'' There is no limit on the amount of hybrid capital instruments 
that may be included within Tier 2 capital.
    (d) Term subordinated debt and intermediate-term preferred stock. 
The aggregate amount of term subordinated debt (excluding mandatory 
convertible debt securities) and intermediate-term preferred stock 
(including any related surplus) that may be treated as Tier 2 capital 
for risk-based capital purposes is limited to 50 percent of Tier 1 
capital. Term subordinated debt and intermediate-term preferred stock 
should have an original average maturity of at least five years to 
qualify as supplementary capital and should not be redeemable at the 
option of the holder prior to maturity, except with the prior approval 
of the FDIC. For state nonmember banks, a term subordinated debt 
instrument is an obligation other than a deposit obligation that:
    (1) Bears on its face, in boldface type, the following: This 
obligation is not a deposit and is not insured by the Federal Deposit 
Insurance Corporation;
    (2)(i) Has a maturity of at least five years; or
    (ii) In the case of an obligation or issue that provides for 
scheduled repayments of principal, has an average maturity of at least 
five years; provided that the Director of the Division of Supervision 
may permit the issuance of an obligation or issue with a shorter 
maturity or average maturity if the Director has determined that exigent 
circumstances require the issuance of such obligation or issue; provided 
further that the provisions of this paragraph I.A.2.(d)(2) shall not 
apply to mandatory convertible debt obligations or issues;
    (3) States express that the obligation:
    (i) Is subordinated and junior in right of payment to the issuing 
bank's obligations to its depositors and to the bank's other obligations 
to its general and secured creditors; and
    (ii) Is ineligible as collateral for a loan by the issuing bank;
    (4) Is unsecured;
    (5) States expressly that the issuing bank may not retire any part 
of its obligation without the prior written consent of the FDIC or other 
primary federal regulator; and
    (6) Includes, if the obligation is issued to a depository 
institution, a specific waiver of the right of offset by the lending 
depository institution.

Subordinated debt obligations issued prior to December 2, 1987 that 
satisfied the definition of the term ``subordinated note and debenture'' 
that was in effect prior to that date also will be deemed to be term 
subordinated debt for risk-based capital purposes. An optional 
redemption (``call'') provision in a subordinated debt instrument that 
is exercisable by the issuing bank in less than five years will not be 
deemed to constitute a maturity of less than five years, provided that 
the obligation otherwise has a stated contractual maturity of at least 
five years; the call is exercisable solely at the discretion or option 
of the issuing bank, and not at the discretion or option of the holder 
of the obligation; and the call is exercisable only with the express 
prior written consent of the FDIC under 12 U.S.C. 1828(i)(1) at the time 
early redemption or retirement is sought, and such consent has not been 
given in advance at the time of issuance of the obligation. Optional 
redemption provisions will be accorded similar treatment when 
determining the perpetual nature and/or maturity of preferred stock and 
other capital instruments.
    (e) Discount of limited-life supplementary capital instruments. As a 
limited-life capital instrument approaches maturity, the instrument 
begins to take on charcteristics of a

[[Page 187]]

short-term obligation and becomes less like a component of capital. 
Therefore, for risk-based capital purposes, the outstanding amount of 
term subordinated debt and limited-life preferred stock eligible for 
inclusion in capital will be adjusted downward, or discounted, as the 
instruments approach maturity. Each limited-life capital instrument will 
be discounted by reducing the outstanding amount of the capital 
instrument eligible for inclusion as supplementary capital by a fifth of 
the original amount (less redemptions) each year during the instrument's 
last five years before maturity. Such instruments, therefore, will have 
no capital value when they have a remaining maturity of less than a 
year.
    (f) Unrealized gains on equity securities and unrealized gains 
(losses) on other assets. Up to 45 percent of pretax net unrealized 
holding gains (that is, the excess, if any, of the fair value over 
historical cost) on available-for-sale equity securities with readily 
determinable fair values may be included in supplementary capital. 
However, the FDIC may exclude all or a portion of these unrealized gains 
from Tier 2 capital if the FDIC determines that the equity securities 
are not prudently valued. Unrealized gains (losses) on other types of 
assets, such as bank premises and available-for-sale debt securities, 
are not included in supplementary capital, but the FDIC may take these 
unrealized gains (losses) into account as additional factors when 
assessing a bank's overall capital adequacy.

            B. Deductions from Capital and Other Adjustments

    Certain assets are deducted from a bank's capital base for the 
purpose of calculating the numerator of the risk-based capital ratio.\7\ 
These assets include:
---------------------------------------------------------------------------

    \7\ Any assets deducted from capital when computing the numerator of 
the risk-based capital ratio will also be excluded from risk-weighted 
assets when computing the denominator of the ratio.
---------------------------------------------------------------------------

    (1) All intangible assets other than mortgage servicing assets, 
nonmortgage servicing assets and purchased credit card relationships.\8\ 
These disallowed intangibles are deducted from the core capital (Tier 1) 
elements.
---------------------------------------------------------------------------

    \8\ In addition to mortgage servicing assets, nonmortgage servicing 
assets and purchased credit card relationships, certain other 
intangibles may be allowed if explicitly approved by the FDIC as part of 
the bank's regulatory capital on a specific case basis. In evaluating 
whether other types of intangibles should be recognized for regulatory 
capital purposes on a specific case basis, the FDIC will accord special 
attention to the general characteristics of the intangibles, including: 
(1) The separability of the intangible asset and the ability to sell it 
separate and apart from the bank or the bulk of the bank's assets, (2) 
the certainty that a readily identifiable stream of cash flows 
associated with the intangible asset can hold its value notwithstanding 
the future prospects of the bank, and (3) the existence of a market of 
sufficient depth to provide liquidity for the intangible asset.
---------------------------------------------------------------------------

    (2) Investments in unconsolidated banking and finance 
subsidiaries.\9\ This includes any equity or debt capital investments in 
banking or finance subsidaries if the subsidiaries are not consolidated 
for regulatory capital requirements.\10\ Generally, these investments

[[Page 188]]

include equity and debt capital securities and any other instruments or 
commitments that are deemed to be capital of the subsidiary. These 
investments are deducted from the bank's total (Tier 1 plus Tier 2) 
capital base.
---------------------------------------------------------------------------

    \9\ For risk-based capital purposes, these subsidiaries are 
generally defined as any company that is primarily engaged in banking or 
finance and in which the bank, either directly or indirectly, owns more 
than 50 percent of the outstanding voting stock but does not consolidate 
the company for regulatory capital purposes. In addition to investments 
in unconsolidated banking and finance subsidiaries, the FDIC may, on a 
case-by-case basis, deduct investments in associated companies or joint 
ventures, which are generally defined as any companies in which the 
bank, either directly or indirectly, owns 20 to 50 percent of the 
outstanding voting stock. Alternatively, the FDIC may, in certain cases, 
apply an appropriate risk-weighted capital charge against a bank's 
proportionate interest in the assets of associated companies and joint 
ventures. The definitions for subsidiaries, associated companies and 
joint ventures are contained in the instructions for the preparation of 
the Consolidated Reports of Condition and Income.
    \10\ Consolidation requirements for regulatory capital purposes 
generally follow the consolidation requirements set forth in the 
instructions for preparation of the consolidated Reports of Condition 
and Income. However, although investments in subsidiaries representing 
majority ownership in another Federally-insured depository institution 
are not consolidated for purposes of the consolidated Reports of 
Condition and Income that are filed by the parent bank, they are 
generally consolidated for purposes of determining FDIC regulatory 
capital requirements. Therefore, investments in these depository 
institution subsidiaries generally will not be deducted for risk-based 
capital purposes; rather, assets and liabilities of such subsidiaries 
will be consolidated with those of the parent bank when calculating the 
risk-based capital ratio. In addition, although securities subsidiaries 
established pursuant to 12 CFR 337.4 are consolidated for Report of 
Condition and Income purposes, they are not consolidated for regulatory 
capital purposes.
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    (3) Investments in securities subsidiaries established pursuant to 
12 CFR 337.4. The FDIC may also consider deducting investments in other 
subsidiaries, either on a case-by-case basis or, as with securities 
subsidiaries, based on the general characteristics or functional nature 
of the subsidiaries.
    (4) Reciprocal holdings of capital instruments of banks that 
represent intentional cross-holdings by the banks. These holdings are 
deducted from the bank's total capital base.
    (5) Deferred tax assets in excess of the limit set forth in 
Sec. 325.5(g). These disallowed deferred tax assets are deducted from 
the core capital (Tier 1) elements.
    On a case-by-case basis, and in conjunction with supervisory 
examinations, other deductions from capital may also be required, 
including any adjustments deemed appropriate for assets classified as 
loss.

            II. Procedures For Computing Risk-Weighted Assets

                          A. General Procedures

    Under the risk-based capital framework, a bank's balance sheet 
assets and credit equivalent amounts of off-balance sheet items are 
assigned to one of four broad risk categories according to the obligor 
or, if relevent, the guarantor or the nature of the collateral. The 
aggregate dollar amount in each category is then multiplied by the risk 
weight assigned to that category. The resulting weighted values from 
each of the four risk categories are added together and this sum is the 
risk-weighted assets total that, as adjusted.\11\ comprises the 
denominator of the risk-based capital ratio.
---------------------------------------------------------------------------

    \11\ Any asset deducted from a bank's capital accounts when 
computing the numerator of the risk-based capital ratio will also be 
excluded from risk-weighted assets when calculating the denominator for 
the ratio.
---------------------------------------------------------------------------

    The risk-weighted amounts for all off-balance sheet items are 
determined by a two-step process. First, the notional principal, or face 
value, amount of each off-balance sheet item generally is multiplied by 
a credit conversion factor to arrive at a balance sheet credit 
equivalent amount. Second, the credit equivalent amount generally is 
assigned to the appropriate risk category, like any balance sheet asset, 
according to the obligor or, if relevant, the guarantor or the nature of 
the collateral.

                         B. Other Considerations

    1. Indirect Holdings of Assets. Some of the assets on a bank's 
balance sheet may represent an indirect holding of a pool of assets; for 
example, mutual funds. An investment in shares of a mutual fund whose 
portfolio consists solely of various securities or money market 
instruments that, if held separately, would be assigned to different 
risk categories, generally is assigned to the risk category appropriate 
to the highest risk-weighted asset that the fund is permitted to hold in 
accordance with the stated investment objectives set forth in its 
prospectus. The bank may, at its option, assign the investment on a pro 
rata basis to different risk categories according to the investment 
limits in the fund's prospectus, but in no case will indirect holdings 
through shares in any mutual fund be assigned to a risk weight less than 
20 percent. If the bank chooses to assign its investment on a pro rata 
basis, and the sum of the investment limits in the fund's prospectus 
exceeds 100 percent, the bank must assign risk weights in descending 
order. If, in order to maintain a necessary degree of short-term 
liquidity, a fund is permitted to hold an insignificant amount of its 
assets in short-term, highly liquid securities of superior credit 
quality that do not qualify for a preferential risk weight, such 
securities will generally be disregarded in determining the risk 
category to which the bank's holdings in the overall fund should be 
assigned. The prudent use of hedging instruments by a mutual fund to 
reduce the risk of its assets will not increase the risk weighting of 
the mutual fund investment. For example, the use of hedging instruments 
by a mutual fund to reduce the interest rate risk of its government bond 
portfolio will not increase the risk weight of that fund above the 20 
percent category. Nonetheless, if the fund engages in any activities 
that appear speculative in nature or has any other characteristics that 
are inconsistent with the preferential risk weighting assigned to the 
fund's assets, holdings in the fund will be assigned to the 100 percent 
risk category.
    2. Collateral. In determining risk weights of various assets, the 
only forms of collateral that are formally recognized by the risk-based 
capital framework are cash on deposit in the lending bank; securities 
issued or guaranteed by the central governments of the OECD-based group 
of countries,\12\ U.S.

[[Page 189]]

Government agencies, or U.S. Government-sponsored agencies; and 
securities issued or guaranteed by multilateral lending institutions or 
regional development banks. Claims fully secured by such collateral are 
assigned to the 20 percent risk category. The extent to which these 
securities are recognized as collateral for risk-based capital purposes 
is determined by their current market value. If a claim is partially 
secured, the portion of the claim that is not covered by the collateral 
is assigned to the risk category appropriate to the obligor or, if 
relevant, the guarantor.
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    \12\ The OECD-based group of countries comprises all full members of 
the Organization for Economic Cooperation and Development (OECD) 
regardless of entry date, as well as countries that have concluded 
special lending arrangements with the International Monetary Fund (IMF) 
associated with the IMF's General Arrangements to Borrow, but excludes 
any country that has rescheduled its external sovereign debt within the 
previous five years. As of November 1995, the OECD included the 
following countries: Australia, Austria, Belgium, Canada, Denmark, 
Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, 
Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Portugal, 
Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United 
States; and Saudi Arabia had concluded special lending arrangements with 
the IMF associated with the IMF's General Arrangements to Borrow. A 
rescheduling of external sovereign debt generally would include any 
renegotiation of terms arising from a country's inability or 
unwillingness to meet its external debt service obligations, but 
generally would not include renegotiations of debt in the normal course 
of business, such as a renegotiation to allow the borrower to take 
advantage of a decline in interest rates or other change in market 
conditions.
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    3. Guarantees. Guarantees of the OECD and non-OECD central 
governments, U.S. Government agencies, U.S. Government-sponsored 
agencies, state and local governments of the OECD-based group of 
countries, multilateral lending institutions and regional development 
banks, U.S. depository institutions and foreign banks are also 
recognized. If a claim is partially guaranteed, the portion of the claim 
that is not fully covered by the guarantee is assigned to the risk 
category appropriate to the obligor or, if relevant, the collateral.
    4. Maturity. Maturity is generally not a factor in assigning items 
to risk categories with the exceptions of claims on non-OECD banks, 
commitments, and interest rate and foreign exchange rate related 
contracts. Except for commitments, short-term is defined as one year or 
less remaining maturity and long-term is defined as over one year 
remaining maturity. In the case of commitments, short-term is defined as 
one year or less original maturity and long-term is defined as over one 
year original maturity.\1\\3\
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    \1\\3\ Through year-end 1992, remaining rather than original 
maturity may be used for determining term to maturity for commitments.
---------------------------------------------------------------------------

    5. Mortgage-Backed Securities. Mortgage-backed securities, including 
pass-throughs and collateralized mortgage obligations (but not stripped 
mortgage-backed securities) that are issued or guaranteed by a U.S. 
Government agency or a U.S. Government-sponsored agency, normally are 
assigned to the risk weight category appropriate to the issuer or 
guarantor. Generally, a privately-issued mortgage-backed security is 
treated as essentially an indirect holding of the underlying assets, and 
assigned to the same risk category as the underlying assets, in 
accordance with the provisions and criteria spelled out in detail in the 
accompanying footnote; \1\\4\ however, such privately-issued mortgage-
backed securities may not be assigned to the zero percent risk category. 
Privately-issued mortgage-backed securities whose structures do not 
comply with the specified provisions set forth in the footnote are 
assigned to the 100 percent risk category. In addition, any class of a 
mortgage-backed security that can absorb more than its pro rata share of 
loss without the whole issue being in default (for example, a 
subordinated class or residual interest) will also be assigned to the 
100 percent risk weight category. All stripped mortgage-backed 
securities, including interest-only strips (IOs), principal-only strips 
(POs), and similar instruments, are assigned to the 100 percent risk 
weight category, regardless of the issuer or guarantor.
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    \1\\4\ A privately-issued mortgage-backed security may be treated as 
an indirect holding of the underlying assets provided that (1) the 
underlying assets are held by an independent trustee and the trustee has 
a first priority, perfected security interest in the underlying assets 
on behalf of the holders of the security, (2) either the holder of the 
security has an undivided pro rata ownership interest in the underlying 
mortgage assets or the trust or single purpose entity (or conduit) that 
issues the security has no liabilities unrelated to the issued 
securities, (3) the security is structured such that the cash flow from 
the underlying assets in all cases fully meets the cash flow 
requirements of the security without undue reliance on any reinvestment 
income, and (4) there is no material reinvestment risk associated with 
any funds awaiting distribution to the holders of the security. In 
addition, if the underlying assets of a mortgage-backed security are 
composed of more than one type of asset, the entire mortgage-backed 
security is generally assigned to the category appropriate to the 
highest risk-weighted asset underlying the issue.
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    6. Small Business Loans and Leases on Personal Property Transferred 
with Recourse--(a) Notwithstanding other provisions of this appendix A, 
a qualifying institution that has transferred small business loans and 
leases

[[Page 190]]

on personal property (small business obligations) with recourse shall 
include in risk-weighted assets only the amount of retained recourse, 
provided two conditions are met. First, the transaction must be treated 
as a sale under generally accepted accounting principles (GAAP) and, 
second, the qualifying institution must establish pursuant to GAAP a 
non-capital reserve sufficient to meet the institution's reasonably 
estimated liability under the recourse arrangement. Only loans and 
leases to businesses that meet the criteria for a small business concern 
established by the Small Business Administration under section 3(a) of 
the Small Business Act (15 U.S.C. 632(a)) are eligible for this capital 
treatment.
    (b) For purposes of this appendix A, a qualifying institution is a 
bank that is well capitalized. In addition, by order of the FDIC, a bank 
that is adequately capitalized may be deemed a qualifying institution. 
In determining whether a bank meets the qualifying institution criteria, 
the prompt corrective action well capitalized and adequately capitalized 
definitions set forth in Sec. 325.103 shall be used, except that the 
bank's capital ratios must be calculated without regard to the 
preferential capital treatment for transfers of small business 
obligations with recourse specified in section II.B.6.(a) of this 
appendix A. The total outstanding amount of recourse retained by a 
qualifying institution on transfers of small business obligations 
receiving the preferential capital treatment cannot exceed 15 percent of 
the institution's total risk-based capital. By order, the FDIC may 
approve a higher limit.
    (c) If a bank ceases to be a qualifying institution or exceeds the 
15 percent of capital limit under section II.B.6.(b) of this appendix A, 
the preferential capital treatment will continue to apply to any 
transfers of small business obligations with recourse that were 
consummated during the time the bank was a qualifying institution and 
did not exceed such limit.
    (d) The risk-based capital ratios of a bank shall be calculated 
without regard to the preferential capital treatment for transfers of 
small business obligations with recourse specified in paragraph (a) of 
this section for purposes of:
    (i) Determining whether a bank is adequately capitalized, 
undercapitalized, significantly undercapitalized, or critically 
undercapitalized under the prompt corrective action capital category 
definitions specified in Sec. 325.103; and
    (ii) Applying the prompt corrective action reclassification 
provisions specified in Sec. 325.103(d), regardless of the bank's 
capital level.

         C. Risk Weights for Balance Sheet Assets (see Table II)

    The risk-based capital framework contains four risk weight 
categories--0 percent, 20 percent, 50 percent and 100 percent. In 
general, if a particular item can be placed in more than one risk 
category, it is assigned to the category that has the lowest risk 
weight. An explanation of the components of each category follows:
    Category 1--Zero Percent Risk Weight. This category includes cash 
(domestic and foreign) owned and held in all offices of the bank or in 
transit; balances due from Federal Reserve Banks and central banks in 
other OECD countries; the portions of local currency claims on or 
unconditionally guaranteed by non-OECD central governments to the extent 
that the bank has liabilities booked in that currency; and gold bullion 
held in the bank's own vaults or in another bank's vaults on an 
allocated basis, to the extent it is offset by gold bullion 
liabilities.\1\\5\
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    \1\\5\ All other bullion holdings are to be assigned to the 100 
percent risk weight category.
---------------------------------------------------------------------------

    The zero percent risk category also includes direct claims \1\\6\ 
(including securities, loans, and leases) on, and the portions of claims 
that are unconditionally guaranteed by, OECD central governments \1\\7\ 
and U.S. Government agencies.\1\\8\ Federal Reserve Bank stock also is 
included in this category.
---------------------------------------------------------------------------

    \1\\6\ For purposes of determining the appropriate risk weights for 
this risk-based capital framework, the terms claims and securities refer 
to loans or other debt obligations of the entity on whom the claim is 
held. Investments in the form of stock or equity holdings in commercial 
or financial firms are generally assigned to the 100 percent risk 
category.
    \1\\7\ A central government is defined to include departments and 
ministries, including the central bank, of the central government. The 
U.S. central bank includes the 12 Federal Reserve Banks. The definition 
of central government does not include state, provincial or local 
governments or commercial enterprises owned by the central government. 
In addition, it does not include local government entities or commercial 
enterprises whose obligations are guaranteed by the central government. 
OECD central governments are defined as central governments of the OECD-
based group of countries. Non-OECD central governments are defined as 
central governments of countries that do not belong to the OECD-based 
group of countries.
    \1\\8\ For risk-based capital purposes U.S. Government agency is 
defined as an instrumentality of the U.S. Government whose debt 
obligations are fully and explicitly guaranteed as to the timely payment 
of principal and interest by the full faith and credit of the U.S. 
Government. These agencies include the Government National Mortgage 
Association (GNMA), the Veterans Administration (VA), the Federal 
Housing Administration (FHA), the Farmers Home Administration (FHA), the 
Export-Import Bank (Exim Bank), the Overseas Private Investment 
Corporation (OPIC), the Commodity Credit Corporation (CCC), and the 
Small Business Administration (SBA). U.S. Government agencies generally 
do not directly issue securities to the public; however, a number of 
U.S. Government agencies, such as GNMA, guarantee securities that are 
publicly held.

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[[Page 191]]

    Category 2--20 Percent Risk Weight. This category includes short-
term claims (including demand deposits) on, and portions of short-term 
claims that are guaranteed \19\ by, U.S. depository institutions \20\ 
and foreign banks;\21\ portions of claims collateralized by cash held in 
a segregated deposit account of the lending bank; cash items in process 
of collection, both foreign and domestic; and long-term claims on, and 
portions of long-term claims guaranteed by, U.S. depository institutions 
and OECD banks.\22\
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    \19\ Claims guaranteed by U.S. depository institutions and foreign 
banks include risk participations in both bankers acceptances and 
standby letters of credit, as well as participations in commitments, 
that are conveyed to other U.S. depository institutions or foreign 
banks.
    \20\ U.S. depository institutions are defined to include branches 
(foreign and domestic) of federally-insured banks and depository 
institutions chartered and headquartered in the 50 states of the United 
States, the District of Columbia, Puerto Rico, and U.S. territories and 
possessions. The definition encompasses banks, mutual or stock savings 
banks, savings or building and loan associations, cooperative banks, 
credit unions, international banking facilities of domestic depository 
institutions, and U.S.-chartered depository institutions owned by 
foreigners. However, this definition excludes branches and agencies of 
foreign banks located in the U.S. and bank holding companies.
    \21\ Foreign banks are distinguished as either OECD banks or non-
OECD banks. OECD banks include banks and their branches (foreign and 
domestic) organized under the laws of countries (other than the U.S.) 
that belong to the OECD-based group of countries. Non-OECD banks include 
banks and their branches (foreign and domestic) organized under the laws 
of countries that do not belong to the OECD-based group of countries. 
For risk-based capital purposes, a bank is defined as an institution 
that engages in the business of banking; is recognized as a bank by the 
bank supervisory or monetary authorities of the country of its 
organization or principal banking operations; receives deposits to a 
substantial extent in the regular course of business; and has the power 
to accept demand deposits.
    \22\ Long-term claims on, or guaranteed by, non-OECD banks and all 
claims on bank holding companies are assigned to the 100 percent risk 
weight category, as are holdings of bank-issued securities that qualify 
as capital of the issuing banks for risk-based capital purposes.
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    This category also includes claims on, or portions of claims 
guaranteed by, U.S. Government-sponsored agencies;\23\ and portions of 
claims (including repurchase agreements) collateralized by securities 
issued or guaranteed by OECD central governments, U.S. Government 
agencies, or U.S. Government-sponsored agencies. Also included in the 20 
percent risk category are portions of claims that are conditionally 
guaranteed by OECD central governments and U.S. Government agencies,\24\ 
as well as portions of local currency claims that are conditionally 
guaranteed by non-OECD central governments to the extent that the bank 
has liabilities booked in that currency.
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    \23\ For risk-based capital purposes, U.S. Government-sponsored 
agencies are defined as agencies originally established or chartered by 
the U.S. Government to serve public purposes specified by the U.S. 
Congress but whose debt obligations are not explicitly guaranteed by the 
full faith and credit of the U.S. Government. These agencies include the 
Federal Home Loan Mortgage Corporation (FHLMC), the Federal National 
Mortgage Association (FNMA), the Farm Credit System, the Federal Home 
Loan Bank System, and the Student Loan Marketing Association (SLMA). For 
risk-based capital purposes, claims on U.S. Government-sponsored 
agencies also include capital stock in a Federal Home Loan Bank that is 
held as a condition of membership in that Bank.
    \24\ For risk-based capital purposes, a conditional guarantee is 
deemed to exist if the validity of the guarantee by the OECD central 
government or the U.S. Government agency is dependent upon some 
affirmative action (e.g., servicing requirements on the part of the 
beneficiary of the guarantee). Portions of claims that are 
unconditionally guaranteed by OECD central governments or U.S. 
Government agencies are assigned to the zero percent risk category.
---------------------------------------------------------------------------

    General obligation claims on, or portions of claims guaranteed by, 
the full faith and credit of states or other political subdivisions of 
the United States or other countries of the OECD-based group are also 
assigned to

[[Page 192]]

this 20 percent risk category.\25\ In addition, this category includes 
claims on the International Bank for Reconstruction and Development 
(World Bank), International Finance Corporation the Inter-American 
Development Bank, the Asian Development Bank, the African Development 
Bank, the European Investment Bank, the European Bank for Reconstruction 
and Development, the Nordic Investment Bank, and other multilateral 
lending institutions or regional development institutions in which the 
U.S. Government is a shareholder or contributing member, as well as 
portions of claims guaranteed by such organizations or collateralized by 
their securities.
---------------------------------------------------------------------------

    \25\ Claims on, or guaranteed by, states or other political 
subdivisions of countries that do not belong to the OECD-based group of 
countries are to be placed in the 100 percent risk weight category.
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    Category 3--50 Percent Risk Weight. This category includes loans 
fully secured by first liens \26\ on one-to-four family residential 
properties, provided that such loans have been approved in accordance 
with prudent underwriting standards, including standards relating to the 
loan amount as a percent of the appraised value of the property,\27\ and 
provided that the loans are not past due 90 days or more or carried in 
nonaccrual status.\28\ The types of loans that qualify as loans secured 
by one-to-four family residential properties are listed in the 
instructions for preparation of the Consolidated Reports of Condition 
and Income. These properties may be either owner-occupied or rented. In 
addition, for risk-based capital purposes, loans secured by one-to-four 
family residential properties include loans to builders with substantial 
project equity for the construction of one-to-four family residences 
that have been presold under firm contracts to purchasers who have 
obtained firm commitments for permanent qualifying mortgage loans and 
have made substantial earnest money deposits. Such loans to builders 
will be considered prudently underwritten only if the bank has obtained 
sufficient documentation that the buyer of the home intends to purchase 
the home (i.e., has a legally binding written sales contract) and has 
the ability to obtain a mortgage loan sufficient to purchase the home 
(i.e., has a firm written commitment for permanent financing of the home 
upon completion), provided the following criteria are met:
    (1) The purchaser is an individual(s) who intends to occupy the 
residence and is not a partnership, joint venture, trust, corporation, 
or any other entity (including an entity acting as a sole 
proprietorship) that is purchasing one or more of the homes for 
speculative purposes;
    (2) The builder must incur at least the first ten percent of the 
direct costs (i.e., actual costs of the land, labor, and material) 
before any drawdown is made under the construction loan and the 
construction loan may not exceed 80 percent of the sales price of the 
presold home;
    (3) The purchaser has made a substantial ``earnest money deposit'' 
of no less than three percent of the sales price of the home and the 
deposit must be subject to forfeiture if the purchaser terminates the 
sales contract; and
    (4) The earnest money deposit must be held in escrow by the bank 
financing the builder or by an independent party in a fiduciary capacity 
and the escrow agreement must provide that, in the event of default 
arising from the cancellation of the sales contract by the buyer, the 
escrow funds must first be used to defray any costs incurred by the 
bank.
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    \26\ If a bank holds the first and junior lien(s) on a residential 
property and no other party holds an intervening lien, the transactions 
are treated as a single loan secured by a first lien for purposes of 
determining the loan-to-value ratio and assigning a risk weight.
---------------------------------------------------------------------------

    By order of the Board of Directors.
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    \27\ For risk-based capital purposes, the loan-to-value ratio 
generally is based upon the most current appraised value of the 
property. The appraisal should be performed in a manner consistent with 
the Federal banking agencies' real estate appraisal guidelines and with 
the bank's own appraisal guidelines.
    \28\ Real estate loans that do not meet all of the specified 
criteria or that are made for the purpose of property development are 
placed in the 100 percent risk category.
---------------------------------------------------------------------------

    This category also includes loans fully secured by first liens on 
multifamily residential properties,\29\ provided that:
---------------------------------------------------------------------------

    \29\ The types of loans that qualify as loans secured by multifamily 
residential properties are listed in the instructions for preparation of 
the Consolidated Reports of Condition and Income. In addition, as 
provided in those instructions, a multifamily residential property loan 
that is sold subject to a pro rata loss sharing arrangement is treated 
by the selling bank as sold (and excluded from balance sheet assets) to 
the extent that the sales agreement provides for the purchaser of the 
loan to share in any loss incurred on the loan on a pro rata basis with 
the selling bank. In such a transaction, from the standpoint of the 
selling bank, the portion of the loan that is treated as sold is not 
subject to the risk-based capital standards. In connection with sales of 
multifamily residential property loans in which the purchaser of a loan 
shares in any loss incurred on the loan with the selling institution on 
other than a pro rata basis, these other loss sharing arrangements are 
taken into account for purposes of determining the extent to which such 
loans are treated by the selling bank as sold (and excluded from balance 
sheet assets) under the risk-based capital framework in the same manner 
as prescribed for reporting purposes in the instructions for preparation 
of the Consolidated Reports of Condition and Income.

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[[Page 193]]

    (1) The loan amount does not exceed 80 percent of the value \30\ of 
the property securing the loan as determined by the most current 
appraisal or evaluation, whichever may be appropriate (75 percent if the 
interest rate on the loan changes over the term of the loan);
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    \30\ At the origination of a loan to purchase an existing property, 
the term ``value'' means the lesser of the actual acquisition cost or 
the estimate of value set forth in an appraisal or evaluation, whichever 
may be appropriate.
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    (2) For the property's most recent fiscal year, the ratio of annual 
net operating income generated by the property (before payment of any 
debt service on the loan) to annual debt service on the loan is not less 
than 120 percent (115 percent if the interest rate on the loan changes 
over the term of the loan) or, in the case of a property owned by a 
cooperative housing corporation or nonprofit organization, the property 
generates sufficient cash flow to provide comparable protection to the 
bank;
    (3) Amortization of principal and interest on the loan occurs over a 
period of not more than 30 years;
    (4) The minimum original maturity for repayment of principal on the 
loan is not less than seven years;
    (5) All principal and interest payments have been made on a timely 
basis in accordance with the terms of the loan for at least one year 
before the loan is placed in this category; \31\
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    \31\ In the case where the existing owner of a multifamily 
residential property refinances a loan on that property, all principal 
and interest payments on the loan being refinanced must have been made 
on a timely basis in accordance with the terms of that loan for at least 
the preceding year. The new loan must meet all of the other eligibility 
criteria in order to qualify for a 50 percent risk weight.
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    (6) The loan is not 90 days or more past due or carried in 
nonaccrual status; and
    (7) The loan has been made in accordance with prudent underwriting 
standards.
    Also included in this category are privately-issued mortgage-backed 
securities provided that: (1) The structure of the security meets the 
criteria described above for ``Mortgage-Backed Securities;'' (2) if the 
security is backed by a pool of conventional mortgages on one-to-four 
family residential or multifamily residential properties, each 
underlying mortgage meets the criteria described in this section for 
inclusion in the 50 percent risk weight category at the time the pool is 
originated; (3) if the security is backed by privately-issued mortgage-
backed securities, each underlying security qualifies for inclusion in 
the 50 percent risk category; and (4) if the security is backed by a 
pool of multifamily residential mortgages, principal or interest 
payments on the security are not 30 days or more past due.\32\
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    \32\ Privately-issued mortgage-backed securities that do not meet 
these criteria or that do not qualify for a lower risk weight generally 
are assigned to the 100 percent risk weight category.
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    This category also includes revenue (non-general obligation) bonds 
or similar obligations, including loans and leases, that are obligations 
of states or political subdivisions of the United States or other OECD 
countries, but for which the government entity is committed to repay the 
debt with revenues from the specific projects financed, rather than from 
general tax funds (e.g., municipal revenue bonds). In addition, the 
credit equivalent amount of derivative contracts that do not qualify for 
a lower risk weight are assigned to the 50 percent risk category.
    Category 4--100 Percent Risk Weight. All assets not included in the 
above risk categories are assigned to this category, which comprises 
standard risk assets. Long-term claims on, or guaranteed by, non-OECD 
banks, and all claims on non-OECD central governments that entail some 
degree of transfer risk are assigned to the 100 percent risk 
category.\3\\3\
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    \3\\3\ Such assets include all non-local currency claims on non-OECD 
central governments and those portions of local currency claims on, or 
guaranteed by, non-OECD central governments that exceed the local 
currency liabilities held by the bank.
---------------------------------------------------------------------------

    This category also includes all claims on foreign and domestic 
private sector obligors that are not assigned to lower risk weight 
categories, including: loans to nondepository financial institutions and 
bank holding companies; claims on commercial firms owned by the public 
sector; customer liabilities to the bank on acceptances outstanding 
involving standard risk claims; \34\ investments in

[[Page 194]]

fixed assets, premises and other real estated owned; common and 
preferred stock of corporations, including stock acquired for debt 
previously contracted; commercial and consumer loans (except those loans 
assigned to lower risk categories due to recognized guarantees or 
collateral); real estate loans and mortgage-backed securities that do 
not meet the criteria for assignment to a lower risk weight (including 
any classes of mortgage-backed securities that can absorb more than 
their pro rata share of loss without the whole issue being in default, 
such as subordinated classes or residual interests); and all stripped 
mortgage-backed securities, including interest-only (IOs) and principal-
only (POs) strips.
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    \34\ Customer liabilities on acceptances outstanding involving non-
standard risk claims, such as claims on U.S. depository institutions, 
are assigned to the risk category appropriate to the identity of the 
obligor or, if relevant, the nature of the collateral or guarantees 
backing the claim. Portions of acceptances conveyed as risk 
participations to U.S. depository institutions or foreign banks should 
be assigned to the 20 percent risk category that is appropriate for 
short-term claims guaranteed by U.S. depository institutions and foreign 
banks.
---------------------------------------------------------------------------

    Also included in this category are industrial development bonds and 
similar obligations issued under the auspices of state or political 
subdivisions of the OECD-based group of countries for the benefit of a 
private party or enterprise where that party or enterprise, rather than 
the government entity, is obligated to pay the principal and interest, 
and all obligations of states or political subdivisions of countries 
that do not belong to the OECD-based group of countries.
    Unless already deducted from capital for risk-based capital 
purposes, the following assets also are included in the 100 percent risk 
category: investments in unconsolidated subsidiaries, joint ventures or 
associated companies; instruments that qualify as capital issued by 
other banks; and mortgage servicing assets, nonmortgage servicing assets 
and other allowed intangibles.

    D. Conversion Factors for Off-Balance Sheet Items (see Table III)

    The face amount of an off-balance sheet item is generally multiplied 
by a credit conversion factor and the resulting credit equivalent amount 
is assigned to the appropriate risk category according to the obligor 
or, if relevant, the guarantor or the nature of the collateral.\35\
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    \35\ The sufficiency of collateral and guarantees for off-balance-
sheet items is determined by the market value of the collateral or the 
amount of the guarantee in relation to the face amount of the item, 
except for derivative contracts, for which this determination is 
generally made in relation to the credit equivalent amount. Collateral 
and guarantees are subject to the same provisions noted under section 
II.B. of this appendix A.
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    1. Items With a 100 Percent Conversion Factor. A 100 percent 
conversion factor applies to direct credit substitutes, which include 
guarantees, or equivalent instruments, backing financial claims, such as 
securities, loans or other financial obligations, or backing off-balance 
sheet items that require capital under the risk-based capital framework. 
These direct credit substitutes include financial standby letters of 
credit, or other equivalent irrevocable undertakings or surety 
arrangements, that effectively guarantee repayment of financial 
obligations such as: commercial paper, tax-exempt securities, commercial 
or individual loans or other debt obligations, or standby or commercial 
letters of credit.
    For risk-based capital purposes, financial standby letters of credit 
(100 percent conversion factor) are distinguished from loan commitments 
(normally a 50 percent conversion factor) in that financial standbys are 
irrevocable obligations of the bank to pay a third-party beneficiary 
when a customer (account party) fails to repay an outstanding loan or 
debt instrument. A loan commitment, on the other hand, involves an 
obligation (with or without a material adverse change clause) of the 
bank to provide funds to its customer in the normal course of business 
should the customer seek to draw down the commitment.
    Therefore, the distinguishing characteristics of a financial standby 
letter of credit for risk-based capital purposes is the combination of 
irrevocability with the notion that funding is triggered by some failure 
to repay or perform on a financial obligation. Thus, any commitment (by 
whatever name) that involves an irrevocable obligation to make a payment 
to the customer or to a third party in the event the customer fails to 
repay an outstanding debt obligation will be treated, for risk-based 
capital purposes, as a financial standby letter of credit and assigned a 
100 percent conversion factor. (Performance-related standby letters of 
credit are assigned a conversion factor of 50 percent.)
    A bank that has conveyed risk participation \36\ in a direct credit 
substitute to a third party should convert the full amount of the direct 
credit substitute at a 100 percent conversion factor without deducting 
the risk participations conveyed. However, portions of direct credit 
substitutes that have been conveyed as risk participations to U.S. 
depository institutions and OECD banks may then be assigned to the 20 
percent risk category that is appropriate for claims guaranteed by U.S. 
depository institutions and

[[Page 195]]

OECD banks, rather than to the risk category appropriate to the account 
party obligor.\37\ A bank acquiring a risk participation in a direct 
credit substitute or bankers acceptance should convert the participation 
at 100 percent and then assign the credit equivalent amount to the risk 
category that is appropriate to the account party obligor or, if 
relevant, the guarantor or the nature of the collateral.
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    \36\ That is, participations in which the originating bank remains 
liable to the beneficiary for the full amount of the direct credit 
substitute if the party that has acquired the participation fails to pay 
when the instrument is drawn upon.
    \37\ Risk participations with a remaining maturity of one year or 
less that are conveyed to non-OECD banks are also assigned to the 20 
percent risk weight category.
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    In the case of direct credit substitutes that are structured in the 
form of a syndication as defined in the instructions for the preparation 
of the Consolidated Reports of Condition and Income (that is, where each 
bank is obligated only for its pro rata share of the risk and there is 
no recourse to the originating bank), each bank will only include its 
pro rata share of the direct credit substitute in its risk-based capital 
calculation.
    Sale and repurchase agreements and asset sales with recourse, if not 
already included on the balance sheet, are also converted at 100 
percent. For risk-based capital purposes, the definition of sales of 
assets with recourse, including the sale of one-to-four family 
residential mortgages, is consistent with the definition contained in 
the instructions for the preparation of the Consolidated Reports of 
Condition and Income. Accordingly, except as noted below, the entire 
amount of any assets transferred with recourse that are not already 
included on the balance sheet, including pools of one-to-four family 
residential mortgages, is to be converted at 100 percent and assigned to 
the risk weight category appropriate to the obligor or, if relevant, the 
guarantor or the nature of the collateral. The terms of a transfer of 
assets with recourse may contractually limit the amount of the bank's 
liability to an amount less than the effective risk-based capital 
requirement for the assets being transferred with recourse. If such a 
transaction (including one that, in accordance with the instructions for 
the preparation of the Consolidated Reports of Condition and Income, is 
reported as a financing, i.e., the assets are not removed from the 
balance sheet) meets the criteria for sale treatment under generally 
accepted accounting principles, the amount of total capital required is 
equal to the maximum amount of loss possible under the recourse 
provision. If the transaction is also treated as a sale in accordance 
with the instructions for the preparation of the Consolidated Reports of 
Condition and Income, then the required amount of capital may be reduced 
by the balance of any associated noncapital liability account 
established pursuant to generally accepted accounting principles to 
cover estimated probable losses under the recourse provision. So-called 
``loan strips'' (that is, short-term advances sold under long-term 
commitments without direct recourse) are defined in the instructions for 
the preparation of the Consolidated Reports of Condition and Income and 
for risk-based capital purposes as assets sold with recourse.
    In addition, a 100 percent conversion factor applies to forward 
agreements. Forward agreements are legally binding contractual 
obligations to purchase assets with drawdown which is certain at a 
specified future date. These obligations include forward purchases, 
forward deposits placed, and partly paid shares and securities, but do 
not include forward foreign exchange rate contracts or commitments to 
make residential mortgage loans.
    Securities lent by a bank are treated in one of two ways, depending 
on whether the lender is exposed to risk of loss. If a bank, as agent 
for a customer, lends the customer's securities and is not obligated to 
indemnify the customer against loss, the securities lending transaction 
is excluded from the risk-based capital calculation. On the other hand, 
if a bank lends its own securities, or acting as agent lends the 
customer's securities and agrees to indemnify the customer against loss, 
the transaction is converted at 100 percent and assigned to the risk 
weight category appropriate to the obligor or, if applicable, to the 
collateral delivered to the lending bank or to the independent custodian 
acting on the lending bank's behalf.
    2. Items With a 50 Percent Conversion Factor. Transaction-related 
contingencies are to be converted at 50 percent. Such contingencies 
include bid bonds, performance bonds, warranties, and performance 
standby letters of credit related to particular transactions, as well as 
acquisitions of risk participations in performance standby letters of 
credits. Performance standby letters of credit (performance bonds) are 
irrevocable obligations of the bank to pay a third-party beneficiary 
when a customer (account party) fails to perform on some contractual 
nonfinancial obligation. Thus, performance standby letters of credit 
represent obligations backing the performance of nonfinancial or 
commercial contracts or undertakings. To the extent permitted by law or 
regulation, performance standby letters of credit include arrangements 
backing, among other things, subcontractors' and suppliers' performance, 
labor and materials contracts, and construction bids.

[[Page 196]]

    The unused portion of commitments with an original maturity 
exceeding one year,\38\ including underwriting commitments and 
commercial and consumer credit commitments, also are to be converted at 
50 percent. Original maturity is defined as the length of time between 
the date the commitment is issued and the earliest date on which: (1) 
The bank can at its option, unconditionally (without cause) cancel the 
commitment,\39\ and (2) the bank is scheduled to (and as a normal 
practice actually does) review the facility to determine whether or not 
it should be extended and, on at least an annual basis, continues to 
regularly review the facility. Facilities that are unconditionally 
cancelable (without cause) at any time by the bank are not deemed to be 
commitments, provided the bank makes a separate credit decision before 
each drawing under the facility.
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    \38\ Remaining maturity may be used for determining the term to 
maturity for loan commitments through year-end 1992; thereafter, 
original maturity shall be used.
    \39\ In the case of home equity or mortgage lines of credit secured 
by liens on one-to-four family residential properties, a bank is deemed 
able to unconditionally cancel the commitment if, at its option, it can 
prohibit additional extensions of credit, reduce the credit line, and 
terminate the commitment to the full extent permitted by relevant 
Federal law.
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    Commitments, for risk-based capital purposes, are defined as any 
arrangements that obligate a bank to extend credit in the form of loans 
or lease financing receivables; to purchase loans, securities, or other 
assets; or to participate in loans and leases. Commitments also include 
overdraft facilities, revolving credit, home equity and mortgage lines 
of credit, and similar transactions. Normally, commitments involve a 
written contract or agreement and a commitment fee, or some other form 
of consideration. Commitments are included in risk-weighted assets 
regardless of whether they contain material adverse change clauses or 
other provisions that are intended to relieve the issuer of its funding 
obligation under certain conditions.
    In the case of commitments structured as syndications where the bank 
is obligated only for its pro rata share, the risk-based capital 
framework includes only the bank's proportional share of such 
commitments. Thus, after a commitment has been converted at 50 percent, 
portions of commitments that have been conveyed to other U.S. depository 
institutions or OECD banks, but for which the originating bank retains 
the full obligation to the borrower if the participating bank fails to 
pay when the commitment is drawn upon, will be assigned to the 20 risk 
category. The acquisition of such a participation in a commitment would 
be converted at 50 percent and the credit equivalent amount would be 
assigned to the risk category that is appropriate for the account party 
obligor or, if relevant, to the nature of the collateral or guarantees.
    Revolving underwriting facilities (RUFs), note issuance facilities 
(NIFs), and other similar arrangements also are converted at 50 percent. 
These are facilities under which a borrower can issue on a revolving 
basis short-term notes in its own name, but for which the underwriting 
banks have a legally binding commitment either to purchase any notes the 
borrower is unable to sell by the rollover date or to advance funds to 
the borrower.
    3. Items With a 20 Percent Conversion Factor. Short-term, self-
liquidating, trade-related contingencies which arise from the movement 
of goods are converted at 20 percent. Such contingencies include 
commercial letters of credit and other documentary letters of credit 
collateralized by the underlying shipments.
    4. Items With a Zero Percent Conversion Factor. These include unused 
portions of commitments with an original maturity of one year or less, 
or which are unconditionally cancellable at any time (provided a 
separate credit decision is made before each drawing under the 
facility). Unused portions of retail credit card lines and related plans 
are deemed to be short-term commitments if the bank, in accordance with 
applicable law, has the unconditional option to cancel the credit line 
at any time.
    E. Derivative Contracts (Interest Rate, Exchange Rate, Commodity 
(including precious metal) and Equity Derivative Contracts)
    1. Credit equivalent amounts are computed for each of the following 
off-balance-sheet derivative contracts:
    (a) Interest Rate Contracts
    (i) Single currency interest rate swaps.
    (ii) Basis swaps.
    (iii) Forward rate agreements.
    (iv) Interest rate options purchased (including caps, collars, and 
floors purchased).
    (v) Any other instrument linked to interest rates that gives rise to 
similar credit risks (including when-issued securities and forward 
deposits accepted).
    (b) Exchange Rate Contracts
    (i) Cross-currency interest rate swaps.
    (ii) Forward foreign exchange contracts.
    (iii) Currency options purchased.
    (iv) Any other instrument linked to exchange rates that gives rise 
to similar credit risks.
    (c) Commodity (including precious metal) or Equity Derivative 
Contracts
    (i) Commodity- or equity-linked swaps.
    (ii) Commodity- or equity-linked options purchased.
    (iii) Forward commodity- or equity-linked contracts.

[[Page 197]]

    (iv) Any other instrument linked to commodities or equities that 
gives rise to similar credit risks.
    2. Exchange rate contracts with an original maturity of 14 calendar 
days or less and derivative contracts traded on exchanges that require 
daily receipt and payment of cash variation margin may be excluded from 
the risk-based ratio calculation. Gold contracts are accorded the same 
treatment as exchange rate contracts except gold contracts with an 
original maturity of 14 calendar days or less are included in the risk-
based calculation. Over-the-counter options purchased are included and 
treated in the same way as other derivative contracts.
    3. Credit Equivalent Amounts for Derivative Contracts. (a) The 
credit equivalent amount of a derivative contract that is not subject to 
a qualifying bilateral netting contract in accordance with section 
II.E.5. of this appendix A is equal to the sum of:
    (i) The current exposure (which is equal to the mark-to-market 
value,\40\ if positive, and is sometimes referred to as the replacement 
cost) of the contract; and
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    \40\ Mark-to-market values are measured in dollars, regardless of 
the currency or currencies specified in the contract and should reflect 
changes in both underlying rates, prices and indices, and counterparty 
credit quality.
---------------------------------------------------------------------------

    (ii) An estimate of the potential future credit exposure.
    (b) The current exposure is determined by the mark-to-market value 
of the contract. If the mark-to-market value is positive, then the 
current exposure is equal to that mark-to-market value. If the mark-to-
market value is zero or negative, then the current exposure is zero.
    (c) The potential future credit exposure of a contract, including a 
contract with a negative mark-to-market value, is estimated by 
multiplying the notional principal amount of the contract by a credit 
conversion factor. Banks should, subject to examiner review, use the 
effective rather than the apparent or stated notional amount in this 
calculation. The credit conversion factors are:

                                            Conversion Factor Matrix
----------------------------------------------------------------------------------------------------------------
                                                                Exchange                  Precious
               Remaining maturity                  Interest     rate and      Equity      metals,       Other
                                                     rate         gold                  except gold  commodities
----------------------------------------------------------------------------------------------------------------
One year or less...............................         0.0%         1.0%         6.0%         7.0%        10.0%
More than one year to five years...............         0.5%         5.0%         8.0%         7.0%        12.0%
More than five years...........................         1.5%         7.5%        10.0%         8.0%        15.0%
----------------------------------------------------------------------------------------------------------------

    (d) For contracts that are structured to settle outstanding exposure 
on specified dates and where the terms are reset such that the market 
value of the contract is zero on these specified dates, the remaining 
maturity is equal to the time until the next reset date. For interest 
rate contracts with remaining maturities of more than one year and that 
meet these criteria, the conversion factor is subject to a minimum value 
of 0.5 percent.
    (e) For contracts with multiple exchanges of principal, the 
conversion factors are to be multiplied by the number of remaining 
payments in the contract. Derivative contracts not explicitly covered by 
any of the columns of the conversion factor matrix are to be treated as 
``other commodities.''
    (f) No potential future exposure is calculated for single currency 
interest rate swaps in which payments are made based upon two floating 
rate indices (so called floating/floating or basis swaps); the credit 
exposure on these contracts is evaluated solely on the basis of their 
mark-to-market values.
    4. Risk Weights and Avoidance of Double Counting. (a) Once the 
credit equivalent amount for a derivative contract, or a group of 
derivative contracts subject to a qualifying bilateral netting 
agreement, has been determined, that amount is assigned to the risk 
category appropriate to the counterparty, or, if relevant, the guarantor 
or the nature of any collateral. However, the maximum weight that will 
be applied to the credit equivalent amount of such contracts is 50 
percent.
    (b) In certain cases, credit exposures arising from the derivative 
contracts covered by these guidelines may already be reflected, in part, 
on the balance sheet. To avoid double counting such exposures in the 
assessment of capital adequacy and, perhaps, assigning inappropriate 
risk weights, counterparty credit exposures arising from the types of 
instruments covered by these guidelines may need to be excluded from 
balance sheet assets in calculating a bank's risk-based capital ratio.
    (c) The FDIC notes that the conversion factors set forth in section 
II.E.3. of appendix A, which are based on observed volatilities of the 
particular types of instruments, are subject to review and modification 
in light of changing volatilities or market conditions.

[[Page 198]]

    (d) Examples of the calculation of credit equivalent amounts for 
these types of contracts are contained in Table IV of this appendix A.
    5. Netting. (a) For purposes of this appendix A, netting refers to 
the offsetting of positive and negative mark-to-market values when 
determining a current exposure to be used in the calculation of a credit 
equivalent amount. Any legally enforceable form of bilateral netting 
(that is, netting with a single counterparty) of derivative contracts is 
recognized for purposes of calculating the credit equivalent amount 
provided that:
    (i) The netting is accomplished under a written netting contract 
that creates a single legal obligation, covering all included individual 
contracts, with the effect that the bank would have a claim or 
obligation to receive or pay, respectively, only the net amount of the 
sum of the positive and negative mark-to-market values on included 
individual contracts in the event that a counterparty, or a counterparty 
to whom the contract has been validly assigned, fails to perform due to 
default, bankruptcy, liquidation, or similar circumstances;
    (ii) The bank obtains a written and reasoned legal opinion(s) 
representing that in the event of a legal challenge, including one 
resulting from default, insolvency, bankruptcy or similar circumstances, 
the relevant court and administrative authorities would find the bank's 
exposure to be such a net amount under:
    (1) The law of the jurisdiction in which the counterparty is 
chartered or the equivalent location in the case of noncorporate 
entities and, if a branch of the counterparty is involved, then also 
under the law of the jurisdiction in which the branch is located;
    (2) The law that governs the individual contracts covered by the 
netting contract; and
    (3) The law that governs the netting contract.
    (iii) The bank establishes and maintains procedures to ensure that 
the legal characteristics of netting contracts are kept under review in 
the light of possible changes in relevant law; and
    (iv) The bank maintains in its file documentation adequate to 
support the netting of derivative contracts, including a copy of the 
bilateral netting contract and necessary legal opinions.
    (b) A contract containing a walkaway clause is not eligible for 
netting for purposes of calculating the credit equivalent amount.\41\
---------------------------------------------------------------------------

    \41\ For purposes of this section, a walkaway clause means a 
provision in a netting contract that permits a non-defaulting 
counterparty to make lower payments than it would make otherwise under 
the contract, or no payment at all, to a defaulter or to the estate of a 
defaulter, even if a defaulter or the estate of a defaulter is a net 
creditor under the contract.
---------------------------------------------------------------------------

    (c) By netting individual contracts for the purpose of calculating 
its credit equivalent amount, a bank represents that it has met the 
requirements of this appendix A and all the appropriate documents are in 
the bank's files and available for inspection by the FDIC. Upon 
determination by the FDIC that a bank's files are inadequate or that a 
netting contract may not be legally enforceable under any one of the 
bodies of law described in paragraphs (ii)(1) through (3) of section 
II.E.5.(a) of this appendix A, underlying individual contracts may be 
treated as though they were not subject to the netting contract.
    (d) The credit equivalent amount of derivative contracts that are 
subject to a qualifying bilateral netting contract is calculated by 
adding:
    (i) The net current exposure of the netting contract; and
    (ii) The sum of the estimates of potential future exposure for all 
individual contracts subject to the netting contract, adjusted to take 
into account the effects of the netting contract.\42\
---------------------------------------------------------------------------

    \42\ For purposes of calculating potential future credit exposure 
for foreign exchange contracts and other similar contracts in which 
notional principal is equivalent to cash flows, total notional principal 
is defined as the net receipts to each party falling due on each value 
date in each currency.
---------------------------------------------------------------------------

    (e) The net current exposure is the sum of all positive and negative 
mark-to-market values of the individual contracts subject to the netting 
contract. If the net sum of the mark-to-market values is positive, then 
the net current exposure is equal to that sum. If the net sum of the 
mark-to-market values is zero or negative, then the net current exposure 
is zero.
    (f) The effects of the bilateral netting contract on the gross 
potential future exposure are recognized through application of a 
formula, resulting in an adjusted add-on amount (Anet). The 
formula, which employs the ratio of net current exposure to gross 
current exposure (NGR) is expressed as:

Anet = (0.4  x  Agross) + 0.6(NGR  x  
Agross)

    The effect of this formula is that Anet is the weighted 
average of Agross, and Agross adjusted by the NGR.
    (g) The NGR may be calculated in either one of two ways--referred to 
as the counterparty-by-counterparty approach and the aggregate approach.
    (i) Under the counterparty-by-counterparty approach, the NGR is the 
ratio of the net current exposure of the netting

[[Page 199]]

contract to the gross current exposure of the netting contract. The 
gross current exposure is the sum of the current exposures of all 
individual contracts subject to the netting contract calculated in 
accordance with section II.E. of this appendix A.
    (ii) Under the aggregate approach, the NGR is the ratio of the sum 
of all of the net current exposures for qualifying bilateral netting 
contracts to the sum of all of the gross current exposures for those 
netting contracts (each gross current exposure is calculated in the same 
manner as in section II.E.5.(g)(i) of this appendix A). Net negative 
mark-to-market values to individual counterparties cannot be used to 
offset net positive current exposures to other counterparties.
    (iii) A bank must use consistently either the counterparty-by-
counterparty approach or the aggregate approach to calculate the NGR. 
Regardless of the approach used, the NGR should be applied individually 
to each qualifying bilateral netting contract to determine the adjusted 
add-on for that netting contract.

                  III. Minimum Risk-Based Capital Ratio

       A. Minimum Risk-Based Capital Ratio After Transition Period

    Banks generally will be expected to meet a minimum ratio of 
qualifying total capital to risk-weighted assets of 8 percent, of which 
at least 4 percentage points should be in the form of core capital (Tier 
1). Any bank that does not meet the minimum risk-based capital ratio, or 
whose capital is otherwise considered inadequate, generally will be 
expected to develop and implement a capital plan for achieving an 
adequate level of capital, consistent with the provisions of this risk-
based capital framework, the specific circumstances affecting the 
individual bank, and the requirements of any related agreements between 
the bank and the FDIC.

                      B. Transitional Arrangements

    The transition period commences with the adoption of this statement 
of policy and ends on December 31, 1992. Initially, this risk-based 
capital framework does not establish a minimum level of capital. 
However, by year-end 1990, banks generally will be expected to meet a 
minimum total capital to risk-weighted assets ratio of 7.25 percent, at 
least one-half of which should be in the form of Tier 1 capital. For 
purposes of calculating this interim minimum ratio, the amount of the 
allowance for loan and lease losses that may be included as a 
supplementary capital element is limited to 1.5 percent of risk-weighted 
assets. In addition, up to 10 percent of a bank's Tier 1 capital (before 
any deduction for disallowed intangibles) may consist of supplementary 
capital elements. Thus, the 7.25 percent interim ratio implies a minimum 
ratio of Tier 1 capital to risk-weighted assets of approximately 3.6 
percent (or one-half of 7.25) and a minimum ratio of core capital 
elements to risk-weighted assets of 3.25 percent (or nine-tenths of the 
Tier 1 capital ratio). By the end of 1992, a state nonmember bank's Tier 
1 capital should consist solely of core capital elements.
    During the transition period, banks should monitor their risk-based 
capital ratios and work toward achieving the interim and final risk-
based capital ratios. Any bank that has risk-based capital ratios of 
less than 4 percent Tier 1 capital and 8 percent total capital should 
develop and implement a capital plan for achieving those minimum 
standards by December 31, 1992, and for achieving the interim minimum 
ratio of 7.25 percent by December 31, 1990. Banks that at present have a 
risk-based capital ratio in excess of 8 percent generally should not 
take any action that would cause the ratio to fall below 8 percent.

               Table I-- Definition of Qualifying Capital
------------------------------------------------------------------------
                                              Minimum requirements and
                Components                           limitations
------------------------------------------------------------------------
(1) Core Capital (Tier 1).................  Must equal or exceed 4% of
                                             risk-weighted assets.
(2) Common stockholders' equity capital...  No limit.\1\
(3) Noncumulative perpetual preferred       No limit.\1\
 stock and any related surplus.
(4) Minority interests in equity capital    No limit.\1\
 accounts of consolidated subsidiaries.
(5) Less: All intangible assets other than  (\2\)
 mortgage servicing rights and purchased
 credit card relationships.
(6) Less: Certain deferred tax assets.....  (\3\)
(7) Supplementary Capital (Tier 2)........  Total of Tier 2 is limited
                                             to 100% of Tier 1.\4\
(8) Allowance for loan and lease losses...  Limited to 1.25% of risk-
                                             weighted assets.\4\
(9) Unrealized gains on certain equity      Limited to 45% of pretax net
 securities \5\.                             unrealized gains.\5\
(10) Cumulative perpetual and long-term     No limit within Tier 2; long-
 preferred stock (original maturity of 20    term preferred is amortized
 years or more) and any related surplus.     for capital purposes as it
                                             approaches maturity.
(11) Auction rate and similar preferred     No limit within Tier 2.
 stock (both cumulative and non-
 cumulative).
(12) Hybrid capital instruments (including  No limit within Tier 2.
 mandatory convertible debt securities).

[[Page 200]]

 
(13) Term subordinated debt and             Term subordinated debt and
 intermediate-term preferred stock           intermediate term preferred
 (original weighted average maturity of      stock are limited to 50% of
 five years or more).                        Tier 1\4\ and amortized for
                                             capital purposes as they
                                             approach maturity.
(14) Deductions (from the sum of Tier 1
 plus Tier 2).
(15) Investments in banking and finance
 subsidiaries that are not consolidated
 for regulatory capital purposes.
(16) Intentional, reciprocal cross-
 holdings of capital securities issued by
 banks.
(17) Other deductions (such as investments  On a case-by-case basis or
 in other subsidiaries or in joint           as a matter of policy after
 ventures) as determined by supervisory      formal consideration of
 authority.                                  relevant issues.
(18) Total Capital (Tier 1 + Tier 2--       Must equal or exceed 8% of
 Deductions).                                risk-weighted assets.
------------------------------------------------------------------------
\1\ No express limits are placed on the amounts of nonvoting common,
  noncumulative perpetual preferred stock, and minority interests that
  may be recognized as part of Tier 1 capital. However, voting common
  stockholders' equity capital generally will be expected to be the
  dominant form of Tier 1 capital and banks should avoid undue reliance
  on other Tier 1 capital elements.
\2\ The amounts of mortgage servicing rights and purchased credit card
  relationships that can be recognized for purposes of calculating Tier
  1 capital are subject to the limitations set forth in Sec.  325.5(f).
  All deductions are for capital purposes only; deductions would not
  affect accounting treatment.
\3\ Deferred tax assets are subject to the capital limitations set forth
  in Sec.  325.5(g).
\4\ Amounts in excess of limitations are permitted but do not qualify as
  capital.
\5\ Unrealized gains on equity securities are subject to the capital
  limitations set forth in paragraph I.A.2.(f) of Appendix A to part
  325.

               Calculation of the Risk-Based Capital Ratio

    When calculating the risk-based capital ratio under the framework 
set forth in this statement of policy, qualifying total capital (the 
numerator) is divided by risk-weighted assets (the denominator). The 
process of determining the numerator for the ratio is summarized in 
Table I. The calculation of the denominator is based on the risk weights 
and conversion factors that are summarized in Tables II and III.
    When determining the amount of risk-weighted assets, balance sheet 
assets are assigned an appropriate risk weight (see Table II) and off-
balance sheet items are first converted to a credit equivalent amount 
(see Table III) and then assigned to one of the risk weight categories 
set forth in Table II.
    The balance sheet assets and the credit equivalent amount of off-
balance sheet items are then multiplied by the appropriate risk weight 
percentages and the sum of these risk-weighted amounts is the gross 
risk-weighted asset figure used in determining the denominator of the 
risk-based capital ratio. Any items deducted from capital when computing 
the amount of qualifying capital may also be excluded from risk-weighted 
assets when calculating the denominator for the risk-based capital 
ratio.

         Table II.--Summary of Risk Weights and Risk Categories

                  Category 1--Zero Percent Risk Weight

    (1) Cash (domestic and foreign).
    (2) Balances due from Federal Reserve Banks and central banks in 
other OECD countries.
    (3) Direct claims on, and portions of claims unconditionally 
guaranteed by, the U.S. Treasury, U.S. Government agencies,\1\ or 
central governments in other OECD countries.
---------------------------------------------------------------------------

    \1\ For the purpose of calculating the risk-based capital ratio, a 
U.S. Government agency is defined as an instrumentality of the U.S. 
Government whose obligations are fully and explicitly guaranteed as to 
the timely repayment of principal and interest by the full faith and 
credit of the U.S. Government.
---------------------------------------------------------------------------

    (4) Portions of local currency claims on, or unconditionally 
guaranteed by, non-OECD central governments (including non-OECD central 
banks), to the extent the bank has liabilities booked in that currency.
    (5) Gold bullion held in the bank's own vaults or in another bank's 
vaults on an allocated basis, to the extent that it is offset by gold 
bullion liabilities
    (6) Federal Reserve Bank stock.

                   Category 2--20 Percent Risk Weight

    (1) Cash items in the process of collection.
    (2) All claims (long- and short-term) on, and portions of claims 
(long- and short-term) guaranteed by, U.S. depository institutions and 
OECD banks.
    (3) Short-term (remaining maturity of one year or less) claims on, 
and portions of short-term claims guaranteed by, non-OECD banks.
    (4) Portions of loans and other claims conditionally guaranteed by 
the U.S. Treasury, U.S. Government agencies,\1\ or central governments 
in other OECD countries and portions of local currency claims 
conditionally guaranteed by non-OECD central governments to the extent 
that the bank has liabilities booked in that currency.

[[Page 201]]

    (5) Securities and other claims on, and portions of claims 
guaranteed by, U.S. Government-sponsored agencies.\2\
---------------------------------------------------------------------------

    \2\ For the purpose of calculating the risk-based capital ratio, a 
U.S. Government-sponsored agency is defined as an agency originally 
established or chartered to serve public purposes specified by the U.S. 
Congress but whose obligations are not explicitly guaranteed by the full 
faith and credit of the U.S. Government.
---------------------------------------------------------------------------

    (6) Portions of loans and other claims (including repurchase 
agreements) collateralized \3\ by securities issued or guaranteed by the 
U.S. Treasury, U.S. Government agencies, U.S. Government-sponsored 
agencies or central governments in other OECD countries.
---------------------------------------------------------------------------

    \3\ Degree of collateralization is determined by current market 
value.
---------------------------------------------------------------------------

    (7) Portions of loans and other claims collateralized \3\ by cash on 
deposit in the lending bank.
    (8) General obligation claims on, and portions of claims guaranteed 
by, the full faith and credit of states or other political subdivisions 
of OECD countries, including U.S. state and local governments.
    (9) Claims on, and portions of claims guaranteed by, official 
multilateral lending institutions or regional development institutions 
in which the U.S. Government is a shareholder or a contributing member.
    (10) Portions of claims collateralized \3\ by securities issued by 
official multilateral lending institutions or regional development 
institutions in which the U.S. Government is a shareholder or 
contributing member.
    (11) Privately-issued mortgage-backed securities representing 
indirect ownership of U.S. Government agency or U.S. Government-
sponsored agency securities.
    (12) Investments in shares of mutual funds whose portfolios are 
permitted to hold only assets that qualify for the zero or 20 percent 
risk categories.

                   Category 3--50 Percent Risk Weight

    (1) Loans fully secured by first liens on one-to-four family 
residential properties (including certain presold residential 
construction loans), provided that the loans were approved in accordance 
with prudent underwriting standards and are not past due 90 days or more 
or carried in nonaccrual status.
    (2) Loans fully secured by first liens on multifamily residential 
properties that have been prudently underwritten and meet specified 
requirements with respect to loan-to-value ratio, level of annual net 
operating income to required debt service, maximum amortization period, 
minimum original maturity, and demonstrated timely repayment 
performance.
    (3) Certain privately-issued mortgage-backed securities representing 
indirect ownership of a pool of residential loans that meet the criteria 
for a 50 percent risk weight.
    (4) Revenue bonds or similar obligations, including loans and 
leases, that are obligations of U.S. state or political subdivisions of 
the United States or other OECD countries but for which the government 
entity is committed to repay the debt only out of revenues from the 
specific projects financed.
    (5) Credit equivalent amounts of interest rate and foreign exchange 
rate related contracts, except for those assigned to a lower risk 
category.

                   Category 4--100 Percent Risk Weight

    (1) All other claims on private obligors.
    (2) Claims on, or guaranteed by, non-OECD banks with a remaining 
maturity exceeding one year.
    (3) Claims on non-OECD central governments that are not included in 
item 4 of Category 1 or item 3 of Category 2, and all claims on non-OECD 
state and local governments.
    (4) Obligations issued by U.S. state or local governments or other 
OECD local governments (including industrial development authorities and 
similar entities) that are repayable solely by a private party or 
enterprise.
    (5) Premises, plant, and equipment; other fixed assets; and other 
real estate owned.
    (6) Investments in any unconsolidated subsidiaries, joint ventures, 
or associated companies--if not deducted from capital.
    (7) Instruments issued by other banking organizations that qualify 
as capital.
    (8) Claims on commercial firms owned by the U.S. Government or 
foreign governments.
    (9) All other assets, including any intangible assets that are not 
deducted from capital, and the credit equivalent amounts \4\ of off-
balance sheet items not assigned to a lower risk category.
---------------------------------------------------------------------------

    \4\ For each off-balance sheet item, a conversion factor (see Table 
III) must be applied to determine the credit equivalent amount prior to 
assigning the off-balance sheet item to a risk weight category.
---------------------------------------------------------------------------

    Table III.--Credit Conversion Factors for Off-Balance Sheet Items

                      100 Percent Conversion Factor

    (1) Direct credit substitutes, including general guarantees of 
indebtedness and guarantee-type instruments, such as standby letters of 
credit that serve as financial guarantees for, or support the repayment 
of, loans, securities or commercial letters of credit.

[[Page 202]]

    (2) Acquisitions of risk participations in bankers acceptances and 
in such direct credit substitutes and financial standby letters of 
credit.
    (3) Sale and repurchase agreements and asset sales with recourse, if 
not already included on the balance sheet.
    (4) Forward agreements representing contractual obligations to 
purchase assets, including financing facilities, with drawdown certain 
at a specified future date.
    (5) Securities lent, if the lending bank is exposed to risk of loss.

                      50 Percent Conversion Factor

    (1) Transaction-related contingencies, including bid bonds, 
performance bonds, warranties, and performance standby letters of credit 
backing the nonfinancial performance of other parties.
    (2) Unused portions of commitments with an original maturity \1\ 
exceeding one year, including underwriting commitments and commercial 
credit lines.
---------------------------------------------------------------------------

    \1\ Remaining maturity may be used until year-end 1990.
---------------------------------------------------------------------------

    (3) Revolving underwriting facilities (RUFs), note issuance 
facilities (NIFs) and other similar arrangements.

                      20 Percent Conversion Factor

    (1) Short-term, self-liquidating, trade-related contingencies, 
including commercial letters of credit.

                     Zero Percent Conversion Factor

    (1) Unused portions of commitments with an original maturity \1\ of 
one year or less.
    (2) Unused portions of commitments (regardless of maturity) which 
are unconditionally cancelable at any time, provided a separate credit 
decision is made before each drawing.

 Credit Conversion for Interest Rate and Foreign Exchange Rate Related 
                                Contracts

    The total replacement cost of contracts (obtained by summing the 
positive mark-to-market values of contracts) is added to a measure of 
future potential increases in credit exposure. This future potential 
credit exposure measure is calculated by multiplying the total notional 
value of contracts by one of the following credit conversion factors, as 
appropriate:

                                            Conversion Factor Matrix
----------------------------------------------------------------------------------------------------------------
                                                                Exchange                  Precious
               Remaining maturity                  Interest     rate and      Equity      metals,       Other
                                                     rate         gold                  except gold  commodities
----------------------------------------------------------------------------------------------------------------
One year or less...............................         0.0%         1.0%         6.0%         7.0%        10.0%
More than one year to five years...............         0.5%         5.0%         8.0%         7.0%        12.0%
More than five years...........................         1.5%         7.5%        10.0%         8.0%        15.0%
----------------------------------------------------------------------------------------------------------------

    No potential exposure is calculated for single currency interest 
rate contracts on which payments are made based on two floating rate 
indices (floating/floating or basis swaps); the credit exposure on these 
contracts is evaluated solely on the basis of their mark-to-market 
values. In the event a netting contract covers transactions that are 
normally not included in the risk-based ratio calculation--for example, 
exchange rate contracts with an original maturity of fourteen calendar 
days or less or instruments traded on exchanges that require daily 
payment of variation margin--an institution may elect to consistently 
either include or exclude all mark-to-market values of such transactions 
when determining a net current exposure. Multiple contracts with the 
same counterparty may be netted for risk-based capital purposes pursuant 
to section II.E.5. of this appendix.

                  Table IV.--Calculation of Credit Equivalent Amounts for Derivative Contracts
----------------------------------------------------------------------------------------------------------------
        Potential exposure               +         Current         =       Credit equivalent amount
------------------------------------------------   exposure  ---------------------------------------    Credit
                                      Notional  -------------  Potential     Mark-to      Current     equivalent
    Type of contract (remaining      principal    Conversion    exposure      market      exposure      amount
             maturity)               (dollars)      factor     (dollars)      value      (dollars)
----------------------------------------------------------------------------------------------------------------
(1) 120-Day Forward Foreign           5,000,000          .01       50,000      100,000      100,000      150,000
 Exchange.........................
(2) 4-Year Forward Foreign            6,000,000          .05      300,000     -120,000            0      300,000
 Exchange.........................
(3) 3-Year Single-Currency Fixed/    10,000,000         .005       50,000      200,000      200,000      250,000
 Floating Interest Rate Swap......
(4) 6-Month Oil Swap..............   10,000,000          .10    1,000,000     -250,000            0    1,000,000

[[Page 203]]

 
(5) 7-Year Cross-Currency Floating/  20,000,000         .075    1,500,000   -1,500,000            0    1,500,000
 Floating Interest Rate Swap......
      Total.......................  ...........  ...........    2,900,000  ...........      300,000    3,200,000
----------------------------------------------------------------------------------------------------------------

    (1) If contracts (1) through (5) above are subject to a qualifying 
bilateral netting contract, then the following applies:

----------------------------------------------------------------------------------------------------------------
                                             Potential
                                               future                                                   Credit
                                              exposure                  Net current                   equivalent
                                               (from                     exposure*                      amount
                                               above)
----------------------------------------------------------------------------------------------------------------
(1).......................................       50,000
(2).......................................      300,000
(3).......................................       50,000
(4).......................................    1,000,000
(5).......................................    1,500,000
      Total...............................    2,900,000  +                        0  =                2,900,000
----------------------------------------------------------------------------------------------------------------
*The total of the mark-to-market values from above is -1,370,000. Since this is a negative amount, the net
  current exposure is zero.

    (2) To recognize the effects of netting on potential future 
exposure, the following formula applies:

Anet = (0.4  x  Agross) + 0.6(NGR  x  
Agross)

    (3) In the above example:

NGR=0=(0/300,000)
Anet=(0.4 x 2,900,000)+0.6(0 x 2,900,000)
Anet=1,160,000

Credit Equivalent Amount: 1,160,000+0=1,160,000

    (4) If the net current exposure was a positive amount, for example, 
$200,000, the credit equivalent amount would be calculated as follows:

NGR = .67 = (200,000/300,000)
Anet = (0.4  x  2,900,000) + 0.6(.67  x  2,900,000)
Anet = 2,325,800

Credit Equivalent Amount: 2,325,800+200,000 = 2,525,800

[54 FR 11509, Mar. 21, 1989]

    Editorial Note: For Federal Register citations affecting Appendix A 
of part 325, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and on GPO Access.

     Appendix B to Part 325--Statement of Policy on Capital Adequacy

    Part 325 of the Federal Deposit Insurance Corporation rules and 
regulations (12 CFR part 325) sets forth minimum leverage capital 
requirements for fundamentally sound, well-managed banks having no 
material or significant financial weaknesses. It also defines capital 
and sets forth sanctions which will be used against banks which are in 
violation of the part 325 regulation. This statement of policy on 
capital adequacy provides some interpretational and definitional 
guidance as to how this part 325 regulation will be administered and 
enforced by the FDIC. This statement of policy also addresses certain 
aspects of the FDIC's minimum risk-based capital guidelines that are set 
forth in appendix A to part 325. This statement of policy does not 
address the prompt corrective action provisions mandated by the Federal 
Deposit Insurance Corporation Improvement Act of 1991. However, section 
38 of the Federal Deposit Insurance Act and subpart B of part 325 
provide guidance on the prompt corrective action provisions, which 
generally apply to institutions with inadequate levels of capital.

             I. Enforcement of Minimum Capital Requirements

    Section 325.3(b)(1) specifies that FDIC-supervised, state-chartered 
nonmember commercial and savings banks (or other insured depository 
institutions making applications to the FDIC that require the FDIC to 
consider the adequacy of the institutions' capital structure) must 
maintain a minimum leverage ratio of Tier 1 (or core) capital to total 
assets of at least 3 percent; however, this minimum only applies to the 
most highly-rated banks (i.e., those with a composite

[[Page 204]]

CAMEL rating of 1 under the Uniform Financial Institutions Rating System 
established by the Federal Financial Institutions Examination Council) 
that are not anticipating or experiencing any significant growth. All 
other state nonmember banks would need to meet a minimum leverage ratio 
that is at least 100 to 200 basis points above this minimum. That is, in 
accordance with Sec. 325.3(b)(2), an absolute minimum leverage ratio of 
not less than 4 percent must be maintained by those banks that are not 
highly-rated or that are anticipating or experiencing significant 
growth.
    In addition to the minimum leverage capital standards, section III 
of appendix A to part 325 indicates that state nonmember banks generally 
are expected to maintain a minimum risk-based capital ratio of 
qualifying total capital to risk-weighted assets of 8 percent by 
December 31, 1992 (and at least 7.25 percent by December 31, 1990), with 
at least one-half of that total capital amount consisting of Tier 1 
capital.
    State nonmember banks (hereinafter referred to as ``banks'') 
operating with leverage capital ratios below the minimums set forth in 
part 325 will be deemed to have inadequate capital and will be in 
violation of the part 325 regulation. Furthermore, banks operating with 
risk-based capital ratios below the minimums set forth in appendix A to 
part 325 generally will be deemed to have inadequate capital. Banks 
failing to meet the minimum leverage and/or risk-based capital ratios 
normally can expect to have any application submitted to the FDIC denied 
(if such application requires the FDIC to evaluate the adequacy of the 
institution's capital structure) and also can expect to be subject to 
the use of capital directives or other formal enforcement action by the 
FDIC to increase capital.
    Capital adequacy in banks which have capital ratios at or above the 
minimums will be assessed and enforced based on the following factors 
(these same criteria will apply to any insured depository institutions 
making applications to the FDIC and to any other circumstances in which 
the FDIC is requested or required to evaluate the adequacy of a 
depository institution's capital structure):

         A. Banks Which Are Fundamentally Sound and Well-Managed

    The minimum leverage capital ratios set forth in Sec. 325.3(b)(2) 
and the minimum risk-based capital ratios set forth in section III of 
appendix A to part 325 generally will be viewed as the minimum 
acceptable capital standards for banks whose overall financial condition 
is fundamentally sound, which are well-managed and which have no 
material or significant financial weaknesses. While the FDIC will make 
this determination in each bank based upon its own condition and 
specific circumstances, this definition will generally apply to those 
banks evidencing a level of risk which is no greater than that normally 
associated with a Composite rating of 1 or 2 under the Uniform Financial 
Institutions Rating System. Banks meeting this definition which are in 
compliance with the minimum leverage and risk-based capital ratio 
standards will not generally be required by the FDIC to raise new 
capital from external sources.
    The FDIC does, however, encourage such banks to maintain capital 
well above the minimums, particularly those institutions that are 
anticipating or experiencing significant growth, and will carefully 
evaluate their earnings and growth trends, dividend policies, capital 
planning procedures and other factors important to the continuous 
maintenance of adequate capital. Adverse trends or deficiencies in these 
areas will be subject to criticism at regular examinations and may be an 
important factor in the FDIC's action on applications submitted by such 
banks. In addition, the FDIC's consideration of capital adequacy in 
banks making applications to the FDIC will also fully examine the 
expected impact of those applications on the bank's ability to maintain 
its capital adequacy. In all cases, banks should maintain capital 
commensurate with the level and nature of risks, including the volume 
and severity of adversely classified assets, to which they are exposed.

                           B. All Other Banks

    Banks not meeting the definition set forth in I.A. of this appendix, 
that is, banks evidencing a level of risk which is at least as great as 
that normally associated with a Composite rating of 3, 4, or 5 under the 
Uniform Financial Institutions Rating System, will be required to 
maintain capital higher than the minimum regulatory requirement and at a 
level deemed appropriate in relation to the degree of risk within the 
institution. These higher capital levels will normally be addressed 
through memorandums of understanding between the FDIC and the bank or, 
in cases of more pronounced risk, through the use of formal enforcement 
actions under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 
1818).

              C. Capital Requirements of Primary Regulator

    Notwithstanding I.A. and B. of this appendix, all banks (or other 
depository institutions making applications to the FDIC that require the 
FDIC to consider the adequacy of the institutions' capital structure) 
will be expected to meet any capital requirements established by their 
primary state or federal regulator which exceed the minimum capital 
requirement set forth in the FDIC's part 325 regulation. In addition, 
the FDIC will, when establishing capital requirements higher

[[Page 205]]

than the minimum set forth in the regulation, consult with an 
institution's primary state or federal regulator.

                            II. Capital Plans

    Section 325.4(b) specifies that any bank which has less than its 
minimum leverage capital requirement is deemed to be engaging in an 
unsafe or unsound banking practice unless it has submitted, and is in 
compliance with, a plan approved by the FDIC to increase its Tier 1 
leverage capital ratio to such level as the FDIC deems appropriate.
    As required under Sec. 325.104(a)(1) of this part, a bank must file 
a written capital restoration plan with the appropriate FDIC regional 
director within 45 days of the date that the bank receives notice or is 
deemed to have notice that the bank is undercapitalized, significantly 
undercapitalized or critically undercapitalized, unless the FDIC 
notifies the bank in writing that the plan is to be filed within a 
different period. The amount of time allowed to achieve the minimum 
leverage capital requirement will be evaluated by the FDIC on a case-by-
case basis and will depend on a number of factors, including the 
viability of the bank and whether it is fundamentally sound and well-
managed.
    Banks evidencing more than normal levels of risk will normally have 
their minimum capital requirements established in a formal or informal 
enforcement proceeding. The time frames for meeting these requirements 
will be set forth in such actions and will generally require some 
immediate action on the bank's part to meet its minimum capital 
requirement. The reasonableness of capital plans submitted by depository 
institutions in connection with applications as provided for in 
Sec. 325.3(d)(2) will be determined in conjunction with the FDIC's 
consideration of the application.

                         III. Written Agreements

    Section 325.4(c) provides that any insured depository institution 
with a Tier 1 capital to total assets (leverage) ratio of less than 2 
percent must enter into and be in compliance with a written agreement 
with the FDIC (or with its primary federal regulator with FDIC as a 
party to the agreement) to increase its Tier 1 leverage capital ratio to 
such level as the FDIC deems appropriate or may be subject to a section 
8(a) termination of insurance action by the FDIC. Except in the very 
rarest of circumstances, the FDIC will require that such agreements 
contemplate immediate efforts by the depository institution to acquire 
the required capital.
    A bank which has issued net worth certificates to the FDIC or 
received approval from the FDIC to defer agricultural loan losses will 
be considered to be in compliance with this written agreement 
requirement for so long as it is in compliance with the FDIC 
requirements set forth in the net worth certificate program and/or 
agricultural loan loss deferral program, provided that both its board 
and the FDIC agree that the net worth certificate or agricultural loan 
loss deferral agreements they enter into or have entered into are 
written agreements as defined in the part 325 regulation. In addition, a 
savings association with qualifying supervisory goodwill that is being 
recognized as Tier 1 capital by the association's primary federal 
regulator will be allowed to recognize this intangible asset for 
purposes of calculating core capital under part 325.
    The guidance in this section III is not intended to preclude the 
FDIC from taking section 8(a) or other enforcement action against any 
institution, regardless of its capital level, if the specific 
circumstances deem such action to be appropriate.

                         IV. Capital Components

    Section 325.2 sets forth the definition of Tier 1 capital for the 
leverage standard as well as the definitions for the various instruments 
and accounts which are included therein. Although nonvoting common 
stock, noncumulative perpetual preferred stock, and minority interests 
in consolidated subsidiaries are normally included in Tier 1 capital, 
voting common stockholders' equity generally will be expected to be the 
dominant form of Tier 1 capital. Thus, banks should avoid undue reliance 
on nonvoting equity, preferred stock and minority interests. The 
following provides some additional guidance with respect to some of the 
items that affect the calculation of Tier 1 capital.

                          A. Intangible Assets

    The FDIC permits state nonmember banks to record intangible assets 
on their books and to report the value of such assets in the 
Consolidated Reports of Condition and Income (``Call Report''). As noted 
in the instructions for preparation of the Consolidated Reports of 
Condition and Income (published by the Federal Financial Institutions 
Examination Council), intangible assets may arise from business 
combinations accounted for under the purchase method in accordance with 
Accounting Principles Board Opinion No. 16, as amended, and acquisitions 
of portions or segments of another institution's business, such as 
branch offices, mortgage servicing portfolios, and credit card 
portfolios.
    Intangible assets created from such transactions may be booked in 
accordance with generally accepted accounting principles with one 
exception. For the purpose of reporting such assets on Call Reports, 
banks reporting to the FDIC shall amortize such assets over their 
estimated useful lives or a

[[Page 206]]

period not in excess of 15 years, whichever is shorter.
    Notwithstanding the authority to report all intangible assets in the 
Consolidated Reports of Condition and Income, Sec. 325(t) of the 
regulation specifies that mortgage servicing assets, nonmortgage 
servicing assets and purchased credit card relationships are the only 
intangible assets which will be allowed as Tier 1 capital.\1\ The 
portion of equity capital represented by other types of intangible 
assets will be deducted from equity capital and assets in the 
computation of a bank's Tier 1 capital. Certain of these intangible 
assets may, however, be recognized for regulatory capital purposes if 
explicitly approved by the Director of the Division of Supervision as 
part of the bank's regulatory capital on a specific case basis. These 
intangibles will be included in regulatory capital under the terms and 
conditions that are specifically approved by the FDIC.\2\
---------------------------------------------------------------------------

    \1\ Although intangible assets in the form of mortgage servicing 
assets, nonmortgage servicing assets and purchased credit card 
relationships are generally recognized for regulatory capital purposes, 
the --deduction of part or all of the mortgage servicing assets, 
nonmortgage servicing assets and purchased credit card relationships may 
be required if the carrying amounts of these rights are excessive in 
relation to their market value or the level of the bank's capital 
accounts. In this regard, mortgage servicing assets, nonmortgage 
servicing assets and purchased credit card relationships will be 
recognized for regulatory capital purposes only to the extent the rights 
meet the conditions, limitations and restrictions described in 
Sec. 325.5(f).
    \2\ This specific approval must be received in accordance with 
Sec. 325.5(b). In evaluating whether other types of intangibles should 
be recognized for regulatory capital purposes, the FDIC will accord 
special attention to the general characteristics of the intangibles, 
including: (1) The separability of the intangible asset and the ability 
to sell it separate and apart from the bank or the bulk of the bank's 
assets, (2) the certainty that a readily identifiable stream of cash 
flows associated with the intangible asset can hold its value 
notwithstanding the future prospects of the bank, and (3) the existence 
of a market of sufficient depth to provide liquidity for the intangible 
asset. However, pursuant to section 18(n) of the Federal Deposit 
Insurance Act (12 U.S.C. 1828(n)), specific approval cannot be given for 
an unidentifiable intangible asset, such as goodwill, if acquired after 
April 12, 1989.
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    In certain instances banks may have investments in unconsolidated 
subsidiaries or joint ventures that have large volumes of intangible 
assets. In such instances the bank's consolidated statements will 
reflect an investment in a tangible asset even though such investment 
will, in fact, be represented by a large volume of intangible assets. In 
any such situation where this is material, the bank's investment in the 
unconsolidated subsidiary will be divided into a tangible and an 
intangible portion based on the percentage of intangible assets to total 
assets in the subsidiary. The intangible portion of the investment will 
be treated as if it were an intangible asset on the bank's books in the 
calculation of Tier 1 capital. However, intangible assets in the form of 
mortgage servicing assets, nonmortgage servicing assets and purchased 
credit card relationships, including servicing intangibles held by 
mortgage banking subsidiaries, are subject to the specific criteria set 
forth in Sec. 325.5(f).

                      B. Perpetual Preferred Stock

    Perpetual preferred stock is defined as preferred stock that does 
not have a maturity date, that cannot be redeemed at the option of the 
holder, and that has no other provisions that will require future 
redemption of the issue. Also, pursuant to section 18(i)(1) of the 
Federal Deposit Insurance Act (12 U.S.C. 1828(i)(1)), a state nonmember 
bank cannot, without the prior consent of the FDIC, reduce the amount or 
retire any part of its perferred stock. (This prior consent is also 
required for the reduction or retirement of any part of a state 
nonmember bank's common stock or capital notes and debentures.)
    Noncumulative perpetual preferred stock is generally included in 
Tier 1 capital. Nonetheless, it is possible for banks to issue preferred 
stock with a dividend rate which escalates to such a high rate that the 
terms become so onerous as to effectively force the bank to call the 
issue (for example, an issue with a low initial rate that is scheduled 
to escalate to much higher rates in subsequent periods). Preferred stock 
issues with such onerous terms have much the same characteristics as 
limited life preferred stock in that the bank would be effectively 
forced to redeem the issue to avoid performance of the onerous terms. 
Such instruments may be disallowed as Tier 1 capital and, for risk-based 
capital purposes, would be included in Tier 2 capital only to the extent 
that the instruments fall within the limitations applicable to 
intermediate-term preferred stock. Banks which are contemplating issues 
bearing terms which may be so characterized are encouraged to submit 
them to the appropriate FDIC regional office for review prior to 
issuance. Nothing herein shall prohibit banks from issuing floating rate 
preferred stock issues where the rate is constant in relation to some 
outside market or index rate. However, noncumulative floating rate 
instruments where the rate paid is based in some part on the current 
credit standing of

[[Page 207]]

the bank, and all cumulative preferred stock instruments, are excluded 
from Tier 1 capital. These instruments are included in Tier 2 capital 
for risk-based capital purposes in accordance with the limitations set 
forth in appendix A to part 325.
    The FDIC will also require that issues of perpetual preferred stock 
be consistent with safe and sound banking practices. Issues which would 
unduly enrich insiders or which contain dividend rates or other terms 
which are inconsistent with safe and sound banking practices will likely 
be the subject of appropriate supervisory response from the FDIC. Banks 
contemplating preferred stock issues which may pose safety and soundness 
concerns are encouraged to submit such issues to the appropriate FDIC 
regional office for review prior to sale. Pursuant to Sec. 325.5(e), 
capital instruments that contain or that are subject to any conditions, 
covenants, terms, restrictions or provisions that are inconsistent with 
safe and sound banking practices will not qualify as capital under part 
325.

   C. Other Instruments or Transactions Which Fail to Provide Capital 
                                 Support

    Section 325.5(b) specifies that any capital component or balance 
sheet entry or account which has characteristics or terms that diminish 
its contribution to an insured depository institution's ability to 
absorb losses shall be deducted from capital. An example involves 
certain types of minority interests in consolidated subsidiaries. 
Minority interests in consolidated subsidiaries have been included in 
capital based on the fact that they provide capital support to the risk 
in the consolidated subsidiaries. Certain transactions have been 
structured where a bank forms a subsidiary by transferring essentially 
risk-free or low-risk assets to the subsidiary in exchange for common 
stock of the subsidiary. The subsidiary then sells preferred stock to 
third parties.
    The preferred stock becomes a minority interest in a consolidated 
subsidiary but, in effect, represents an essentially risk-free or low-
risk investment for the preferred stockholders. This type of minority 
interest fails to provide any meaningful capital support to the 
consolidated entity inasmuch as it has a preferred claim on the 
essentially risk-free or low-risk assets of the subsidiary. In addition, 
certain minority interests are not substantially equivalent to permanent 
equity in that the interests must be paid off on specified future dates, 
or at the option of the holders of the minority interests, or contain 
other provisions or features that limit the ability of the minority 
interests to effectively absorb losses. Capital instruments or 
transactions of this nature which fail to absorb losses or provide 
meaningful capital support will be deducted from Tier 1 capital.

                      D. Mandatory Convertible Debt

    Mandatory convertible debt securities are subordinated debt 
instruments that require the issuer to convert such instruments into 
common or perpetual preferred stock by a date at or before the maturity 
of the debt instruments. The maturity of these instruments must be 12 
years or less and the instruments must also meet the other criteria set 
forth in appendix A to part 325. Mandatory convertible debt is excluded 
from Tier 1 capital but, for risk-based capital purposes, is included in 
Tier 2 capital as a ``hybrid capital instrument.''
    So-called ``equity commitment notes,'' which merely require a bank 
to sell common or perpetual preferred stock during the life of the 
subordinated debt obligation, are specifically excluded from the 
definition of mandatory convertible debt securities and are only 
included in Tier 2 capital under the risk-based capital framework to the 
extent that they satisfy the requirements and limitations for ``term 
subordinated debt'' set forth in appendix A to part 325.

                  V. Analysis of Consolidated Companies

    In determining a bank's compliance with its minimum capital 
requirements the FDIC will, with two exceptions, generally utilize the 
bank's consolidated statements as defined in the instructions for the 
preparation of Consolidated Reports of Condition and Income.
    The first exception relates to securities subsidiaries of state 
nonmember banks which are subject to Sec. 337.4 of the FDIC's rules and 
regulations (12 CFR 337.4). Any subsidiary subject to this section must 
be a bona fide subsidiary which is adequately capitalized. In addition, 
Sec. 337.4(b)(3) requires that any insured state nonmember bank's 
investment in such a subsidiary shall not be counted towards the bank's 
capital. In those instances where the securities subsidiary is 
consolidated in the bank's Consolidated Report of Condition it will be 
necessary, for the purpose of calculating the bank's Tier 1 capital, to 
adjust the Consolidated Report of Condition in such a manner as to 
reflect the bank's investment in the securities subsidiary on the equity 
method. In this case, and in those cases where the securities subsidiary 
has not been consolidated, the investment in the subsidiary will then be 
deducted from the bank's capital and assets prior to calculation of the 
bank's Tier 1 capital ratio. (Where deemed appropriate, the FDIC may 
also consider deducting investments in other subsidiaries, either on a 
case-by-case basis or, as with securities subsidiaries, based on the 
general characteristics or functional nature of the subsidiaries.)
    The second exception relates to the treatment of subsidiaries of 
insured banks that are domestic depository institutions such as

[[Page 208]]

commercial banks, savings banks, or savings associations. These 
subsidiaries are not consolidated on a line-by-line basis with the 
insured bank parent in the bank parent's Consolidated Reports of 
Condition and Income. Rather, the instructions for these reports provide 
that bank investments in such depository institution subsidiaries are to 
be reported on an unconsolidated basis in accordance with the equity 
method. Since the FDIC believes that the minimum capital requirements 
should apply to a bank's depository activities in their entirety, 
regardless of the form that the organization's corporate structure 
takes, it will be necessary, for the purpose of calculating the bank's 
Tier 1 leverage and total risk-based capital ratios, to adjust a bank 
parent's Consolidated Report of Condition to consolidate its domestic 
depository institution subsidiaries on a line-by-line basis. The 
financial statements of the subsidiary that are used for this 
consolidation must be prepared in the same manner as the Consolidated 
Report of Condition.
    The FDIC will, in determining the capital adequacy of a bank which 
is a member of a bank holding company or chain banking group, consider 
the degree of leverage and risks undertaken by the parent company or 
other affiliates. Where the level of risk in a holding company system is 
no more than normal and the consolidated company is adequately 
capitalized at all appropriate levels, the FDIC generally will not 
require additional capital in subsidiary banks under its supervision 
over and above that which would be required for the subsidiary bank on 
its own merit. In cases where a holding company or other affiliated 
banks (or other companies) evidence more than a normal degree of risk 
(either by virtue of the quality of their assets, the nature of the 
activities conducted, or other factors) or where the affiliated 
organizations are inadequately capitalized, the FDIC will consider the 
potential impact of the additional risk or excess leverage upon an 
individual bank to determine if such factors will likely result in 
excessive requirements for dividends, management fees, or other support 
to the holding company or affiliated organizations which would be 
detrimental to the bank. Where the excessive risk or leverage in such 
organizations is determined to be potentially detrimental to the bank's 
condition or its ability to maintain adequate capital, the FDIC may 
initiate appropriate supervisory action to limit the bank's ability to 
support its weaker affiliates and/or require higher than minimum capital 
ratios in the bank.

          VI. Applicability of Part 325 to Savings Associations

    Section 325.3(c) indicates that, where the FDIC is required to 
evaluate the adequacy of any depository institution's (including any 
savings association's) capital structure in conjunction with an 
application filed by the institution, the FDIC will not approve the 
application if the depository institution does not meet the minimum 
leverage capital requirement set forth in Sec. 325.3(b).
    Also, Sec. 325.4(b) states that, under certain conditions specified 
in section 8(t) of the Federal Deposit Insurance Act, the FDIC may take 
section 8(b)(1) and/or 8(c) enforcement action against a savings 
association that is deemed to be engaged in an unsafe or unsound 
practice on account of its inadequate capital structure. Section 
325.4(c) further specifies that any insured depository institution with 
a Tier 1 leverage ratio (as defined in part 325) of less than 2 percent 
is deemed to be operating in an unsafe or unsound condition pursuant to 
section 8(a) of the Federal Deposit Insurance Act.
    In addition, the Office of Thrift Supervision (OTS), as the primary 
federal regulator of savings associations, has established minimum core 
capital leverage, tangible capital and risk-based capital requirements 
for savings associations (12 CFR part 567). In this regard, certain 
differences exist between the methods used by the OTS to calculate a 
savings association's capital and the methods set forth by the FDIC in 
part 325. These differences include, among others, the core capital 
treatment for investments in subsidiaries and for certain intangible 
assets.
    In determining whether a savings association's application should be 
approved pursuant to Sec. 325.3(c), or whether an unsafe or unsound 
practice or condition exists pursuant to Secs. 325.4(b) and 325.4(c), 
the FDIC will consider the extent of the savings association's capital 
as determined in accordance with part 325. However, the FDIC will also 
consider the extent to which a savings association is in compliance with 
(a) the minimum capital requirements set forth by the OTS, (b) any 
related capital plans for meeting the minimum capital requirements 
approved by the OTS, and/or (c) any other criteria deemed by the FDIC as 
appropriate based on the association's specific circumstances.

[56 FR 10166, Mar. 11, 1991, as amended at 58 FR 6369, Jan. 28, 1993; 58 
FR 8219, Feb. 12, 1993; 58 FR 60103, Nov. 15, 1993; 60 FR 39232, Aug. 1, 
1995; 63 FR 42678, Aug. 10, 1998]

[[Page 209]]

 Appendix C to Part 325--Risk-Based Capital for State Non-Member Banks: 
                               Market Risk

      Section 1. Purpose, Applicability, Scope, and Effective Date

    (a) Purpose. The purpose of this appendix is to ensure that banks 
with significant exposure to market risk maintain adequate capital to 
support that exposure.\1\ This appendix supplements and adjusts the 
risk-based capital ratio calculations under appendix A of this part with 
respect to those banks.
---------------------------------------------------------------------------

    \1\ This appendix is based on a framework developed jointly by 
supervisory authorities from the countries represented on the Basle 
Committee on Banking Supervision and endorsed by the Group of Ten 
Central Bank Governors. The framework is described in a Basle Committee 
paper entitled ``Amendment to the Capital Accord to Incorporate Market 
Risks,'' January 1996. Also see modifications issued in September 1997.
---------------------------------------------------------------------------

    (b) Applicability. (1) This appendix applies to any insured state 
nonmember bank whose trading activity \2\ (on a worldwide consolidated 
basis) equals:
---------------------------------------------------------------------------

    \2\ Trading activity means the gross sum of trading assets and 
liabilities as reported in the bank's most recent quarterly Consolidated 
Report of Condition and Income (Call Report).
---------------------------------------------------------------------------

    (i) 10 percent or more of total assets; \3\ or
---------------------------------------------------------------------------

    \3\ Total assets means quarter-end total assets as reported in the 
bank's most recent Call Report.
---------------------------------------------------------------------------

    (ii) $1 billion or more.
    (2) The FDIC may additionally apply this appendix to any insured 
state nonmember bank if the FDIC deems it necessary or appropriate for 
safe and sound banking practices.
    (3) The FDIC may exclude an insured state nonmember bank otherwise 
meeting the criteria of paragraph (b)(1) of this section from coverage 
under this appendix if it determines the bank meets such criteria as a 
consequence of accounting, operational, or similar considerations, and 
the FDIC deems it consistent with safe and sound banking practices.
    (c) Scope. The capital requirements of this appendix support market 
risk associated with a bank's covered positions.
    (d) Effective date. This appendix is effective as of January 1, 
1997. Compliance is not mandatory until January 1, 1998. Subject to 
supervisory approval, a bank may opt to comply with this appendix as 
early as January 1, 1997.\4\
---------------------------------------------------------------------------

    \4\ A bank that voluntarily complies with the final rule prior to 
January 1, 1998, must comply with all of its provisions.
---------------------------------------------------------------------------

                         Section 2. Definitions

    For purposes of this appendix, the following definitions apply:
    (a) Covered positions means all positions in a bank's trading 
account, and all foreign exchange \5\ and commodity positions, whether 
or not in the trading account.\6\ Positions include on-balance-sheet 
assets and liabilities and off-balance-sheet items. Securities subject 
to repurchase and lending agreements are included as if they are still 
owned by the lender.
---------------------------------------------------------------------------

    \5\ Subject to FDIC review, a bank may exclude structural positions 
in foreign currencies from its covered positions.
    \6\ The term trading account is defined in the instructions to the 
Call Report.
---------------------------------------------------------------------------

    (b) Market risk means the risk of loss resulting from movements in 
market prices. Market risk consists of general market risk and specific 
risk components.
    (1) General market risk means changes in the market value of covered 
positions resulting from broad market movements, such as changes in the 
general level of interest rates, equity prices, foreign exchange rates, 
or commodity prices.
    (2) Specific risk means changes in the market value of specific 
positions due to factors other than broad market movements and includes 
event and default risk as well as idiosyncratic variations.
    (c) Tier 1 and Tier 2 capital are defined in appendix A of this 
part.
    (d) Tier 3 capital is subordinated debt that is unsecured; is fully 
paid up; has an original maturity of at least two years; is not 
redeemable before maturity without prior approval by the FDIC; includes 
a lock-in clause precluding payment of either interest or principal 
(even at maturity) if the payment would cause the issuing bank's risk-
based capital ratio to fall or remain below the minimum required under 
appendix A of this part; and does not contain and is not covered by any 
covenants, terms, or restrictions that are inconsistent with safe and 
sound banking practices.
    (e) Value-at-risk (VAR) means the estimate of the maximum amount 
that the value of covered positions could decline during a fixed holding 
period within a stated confidence level, measured in accordance with 
section 4 of this appendix.

  Section 3. Adjustments to the Risk-Based Capital Ratio Calculations.

    (a) Risk-based capital ratio denominator. A bank subject to this 
appendix shall calculate its risk-based capital ratio denominator as 
follows:
    (1) Adjusted risk-weighted assets. Calculate adjusted risk-weighted 
assets, which equals

[[Page 210]]

risk-weighted assets (as determined in accordance with appendix A of 
this part), excluding the risk-weighted amounts of all covered positions 
(except foreign exchange positions outside the trading account and over-
the-counter derivative positions).\7\
---------------------------------------------------------------------------

    \7\ Foreign exchange positions outside the trading account and all 
over-the-counter derivative positions, whether or not in the trading 
account, must be included in adjusted risk weighted assets as determined 
in appendix A of this part.
---------------------------------------------------------------------------

    (2) Measure for market risk. Calculate the measure for market risk, 
which equals the sum of the VAR-based capital charge, the specific risk 
add-on (if any), and the capital charge for de minimis exposures (if 
any).
    (i) VAR-based capital charge. The VAR-based capital charge equals 
the higher of:
    (A) The previous day's VAR measure; or
    (B) The average of the daily VAR measures for each of the preceding 
60 business days multiplied by three, except as provided in section 4(e) 
of this appendix;
    (ii) Specific risk add-on. The specific risk add-on is calculated in 
accordance with section 5 of this appendix; and
    (iii) Capital charge for de minimis exposure. The capital charge for 
de minimis exposure is calculated in accordance with section 4(a) of 
this appendix.
    (3) Market risk equivalent assets. Calculate market risk equivalent 
assets by multiplying the measure for market risk (as calculated in 
paragraph (a)(2) of this section) by 12.5.
    (4) Denominator calculation. Add market risk equivalent assets (as 
calculated in paragraph (a)(3) of this section) to adjusted risk-
weighted assets (as calculated in paragraph (a)(1) of this section). The 
resulting sum is the bank's risk-based capital ratio denominator.
    (b) Risk-based capital ratio numerator. A bank subject to this 
appendix shall calculate its risk-based capital ratio numerator by 
allocating capital as follows:
    (1) Credit risk allocation. Allocate Tier 1 and Tier 2 capital equal 
to 8.0 percent of adjusted risk-weighted assets (as calculated in 
paragraph (a)(1) of this section).\8\
---------------------------------------------------------------------------

    \8\ A bank may not allocate Tier 3 capital to support credit risk 
(as calculated under appendix A of this part).
---------------------------------------------------------------------------

    (2) Market risk allocation. Allocate Tier 1, Tier 2, and Tier 3 
capital equal to the measure for market risk as calculated in paragraph 
(a)(2) of this section. The sum of Tier 2 and Tier 3 capital allocated 
for market risk must not exceed 250 percent of Tier 1 capital allocated 
for market risk. (This requirement means that Tier 1 capital allocated 
in this paragraph (b)(2) must equal at least 28.6 percent of the measure 
for market risk.)
    (3) Restrictions. (i) The sum of Tier 2 capital (both allocated and 
excess) and Tier 3 capital (allocated in paragraph (b)(2) of this 
section) may not exceed 100 percent of Tier 1 capital (both allocated 
and excess).\9\
---------------------------------------------------------------------------

    \9\ Excess Tier 1 capital means Tier 1 capital that has not been 
allocated in paragraphs (b)(1) and (b)(2) of this section. Excess Tier 2 
capital means Tier 2 capital that has not been allocated in paragraph 
(b)(1) and (b)(2) of this section, subject to the restrictions in 
paragraph (b)(3) of this section.
---------------------------------------------------------------------------

    (ii) Term subordinated debt (and intermediate-term preferred stock 
and related surplus) included in Tier 2 capital (both allocated and 
excess) may not exceed 50 percent of Tier 1 capital (both allocated and 
excess).
    (4) Numerator calculation. Add Tier 1 capital (both allocated and 
excess), Tier 2 capital (both allocated and excess), and Tier 3 capital 
(allocated under paragraph (b)(2) of this section). The resulting sum is 
the bank's risk-based capital ratio numerator.

                       Section 4. Internal Models

    (a) General. For risk-based capital purposes, a bank subject to this 
appendix must use its internal model to measure its daily VAR, in 
accordance with the requirements of this section.\10\ The FDIC may 
permit a bank to use alternative techniques to measure the market risk 
of de minimis exposures so long as the techniques adequately measure 
associated market risk.
---------------------------------------------------------------------------

    \10\ A bank's internal model may use any generally accepted 
measurement techniques, such as variance-covariance models, historical 
simulations, or Monte Carlo simulations. However, the level of 
sophistication and accuracy of a bank's internal model must be 
commensurate with the nature and size of its covered positions. A bank 
that modifies its existing modeling procedures to comply with the 
requirements of this appendix for risk-based capital purposes should, 
nonetheless, continue to use the internal model it considers most 
appropriate in evaluating risks for other purposes.
---------------------------------------------------------------------------

    (b) Qualitative requirements. A bank subject to this appendix must 
have a risk management system that meets the following minimum 
qualitative requirements:
    (1) The bank must have a risk control unit that reports directly to 
senior management and is independent from business trading units.
    (2) The bank's internal risk measurement model must be integrated 
into the daily management process.
    (3) The bank's policies and procedures must identify, and the bank 
must conduct, appropriate stress tests and backtests.\11\ The

[[Page 211]]

bank's policies and procedures must identify the procedures to follow in 
response to the results of such tests.
---------------------------------------------------------------------------

    \11\ Stress tests provide information about the impact of adverse 
market events on a bank's covered positions. Backtests provide 
information about the accuracy of an internal model by comparing a 
bank's daily VAR measures to its corresponding daily trading profits and 
losses.
---------------------------------------------------------------------------

    (4) The bank must conduct independent reviews of its risk 
measurement and risk management systems at least annually.
    (c) Market risk factors. The bank's internal model must use risk 
factors sufficient to measure the market risk inherent in all covered 
positions. The risk factors must address interest rate risk,\12\ equity 
price risk, foreign exchange rate risk, and commodity price risk.
---------------------------------------------------------------------------

    \12\ For material exposures in the major currencies and markets, 
modeling techniques must capture spread risk and must incorporate enough 
segments of the yield curve--at least six--to capture differences in 
volatility and less than perfect correlation of rates along the yield 
curve.
---------------------------------------------------------------------------

    (d) Quantitative requirements. For regulatory capital purposes, VAR 
measures must meet the following quantitative requirements:
    (1) The VAR measures must be calculated on a daily basis using a 99 
percent, one-tailed confidence level with a price shock equivalent to a 
ten-business day movement in rates and prices. In order to calculate VAR 
measures based on a ten-day price shock, the bank may either calculate 
ten-day figures directly or convert VAR figures based on holding periods 
other than ten days to the equivalent of a ten-day holding period (for 
instance, by multiplying a one-day VAR measure by the square root of 
ten).
    (2) The VAR measures must be based on an historical observation 
period (or effective observation period for a bank using a weighting 
scheme or other similar method) of at least one year. The bank must 
update data sets at least once every three months or more frequently as 
market conditions warrant.
    (3) The VAR measures must include the risks arising from the non-
linear price characteristics of options positions and the sensitivity of 
the market value of the positions to changes in the volatility of the 
underlying rates or prices. A bank with a large or complex options 
portfolio must measure the volatility of options positions by different 
maturities.
    (4) The VAR measures may incorporate empirical correlations within 
and across risk categories, provided that the bank's process for 
measuring correlations is sound. In the event that the VAR measures do 
not incorporate empirical correlations across risk categories, then the 
bank must add the separate VAR measures for the four major risk 
categories to determine its aggregate VAR measure.
    (e) Backtesting. (1) Beginning one year after a bank starts to 
comply with this appendix, a bank must conduct backtesting by comparing 
each of its most recent 250 business days' actual net trading profit or 
loss \13\ with the corresponding daily VAR measures generated for 
internal risk measurement purposes and calibrated to a one-day holding 
period and a 99 percent, one-tailed confidence level.
---------------------------------------------------------------------------

    \13\ Actual net trading profits and losses typically include such 
things as realized and unrealized gains and losses on portfolio 
positions as well as fee income and commissions associated with trading 
activities.
---------------------------------------------------------------------------

    (2) Once each quarter, the bank must identify the number of 
exceptions, that is, the number of business days for which the magnitude 
of the actual daily net trading loss, if any, exceeds the corresponding 
daily VAR measure.
    (3) A bank must use the multiplication factor indicated in Table 1 
of this appendix in determining its capital charge for market risk under 
section 3(a)(2)(i)(B) of this appendix until it obtains the next 
quarter's backtesting results, unless the FDIC determines that a 
different adjustment or other action is appropriate.

     Table 1--Multiplication Factor Based on Results of Backtesting
------------------------------------------------------------------------
                                                          Multiplication
                  Number of exceptions                        factor
------------------------------------------------------------------------
4 or fewer..............................................          3.00
5.......................................................          3.40
6.......................................................          3.50
7.......................................................          3.65
8.......................................................          3.75
9.......................................................          3.85
10 or more..............................................          4.00
------------------------------------------------------------------------

                        Section 5. Specific Risk

    (a) Modeled specific risk. A bank may use its internal model to 
measure specific risk. If the bank has demonstrated to the FDIC that its 
internal model measures the specific risk, including event and default 
risk as well as idiosyncratic variation, of covered debt and equity 
positions and includes the specific risk measure in the VAR-based 
capital charge in section 3(a)(2)(i) of this appendix, then the bank has 
no specific risk add-on for purposes of section 3(a)(2)(ii) of this 
appendix. The model should explain the historical price variation in the 
trading portfolio and capture concentration, both magnitude and changes 
in composition. The model should also be robust to an adverse 
environment and have been validated through backtesting which assesses 
whether specific risk is being accurately captured.

[[Page 212]]

    (b) Add-on charge for modeled specific risk. A bank that 
incorporates specific risk in its internal model but fails to 
demonstrate to the FDIC that its internal model adequately measures all 
aspects of specific risk for covered debt and equity positions, 
including event and default risk, as provided by section 5(a) of this 
appendix, must calculate the bank's specific risk add-on for purposes of 
section 3(a)(2)(ii) of this appendix as follows:
    (1) If the model is capable of valid separation of the VAR measure 
into a specific risk portion and a general market risk portion, then the 
specific risk add-on is equal to the previous day's specific risk 
portion.
    (2) If the model does not separate the VAR measure into a specific 
risk portion and a general market risk portion, then the specific risk 
add-on is the sum of the previous day's VAR measures for subportfolios 
of covered debt and equity positions.
    (c) Add-on charge if specific risk is not modeled. If a bank does 
not model specific risk in accordance with paragraph (a) or (b) of this 
section, the bank's specific risk add-on charge for purposes of section 
3(a)(2)(ii) of this appendix equals the sum of the components for 
covered debt and equity positions. If a bank models, in accordance with 
paragraph (a) or (b) of this section, the specific risk of covered debt 
positions but not covered equity positions (or vice versa), then the 
bank's specific risk add-on charge for the positions not modeled is the 
component for covered debt or equity positions as appropriate:
    (1) Covered debt positions. (i) For purposes of this section 5, 
covered debt positions means fixed-rate or floating-rate debt 
instruments located in the trading account and instruments located in 
the trading account with values that react primarily to changes in 
interest rates, including certain non-convertible preferred stock, 
convertible bonds, and instruments subject to repurchase and lending 
agreements. Also included are derivatives (including written and 
purchased options) for which the underlying instrument is a covered debt 
instrument that is subject to a non-zero specific risk capital charge.
    (A) For covered debt positions that are derivatives, a bank must 
risk-weight (as described in paragraph (c)(1)(iii) of this section) the 
market value of the effective notional amount of the underlying debt 
instrument or index portfolio. Swaps must be included as the notional 
position in the underlying debt instrument or index portfolio, with a 
receiving side treated as a long position and a paying side treated as a 
short position; and
    (B) For covered debt positions that are options, whether long or 
short, a bank must risk-weight (as described in paragraph (c)(1)(iii) of 
this section) the market value of the effective notional amount of the 
underlying debt instrument or index multiplied by the option's delta.
    (ii) A bank may net long and short covered debt positions (including 
derivatives) in identical debt issues or indices.
    (iii) A bank must multiply the absolute value of the current market 
value of each net long or short covered debt position by the appropriate 
specific risk weighting factor indicated in Table 2 of this appendix. 
The specific risk capital charge component for covered debt positions is 
the sum of the weighted values.

   Table 2--Specific Risk Weighting Factors for Covered Debt Positions
------------------------------------------------------------------------
                                                               Weighting
              Category                  Remaining maturity    factor (in
                                          (contractual)        percent)
------------------------------------------------------------------------
Government.........................  N/A....................        0.00
Qualifying.........................  6 months or less.......        0.25
                                     Over 6 months to 24            1.00
                                      months.
                                     Over 24 months.........        1.60
Other..............................  N/A....................        8.00
------------------------------------------------------------------------

    (A) The government category includes all debt instruments of central 
governments of OECD-based countries \14\ including bonds, Treasury 
bills, and other short-term instruments, as well as local currency 
instruments of non-OECD central governments to the extent the bank has 
liabilities booked in that currency.
---------------------------------------------------------------------------

    \14\ Organization for Economic Cooperation and Development (OECD)-
based countries is defined in appendix A of this part.
---------------------------------------------------------------------------

    (B) The qualifying category includes debt instruments of U.S. 
government-sponsored agencies, general obligation debt instruments 
issued by states and other political subdivisions of OECD-based 
countries, multilateral development banks, and debt instruments issued 
by U.S. depository institutions or OECD-banks that do not qualify as 
capital of the issuing institution.\15\ This category also includes 
other debt instruments, including corporate debt and revenue instruments 
issued by states and other political subdivisions of OECD countries, 
that are:
---------------------------------------------------------------------------

    \15\ U.S. government-sponsored agencies, multilateral development 
banks, and OECD banks are defined in appendix A of this part.
---------------------------------------------------------------------------

    (1) Rated investment-grade by at least two nationally recognized 
credit rating services;
    (2) Rated investment-grade by one nationally recognized credit 
rating agency and not rated less than investment-grade by any other 
credit rating agency; or
    (3) Unrated, but deemed to be of comparable investment quality by 
the reporting bank and the issuer has instruments listed on a recognized 
stock exchange, subject to review by the FDIC.

[[Page 213]]

    (C) The other category includes debt instruments that are not 
included in the government or qualifying categories.
    (2) Covered equity positions. (i) For purposes of this section 5, 
covered equity positions means equity instruments located in the trading 
account and instruments located in the trading account with values that 
react primarily to changes in equity prices, including voting or non-
voting common stock, certain convertible bonds, and commitments to buy 
or sell equity instruments. Also included are derivatives (including 
written and purchased options) for which the underlying is a covered 
equity position.
    (A) For covered equity positions that are derivatives, a bank must 
risk weight (as described in paragraph (c)(2)(iii) of this section) the 
market value of the effective notional amount of the underlying equity 
instrument or equity portfolio. Swaps must be included as the notional 
position in the underlying equity instrument or index portfolio, with a 
receiving side treated as a long position and a paying side treated as a 
short position; and
    (B) For covered equity positions that are options, whether long or 
short, a bank must risk weight (as described in paragraph (c)(2)(iii) of 
this section) the market value of the effective notional amount of the 
underlying equity instrument or index multiplied by the option's delta.
    (ii) A bank may net long and short covered equity positions 
(including derivatives) in identical equity issues or equity indices in 
the same market.\16\
---------------------------------------------------------------------------

    \16\ A bank may also net positions in depository receipts against an 
opposite position in the underlying equity or identical equity in 
different markets, provided that the bank includes the costs of 
conversion.
---------------------------------------------------------------------------

    (iii)(A) A bank must multiply the absolute value of the current 
market value of each net long or short covered equity position by a risk 
weighting factor of 8.0 percent, or by 4.0 percent if the equity is held 
in a portfolio that is both liquid and well-diversified.\17\ For covered 
equity positions that are index contracts comprising a well-diversified 
portfolio of equity instruments, the net long or short position is 
multiplied by a risk weighting factor of 2.0 percent.
---------------------------------------------------------------------------

    \17\ A portfolio is liquid and well-diversified if: (1) it is 
characterized by a limited sensitivity to price changes of any single 
equity issue or closely related group of equity issues held in the 
portfolio; (2) the volatility of the portfolio's value is not dominated 
by the volatility of any individual equity issue or by equity issues 
from any single industry or economic sector; (3) it contains a large 
number of individual equity positions, with no single position 
representing a substantial portion of the portfolio's total market 
value; and (4) it consists mainly of issues traded on organized 
exchanges or in well-established over-the-counter markets.
---------------------------------------------------------------------------

    (B) For covered equity positions from the following futures-related 
arbitrage strategies, a bank may apply a 2.0 percent risk weighting 
factor to one side (long or short) of each position with the opposite 
side exempt from charge, subject to review by the FDIC:
    (1) Long and short positions in exactly the same index at different 
dates or in different market centers; or
    (2) Long and short positions in index contracts at the same date in 
different but similar indices.
    (C) For futures contracts on broadly-based indices that are matched 
by offsetting positions in a basket of stocks comprising the index, a 
bank may apply a 2.0 percent risk weighting factor to the futures and 
stock basket positions (long and short), provided that such trades are 
deliberately entered into and separately controlled, and that the basket 
of stocks comprises at least 90 percent of the capitalization of the 
index.
    (iv) The specific risk capital charge component for covered equity 
positions is the sum of the weighted values.

[61 FR 47376, Sept. 6, 1996, as amended at 62 FR 68068, Dec. 30, 1997; 
64 FR 19038, Apr. 19, 1999]

    Effective Date Note: At 65 FR 75859, Dec. 5, 2000, appendix C to 
part 325, in section 3, paragraph (a)(1) was revised, effective Jan. 4, 
2001. For the convenience of the user, the revised text is set forth as 
follows:

 Appendix C to Part 325--Risk-Based Capital for State Non-Member Banks: 
                               Market Risk

                                * * * * *

   Section 3. Adjustments to the Risk-Based Capital Ratio Calculations

    (a) * * *

                                * * * * *

    (1) Adjusted risk-weighted assets. Calculate adjusted risk-weighted 
assets, which equals risk-weighted assets (as determined in accordance 
with appendix A of this part), excluding the risk-weighted amounts of 
all covered positions (except foreign exchange positions outside the 
trading account and over-the-counter derivative positions) \7\ and 
receivables arising from the posting of cash collateral that is 
associated with securities borrowing transactions to the extent the 
receivables are collateralized by the market value of the borrowed 
securities, provided that the following conditions are met:

[[Page 214]]

    (i) The transaction is based on securities includable in the trading 
book that are liquid and readily marketable,
    (ii) The transaction is marked to market daily,
    (iii) The transaction is subject to daily margin maintenance 
requirements,
    (iv) The transaction is a securities contract for the purposes of 
section 555 of the Bankruptcy Code (11 U.S.C. 555), a qualified 
financial contract for the purposes of section 11(e)(8) of the Federal 
Deposit Insurance Act (12 U.S.C. 1821(e)(8)), or a netting contract 
between or among financial institutions for the purposes of sections 
401-407 of the Federal Deposit Insurance Corporation Improvement Act of 
1991 (12 U.S.C. 4401-4407), or the Board's Regulation EE (12 CFR Part 
231).

                                * * * * *

    \7\ Foreign exchange positions outside the trading account and all 
over-the-counter derivative positions, whether or not in the trading 
account, must be included in the adjusted risk weighted assets as 
determined in appendix A of this part.



PART 326--MINIMUM SECURITY DEVICES AND PROCEDURES AND BANK SECRECY ACT \1\ COMPLIANCE--Table of Contents



---------------------------------------------------------------------------

    \1\ In its original form, subchapter II of chapter 53 of title 31 
U.S.C., was part of Pub. L. 91-508 which requires recordkeeping for and 
reporting of currency transactions by banks and others and is commonly 
known as the Bank Secrecy Act.
---------------------------------------------------------------------------

                 Subpart A--Minimum Security Procedures

Sec.
326.0  Authority, purpose, and scope.
326.1  Definitions.
326.2  Designation of security officer.
326.3  Security program.
326.4  Reports.

    Subpart B--Procedures for Monitoring Bank Secrecy Act Complianace

326.8  Bank Secrecy Act compliance.

    Authority: 12 U.S.C. 1813, 1815, 1817, 1818, 1819 [Tenth], 1881-
1883; 31 U.S.C. 5311-5324.



                 Subpart A--Minimum Security Procedures

    Source: 56 FR 13581, Apr. 3, 1991, unless otherwise noted.



Sec. 326.0  Authority, purpose, and scope.

    (a) This part is issued by the Federal Deposit Insurance Corporation 
(``FDIC'') pursuant to section 3 of the Bank Protection Act of 1968 (12 
U.S.C. 1882). It applies to insured state banks that are not members of 
the Federal Reserve System. It requires each bank to adopt appropriate 
security procedures to discourage robberies, burglaries, and larcenies 
and to assist in identifying and apprehending persons who commit such 
acts.
    (b) It is the responsibility of the bank's board of directors to 
comply with this part and ensure that a written security program for the 
bank's main office and branches is developed and implemented.

(Approved by the Office of Management and Budget under control number 
3064-0095)



Sec. 326.1  Definitions.

    For the purposes of this part--
    (a) The term insured nonmember bank means any bank, including a 
foreign bank having a branch the deposits of which are insured in 
accordance with the provisions of the Federal Deposit Insurance Act, 
which is not a member of the Federal Reserve System. The term does not 
include any institution chartered or licensed by the Comptroller of the 
Currency, any District bank, or any savings association.
    (b) The term banking office includes any branch of an insured 
nonmember bank, and, in the case of an insured state nonmember bank, it 
includes the main office of that bank.
    (c) The term branch for a bank chartered under the laws of any state 
of the United States includes any branch bank, branch office, branch 
agency, additional office, or any branch place of business located in 
any state or territory of the United States, District of Columbia, 
Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific 
Islands, the Northern Mariana Islands or the Virgin Islands at which 
deposits are received or checks paid or money lent. In the case of a 
foreign bank, as defined in Sec. 347.202 of this chapter, the term 
branch has the same

[[Page 215]]

meaning given in Sec. 347.202 of this chapter.

[56 FR 13581, Apr. 3, 1991, as amended at 63 FR 17075, Apr. 8, 1998]



Sec. 326.2  Designation of security officer.

    Upon the issuance of federal deposit insurance, the board of 
directors of each insured nonmember bank \2\ shall designate a security 
officer who shall have the authority, subject to the approval of the 
board of directors, to develop, within a reasonable time, but no later 
than 180 days, and to administer a written security program for each 
banking office.
---------------------------------------------------------------------------

    \2\ The term board of directors includes the managing official of an 
insured branch of a foreign bank for purposes of 12 CFR 326.0-326.4.
---------------------------------------------------------------------------



Sec. 326.3  Security program.

    (a) Contents of security program. The security program shall:
    (1) Establish procedures for opening and closing for business and 
for the safekeeping of all currency, negotiable securities, and similar 
valuables at all times;
    (2) Establish procedures that will assist in identifying persons 
committing crimes against the bank and that will preserve evidence that 
may aid in their identification and prosecution; such procedures may 
include, but are not limited to:
    (i) Retaining a record of any robbery, burglary, or larceny 
committed against the bank;
    (ii) Maintaining a camera that records activity in the banking 
office; and
    (iii) Using identification devices, such as prerecorded serial-
numbered bills, or chemical and electronic devices;
    (3) Provide for initial and periodic training of officers and 
employees in their responsibilities under the security program and in 
proper employee conduct during and after a robbery, burglary or larceny; 
and
    (4) Provide for selecting, testing, operating and maintaining 
appropriate security devices, as specified in paragraph (b) of this 
section.
    (b) Security devices. Each insured nonmember bank shall have, at a 
minimum, the following security devices:
    (1) A means of protecting cash or other liquid assets, such as a 
vault, safe, or other secure space;
    (2) A lighting system for illuminating, during the hours of 
darkness, the area around the vault, if the vault is visible from 
outside the banking office;
    (3) An alarm system or other appropriate device for promptly 
notifying the nearest responsible law enforcement officers of an 
attempted or perpetrated robbery or burglary;
    (4) Tamper-resistant locks on exterior doors and exterior windows 
that may be opened; and
    (5) Such other devices as the security officer determines to be 
appropriate, taking into consideration:
    (i) The incidence of crimes against financial institutions in the 
area;
    (ii) The amount of currency or other valuables exposed to robbery, 
burglary, and larceny;
    (iii) The distance of the banking office from the nearest 
responsible law enforcement officers;
    (iv) The cost of the security devices;
    (v) Other security measures in effect at the banking office; and
    (vi) The physical characteristics of the structure of the banking 
office and its surroundings.



Sec. 326.4  Reports.

    The security officer for each insured nonmember bank shall report at 
least annually to the bank's board of directors on the implementation, 
administration, and effectiveness of the security program.



    Subpart B--Procedures for Monitoring Bank Secrecy Act Compliance



Sec. 326.8  Bank Secrecy Act compliance.

    (a) Purpose. This subpart is issued to assure that all insured 
nonmember banks as defined in Sec. 326.1 \3\ establish and maintain 
procedures reasonably

[[Page 216]]

designed to assure and monitor their compliance with the requirements of 
subchapter II of chapter 53 of title 31, United States Code, and the 
implementing regulations promulgated thereunder by the Department of 
Treasury at 31 CFR part 103.
---------------------------------------------------------------------------

    \3\ In regard to foreign banks, the programs and procedures required 
by Sec. 326.8 need be instituted only at an insured branch as defined in 
Sec. 347.202 of this chapter which is a State branch as defined in 
Sec. 347.202 of this chapter.
---------------------------------------------------------------------------

    (b) Compliance procedures. On or before April 27, 1987, each bank 
shall develop and provide for the continued administration of a program 
reasonably designed to assure and monitor compliance with recordkeeping 
and reporting requirements set forth in subchapter II of chapter 53 of 
title 31 U.S.C., and the implementing regulations promulgated thereunder 
by the Department of Treasury at 31 CFR part 103. The compliance program 
shall be reduced to writing, approved by the board of directors and 
noted in the minutes.
    (c) Contents of compliance program. The compliance program shall, at 
a minimum:
    (1) Provide for a system of internal controls to assure ongoing 
compliance;
    (2) Provide for independent testing for compliance to be conducted 
by bank personnel or by an outside party;
    (3) Designate an individual or individuals responsible for 
coordinating and monitoring day-to-day compliance; and
    (4) Provide training for appropriate personnel.

(Approved by the Office of Management and Budget under control number 
3064-0087)

[52 FR 2860, Jan. 27, 1987, as amended at 53 FR 17917, May 19, 1988; 63 
FR 17075, Apr. 8, 1998]



PART 327--ASSESSMENTS--Table of Contents




                          Subpart A--In General

Sec.
327.1  Purpose and scope.
327.2  Certified statements.
327.3  Payment of semiannual assessments.
327.4  Annual assessment rate.
327.5  Assessment base.
327.6  Terminating transfers; other terminations of insurance.
327.7  Payment of interest on assessment underpayments and overpayments.
327.8  Definitions.
327.9  Assessment schedules.
327.10  Interpretive rule: Section 7(b)(2)(A)(v).

  Subpart B--Insured Depository Institutions Participating in Section 
                          5(d)(3) Transactions

327.31  Scope.
327.32  Computation and payment of assessment.
327.33  ``Acquired'' deposits.
327.34  Application of AADAs.
327.35  Grandfathered AADA elements.
327.36  Growth computation.
327.37  Attribution of transferred deposits.

    Authority: 12 U.S.C. 1441, 1441b, 1813, 1815, 1817-1819; Pub. L. 
104-208, 110 Stat. 3009-479 (12 U.S.C. 1821).

    Source: 54 FR 51374, Dec. 15, 1989, unless otherwise noted.



                          Subpart A--In General



Sec. 327.1  Purpose and scope.

    (a) Scope. This part 327 applies to any insured depository 
institution, including any insured branch of a foreign bank.
    (b) Purpose. (1) Except as specified in paragraph (b)(2) of this 
section, this part 327 sets forth the rules for:
    (i) The time and manner of filing certified statements by insured 
depository institutions;
    (ii) The time and manner of payment of the semiannual assessments by 
such institutions; and
    (iii) The payment of assessments by depository institutions whose 
insured status has terminated.
    (2) Deductions from the assessment base of an insured branch of a 
foreign bank are stated in subpart B of part 347 of this chapter.

[54 FR 51374, Dec. 15, 1989, as amended at 63 FR 17075, Apr. 8, 1998]



Sec. 327.2  Certified statements.

    (a) Required. Each insured depository institution shall file a 
certified statement during each semiannual period.
    (b) Time of filing. Certified statements for any semiannual period 
must be filed no later than the second-quarterly payment date specified 
in Sec. 327.3(d)(2). Certified statements postmarked on or before such 
date are deemed to be timely filed.
    (c) Form. The Corporation will provide to each insured depository 
institution a certified statement form showing the amount and 
computation of the

[[Page 217]]

institution's semiannual assessment. The president of the insured 
depository institution, or such other officer as the institution's board 
of directors or trustees may designate, shall review the information 
shown on the form.
    (d) Certification--(1) Form accepted. If such officer agrees that to 
the best of his or her knowledge and belief the information shown on the 
certified statement form is true, correct and complete and in accordance 
with the Federal Deposit Insurance Act and the regulations issued 
thereunder, the officer shall so certify.
    (2) Form amended--(i) In general. If such officer determines that to 
the best of his or her knowledge and belief the information shown on the 
certified statement form is not true, correct and complete and in 
accordance with the Federal Deposit Insurance Act and the regulations 
issued thereunder, the officer shall make such amendments to the 
information as he or she believes necessary. The officer shall certify 
that to the best of his or her knowledge and belief the information 
shown on the form, as so amended, is true, correct and complete and in 
accordance with the Federal Deposit Insurance Act and the regulations 
issued thereunder.
    (ii) Request for revision. The certification and filing of an 
amended form under paragraph (d)(2) of this section does not constitute 
a request for revision by the Corporation of the information shown on 
the form. Any such request to the Corporation for revision of the 
information shown on the form shall be submitted separately from the 
certified statement and in accordance with the provisions of 
Sec. 327.3(h).
    (iii) Rate multiplier. The rate multiplier shown on the certified 
statement form shall be amended only if it is inconsistent with the 
assessment risk classification assigned to the institution in writing by 
the Corporation for the current semiannual period pursuant to 
Sec. 327.4(a). Agreement with the rate multiplier shall not be deemed to 
constitute agreement with the assessment risk classification assigned.

[59 FR 67160, Dec. 29, 1994]



Sec. 327.3  Payment of semiannual assessments.

    (a) Required--(1) In general. Except as provided in paragraph (b) of 
this section, each insured depository institution shall pay to the 
Corporation, in two quarterly payments, a semiannual assessment 
determined in accordance with this part 327.
    (2) Notice of designated deposit account. For the purpose of making 
such payments, each insured depository institution shall designate a 
deposit account for direct debit by the Corporation. No later than 30 
days prior to the next payment date specified in paragraphs (c)(2) and 
(d)(2) of this section, each institution shall provide written notice to 
the Corporation of the account designated, including all information and 
authorizations needed by the Corporation for direct debit of the 
account. After the initial notice of the designated account, no further 
notice is required unless the institution designates a different account 
for assessment debit by the Corporation, in which case the requirements 
of the preceding sentence apply.
    (b) Newly insured institutions. A newly insured institution shall 
not be required to pay an assessment for the semiannual period during 
which it becomes an insured institution. For the semiannual period 
following the period during which it becomes an insured institution, it 
shall pay its full semiannual assessment at the time and in the manner 
provided for in paragraph (d) of this section, in an amount that is the 
product of its assessment base for the prior semiannual period, as 
provided for in Sec. 327.5(c), multiplied by one-half of the annual 
assessment rate corresponding to the assessment risk classification 
assigned to the institution pursuant to Sec. 327.4(a). For the purpose 
of making such payment, the institution shall provide to the Corporation 
no later than the payment date specified in paragraph (d)(2) of this 
section the notice required by paragraph (a)(2) of this section.
    (c) First-quarterly payment--(1) Invoice. Except in the case of 
invoices for the first quarterly payment for the first semiannual period 
of 1997, no later than 15 days prior to the payment date

[[Page 218]]

specified in paragraph (c)(2) of this section, the Corporation will 
provide to each insured depository institution an invoice showing the 
amount of the assessment payment due from the institution for the first 
quarter of the upcoming semiannual period, and the computation of that 
amount. Subject to paragraph (g) of this section and to subpart B of 
this part, the invoiced amount shall be the product of the following: 
The assessment base of the institution for the preceding September 30 
(for the semiannual period beginning January 1) or March 31 (for the 
semiannual period beginning July 1) computed in accordance with 
Sec. 327.5; multiplied by one-quarter of the annual assessment rate 
corresponding to the assessment risk classification assigned to the 
institution pursuant to Sec. 327.4(a).
    (2) Payment date and manner. Except as provided in paragraphs (c)(3) 
and (j) of this section, the Corporation will cause the amount stated in 
the applicable invoice to be directly debited on the appropriate regular 
payment date from the deposit account designated by the insured 
depository institution for that purpose, as follows:
    (i) In the case of the first quarterly payment for a semiannual 
period that begins on January 1, the regular payment date is January 2; 
and
    (ii) In the case of the first quarterly payment for a semiannual 
period that begins on July 1, the regular payment date is the preceding 
June 30.
    (3) Alternate payment date--(i) Election. An insured depository 
institution may elect to pay the first quarterly payment for a 
semiannual period that begins on January 1 of a current year on the 
alternate payment date. The alternate payment date is December 30 of the 
prior year.
    (ii) Certification. (A) In order to elect the alternate payment date 
with respect to a current semiannual period, an institution must so 
certify in writing in advance. In order for the election to be effective 
with respect to the current semiannual period, the Corporation must 
receive the certification no later than the prior November 1.
    (B) The certification shall be made on a pre-printed form provided 
by the Corporation. The form shall be signed by the institution's chief 
financial officer or such other officer as the institution's board of 
directors may designate for that purpose. The form shall be sent to the 
attention of the Chief of the Assessment Operations Section of the 
Corporation's Division of Finance. An institution may obtain the form 
from the Corporation's Division of Finance.
    (C) The election of the alternate payment date shall be effective 
with respect to the semiannual period specified in the certification and 
thereafter, until terminated.
    (iii) Termination. (A) An insured depository institution may 
terminate its election of the alternate payment date, and thereby revert 
to the regular payment date, by so certifying in writing to the 
Corporation in advance. In order for the termination to be effective for 
a current semiannual period, the Corporation must receive the 
termination certification no later than the prior November 1.
    (B) The termination certification shall be made on a pre-printed 
form provided by the Corporation. The form shall be signed by the 
institution's chief financial officer or such other officer as the 
institution's board of directors may designate for that purpose. The 
form shall be sent to the attention of the Chief of the Assessment 
Operations Section of the Corporation's Division of Finance. An 
institution may obtain the form from the Corporation's Division of 
Finance.
    (C) The termination shall be permanent, except that an institution 
that has terminated an election may make a new election under paragraph 
(c)(3)(i) of this section.
    (iv) Manner of payment. Except as provided in paragraph (j) of this 
section, if an insured depository institution elects the alternate 
payment date, the Corporation will cause the amount stated in the 
applicable invoice to be directly debited on the alternate payment date 
from the deposit account designated by the insured depository 
institution for that purpose.
    (d) Second-quarterly payment--(1) Invoice. No later than 15 days 
prior to the payment date specified in paragraph (d)(2) of this section, 
the Corporation will provide to each insured depository institution an 
invoice showing the amount of the assessment payment due

[[Page 219]]

from the institution for the second quarter of that semiannual period, 
and the computation of that amount. Subject to paragraph (g) of this 
section and to subpart B of this part, the invoiced amount shall be the 
product of the following: The assessment base of the institution for the 
preceding December 31 (for the semiannual period beginning January 1) or 
June 30 (for the semiannual period beginning July 1) computed in 
accordance with Sec. 327.5; multiplied by one-quarter of the annual 
assessment rate corresponding to the assessment risk classification 
assigned to the institution pursuant to Sec. 327.4(a).
    (2) Except as provided in paragraph (j) of this section, the 
Corporation will cause the amount stated in the applicable invoice to be 
directly debited on the appropriate regular payment date from the 
deposit account designated by the insured depository institution for 
that purpose, as follows:
    (i) In the case of the second quarterly payment for a semiannual 
period that begins on January 1, the regular payment date is March 30; 
and
    (ii) In the case of the second quarterly payment for a semiannual 
period that begins on July 1, the regular payment date is September 30.
    (e) Necessary action, sufficient funding by institution. Each 
insured depository institution shall take all actions necessary to allow 
the Corporation to debit assessments from the insured depository 
institution's designated deposit account. Each insured depository 
institution shall, prior to each payment date indicated in paragraphs 
(c)(2), (c)(3)(i), and (d)(2) of this section, ensure that funds in an 
amount at least equal to the invoiced amount (or twice the invoiced 
amount if the insured depository institution has elected the doubled-
payment option pursuant to paragraph (j) of this section) are available 
in the designated account for direct debit by the Corporation. Failure 
to take any such action or to provide such funding of the account shall 
be deemed to constitute nonpayment of the assessment.
    (f) Business days. If a payment date specified in paragraph 
(c)(2)(i) falls on a date that is not a business day, the applicable 
date shall be the following business day. If a payment date specified in 
paragraph (c)(1), (c)(2)(ii), (c)(3)(i), or (d)(2) of this section falls 
on a date that is not a business day, the applicable date shall be the 
previous business day.
    (g) Payment adjustments in succeeding quarters. The quarterly 
assessment invoices provided by the Corporation may reflect adjustments, 
initiated by the Corporation or an institution, resulting from such 
factors as amendments to prior quarterly reports of condition, 
retroactive revision of the institution's assessment risk 
classification, and revision of the Corporation's assessment 
computations for prior quarters.
    (h) Request for revision of computation of quarterly assessment 
payment--(1) In general. An institution may submit a request for 
revision of the computation of the institution's quarterly assessment 
payment as shown on the quarterly invoice. Such revision may be 
requested in the following circumstances:
    (i) The institution disagrees with the computation of the assessment 
base as stated on the invoice;
    (ii) The institution determines that the rate multiplier applied by 
the Corporation is inconsistent with the assessment risk classification 
assigned to the institution in writing by the Corporation for the 
semiannual period for which the payment is due; or
    (iii) The institution believes that the invoice does not fully or 
accurately reflect adjustments provided for in paragraph (g) of this 
section.
    (2) Inapplicability. This paragraph (h) is not applicable to 
requests for review of an institution's assessment risk classification, 
which are covered by Sec. 327.4(d).
    (3) Requirements. Any such request for revision must be submitted 
within 60 days of the date of the quarterly assessment invoice for which 
revision is requested, except that requests for revision resulting from 
detection by the institution of an error or omission for which the 
institution files an amendment to its quarterly report of condition must 
be submitted within 60 days of the filing date of the amendment to the 
quarterly report of condition. The request for revision shall be 
submitted

[[Page 220]]

to the Chief of the Assessment Operations Section and shall provide 
documentation sufficient to support the revision sought by the 
institution. If additional information is requested by the Corporation, 
such information shall be provided by the institution within 21 days of 
the date of the Corporation's request for additional information. Any 
institution submitting a timely request for revision will receive 
written response from the Corporations's Chief Financial Officer (or his 
or her designee) within 60 days of receipt by the Corporation of the 
request for revision or, if additional information has been requested by 
the Corporation, within 60 days of receipt of the additional 
information. Whenever feasible, the response will notify the institution 
of the determination of the Chief Financial Officer (or designee) as to 
whether the requested revision is warranted. In all instances in which a 
timely request for revision is submitted, the Chief Financial Officer 
(or designee) will make a determination on the request as promptly as 
possible and notify the institution in writing of the determination.
    (i) Assessment notice not received. Any institution that has not 
received an assessment invoice for any quarterly payment by the 
fifteenth day of the month in which the quarterly payment is due shall 
promptly notify the Corporation. Failure to provide prompt notice to the 
Corporation shall not affect the institution's obligation to make full 
and timely assessment payment. Unless otherwise directed by the 
Corporation, the institution shall preliminarily pay the amount shown on 
its assessment invoice for the preceding quarter, subject to subsequent 
correction.
    (j) Doubled-payment option--(1) Election. In the case of a quarterly 
payment to be made on March 30, on June 30, on September 30, or on the 
alternate payment date, an insured depository institution may elect to 
pay twice the amount of such quarterly payment.
    (2) Certification. (i) In order to elect the doubled-payment option 
with respect to a selected payment date, an institution must so certify 
in writing to the Corporation in advance. In order for the election to 
be effective, the Corporation must receive the certification by the 
following dates: in the case of a quarterly payment to be made on March 
30, June 30, or September 30, the Corporation must receive the 
certification no later than the prior February 1, May 1, or August 1, 
respectively; in the case of a quarterly payment to be made on the 
alternate payment date, the Corporation must receive the certification 
by the prior November 1.
    (ii) The certification shall be made on a pre-printed form provided 
by the Corporation. The form shall be signed by the institution's chief 
financial officer or such other officer as the institution's board of 
directors may designate for that purpose. The form shall be sent to the 
attention of the Chief of the Assessment Operations Section of the 
Corporation's Division of Finance. An institution may obtain the form 
from the Corporation's Division of Finance.
    (iii) The election shall be effective with respect to the selected 
quarterly payment for the year specified in the certification and with 
respect to subsequent quarterly payments made on the selected payment 
date in subsequent years, until the election is terminated.
    (3) Termination. (i) An insured depository institution may terminate 
its election of the doubled-payment option for a selected payment date 
by so certifying in writing to the Corporation in advance. In order for 
the termination to be effective, the Corporation must receive the 
termination certification by the following dates: In the case of a 
quarterly payment to be made on March 30, June 30, or September 30, the 
Corporation must receive the termination certification no later than the 
prior February 1, May 1, or August 1, respectively; in the case of a 
quarterly payment to be made on the alternate payment date, the 
Corporation must receive the termination certification by the prior 
November 1.
    (ii) The termination certification shall be made on a pre-printed 
form provided by the Corporation. The form shall be signed by the 
institution's chief financial officer or such other officer as the 
institution's board of directors may designate for that purpose. The 
form shall be sent to the attention

[[Page 221]]

of the Chief of the Assessment Operations Section of the Corporation's 
Division of Finance. An institution may obtain the form from the 
Corporation's Division of Finance.
    (iii) The termination shall be permanent, except that an institution 
that has terminated its election of the doubled-payment option for a 
selected payment date may make a new election.
    (4) Manner of payment. If an insured depository institution elects 
the doubled-payment option for a selected payment date, the Corporation 
will cause an amount equal to twice the amount stated in the applicable 
invoice to be directly debited on the selected payment date from the 
deposit account designated by the insured depository institution for 
that purpose.

[59 FR 67161, Dec. 29, 1994, as amended at 60 FR 50407, Sept. 29, 1995; 
61 FR 67696, Dec. 24, 1996; 64 FR 70181, Dec. 16, 1999]



Sec. 327.4  Annual assessment rate.

    (a) Assessment risk classification. For the purpose of determining 
the annual assessment rate for insured depository institutions under 
Sec. 327.9, each insured depository institution will be assigned an 
``assessment risk classification''. Notice of the assessment risk 
classification applicable to a particular semiannual period will be 
provided to the institution with the first-quarterly invoice provided 
pursuant to Sec. 327.3(c)(1). Each institution's assessment risk 
classification, which will be composed of a group and a subgroup 
assignment, will be based on the following capital and supervisory 
factors:
    (1) Capital factors. Institutions will be assigned to one of the 
following three capital groups on the basis of data reported in the 
institution's Consolidated Reports of Condition and Income, Report of 
Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks, 
or Thrift Financial Report dated as of March 31 for the assessment 
period beginning the following July and as of September 30 for the 
assessment period beginning the following January 1.
    (i) Well capitalized. For assessment risk classification purposes, 
the short-form designation for this group is ``1''.
    (A) Except as provided in paragraph (a)(1)(i)(B) of this section, 
this group consists of institutions satisfying each of the following 
capital ratio standards: Total risk-based ratio, 10.0 percent or 
greater; Tier 1 risk-based ratio, 6.0 percent or greater; and Tier 1 
leverage ratio, 5.0 or greater. New insured depository institutions 
coming into existence after the report date specified in paragraph 
(a)(1) of this section will be included in this group for the first 
semiannual period for which they are required to pay assessments. For 
the purpose of computing the ratios referred to in this paragraph 
(a)(1)(i)(A) for the second semiannual period of 1997, each such ratio 
shall be computed for an institution as if the institution had retained 
the funds that the institution disbursed in payment of the special 
assessment prescribed by Sec. 329.41(a).
    (B) For purposes of assessment risk classification, an insured 
branch of a foreign bank will be deemed to be ``well capitalized'' if 
the insured branch:
    (1) Maintains the pledge of assets required under Sec. 347.210 of 
this chapter; and
    (2) Maintains the eligible assets prescribed under Sec. 347.211 of 
this chapter at 108 percent or more of the average book value of the 
insured branch's third-party liabilities for the quarter ending on the 
report date specified in paragraph (a)(1) of this section.
    (ii) Adequately capitalized. For assessment risk classification 
purposes, the short-form designation for this group is ``2''.
    (A) Except as provided in paragraph (a)(1)(ii)(B) of this section, 
this group consists of institutions that do not satisfy the standards of 
``well capitalized'' under this paragraph but which satisfy each of the 
following capital ratio standards: Total risk-based ratio, 8.0 percent 
or greater; Tier 1 risk-based ratio, 4.0 percent or greater; and Tier 1 
leverage ratio, 4.0 percent or greater. For the purpose of computing the 
ratios referred to in this paragraph (a)(1)(ii)(A) for the second 
semiannual period of 1997, each such ratio shall be computed for an 
institution as if the institution had retained the funds that the 
institution disbursed in payment of the special assessment prescribed by 
Sec. 327.41(a).

[[Page 222]]

    (B) For purposes of assessment risk classification, an insured 
branch of a foreign bank will be deemed to be ``adequately capitalized'' 
if the insured branch:
    (1) Maintains the pledge of assets required under Sec. 347.210 of 
this chapter; and
    (2) Maintains the eligible assets prescribed under Sec. 347.211 of 
this chapter at 106 percent or more of the average book value of the 
insured branch's third-party liabilities for the quarter ending on the 
report date specified in paragraph (a)(1) of this section; and
    (3) Does not meet the definition of a well capitalized insured 
branch of a foreign bank.
    (iii) Undercapitalized. For assessment risk classification purposes, 
the short-form designation for this group is ``3''. This group consists 
of institutions that do not qualify as either ``well capitalized'' or 
``adequately capitalized'' under paragraphs (a)(1) (i) and (ii) of this 
section.
    (2) Supervisory risk factors. Within its capital group, each 
institution will be assigned to one of three subgroups based on the 
Corporation's consideration of supervisory evaluations provided by the 
institution's primary federal regulator. The supervisory evaluations 
include the results of examination findings by the primary federal 
regulator, as well as other information the primary federal regulator 
determines to be relevant. In addition, the Corporation will take into 
consideration such other information (such as state examination 
findings, if appropriate) as it determines to be relevant to the 
institution's financial condition and the risk posed to the BIF or SAIF. 
Authority to set dates applicable to the determination of supervisory 
subgroup assignments is delegated to the Corporation's Director of the 
Division of Supervision (or his or her designee). The three supervisory 
subgroups are:
    (i) Subgroup ``A''. This subgroup consists of financially sound 
institutions with only a few minor weaknesses;
    (ii) Subgroup ``B''. This subgroup consists of institutions that 
demonstrate weaknesses which, if not corrected, could result in 
significant deterioration of the institution and increased risk of loss 
to the BIF or SAIF; and
    (iii) Subgroup ``C''. This subgroup consists of institutions that 
pose a substantial probability of loss to the BIF or SAIF unless 
effective corrective action is taken.
    (b) Payment of assessment at rate assigned. Institutions shall make 
timely payment of assessments based on the assessment risk 
classification assigned in the notice provided to the institution 
pursuant to paragraph (a) of this section. Timely payment is required 
notwithstanding any request for review filed pursuant to paragraph (d) 
of this section. An institution for which the assessment risk 
classification cannot be determined prior to an invoice date specified 
in Sec. 327.3(c)(1) or (d)(1) shall preliminarily pay on that invoice at 
the assessment rate applicable to the classification designated ``2A'' 
in the appropriate rate schedule set forth in Sec. 327.9. If such 
institution is subsequently assigned for that semiannual period an 
assessment risk classification other than that designated as ``2A'', or 
if the classification assigned to an institution in the notice is 
subsequently changed, any excess assessment paid by the institution will 
be credited by the Corporation, with interest, and any additional 
assessment owed shall be paid by the institution, with interest, in the 
next quarterly assessment payment after such subsequent assignment or 
change. Interest payable under this paragraph shall be determined in 
accordance with Sec. 327.7.
    (c) Classification for certain types of institutions. The annual 
assessment rate applicable to institutions that are bridge banks under 
12 U.S.C. 1821(n) and to institutions for which the Corporation has been 
appointed or serves as conservator shall in all cases be the rate 
applicable to the classification designated as ``2A'' in the appropriate 
assessment schedule prescribed pursuant to Sec. 327.9.
    (d) Requests for review. An institution may submit a written request 
for review of its assessment risk classification. Any such request must 
be submitted within 90 days of the date of the assessment risk 
classification notice provided by the Corporation pursuant to paragraph 
(a) of this section. The request shall be submitted to the Corporation's 
Director of the Division of

[[Page 223]]

Insurance in Washington, D.C., and shall include documentation 
sufficient to support the reclassification sought by the institution. If 
additional information is requested by the Corporation, such information 
shall be provided by the institution within 21 days of the date of the 
request for additional information. Any institution submitting a timely 
request for review will receive written notice from the Corporation 
regarding the outcome of its request. Upon completion of a review, the 
Director of the Division of Insurance (or designee) or the Director of 
the Division of Supervision (or designee), as appropriate, shall 
promptly notify the institution in writing of his or her determination 
of whether reclassification is warranted. Notice of the procedures 
applicable to reviews will be included with the assessment risk 
classification notice to be provided pursuant to paragraph (a) of this 
section.
    (e) Disclosure restrictions. The supervisory subgroup to which an 
institution is assigned by the Corporation pursuant to paragraph (a) of 
this section is deemed to be exempt information within the scope of 
Sec. 309.5(g)(8) of this chapter and, accordingly, is governed by the 
disclosure restrictions set out at Sec. 309.6 of this chapter.
    (f) Limited use of assessment risk classification. The assignment of 
a particular assessment risk classification to a depository institution 
under this part 327 is for purposes of implementing and operating a 
risk-based assessment system. Unless permitted by the Corporation or 
otherwise required by law, no institution may state in any advertisement 
or promotional material the assessment risk classification assigned to 
it pursuant to this part.
    (g) Lifeline accounts. Notwithstanding any other provision of this 
part 327, the portion of an institution's assessment base that is 
attributable to deposits in lifeline accounts pursuant to the Bank 
Enterprise Act, 12 U.S.C. 1834, will be assessed at such rate as may be 
established by the Corporation pursuant to 12 U.S.C. 1834 and section 
7(b)(2)(H) of the Federal Deposit Insurance Act, as amended, 12 U.S.C. 
1817(b)(2)(H).

[59 FR 67162, Dec. 29, 1994, as amended at 61 FR 67696, Dec. 24, 1996; 
63 FR 17075, Apr. 8, 1998; 64 FR 70181, Dec. 16, 1999]



Sec. 327.5  Assessment base.

    (a) Computation of assessment base. Except as provided in paragraph 
(c) of this section, the assessment base of an insured depository 
institution for any date on which the institution is required to file a 
quarterly report of condition shall be computed by:
    (1) Adding--
    (i) All demand deposits--
    (A) That the institution reported as such in the quarterly report of 
condition for that date;
    (B) That belong to subsidiaries of the institution and were 
eliminated in consolidation;
    (C) That are held in any insured branches of the institution that 
are located in the territories and possessions of the United States;
    (D) That represent any uninvested trust funds required to be 
separately stated in the quarterly report for that date;
    (E) That represent any unposted credits to demand deposits, as 
determined in accordance with the provisions of paragraph (b)(1) of this 
section; and
    (ii) All time and savings deposits, together with all interest 
accrued and unpaid thereon--
    (A) That the institution reported as such in the quarterly report of 
condition for that date;
    (B) That belong to subsidiaries of the institution and were 
eliminated in consolidation;
    (C) That are held in any insured branches of the institution that 
are located in the territories and possessions of the United States;
    (D) That represent any unposted credits to time and savings 
deposits, as determined in accordance with the provisions of paragraph 
(b)(1) of this section; then
    (2) Subtracting, in the case of any institution that maintains such 
records as will readily permit verification of the correctness of its 
assessment base--
    (i) Any unposted debits;
    (ii) Any pass-through reserve balances;
    (iii) 16\2/3\ percent of the amount computed by subtracting, from 
the amount specified in paragraph (a)(1)(i) of this section, the sum of:

[[Page 224]]

    (A) Unposted debits allocated to demand deposits pursuant to the 
provisions of paragraph (b)(2) of this section; plus
    (B) Pass-through reserve balances representing demand deposits;
    (iv) 1 percent of the amount computed by subtracting, from the 
amount specified in paragraph (a)(1)(ii) of this section, the sum of:
    (A) Unposted debits allocated to time and savings deposits pursuant 
to the provisions of paragraph (b)(2) of this section; plus
    (B) Pass-through reserve balances representing time and savings 
deposits;
    (v) Liabilities arising from a depository institution investment 
contract that are not treated as insured deposits under section 11(a)(8) 
of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(8)).
    (b) Methods of reporting unposted credits and unposted debits--(1) 
Unposted credits. Each insured depository institution shall report 
unposted credits in quarterly reports of condition for addition to the 
assessment base in the following manner:
    (i) If the institution's records show the total actual amount of 
unposted credits segregated into demand deposits and time and savings 
deposits, the institution must report the segregated amounts for 
addition to demand deposits and time and savings deposits, respectively.
    (ii) If the institution's records show the total actual amount of 
unposted credits but do not segregate the amount as stated in paragraph 
(b)(1)(i) of this section, the institution must report the total actual 
amount of the unposted credits for addition to time and savings 
deposits.
    (2) Unposted debits. Unposted debits may be reported in the same 
manner as stated in paragraph (b)(1) of this section for deduction from 
the assessment base, except that unsegregated amounts may be reported 
for deduction only from demand deposits.
    (c) Newly insured institutions. In the case of a newly insured 
institution, the assessment base for the last date for which insured 
depository institutions are required to file quarterly reports of 
condition within the semiannual period in which the newly insured 
institution became an insured institution shall be deemed to be its 
assessment base for that semiannual period. If the institution has not 
filed such a report by the due date for such reports from insured 
depository institutions, it shall promptly provide to the Corporation 
such information as the Corporation may require to prepare the certified 
statement form for the institution for the current semiannual period.

[59 FR 67163, Dec. 29, 1994]



Sec. 327.6  Terminating transfers; other terminations of insurance.

    (a) Terminating transfer--(1) Assessment base computation. If a 
terminating transfer occurs at any time in the second half of a 
semiannual period, each surviving institution's assessment base (as 
computed pursuant to Sec. 327.5) for the first half of that semiannual 
period shall be increased by an amount equal to such institution's pro 
rata share of the terminating institution's assessment base for such 
first half.
    (2) Pro rata share. For purposes of paragraph (a)(1) of this 
section, the phrase pro rata share means a fraction the numerator of 
which is the deposits assumed by the surviving institution from the 
terminating institution during the second half of the semiannual period 
during which the terminating transfer occurs, and the denominator of 
which is the total deposits of the terminating institution as required 
to be reported in the quarterly report of condition for the first half 
of that semiannual period.
    (3) Other assessment-base adjustments. The Corporation may in its 
discretion make such adjustments to the assessment base of an 
institution participating in a terminating transfer, or in a related 
transaction, as may be necessary properly to reflect the likely amount 
of the loss presented by the institution to its insurance fund.
    (4) Limitation on aggregate adjustments. The total amount by which 
the Corporation may increase the assessment bases of surviving or other 
institutions under this paragraph (a) shall not exceed, in the 
aggregate, the terminating institution's assessment base as

[[Page 225]]

reported in its quarterly report of condition for the first half of the 
semiannual period during which the terminating transfer occurs.
    (b) Other terminations. When the insured status of an institution is 
terminated, and the deposit liabilities of such institution are not 
assumed by another insured depository institution--
    (1) Payment of assessments; certified statements. The terminating 
depository institution shall continue to file certified statements and 
pay assessments for the period its deposits are insured. Such 
terminating institution shall not be required to file further certified 
statements or to pay further assessments after the depository 
institution has paid in full its deposit liabilities and the assessment 
to the Corporation required to be paid for the semiannual period in 
which its deposit liabilities are paid in full, and after it, under 
applicable law, has ceased to have authority to transact a banking 
business and to have existence, except for the purpose of, and to the 
extent permitted by law for, winding up its affairs.
    (2) Payment of deposits; certification to Corporation. When the 
deposit liabilities of the depository institution have been paid in 
full, the depository institution shall certify to the Corporation that 
the deposit liabilities have been paid in full and give the date of the 
final payment. When the depository institution has unclaimed deposits, 
the certification shall further state the amount of the unclaimed 
deposits and the disposition made of the funds to be held to meet the 
claims. For assessment purposes, the following will be considered as 
payment of the unclaimed deposits:
    (i) The transfer of cash funds in an amount sufficient to pay the 
unclaimed and unpaid deposits to the public official authorized by law 
to receive the same; or
    (ii) If no law provides for the transfer of funds to a public 
official, the transfer of cash funds or compensatory assets to an 
insured depository institution in an amount sufficient to pay the 
unclaimed and unpaid deposits in consideration for the assumption of the 
deposit obligations by the insured depository institution.
    (3) Notice to depositors. (i) The terminating depository institution 
shall give sufficient advance notice of the intended transfer to the 
owners of the unclaimed deposits to enable the depositors to obtain 
their deposits prior to the transfer. The notice shall be mailed to each 
depositor and shall be published in a local newspaper of general 
circulation. The notice shall advise the depositors of the liquidation 
of the depository institution, request them to call for and accept 
payment of their deposits, and state the disposition to be made of their 
deposits if they fail to promptly claim the deposits.
    (ii) If the unclaimed and unpaid deposits are disposed of as 
provided in paragraph (b)(2)(i) of this section, a certified copy of the 
public official's receipt issued for the funds shall be furnished to the 
Corporation.
    (iii) If the unclaimed and unpaid deposits are disposed of as 
provided in paragraph (b)(2)(ii) of this section, an affidavit of the 
publication and of the mailing of the notice to the depositors, together 
with a copy of the notice and a certified copy of the contract of 
assumption, shall be furnished to the Corporation.
    (4) Notice to Corporation. The terminating depository institution 
shall advise the Corporation of the date on which the authority or right 
of the depository institution to do a banking business has terminated 
and the method whereby the termination has been effected (i.e., whether 
the termination has been effected by the surrender of the charter, the 
cancellation of its authority or license to do a banking business by the 
supervisory authority, or otherwise).
    (c) Resumption of insured status before insurance of deposits 
ceases. If a depository institution whose insured status has been 
terminated is permitted by the Corporation to continue or resume its 
status as an insured depository institution before the insurance of its 
deposits has ceased, the institution will be deemed, for assessment 
purposes, to continue as an insured depository institution and must 
thereafter furnish certified statements and pay assessments as though 
its insured status had not been terminated. The procedure for

[[Page 226]]

applying for the continuance or resumption of insured status is set 
forth in Sec. 303.5 of this chapter.

[54 FR 51374, Dec. 15, 1989, as amended at 59 FR 67164, Dec. 29, 1994; 
61 FR 64983, Dec. 10, 1996]



Sec. 327.7  Payment of interest on assessment underpayments and overpayments.

    (a) Payment of interest--(1) Payment by institutions. Each insured 
depository institution shall pay interest to the Corporation on any 
underpayment of the institution's assessment.
    (2) Payment by Corporation. (i) The Corporation will pay interest on 
any overpayment by the institution of its assessment.
    (ii) When an institution elects the alternate payment date pursuant 
to Sec. 327.3(c)(3), or otherwise pays an amount due on a regular 
payment date before that date, the payment of the invoiced amount prior 
to the regular payment date shall not be regarded as an overpayment of 
an assessment.
    (iii) When an institution elects the doubled-payment option pursuant 
to Sec. 327.3(j), the payment of any amount in excess of the invoiced 
amount shall not be regarded as an overpayment of an assessment.
    (3) Accrual of interest. (i) Interest on an amount owed to or by the 
Corporation for the underpayment or overpayment of an assessment shall 
accrue interest at the relevant interest rate.
    (ii) Interest on an amount specified in paragraph (a)(3)(i) of this 
section shall begin to accrue on the day following the regular payment 
date, as provided for in Sec. 327.3(c)(2) and (d)(2), for the amount so 
overpaid or underpaid, provided, however, that interest shall not begin 
to accrue on any overpayment until the day following the date such 
overpayment was received by the Corporation. Interest shall continue to 
accrue through the date on which the overpayment or underpayment 
(together with any interest thereon) is discharged.
    (iii) The relevant interest rate shall be redetermined for each 
quarterly assessment interval. A quarterly assessment interval begins on 
the day following a regular payment date, as specified in 
Sec. 327.3(c)(2) and (d)(2), and ends on the immediately following 
regular payment date.
    (b) Rates after the first payment date in 1996. (1) On and after 
January 3, 1996, the relevant interest rate for a quarterly assessment 
interval that includes the month of January, April, July, and October, 
respectively, is the coupon equivalent yield of the average discount 
rate set on the 3-month Treasury bill at the last auction held by the 
United States Treasury Department during the preceding December, March, 
June, and September, respectively.
    (2) The relevant interest rate for a quarterly assessment interval 
will apply to any amounts overpaid or underpaid on the payment date 
(whether regular or alternate) immediately prior to the beginning of the 
quarterly assessment interval. The relevant interest rate will also 
apply to any amounts owed for previous overpayments or underpayments 
(including any interest thereon) that remain outstanding, after any 
adjustments to such overpayments or underpayments have been made 
thereon, at the end of the regular payment date immediately prior to the 
beginning of the quarterly assessment interval.
    (c) Rates prior to the first payment date in 1996. Through January 
3, 1996:
    (1) The interest rate will be the United States Treasury 
Department's current value of funds rate which is issued under the 
Treasury Fiscal Requirements Manual (TFRM rate) and published in the 
Federal Register;
    (2) The interest will be calculated based on the rate issued under 
the TFRM for each applicable period and compounded annually;
    (3) For the initial year, the rate will be applied to the gross 
amount of the underpayment or overpayment; and
    (4) For each additional year or portion thereof, the rate will be 
applied to the net amount of the underpayment or overpayment after that 
amount has been reduced by the assessment credit, if any, for the year.

[54 FR 51374, Dec. 15, 1989, as amended at 57 FR 45286, Oct. 1, 1992; 58 
FR 3069, Jan. 7, 1993; 59 FR 67164, Dec. 29, 1994; 60 FR 50409, Sept. 
29, 1995]



Sec. 327.8  Definitions.

     For the purposes of this part 327:

[[Page 227]]

    (a) Unposted credits and debits--(1) Unposted credit. The term 
unposted credit means any deposit received in any office of a depository 
institution for deposit in any other office of the depository 
institution located in any State of the United States, the District of 
Columbia, Puerto Rico, Guam, American Samoa, the Northern Marianas 
Islands, or the Virgin Islands, except those which have been:
    (i) Included in the total deposits in the quarterly report of 
condition; or
    (ii) Offset in the quarterly report of condition by an equal amount 
of cash items in the institution's possession drawn on itself (on the 
same type of deposits as those offset) and not charged against deposit 
liabilities at the close of business on the date of the quarterly report 
of condition.
    (2) Unposted debit. The term unposted debit means a cash item in the 
reporting institution's possession that is drawn on the institution and 
immediately chargeable, but not yet charged, against the institution's 
deposit liabilities at the close of business on the date of the 
quarterly report of condition. The following items are excluded:
    (i) Cash items drawn on other depository institutions,
    (ii) Overdrafts and nonsufficient fund (NSF) items,
    (iii) Cash items returned unpaid to the last endorser for any 
reason, and
    (iv) Drafts and warrants that are payable at or payable through the 
reporting institution for which there is no written authorization on 
file at the institution or State statute allowing the institution at its 
discretion to charge the items against the deposit accounts of the 
drawees.
    (3) Exclusion. The above terms unposted credit and unposted debit do 
not include items which have been reflected in deposit accounts on the 
general ledger and in the quarterly report of condition, even though 
they have not been credited or debited to individual deposit accounts.
    (b) Deposits--(1) Deposit. The term deposit has the meaning 
specified in section 3(1) of the Federal Deposit Insurance Act. In 
particular, the term deposit includes any liability--without regard for 
whether the liability is a liability of an insured bank or of an insured 
savings association--that is of a kind which, had the liability been a 
liability of an insured bank immediately prior to the effective date of 
the Financial Institutions Reform, Recovery, and Enforcement Act of 
1989, would have constituted a deposit in such bank within the meaning 
of section 3(1) of the Federal Deposit Insurance Act as such section 
3(1) was then in effect.
    (2) Demand deposits. The term demand deposits refers to deposits 
specified in Sec. 329.1(b) of this chapter, except that any reference to 
bank in such section shall be deemed to refer to depository institution.
    (3) Time and savings deposits. The term time and savings deposits 
refers to any deposits other than demand deposits.
    (4) Exception. (i) Deposits accumulated for the payment of personal 
loans, which represent actual loan payments received by the depository 
institution from borrowers and accumulated by the depository institution 
in hypothecated deposit accounts for payment of the loans at maturity, 
shall not be reported as deposits on the quarterly report of condition. 
The deposit amounts covered by the exception are to be deducted from the 
loan amounts for which these deposits have been accumulated and assigned 
or pledged to effectuate payment.
    (ii) Time and savings deposits that are pledged as collateral to 
secure loans are not deposits accumulated for the payment of personal 
loans and are to be reported in the same manner as if they were not 
securing a loan.
    (c) Quarterly report of condition. The term quarterly report of 
condition means a report required to be filed pursuant to section 
7(a)(3) of the Federal Deposit Insurance Act.
    (d) Semiannual period--(1) In general. The term semiannual period 
means a period beginning on January 1 of any calendar year and ending on 
June 30 of the same year, or a period beginning on July 1 of any 
calendar year and ending on December 31 of the same year.
    (2) Current semiannual period. The term current semiannual period 
means, with respect to a certified statement or an assessment, the 
semiannual period within which such certified statement

[[Page 228]]

is required to be filed or for which such assessment is required to be 
paid.
    (3) Prior semiannual period. The term prior semiannual period means, 
with respect to a certified statement or an assessment, the semiannual 
period immediately prior to the current semiannual period.
    (e) Newly insured institution. The term newly insured institution 
means an institution that became an insured depository institution 
during the semiannual period immediately prior to the period for which 
the certified statement is required: Provided, That the term newly 
insured institution does not include any institution that became an 
insured depository institution as a result of the operation of section 
4(a)(2) of the Federal Deposit Insurance Act.
    (f) BIF; BIF member--(1) BIF. The term BIF means the Bank Insurance 
Fund.
    (2) BIF member The term BIF member means a depository institution 
that is a member of the BIF.
    (g) SAIF; SAIF member.--(1) SAIF. The term SAIF means the Savings 
Association Insurance Fund.
    (2) SAIF member. The term SAIF member means a depository institution 
that is a member of the SAIF.
    (h) As used in Sec. 327.6(a), the following terms are given the 
following meanings:
    (1) Surviving institution. The term surviving institution means an 
insured depository institution that assumes some or all of the deposits 
of another insured depository institution in a terminating transfer.
    (2) Terminating institution. The term terminating institution means 
an insured depository institution some or all of the deposits of which 
are assumed by another insured depository institution in a terminating 
transfer.
    (3) Terminating transfer. The term terminating transfer means the 
assumption by one insured depository institution of another insured 
depository institution's liability for deposits, whether by way of 
merger, consolidation, or other statutory assumption, or pursuant to 
contract, when the terminating institution goes out of business or 
transfers all or substantially all its assets and liabilities to other 
institutions or otherwise ceases to be obliged to pay subsequent 
assessments by or at the end of the semiannual period during which such 
assumption of liability for deposits occurs. The term terminating 
transfer does not refer to the assumption of liability for deposits from 
the estate of a failed institution, or to a transaction in which the 
FDIC contributes its own resources in order to induce a surviving 
institution to assume liabilities of a terminating institution.
    (i) [Reserved]
    (j) Primary fund. The primary fund of an insured depository 
institution is the insurance fund of which the institution is a member.
    (k) Secondary fund. The secondary fund of an insured depository 
institution is the insurance fund that is not the primary fund of the 
institution.

[54 FR 51374, Dec. 15, 1989, as amended at 59 FR 67164, Dec. 29, 1994; 
60 FR 42741, Aug. 16, 1995; 61 FR 64983, Dec. 10, 1996; 61 FR 67696, 
Dec. 24, 1996; 62 FR 27176, May 19, 1997]



Sec. 327.9  Assessment schedules.

    (a) Base assessment schedules--(1) In general. Subject to 
Sec. 327.4(c) and subpart B of this part, the base annual assessment 
rate for an insured depository institution shall be the rate prescribed 
in the appropriate base assessment schedule set forth in paragraph 
(a)(2) of this section applicable to the assessment risk classification 
assigned by the Corporation under Sec. 327.4(a) to that institution. 
Each base assessment schedule utilizes the group and subgroup 
designations specified in Sec. 327.4(a). An institution shall pay 
assessments at the rate specified in the appropriate base assessment 
schedule except as provided in paragraph (b) of this section.
    (2) Assessment schedules--(i) Base rates for BIF members. The 
following base assessment schedule applies with respect to assessments 
paid to the BIF by BIF members and by other institutions that are 
required to make payments to the BIF pursuant to subpart B of this part:

                      BIF Base Assessment Schedule
------------------------------------------------------------------------
                                                Supervisory subgroup
               Capital group               -----------------------------
                                                A         B         C
------------------------------------------------------------------------
1.........................................         4         7        21
2.........................................         7        14        28
3.........................................        14        28        31
------------------------------------------------------------------------


[[Page 229]]

    (ii) Base rates for SAIF members. The following base assessment 
schedule applies with respect to assessments paid to the SAIF by SAIF 
members and by other institutions that are required to make payments to 
the SAIF pursuant to subpart B of this part:

                      SAIF Base Assessment Schedule
------------------------------------------------------------------------
                                                Supervisory subgroup
               Capital group               -----------------------------
                                                A         B         C
------------------------------------------------------------------------
1.........................................         4         7        21
2.........................................         7        14        28
3.........................................        14        28        31
------------------------------------------------------------------------

    (b) Adjusted assessment schedules--(1) In general. Except as 
provided in paragraph (b)(3)(ii) of this section, institutions shall pay 
semiannual assessments at the rates specified in this paragraph (b) 
whenever such rates have been prescribed by the Board.
    (2) Adjusted rates for BIF members. The Board has adjusted the BIF 
Base Assessment Schedule by reducing each rate therein by 4 basis points 
for the first semiannual period of 1997 and thereafter. Accordingly, the 
following adjusted assessment schedule applies to BIF members:

                    BIF Adjusted Assessment Schedule
------------------------------------------------------------------------
                                                Supervisory subgroup
               Capital group               -----------------------------
                                                A         B         C
------------------------------------------------------------------------
1.........................................         0         3        17
2.........................................         3        10        24
3.........................................        10        24        27
------------------------------------------------------------------------

    (3) Adjusted rates for SAIF members--(i) In general. The Board has 
adjusted the SAIF Base Assessment Schedule by reducing each rate therein 
by 4 basis points for the first semiannual period of 1997 and 
thereafter. Accordingly, except as provided in paragraph (b)(3)(ii) of 
this section, the following adjusted assessment schedule applies to SAIF 
members:

                    SAIF Adjusted Assessment Schedule
------------------------------------------------------------------------
                                                Supervisory subgroup
               Capital group               -----------------------------
                                                A         B         C
------------------------------------------------------------------------
1.........................................         0         3        17
2.........................................         3        10        24
3.........................................        10        24        27
------------------------------------------------------------------------

    (ii) Institutions exempt from the special assessment--(A) Rate 
schedule. An institution that, pursuant to former Sec. 327.43 (a) or (b) 
as in effect on November 27, 1996 (See 12 CFR 327.43 as revised January 
1, 1997.), was exempt from the special assessment prescribed by 12 
U.S.C. 1817 Note shall pay regular semiannual assessments to the SAIF 
from the first semiannual period of 1996 through the second semiannual 
period of 1999 according to the schedule of rates specified in former 
Sec. 327.9(d)(1) as in effect for SAIF members on June 30, 1995 (See 12 
CFR 327.9 as revised January 1, 1996.), as follows:

------------------------------------------------------------------------
                                                Supervisory subgroup
               Capital group               -----------------------------
                                                A         B         C
------------------------------------------------------------------------
1.........................................        23        26        29
2.........................................        26        29        30
3.........................................        29        30        31
------------------------------------------------------------------------

    (B) Termination of special rate schedule. An institution that makes 
a pro-rata payment of the special assessment shall cease to be subject 
to paragraph (b)(3)(ii)(A) of this section. The pro-rata payment must be 
equal to the following product: 16.7 percent of the amount the 
institution would have owed for the special assessment, multiplied by 
the number of full semiannual periods remaining between the date of the 
payment and December 31, 1999.
    (c) Rate adjustments; procedures--(1) Semiannual adjustments. The 
Board may increase or decrease the BIF Base Assessment Schedule set 
forth in paragraph (a)(2)(i) of this section or the SAIF Base Assessment 
Schedule set forth in paragraph (a)(2)(ii) of this section up to a 
maximum increase of 5 basis points or a fraction thereof or a maximum 
decrease of 5 basis points or a fraction thereof (after aggregating 
increases and decreases), as the Board deems necessary to maintain the 
reserve ratio of an insurance fund at the designated reserve ratio for 
that fund. Any such adjustment shall apply uniformly to each rate in the 
base assessment schedule. In no case may such adjustments result in an 
assessment rate that is mathematically less than zero or in a rate 
schedule for an insurance fund that, at any time, is more than 5 basis 
points above or below the base assessment schedule for that fund, nor

[[Page 230]]

may any one such adjustment constitute an increase or decrease of more 
than 5 basis points. The adjustment for any semiannual period for a fund 
shall be determined by:
    (i) The amount of assessment revenue necessary to maintain the 
reserve ratio at the designated reserve ratio; and
    (ii) The assessment schedule that would generate the amount of 
revenue in paragraph (c)(1)(i) of this section considering the risk 
profile of the institutions required to pay assessments to the fund.
    (2) Amount of revenue. In determining the amount of assessment 
revenue in paragraph (c)(1)(i) of this section, the Board shall take 
into consideration the following:
    (i) Expected operating expenses of the insurance fund;
    (ii) Case resolution expenditures and income of the insurance fund;
    (iii) The effect of assessments on the earnings and capital of the 
institutions paying assessments to the insurance fund; and
    (iv) Any other factors the Board may deem appropriate.
    (3) Adjustment procedure. Any adjustment adopted by the Board 
pursuant to this paragraph (c) will be adopted by rulemaking. 
Nevertheless, because the Corporation is generally required by statute 
to set assessment rates as necessary (and only to the extent necessary) 
to maintain or attain the target designated reserve ratio, and because 
the Corporation must do so in the face of constantly changing 
conditions, and because the purpose of the adjustment procedure is to 
permit the Corporation to act expeditiously and frequently to maintain 
or attain the designated reserve ratio in an environment of constant 
change, but within set parameters not exceeding 5 basis points, without 
the delays associated with full notice-and-comment rulemaking, the 
Corporation has determined that it is ordinarily impracticable, 
unnecessary and not in the public interest to follow the procedure for 
notice and public comment in such a rulemaking, and that accordingly 
notice and public procedure thereon are not required as provided in 5 
U.S.C. 553(b). For the same reasons, the Corporation has determined that 
the requirement of a 30-day delayed effective date is not required under 
5 U.S.C. 553(d). Any adjustment adopted by the Board pursuant to a 
rulemaking specified in this paragraph (c) will be reflected in an 
adjusted assessment schedule set forth in paragraph (b)(2) or (b)(3) of 
this section, as appropriate.
    (4) Announcement. Except with respect to assessments for the first 
semiannual period of 1997, the Board shall announce the semiannual 
assessment schedule and the amount and basis for any adjustment thereto 
not later than 30 days before the invoice date specified in 
Sec. 327.3(c) for the first quarter of the semiannual period for which 
the adjustment shall be effective.
    (d) Refunds or credits of certain assessments. If the amount paid by 
an institution for the regular semiannual assessment for the second 
semiannual period of 1996 exceeds, as a result of the reduction in the 
rate schedule for a portion of that semiannual period, the amount due 
from the institution for that semiannual period, the Corporation will 
refund or credit any such excess payment and will provide interest on 
the excess payment in accordance with the provisions of Sec. 327.7. 
Notwithstanding Sec. 327.7(a)(3)(ii), such interest will accrue 
beginning as of October 1, 1996.

[61 FR 67696, Dec. 24, 1996, as amended at 62 FR 27176, May 19, 1997; 64 
FR 70181, Dec. 16, 1999]



Sec. 327.10  Interpretive rule: Section 7(b)(2)(A)(v).

    This interpretive rule explains certain phrases used in section 
7(b)(2)(A)(v) of the Federal Deposit Insurance Act, 12 U.S.C. 
1817(b)(2)(A)(v).
    (a) An institution classified in supervisory subgroup B or C 
pursuant to Sec. 327.4(a)(2) exhibits ``financial, operational, or 
compliance weaknesses ranging from moderately severe to unsatisfactory'' 
within the meaning of such section 7(b)(2)(A)(v).
    (b) An institution classified in capital group 2 or 3 pursuant to 
Sec. 327.4(a)(1) is ``not well capitalized'' within the meaning of such 
section 7(b)(2)(A)(v).

[61 FR 67698, Dec. 24, 1996]

[[Page 231]]



  Subpart B--Insured Depository Institutions Participating in Section 
                          5(d)(3) Transactions



Sec. 327.31  Scope.

    (a) Affected institutions. This subpart B applies to any insured 
depository institution that:
    (1) Is either a BIF or SAIF member; and
    (2) Is the assuming, surviving, or resulting institution in a 
transaction undertaken pursuant to section 5(d)(3) of the Federal 
Deposit Insurance Act.
    (b) Duration. This subpart B shall cease to apply to an insured 
depository institution if:
    (1) On or after August 9, 1994, the Corporation approves an 
application by an insured depository institution to treat the 
transaction described in paragraph (a) of this section as a conversion 
transaction; and
    (2) The insured depository institution pays the amount of any exit 
and entrance fee assessed by the Corporation with respect to such 
transaction.

[57 FR 45286, Oct. 1, 1992, as amended at 59 FR 67165, Dec. 29, 1994]



Sec. 327.32  Computation and payment of assessment.

    (a) Rate of assessment--(1) BIF and SAIF member rates. (i) Except as 
provided in paragraph (a)(2) of this section, and consistent with the 
provisions of Sec. 327.4, the assessment to be paid by an institution 
that is subject to this subpart B shall be computed at the rate 
applicable to institutions that are members of the primary fund of such 
institution. (ii) Such applicable rate shall be applied to the 
institution's assessment base less that portion of the assessment base 
which is equal to the institution's adjusted attributable deposit 
amount.
    (2) Rate applicable to the adjusted attributable deposit amount. 
Notwithstanding paragraph (a)(1)(i) of this section, that portion of the 
assessment base of any acquiring, assuming, or resulting institution 
which is equal to the adjusted attributable deposit amount of such 
institution shall:
    (i) Be subject to assessment at the assessment rate applicable to 
members of the secondary fund of such institution pursuant to subpart A 
of this part; and
    (ii) Not be taken into account in computing the amount of any 
assessment to be allocated to the primary fund of such institution.
    (3) Adjusted attributable deposit amount. An insured depository 
institution's ``adjusted attributable deposit amount'' for any 
semiannual period is equal to the sum of:
    (i) The amount of any deposits acquired by the institution in 
connection with the transaction (as determined at the time of such 
transaction) described in Sec. 327.31(a), but subject to the adjustment 
specified in paragraph (c) of this section;
    (ii) The total of the amounts determined under paragraph (a)(3)(iii) 
of this section for semiannual periods preceding the semiannual period 
for which the determination is being made under this section; and
    (iii) The amount by which the sum of the amounts described in 
paragraphs (a)(3)(i) and (a)(3)(ii) of this section would have increased 
during the preceding semiannual period (other than any semiannual period 
beginning before the date of such transaction) if such increase occurred 
at a rate equal to the annual rate of growth of deposits of the 
acquiring, assuming, or resulting depository institution minus the 
amount of any deposits acquired through the acquisition, in whole or in 
part, of another insured depository institution.
    (4) Deposits acquired by the institution. As used in paragraph 
(a)(3)(i) of this section, the term ``deposits acquired by the 
institution'' means all deposits that are held in the institution 
acquired by such institution on the date of such transaction; provided, 
that if on or before June 30, 1997, the Corporation has been appointed 
or serves as conservator or receiver for the acquired institution, such 
term:
    (i) Does not include any deposit held in the acquired institution on 
the date of such transaction which the acquired institution has 
obtained, directly or indirectly, by or through any deposit broker;
    (ii) Does not include that part of any remaining deposit held in the 
acquired

[[Page 232]]

institution on the date of such transaction that is in excess of 
$80,000; and
    (iii) Is limited to 80 per centum of the remaining portion of the 
aggregate of the deposits specified in paragraph (a)(4)(ii) of this 
section.
    (5) Deposit broker. As used in paragraph (a)(4) of this section, the 
term ``deposit broker'' has the meaning specified in section 29 of the 
Federal Deposit Insurance Act (12 U.S.C. 1831f).
    (b) Procedures for computation and payment. An insured depository 
institution subject to this subpart B shall follow the payment procedure 
that is set forth in subpart A of this part.
    (c) Reduction of deposits acquired by certain institutions. In the 
case of a transaction occurring on or before March 31, 1995, the amount 
determined under paragraph (a)(3)(i) of this section shall be reduced by 
20 percent for the purpose of computing the adjusted attributable 
deposit amount for any semiannual period beginning after December 31, 
1996, of a BIF member bank that, as of June 30, 1995:
    (1) Had an adjusted attributable deposit amount the value of which 
was less than 50 percent of the amount of its total deposits; or
    (2)(i) Had an adjusted attributable deposit amount the value of 
which was less than 75 percent of the value of its total deposits;
    (ii) Had total deposits greater than $5,000,000,000; and
    (iii) Was owned or controlled by a bank holding company that owned 
or controlled insured depository institutions having an aggregate amount 
of deposits insured or treated as insured by the BIF greater than the 
aggregate amount of deposits insured or treated as insured by the SAIF.

[59 FR 67165, Dec. 29, 1994, as amended at 61 FR 53839, Oct. 16, 1996; 
61 FR 64983, Dec. 10, 1996]



Sec. 327.33  ``Acquired'' deposits.

    This section interprets the phrase ``deposits acquired by the 
institution'' as used in Sec. 327.32(a)(3)(i).
    (a) In general--(1) Secondary-fund deposits. The phrase ``deposits 
acquired by the institution'' refers to deposits that are insured by the 
secondary fund of the acquiring institution, and does not include 
deposits that are insured by the acquiring institution's primary fund.
    (2) Nominal dollar amount. Except as provided in paragraph (b) of 
this section, an acquiring institution is deemed to acquire the entire 
nominal dollar amount of any deposits that the transferring institution 
holds on the date of the transaction and transfers to the acquiring 
institution.
    (b) Conduit deposits--(1) Defined. As used in this paragraph (b), 
the term ``conduit deposits'' refers to deposits that an acquiring 
institution has assumed from another institution (original transferor) 
in the course of a transaction described in Sec. 327.31(a), and that are 
treated as insured by the secondary fund of the acquiring institution, 
but which the acquiring institution has been explicitly and specifically 
ordered by the Corporation, or by the appropriate federal banking agency 
for the institution, or by the Department of Justice to commit to re-
transfer to another insured depository institution (re-transferee 
institution) as a condition of approval of the transaction. The 
commitment must be enforceable, and the divestiture must be required to 
occur and must occur within 6 months after the date of the initial 
transaction.
    (2) Treatment with respect to acquiring institution. Conduit 
deposits are not considered to be acquired by the acquiring institution 
within the meaning of Sec. 327.32(a)(3)(i) for the purpose of computing 
the acquiring institution's adjusted attributable deposit amount for a 
current semiannual period that begins after the end of the semiannual 
period following the semiannual period in which the acquiring 
institution re-transfers the deposits.
    (3) Treatment with respect to re-transferee institution. Conduit 
deposits are treated as insured by the same insurance fund after having 
been acquired by the re-transferee institution as when held by the 
original transferor.

[61 FR 64983, Dec. 10, 1996]



Sec. 327.34  Application of AADAs.

    This section interprets the meaning of the phrase ``an insured 
depository

[[Page 233]]

institution's `adjusted attributable deposit amount' for any semiannual 
period'' as used in the introductory text of Sec. 327.32(a)(3).
    (a) In general. The phrase ``for any semiannual period'' refers to 
the current semiannual period: that is, the period for which the 
assessment is due, and for which an institution's adjusted attributable 
deposit amount (AADA) is computed.
    (b) Quarterly components of AADAs. An AADA for a current semiannual 
period consists of 2 quarterly AADA components. The first quarterly AADA 
component for the current period is determined with respect to the first 
quarter of the prior semiannual period, and the second quarterly AADA 
component for the current period is determined with respect to the 
second quarter of the prior period.
    (c) Application of AADAs. The value of an AADA that is to be applied 
to a quarterly assessment base in accordance with Sec. 327.32(a)(2) is 
the value of the quarterly AADA component for the corresponding quarter.
    (d) Initial AADAs. If an AADA for a current semiannual period has 
been generated in a transaction that has occurred in the second calendar 
quarter of the prior semiannual period, the first quarterly AADA 
component for the current period is deemed to have a value of zero.
    (e) Transition rule. Paragraphs (b), (c) and (d) of this section 
shall apply to any AADA for any semiannual period beginning on or after 
July 1, 1997.

[61 FR 64984, Dec. 10, 1996]



Sec. 327.35  Grandfathered AADA elements.

    This section explains the meaning of the phrase ``total of the 
amounts determined under paragraph (a)(3)(iii)'' in 
Sec. 327.32(a)(3)(ii). The phrase ``total of the amounts determined 
under paragraph (a)(3)(iii)'' refers to the aggregate of the increments 
of growth determined in accordance with Sec. 327.32(a)(3)(iii). Each 
such increment is deemed to be computed in accordance with the 
contemporaneous provisions and interpretations of such section. 
Accordingly, any increment of growth that is computed with respect to a 
semiannual period has the value appropriate to the proper calculation of 
the institution's assessment for the semiannual period immediately 
following such semiannual period.

[61 FR 64984, Dec. 10, 1996]



Sec. 327.36  Growth computation.

    This section interprets various phrases used in the computation of 
growth as prescribed in Sec. 327.32(a)(3)(iii).
    (a) Annual rate. The annual rate of growth of deposits refers to the 
rate, which may be expressed as an annual percentage rate, of growth of 
an institution's deposits over any relevant interval. A relevant 
interval may be less than a year.
    (b) Growth; increase; increases. Except as provided in paragraph (c) 
of this section, references to ``growth'', ``increase'', and 
``increases'' may generally include negative values as well as positive 
ones.
    (c) Growth of deposits. ``Growth of deposits'' does not include any 
decrease in an institution's deposits representing deposits transferred 
to another insured depository institution, if the transfer occurs on or 
after July 1, 1996.
    (d) Quarterly determination of growth. For the purpose of computing 
assessments for semiannual periods beginning on July 1, 1997, and 
thereafter, the rate of growth of deposits for a semiannual period, and 
the amount by which the sum of the amounts specified in 
Sec. 327.32(a)(3)(i) and (ii) would have grown during a semiannual 
period, is to be determined by computing such rate of growth and such 
sum of amounts for each calendar quarter within the semiannual period.

[61 FR 64984, Dec. 10, 1996]



Sec. 327.37  Attribution of transferred deposits.

    This section explains the attribution of deposits to the BIF and the 
SAIF when one insured depository institution (acquiring institution) 
acquires deposits from another insured depository institution 
(transferring institution). For the purpose of determining whether the 
assumption of deposits (assumption transaction) constitutes a 
transaction undertaken pursuant to

[[Page 234]]

section 5(d)(3) of the Federal Deposit Insurance Act (12 U.S.C. 
1815(d)(3)), and for the purpose of computing the adjusted attributable 
deposit amounts, if any, of the acquiring and the transferring 
institutions after the transaction:
    (a) Transferring institution--(1) Transfer of primary-fund deposits. 
To the extent that the aggregate volume of deposits that is transferred 
by a transferring institution in a transaction, or in a related series 
of transactions, does not exceed the volume of deposits that is insured 
by its primary fund (primary-fund deposits) immediately prior to the 
transaction (or, in the case of a related series of transactions, 
immediately prior to the initial transaction in the series), the 
transferred deposits shall be deemed to be insured by the institution's 
primary fund. The primary institution's volume of primary-fund deposits 
shall be reduced by the aggregate amount so transferred.
    (2) Transfer of secondary-fund deposits. To the extent that the 
aggregate volume of deposits that is transferred by the transferring 
institution in a transaction, or in a related series of transactions, 
exceeds the volume of deposits that is insured by its primary fund 
immediately prior to the transaction (or, in the case of a related 
series of transactions, immediately prior to the initial transaction in 
the series), the following volume of the deposits so transferred shall 
be deemed to be insured by the institution's secondary fund (secondary-
fund deposits): the aggregate amount of the transferred deposits minus 
that portion thereof that is equal to the institution's primary-fund 
deposits. The transferring institution's volume of secondary-fund 
deposits shall be reduced by the volume of the secondary-fund deposits 
so transferred.
    (b) Acquiring institution. The deposits shall be deemed, upon 
assumption by the acquiring institution, to be insured by the same fund 
or funds in the same amount or amounts as the deposits were so insured 
immediately prior to the transaction.

[61 FR 64984, Dec. 10, 1996]



PART 328--ADVERTISEMENT OF MEMBERSHIP--Table of Contents




Sec.
328.0  Scope.
328.1  Official signs.
328.2  Mandatory requirements with regard to the official sign and its 
          display by banks.
328.3  Mandatory requirements with regard to the official advertising 
          statement and manner of use by banks.
328.4  Mandatory requirements with regard to the display of the official 
          savings association sign by insured savings associations.

    Authority: 12 U.S.C. 1819; 12 U.S.C. 1828(a), as amended by sec. 
221, Pub. L. 101-73, 103 Stat. 183.



Sec. 328.0  Scope.

    The regulation contained in this part describes the official signs 
of the FDIC and prescribes their use by insured depository institutions. 
It also prescribes the official advertising statement insured banks must 
include in their advertisements. Insured banks which maintain offices 
that are not insured in foreign countries are not required to include 
the advertising statement in advertisements published in foreign 
countries. For purposes of this part 328, the term insured bank includes 
a foreign bank having an insured branch.

[54 FR 33670, Aug. 16, 1989]



Sec. 328.1  Official signs.

    (a) Official bank sign. The official sign referred to in this 
paragraph (bank sign) shall be 7" by 3" in size and of the following 
design:

[[Page 235]]

[GRAPHIC] [TIFF OMITTED] TC23SE91.000


The symbol of the Corporation shall be that portion of the official bank 
sign represented by the letters and the Corporation seal contained upon 
the official bank sign.
    (b) Official savings association sign. The official sign referred to 
in this paragraph (savings association sign) shall be 5\1/8\" in 
diameter and of the following design:
[GRAPHIC] [TIFF OMITTED] TC23SE91.001


[54 FR 33670, Aug. 16, 1989, as amended at 57 FR 45977, Oct. 6, 1992]



Sec. 328.2  Mandatory requirements with regard to the official sign and its display by banks.

    (a) Insured banks to display official sign. Each insured bank shall 
continuously display an official bank sign or an official savings 
association sign at each station or window where insured deposits are 
usually and normally received in its principal place of business and in 
all its branches, except on automatic service facilities including 
automated teller machines, cash dispensing machines, point-of-sale 
terminals, and other electronic facilities where deposits are received. 
However, no bank becoming an insured bank shall be required to display 
such an official sign until twenty-one (21) days after its first day of 
operation as an insured bank. An official sign may be displayed by an 
insured bank prior to the date display is required. Additional bank 
signs or savings association signs may be displayed in other locations 
within an insured bank in other sizes, colors, or materials. An insured 
bank may display an official sign at a remote service facility, provided 
that if there are any noninsured institutions which share in the remote 
service facility, any insured bank which displays the official bank sign 
must clearly show that the sign refers only to a designated insured bank 
or banks.
    (b) Obtaining official signs. (1) Any insured bank may procure 
official bank signs with black letters on a gold background or official 
savings association signs with black letters, stars, and eagle, on a 
gold background, from the Corporation for official use at no charge. The 
Corporation shall furnish to banks an order blank for use in procuring 
the official signs. Any bank which promptly, after the receipt of the 
order blank, fills it in, executes it, and properly directs and forwards 
it to

[[Page 236]]

the Federal Deposit Insurance Corporation, Washington, DC 20429, shall 
not be deemed to have violated this regulation on account of not 
displaying an official sign, or signs, unless the bank shall omit to 
display such official sign or signs after receipt thereof.
    (2) Official signs or signs reflecting variations in size, colors, 
or materials may be procured by insured banks from commercial suppliers.
    (c) Receipt of deposits at same teller's station or window as 
noninsured bank or institution. An insured bank is forbidden to receive 
deposits at any teller's station or window except a remote service 
facility as defined in Sec. 303.0(b)(18) of this chapter, where any 
noninsured insitution receives deposits or similar liabilities.
    (d) Required changes in official sign. The Corporation may require 
any insured bank, upon at least 30 days' written notice, to change the 
wording of its official signs in a manner deemed necessary for the 
protection of depositors or others.

[54 FR 33670, Aug. 16, 1989, as amended at 57 FR 45977, Oct. 6, 1992]



Sec. 328.3  Mandatory requirements with regard to the official advertising statement and manner of use by banks.

    (a) Insured banks to include official advertising statement in all 
advertisements except as provided in paragraph (c) of this section. Each 
insured bank shall include the official advertising statement, 
prescribed in paragraph (b) of this section, in all of its 
advertisements except as provided in paragraph (c) of this section.
    (1) An insured bank is not required to include the official 
advertising statement in its advertisements until thirty (30) days after 
its first day of operation as an insured bank.
    (2) In cases where the Board of Directors of the Federal Deposit 
Insurance Corporation shall find the application to be meritorious, that 
there has been no neglect or willful violation in the observance of the 
section and that undue hardship will result by reason of its 
requirements, the Board of Directors may grant a temporary exemption 
from its provision to a particular bank upon its written application 
setting forth the facts. For the procedure to be followed in making such 
application see Sec. 303.8 of this chapter.
    (3) In cases where advertising copy not including the official 
advertising statement is on hand on the date the requirements of this 
section become operative, the insured bank may cause the official 
advertising statement to be included by use of a rubber stamp or 
otherwise.
    (4) When a foreign bank has both insured and noninsured U.S. 
branches, the bank must identify which branches are insured and which 
branches are not insured in all of its advertisements requiring the use 
of the official advertising statement.
    (b) Official advertising statement. The official advertising 
statement shall be in substance as follows: ``Member of the Federal 
Deposit Insurance Corporation''. The word ``the'' or the words ``of 
the'' may be omitted. The words ``This bank is a'' or the words ``This 
institution is a'' or the name of the insured bank followed by the words 
``is a'' may be added before the word ``member''. The short title 
``Member of FDIC'' or ``Member FDIC'' or a reproduction of the 
``symbol'' may be used by insured banks at their option as the official 
advertising statement. The official advertising statement shall be of 
such size and print to be clearly legible. Where it is desired to use 
the ``symbol'' of the Corporation as the official advertising statement, 
and the ``symbol'' must be reduced to such proportions that the small 
lines of type and the Corporation seal therein are indistinct and 
illegible, the Corporation seal in the letter C and the two lines of 
small type may be blocked out or dropped.
    (c) Types of advertisements which do not require the official 
advertising statement. The following is an enumeration of the types of 
advertisements which need not include the official advertising 
statement:
    (1) Statements of condition and reports of condition of an insured 
bank which are required to be published by State or Federal law;
    (2) Bank supplies such as stationery (except when used for circular 
letters), envelopes, deposit slips, checks, drafts, signature cards, 
deposit passbooks, certificates of deposit, etc.;

[[Page 237]]

    (3) Signs or plates in the banking office or attached to the 
building or buildings in which the banking offices are located;
    (4) Listings in directories;
    (5) Advertisements not setting forth the name of the insured bank;
    (6) Display advertisements in bank directory, provided the name of 
the bank is listed on any page in the directory with a symbol or other 
descriptive matter indicating it is a member of the Federal Deposit 
Insurance Corporation;
    (7) Joint or group advertisements of banking services where the 
names of insured banks and noninsured banks or institutions are listed 
and form a part of such advertisements;
    (8) Advertisements by radio which do not exceed thirty (30) seconds 
in time;
    (9) Advertisements by television, other than display advertisements, 
which do not exceed thirty (30) seconds in time;
    (10) Advertisements which are of the type or character making it 
impractical to include thereon the official advertising statement 
including, but not limited to, promotional items such as calendars, 
matchbooks, pens, pencils, and key chains;
    (11) Advertisements which contain a statement to the effect that the 
bank is a member of the Federal Deposit Insurance Corporation, or that 
the bank is insured by the Federal Deposit Insurance Corporation, or 
that its deposits or depositors are insured by the Federal Deposit 
Insurance Corporation to the maximum of $100,000 for each depositor;
    (12) Advertisements relating to the making of loans by the bank or 
loan services;
    (13) Advertisements relating to safekeeping box business or 
services;
    (14) Advertisements relating to trust business or trust department 
services;
    (15) Advertisements relating to real estate business or services;
    (16) Advertisements relating to armored car services;
    (17) Advertisements relating to service charges or analysis charges;
    (18) Advertisements relating to securities business or securities 
department services;
    (19) Advertisements relating to travel department business, 
including traveler's checks on which the bank issuing or causing to be 
issued the advertisement is not primarily liable;
    (20) Advertisements relating to savings bank life insurance.
    (d) Outstanding billboard advertisements. Where an insured bank has 
billboard advertisements outstanding which are required to include the 
official advertising statement and has direct control of such 
advertisements either by possession or under the terms of a contract, it 
shall, as soon as it can consistent with its contractual obligations, 
cause the official advertising statement to be included therein.
    (e) Official advertising statement in non-English language. The non-
English equivalent of the official advertising statement may be used in 
any advertisement: Provided, That the translation has had the prior 
written approval of the Corporation.

(Sec. 3(m), 9, 64 Stat. 881; 12 U.S.C. 1813(m), 1819)

[32 FR 10189, July 11, 1967, as amended at 45 FR 23645, Apr. 8, 1980; 46 
FR 37876, July 23, 1981. Redesignated and amended at 54 FR 33670, Aug. 
16, 1989]



Sec. 328.4  Mandatory requirements with regard to the display of the official savings association sign by insured savings associations.

    (a) Insured savings associations to display official savings 
association sign. Each insured savings association shall continuously 
display an official savings association sign at each station or window 
where insured deposits are usually and normally received in its 
principal place of business and at all of its branches, except on 
automatic service facilities including automated teller machines, cash 
dispensing machines, point-of-sale terminals, and other electronic 
facilities where deposits are received. However, no savings association 
becoming an insured savings association as a result of the enactment of 
the Financial Institutions Reform, Recovery and Enforcement Act of 1989 
or otherwise, shall be required to display an official savings 
association sign until twenty-one (21) days after its first day of 
operation as an insured savings association. The official savings 
association sign may be displayed by any insured savings association 
prior to the

[[Page 238]]

date display is required. Additional savings association signs in other 
sizes, colors, or materials, may be displayed in other locations within 
an insured savings association. An insured savings association may 
display the official savings association sign at a remote service 
facility, provided that if there are any noninsured institutions which 
share in the remote service facility, any insured savings association 
which displays the sign must clearly show that the official savings 
association sign refers only to a designated insured savings association 
or associations.
    (b) Obtaining official savings association signs. (1) Any insured 
savings association may procure official savings association signs with 
black letters, stars, and eagle, on a gold background