[Federal Register Volume 79, Number 111 (Tuesday, June 10, 2014)]
[Proposed Rules]
[Pages 33259-33387]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-11473]



[[Page 33259]]

Vol. 79

Tuesday,

No. 111

June 10, 2014

Part II





Department of the Treasury





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Office of the Comptroller of the Currency





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12 CFR Parts 4, 5, 7, et al.





Integration of National Bank and Federal Savings Association 
Regulations: Licensing Rules; Proposed Rule

Federal Register / Vol. 79 , No. 111 / Tuesday, June 10, 2014 / 
Proposed Rules

[[Page 33260]]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 4, 5, 7, 14, 32, 34, 100, 116, 143, 144, 145, 146, 
150, 152, 159, 160, 161, 162, 163, 174, 192, 193

[Docket ID OCC-2014-0007]
RIN 1557-AD80


Integration of National Bank and Federal Savings Association 
Regulations: Licensing Rules

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
proposing to integrate its rules relating to policies and procedures 
for corporate activities and transactions involving national banks and 
Federal savings associations, to revise some of these rules in order to 
eliminate unnecessary requirements consistent with safety and 
soundness, and to make other technical and conforming changes. The OCC 
also is proposing amendments to update its rules for agency 
organization and function.

DATES: Comments must be received on or before August 11, 2014.

ADDRESSES: You may submit comments to the OCC by any of the methods set 
forth below. Paper mail in Washington, DC and at the OCC may be subject 
to delay, however, and the OCC encourages commenters to submit comments 
through the Federal eRulemaking Portal or by email. For comments 
submitted to the OCC, please use the title ``Integration of National 
Bank and Savings Association Regulations: Licensing Rules'' to 
facilitate the organization and distribution of these comments.
     Federal eRulemaking Portal: Go to www.regulations.gov, 
enter ``Docket ID OCC-2014-0007'' in the Search Box, and click 
``Search''. You can filter results by using the filtering tools on the 
left side of the screen. Click on ``Comment Now'' to submit public 
comments. Alternatively, click on the ``Help'' tab on the site's home 
page to get information on using this site, including instructions for 
submitting public comments.
     Email: Submit comments at regs.comments@occ.treas.gov.
     Paper Mail: Legislative and Regulatory Activities 
Division, Office of the Comptroller of the Currency, 400 7th Street 
SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street SW., Suite 3E-218, 
Mail Stop 9W-11, Washington, DC 20219.
     Fax: (571) 465-4326.
    Instructions: Include ``OCC'' as the agency name and ``Docket ID 
OCC-2014-0007'' in each comment. In general, the OCC will enter each 
comment received into the docket and publish each comment on the 
Regulations.gov Web site without change, including any business or 
personal information, name and address, email addresses, and phone 
numbers. Comments received, including attachments and other supporting 
material, are part of the public record and subject to public 
disclosure. Do not enclose any information in a comment or supporting 
material that is confidential or inappropriate for public disclosure.
    You may review all comments received by the OCC and related 
materials by the following methods:
     Viewing Comments Electronically: Go to 
www.regulations.gov, enter ``Docket ID OCC-2014-0007'' in the Search 
box, and click ``Search''. Comments can be filtered using the filtering 
tools on the left side of the screen. Alternatively, click on the 
``Help'' tab on the site's home page to get information on using this 
site, including instructions for viewing public comments, other 
supporting and related material, and the complete docket after the 
close of the comment period.
     Viewing Comments in Person: You may inspect and photocopy 
comments in person at the OCC, 400 7th Street SW., Washington, DC 
20219. For security reasons, you first must call (202) 649-6700 to make 
an appointment. Upon arrival at the OCC, you must present a valid 
government-issued photo identification and submit to a security 
screening.
     Docket: You may also view or request available background 
documents and project summaries using the methods described above.

FOR FURTHER INFORMATION CONTACT: For additional information, contact 
Heidi Thomas, Special Counsel; Melissa Lisenbee, Law Clerk; or Stuart 
Feldstein, Director, Legislative and Regulatory Activities Division, 
(202) 649-5490, for persons who are deaf or hard of hearing, TTY, (202) 
649-5597; or Kevin Corcoran, Assistant Director, or Richard Cleva, 
Senior Counsel, Bank Activities and Structure, (202) 649-5500, or 
Stephen Lybarger, Deputy Comptroller for Licensing, (202) 649-6319, 
Office of the Comptroller of the Currency, 400 7th Street SW., 
Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

I. Background

    Title III of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (Dodd-Frank Act), Public Law 111-203, 124 Stat. 1376 
(2010), transferred to the OCC all functions of the former Office of 
Thrift Supervision (OTS) and the Director of the OTS relating to 
Federal savings associations. As a result, the OCC is now responsible 
for the ongoing examination, supervision, and regulation of Federal 
savings associations, in addition to national banks and Federal 
branches and agencies. With a few exceptions, the OCC has one set of 
rules applicable to national banks and another set of rules applicable 
to Federal savings associations, or, where appropriate, to all savings 
associations.\1\ The OCC is now reviewing its rules to determine 
whether it is appropriate to integrate them into a single set of rules 
for both national banks and savings associations, taking into account 
consistency with the underlying statutes that apply to each type of 
institution. The key objectives of this review are to reduce regulatory 
duplication, promote fairness in supervision, eliminate unnecessary 
burden consistent with safety and soundness, and create efficiencies 
for both national banks and savings associations, as well as the 
OCC.\2\ In

[[Page 33261]]

addition, the OCC is in the latter stages of developing an electronic 
applications filing system capable of handling applications and other 
filings from both national banks and Federal savings associations. 
Accordingly, another important objective of this proposal is to 
complete the integration of our licensing rules expeditiously so that 
we can include these integrated rules in this new applications system.
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    \1\ Title III of the Dodd-Frank Act transferred the functions of 
the former OTS relating to state savings associations to the Federal 
Deposit Insurance Corporation (FDIC). Dodd-Frank Act, section 
312(b)(2)(C), 12 U.S.C. 5412(b)(2)(C). The Act also transferred to 
the OCC the rulemaking authority of the OTS relating to all savings 
associations, both State and Federal, unless rulemaking authority is 
provided to another agency by a specific statute. See Dodd-Frank 
Act, section 312(b)(2)(B)(i)(II), 12 U.S.C. 5412(b)(2)(B)(i)(II). On 
July 21, 2011, the OCC issued an interim final rule and request for 
comments that restated the former OTS regulations as 12 CFR parts 
100 through 197, with nomenclature and other technical changes. See 
76 FR 48950 (Aug. 9, 2011). The FDIC has identified a number of 
independent bases for rulemaking authority for State savings 
associations in some cases. Where there is no such independent 
rulemaking authority, the FDIC will enforce applicable OCC 
regulations for State savings associations.
    \2\ Concurrent with our integration of national bank and Federal 
savings association rules, the OCC also is reviewing OTS-issued 
supervisory policies to integrate them into the OCC's policy 
framework and to rescind any issuances that are duplicative, 
outdated, or replaced by other supervisory guidance. Our goal is to 
produce uniform policies for national banks and Federal savings 
associations, while recognizing differences that exist in statute. 
This policy review is occurring in conjunction with this integration 
rulemaking project. Many OTS-issued supervisory policies already 
have been integrated, rescinded, or replaced by new or existing OCC 
guidance. We will update this policy guidance, as appropriate, to 
reflect the integration of OCC rules as of the effective date of the 
final rules. Until that time, the Dodd-Frank Act provides that all 
such OTS issuances continue in effect until modified, terminated, 
set aside, or superseded. See Dodd-Frank Act section 316(b)(2) (12 
U.S.C. 5414(b)(2)); OCC Bulletins 2011-47 (Dec. 11, 2011), 2012-2 
(Jan. 06, 2012), 2012-3 (Jan. 06, 2012), 2012-15 (May 17, 2012), and 
2013-34 (Nov. 20); and www.occ.gov/publications/publications-by-type/comptrollers-handbook/index-comptrollers-handbook.html.
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    Based on this review of our national bank and savings association 
rules, the OCC is proposing to integrate its rules relating to 
corporate activities and transactions involving national banks and 
Federal savings associations (licensing rules).\3\ This integration 
would create, where possible, filing parity for all activities and 
transactions addressed in the OCC's licensing rules. The OCC believes 
that it is more equitable and efficient to have a single filing and 
review process for corporate activities and transactions of national 
banks and Federal savings associations.
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    \3\ The OCC previously has issued rulemakings that integrated, 
or proposed to integrate, its rules for national banks and Federal 
savings associations relating to lending limits, capital, flood 
insurance, and safety and soundness standards. See 78 FR 37930 (June 
25, 2013); 78 FR 62018 (Oct. 11, 2013), 78 FR 65108 (October 30, 
2013), and 79 FR 4282 (Jan. 27, 2014), respectively. Furthermore, 
the OCC recently issued a final rule that integrates its rules 
relating to consumer protection in insurance sales, Bank Secrecy Act 
compliance, management interlocks, appraisals, disclosure and 
reporting of Community Reinvestment Act (CRA)-related agreements, 
and the Fair Credit Reporting Act. See 79 FR 28393 (May 16, 2014). 
Because the OCC and the OTS adopted these rules on an interagency 
basis with other Federal regulators, the OCC did not make any 
substantive changes to these rules.
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II. Review Pursuant to the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996

    The OCC also will be participating in an interagency review of 
regulations pursuant to section 2222 of the Economic Growth and 
Regulatory Paperwork Reduction Act of 1996 (EGRPRA).\4\ EGRPRA requires 
the Federal Financial Institutions Examination Council (FFIEC) and the 
OCC, the FDIC, and the Board of Governors of the Federal Reserve System 
(Federal Reserve Board) (collectively, the Agencies) to conduct a 
review of all their regulations to identify outdated, unnecessary, or 
unduly burdensome regulations applicable to insured depository 
institutions. The FFIEC and the Agencies must conduct this review at 
least once every 10 years, and the next review must be completed by 
December 31, 2016. Over the next two years the OCC, FDIC and Federal 
Reserve Board will issue joint notices requesting comments on their 
rules pursuant to EGRPRA. The EGRPRA contemplates that the Agencies 
will initiate appropriate rulemakings to change or eliminate outdated, 
unnecessary, or unduly burdensome rules, as appropriate, based on the 
comments received.
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    \4\ 12 U.S.C. 3311.
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    The Agencies published the first EGRPRA notice on June 4, 2014.\5\ 
This interagency notice requests comments on three categories of rules, 
including the Agencies' licensing rules. Thus, the timing of the OCC's 
licensing integration review and the EGRPRA review of licensing rules 
overlaps. To ensure that the OCC's final licensing rules take account 
of all comments we receive, the OCC will consider comments received on 
both this Notice of Proposed Rulemaking (NPRM) and this first EGRPRA 
notice when finalizing its licensing integration rule.
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    \5\ 79 FR 32172.
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    To minimize the potential for overlap and confusion going forward, 
and to afford the OCC the benefit of public comment through the EGRPRA 
process on potential ways to streamline and reduce burden for all of 
our rules, the OCC does not intend to publish further integration-
specific proposals until the Agencies have completed the EGRPRA notice 
process. However, as has been the practice since the OCC assumed 
supervisory oversight of Federal savings associations, the OCC will 
continue to evaluate whether to integrate rules as they are otherwise 
revised (for example, as we did when amending the OCC's lending limits 
rules to conform to the Dodd-Frank Act).\6\
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    \6\ See 78 FR 37930 (June 25, 2013).
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III. Overview of the Proposal

    Part 5 sets forth the OCC's rules, policies and procedures for 
national bank corporate activities and transactions. Subpart A sets 
forth the generally applicable rules and procedures, while subparts B 
through D contain the rules for national bank initial activities, the 
expansion of activities, and other changes in activities and 
operations. Subpart E addresses a national bank's payment of dividends, 
and subpart F addresses Federal branches and agencies. The OCC's 
equivalent rules, policies and procedures for Federal savings 
associations are dispersed throughout parts 100-199, with the generally 
applicable rules and procedures in part 116. The OCC proposes to revise 
part 5 to include the rules applicable to Federal savings associations 
and, to the extent appropriate, to delete the corresponding provisions 
found in parts 100 through 199.
    The proposal would consolidate most licensing provisions for 
Federal savings associations into the existing national bank rule in 
part 5 of the OCC's regulations and would eliminate parts 116, 146, 
152, 159, 174 and the corresponding provision in parts 143, 144, 145, 
150, 160, and 163. These combined rules would be as follows:
     Rules of general applicability (subpart A)
     Organizing a national bank or Federal savings association 
(Sec.  5.20)
     Conversion from a national bank or Federal savings 
association (Sec.  5.25)
     Fiduciary powers of national banks or Federal savings 
associations (Sec.  5.26)
     Business combinations involving a national bank or Federal 
savings association (Sec.  5.33)
     Bank service company investments of a national bank or 
Federal savings association (Sec.  5.35)
     Investment in national bank or Federal savings association 
premises (Sec.  5.37)
     Change in location of a main office of a national bank or 
home office of Federal savings association (Sec.  5.40)
     Corporate title of a national bank or Federal savings 
association (Sec.  5.42)
     Voluntary liquidation of a national bank or Federal 
savings association (Sec.  5.48)
     Change in control of a national bank or Federal savings 
association; reporting of stock loans (Sec.  5.50)
     Changes in directors and senior executive officers of a 
national bank or Federal savings association (Sec.  5.51)
     Change of address of national bank or Federal savings 
association (Sec.  5.52)
     Substantial asset change by a national bank or Federal 
savings association (Sec.  5.53)
    In other cases, we propose separate rules for national banks and 
Federal savings association in part 5 because the rules do not apply to 
both charters, are better organized as separate rules, or because their 
differences and complexity make integration difficult. The new Federal 
savings association rules would be as follows:
     Federal mutual savings association charters and bylaws 
(Sec.  5.21)
     Federal stock savings association charters and bylaws 
(Sec.  5.22)
     Conversion to become a Federal savings association (Sec.  
5.23)

[[Page 33262]]

     Establishment, acquisition, and relocation of a branch of 
a Federal savings association (Sec.  5.31)
     Operating subsidiaries of a Federal savings association 
(Sec.  5.38)
     Increases in permanent capital of a Federal savings 
association (Sec.  5.45)
     Capital distributions by a Federal savings association 
(Sec.  5.55)
     Inclusion of subordinated debt securities and mandatorily 
redeemable preferred stock as supplementary (tier 2) capital (Sec.  
5.56)
     Pass-through investments by a Federal savings association 
(Sec.  5.58)
     Service corporations of a Federal savings association 
(Sec.  5.59)
    The remaining rules in part 5 would continue to be applicable only 
to national banks, with the exception of subpart E. (Subpart E applies 
only to Federal branches and agencies, and we do not propose to amend 
it in this proposal.) We propose to revise some of these rules to be 
consistent with the changes proposed for Federal savings associations, 
revise the titles of some of these rules to reflect the inclusion of 
rules applicable to Federal savings associations in part 5, and to make 
other technical changes. These national bank-only rules would be as 
follows:
     Establishment, acquisition, and relocation of a branch of 
a national bank (Sec.  5.30)
     Expedited procedures for certain reorganizations of a 
national bank (Sec.  5.32)
     Operating subsidiaries of a national bank (Sec.  5.34)
     Other equity investments by a national bank (Sec.  5.36)
     Financial subsidiaries of a national bank (Sec.  5.39)
     Changes in permanent capital of a national bank (Sec.  
5.46)
     National bank subordinated debt as capital (Sec.  5.47)
     Conversion to become a national bank (Sec.  5.24)
     Payment of Dividends by National Banks, Subpart E
    In addition to the placement and integration of Federal savings 
association rules, this proposal would make substantive changes to the 
OCC's licensing rules in order to eliminate unnecessary requirements or 
further the safe and sound operation of the institutions the OCC 
supervises. Furthermore, the proposal would make conforming and 
technical changes to the rules in parts 5, 7, and 34 and in various 
provisions of parts 100 through 199 to reflect the movement of the 
licensing rules for savings associations to part 5, to adjust section 
titles, and to conform cross-references. In particular, the OCC is 
proposing to replace, where appropriate, references to ``bank'' with 
``national bank,'' the term that parallels ``Federal savings 
association.'' Finally, the proposal would amend the OCC's licensing 
rules to make consistent the OCC office to which a national bank or 
Federal savings association must file its notice or application. 
Specifically, the proposal would amend each rule in part 5 to direct 
such filings to the institution's appropriate OCC licensing office or 
appropriate OCC supervisory office, as applicable, and, in clarifying 
amendments, would update the description of the OCC's supervisory 
structure in part 4.
    A detailed description of each amendment in this NPRM is set forth 
below in Section IV of the preamble. Section V of the preamble 
summarizes the significant changes for national banks and Federal 
savings associations that would result from this NPRM. Section VIII of 
the preamble contains a redesignation table that indicates changes in 
the numbering of the rules as proposed. Sections V and VIII may be used 
as a quick-reference guide to our rulemaking and are intended to assist 
national banks and Federal savings associations, especially community 
institutions, in understanding the changes we propose.

IV. Description of the Proposed Rule

A. Part 4--District Offices (Sec.  4.5)

    Part 4 comprises regulations on a range of topics, including 
regulations pertaining to the OCC's organizational structure. Section 
4.4 describes the role of the OCC's Washington office. Section 4.5 
describes the role of the OCC's district and field offices and sets 
forth the address of, and the geographical area covered by, each 
district office. However, Sec.  4.4 and Sec.  4.5 do not completely 
describe all of the OCC's supervisory offices. The OCC proposes to 
amend 12 CFR part 4 by restructuring 12 CFR 4.5 to reflect more 
accurately the current supervisory structure for national banks and 
Federal savings associations. Specifically, the proposal revises Sec.  
4.5 to include a description and address of the OCC's Midsize Bank 
Supervision program, and to provide that the district offices supervise 
community banks not otherwise supervised by the Washington office or 
Midsize Bank Supervision. The proposal also replaces the outdated 
reference to ``duty stations'' with the currently used ``field office 
satellite offices.''

B. Part 5--Rules, Policies, and Procedures for Corporate Activities 
Rules of General Applicability (Part 5, Subpart A)

    Twelve CFR part 5, subpart A, and 12 CFR part 116 set forth the 
OCC's generally applicable rules and procedures for processing filings 
\7\ related to corporate activities and transactions of national banks 
and Federal savings associations, respectively. Both sets of 
regulations include filing requirements and explain where and how to 
file. The OCC believes that it is more efficient to have a single 
filing process for national banks and Federal savings associations, 
where possible, and proposes to amend subpart A to apply to both sets 
of institutions and to remove part 116. The OCC also proposes 
additional substantive and technical subpart A changes, as explained 
below.
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    \7\ Current rules use slightly different terminology for 
national banks and Federal savings associations. Under 12 CFR 
5.3(i), a ``filing'' is an application or notice submitted under 
part 5. Twelve CFR 116.1(a) uses the word ``application'' to mean an 
application, notice or filing related to a Federal savings 
association. In this preamble, when it is not necessary to 
distinguish among the three, we use the word ``filing'' to refer to 
an application, notice, or filing.
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    Sec.  5.2 Rules of General Applicability. Current rules differ with 
respect to the scope and applicability of the generally applicable 
licensing procedures for national banks and Federal savings 
associations. The national bank rule at 12 CFR 5.2(a) states that the 
subpart A procedures apply to all part 5 filings, unless otherwise 
stated.\8\ Section 5.2(b) states that the OCC may adopt materially 
different procedures if it provides notice to affected parties. In 
contrast, the Federal savings association rule at Sec.  116.1 states 
that the part 116 prefiling and filing procedures and the rules on OCC 
review apply to all required filings related to Federal savings 
associations, but that the publication requirements and the comment and 
meeting procedures apply only when an OCC regulation specifically 
incorporates these procedures or the OCC otherwise requires. Section 
116.1(b) also specifies that part 116 does not apply to filings related 
to transactions under sections 13(c) or (k) of the Federal Deposit 
Insurance Act (FDI Act); \9\ certain final agency action requests; 
certain requests related to litigation, enforcement proceedings, or 
supervisory directives or agreements; or applications filed

[[Page 33263]]

under an OCC regulation that prescribes other application processing 
procedures and time frames.
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    \8\ Certain substantive activity or transaction rules in part 5 
specify that one or more of the procedures in subpart A do not 
apply. In some cases, the rule specifies other procedures.
    \9\ 12 U.S.C. 1823(c) and (k).
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    As proposed, all subpart A procedures would apply to all part 5 OCC 
filings, unless the substantive rule specifically exempts the filing or 
the OCC states otherwise. This change would create filing parity for 
all national banks and Federal savings association activities and 
transactions addressed in proposed part 5. The effect of this change on 
a specific activity or transaction is discussed below, in the context 
of that activity or transaction.
    Section 5.2(c) also states that the Comptroller's Licensing Manual 
(Manual) provides additional filing information and is available on-
line and, for a fee, in print. The OCC proposes to revise this 
provision to state only that the Manual is available on-line. This 
proposed revision reflects the OCC's decision to stop printing the 
Manual in hard copy, in order to reduce paper consumption and to ensure 
that the public receives only the most up-to-date information. The OCC 
also is in the process of updating the Manual, as well as filing forms, 
to contain information on both national bank and Federal savings 
association filings. As indicated earlier in this preamble discussion, 
we also anticipate updating our electronic filing system so that a 
single system can receive filings from both national banks and Federal 
savings associations.
    Finally, Sec.  5.2(d) states that the OCC may permit electronic 
filing for any class of filings. In order to reflect the agency's move 
toward the more efficient and less costly electronic filings, we 
propose to revise this provision to state that the OCC encourages all 
filings to be made electronically.
    Sec.  5.3 Definitions. Section 5.3 contains definitions of terms 
used throughout part 5. The OCC is proposing amendments to this section 
as part of the proposal to address both national bank and Federal 
savings association filings in part 5. For example, we propose to amend 
the definition of ``capital and surplus'' to include reference to 
Federal savings associations.\10\
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    \10\ We note that the OCC issued a final rule on October 11, 
2013 that, among other things, integrates the OCC's national bank 
and Federal savings association capital rules. This integration has 
a two-tier effective date, with the integration complete for all 
savings associations on January 1, 2015. See 78 FR 62018. The OCC 
issued an interim final rule on February 28, 2014 that amends the 
OCC's rules, including part 5, to reflect this integration. 79 FR 
11300.
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    The OCC also proposes to amend the Sec.  5.3 definition of 
``eligible bank'' to add ``eligible savings associations.'' Currently, 
an ``eligible bank'' is a national bank that (1) is well capitalized 
under the OCC's Prompt Corrective Action (PCA) regulations, (2) has a 
composite rating of 1 or 2 under the Uniform Financial Institutions 
Rating System (CAMELS), (3) has an ``Outstanding'' or ``Satisfactory'' 
CRA rating, and (4) is not subject to a cease and desist order, consent 
order, formal written agreement, or PCA directive, or, if it is, the 
OCC has informed the bank that it may nonetheless be treated as an 
``eligible bank.'' Under certain of the substantive activity or 
transaction rules in part 5, an eligible bank may receive expedited 
review of a filing in the manner set out in the rule. Section 
5.13(a)(2) sets out additional information about the expedited review 
process.
    Part 116 also has an expedited review process for certain filings. 
Specifically, Sec.  116.5 provides that a Federal savings association 
filing will receive expedited treatment unless: (1) It has a composite 
or compliance rating below 2 or a CRA rating of Needs to Improve or 
Substantial Noncompliance, (2) it fails any part 3 or 167 capital 
requirement, as applicable, and has been notified that it is in 
troubled condition,\11\ (3) it does not have a composite, compliance, 
or CRA rating, or (4) the applicable regulation does not specifically 
state that expedited treatment is available.
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    \11\ ``Troubled condition'' is currently defined at 12 CFR 
163.555.
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    The OCC proposes to amend Sec.  5.3 by defining ``eligible bank or 
eligible savings association'' (instead of ``eligible bank'') and by 
adding an OCC compliance rating of 1 or 2 to the eligibility 
requirements for all institutions. This proposal will create parity for 
all OCC filings with respect to the criteria that a filing must satisfy 
to receive expedited processing. Furthermore, because some limited 
purpose banks, such as trust banks, are not subject to the CRA, the 
proposal also would clarify that the CRA rating component applies only 
if the CRA is applicable to the institution.
    The addition of the OCC compliance rating would be a change for 
national banks, but not for Federal savings associations. The OCC 
believes that a bank's compliance with statutes and regulations, 
particularly consumer-related laws, should be a factor imposed by 
regulation in determining whether a bank may qualify for expedited 
treatment. Furthermore, as explained in greater detail below, because 
Sec.  5.13(a)(2) permits the OCC to remove a filing from expedited 
review if it raises certain issues, including compliance concerns,\12\ 
this proposal would not be a significant change for national banks and 
would in fact provide more certainty regarding their eligibility for 
expedited review.
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    \12\ In addition, Sec.  5.2(b) provides the OCC with the 
authority to make exceptions for particular filings, where 
appropriate.
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    With respect to Federal savings associations, the proposal may 
result in changes for some filings because the criteria in Sec. Sec.  
5.3 and 116.5 are not identical. Under the current rules, the two tests 
are similar in that they both require a composite CAMELS rating of 1 or 
2 and a CRA rating of outstanding or satisfactory. In addition, if an 
institution has not received a rating, it is not eligible for expedited 
treatment under either set of current rules and would remain ineligible 
under the proposed rule. However, there are some differences. The first 
difference involves the capital requirement. Under the current savings 
association rule, both well and adequately capitalized institutions are 
eligible for expedited treatment. Under the proposal, only savings 
associations that are well capitalized would qualify for expedited 
review. The OCC proposes to apply the well capitalized requirement to 
savings associations because, in the OCC's experience, national banks 
and Federal savings associations that are less than well capitalized 
are more likely than other institutions to present supervisory concerns 
such that expedited review is not necessarily appropriate. This 
requirement may exclude some savings associations that qualify for 
expedited treatment under the current rule.
    A second difference involves the supervisory condition of the 
savings association. Under the current savings association rule, the 
institution must not have been notified it is in troubled condition, 
while under the proposal, an eligible savings association must not be 
subject to certain orders, agreements or directives. Although 
different, these supervisory condition tests generally should have 
similar outcomes.
    The OCC also proposes to amend the definition of ``eligible 
depository institution'' to address the fact that either a national 
bank or a Federal savings association may enter into a transaction with 
an eligible depository institution, consistent with the changes 
proposed to 12 CFR 5.33 and discussed elsewhere in this rulemaking.
    Another proposed change is to the Sec.  5.3 definition of 
``notice.'' Section 5.3 defines a notice as a submission informing the 
OCC that a national bank intends to engage in or has commenced certain 
corporate activities or

[[Page 33264]]

transactions. Under Sec.  5.3, an ``application'' is a submission 
requesting prior OCC approval to engage in various corporate activities 
and transactions. The two definitions suggest that a ``notice'' does 
not require OCC approval. However, the rules use the term ``notice'' in 
several different ways. In some rules, a ``notice'' is the same as an 
application in that the filer must obtain prior OCC approval before 
engaging in the activity or transaction. In other rules, a ``notice'' 
is similar to an application in that, while the OCC does not 
``approve'' the filing, the OCC may disapprove it. In still other 
rules, the notice only informs the OCC that the filer intends to engage 
in or has engaged in a transaction. The OCC may review the notice, but 
there is no requirement of prior OCC approval. Some of the latter 
notices can be filed after-the-fact. We propose to add provisions to 
Sec.  5.3(j) to clarify the scope of ``notice,'' as well as adding 
Federal savings associations to Sec.  5.3(j).
    The OCC also proposes to strike the Sec.  5.3 definition of 
``appropriate district office'' and, instead, to define ``appropriate 
OCC licensing office'' as described at OCC.gov and ``appropriate OCC 
supervisory office'' as described in subpart A of 12 CFR part 4. This 
change will eliminate confusion caused by the current definition with 
respect to where a filing should be made. Conforming changes are 
proposed throughout part 5.
    Another proposed change is to the current definition of ``short-
distance relocation,'' a term that is used in current national bank 
branch and main office relocations regulations.\13\ The OCC proposes to 
amend this definition to reference both national bank main office 
relocations and Federal savings association home office relocations, 
consistent with the changes proposed in 12 CFR 5.40 and discussed 
elsewhere in this rulemaking.\14\
---------------------------------------------------------------------------

    \13\ See 12 CFR 5.30(h)(2) and 12 CFR 5.40(d)(5)(ii), 
respectively.
    \14\ As explained in the discussion of the proposed changes to 
12 CFR 5.40, the Federal savings association home office is the 
equivalent of a national bank main office.
---------------------------------------------------------------------------

    The current ``short-distance relocation'' definition also 
references whether a branch is located within a ``central city of a MSA 
(metropolitan statistical area).'' The Office of Management and Budget 
(OMB), which designates MSAs, uses the term ``principal city'' in 
describing MSAs.\15\ The OCC proposes to amend its current rule to use 
the term ``principal city,'' thereby bringing the rule into conformity 
with the MSA terminology used by OMB. In addition, we propose to strike 
the Sec.  5.3 definition of ``central city'' and add a definition of 
``principal city.'' ``Principal city'' will be defined as an area 
designated as such by OMB. These changes have no material effect. Under 
this proposal, this definition will apply to Federal savings 
associations without any other change to the current regulatory 
language. The current Federal savings association regulation uses the 
term ``principal city.''
---------------------------------------------------------------------------

    \15\ See, e.g., www.ffiec.gov/Geocode/help1.aspx (referencing 
MSAs and principal cities).
---------------------------------------------------------------------------

    Under this proposal, other definitions also will apply to Federal 
savings association filings without any language changes. These include 
the definitions of ``applicant,'' ``application,'' ``depository 
institution,'' and ``filing.'' Other non-substantive and technical 
changes are proposed to Sec.  5.3. As noted above, the effect, if any, 
of a proposed Sec.  5.3 change is discussed in the context of the 
substantive provision at issue.
    Sec.  5.4 Filing required. Section 5.4(a) directs a depository 
institution to file an application or notice with the OCC to engage in 
national bank activities and transactions described in part 5. As a 
result of the other proposed changes to part 5, this directive would 
apply to Federal savings associations with respect to part 5 
transactions and activities. No change is needed to the regulatory 
language in Sec.  5.4 to achieve this result.
    Section 5.4(b) states that forms and instructions for filings are 
available in the Manual or from an OCC district office. The OCC 
proposes to revise this section to reflect the fact that the Manual is 
now available only on-line. As noted above, the OCC will be updating 
this Manual and it will contain information on both national bank and 
Federal savings association filings.
    Section 5.4(c) states that, at a filer's request, the OCC may 
accept another agency's form or filing if it contains substantially the 
same information required by the OCC. Section 116.25(c), which allows 
the OCC to waive certain filing requirements, has been used for this 
same purpose with respect to Federal savings association filings. Under 
proposed Sec.  5.4(c), this option will remain available for both 
national banks and Federal savings associations with no changes to the 
regulatory text.
    Section 5.4(d) directs a filer to submit a filing or other 
submission to the OCC's Director for District Licensing at the 
appropriate district office, unless directed otherwise in a pre-filing 
communication. For Federal savings associations, Sec.  116.40(a) 
directs filings to the Director for District Licensing at the 
appropriate OCC licensing office or the OCC licensing office at OCC 
headquarters. In addition, under Sec.  116.40(b), if a filing involves 
significant issues of law or policy, or if the applicable regulation or 
form so directs, the applicant must also file copies at the OCC 
headquarters licensing office.
    As proposed, Sec.  5.4(d) directs that part 5 filings and related 
submissions be addressed to the appropriate OCC licensing or 
appropriate OCC supervisory office (unless the OCC advises otherwise 
through a pre-filing communication) and states that the relevant 
addresses are on the OCC's Internet Web page, www.OCC.gov.
    Furthermore, the OCC's current rules do not specify the number of 
copies of a filing that must be provided to the OCC. This information 
generally is stated on the form itself or in the Manual. In contrast, 
Sec.  116.40(a) states that Federal savings association filers must 
submit to the appropriate licensing office or the OCC licensing office 
at headquarters the original form plus the number of copies specified 
on the application. If none is specified, Sec.  116.40(a) directs 
applicants to submit the original plus two copies. The OCC is removing 
this requirement and, instead, directs Federal savings association 
filers to consult the appropriate form and the Manual for information 
on the number of required copies.
    Section 5.4(e) permits an applicant to incorporate by reference 
relevant, current information contained in another OCC application or 
filing, provided that the material (1) is attached to the application, 
(2) is current, and (3) is responsive to the requested information. The 
filing must clearly indicate that the information is incorporated and 
include a cross-reference to the incorporated information. With respect 
to Federal savings association filings, Sec.  116.25(c), which allows 
the OCC to waive certain filing requirements, is currently used to 
allow incorporation by reference. Moreover, the Federal savings 
association filing forms themselves typically provide for incorporating 
by reference other documents. As proposed, Sec.  5.4(e) would apply to 
all filings with the OCC, without any change to the regulatory language 
and with no material change to affected institutions or persons.
    Finally, Sec.  116.15(b)(2) encourages all applicants to contact 
the appropriate OCC licensing office to determine whether the applicant 
must attend a prefiling meeting or whether the submission of a draft 
business plan or other information would expedite the application 
review process. Section 116.20 describes the required contents

[[Page 33265]]

of a draft business plan.\16\ In contrast, part 5, subpart A does not 
include rules on prefiling meetings, although specific activity or 
transaction rules may address these meetings,\17\ and the OCC may 
request such a meeting on a case-by-case basis under Sec.  5.2(b). 
Subpart A also does not address the submission of business plans to the 
OCC.
---------------------------------------------------------------------------

    \16\ Certain Federal savings association activity and 
transaction rules also address these meetings. See, e.g., 12 CFR 
116.15(a)(1) (discussing prefiling meetings when organizing a 
Federal savings association).
    \17\ See, e.g., 12 CFR 5.20(i) (discussing prefiling meetings 
when organizing a national bank); 12 CFR 5.24(d)(2) (discussing 
prefiling meetings when converting to a national bank); and 12 CFR 
116.15(a)(1) (discussing prefiling meetings when organizing a 
Federal savings association).
---------------------------------------------------------------------------

    The OCC has found that prefiling meetings, as well as the 
submission of business plans or other information before such meetings, 
often result in a more efficient review process. In order to highlight 
this opportunity, the OCC proposes to revise subpart A by adding a new 
Sec.  5.4(f) that encourages application filers to contact the OCC to 
determine the need for a prefiling meeting, regardless of whether a 
prefiling meeting is specifically required by another regulation. This 
new provision also states that the OCC will decide on a case-by-case 
basis whether a meeting is necessary and states that the prior 
submission of a draft business plan or other relevant information may 
expedite the process. Unlike part 116, however, the proposal does not 
specify what must be included in a draft business plan because the OCC 
does not believe that this level of detail is necessary in regulatory 
text. The proposed rule does note, however, that information on model 
business plans can be found in the Manual.
    Sec.  5.5 Filing fees. Section Sec.  5.5 states that an applicant 
shall submit filing fees in the form of a check made payable to the 
OCC. The rule also states that the OCC publishes a fee schedule 
annually and does not generally refund filing fees. Section 
116.45(a)(3) addresses the payment of Federal savings association 
filings fees, directing applicants to submit fees to the appropriate 
OCC licensing office and permitting fees to be paid by check, money 
order, cashier's check, or wire transfer.
    Under this proposal, Sec.  5.5 will apply to all fees paid to the 
OCC and will be revised to state that fees may be paid by check, money 
order, cashier's check, or wire transfer. This statement is consistent 
with both the current Federal savings association rule and the OCC's 
ability to accept these forms of payment from all filers. The section 
also will state that additional filing fee information, including where 
to submit the fee, can be found in the Manual. Finally, as a technical 
amendment, the OCC proposes to remove the word ``annually'' from the 
Sec.  5.5 description of when it publishes a fee schedule, to clarify 
that, as stated in 12 CFR 8.8, the OCC may publish an interim or 
amended filing fee schedule, in addition to its annual publication.
    Sec.  5.7 Investigations. Section 5.7 states that the OCC may 
examine or investigate and evaluate facts related to a filing to the 
extent necessary to reach an informed decision. Section 116.230 has a 
somewhat narrower scope and time frame, providing that the OCC may 
conduct an eligibility examination at any time before it deems an 
application complete. As proposed, Sec.  5.7 would apply to all filings 
received by the OCC, including those related to Federal savings 
associations, because the OCC believes that the more flexible approach 
in Sec.  5.7 is preferable.
    Section 5.7 also states that, as described in 12 CFR 8.6, the OCC 
has the authority to assess fees for special examinations and 
investigations. Section 8.6 is currently applicable to both national 
banks and Federal savings associations and related filings, as a result 
of the July 21, 2011 final rule,\18\ discussed above. As a result, the 
application of Sec.  5.7 under this proposal to Federal savings 
association filings will be a technical change only.
---------------------------------------------------------------------------

    \18\ 76 FR 43549.
---------------------------------------------------------------------------

    Sec.  5.8 Public notice. Under Sec.  5.8(a), on the date of filing 
or as soon as practicable before or after filing, a national bank 
applicant shall publish a public notice in a general circulation 
newspaper in the community in which the applicant proposes to engage in 
business. The rules do not specify the language in which the notice 
must be published.
    Under Sec.  116.60, a Federal savings association applicant shall 
publish notice no earlier than seven days before and no later than the 
date of the filing. Under Sec.  116.80, this notice must be published 
in an English-language newspaper unless the OCC determines that the 
primary language of a significant number of adult residents of the 
community is not English, in which case the agency may require the 
applicant simultaneously to publish one or more additional notices in 
the appropriate language or languages.
    Under this proposal, Sec.  5.8(a) would apply to all applicants. As 
a result, Federal savings associations would no longer have to publish 
a public notice within the seven days before the filing date but may 
publish as soon as practicable before or after filing, unless otherwise 
required.\19\ This change would provide Federal savings association 
filers with the same flexibility that national bank filers have with 
respect to when to publish a public notice while still providing the 
public with timely notice.
---------------------------------------------------------------------------

    \19\ Certain activities and transactions are exempt from the 
Sec.  5.8 notice requirements and subject to other notice 
requirements. See, e.g., 12 CFR 5.50(g) (notice of change in bank 
control).
---------------------------------------------------------------------------

    In addition, the OCC proposes to add to Sec.  5.8(a) the 
requirements in Sec.  116.80 that notices must be published in English 
and, if the OCC determines it is necessary, also in other languages. As 
a result, national bank filers would be required to publish their 
notices in English and may be required simultaneously to publish in 
languages other than English, as is currently the case for Federal 
savings associations. This change will further ensure that interested 
persons have meaningful access to the Sec.  5.8(a) notice.
    Section 5.8(b) now states that a public notice must include: (1) A 
statement that a filing is being made, (2) the date of the filing, (3) 
the applicant's name, (4) the subject matter of the filing, (5) a 
statement that the public may submit comments to the OCC and where such 
comments should be sent, (6) the comment period closing date, and (7) 
any other information that the OCC requires. Section Sec.  116.55 
requires that similar, but not identical, information be included in a 
public notice.
    The OCC proposes to revise Sec.  5.8(b) to include Federal savings 
associations and to add some requirements to the notice included in 
Sec.  116.55. As a result, in addition to what Sec.  5.8(b) currently 
requires, a public notice related to a national bank filing also would 
be required to include (1) the name of the institution that is the 
subject of the filing, (2) a statement that the public portion of the 
filing is available on request, and (3) the address of the applicant. 
The public notice also would need to state that the public may submit 
comments to the appropriate OCC licensing office and provide the 
address of this office. A public notice related to a Federal savings 
association filing, in addition to the information currently required 
under Sec.  116.55, also would need to include a specific statement 
that a filing is being made and the date of the filing. The OCC 
believes that proposed Sec.  5.8(b) would provide the public with the 
full range of helpful information and treat all part 5 filings 
consistently, while requiring negligible additional work from filers. 
We also propose other minor technical changes to Sec.  5.8(b).

[[Page 33266]]

    Section 5.8(c) currently requires a filer to confirm that the Sec.  
5.8(a) notice has been published by delivering to the OCC a statement 
of the date of publication, the name and address of the paper in which 
notice was published, and a copy of the notice. Federal savings 
association filers are required to do the same, although this 
requirement is set forth on the application itself and not included in 
the regulatory text. The OCC proposes to apply Sec.  5.8(c) to both 
national bank and Federal savings association filings pursuant to part 
5.
    Section 5.8(d) currently states that the OCC 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 filing a 
single public notice for multiple transactions, the filer shall explain 
in the notice how the transactions are related. Although this is not 
specifically permitted under part 116, it has been an accepted practice 
for Federal savings association filings. Under this rulemaking, both 
national banks and Federal savings associations may continue to engage 
in this practice, which eliminates unnecessary publications while 
ensuring that the public's need for notice is met.
    Under Sec.  5.8(e), upon the request of an applicant for a 
transaction subject to a public notice requirement of both the OCC and 
another Federal agency, the OCC may accept publication of a single 
joint notice containing the information required by both the OCC and 
the other Federal agency, provided that the notice states that comments 
must be submitted to both the OCC and, if applicable, the other Federal 
agency. For example, a merger filing where there is an application to 
the OCC for approval of the merger and a filing with the FDIC for 
approval under the Bank Merger Act when the merger is between an 
insured national bank and an entity that is not FDIC-insured. Although 
there is no specific part 116 provision addressing this practice, the 
OCC has permitted such joint notices for Federal savings associations. 
As part of the integration of Federal savings associations into part 5, 
the OCC also will accept joint public notices for both national bank 
and Federal savings association transaction or activity applications. 
This provision would benefit filers and serve the public's needs.
    Section 5.8(f) allows the OCC to require or give public notice and 
request comment on any filing and in any manner that it determines is 
appropriate for a particular filing. There is no specific equivalent to 
this provision in part 116. As part of this proposal, this provision 
would apply to both national banks and Federal savings association 
filings, allowing the OCC to ensure that the notice provided to the 
public is appropriate for each filing.
    Finally, Sec.  116.240(b) provides that, prior to the end of the 
applicable review period, if the OCC determines that an issue of law or 
change in circumstances has arisen that will substantially affect an 
application, it may require an applicant to publish, among other 
things, a new public notice. Although no specific national bank rule 
provides for this result, the OCC has a similar practice for national 
bank filings. In order to codify and clarify this practice, the OCC 
proposes to add a new Sec.  5.8(g) that states that the OCC, at its 
discretion, may require an applicant to publish a new public notice if 
(1) the applicant submits either a revised filing or new or additional 
information related to a filing, (2) there is a major issue of law or a 
change in circumstances arises after a filing, or (3) the agency 
determines that a new public notice is appropriate. This provision does 
not represent a material change for either national bank or Federal 
savings association filers.
    Sec.  5.9 Public availability. Section 5.9 addresses both access to 
the public portion of a filing and the confidential treatment that may 
be provided to certain information in a filing. Specifically, Sec.  
5.9(a) states that the OCC will provide a copy of the public portion of 
a pending filing in response to a written request made to the 
appropriate district office. A person may submit a written request to 
the OCC's Communication's Division for a copy of the public portion of 
a decided or closed application. In either case, the OCC may impose a 
fee for the copy. Section 5.9(b) explains that a public file consists 
of the portions of the filing, supporting data, supplementary 
information, and information submitted by interested persons to the 
extent that these items have not been afforded confidential treatment.
    Section 5.9(c) addresses the confidential treatment of information 
included in a filing, explaining both that an applicant and an 
interested person submitting information may request that specific 
information be treated as confidential under the Freedom of Information 
Act (FOIA) (5 U.S.C. 552) and how to make this request. The provision 
also states that if the OCC does not consider the information to be 
confidential, the agency may include that information in the public 
portion of a filing after providing notice to the submitter. It also 
permits the OCC to determine, on its own initiative, that certain 
information should be treated as confidential and to withhold that 
information from the public file.
    Section 116.35 addresses the public and confidential aspects of a 
Federal savings association filing. Paragraph (a) states that the OCC 
generally makes part 116 submissions available to the public but may 
keep portions confidential. Section 116.35(b) provides that an 
applicant may request confidential treatment of certain portions of a 
filing and explains specifically how to make this request. It also 
states that the OCC will not treat as confidential the portion of a 
filing that describes how an applicant plans to meet its CRA objectives 
and notes that the agency will advise an applicant before it makes 
information designated as confidential available to the public.
    Under this proposal, Sec.  5.9 would apply to all filings made 
pursuant to part 5, as revised. This revision is not intended to result 
in material changes for either national bank or Federal savings 
association filings. It should be noted that although Sec.  5.9 does 
not explicitly address the OCC's treatment of filing information about 
how a filer plans to meet its CRA objectives, the OCC does not treat 
this information as confidential. The proposal contains other minor 
changes to Sec. Sec.  5.9(a) and (c), including which OCC office a 
request should be submitted either to obtain the public portion of a 
decided or closed application or to withhold information from a public 
file.
    Sec.  5.10 Comments. Section 5.10(a) provides that during the 
comment period, any person may submit a comment to the appropriate 
district office. Section 5.10(b)(1) provides that, unless otherwise 
stated, the comment period runs for 30 days after publication of the 
Sec.  5.8(a) public notice. Under Sec.  5.10(b)(2), the OCC may extend 
the comment period if an applicant either fails to file in a timely 
manner all required publicly available information or makes a request 
for confidential treatment that is not granted by the OCC and that 
delays the public availability of information. The comment period also 
may be extended to develop factual information needed to consider the 
application or if the OCC determines that other extenuating 
circumstances exist. In addition, the rule provides that the OCC may 
give an applicant an opportunity to respond to comments received during 
the comment period.
    The Federal savings association rules are much more detailed, 
particularly with respect to application comments. Section 116.110 
provides that any person may comment on a filing and Sec.  116.120(a) 
states that a comment

[[Page 33267]]

should include all relevant facts supporting the commenter's position. 
It further provides that a comment should address at least one reason 
why the OCC may deny the application under relevant law, recite facts 
and data supporting these reasons, and discuss how the approval could 
harm the commenter or any community. Under Sec.  116.120(b), any 
request for a meeting must be included with the comment. Section 
116.130 states that a commenter must file with the appropriate OCC 
licensing office and further directs that a copy of any written comment 
shall simultaneously be provided to the applicant. Under Sec.  116.140, 
a commenter must file a comment within 30 days after publication of the 
initial public notice and further states that the OCC may consider 
later filed comments if the comment will assist in the disposition of 
the application.
    The OCC has found that the less detailed and prescriptive approach 
in the current part 5 rules works well for both filers and the public 
and proposes to apply Sec.  5.10 to all filings received by the OCC, 
with one clarification. This application would result in two changes 
with respect to Federal savings association filings. First, the 
proposal does not specify what information should be included in a 
comment. Second, a commenter on a Federal savings association filing 
would not be required to provide a copy of the comment to the Federal 
savings association. Instead, the Federal savings association would 
obtain a copy of the public portion of any comment from the OCC. The 
proposal would clarify that comments relating to either a national bank 
or a Federal savings association should be submitted to the appropriate 
OCC licensing office, as provided in the current Federal savings 
association rule.
    As both sets of current rules include a 30-day comment period that 
begins when the public notice is published, the proposal generally does 
not affect the length of the comment period. In addition, although 
neither current nor proposed Sec.  5.10(b) expressly states that the 
OCC can consider late-filed comments, as is stated in Sec.  116.140, 
the OCC's practice generally has been to consider all comments, 
including late-filed comments.
    The OCC proposes other changes to Sec.  5.10 that would affect both 
national banks and Federal savings associations. First, as revised, 
Sec.  5.10(b)(1) would provide that the OCC may require a new comment 
period of up to 30 days if a new public notice is required under 
proposed Sec.  5.8(g). This change is necessary to provide interested 
parties with an opportunity to comment when a new notice is published, 
which, as explained in the discussion of proposed Sec.  5.8(g), may be 
required in certain circumstances. Finally, a minor change is proposed 
to Sec.  5.10(b)(2) to clarify that the OCC can extend any comment 
period, either an original or a new comment period.
    Sec.  5.11 Hearings and other meetings. Pursuant to Sec.  5.11(a), 
any person can request a hearing on a filing by submitting to the 
appropriate district office a description of the issues or facts to be 
presented and explaining why a written submission is not adequate. The 
requestor must simultaneously provide the request to the applicant. As 
noted above, under Sec.  116.120(b), a request for a meeting must be 
included in a comment and explain why written submissions are 
insufficient. Also under Sec.  116.130, this comment and hearing 
request must be filed with the appropriate OCC licensing office, with a 
copy to the applicant.
    As proposed, Sec.  5.11(a) would apply to all OCC hearing requests. 
Therefore, a person seeking a hearing on a filing pertaining to a 
Federal savings association would no longer be required to request a 
hearing as part of a comment submission, and a hearing request would be 
submitted to the appropriate OCC office. This revision would provide 
added flexibility to those requesting hearings related to Federal 
savings association filings.
    Section 5.11(b) states that the OCC may grant or deny a hearing 
request, limit the issues to those it deems relevant or material, and 
order a hearing in the public's interest. Under Sec.  5.11(c), if the 
OCC denies a hearing request, the agency will notify the requestor of 
the reason for the denial. Sections 116.170(a) and (b) are 
substantively the same as Sec. Sec.  5.11(b) and (c). Under this 
proposal, Sec. Sec.  5.11(b) and (c) would apply to all hearings with 
no substantive change for affected parties.
    Section Sec.  5.11(d) describes the OCC's pre-hearing procedures. 
Specifically, under Sec.  5.11(d)(1), if the OCC decides to hold a 
hearing, it sends a Notice of Hearing to the applicant, the person 
requesting the hearing, and anyone else who requests a copy. The Notice 
states the subject and date of the filing, the time and place of the 
hearing, and the issues to be addressed at the hearing. Section 
5.11(d)(2) states that the OCC appoints a presiding officer to conduct 
a hearing.
    There are no equivalent provisions in the Federal savings 
association regulations. Instead, Sec.  116.170(a) states that the OCC 
may either grant a meeting request or hold one on its own initiative, 
and it may limit the issues considered at a meeting to those it deems 
relevant or material. Under this proposal, Sec.  5.11(d)(1) will apply 
to all part 5 OCC hearings and all interested persons will receive a 
Notice of Hearing when a hearing is scheduled. This revision ensures 
that all interested parties are notified of an upcoming hearing. The 
OCC also proposes to amend Sec.  5.11(d)(1) to state, as in Sec.  
116.170(a), that the agency may limit the issues considered at a 
hearing to those it determines are relevant or material.
    Section 5.11(e) states that a person who wishes to appear at a 
hearing shall notify the appropriate district office within 10 days of 
when the OCC issues a Notice of Hearing. It also requires, at least 
five days before the hearing, that each participant submit the names of 
witnesses and one copy of each exhibit to be presented, to the OCC, the 
applicant, and any other person the OCC requires. There are no 
equivalent rules in the Federal savings association regulations. As 
proposed, Sec.  5.11(e) would be applicable to all persons who wish to 
appear at an OCC hearing. Section 5.11(e) allows the OCC and other 
persons to prepare for a hearing and yields a more efficient and 
productive hearing.
    Section 5.11(f) explains that the OCC arranges for a hearing 
transcript and states that the person requesting a hearing generally 
bears the cost of one copy of the transcript. There is no equivalent 
part 116 provision. The OCC proposes to apply this provision to all OCC 
hearings and also to replace the ``generally bears'' phrase with ``may 
be required to bear.'' This change reflects the fact that the OCC 
generally has not passed this cost onto a hearing requestor but, in 
certain cases, may find it appropriate to do so. Although this is a 
technical change with respect to national bank filers, a person 
requesting a hearing on a filing pertaining to a Federal savings 
association should be aware that, under this proposal, a hearing 
transcript will be prepared and that the requestor may be required to 
pay its cost.
    Section 5.11(g) explains how a part 5 hearing is conducted, 
providing generally that the applicant and participants may make 
opening statements and present witnesses, material, and data. It also 
requires a copy of any documentary material to be provided to the OCC, 
the applicant, and each participant. In contrast, the Sec.  116.180 
procedures for Federal savings association hearings provide that the 
OCC may conduct a meeting in any format, including telephone 
conferences, face-to-face meetings, or

[[Page 33268]]

formal meeting. In addition, both Sec. Sec.  5.11(g) and 116.180 
provide that the Administrative Procedure Act, the Federal Rules of 
Evidence, the Federal Rules of Civil Procedure, and the OCC's relevant 
rules of practice and procedure (12 CFR part 19 and part 109, 
respectively) do not apply to these hearings.
    Under this proposal, Sec.  5.11(g) would apply to all subpart A 
hearings. As a result, all applicants and hearing participants may be 
permitted to make opening statements and to present witnesses, 
material, and data. Any person presenting documentary material at a 
hearing must furnish a copy to the OCC, the applicant, and each 
participant.
    The OCC also proposes to add a new paragraph Sec.  5.11(g)(4), 
stating that the OCC may conduct a meeting in any format that it 
determines is appropriate, including a telephone conference, a face-to-
face meeting, or a more formal meeting. This new provision, which 
mirrors Sec.  116.180(a), is not a change to what is permissible for 
the OCC, but rather highlights the options available to the agency.
    Under Sec.  5.11(h), at an applicant's or participant's request, 
the OCC may keep the hearing record open for up to 14 days following 
its receipt of the hearing transcript. The agency resumes processing 
the filing after the record closes. Section 116.190 states that if the 
OCC conducts a meeting, it may suspend the applicable filing time 
frames. If suspended, the time period will resume when the OCC 
determines that the record has been sufficiently developed to support a 
determination on the issue(s) considered at the meeting.
    Under this proposal, Sec.  5.11(h) will apply with respect to all 
filings on which a hearing is held. As a result, all applicants, 
commenters, and other interested persons should be aware that the 
hearing record may be kept open for up to 14 days following receipt of 
the transcript, after which the OCC will resume processing the filing. 
The OCC believes that the public and affected parties benefit from 
knowing how long the record will remain open, following a hearing.
    Finally, Sec.  5.11(i) addresses meetings other than hearings that 
the OCC may hold in connection with an application. Section 5.11(i)(1) 
states that the OCC may hold a public meeting, either in response to a 
written request received during the comment period or on its own 
initiative. These public meetings are arranged and presided over by a 
presiding officer. Alternatively, under Sec.  5.11(i)(2), the OCC may 
arrange a private meeting with an applicant or other interested parties 
to clarify and narrow the issues and to facilitate the resolution of 
the issues. As noted above, Sec.  116.180 states that the OCC may 
conduct meetings related to Federal savings association filings in any 
format.
    Under this proposal, Sec.  5.11(i) would apply to all applications 
received by the OCC and does not represent a change from what is 
currently permitted for filings related to Federal savings 
associations. In addition, the OCC proposes to add paragraph (i)(3) to 
Sec.  5.11, stating that the OCC may limit the issues considered at a 
meeting to those it determines to be relevant or material. This 
provision is substantively the same as the provision the agency 
proposes to add to Sec.  5.11(d) (regarding hearings) and permits the 
agency to ensure that meetings are meaningful and efficient. The OCC 
also proposes minor, clarifying changes to Sec.  5.11(i).
    Section 116.185 states that the OCC will not approve or deny an 
application at a meeting. Although no similar language is included in 
either current or proposed Sec.  5.11, it is the OCC's practice not to 
decide on applications at hearings or other meetings. While hearings 
and meetings provide an opportunity for interested persons to share 
information with the OCC, the OCC considers information obtained at a 
hearing together with other materials and information pertaining to the 
application, before rendering a decision. Decisions on filings are 
discussed in greater detail below.
    In addition, Sec.  116.190 explains that if the OCC decides to 
conduct a meeting, it may suspend the application processing time 
frames. Although the part 5, subpart A, rules do not state this 
directly, current and proposed Sec.  5.10(b)(2) allow the OCC to extend 
a comment period when necessary, current and proposed Sec.  5.11(h) 
allow the OCC to keep a hearing record open for 14 days after a hearing 
and resume processing the filing only when the record closes, and 
proposed Sec.  5.13(a)(2) allows the OCC to extend the expedited review 
period in certain circumstances or remove a filing from expedited 
review when necessary. These provisions provide the OCC with the tools 
it needs to adjust the processing time frames when appropriate, while 
balancing the need for interested persons to have a predictable set of 
procedures on which to rely.
    Sec.  5.12 Computation of time. In computing the relevant time 
periods related to a national bank filing, the OCC includes the day of 
the act or event (e.g., the date an application is received by the OCC) 
and the last day of a time period, regardless of whether that day is a 
Saturday, Sunday, or legal holiday. Under Sec.  116.10, in computing 
the relevant time period with respect to a Federal savings association 
filing, the OCC does not include the day of the act or the event that 
commences the time period. When the last day is a Saturday, Sunday or 
Federal holiday, the time period runs until the end of the next day 
that is not a Saturday, Sunday or Federal holiday.
    Efficiency would be promoted by a single set of time computation 
rules for OCC filings. Accordingly, the OCC proposes to change Sec.  
5.12 to mirror the current Federal savings association rule. As a 
result, when computing time for national bank filings, the day of the 
act would no longer be included and the time period would no longer end 
on a Saturday, Sunday, or Federal holiday but would end on the next day 
that is not a Saturday, Sunday or Federal holiday. It also should be 
noted that proposed Sec.  5.12 replaces ``legal holiday'' with 
``Federal holiday,'' consistent with the current Federal savings 
association rule, to eliminate confusion when a legal state holiday is 
not also a Federal holiday.
    Sec.  5.13 Decisions. Under Sec.  5.13(a), the OCC may approve or 
deny a national bank filing based on its review and consideration of 
the record, including the activities, resources, or condition of a 
filer's affiliate to the extent relevant. Under Sec.  5.13(a)(1), it 
may impose conditions on an approval, including to address significant 
supervisory, CRA (if applicable), or compliance concerns.
    Section 5.13(a)(2) explains the OCC expedited review process for 
filings concerning ``eligible'' banks, as defined in Sec.  5.3. 
Specifically, these filings are deemed approved a certain number of 
days after the filing date or the close of the public comment period 
(or extension of the comment period under Sec.  5.10), unless, prior to 
this date, the OCC notifies the filer otherwise. The number of days 
after which a particular filing is deemed approved varies depending on 
the activity or transaction at issue and is set out in the substantive 
part 5 rule for that particular activity or transaction.\20\
---------------------------------------------------------------------------

    \20\ For example, Sec.  5.20(j) provides that certain 
applications to establish a national bank are deemed preliminarily 
approved as of the 15th day after the close of the public comment 
period or the 45th day after the filing is received by the OCC, 
whichever is later, unless the OCC takes certain action to remove 
the filing from expedited review.
---------------------------------------------------------------------------

    Under Sec.  5.13(a)(2)(i), the OCC may extend the expedited review 
period for filings subject to CRA up to 10 days if the OCC receives 
comments containing certain assertions about the bank's CRA

[[Page 33269]]

performance. Section 5.13(a)(2)(ii) states that the OCC will remove a 
filing from expedited review if a filing or a comment raises a 
significant supervisory, CRA (if applicable), compliance, legal, or 
policy concern or issue. If this removal happens, the OCC will provide 
a written explanation. Section 5.13(a)(2)(iii) explains that not all 
adverse comments cause the OCC to extend the expedited review period or 
remove a filing from expedited review.
    Finally, Sec.  5.13(a)(2)(iv) provides that if a filing is 
dependent upon the approval of another filing, or if multiple requests 
for approval are combined in a single application, none of the filings 
is deemed approved unless all of the applications are subject to 
expedited review procedures and the longest time period expires without 
the OCC issuing a decision or notifying the bank that the filings are 
not eligible for expedited review.
    Filings that are not eligible for or do not receive expedited 
review are considered under the standard review process. The process 
and timeframes associated with the standard review process vary 
depending on the nature and circumstances of a filing and are set forth 
in the applicable substantive activity or transaction rule.
    Section 5.13(b) explains that the OCC may deny a filing if a 
significant supervisory, CRA, compliance, legal, or policy concern 
exists or if an applicant fails to provide the OCC with information 
that it requests. Pursuant to Sec.  5.13(c), a filing must contain the 
information required in the applicable substantive part 5 activity or 
transaction rule, and the OCC may require additional information as 
well. Section 5.13(c) further provides that the OCC may deem a filing 
abandoned if information that is required or requested is not provided 
within a specified time period and may return a filing found to be 
materially deficient.
    Section 5.13(d) explains that the OCC will notify a filer and other 
interested party (or parties) of the final disposition of a filing, 
including a notification confirming expedited review. If a filing is 
denied, the OCC will explain why. Under Sec.  5.13(e), the OCC will 
make a decision public if it represents new or changed policy or issues 
of general interest. In rendering decisions, the OCC also may elect not 
to disclose information that it deems to be private or confidential.
    Section 5.13(f) explains that a filer can appeal a decision by 
writing to the Deputy Comptroller for Licensing or the OCC Ombudsman 
(or, in some cases, to the Chief Counsel). Section Sec.  5.13(g) 
explains that when the OCC approves or conditionally approves a filing, 
the agency generally gives the filer a specified period of time in 
which to commence the activity and generally does not grant extensions.
    Finally, Sec.  5.13(h) states that the OCC can nullify a filing 
decision if, for example, it discovers a misrepresentation or omission 
in a filing or supporting material after it renders a filing decision. 
A person responsible for a material misrepresentation or omission may 
be subject to various sanctions, including criminal penalties. The OCC 
also may nullify a filing decision that is contrary to law, regulation, 
or OCC policy or that was granted due to clerical or administrative 
error or a material mistake of law or fact.
    Pursuant to part 116, a savings association filing may receive 
either expedited treatment or standard treatment. If a filer is 
eligible for expedited treatment, as determined under Sec.  116.5, it 
may file its application in the form of a notice. Pursuant to Sec.  
116.200, 30 days after filing a notice, the filer may engage in the 
proposed activity or transaction unless the OCC (1) requests additional 
information,\21\ (2) determines that standard treatment is appropriate, 
(3) suspends the applicable time frame under Sec.  116.190, or (4) 
disapproves the notice.
---------------------------------------------------------------------------

    \21\ Section 116.200(a) explains the sequence of events and 
timing when the OCC requests additional information about a notice.
---------------------------------------------------------------------------

    Pursuant to Sec.  116.25, a filer files a standard application if 
it is not eligible for expedited treatment. Under Sec.  116.210, within 
30 calendar days after receiving a standard application, the OCC will 
(1) notify the applicant that the application is complete and review 
will commence, (2) request more information, or (3) determine that the 
application is materially deficient, in which case, the OCC will not 
process the filing. If the OCC takes no action, an application is 
deemed complete and the review period begins. Under Sec.  116.270, this 
review period is generally 60 calendar days after an application is 
complete but may be extended. For example, under Sec.  116.270(c), the 
OCC may extend the review period for up to 30 days for any reason or 
for as long as needed if the application presents a significant issue 
of law or policy requiring additional time to resolve. In either 
situation, the OCC must provide a written notification of any 
extension.
    Section 116.280 explains that the OCC will approve or deny an 
application before the end of the applicable review period and will 
notify applicants of the decision. If the OCC fails to notify an 
applicant, under Sec.  116.280(b), the application is approved.
    Section 116.220 provides a detailed explanation of how the OCC will 
process an application if it requests more information to complete a 
filing, including the time frames within which certain actions must be 
taken. Section 116.240(a) explains that even if an application is 
deemed complete under Sec.  116.210, the OCC may still require the 
filer to provide additional information to resolve or clarify an issue 
presented by the application. Or, if the OCC determines that a major 
issue or law or change of circumstances has arisen, it may notify the 
filer that the application is now incomplete and require a new public 
notice to be filed under Sec.  116.250. Under Sec.  116.290, an 
application that is not approved or denied within two calendar years of 
filing is deemed withdrawn, subject to certain exceptions.
    As is clear, the OCC has two different, albeit similar, sets of 
application processing procedures. In order to gain the efficiencies 
inherent in administering a single set of procedures and to create 
parity for OCC-regulated institutions, the OCC proposes to apply Sec.  
5.13 to all OCC filings. As a result, Federal savings association 
filers will need to determine whether a filing is eligible for 
expedited review under subpart A based on the proposed Sec.  5.3(h) 
definition of ``eligible bank or eligible savings association.'' The 
OCC does not anticipate that there will be a significant difference in 
which filings are eligible for expedited review under the current and 
proposed rules because, as explained above, the criteria in Sec.  5.3 
and Sec.  116.5 are substantively similar.
    Unlike Sec.  116.200, part 5, subpart A, does not state the 
applicable expedited review time frames. These time frames are unique 
to the type of activity or transaction and set out in the relevant part 
5 section detailing that activity or transaction. If a filing is not 
eligible for expedited review, the filer will have to follow the 
standard review procedures set out in the rules applicable to the 
particular activity or transaction at issue.
    In addition, as part of this rulemaking, the OCC is proposing other 
changes to Sec.  5.13, which would apply to filings related to both 
national banks and Federal savings associations. Specifically, it 
proposes to add a statement to the Sec.  5.13(a) introductory language 
providing that when reviewing a filing, the OCC may consider 
information available from any source, including any comments submitted 
by interested parties or views expressed by

[[Page 33270]]

interested parties at meetings with the OCC.
    With respect to Sec.  5.13(a)(2) concerning expedited review, the 
OCC proposes to strike the Sec.  5.13(a)(2) clause that states that the 
OCC grants eligible banks expedited review within a specified time, 
``including any extension of the comment period granted pursuant to 
Sec.  5.10.'' This change reflects the fact that when the OCC grants an 
extension of the comment period under Sec.  5.10, a filing is no longer 
considered under the expedited review procedures. The circumstances 
that lead to an extended comment period are generally not compatible 
with expedited review.
    In addition, as discussed above, Sec.  5.13(a)(2)(i) provides that 
the OCC may extend the expedited review period for a filing subject to 
CRA for up to 10 days if a comment makes certain assertions about CRA 
and Sec.  5.13(a)(2)(ii) provides that the OCC will remove a filing 
from expedited review if the filing presents significant supervisory, 
CRA, compliance, legal or policy concerns or issues and explains 
specifically what constitutes a significant CRA concern in this 
context. The OCC proposes to combine Sec. Sec.  5.13(a)(2)(i) and (ii) 
into proposed Sec.  5.13(a)(2)(i) that addresses both extending the 
expedited review period and removing a filing from expedited review and 
to strike the description of CRA-related assertions in comments and 
what constitutes a significant CRA concern. These changes would 
simplify Sec.  5.13(a)(2) and are not intended to have a substantive 
effect on expedited review procedures. Comments and concerns about CRA 
will continue to be given the same weight. Other minor, technical, or 
conforming changes are also proposed to Sec.  5.13.
    Finally, as part of this rulemaking, the OCC proposes to delete 
part 116 in its entirety. Organizing a National Bank or Federal Savings 
Association; Federal Savings Association Charters and Bylaws (Sec.  
5.20, new Sec.  5.21, new Sec.  5.22)
    Twelve CFR 5.20 sets forth the requirements and procedures involved 
in organizing a de novo national bank. Specifically, Sec.  5.20(e) 
provides that the OCC will verify that organizers have fulfilled 
certain statutory requirements such as filing articles of association 
with the OCC, Sec.  5.20(f) sets forth policy considerations that the 
OCC considers in evaluating an application, Sec.  5.20(g) discusses the 
OCC's requirements with respect to the organizing group, Sec.  5.20(h) 
lists requirements for the organizers' business plan or operating plan, 
Sec.  5.20(i) lists the procedures that the organizers must follow, 
Sec.  5.20(j) specifies the requirements for expedited review of an 
application, and Sec.  5.20(l) lists requirements for the establishment 
of special purpose banks.
    Corresponding rules applicable to organizing Federal savings 
associations are set forth in three CFR parts: Part 143, Federal Mutual 
Savings Associations--Incorporation, Organization, and Conversion; part 
144, Federal Mutual Savings Associations--Charter and Bylaws; and part 
152, Federal Stock Associations--Incorporation, Organization, and 
Conversion. In addition, Sec.  163.1 imposes certain rules concerning a 
Federal savings association's charter and bylaws.
    Part 143 sets forth the requirements and procedures for organizing 
a Federal mutual savings association. For example, Sec. Sec.  143.2 and 
143.3 describe the requirements for applying for a Federal mutual 
savings association charter and the factors the OCC will consider in 
such an application. Section 143.4 provides that the OCC's approval of 
the application constitutes the issuance of a charter and Sec.  143.5 
specifies the initial steps the organizers must undertake after 
issuance of the charter. Certain provisions of part 143 set forth rules 
and prohibitions, such as Sec.  143.1(a), which prohibits a Federal 
savings association from adopting a title that misrepresents the nature 
of the institution or the services it offers, and Sec.  143.6, which 
prohibits a Federal savings association from transacting any business 
other than as provided in part 143. Finally, Sec.  143.7 clarifies that 
part 143 does not apply to a Federal savings association chartered in 
connection with a Federal savings association in default or in danger 
of default.
    Part 144 covers the charter and bylaws of Federal mutual savings 
associations. Section 144.1 sets forth the form and required provisions 
of the charter, Sec.  144.2 lists the requirements for amending a 
charter, and Sec.  144.4 states that the issuance of a Federal mutual 
savings association charter constitutes the incorporation of that 
association. Section 144.5 sets forth the required provisions of the 
bylaws and Sec. Sec.  144.6 and 144.7 set forth rules with respect to 
the effect of a change to a charter or bylaws subsequent to a Federal 
mutual savings association's transaction; and the availability of the 
charter and bylaws.
    Part 152 sets forth the requirements and procedures for organizing 
a Federal stock savings association and also contains the requirements 
for the charter and bylaws of Federal stock savings associations, as 
well as related matters including shareholders, board of directors, and 
officers. More specifically, Sec.  152.1 describes the initial steps 
organizers must take in establishing a Federal stock savings 
association and also indicates the factors the OCC will consider in 
such an application; Sec.  152.3 sets forth the form and required 
provisions of the charter; Sec.  152.4 lists the requirements for 
amending a charter; Sec.  152.5 covers the bylaws of Federal stock 
savings associations; Sec. Sec.  152.6, 152.7 and 152.8 address 
shareholders, the board of directors, and officers, respectively; and 
Sec.  152.9 covers certificates for shares and their transfer.
    Section 163.1 requires a de novo Federal savings association to 
file its charter and bylaws with the OCC prior to commencing operations 
and requires a Federal savings association to make its charter and 
bylaws available to accountholders.
    Many of the procedures organizers must follow to charter a national 
bank or Federal savings association are substantively similar, with 
only minor differences. With respect to many of these regulations, the 
OCC believes these rules should be coordinated and harmonized in order 
to promote consistency and equal treatment between the two types of 
institutions and to remove unnecessary regulatory burden where 
possible. These goals are accomplished by amending Sec.  5.20 to 
include Federal savings associations, adding to Sec.  5.20 some 
provisions that address the organizing process currently in parts 143 
and 152, and removing other provisions in part 143, 152, and 163 that 
address the organizing process (Sec. Sec.  143.2 through 143.7, 152.1 
and 152.2, and 163.1).
    The regulations for national banks and those for Federal savings 
associations treat the provisions related to ``organizing documents'' 
(organization certificate and articles of association for national 
banks, charter for Federal savings associations, and bylaws) 
differently.\22\ For national banks, there are several applicable 
statutes, but few regulations.\23\ For

[[Page 33271]]

Federal savings associations, there are no statutory requirements, but 
Sec. Sec.  144.1 and 152.3 contain specific language and requirements 
to be used for the charter of Federal mutual savings associations and 
Federal stock savings associations, respectively, and Sec. Sec.  144.2 
and 152.4 contain specific requirements for the bylaws of Federal 
mutual savings associations and Federal stock savings associations, 
respectively. Also, the charter provisions for Federal mutual savings 
associations are substantially different from national banks and 
Federal stock savings associations. These differences stem from the 
unique characteristics of Federal mutual charters, such as the 
inability of members to communicate directly with each other (because 
membership is based on the depository relationship) under Sec.  144.8, 
the use of ``running proxies,'' and the potential that certain charter 
or bylaw provisions could later affect a mutual-to-stock conversion by 
the association. These characteristics require a need to place greater 
controls over changes to the Federal mutual charter in order to prevent 
the inappropriate transfer of the association's equity and to prevent 
the introduction of provisions that may impede a mutual-to-stock 
conversion.
---------------------------------------------------------------------------

    \22\ It may be helpful to clarify terminology. For national 
banks, the term ``charter'' is used to refer to the certificate of 
authority to commence banking issued by the OCC under 12 U.S.C. 27. 
A national bank's ``articles of association'' is similar to a 
business corporation's articles of incorporation setting out the 
general features of the business's organizational structure and 
purpose. A Federal savings association's ``charter'' issued by the 
OCC under 12 U.S.C. 1464(a)(2) is the agency's authorization to 
engage in business as a savings association, but it also contains 
provisions comparable to a national bank's articles of association.
    \23\ Additional guidance for national banks is provided by 
sample articles and bylaws in the Comptroller's Licensing Manual 
(www.occ.gov/publications/publications-by-type/licensing-manuals/index-licensing-manuals.html#sd) and by review of the proposed 
documents during the application process.
---------------------------------------------------------------------------

    In order to preserve the enforceability of the Federal savings 
association charter and bylaw requirements and to ensure the necessary 
controls unique to the Federal mutual savings association charter, the 
OCC believes it is necessary and appropriate to continue to include 
separate provisions concerning a Federal savings association's charter 
and bylaws.
    Therefore, the OCC proposes to amend 12 CFR part 5, subpart B, by: 
(1) Revising Sec.  5.20 to apply to both national banks and Federal 
savings associations and to make certain other changes as described 
below; (2) adding a new Sec.  5.21 (based on part 144) to specify the 
language and requirements for the Federal mutual savings association 
charter, bylaws, and charter amendments and to require a Federal mutual 
savings association to make its charter and bylaws available to 
accountholders; and (3) adding a new Sec.  5.22 (based on Sec. Sec.  
152.3 through 152.11) to specify the language and requirements for the 
Federal stock savings association charter, bylaws, charter amendments, 
and related matters. In addition, the OCC proposes to amend parts 143, 
144, 152, and 163 by rescinding various provisions in those parts 
concerning charters and bylaws.
    As a result of this rulemaking, organizers of de novo Federal 
savings associations and national banks and existing Federal savings 
associations and national banks should be aware of the proposed changes 
that are detailed below.
    Applying Existing National Bank Requirements to Federal Savings 
Associations. The majority of the proposed changes to Sec.  5.20 apply 
existing requirements for organizing a national bank to organizing a 
Federal savings association by inserting ``Federal savings 
association'' where appropriate. Most of these amendments will result 
in little or no change to existing practices concerning an application 
to charter a Federal savings association. However, potential organizers 
should carefully review the following amendments that would change the 
current process.
    First, under the proposal, an application to charter a Federal 
savings association would be subject to the two-part approval process 
contained in Sec.  5.20(i)(5). Based on statute and longstanding 
practice, the OCC uses a two-part approval process for de novo national 
bank charters. After an application is filed, if the OCC determines it 
meets the applicable standards, the OCC issues a ``preliminary 
approval.'' Once it has received this approval, the national bank in 
organization proceeds to take the steps needed to organize, raise 
capital, obtain any other regulatory approvals, and generally become 
ready to commence business. Many of these steps are not specified in 
Sec.  5.20 but instead are provided in the OCC's preliminary approval 
and in the Charters Booklet of the Comptroller's Licensing Manual. The 
OCC issues a ``final approval'' and the national bank's charter only 
after all these steps are concluded, including compliance with any 
conditions imposed in the preliminary approval. Under the current 
Federal savings association rule, the OCC issues only one approval 
before it issues the charter but this approval is subject to the 
institution completing various post-approval organizational steps and 
other requirements before it can commence business. These steps and 
requirements are specified in Sec. Sec.  143.4, 143.5, 143.6, and 
152.1(c) through 152.1(i). We propose to remove these provisions 
because they will no longer be necessary since final approval will be 
granted only after all organizational steps and other requirements are 
met. The two processes in practice may not be different, but use of a 
formal two-part approval framework provides more certainty and reduces 
any risk of an institution inadvertently operating before it has 
completed all required steps. Applying the bank rule's two-step 
approval process to savings associations also will enhance consistency 
between the chartering application process for national banks and 
Federal savings associations.
    Second, Sec.  5.20(i)(5)(iv) provides that preliminary approval 
expires if the national bank has not raised the required capital within 
twelve months or has not commenced business within eighteen months. 
Sections 143.5(d) and 152.1(i) provide that a Federal savings 
association's charter becomes void if organization is not completed 
within six months after approval. The proposal would amend Sec.  
5.20(i)(5)(iv) to apply the same twelve- and eighteen-month expiration 
periods to Federal savings associations, rather than the six-month 
period.
    Third, the OCC proposes to amend Sec.  5.20(j), which allows for 
expedited review of an application to establish a full-service national 
bank filed by a bank holding company with a lead depository institution 
that is an eligible depository institution. We propose to add Federal 
savings associations and savings and loan holding companies. The 
current regulations for chartering a de novo Federal savings 
association do not have a comparable expedited review process. We also 
propose to limit the availability of this expedited review to 
applications to charter a national bank or Federal savings association 
where the existing lead depository institution is an eligible national 
bank or eligible Federal savings association. In those cases, the OCC 
will have knowledge and experience of the holding company's and lead 
institution's operations. In cases where a state institution is the 
lead depository institution, the OCC would not have that knowledge and 
experience, and we believe expedited review would not be appropriate.
    Fourth, the proposal would add Federal savings associations to 
Sec.  5.20(k)(3), which addresses investments in bankers' banks and 
Sec.  5.20(l), which addresses chartering special purpose institutions. 
These provisions reflect authority that national banks and Federal 
savings associations possess.
    Fifth, parts 143, 144, 152, and 163 contain various filing 
procedural matters. As discussed above, this proposed rule amends part 
5, subpart A, rules of general applicability, to include filing rules 
and procedures for Federal savings associations for all matters

[[Page 33272]]

covered by part 5. Thus, once Federal savings associations are included 
in Sec.  5.20 and new Sec. Sec.  5.21 and 5.22 are added to part 5, 
filings related to the organizing process and to charters and bylaws 
will be governed by the filing provisions in subpart A. We therefore 
have not included the filing procedures provisions in parts 143, 144, 
152, and 163 in the amendments to Sec.  5.20, or in new Sec. Sec.  5.21 
and 5.22.
    Amendments that Specifically Cover Federal Savings Association 
Matters. The OCC is proposing to incorporate certain provisions 
contained in parts 143 and 152 into Sec.  5.20. Specifically, with 
respect to an application to organize a Federal savings association, 
section 5(e) of the Home Owners' Loan Act (HOLA) \24\ requires the OCC 
to consider whether: (1) The applicants are of good character and 
responsibility; (2) there is a need for the association in the 
community to be served; (3) there is a reasonable probability of 
usefulness and success; and (4) there will be undue injury to existing 
local thrift and home financing institutions. These criteria are 
included in Sec.  143.2(g)(1) and Sec.  152.1(b)(1), and this proposed 
rule adds them to Sec.  5.20(e).
---------------------------------------------------------------------------

    \24\ 12 U.S.C. 1464(e).
---------------------------------------------------------------------------

    Sections 143.2(g)(2)(i) and 152.1(b)(3)(i) provide that approval of 
an application to organize a Federal mutual or stock savings 
association, respectively, is conditioned on OCC receipt of written 
confirmation from the FDIC that accounts will be insured. Similar 
requirements appear in Sec. Sec.  143.5(c) and 152.1(f) (when a charter 
is issued, a Federal savings association, or a Federal stock savings 
association, respectively, must promptly meet all requirements 
necessary to obtain FDIC insurance of its accounts), as well as 
Sec. Sec.  143.5(d) and 152.1(h)(1) (organization of a Federal savings 
association, or a Federal stock savings association, respectively, is 
complete when, among other things, the OCC receives confirmation of 
FDIC insurance).
    For these reasons, the OCC is proposing in Sec.  5.20(e)(3) to 
retain the requirement that all Federal savings associations be insured 
by the FDIC. Nonetheless, we invite further comment on this matter.
    Proposals to Apply Federal Savings Association Application 
Requirements to National Bank Applications. The OCC is proposing to 
amend Sec.  5.20 to apply certain requirements applicable to Federal 
savings associations to both national banks and Federal savings 
associations. First, Sec.  143.1(a) prohibits a Federal savings 
association from adopting a title that misrepresents the nature of the 
institution or the services it offers. The OCC believes that 
incorporating such a provision in a regulation is good public policy 
because it protects both customers and the institution. Therefore, the 
OCC proposes to amend Sec.  5.20(e)(1) to apply this requirement to 
both Federal savings associations and national banks.
    Second, Sec.  143.3(b)(1) requires that all securities of a 
particular class in an initial offering must be sold at the same price. 
The proposal would amend Sec.  5.20(i)(5)(iii) to apply this 
requirement to both Federal savings associations and national banks. 
Such a requirement promotes fairness and uniformity, does not allow 
insiders to gain an unfair advantage over other shareholders, and 
discourages the formation of an institution for speculative purposes. 
Moreover, the FDIC also imposes this requirement in determining whether 
to approve an application for deposit insurance.\25\
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    \25\ FDIC Statement of Policy on Applications for Deposit 
Insurance. 63 FR 44752, 44757 (August 20, 1998).
---------------------------------------------------------------------------

    Third, Sec. Sec.  143.5(d) and Sec.  152.1(i) require that, in the 
event the organization of a Federal savings association is not 
completed, all cash collected on subscriptions shall be returned. The 
proposal would amend Sec.  5.20(i)(5)(iv) to apply this requirement to 
both Federal savings associations and national banks.
    Proposals to Eliminate Certain Federal Savings Association Approval 
Criteria. Sections 143.2(g)(1) and 152.1(b)(1) require the OCC to 
consider whether the Federal savings association will provide credit 
for housing in a safe and sound manner and whether the factors in Sec.  
143.3 (regarding capitalization, business and investment plans, the 
board of directors, management) will be met. These approval criteria 
are not statutorily required. In most cases, these factors are similar 
to factors the OCC currently considers either under Sec.  5.20 or as a 
matter of practice. Moreover, provision of housing credit also is 
addressed by the lending and investment provisions of 12 U.S.C. 1464(c) 
and the qualified thrift lender test of 12 U.S.C. 1467a(m). Therefore, 
the OCC is not proposing to include these provisions in Sec.  5.20.
    The OCC is proposing to rescind provisions of parts 143 and 152 
that are redundant, unnecessary, or no longer appropriate. For example, 
the OCC is proposing to rescind Sec. Sec.  143.7 and 152.17, which 
exempt from the requirements of parts 143 and 157 Federal stock 
associations created in connection with an association in default or in 
danger of default. These provisions are not necessary in light of the 
FDIC's authority, as part of the resolution process, to create new and 
bridge Federal savings associations under 12 U.S.C. 1821(m) and (n).
    Similarly, the OCC proposes to rescind Sec.  143.3(f), which 
provides that the normal requirements that apply to an application to 
charter a Federal savings association do not apply to a supervisory 
transaction. This provision is not necessary because the OCC has the 
ability to waive such requirements under 12 CFR 5.2(b). Also, the OCC 
proposes to rescind the requirements in Sec. Sec.  143.5(c) and 
152.1(f) for a proposed Federal savings association to promptly qualify 
as a member of a Federal Home Loan Bank. The HOLA no longer requires 
such membership.
    Proposals to Reflect Current OCC Policy or Practice. The OCC is 
proposing several amendments that would update Sec.  5.20 to reflect 
current OCC policy or practice. Specifically, the proposal would amend 
Sec.  5.20(f)(1) to update the OCC's general policy in making 
determinations regarding charter applications to reflect the OCC's 
statutory mission as amended in section 314 of the Dodd-Frank Act.\26\
---------------------------------------------------------------------------

    \26\ 12 U.S.C. 1.
---------------------------------------------------------------------------

    Second, Sec.  5.20(g)(2) notes that, as a condition of a charter 
approval, the OCC retains the right to object to the hiring of any 
officer or appointment or election of any director for a two-year 
period from the date the institution commences business. We propose to 
clarify that, in appropriate instances, the OCC may impose this 
condition for a longer period. This regulatory change reflects current 
authority and practice.
    Third, Sec.  5.20(g)(3)(ii) requires a proposed director to be able 
to supply or have a realistic plan to enable the institution to obtain 
capital when needed. The OCC is proposing to clarify that this 
requirement applies to the proposed directors as a group, rather than 
each director individually.
    Federal Mutual Savings Association Charter, Bylaws and Related 
Provisions. As discussed above, the OCC believes it is necessary and 
appropriate to continue to include separate regulations setting forth 
the provisions concerning a Federal savings association's charter and 
bylaws. With respect to Federal mutual savings associations, these 
provisions are currently in part 144. The OCC is proposing to add a new 
Sec.  5.21, ``Federal Mutual Savings Associations Charters and 
Bylaws,'' which will incorporate most of part 144.
    Proposed Sec.  5.21(d) sets forth exceptions to the rules of 
general

[[Page 33273]]

applicability. More specifically, it provides that Sec. Sec.  5.8 
through 5.11 do not apply to this section. These sections provide for 
public notice, public availability, comments and hearings on an 
application. The OCC believes it is not appropriate to subject the 
charter and bylaws requirements to these provisions. This belief is 
consistent with current requirements for Federal mutual savings 
associations as well as national banks.
    Proposed Sec.  5.21(e) prescribes the language and requirements for 
a Federal mutual savings association charter and is substantively 
identical to Sec.  144.1. Proposed Sec. Sec.  5.21(f) through (h) cover 
matters related to charter amendments and are substantively identical 
to Sec.  144.2. Proposed Sec.  5.21(i) requires a Federal mutual 
savings association to make its charter, bylaws, and all amendments 
available to accountholders at all times in each savings association 
office, and to deliver to any accountholders a copy of the charter, 
bylaws or amendments, upon request. This provision is substantively 
identical to Sec.  144.7.\27\
---------------------------------------------------------------------------

    \27\ See related discussion concerning 12 CFR 163.1(b) infra.
---------------------------------------------------------------------------

    Proposed Sec.  5.21(j) would specify the language and requirements 
for Federal mutual savings association bylaws. This proposed new 
paragraph reflects the provisions in Sec.  144.5.
    Section 144.5(b)(11) provides that directors may only be removed 
``for cause'' as defined in Sec.  163.39 of this chapter, by a vote of 
the holders of a majority of the shares then entitled to vote at an 
election of directors,'' and Sec.  144.5(b)(10) provides that ``[a]ny 
officer may be removed by the board of directors with or without cause, 
but such removal, other than for cause, shall be without prejudice to 
the contractual rights, if any of the person so removed.'' For ease of 
use, the OCC is proposing to include the definition of ``for cause'' in 
proposed Sec.  5.21(j)(1)(x)(B), the first time it appears in Sec.  
5.21, rather than cross-referencing Sec.  163.39. Where the term 
``cause'' is used elsewhere in Sec.  5.21, and in Sec.  5.22, for 
Federal stock savings associations, the regulation references the 
definition at Sec.  5.21(j)(1)(x)(B).
    The OCC believes that many of the bylaw provisions in Sec.  144.5 
are unnecessarily detailed or self-evident. Therefore, the proposal 
does not include the following provisions.\28\
---------------------------------------------------------------------------

    \28\ Federal mutual savings associations would not be required 
to amend existing bylaws to conform to these changes.
---------------------------------------------------------------------------

    Section 144.5(b)(1) discusses the annual meeting of members. It 
provides, among other things, that the meeting be held ``as designated 
by its board of directors, at a location within the state that 
constitutes the principal place of business of the association, or at 
any other any convenient place the board of directors may designate.'' 
Proposed Sec.  5.21(j)(1)(i) does not include the requirement that the 
meeting be held in the state that constitutes the principal place of 
business of the association. The OCC believes that this requirement 
introduces unnecessary detail into the regulation, and that in certain 
cases there may be locations outside the state constituting the 
association's principal place of business at which the annual meeting 
may be held that are appropriately convenient to members.
    Section 144.5(b)(2) provides, among other things, that the subject 
matter of a special shareholder meeting must be established in the 
notice for such meeting. The OCC believes this provision is self-
evident and unnecessarily detailed and proposes not to include this 
requirement in Sec.  5.21(j).
    Section 144.5(b)(3) covers the requirements for providing notice of 
meetings to members. Among other things, it provides that notice must 
be provided at a member's last address appearing on the books of the 
association. The OCC believes this provision merely states the obvious 
and proposes not to include this requirement in Sec.  5.21(j)(1)(iii).
    Section 144.5(b)(4) states that the purpose of determining the 
record date is to determine the ``members entitled to notice of or to 
vote at any meeting of members or any adjournment thereof, or in order 
to make a determination of members for any other proper purpose.'' The 
OCC believes this provision is self-evident and proposes not to include 
this requirement in Sec.  5.21(j)(1)(iv).
    Section 144.5(b)(6) provides that procedures must be established 
for voting by proxy pursuant to the rules and regulations of the OCC, 
``including the placing of such proxies on file with the secretary of 
the association, for verification, prior to the convening of such 
meeting.'' The OCC believes the inclusion language is self-evident and 
unnecessarily detailed and proposes not to include this requirement in 
Sec.  5.21(j)(1)(vi).
    Section 144.5(b)(9) provides that board of director meetings 
``shall be under the direction of a chairman, appointed annually by the 
board; or in the absence of the chairman, the meetings shall be under 
the direction of the president.'' The OCC believes this provision is 
unnecessarily detailed and proposes not to include this requirement in 
Sec.  5.21(j)(1)(ix).
    Section 144.5(b)(10) provides, among other things, that ``[a]ll 
officers and agents of the association, as between themselves and the 
association, shall have such authority and perform such duties in the 
management of the association as may be provided in the bylaws, or as 
may be determined by resolution of the board of directors not 
inconsistent with the bylaws. In the absence of any such provision, 
officers shall have such powers and duties as generally pertain to 
their respective offices.'' The OCC believes this provision is 
unnecessary and self-evident and proposes not to include this 
requirement in Sec.  5.21(j)(1)(x).
    Section 144.5(b)(11) covers vacancies, resignation, and removal of 
directors. Proposed Sec.  5.21(j)(1)(xi) does not include the 
requirements in Sec.  144.5(b)(11) that directors be elected by ballot 
and that resignation of a director be by written notice. The OCC 
believes that these provisions are self-evident.
    Section 144.5(b)(12) covers the powers of the board of directors. 
It provides, among other things, that a board may, by resolution, 
``appoint from among its members and remove an executive committee and 
one or more other committees, which committee[s] shall have and may 
exercise all the powers of the board between the meetings or the board; 
but no such committee shall have the authority of the board to amend 
the charter or bylaws, adopt a plan of merger, consolidation, 
dissolution, or provide for the disposition of all or substantially all 
the property and assets of the association. Such committee shall not 
operate to relieve the board, or any member thereof, of any 
responsibility imposed by law.'' This section further provides that a 
board may fix the compensation of directors, officers, and employees. 
The OCC believes these provisions are self-evident and unnecessarily 
detailed and therefore proposes not to include these requirements in 
Sec.  5.21(j)(1)(xii).
    Section 144.5(b)(14) provides in part that procedures for the 
introduction of new business at the annual meeting may require that 
such new business be stated in writing and filed with the secretary 
prior to the annual meeting at least 30 days prior to the date of the 
annual meeting. The OCC believes this provision is overly detailed and 
unnecessary. Accordingly, the OCC is proposing not to include this 
provision in Sec.  5.21(j)(1)(xiv).
    Finally, Sec.  144.5(b)(16) provides that the bylaws may address 
age limitations for directors or officers as long as they are 
consistent with applicable Federal

[[Page 33274]]

law, rules or regulations. The OCC believes this provision is self-
evident and unnecessary and therefore is proposing not to include this 
provision in Sec.  5.21(j)(1)(xvi).
    Federal Stock Savings Association Charter, Bylaws and Related 
Provisions. The provisions concerning the charter and bylaws of a 
Federal stock savings association, as well as related provisions, are 
currently in Sec. Sec.  152.3 through 152.9. The OCC is proposing to 
add a new Sec.  5.22, ``Federal Stock Savings Associations Charters and 
Bylaws,'' which will incorporate most of Sec. Sec.  152.3 through 
152.9.
    Proposed Sec.  5.22(d) sets forth exceptions to the rules of 
general applicability. More specifically, it provides that Sec. Sec.  
5.8 through 5.11 do not apply to this section. These sections provide 
for public notice, public availability, comments and hearings on an 
application. The OCC believes it is not appropriate to subject the 
charter and bylaws requirements to these provisions. This belief is 
consistent with current requirements for Federal savings associations 
as well as national banks.
    Proposed Sec.  5.22(e) prescribes the language and requirements for 
a Federal stock savings association charter and is substantively 
identical to Sec.  152.3. Proposed Sec. Sec.  5.22 (f) through (i) 
cover matters related to charter amendments and are substantively 
identical to Sec.  152.4, with the addition of one provision. Section 
152.4(b)(8) provides that a Federal stock savings association may amend 
its charter by adding certain anti-takeover provisions following mutual 
to stock conversions. One such provision is a prohibition on a person 
acquiring more than 10 percent of any class of equity securities of the 
association, unless ``the purchase of shares [is] by a tax-qualified 
employee stock benefit plan which is exempt from the approval 
requirements under Sec.  174.3(c)(2)(i)(D) of the OCC's regulations.'' 
The OCC proposes to eliminate the cross-reference and include the 
appropriate language in Sec.  5.22(g)(8). The OCC does not intend for 
this amendment to have any substantive effect.
    Proposed Sec.  5.22(j) would specify the requirements for adopting 
and filing Federal stock savings association bylaws. This proposed new 
paragraph reflects the provisions in Sec.  152.5 with two exceptions. 
The first sentence of Sec.  152.5(a) provides that ``[a]t its first 
organizational meeting, the board of directors of a Federal stock 
association shall adopt a set of bylaws for the administration and 
regulation of its affairs.'' The third sentence requires the bylaws to 
contain sufficient provisions to govern the association in accordance 
with the requirements of other sections of part 152 and prohibits the 
bylaws from containing a provision that is inconsistent with those 
sections or with applicable laws, rules, regulations or the 
association's charter. The OCC believes that these two provisions are 
unnecessarily detailed and self-evident and is therefore proposing not 
to include these provisions in proposed Sec.  5.22(i).
    The OCC is proposing to add a new Sec.  5.22(k) to address 
shareholder meetings and related matters. This proposed new paragraph 
reflects the provisions in Sec.  152.6 with two exceptions. Section 
152.6(a) provides, among other things, that shareholder meetings must 
be held in the state in which the association has its principal place 
of business. With respect to shareholder voting by proxy, Sec.  
152.6(f) provides, in part, that a ``proxy may designate as holder a 
corporation, partnership or company as defined in part 174 of this 
chapter, or other person.'' Proposed Sec.  5.22(k) does not include 
these provisions because the OCC believes they are unnecessary.\29\
---------------------------------------------------------------------------

    \29\ Federal stock savings associations would not be required to 
amend their existing bylaws to conform to these changes.
---------------------------------------------------------------------------

    The OCC is proposing to add a new Sec.  5.22(l) addressing matters 
involving a Federal stock savings association's board of directors. 
This proposed new paragraph reflects the provisions in Sec.  152.7, 
with certain exceptions. Section 152.7(b) sets forth the permissible 
number and terms of directors to be included in an association's 
bylaws. It provides, among other things, that in ``the case of a 
converting or newly chartered association where all directors shall be 
elected at the first election of directors, if a staggered board is 
chosen, the terms shall be staggered in length from one to three 
years.'' Section 152.7(g) addresses matters concerning executive and 
other committees of a board of directors. It provides in pertinent part 
that each committee, to the extent provided in the resolution or bylaws 
of the association, shall have and may exercise all of the authority of 
the board of directors, subject to certain exceptions. The OCC believes 
these provisions are overly detailed and unnecessary. Accordingly, 
proposed Sec. Sec.  5.22(l)(2) and (7), respectively, do not include 
these provisions.
    The OCC is proposing to add a new Sec.  5.22(m) addressing matters 
involving a Federal stock savings association's officers. This proposed 
new paragraph is substantively identical to Sec.  152.8, with one 
exception. Section 152.8 mandates that a Federal stock savings 
association have certain officers. It further provides that the ``board 
of directors may also elect or authorize the appointment of such other 
officers as the business of the association may require. The officers 
shall have such authority and perform such duties as the board of 
directors may from time to time authorize or determine. In the absence 
of action by the board of directors, the officers shall have such 
powers and duties as generally pertain to their respective offices.'' 
The OCC believes that the quoted provision is self-evident and 
unnecessary and therefore is not including it in new Sec.  5.22(m).
    The OCC is proposing to add a new Sec.  5.22(n) concerning stock 
certificates. This proposed new paragraph is substantively identical to 
Sec.  152.9, with one exception. Section 152.9(a) provides in pertinent 
part that the ``certificates shall be signed by the chief executive 
officer or by any other officer of the association authorized by the 
board of directors, attested by the secretary or an assistant 
secretary, and sealed with the corporate seal or a facsimile thereof. 
The signatures of such officers upon a certificate may be facsimiles if 
the certificate is manually signed on behalf of a transfer agent or a 
registrar other than the association itself or one of its employees. 
Each certificate for shares of capital stock shall be consecutively 
numbered or otherwise identified.'' The OCC believes this provision is 
overly detailed and is proposing not to include it in new Sec.  
5.22(n)(1).
    Federal Savings Association Charter and Bylaws Availability 
Requirement. Section 163.1(b) requires each Federal savings association 
to cause a true copy of its charter and bylaws and all amendments 
thereto to be available to accountholders at all times in each office 
of the savings association, and to deliver to any accountholders a copy 
of such charter and bylaws or amendments thereto, upon request. As 
discussed above, Sec.  144.7 imposes the same requirement, but is 
applicable only to Federal mutual savings associations.
    There is no comparable requirement for national banks and the OCC 
believes this provision is no longer necessary for Federal stock 
savings associations, as this information is relatively easy for 
accountholders of these types of institutions to obtain. Conversely, 
accountholders of Federal mutual savings associations may not have easy 
access to these documents in light of the inability of accountholders 
to communicate directly with each other under Sec.  144.8. Accordingly, 
the proposal would continue applying this requirement only with respect 
to

[[Page 33275]]

Federal mutual savings associations under new Sec.  5.21(i).
    Disposition of current Federal savings association organization, 
charter, and bylaws provisions. The proposed amendments discussed above 
would remove from Title 12 of the Code of Federal Regulations 
Sec. Sec.  143.2 through 143.7, all of part 144 except Sec.  144.8, 
Sec.  152.1(b)(1), Sec. Sec.  152.1(c) through 152.1(i), Sec. Sec.  
152.2 through 152.9, Sec.  152.17, Sec.  163.1(b), and Sec. Sec.  
163.22(b)(1)(ii) and (b)(2).
    Section 144.8, which addresses communication between members of a 
Federal mutual savings association, is not a licensing regulation and 
does not involve an application process. The OCC proposes leaving it 
unchanged. Because it will be the only section that remains in part 
144, the OCC proposes renaming part 144 as part 144--Federal mutual 
savings associations--communication between members.
    Other provisions of Sec.  152.2, which provides procedures for the 
organization of interim Federal savings associations, are addressed in 
revisions to the business combinations regulation--Sec.  5.33, 
described below. The remaining provisions of part 143, part 152, and 
part 163 contain other provisions applicable to Federal mutual and 
stock savings associations. The OCC is proposing to rescind some of 
these provisions elsewhere in this proposal.
Charter Conversions (New Sec.  5.23, Sec.  5.24, New Sec.  5.25)
    Twelve CFR 5.24 sets forth the rules and procedures that a state 
bank, state savings association, or Federal savings association must 
follow to convert to a national bank and for a national bank to convert 
to a state bank or Federal or state savings association. The OCC's 
rules for a mutual depository institution to convert to a Federal 
mutual savings association are at 12 CFR 143.8 through 143.14 and the 
rules for a stock form depository institution to convert to a Federal 
stock savings association are at 12 CFR 152.18. The rules for a Federal 
savings association to convert to a national bank or state bank are set 
forth at 12 CFR 152.19 and 163.22(b)(1)(ii) and (b)(2). While there are 
some differences in procedures, as discussed below, the rules for 
national banks and Federal savings associations are substantively 
similar.
    The OCC proposes to simplify this regulatory framework by (1) 
revising Sec.  5.24 to include only rules for converting into a 
national bank, (2) placing all rules for converting into a Federal 
savings association (either stock or mutual) in new Sec.  5.23, and (3) 
placing rules for conversion from national bank and Federal savings 
association charters in new Sec.  5.25. The agency also proposes 
additional substantive and technical changes to these rules. The 
substantive changes include provisions implementing section 612 of the 
Dodd-Frank Act, which prohibits conversions from state to Federal 
charter, or Federal to state charter, in certain circumstances and adds 
requirements to the conversion process. The changes to the OCC's 
regulations implementing section 612 are discussed as a group later in 
the preamble.
    Conversion to a national bank charter. As part of the 
reorganization of the conversion rules, the OCC proposes to move the 
rules governing a national bank converting to a state bank or Federal 
savings association from Sec.  5.24 to a new Sec.  5.25. As a result, 
Sec.  5.24 would apply only to conversions to become a national bank. 
The OCC also proposes to make several other changes in Sec.  5.24.
    Specifically, the proposal adds ``stock state savings 
associations'' to the description of the types of institutions that can 
apply to convert to a national bank and the word ``stock'' before the 
phrase ``Federal savings associations'' throughout revised Sec.  5.24. 
Stock state savings associations currently are included in the rule 
because they are within the definition of ``state bank'' incorporated 
from 12 U.S.C. 214(a). We are proposing to add the express term both in 
the interest of eliminating any confusion and because section 612 added 
the term ``state savings association'' to 12 U.S.C. 35. We are adding 
the term ``stock'' to Federal savings association for clarity as well. 
National banks are corporate bodies, and so a mutual institution cannot 
become a national bank unless it has first changed into corporate form 
under other law. These changes merely clarify the existing regulation 
and would have no substantive impact.
    In Sec.  5.24(d), which states the OCC's policy for approving and 
disapproving conversions to national bank charters, the proposal adds a 
statement that the institution seeking to convert to a national bank 
charter must obtain all necessary regulatory and shareholder approvals. 
Although this requirement is not new, it was not previously stated in 
Sec.  5.24. There is a similar provision in the current Federal savings 
association regulation, Sec.  143.8(a)(2). The OCC is continuing it for 
Federal savings associations in proposed Sec.  5.23, and has determined 
it would be helpful to include it for national banks as well.
    The proposal also clarifies the information the applicant must 
include in the application. First, proposed Sec.  5.24(e)(2)(vii) would 
add bank service company investments and other equity investments to 
the current requirement to identify subsidiaries. This requirement 
reflects the current practice of the OCC to review the legal 
permissibility for the converted national bank to continue to hold 
these other investments when evaluating a conversion application. 
Second, proposed Sec.  5.24(e)(2)(ix) would require the application to 
include a business plan if the converting institution has been 
operating for less than three years, plans to make significant changes 
to its business after the conversion, or at the request of the OCC. The 
OCC currently requests this information on a case-by-case basis. 
However, the OCC believes this requirement should be applied to all 
such applications, as it would provide valuable information about the 
financial institution's safety and soundness, thereby allowing the OCC 
to make a more informed decision as to whether to grant the 
application. Appendix G of the ``Charters'' booklet of the 
Comptroller's Licensing Manual (Significant Deviations after Opening) 
contains a discussion of what constitutes a ``significant change.''
    Section 5.24 currently addresses the OCC's authority to permit a 
national bank to retain nonconforming assets of a converting state 
bank, subject to the requirements in 12 U.S.C. 35. The proposal would 
add language to this provision (which would be paragraph (e)(4) in the 
revised regulation) clarifying that a converted national bank also may 
be permitted to retain nonconforming activities of a state bank or 
stock state savings association and nonconforming assets or activities 
of a Federal stock savings association for a transition period after 
conversion. The OCC believes such retention is appropriate to 
facilitate the transition from a state institution or Federal savings 
association to a national bank. These additions also reflect current 
OCC practice.
    The OCC also proposes to amend Sec.  5.24(g) which allows for 
expedited review of a conversion application filed by an eligible 
depository institution. We propose to limit the availability of 
expedited review to applications by institutions already supervised by 
the OCC (i.e., conversions from a Federal savings association to a 
national bank or from a national bank to a Federal savings 
association). In those cases, the OCC is already familiar with the 
institution. In cases where a state institution is the applicant, the 
OCC would require more time to review the institution's condition and 
proposal, and we believe expedited review would

[[Page 33276]]

not be appropriate. We are also proposing to extend the expedited 
review period from 30 days to 60 days. The expedited review provision 
in proposed Sec.  5.23(d)(4) is similar.
    In addition, the proposal adds a new paragraph (h) to Sec.  5.24 
codifying that the resulting national bank after a conversion is the 
same business and corporate entity as the converting institution, and 
all assets, rights, liabilities, obligations, and other business of the 
converting institution continue in the resulting national bank by 
operation of law. This paragraph reflects longstanding case law under 
12 U.S.C. 35 and is similar to statutory provisions in 12 U.S.C. 214b 
(continuation in conversion of national bank to state bank or merger of 
national bank into state bank) and 12 U.S.C. 215(e) and 215a(e) 
(continuation in consolidation or merger of national or state bank into 
national bank). The specific language is based on 12 U.S.C. 214b and on 
current provisions governing Federal savings associations at Sec. Sec.  
146.14 (Federal mutual savings associations) and 152.18(b) (Federal 
stock savings associations).
    Finally, the proposal adds provisions to Sec.  5.24 to implement 
section 612 of the Dodd-Frank Act, which are discussed below, and makes 
several technical or housekeeping changes to Sec.  5.24 to make it 
easier to read.
    Conversion to a Federal savings association charter. As noted 
above, the OCC proposes to create a new Sec.  5.23 to address 
conversions of a mutual depository institution to a Federal mutual 
savings association or of a stock depository institution to a Federal 
stock savings association. This new section is similar to the proposed 
Sec.  5.24 rules applicable to converting to a national bank, except 
that references to national banking laws are replaced by references to 
the HOLA, including the statutory criteria in section 5(e) of the HOLA 
for granting a Federal savings association charter. The requirements of 
proposed Sec.  5.23 include many of the requirements in the current 
Federal savings association conversion regulations. However, the OCC is 
proposing not to continue certain provisions in parts 143 and 152 for 
which there is no statutory requirement in the HOLA. These include the 
confidentiality provisions set forth at Sec.  143.8, which the OCC 
believes are addressed under its general confidentiality regulations, 
12 CFR part 4, and the public notice and inspection requirements set 
forth at Sec.  143.9(a)(2) (incorporating Sec.  143.2(d)), which the 
OCC believes generally are unnecessary in the case of conversions. We 
note that if there are instances where the OCC believes publication is 
warranted, the OCC could require publication under Sec.  5.2(b), which 
allows the OCC to require materially different procedures for a 
particular filing. We also are not continuing in the regulation a 
number of provisions included in Sec.  143.9 that advise applicants of 
the various steps in the process. Instead, the OCC addresses this 
information through its guidance to applicants in the Comptroller's 
Licensing Manual, application forms, and the application process.
    There are four significant differences between proposed Sec.  5.24 
and proposed Sec.  5.23. First, the definition of ``depository 
institution'' for purposes of Sec.  5.23, which is based on the 
definition in Sec. Sec.  143.8(a) and 152.13, includes credit unions, 
unlike the definition in Sec.  5.3(f) applicable to Sec.  5.24. Second, 
as included in the Sec. Sec.  143.8(a)(1) and 152.18(a) and because all 
Federal savings associations are required to be FDIC-insured, paragraph 
(c) of proposed Sec.  5.23 provides that the converting institution 
must have deposits insured by the FDIC or, if it is not so insured, 
must obtain insurance before converting. Third, proposed paragraph 
(d)(2)(ii)(K) of Sec.  5.23, would require a converting institution 
that does not meet the qualified thrift lender test of 12 U.S.C. 
1467a(m) to include a plan to achieve compliance within a reasonable 
period of time and to request an exception from the OCC in the 
application. This requirement reflects agency practice but is not 
expressly included in the current regulation. Fourth, paragraph (e) of 
Sec.  5.23 includes certain provisions contained in Sec.  143.10 that 
are unique to conversions of a mutual depository institution to a 
Federal mutual savings association. These provisions reflect the unique 
organizational structure of mutual depository institutions, which are 
largely member based.
    Finally, the proposal includes provisions in Sec.  5.23 to 
implement section 612 of the Dodd-Frank Act, as discussed below.
    Conversion from a national bank or Federal savings association 
charter. Proposed Sec.  5.25 sets forth a new provision that addresses 
conversions from a national bank or Federal savings association to 
another charter. Specifically, paragraph (d) covers conversions from a 
national bank or Federal savings association to a state bank or state 
savings association charter, while paragraph (e) covers conversions 
between a national bank and a Federal savings association. The 
provisions concerning a national bank conversion to a different charter 
mostly reflect current provisions in Sec.  5.24(e) that are being moved 
to Sec.  5.25. Because section 612 of the Dodd-Frank Act applies to 
conversions from Federal to state charters, but does not apply to 
conversions between different Federal charters, Sec.  5.25 applies 
different provisions for these different transactions.
    Consistent with Sec.  5.24(e), proposed Sec.  5.25(d) provides that 
converting from a Federal charter does not require prior OCC 
approval.\30\ Instead, the institution must file only a notice with the 
OCC. This process would be a change for some Federal savings 
associations. Under the current regulations, Federal savings 
associations that are not eligible for expedited treatment must file an 
application to convert to a national bank or state bank.\31\ Under the 
proposal, this notice must contain a copy of its conversion application 
to the regulator to which it is applying for approval to convert (as 
required by section 612 of the Dodd-Frank Act), a showing of its 
compliance with applicable requirements for converting from the 
charter, and a discussion of any issues regarding the permissibility of 
the conversion under section 612 of Dodd-Frank Act. This section also 
would require the institution to file a copy of its conversion 
application with the Federal banking agency that would become its 
appropriate Federal banking agency after the conversion, pursuant to 
section 612 of the Dodd-Frank Act, as discussed below.
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    \30\ If it is a conversion between a national bank and a Federal 
savings association, the institution would require OCC approval for 
the ``converting-in'' perspective of the transaction under Sec.  
5.24 or Sec.  5.25, as applicable. In essence, the institution must 
satisfy the requirements, and receive OCC approval, to convert in 
under the statutes and regulations governing conversions in. It must 
also satisfy the requirements under other laws to ``convert out'' 
and notify the OCC it has done so. The OCC believes having the 
requirements in separate regulations makes it easier to follow them 
and will help ensure that a converting institution is mindful of 
meeting the requirements of both ``sides'' of the transaction.
    \31\ See 12 CFR 152.19 and 163.22(b)(2).
---------------------------------------------------------------------------

    For conversions between a national bank and a Federal savings 
association, proposed Sec.  5.25(e) requires the institution planning 
to convert to file a notice for the conversion-out aspect of the 
transaction with the OCC. Currently, Federal savings associations must 
file an application, unless they qualify for expedited review. This 
notice must contain a showing of its compliance with applicable 
requirements for converting from the Federal charter. As discussed in 
footnote 29 of this preamble, the applicable ``converting-in'' 
regulation (Sec. Sec.  5.24 or 5.23) would require the institution to 
file an application with the OCC with respect

[[Page 33277]]

to the ``converting-in'' aspect of the transaction.
    Implementation of section 612 of the Dodd-Frank Act. Section 612 of 
the Dodd-Frank Act added several provisions to Federal law regarding 
conversions. First, section 612(b) amended 12 U.S.C. 35 to provide that 
the OCC may not approve an application by a state bank or a state 
savings association to convert to a national bank or Federal savings 
association during any period in which the state bank or state savings 
association is subject to a cease and desist order (or other formal 
enforcement order) issued by, or a memorandum of understanding entered 
into with, a state banking supervisor or the appropriate Federal 
banking agency with respect to a significant supervisory matter or a 
final enforcement action by a state Attorney General. The OCC does not 
need to amend its regulations to implement this basic prohibition; the 
current and proposed regulations already include compliance with 
applicable law among the criteria for approval or denial.\32\ Proposed 
Sec. Sec.  5.24(e)(2)(x) and 5.23(d)(2)(ii)(J) require the conversion 
application to include information about enforcement actions and other 
supervisory criticisms and the applicant's analysis of whether 
conversion is permissible under 12 U.S.C. 35, as amended by section 
612. The OCC would use this information to assess the permissibility of 
the proposed conversion under section 35, including the possibility of 
using the exception to the prohibition on conversions provided in 
section 612.\33\ The information also will assist in making the OCC 
aware of the condition of the applicant.
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    \32\ See proposed Sec. Sec.  5.24(d) and 5.25(d)(1) (each 
incorporating Sec.  5.13(b)).
    \33\ Subsection (d) of section 612 provides for an exception to 
the prohibition. Specifically, the prohibition on conversion does 
not apply if: (1) The Federal banking agency that would be the 
appropriate Federal banking agency after the conversion (the OCC in 
conversions of a state-chartered institution to a national bank or 
Federal savings association) gives written notice of the proposed 
conversion to the current Federal appropriate banking agency or 
state bank supervisor that issued the enforcement action, including 
a plan to address the significant supervisory matter in a manner 
that is consistent with the safe and sound operation of the 
institution; (2) the current Federal appropriate banking agency or 
state bank supervisor that issued the enforcement action does not 
object to the conversion or the plan; (3) after conversion, the plan 
is implemented; and (4) in the case of a final enforcement action by 
a state Attorney General, approval of the conversion is conditioned 
on the institution's compliance with the terms of such final 
enforcement action. Section 612(d) is codified as a note attached to 
12 U.S.C. 35. Applicants should be aware that the Agencies have 
issued interagency guidance stating the Agencies' position that such 
exceptions would be rare, and generally would occur only when the 
institution already has substantially addressed the matters in the 
enforcement action or there are substantial changes in 
circumstances. See Interagency Statement on Section 612 of the Dodd-
Frank Act: Restrictions on Conversions of Troubled Banks (November 
26, 2012), available at www.occ.gov/news-issuances/bulletins/2012/bulletin-2012-39a.pdf.
---------------------------------------------------------------------------

    Second, section 612(b) added a new section 12 U.S.C. 214d 
prohibiting a national bank from converting to a state bank or state 
savings association during any period in which the national bank is 
subject to a cease and desist order (or other formal enforcement order) 
issued by, or a memorandum of understanding entered into with, the OCC 
with respect to a significant supervisory matter. Section 612(c) 
similarly added a new paragraph (6) to the end of the HOLA \34\ 
prohibiting a Federal savings association from converting to a state 
bank or state savings association during any period in which the 
Federal savings association is subject to a cease and desist order (or 
other formal enforcement order) issued by, or a memorandum of 
understanding entered into with, the OTS or the OCC with respect to a 
significant supervisory matter. The exception to the prohibitions on 
conversions in section 612(d), discussed above, applies to the 
prohibitions in sections 214d and 1464(i)(6). Proposed Sec.  5.25(d)(3) 
would require that the information that must be submitted to the OCC 
when a national bank or Federal savings association plans to convert to 
a state bank or state savings association must include a discussion of 
the impact of any enforcement action on the permissibility of the 
conversion under 12 U.S.C. 214d or 1464(i)(6). This discussion will 
assist the OCC in monitoring compliance with these statutes.
---------------------------------------------------------------------------

    \34\ Section 5(i), 12 U.S.C. 1464(i)(6).
---------------------------------------------------------------------------

    Third, paragraph (e)(1) of section 612 requires that at the time an 
insured depository institution files a conversion application, it must 
transmit a copy of the conversion application to both the appropriate 
Federal banking agency for the institution and the Federal banking 
agency that would become the appropriate Federal banking agency for the 
institution after the proposed conversion. Reflecting this statutory 
requirement, as noted above, the proposal adds to our regulations at 
Sec. Sec.  5.24(e)(2), 5.23(d)(2)(ii), 5.25(d)(3)(i)(last sentence), 
and 5.25(d)(3)(ii)(A) a requirement to send a copy of the conversion 
application to the appropriate Federal banking agencies. Including the 
requirement in our regulations will help ensure applicants are aware of 
this requirement.
    Disposition of current Federal savings association conversion 
regulations. Sections 5.23 and 5.25 will replace most of the current 
Federal savings association regulations on conversions. Accordingly, 
this proposal removes Sec. Sec.  143.8, 143.9, 143.10, 143.14, 152.18, 
and 152.19.\35\ We also propose to remove Sec.  143.11, which provides 
for an organizational plan for governance during the first six years 
after a state mutual savings bank converts to a Federal charter. The 
OCC believes it can provide this oversight of the process for the 
converting institution to come into compliance with the requirements 
for Federal mutual savings banks through the application process.
---------------------------------------------------------------------------

    \35\ This preamble discusses the removal of Sec.  
163.22(b)(1)(ii) and (b)(2) in the discussion of amendments to the 
OCC's rules regarding the organization a national bank or Federal 
savings association and Federal savings association charters and 
bylaws, above. Other provisions of this proposal would remove the 
remaining provisions of part 143 (except for Sec.  143.12), part 152 
and Sec.  163.22.
---------------------------------------------------------------------------

    Question 1: The OCC requests comment on the benefit to converting 
institutions of retaining this organizational governance provision in 
Sec.  143.11 as a regulation.
    Section 143.12, which implements section 5(i)(4) of the HOLA,\36\ 
addresses grandfathered authority of certain Federal savings 
associations. It is not a licensing regulation and does not involve an 
application process. The OCC proposes leaving it unchanged. As a result 
of other changes in this rulemaking, it will be the only section that 
remains in part 143. Therefore, the OCC proposes renaming part 143 as 
part 143--Federal Savings Associations--Grandfathered Authority.
---------------------------------------------------------------------------

    \36\ 12 U.S.C. 1464(i)(4).
---------------------------------------------------------------------------

Fiduciary Powers (Sec.  5.26)
    Twelve 12 CFR 5.26 contains the application requirements and 
processes for national banks that wish to engage in the exercise of 
fiduciary powers. Twelve CFR part 150, subpart A (Sec. Sec.  150.70 
through 150.125) addresses the application requirements and processes 
for Federal savings associations that wish to engage in the exercise of 
fiduciary powers. We propose to consolidate the application and notice 
filing procedures for fiduciary powers for national banks and Federal 
savings associations by revising Sec.  5.26 to cover Federal savings 
associations, incorporating certain provisions from part 150 in Sec.  
5.26, amending Sec.  150.70 to remove the current language regarding 
filing requirements and direct Federal savings associations to Sec.  
5.26 for the application and notice procedures they should

[[Page 33278]]

follow, and deleting Sec. Sec.  150.80 through 150.125, which contain 
additional current Federal savings association filing requirements.
    In general, the proposal would revise Sec.  5.26 by adding language 
that will make it applicable to both national banks and Federal savings 
associations. The proposal also would make the following revisions to 
the application requirements in Sec.  5.26.
    First, we propose to add Sec.  5.26(e)(2)(iii) that would provide 
examples of factors the OCC will consider when reviewing an application 
to exercise fiduciary powers. These factors include financial 
condition, adequacy of capital, character and ability of proposed trust 
management, the adequacy of any proposed business plan, and the needs 
of the community served.
    These factors will help clarify the standard of review that will be 
used by the OCC. Three of the factors are requirements found in both 
the National Bank Act \37\ and the HOLA: \38\ capital adequacy, 
requiring that the needs of the community be served, and providing that 
the OCC may consider any other factors or circumstances that the agency 
considers proper. A review of the financial condition of the national 
bank or Federal savings association, the experience and character of 
the management of the institution, and the adequacy of any proposed 
business plan are all factors that the OCC already takes into account 
when reviewing an application submitted by a national bank or Federal 
savings association to conduct fiduciary powers. In addition, the 
Federal savings association rule, Sec.  150.100, includes the factors 
requiring assessment of the financial condition, the overall 
performance, and the proposed supervision of the Federal savings 
association.
---------------------------------------------------------------------------

    \37\ 12 U.S.C. 92a(i).
    \38\ 12 U.S.C. 1464(n)(8).
---------------------------------------------------------------------------

    Second, we propose to add a new paragraph (e)(5) to Sec.  5.26. 
This amendment would require a national bank or a Federal savings 
association that has not conducted previously approved fiduciary powers 
for 18 consecutive months to provide a notice to the OCC containing the 
information required by Sec.  5.26 (e)(2)(i) 60 days in advance of 
commencing the activities. This amendment is similar to the requirement 
in the Federal savings association rule at Sec.  150.560, which 
requires filing a notice if the savings association has not conducted 
the fiduciary activity for five years after it was approved to engage 
in the activity. We have determined, however, that 18 months is a more 
appropriate timeframe for this notice because the management and 
condition of a national bank or Federal savings association may change 
in a shorter period of time. This amendment will ensure that both a 
national bank and a Federal savings association previously granted 
fiduciary powers would still have the financial ability and managerial 
expertise necessary to conduct fiduciary activities in a safe and sound 
manner. This transfer also is consistent with the National Bank Act 
\39\ and the HOLA,\40\ which provide that if a national bank or Federal 
savings association, respectively, has not exercised previously granted 
fiduciary powers, the OCC may use specified procedures to revoke the 
authorized fiduciary powers. The OCC also believes this notification is 
important because it will enable the agency to allocate supervisory 
resources needed to evaluate the institution when it resumes fiduciary 
activities it has not engaged in for a long period of time.
---------------------------------------------------------------------------

    \39\ 12 U.S.C. 92a(k).
    \40\ 12 U.S.C. 1464(n)(10).
---------------------------------------------------------------------------

    Third, we propose adding a new Sec.  5.26(e)(1)(iv) that specifies 
that a national bank or Federal savings association that has received 
approval from the OCC to offer limited fiduciary services and desires 
to offer full fiduciary services must apply to the OCC. This reflects 
current practice for national banks. An applicant can apply for 
approval for limited powers (authority for one or more specific type of 
fiduciary powers described in the application) or for full powers 
(authority to exercise all powers authorized under the law). If an 
institution that had previously been approved only for certain powers 
planned to begin exercising others, it would need to apply. However, an 
institution that had applied, and been approved, for full powers could 
add to the activities it engages in without additional application.
    In addition, incorporating Federal savings associations in the 
application framework of Sec.  5.26 also results in some other minor 
changes or clarifications of requirements for Federal savings 
associations. New paragraphs (b)(2) and (4) of Sec.  5.26 set out 
circumstances in which a Federal savings association does not need to 
apply for fiduciary powers in connection with certain mergers. The new 
provision in Sec.  5.26(e)(1)(iv), discussed above, requiring an 
application when an institution previously approved only to exercise 
specified limited powers planned to exercise more powers would replace 
a current provision requiring a Federal savings association to apply if 
it planned to conduct fiduciary activities that are ``materially 
different'' from those previously approved, regardless of whether the 
prior approval had been for limited or full powers. Section 5.26(e)(3) 
provides for expedited review of applications by eligible national 
banks and eligible Federal savings associations. Part 150 does not 
provide for expedited treatment of fiduciary powers applications by 
Federal savings associations.
Establishment, Acquisition, and Relocation of a Branch (Sec.  5.30 and 
Sec.  5.31)
    Overview. Section 5.30 of the OCC's rules addresses the 
establishment, acquisition, and relocation of branch offices of 
national banks. Sections 145.92, 145.93, 145.95 and 145.96 address 
these subjects, as well as agency offices, for Federal savings 
associations.\41\ While these national bank and Federal savings 
association rules address a common subject there are two important 
differences between them, namely the definition of ``branch'' (and many 
provisions related to the definition) and the scope of the requirement 
for prior OCC approval.\42\ As discussed below, these differences stem 
from the statutes applicable to national banks and Federal savings 
associations. At this time, the OCC is proposing to retain these 
differences. Accordingly, we are not proposing to add Federal savings 
associations to 12 CFR 5.30. Instead, we propose to add a new Sec.  
5.31 to part 5 in order to bring the establishment and relocation of 
branches by a Federal savings association within the licensing 
procedures of part 5. Section 5.31 would be similar in format to Sec.  
5.30, but would include provisions based on Sec. Sec.  145.92 and 
145.93 regarding the definition of ``branch'' and the scope of the 
application requirements. Section 5.31 also would include the 
provisions of Sec.  145.96 regarding agency offices. We then also 
propose to remove 12 CFR 145.93, 145.95 and 145.96, and make a 
conforming change to Sec.  145.92. Under this proposal, national banks 
and

[[Page 33279]]

Federal savings associations generally would continue to be subject to 
different branching application provisions and requirements.
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    \41\ An agency office is an office of a Federal savings 
association that services, originates, or approves loans and 
contracts; manages or sells real estate owned by the savings 
association; or conducts fiduciary activities or activities 
ancillary to the savings association's fiduciary business, or, with 
the approval of the OCC, provides other services. See 12 CFR 145.96.
    \42\ There are also differences in the locations at which a 
national bank or a Federal savings association may establish a 
branch. Generally, Federal savings associations have somewhat 
broader branching authority than national banks. The relevant 
application procedure regulations do not address this subject.
---------------------------------------------------------------------------

    As an alternative to this proposal, the OCC is considering whether 
to harmonize the treatment of the branch licensing regulations of 
national banks and Federal savings associations in order to simplify 
our licensing procedures and provide for comparable treatment of 
national banks and Federal savings associations. As a second 
alternative approach, we also are considering whether to adopt an 
after-the-fact branch notice requirement for Federal savings 
associations. These alternatives are discussed below, and the OCC 
invites comment on the desirability of adopting one of them rather than 
the proposal.
    For national banks, the term ``branch'' is defined by statute. The 
McFadden Act defines a ``branch'' as an office ``at which deposits are 
received, or checks paid, or money lent.'' \43\ Over the years, the 
meaning of the term in various contexts has been addressed extensively 
in case law and regulatory interpretation. The OCC codified much of 
that interpretive explanation in Sec.  5.30 and in a number of 
provisions in part 7 that specify what constitutes a branching activity 
and what does not. For Federal savings associations, the HOLA does not 
have a general definition of ``branch.'' \44\ Consideration of whether 
an office of a Federal savings association is a branch office has 
focused only on activities involving deposit accounts, not lending. 
Furthermore, there is little in the regulations specifying which 
activities are branching activities and which are not. The proposal 
retains this difference between national banks and Federal savings 
associations. In the alternative, harmonized approach, discussed below, 
the regulation would apply the national bank definition to Federal 
savings associations, and Federal savings associations would be added 
to all the provisions in Sec.  5.30 and part 7 that address branching.
---------------------------------------------------------------------------

    \43\ Section 5155 of the Revised Statutes, 12 U.S.C. 36(j).
    \44\ There is a definition in section 5(m) of the HOLA, 12 
U.S.C. 1464(m), but it addresses branching only in the District of 
Columbia. In that subsection, branch is defined as an office ``at 
which accounts are opened or payments are received or withdrawals 
are made.'' 12 U.S.C. 1464(m)(2).
---------------------------------------------------------------------------

    In addition, the statutes authorizing a national bank to establish 
a branch require that it obtain approval from the OCC.\45\ Accordingly, 
the OCC licensing regulations at 12 CFR 5.30 require national banks to 
file an application and obtain OCC approval for every branch. The HOLA 
does not have a general provision requiring approval for a Federal 
savings association to establish a branch.\46\ By regulation, at Sec.  
145.93, the OCC (continuing a provision originally adopted by the OTS) 
requires an application for a Federal savings association to establish 
or relocate a branch, but this rule also provides certain exceptions. 
The proposal also retains this difference between national banks and 
Federal savings associations. In the first alternative approach below, 
the regulation would require Federal savings associations to file 
applications to establish or relocate a branch without exceptions. The 
second alternative approach would require Federal savings to file an 
after-the-fact notice instead of an application.
---------------------------------------------------------------------------

    \45\ See 12 U.S.C. 36(b), 36(c), 36(g).
    \46\ However, the provision regarding branching in the District 
of Columbia does require prior regulatory approval. 12 U.S.C. 
1464(m)(1).
---------------------------------------------------------------------------

    Branches of national banks (Sec.  5.30). We are proposing several 
minor substantive clarifications in Sec.  5.30. First, the proposal 
would revise Sec.  5.30(c), the scope section, to divide it into 
paragraphs. Second, Sec.  5.30(c)(2) (formerly part of Sec.  5.30(c)) 
would continue to provide that the standards of Sec.  5.30 (governing 
review and approval of applications by the OCC) and, as applicable, 12 
U.S.C. 36(b), would apply to branches acquired or retained in a 
conversion approved under Sec.  5.24 or a business combination approved 
under Sec.  5.33, but such branches would be subject only to the 
application procedures set forth in Sec. Sec.  5.24 or 5.33. The 
addition of branches acquired or retained in a conversion under Sec.  
5.24 to this section reflects current practice.
    Third, the OCC is proposing revisions to portions of the definition 
of ``branch.'' Section 5.30(d)(1)(ii)(B), which currently excepts from 
the definition of ``branch'' a facility that is located at the site of, 
or is an extension of, an approved main office or branch office of the 
national bank, would be amended to state that the OCC will consider a 
drive-in or pedestrian facility located within 500 feet of a public 
entrance to an existing main office or branch office to be such an 
extension, provided the functions performed at the drive-in or 
pedestrian facility are limited to functions ordinarily performed at a 
teller window. This ``bright-line'' 500-foot test for national banks 
that a facility is an extension of an existing branch rather than a 
new, separate branch is consistent with Sec.  145.93(b)(1), which 
provides an exception to the application requirement for branches for 
such a facility for Federal savings associations. The proposal also 
adds new Sec.  5.30(d)(1)(iii) to describe more clearly what is not a 
branch, including ATMs and remote service units,\47\ as well as loan 
production offices, deposit production offices, administrative offices, 
and any other office that does not engage in any of the activities set 
out in paragraph (d)(1).
---------------------------------------------------------------------------

    \47\ We also are proposing to amend Sec.  7.4003 (establishment 
and operation of a remote service unit) to add a number of 
additional examples of remote service units. The proposal expands 
this illustrative list in order to modernize the regulation to 
capture new technology with similar functional capability.
---------------------------------------------------------------------------

    Fourth, the proposal updates Sec.  5.30(e), relating to the 
principles that guide the OCC in making determinations on applications 
under this section, to reflect the OCC's statutory mission as amended 
in section 314 of the Dodd-Frank Act.\48\
---------------------------------------------------------------------------

    \48\ 12 U.S.C. 1(a).
---------------------------------------------------------------------------

    Finally, the proposal amends Sec.  5.30(f)(6), which sets forth the 
procedures for expedited review of applications by eligible national 
banks, to clarify that the time period for review of an application for 
a short-distance relocation is the 15th day after the close of the 
comment period or the 30th day after the filing is received by the OCC, 
whichever is later, to be consistent with the shorter comment period 
for applications for short-distance relocations (15 days rather than 
the standard 30 days).
    Branches and agency offices of Federal savings associations (Sec.  
5.31). The OCC is proposing to add a new Sec.  5.31 to address the 
establishment or relocation of branches, or the establishment of agency 
offices, by Federal savings associations. Its format follows that of 
Sec.  5.30, but it does not include provisions from Sec.  5.30 that 
apply only to national banks.
    Section 5.31(a) recites the statutory authority under which the 
rule is issued. Section 5.31(b) sets out the basic requirement that a 
Federal savings association must file an application to establish or 
relocate a branch, unless the transaction would qualify for one of the 
exceptions in the rule.
    Section 5.31(c), the scope section, generally describes what the 
section covers--namely, the procedures and standards for review and 
approval of applications to establish or relocate a branch, the 
circumstances in which an application is not required, and the 
authority to establish agency offices. Section 5.31(c)(2) (similar to 
proposed Sec.  5.30(c)(2) and part of current Sec.  5.30(c)) provides 
that the standards of Sec.  5.31

[[Page 33280]]

(governing review and approval of applications by the OCC) would apply 
to branches acquired or retained in a conversion approved under Sec.  
5.23 or a business combination approved under Sec.  5.33, but that such 
branches would be subject only to the application procedures set forth 
in Sec. Sec.  5.23 or 5.33. Section 5.31(c)(3) says that Sec.  5.31 
also implements section 5(m) of the HOLA,\49\ which addresses branching 
by Federal and state savings associations in the District of Columbia.
---------------------------------------------------------------------------

    \49\ 12 U.S.C. 1464(m).
---------------------------------------------------------------------------

    In Sec.  5.31(d), we are proposing to add a definition of ``branch 
office'' for Federal savings associations for purposes of Sec.  5.31 by 
referring to the definition in 12 CFR 145.92(a). We are also proposing 
to include a definition of ``home state''--the state in which the 
association's home office is located.
    In Sec.  5.31(e) we are proposing the policy principles that guide 
the OCC's review of an application to establish or relocate a branch. 
These principles reflect the OCC's statutory mission as amended in 
section 314 of the Dodd-Frank Act, and are identical to those 
principles set forth in Sec.  5.30(e) for the OCC's review of a 
national bank branch application or relocation.\50\
---------------------------------------------------------------------------

    \50\ 12 U.S.C. 1(a).
---------------------------------------------------------------------------

    Paragraph (f)(1) of Sec.  5.31 sets out the general requirement 
that each Federal savings association that wants to establish or 
relocate a branch must submit a separate application for each proposed 
branch, unless the transaction qualifies for one of the exceptions in 
paragraph (f)(2). Sections 145.93 and 145.95 contain a number of 
provisions regarding the filing of notices and applications with the 
OCC as well as notices to the public. These provisions will no longer 
be necessary once Federal savings association branch filings are 
subject to part 5 and part 5's corresponding procedural provisions. One 
of the provisions in Sec.  145.93--paragraph (e)--does not have an 
analogue in Sec.  5.30, and the OCC does not propose to include it in 
Sec.  5.31. Under Sec.  145.93(e), a Federal savings association may 
not file an application or notice, or use any of the exceptions, to 
establish a branch if the association has filed an application to merge 
or otherwise surrender its charter and the application has been pending 
for less than six months.
    Paragraph (f)(2) of Sec.  5.31 would carry forward three of the 
exceptions to the requirement to file an application that are now 
included in Sec.  145.93(b).\51\ Paragraph (f)(2)(i) continues the 
exception for the establishment of a drive-in or pedestrian office that 
is located within 500 feet of an existing home or branch office. 
Paragraph (f)(2)(ii) continues the exception for a short-distance 
relocation of a branch. Paragraph (f)(2)(iii) continues the exception 
for the establishment or relocation of a branch by highly-rated Federal 
savings associations. Under Sec.  145.93(b)(3), certain highly-rated 
Federal savings associations are not required to file an application to 
change the permanent location of an existing branch or to establish a 
new branch if it meets certain requirements. Those requirements are: 
(1) The Federal savings association is eligible for expedited 
treatment, (2) it publishes notice, at a time period specified in the 
rule, of its intent to establish or relocate a branch, (3) in the case 
of a relocation, it posts notice of its intent to relocate the branch 
at the existing branch, and (4) no person files a comment opposing the 
action, or if a comment is filed, the OCC determines the comment raises 
issues that are not relevant to the standards for approving a branch 
application. The proposal continues this exception and these 
requirements except that, as with other sections in part 5, the 
condition for qualifying is that the Federal savings association is an 
``eligible savings association'' rather than eligible for expedited 
treatment. As discussed earlier in this preamble, there are some 
differences in these tests.
---------------------------------------------------------------------------

    \51\ We are proposing to replace the fourth exception (which 
provides that a Federal savings association may re-designate an 
existing branch office as a home office at the same time that it re-
designates its existing home office as a branch office) with 
provisions in Sec.  5.40. Section 5.40 would govern changes in the 
locations of a national bank's main office or a Federal savings 
association's home office. Changes in the location of a home office, 
including to an existing branch office, are subject to Sec.  5.40. 
If the Federal savings association proposes to establish a branch at 
its former home office location, paragraph (c)(3) of Sec.  5.40 
directs the association to follow Sec.  5.31.
---------------------------------------------------------------------------

    Paragraph (d) of Sec.  145.93 addresses maintenance of branches 
following a conversion or business combination and provides that such 
branches may be maintained after the conversion or combination unless 
the approval of the transaction specifies otherwise. The proposal does 
not retain this provision in Sec.  5.31. In part 5, retention of 
branches in a conversion or business combination is addressed in the 
conversion and business combination regulations (in this proposal, 
Sec.  5.23 for conversions to become a Federal savings association and 
Sec.  5.33 for business combinations resulting in a Federal savings 
association).
    Paragraph (g) of Sec.  5.31 would set out exceptions to the rules 
of general applicability for applications by a Federal savings 
association to establish or relocate a branch. Specifically, the OCC 
would be able to waive or reduce the public notice and comment period 
in certain emergency situations or with respect to certain temporary 
branches.
    Paragraph (h) of Sec.  5.31 would provide that the OCC's approval 
of a branch expires if the branch has not commenced business within 18 
months, unless the OCC grants an extension. This period is longer than 
the current twelve month expiration period for branch approvals for 
Federal savings associations under Sec.  145.95(c).
    Paragraph (i) of Sec.  5.31 would provide that Federal savings 
associations must comply with the portions of 12 U.S.C. 1831r-1 that 
apply to Federal savings associations with respect to branch closings.
    The proposal would add Sec.  5.31(j) to implement section 5(m)(1) 
of the HOLA.\52\ Section 5(m)(1), which applies to both Federal and 
state savings associations, provides that no savings association 
incorporated under the laws of the District of Columbia or organized in 
the District or doing business in the District shall establish any 
branch or move its principal office or any branch without the 
Comptroller's prior written approval and that no savings association 
shall establish any branch in the District or move its principal office 
or any branch in the District without the Comptroller's prior written 
approval. Section 145.93(c) currently provides prior approval for any 
savings association branch that would be subject to section 5(m)(1), if 
the association meets the requirements of Sec.  145.93(b) for an 
exception to the branch application filing requirement. After 
reconsideration, the OCC believes requiring an application and issuing 
a prior written approval for each application is more consistent with 
the statutory language of section 5(m)(1). Accordingly, we are changing 
the provisions implementing section 5(m)(1) of the HOLA to require an 
application. The proposal provides a short paraphrase of the statutory 
provision and instructs savings associations requiring approval under 
section 5(m)(1) to follow the application procedures of 12 CFR 5.31.
---------------------------------------------------------------------------

    \52\ 12 U.S.C. 1464(m)(1).
---------------------------------------------------------------------------

    Question 2: The OCC invites commenters' views on whether section 
5(m) is outdated.
    Finally, we are proposing to add paragraph (k) to Sec.  5.31, which 
would include provisions currently in Sec.  145.96 regarding agency 
offices.
    Alternative approaches to harmonize licensing rules for branching. 
As

[[Page 33281]]

mentioned above, the OCC also is considering whether it would be 
preferable to integrate the licensing rules for establishing branches 
by adding Federal savings associations to Sec.  5.30. Under this 
approach, both national banks and Federal savings associations would be 
required to file an application and obtain prior OCC approval to 
establish or relocate a branch. This requirement would be a change from 
the current rule for Federal savings associations, which provides that 
certain highly-rated Federal savings associations are not required to 
file an application to change the permanent location of an existing 
branch or to establish a new branch if it meets certain requirements 
and no person files a relevant comment opposing the action.
    We note, however, that under this alternative approach even though 
these highly-rated institutions would have to file an application, they 
most likely would qualify for expedited review of their applications. 
Moreover, the alternative approach would grandfather branches in 
existence as of the date the final rule would be published in the 
Federal Register.
    The alternative approach also would apply the definition of 
``branch'' in Sec.  5.30(d) to both national banks and Federal savings 
associations.\53\ As a result of this change, Federal savings 
associations would be subject to all the provisions in Sec.  5.30 that 
interpret, explain, or apply the definition of ``branch'' or that 
address when various activities are or are not branching activities. In 
addition, because this definition of ``branch'' (an office at which 
deposits are received, checks paid, or money lent) is established by 
statute,\54\ the meaning of ``branch'' has an extensive case law and 
regulatory history that also may apply to Federal savings associations. 
This alternative proposal also would describe more clearly what is not 
a branch, including ATMs, electronic means or facilities used in 
providing financial services, loan production offices, deposit 
production offices, administrative offices, and any other office that 
does not engage in any of the activities set out in Sec.  5.30(d)(1).
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    \53\ However, under this alternative, while the OCC would adopt 
the same definition for both national banks and Federal savings 
associations, we would clarify that the locations at which each type 
of institution may maintain a branch are governed by the separate 
and different legal authorities applicable to each type of 
institution, as indicated in the scope paragraph.
    \54\ 12 U.S.C. 36(j).
---------------------------------------------------------------------------

    Because of the application of the branch definition to Federal 
savings associations, a Federal savings association agency office at 
which loan proceeds are disbursed in the manner described in 12 CFR 
7.1003(a) would be a branch,\55\ but an agency office that conducts its 
lending related activities in such a manner as to be a loan production 
office would not be a branch. However, this alternative would 
grandfather existing agency offices that were in existence on the date 
the final rule would be published in the Federal Register and that 
engaged in the disbursal of loan proceeds in the manner described in 12 
CFR 7.1003(a) as of that date and continue to do so, provided they do 
not engage in any other branching activity. (We note that such an 
office could alter the manner in which it conducts business so that it 
would be a loan production office rather than a grandfathered Federal 
savings association agency office or a branch.) If a Federal savings 
association with a grandfathered Federal savings association agency 
office were to convert to or merge into a national bank or be acquired 
by or merge into another Federal savings association, or if the 
grandfathered Federal savings association agency office itself were 
acquired by a national bank or another Federal savings association, the 
agency office would lose its grandfathered status. The alternative 
proposal also would remove Sec.  145.96 so that Federal savings 
associations would not be required to obtain OCC approval for offices 
to conduct permitted activities that are not considered branching 
activities, unless approval is required under some other provision.
---------------------------------------------------------------------------

    \55\ Under Sec.  7.1003(a), for purposes of what constitutes a 
branch, `` `money' is deemed to be `lent' only at the place, if any, 
where the borrower in-person receives loan proceeds directly from 
bank funds.''
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    Finally, this alternative proposal would amend Sec. Sec.  7.1003, 
7.1004, 7.1005, 7.1012, 7.1014, 7.4003, 7.4004, and 7.4005, which 
interpret, explain, or apply the definition of ``branch,'' or that 
address when various activities are or are not branching activities, to 
apply them to Federal savings associations as well as national banks. 
These activities currently are permitted in Federal savings association 
agency offices.
    The OCC notes that the additional application requirement of the 
alternative approach described above could strengthen the ability of 
the OCC to monitor Federal savings association branching activity. In 
particular, branch applications could allow the OCC to identify 
emerging issues that have not yet affected the institution's rating and 
allow the OCC to put into place appropriate safeguards that address 
those risks before they might be exacerbated by the establishment of 
the branch. Moreover, a branch application requirement would mean the 
proposed establishment of a branch would be an application listed in 
the OCC's Weekly Bulletin. This would provide those who may be 
interested in commenting on a proposal to establish a branch another 
form of notice in addition to the publication of notice by the 
association. A branch application requirement also would enable the OCC 
to maintain comprehensive supervisory and structural data for Federal 
savings associations, in addition to national banks. Because the 
current rule requires Federal savings associations to comply with a 
public notice process for each new branch, the OCC believes that filing 
an application with the OCC at the time of this notice may add only 
incremental time and burden to the process of opening a new branch, 
especially for the majority of Federal savings associations that would 
qualify for expedited review of the application.
    However, there is no statutory requirement that Federal savings 
associations seek approval from the OCC to open a new branch, and the 
OCC is mindful that the imposition of this requirement on Federal 
savings associations could be perceived as unnecessary and burdensome, 
especially given the fact that the last EGRPRA review of savings 
association rules resulted in the elimination of the branch application 
requirement for 1- and 2-rated savings associations.\56\ Furthermore, 
the OCC is able to obtain some branch information through other 
sources, such as through the examination process and from the FDIC's 
annual Summary of Deposits.\57\ In addition, the OCC notes that CRA 
rules require institutions to maintain a list of their branches, their 
street addresses, and geographies, as well as a list of branches opened 
or closed during the current year and each of the prior two calendar 
years.\58\
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    \56\ The OTS published an interim final rule on November 24, 
2004 modifying application and reporting requirements as part of its 
review under EGRPRA. (69 FR 68239).
    \57\ See www2.fdic.gov/idasp/main.asp.
    \58\ See 12 CFR 195.43(a)(3) and (4).
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    Question 3: The OCC specifically requests comment on whether the 
alternative integrated rule approach should be adopted as the final 
rule.
    As a second alternative approach, the OCC could require Federal 
savings associations to submit an after-the-fact notice, either as an 
amendment to Sec.  5.31 as proposed in this rulemaking or in lieu of an 
application in the alternative approach of an integrated rule, 
described above. Under this after-the-

[[Page 33282]]

fact notice alternative, a Federal savings association would be 
required to provide a written notice to the OCC no later than 10 days 
after the opening or relocation of a branch. The written notice would 
identify the address of the branch, the date of opening the branch, and 
the type of branch. Such a notice would enable the OCC to obtain timely 
information on Federal savings association branching activity without 
requiring a 1- or 2-rated Federal savings association to obtain prior 
OCC approval to engage in an activity that they now may do without 
approval.
    Question 4: The OCC specifically requests comment on whether the 
final rule should include in Sec.  5.31 an after-the-fact notice for 
Federal savings associations, or, if the alternative integrated rule 
approach is adopted, whether such an after-the-fact notice should be 
required in lieu of an application requirement for savings 
associations.
Expedited Procedures for Certain Reorganizations (Sec.  5.32)
    Twelve CFR 5.32 provides the procedures for OCC review and approval 
of a national bank's reorganization to become a subsidiary of a bank 
holding company or a company that will, upon consummation of such 
reorganization, become a bank holding company. Section 5.32 currently 
does not expressly exempt such reorganizations from the general 
procedures in part 5 for public notice, public availability, and 
hearings and other meetings (Sec. Sec.  5.8, 5.9, and 5.11). When 
originally adopted, it was not the OCC's intent to apply these 
procedures to these reorganizations, and, in general, the OCC has not 
required national banks to comply with these procedures. The proposal 
would amend Sec.  5.32 to make clear in the regulation that these 
procedural requirements do not apply unless the OCC concludes that an 
application presents significant and novel policy, supervisory, or 
other legal issues. This is consistent with procedural exceptions for 
conversions (Sec.  5.23), fiduciary powers (Sec.  5.26), operating 
subsidiaries (Sec.  5.34), bank service companies (Sec.  5.35), and 
change in asset composition (Sec.  5.53).
Business Combinations (Sec.  5.33)
    Business combinations include mergers and consolidations, as well 
as certain purchase and assumption transactions. The OCC's regulations 
governing the application requirements and procedures for national 
banks engaging in business combinations are contained in 12 CFR 5.33. 
The regulations governing the application requirements and procedures 
for Federal savings associations engaging in business combinations are 
contained in 12 CFR 163.22. The statutes governing mergers and 
consolidations by national banks contain extensive specifications for 
their authority, the procedures the bank must follow, and the effect of 
the merger or consolidation.\59\ Thus, there are few OCC regulations on 
these matters. By contrast, the statutes governing mergers and 
consolidations by Federal savings associations contain few provisions 
addressing these matters.\60\ Accordingly, the OCC (and its predecessor 
regulators of Federal savings associations) has adopted extensive 
regulations addressing the authority of Federal savings associations to 
engage in mergers and consolidations, the procedures the savings 
association must follow, and the effect of the merger or consolidation. 
These rules are contained in 12 CFR part 146 for Federal mutual savings 
associations and in 12 CFR 152.13, 152.14, and 152.15 for Federal stock 
savings associations.
---------------------------------------------------------------------------

    \59\ See 12 U.S.C. 214-214d, 215-215b, and 215c, respectively.
    \60\ See 12 U.S.C. 1464(d)(3)(A) and 1467a(s).
---------------------------------------------------------------------------

    While these rules address a common subject there are a number of 
differences between them. We are proposing to harmonize the treatment 
of the business combination activities of national banks and Federal 
savings associations where consistent with the underlying statutory 
authorities of each type of institution and to consolidate our 
regulations by amending 12 CFR 5.33 to apply to Federal savings 
associations and by removing 12 CFR part 146 and 12 CFR 152.13, 152.14, 
152.15, and 163.22.\61\ This harmonization is intended to reduce 
regulatory duplication and promote fairness in supervision. We also 
propose to include in Sec.  5.33 some provisions from the Federal 
savings association application requirements and procedures, to make 
several other substantive changes in Sec.  5.33, and to make a number 
of clarifying or technical amendments. Under this proposal, as 
explained below, national banks and Federal savings associations 
generally would be subject to the same application requirements and 
procedures. In addition, we propose to add to Sec.  5.33 new 
paragraphs, based on 12 CFR part 146 and 12 CFR 152.13 and 152.14, to 
continue to provide regulations addressing the authority of Federal 
savings associations to engage in mergers and consolidations, the 
procedures the savings association must follow, and the effect of the 
merger or consolidation.
---------------------------------------------------------------------------

    \61\ The removal of part 146 and Sec.  163.22 also is discussed 
elsewhere in this proposal.
---------------------------------------------------------------------------

    Specifically, we propose to modify the scope section, Sec.  
5.33(b), to remove the reference to a merger between a national bank 
and its nonbank affiliate, as those transactions are now covered in the 
revised definition of ``business combination,'' discussed below. We 
also propose to revise the language regarding notices to the OCC when a 
national bank or Federal savings association is not the resulting 
institution to address situations in which the merger is with an entity 
that is not a ``depository institution'' as defined for purposes of 
Sec.  5.33.\62\ We also propose to add a footnote to the licensing 
requirements section indicating that some of the transactions that do 
not require an application under Sec.  5.33 may require an application 
under 12 CFR 5.53 for a substantial asset change.
---------------------------------------------------------------------------

    \62\ Under Sec.  5.3(f), ``depository institution'' means any 
bank or savings association.
---------------------------------------------------------------------------

    Section 5.33(d) contains definitions. The OCC is proposing to 
revise the definition of ``business combination'' in several ways. 
First, we propose to include consolidations and mergers of Federal 
savings associations with state trust companies in the definition. A 
consolidation or merger of a state trust company with a national bank 
is included in current Sec.  5.33(g)(1) because 5.33(g)(1) covers 
merger and consolidations with a state bank as defined in 12 U.S.C. 
215b, and that definition includes state trust companies. Second, new 
Sec.  5.33(d)(2)(ii) includes mergers and consolidations between a 
Federal savings association and a credit union in the definition of 
business combinations. Federal savings associations have this 
authority, but national banks do not. Third, new Sec.  5.33(d)(2)(iii) 
includes mergers between a national bank and its nonbank affiliate. 
National banks have this authority, but Federal savings associations do 
not.
    Fourth, new Sec.  5.33(d)(2)(v) revises an existing provision in 
Sec.  5.33(d)(2), which currently includes in the definition only the 
assumption of deposit liabilities from another depository institution, 
to also include the assumption, from a credit union or any other 
institution that is not FDIC-insured, of deposit accounts or other 
liabilities that will become deposits at the assuming national bank or 
Federal savings association. Section 163.22(c) requires an application 
by a Federal savings association in such cases.\63\ We propose to keep 
the requirement and extend it to national

[[Page 33283]]

banks. This requirement will assist the OCC in monitoring acquisitions 
of deposit liabilities from outside the FDIC-insured system.
---------------------------------------------------------------------------

    \63\ Section 163.22(c) also is discussed elsewhere in this 
preamble in connection with 12 CFR 5.53.
---------------------------------------------------------------------------

    Fifth, new Sec.  5.33(d)(2)(vi) includes in the definition purchase 
and assumption transactions which involve the acquisition by a national 
bank or a Federal savings association of all or substantially all, of 
the assets, or the assumption of all or substantially all of the 
liabilities, of companies in addition to depository institutions, 
including credit unions, nonbank affiliates, or any other company (a 
``whole entity purchase and assumption''). This definition is intended 
to cover a whole entity purchase and assumption with an entity other 
than a depository institution (which is covered by proposed Sec.  
5.33(d)(2)(iv), continuing a provision in the current rule). Currently, 
a Federal savings association has authority to engage in such 
transactions only with an entity with which it could engage in a 
consolidation or merger (i.e., a bank, savings association, or credit 
union), not a nonbank affiliate or other company. A Federal savings 
association is required to file an application for such transactions. A 
national bank has authority to engage in a whole entity purchase and 
assumption transaction without regard to whether it has authority to 
consolidate or merge with the counterparty. The purchase and assumption 
of bank-permissible assets and liabilities is an exercise of a bank's 
power to engage in the business of banking under 12 U.S.C. 24(Seventh), 
not the power to combine organically with another institution, as in a 
merger. The OCC proposes to adopt the same position regarding the power 
of a Federal savings association to engage in purchase and assumption 
transactions. Thus, a Federal savings association would have the 
authority to engage in a whole entity purchase and assumption without 
regard to whether it has authority to consolidate or merge with the 
counterparty. While national banks have had this authority, there has 
not been a requirement to apply to the OCC for approval of a whole 
entity purchase and assumption other than one with a depository 
institution. The OCC believes such transactions with parties other than 
depository institutions can have an impact on the acquiring national 
bank or Federal savings association if they are material, and so should 
have regulatory review. The OCC proposes to require an application if 
the whole entity purchase and assumption would result in an increase in 
the asset size of the bank or savings association of 25 percent or 
more.
    Question 5: The OCC requests comment on whether an increase in 
asset size of 25 percent or more is the appropriate threshold for 
materiality for whole entity purchase and assumption transactions or 
whether there are there other possible measures of materiality.
    We are proposing to add a new term ``other combination'' in Sec.  
5.33(d)(10). It would be used in Sec.  5.33 to refer to those 
combinations that do not require application to the OCC under Sec.  
5.33 (i.e., those in which a national bank or Federal savings 
association is not the resulting institution). The OCC also is 
proposing to add definitions of ``credit union,'' ``savings 
association'' and ``state savings association,'' and ``state trust 
company'' in Sec.  5.33(d)(6), (11), and (12), respectively.
    The OCC is proposing expressly to include in Sec.  5.33(e)(1)(i) 
the factors the OCC uses to evaluate all business combination 
applications, including both those the OCC reviews under the Bank 
Merger Act and those the OCC does not. These factors are: The 
institution's capital level; the conformity of the transaction to 
applicable law, regulation, and supervisory policies; the purpose of 
the transaction; the impact of the transaction on safety and soundness; 
and the effect of the transaction on the institution's shareholders, 
depositors, other creditors, and customers. These factors all reflect 
current practice. Some of them are included in Sec.  5.33(g)(4) and (5) 
now for a merger with a nonbank affiliate, in which the OCC does not 
have Bank Merger Act review. Others are included in the Federal savings 
association regulations at Sec.  163.22(d). Section 163.22(d)(1)(vi) 
also has a factor relating to the fairness of the transaction, 
disclosure regarding the transaction, and equitable treatment that 
includes a detailed presentation of considerations involved in 
assessing the factor. The OCC believes it is not necessary to include 
this detailed material in the regulation. We believe the factor in 
Sec.  5.33(e)(1)(i)(E) regarding the effect of the transaction on the 
institution's shareholders, depositors, other creditors, and customers 
is sufficient to provide a basis to review such matters in appropriate 
cases.
    We are proposing to include three additional factors in Sec.  
5.33(e)(1)(ii) for applications in which the OCC reviews the 
transaction under the Bank Merger Act. First, we are moving the money 
laundering factor included in current Sec.  5.33(e)(1)(iii) to the Bank 
Merger Act paragraph because it is a factor in the Bank Merger Act. We 
are adding the other two factors, financial stability and deposit 
concentration limit, because the Dodd-Frank Act added these factors to 
the Bank Merger Act.\64\
---------------------------------------------------------------------------

    \64\ Public Law 111-203, sections 604(f) and 623(a), 124 Stat. 
1376, 1602 and 1634 (2010).
---------------------------------------------------------------------------

    The proposal also would clarify the information the applicant must 
include in the application. Section 5.33(e)(2) currently requires an 
applicant to disclose the location of any branch it will acquire and 
retain in a business combination. We propose to amend this requirement 
to clarify that this disclosure include the location of any branches 
that are approved but not yet opened. Proposed Sec.  5.33(e)(3) would 
add a financial subsidiary investment, bank service company investment, 
service corporation investment, and other equity investment to the 
current requirement to identify subsidiaries and provide an analysis of 
the permissibility for the national bank or Federal savings association 
to hold the subsidiary or investment. This requirement reflects the 
current practice of the OCC to review the legal permissibility for the 
resulting national bank or Federal savings association to continue to 
hold these other investments when evaluating a business combination 
application.
    In the provision regarding retention of nonconforming assets for a 
limited period of time after consummation of a business combination, 
Sec.  5.33(e)(5), we propose to add Federal savings associations to the 
current provision and to add a new paragraph (e)(5)(ii) applicable to 
Federal savings associations to address provisions in the HOLA 
regarding certain nonconforming assets.
    In the provision regarding the exercise of fiduciary powers by the 
resulting national bank or Federal savings association, Sec.  
5.33(e)(6), we propose to add a new paragraph (e)(6)(ii) clarifying 
that if the applicant intends to exercise fiduciary powers after the 
combination and requires OCC approval for such powers, it must include 
in the business combination application the information required in 
Sec.  5.26 for a request for fiduciary powers. This requirement 
reflects current practice.
    In the provision regarding the expiration of approval, Sec.  
5.33(e)(7), we propose to shorten the time within which an approval 
expires if the transaction has not been consummated from one year to 
six months and add a provision under which the OCC can extend the six 
month period.
    Section 5.33(f) contains the exceptions to the rules of general 
applicability for filings under Sec.  5.33. Paragraph (f)(1) addresses 
filings in which a national bank (and, as

[[Page 33284]]

proposed, a Federal savings association) is the applicant. We propose 
to amend paragraph (f)(1) to clarify that the requirement of public 
notice and comment would apply only when the application is subject to 
a public notice requirement under the Bank Merger Act or other 
applicable statute that requires notice to the public. In such cases, 
the statutory requirements apply. In other cases, the public notice and 
comment provisions in Sec. Sec.  5.8, 5.10 and 5.11 would not apply 
unless the OCC concludes a particular application presents significant 
or novel policy, supervisory, or legal issues.\65\ This publication 
requirement would not be a change for national banks or Federal savings 
associations.
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    \65\ Section 5.33(f) currently includes a list of several other 
statutory or regulatory requirements for publication in connection 
with certain mergers or consolidations that also except those 
transactions from the one-time publication of notice requirement of 
Sec.  5.8(a). However, those provisions concern publication of 
notice of the shareholders' meeting being called to vote on the 
proposed merger or consolidation. They are not notices to the public 
inviting comment on the merger or consolidation application. The OCC 
is proposing to remove them in revised Sec.  5.33(f)(1)(i).
---------------------------------------------------------------------------

    In addition, another change for Federal savings associations would 
be the frequency and timing of publication for transactions that are 
subject to the Bank Merger Act. Section 163.22(e)(1)(i) requires an 
initial publication and then publication on a weekly basis during the 
public comment period. For national banks, the OCC requires an initial 
publication and two subsequent publications at intervals during the 
standard 30 day public comment period.
    Paragraph (f)(1)(ii) continues the current provisions under which a 
merger between a national bank and its nonbank affiliate is excepted 
from public notice and comment. Such mergers are merely internal 
reorganizations of the company's existing operations.
    Section 5.33(f)(3) addresses filings in which a national bank (and 
as revised, a Federal savings association) is the target company and 
will not be the resulting institution. We are clarifying this provision 
so that it no longer includes a Federal savings association as a 
resulting institution, as Federal savings associations now apply to the 
OCC under proposed Sec.  5.33(g)(3). We also are adding credit unions, 
as a merger or consolidation of a Federal savings association into a 
credit union will be within the scope of Sec.  5.33. In addition, we 
propose to remove Sec.  5.2 (rules of general applicability) and Sec.  
5.5 (fees) from the list of sections excepted. They include provisions 
that may be useful to apply in some situations.
    We are proposing to amend Sec.  5.33(g)(1) (merger or consolidation 
of a national bank or a state bank into a national bank) to require 
that a national bank that will not be the resulting bank in a merger or 
consolidation with another national bank must file a notice to the OCC 
under Sec.  5.33(k). This notice, which would also be required whenever 
a national bank or Federal savings association merges or consolidates 
into another institution, provides the OCC information about the target 
national bank's compliance with requirements to ``merge-out'' and sets 
in motion the steps for the disappearing national bank to end its 
separate existence. Section 5.33(k) is discussed further below.
    We are proposing to amend Sec.  5.33(g)(2) (merger or consolidation 
of a Federal savings association into a national bank) to reflect the 
fact that the OCC now is the regulator of Federal savings associations. 
First, requirements similar to those in 12 CFR part 146 and 12 CFR 
152.13 and 163.22 would now be required in Sec.  5.33(g)(2)(i)(B) 
(referring to Sec. Sec.  5.33(n) and (o)), replacing current Sec.  
5.33(g)(2)(i)(B). In addition, proposed Sec.  5.33(g)(2)(i)(B) also 
would include a provision under which a whole purchase and assumption 
of the target Federal savings association would be treated as a 
consolidation for the Federal savings association, so that the 
procedural requirements in paragraph (o) would apply. The current 
regulations, at 12 CFR part 146 and 12 CFR 152.13, apply these 
requirements to such transactions now through the definition of 
``combination'' in Sec.  152.13(b)(1), which includes a whole purchase 
and assumption transaction between depository institutions, in addition 
to a consolidation and a merger.
    Second, the provision in Sec.  5.33(g)(2)(ii), under which the OCC 
may conduct an appraisal of dissenters' shares of stock in a national 
bank involved in a consolidation with a Federal savings association if 
all the parties agree, would be changed in proposed Sec.  
5.33(g)(2)(ii)(A) from a voluntary to a required process, as the OCC 
has regulatory authority over both the national bank and the Federal 
savings association. Third, proposed Sec.  5.33(g)(2)(ii)(B) and (C) 
would set out the process for appraisal of dissenters' shares of stock 
in a Federal stock savings association involved in a consolidation or 
merger into a national bank. Mergers and consolidations of Federal 
savings associations into national banks are authorized under 12 U.S.C. 
215c, but the statute has no provisions addressing dissenters' rights. 
The OCC is proposing to apply the statutory provisions governing 
national bank dissenters' rights in 12 U.S.C. 215 and 215a to 
transactions in which a Federal savings association is merging or 
consolidating into a national bank, rather than continuing the 
regulatory dissenters' rights provision in 12 CFR 152.14. Applications 
in which there are dissenting shareholders and the appraisal process is 
used are rare. The basic frameworks of the national bank and Federal 
savings association processes are similar. In the interest of 
simplicity of administration and similar treatment for each type of 
institution, the OCC prefers to use only one dissenters' rights 
process. We propose to use the process for national banks because it is 
mandated by statutes for the transactions covered by those statutes. 
However, since we would be applying the dissenters' rights process 
based on regulation, not statute, to the transactions covered by Sec.  
5.33(g)(2), we propose to include one element from Sec.  152.14 that is 
different from the national bank statutes. Under the statutes, the bank 
is required to bear all costs.\66\ Under Sec.  152.14(c)(9), the OCC 
may apportion costs. When we apply the national bank process to 
transactions to which it is not applicable by statute, we propose to 
include the authority to apportion costs for both participating Federal 
savings associations and participating national banks. Thus, in 
proposed Sec.  5.33(g)(2)(ii)(C), we propose to do so for the type of 
consolidation or merger subject to Sec.  5.33(g)(2).
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    \66\ See 12 U.S.C. 214a(b), 215(d), and 215a(d).
---------------------------------------------------------------------------

    In Sec.  5.33(g)(2)(iii), we propose to include a requirement that 
the consolidation or merger agreement must address the effect upon, and 
the terms of the assumption of, any liquidation account of any other 
participating institution by the resulting institution. This 
requirement is based on provisions in Sec. Sec.  146.2(b)(9) and 
152.13(f)(9). Although not currently in Sec.  5.33, it is a requirement 
for national banks as discussed in the OCC Licensing Manual.
    We propose to add a new Sec.  5.33(g)(3) addressing consolidations 
and mergers of other institutions into a Federal savings 
association.\67\ The proposed section would require application to the 
OCC and, in Sec.  5.33(g)(3)(i)(A) (referring to Sec. Sec.  5.33(n) and 
(o)), would require the

[[Page 33285]]

Federal savings association to comply with requirements and procedures 
similar to those in 12 CFR part 146 and 12 CFR 152.13 and 163.22. 
Proposed Sec.  5.33(g)(3)(i)(A) also would provide that if a 
combination involves a whole purchase and assumption of a Federal 
savings association, then the combination would be treated as a 
consolidation for participating Federal savings associations, so that 
the procedural requirements in paragraph (o) would apply. As discussed 
above, the current regulations, at 12 CFR part 146 and 12 CFR 152.13, 
apply these requirements to such transactions now through the 
definition of ``combination'' in Sec.  152.13(b)(1), which includes a 
whole purchase and assumption transaction between depository 
institutions, in addition to a consolidations and a merger.
---------------------------------------------------------------------------

    \67\ The proposal would move the provisions in current Sec.  
5.33(g)(3) that address a consolidation or merger of a national bank 
into a state chartered depository institution to become Sec.  
5.33(g)(6). The provisions in current Sec.  5.33(g)(3) that address 
a consolidation or merger of a national bank into a Federal savings 
association would remain here in new Sec.  5.33(g)(3) with 
modifications, as discussed in the text.
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    Section 5.33(g)(3)(i)(B)(1) would continue the provisions in 
current Sec.  5.33(g)(3)(iii)(A) requiring a target national bank to 
follow the procedures of 12 U.S.C. 214a and 12 U.S.C. 214c, as if the 
Federal savings association were a state bank. Section 
5.33(g)(3)(i)(B)(2) would continue the provisions in current Sec.  
5.33(g)(3)(iii)(B), under which the OCC may conduct an appraisal of 
dissenters' shares of stock in a target national bank involved in a 
merger or consolidation with a Federal savings association if all the 
parties agree. However, the proposal would make the appraisal of 
dissenters' rights in proposed Sec.  5.33(g)(3)(i)(B)(2) a required 
process, as the OCC has regulatory authority over both the national 
bank and the Federal savings association as a result of the Dodd-Frank 
Act. As above, because we are applying this process by regulation to 
types of transactions that do not have statutory dissenters' rights 
provisions, we propose to include a cost allocation provision for both 
national banks and Federal savings associations.
    Section 5.33(g)(3)(i)(C) would set out the process for appraisal of 
dissenters' shares of stock in a Federal stock savings association 
involved in a consolidation or merger into another Federal savings 
association. In applications in which a Federal savings association is 
merging into another Federal savings association, the OCC is proposing 
to apply the statutory provisions governing national bank dissenters' 
rights in 12 U.S.C. 214a to Federal savings associations, as if the 
Federal savings association were a national bank merging into a state 
bank under section 214a. We are proposing to use the national bank 
dissenters' right process rather than continuing the regulatory 
dissenters' rights provision in 12 CFR 152.14 for the reasons discussed 
above. As above, because the process is being applied in these 
situations by regulation, not statute, we propose to include a cost 
allocation provision. We are also proposing to include the requirement 
from 12 U.S.C. 214a(b) that the plan of merger or consolidation must 
provide the manner of disposing of the shares of the resulting Federal 
savings association not taken by the dissenting shareholders. This 
requirement is a change from Sec.  152.14(c)(11), under which such 
shares shall have the status of authorized and unissued shares of the 
resulting association. The plan of merger or consolidation could still 
provide such status for these shares, but such status no longer would 
be mandatory.
    In Sec.  5.33(g)(3)(i)(D), we propose to provide that a state bank, 
state savings association or credit union that engages in a 
consolidation or merger into a Federal savings association would follow 
the procedures and dissenters' rights process set out for such 
transactions in the law of the state or other jurisdiction under which 
it is organized. This provision is similar to the current provisions in 
Sec.  5.33(g)(4) and (g)(5) for mergers between a national bank and its 
nonbank affiliate.
    In Sec.  5.33(g)(3)(ii), we propose to include a requirement that 
the consolidation or merger agreement must address the effect upon and 
the terms of the assumption of, any liquidation account of any other 
participating institution by the resulting institution. This is based 
on provisions in Sec. Sec.  146.2(b)(9) and 152.13(f)(9). Although not 
currently in Sec.  5.33, it is a requirement for national banks as 
discussed in the OCC Licensing Manual.
    Sections 5.33(g)(4) and (g)(5) address mergers between a national 
bank and its nonbank subsidiary or affiliate. Section 5.33(g)(4) covers 
mergers into the national bank; Sec.  5.33(g)(5) covers mergers into 
the nonbank subsidiary or affiliate. They implement a statute 
applicable only to national banks, not Federal savings 
associations.\68\ In Sec.  5.33(g)(4), we propose to add a 
clarification that the transaction is subject to review by the FDIC 
under the Bank Merger Act only when the national bank is insured. We 
also are removing the factors the OCC considers in reviewing these 
applications from Sec.  5.33(g)(4)(i) and Sec.  5.33(g)(5)(i). These 
factors would no longer be needed in these provisions as we have 
included them in proposed Sec.  5.33(e)(1)(i) and applied them to all 
business combinations.
---------------------------------------------------------------------------

    \68\ See 12 U.S.C. 215a-3.
---------------------------------------------------------------------------

    Proposed Sec.  5.33(g)(6) addresses a consolidation or merger under 
12 U.S.C. 214a of a national bank with a state bank resulting in a 
state bank (as defined in 12 U.S.C. 214(a)). This new paragraph is 
based on the portions of current Sec.  5.33(g)(3) that address a 
consolidation or merger of a national bank into a state bank.\69\ We 
also propose to add express provisions on procedures and dissenters' 
rights. These requirements are statutory and were implied in current 
Sec.  5.33(g)(3)(i). We propose to move the provisions on termination 
of charter and notice to the OCC in current Sec.  5.33(g)(3)(i) and 
(ii) to new Sec.  5.33(k). In Sec.  5.33(g)(6)(iv), we propose to 
include a requirement that the consolidation or merger agreement must 
address the effect upon, and the terms of the assumption of, any 
liquidation account of any other participating institution by the 
resulting institution. This requirement is based on provisions in 
Sec. Sec.  146.2(b)(9) and 152.13(f)(9). Although not currently in 
Sec.  5.33, it is a requirement for national banks as discussed in the 
OCC Licensing Manual.
---------------------------------------------------------------------------

    \69\ The portions of current Sec.  5.33(g)(3) that address a 
consolidation or merger of a national bank into a Federal savings 
association would remain in revised Sec.  5.33(g)(3).
---------------------------------------------------------------------------

    We propose to add a new Sec.  5.33(g)(7), similar to proposed Sec.  
5.33(g)(6), that would address a consolidation or merger of a Federal 
savings association into a state bank, state savings bank, state 
savings association, state trust company, or credit union. Under 
proposed Sec.  5.33(g)(7)(i), such transactions would require only a 
notice to the OCC, not application and approval. This requirement is a 
change for Federal savings associations because, under Sec.  163.22(c), 
an application is required for a combination with an uninsured bank, 
savings association or trust company or a credit union. Proposed Sec.  
5.33(g)(7)(ii) would address the procedures Federal savings association 
must follow to engage in the consolidation or merger and would require 
the association to follow the provisions of Sec.  5.33(n) and (o), 
which are based on provisions in 12 CFR part 146 and 12 CFR 152.13 and 
163.22. In addition, proposed Sec.  5.33(g)(7)(ii) would include a 
provision under which a whole purchase and assumption of the target 
Federal savings association would be treated as a consolidation for the 
Federal savings association, so that the procedural requirements in 
paragraph (o) would apply. The current regulations, at 12 CFR part 146 
and 12

[[Page 33286]]

CFR 152.13, apply these requirements to such transactions now through 
the definition of ``combination'' in Sec.  152.13(b)(1), which includes 
a whole purchase and assumption transaction between depository 
institutions, in addition to a consolidation and a merger.
    Proposed Sec.  5.33(g)(7)(iii) would set out the process for 
appraisal of dissenters' shares of stock in a Federal stock savings 
association involved in a consolidation or merger into a state bank, 
state savings bank, state savings association, state trust company, or 
credit union. The process is similar to the process included in Sec.  
5.33(g)(3)(C), described above, for appraisal of dissenters' shares of 
stock in a Federal stock savings association involved in a 
consolidation or merger into a another Federal savings association. In 
Sec.  5.33(g)(7)(iv), we propose to include a requirement that the 
consolidation or merger agreement must address the effect upon, and the 
terms of the assumption of, any liquidation account of any other 
participating institution by the resulting institution. This 
requirement is based on provisions in Sec. Sec.  146.2(b)(9) and 
152.13(f)(9). Although not currently in Sec.  5.33, it is a requirement 
for national banks as discussed in the OCC Licensing Manual.
    Section 5.33(i) provides for expedited review of business 
reorganizations (defined in Sec.  5.33(d)(3)) and streamlined 
applications (described in Sec.  5.33(j)). We propose to add Federal 
savings associations to Sec.  5.33(d)(3) and Sec.  5.33(j), so that 
Federal savings association applications that meet the requirements 
would be eligible for expedited review. Under expedited review, an 
application is deemed approved as of the later of the 45th day after 
the application was filed or the 15th day after the close of the 
comment period, unless the OCC notifies the applicant that the 
application is not eligible for expedited review or the expedited 
review process is extended. Business reorganizations are (1) a business 
combination between eligible depository institutions owned by the same 
holding company or (2) a business combination between an eligible bank 
or savings association and an interim national bank or interim Federal 
savings association that is being effected to form a holding company 
that would own the eligible bank or savings association. For both 
business reorganizations and streamlined applications, the acquiring 
bank must be an eligible bank and the resulting institution must be 
well capitalized. There are several types of streamlined applications. 
The different types of streamlined applications vary depending on the 
other institutions' status as eligible institutions, the amount by 
which the resulting institution would grow in size, and, in some cases, 
a pre-filing approval from the OCC to use a streamlined application.
    Under the proposal, expedited review under Sec.  5.33(j) would 
replace the automatic approval provision in Sec.  163.22(f) for Federal 
savings associations. Under Sec.  163.22(f), an application is deemed 
to be approved automatically 30 days after the OCC sends the applicant 
a written notice that the application is complete. An application would 
fall out of the automatic approval process in a number of specified 
circumstances. Many of these circumstances are the same as those that 
would cause an application not to be eligible for expedited review 
under Sec.  5.33(j). However, the size-based limit included in Sec.  
163.22(f) is more restrictive than eligibility for expedited review as 
a business reorganization or streamlined application in Sec.  5.33. 
Specifically, under Sec.  163.22(f)(10), an application does not 
qualify for the automatic approval process if the acquiring institution 
has assets of $1 billion or more and proposes to acquire assets of $1 
billion or more. Business reorganizations have no size limit. 
Streamlined applications under Sec.  5.33(j) have limits based on the 
relative size of the acquiring institution and the assets to be 
acquired but do not have a fixed maximum dollar amount limit on the 
size. In addition, under Sec.  163.22(f) a number of the other 
disqualifying conditions are based on the competitive impact of the 
proposed combination, creating safe harbors that the proposal must meet 
in order qualify for the automatic approval process. The OCC believes 
it is not necessary to include competitive impact thresholds in the 
regulation. When a streamlined application is filed, the OCC would 
review it, and if it raised potential competitive concerns, the OCC 
would notify the applicant that the application is not eligible for 
expedited review. Accordingly, the OCC proposes not to include the 
automatic approval process of Sec.  163.22(f), but to add one of the 
disqualifying factors set forth in Sec.  163.22(f) to the streamlined 
application provision. Specifically, under proposed Sec.  5.33(j)(2), 
an applicant would not qualify for a streamlined business combination 
application if the transaction is part of a mutual to stock conversion 
under 12 CFR part 192.
    We are proposing to add a new Sec.  5.33(k) regarding notices to be 
filed when a national bank or Federal savings association is 
consolidating or merging with another national bank or Federal savings 
association or with a state chartered institution or credit union and 
the target national bank or Federal savings association is not the 
resulting institution. It also includes provisions regarding the steps 
to be taken to terminate the institution's status as a national bank or 
Federal savings association. This new provision gathers in one place 
material from current Sec. Sec.  5.33(g)(3), 163.22(b) and 
163.22(h)(1)(i) on filing the notice and the timing of the filing, 
material from Sec.  163.22(h)(1)(i) and (ii) on the content of the 
notice, and material from Sec. Sec.  5.33(g)(3), 146.2(g) and 152.13(k) 
on termination of the institution's status as a national bank or 
Federal savings association. There would be no change for Federal 
savings associations. However, national banks would be required to 
include more information in the notice than currently required in Sec.  
5.33. This additional information would include a short description of 
the transaction or a copy of the filing made by the acquiring 
institution to its regulators for approval of the transaction and 
information showing the target national bank or Federal savings 
association has complied with the requirements to engage in the 
transaction (e.g., board and shareholder approval). The OCC is adding 
the requirement to include the information in order to monitor the 
transaction to ensure the national bank or Federal savings association 
complies with applicable law. The information involved is information 
the institution already would have compiled. Finally, under proposed 
Sec.  5.33(k)(5), if the business combination contemplated by the 
notice has not occurred within six months after receipt of the notice, 
a new notice must be submitted, unless the OCC grants an extension of 
time. This requirement is in Sec.  163.22(h)(1)(ii), except that the 
time period is shortened from one year to be consistent with the 
expiration period for OCC approvals under Sec.  5.33(e)(7). This 
expiration provision would be new for national banks. After six months 
the information in the original notice could be out of date. Moreover, 
such a delay in consummation of the transaction may indicate changes in 
the condition or circumstances of the parties. Treating the notice as 
having expired and requiring a new one is similar to the requirement in 
various sections of part 5 that an approval expires after the passage 
of a specified amount of time.
    The OCC is proposing to add new Sec.  5.33(l) addressing the 
transfer of assets, liabilities, rights, franchises,

[[Page 33287]]

interests, and fiduciary appointments to the resulting national bank or 
Federal savings association and its status as the continuation of each 
participating institution, sometimes referred to as corporate 
succession. It reflects the corporate succession provisions in national 
bank statutes \70\ and continues the substance of current regulations 
providing succession for a Federal savings associations when it is the 
resulting institution in a consolidation or merger.\71\
---------------------------------------------------------------------------

    \70\ 12 U.S.C. 214b, 215(e) and 215a(e).
    \71\ 12 CFR 146.3 (Federal mutual savings associations); 12 CFR 
152.13(l) (stock Federal savings associations).
---------------------------------------------------------------------------

    The OCC is proposing to add new Sec.  5.33(m) addressing 
certification of a consolidation or merger and documentation of its 
effective date. Specifically, proposed Sec.  5.33(m) would require the 
applicant to submit information showing that all steps needed to 
complete the transaction have been met and to notify the OCC of the 
planned consummation date. The OCC would then issue a certification 
letter documenting that the consolidation or merger occurred and 
specifying the effective date. This new section reflects current OCC 
practice for national banks. The new section accomplishes through an 
applicant notification letter and issuance of an OCC certification 
letter what Sec.  152.13(j) does in requiring the applicant to submit 
two sets of ``Articles of Combination'' that are filed with the OCC, 
and then endorsed by the OCC, with one set returned to the applicant 
with a specification of the effective date. The difference in forms and 
terminology would not represent a change in substance for Federal 
savings associations.
    The OCC is proposing to add a new Sec.  5.33(n). It would include 
provisions in Sec.  146.2 and Sec.  152.13 that set out the authority 
for Federal savings associations to engage in various types of business 
combinations and limitations on that authority. Section 5.33(n)(1) is 
based on Sec.  152.13(a). Section 5.33(n)(2) is based on Sec.  146.2(a) 
and Sec.  152.13(c). However, we propose to add authority to engage in 
other business combinations listed in current Sec.  5.33(d)(2), 
including the authority to enter whole entity purchase and assumptions 
with any entity (by the cross-reference to 5.33(d)(2)(vi)) and the 
other combinations listed in Sec.  5.33(d)(10). We also propose to omit 
the requirement to meet the requirements for Federal Home Loan Bank 
membership, since membership in a Federal Home Loan Bank is no longer 
mandatory. Section 5.33(n)(3) is based on Sec.  146.2(d). Section 
5.33(n)(4) is based on Sec.  163.22(e)(2).
    The OCC is proposing to add a new Sec.  5.33(o). It would include 
various provisions in Sec.  146.2 and Sec.  152.13 that set out the 
procedural requirements for board, shareholder (in the case of stock 
savings associations), and, if required by the OCC, voting member (in 
the case of mutual savings associations) approval of business 
combinations involving the Federal savings association. As noted 
earlier, Sec.  146.2 and Sec.  152.13 use the term ``combination'' to 
include a whole purchase and assumption transaction, as well as a 
consolidation or merger, and therefore apply these procedural 
requirements to those transactions. Section 5.33 uses the term business 
combination more broadly. In order to avoid applying the requirements 
to a broader set of transactions and achieve the same result as Sec.  
146.2 and Sec.  152.13, we propose to use ``consolidation or merger'' 
instead of ``combination'' in Sec.  5.33(o), and require in Sec.  
5.33(g)(2), (g)(3), and (g)(7) that a whole purchase and assumption 
transaction be treated as a consolidation by a Federal savings 
association for purposes of applying the requirements of Sec.  5.33(o).
    Section 5.33(o)(1) is based on Sec.  146.2(b) and 152.13(e), except 
that we propose to reduce the required majority for the board of 
directors approval for Federal stock savings associations from two-
thirds to a majority. We are not proposing to reduce the requirement 
for Federal mutual savings associations, since the board of directors 
vote is the principal vote; there typically is not a vote of the voting 
members, unless the OCC requires it as provided in proposed Sec.  
5.33(o)(4). Section 5.33(o)(2) is based on Sec.  146.2(g). Section 
5.33(o)(3) is based on Sec.  152.13(h). Section 5.33(o)(4) is based on 
Sec.  146.2(e). We are not proposing to include in Sec.  5.33 the 
requirements in Sec.  146.2(b)(1) and 152.13(f) that require the 
savings association to include all terms regarding the combination in a 
combination agreement and set out in some detail provisions that the 
agreement must contain. OCC practice with respect to national banks has 
not been to include these requirements in detailed regulations, as the 
drafting of a merger agreement is a business matter for the 
participating parties. However, we note that the OCC Licensing Manual 
includes sample agreements.
Operating Subsidiaries of a National Bank (Sec.  5.34)
    The proposal would make a number of changes to the provisions 
governing operating subsidiaries of national banks set forth at 12 CFR 
5.34. Some of these changes would incorporate elements of the Federal 
savings association operating subsidiary regulations currently 
contained in 12 CFR 159 in order to promote consistency between the 
regulations for operating subsidiaries for both charters.\72\ We also 
are proposing a number of other changes to clarify existing provisions 
in Sec.  5.34.
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    \72\ Elsewhere in this proposal we are proposing to add a new 
Sec.  5.38 to part 5 of our regulations to address Federal savings 
association operating subsidiaries. The proposed new Sec.  5.38 is 
based on Sec.  5.34, and many of its provisions are nearly identical 
or very similar. However, there are differences that reflect some 
differences between national bank operating subsidiaries and Federal 
savings association operating subsidiaries based on certain 
statutory provisions. The similarities and differences are discussed 
in the Sec.  5.38 portion of the preamble.
---------------------------------------------------------------------------

    Specifically, the OCC is proposing to amend the scope section in 
Sec.  5.34(c) by including language from Sec.  159.1(a) that provides 
that the OCC may, at any time, limit a national bank's investment in an 
operating subsidiary, or may limit or refuse to permit any activities 
in an operating subsidiary, for supervisory, legal, or safety and 
soundness reasons. While the OCC currently has this authority, we are 
proposing to clarify the regulation by explicitly including this 
language.
    The proposal would add a new Sec.  5.34(e)(1)(ii), which would 
provide that before beginning business, an operating subsidiary must 
comply with other laws applicable to it, including applicable licensing 
or registration requirements. This is not a new requirement for 
national banks. We are adding the language to clarify that compliance 
with Sec.  5.34 and approval of an operating subsidiary by the OCC are 
not the only requirements that must be met.
    Section 5.34(e)(2) provides the criteria for a subsidiary to 
qualify as a national bank operating subsidiary. Section 
5.34(e)(2)(i)(A) currently states that the national bank must have the 
ability to control the management and operations of the subsidiary. The 
proposal would clarify this provision by adding that no other person or 
entity has the ability to control the management or operations of the 
subsidiary. This reflects OCC practice regarding national bank 
operating subsidiaries. The language is based on a provision in Sec.  
159.3(c)(1) and we have added it to be consistent with that provision 
and the new Federal savings association operating subsidiary 
regulation. Section 5.34(e)(5)(ii)(A)(3), as redesignated in the 
proposal, would also include this language. The redesignation is 
discussed below. The OCC also is proposing to revise Sec.  
5.34(e)(2)(i)(B) to clarify that, in

[[Page 33288]]

instances where the bank owns less than 50 percent of an operating 
subsidiary (but still controls it), no other party can own a greater 
percentage than the bank. This reflects current OCC practice, as set 
out in the Comptroller's Licensing Manual. We also are proposing a new 
Sec.  5.34(e)(2)(iii) to clarify that the national bank must have 
reasonable policies and procedures to preserve the limited liability of 
the bank and its operating subsidiaries. This provision has been 
adapted from Sec.  159.10 and would be consistent with the new 
operating subsidiary rule for Federal savings associations. It 
clarifies that the requirement that the bank must control the operating 
subsidiary does not mean they should be treated as a single entity.
    The OCC also is proposing to revise Sec.  5.34(e)(3) to clarify 
that there are other instances where different treatment of the 
operating subsidiary and the parent national bank may occur in addition 
to those regarding the application of state law addressed by the Dodd-
Frank Act.
    Section 5.34(e)(5)(i) provides that national banks meeting certain 
requirements are not required to file a prior application but may give 
after-the-fact notice when establishing or acquiring an operating 
subsidiary or performing a new activity in an existing operating 
subsidiary. Section 5.34(e)(5)(ii) requires a prior application and OCC 
approval in other instances and sets out the information that must be 
included in the filing. We are proposing to reverse the order of the 
application and notice provisions so that the application provision is 
first. The change in order simplifies and clarifies the opening 
language of each paragraph. It also will make the order of these 
provisions the same as that of the similar provisions in the regulation 
for operating subsidiaries of Federal savings associations. The 
proposal would make technical revisions in Sec.  5.34(e)(5)(ii)(A)(3), 
as redesignated in the proposal (current Sec.  5.34(e)(5)(i)(A)(3)), to 
account for instances in which the operating subsidiary is a limited 
liability company. We also propose other clarifying and technical 
changes in redesignated Sec.  5.34(e)(5)(i) through (v).
    Section 5.34(e)(5)(vi) provides that no application or notice is 
required for a national bank that is well managed and adequately 
capitalized or well capitalized to acquire or establish an operating 
subsidiary or perform a new activity in an existing operating 
subsidiary, if the activities of the new subsidiary are limited to 
those previously reported to the OCC in connection with a prior 
operating subsidiary and certain other requirements are met. We are 
proposing to change the requirement from adequately capitalized to well 
capitalized. This is consistent with the well capitalized requirement 
to be eligible for the after-the-fact notice procedure.
    The proposal also would amend Sec.  5.34(e)(5)(vii) by codifying 
the OCC's position that when a national bank operating subsidiary 
wishes to act as a fiduciary, its national bank parent must have 
fiduciary powers and the operating subsidiary also must have its own 
fiduciary powers under the law applicable to the subsidiary. The 
operating subsidiary may not rely on the national bank's fiduciary 
powers. Further, this provision also would explicitly provide that when 
an operating subsidiary that exercises investment discretion on behalf 
of customers or provides investment advice for a fee is a registered 
investment adviser, it is not necessary for its national bank parent to 
have fiduciary powers. These provisions reflect OCC practice as set out 
in the Comptroller's Licensing Manual.
    Finally, a new Sec.  5.34(e)(5)(viii) would be added, providing 
that OCC approvals granted under Sec.  5.34 expire within 12 months if 
a national bank has not established or acquired the operating 
subsidiary or commenced the new activity in an existing operating 
subsidiary, unless the OCC shortens or extends the time period. This is 
similar to provisions in other sections of part 5 regarding the 
expiration of an OCC approval.
National Bank and Federal Savings Association Investments in Service 
Companies (Sec.  5.35)
    Twelve CFR 5.35 addresses national bank investments in bank service 
companies pursuant to the Bank Service Company Act, 12 U.S.C. 1861-
1867. The Bank Service Company Act was amended in 2006 to permit 
Federal savings associations to invest in bank service companies.\73\ 
The OTS did not adopt implementing regulations. The OCC is proposing to 
amend Sec.  5.35 to make it applicable to Federal savings associations, 
to state explicitly certain authority of the OCC, to conform 
definitions to Dodd-Frank Act changes, and to make a number of 
technical changes. The changes for Federal savings associations are not 
likely to be very significant because Federal savings associations are 
already subject to the statute and the filing procedures in Sec.  5.35 
follow the statute.
---------------------------------------------------------------------------

    \73\ Public Law 109-351, section 602, 120 Stat. 1965 (2006).
---------------------------------------------------------------------------

    The authority of Federal savings associations to invest in bank 
service companies under the Bank Service Company Act is separate from 
the authority to invest in service corporations under section 
5(c)(4)(B) of the HOLA.\74\ Accordingly, a Federal savings 
association's investments in bank service companies are not included in 
the investment limits for service corporations in section 5(c)(4)(B). 
They instead are subject to the separate limits of the Bank Service 
Company Act, codified at 12 U.S.C. 1862.
---------------------------------------------------------------------------

    \74\ 12 U.S.C. 1464(c)(4)(B).
---------------------------------------------------------------------------

    The OCC is proposing to amend the scope section in Sec.  5.35(c) by 
including language, based on 12 CFR 159.1(a), that provides that the 
OCC may, for supervisory, legal, or safety and soundness reasons, limit 
at any time a national bank's or Federal savings association's 
investment in a bank service company or limit or refuse to permit any 
activities of any bank service company for which a national bank or 
Federal savings association is the principal investor.
    In addition, the OCC is proposing a technical amendment to the 
definition of the term ``depository institution'' in Sec.  5.35(d)(3) 
to conform it to 12 U.S.C. 1861(b)(4) as amended by section 357 of the 
Dodd-Frank Act. Section 357 of the Dodd-Frank Act also amended 12 
U.S.C. 1861(b)(5) by striking the definition of ``insured depository 
institution'' and adding in its place a second definition of 
``depository institution'' that refers to section 3 of the FDI Act. The 
OCC believes that the deletion of the term ``insured depository 
institution'' was inadvertent and not intended to effect a change 
because the statute continues to use this term throughout. Therefore, 
we have not changed the definition of ``insured depository 
institution'' in Sec.  5.35(d)(4).
    The OCC is also proposing to change the filing and review process 
of Sec.  5.35(f)(2). It provides for an after-the-fact notice with no 
requirement for OCC approval before the bank makes the investment if 
specified eligibility conditions are met. We are proposing to change it 
to a prior notice with OCC approval through an expedited review 
process, under which the notice is deemed approved on the 30th day 
after filing unless the OCC notifies the filer otherwise. We believe 
this process follows the statutory provisions more directly. Along with 
this change we are adding some of the provisions in Sec.  5.35(f)(2) 
regarding what must be

[[Page 33289]]

included in the notice to the general provision covering the required 
information in paragraph (g) of Sec.  5.35, since paragraph (g) will 
now apply to all filings, and eliminating duplication between current 
Sec.  5.35(f)(2) and (g).
    Finally, we are proposing to make a number of technical changes in 
Sec. Sec.  5.35(c), (d)(3), (d)(4), (d)(6), (e), (f)(1), (f)(2), 
(f)(3), (f)(5) and (i).
Investment in National Bank or Federal Savings Association Premises 
(Sec. Sec.  5.37, 7.1000, 7.3001)
    Under 12 U.S.C. 29, a national bank can purchase and hold real 
property necessary to transact business and may hold real estate in 
exchange for debts previously contracted subject to certain divestiture 
requirements. Under 12 U.S.C. 371d, a national bank is required to 
obtain prior OCC approval to invest in bank premises, unless its 
aggregate investment and related indebtedness is less than or equal to 
either the bank's capital stock or 150 percent of the bank's capital 
and surplus (and the bank meets certain other criteria, as described 
below).
    National banks are subject to several regulations that further 
delineate the parameters of their investment in and use of real 
property. Specifically, 12 CFR 7.1000 details the types of real estate 
that are necessary, pursuant to 12 U.S.C. 29, for a national bank's 
transaction of business, including premises owned and occupied by the 
bank, its branches, and its subsidiaries; property intended to be used 
for future bank expansion; and other property to be used by bank 
customers and employees. Section 7.1000 cross-references 12 CFR 5.37, 
which contains the quantitative limitations based on a national bank's 
capital that are specified in 12 U.S.C. 371d. Section 5.37 also 
prescribes the OCC premises approval process. Twelve CFR 7.3001 sets 
forth the rules that apply when a national bank shares its space and 
employees with other entities. Finally, 12 CFR 34.84 sets forth 
specific requirements for property held for future bank expansion.
    No statute specifically addresses a Federal savings association's 
investment in banking premises.\75\ However, regulatory provisions 
governing banking premises are issued pursuant to the OCC's general 
supervisory and rulemaking authority under the HOLA. Specifically, 12 
CFR 160.37 permits a Federal savings association to invest in real 
estate, whether improved or unimproved, to be used for office and 
related facilities of the association if such investment is made and 
maintained under a prudent program of property acquisition to meet the 
association's present needs for office and related facilities and the 
outstanding book value of these investments does not exceed the 
association's total capital. In addition, OCC regulations at 12 CFR 
part 159 recognize certain real estate-related activities as 
permissible for a Federal savings association service corporation, 
including real estate development and the acquisition of real estate 
for use by a stockholder of the service corporation. OCC guidance 
provides that a Federal savings association ordinarily must obtain 
prior OCC approval if such investments would exceed the amount of its 
total capital.\76\ Currently, a Federal savings association seeking to 
exceed the total capital limitation would request a waiver under 12 CFR 
100.2.
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    \75\ The OCC is using the term ``banking premises'' instead of 
``bank premises'' in revised Sec. Sec.  5.37, 7.1000, and 7.3001 to 
alleviate any confusion with respect to Federal savings 
associations.
    \76\ OTS Handbook, Section 252, Fixed Assets, April 1999.
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    The OCC proposes numerous changes to these regulations, including 
applying the national bank regulations to Federal savings associations, 
rescinding 12 CFR 160.37, and making clarifying amendments. The details 
of these proposed changes are set forth below.
    National bank ownership of property (12 CFR 7.1000). The OCC 
proposes to amend 12 CFR 7.1000 to make it applicable to Federal 
savings associations and to make other changes described below. While 
we do not believe that there are significant substantive differences 
between Sec.  7.1000 and Sec.  160.37 and related OTS guidance, Sec.  
7.1000 provides additional detailed regulatory guidance that we 
believe, as a supervisory matter, is appropriate to apply to both 
national banks and Federal savings associations.
    Under proposed Sec.  7.1000(a), a Federal savings association would 
be permitted to invest in real estate necessary to transact its 
business. Proposed Sec.  7.1000(a)(2) would provide a non-exclusive 
list of permissible real estate investments for Federal savings 
associations. These investments are generally permitted for Federal 
savings associations under Sec.  160.37, with the addition of lodging 
for customers, officers, or employees of the Federal savings 
association, its branches or consolidated subsidiaries in areas where 
suitable commercial lodging is not readily available, which is 
currently permissible for national banks.
    Under Sec.  7.1000(a)(3), a national bank is permitted to hold 
premises through any reasonable and prudent means, including fee 
ownership, leasehold estate, and interest in a cooperative. It also is 
permitted to hold such premises directly or through one or more 
subsidiaries and to organize a premises subsidiary as a corporation, 
partnership, or similar entity, such as a limited liability company. 
Section 160.37 permits a Federal savings association to invest in real 
estate, whether improved or unimproved, to be used for office and 
related facilities of the association under certain conditions, though 
it does not address how a Federal savings association may hold such 
premises. By adding Federal savings associations to proposed Sec.  
7.1000(a)(3), the OCC is making clear that a Federal savings 
association may hold its premises in any of the means set forth in that 
section. In addition, the proposal adds a new paragraph to recognize a 
Federal savings association's separate authority under part 159, as 
proposed to be amended and redesignated as 12 CFR 5.59 in this 
rulemaking, to acquire and hold banking premises in a service 
corporation.
    In paragraph (c)(1) of Sec.  7.1000, we propose to delete the 
reference to 12 U.S.C. 371d and replace it with language to clarify 
that the quantitative limitations in Sec.  5.37(d)(1)(i) and (d)(3)(i) 
govern when OCC approval is required to invest in banking premises, in 
order to encompass Federal savings associations. We propose to amend 
Sec.  7.1000(c)(2) by dividing it into two separate paragraphs. 
Proposed paragraph (c)(2)(i) would clarify that a national bank or 
Federal savings association must seek approval to invest in banking 
premises in accordance with Sec.  5.37(d). New paragraph (c)(2)(ii) 
would clarify that a Federal savings association that invests in 
banking premises through a service corporation must comply with the 
quantitative limitations in Sec.  5.37(d), and, to the extent 
applicable, Sec.  5.59. As described below, proposed amendments to 
Sec.  5.37(d) would clarify which requirements in Sec.  5.37(d) would 
apply to service corporations.
    Under redesignated Sec.  7.1000(c)(3), a national bank must receive 
OCC approval to exercise an option to purchase banking premises or 
stock in a corporation holding banking premises if the price of the 
option and the bank's other investments in banking premises exceed the 
amount of the bank's capital stock. We propose to simplify paragraph 
(c)(3) by removing the unnecessary language explaining when approval is 
required and replacing it with a statement that the national bank or 
Federal savings association must comply with the requirements in

[[Page 33290]]

Sec.  5.37(d). The procedures in Sec.  5.37(d) are discussed below. In 
addition, we propose to make other nonsubstantive, clarifying changes. 
Section 160.37 does not address an option to purchase banking premises 
or stock in a corporation holding banking premises; therefore, this 
would be a new requirement for a Federal savings association.
    We propose to delete Sec.  7.1000(d), Other real property, because 
the two examples provided are based on well-established precedent and 
we believe it is unnecessary to include them in Sec.  7.1000. Section 
7.1000(d) was not intended to be a limitation on ownership of real 
property, and deleting it would eliminate the need to add clarifying 
language stating that national banks and Federal savings associations 
may have other sources of authority. Furthermore, deleting Sec.  
7.1000(d) would simplify Sec.  7.1000 by limiting it to real estate 
necessary for the transaction of business.
    Section 34.84 provides rules for a national bank's investment in 
future banking premises and is contained in the OCC's rules on ``other 
real estate owned'' (OREO). Specifically, this section provides that a 
national bank normally should use real estate acquired for future 
expansion within five years and, after holding such real estate for one 
year, must state, by resolution of the board of directors or an 
appropriate authorized bank official or a subcommittee of the board of 
directors, definite plans for use of such real estate.\77\ This 
resolution or other official action must be available for inspection by 
bank examiners. We propose to move Sec.  34.84 from part 34, subpart E, 
Other real estate owned, to Sec.  7.1000 as paragraph (d) because it 
relates to banking premises, not other real estate owned, and amend it 
to include Federal savings associations. The revised ``Other Real 
Estate Owned'' booklet of the Comptroller's Handbook applies this 5-
year timeframe for the use of real estate acquired for future premises 
to Federal savings associations. Thus, the regulatory requirements 
regarding future banking premises under proposed Sec.  7.1000(d) would 
codify existing OCC policy for Federal savings associations.
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    \77\ National banks and Federal savings associations should be 
aware that if they decide not to use real estate acquired for future 
banking premises, the investment would be considered other real 
estate owned and subject to applicable OREO requirements. For 
savings associations, see Comptroller's Handbook, ``Other Real 
Estate Owned'' (Sept. 2013) (``OREO Handbook''), and for national 
banks, see 12 CFR part 34, subpart E and the OREO Handbook.
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    To minimize practical difficulties that may arise as a result of 
these changes, we propose to add a transition provision, Sec.  
7.1000(e), that would grandfather Federal savings associations' 
existing premises investments, provided the investment complies with 
the legal requirements in effect prior to the publication date of this 
proposal and continues to comply with those requirements. However, 
modifying, expanding, or improving such investments, with the exception 
of routine maintenance, would require prior approval of the appropriate 
OCC supervisory office. We believe it is appropriate to require prior 
approval in such circumstances to ensure safety and soundness concerns 
are satisfied and to apply consistent standards to national banks and 
Federal savings associations.
    Sharing space and employees (Sec.  7.3001). The OCC proposes to 
amend 12 CFR 7.3001 to make it applicable to Federal savings 
associations. While Sec.  7.3001 is more detailed than OTS guidance, as 
described below, we do not believe that there are substantive 
differences in the way in which savings associations share offices and 
employees. Section 7.3001 provides additional guidance on how to share 
offices and employees in a manner that protects customers and is 
consistent with safe and sound banking practices. The OCC believes 
that, as a supervisory matter, it is appropriate to apply similar 
specific safety and soundness restrictions to both national banks and 
Federal savings associations.
    Specifically, section 7.3001 provides for the sharing of office 
space and employees. Section 160.37 does not specifically provide for 
such sharing arrangements; however, through guidance a Federal savings 
association is authorized to share space in a manner similar to that 
provided in Sec.  7.3001, and the safety and soundness requirements 
imposed are substantially similar, though not identical, to those 
imposed by Sec.  7.3001(c). For example, both the guidance and Sec.  
7.3001(c) prohibit joint ventures but the methods to determine what 
constitutes a joint venture are different. Under Sec.  7.3001(c)(3), 
what constitutes a joint venture or partnership is determined by 
applicable state law. In addition, under proposed Sec.  7.3001(a), a 
Federal savings association would be permitted to: (1) Lease excess 
space on banking premises to one or more other businesses (including 
other banks, Federal or state savings institutions, or financial 
institutions); (2) share space jointly held with one or more other 
businesses; or (3) offer its services in space owned or leased to other 
businesses. Under proposed Sec.  7.3001(b), as part of such a sharing 
arrangement, a Federal savings association may, pursuant to a written 
agreement, agree that its employee may act as an agent for the other 
business, or an employee of the other business may act as an agent for 
the savings association. Under proposed Sec.  7.3001(c), a Federal 
savings association sharing office space would be required to satisfy 
eight requirements intended to ensure that the practice of sharing 
space was conducted in a safe and sound manner and also provides 
customer protections. This treatment is substantially similar to that 
in OCC guidance for Federal savings associations.\78\
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    \78\ OTS Handbook, Section 252, Fixed Assets, p. 3.
---------------------------------------------------------------------------

    To minimize practical difficulties that may arise as a result of 
these changes, we propose to add a transition provision, Sec.  
7.3001(e), that would grandfather existing sharing arrangements, 
provided such sharing arrangements comply with the legal requirements 
in effect prior to the publication date of this proposal and continue 
to comply with those requirements. However, the association may not 
amend or renew the agreement, or extend the agreement beyond its 
current term, without the prior approval of the appropriate OCC 
supervisory office. We believe it is appropriate to require prior 
approval in such circumstances to ensure customers are protected and 
safety and soundness concerns are satisfied and to apply consistent 
standards to national banks and Federal savings associations.
    Investment in banking premises (Sec.  5.37). The OCC proposes to 
amend Sec.  5.37 to make it applicable to Federal savings associations 
and to make other changes as described below. The OCC believes that, 
for safety and soundness purposes, it would be prudent to apply the 
procedures and quantitative investment limitations in Sec.  5.37 to 
both national banks and Federal savings associations. In addition, we 
believe that consistent standards should be applied to national banks 
and Federal savings associations.
    Specifically, Sec.  5.37(d)(1)(i) requires a national bank to 
submit an application to the appropriate supervisory office to make an 
investment in banking premises, or to make loans to or upon the 
security of the stock of such a corporation, if the aggregate of all 
such investments and loans, together with the indebtedness incurred by 
any such corporation that is an affiliate of the national bank, will 
exceed the amount of its capital stock. Section 5.37(c) defines ``bank 
premises'' as including (but not limited to): (1) Premises that are 
owned and occupied (or to be occupied,

[[Page 33291]]

if under construction) by the bank, its branches, or its consolidated 
subsidiaries; (2) capitalized leases and leasehold improvements, 
vaults, and fixed machinery and equipment; (3) remodeling costs to 
existing premises; (4) real estate acquired and intended, in good 
faith, for use in future expansion, or (5) parking facilities that are 
used by customers or employees of the bank, its branches, and its 
consolidated subsidiaries. In contrast, Sec.  160.37 does not contain 
such a detailed definition and states, in general, that real estate may 
be used for office and related facilities for the association's current 
and future use.
    Section 5.37(d)(1)(ii) requires the application to include a 
description of the bank's present investment in banking premises, the 
investment in such premises that the bank intends to make, the business 
reason for the investment, and the amount by which the national bank's 
aggregate investment will exceed the amount of its capital stock. 
Section 5.37(d)(2) provides information regarding the approval process, 
including that an application is deemed approved on the 30th day after 
the filing is received by the OCC, unless the OCC notifies the national 
bank prior to that date that the filing presents a significant 
supervisory or compliance concern, or raises a significant legal or 
policy issue. We propose to make these provisions applicable to a 
Federal savings association and to make other nonsubstantive, 
clarifying changes.
    Section 5.37(d)(3) provides an alternative, after-the-fact notice 
process if a national bank satisfies certain requirements. 
Specifically, a national bank may make an aggregate investment in 
banking premises up to 150 percent of its capital and surplus without 
the OCC's prior approval and instead may provide the OCC with after-
the-fact notice, provided the national bank has a 1 or 2 CAMELS rating, 
is well capitalized as defined in 12 CFR part 6, and will continue to 
be well capitalized after the investment or loan is made. The proposal 
makes these provisions applicable to Federal savings associations. 
However, a Federal savings association may not be eligible for after-
the-fact notice if 12 U.S.C. 1828(m)(1) applies to the transaction. 
Twelve U.S.C. 1828(m)(1) requires a Federal savings association to file 
a 30-day prior notice when it establishes or acquires a subsidiary or 
when it conducts a new activity in a subsidiary. Thus, a Federal 
savings association would not be eligible for the after-the-fact notice 
process described in 5.37(d)(3)(i) if it proposes to establish or 
acquire a subsidiary to make an investment in banking premises, or if 
investing in banking premises would be a new activity for such a 
subsidiary. In those circumstances, the Federal savings association 
would be required to comply with the provisions of Sec.  5.38 in the 
case of an operating subsidiary or Sec.  5.59 in the case of a service 
corporation. Accordingly, we propose to reorganize current Sec.  
5.37(d)(3) by redesignating it Sec.  5.37(d)(3)(i), General rule, and 
adding a new paragraph (d)(3)(ii), Exception, to describe the 
circumstances under which a Federal savings association would not be 
eligible for the after-the-fact notice process and to identify what 
requirements would apply.
    Furthermore, a Federal savings association's investments in banking 
premises through a service corporation would not be subject to the 
premises application and notice requirements of Sec.  5.37(d); instead, 
a Federal savings association wound need to comply with the 
requirements in proposed Sec.  5.59. However, the amount of such an 
investment must be included when calculating the quantitative 
limitations in paragraph (d). Therefore, we propose to redesignate 
current Sec.  5.37(d)(4), Exceptions to rules of general applicability, 
as proposed paragraph (d)(5), and add a new paragraph (d)(4) to clarify 
the treatment of an investment in banking premises through a service 
corporation.
    As indicated above, pursuant to 12 U.S.C. 29 and 371d, Sec.  5.37 
provides that the quantitative limitations on a national bank's 
investment in banking premises are expressed as a percentage of 
``capital stock'' or ``capital and surplus.'' Under Sec.  160.37, the 
sole quantitative limit on a Federal savings association's investment 
in banking premises is based on ``total capital.'' \79\ We propose to 
apply the quantitative investment limitations currently applicable to 
national banks to Federal savings associations, with the exception of 
Federal mutual savings associations, as discussed more fully below. To 
avoid confusion, we also propose to add definitions for the terms 
``capital stock'' and ``capital and surplus'' in paragraph (c). Because 
the vast majority of national banks and Federal savings associations 
have a CAMELS rating of 1 or 2,\80\ we believe the relevant limit for a 
Federal savings association generally would be ``capital and surplus,'' 
which is not materially different from ``total capital.'' In addition, 
for a Federal savings association that satisfies the criteria in 
proposed Sec.  5.37(d)(3)(i), the quantitative limitation would be 150 
percent of capital and surplus, which would be a greater amount than 
100 percent of ``total capital.'' Thus, we expect that under the 
proposal, the amount that a Federal savings association could invest in 
banking premises without OCC approval would be increased, thereby 
reducing burden on those Federal savings associations. For Federal 
savings associations that do not have a CAMELS rating of 1 or 2 and are 
not well capitalized, the relevant limitation would be ``capital 
stock,'' which is a significantly lower threshold than ``total 
capital'' in Sec.  160.37. While we are aware that this new lower 
threshold likely would increase the burden on low-rated Federal savings 
associations, we believe that additional scrutiny of investments in 
banking premises by such Federal savings associations is warranted for 
safety and soundness purposes.
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    \79\ As mentioned previously in this preamble, the OCC issued a 
final rule on October 11, 2013 that, among other things, amends the 
OCC's risk-based and leverage capital rules and integrates the OCC's 
national bank and Federal savings association capital rules. 78 FR 
62018 (Oct. 11, 2013). This final rule has a two-tier effective 
date, however, with the rule applicable for all banks and savings 
associations on January 1, 2015. Until that time, for a savings 
association that is not subject to the advanced approaches rule, the 
OCC's capital rule at 12 CFR part 167 will apply. This rules defines 
the term ``total capital'' to mean the sum of a savings 
association's core capital and supplementary capital (to the extent 
that such supplementary capital does not exceed 100% of its core 
capital), minus assets required to be deducted from core capital, 
reciprocal holdings of depository institution capital instruments, 
and all equity investments. The rule for national banks that are not 
subject to the advanced approaches rule defines the term ``capital 
stock'' to mean the amount of common stock outstanding and 
unimpaired plus the amount of perpetual preferred stock outstanding 
and unimpaired, and the term ``capital and surplus'' to mean a 
bank's Tier 1 and Tier 2 capital calculated under the OCC's risk-
based capital standards set forth in appendix A to 12 CFR part 3, as 
reported in the bank's Call Reports, plus the balance of a bank's 
allowance for loan and lease losses (ALLL) not included in the 
bank's Tier 2 capital. These definitions of ``total capital and 
``capital and surplus'' are substantially similar, except that 
``capital and surplus'' includes the ALLL excluded from Tier 2 
capital and ``total capital'' includes certain deductions described 
above. However, the definition of ``capital stock'' is significantly 
more stringent than ``total capital'' because capital stock does not 
include undivided profits. As of January 1, 2015, all national banks 
and savings associations will be subject to a new definition of 
capital.
    \80\ According to the OCC's 2013 Annual Report, in the fiscal 
year 2013, 80 percent of national banks and Federal savings 
associations had a CAMELS rating of 1 or 2. Office of the 
Comptroller of the Currency, Annual Report, Fiscal Year 2013, at 72, 
available at www.occ.gov/publications/publications-by-type/annual-reports/index-annual-reports.html.
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    In the case of a Federal mutual savings association, which by 
definition does not issue stock, a limit based on capital stock cannot 
apply to such associations. However, we believe it is important, 
wherever possible, to apply consistent standards to national banks

[[Page 33292]]

and Federal savings associations, both from a safety and soundness 
perspective and an administrative perspective. Accordingly, because a 
Federal mutual savings association's equity capital consists primarily 
of retained earnings, we propose to use retained earnings as a proxy 
for capital stock for purposes of the quantitative limitations on 
investments in banking premises by Federal mutual savings associations. 
Such a limitation based on retained earnings would not be a significant 
change for a Federal mutual savings association since generally ``total 
capital'' of a Federal mutual savings association mostly consists of 
retained earnings. Moreover, under the proposal, a Federal mutual 
savings association that is CAMELS 1- or 2-rated would have a higher 
limit of 150 percent of retained earnings.
    Question 6: We request comments on whether a limit based on the 
amount of retained earnings for a Federal mutual savings association's 
investment in bank premises provides a basis of measurement that is 
most comparable to capital stock for Federal stock savings 
associations.
    Finally, we propose to amend Sec.  5.37 by adding a new paragraph 
(e) to provide an appropriate transition provision that would 
grandfather existing banking premises investments, provided the 
investment complies with the legal requirements in effect prior to the 
publication date of this proposal, and continues to comply with those 
requirements. However, modifying, expanding, or improving such an 
investment, with the exception of routine maintenance, would require 
prior approval of the appropriate OCC supervisory office. We believe it 
is appropriate to require prior approval in such circumstances to 
ensure safety and soundness concerns are satisfied and to apply 
consistent standards to national banks and Federal savings 
associations.
    Question 7: Because of the differences in corporate organization 
between a Federal stock savings association and a Federal mutual 
savings association, we request comments on whether it would be more 
appropriate and less burdensome to both types of savings associations 
to retain separate banking premises rules for national banks and 
Federal savings associations.
Operating Subsidiaries of Federal Savings Associations (New Sec.  5.38)
    Twelve CFR part 159 addresses subordinate organizations of Federal 
savings associations. This part covers both operating subsidiaries and 
other subsidiaries of Federal savings associations such as service 
corporations. The OCC is proposing to create a new Sec.  5.38 to 
address only operating subsidiaries of Federal savings associations 
\81\ and to remove those provisions of part 159 that address Federal 
savings association operating subsidiaries.\82\ In order to harmonize 
the regulations applicable to Federal savings associations with those 
that apply to national banks, Sec.  5.38 is based on current OCC 
regulations at 12 CFR 5.34. Many of the provisions in proposed Sec.  
5.38 and Sec.  5.34 are nearly identical. Many of the requirements in 
proposed Sec.  5.38 are similar to those in part 159. There are some 
differences between the proposal and provisions in part 159, as well as 
differences between Sec.  5.38 and Sec.  5.34. These differences are 
described below.
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    \81\ In addition, as described elsewhere in this issuance, the 
OCC is proposing to create a new separate section for service 
corporations of Federal savings associations. The OCC is proposing 
to separate the regulations for Federal savings association 
operating subsidiaries and service corporations in order to better 
organize our rules and to have consistent parallel provisions for 
operating subsidiaries of national banks and Federal savings 
associations.
    \82\ As stated elsewhere in this rulemaking, the OCC proposes to 
create a new Sec.  5.59 that would address Federal savings 
association service corporations. As a result, all of part 159 would 
be removed.
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    Paragraph (b) of Sec.  5.38 mirrors paragraph (b) of Sec.  5.34 and 
would require a Federal savings association to file an application to 
acquire or establish any operating subsidiary or to commence a new 
activity in an existing operating subsidiary. Under Sec. Sec.  159.1(a) 
and 159.11, Federal savings associations must give 30 days' notice \83\ 
to the OCC prior to establishing or acquiring an operating subsidiary 
or commencing a new activity in an operating subsidiary. Section 159.11 
requires a filing when it is required under 12 U.S.C. 1828(m), and 
section 1828(m) does not require a filing if the subsidiary is an 
insured depository institution.\84\ Proposed Sec.  5.38(b) would 
require an application to acquire an insured depository institution as 
an operating subsidiary,\85\ in order to provide the OCC with an 
appropriate opportunity to review the proposed transaction.
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    \83\ Under these provisions in part 159, the OCC treats the 
notice as an application that is eligible for expedited treatment.
    \84\ See 12 U.S.C. 1828(m)(1) and (4).
    \85\ Section 159.3(e)(1) explicitly provides that a Federal 
savings association may have an insured depository institution as an 
operating subsidiary. While this proposition would remain the case 
under the proposal, it is not explicitly set out in the proposal.
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    Section 159.3(a)(1) also provides that any finance subsidiary that 
existed on January 1, 1997 is deemed to be an operating subsidiary 
without further action by the savings association. The OCC is proposing 
to omit this provision from Sec.  5.38 as not needed and without intent 
to make any change in substance.
    Question 8: The OCC requests comment on whether the provision 
should be retained from any Federal savings associations that may still 
have a finance subsidiary that existed on January 1, 1997.
    Paragraph (c) of Sec.  5.38 addresses the scope of this section. 
This paragraph mirrors proposed paragraph (c) of Sec.  5.34, including 
the additional language currently contained in Sec.  159.1(a) that 
would permit the OCC to limit a Federal savings association's 
investment in an operating subsidiary or limit or refuse to permit any 
activities of an operating subsidiary for supervisory, legal, or safety 
and soundness reasons. While the OCC currently has this authority, we 
are proposing to clarify the regulation by explicitly including this 
language.
    Paragraph (d) of Sec.  5.38 sets out definitions for ``well 
capitalized'' and ``well managed,'' which will be used as part of the 
determination of which applications are eligible for expedited review 
by the OCC. These definitions are the same as those in Sec.  5.34(d), 
and the OCC uses these terms as criteria to permit national banks to 
make an after-the-fact notice filing pursuant to Sec.  5.34(e)(5). They 
are used similarly in proposed Sec.  5.38 to determine if an 
application by a Federal savings association is eligible for expedited 
review.
    Like Sec. Sec.  159.3(e)(1) and 5.34(e)(1)(i), paragraph (e)(1)(i) 
of Sec.  5.38 provides that a Federal savings association may conduct 
in an operating subsidiary activities that are permissible for the 
savings association to engage in directly. The proposal also would add 
a new Sec.  5.34(e)(1)(ii), which would provide that before beginning 
business, an operating subsidiary must comply with other laws 
applicable to it, including applicable licensing or registration 
requirements. This requirement is not new for Federal savings 
associations. The language is being added to clarify that compliance 
with Sec.  5.38 and approval of an operating subsidiary by the OCC are 
not the only requirements that must be met. The proposal would add a 
similar provision to Sec.  5.34 for national banks.
    Pursuant to Sec.  159.3(c)(1), a Federal savings association must 
own, directly or indirectly, more than 50 percent of the voting shares 
of an operating subsidiary and no one else may exercise effective 
operating control. Proposed Sec.  5.38(e)(2) describes what entities 
are ``qualifying subsidiaries'' for purposes of Sec.  5.38. This 
provision mirrors

[[Page 33293]]

Sec.  5.34(e)(2). Unlike Sec.  159.3(c)(1), the proposal includes as a 
qualifying subsidiary one in which the savings association owns less 
than 50 percent of the voting shares. Specifically, under the proposal, 
a qualifying subsidiary is one in which: (1) The savings association 
has the ability to control the management and operations of the 
subsidiary and no other person or entity has the ability to do so, and 
(2) the savings association owns and controls more than 50 percent of 
the voting (or similar type of controlling) interest of the operating 
subsidiary, or the parent savings association otherwise controls the 
operating subsidiary and no other party controls a greater percentage 
of the voting (or similar type of controlling) interest of the 
operating subsidiary than the Federal savings association. In addition, 
as is currently the case under part 159, the operating subsidiary would 
need to be consolidated with the savings association under Generally 
Accepted Accounting Principles (GAAP). Proposed Sec.  5.38(e)(2)(iii), 
adapted from Sec.  159.10, would expressly require the savings 
association to have reasonable policies and procedures to preserve the 
limited liability of the savings association and its operating 
subsidiaries. Furthermore, it clarifies that the requirement that the 
savings association must control the operating subsidiary does not mean 
they should be treated as a single entity.
    Proposed paragraph (e)(3) of Sec.  5.38 mirrors proposed Sec.  
5.34(e)(3). Similar to Sec.  159.3(h)(1), paragraph (e)(3) generally 
provides that an operating subsidiary of a Federal savings association 
conducts activities pursuant to the same authorization, terms, and 
conditions that apply to the parent savings association, unless 
otherwise specifically provided by statute, regulation or published OCC 
policy. It also includes reference to the provisions in the Dodd-Frank 
Act regarding the application of state law, the subject of which is 
currently addressed in Sec.  159.3(n)(1), and language to clarify that 
there are other instances in which different treatment of the operating 
subsidiary and the parent Federal savings association may occur, in 
addition to those regarding the application of state law addressed by 
the Dodd-Frank Act. In addition, this paragraph provides that, subject 
to certain statutory limitations, if the OCC determines that an 
operating subsidiary is in violation of law, regulation, or written 
condition, or in an unsafe or unsound manner or otherwise threatens the 
safety or soundness of the bank, the OCC will direct the savings 
association or operating subsidiary to take appropriate remedial 
action, which may include requiring the savings association to divest 
or liquidate the operating subsidiary, or discontinue specified 
activities. This is similar to provisions in Sec.  159.3(q)(1).
    Proposed Sec.  5.38(e)(4) addresses consolidation of figures and 
provides that the savings association and its operating subsidiaries 
shall be combined for purposes of applying statutory or regulatory 
limitations when the combination is needed to effect the intent of the 
statute or regulation. Twelve U.S.C. 1467a(m)(5) governs consolidation 
for purposes of calculating portfolio assets and the qualified thrift 
lender test. These provisions are consistent with Sec. Sec.  
159.3(i)(1), (j)(1), (k)(1), and (m)(1).
    Section Sec.  159.11 provides that when required by 12 U.S.C. 
1828(m), Federal savings associations must file a notice at least 30 
days prior to establishing or acquiring an operating subsidiary or 
conducting a new activity in an existing operating subsidiary. The OCC 
processes this notice in a manner similar to the OCC's expedited review 
for applications and notices of national banks.\86\ Proposed paragraph 
(e)(5) of Sec.  5.38 sets out the detailed procedures a Federal savings 
association must follow when filing applications required under Sec.  
5.38.\87\ Paragraph (e)(5)(i)(B) of Sec.  5.38 describes the contents 
of the application and mirrors Sec.  5.34(e)(5)(i)(B), as redesignated 
in this proposal, currently at Sec.  5.34(e)(5)(ii)(B). Paragraph 
(e)(5)(ii)(A) of Sec.  5.38 also mirrors Sec.  5.34 and provides for 
expedited review of applications to establish or acquire an operating 
subsidiary, or to perform a new activity in an existing operating 
subsidiary. These applications would be deemed approved by the OCC as 
of the 30th day after the filing is received, unless the OCC notifies 
the savings association otherwise during the 30-day period.\88\ In 
order to be eligible for expedited review, proposed Sec.  
5.38(e)(5)(ii)(B) provides that the savings association must be ``well 
capitalized'' and ``well managed,'' the activities to be performed by 
the operating subsidiary must be listed in Sec.  5.38(e)(5)(v), and the 
operating subsidiary must be a corporation, limited liability company, 
or limited partnership. In addition, the savings association must 
clearly demonstrate control over the operating subsidiary, i.e., the 
savings association: (1) Must have the ability to control the 
management and operations of the operating subsidiary by holding voting 
interests sufficient to select the number of directors needed to 
control the subsidiary's board and to select and terminate senior 
management; (2) must hold more than 50 percent of the voting, or 
equivalent, interests in the operating subsidiary, and, in the case of 
a limited partnership or limited liability company, the savings 
association or an operating subsidiary thereof must be the sole general 
partner of the limited partnership or the sole managing member of the 
limited liability company; and (3) must be required to consolidate its 
financial statements with those of the operating subsidiary under GAAP.
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    \86\ If the OCC determines that the notice presents supervisory 
concerns or raises significant issues of law or policy, a Federal 
savings association must apply for approval under standard treatment 
processing procedures in part 116.
    \87\ Applications filed pursuant to Sec.  5.38 also serve to 
satisfy the requirement for notice under 12 U.S.C. 1828(m).
    \88\ This differs from the national bank regulation. Under Sec.  
5.34(e)(5)(ii), as redesignated in this proposal, national banks may 
provide after-the-fact notice in certain circumstances. After-the-
fact notice is not available to Federal savings associations due to 
a statutory requirement for prior notice. See 12 U.S.C. 1828(m).
---------------------------------------------------------------------------

    The proposed expedited review process would operate much like the 
process in Sec.  159.11. As indicated above, under Sec.  159.11 all 
Federal savings associations that wish to establish or obtain an 
interest in an operating subsidiary file a notice with the OCC when 
required under 12 U.S.C. 1828(m). Then, unless the OCC notifies the 
savings association within 30 days that the notice presents supervisory 
concerns or raises significant issues of law or policy, in which case 
the savings association must apply for approval under standard 
treatment processing procedures under part 116, the savings association 
may proceed with the operating subsidiary. Under Sec.  159.11, all 
filings begin and are processed in this manner. Under the proposed 
Sec.  5.38 expedited review process, only filings that meet the 
eligibility requirements can begin as an expedited review application. 
However, we do not believe this change will make a large difference for 
savings associations in practice. A filing that would not meet the 
eligibility requirements (clear showing of control, clearly permissible 
activity, a Federal savings association that is well managed and well 
capitalized) under the proposal would have a high likelihood of 
presenting supervisory concerns or raising significant issues of law or 
policy that would require an application under part 159.
    Proposed paragraph (e)(5)(iii) of Sec.  5.38 provides that the 
rules of general applicability at 12 CFR 5.8 (requiring public notice), 
5.10 (addressing public

[[Page 33294]]

comments received), and 5.11 (addressing requests for hearings or other 
meetings) do not apply to Sec.  5.38, but the OCC may determine that 
any of these rules apply if the OCC concludes that the application 
presents significant or novel policy, supervisory, or legal issues.
    Proposed paragraph (e)(5)(v) of Sec.  5.38 sets out a list of 
activities that are eligible for expedited review. This list is based 
on the list of activities eligible for notice for national banks in 
Sec.  5.34(e)(5)(v), but has been adapted for Federal savings 
associations, removing activities that are not permissible for Federal 
savings associations to conduct directly and listing only those 
activities that have been approved for operating subsidiaries of 
Federal savings associations in the past.
    Question 9: The OCC requests comments and suggestions for other 
activities that should be added to the list of activities that are 
eligible for expedited review, and on other changes to the list. 
Commenters proposing an activity should include reference to the 
precedent approving the activity to be conducted directly by a Federal 
savings association or in an operating subsidiary. An approval to 
conduct an activity in a service corporation is not sufficient unless 
the precedent's analysis states the activity is one that could be 
conducted directly in a Federal savings association.
    Section 159.3(p)(1) provides that a Federal savings association 
must consult with the appropriate OCC licensing office prior to 
redesignating a service corporation as an operating subsidiary. It also 
requires the Federal savings association to make available for 
examination adequate internal records demonstrating that the 
redesignated office meets all of the requirements for an operating 
subsidiary and that the board of directors has approved of the 
redesignation. Proposed paragraph (e)(5)(vi) of Sec.  5.38 would 
require a Federal savings association to provide 30 days' prior notice 
to the OCC when the savings association wants to redesignate a service 
corporation as an operating subsidiary.
    Proposed paragraph (e)(5)(vii) of Sec.  5.38 mirrors proposed Sec.  
5.34(e)(5)(vii) and provides that when a Federal savings association 
operating subsidiary wishes to act as a fiduciary, its savings 
association parent must have fiduciary powers and the operating 
subsidiary also must have its own fiduciary powers under the law 
applicable to the subsidiary. The operating subsidiary may not rely on 
the savings association's fiduciary powers. Further, this provision 
also would explicitly provide that when an operating subsidiary that 
exercises investment discretion on behalf of customers or provides 
investment advice for a fee is a registered investment adviser, it is 
not necessary for its savings association parent to have fiduciary 
powers. These provisions reflect OCC practice for national banks as set 
out in the Comptroller's Licensing Manual.
    Proposed paragraph (e)(5)(viii) of Sec.  5.38 would provide that an 
OCC approval granted under Sec.  5.38 expires within 12 months if a 
Federal savings association has not established or acquired the 
operating subsidiary or commenced the new activity in an existing 
operating subsidiary, unless the OCC shortens, or extends the time 
period. We also are adding this provision to Sec.  5.34 for national 
banks. As previously indicated, this provision is similar to others in 
part 5 regarding the expiration of an OCC approval.
    Proposed paragraph (e)(6) of Sec.  5.38 contains provisions 
regarding grandfathered Federal savings association operating 
subsidiaries. It is modeled on Sec.  5.34(e)(6) and provides that, 
notwithstanding the requirements for a qualifying operating subsidiary 
in Sec.  5.38(e)(2) and unless otherwise notified by the OCC with 
respect to a particular operating subsidiary, an operating subsidiary 
that a Federal savings association lawfully acquired or established 
before June 10, 2014 may continue to operate as a Federal savings 
association operating subsidiary, provided that the savings association 
and the operating subsidiary were, and continue to be, conducting 
authorized activities in compliance with the standards and requirements 
applicable when the operating subsidiary was established or acquired.
    Proposed paragraph (e)(7) addresses the issuance of securities by 
an operating subsidiary. It is based on portions of Sec.  159.12(a) and 
(c).
    Proposed paragraph (e)(8) of Sec.  5.38 requires Federal savings 
associations to file an annual report on operating subsidiaries that do 
business directly with consumers in the United States and are not 
functionally regulated subsidiaries, which the OCC will make available 
to the public at www.OCC.gov. This provision mirrors Sec.  5.34(e)(7) 
as well as the proposed provision in Sec.  5.59 with respect to service 
corporations. There is no similar provision in part 159. This report 
enables the public to be aware of when they are dealing with an 
operating subsidiary of a Federal savings association. This report also 
provides information to the OCC on which Federal savings association 
operating subsidiaries are currently active.
    Finally, a chart in Sec.  159.3 provides a detailed side-by-side 
comparison of operating subsidiaries and service corporations. The 
proposal includes some of this information from this chart in various 
provisions of Sec.  5.38, such as the specific items that are necessary 
to set out qualifying requirements and licensing requirements. 
Furthermore, proposed Sec.  5.38(e)(4), consolidation of figures, 
covers provisions included in the chart at Sec. Sec.  159.3(i)(1), 
(k)(1), (l)(1), and (m)(1).\89\ Other provisions of the chart are not 
necessary to include in a regulation as they merely repeat applicable 
law and are in the chart for purposes of the comparison with service 
corporations. These provisions include Sec. Sec.  159.3(b)(1), (d)(1), 
(f)(1), (g)(1), and (j)(1). While the OCC is proposing to remove the 
chart from its regulations, we are considering including a similar 
chart in the Comptroller's Licensing Manual as a reference.
---------------------------------------------------------------------------

    \89\ Part 32, lending limits, currently provides the information 
that had been included in Sec.  159.3(k)(1). See 78 FR 37930 (June 
25, 2013).
---------------------------------------------------------------------------

Change in Location of Main Office/Home Office (Sec.  5.40)
    Twelve CFR 5.40 addresses changes in location of a national bank's 
main office. Twelve CFR 145.91, 145.93 and 145.95 address changes in 
location of a Federal savings association's home office.\90\ While 
these rules address a common subject there are a number of differences 
between them. We are proposing to harmonize the procedures for national 
banks and Federal savings associations and to consolidate our 
regulations by amending 12 CFR 5.40 to apply to Federal savings 
associations and to remove 12 CFR 145.91, 145.93 and 145.95.\91\ As 
described below, as a result of this proposal, Federal savings 
associations would be subject to certain additional notices and 
applications to assist the OCC in monitoring these institutions' 
activities. Although these procedures are different from those that 
savings associations currently follow when taking certain actions with 
respect to their home offices, we expect those institutions that would 
qualify for treatment as highly-rated savings associations under the 
current regulation will also qualify for expedited treatment under the 
proposed

[[Page 33295]]

regulation, resulting in only minimal additional requirements.
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    \90\ The terms ``main office'' and ``home office'' are 
functionally the same. However, both terms are used in our 
regulations in order to be consistent with the relevant statutes 
that govern national banks and Federal savings associations, 
respectively.
    \91\ Sections 145.93 and 145.95 also address branch offices. The 
preamble discusses these provisions with respect to branch offices, 
above.
---------------------------------------------------------------------------

    Pursuant to Sec.  145.93(a), a Federal savings association must 
file an application or notice with the OCC and receive approval or non-
objection prior to changing the permanent location of its home office 
or prior to establishing a new home office. However, Sec.  145.93(b) 
provides that an application or notice is not required for a Federal 
savings association to: (i) Establish a drive-in or pedestrian office 
within 500 feet of a public entrance to its existing home office; (ii) 
make a short-distance relocation of its home office; or (iii) 
redesignate an existing branch office as a home office when 
redesignating the existing home office as a branch office. In addition, 
Sec.  145.93(b) permits certain highly-rated Federal savings 
associations to change the permanent location of their home office or 
establish a new home office if the associations meet certain 
requirements without filing a notice or application. Section 145.95 
contains processing procedures that apply to the aforementioned 
transactions.
    The proposal would reorganize Sec.  5.40 slightly and apply it to 
Federal savings associations, discontinuing the exceptions to filing 
applications or notices under Sec.  145.93(b) and replacing the 
applicable processing procedures contained in Sec.  145.95 with those 
contained in part 5 of our regulations.
    Currently, Sec.  5.40(b) generally sets out the licensing 
requirements for national banks to relocate their main office and Sec.  
5.40(c) sets out the scope of the rule. Section 5.40(d)(1) provides 
that national banks may relocate their main office to an authorized 
branch location within the same city, town, or village limits by giving 
prior notice to the OCC and Sec.  5.40(d)(2) provides that a national 
bank may relocate its main office to any other location, by filing an 
application with the OCC. Section 5.40(d)(3) requires national banks to 
obtain OCC approval pursuant to the standards in Sec.  5.30 in order to 
establish a branch at the site of a former main office. Section 
5.40(d)(4) provides that an application submitted by an eligible 
national bank to move its main office to a location other than an 
authorized branch location will be approved by the OCC as of the 15th 
day after the close of the public comment period or the 45th day after 
the filing is received by the OCC, whichever is later, unless the OCC 
notifies the bank prior to that time that the filing is not eligible 
for expedited review, or the expedited review period is extended under 
Sec.  5.13(a)(2). Section 5.40(d)(5) provides for exceptions to rules 
of general applicability in part 5 for relocations to an authorized 
branch location within the same city, town, or village limits. Finally, 
Sec.  5.40(e) provides that an OCC approval of a main office relocation 
shall expire if the national bank has not opened its main office at the 
relocated site within 18 months of the date of the approval.
    The proposal would redesignate the scope section as Sec.  5.40(b) 
and would combine former paragraphs (b) and (d), which address 
licensing requirements and procedures, into a redesignated Sec.  
5.40(c). The proposal also generally would amend these newly 
redesignated provisions to apply to Federal savings associations. 
Proposed Sec.  5.40(c)(1) would require national banks and Federal 
savings associations to give prior notice to the OCC when relocating a 
main office or home office, as applicable, to an authorized branch 
location within city, town, or village limits. Propose Sec.  
5.40(c)(2)(i) would require national banks to submit an application to 
the appropriate OCC licensing office in order to relocate a main office 
to any location other than an authorized branch location in the city, 
town, or village in which the main office of the bank is located or to 
any other location within 30 miles of the limits of such city, town, or 
village. As in the current rule, if a national bank is relocating its 
main office outside the limits of its city, town, or village, the 
national bank also would be required to obtain the approval of 
shareholders owning two-thirds of the voting stock of the bank and to 
amend its articles of association. Proposed Sec.  5.40(c)(2)(ii) would 
require a Federal savings association to submit an application to the 
appropriate OCC licensing office and obtain prior OCC approval to 
relocate its home office to any location other than an authorized 
branch location within the city, town, or village in which the home 
office of the savings association is located. As with a national bank, 
a Federal savings association relocating the home office outside the 
limits of its city, town, or village would be required to amend its 
charter. Proposed Sec.  5.40(c)(3) would require a national bank or 
Federal savings association to follow the provisions of Sec.  5.30 or 
Sec.  5.31, respectively, in order to establish a branch at the site of 
a former main office or home office. Proposed Sec.  5.40(c)(4) would 
provide expedited review for applications submitted under paragraph 
(c)(2) (relocations of a main office or home office to any location 
other than an authorized branch location) for eligible Federal savings 
associations as well as eligible national banks. The proposal also 
would revise the expedited review time for short-distance relocations 
of a main office or home office so that they would be deemed approved 
15 days after the close of the comment period or 30 days after the date 
the notice is filed, whichever is later. This change would reflect the 
shorter 15-day comment period for short-distance relocations.
    Proposed Sec.  5.40(c)(5) would provide exceptions to the OCC's 
rules of general applicability in part 5 of the OCC's regulations for 
relocations of a main office or home office to an authorized branch 
location within city, town, or village limits under paragraph (c)(1) 
and applies these exceptions to Federal savings associations. 
Redesignated Sec.  5.40(d) of the proposal would require Federal 
savings associations, like national banks, to open a relocated home 
office within 18 months from the date of OCC approval, unless the OCC 
grants an extension. Under Sec.  145.95(c), Federal savings 
associations currently must open or relocate a home office for which 
they have received approval or non-objection from the OCC within 12 
months.
Corporate Title (Sec.  5.42)
    Sections 5.42 and 143.1 of Title 12 set forth applicable standards 
and procedures for when a national bank or Federal savings association, 
respectively, seeks to change its corporate title. Under Sec.  5.42(c), 
a national bank may change its corporate title without prior notice to 
the OCC if the new title includes the word ``national'' and complies 
with other OCC guidance and Federal laws, including laws regarding 
false advertising and misuse of names. In addition, if the national 
bank's articles of association specify the corporate title, Sec.  
5.42(d)(2) requires the bank to amend the articles in accordance with 
12 U.S.C. 21a, which specifically addresses amendments to national bank 
articles of association.
    Pursuant to Sec.  143.1(b), a Federal savings association must 
provide the OCC with prior notice of a change in corporate title. If 
the OCC does not object within 30 days, the Federal savings association 
may change its title by amending its charter in accordance with the 
Federal mutual savings association or Federal stock association charter 
amendment regulatory procedures in Sec. Sec.  5.21 or 5.22, 
respectively. There is no specific statute addressing Federal savings 
association charter amendments. In addition, Sec.  143.1(a) prohibits a 
Federal savings association from adopting a title that

[[Page 33296]]

misrepresents the nature of the institution or the services it offers.
    The OCC proposes to amend Sec.  5.42 to include Federal savings 
associations. The primary substantive effect of this proposal is to 
eliminate the advance notice requirement currently applicable to 
Federal savings association corporate title changes. Instead, Federal 
savings associations would be required promptly to provide a notice to 
the appropriate OCC licensing office subsequent to any change in its 
corporate title. The OCC believes that the advance notice of a change 
in corporate title is not necessary and that an after-the-fact notice 
will provide the OCC with adequate information for regulatory purposes 
and will reduce burden on Federal savings associations without 
affecting safety and soundness.
    The proposal does not incorporate the provision in Sec.  143.1(a) 
that prohibits a Federal savings association from adopting a title that 
misrepresents the nature of the institution or the services it offers. 
This statement is implicit in the current national bank rule and would 
be implicit under the revised rule for both national banks and Federal 
savings associations. Furthermore, the issue addressed by the savings 
association provision is not an area of concern in the current banking 
environment, and, if necessary, can be addressed through the 
supervisory process. For these reasons, we find it unnecessary to 
include a similar prohibition in Sec.  5.42.
    The OCC also proposes a number of conforming edits. Specifically, 
the proposal would add to Sec.  5.42 a cross-reference to Sec. Sec.  
5.21(g) or 5.22(g), the regulatory charter amendment procedures that a 
Federal mutual savings association or Federal stock association must 
follow when amending its charter to reflect a corporate title change. 
This cross-reference simply transfers these requirements from the 
current Federal savings association rule to the proposed integrated 
rule. In addition, the OCC proposes to remove the word ``Federal'' in 
Sec.  5.42(c)(1) to clarify that the new title must comply with all 
applicable laws, whether Federal or state.
Increases in Permanent Capital by a Federal Stock Savings Association 
(New Sec.  5.45)
    Twelve CFR 5.46 sets out the OCC's rules addressing changes in 
permanent capital by national banks. These rules implement statutory 
provisions that establish the processes and requirements for a national 
bank to increase or decrease its permanent capital (i.e., capital stock 
and capital surplus), including 12 U.S.C. 51a, 51b, 51b-1, 52, 56, 57, 
59, and 60. The statutes require OCC approval for all increases and 
decreases in permanent capital at a national bank.
    The OCC has established a streamlined approval process for most 
increases in permanent capital by national banks. However, in certain 
specified instances, the OCC requires a full application and prior 
approval. These instances, listed below, involve situations in which 
there are supervisory concerns with the institution or the capital 
contribution is not in cash, raising issues of proper valuation of the 
capital increase.
    These statutes do not apply to Federal savings association, and 
there are not comparable provisions in the HOLA requiring a savings 
association to receive prior approval for any increase in permanent 
capital. Accordingly, the OCC is not proposing to add Federal savings 
associations to Sec.  5.46. However, we are proposing to add a new 
Sec.  5.45 to require a Federal stock savings association to apply to 
the OCC and obtain prior approval in the same circumstances in which a 
national bank would be required to file a full application under Sec.  
5.46. Those circumstances are: (1) When the savings association is 
required to receive OCC approval pursuant to letter, order, directive, 
written agreement or otherwise, (2) when the savings association is 
selling common or preferred stock for consideration other than cash, or 
(3) when the savings association is receiving a material noncash 
contribution to capital surplus.
    We propose to base this new section on the provisions in Sec.  5.46 
that address increases in permanent capital, except that provisions 
that are required by statute for national banks, but are not needed for 
the OCC's supervisory objectives regarding Federal savings 
associations, are not included.
    We are limiting the requirement to Federal stock savings 
associations. Federal mutual savings associations generally do not 
raise additional capital, other than through retained earnings, by 
methods comparable to Federal stock savings associations and national 
banks. The OCC will review any proposed capital increases at Federal 
mutual savings associations on a case-by-case basis.
Changes in Permanent Capital by a National Bank (Sec.  5.46)
    Twelve CFR 5.46 sets out the OCC's rules addressing changes in 
permanent capital by national banks. These rules implement statutory 
provisions that establish the processes and requirements for a national 
bank to increase or decrease its permanent capital (i.e., capital stock 
and capital surplus), including 12 U.S.C. 51a, 51b, 51b-1, 52, 56, 57, 
59, and 60. The statutes require OCC approval for increases and 
decreases in permanent capital. These statutes do not apply to Federal 
savings association, and there are not comparable provisions in the 
HOLA. Accordingly, the OCC is not proposing to add Federal savings 
associations to Sec.  5.46.\92\
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    \92\ Reductions in capital are included in the regulations 
governing capital distributions by Federal savings associations, 12 
CFR part 163, subpart E (which is proposed to become new Sec.  5.55 
in this rulemaking), discussed elsewhere in this preamble. Those 
regulations treat a reduction in capital by a Federal savings 
association that is comparable to a reduction in capital that would 
be subject to Sec.  5.46 for a national bank (i.e., a reduction 
other than a dividend from undivided profits) in a similar manner, 
requiring an application to the OCC.
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    We propose to clarify existing provisions in Sec.  5.46 regarding 
increases in capital. Specifically, we propose to revise paragraph 
(g)(1) to describe more fully those increases for which an application 
and prior approval are not required and when such increases are 
considered approved by the OCC. Portions of this provision are 
currently in paragraph (i)(3) which principally deals with the bank's 
notification to the OCC that the increase has occurred and the 
certification of the increase by the OCC. In the proposed revision, all 
of the discussion of the approval process would be in paragraph (g)(1), 
and paragraph (i)(3) would cover only the bank's notice of increase and 
OCC certification We also propose to revise paragraph (i)(3) to divide 
it into separate provisions, one about the bank's notice of increase, 
and the other about OCC certification. This layout makes the paragraph 
easier to follow. We also propose to describe more fully the 
certification process and clarify that the effective date of a capital 
increase is the date the increase occurred, not the date on which the 
OCC issues its certification. No changes in substance are intended in 
these clarifications.
    We also propose to make a small number of technical changes, 
including revising the section's title to indicate it applies only to 
national banks.
Voluntary Liquidation (Sec.  5.48)
    Twelve U.S.C. 181 and 182 establish liquidation standards and 
procedures for national banks, including requirements for public notice 
of liquidation plans.\93\ Twelve CFR 5.48

[[Page 33297]]

implements these statutes, setting forth the standards and procedures 
for voluntary liquidation by a national bank. Specifically, Sec.  5.48 
provides that a national bank: (1) May liquidate in accordance with 12 
U.S.C. 181; (2) must notify the OCC when it is considering voluntary 
liquidation; (3) must provide the public notice required by 12 U.S.C. 
182, as well as notice to the OCC, after its shareholders have voted to 
voluntarily liquidate; and (4) must file reports of both condition and 
progress with the OCC. In addition, Sec.  5.48(f) contains provisions 
for expedited voluntary liquidations in connection with certain 
acquisitions and Sec.  5.48(g) addresses a national bank as the 
acquirer of a liquidating national bank.
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    \93\ Twelve U.S.C. 181 sets forth the liquidation standards and 
procedures with respect to shareholder approval, liquidating agents, 
progress reports, and OCC examination of a liquidating bank. It 
requires, inter alia, that two-thirds of a national bank's 
shareholders vote to liquidate in order for a liquidation to 
proceed. Twelve U.S.C. 182 requires, inter alia, that a liquidating 
national bank's board of directors publish for two months a notice 
of liquidation in every newspaper published where the bank is 
located (or nearby, if no paper is published in that city or town). 
The notice must state that the bank is closing up its affairs and 
notify creditors to present their claims for payment.
---------------------------------------------------------------------------

    There are no statutory requirements similar to 12 U.S.C. 181 and 
182 that apply to Federal savings associations. However, Sec.  146.4 
contains standards and procedures for a Federal savings association to 
dissolve voluntarily. Under these rules, a Federal savings 
association's board of directors may propose a dissolution plan, which 
must be submitted to the OCC for approval. The OCC may approve the 
plan, make recommendations concerning the plan, or disapprove the plan. 
Once approved by both the board of directors and the OCC, the Federal 
savings association must submit the plan to the savings association's 
members for a vote. If approved by a majority of the members, the plan 
becomes effective. After dissolution, the savings association must 
provide a certificate evidencing such dissolution to the OCC, after 
which the OCC will cancel the savings association's charter.\94\
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    \94\ These rules do not apply to transactions such as mergers or 
consolidations, which are governed by 12 CFR 163.22.
---------------------------------------------------------------------------

    The OCC proposes to amend Sec.  5.48 to incorporate certain 
provisions from Sec.  146.4, to make Sec.  5.48 applicable to both 
Federal savings associations and national banks, and to rescind Sec.  
146.4. These changes would provide the OCC with additional methods by 
which to ensure the safety and soundness of national banks and Federal 
savings associations. These changes also would streamline and improve 
the process by which an OCC-regulated institution may liquidate, 
thereby reducing regulatory burden for the institution. The proposal 
would result in changes to the liquidation procedures for both types of 
institutions.
    Specifically, under proposed Sec.  5.48(b), a Federal savings 
association would be required to provide preliminary notice to the OCC 
when it is considering voluntary liquidation and again when its 
liquidation plan is definite. These requirements currently apply only 
to national banks. The OCC has found that these advance notices are 
helpful to the agency in ensuring the liquidations are planned and 
executed in a safe and sound manner and in anticipating any issues that 
may arise as liquidation commences. Also under proposed Sec.  5.48(b), 
neither a national bank nor a Federal savings association may commence 
liquidation until the OCC has notified it that the agency does not 
object to the liquidation plan. Although this requirement is included 
only in the current Federal savings association regulation, it is 
consistent with the OCC's current supervisory practice for national 
banks. The OCC has found that it can identify and communicate 
supervisory concerns in a timely manner if it reviews liquidation plans 
prior to the commencement of liquidation and believes that it is 
appropriate to include this requirement in the proposal.
    Proposed Sec.  5.48(d) specifies the factors the OCC will consider 
when reviewing a proposed liquidation plan. Neither Sec.  5.48 nor 
Sec.  146.4 currently sets out these factors; however, the OCC believes 
that the additional specificity provided by the proposed amendment will 
aid filers in the efficient preparation of liquidation plans and, 
accordingly, finds that it is appropriate to provide notice of what the 
OCC will consider in reviewing a proposed plan.
    Specifically, proposed Sec.  5.48(d)(1) states that in reviewing a 
liquidation plan, the OCC will consider the purpose of the liquidation, 
its impact on the liquidating institution's safety and soundness, and 
its impact on the institution's depositors, other creditors, and 
customers. These factors are similar to those that the OCC currently 
considers when reviewing the merger of a national bank with a nonbank 
affiliate and substantial changes in the composition of a national 
bank's assets.\95\ Furthermore, the OCC currently uses similar 
considerations in reviewing voluntary dissolutions of Federal savings 
associations and bulk transfers by Federal savings associations.\96\ 
These factors provide the OCC with a clear understanding of a plan's 
potential effect and help to ensure that liquidations are carried out 
in a safe and sound manner.
---------------------------------------------------------------------------

    \95\ See 12 CFR 5.33(g) and 5.53.
    \96\ See 12 CFR 146.4(b) and 163.22(c).
---------------------------------------------------------------------------

    Proposed Sec.  5.48(d)(2) states that the OCC also will review a 
national bank's liquidation plan for compliance with 12 U.S.C. 181 and 
182. These statutory requirements do not apply to Federal savings 
associations and the OCC does not believe it is necessary to extend 
them to these institutions by regulation. Finally, because of the 
unique structure of mutual savings associations, proposed Sec.  
5.48(d)(3) states that the OCC will assess the advisability and effect 
of liquidation, as well as any alternatives to such action, when a 
mutual savings association plans to liquidate. As stated above, the OCC 
believes it must consider these factors in assessing a plan and that it 
is appropriate to provide affected parties with notice that these 
factors will be considered.
    Proposed Sec. Sec.  5.48(e)(1) and (e)(2) describe the procedures 
that apply to the proposed requirements to provide notice of 
consideration of a plan, to submit a plan, and to receive OCC non-
objection before proceeding with a plan. Proposed Sec.  5.48(e)(3) 
provides that a national bank or Federal savings association's board of 
directors and its shareholders (or, in the case of a Federal mutual 
savings association, directors and members) must vote to approve a 
voluntary liquidation plan. While this requirement is included in Sec.  
146.4, only shareholders are required to vote on a liquidation plan 
under Sec.  5.48(e). The OCC believes that it is prudent and 
appropriate for a national bank's board of directors also to vote to 
liquidate because of its direct role in governing the operation of the 
institution and its role in liquidation, and that the addition of this 
requirement reflects existing practices of boards of directors in 
voluntary liquidations.
    Currently, only a national bank is required to notify the OCC of a 
vote to liquidate. The OCC believes that each institution that it 
regulates should inform the OCC of such a vote so that the OCC knows 
the status of the liquidation process. Therefore, proposed Sec.  5.48 
(e)(3)(A) states that a national bank or Federal savings association 
must file a notice with the OCC once the specified parties vote to 
liquidate. In addition, proposed Sec.  5.48(e)(3)(A) requires the bank 
or savings association to provide notice to depositors, other known 
creditors, and known claimants. Currently, Sec.  146.4 has no specific 
notice requirement and, as noted above, Sec.  5.48(e)(1) simply directs 
a bank to publish notice in accordance with 12 U.S.C. 182. The OCC 
believes that the

[[Page 33298]]

public will be best served when notice to depositors, creditors, and 
claimants is provided and, therefore, the OCC has drafted the proposal 
to require this notice. Proposed Sec.  5.48(e)(3)(B) makes clear, 
however, that the statutory vote and notice requirements of 12 U.S.C. 
181 and 182 are applicable only to national banks.
    The OCC also proposes to extend to Federal savings associations the 
Sec.  5.48(e)(4) and (e)(5) requirements to submit reports of condition 
and progress to the OCC. The OCC has found these reports useful in 
determining whether a national bank is following its plan of 
liquidation and conducting the liquidation in a safe and sound manner. 
The OCC believes that it would be useful to have this same information 
for a liquidating Federal savings association. In addition, the 
proposal would require the bank's or savings association's liquidating 
agent or committee to submit to the OCC a report at the start of 
liquidation showing the bank's current balance sheet.
    Proposed Sec.  5.48(e)(6) would require a national bank and Federal 
savings association to submit a final report of the liquidation to the 
OCC. This requirement currently exists only for Federal savings 
associations. However, the OCC believes that this report allows the 
agency to confirm that the liquidation was accomplished in accordance 
with the liquidation plan. Furthermore, this requirement is consistent 
with the OCC's current supervisory practice. Both national banks and 
Federal savings associations also would be specifically required to 
return the charter certificate to the OCC.
    Both Sec. Sec.  5.48(f) and 146.4(b) contain substantively similar 
provisions for expedited liquidations, and the OCC proposes to 
consolidate the two provisions by applying Sec.  5.48(f) to Federal 
stock savings associations. The Sec.  146.4(b) provision excepting from 
the voluntary liquidation requirements the transfer of a Federal 
savings association's assets to a national bank remains in effect under 
proposed Sec.  5.48(f). Consistent with Sec.  146.4(b), however, the 
proposal does not extend paragraph (f) to Federal mutual savings 
associations because of the unique ownership structure of those savings 
associations. The OCC also proposes to eliminate Sec.  5.48(g), 
concerning a national bank as an acquirer of a liquidating national 
bank, because it does not impose requirements beyond those stated in 
current law. Finally, the OCC proposes other technical changes to 
clarify the rule where necessary.
Change in Control (Sec.  5.50)
    Twelve CFR 5.50, Change in bank control; Reporting of stock loans, 
and 12 CFR part 174, Acquisition of control of Federal savings 
associations, set forth the policy and establish the process for 
acquisitions of control of national banks and Federal savings 
associations, respectively. These rules provide the framework with 
which prospective acquirers are required to comply when they seek to 
acquire control of a national bank or Federal savings association. 
Specifically, Sec.  5.50 and part 174 describe the application process 
and the factors the OCC considers in reviewing the qualifications of 
the prospective acquirer, and address the factors that prospective 
acquirers should consider when exploring possible acquisitions.
    While both Sec.  5.50 and part 174 implement the Change in Bank 
Control Act \97\ and many of the substantive requirements are the same, 
part 174 includes certain substantive requirements that are not 
included in Sec.  5.50. For example, the rules for Federal savings 
associations contain many of the same thresholds and control concepts 
included in Sec.  5.50, but part 174 includes rebuttable control 
presumptions and rebuttable presumptions of concerted action that are 
absent in Sec.  5.50.
---------------------------------------------------------------------------

    \97\ 12 U.S.C. 1817(j).
---------------------------------------------------------------------------

    We propose to amend 12 CFR 5.50 by making it applicable to both 
national banks and Federal savings associations and to rescind 12 CFR 
part 174. The amendments to Sec.  5.50 would make uniform the treatment 
of ownership interests held in all Federally chartered depository 
institutions and provide the market and its participants with clarity 
as to what the OCC considers important when the agency reviews an 
application for change in control, whether for a national bank or a 
Federal savings association. The proposal also would give additional 
guidance to investors contemplating purchasing shares in a national 
bank or Federal savings association by providing information about what 
transactions would be covered by the requirements and when a notice 
would be necessary. The proposed amendments would clarify the OCC's 
supervisory expectations for these transactions.
    Specifically, we propose to amend Sec.  5.50 to include a number of 
the definitions and substantive provisions found in part 174. In some 
instances, these amendments would be codifying substantive differences, 
as described below. Therefore, national banks, Federal savings 
associations and prospective acquirers of national banks and Federal 
savings associations should be aware of the following proposed changes 
to the rule.
    We are proposing to amend the definition section in Sec.  5.50 and 
to add a number of definitions from part 174. The proposed additional 
definitions would provide clarity since the terms are used in the 
proposed substantive provisions. They include ``controlling 
shareholder,'' ``management official,'' ``company,'' and several 
definitions that are necessary because the proposed rule would be 
applicable to Federal savings associations. We also propose to replace 
the definition of ``acquisition'' with that of ``acquire'' from part 
174, which contains a more detailed description of transactions that 
would be covered by the proposed rule. ``Acquire'' is defined as 
obtaining ownership, control, power to vote, or sole power of 
disposition of stock, directly or indirectly or through one or more 
transactions or subsidiaries, through purchase, assignment, transfer, 
pledge, exchange, succession, or other disposition of voting stock, and 
includes specific examples. The proposed definition is more detailed 
than the current definition of ``acquisition'' included in Sec.  5.50, 
and thereby provides a clearer description of what would be covered by 
the proposal. Finally, the proposal retains and applies to Federal 
savings associations the current definition of ``voting securities,'' 
which would replace the part 174 definition of ``voting stock.'' The 
use of this definition would affect the standard for convertible 
securities. Currently, part 174 includes as voting stock any security 
that, upon transfer or otherwise, is convertible into voting stock or 
exercisable to acquire voting stock where the holder of the convertible 
security has the preponderant economic risk in the underlying voting 
stock. Section 5.50, by contrast, defines voting securities to include 
securities that are immediately convertible into voting securities at 
the option of the owner or holder. The OCC believes the immediately 
convertible standard is simpler and easier to apply than the 
preponderant economic risk standard, and provides an appropriate 
standard for the treatment of securities that are convertible into, or 
exchangeable for, voting securities.
    The proposed amendments to Sec.  5.50 would add several 
presumptions of concerted action. These additional presumptions of 
concerted action would provide clarity and guidance about how and when 
parties are presumed to be acting in concert for purposes of Sec.  
5.50, and help ensure compliance with the regulation. Currently, 
pursuant to Sec.  5.50,

[[Page 33299]]

an acquirer that proposes to rebut control of a national bank cannot 
have a representative on the board. The proposed regulation would allow 
acquirers to rebut a presumption of control in cases where the acquirer 
will have a representative on the board of directors of the national 
bank or Federal savings association to be acquired. The proposal to 
allow a rebutting party to have a board seat provides greater 
flexibility for acquirers; in addition, these changes help harmonize 
the OCC's proposed change in control regulations with the Federal 
Reserve System's regulations addressing acquisitions of control of bank 
holding companies and savings association holding companies. 
Additionally, the proposal would establish specific limitations, in the 
rebuttal of control context, on the total equity invested, where an 
acquirer proposes to acquire more than fifteen percent of the national 
bank's or Federal savings association's voting stock. The proposed 
regulatory changes have the effect of eliminating most of the 
rebuttable presumptions of control with respect to Federal savings 
associations that are currently set forth in Sec.  174.4(b) and (c). 
The proposed regulatory changes also remove certain of the rebuttable 
presumptions of concerted action currently set forth in Sec.  174.4(d).
    The proposal does not include the detailed part 174 procedures for 
rebuttal of control and concerted action, retaining instead the 
provisions from Sec.  5.50(f)(2)(vi) and applying them to Federal 
savings associations. The OCC believes that rebuttals are processed in 
a timely manner under Sec.  5.50, and that the processing procedures 
established in part 174 are unnecessarily detailed. The amended Sec.  
5.50 will also exclude certain other provisions from part 174, 
resulting in changes for Federal savings associations. For instance, 
the proposed Sec.  5.50 will retain the current prior notice exemption 
provisions for acquisition of control as a result of testate or 
intestate succession. Thus, both national banks and Federal savings 
associations would need to file a notice and pay the appropriate filing 
fee within 90 calendar days after the transaction occurs. Previously, 
persons who acquired control of a Federal savings association as a 
result of testate or intestate succession needed only to file a 
notification of acquisition to the OCC within 60 days of the 
acquisition and provide information requested by the OCC. The OCC 
believes this change is appropriate, because it enables the OCC to 
review acquisitions of control through testate or intestate succession 
under the standards set forth in Sec.  5.50.
    Likewise, the proposed Sec.  5.50 does not include the presumptive 
disqualifiers from part 174--a list of factors, which, if present, may 
show a lack of integrity or lack of financial capability to proceed 
with a proposed transaction. While the OCC believes that the 
presumptive disqualifiers provide helpful guidance regarding 
circumstances in which the OCC might consider a change of control 
notice to be objectionable under the standards for disapproval, the OCC 
does not consider it necessary to include these detailed provisions in 
the regulation. The OCC intends to amend the Change in Bank Control Act 
booklet of the Comptroller's Licensing Manual to address the situations 
described in the presumptive disqualifiers to the extent it considers 
appropriate. The proposed regulation retains the standards for 
disapproval set forth in the Sec. Sec.  5.50(e)(5) and (6).
    Proposed Sec.  5.50 also excludes the requirement at Sec.  174.5(a) 
that acquirers of beneficial ownership exceeding 10 percent of any 
class of stock of a Federal savings association that does not file a 
control notice or control rebuttal file a certification of ownership. 
The OCC believes that the regulatory burden of these filings exceeds 
the benefits derived from them. These acquirers would no longer need to 
file a certification of ownership with the OCC.
    Finally, the proposal would eliminate Appendix A to 174--Rebuttal 
of Control Agreement.
    Question 10: Both the current and proposed rule provide that a 
person and the members of the person's immediate family will be 
presumed to be acting in concert for purposes of Sec.  5.50. It has 
been the practice of the OCC, as well as the former OTS, to apply this 
presumption only to immediate family members who own stock in the 
institution or are institution-affiliated parties, as defined in 
sections 3(u)(1), (2), or (3) of the FDI Act.\98\ We request comment on 
whether Sec.  5.50 should be amended to provide this clarification.
---------------------------------------------------------------------------

    \98\ 12 U.S.C. 1813(u)(1), (2), or (3).
---------------------------------------------------------------------------

Change in Directors & Senior Executive Officers (Sec.  5.51)
    Twelve CFR 5.51, Changes in directors and senior executive 
officers, and 12 CFR part 163, subpart H, Notice of change of director 
or senior executive officer (Sec. Sec.  163.550 through 163.590), 
implement 12 U.S.C. 1831i, which requires certain national banks and 
Federal savings associations to notify the OCC of a change in a 
director or senior executive officer. In order to harmonize the 
treatment of national banks and Federal savings associations, we 
propose to amend Sec.  5.51 by adding language to make it applicable to 
both national banks and Federal savings associations and to rescind 12 
CFR part 163, subpart H. In so doing, we also propose to amend Sec.  
5.51 by including certain requirements currently applicable only to 
Federal savings associations and by making various clarifying changes. 
As a result of this consolidation, Federal savings associations should 
be aware of the differences between Sec.  5.51 and part 163, subpart H, 
and national banks should be aware of the proposed changes to Sec.  
5.51, as described below.
    Definitions. The definition in Sec.  5.51(c)(1) of a ``director'' 
for a national bank is not as broad as the definition of the same term 
in Sec.  163.555 for a Federal savings association. Specifically, the 
definition in the bank rule includes an advisory director who is 
authorized to vote on any matters before, or provides more than general 
advice to, the board of directors. The savings association rule 
includes an advisory director who votes or provides such advice to a 
committee of the board in addition to the board of directors. We 
propose to amend Sec.  5.51(c)(1)(ii) to include this broader 
definition. As a result, an advisory director of a national bank who 
may vote on matters before, or provides more than general advice to, 
any committee of the board of directors would now be subject to the 
requirements of Sec.  5.51.
    Section 5.51(c)(2) defines the term ``national bank.'' To provide 
parallel treatment, we propose to redesignate Sec.  5.51(c)(2) as Sec.  
5.51(c)(3) and add a definition for the term ``Federal savings 
association'' at Sec.  5.51(c)(2).
    ``Senior executive officer'' is defined in Sec.  5.51(c)(3) for a 
national bank and in Sec.  163.555 for a Federal savings association. 
In addition to minor differences in wording, the definitions have two 
primary differences. First, the definition in Sec.  163.555 includes an 
individual serving as president of the institution, while Sec.  
5.51(c)(3) does not. To eliminate any ambiguity, this final rule adds 
``president'' to the definition of senior executive officer and 
redesignates Sec.  5.51(c)(3) as Sec.  5.51(c)(4). Second, the 
definition in Sec.  163.555 specifies that a ``senior executive 
officer'' also includes any other person identified by the OCC or the 
OTS in writing as an individual who exercises significant influence 
over, or participates in, major policymaking decisions, whether or not 
hired as an employee, while Sec.  5.51(c)(3) does not specify that the 
notification by the OCC be in writing. We propose to amend

[[Page 33300]]

redesignated Sec.  5.51(c)(4) to clarify that the notification must be 
in writing.
    Section 5.51(c)(4) defines the term ``technically complete notice'' 
for a national bank to mean a notice that includes all information 
required by Sec.  5.51(e)(2), and includes information that may be 
requested by the OCC after the original submission of the notice. While 
Sec.  163.555 does not include a specific definition of this term for a 
Federal savings association, the term ``technically complete notice'' 
as defined in the bank rule is generally consistent with the content 
requirements in Sec.  163.570 and the procedures in Sec.  163.575 
governing review of a notice for completeness. We are proposing to 
amend this definition to delete the phrase ``original submission of the 
notice'' and replace it with ``notice'' to allow for subsequent OCC 
requests for additional information.
    Redesignated Sec.  5.51(c)(6) defines the term ``technically 
complete notice date'' to mean the date on which the OCC has received a 
technically complete notice for a national bank or Federal savings 
association. A Federal savings association should be aware of this 
definition because it triggers the 90-day time period for OCC review 
and decision discussed below.
    ``Troubled condition'' is defined in Sec.  5.51(c)(6) for a 
national bank and in Sec.  163.555 for a Federal savings association. 
The definitions are substantially similar, and we believe the 
definition of troubled condition for a national bank encompasses all of 
the actions included in the definition for a Federal savings 
association. However, Sec.  5.51(c)(6) provides that a national bank 
may be designated in troubled condition based on information obtained 
as a result of an examination, while Sec.  163.555 provides that a 
Federal savings association may be designated in troubled condition 
based on information available to the OCC. The language in Sec.  
163.555 is broader and thus provides the OCC with greater ability to 
ensure the safety and soundness of the institutions we supervise. 
Accordingly, we propose to amend Sec.  5.51(c)(6) by redesignating it 
Sec.  5.51(c)(7) and by deleting the phrase ``as a result of an 
examination'' and replacing it with the phrase ``based on information 
pertaining to such national bank or Federal savings association.''
    Prior Notice. Sections 5.51(d) and (e)(6)(ii) prescribe when a 
national bank must provide prior notice to the OCC, and Sec. Sec.  
163.560, 163.585(a)(2), and 163.590(b) are the corresponding provisions 
for a Federal savings association. The description of circumstances 
requiring prior notice are similar in most respects, but there are 
differences in the timeframe for prior notice and the treatment of an 
individual seeking election to the board of directors who has not been 
nominated by management. Under Sec.  5.51(d), a national bank must 
provide 90 days prior notice before adding or replacing any director or 
senior executive officer, or changing the position of a current senior 
executive officer, if the bank is not in compliance with minimum 
capital requirements, is otherwise in a troubled condition, or the OCC 
determines, under section 38 of the FDI Act,\99\ that prior notice is 
appropriate. Section 163.560 requires 30 days prior notice for a 
Federal savings association if similar prerequisites are met. The OCC 
may extend this review period under Sec.  163.585(a)(2) for an 
additional period not to exceed 60 days. Furthermore, in lieu of 
following the procedures under Sec.  163.590(b), this 30-day notice 
requirement applies to an individual seeking election to the board of 
directors who has not been nominated by management.
---------------------------------------------------------------------------

    \99\ 12 U.S.C. 1831o.
---------------------------------------------------------------------------

    As a result of our proposed integration of savings associations 
into Sec.  5.51, Federal savings associations would be required to 
provide 90 days prior notice of a new director or senior executive 
officer, instead of 30 days prior notice. We believe this longer prior 
notice is appropriate for both banks and savings associations and 
conforms with the review of these notices under current OCC practice 
pursuant to the notice period extension. In addition, under the revised 
rule, only a Federal savings association may file the notice with the 
OCC; an individual seeking election to the board of directors of a 
Federal savings association who has not been nominated by management 
would no longer be allowed to do so. We believe it would be a more 
judicious use of the agency's resources to conduct the necessary review 
only after an individual has been elected to the board of directors.
    We also propose to require that if the OCC determines that prior 
notice is required based on review of an agency plan under section 38 
of the FDI Act, such determination must be in writing.
    Exceptions to rules of general procedure. For a national bank, 
under Sec.  5.51(e)(8), notices are not subject to public notice and 
comment, are not publicly available, and are excepted from certain 
other generally applicable application processing provisions of part 5. 
Under part 163, subpart H and the application processing regulations 
applicable to Federal savings associations, notices pertaining to 
Federal savings associations are treated similarly. We propose to apply 
Sec.  5.51(e)(8) to Federal savings associations. In addition, we 
propose to amend Sec.  5.51(e)(8) to clarify that the procedures in 
Sec.  5.13(c) regarding required information and abandonment of a 
filing apply to the extent provided for in proposed Sec. Sec.  
5.51(e)(3)(iii) and (e)(7).
    Content of Notice. Sections 5.51(e)(2) and 163.570 provide, 
respectively, the requirements governing the content of a notice for a 
national bank and a Federal savings association. Although Sec.  
5.51(e)(2) lists the specific items required and Sec.  163.570 refers 
to 12 U.S.C. 1817(j)(6)(A) and the Interagency Biographical and 
Financial Report (IBFR), these requirements are essentially the same, 
except that Sec.  5.51(e)(2) currently does not require the financial 
portion of the IBFR for a national bank. Because the financial section 
of the IBFR provides information that is useful and relevant to the 
disapproval standards and may not be available to the OCC in the 
information currently required to be provided, we propose to revise 
Sec.  5.51(e)(2) to require the submission of the financial portion of 
the IBFR, except when the OCC determines in writing that such 
information is not required.
    We also propose to add language to Sec.  5.51(e)(2) that would 
permit the OCC to require additional information and to require or 
accept other information in place of the information required by this 
paragraph. This language, which provides valuable flexibility to the 
OCC, is currently included in Sec. Sec.  163.570(a)(3) and 163.570(b). 
In addition, we propose to add language to Sec.  5.51(e)(2) to clarify 
how to calculate the three-year exception for providing fingerprints.
    Request for additional information. We propose to amend Sec.  
5.51(e)(3), redesignated as Sec.  5.51(e)(3)(i), to remove the 
qualification that the OCC's request for information be in writing 
``where feasible'' and instead require that the OCC's request must 
always be in writing and that the OCC provide an explanation of why the 
information is needed. In addition, we propose adding new Sec.  
5.51(e)(3)(ii) to provide that a national bank or Federal savings 
association that cannot provide the requested information within the 
time specified by the OCC may request that the OCC suspend processing 
of the notice and that the OCC, in its discretion, may either grant or 
deny such request in writing, and if granted, specify the time period 
during which the information must be provided. This

[[Page 33301]]

provision is similar to what is included in Sec.  163.575(b). We also 
propose to add new Sec.  5.51(e)(3)(iii), which would provide that if a 
national bank or Federal savings association fails to provide the 
requested information within the time specified in Sec.  5.51(e)(3)(i) 
or in the OCC's grant of the suspension request pursuant to Sec.  
5.51(e)(3)(ii), the OCC may either deem the filing abandoned under 
Sec.  5.13(c), or review the notice based on the information provided. 
This provision is included in Sec.  163.575(b). Based on our 
supervisory experience, it is appropriate to apply these specific 
consequence for failing to provide such additional information to 
national banks in addition to Federal savings associations.
    Notice of disapproval/notice of intent not to disapprove. Sections 
5.51(e)(4) and (5) describe the requirements governing a notice of 
disapproval and a notice of intent not to disapprove for a national 
bank, and Sec. Sec.  163.580 and 163.585 are the equivalent provisions 
for a Federal savings association. Although there are minor differences 
in wording, they are substantively the same. Accordingly, we propose to 
amend Sec. Sec.  5.51(e)(4) and (5) to include Federal savings 
associations. In addition, in Sec. Sec.  5.51(e)(4) and (5), we propose 
to clarify that the notice of disapproval and the notice of intent not 
to disapprove must be in writing. We also propose to clarify in Sec.  
5.51(e)(5) that the OCC provide the notice of intent not to disapprove 
to the individual in addition to the institution. This change clarifies 
an ambiguity and makes this provision consistent with other provisions 
in Sec.  5.51. Finally, we propose to revise Sec.  5.51(e)(5) to 
require that all applicable legal requirements must be satisfied in 
order for the individual to begin service as a director or senior 
executive officer after receiving a notice of intent not to disapprove.
    Waiver. Section 5.51(e)(6) prescribes the waiver procedure that 
allows an individual to serve as a director or senior executive officer 
of a national bank prior to filing a notice, and Sec.  163.590 
prescribes corresponding procedures for a Federal savings association. 
Although these provisions are similar in terms of standards for 
granting a waiver and requiring that a notice be filed within a 
specified time period after the waiver has been granted, the savings 
association rule does not detail the length of service of such an 
interim position. We propose to apply Sec.  5.51(e)(6) to savings 
associations, reorganize and renumber Sec.  5.51(e)(6), and make the 
changes described below.
    First, under redesignated Sec.  5.51(e)(6)(i)(B), we propose to 
clarify that the OCC's finding in support of the waiver must be in 
writing, which is our current practice and which is included in the 
savings association rule.
    Second, Sec.  5.51(e)(6) provides that the OCC may waive the prior 
notice requirement if delay could harm the national bank or the public 
interest, or if other extraordinary circumstances justify waiving the 
requirement. Under Sec.  163.590(a), the OCC may grant a waiver if 
delay would threaten the safety and soundness of the savings 
association, would not be in the public interest, or if there are other 
extraordinary circumstances. We propose revising Sec.  5.51(e)(6) to 
incorporate the safety and soundness standard, modified slightly from 
what is included in the savings association rule. Specifically, as 
proposed, the OCC could grant a waiver if delay could adversely affect 
the safety and soundness of the national bank or Federal savings 
association, would not be in the public interest, or other 
extraordinary circumstances justify the waiver.
    Third, both Sec.  5.51(e)(6) and Sec.  163.590 provide that if the 
OCC grants a waiver, the national bank must file the required notice 
within the time period specified in the waiver. We propose to amend 
redesignated Sec.  5.51(e)(6)(i)(C) to clarify that such notices must 
be technically complete within this specified time period.
    Fourth, we propose to amend redesignated Sec.  5.51(e)(6)(i)(D) by 
amending the alternative outcomes that may occur after a waiver is 
granted and the proposed individual has assumed the position on an 
interim basis. Section 163.590 does not include similar provisions. 
Under the current rule, if a proposed director or senior executive 
officer who is serving under a waiver receives notice of disapproval, 
that person could continue to serve pending resolution of an appeal. We 
believe it is not in the best interest of the national bank or Federal 
savings association, and would be contrary to safe or sound practices, 
to allow an individual to continue to serve pending an appeal. 
Therefore, proposed Sec.  5.51(e)(6)(i)(D)(2) would require an 
individual who is serving on an interim basis and receives a notice of 
disapproval to resign immediately from the board. This person may 
assume the position on a permanent basis only if the notice of 
disapproval is reversed on appeal and all other applicable legal 
requirements are satisfied.
    Section 5.51(e)(6) also provides that if the required notice is not 
filed within the time period specified in the waiver, the proposed 
individual must resign his or her position. Thereafter, the individual 
may assume the position on a permanent basis only after the national 
bank receives a notice of intent not to disapprove, after the review 
period elapses, or after a notice of disapproval has been overturned on 
appeal. Section 163.590 does not include a similar provision. The rule 
also provides that a waiver does not affect the OCC's authority to 
issue a notice of disapproval within 30 days of the expiration of such 
waiver. We propose in Sec.  5.51(e)(6)(i)(E) to clarify that the 
individual may assume the position under these circumstances only after 
a technically complete notice has been filed and all other applicable 
requirements are satisfied. Furthermore, we also propose in Sec.  
5.51(e)(6)(i)(D)(3) to specify that the ``elapse'' of the review period 
occurs when the OCC fails to act within 90 calendar days after 
submission of a technically complete notice and the individual 
satisfies all other legal requirements. As a matter of practice, the 
OCC has taken the position that waiver of prior notice does not affect 
the general 90-day review period and this amendment codifies this 
position in our rule.
    We also propose in Sec.  5.51(e)(6)(i)(D)(1) to clarify that 
following receipt of a notice of intent not to disapprove, the 
individual may assume the position on a permanent basis, provided all 
other applicable legal requirements are satisfied.
    Section 5.51(e)(6)(ii) prescribes the requirements for an automatic 
waiver for a national bank, and Sec.  163.590(b) is the corresponding 
provision for a Federal savings association. Specifically, Sec.  
5.51(e)(6)(ii) provides that if a new director not proposed by 
management is elected at a shareholder meeting, a waiver of the prior 
notice requirement is granted automatically and the elected individual 
may begin service as a director. However, the national bank must file 
the required notice as soon as practical, and not later than seven days 
from the date the individual is notified of the election. This 
provision differs from Sec.  163.590(b), which requires the individual, 
and not the institution, to file the notice. Federal savings 
associations should note this change.
    Commencement of Service. For a national bank, Sec.  5.51(e)(7) 
prescribes when a proposed individual may assume the office. Section 
163.585 is the corresponding provision for a Federal savings 
association. Under Sec.  5.51(e)(7),

[[Page 33302]]

an individual may begin service at the end of the OCC's review period 
unless the OCC issues a notice of disapproval or the OCC deems the 
notice to be abandoned because the bank does not provide additional 
requested information. Under Sec.  163.585, an individual may begin 
service at the end of the 30-day review period (or, if extended, the 
90-day review period) unless the OCC issues a notice of disapproval, or 
when the OCC notifies the bank in writing of its intent not to 
disapprove.
    We propose to add new Sec.  5.51(e)(7)(i) to clarify that an 
individual may assume the office on a permanent basis prior to 
expiration of the review period only if the OCC notifies the national 
bank or Federal savings association in writing that the OCC does not 
disapprove the proposed director or senior executive officer. As 
indicated above, this provision is included in Sec.  163.585(b). We 
also propose to add conforming language in Sec.  5.51(e)(7)(i), 
redesignated as Sec.  5.51(e)(7)(ii)(A), to provide that the OCC's 
notice of disapproval must be in writing. We note that redesignated 
Sec.  5.51(e)(7)(ii)(B) would specifically prohibit individuals from 
beginning service at a Federal savings association, in addition to 
national banks, if the OCC deems the application abandoned. While Sec.  
163.575 applies the concept of abandonment to a Federal savings 
association when a notice is not complete, Sec.  163.585 does not 
specify this consequence.
    Appeal. Section 5.51(f) prescribes the applicable procedures for a 
national bank or a proposed individual to appeal a notice of 
disapproval. There is no equivalent rule in Sec.  163, subpart H for a 
Federal savings association. Accordingly, under Sec.  5.51(f) as 
amended by this final rule, this appeal process would be available to 
both a Federal savings association and the proposed individual.
    Technical changes. We propose to make minor technical changes 
throughout Sec.  5.51. For example, Sec.  5.51 uses the terms 
``individual'' and ``person'' interchangeably and uses the terms 
``lapse,'' ``end,'' and ``expire'' interchangeably. To promote 
consistency and conform to the language in 12 U.S.C. 1831i, we propose 
to replace the word ``person'' with ``individual'' and to use the word 
``expire'' or ``expiration.'' To promote consistency and avoid 
confusion, we propose to add the word ``calendar'' before the word 
``days.'' Finally, in the definition of ``national bank'' in Sec.  
5.51(c)(2), we propose to delete the reference to Sec.  5.3(j) because 
it is obsolete.
Change in Address (Sec.  5.52)
    Twelve CFR 5.52 requires a national bank to submit a written notice 
to the OCC if its main office or post office box address changes. 
Twelve CFR 145.91(b) requires a Federal savings association to notify 
the appropriate OCC licensing office if it changes the permanent 
address of its home office, with certain exceptions. The rules are 
substantially similar. In order to consolidate and harmonize these 
rules, the OCC proposes to amend Sec.  5.52 by making it applicable to 
both national banks and Federal savings associations and to rescind 
Sec.  145.91(b). As previously discussed in this preamble with respect 
to proposed Sec.  5.40, the OCC's proposal uses the term ``main 
office'' when discussing a national bank and ``home office'' when 
discussing a Federal savings association.
    As noted above, the current national bank and Federal savings 
association notice requirements are subject to certain exceptions. 
Specifically, Sec.  5.52(b) currently provides that a national bank is 
not required to provide notice of a main office or post office box 
address change if the change results from a transaction approved under 
part 5. Section 145.91(b) provides that a Federal savings association 
is not required to provide a change of address notice if the 
association submitted an application or notice to relocate or establish 
a new home or branch office pursuant to Sec. Sec.  145.93 and 145.95. 
The proposal seeks to harmonize these provisions by providing that 
neither a national bank nor a Federal savings association would be 
required to file a notice if it submitted a notice under Sec.  5.40(b), 
which, as proposed, addresses a relocation of a main office or home 
office. In addition, a Federal savings association would not be 
required to file a notice for a transaction approved under part 5, 
consistent with the current treatment for national banks.
    We note that under current Federal savings association rules, 
highly-rated savings associations are exempt from the Sec. Sec.  145.93 
and 145.95 provisions requiring an application or notice for the 
relocation or establishment of a new home or branch office, and 
therefore must file a change in address notice under 145.91. As a 
result of this proposal's integration of Sec. Sec.  145.93 and Sec.  
145.95 into Sec.  5.40 and the concurrent removal of the exemption for 
highly-rated savings associations, all savings associations that file 
an application or notice for the relocation or establishment of a new 
home or branch office pursuant to proposed Sec.  5.40 would be exempt 
from the change in address notice under proposed Sec.  5.52.
    Finally, Sec.  145.91(a) provides that all operations of a Federal 
savings association are subject to direction from the home office. 
There is no equivalent provision for national banks. The OCC believes 
this provision to be unnecessary and proposes to delete it.
Change in Asset Composition (Sec.  5.53)
    Twelve CFR 5.53 sets out the OCC's rules addressing changes in 
asset composition for national banks. It requires a national bank to 
apply to the OCC and obtain prior written approval before changing the 
composition of all, or substantially all, of its assets (1) through 
sales or other dispositions, or, (2) having sold or disposed of all or 
substantially all of its assets, through subsequent purchases or other 
acquisitions or other expansions of its operations. It contains 
exceptions for changes in asset composition that occur in connection 
with an enforcement action, a liquidation under 12 CFR 5.48, or a 
bank's ordinary and ongoing business of originating and securitizing 
loans.
    Twelve CFR 163.22(c) and (h)(2) set out the OCC's rules addressing 
changes in asset composition, as well as several other types of changes 
in business, for Federal savings associations. Section 163.22(c) 
requires a Federal savings association to file either an expedited 
treatment notice (which is a form of application) or a standard 
treatment application, as specified in Sec.  163.22(h)(2), for 
transactions described in Sec.  163.22(c). Section 163.22(c) includes: 
(1) Purchases or sales or other transfers of assets in bulk not made in 
the ordinary course of business, unless the transaction is a 
combination with, or the assumption of deposits from, another insured 
depository institution and is subject to the Bank Merger Act, (2) 
assumptions or sales or other transfers of savings account liabilities, 
deposit accounts, or other liabilities in bulk not made in the ordinary 
course of business, unless the transaction is a combination with, or 
the assumption of deposits from, another insured depository institution 
and is subject to the Bank Merger Act, and (3) combinations with a 
depository institution other than an insured depository 
institution.\100\
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    \100\ Transfers and combinations with insured depository 
institutions that are subject to the Bank Merger Act are covered by 
other parts of Sec.  163.22.
---------------------------------------------------------------------------

    The OCC is proposing to combine these rules in an expanded Sec.  
5.53 by including some additional requirements for approval of asset 
transfers based on

[[Page 33303]]

Sec.  163.22(c).\101\ We also propose to make clarifications in some of 
the existing provisions of Sec.  5.53. In addition, we are revising the 
rule's layout to make it easier to follow. Finally, as a result of 
these changes and others in this proposal, we propose to remove 12 CFR 
163.22(c) and (h)(2).\102\
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    \101\ We are proposing to address the provisions in Sec.  
163.22(c) regarding combinations and transfers of deposits and other 
liabilities in proposed revised 12 CFR 5.33 on business 
combinations, discussed elsewhere in the preamble.
    \102\ Other provision of this proposal would remove the 
remaining provisions Sec.  163.22.
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    Specifically, we propose to revise Sec.  5.53(b), the scope 
section, making it a single sentence and moving the extended 
description of covered transactions and exceptions into a new 
definition section. In Sec.  5.53(c)(1)(i) of the definition section, 
we propose to amend an existing provision to clarify that a sale of all 
or substantially all assets in a series of transactions is covered, not 
only the sale of assets in a single transaction to one purchaser.
    We propose to add two provisions in the definition that will bring 
some of the asset transfers that are covered by Sec.  163.22(c) within 
the scope of Sec.  5.53. Section 163.22(c) includes all purchases or 
sales or other transfers of assets in bulk not made in the ordinary 
course of business, unless the transaction is a combination with, or 
the assumption of deposits from, another insured depository institution 
and is subject to the Bank Merger Act. We are proposing to add some, 
but not all, such transfers to Sec.  5.53. The existing national bank 
rule at Sec. Sec.  5.53(b)(second half of first sentence) and 
(c)(1)(ii) (which the proposal includes at Sec.  5.53(c)(1)(ii)) 
includes asset purchases only after a prior asset sale. The first 
proposed addition, in Sec.  5.53(c)(1)(iii), would include any other 
asset purchases or other expansions of business that are part of a plan 
to increase the size of the bank or savings association by more than 25 
percent in one year. The second proposed addition, in Sec.  
5.53(c)(1)(iv), would include any other material increase or decrease 
in the size of the national bank or Federal savings association or a 
material alteration in the composition of the types of assets or 
liabilities of the national bank or Federal savings association 
(including the entry or exit of business lines), on a case-by-case 
basis, as determined by the OCC. The proposed rule advises banks and 
savings associations that are contemplating transactions that may 
constitute a material change to consult the appropriate OCC supervisory 
office and sets out factors the OCC would use in determining whether an 
application is required. The intent of this provision is to establish a 
mechanism for requiring prior approval of significant changes when the 
OCC considers it necessary for supervisory reasons without establishing 
specific application criteria in the rule that would require banks and 
savings associations to file applications in all other cases.
    Question 11: The OCC invites comment on other methods of 
accomplishing the OCC's review of significant changes.
    The net effect of these proposed changes on national banks would be 
to require applications for approval in more situations than under 
current Sec.  5.53, but these additional situations likely already 
would involve discussions between the bank and its supervisory office. 
The net effect of these changes on Federal savings associations would 
be fewer situations in which applications for approval are required 
than now required under current Sec.  163.22(c).
    Section 5.53 has three exceptions to the requirement to file an 
application. An application under Sec.  5.53 is not required if the 
bank is making the asset change in response to direction from the OCC 
(e.g., in an enforcement action), if the asset change is part of a 
voluntary liquidation under 12 U.S.C. 181 and 182 and 12 CFR 5.48 that 
will be completed within one year, or if the asset change occurs as a 
result of a bank's ordinary and ongoing business of originating and 
securitizing loans. In the exception for asset changes that are part of 
a voluntary liquidation, we propose to add that the bank or savings 
association has received OCC approval of its plan of liquidation. 
Elsewhere in this rulemaking, we are proposing to add a requirement of 
OCC approval of the plan of liquidation to Sec.  5.48 and to add 
liquidation of Federal savings associations to Sec.  5.48. We also 
propose to add an exception for changes in assets that are subject to 
OCC approval under another application to the OCC. In such cases, an 
additional application under Sec.  5.53 is not required. This exception 
is now only implied.
    Section 5.53 currently does not have a provision granting expedited 
review of applications by eligible banks. The OCC believes the 
transactions covered under the current rule and under the proposed rule 
would always be significant enough that expedited review is not 
appropriate. Section 163.22(c) covered a broader range of transactions 
than Sec.  5.53, and Sec. Sec.  163.22(c) and (h)(2) provided for 
expedited treatment of bulk transfer filings if all the participating 
Federal savings associations meet the conditions for expedited 
treatment. We are not proposing to include expedited review in Sec.  
5.53.
    Finally, we propose to revise the approval requirement provision in 
Sec.  5.53(d)(1) to eliminate language that is now covered by the use 
of the defined term ``substantial asset change'' and to revise the 
manner in which the review factors are set out in Sec.  5.53(d)(2)(i) 
to be the same as the similar factors in 12 CFR 5.33.
Capital Distributions by Federal Savings Associations (New Sec.  5.55)
    Subpart E of part 163, Capital distributions, sets forth the 
procedures and standards for all capital distributions made by a 
Federal savings associations. Section 5.46, Changes in permanent 
capital, and part 5 of subpart E, Payment of dividends, describes the 
procedures and standards relating to a transaction resulting in a 
change in a national bank's permanent capital and declaration and 
payment of national bank dividends, respectively. Although part 163, 
subpart E and Sec.  5.46 and subpart E of part 5 cover similar 
transactions, they are structured differently and apply in different 
ways to Federal savings associations and national banks. Therefore, the 
OCC is not proposing to integrate these rules at this time. However, in 
order to include all OCC licensing-related rules in the same part of 
Chapter 12, we propose to move the provisions contained in subpart E of 
part 163 to part 5 as new 12 CFR 5.55; update the cross-references in 
Sec. Sec.  192.510(c)(1) and 192.520(c) to reflect the new Sec.  5.55; 
and make other conforming changes.
    In addition, we propose to include in new Sec.  5.55 filing 
procedures based on provisions in part 5 regarding eligible savings 
associations and expedited review. Because the proposal would move this 
rule into part 5 and in part 5 a Federal savings association must be an 
``eligible savings association'' in order to qualify for expedited 
review of applications and notices generally, the OCC believes it is 
appropriate to apply the eligibility criterion to Federal savings 
associations seeking expedited review of filings for capital 
distributions even though the regulation is not being integrated with 
its national bank counterpart. These part 5 procedures would result in 
filing requirements similar to those in subpart E of part 163. However, 
as described in the discussion of the part 5, subpart A, definition of 
``eligible bank or eligible savings association'' elsewhere in this 
preamble, because the eligibility requirements in part 5 and in the 
current Federal savings association rules are not identical, the part 5 
eligibility requirements for

[[Page 33304]]

expedited review could affect which savings associations qualify for 
the expedited process.
    We also have clarified the provisions regarding filing a notice 
with the OCC and Federal Reserve Board in proposed Sec. Sec.  
5.55(e)(2)(iii), (e)(2)(iv) and (4) to more precisely describe the 
requirements.
    We do not propose any other substantive changes to this rule.
Subordinated Debt (New Sec.  5.56)
    The OCC currently has separate rules for subordinated debt issued 
by national banks and Federal savings associations (12 CFR 5.47 and 12 
CFR 163.81, respectively). Because of the differences and complexity of 
these rules, we are not proposing to integrate them in this rulemaking, 
although we may propose to do so at a later date. However, in order to 
include all OCC licensing-related rules in the same part of Chapter 12, 
we propose to move Sec.  163.81 to part 5 as new 12 CFR 5.56 and update 
the cross-reference in Sec.  193.101(c) to reflect the new Sec.  5.56.
    In addition, we propose to include in new Sec.  5.56 filing 
procedures based on provisions in part 5 regarding eligible savings 
associations and expedited review that would result in filing 
requirements similar to those in Sec.  163.81. However, as described in 
the discussion of the part 5, subpart A, definition of ``eligible bank 
or eligible savings association'' elsewhere in this preamble, because 
the eligibility requirements in part 5 and in the current Federal 
savings association rules are not identical, the part 5 eligibility 
requirements for expedited review could affect which savings 
associations qualify for the expedited process.
    We do not propose any other substantive changes to this rule.
Pass-Through Investments by Federal Savings Associations (New Sec.  
5.58)
    National banks and Federal savings associations may make, directly 
or through an operating subsidiary, non-controlling investments (the 
national bank term) or pass-through investments (the Federal savings 
association term) in entities pursuant to their respective authority 
under 12 U.S.C. 24(Seventh) (national banks) and 12 U.S.C. 1464(c) 
(Federal savings associations) and other statutes. Twelve CFR 5.36 
describes the procedures for making these non-controlling investments 
for national banks. Twelve CFR 160.32(a) addresses the authority of 
Federal savings associations to make pass-through investments, while 
Sec.  160.32(b) and (c) describe the procedures for making pass-through 
investments for Federal savings associations.
    With respect to Federal savings associations, Sec.  160.32(a) 
codifies the authority of Federal savings associations to make pass-
through investments in certain entities that hold only assets and 
engage only in activities permissible for Federal savings associations. 
When making the pass-through investment, a Federal savings association 
must comply with all the statutes and regulations that would apply if 
it were engaging in the activity directly. For example, a Federal 
savings association must aggregate a proportionate share of its pass-
through investment in an entity with the assets the Federal savings 
association holds directly in calculating its investment limits.\103\
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    \103\ See 12 CFR 160.32(a) (noting, as an example, aggregation 
for purposes of the non-residential real estate loan limits under 
section 5(c) of the HOLA).
---------------------------------------------------------------------------

    Section 160.32(b) provides that a Federal savings association may 
make certain qualifying pass-through investments without prior notice 
to the OCC (a ``no-notice procedure'') in any entity that is a limited 
partnership, an open-ended mutual fund, a closed-end investment trust, 
a limited liability company, or an entity in which the Federal savings 
association is investing primarily to use the company's services. To 
qualify for this no-notice procedure the investment must satisfy the 
conditions set forth in Sec.  160.32(b): (1) The investment is not more 
than 15 percent of the association's total capital, (2) the book value 
of the association's aggregate pass-through investments does not exceed 
50 percent of the association's total capital, (3) the investment does 
not give the association direct or indirect control of the company, and 
(4) the association's liability is limited to the amount of the 
investment. Section 160.32(c) requires a Federal savings association to 
provide the OCC with 30 days advance written notice prior to making any 
pass-through investment that does not meet these no-notice standards. 
The notice is a form of application and may become a standard 
application if the OCC notifies the filer that the investment presents 
supervisory, legal, or safety and soundness concerns. Section 160.32 
does not specify the content of the notice or application, as does 
Sec.  5.36.
    The OCC proposes to harmonize its filing requirements for non-
controlling and pass-through investments in order to have consistent 
review and oversight of such investments for national banks and Federal 
savings associations. The proposal would accomplish this by adding a 
new Sec.  5.58 to part 5. Section 5.58 is based on Sec.  5.36 and would 
subject Federal savings association pass-through investments to filing 
requirements very similar to those applicable to national banks. We are 
not proposing to add Federal savings associations to Sec.  5.36 at this 
time because of differences in the respective statutory authorities, 
the regulations implementing them, and their interpretation. We plan to 
consider further harmonization of these filing rules, particularly in 
conjunction with any combination of the substantive regulations 
implementing the statutory authorities. The proposal also would amend 
Sec.  160.32(b) to become a cross-reference referring Federal savings 
associations to Sec.  5.36, and remove Sec.  160.32(c). We would retain 
Sec.  160.32(a) without change.
    The scope section at proposed Sec.  5.58(b) would refer to the 
authority of Federal savings associations to make equity investments, 
including pass-through investments, under 12 U.S.C. 1464 and other 
statutes. It also would reflect that the authority to make a pass-
through investment subject to Sec. Sec.  5.58(b) and 160.32(a) is in 
addition to authorities to make investments subject to Sec. Sec.  5.35 
and 5.37, as amended by this proposal to include Federal savings 
associations, and proposed new Sec. Sec.  5.38 and 5.59.
    Proposed paragraph (c) of Sec.  5.58 would require a Federal 
savings association to file a notice or application for a pass-through 
investment when required by Sec.  5.58. Proposed Sec.  5.58(d) contains 
definitions used in the section. The definitions are like those in 
Sec.  5.36(c).
    Proposed paragraph (e) of Sec.  5.58 mirrors Sec.  5.36(e) and 
would provide that a well capitalized, well managed Federal savings 
association may make certain pass-through investments, directly or 
through its operating subsidiary, in certain entities \104\ by filing a 
written notice with the OCC no later than 10 days after making the 
investment. This after-the-fact notice procedure is available if the 
activity conducted by the enterprise is on the list of activities 
eligible for a notice filing for operating subsidiaries under proposed 
Sec.  5.38, or if it is substantially the same as an activity that has 
been previously approved for a Federal savings association (or its 
operating subsidiary) in published OCC precedent, including published 
former OTS precedent, and is conducted on the

[[Page 33305]]

same terms and conditions that apply to the activity approved in that 
precedent. This notice must contain the information enumerated in Sec.  
5.58(e), including: (1) A description of the structure of the 
investment and the types of activities conducted by the enterprise in 
which the bank is investing, (2) how the activity comports with the 
activities listed in Sec.  5.38 or OCC precedent, (3) a certification 
that the savings association is well managed and well capitalized at 
the time of the investment, (4) how the savings association will 
prevent the enterprise from engaging in impermissible activities, (5) a 
description of how the investment is convenient and useful to the 
savings association and not a passive investment, (6) a certification 
that the savings association's loss exposure is limited and that it 
does not have unlimited liability for the obligations of the 
enterprise, and (7) a certification that the enterprise agrees to be 
subject to OCC supervision and examination as permitted under certain 
Federal statutes.
---------------------------------------------------------------------------

    \104\ Under proposed Sec.  5.58(d)(1), a Federal savings 
association may invest in an ``enterprise'' that is a corporation, 
limited liability company, partnership, trust, or similar business 
entity.
---------------------------------------------------------------------------

    If a Federal savings association is not well capitalized and well 
managed or if the activity conducted by the enterprise does not qualify 
for the after-the-fact notice procedure, the savings association would 
be required to apply to the OCC and receive prior approval for the non-
controlling investment under Sec.  5.58(f), which mirrors Sec.  
5.36(f). The application must satisfy the other conditions enumerated 
in proposed Sec.  5.58(e).
    Proposed Sec.  5.58(g)(1), based on Sec.  5.36(g)(1), would provide 
for an expedited notice procedure for pass-through investments in 
entities holding assets in satisfaction of debts previously contracted. 
Under Sec.  5.58(g)(2), based on Sec.  5.36(g)(2), a Federal savings 
association would not be required to file a notice or application under 
Sec.  5.58 when acquiring a non-controlling investment in shares of a 
company through foreclosure or otherwise in good faith to compromise a 
doubtful claim, or in the ordinary course of collecting a debt 
previously contracted.
    The proposal to require Federal savings associations to follow 
filing requirement for pass-through investments similar to the filing 
requirements for national bank non-controlling investments, to amend 
Sec.  160.32(b), and to remove Sec.  160.32(c) would not affect the 
authority of Federal savings associations to make pass-through 
investments in entities that engage only in activities permissible for 
Federal savings associations. In addition, Sec.  5.36 permits national 
banks to make non-controlling investments greater than 25 percent of 
the company's equity. Under Sec.  5.58, Federal savings associations 
would be permitted to do the same. Such an investment, however, would 
constitute ``control'' under the definition used in 12 U.S.C. 1828(m) 
and applicable to Federal savings associations, making the enterprise a 
subsidiary of the association for purposes of section 1828(m) and 
triggering a filing with the OCC pursuant to section 1828(m).\105\ 
Accordingly, proposed Sec.  5.58(f)(2) provides that, in all cases in 
which a Federal savings association proposes to invest in an enterprise 
that would be a subsidiary of the Federal savings association for 
purposes of section 1828(m) and would not be an operating subsidiary or 
service corporation, the Federal savings association must submit an 
application for approval to the OCC, similar to the application 
required under Sec.  5.58(f)(1) for investments that do not qualify for 
the notice procedure.
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    \105\ A ``non-controlling'' investment is not defined in Sec.  
5.36. It is generally understood to mean an investment other than 
one that would constitute ``control'' under the OCC's operating 
subsidiary regulation, Sec.  5.34, which is a different standard 
than the one applicable for section 1828(m). Because of this general 
understanding, national banks' non-controlling investments have not, 
in general, exceeded 50 percent of an enterprise's equity.
---------------------------------------------------------------------------

    The application of Sec.  5.58 to Federal savings associations also 
would change the filing requirements for Federal savings associations' 
non-controlling investments. Some pass-through investments could meet 
the requirements for the after-the-fact notice procedure, and the 
Federal savings association would need to file only the after-the-fact 
notice, not an application as under Sec.  160.32(c). However, some non-
controlling investments that currently may qualify for the no-notice 
procedure under Sec.  160.32(b) would require a filing under Sec.  
5.58. In this regard, we understand the no-notice procedure under Sec.  
160.32(b) was primarily used for investments in investment companies 
that held assets permissible for a Federal savings association to hold 
directly. Proposed Sec.  5.58(h) would continue the no-notice procedure 
for such investments by Federal savings associations.\106\ In addition, 
some investments that may have qualified for the no-notice procedure 
may be eligible for the after-the-fact notice of Sec.  5.58(e). Thus, 
the OCC believes there should not be a substantial impact of this 
change on Federal savings associations, since the proposal would 
continue the most common exception to the application requirement in 
Sec.  160.32, and other pass-through investments may qualify for after-
the-fact filing.
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    \106\ Currently, national banks similarly are not required to 
file under Sec.  5.36 for such investments. The rule contains 
exceptions to the Sec.  5.36 filing requirements when the bank is 
required to make the investment under another regulation 
implementing a specific statutory authority. One of those exceptions 
is for investments made under 12 CFR part 1. Investments by national 
banks in pooled investment vehicles are covered by 12 CFR 1.3(h). 
Thus, a national bank would not be required to file under Sec.  5.36 
for such investments. Proposed Sec.  5.58(h) will provide the same 
exception to the filing requirement for Federal savings 
associations.
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Service Corporations of Federal Savings Associations (New Sec.  5.59)
    Section 5(c)(4)(B) of the HOLA \107\ authorizes savings 
associations to invest in service corporations. There is no similar 
authority for national banks. OCC rules addressing service corporations 
of Federal savings associations (as well as operating subsidiaries of 
Federal savings associations) are currently set forth at 12 CFR part 
159 (Subordinate organizations). The OCC is proposing to remove these 
provisions of part 159 and create a new Sec.  5.59 based on part 159 
that would address only Federal savings association service 
corporations.\108\ This part would set forth the characteristics of 
Federal savings association service corporations, the requirements 
applicable to such service corporations, and the filing requirements 
that apply to a Federal savings association's establishment or 
acquisition of a service corporation or its commencement of new 
activities in an existing service corporation.
---------------------------------------------------------------------------

    \107\ 12 U.S.C. 1464(c)(4)(B).
    \108\ As stated elsewhere in this rulemaking, the OCC proposes 
to create a new Sec.  5.38 that would address Federal savings 
association operating subsidiaries. As a result, all of part 159 
would be removed.
---------------------------------------------------------------------------

    The current service corporation regulation provides that, when 
required by section 18(m) of the FDI Act, a Federal savings association 
must file a notice under 12 CFR part 116 at least 30 days before 
establishing or acquiring a subsidiary or engaging in a new activity in 
a subsidiary.\109\ The regulation defines a ``subsidiary'' as a 
subordinate organization directly or indirectly controlled by a Federal 
savings association.\110\ Accordingly, under the current regulation, a 
Federal savings association is not required to file a service 
corporation application if the association proposes to make a non-
controlling investment in a service corporation.
---------------------------------------------------------------------------

    \109\ 12 CFR 159.11.
    \110\ 12 CFR 159.2.
---------------------------------------------------------------------------

    The OCC proposes to amend the service corporation regulation to 
require that a Federal savings association file with the OCC before 
acquiring or

[[Page 33306]]

establishing any service corporation, including one that it would not 
control. The OCC believes that this requirement is more consistent with 
the underlying statute, 12 U.S.C. 1828(m), and also is more prudent 
from a regulatory standpoint, because it enables the OCC to review the 
proposed establishment or acquisition of all service corporations, not 
merely ones the Federal savings association controls.\111\ This ability 
to review is particularly important because service corporations may 
engage in a broader range of activities than Federal savings 
associations, and because Federal savings associations may make sizable 
investments in service corporations (the aggregate statutory limit for 
all service corporation investments is three percent of assets). The 
OCC believes that the proposed amendment will not materially increase 
the regulatory burden on Federal savings associations, because, in most 
cases, the notice process is not lengthy, and information requirements 
are not extensive.
---------------------------------------------------------------------------

    \111\ The OCC proposes to retain the requirement that, with 
respect to a service corporation that proposes to engage in new 
activities, a Federal savings association files with the OCC only if 
the association controls the service corporation. This requirement 
is also consistent with 12 U.S.C. 1828(m).
---------------------------------------------------------------------------

    The current service corporation regulation uses the definition of 
``control'' in 12 CFR part 174. Section 5.59(d)(1), as proposed, states 
that ``control'' has the meaning set forth in the Bank Holding Company 
Act (BHC Act) and the Federal Reserve Board's regulations thereunder. 
The term ``control'' as it relates to the filing requirement, is set 
forth in section 18(m)(1) of the FDI Act. The FDI Act defines control 
by cross-referencing the definition of the term in the BHC Act, at 12 
U.S.C. 1841.\112\ Accordingly, the OCC believes that the appropriate 
definition of control is the BHC Act definition. The OCC does not 
believe that this definitional change will have a significant impact on 
Federal savings associations.\113\
---------------------------------------------------------------------------

    \112\ 12 U.S.C. 1813(w)(5).
    \113\ The primary differences between the definition of control 
in part 174 and the definition of control in the BHC Act at 12 
U.S.C. 1841(a)(2) and the Federal Reserve Board's implementing 
regulations (BHC definition) are: (i) Part 174 includes certain 
rebuttable control presumptions that are not in the BHC definition; 
and (ii) the BHC definition provides that control exists if a 
company controls in any manner the election of a majority of 
directors or trustees of a bank or holding company.
---------------------------------------------------------------------------

    Proposed Sec.  5.59(e)(5) explicitly states that service 
corporations may be organized in any organizational form that provides 
the same protections as the corporate form of organization, including 
limited liability. This provision is consistent with the OTS's intent 
in promulgating 12 CFR part 559, the predecessor to part 159,\114\ and 
is consistent with OTS precedent. In amending the service corporation 
regulation to provide explicitly that service corporations were not 
required to be in the corporate form, the OTS stated that it was 
following its standard practice of interpreting the HOLA in a manner 
that does not elevate form over substance, and that the HOLA 
authorization to invest in service corporations should be read ``to 
permit any organizational form that provides the same basic protections 
as the corporate form of organization.'' \115\
---------------------------------------------------------------------------

    \114\ See 61 FR 66561, at 66564 (Dec. 18, 1996). The OTS noted 
that it would review any proposal to organize an LLC or limited 
partnership as a first-tier service corporation in the notice 
process to ascertain whether liability will in fact be limited and 
whether any other safety and soundness concerns are present.
    \115\ Id.
---------------------------------------------------------------------------

    The current service corporation regulation provides that state law 
applies to a service corporation regardless of whether state law 
applies to the parent Federal savings association.\116\ The OCC 
previously has amended its regulations to reflect the preemption 
provisions of the Dodd-Frank Act.\117\ Accordingly, the proposal does 
not include this statement in proposed Sec.  5.59. This result does not 
effect a substantive change from the current regulations.
---------------------------------------------------------------------------

    \116\ 12 CFR 159.3(n)(2).
    \117\ 76 FR 43549 at 43552, 43558, and 43565-66 (July 21, 2011).
---------------------------------------------------------------------------

    Twelve CFR 163.161 includes a requirement that service corporations 
must be well managed and operate safely and soundly. That section also 
provides that service corporations must pursue financial policies that 
are safe and consistent with the purposes of savings associations, and 
that service corporations must maintain sufficient liquidity to ensure 
their safe and sound operation. These requirements addressing service 
corporations are more appropriately included in the service corporation 
regulations, and are set forth in proposed Sec.  5.59(e)(7).
    The proposed regulation would retain the provisions regarding 
separate corporate identity, with one exception. Proposed Sec.  
5.59(e)(8) does not include the provision in Sec.  159.10(a)(3) that 
requires adequate financing as a separate unit in light of normal 
obligations reasonably foreseeable for a business of the service 
corporation's size and character because the OCC believes that this 
provision may be unnecessarily burdensome. For a service corporation 
that the Federal savings association does not control, the savings 
association may not have the power to ensure that it is adequately 
financed at all times; and such lack of control may help demonstrate 
the service corporation's separate corporate identity. Where the 
savings association controls the service corporation, the savings 
association may find it an ineffective use of resources to finance the 
entity far in advance; the proposed change helps provide a savings 
association with flexibility as to when it provides financing to the 
service corporation and reduces uncertainty regarding what the agency 
may consider adequate financing.
    Proposed Sec.  5.59(f) would retain the list of preapproved 
activities currently in Sec.  159.4, with minor changes. Section 
159.4(h) addresses both community development and charitable 
activities. The proposal would divide this paragraph into two separate 
provisions, one addressing community development (paragraph (f)(8)), 
and the other addressing charitable activities (paragraph (f)(9)). In 
addition, the community development provision would be simplified by 
deleting the current list of examples of preapproved community 
development activities (which generally fall within the scope of the 12 
CFR 24.3 description of public welfare investments), and revising the 
provision to include a reference to community development investments 
that are permissible under part 24.
    As a related matter, Sec.  159.5(a) specifies several types of 
investments as serving primarily community, inner city, or community 
development purposes.\118\ Proposed Sec.  5.59(g) would delete these 
examples, all of which are within the scope of Sec.  24.6, and provide 
that such investments must be consistent with Sec.  24.6.
---------------------------------------------------------------------------

    \118\ See 12 CFR 159.5(a)(1) through (4). Any investment that 
would cause a savings association's investment in service 
corporations to exceed two percent of assets must serve one of these 
purposes. 12 CFR 159.5(a).
---------------------------------------------------------------------------

    Proposed Sec.  5.59(h)(1)(ii) includes an information requirement 
for service corporations with respect to insurance activities that is 
similar to the requirement for operating subsidiaries. This provision, 
which is intended to help the OCC carry out its statutory 
responsibilities,\119\ would require a Federal savings association to 
list for

[[Page 33307]]

each state the lines of business for which the service corporation 
holds, or will hold, an insurance license, and each state in which the 
service corporation holds a resident license or charter.
---------------------------------------------------------------------------

    \119\ Section 307(c) of the Gramm-Leach-Bliley Act, Public Law 
106-102, 113 Stat. 1416, codified at 15 U.S.C. 6716, requires the 
OCC to consult with the appropriate state insurance regulator, and 
take such regulator's views into account, before making any 
determination relating to the initial affiliation of, or the 
continuing affiliation of, a depository institution with a company 
engaged in insurance activities.
---------------------------------------------------------------------------

    Proposed Sec.  5.59(h)(2) would revise the circumstances under 
which a Federal savings association would receive expedited review for 
a service corporation filing. Currently, the criteria for expedited 
review are set forth in 12 CFR part 116. Pursuant to the proposal, a 
service corporation filing would be eligible for expedited review if 
the savings association is ``well capitalized'' and ``well managed,'' 
and the service corporation engages only in one or more of the 
preapproved activities listed in Sec.  5.59(f).
    Proposed Sec.  5.59(k) would require each Federal savings 
association to file an annual report listing, for each service 
corporation subsidiary that is not functionally regulated and does 
business with consumers in the United States, certain information 
including the name and principal place of business of the service 
corporation, the lines of business in which the service corporation 
subsidiary engages directly with consumers, and the nature of the 
parent savings association's interest in the service corporation 
subsidiary. This would be a new requirement. The OCC currently requires 
similar information to be filed regarding bank operating subsidiaries 
and is also proposing in this rulemaking to require this information 
with respect to operating subsidiaries of Federal savings associations. 
The OCC makes publicly available a list of national bank operating 
subsidiaries that do business with the public, so that the public is 
aware when they are dealing with an operating subsidiary of a national 
bank. Adding Federal savings association operating subsidiaries and 
service corporation subsidiaries to this list will help ensure that the 
public is aware when they are dealing with an operating subsidiary or 
service corporation that is controlled by a Federal savings 
association.

C. Conforming Amendments

    As indicated above, the proposal would make conforming and 
technical changes to both the rules in parts 5, 7, and 34 and in 
various provisions of parts 100 through 199 to reflect the movement of 
the licensing rules for savings association rules to part 5, to adjust 
section titles, and to conform cross-references. Specifically, the 
proposal would amend Sec.  162.4 (audit of savings associations) to 
replace the cross-reference to the part 116 definition of composite 
ratings with a reference to the Uniform Financial Institutions Rating 
System, as referred to in other OCC rules. The proposal also would 
amend part 192 (conversions from mutual to stock form) to replace 
references to part 116, part 152 (Federal savings associations 
incorporation, organization and conversion), subpart E (capital 
distributions) and subpart H (notice of change in directors or senior 
executive officers) of part 163, and part 174 (change in control) with 
the appropriate cross-references in proposed part 5. In addition, the 
proposal would replace the reference to the standard treatment 
processing procedures of part 116 in Sec.  160.35 (adjustments to home 
loans) with a statement that Federal savings associations must apply 
for and receive the OCC's prior written approval.
    Part 32 (lending limits) also references the expedited and standard 
application processing procedures of part 116 at Sec.  32.3(d) (loans 
by savings associations to develop domestic residential housing units). 
The proposal would replace this reference with a new paragraph that 
sets forth the application procedures for Federal savings associations 
for this activity. These procedures are based on those in Sec.  32.7(b) 
with the addition of an expedited review process. With respect to state 
savings associations, the proposal would replace the citation to the 
FDIC application processing rule with a more general reference to the 
rules and procedures established by the appropriate Federal banking 
agency.
    In addition, the proposal would conform the cross-references to 
part 159 (service corporations) and Sec.  163.81 (subordinated debt) to 
proposed Sec. Sec.  5.59 and 5.56, respectively.
    Furthermore, the proposal would amend Sec. Sec.  5.39, 5.47, and 
5.64, which are not proposed to be integrated in this rulemaking, to 
clarify and make consistent the OCC office to which a national bank or 
Federal savings association must file a notice or application. 
Specifically, the proposal would direct such filings to the 
institution's appropriate OCC licensing office or appropriate OCC 
supervisory office, as noted, instead of the appropriate district 
office.
    Finally, the proposal would amend Sec. Sec.  100.1 (certain 
regulations superseded) and 100.2 (waiver authority) so that these 
provisions would continue to apply to rules pertaining to savings 
associations that would be included in parts other than parts 100 
through 199 of Chapter 12 of the Code of Federal Regulations as a 
result of this rulemaking.

V. Summary of Substantive Changes for National Banks and Federal 
Savings Associations

A. Proposed Substantive Changes for National Banks

    The following is a summary of the substantive changes, listed by 
rule, proposed in this rulemaking for national banks.
Rules of General Applicability (Proposed 12 CFR part 5, subpart A)
     To qualify for expedited review as an ``eligible bank,'' a 
national bank would be required to have an OCC compliance rating of 1 
or 2. Currently, a bank's compliance rating is not a factor in the 
requirements for eligibility; however, Sec.  5.13(a)(2) currently 
permits the OCC to remove a filing from expedited review if it raises 
certain issues, including compliance concerns.
     A national bank would be required to publish its public 
notice of a filing in English and, if the OCC determines necessary, 
also in other languages. Currently, the rules do not specify the 
language in which the notice must be published.
     In addition to what is currently required, a public notice 
related to a national bank filing would be required to state (1) the 
name of the institution that is the subject of the filing, (2) that the 
public portion of the filing is available on request, and (3) the 
address of the applicant.
     The OCC, at its discretion, could require an applicant to 
publish a new public notice if (1) the applicant submits either a 
revised filing or new or additional information related to a filing, 
(2) there is a major issue of law or a change in circumstances arises 
after a filing, or (3) the agency determines that a new public notice 
is appropriate. (Although this is not specifically permitted under 
current rules, this has been the practice of the OCC.)
     When computing time for national bank filings, the day of 
the filing would no longer be included and the time period would no 
longer end on a Saturday, Sunday, or Federal holiday but would end on 
the next day that is not a Saturday, Sunday or Federal holiday.
Articles of Association, Bylaws, Charters and Chartering Procedures 
(proposed 12 CFR 5.20, 5.21, 5.22)
     National banks would be prohibited by regulation from 
adopting a title that misrepresents the nature of the institution or 
the services it offers. This reflects current practice.

[[Page 33308]]

     National banks would be required to sell all securities of 
a particular class in an initial offering at the same price.
     In the event the organization of a national bank is not 
completed, the organizers would be required to return all cash 
collected on subscriptions.
     The OCC charter approval could include a condition that 
OCC would review proposed directors and officers for more than two 
years after the bank commences business. The regulation currently says 
two years, but a longer time is sometimes imposed in practice.
     Expedited OCC review would be available for an application 
to establish a full-service national bank filed by a bank holding 
company or savings and loan holding company only when the lead 
depository institution is an eligible national bank or eligible Federal 
savings and loan associations. Currently, the lead depository 
institution can be an eligible state institution.
Conversions (Proposed 12 CFR 5.24, 5.25)
     Conversion to a National Bank Charter:
    [cir] An institution seeking to convert to a national bank charter 
would be required by regulation to obtain all necessary regulatory and 
shareholder approvals. (OCC policy currently requires these approvals.)
    [cir] The application would be required to:
    [ssquf] Identify bank service company investments and other equity 
investments, in addition to subsidiaries. (This requirement reflects 
current practice.)
    [ssquf] Include a business plan if the converting institution has 
been operating for less than three years, plans to make significant 
changes to its business after the conversion, or at the request of the 
OCC. (The OCC currently requests this information on a case-by-case 
basis.)
    [ssquf] Include information about enforcement actions and other 
supervisory criticisms and the applicant's analysis of whether 
conversion is permissible under 12 U.S.C. 35, especially the provisions 
added to section 35 by section 612 of the Dodd-Frank Act.
    [cir] The OCC could permit a converted national bank to retain 
nonconforming activities of a state bank or stock state savings 
association and nonconforming assets or activities of a Federal stock 
savings association for a transition period after conversion. (This 
regulatory change reflects current OCC practice.) The regulation now 
provides that the OCC may only permit the retention of nonconforming 
assets of a converting state bank, subject to requirements in 12 U.S.C. 
35.
    [cir] Expedited OCC review would be available only for conversion 
applications by Federal savings associations, because they are 
institutions the OCC already regulates. It would no longer be available 
for state-chartered institutions. The time for expedited review is 
extended from 30 to 60 days.
     Conversions from a national bank to a state-chartered 
institution:
    [cir] As required by section 612 of the Dodd-Frank Act, a national 
bank must include a copy of its conversion application filed with the 
state regulator to which it is applying for approval to convert in its 
notice to the OCC to convert, and it must send a copy of the 
application to the Federal banking agency that would become its 
appropriate Federal banking agency after the conversion.
    [cir] It must also include a showing of its compliance with 
applicable requirements for converting.
Fiduciary Powers Applications (Proposed 12 CFR 5.26)
     When reviewing an application to exercise fiduciary 
powers, the OCC would by regulation consider the bank's financial 
condition and capital adequacy, the character and ability of proposed 
trust management, the adequacy of any proposed business plan, and the 
needs of the community served. (Some of these factors are statutory and 
all reflect current OCC practice.)
     A national bank that has not conducted previously approved 
fiduciary powers for 18 consecutive months would be required to provide 
a notice to the OCC 60 days in advance of commencing the activities.
     A national bank that has received approval from the OCC to 
offer limited fiduciary services and desires to offer full fiduciary 
services would be required to apply to the OCC. (This requirement 
reflects current OCC practice.)
Branching (Proposed 12 CFR 5.30 and Branching-Related Sections in Part 
7)
     A drive-in or pedestrian facility located within 500 feet 
of a branch always would be an extension of the branch, not a separate 
branch. Currently, this result depends on a case-by-case analysis.
     Under the expedited approval process, short-distance 
relocations of branches would be deemed approved 15 days after the 
close of the comment period or 30 days after the date the notice is 
filed, whichever is later. Currently, short-distance relocations are 
deemed approved 15 days after the close of the comment period or 45 
days after the date the notice is filed, whichever is later.
Expedited Procedures For Certain Reorganizations (Proposed 12 CFR 
5.32).
     A national bank would not be required to comply with the 
public notice, public availability, and hearing requirements of part 5, 
subpart A (12 CFR 5.8, 5.9, and 5.11) for an application to reorganize 
to become a subsidiary of a bank holding company or a company that 
will, upon consummation of such reorganization, become a bank holding 
company unless the OCC concludes that an application presents 
significant and novel policy, supervisory, or other legal issues. 
Currently, such applications are subject to these subpart A 
requirements.
Business Combinations (Proposed 12 CFR 5.33)
     An application to the OCC would be required for the 
assumption of deposit liabilities or other liabilities from a credit 
union or any other institution that is not FDIC-insured that will 
become deposits at the assuming national bank.
     An application to the OCC would be required for the 
acquisition by a national bank of all or substantially all of the 
assets, or the assumption of all or substantially all of the 
liabilities, of companies in addition to depository institutions, 
including credit unions, nonbank affiliates, or any other company (a 
``whole entity purchase and assumption'') if the whole entity purchase 
and assumption would result in an increase in the asset size of the 
bank of 25 percent or more.
     In the application for a business combination, national 
banks would be required to identify a financial subsidiary investment, 
bank service company investment, service corporation investment, and 
other equity investment in addition to the current requirement to 
identify subsidiaries and provide an analysis of the permissibility for 
the national bank to hold the subsidiary or investment. This regulatory 
change reflects current practice.
     If the applicant intends to exercise fiduciary powers 
after the combination and requires OCC approval for such powers, the 
applicant would be required to include in the business combination 
application the information required in Sec.  5.26 for a request for 
fiduciary powers. This regulatory change reflects current practice.

[[Page 33309]]

     Filings in which a national bank is the target company and 
will not be the resulting institution will no longer be exempt from 
Sec. Sec.  5.2 and 5.5. Section 5.2 (rules of general applicability) 
provides that the OCC may adopt different procedures for particular 
filings, in exceptional circumstances or for unusual transactions, and 
that the OCC permits electronic filing. Section 5.5 provides that an 
applicant must pay the applicable filing fee, if any.
     If there are dissenting shareholders in a merger or 
consolidation between a national bank and Federal savings association, 
the OCC will conduct an appraisal of dissenters' shares of stock 
according to the statutory dissenters' appraisal processes that apply 
to mergers between national banks and state banks. Under the current 
rule, the OCC may conduct such an appraisal if all the parties agree. 
Now that the OCC regulates both the national bank and the Federal 
savings association, the processes can be required.
     The OCC would have the authority to apportion costs for 
the dissenters' rights process for transactions to which 12 U.S.C. 214a 
or 215 and 215a are not applicable. (These statutes require the bank to 
bear all costs.) Under the current rule, in transactions that are not 
subject to those statutes, the parties must agree how costs are to be 
divided. Under the proposal, if the OCC regulates the institutions and 
the transaction is not subject to the statutes, then the OCC would have 
authority to apportion costs as the OCC determines.
     A national bank's consolidation or merger agreement would 
be required to address the effect upon, and the terms of the assumption 
of, any liquidation account of any participating institution by the 
resulting institution. Although not currently in Sec.  5.33, a 
resulting national bank in such transactions is required to establish 
and maintain a liquidation account, as discussed in the OCC Licensing 
Manual.
     The national bank applicant in a consolidation or merger 
would be required to submit information showing that all steps needed 
to complete the transaction have been met and to notify the OCC of the 
planned consummation date. The OCC would then issue a certification 
letter documenting that the consolidation or merger occurred and 
specifying the effective date. This process reflects current OCC 
practice for national banks.
     The OCC's approval of a transaction under Sec.  5.33 would 
expire in six months instead of 12 months; the OCC could extend this 
six month period.
     A national bank that will not be the resulting bank in a 
merger or consolidation with another national bank would be required to 
file a notice to the OCC under Sec.  5.33(k). This notice is discussed 
in the next item.
     When a national bank is consolidating or merging with a 
Federal savings association or a state chartered institution or credit 
union and the national bank is not the resulting institution, it would 
be required to include more information in the notice than currently 
required in Sec.  5.33. This additional information would include a 
short description of the transaction or a copy of the filing made by 
the acquiring institution to its regulators for approval of the 
transaction and information showing the target national bank or Federal 
savings association has complied with the requirements to engage in the 
transaction (e.g., board and shareholder approval). (The bank should 
already have compiled this information.)
     If a consolidation or merger of a national bank in which 
the national bank is not the resulting institution has not occurred 
within six months after the OCC's receipt of the notice of the 
transaction, the bank must submit a new notice with the OCC.
Operating Subsidiaries (Proposed 12 CFR 5.34)
     Before beginning business, an operating subsidiary would 
be required to comply with other laws applicable to it, including 
applicable licensing or registration requirements. This change would 
codify current OCC policy.
     The proposal would make the following changes regarding a 
national bank's control of an operating subsidiary:
     Where a national bank has the ability to control the 
management and operations of an operating subsidiary, no other person 
or entity could have the ability to control the management or 
operations of the subsidiary. This change would codify current OCC 
policy.
     Where a bank owns less than 50 percent of an operating 
subsidiary (but still controls it), no other party could own a greater 
percentage than the bank. This change would codify current OCC policy.
     A national bank would be required to have reasonable 
policies and procedures to preserve the limited liability of the bank 
and its operating subsidiaries.
     Adequately capitalized banks would no longer be exempt 
from the application or notice requirements when acquiring or 
establishing an operating subsidiary or performing a new activity in an 
existing operating subsidiary when the activities of the new subsidiary 
are limited to those previously reported to the OCC in connection with 
a prior operating subsidiary and certain other requirements are met.
     If a national bank operating subsidiary wishes to act as a 
fiduciary, its national bank parent would be required to have fiduciary 
powers and the operating subsidiary also must have its own fiduciary 
powers under the law applicable to the subsidiary. The operating 
subsidiary no longer would be able to rely on the national bank's 
fiduciary powers, except when the subsidiary exercises investment 
discretion on behalf of customers or provides investment advice for a 
fee as a registered investment adviser. This change would codify 
longstanding OCC practice.
     OCC approvals granted under Sec.  5.34 would expire within 
12 months if a national bank has not established or acquired the 
operating subsidiary or commenced the new activity in an existing 
operating subsidiary, unless the OCC shortens or extends the time 
period.
Investment in Bank Service Companies (Proposed 12 CFR 5.35)
     To invest in a bank service company, a national bank would 
be required to file a prior notice for OCC approval through an 
expedited review process, under which the notice would be deemed 
approved on the 30th day after filing unless the OCC notifies 
otherwise. Under the current rule, a national bank files an after-the-
fact notice with no requirement for OCC approval before the bank makes 
the investment, if specified eligibility conditions are met.
Other Equity Investments (Proposed 12 CFR 5.36)
     No substantive changes.
Banking Premises (Proposed 12 CFR 5.37, 7.1000, 7.3001)
     No substantive changes.
Main Office and Home Office Relocations (Proposed 12 CFR 5.40)
     Under the expedited approval process, short-distance 
relocations of main offices would be deemed approved 15 days after the 
close of the comment period or 30 days after the date the notice is 
filed, whichever is later. Currently, short-distance relocations are 
deemed approved 15 days after the close of the comment period or 45 
days after the date the notice is filed, whichever is later.

[[Page 33310]]

Change in Corporate Title (Proposed 12 CFR 5.42)
     No substantive changes.
Changes in Permanent Capital (Proposed 12 CFR 5.46)
     No substantive changes.
Subordinated Debt as Capital (Proposed 12 CFR 5.47)
     No substantive changes.
Voluntary Liquidation (Proposed 12 CFR 5.48)
     The following provisions in the proposal would codify 
existing OCC or national bank practice:
    [cir] A national bank may not commence liquidation until the OCC 
has notified it that the agency does not object to the liquidation 
plan.
    [cir] A national bank's board of directors, in addition to its 
shareholders, must vote to approve a voluntary liquidation plan.
    [cir] A national bank would be required to provide notice of the 
liquidation to depositors, other known creditors, and known claimants 
in addition to the current requirement to publish notice in accordance 
with 12 U.S.C. 182.
    [cir] The national bank's liquidating agent or committee would be 
required to submit to the OCC a report at the start of liquidation 
showing the bank's current balance sheet and a final report of the 
liquidation.
Change in Control (Proposed 12 CFR 5.50)
     The proposal would add several presumptions of concerted 
action. These additional presumptions would provide clarity and 
guidance about how and when parties are presumed to be acting in 
concert for purposes of Sec.  5.50.
     Acquirers would be permitted to rebut a presumption of 
control in cases where the acquirer will have a representative on the 
board of directors of the national bank to be acquired. Currently, an 
acquirer that proposes to rebut control of a national bank cannot have 
a representative on the board.
     The proposal would establish specific limitations, in the 
rebuttal of control context, on the total equity invested, where an 
acquirer proposes to acquire more than fifteen percent of the national 
bank's voting stock.
Changes in Directors and Senior Executive Officers (Proposed 12 CFR 
5.51)
     An advisory director of a national bank who may vote on 
matters before, or provides more than general advice to, any committee 
of the board of directors, in addition to the board itself, would be 
subject to the requirements of Sec.  5.51.
     The notice of a change in directors or senior executive 
officers for a national bank would need to include financial 
information on the individual, except when the OCC determines in 
writing that such information is not required.
     If the OCC requests additional information regarding the 
notice, a national bank that cannot provide the requested information 
within the time specified by the OCC may request additional time to 
provide the information.
     An individual who is serving on an interim basis pursuant 
to an OCC-granted waiver and receives a notice of disapproval would be 
required to resign immediately from the board, and would be able to 
assume the position on a permanent basis only if the notice of 
disapproval is reversed on appeal and all other applicable legal 
requirements are satisfied. Currently, the individual may continue on 
the board pending resolution of an appeal.
Change in Address (Proposed 12 CFR 5.52)
     A national bank would not be required to file a notice of 
a change in the permanent address of its home office if it submitted a 
notice under Sec.  5.40(b) (relocation of a main office to a branch 
location in the same city, town or village).
Change in Asset Composition (Proposed 12 CFR 5.53)
     With regard to a change in asset composition, the national 
bank rule requires approval of only the sale of all or substantially 
all of a bank's assets, and the subsequent purchase of assets or 
expansion of operations after such a sale. Under the proposal, the 
following additional transactions would require approval under Sec.  
5.53:
    [cir] Any other asset purchases or other expansions of business 
that are part of a plan to increase the size of the bank by more than 
25 percent in one year.
    [cir] As determined by the OCC on a case-by-case basis, any other 
material increase or decrease in the size of the bank or a material 
alteration in the composition of the types of its assets or liabilities 
(including the entry or exit of business lines). The OCC would consider 
the size and nature of the transaction and the condition of the 
institutions in determining whether to require an application and 
believes the additional situations in which the OCC would require an 
application likely already would involve discussions between the bank 
and its appropriate supervisory office.
     The OCC would need to approve a bank's plan of voluntary 
liquidation in order for asset changes that are part of such 
liquidation to be exempt from the approval requirements of Sec.  5.53. 
(The proposal also would amend the regulation governing liquidations, 
Sec.  5.48, to require OCC approval of the plan of liquidation.)
     Asset changes that are subject to OCC approval under 
another application to the OCC would specifically be exempt from the 
approval requirements of Sec.  5.53. This exception is now only 
implied.

B. Proposed Substantive Changes for Federal Savings Associations

    The following is a summary of the substantive changes proposed by 
this rulemaking, listed by revised rule, for Federal savings 
associations.
Rules of General Applicability (Proposed 12 CFR Part 5, Subpart A)
     As a result of removing 12 CFR part 116 and applying 12 
CFR part 5, subpart A, Federal savings associations would need to 
follow different procedural and processing provisions. While many of 
the underlying processes are similar, minor variations and different 
terminology is sometimes used. Federal savings associations would need 
to adjust to these variations and differences.
     Adequately capitalized Federal savings associations would 
no longer qualify for expedited treatment; only well capitalized 
institutions would be eligible.
     A Federal savings association would no longer have to 
publish a public notice within the seven days before a filing date but 
may publish as soon as practicable before or after filing, unless 
otherwise required.
     In addition to what is currently required, a public notice 
related to a Federal savings association filing also would have to 
state that a filing is being made and the date of the filing.
     A Federal savings association could publish a single 
public notice for multiple transactions or a single notice that would 
comply with the notice requirement of both the OCC and another Federal 
agency, if accepted by the OCC. (Although this is not specifically 
permitted under current rules, this has been an accepted practice for 
Federal savings association filings.)
     Federal savings associations would obtain from the OCC the 
public comments made in response to a filing's public notice. 
Currently, the commenter

[[Page 33311]]

is required to send comments directly to the institution.
Articles of Association, Bylaws, Charters and Chartering Procedures 
(Proposed 12 CFR 5.20, 5.21, 5.22)
     All Federal savings associations:
    [cir] An application to charter a Federal savings association would 
be subject to the same two-part approval process used for de novo 
national bank charters, whereby the OCC first issues a preliminary 
approval, followed by a final approval and charter issuance if the 
applicant completes all of the steps required by the preliminary 
approval and the Comptroller's Licensing Manual. Under the current 
Federal savings association rule, there is one approval before the OCC 
issues the charter but the approval is subject to the institution 
completing various post-approval organizational steps and other 
requirements before it can commence business, as specified in 12 CFR 
143.4, 143.5, 143.6, and 152.1(c) through 152.1(i).
    [cir] Expedited OCC review would be available for an application to 
establish a full-service Federal savings association filed by a bank 
holding company or savings and loan holding company when the lead 
depository institution is an eligible national bank or eligible Federal 
savings and loan association. The current regulations for chartering a 
de novo Federal savings association do not have a comparable expedited 
review process.
    [cir] The OCC's preliminary approval of an application for a new 
Federal savings association would expire if the savings association has 
not raised the required capital within twelve months or has not 
commenced business within eighteen months. Under current rules, a 
Federal savings association's charter becomes void if organization is 
not completed within six months after approval.
    [cir] The proposal rescinds de novo chartering approval criteria in 
Sec. Sec.  143.2(g)(1) and 152.1(b)(1) that require the OCC to consider 
whether the Federal savings association will provide credit for housing 
in a safe and sound manner and approval considerations set forth in 
Sec.  143.3 regarding the composition of board or directors.
     Federal stock savings associations:
    [cir] A Federal stock savings associations no longer would be 
required to cause a true copy of its charter and bylaws to be available 
to accountholders at all times in each office of the savings 
association, or to deliver to any accountholders a copy of such charter 
and bylaws or amendments upon request.
    [cir] The requirements for adopting and filing Federal stock 
savings association bylaws would no longer include the requirements 
that the adoption of bylaws be by the board of directors at its first 
organizational meeting.
    [cir] Shareholder meetings no longer would be required to be held 
in the state in which the association has its principal place of 
business.
    [cir] Staggered terms for certain directors would no longer be 
specified.
    [cir] Stock certificates of a Federal savings association would no 
longer be required to be signed by the chief executive officer or by 
any other officer of the association authorized by the board of 
directors, attested by the secretary or an assistant secretary, and 
sealed with the corporate seal or a facsimile thereof. Furthermore, 
each certificate for shares of capital would not be required to be 
consecutively numbered or otherwise identified.
     Federal mutual savings associations:
    [cir] Federal mutual savings association bylaws no longer would be 
required to provide some of the language or requirements specified in 
current Sec.  144.5(b) regarding aspects of: The location of and 
notices for the annual meeting of members; reporting requirements at 
the annual meeting; record dates; proxy voting; annual meeting 
governance; duties of officers and agents of the association; director 
election and resignation; executive committees; director, officer and 
employee compensation and removal; and age limits for directors.
Conversions (Proposed 12 CFR 5.23, 5.25)
     Conversions to a Federal savings association charter:
    [cir] The applicant would no longer be required to publish a public 
notice of the application, and the application would no longer be 
available for public inspection, unless specifically required by the 
OCC.
    [cir] An applicant that does not meet the qualified thrift lender 
test would be required to include in its application a plan for 
achieving compliance and a request for an exception. This is agency 
practice but is not expressly mentioned in the regulation.
    [cir] Many details of the application process would no longer be 
included in the regulations. Instead, this information would be found 
in the Comptroller's Licensing Manual and other OCC guidance.
    [cir] The applicant would be required to include in its conversion 
application information about enforcement actions and other supervisory 
criticisms and its analysis of whether conversion is permissible under 
12 U.S.C. 35, especially the provisions added to section 35 by section 
612 of the Dodd-Frank Act.
     Conversions from a Federal savings association to any 
another charter
    [cir] Any Federal savings association converting from its charter 
would be required to file a notice with the OCC. Under current rules, 
Federal savings associations that are not eligible for expedited 
treatment must file an application to convert out.
     Conversions from a Federal savings association to a state 
chartered institution
    [cir] As required by section 612 of the Dodd-Frank Act, a Federal 
savings association must include a copy of its conversion application 
filed with the state regulator to which it is applying for approval to 
convert in its notice to the OCC, and it must file a copy of its 
conversion application with the Federal banking agency that would 
become its appropriate Federal banking agency after the conversion.
    [cir] It must also include a showing of its compliance with 
applicable requirements for converting.
Fiduciary Powers Applications (Proposed 12 CFR 5.26 and Part 150, 
Subpart A)
     The time period that triggers the need to re-notify the 
agency before beginning to exercise previously approved fiduciary 
powers that have not been exercised is shortened from 5 years to 18 
months.
     The trigger for requiring a new application for a Federal 
savings association would be whether the original approval for 
fiduciary activities is for limited or full fiduciary powers. Under the 
current rule, the trigger for a new application is whether the activity 
is ``materially different'' from what had been approved.
     Eligible Federal savings associations would receive 
expedited review of applications for fiduciary powers.
Branching (Proposed 12 CFR 5.31)
     Only well capitalized Federal savings associations could 
be ``eligible savings associations'' as defined in part 5, and 
therefore exempt from the branch application requirement. Currently 
both well and adequately capitalized Federal savings associations are 
eligible for expedited treatment and therefore can be exempt from this 
requirement.
     A Federal savings association would be required to obtain 
OCC approval in order to establish a branch at the site of a former 
home office unless

[[Page 33312]]

the branch establishment meets one of the exceptions in Sec.  5.31. 
Under the current rule, no notice or application is required in all 
cases of home office and branch office re-designations.
     The OCC's approval of a branch expires after 18 months, 
unless the OCC grants an extension. Under the current rule, OCC 
approval expires after 12 months.
     A state and Federal savings association would be required 
to file an application with the OCC to establish a branch in the 
District of Columbia.
Business Combinations (Proposed 12 CFR 5.33)
     A Federal savings association would be permitted to 
acquire all or substantially all of the assets, or to assume all or 
substantially all of the liabilities, of nonbank affiliates, or any 
other company that is not a depository institution, in addition to 
credit unions. Currently, such acquisitions are limited to banks, 
savings associations, and credit unions.
     In the factors the OCC considers in reviewing a business 
combination, the factor covering the fairness of the transaction, 
equitable treatment, and disclosure would be replaced by a factor 
assessing the effect of the transaction on the association's 
shareholders, depositors, other creditors, and customers.
     In the application for a business combination, Federal 
savings associations would be required to identify a financial 
subsidiary investment, bank service company investment, service 
corporation investment, and other equity investment in addition to the 
current requirement to identify subsidiaries and provide an analysis of 
the permissibility for the Federal savings association to hold the 
subsidiary or investment. This requirement reflects current practice.
     If the applicant intends to exercise fiduciary powers 
after the combination and requires OCC approval for such powers, the 
applicant would be required to include in the business combination 
application the information required in proposed Sec.  5.26 for a 
request for fiduciary powers. This requirement reflects current 
practice.
     The OCC's approval of a transaction under the proposal 
would expire in six months; the OCC could extend this six-month period. 
Under current OCC practice, transactions not involving an interim 
association must be consummated in 120 days.
     A Federal savings association would be required to publish 
an initial public notice and two other public notices during the 
standard 30-day public comment period. Currently, Sec.  163.22(e)(1)(i) 
requires an initial publication and then publication on a weekly basis 
during the public comment period.
     The statutory provisions governing national bank 
dissenters' rights in 12 U.S.C. 215 and 215a would be applied to 
transactions in which a Federal savings association is merging or 
consolidating into a national bank, rather than the regulatory 
dissenters' rights provision in 12 CFR 152.14, with one exception--the 
proposal includes authority for the OCC to apportion costs for the 
dissenters' rights process.
     In consolidation or merger of a state bank, state savings 
association, state trust company or a credit union into a Federal 
savings association, the institution would follow the procedures and 
dissenters' rights process set out for such transactions in the law of 
the state or other jurisdiction under which it is organized.
     For consolidations or mergers of a Federal stock savings 
association into a another Federal savings association, the plan of 
merger or consolidation would be required to provide the manner of 
disposing of the shares of the resulting Federal savings association 
not taken by dissenting shareholders. Under Sec.  152.14(c)(11), such 
shares have the status of authorized and unissued shares of the 
resulting association. The plan of merger or consolidation could still 
provide such status for these shares, but under the proposal such 
status no longer would be mandatory.
     A consolidation or merger of a Federal savings association 
into an uninsured bank, savings association, or trust company, or into 
a credit union would require only a notice to the OCC, not application 
and approval as required under Sec.  163.22(c).
     Federal savings association applications for business 
reorganizations (defined in Sec.  5.33(d)(3)) and streamlined 
applications (described in Sec.  5.33(j)) that meet the requirements 
would be eligible for expedited review, under which an application is 
deemed approved as of the later of the 45th day after the application 
was filed or the 15th day after the close of the comment period, unless 
the OCC notifies the applicant that the application is not eligible for 
expedited review or the expedited review process is extended. This 
process would replace the automatic approval provision in Sec.  
163.22(f), under which an application is deemed to be approved 
automatically 30 days after the OCC sends the applicant a written 
notice that the application is complete.
    [cir] The size-based limit for expedited review of a business 
reorganization or streamlined application included in the proposal is 
less restrictive than the criteria for automatic approval under the 
current savings association rule, 12 CFR 163.22(f), which provides that 
an application does not qualify for the automatic approval process if 
the acquiring institution has assets of $1 billion or more and proposes 
to acquire assets of $1 billion or more. To qualify for expedited 
review under the proposal, business reorganizations would have no size 
limit and streamlined applications would have limits based on the 
relative size of the acquiring institution and the assets to be 
acquired but would not have a fixed maximum dollar amount limit on the 
size.
    [cir] The expedited procedure in the proposal would not include 
competitive impact thresholds as a disqualifier, as in the current 
savings association rule.
    [cir] However, as in the current savings association rule, an 
applicant would not qualify for a streamlined business combination 
application if the transaction is part of a mutual to stock conversion 
under 12 CFR part 192.
     Federal savings associations would no longer be required 
by regulation to meet the requirements for Federal Home Loan Bank 
membership, as membership in a Federal Home Loan Bank is no longer 
mandatory.
     The approval of a board of directors of a business 
combination involving a Federal stock savings association would be 
reduced from two-thirds to a majority of the directors.
     For a Federal stock savings association, the execution and 
filing of Articles of Combination as the method of documenting 
shareholder approval of the combination, consummation of the 
combination, and its effective date would be replaced by a letter to 
the OCC followed by a certification issued by the OCC.
     A Federal savings association would not be required to 
include all terms regarding the combination in a combination agreement 
nor include the specific provisions in the agreement that are required 
by the current savings association rule.
     If a consolidation or merger of a Federal savings 
association in which the savings association is not the resulting 
institution has not occurred within six months after the OCC's receipt 
of the notice of the transaction, the savings association must submit a 
new notice to the OCC. The current rule requires a new notice after 12 
months.

[[Page 33313]]

Investment in Bank Service Companies (Proposed 12 CFR 5.35)
     No substantive changes. There are no regulations 
addressing Federal savings association investment in bank service 
companies, and the proposed rule closely implements the statute.
Banking Premises (Proposed 12 CFR 5.37, 7.1000, 7.3001)
     For Federal stock savings associations, the quantitative 
limitations on investment in banking premises would be based on the 
association's capital stock or, if a 1 or 2 CAMELS rated, well 
capitalized association, 150 percent of capital and surplus. Currently, 
the sole quantitative limit on a Federal savings association's 
investment in banking premises is total capital. Because 150 percent of 
capital and surplus would be a greater amount than 100 percent of total 
capital, we expect that under the proposal, the amount that a savings 
association could invest in banking premises without OCC approval would 
be increased. For Federal savings associations that do not have a 
CAMELS rating of 1 or 2 and are not well capitalized, the relevant 
limitation would be capital stock, which is a significantly lower 
threshold than total capital.
     For Federal mutual savings associations, the quantitative 
investment limit in banking premises would be based on the amount of 
retained earnings, instead of total capital.
     A Federal savings association would be required to follow 
the specific application requirements contained in proposed Sec.  5.37.
     The proposal would grandfather Federal savings 
associations' existing premises investments and arrangements for 
sharing office space and employees, provided the investment complies 
with the legal requirements in effect prior to the effective date of 
the final rule, and continues to comply with those requirements.
     The rule would specifically permit Federal savings 
associations to invest in lodging for customers, officers, or employees 
of the savings association, its branches, or consolidated subsidiaries 
in areas where suitable commercial lodging is not readily available.
     A Federal savings association would need to obtain OCC 
approval or provide after-the-fact notice to exercise an option to 
purchase banking premises or stock in a corporation that holds banking 
premises.
     A Federal savings association would be permitted by 
regulation to hold banking premises through an operating subsidiary and 
to hold premises by any reasonable and prudent means.
     A Federal savings association normally would need to use 
real estate acquired for future expansion within five years and, after 
holding such real estate for one year; would be required to state, by 
resolution of the board of directors or an appropriate authorized 
association official or a subcommittee of the board of directors, 
definite plans for use of such real estate. Currently, OCC guidance 
provides a Federal savings association with a one to three year 
timeframe for the use of real estate acquired for future premises.
Operating Subsidiaries (Proposed New 12 CFR 5.38)
     Before beginning business, an operating subsidiary of a 
Federal savings association would be required to comply with other laws 
applicable to it, including applicable licensing or registration 
requirements. This change would codify current OCC policy.
     Under this proposal, a Federal savings association could 
control an entity in which it owns less than 50 percent of the voting 
shares of the entity, provided no other party owns a greater percentage 
than the savings association, the savings association otherwise 
controls the subsidiary, and no one else exercises effective operating 
control. Currently, for control to exist, a savings association must 
own, directly or indirectly, more than 50 percent of the voting shares 
of an operating subsidiary.
     A Federal savings association would be required to have 
reasonable policies and procedures to preserve the limited liability of 
the savings association and its operating subsidiaries. The detailed 
requirements for separate corporate identities for subsidiaries in 12 
CFR 159.10 are removed.
     A Federal savings association would need to file an 
application to acquire or establish an insured depository institution 
as an operating subsidiary.
     A Federal savings association would need to file an 
application, and receive prior OCC approval, to acquire or establish an 
operating subsidiary or to commence a new activity in an existing 
operating subsidiary. The current rule in Sec.  159.11 requires filing 
a notice at least 30 days prior to establishing or acquiring a 
subsidiary or engaging in new activities in a subsidiary; this notice 
is treated like an application under Sec.  159.1(b).
     Some applications would qualify for the proposal's 
expedited review of applications process. This expedited review is 
similar to the current rule's notice process: applications would be 
deemed approved by the OCC as of the 30th day after the filing is 
received, unless the OCC notifies the Federal savings association 
otherwise during the 30-day period.
    [cir] For the application to qualify, the Federal savings 
association must be ``well capitalized'' and ``well managed,'' the 
activities to be performed by the operating subsidiary must be listed 
in proposed Sec.  5.38(e)(5)(v) (activities that have been approved for 
operating subsidiaries of Federal savings associations in the past), 
the operating subsidiary must be a corporation, limited liability 
company, or limited partnership, and the savings association must 
clearly demonstrate control over the operating subsidiary (it must meet 
a standard for control that is more stringent than the general standard 
for operating subsidiaries).
    [cir] Under the current rule, all filings start as 30-day prior 
notices. They become standard treatment applications if the OCC 
notifies the applicant that the notice presents supervisory concerns or 
raises significant issues of law or policy.
    [cir] While there is overlap between an application failing to meet 
the criteria to qualify for expedited review (and so requiring standard 
processing) and raising issues that would cause a filing to present 
supervisory concerns, or raises significant issues of law or policy 
(and so requiring standard processing), there may be instances in which 
a filing would have had to be processed under standard procedures under 
one test but not the other.
     For a Federal savings association operating subsidiary to 
act as a fiduciary, its savings association parent would be required to 
have fiduciary powers and the operating subsidiary also must have its 
own fiduciary powers under the law applicable to the subsidiary. The 
operating subsidiary no longer would be able to rely on the savings 
association's fiduciary powers, except when the subsidiary exercises 
investment discretion on behalf of customers or provides investment 
advice for a fee as a registered investment adviser. This change would 
codify OCC and OTS practice.
     The regulation would no longer expressly state that any 
finance subsidiary of a Federal savings association that existed on 
January 1, 1997, is deemed to be an operating subsidiary without 
further action by the savings association. The pertinent provision is 
removed because it is thought no longer necessary. No change

[[Page 33314]]

in substance is intended. The proposal asks if it needs to be retained.
     OCC approvals granted under proposed Sec.  5.38 would 
expire within 12 months if a Federal savings association has not 
established or acquired the operating subsidiary or commenced the new 
activity in an existing operating subsidiary, unless the OCC shortens 
or extends this time period.
     Federal savings associations would be required to file an 
annual report on operating subsidiaries that do business directly with 
consumers in the United States and are not functionally regulated 
subsidiaries.
Main Office and Home Office Relocations (Proposed 12 CFR 5.40)
     Under the current rule, no notice or application is 
required if the relocation is a short-distance relocation, if the 
Federal savings association redesignates an existing branch office as a 
home office when redesignating the existing home office as a branch 
office, or if the savings association is highly-rated and certain other 
requirements are met. If the relocation does not meet the above 
exceptions, a notice is required for savings associations that qualify 
for expedited treatment and OCC approval is required for all other 
savings associations. Under the proposal, all Federal savings 
associations would be required to:
    [cir] Submit prior notice to the OCC for home office relocations to 
a branch site in the same city, town, or village of the current home 
office; and
    [cir] Obtain prior OCC approval for home office relocations to a 
branch location other than a branch site in the same city, town, or 
village of the current home office. An application submitted by an 
eligible Federal savings association would be deemed approved by the 
OCC as of the 15th day after the close of the public comment period or 
the 45th day after the filing is received by the OCC (or in the case of 
a short-distance relocation, the 30th day after the filing is received 
by the OCC), whichever is later, unless the OCC notifies the bank or 
savings association prior to that time that the filing is not eligible 
for expedited review, or the expedited review period is extended.
     A Federal savings association would be required to obtain 
OCC approval pursuant to Sec.  5.31 (branching) in order to establish a 
branch at the site of a former home office unless the branch 
establishment meets one of the exceptions in Sec.  5.31. Under the 
current rule, no notice or application is required in all cases of home 
office and branch office re-designations.
     A Federal savings association would be required to open a 
relocated home office within 18 months from the date of OCC approval, 
unless the OCC grants an extension. Under the current rule, this office 
must be opened within 12 months of OCC approval or non-objection.
Change in Corporate Title (Proposed 12 CFR 5.42)
     Federal savings associations would be required to submit 
an after-the-fact notice to the OCC instead of a 30-day prior notice 
for a change in corporate title.
Increases in Permanent Capital (Proposed New 12 CFR 5.45)
     Federal stock savings associations would be required to 
apply to the OCC and obtain prior approval for increases in capital in 
the following circumstances: (1) When the savings association is 
required to receive OCC approval pursuant to letter, order, directive, 
written agreement or otherwise, (2) when the savings association is 
selling common or preferred stock for consideration other than cash, or 
(3) when the savings association is receiving a material noncash 
contribution to capital surplus. Currently, savings associations are 
not required to apply for increases in capital.
Voluntary Liquidation (Proposed 12 CFR 5.48)
     The Federal savings association's liquidating agent or 
committee would be required to submit to the OCC:
    [cir] At the start of liquidation, a report showing the 
association's current balance sheet;
    [cir] Quarterly Consolidated Reports of Condition and Income (Call 
Reports); and
    [cir] Annual reports on the progress of the liquidation.
     The following provisions in the proposal would codify 
existing OCC practice:
    [cir] A Federal savings association would be required to provide 
notice of the liquidation to depositors, other known creditors, and 
known claimants.
    [cir] A Federal savings association would be required to publish 
public notice of its plan to liquidate if so directed by the OCC.
Change in Control (Proposed 12 CFR 5.50)
     The current definition of ``voting securities'' in Sec.  
5.50 would replace the part 174 definition of ``voting stock.'' This 
would affect the standard for convertible securities. Currently, part 
174 includes as voting stock any security that, upon transfer or 
otherwise, is convertible into voting stock or exercisable to acquire 
voting stock where the holder of the convertible security has the 
preponderant economic risk in the underlying voting stock. Section 
5.50, by contrast, defines voting securities to include securities that 
are immediately convertible into voting securities at the option of the 
owner or holder.
     The proposal excludes part 174 procedures for rebuttal of 
control and concerted action, applying instead the provisions in Sec.  
5.50(f)(2)(vi).
     Persons who acquire control of a Federal savings 
association as a result of testate or intestate succession would need 
to file a notice and pay the appropriate filing fee within 90 calendar 
days after the transaction occurs. Currently, such persons need only 
file a notification of acquisition to the OCC within 60 days of the 
acquisition and provide information requested by the OCC.
     The proposal excludes the presumptive disqualifiers from 
part 174--a list of factors, which, if present, may show a lack of 
integrity or lack of financial capability to proceed with a proposed 
transaction.
     The proposed regulatory changes have the effect of 
eliminating most of the rebuttable presumptions of control with respect 
to Federal savings associations that are currently set forth in 12 CFR 
174.4(b) and (c). The proposed regulatory changes also remove certain 
of the rebuttable presumptions of concerted action currently set forth 
in Sec.  174.4(d).
     Acquirers of beneficial ownership exceeding 10 percent of 
any class of stock of a Federal savings association that do not file a 
control notice or control rebuttal would not be required to file a 
certification of ownership.
Changes in Directors and Senior Executive Officers (Proposed 12 CFR 
5.51)
     A Federal savings association would be required to provide 
90 days prior notice of a new director or senior executive officer if 
the association is not in compliance with minimum capital requirements, 
is otherwise in a troubled condition, or the OCC determines, under 
section 38 of the FDI Act (12 U.S.C. 1831o), that prior notice is 
appropriate. Currently, such an association is required to provide 30 
days prior notice, which the OCC may extend for an additional 60 days.
     Only a Federal savings association would be permitted to 
file the notice with the OCC; an individual seeking

[[Page 33315]]

election to the board of directors who has not been nominated by 
management would no longer be allowed to do so.
     A Federal savings association or a proposed individual 
would be able to appeal an OCC notice of disapproval. The current rule 
does not provide an appeal process, although the OCC has permitted 
appeals by Federal savings associations in practice.
Change in Address (Proposed 12 CFR 5.52)
     A Federal savings association no longer would be required 
to provide notice of a home office or post office box address change if 
the change results from any transaction approved under 12 CFR part 5. 
The current rule provides this exception only in cases of an 
application to relocate or establish a new home or branch office.
     All Federal savings associations no longer would be 
required to provide notice of a home office or post office box address 
change if they have filed a notice for the relocation or establishment 
of a new home or branch office pursuant to proposed Sec.  5.40 (main 
office and home office relocations). Under current rules, highly-rated 
savings associations are required to file a change in address notice 
because they are exempt from the relocation notice requirement.
     Federal savings associations no longer would be subject to 
the requirement that all operations be directed from the home office.
Change in Asset Composition (Proposed 12 CFR 5.53)
     The Federal savings association rule now requires approval 
of all purchases or sales or other transfers of assets in bulk not made 
in the ordinary course of business, unless the transaction is subject 
to the Bank Merger Act (in which case other parts of the rule apply). 
Under the proposal, Federal savings associations would be required to 
obtain OCC approval only for the following (unless one of the 
exceptions applies).
    [cir] The sale or other disposition of all, or substantially all, 
of the savings association's assets in a transaction or a series of 
transactions.
    [cir] After having sold or disposed of all, or substantially all, 
of its assets, subsequent purchases or other acquisitions or other 
expansions of the savings association's operations.
    [cir] Any other asset purchases or other expansions of business 
that are part of a plan to increase the size of the savings association 
by more than 25 percent in one year.
    [cir] As determined by the OCC on a case-by-case basis, any other 
material increase or decrease in the size of the savings association or 
a material alteration in the composition of the types of its assets or 
liabilities (including the entry or exit of business lines). The OCC 
would consider the size and nature of the transaction and the condition 
of the institutions in determining whether to require an application 
and believes the additional situations in which the OCC would require 
an application likely already would involve discussions with the bank's 
appropriate supervisory office.
     When an application is required, it would have standard 
processing. Currently, an application can qualify for expedited 
treatment if all participating Federal savings associations meet the 
conditions for expedited treatment.
Capital Distributions (Proposed New 12 CFR 5.55)
     The expedited review process in part 5 would apply to 
Federal savings associations seeking expedited review of filings for 
capital distributions instead of the expedited treatment process in 
part 116. Because the eligibility requirements for expedited review 
differ from the requirements for expedited treatment, this change could 
affect which savings associations qualify for the expedited process.
    [cir] Under the current savings association rule, both well and 
adequately capitalized institutions are eligible for expedited 
treatment. Under the proposal, only savings associations that are well 
capitalized would qualify for expedited review.
    [cir] Under the current savings association rule, the institution 
must not have been notified it is in troubled condition, while under 
the proposal an eligible savings association must not be subject to an 
enforcement action. (Although different, these supervisory condition 
tests generally should overlap.)
    [cir] Under the current rule, a savings association that has not 
been assigned a CAMELS rating, a CRA rating and a compliance rating is 
not eligible for expedited treatment. This requirement is not a factor 
in the requirements for eligible bank or eligible savings association 
status in part 5.
Subordinated Debt (Proposed New 12 CFR 5.56)
     The expedited review process in part 5 would apply to 
Federal savings associations seeking expedited review of filings to 
issue subordinated debt instead of the expedited treatment process in 
part 116. Because the eligibility requirements for expedited review 
differ from the requirements for expedited treatment, this change could 
affect which savings associations qualify for the expedited process, as 
described above for the capital distributions rule.
Pass-Through Investments (Proposed New 12 CFR 5.58)
     Federal savings associations would be allowed to make 
pass-through investments greater than 25 percent of the company's 
equity, but because this investment would make the company a subsidiary 
under law applicable to the Federal savings associations, the 
association would be required to submit an application for approval as 
a subsidiary.
     Federal savings associations may be subject to different 
filing requirements:
    [cir] Some pass-through investments that currently may qualify for 
the no-notice procedure under Sec.  160.32(b) would require a filing 
under Sec.  5.58. (However, pass-through investments in investment 
companies that hold assets permissible for a Federal savings 
association to hold directly would continue not to require a filing.)
    [cir] For pass-through investments that meet the requirements for 
the after-the-fact notice procedure, the Federal savings association 
would need to file only the after-the-fact notice. This treatment would 
apply both to both investments that would have required a prior 
application under Sec.  160.32(c) and investments that would have 
qualified for the no-notice procedure under Sec.  160.32(b).
     Federal savings associations would be subject to the 
notice content requirements of Sec.  5.58. Section 160.32 does not 
specify the content of the notice or application.
Service Corporations (Proposed New 12 CFR 5.59)
     The corporate separateness requirements would be amended 
to eliminate the requirement that a Federal savings association's 
service corporation be adequately financed as a separate unit in light 
of normal obligations reasonably foreseeable for a business of the 
service corporation's size and character in order to maintain the 
requisite corporate separateness.
     Consistent with 12 U.S.C. 1828(m), a Federal savings 
association would be required to file an application with the OCC 
before investing in any service corporation, including one that it 
would not control. Currently, the service corporation regulation 
requires a Federal savings association to file with the OCC only if it 
directly or indirectly controls the service corporation.

[[Page 33316]]

     Applications to establish or acquire a service corporation 
would be required to list for each state the lines of business for 
which the service corporation holds, or will hold, an insurance 
license, and the state where the service corporation holds a resident 
license or charter.
     Each Federal savings association would be required to file 
an annual report listing, for each service corporation subsidiary that 
is not functionally regulated and does business with consumers in the 
United States, certain information including the name and principal 
place of business of the service corporation, the lines of business in 
which the service corporation subsidiary engages directly with 
consumers, and the nature of the parent savings association.

VI. Request for Comments

    The OCC encourages comment on any aspect of this proposal and 
especially on those issues specified in this preamble. If commenting on 
a specific question contained in the preamble, please refer to that 
question number in your comment letter. As noted above, the OCC will 
also consider comments received in response to the Agencies' EGRPRA 
notice on licensing rules when finalizing this licensing integration 
rule.

VII. Regulatory Analysis

Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (RFA),\120\ an agency 
must prepare a regulatory flexibility analysis for all proposed and 
final rules that describe the impact of the rule on small entities, 
unless the head of an agency certifies that the rule will not have ``a 
significant economic impact on a substantial number of small 
entities.'' The OCC currently supervises approximately 1,189 small 
entities (361 Federal savings associations, 801 national banks, and 21 
trust companies).\121\ Because some of the NPRM's provisions could 
impact any national bank and other provisions could impact any Federal 
savings association, the proposed rule could impact a substantial 
number of small institutions.
---------------------------------------------------------------------------

    \120\ Public Law 96-354, 5 U.S.C. 601-612 (1980).
    \121\ We base our estimate of the number of small entities on 
the SBA's size thresholds for commercial banks and savings 
institutions, and trust companies, which are $ 500 million and $ 
35.5 million, respectively. 13 CFR 121.103(a). Consistent with the 
General Principles of Affiliation, 13 CFR 121.103(a), we count the 
assets of affiliated financial institutions when determining if we 
should classify a bank we supervise as a small entity. We use 
December 31, 2013, to determine size because a ``financial 
institution's assets are determined by averaging the assets reported 
on its four quarterly financial statements for the preceding year.'' 
See footnote 8 of the U.S. Small Business Administration's Table of 
Size Standards.
---------------------------------------------------------------------------

    We estimated that the monetized direct compliance cost would be 
approximately $14.7 thousand per institution. Using the average direct 
cost per institution we believe compliance with the proposed rule will 
have a significant economic impact on 24 small institutions (of which 
10 are small Federal savings associations), which is not a substantial 
number. Furthermore, we conclude that the amendments to Sec.  5.37, 
investment in national bank or Federal savings association premises, 
could have a significant impact on an additional five Federal savings 
associations.\122\ Therefore, we conclude that the proposed rule in 
total will have a significant economic impact on no more than 29 small 
institutions of the 1,189 small entities currently supervised by the 
OCC, which is not a substantial number (approximately 2.4 percent of 
small entities).
---------------------------------------------------------------------------

    \122\ Because the OCC will require some Federal savings 
associations to obtain approval, we assume that investments may be 
constrained for 15 small Federal savings associations with a 
positive return on assets (ROA) that are currently eligible to file 
an after-the fact notice for investments in premises that will not 
be able to do so under the proposal. (We assume that all small 
entities seek to maximize ROA and net income. Thus, we assume that 
those small Federal savings associations that currently have a 
negative ROA are not likely to seek approval to increase their 
investment in premises.) However, based on the recent behavior of 
these Federal savings associations, it is unlikely that all 15 would 
seek to increase their investments in premises in one year. (The 
number of these small Federal savings associations that increased 
their investment in premises during calendar years 2012 and 2013 
were three and four, respectively.) For purposes of this analysis we 
estimate that no more than five Federal savings associations would 
seek to increase their investments in premises in one year. To test 
if a substantial number of small entities could be impacted by this 
provision, we assume that all of these requests will be declined and 
that the associated economic impact is significant.
---------------------------------------------------------------------------

    Based on the information set forth above, and pursuant to section 
605(b) of the RFA, the OCC hereby certifies that this proposal would 
not have a significant economic impact on a substantial number of small 
entities. Accordingly, an initial regulatory flexibility analysis is 
not required.
Unfunded Mandates Reform Act of 1995
    The OCC has analyzed the proposed rule under the factors in the 
Unfunded Mandates Reform Act of 1995 (UMRA).\123\ Under this analysis, 
the OCC considered whether the proposed rule includes a Federal mandate 
that may result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year (adjusted annually for inflation). The 
OCC finds that the proposed rule does not trigger the UMRA cost 
threshold. Accordingly, this proposal is not subject to section 202 of 
the Unfunded Mandates Act.
---------------------------------------------------------------------------

    \123\ Public Law 104-4, 2 U.S.C. 1501 et seq. (1995).
---------------------------------------------------------------------------

Paperwork Reduction Act
    Under the Paperwork Reduction Act (PRA) of 1995,\124\ the OCC may 
not conduct or sponsor, and a person is not required to respond to, an 
information collection unless the information collection displays a 
valid Office of Management and Budget (OMB) control number. The OCC has 
submitted the information collection requirements imposed by this rule 
to OMB for review.
---------------------------------------------------------------------------

    \124\ Public Law 104-13, (44 U.S.C. 3501 et seq.).
---------------------------------------------------------------------------

    The proposal contains both new and revised information collection 
requirements. Some of the revisions provide exceptions to existing 
requirements, which will result in a reduction in burden. Some of the 
requirements are currently in place for national banks and are being 
extended to cover both national banks and Federal savings associations. 
Some of the amendments impose new requirements on Federal savings 
associations and amend the requirements for national banks. A number of 
the revisions involve amendments to definitions, which, in some cases, 
would affect the respondent count for related provisions. For example, 
the change in the definition of ``eligible bank'' to include the 
compliance rating in addition to the CAMELS and CRA rating will affect 
respondent counts. The provisions are included the OCC's information 
collection for the Comptroller's Licensing Rules. The collection has 
been revised and submitted to OMB for review in connection with 
publication of the proposed rule. A number of the provisions being 
amended contain existing PRA requirements that have been previously 
approved by OMB.\125\ The amendments proposed today do not create any 
new information collection requirements and, therefore, require no PRA 
filings, other than non-material changes necessary due to the 
consolidation of the regulations.
---------------------------------------------------------------------------

    \125\ OMB Control Nos. 1557-0106, 1557-0140, 1557-0190, 1557-
0204, 1557-0221, 1557-0266, and 1557-0310.
---------------------------------------------------------------------------

Rules of General Applicability
    Federal savings associations would be required to follow the 
procedure and processing provisions currently imposed on national banks 
(part 5, subpart A) instead of those in part 116, which they currently 
follow. Only well

[[Page 33317]]

capitalized Federal savings associations would qualify for expedited 
treatment and adequately capitalized institutions would no longer 
qualify. Public notices of filings would be required to be filed as 
soon as practicable after a filing date instead of seven days prior to 
the filing date. Public notice would have to state that a filing is 
being made and the date of the filing. A single public notice would be 
acceptable for multiple transactions or transactions filed with the OCC 
and another agency, under certain circumstances. Comments in response 
to a filing would have to be obtained from the OCC, as comments would 
no longer be sent directly to the institution.
    The requirement for publication of notice of a filing by national 
banks would be made more specific and require the notice: to be 
published in English; to specify the name of institution that is the 
subject of the filing; to indicate that the public portion is available 
on request; and to provide the address of the applicant. Under certain 
circumstances, the OCC could require the applicant to publish a new 
notice.
Fiduciary Powers
    In order to exercise fiduciary powers, Federal savings associations 
would be required to comply with the application requirements of Sec.  
5.26 in place of the requirements under current part 150. In addition, 
Sec.  5.26 would be revised to require a national bank or Federal 
savings association that has not conducted previously approved 
fiduciary powers for 18 consecutive months to provide the OCC with 60 
days' advance notice before engaging in the activities. It would also 
require that a national bank or Federal savings association that has 
received approval to offer limited fiduciary services apply to the OCC 
to offer full fiduciary services. Eligible Federal savings associations 
would receive expedited review of applications. A provision would be 
added setting out the circumstances under which a Federal savings 
association does not need to apply for fiduciary powers in connection 
with certain mergers.
Establishment, Acquisition, and Relocation of a Branch
    New Sec.  5.31 would address the establishment and relocation of 
branches, or the establishment of agency offices, by Federal savings 
associations and would replace several provisions currently found in 
part 145.
    Section 5.31(f)(1) would set out the general requirement that each 
Federal savings association proposing to establish or relocate a branch 
shall submit a separate application for each proposed branch, unless 
the transaction qualifies for an exception. The provision in Sec.  
145.93(e) stating that a Federal savings association may not file an 
application or notice, or use any of the exceptions, to establish a 
branch if the association has filed an application to merge or 
otherwise surrender its charter and the application has been pending 
for less than six months would not be carried over to Sec.  5.31.
    Section 145.93(b)(3) provides that certain highly-rated Federal 
savings associations are not required to file an application to change 
the permanent location of an existing branch or to establish a new 
branch if it meets certain requirements, including that the Federal 
savings association meet the eligibility requirements for expedited 
treatment. The proposal would change this to require that the Federal 
savings association is an ``eligible savings association,'' as defined 
in 12 CFR 5.3(h), rather than eligible for expedited treatment.
    Section 5.31(g) would set out exceptions to the rules of general 
applicability for applications by a Federal savings association to 
establish or relocate a branch and specify that the OCC would be able 
to waive or reduce the public notice and comment period in certain 
emergency situations or with respect to certain temporary branches.
    Section 5.31(h) would provide that OCC's approval of a branch 
expires if the branch has not commenced business within 18 months, 
unless the OCC grants an extension. This period is longer than the 
current twelve month expiration period for branch approvals for Federal 
savings associations under Sec.  145.95(c).
    Section 145.93(c) currently requires prior approval for any savings 
association branch that would be subject to section 5(m)(1) of the HOLA 
(regarding District of Columbia savings associations), if the 
association meets the requirements of Sec.  145.93(b) for an exception 
to the branch application filing requirement. New Sec.  5.31(j) would 
require an application and prior written approval for each application.
    State and Federal savings associations would be required to file an 
application with the OCC to establish or move a branch in the District 
of Columbia.
Investment in Bank Service Companies
    This section would be expanded to cover Federal savings 
associations. It would replace the after-the-fact notice before making 
an investment in the equity of a bank service company or performing new 
activities in an existing bank service company with an expedited prior 
notice procedure.
Investments in Premises
    This section would be expanded to cover Federal savings 
associations. In addition, an alternative, after-the-fact notice 
process would be added for both national banks and Federal savings 
associations and an exception to the premise application and notice 
requirements for investments in banking premises through a service 
corporation is provided for Federal savings associations. Amendments to 
the definitions of ``capital stock'' and ``capital and surplus,'' which 
would increase the amount that a Federal savings association could 
invest in banking premises without OCC approval, would result in a 
decrease in the number of requests for approval. A transition provision 
would be added for Federal savings associations to grandfather existing 
banking premises investments. Modifying, expanding, or approving such 
investments would require prior approval. A Federal savings association 
would be given a one to three year timeframe for the use of real estate 
acquired for future premises in place of the current requirement, which 
requires use of real estate acquired for future expansion within five 
years and, after holding the real estate for one year, requires a 
statement by resolution of the definite plans for use.
Main Office and Home Office Relocations
    Federal savings associations would be required to submit prior 
notice to the OCC for home office relocations to a branch site in the 
same city, town, or village of the current home office and obtain prior 
approval for other relocations. They would also be required to obtain 
prior approval to establish a branch at the site of a former main or 
home office.
Change in Corporate Title
    For change in corporate title, Federal savings associations would 
be required to submit an after-the-fact notice in place of the current 
30-day prior notice.
Voluntary Liquidation
    This section would be expanded to cover Federal savings 
associations. The liquidating agent or committee of the national bank 
or Federal savings association would be required to submit: A report to 
the appropriate OCC Licensing Office at the start of liquidation 
showing the bank's or savings associations balance sheet as of the 
start of liquidation; quarterly Call

[[Page 33318]]

Reports; a report of condition at the start of the liquidation; annual 
progress reports; and a final report of liquidation. National banks and 
Federal savings associations would be required to notify all 
depositors, other known creditors, and known claimants of the bank or 
savings association.
Change in Control; Reporting of Stock Loans
    This section would be expanded to cover Federal savings 
associations. Procedures for rebuttal of control and concerted action 
under part 174 would no longer be applicable to Federal savings 
associations. Persons who acquire control of a Federal savings 
association as a result of testate or intestate succession would need 
to file a notice within 90 days of the transaction, while the current 
regulations require only a notification of the acquisition within 60 
days. Under Sec.  5.50, acquirers of beneficial ownership exceeding 10 
percent of any class of stock of a Federal savings association that 
does not file a control notice or control rebuttal would not be 
required to file a certification of ownership.
Changes in Directors and Senior Executive Officers
    The notice of a change in directors or senior executive officers 
for a national bank would need to include financial information on the 
individual, except when the OCC determines it is not required. If the 
OCC requests additional information, a national bank may request a time 
extension to provide the information, if necessary.
    Federal savings associations would be required to provide 90 days 
prior notice of a new director or senior executive officer, under 
certain circumstances, in place of the current shorter notice period. 
Only a Federal savings association would be permitted to file the 
notice; nominees no longer will be able to file. Federal savings 
associations would be able to appeal an OCC notice of disapproval.
Change in Address
    Under certain circumstances, national banks and Federal savings 
associations would no longer be required to file a notice of home 
office change of address and Federal savings associations would no 
longer be required to provide notice of a post office box address.
Bank Activities and Operations
    A number of provisions in part 7 are being expanded to cover 
Federal savings associations. A transition period would be added to 
grandfather Federal savings associations' existing premise investments, 
provided they are not modified, expanded, or improved. A transition 
period would also be provided for Federal savings associations that 
share space or employees with another business under an agreement that 
complies with legal requirements previously in place that would violate 
this provision. They would be permitted to continue under the existing 
agreement, but would not be able to amend, renew, or extend the 
agreement without prior approval.
    The requirements in part 145 regarding the establishment of agency 
offices of Federal savings associations would be removed and agency 
offices of Federal savings associations that conduct non-branch 
activities would not be considered branches and would not be required 
to obtain OCC approval for these offices.
Organizing a National Bank or Federal Savings Association
    In Sec.  5.20, paragraph (h) specifies requirements for the 
organizers' business plan or operating plan, paragraph (i) lists the 
procedures that the organizers must follow, paragraph (j) specifies the 
requirements for expedited review of an application, and paragraph (l) 
lists requirements for the establishment of special purpose banks. An 
application to charter a Federal savings association would be subject 
to the two-part approval process contained in paragraph (i)(5). The OCC 
uses a two-part approval process for de novo national bank charters. 
After an application is filed, if the OCC determines it meets the 
applicable standards, the application is given preliminary approval. 
The national bank in organization would then take the steps needed to 
organize itself, raise capital, obtain any other regulatory approvals, 
and generally become ready to commence business. Final approval is 
given and the national bank's charter is issued only after all these 
steps are concluded, including compliance with any conditions imposed 
in the preliminary approval. Currently, the OCC issues only one 
approval before it issues the charter, but this approval is subject to 
the institution completing various post-approval organizational steps 
and other requirements before it can begin conducting business. 
Paragraph (j) currently provides for expedited review of an application 
to establish a full-service national bank filed by a bank holding 
company with a lead depository institution that is an eligible 
depository institution. Under the proposal, Federal savings 
associations and savings and loan holding companies would be added.
    The corresponding rules applicable to organizing Federal savings 
associations are found in parts 143, 144, 152, and Sec.  163.1. 
Sections 144.1 and 152.3 contain specific language and requirements to 
be used for the charter of Federal mutual savings associations and 
Federal stock savings associations, respectively, and Sec. Sec.  144.2 
and 152.4 contain specific requirements for the bylaws of Federal 
mutual savings associations and Federal stock savings associations, 
respectively. Sections 143.2(g)(2)(i) and 152.1(b)(3)(i) provide that 
approval of an application to organize a Federal mutual or stock 
savings association, respectively, is conditioned on OCC receipt of 
written confirmation from the FDIC that accounts will be insured. 
Section 152.2, which provides procedures for the organization of 
interim Federal savings associations, would be rescinded and addressed 
in the business combinations regulation at Sec.  5.33.
    Proposed Sec.  5.21(j) would specify the language and requirements 
for Federal mutual savings association bylaws. The provision reflects 
the requirements in Sec.  144.5.
Federal Stock Savings Association Charter, Bylaws and Related 
Provisions
    Proposed Sec.  5.22(e) would specify the language and requirements 
for a Federal stock savings association charter. The provision reflects 
the requirements in Sec.  152.3.
Federal Savings Association Charter and Bylaws Availability Requirement
    Section 163.1(b), which requires each Federal savings association 
to cause a true copy of its charter and bylaws and all amendments 
thereto to be available to accountholders at all times in each office 
of the savings association, and to deliver to any accountholders a copy 
of such charter and bylaws or amendments thereto, upon request, is 
being rescinded and OCC will continue applying this requirement only 
with respect to Federal mutual savings associations under new Sec.  
5.21(i).
Conversions to and From National Bank and Federal Savings Association 
Charters
    In Sec.  5.24(d), regarding the policy for approving and 
disapproving conversions to national bank charters, a statement would 
be added that the institution seeking to convert to a national bank 
charter must obtain all necessary regulatory and shareholder approvals. 
A parallel provision is found in Sec.  143.8(a)(2), which would be now 
found in Sec.  5.25. The public notice and inspection requirements at 
Sec.  143.9(a)(2)

[[Page 33319]]

are being rescinded. If there are instances where the OCC believes 
publication is warranted, the OCC could require publication under Sec.  
5.2(b), which allows the OCC to require materially different procedures 
for a particular filing.
    Section 5.24(e)(2)(ix) would require the application for conversion 
to include a business plan if the converting institution has been 
operating for less than three years or plans to make significant 
changes to its business after the conversion, instead of the current 
policy of requesting it on a case-by-case basis.
    Section 5.24(g), which allows for expedited review of a conversion 
application filed by an eligible depository institution, would be 
limited to applications by institutions already supervised by the OCC.
    Proposed Sec.  5.23(d)(2)(ii)(K) would require a converting 
institution that does not meet the qualified thrift lender test of 12 
U.S.C. 1467a(m) to include a plan to achieve compliance within a 
reasonable period of time and to request an exception from the OCC in 
the application.
    Proposed Sec.  5.25(d) provides that converting from a Federal 
charter does not require prior OCC approval. The institution must file 
only a notice with the OCC. Currently, Federal savings associations 
that are not eligible for expedited treatment must file an application 
to convert to a national bank or state bank. The notice must contain a 
copy of the conversion application to the regulator to which it is 
applying for approval to convert, and a discussion of any issues 
regarding the permissibility of the conversion under section 612 of 
Dodd-Frank Act. The institution would also be required to file a copy 
of its conversion application with the Federal banking agency that 
would become its appropriate Federal banking agency after the 
conversion.
    For conversions between a national bank and a Federal savings 
association, proposed Sec.  5.25(e) requires the institution planning 
to convert to file a notice for the conversion-out aspect of the 
transaction with the OCC. Federal savings associations currently must 
file an application, unless they qualify for expedited review. The 
notice must contain a showing of its compliance with applicable 
requirements for converting from the Federal charter. The applicable 
``converting-in'' regulation (Sec.  5.23 or Sec.  5.24) would require 
the institution to file an application with the OCC with respect to the 
``converting-in'' aspect of the transaction.
    Proposed Sec.  5.24(e)(2)(x) and Sec.  5.23(d)(2)(ii)(J) would 
require the conversion application to include information about 
enforcement actions and other supervisory criticisms and the 
applicant's analysis of whether conversion is permissible under 12 
U.S.C. 35, as amended by section 612.
    Proposed Sec.  5.25(d)(3) would require that the information that 
must be submitted to the OCC when a national bank or Federal savings 
association plans to convert to a state bank or state savings 
association must include a discussion of the impact of any enforcement 
action on the permissibility of the conversion under 12 U.S.C. 214d or 
1464(i)(6).
    Sections 5.24(e)(2), 5.23(d)(2)(ii), 5.25(d)(3)(i), and 
5.25(d)(3)(ii)(A) require that, at the time an insured depository 
institution files a conversion application, it must transmit a copy of 
the conversion application to both the appropriate Federal banking 
agency for the institution and the Federal banking agency that would 
become the appropriate Federal banking agency for the institution after 
the proposed conversion.
Service Corporations
    Under the current service corporation regulation, a Federal savings 
association must file a notice under part 116 at least 30 days before 
establishing or acquiring a subsidiary or engaging in a new activity in 
a subsidiary. A Federal savings association is not required to file a 
service corporation application if the association proposes to make a 
non-controlling investment in a service corporation. The proposal would 
amend the service corporation regulation at Sec.  5.59 to require that 
a Federal savings association file with the OCC before acquiring or 
establishing any service corporation, including one that it would not 
control.
    Section 5.59(h)(1)(ii) would require a Federal savings association 
to list for each state the lines of business for which the service 
corporation holds, or will hold, an insurance license, and each state 
in which the service corporation holds a resident license or charter. 
Section 5.59(h)(2) would change the circumstances under which a Federal 
savings association would receive expedited review for a service 
corporation filing, currently found in part 116. A service corporation 
filing would be eligible for expedited review if the savings 
association is ``well capitalized'' and ``well managed,'' and the 
service corporation engages only in one or more of the preapproved 
activities listed in Sec.  5.59(f).
    A new requirement would be added in section 5.59(k) to require each 
Federal savings association to file an annual report that includes, for 
each service corporation subsidiary that is not functionally regulated 
and does business with consumers in the United States, certain 
information including the name and principal place of business of the 
service corporation, the lines of business in which the service 
corporation subsidiary engages directly with consumers, and the nature 
of the parent savings association's interest in the service corporation 
subsidiary.
Operating Subsidiaries; Subordinate Organizations
    New Sec.  5.34(e)(2)(iii) would be added to clarify that a national 
bank must have reasonable policies and procedures to preserve the 
limited liability of the bank and its operating subsidiaries. This 
requirement has been adapted from Sec.  159.10 and would be consistent 
with the new operating subsidiary rule for Federal savings 
associations.
    Current Sec.  5.34(e)(5)(i) provides that national banks meeting 
certain requirements are not required to file a prior application but 
may give after-the-fact notice when establishing or acquiring an 
operating subsidiary or performing a new activity in an existing 
operating subsidiary. Paragraph (e)(5)(ii) requires a prior application 
and OCC approval in other instances and sets out the information that 
must be included in the filing.
    Current Sec.  5.34(e)(5)(vi) provides that no application or notice 
is required for a national bank that is well managed and adequately 
capitalized or well capitalized to acquire or establish an operating 
subsidiary or perform a new activity in an existing operating 
subsidiary, if the activities of the new subsidiary are limited to 
those previously reported to the OCC in connection with a prior 
operating subsidiary and certain other requirements are met. The 
proposal would change the criteria from adequately capitalized to well 
capitalized. This is consistent with the well capitalized requirement 
to be eligible for the after-the-fact notice procedure.
    Section 5.38(b) would require a Federal savings association to file 
an application to acquire or establish any operating subsidiary or to 
commence a new activity in an existing operating subsidiary. Part 159 
required Federal savings associations to give 30 days' notice to the 
OCC prior to establishing or acquiring an operating subsidiary or 
commencing a new activity in an operating subsidiary. Section 159.11

[[Page 33320]]

required a filing when it is required under 12 U.S.C. 1828(m), and 
section 1828(m) does not require a filing if the subsidiary is an 
insured depository institution. Proposed Sec.  5.38(b) would require an 
application to acquire an insured depository institution as an 
operating subsidiary. A proposal for a Federal savings association to 
own an insured depository institution subsidiary that would cause the 
savings association to be a bank holding company or a savings and loan 
holding company raises issues of law and policy as well as supervisory 
concerns. The acquisition of other insured depository institutions as 
operating subsidiaries also requires agency review. Accordingly, the 
OCC believes an application is needed, even if not required under 12 
U.S.C. 1828(m).
    Section 5.38(d) sets out definitions for ``well capitalized'' and 
``well managed,'' which will be used as part of the determination of 
which applications are eligible for expedited review by the OCC. These 
definitions are the same as those in Sec.  5.34(d), and the OCC uses 
these terms as criteria to permit national banks to make an after-the-
fact notice filing pursuant to Sec.  5.34(e)(5). They are also used in 
proposed Sec.  5.38 to determine if an application by a Federal savings 
association is eligible for expedited review.
    Section Sec.  5.38(e)(1)(ii) would provide that if the activities 
performed at a location of an operating subsidiary (other than the home 
office of the savings association) include activities that would 
require the savings association to have approval for a branch office if 
the office were a direct office of the savings association, the savings 
association must obtain OCC approval for a branch office at that 
location, if it has not already been authorized as a branch. Existing 
offices would be grandfathered. This is requirement is new for Federal 
savings associations.
    Section 5.38(e)(2)(iii) (similar to Sec.  159.10) would expressly 
require a savings association to have reasonable policies and 
procedures to preserve the limited liability of the savings association 
and its operating subsidiaries.
    Section 159.11 specifies when Federal savings associations must 
file a notice at least 30 days prior to establishing or acquiring an 
operating subsidiary or conducting a new activity in an existing 
operating subsidiary. Section 5.38(e)(5) specifies the procedures a 
Federal savings association must follow when filing applications 
required under Sec.  5.38. Section 5.38(e)(5)(ii)(A) provides for 
expedited review of applications to establish or acquire an operating 
subsidiary, or to perform a new activity in an existing operating 
subsidiary. The expedited review process is similar to that contained 
in Sec.  159.11.
    Section 159.3(p)(1) provides that a Federal savings association 
must consult with the appropriate OCC licensing office prior to 
redesignating a service corporation as an operating subsidiary, and 
make available for examination adequate internal records demonstrating 
that the redesignated office meets all of the requirements for an 
operating subsidiary and that the board of directors has approved of 
the redesignation. Section 5.38(e)(vi) would require a Federal savings 
association to provide 30 days' prior notice to the OCC when the 
savings association wants to redesignate a service corporation as an 
operating subsidiary.
    Section 5.38(e)(8) requires Federal savings associations to file an 
annual report on operating subsidiaries that do business directly with 
consumers in the United States and are not functionally regulated 
subsidiaries, which the OCC will make available to the public.
Pass-Through Investments
    Section 160.32(b) currently provides that a Federal savings 
association may make certain qualifying pass-through investments 
without prior notice to the OCC in any entity that is a limited 
partnership, an open-ended mutual fund, a closed-end investment trust, 
a limited liability company, or an entity in which the Federal savings 
association is investing primarily to use the company's services. 
Section 160.32(c) requires a Federal savings association to provide the 
OCC with written notice 30 days prior to making any pass-through 
investment that does not meet the no-notice standards. The notice is a 
form of application and may become a standard application if the OCC 
notifies the filer that the investment presents supervisory, legal, or 
safety and soundness concerns. The proposal would remove these 
provisions and cross-reference Sec.  5.36.
    Proposed Sec.  5.58(e) mirrors Sec.  5.36(e) and would provide that 
a well capitalized, well managed Federal savings association may make 
certain pass-through investments, directly or through its operating 
subsidiary, in certain entities by filing a written after-the-fact 
notice with the OCC no later than 10 days after making the investment 
if the activity conducted by the enterprise is on the list of 
activities eligible for a notice filing for operating subsidiaries, or 
if it is substantially the same as an activity that has been previously 
approved for a Federal savings association (or its operating 
subsidiary).
    If a Federal savings association is not well capitalized and well 
managed or if the activity conducted by the enterprise does not qualify 
for the after-the-fact notice procedure, the savings association would 
be required to apply to the OCC and receive prior approval for the non-
controlling investment.
    Section 5.58(g)(1) would provide for an expedited notice procedure 
for pass-through investments in entities holding assets in satisfaction 
of debts previously contracted. A Federal savings association would not 
be required to file a notice or application under Sec.  5.58 when 
acquiring a non-controlling investment in shares of a company through 
foreclosure or otherwise in good faith to compromise a doubtful claim, 
or in the ordinary course of collecting a debt previously contracted.
    Under Sec.  5.58, Federal savings associations would be permitted 
to make non-controlling investments greater than 25 percent of the 
company's equity. The investment, however, would constitute 
``control,'' making the enterprise a subsidiary of the association and 
triggering a filing. Section 5.58(f)(2) provides that a Federal savings 
association must submit an application for approval prior to investing 
in an enterprise that would be considered a subsidiary of the Federal 
savings association.
    Section 5.58 would change the filing requirements for Federal 
savings associations' non-controlling investments. Some pass-through 
investments could meet the requirements for the after-the-fact notice 
procedure, and only the after-the-fact notice would be required. Some 
non-controlling investments that qualify for the no-notice procedure 
under Sec.  160.32(b) would require a filing under Sec.  5.58. Section 
5.58(h) would continue the no-notice procedure for investments by 
Federal savings associations in investment companies that held assets 
permissible to be held directly. Some investments that may have 
qualified for the no-notice procedure may be eligible for the after-
the-fact notice of Sec.  5.58(e).
Change in Asset Composition
    The proposal would expand the requirements of Sec.  5.53 and remove 
Sec.  163.22 regarding change in asset composition. Institutions 
contemplating transactions that may constitute a material change would 
be advised to consult the appropriate OCC supervisory office. National 
banks would find more situations in which applications for approval 
would be required than under current Sec.  5.53, but

[[Page 33321]]

these additional situations likely already would involve discussions 
between the bank and its supervisory office. Federal savings 
associations would find fewer situations in which applications for 
approval are required than now required under current Sec.  163.22(c).
    Under the application exception for asset changes that are part of 
a voluntary liquidation, the proposal would add that the bank or 
savings association must have received OCC approval of its plan of 
liquidation.
    The expedited treatment under Sec.  163.22(c) for of bulk transfer 
filings if all of the participating Federal savings associations meet 
the conditions for expedited treatment would not be carried over into 
Sec.  5.53.
Business Combinations
    Proposed Sec.  5.33(d)(2)(v) expands the definition of ``business 
combination'' in Sec.  5.33(d)(2), which currently includes only the 
assumption of deposit liabilities from another depository institution, 
to also include the assumption, from a credit union or any other 
institution that is not FDIC-insured, of deposit accounts or other 
liabilities that will become deposits at the assuming national bank or 
Federal savings association. Federal savings associations are currently 
required to file an application under Sec.  163.22(c). The proposal 
retains the requirement and expands it to cover national banks.
    Under the proposal, a Federal savings association would have the 
authority to engage in a whole entity purchase and assumption without 
regard to whether it has authority to consolidate or merge with the 
counterparty. National banks have had this authority but have not been 
required to apply to the OCC for approval of a whole entity purchase 
and assumption other than one with a depository institution. The 
proposal would require an application if the whole entity purchase and 
assumption would result in an increase in the asset size of the bank or 
savings association of twenty-five percent or more.
    Proposed Sec.  5.33(e)(3) would amend the business combination 
application to add to the current requirement to identify subsidiaries 
and provide an analysis of the permissibility for the national bank or 
Federal savings association to hold the subsidiary or investment, a 
financial subsidiary investment, bank service company investment, 
service corporation investment, and other equity investment.
    Under proposed Sec.  5.33(e)(6), regarding the exercise of 
fiduciary powers by the resulting national bank or Federal savings 
association, a clarification would be made that if the applicant 
intends to exercise fiduciary powers after the combination and requires 
OCC approval for such powers, it must include in the business 
combination application the information required in Sec.  5.26 for a 
request for fiduciary powers.
    Section 5.33(f)(1) would be amended to clarify that the requirement 
of public notice and comment would apply only when the application is 
subject to a public notice requirement under the Bank Merger Act or 
other applicable statute that requires notice to the public. This 
publication requirement would not be a change for national banks or 
Federal savings associations.
    The frequency and timing of publication for transactions that are 
subject to the Bank Merger Act would be changed for Federal savings 
associations. Section 163.22(e)(1)(i) requires an initial publication 
and then publication on a weekly basis during the public comment 
period. Under proposed Sec.  5.33(f)(1), the OCC would require the 
initial publication and two other publications during the standard 30-
day public comment period.
    Section 5.33(g)(1), addressing the merger or consolidation of a 
national bank or a state bank into a national bank, would require that 
a national bank that will not be the resulting bank in a merger or 
consolidation with another national bank must file a notice to the OCC 
under Sec.  5.33(k). This notice would also be required whenever a 
national bank or Federal savings association merges or consolidates 
into another institution. It provides the OCC information about the 
target national bank's compliance with requirements to ``merge-out'' 
and sets in motion the steps for the disappearing national bank to end 
its separate existence.
    Section 5.33(g)(2)(ii), under which the OCC may conduct an 
appraisal of dissenters' shares of stock in a national bank involved in 
a consolidation with a Federal savings association if all the parties 
agree, would be changed from a voluntary to a required process. Section 
5.33(g)(2)(ii)(B) and (C) would specify the process for appraisal of 
dissenters' shares of stock in a stock Federal savings association 
involved in a consolidation or merger into a national bank.
    Section 5.33(g)(2)(iii) would include a requirement that a 
consolidation or merger agreement must address the effect upon, and the 
terms of the assumption of, any liquidation account of any other 
participating institution by the resulting institution.
    New Sec.  5.33(g)(3), addressing consolidations and mergers of 
other institutions into a Federal savings association, would require 
application to the OCC and would require the Federal savings 
association to comply with requirements and procedures similar to those 
currently imposed on them. If a combination involves a whole purchase 
and assumption of a Federal savings association, then the combination 
would be treated as a consolidation for participating Federal savings 
associations, and the procedural requirements in Sec.  5.33(o) would 
apply.
    Section 5.33(g)(3)(ii) would include a requirement that the 
consolidation or merger agreement must address the effect upon and the 
terms of the assumption of, any liquidation account of any other 
participating institution by the resulting institution.
    Section 5.33(g)(6)(iv) would include a requirement that the 
consolidation or merger agreement must address the effect upon, and the 
terms of the assumption of, any liquidation account of any other 
participating institution by the resulting institution. This 
requirement is based on provisions in Sec. Sec.  146.2(b)(9) and 
152.13(f)(9).
    Section 5.33(g)(7) would address a consolidation or merger of a 
Federal savings association into a state bank, state savings bank, 
state savings association, state trust company, or credit union and 
require only a notice to the OCC, not application and approval. This 
requirement is a change for Federal savings associations from Sec.  
163.22(c), under which an application is required for a combination 
with an uninsured bank, savings association or trust company or a 
credit union. Section 5.33(g)(7)(ii) would include a provision under 
which a whole purchase and assumption of the target Federal savings 
association would be treated as a consolidation for the Federal savings 
association, so that the procedural requirements in Sec.  5.33(o) would 
apply.
    Section 5.33(g)(7)(iii) would set out the process for appraisal of 
dissenters' shares of stock in a stock Federal savings association 
involved in a consolidation or merger into a state bank, state savings 
bank, state savings association, state trust company, or credit union. 
Section 5.33(g)(7)(iv) would require that the consolidation or merger 
agreement must address the effect upon, and the terms of the assumption 
of, any liquidation account of any other participating institution by 
the resulting institution.
    Section 5.33(i), which would provide for expedited review of 
business reorganizations and streamlined applications, would be 
expanded to include Federal savings association applications.

[[Page 33322]]

    Expedited review under Sec.  5.33(j) would replace the automatic 
approval provision in Sec.  163.22(f) for Federal savings associations, 
which provides that an application is deemed to be approved 
automatically 30 days after the OCC sends the applicant a written 
notice that the application is complete.
    New Sec.  5.33(k) would address notices to be filed when a national 
bank or Federal savings association is consolidating or merging with 
another national bank or Federal savings association or with a state 
chartered institution or credit union and the target national bank or 
Federal savings association is not the resulting institution. It 
includes the steps to be taken to terminate the institution's status as 
a national bank or Federal savings association. This consolidates 
requirements from Sec. Sec.  5.33(g)(3), 146.2(g), 152.13(k), 163.22(b) 
and 163.22(h)(1)(i) and (ii). There would be no change for Federal 
savings associations, but national banks would be required to include 
more information in the notice than currently required.
    Section 5.33(m) would address certification of a consolidation or 
merger and documentation of its effective date. The applicant would be 
required to submit information showing that all steps needed to 
complete the transaction have been met and to notify the OCC of the 
planned consummation date. This reflects current OCC practice for 
national banks. It accomplishes through an applicant notification 
letter and issuance of an OCC certification letter what Sec.  152.13(j) 
does in requiring the applicant to submit two sets of ``Articles of 
Combination'' that are filed with the OCC, and then endorsed by the 
OCC, with one set returned to the applicant with a specification of the 
effective date.
    New Sec.  5.33(o) would include provisions from Sec. Sec.  146.2 
and 152.13 that set out the procedural requirements for board, 
shareholder (in the case of stock savings associations), and, if 
required by the OCC, voting member (in the case of mutual savings 
associations) approval of business combinations involving the Federal 
savings association.
Changes in Permanent Capital
    Section 5.46(g)(1) would be amended to describe more fully those 
increases in permanent capital of a national bank for which an 
application and prior approval are not required and when such increases 
are considered approved by the OCC. Portions of this requirement are 
currently in paragraph (i)(3), which addresses the bank's notification 
to the OCC that the increase has occurred and the certification of the 
increase by the OCC.
Subordinated Debt
    The expedited treatment process in part 116 for savings 
associations would be replaced by the expedited review process in part 
5 for Federal savings associations seeking expedited review of filings 
to issue subordinated debt. This could result in a change in which 
savings associations qualify for the expedited process, due to the 
difference between the eligibility requirements for expedited review 
and the requirements for expedited treatment.
Capital Distributions
    New Sec.  5.55 contains Federal savings association procedures and 
standards for capital distributions currently found in part 163 and 
filing procedures based on provisions in part 5 regarding eligible 
savings associations and expedited review. A Federal savings 
association must be an ``eligible savings association'' in order to 
qualify for expedited review of filings for capital distributions. 
Because the eligibility requirements in part 5 and in the current 
Federal savings association rules are not identical, the part 5 
eligibility requirements for expedited review could affect which 
Federal savings associations qualify for the expedited process.
    Title of Information Collection: Comptroller's Licensing Rules.
    OMB Control No: 1557-0014.
    Frequency of Response: Event generated.
    Affected Public: Businesses or other for-profit organizations.
    Current Burden for the Comptroller's Licensing Rules:
    Number of Respondents: 3,831.
    Average Burden per Respondent: 3.18 hours.
    Total Burden: 12,174 hours.
    Burden Estimates for the Comptroller's Licensing Rules as Amended 
by the proposal:
    Number of Respondents: 3,879.
    Average Burden per Respondent: 3.22 hours.
    Total Burden: 12,485 hours.
    The change in burden for the collection is an overall increase of 
311 hours, or 2.6%. The change in number of respondents is due to an 
increase in the number of regulated entities involved in licensing 
activities and the revisions to certain definitions. The change in 
burden per respondent is an overall increase in .04 hours. This is a 
result of the combination of the expansion of national bank 
requirements to savings associations, the revision of requirements for 
both national banks and savings associations, the addition of 
exemptions, and the streamlining and elimination of unnecessary 
requirements. The OCC requests comment on:
    a. Whether the information collection is necessary for the proper 
performance of the OCC's functions, and how the instructions can be 
clarified so that information gathered has more practical utility;
    b. The accuracy of the OCC's estimates of the burdens of the 
information collection, including the validity of the methodology and 
assumptions used;
    c. Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    d. Ways to minimize the burden of the information collection on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    e. Estimates of capital or startup costs and costs of operation, 
maintenance, and purchase of services to provide information.

VIII. Redesignation Table

    The following redesignation table is provided for reader reference. 
It lists the current savings association provision and identifies the 
provision in this final rule that would replace it.

------------------------------------------------------------------------
                                    Former section
             Subject                number/guidance     New section No.
------------------------------------------------------------------------
Application Processing            Part 116..........  Part 5, subpart A.
 Procedures.                                           See also relevant
                                                       activity or
                                                       transaction rule
                                                       in part 5.
    What does this part do?.....  116.1.............  5.1, 5.2.
    Do the same procedures apply  116.5.............  5.2.
     to all applications under
     this part?.
    How does the OCC compute      116.10............  5.12.
     time periods under this
     part?.
    Must I meet with the OCC      116.15............  5.4(f).
     before I file my
     application?.

[[Page 33323]]

 
    What information must I       116.20............  See 5.4(f).
     include in my draft
     business plan?.
    What type of application      116.25............  See 5.4.
     must I file?.
    What information must I       116.30............  See 5.4 (e).
     provide with my
     application?.
    May I keep portions of my     116.35............  5.9.
     application confidential?.
    Where do I file my            116.40............  5.4(d).
     application?.
    What is the filing date of    116.45............  See 5.12.
     my application?/Filing fees.
    How do I amend or supplement  116.47............  None.
     my application?.
    Public notice...............  116.50-116.80.....  5.8.
    Comment procedures: What      116.100...........  None.
     does this subpart do?.
    Public comment..............  116.110-116.140...  5.10.
    Meeting procedures: What      116.160...........  None.
     does this subpart do?.
    When will the OCC conduct a   116.170...........  5.11.
     meeting on an application?.
    What procedures govern the    116.180...........  5.11.
     conduct of a meeting?.
    Will the OCC approve or       116.185...........  None.
     disapprove an application
     at a meeting?.
    Will a meeting affect         116.190...........  See 5.10(b)(2),
     application processing time                       5.11(h), and
     frames?.                                          5.13(a)(2).
    If I file a notice under      116.200...........  See relevant
     expedited treatment, when                         activity or
     may I engage in the                               transaction rule
     proposed activities?                              in part 5.
    What will the OCC do after I  116.210...........  5.13.
     file my application?.
    If the OCC requests           116.220...........  5.13.
     additional information to
     complete my application,
     how will it process my
     application?
    Will the OCC conduct an       116.230...........  5.7.
     eligibility examination?.
    What may the OCC require me   116.240...........  5.8(g), 5.13(c).
     to do after my application
     is deemed complete?
    Will the OCC require me to    116.250...........  5.8(g).
     publish a new public
     notice?.
    May the OCC suspend           116.260...........  None.
     processing of my
     application?.
    How long is the OCC review    116.270...........  5.13; See also
     period?.                                          relevant activity
                                                       or transaction
                                                       rule in part 5.
    How will I know if my         116.280...........  5.13(d).
     application is approved?.
    What will happen if the OCC   116.290...........  See 5.13(c).
     does not approve or
     disapprove my application
     within two calendar years
     after the filing date?
Federal Mutual Savings            Part 143..........  5.20; 5.42.
 Associations--Incorporation,
 Organization, and Conversion.
    Corporate title.............  143.1.............  5.20(f)(2(i)),
                                                       5.42.
    Application for permission    143.2.............  5.20.
     to organize.
    ``De novo'' applications for  143.3.............  5.20.
     a Federal savings
     association charter.
    Issuance of charter.........  143.4.............  None.
    Completion of organization..  143.5.............  5.20.
    Limitations on transaction    143.6.............  None.
     of business.
    Federal savings association   143.7.............  None.
     created in connection with
     an association in default
     or in danger of default.
    Conversions.................  143.8-143.10......  5.23.
    Organization plan for         143.11............  None.
     governance during first
     years after issuance of
     Federal mutual savings bank
     charter.
    Continuity of existence.....  143.14............  5.23.
Federal Mutual Savings            144...............  5.21.
 Associations--Charter and
 Bylaws.
    Federal mutual charter......  144.1.............  5.21(e).
    Charter amendments..........  144.2.............  5.21(f)-(h).
    Issuance of charter.........  144.4.............  None.
    Federal mutual savings        144.5.............  See 5.21(j).
     association bylaws.
    Effect of subsequent charter  144.6.............  5.21(j)(4).
     of bylaw change.
    Availability--in association  144.7.............  5.21(i).
     offices.
    Communication between         144.8.............  144.8.
     members of a Federal mutual
     savings association.
Federal Savings Associations--    Part 145..........  5.31, 5.40, 5.52.
 Operations.
    Home office.................  145.91(a).........  None.
                                  145.91(b).........  5.52.
    Branch offices..............  145.92............  5.31.
    Application and notice        145.93, 145.95....  5.31 (branch
     requirements and processing                       office).
     procedures for branch and                        5.40 (home
     home offices.                                     office).
    Agency office...............  145.96............  5.31(k).
Federal Mutual Savings            Part 146..........  5.33, 5.48.
 Associations--Merger,
 Dissolution, Reorganization,
 and Conversion.
    Definitions, procedures, and  146.1-146.3.......  5.33.
     transfer of assets upon
     merger or consolidation.
    Voluntary dissolution.......  146.4.............  5.48.
Fiduciary Powers of Federal       Part 150, subpart   5.26.
 Savings Associations.             A.
    Obtaining fiduciary powers:   150.70............  150.70 (revised),
     Must I obtain OCC approval                        5.26.
     or file a notice before I
     exercise fiduciary powers?
    Obtaining fiduciary powers..  150.80-150.125....  5.26.
Federal Stock Associations--      Part 152..........  5.20, 5.22, 5.23,
 Incorporation, Organization,                          5.24, 5.25, 5.33.
 and Conversion.
    Procedure for organization    152.1.............  5.20.
     of Federal stock
     association.

[[Page 33324]]

 
    Procedures for organization   152.2.............  5.33(e)(4).
     of interim Federal stock
     association.
    Charters, bylaws, boards of   152.3-152.11......  5.22.
     directors and officers,
     share certificates, and
     books and records.
    Business combinations.......  152.13-152.15.....  5.33.
    Effect of subsequent charter  152.16............  5.22.
     or bylaw change.
    Federal stock association     152.17............  None.
     created in connection with
     an association in default
     or in danger of default.
    Conversion from stock form    152.18............  5.23.
     depository institution to
     Federal stock association.
    Conversion to National        152.19............  5.24 (to national
     banking association or                            bank).
     state bank.                                      5.25 (to State
                                                       bank).
Subordinate organizations.......  159 (159.1-159.13)  5.38 (operating
                                                       subsidiaries).
                                                      5.59 (service
                                                       corporations).
Lending and investment
    Pass-through investments....  160.32, except:...  5.58.
                                  160.32(a).........  160.32(a) (same).
                                  160.32(b).........  160.32(b)
                                                       (revised).
    Real estate for office and    160.37............  5.37, 7.1000,
     related facilities.                               7.3001.
Savings Associations--Operations
    Submission for approval of    163.1(a)..........  See
     chartering documents.                             5.20(e)(1)(iii)(A
                                                       ).
    Availability of chartering    163.1(b)..........  None (Federal
     documents.                                        stock savings
                                                       associations).
                                                      5.21(i) (Federal
                                                       mutual savings
                                                       associations).
    Merger, consolidation,        163.22............  5.33, 5.53.
     purchase or sale of assets,
     or assumption of
     liabilities.
    Conversion to state bank....  163.22(b)(1)(ii)..  5.25.
    Conversion to national bank.  163.22(b)(2)......  5.24.
    Inclusion of subordinated     163.81............  5.56.
     debt securities and
     mandatorily redeemable
     preferred stock as
     supplementary capital.
    Capital Distributions.......  163.140-163.146     5.55.
                                   (subpart E).
    Management and financial      163.161...........  5.59
     policies.                                         (e)(7)(service
                                                       corporations
                                                       only).
    Notice of change of director  163.550-163.590     5.51.
     or senior executive officer.  (subpart H)..
Acquisition of Control of         174.1-174.7.......  5.50.
 Federal Savings Associations.    174, Appendix A...  None.
------------------------------------------------------------------------

List of Subjects

12 CFR Part 4

    Administrative practice and procedure, Freedom of information, 
Individuals with disabilities, Minority businesses, Organization and 
functions (Government agencies), Reporting and recordkeeping 
requirements, Women.

12 CFR Part 5

    Administrative practice and procedure, National banks, Reporting 
and recordkeeping requirements, Securities.

12 CFR Part 7

    Computer technology, Credit, Insurance, Investments, National 
banks, Reporting and recordkeeping requirements, Securities, Surety 
bonds.

12 CFR Part 14

    Banks, Banking, Consumer protection, Insurance, National banks, 
Reporting and recordkeeping requirements.

12 CFR Part 32

    National banks, Reporting and recordkeeping requirements.

12 CFR Part 34

    Mortgages, National banks, Reporting and recordkeeping 
requirements.

12 CFR Part 100

    Savings associations.

12 CFR Part 116

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, Savings associations.

12 CFR Part 143

    Reporting and recordkeeping requirements; Savings associations.

12 CFR Part 144

    Reporting and recordkeeping requirements, Savings associations.

12 CFR Part 145

    Consumer protection, Credit, Electronic funds transfers, 
Investments, Manufactured homes, Mortgages, Reporting and recordkeeping 
requirements, Savings associations.

12 CFR Part 146

    Reporting and recordkeeping requirements, Savings associations.

12 CFR Part 150

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, Savings associations, Trusts and trustees.

12 CFR Part 152

    Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 159

    Reporting and recordkeeping requirements, Savings associations, 
Subsidiaries.

12 CFR Part 160

    Consumer protection, Investments, Manufactured homes, Mortgages, 
Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 161

    Administrative practice and procedure, Savings associations.

12 CFR Part 162

    Accounting, Reporting and recordkeeping requirements, Savings 
associations.

[[Page 33325]]

12 CFR Part 163

    Accounting, Administrative practice and procedure, Advertising, 
Conflict of interests, Crime, Currency, Investments, Mortgages, 
Reporting and recordkeeping requirements, Savings associations, 
Securities, Surety bonds.

12 CFR Part 174

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, Savings associations, Securities.

12 CFR Part 192

    Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 193

    Accounting, Savings associations, Securities.

    For the reasons set forth in the preamble, and under the authority 
of 12 U.S.C. 93a and 5412(b)(2)(B), chapter I of title 12 of the Code 
of Federal Regulations is proposed to be amended as follows:

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

0
1. The authority citation for part 4 is revised to read as follows:

    Authority:  12 U.S.C. 1, 12 U.S.C. 93a, 12 U.S.C. 5321, 12 
U.S.C. 5412, and 12 U.S.C. 5414. Subpart A also issued under 5 
U.S.C. 552. Subpart B also issued under 5 U.S.C. 552; E.O. 12600 (3 
CFR 1987 Comp., p. 235). Subpart C also issued under 5 U.S.C. 301, 
552; 12 U.S.C. 161, 481, 482, 484(a), 1442, 1462a, 1463, 1464 
1817(a)(2) and (3), 1818(u) and (v), 1820(d)(6), 1820(k), 1821(c), 
1821(o), 1821(t), 1831m, 1831p-1, 1831o, 1867, 1951 et seq., 2601 et 
seq., 2801 et seq., 2901 et seq., 3101 et seq., 3401 et seq.; 15 
U.S.C. 77uu(b), 78q(c)(3); 18 U.S.C. 641, 1905, 1906; 29 U.S.C. 
1204; 31 U.S.C. 5318(g)(2), 9701; 42 U.S.C. 3601; 44 U.S.C. 3506, 
3510. Subpart D also issued under 12 U.S.C. 1833e. Subpart E is also 
issued under 12 U.S.C. 1820(k).

0
2. Revise Sec.  4.5 to read as follows:


Sec.  4.5  Other OCC supervisory offices.

    (a) Midsize Bank Supervision (MBS). Midsize Bank Supervision is 
responsible for supervising midsize national banks and Federal savings 
associations that present unique supervisory challenges based on size, 
complexity, and/or product line. MBS also supervises credit card and 
certain other special purpose banks. MBS is headquartered in Chicago, 
Il and located at 1 South Wacker Drive, Suite 2000, Chicago, IL 60606.
    (b) Community bank supervision. (1) District offices. Each district 
office of the OCC is responsible for the direct supervision of the 
national banks and Federal savings associations in its district, with 
the exception of the national banks and Federal savings associations 
supervised by the Washington office pursuant to Sec.  4.4 of this part 
or Midsize Bank Supervision pursuant to Sec.  4.5(a). The four district 
offices cover the United States, Puerto Rico, the Virgin Islands, Guam, 
and the Northern Mariana Islands. The geographical composition of each 
district follows:

------------------------------------------------------------------------
                                                        Geographical
             District              Office location       composition
------------------------------------------------------------------------
Northeastern District............  Office of the    Connecticut,
                                    Comptroller of   Delaware, District
                                    the Currency,    of Columbia,
                                    340 Madison      northeast Kentucky,
                                    Avenue, 5th      Maine, Maryland,
                                    Floor New        Massachusetts, New
                                    York, NY 10173-  Hampshire, New
                                    0002.            Jersey, New York,
                                                     North Carolina,
                                                     Pennsylvania,
                                                     Puerto Rico, Rhode
                                                     Island, South
                                                     Carolina, Vermont,
                                                     the Virgin Islands,
                                                     Virginia, and West
                                                     Virginia.
Central District.................  Office of the    Illinois, Indiana,
                                    Comptroller of   central and
                                    the Currency,    southern Kentucky,
                                    One Financial    Michigan, northern
                                    Place, Suite     and eastern
                                    2700, 440        Minnesota, eastern
                                    South LaSalle    Missouri, North
                                    Street,          Dakota, Ohio, and
                                    Chicago, IL      Wisconsin.
                                    60605.
Southern District................  Office of the    Alabama, Arkansas,
                                    Comptroller of   Florida, Georgia,
                                    the Currency,    Louisiana,
                                    500 North        Mississippi,
                                    Akard Street,    Oklahoma,
                                    Suite 1600,      Tennessee, and
                                    Dallas, TX       Texas.
                                    75201.
Western District.................  Office of the    Alaska, American
                                    Comptroller of   Samoa, Arizona,
                                    the Currency,    California,
                                    1225 17th        Colorado, Guam,
                                    Street, Suite    Hawaii, Idaho,
                                    300, Denver,     Iowa, Kansas,
                                    CO 80202.        southwestern
                                                     Minnesota, western
                                                     Missouri, Montana,
                                                     Nebraska, Nevada,
                                                     New Mexico,
                                                     Northern Mariana
                                                     Islands, Oregon,
                                                     South Dakota, Utah,
                                                     Washington, and
                                                     Wyoming.
------------------------------------------------------------------------

    (2) Field offices and other supervisory offices. Field offices and 
field office satellite offices support the bank and savings association 
supervision responsibilities of the district offices.

PART 5--RULES, POLICIES, AND PROCEDURES FOR CORPORATE ACTIVITIES

0
3. The authority citation for part 5 is revised to read as follows:

    Authority:  12 U.S.C. 1 et seq., 24a, 93a, 215a-2, 215a-3, 481, 
1462a, 1463, 1464, 2901 et seq., 3907, and 5412(b)(2)(B).

0
4. Section 5.1 is revised to read as follows:


Sec.  5.1  Scope.

    This part establishes rules, policies and procedures of the Office 
of the Comptroller of the Currency (OCC) for corporate activities and 
transactions involving national banks and Federal savings associations. 
It contains information on rules of general and specific applicability, 
where and how to file, and requirements and policies applicable to 
filings. This part also establishes the corporate filing procedures for 
Federal branches and agencies of foreign banks.
0
5. Subpart A of part 5 is revised to read as follows:
Subpart A--Rules of General Applicability
Sec.
5.2 Rules of general applicability.
5.3 Definitions.
5.4 Filing required.
5.5 Fees.
5.6 [Reserved]
5.7 Investigations.
5.8 Public notice.
5.9 Public availability.
5.10 Comments.
5.11 Hearings and other meetings.
5.12 Computation of time.
5.13 Decisions.

Subpart A--Rules of General Applicability


Sec.  5.2  Rules of general applicability.

    (a) General. The rules in this subpart apply to all sections in 
this part unless otherwise stated.
    (b) Exceptions. The OCC may adopt materially different procedures 
for a

[[Page 33326]]

particular filing, or class of filings, in exceptional circumstances or 
for unusual transactions, after providing notice of the change to the 
applicant and to any other party that the OCC determines should receive 
notice.
    (c) Comptroller's Licensing Manual. The ``Comptroller's Licensing 
Manual'' (Manual) provides additional filing guidance, including 
policies and procedures. The Manual and sample forms are available on 
the OCC's Internet Web page at www.occ.gov.
    (d) Electronic filing. The OCC encourages electronic filing for all 
filings. The Manual describes the OCC's electronic filing procedures.


Sec.  5.3  Definitions.

    (a) Applicant means a person or entity that submits a notice or 
application to the OCC under this part.
    (b) Application means a submission requesting OCC approval to 
engage in various corporate activities and transactions.
    (c) Appropriate OCC licensing office means the OCC office that is 
responsible for processing applications or notices to engage in various 
corporate activities or transactions, as described at www.OCC.gov.
    (d) Appropriate OCC supervisory office means the OCC office that is 
responsible for the supervision of a national bank or Federal savings 
association, as described in subpart A of 12 CFR part 4.
    (e) Capital and surplus means:
    (1) A bank's or Federal savings association's tier 1 and tier 2 
capital calculated under the OCC's risk-based capital standards set 
forth in 12 CFR part 3, as applicable, as reported in the bank's or 
savings association's Consolidated Reports of Condition and Income 
(Call Reports) filed under 12 U.S.C. 161 or 12 U.S.C. 1464(v), 
respectively; plus
    (2) The balance of the national bank's or Federal savings 
association's allowance for loan and lease losses not included in the 
institution's Tier 2 capital, for purposes of the calculation of risk-
based capital reported in the institution's Call Reports, described in 
paragraph (e)(1) of this section.
    (f) Depository institution means any bank or savings association.
    (g) Eligible bank or eligible savings association means a national 
bank or Federal savings association that:
    (1) Is well capitalized as defined in 12 CFR 6.4;
    (2) Has a composite rating of 1 or 2 under the Uniform Financial 
Institutions Rating System (CAMELS);
    (3) Has a Community Reinvestment Act (CRA), 12 U.S.C. 2901 et seq., 
rating of ``Outstanding'' or ``Satisfactory,'' if applicable;
    (4) Has an OCC compliance rating of 1 or 2; and
    (5) Is not subject to a cease and desist order, consent order, 
formal written agreement, or Prompt Corrective Action directive (see 12 
CFR part 6, subpart B) or, if subject to any such order, agreement, or 
directive, is informed in writing by the OCC that the bank or savings 
association may be treated as an ``eligible bank or eligible savings 
association'' for purposes of this part.
    (h) Eligible depository institution means:
    (1) With respect to a national bank, a state bank or a Federal or 
state savings association that meets the criteria for an ``eligible 
bank or eligible savings association'' under Sec.  5.3(g) and is FDIC-
insured; and
    (2) With respect to a Federal savings association, a state or 
national bank or a state savings association that meets the criteria 
for an ``eligible bank or eligible savings association'' under Sec.  
5.3(g) and is FDIC-insured.
    (i) Filing means an application or notice submitted to the OCC 
under this part.
    (j) Notice, in general, means a submission notifying the OCC that a 
national bank or Federal savings association intends to engage in or 
has commenced certain corporate activities or transactions. The 
specific meaning of notice depends on the context of the rule in which 
it is used and may require the filer to obtain prior OCC approval 
before engaging in the activity or transaction, may provide the OCC 
with authority to disapprove the notice, or may be informational 
requiring no official OCC action.
    (k) Principal city means an area designated as a ``principal city'' 
by the Office of Management and Budget.
    (l) Short-distance relocation means moving the premises of a branch 
or main office of a national bank or a branch or home office of a 
Federal savings association within a:
    (1) One thousand foot-radius of the site if the branch, main 
office, or home office is located within a principal city of an MSA;
    (2) One-mile radius of the site if the branch, main office, or home 
office is not located within a principal city, but is located within an 
MSA; or
    (3) Two-mile radius of the site if the branch, main office, or home 
office is not located within an MSA.


Sec.  5.4  Filing required.

    (a) Filing. A depository institution shall file an application or 
notice with the OCC to engage in corporate activities and transactions 
as described in this part.
    (b) Availability of forms. Forms and instructions for filing are 
available on the OCC's Internet Web page at www.occ.gov.
    (c) Other agency's applications or filings. At the request of the 
applicant, the OCC may accept an application or other filing submitted 
to another Federal agency that covers the proposed action or 
transaction and contains substantially the same information as required 
by the OCC. The OCC also may require the applicant to submit 
supplemental information.
    (d) Where to file. An applicant should address a filing or other 
submission under this part to the appropriate OCC licensing office or 
appropriate OCC supervisory office, unless the OCC advises an applicant 
otherwise. Relevant addresses are listed on the OCC's Internet Web page 
at www.occ.gov.
    (e) Incorporation of other material. An applicant may incorporate 
any material contained in any other application or filing filed with 
the OCC or other Federal agency by reference, provided that the 
material is attached to the application and is current and responsive 
to the information requested by the OCC. The filing must clearly 
indicate that the information is so incorporated and include a cross-
reference to the information incorporated.
    (f) Prefiling meeting. When submitting an application to the OCC, 
an applicant is encouraged to contact the appropriate OCC licensing 
office to determine the need for a prefiling meeting. The OCC decides 
whether to require a prefiling meeting on a case-by-case basis. 
Submission of a draft business plan or other relevant information 
before any prefiling meeting may expedite the filing review process. 
Information on model business plans can be found in the Manual.


Sec.  5.5  Filing fees.

    (a) Procedure. An applicant shall submit the appropriate filing 
fee, if any, in connection with its filing. Filing fees may be paid by 
check, money order, cashier's check, or wire transfer. Additional 
information on filing fees, including where to file, can be found in 
the Manual. The OCC generally does not refund the filing fees.
    (b) Fee schedule. The OCC publishes a fee schedule in the ``Notice 
of Comptroller of the Currency Fees,'' as described in 12 CFR 8.8.

[[Page 33327]]

Sec.  5.6  [Reserved]


Sec.  5.7  Investigations.

    (a) Authority. The OCC may examine or investigate and evaluate 
facts related to a filing to the extent necessary to reach an informed 
decision.
    (b) Fees. As described in 12 CFR 8.6, the OCC may assess fees for 
investigations or examinations conducted under paragraph (a) of this 
section. The OCC publishes a fee schedule in the ``Notice of 
Comptroller of the Currency Fees,'' as described in 12 CFR 8.8.


Sec.  5.8  Public notice.

    (a) General. An applicant shall publish a public notice of its 
filing in a newspaper of general circulation in the community in which 
the applicant proposes to engage in business, on the date of filing, or 
as soon as practicable before or after the date of filing. This notice 
shall be published in the English language but if the OCC determines 
that the primary language of a significant number of adult residents of 
the community is a language other than English, the OCC may require 
that an additional notice(s) simultaneously be published in the 
community in the appropriate language(s).
    (b) Contents of the public notice. The public notice shall state 
that a filing is being made, the date of the filing, the name and 
address of the applicant, the subject matter of the filing (including 
the name of the institution that is the subject of the filing), that 
the public may submit comments to the appropriate OCC licensing office, 
the address of the appropriate OCC licensing office where comments 
should be sent, the closing date of the public comment period, that the 
public portion of the filing is available on request, and any other 
information that the OCC requires.
    (c) Confirmation of public notice. Promptly following publication, 
the applicant shall mail or otherwise deliver to the appropriate OCC 
licensing office a statement containing the date of publication, the 
name and address of the newspaper that published the public notice, a 
copy of the public notice, and any other information that the OCC 
requires.
    (d) Multiple transactions. The OCC 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 filing a 
single public notice for multiple transactions, the applicant shall 
explain in the notice how the transactions are related.
    (e) Joint public notices accepted. Upon the request of an 
applicant, for a transaction subject to a public notice requirement of 
both the OCC and another Federal agency, the OCC may accept publication 
of a single joint notice containing the information required by both 
the OCC and the other Federal agency, provided that the notice states 
that comments must be submitted to both the OCC and, if applicable, the 
other Federal agency.
    (f) Public notice by the OCC. In addition to the foregoing, the OCC 
may require or give public notice and request comment on any filing and 
in any manner the OCC determines appropriate for the particular filing.
    (g) New public notice. At the OCC's discretion, an applicant may be 
required to publish a new public notice if:
    (1) The applicant submits either a revised filing or new or 
additional information related to a filing;
    (2) A major issue of law or change in circumstance arises after a 
filing; or
    (3) The OCC determines that a new public notice is appropriate.


Sec.  5.9  Public availability.

    (a) General. The OCC provides a copy of the public file to any 
person who requests it. A requestor should submit a written request for 
the public file concerning a pending filing to the appropriate OCC 
licensing office. A requestor should submit a written request for the 
public file concerning a decided or closed filing to the OCC's Freedom 
of Information Act Officer, Communications Division, at the address 
listed on www.OCC.gov. The OCC may impose a fee in accordance with 12 
CFR 4.17 and at the rate the OCC publishes in the ``Notice of 
Comptroller of the Currency Fees,'' described in 12 CFR 8.8.
    (b) Public file. A public file consists of the portions of the 
filing, supporting data, supplementary information, and information 
submitted by interested persons, to the extent that those documents 
have not been afforded confidential treatment. Applicants and other 
interested persons may request that confidential treatment be afforded 
information submitted to the OCC pursuant to paragraph (c) of this 
section.
    (c) Confidential treatment. The applicant or an interested person 
submitting information may request that specific information be treated 
as confidential under the Freedom of Information Act, 5 U.S.C. 552 (see 
12 CFR 4.12(b)). A submitter should draft its request for confidential 
treatment narrowly to extend only to those portions of a document it 
considers confidential. If a submitter requests confidential treatment 
for information that the OCC does not consider to be confidential, the 
OCC may include that information in the public file after providing 
notice to the submitter. Moreover, at its own initiative, the OCC may 
determine that certain information should be treated as confidential 
and withhold that information from the public file. A person requesting 
information withheld from the public file should submit the request to 
the OCC's Freedom of Information Act Officer, Communications Division, 
under the procedures described in 12 CFR part 4, subpart B. That 
request may be subject to the predisclosure notice procedures of 12 CFR 
4.16.


Sec.  5.10  Comments.

    (a) Submission of comments. During the comment period, any person 
may submit written comments on a filing to the appropriate OCC 
licensing office.
    (b) Comment period-- (1) General. Unless otherwise stated, the 
comment period is 30 days after publication of the public notice 
required by Sec.  5.8(a). If a new public notice is required under 
Sec.  5.8(g), the OCC may require a new comment period of up to 30 days 
after publication of the new public notice.
    (2) Extension. The OCC may extend a comment period if:
    (i) The applicant fails to file all required publicly available 
information on a timely basis to permit review by interested persons or 
makes a request for confidential treatment not granted by the OCC that 
delays the public availability of that information;
    (ii) Any person requesting an extension of time satisfactorily 
demonstrates to the OCC that additional time is necessary to develop 
factual information that the OCC determines is necessary to consider 
the application; or
    (iii) The OCC determines that other extenuating circumstances 
exist.
    (3) Applicant response. The OCC may give the applicant an 
opportunity to respond to comments received.


Sec.  5.11  Hearings and other meetings.

    (a) Hearing requests. Prior to the end of the comment period, any 
person may submit to the appropriate OCC office a written request for a 
hearing on a filing. 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 OCC. A person requesting a hearing shall simultaneously 
submit a copy of the request to the applicant.
    (b) Action on a hearing request. The OCC may grant or deny a 
request for a hearing and may limit the issues to those it deems 
relevant or material. The OCC generally grants a hearing request

[[Page 33328]]

only if the OCC determines that written submissions would be 
insufficient or that a hearing would otherwise benefit the decision-
making process. The OCC also may order a hearing if it concludes that a 
hearing would be in the public interest.
    (c) Denial of a hearing request. If the OCC denies a hearing 
request, it shall notify the person requesting the hearing of the 
reason for the denial.
    (d) OCC procedures prior to the hearing--(1) Notice of Hearing. The 
OCC issues a Notice of Hearing if it grants a request for a hearing or 
orders a hearing because it is in the public interest. The OCC sends a 
copy of the Notice of Hearing to the applicant, to the person 
requesting the hearing, and anyone else requesting a copy. The Notice 
of Hearing states the subject and date of the filing, the time and 
place of the hearing, and the issues to be addressed. The OCC may limit 
the issues considered at a hearing to those it determines are relevant 
or material.
    (2) Presiding officer. The OCC appoints a presiding officer to 
conduct the hearing. The presiding officer is responsible for all 
procedural questions not governed by this section.
    (e) Participation in the hearing. Any person who wishes to appear 
(participant) shall notify the appropriate OCC licensing office of his 
or her intent to participate in the hearing within ten days from the 
date the OCC issues the Notice of Hearing. At least five days before 
the hearing, each participant shall submit to the appropriate OCC 
licensing office, the applicant, and any other person the OCC requires, 
the names of witnesses and one copy of each exhibit the participant 
intends to present.
    (f) Hearing transcripts. The OCC arranges for a hearing transcript. 
The person requesting the hearing may be required to bear the cost of 
one copy of the transcript for his or her use.
    (g) Conduct of the hearing--(1) Presentations. Subject to the 
rulings of the presiding officer, the applicant and participants may 
make opening statements and present witnesses, material, and data.
    (2) Information submitted. A person presenting documentary material 
shall furnish one copy to the OCC and one copy to the applicant and 
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 OCC's Rules of Practice and Procedure (12 CFR part 19) 
do not apply to hearings under this section.
    (4) Meeting format. The OCC may conduct a meeting in the format 
that it determines is appropriate, including a telephone conference, a 
face-to-face meeting, or a more formal meeting.
    (h) Closing the hearing record. At the applicant's or participant's 
request, the OCC may keep the hearing record open for up to 14 days 
following the OCC's receipt of the transcript. The OCC resumes 
processing the filing after the record closes.
    (i) Other meetings--(1) Public meetings. The OCC may arrange for a 
public meeting in connection with an application, either upon receipt 
during the comment period of a written request for such a meeting or 
upon the OCC's own initiative, if the OCC finds that written 
submissions are insufficient to address facts or issues raised in the 
application or otherwise determines that a meeting will benefit the 
decision-making process. Public meetings will be arranged and presided 
over by a presiding officer.
    (2) Private meetings. The OCC may arrange a meeting with an 
applicant or other interested parties to clarify and narrow the issues 
and to facilitate the resolution of the issues.
    (3) Issues at meetings. The OCC may limit the issues considered at 
a meeting to those it determines are relevant or material.


Sec.  5.12  Computation of time.

    In computing the period of days, the OCC does not include the day 
of the act or event (e.g., the date an application is received by the 
OCC) from which the period begins to run. When the last day of a time 
period is a Saturday, Sunday, or Federal holiday, the time period runs 
until the end of the next day that is not a Saturday, Sunday or Federal 
holiday.


Sec.  5.13  Decisions.

    (a) General. The OCC may approve, conditionally approve, or deny a 
filing after appropriate review and consideration of the record. In 
reviewing a filing, the OCC may consider the activities, resources, or 
condition of an affiliate of the applicant that may reasonably reflect 
on or affect the applicant. It also may consider information available 
from any source, including any comments submitted by interested parties 
or views expressed by interested parties at meetings with the OCC.
    (1) Conditional approval. The OCC may impose conditions on any 
approval, including to address a significant supervisory, CRA (if 
applicable), or compliance concern, if the OCC determines that the 
conditions are necessary or appropriate to ensure that approval is 
consistent with relevant statutory and regulatory standards and OCC 
policies thereunder and safe and sound banking practices.
    (2) Expedited review. The OCC grants eligible banks and eligible 
savings associations expedited review within a specified time after 
filing or commencement of the public comment period.
    (i) The OCC may extend the expedited review period or remove a 
filing from expedited review procedures if it concludes that the 
filing, or an adverse comment regarding the filing, presents a 
significant supervisory, CRA (if applicable), or compliance concern, or 
raises a significant legal or policy issue, requiring additional OCC 
review. The OCC will provide the applicant with a written explanation 
if it decides not to process an application from an eligible bank or 
eligible savings association under expedited review pursuant to this 
paragraph.
    (ii) Adverse comments that the OCC determines do not raise a 
significant supervisory, CRA (if applicable), or compliance concern, or 
a significant legal or policy issue, or are frivolous, filed primarily 
as a means of delaying action on the filing, or that raise a CRA 
concern that the OCC determines has been satisfactorily resolved, do 
not affect the OCC's decision under paragraph (a)(2)(i) of this 
section. The OCC considers a CRA concern to have been satisfactorily 
resolved if the OCC previously reviewed (e.g., in an examination or an 
application) a concern presenting substantially the same issue in 
substantially the same assessment area during substantially the same 
time, and the OCC determines that the concern would not warrant denial 
or imposition of a condition on approval of the application.
    (iii) If a bank or savings association files an application for any 
activity or transaction that is dependent upon the approval of another 
application under this part, or if requests for approval for more than 
one activity or transaction are combined in a single application under 
applicable sections of this part, none of the subject applications may 
be deemed approved upon expiration of the applicable time periods, 
unless all of the applications are subject to expedited review 
procedures and the longest of the time periods expires without the OCC 
issuing a decision or notifying the bank or savings association that 
the filings are not eligible for expedited review under the standards 
in paragraph (a)(2)(i) of this section.

[[Page 33329]]

    (b) Denial. The OCC may deny a filing if:
    (1) A significant supervisory, CRA (if applicable), or compliance 
concern exists with respect to the applicant;
    (2) Approval of the filing is inconsistent with applicable law, 
regulation, or OCC policy thereunder; or
    (3) The applicant fails to provide information requested by the OCC 
that is necessary for the OCC to make an informed decision.
    (c) Required information and abandonment of filing. A filing must 
contain information required by the applicable section set forth in 
this part. To the extent necessary to evaluate an application, the OCC 
may require an applicant to provide additional information. The OCC may 
deem a filing abandoned if information required or requested by the OCC 
in connection with the filing is not furnished within the time period 
specified by the OCC. The OCC may return an application without a 
decision if it finds the filing to be materially deficient. A filing is 
materially deficient if it lacks sufficient information for the OCC to 
make a determination under the applicable statutory or regulatory 
criteria.
    (d) Notification of final disposition. The OCC notifies the 
applicant, and any person who makes a written request, of the final 
disposition of a filing, including confirmation of an expedited review 
under this part. If the OCC denies a filing, the OCC notifies the 
applicant in writing of the reasons for the denial.
    (e) Publication of decision. The OCC will issue a public decision 
when a decision represents a new or changed policy or presents issues 
of general interest to the public or the banking industry. In rendering 
its decisions, the OCC may elect not to disclose information that the 
OCC deems to be private or confidential.
    (f) Appeal. An applicant may file an appeal of an OCC decision in 
writing with the Deputy Comptroller for Licensing or with the Ombudsman 
at the address listed on www.OCC.gov. In the event that the Deputy 
Comptroller for Licensing was the deciding official of the matter 
appealed, or was involved personally and substantially in the matter, 
the appeal may be referred instead to the Chief Counsel or the 
Ombudsman.
    (g) Extension of time. When the OCC approves or conditionally 
approves a filing, the OCC generally gives the applicant a specified 
period of time to commence that new or expanded activity. The OCC does 
not generally grant an extension of the time specified to commence a 
new or expanded corporate activity approved under this part, unless the 
OCC determines that the delay is beyond the applicant's control.
    (h) Nullifying a decision--(1) Material misrepresentation or 
omission. An applicant shall certify that any filing or supporting 
material submitted to the OCC contains no material misrepresentations 
or omissions. The OCC may review and verify any information filed in 
connection with a notice or an application. If the OCC discovers a 
material misrepresentation or omission after the OCC has rendered a 
decision on the filing, the OCC may nullify its decision. Any person 
responsible for any material misrepresentation or omission in a filing 
or supporting materials may be subject to enforcement action and other 
penalties, including criminal penalties provided in 18 U.S.C. 1001.
    (2) Other nullifications. The OCC may nullify any decision on a 
filing that is:
    (i) Contrary to law, regulation, or OCC policy thereunder; or
    (ii) Granted due to clerical or administrative error, or a material 
mistake of law or fact.
0
6. Section 5.20 is revised to read as follows:


Sec.  5.20  Organizing a national bank or Federal savings association.

    (a) Authority. 12 U.S.C. 21, 22, 24(Seventh), 26, 27, 92a, 93a, 
1814(b), 1816, 1462a, 1463, 1464, 2903, and 5412(b)(2)(B).
    (b) Licensing requirements. Any person desiring to establish a 
national bank or a Federal savings association shall submit an 
application and obtain prior OCC approval.
    (c) Scope. This section describes the procedures and requirements 
governing OCC review and approval of an application to establish a 
national bank or a Federal stock or mutual savings association, 
including a national bank or a Federal savings association with a 
special purpose. Information regarding an application to establish an 
interim national bank or an interim Federal savings association solely 
to facilitate a business combination is set forth in Sec.  5.33.
    (d) Definitions. For purposes of this section:
    (1) Bankers' bank means a bank owned exclusively (except to the 
extent directors' qualifying shares are required by law) by other 
depository institutions or depository institution holding companies (as 
that term is defined in section 3 of the Federal Deposit Insurance Act, 
12 U.S.C. 1813), the activities of which are limited by its articles of 
association exclusively to providing services to or for other 
depository institutions, their holding companies, and the officers, 
directors, and employees of such institutions and companies, and to 
providing correspondent banking services at the request of other 
depository institutions or their holding companies.
    (2) Control means with respect to an application to establish a 
national bank, control as used in section 2 of the Bank Holding Company 
Act, 12 U.S.C. 1841(a)(2), and with respect to an application to 
establish a Federal savings association, control as used in section 10 
of the Home Owners' Loan Act, 12 U.S.C. 1467a(a)(2).
    (3) Final approval means the OCC action issuing a charter and 
authorizing a national bank or Federal savings association to open for 
business.
    (4) Holding company means any company that controls or proposes to 
control a national bank or a Federal savings association whether or not 
the company is a bank holding company under section 2 of the Bank 
Holding Company Act, 12 U.S.C. 1841(a)(1), or a savings and loan 
holding company under section 10 of the Home Owners' Loan Act, 12 
U.S.C. 1467a.
    (5) Lead depository institution means the largest depository 
institution controlled by a bank holding company or savings and loan 
holding company based on a comparison of the average total assets 
controlled by each depository institution as reported in its 
Consolidated Report of Condition and Income required to be filed for 
the immediately preceding four calendar quarters.
    (6) Institution means either a national bank or Federal savings 
association.
    (7) Organizing group means five or more persons acting on their own 
behalf, or serving as representatives of a sponsoring holding company, 
who apply to the OCC for a national bank or Federal savings association 
charter.
    (8) Preliminary approval means a decision by the OCC permitting an 
organizing group to go forward with the organization of the proposed 
national bank or Federal savings association. A preliminary approval 
generally is subject to certain conditions that an applicant must 
satisfy before the OCC will grant final approval.
    (e) Requirements--(1) General. (i) The OCC charters a national bank 
under the authority of the National Bank Act of 1864, as amended, 12 
U.S.C. 1 et seq. The bank may be a special purpose bank that limits its 
activities to fiduciary activities or to any other activities within 
the business of banking. A special purpose bank that conducts 
activities other than fiduciary activities must conduct at least one of 
the

[[Page 33330]]

following three core banking functions: receiving deposits; paying 
checks; or lending money. The name of a proposed national bank must 
include the word ``national.''
    (ii) The OCC charters a Federal savings association under the 
authority of section 5 of the Home Owners' Loan Act, 12 U.S.C. 1464, 
which in an application to establish a Federal savings association 
requires the OCC to consider:
    (A) Whether the applicants are persons of good character and 
responsibility;
    (B) Whether a necessity exists for the association in the community 
to be served;
    (C) Whether there is a reasonable probability of the association's 
usefulness and success; and
    (D) Whether the association can be established without undue injury 
to properly conducted existing local savings associations and home 
financing institutions.
    (iii) In determining whether to approve an application to establish 
a national bank or Federal savings association, the OCC verifies that 
the proposed national bank or Federal savings association has complied 
with the following requirements. A national bank or a Federal savings 
association shall:
    (A) File either articles of association (for a national bank), or a 
charter and by-laws (for a Federal savings association) with the OCC;
    (B) In the case of an application to establish a national bank, 
file an organization certificate containing specified information with 
the OCC;
    (C) Ensure that all capital stock is paid in, or in the case of a 
Federal mutual savings association, ensure that at least a minimum 
amount of capital is paid in; and
    (D) Have at least five elected directors.
    (2) Community Reinvestment Act. (i) Twelve CFR part 25 requires the 
OCC to take into account a proposed insured national bank's description 
of how it will meet its CRA objectives.
    (ii) Twelve CFR part 195 requires the OCC to take into account a 
proposed insured Federal savings association description of how it will 
meet its CRA objectives.
    (3) Federal Deposit Insurance. Preliminary approval for an 
application to establish a Federal savings association will be 
conditioned on the savings association applying for and receiving 
approval for deposit insurance from the Federal Deposit Insurance 
Corporation (FDIC). Final approval for an application to establish a 
Federal savings association will not be issued until receipt by the OCC 
of written confirmation by the FDIC that the accounts of the Federal 
savings association will be insured by the FDIC.
    (f) Policy--(1) General. In determining whether to approve an 
application to establish a national bank or Federal savings 
association, the OCC is guided by the following principles:
    (i) Maintaining a safe and sound banking system;
    (ii) Encouraging a national bank or Federal savings association to 
provide fair access to financial services by helping to meet the credit 
needs of its entire community;
    (iii) Ensuring compliance with laws and regulations; and
    (iv) Promoting fair treatment of customers including efficiency and 
better service.
    (2) Policy considerations. (i) In evaluating an application to 
establish a national bank or Federal savings association, the OCC 
considers whether the proposed institution:
    (A) Has organizers who are familiar with national banking laws and 
regulations or Federal savings association laws and regulations, 
respectively;
    (B) Has competent management, including a board of directors, with 
ability and experience relevant to the types of services to be 
provided;
    (C) Has capital that is sufficient to support the projected volume 
and type of business;
    (D) Can reasonably be expected to achieve and maintain 
profitability;
    (E) Will be operated in a safe and sound manner; and
    (F) Does not have a title that misrepresents the nature of the 
institution or the services it offers.
    (ii) In evaluating an application to establish a Federal savings 
association, the OCC considers whether the proposed Federal savings 
association will be operated as a qualified thrift lender under section 
10(m) of the Home Owners' Loan Act, 12 U.S.C. 1467a(m).
    (iii) The OCC may also consider additional factors listed in 
section 6 of the Federal Deposit Insurance Act, 12 U.S.C. 1816, 
including the risk to the Federal deposit insurance fund, and whether 
the proposed institution's corporate powers are consistent with the 
purposes of the Federal Deposit Insurance Act, the National Bank Act, 
and the Home Owners' Loan Act, as applicable.
    (3) OCC evaluation. The OCC evaluates a proposed institution's 
organizing group and its business plan or operating plan together. The 
OCC's judgment concerning one may affect the evaluation of the other. 
An organizing group and its business plan or operating plan must be 
stronger in markets where economic conditions are marginal or 
competition is intense.
    (g) Organizing group-- (1) General. Strong organizing groups 
generally include diverse business and financial interests and 
community involvement. An organizing group must have the experience, 
competence, willingness, and ability to be active in directing the 
proposed institution's affairs in a safe and sound manner. The 
institution's initial board of directors generally is comprised of 
many, if not all, of the organizers. The business plan or operating 
plan and other information supplied in the application must demonstrate 
an organizing group's collective ability to establish and operate a 
successful national bank or Federal savings association in the economic 
and competitive conditions of the market to be served. Each organizer 
should be knowledgeable about the business plan or operating plan. A 
poor business plan or operating plan reflects adversely on the 
organizing group's ability, and the OCC generally denies applications 
with poor business plans or operating plans.
    (2) Management selection. The initial board of directors must 
select competent senior executive officers before the OCC grants final 
approval. Early selection of executive officers, especially the chief 
executive officer, contributes favorably to the preparation and review 
of a business plan or operating plan that is accurate, complete, and 
appropriate for the type of national bank or Federal savings 
association proposed and its market, and reflects favorably upon an 
application. As a condition of the charter approval, the OCC retains 
the right to object to and preclude the hiring of any officer, or the 
appointment or election of any director, for a two-year period from the 
date the institution commences business, or longer as appropriate.
    (3) Financial resources. (i) Each organizer must have a history of 
responsibility, personal honesty, and integrity. Personal wealth is not 
a prerequisite to become an organizer or director of a national bank or 
Federal savings association. However, directors' stock purchases, or, 
in the case of a Federal mutual savings association, capital 
contributions, individually and in the aggregate, should reflect a 
financial commitment to the success of the institution that is 
reasonable in relation to their individual and collective financial 
strength. A director should not have to depend on institution 
dividends, fees, or other

[[Page 33331]]

compensation to satisfy financial obligations.
    (ii) Because directors are often the primary source of additional 
capital for an institution not affiliated with a holding company, it is 
desirable that the proposed directors of the national bank or Federal 
savings association, as a group, be able to supply or have a realistic 
plan to enable the institution to obtain capital when needed.
    (iii) Any financial or other business arrangement, direct or 
indirect, between the organizing group or other insiders and the 
proposed national bank or Federal savings association must be on 
nonpreferential terms.
    (4) Organizational expenses. (i) Organizers are expected to 
contribute time and expertise to the organization of the national bank 
or Federal savings association. Organizers should not bill excessive 
charges to the institution for professional and consulting services or 
unduly rely upon these fees as a source of income.
    (ii) A proposed national bank or Federal savings association shall 
not pay any fee that is contingent upon an OCC decision. Such action 
generally is grounds for denial of the application or withdrawal of 
preliminary approval. Organizational expenses for denied applications 
are the sole responsibility of the organizing group.
    (5) Sponsor's experience and support. A sponsor must be financially 
able to support the new institution's operations and to provide or 
locate capital when needed. The OCC primarily considers the financial 
and managerial resources of the sponsor and the sponsor's record of 
performance, rather than the financial and managerial resources of the 
organizing group, if an organizing group is sponsored by:
    (i) An existing holding company;
    (ii) Individuals currently affiliated with other depository 
institutions; or
    (iii) Individuals who, in the OCC's view, are otherwise 
collectively experienced in banking and have demonstrated the ability 
to work together effectively.
    (h) Business plan or Operating plan--(1) General. (i) Organizers of 
a proposed national bank or Federal savings association shall submit a 
business plan or operating plan that adequately addresses the statutory 
and policy considerations set forth in paragraphs (e) and (f)(2) of 
this section. In the case of a proposed Federal savings association the 
plan must also specifically address meeting qualified thrift lender 
requirements. The plan must reflect sound banking principles and 
demonstrate realistic assessments of risk in light of economic and 
competitive conditions in the market to be served.
    (ii) The OCC may offset deficiencies in one factor by strengths in 
one or more other factors. However, deficiencies in some factors, such 
as unrealistic earnings prospects, may have a negative influence on the 
evaluation of other factors, such as capital adequacy, or may be 
serious enough by themselves to result in denial. The OCC considers 
inadequacies in a business plan or operating plan to reflect negatively 
on the organizing group's ability to operate a successful institution.
    (2) Earnings prospects. The organizing group shall submit pro forma 
balance sheets and income statements as part of the business plan or 
operating plan. The OCC reviews all projections for reasonableness of 
assumptions and consistency with the business plan or operating plan.
    (3) Management. (i) The organizing group shall include in the 
business plan or operating plan information sufficient to permit the 
OCC to evaluate the overall management ability of the organizing group. 
If the organizing group has limited banking experience or community 
involvement, the senior executive officers must be able to compensate 
for such deficiencies.
    (ii) The organizing group may not hire an officer or elect or 
appoint a director if the OCC objects to that person at any time prior 
to the date the institution commences business.
    (4) Capital. A proposed bank or Federal savings association must 
have sufficient initial capital, net of any organizational expenses 
that will be charged to the institution's capital after it begins 
operations, to support the institution's projected volume and type of 
business.
    (5) Community service. (i) The business plan or operating plan must 
indicate the organizing group's knowledge of and plans for serving the 
community. The organizing group shall evaluate the banking needs of the 
community, including its consumer, business, nonprofit, and government 
sectors. The business plan or operating plan must demonstrate how the 
proposed national bank or Federal savings association responds to those 
needs consistent with the safe and sound operation of the institution. 
The provisions of this paragraph may not apply to an application to 
organize an institution for a special purpose.
    (ii) As part of its business plan or operating plan, the organizing 
group shall submit a statement that demonstrates its plans to achieve 
CRA objectives.
    (iii) Because community support is important to the long-term 
success of a national bank or Federal savings association, the 
organizing group shall include plans for attracting and maintaining 
community support.
    (6) Safety and soundness. The business plan or operating plan must 
demonstrate that the organizing group (and the sponsoring company, if 
any), is aware of, and understands, applicable depository institution 
laws and regulations, and safe and sound banking operations and 
practices. The OCC will deny an application that does not meet these 
safety and soundness requirements.
    (7) Fiduciary services. The business plan or operating plan must 
indicate if the proposed institution intends to offer fiduciary 
services. The information required by Sec.  5.26 shall be filed with 
the charter application. A separate application is not required.
    (i) Procedures--(1) Prefiling meeting. The OCC normally requires a 
prefiling meeting with the organizers of a proposed national bank or 
Federal savings association before the organizers file an application. 
Organizers should be familiar with the OCC's chartering policy and 
procedural requirements in the Comptroller's Licensing Manual before 
the prefiling meeting. The prefiling meeting normally is held in the 
district office where the application will be filed but may be held at 
another location at the request of the applicant.
    (2) Business plan or operating plan. An organizing group shall file 
a business plan or operating plan that addresses the subjects discussed 
in paragraph (h) of this section.
    (3) Contact person. The organizing group shall designate a contact 
person to represent the organizing group in all contacts with the OCC. 
The contact person shall be an organizer and proposed director of the 
new national bank or Federal savings association, except a 
representative of the sponsor or sponsors may serve as contact person 
if an application is sponsored by an existing holding company, 
individuals currently affiliated with other depository institutions, or 
individuals who, in the OCC's view, are otherwise collectively 
experienced in banking and have demonstrated the ability to work 
together effectively.
    (4) Decision notification. The OCC notifies the spokesperson and 
other interested persons in writing of its decision on an application.
    (5) Activities. (i) Before the OCC grants final approval, a 
proposed national bank or Federal savings association must be 
established as a legal entity. A national bank becomes a

[[Page 33332]]

legal entity after it has filed its organization certificate and 
articles of association with the OCC as required by law. A Federal 
savings association becomes a legal entity after it has filed its 
proposed charter and bylaws with the OCC. A proposed national bank may 
offer and sell securities prior to OCC preliminary approval of the 
proposed national bank's charter application, provided that the 
proposed national bank has filed articles of association, an 
organization certificate, and a completed charter application and the 
bank complies with paragraph (i)(5)(iii) of this section. A proposed 
Federal stock savings association may offer and sell securities prior 
to OCC preliminary approval of the proposed Federal stock savings 
association's charter application, provided that the proposed Federal 
stock savings association has filed a proposed charter, bylaws, and a 
completed charter application and the Federal stock savings association 
complies with paragraph (i)(5)(iii) of this section.
    (ii) (A) After the OCC grants preliminary approval, the organizing 
group shall elect a board of directors, take steps necessary to 
organize the proposed national bank or Federal savings association and 
prepare it for commencing business.
    (B) A proposed national bank may not conduct the business of 
banking until the OCC grants final approval and issues a charter. A 
proposed Federal savings association may not commence business until 
the OCC grants final approval and issues a charter, which shall be in 
the form provided in this part.
    (iii) For all capital obtained through a public offering a proposed 
national bank or Federal savings association shall use an offering 
circular that complies with the OCC's securities offering regulations, 
12 CFR part 16 or part 197, as applicable. All securities of a 
particular class in the initial offering shall be sold at the same 
price.
    (iv) A national bank or Federal savings association in organization 
shall raise its capital before it commences business. Preliminary 
approval expires if the proposed national bank or Federal savings 
association does not raise the required capital within 12 months from 
the date the OCC grants preliminary approval. Preliminary approval 
expires if the proposed national bank or Federal savings association 
does not commence business within 18 months from the date of 
preliminary approval, unless the OCC grants an extension. If 
preliminary approval expires, all cash collected on subscriptions shall 
be returned.
    (j) Expedited review. An application to establish a full-service 
national bank or Federal savings association that is sponsored by a 
bank holding company or savings and loan holding company whose lead 
depository institution is an eligible bank or eligible savings 
association is deemed preliminarily approved by the OCC as of the 15th 
day after the close of the public comment period or the 45th day after 
the filing is received by the OCC, whichever is later, unless the OCC:
    (1) Notifies the applicant prior to that date that the filing is 
not eligible for expedited review, or the expedited review process is 
extended, under Sec.  5.13(a)(2); or
    (2) Notifies the applicant prior to that date that the OCC has 
determined that the proposed bank will offer banking services that are 
materially different than those offered by the lead depository 
institution.
    (k) National bankers' banks--(1) Activities and customers. In 
addition to the other requirements of this section, when an organizing 
group seeks to organize a national bankers' bank, the organizing group 
shall list in the application the anticipated activities and customers 
or clients of the proposed national bankers' bank.
    (2) Waiver of requirements. At the organizing group's request, the 
OCC may waive requirements that are applicable to national banks in 
general if those requirements are inappropriate for a national bankers' 
bank and would impede its ability to provide desired services to its 
market. An applicant must submit a request for a waiver with the 
application and must support the request with adequate justification 
and legal analysis. A national bankers' bank that is already in 
operation may also request a waiver. The OCC cannot waive statutory 
provisions that specifically apply to national bankers' banks pursuant 
to 12 U.S.C. 27(b)(1).
    (3) Investments. A national bank or Federal savings association may 
invest up to ten percent of its capital and surplus in a bankers' bank 
and may own five percent or less of any class of a bankers' bank's 
voting securities.
    (l) Special purpose institutions. An applicant for a national bank 
or Federal savings association charter that will limit its activities 
to fiduciary activities, credit card operations, or another special 
purpose shall adhere to established charter procedures with 
modifications appropriate for the circumstances as determined by the 
OCC. An applicant for a national bank or Federal savings association 
charter that will have a community development focus shall also adhere 
to established charter procedures with modifications appropriate for 
the circumstances as determined by the OCC. A national bank that seeks 
to invest in a bank or savings association with a community development 
focus must comply with applicable requirements of 12 CFR part 24. A 
Federal savings association that seeks to invest in a bank or savings 
association with a community development focus must comply with Sec.  
160.36 or any other applicable requirements.
0
7. Section 5.21 is added to read as follows:


Sec.  5.21  Federal Mutual Savings Association Charter and Bylaws.

    (a) Authority. 12 U.S.C. 1462a, 1463, 1464, and 2901 et seq.
    (b) Licensing requirements. A Federal mutual savings association 
must file an application, notice, or other filing as prescribed by this 
section when adopting or amending its charter or bylaws.
    (c) Scope. This section describes the procedures and requirements 
governing charters and bylaws for Federal mutual savings associations.
    (d) Exceptions to rules of general applicability. Notwithstanding 
any other provision of this part, Sec. Sec.  5.8 through 5.11 shall not 
apply to this section.
    (e) Charter form. Except as provided in paragraphs (f) and (g), a 
Federal mutual savings association shall have a charter in the 
following form. A charter for a Federal mutual savings bank shall 
substitute the term ``savings bank'' for ``association.'' The term 
``trustee'' may be substituted for the term ``director.'' Associations 
adopting this charter with existing borrower members must grandfather 
those borrower members who were members as of the date of issuance of 
the new charter by the OCC. Such borrowers shall have one vote for the 
period of time such borrowings are in existence.
Federal Mutual Charter
    Section 1. Corporate title. The full corporate title of the Federal 
savings association is --.
    Section 2. Office. The home office shall be located in -- [city, 
state].
    Section 3. Duration. The duration of the association is perpetual.
    Section 4. Purpose and powers. The purpose of the association is to 
pursue any or all of the lawful objectives of a Federal mutual savings 
association chartered under section 5 of the Home Owners' Loan Act and 
to exercise all the express, implied, and incidental powers conferred 
thereby and by all acts amendatory thereof and supplemental thereto, 
subject to the Constitution and laws of the United States as they are

[[Page 33333]]

now in effect, or as they may hereafter be amended, and subject to all 
lawful and applicable rules, regulations, and orders of the Office of 
the Comptroller of the Currency (``OCC'').
    Section 5. Capital. The association may raise capital by accepting 
payments on savings and demand accounts and by any other means 
authorized by the OCC.
    Section 6. Members. All holders of the association's savings, 
demand, or other authorized accounts are members of the association. In 
the consideration of all questions requiring action by the members of 
the association, each holder of an account shall be permitted to cast 
one vote for each $100, or fraction thereof, of the withdrawal value of 
the member's account. No member, however, shall cast more than 1000 
votes. All accounts shall be nonassessable.
    Section 7. Directors. The association shall be under the direction 
of a board of directors. The authorized number of directors shall not 
be fewer than five nor more than fifteen persons, as fixed in the 
association's bylaws, except that the number of directors may be 
decreased to a number less than five or increased to a number greater 
than fifteen with the prior approval of the OCC.
    Section 8. Capital, surplus, and distribution of earnings. The 
association shall maintain for the purpose of meeting losses the amount 
of capital required by section 5 of the Home Owners' Loan Act and by 
regulations of the OCC. The association shall distribute net earnings 
on its accounts on such basis and in accordance with such terms and 
conditions as may from time to time be authorized by the OCC: Provided, 
That the association may establish minimum-balance requirements for 
accounts to be eligible for distribution of earnings.
    All holders of accounts of the association shall be entitled to 
equal distribution of assets, pro rata to the value of their accounts, 
in the event of voluntary or involuntary liquidation, dissolution, or 
winding up of the association. Moreover, in any such event, or in any 
other situation in which the priority of such accounts is in 
controversy, all such accounts shall, to the extent of their withdrawal 
value, be debts of the association having the same priority as the 
claims of general creditors of the association not having priority 
(other than any priority arising or resulting from consensual 
subordination) over other general creditors of the association.
    Section 9. Amendment of charter. Adoption of any preapproved 
charter amendment shall be effective after such preapproved amendment 
has been approved by the members at a legal meeting. Any other 
amendment, addition, change, or repeal of this charter must be approved 
by the OCC prior to approval by the members at a legal meeting, and 
shall be effective upon filing with the OCC in accordance with 
regulatory procedures.
Attest:----------------------------------------------------------------

Secretary of the Association

By:--------------------------------------------------------------------

President or Chief Executive Officer of the Association

Attest:----------------------------------------------------------------

Deputy Comptroller for Licensing

By:--------------------------------------------------------------------

Comptroller of the Currency

Effective Date:--------------------------------------------------------

    (f) Charter amendments. In order to adopt a charter amendment, a 
Federal mutual savings association must comply with the following 
requirements:
    (1) Board of directors approval. The board of directors of the 
association must adopt a resolution proposing the charter amendment 
that states the text of such amendment;
    (2) Form of filing--(i) Application requirement. If the proposed 
charter amendment would: render more difficult or discourage a merger, 
proxy contest, the assumption of control by a mutual account holder of 
the association, or the removal of incumbent management; or involve a 
significant issue of law or policy; then, the association shall file 
the proposed amendment and obtain the prior approval of the OCC.
    (ii) Notice requirement. If the proposed charter amendment does not 
involve a provision that would be covered by paragraph (f)(2)(i) of 
this section and is permissible under all applicable laws, rules and 
regulations, then the association shall submit the proposed amendment 
to the appropriate OCC licensing office, at least 30 days prior to the 
effective date of the proposed charter amendment.
    (g) Approval. Any charter amendment filed pursuant to paragraph 
(f)(2)(ii) of this section shall automatically be approved 30 days from 
the date of filing of such amendment, provided that the association 
follows the requirements of its charter in adopting such amendment. 
This automatic approval does not apply if, prior to the expiration of 
such 30-day period, the OCC notifies the association that such 
amendment is rejected or that such amendment is deemed to be filed 
under the provisions of paragraph (f)(2)(i) of this section. In 
addition, notwithstanding anything in paragraph (f) of this section to 
the contrary, the following charter amendments, including the adoption 
of the Federal mutual charter as set forth in paragraph (e) of this 
section, shall be effective and deemed approved at the time of 
adoption, if adopted without change and filed with the OCC, within 30 
days after adoption, provided the association follows the requirements 
of its charter in adopting such amendments:
    (1) Purpose and powers. Add a second paragraph to section 4, as 
follows:
    Section 4. Purpose and powers. * * * The association shall have the 
express power: (i) To act as fiscal agent of the United States when 
designated for that purpose by the Secretary of the Treasury, under 
such regulations as the Secretary may prescribe, to perform all such 
reasonable duties as fiscal agent of the United States as may be 
required, and to act as agent for any other instrumentality of the 
United States when designated for that purpose by any such 
instrumentality; (ii) To sue and be sued, complain and defend in any 
court of law or equity; (iii) To have a corporate seal, affixed by 
imprint, facsimile or otherwise; (iv) To appoint officers and agents as 
its business shall require and allow them suitable compensation; (v) To 
adopt bylaws not inconsistent with the Constitution or laws of the 
United States and rules and regulations adopted thereunder and under 
this Charter; (vi) To raise capital, which shall be unlimited, by 
accepting payments on savings, demand, or other accounts, as are 
authorized by rules and regulations made by the OCC, and the holders of 
all such accounts or other accounts as shall, to such extent as may be 
provided by such rules and regulations, be members of the association 
and shall have such voting rights and such other rights as are thereby 
provided; (vii) To issue notes, bonds, debentures, or other 
obligations, or securities, provided by or under any provision of 
Federal statute as from time to time is in effect; (viii) To provide 
for redemption of insured accounts; (ix) To borrow money without 
limitation and pledge and otherwise encumber any of its assets to 
secure its debts; (x) To lend and otherwise invest its funds as 
authorized by statute and the rules and regulations of the OCC; (xi) To 
wind up and dissolve, merge, consolidate, convert, or reorganize; (xii) 
To purchase, hold, and convey real estate and personalty consistent 
with its objects, purposes, and powers; (xiii) To mortgage or lease any 
real estate and personalty and take such property by gift, devise, or 
bequest; and (xiv) To exercise all powers conferred by law. In addition 
to the foregoing powers expressly enumerated, this association shall 
have power to do all things

[[Page 33334]]

reasonably incident to the accomplishment of its express objects and 
the performance of its express powers.
    (2) Title change. A Federal mutual savings association that has 
complied with Sec.  5.42 of this chapter may amend its charter by 
substituting a new corporate title in section 1.
    (3) Home office. A Federal mutual savings association may amend its 
charter by substituting a new home office in section 2, if it has 
complied with applicable requirements of Sec.  5.40 of this chapter.
    (4) Maximum number of votes. A Federal mutual savings association 
may amend its charter by substituting any number of votes per member 
between 1 and 1000 in section 6.
    (h) Reissuance of charter. A Federal mutual savings association 
that has amended its charter may apply to have its charter, including 
the amendments, reissued by the OCC. Such request for reissuance should 
be filed at the appropriate OCC licensing office and contain signatures 
required under paragraph (e) of this section, together with such 
supporting documents as may be needed to demonstrate that the 
amendments were properly adopted.
    (i) Availability of chartering documents. A Federal mutual savings 
association shall cause a true copy of its charter and bylaws and all 
amendments thereto to be available to accountholders at all times in 
each office of the savings association, and shall upon request deliver 
to any accountholders a copy of such charter and bylaws or amendments 
thereto.
    (j) Bylaws for Federal mutual savings associations--A Federal 
mutual savings association shall operate under bylaws that contain 
provisions that comply with all requirements specified by the OCC in 
this paragraph and that are not otherwise inconsistent with the 
provisions of this paragraph, the association's charter, and all other 
applicable laws, rules, and regulations provided that, a bylaw 
provision inconsistent with the provisions of this paragraph may be 
adopted with the approval of the OCC. Bylaws may be adopted, amended or 
repealed by a majority of the votes cast by the members at a legal 
meeting or a majority of the association's board of directors. The 
bylaws for a Federal mutual savings bank shall substitute the term 
``savings bank'' for ``association''. The term ``trustee'' may be 
substituted for the term ``director''.
    (1) The following requirements are applicable to Federal mutual 
savings associations:
    (i) Annual meetings of members. (A) An association shall provide 
for and conduct an annual meeting of its members for the election of 
directors and at which any other business of the association may be 
conducted. Such meeting shall be held at any convenient place the board 
of directors may designate, and at a date and time within 150 days 
after the end of the association's fiscal year.
    (B) At each annual meeting, the officers shall make a full report 
of the financial condition of the association and of its progress for 
the preceding year and shall outline a program for the succeeding year.
    (ii) Special meetings of members. Procedures for calling any 
special meeting of the members and for conducting such a meeting shall 
be set forth in the bylaws. The board of directors of the association 
or the holders of 10 percent or more of the voting capital shall be 
entitled to call a special meeting. For purposes of this paragraph, 
``voting capital'' means FDIC-insured deposits as of the voting record 
date.
    (iii) Notice of meeting of members. Notice specifying the date, 
time, and place of the annual or any special meeting and adequately 
describing any business to be conducted shall be published for two 
successive weeks immediately prior to the week in which such meeting 
shall convene in a newspaper of general circulation in the city or 
county in which the principal place of business of the association is 
located, or mailed postage prepaid at least 15 days and not more than 
45 days prior to the date on which such meeting shall convene to each 
of its members of record. A similar notice shall be posted in a 
conspicuous place in each of the offices of the association during the 
14 days immediately preceding the date on which such meeting shall 
convene. The bylaws may permit a member to waive in writing any right 
to receive personal delivery of the notice. When any meeting is 
adjourned for 30 days or more, notice of the adjournment and 
reconvening of the meeting shall be given as in the case of the 
original meeting.
    (iv) Fixing of record date. The bylaws shall provide for the fixing 
of a record date and a method for determining from the books of the 
association the members entitled to vote. Such date shall be not more 
than 60 days nor fewer than 10 days prior to the date on which the 
action, requiring such determination of members, is to be taken. The 
same determination shall apply to any adjourned meeting.
    (v) Member quorum. Any number of members present and voting, 
represented in person or by proxy, at a regular or special meeting of 
the members shall constitute a quorum. A majority of all votes cast at 
any meeting of the members shall determine any question, unless 
otherwise required by regulation. At any adjourned meeting, any 
business may be transacted that might have been transacted at the 
meeting as originally called. Members present at a duly constituted 
meeting may continue to transact business until adjournment.
    (vi) Voting by proxy. Procedures shall be established for voting at 
any annual or special meeting of the members by proxy pursuant to the 
rules and regulations of the OCC. Proxies may be given telephonically 
or electronically as long as the holder uses a procedure for verifying 
the identity of the member. All proxies with a term greater than eleven 
months or solicited at the expense of the association must run to the 
board of directors as a whole, or to a committee appointed by a 
majority of such board.
    (vii) Communications between members. Provisions relating to 
communications between members shall be consistent with Sec.  144.8 of 
this part. No member, however, shall have the right to inspect or copy 
any portion of any books or records of a Federal mutual savings 
association containing:
    (A) A list of depositors in or borrowers from such association;
    (B) Their addresses;
    (C) Individual deposit or loan balances or records; or
    (D) Any data from which such information could be reasonably 
constructed.
    (viii) Number of directors, membership. The bylaws shall set forth 
a specific number of directors, not a range. The number of directors 
shall be not fewer than five nor more than fifteen, unless a higher or 
lower number has been authorized by the OCC. Each director of the 
association shall be a member of the association. Directors may be 
elected for periods of one to three years and until their successors 
are elected and qualified, but if a staggered board is chosen, 
provision shall be made for the election of approximately one-third or 
one-half of the board each year, as appropriate. State-chartered 
savings banks converting to Federal savings banks may include 
alternative provisions for the election and term of office of directors 
so long as such provisions are authorized by the OCC, and provide for 
compliance with the standard provisions of this paragraph no later

[[Page 33335]]

than six years after the conversion to a Federal savings association.
    (ix) Meetings of the board. The board of directors shall determine 
the place, frequency, time, procedure for notice, which shall be at 
least 24 hours unless waived by the directors, and waiver of notice for 
all regular and special meetings. The board also may permit telephonic 
participation at meetings. The bylaws may provide for action to be 
taken without a meeting if unanimous written consent is obtained for 
such action. A majority of the authorized directors shall constitute a 
quorum for the transaction of business. The act of a majority of the 
directors present at any meeting at which there is a quorum shall be 
the act of the board.
    (x) Officers, employees and agents. (A) The bylaws shall contain 
provisions regarding the officers of the association, their functions, 
duties, and powers. The officers of the association shall consist of a 
president, one or more vice presidents, a secretary, and a treasurer or 
comptroller, each of whom shall be elected annually by the board of 
directors. Such other officers and assistant officers and agents as may 
be deemed necessary may be elected or appointed by the board of 
directors or chosen in such other manner as may be prescribed in the 
bylaws. Any two or more offices may be held by the same person, except 
the offices of president and secretary.
    (B) Any officer may be removed by the board of directors with or 
without cause, but such removal, other than for cause, shall be without 
prejudice to the contractual rights, if any, of the person so removed. 
Termination for cause, for purposes of this Sec.  5.21 and Sec.  5.22, 
shall include termination because of the person's personal dishonesty, 
incompetence, willful misconduct, breach of fiduciary duty involving 
personal profit, intentional failure to perform stated duties, willful 
violation of any law, rule, or regulation (other than traffic 
violations or similar offenses) or final cease and desist order, or 
material breach of any provision of an employment contract.
    (xi) Vacancies, resignation or removal of directors. In the event 
of a vacancy on the board, the board of directors may, by their 
affirmative vote, fill such vacancy, even if the remaining directors 
constitute less than a quorum. A director elected to fill a vacancy 
shall be elected to serve only until the next election of directors by 
the members. The bylaws shall set out the procedure for the resignation 
of a director. Directors may be removed only for cause, as defined in 
Sec.  5.21(j)(1)(x)(B), by a vote of the holders of a majority of the 
shares then entitled to vote at an election of directors.
    (xii) Powers of the board. The board of directors shall have the 
power to exercise any and all of the powers of the association not 
expressly reserved by the charter to the members.
    (xiii) Nominations for directors. The bylaws shall provide that 
nominations for directors may be made at the annual meeting by any 
member and shall be voted upon, except, however, the bylaws may require 
that nominations by a member must be submitted to the secretary and 
then prominently posted in the principal place of business, at least 10 
days prior to the date of the annual meeting. However, if such 
provision is made for prior submission of nominations by a member, then 
the bylaws must provide for a nominating committee, which, except in 
the case of a nominee substituted as a result of death or other 
incapacity, must submit nominations to the secretary and have such 
nominations similarly posted at least 15 days prior to the date of the 
annual meeting.
    (xiv) New business. The bylaws shall provide procedures for the 
introduction of new business at the annual meeting.
    (xv) Amendment. Bylaws may include any provision for their 
amendment that would be consistent with applicable law, rules, and 
regulations and adequately addresses its subject and purpose.
    (A) Amendments shall be effective:
    (1) After approval by a majority vote of the authorized board, or 
by a majority of the vote cast by the members of the association at a 
legal meeting; and
    (2) After receipt of any applicable regulatory approval.
    (B) When an association fails to meet its quorum requirement, 
solely due to vacancies on the board, the bylaws may be amended by an 
affirmative vote of a majority of the sitting board.
    (xvi) Miscellaneous. The bylaws may also address any other subjects 
necessary or appropriate for effective operation of the association.
    (2) Form of filing--(i) Application requirement. (A) Any bylaw 
amendment shall be submitted to the appropriate OCC licensing office 
for OCC approval if it would render more difficult or discourage a 
merger, proxy contest, the assumption of control by a mutual account 
holder of the association, or the removal of incumbent management; 
involve a significant issue of law or policy, including 
indemnification, conflicts of interest, and limitations on director or 
officer liability; or be inconsistent with the requirements of this 
paragraph or with applicable laws, rules, regulations, or the 
association's charter.
    (B) For purposes of paragraph (j)(2), bylaw provisions that adopt 
the language of the OCC's model or optional bylaws, if adopted without 
change, and filed with the OCC within 30 days after adoption, are 
effective upon adoption.
    (ii) Filing requirement. If the proposed bylaw amendment does not 
involve a provision that would be covered by paragraph (j)(2)(i)(A) of 
this section, then the association shall submit the amendment to the 
appropriate OCC licensing office at least 30 days prior to the date the 
bylaw amendment is to be adopted by the association.
    (iii) Corporate governance procedures. A Federal mutual association 
may elect to follow the corporate governance procedures of the laws of 
the state where the main office of the institution is located, provided 
that such procedures may be elected only to the extent not inconsistent 
with applicable Federal statutes, regulations, and safety and 
soundness, and such procedures are not of the type described in 
paragraph (j)(2)(i)(A) of this section. If this election is selected, a 
Federal mutual association shall designate in its bylaws the provision 
or provisions from the body of law selected for its corporate 
governance procedures, and shall file a copy of such bylaws, which are 
effective upon adoption, within 30 days after adoption. The submission 
shall indicate, where not obvious, why the bylaw provisions meet the 
requirements stated in paragraph (j)(2)(i)(A) of this section.
    (3) Effectiveness. Any bylaw amendment filed pursuant to paragraph 
(j)(2)(ii) of this section shall automatically be effective 30 days 
from the date of filing of such amendment, provided that the 
association follows the requirements of its charter and bylaws in 
adopting such amendment. This automatic effective date does not apply 
if, prior to the expiration of such 30-day period, the OCC notifies the 
association that such amendment is rejected or that such amendment 
requires an application to be filed pursuant to paragraph (j)(2)(i) of 
this section.
    (4) Effect of subsequent charter or bylaw change. Notwithstanding 
any subsequent change to its charter or bylaws, the authority of a 
Federal mutual savings association to engage in any transaction shall 
be determined only by the association's charter or bylaws then in 
effect.
0
8. Section 5.22 is added to read as follows:

[[Page 33336]]

Sec.  5.22  Federal stock savings association charter and bylaws.

    (a) Authority. 12 U.S.C. 1462a, 1463, 1464, and 2901 et seq.
    (b) Licensing requirements. A Federal stock savings association 
must file an application, notice, or other filing as prescribed by this 
section when adopting or amending its charter or bylaws.
    (c) Scope. This section describes the procedures and requirements 
governing charters and bylaws for Federal stock savings associations.
    (d) Exceptions to rules of general applicability. Notwithstanding 
any other provision of this part, Sec. Sec.  5.8 through 5.11 shall not 
apply to this section.
    (e) Charter form. The charter of a Federal stock association shall 
be in the following form, except as provided in this section. An 
association that has converted from the mutual form pursuant to part 
192 of this chapter shall include in its charter a section establishing 
a liquidation account as required by Sec.  192.3(c)(13) of this 
chapter. A charter for a Federal stock savings bank shall substitute 
the term ``savings bank'' for ``association.'' Charters may also 
include any preapproved optional provision contained in this section.
Federal Stock Charter
    Section 1. Corporate title. The full corporate title of the 
association is ------.
    Section 2. Office. The home office shall be located in ------ 
[city, state].
    Section 3. Duration. The duration of the association is perpetual.
    Section 4. Purpose and powers. The purpose of the association is to 
pursue any or all of the lawful objectives of a Federal savings 
association chartered under section 5 of the Home Owners' Loan Act and 
to exercise all of the express, implied, and incidental powers 
conferred thereby and by all acts amendatory thereof and supplemental 
thereto, subject to the Constitution and laws of the United States as 
they are now in effect, or as they may hereafter be amended, and 
subject to all lawful and applicable rules, regulations, and orders of 
the Office of the Comptroller of the Currency (``OCC'').
    Section 5. Capital stock. The total number of shares of all classes 
of the capital stock that the association has the authority to issue is 
------, all of which shall be common stock of par [or if no par is 
specified then shares shall have a stated] value of ------ per share. 
The shares may be issued from time to time as authorized by the board 
of directors without the approval of its shareholders, except as 
otherwise provided in this Section 5 or to the extent that such 
approval is required by governing law, rule, or regulation. The 
consideration for the issuance of the shares shall be paid in full 
before their issuance and shall not be less than the par [or stated] 
value. Neither promissory notes nor future services shall constitute 
payment or part payment for the issuance of shares of the association. 
The consideration for the shares shall be cash, tangible or intangible 
property (to the extent direct investment in such property would be 
permitted to the association), labor, or services actually performed 
for the association, or any combination of the foregoing. In the 
absence of actual fraud in the transaction, the value of such property, 
labor, or services, as determined by the board of directors of the 
association, shall be conclusive. Upon payment of such consideration, 
such shares shall be deemed to be fully paid and nonassessable. In the 
case of a stock dividend, that part of the retained earnings of the 
association that is transferred to common stock or paid-in capital 
accounts upon the issuance of shares as a stock dividend shall be 
deemed to be the consideration for their issuance.
    Except for shares issued in the initial organization of the 
association or in connection with the conversion of the association 
from the mutual to stock form of capitalization, no shares of capital 
stock (including shares issuable upon conversion, exchange, or exercise 
of other securities) shall be issued, directly or indirectly, to 
officers, directors, or controlling persons of the association other 
than as part of a general public offering or as qualifying shares to a 
director, unless the issuance or the plan under which they would be 
issued has been approved by a majority of the total votes eligible to 
be cast at a legal meeting.
    The holders of the common stock shall exclusively possess all 
voting power. Each holder of shares of common stock shall be entitled 
to one vote for each share held by such holder, except as to the 
cumulation of votes for the election of directors, unless the charter 
provides that there shall be no such cumulative voting. Subject to any 
provision for a liquidation account, in the event of any liquidation, 
dissolution, or winding up of the association, the holders of the 
common stock shall be entitled, after payment or provision for payment 
of all debts and liabilities of the association, to receive the 
remaining assets of the association available for distribution, in cash 
or in kind. Each share of common stock shall have the same relative 
rights as and be identical in all respects with all the other shares of 
common stock.
    Section 6. Preemptive rights. Holders of the capital stock of the 
association shall not be entitled to preemptive rights with respect to 
any shares of the association which may be issued.
    Section 7. Directors. The association shall be under the direction 
of a board of directors. The authorized number of directors, as stated 
in the association's bylaws, shall not be fewer than five nor more than 
fifteen except when a greater or lesser number is approved by the OCC.
    Section 8. Amendment of charter. Except as provided in Section 5, 
no amendment, addition, alteration, change or repeal of this charter 
shall be made, unless such is proposed by the board of directors of the 
association, approved by the shareholders by a majority of the votes 
eligible to be cast at a legal meeting, unless a higher vote is 
otherwise required, and approved or preapproved by the OCC.

Attest:----------------------------------------------------------------

Secretary of the Association

By:--------------------------------------------------------------------

President or Chief Executive Officer of the Association

Attest:----------------------------------------------------------------

Deputy Comptroller for Licensing

By:--------------------------------------------------------------------

Comptroller of the Currency

Effective Date:--------------------------------------------------------

    (f) Charter amendments. In order to adopt a charter amendment, a 
Federal stock savings association must comply with the following 
requirements:
    (1) Board of directors approval. The board of directors of the 
association must adopt a resolution proposing the charter amendment 
that states the text of such amendment;
    (2) Form of filing--(i) Application requirement. If the proposed 
charter amendment would render more difficult or discourage a merger, 
tender offer, or proxy contest, the assumption of control by a holder 
of a block of the association's stock, the removal of incumbent 
management, or involve a significant issue of law or policy, the 
association shall file the proposed amendment and shall obtain the 
prior approval of the OCC; and
    (ii) Notice requirement. If the proposed charter amendment does not 
involve a provision that would be covered by paragraph (f)(2)(i) of 
this section and such amendment is permissible under all applicable 
laws, rules or regulations, then the association shall submit the 
proposed amendments to the appropriate OCC licensing office,

[[Page 33337]]

at least 30 days prior to the date the proposed charter amendment is to 
be mailed for consideration by the association's shareholders.
    (g) Approval. Any charter amendment filed pursuant to paragraph 
(f)(2)(ii) of this section shall automatically be approved 30 days from 
the date of filing of such amendment, provided that the association 
follows the requirements of its charter in adopting such amendment, 
unless prior to the expiration of such 30-day period the OCC notifies 
the association that such amendment is rejected or that such amendment 
is deemed to be filed under the provisions of paragraph (f)(2)(i) of 
this section. In addition, the following charter amendments, including 
the adoption of the Federal stock charter as set forth in paragraph (e) 
of this section, shall be approved at the time of adoption, if adopted 
without change and filed with the OCC within 30 days after adoption, 
provided the association follows the requirements of its charter in 
adopting such amendments:
    (1) Title change. A Federal stock association that has complied 
with Sec.  5.42 of this chapter may amend its charter by substituting a 
new corporate title in section 1.
    (2) Home office. A Federal savings association may amend its 
charter by substituting a new home office in section 2, if it has 
complied with applicable requirements of Sec.  5.40 of this chapter.
    (3) Number of shares of stock and par value. A Federal stock 
association may amend Section 5 of its charter to change the number of 
authorized shares of stock, the number of shares within each class of 
stock, and the par or stated value of such shares.
    (4) Capital stock. A Federal stock association may amend its 
charter by revising Section 5 to read as follows:
    Section 5. Capital stock. The total number of shares of all classes 
of capital stock that the association has the authority to issue is --, 
of which -- shall be common stock of par [or if no par value is 
specified the stated] value of -- per share and of which [list the 
number of each class of preferred and the par or if no par value is 
specified the stated value per share of each such class]. The shares 
may be issued from time to time as authorized by the board of directors 
without further approval of shareholders, except as otherwise provided 
in this Section 5 or to the extent that such approval is required by 
governing law, rule, or regulation. The consideration for the issuance 
of the shares shall be paid in full before their issuance and shall not 
be less than the par [or stated] value. Neither promissory notes nor 
future services shall constitute payment or part payment for the 
issuance of shares of the association. The consideration for the shares 
shall be cash, tangible or intangible property (to the extent direct 
investment in such property would be permitted), labor, or services 
actually performed for the association, or any combination of the 
foregoing. In the absence of actual fraud in the transaction, the value 
of such property, labor, or services, as determined by the board of 
directors of the association, shall be conclusive. Upon payment of such 
consideration, such shares shall be deemed to be fully paid and 
nonassessable. In the case of a stock dividend, that part of the 
retained earnings of the association that is transferred to common 
stock or paid-in capital accounts upon the issuance of shares as a 
stock dividend shall be deemed to be the consideration for their 
issuance.
    Except for shares issued in the initial organization of the 
association or in connection with the conversion of the association 
from the mutual to the stock form of capitalization, no shares of 
capital stock (including shares issuable upon conversion, exchange, or 
exercise of other securities) shall be issued, directly or indirectly, 
to officers, directors, or controlling persons of the association other 
than as part of a general public offering or as qualifying shares to a 
director, unless their issuance or the plan under which they would be 
issued has been approved by a majority of the total votes eligible to 
be cast at a legal meeting.
    Nothing contained in this Section 5 (or in any supplementary 
sections hereto) shall entitle the holders of any class of a series of 
capital stock to vote as a separate class or series or to more than one 
vote per share, except as to the cumulation of votes for the election 
of directors, unless the charter otherwise provides that there shall be 
no such cumulative voting: Provided, That this restriction on voting 
separately by class or series shall not apply:
    i. To any provision which would authorize the holders of preferred 
stock, voting as a class or series, to elect some members of the board 
of directors, less than a majority thereof, in the event of default in 
the payment of dividends on any class or series of preferred stock;
    ii. To any provision that would require the holders of preferred 
stock, voting as a class or series, to approve the merger or 
consolidation of the association with another corporation or the sale, 
lease, or conveyance (other than by mortgage or pledge) of properties 
or business in exchange for securities of a corporation other than the 
association if the preferred stock is exchanged for securities of such 
other corporation: Provided, That no provision may require such 
approval for transactions undertaken with the assistance or pursuant to 
the direction of the OCC or the Federal Deposit Insurance Corporation;
    iii. To any amendment which would adversely change the specific 
terms of any class or series of capital stock as set forth in this 
Section 5 (or in any supplementary sections hereto), including any 
amendment which would create or enlarge any class or series ranking 
prior thereto in rights and preferences. An amendment which increases 
the number of authorized shares of any class or series of capital 
stock, or substitutes the surviving association in a merger or 
consolidation for the association, shall not be considered to be such 
an adverse change.
    A description of the different classes and series (if any) of the 
association's capital stock and a statement of the designations, and 
the relative rights, preferences, and limitations of the shares of each 
class of and series (if any) of capital stock are as follows:
    A. Common stock. Except as provided in this Section 5 (or in any 
supplementary sections thereto) the holders of the common stock shall 
exclusively possess all voting power. Each holder of shares of the 
common stock shall be entitled to one vote for each share held by each 
holder, except as to the cumulation of votes for the election of 
directors, unless the charter otherwise provides that there shall be no 
such cumulative voting.
    Whenever there shall have been paid, or declared and set aside for 
payment, to the holders of the outstanding shares of any class of stock 
having preference over the common stock as to the payment of dividends, 
the full amount of dividends and of sinking fund, retirement fund, or 
other retirement payments, if any, to which such holders are 
respectively entitled in preference to the common stock, then dividends 
may be paid on the common stock and on any class or series of stock 
entitled to participate therewith as to dividends out of any assets 
legally available for the payment of dividends.
    In the event of any liquidation, dissolution, or winding up of the 
association, the holders of the common stock (and the holders of any 
class or series of stock entitled to participate with the common stock 
in the distribution of assets) shall be entitled to receive, in cash or 
in kind, the assets of the association available for distribution 
remaining after: (i) Payment

[[Page 33338]]

or provision for payment of the association's debts and liabilities; 
(ii) distributions or provision for distributions in settlement of its 
liquidation account; and (iii) distributions or provision for 
distributions to holders of any class or series of stock having 
preference over the common stock in the liquidation, dissolution, or 
winding up of the association. Each share of common stock shall have 
the same relative rights as and be identical in all respects with all 
the other shares of common stock.
    B. Preferred stock. The association may provide in supplementary 
sections to its charter for one or more classes of preferred stock, 
which shall be separately identified. The shares of any class may be 
divided into and issued in series, with each series separately 
designated so as to distinguish the shares thereof from the shares of 
all other series and classes. The terms of each series shall be set 
forth in a supplementary section to the charter. All shares of the same 
class shall be identical except as to the following relative rights and 
preferences, as to which there may be variations between different 
series:
    a. The distinctive serial designation and the number of shares 
constituting such series;
    b. The dividend rate or the amount of dividends to be paid on the 
shares of such series, whether dividends shall be cumulative and, if 
so, from which date(s), the payment date(s) for dividends, and the 
participating or other special rights, if any, with respect to 
dividends;
    c. The voting powers, full or limited, if any, of shares of such 
series;
    d. Whether the shares of such series shall be redeemable and, if 
so, the price(s) at which, and the terms and conditions on which, such 
shares may be redeemed;
    e. The amount(s) payable upon the shares of such series in the 
event of voluntary or involuntary liquidation, dissolution, or winding 
up of the association;
    f. Whether the shares of such series shall be entitled to the 
benefit of a sinking or retirement fund to be applied to the purchase 
or redemption of such shares, and if so entitled, the amount of such 
fund and the manner of its application, including the price(s) at which 
such shares may be redeemed or purchased through the application of 
such fund;
    g. Whether the shares of such series shall be convertible into, or 
exchangeable for, shares of any other class or classes of stock of the 
association and, if so, the conversion price(s) or the rate(s) of 
exchange, and the adjustments thereof, if any, at which such conversion 
or exchange may be made, and any other terms and conditions of such 
conversion or exchange.
    h. The price or other consideration for which the shares of such 
series shall be issued; and
    i. Whether the shares of such series which are redeemed or 
converted shall have the status of authorized but unissued shares of 
serial preferred stock and whether such shares may be reissued as 
shares of the same or any other series of serial preferred stock.
    Each share of each series of serial preferred stock shall have the 
same relative rights as and be identical in all respects with all the 
other shares of the same series.
    The board of directors shall have authority to divide, by the 
adoption of supplementary charter sections, any authorized class of 
preferred stock into series, and, within the limitations set forth in 
this section and the remainder of this charter, fix and determine the 
relative rights and preferences of the shares of any series so 
established.
    Prior to the issuance of any preferred shares of a series 
established by a supplementary charter section adopted by the board of 
directors, the association shall file with the OCC a dated copy of that 
supplementary section of this charter established and designating the 
series and fixing and determining the relative rights and preferences 
thereof.
    (5) Limitations on subsequent issuances. A Federal stock 
association may amend its charter to require shareholder approval of 
the issuance or reservation of common stock or securities convertible 
into common stock under circumstances which would require shareholder 
approval under the rules of the New York Stock Exchange if the shares 
were then listed on the New York Stock Exchange.
    (6) Cumulative voting. A Federal stock association may amend its 
charter by substituting the following sentence for the second sentence 
in the third paragraph of Section 5: ``Each holder of shares of common 
stock shall be entitled to one vote for each share held by such holder 
and there shall be no right to cumulate votes in an election of 
directors.''
    (7) Anti-takeover provisions following mutual to stock conversion. 
Notwithstanding the law of the state in which the association is 
located, a Federal stock association may amend its charter by 
renumbering existing sections as appropriate and adding a new section 8 
as follows:
    Section 8. Certain Provisions Applicable for Five Years. 
Notwithstanding anything contained in the Association's charter or 
bylaws to the contrary, for a period of [specify number of years up to 
five] years from the date of completion of the conversion of the 
Association from mutual to stock form, the following provisions shall 
apply:
    A. Beneficial Ownership Limitation. No person shall directly or 
indirectly offer to acquire or acquire the beneficial ownership of more 
than 10 percent of any class of an equity security of the association. 
This limitation shall not apply to a transaction in which the 
association forms a holding company without change in the respective 
beneficial ownership interests of its stockholders other than pursuant 
to the exercise of any dissenter and appraisal rights, the purchase of 
shares by underwriters in connection with a public offering, or the 
purchase of less than 25 percent of a class of stock by a tax-qualified 
employee stock benefit plan as defined in Sec.  192.25 of the OCC's 
regulations.
    In the event shares are acquired in violation of this section 8, 
all shares beneficially owned by any person in excess of 10% shall be 
considered ``excess shares'' and shall not be counted as shares 
entitled to vote and shall not be voted by any person or counted as 
voting shares in connection with any matters submitted to the 
stockholders for a vote.
    For purposes of this section 8, the following definitions apply:
    1. The term ``person'' includes an individual, a group acting in 
concert, a corporation, a partnership, an association, a joint stock 
company, a trust, an unincorporated organization or similar company, a 
syndicate or any other group formed for the purpose of acquiring, 
holding or disposing of the equity securities of the association.
    2. The term ``offer'' includes every offer to buy or otherwise 
acquire, solicitation of an offer to sell, tender offer for, or request 
or invitation for tenders of, a security or interest in a security for 
value.
    3. The term ``acquire'' includes every type of acquisition, whether 
effected by purchase, exchange, operation of law or otherwise.
    4. The term ``acting in concert'' means (a) knowing participation 
in a joint activity or conscious parallel action towards a common goal 
whether or not pursuant to an express agreement, or (b) a combination 
or pooling of voting or other interests in the securities of an issuer 
for a common purpose pursuant to any contract, understanding,

[[Page 33339]]

relationship, agreement or other arrangements, whether written or 
otherwise.
    B. Cumulative Voting Limitation. Stockholders shall not be 
permitted to cumulate their votes for election of directors.
    C. Call for Special Meetings. Special meetings of stockholders 
relating to changes in control of the association or amendments to its 
charter shall be called only upon direction of the board of directors.
    (h) Anti-takeover provisions. The OCC may grant approval to a 
charter amendment not listed in paragraph (g) of this section regarding 
the acquisition by any person or persons of its equity securities 
provided that the association shall file as part of its application for 
approval an opinion, acceptable to the OCC, of counsel independent from 
the association that the proposed charter provision would be permitted 
to be adopted by a corporation chartered by the state in which the 
principal office of the association is located. Any such provision must 
be consistent with applicable statutes, regulations, and OCC policies. 
Further, any such provision that would have the effect of rendering 
more difficult a change in control of the association and would require 
for any corporate action (other than the removal of directors) the 
affirmative vote of a larger percentage of shareholders than is 
required by this part, shall not be effective unless adopted by a 
percentage of shareholder vote at least equal to the highest percentage 
that would be required to take any action under such provision.
    (i) Reissuance of charter. A Federal stock association that has 
amended its charter may apply to have its charter, including the 
amendments, reissued by the OCC. Such requests for reissuance should be 
filed with the appropriate OCC licensing office, and contain signatures 
required under (c) of this part, together with such supporting 
documents as needed to demonstrate that the amendments were properly 
adopted.
    (j) Bylaws for Federal stock savings associations--(1) General. 
Bylaws may be adopted, amended or repealed by either a majority of the 
votes cast by the shareholders at a legal meeting or a majority of the 
board of directors. A bylaw provision inconsistent with paragraph (k), 
(l), (m) or (n), of this section may be adopted only with the approval 
of the OCC.
    (2) Form of Filing--(i) Application requirement. (A) Any bylaw 
amendment shall be submitted to the OCC for approval if it would:
    (1) Render more difficult or discourage a merger, tender offer, or 
proxy contest, the assumption of control by a holder of a large block 
of the association's stock, or the removal of incumbent management; or
    (2) Be inconsistent with paragraphs (k) through (n) of this 
section, with applicable laws, rules, regulations or the association's 
charter or involve a significant issue of law or policy, including 
indemnification, conflicts of interest, and limitations on director or 
officer liability.
    (B) Bylaw provisions that adopt the language of the OCC's model or 
optional bylaws, if adopted without change, and filed with the OCC 
within 30 days after adoption, are effective upon adoption.
    (ii) Filing requirement. If the proposed bylaw amendment does not 
involve a provision that would be covered by paragraph (j)(2)(i) or 
(iii) of this section and is permissible under all applicable laws, 
rules, or regulations, then the association shall submit the amendment 
to the OCC at least 30 days prior to the date the bylaw amendment is to 
be adopted by the association.
    (iii) Corporate governance procedures. A Federal stock association 
may elect to follow the corporate governance procedures of: The laws of 
the state where the main office of the association is located; the laws 
of the state where the association's holding company, if any, is 
incorporated or chartered; Delaware General Corporation law; or The 
Model Business Corporation Act, provided that such procedures may be 
elected to the extent not inconsistent with applicable Federal statutes 
and regulations and safety and soundness, and such procedures are not 
of the type described in paragraph (j)(2)(i) of this section. If this 
election is selected, a Federal stock association shall designate in 
its bylaws the provision or provisions from the body or bodies of law 
selected for its corporate governance procedures, and shall file a copy 
of such bylaws, which are effective upon adoption, within 30 days after 
adoption. The submission shall indicate, where not obvious, why the 
bylaw provisions meet the requirements stated in paragraph (j)(2)(i) of 
this section.
    (3) Effectiveness. Any bylaw amendment filed pursuant to paragraph 
(j)(2)(ii) of this section shall automatically be effective 30 days 
from the date of filing of such amendment, provided that the 
association follows the requirements of its charter and bylaws in 
adopting such amendment, unless prior to the expiration of such 30-day 
period the OCC notifies the association that such amendment is rejected 
or that such amendment requires an application to be filed pursuant to 
paragraph (j)(2)(i) of this section.
    (4) Effect of subsequent charter or bylaw change. Notwithstanding 
any subsequent change to its charter or bylaws, the authority of a 
Federal savings association to engage in any transaction shall be 
determined only by the association's charter or bylaws then in effect.
    (k) Shareholders of Federal stock savings associations.--(1) 
Shareholder meetings. A meeting of the shareholders of the association 
for the election of directors and for the transaction of any other 
business of the association shall be held annually within 150 days 
after the end of the association's fiscal year. Unless otherwise 
provided in the association's charter, special meetings of the 
shareholders may be called by the board of directors or on the request 
of the holders of 10 percent or more of the shares entitled to vote at 
the meeting, or by such other persons as may be specified in the bylaws 
of the association. All annual and special meetings of shareholders 
shall be held at any convenient place the board of directors may 
designate.
    (2) Notice of shareholder meetings. Written notice stating the 
place, day, and hour of the meeting and the purpose or purposes for 
which the meeting is called shall be delivered not fewer than 20 nor 
more than 50 days before the date of the meeting, either personally or 
by mail, by or at the direction of the chairman of the board, the 
president, the secretary, or the directors, or other persons calling 
the meeting, to each shareholder of record entitled to vote at such 
meeting. If mailed, such notice shall be deemed to be delivered when 
deposited in the mail, addressed to the shareholder at the address 
appearing on the stock transfer books or records of the association as 
of the record date prescribed in paragraph (i)(3) of this section, with 
postage thereon prepaid. When any shareholders' meeting, either annual 
or special, is adjourned for 30 days or more, notice of the adjourned 
meeting shall be given as in the case of an original meeting. 
Notwithstanding anything in this section, however, a Federal stock 
association that is wholly owned shall not be subject to the 
shareholder notice requirement.
    (3) Fixing of record date. For the purpose of determining 
shareholders entitled to notice of or to vote at any meeting of 
shareholders or any adjournment thereof, or shareholders entitled to 
receive payment of any dividend, or in order to make a

[[Page 33340]]

determination of shareholders for any other proper purpose, the board 
of directors shall fix in advance a date as the record date for any 
such determination of shareholders. Such date in any case shall be not 
more than 60 days and, in case of a meeting of shareholders, not less 
than 10 days prior to the date on which the particular action, 
requiring such determination of shareholders, is to be taken. When a 
determination of shareholders entitled to vote at any meeting of 
shareholders has been made as provided in this section, such 
determination shall apply to any adjournment thereof.
    (4) Voting lists. (i) At least 20 days before each meeting of the 
shareholders, the officer or agent having charge of the stock transfer 
books for the shares of the association shall make a complete list of 
the stockholders of record entitled to vote at such meeting, or any 
adjournments thereof, arranged in alphabetical order, with the address 
and the number of shares held by each. This list of shareholders shall 
be kept on file at the home office of the association and shall be 
subject to inspection by any shareholder of record or the stockholder's 
agent during the entire time of the meeting. The original stock 
transfer book shall constitute prima facie evidence of the stockholders 
entitled to examine such list or transfer books or to vote at any 
meeting of stockholders. Notwithstanding anything in this section, 
however, a Federal stock association that is wholly owned shall not be 
subject to the voting list requirements.
    (ii) In lieu of making the shareholders list available for 
inspection by any shareholders as provided in paragraph (j)(4)(i) of 
this section, the board of directors may perform such acts as required 
by paragraphs (a) and (b) of Rule 14a-7 of the General Rules and 
Regulations under the Securities and Exchange Act of 1934 (17 CFR 
240.14a-7) as may be duly requested in writing, with respect to any 
matter which may be properly considered at a meeting of shareholders, 
by any shareholder who is entitled to vote on such matter and who shall 
defray the reasonable expenses to be incurred by the association in 
performance of the act or acts required.
    (5) Shareholder quorum. A majority of the outstanding shares of the 
association entitled to vote, represented in person or by proxy, shall 
constitute a quorum at a meeting of shareholders. The shareholders 
present at a duly organized meeting may continue to transact business 
until adjournment, notwithstanding the withdrawal of enough 
shareholders to leave less than a quorum. If a quorum is present, the 
affirmative vote of the majority of the shares represented at the 
meeting and entitled to vote on the subject matter shall be the act of 
the stockholders, unless the vote of a greater number of stockholders 
voting together or voting by classes is required by law or the charter. 
Directors, however, are elected by a plurality of the votes cast at an 
election of directors.
    (6) Shareholder voting--(i) Proxies. Unless otherwise provided in 
the association's charter, at all meetings of shareholders, a 
shareholder may vote in person or by proxy executed in writing by the 
shareholder or by a duly authorized attorney in fact. Proxies may be 
given telephonically or electronically as long as the holder uses a 
procedure for verifying the identity of the shareholder. Proxies 
solicited on behalf of the management shall be voted as directed by the 
shareholder or, in the absence of such direction, as determined by a 
majority of the board of directors. No proxy shall be valid more than 
eleven months from the date of its execution except for a proxy coupled 
with an interest.
    (ii) Shares controlled by association. Neither treasury shares of 
its own stock held by the association nor shares held by another 
corporation, if a majority of the shares entitled to vote for the 
election of directors of such other corporation are held by the 
association, shall be voted at any meeting or counted in determining 
the total number of outstanding shares at any given time for purposes 
of any meeting.
    (7) Nominations and new business submitted by shareholders. 
Nominations for directors and new business submitted by shareholders 
shall be voted upon at the annual meeting if such nominations or new 
business are submitted in writing and delivered to the secretary of the 
association at least five days prior to the date of the annual meeting. 
Ballots bearing the names of all the persons nominated shall be 
provided for use at the annual meeting.
    (8) Informal action by stockholders. If the bylaws of the 
association so provide, any action required to be taken at a meeting of 
the stockholders, or any other action that may be taken at a meeting of 
the stockholders, may be taken without a meeting if consent in writing 
has been given by all the stockholders entitled to vote with respect to 
the subject matter.
    (l) Board of directors. (1) General powers and duties. The business 
and affairs of the association shall be under the direction of its 
board of directors. The board of directors shall annually elect a 
chairman of the board from among its members and shall designate the 
chairman of the board, when present, to preside at its meeting. 
Directors need not be stockholders unless the bylaws so require.
    (2) Number and term. The bylaws shall set forth a specific number 
of directors, not a range. The number of directors shall be not fewer 
than five nor more than fifteen, unless a higher or lower number has 
been authorized by the OTS, prior to July 21, 2011 or the OCC. 
Directors shall be elected for a term of one to three years and until 
their successors are elected and qualified. If a staggered board is 
chosen, the directors shall be divided into two or three classes as 
nearly equal in number as possible and one class shall be elected by 
ballot annually.
    (3) Regular meetings. The board of directors shall determine the 
place, frequency, time and procedure for notice of regular meetings.
    (4) Quorum. A majority of the number of directors shall constitute 
a quorum for the transaction of business at any meeting of the board of 
directors. The act of the majority of the directors present at a 
meeting at which a quorum is present shall be the act of the board of 
directors, unless a greater number is prescribed by regulation of the 
OCC.
    (5) Vacancies. Any vacancy occurring in the board of directors may 
be filled by the affirmative vote of a majority of the remaining 
directors although less than a quorum of the board of directors. A 
director elected to fill a vacancy shall be elected to serve only until 
the next election of directors by the shareholders. Any directorship to 
be filled by reason of an increase in the number of directors may be 
filled by election by the board of directors for a term of office 
continuing only until the next election of directors by the 
shareholders.
    (6) Removal or resignation of directors. (i) At a meeting of 
shareholders called expressly for that purpose, any director may be 
removed only for cause, as termination for cause is defined in Sec.  
5.21(j)(1)(x)(B), by a vote of the holders of a majority of the shares 
then entitled to vote at an election of directors. Associations may 
provide for procedures regarding resignations in the bylaws.
    (ii) If less than the entire board is to be removed, no one of the 
directors may be removed if the votes cast against the removal would be 
sufficient to elect a director if then cumulatively voted at an 
election of the class of directors of which such director is a part.
    (iii) Whenever the holders of the shares of any class are entitled 
to elect one or more directors by the provisions of the charter or 
supplemental sections

[[Page 33341]]

thereto, the provisions of this section shall apply, in respect to the 
removal of a director or directors so elected, to the vote of the 
holders of the outstanding shares of that class and not to the vote of 
the outstanding shares as a whole.
    (7) Executive and other committees. The board of directors, by 
resolution adopted by a majority of the full board, may designate from 
among its members an executive committee and one or more other 
committees. No committee shall have the authority of the board of 
directors with reference to: The declaration of dividends; the 
amendment of the charter or bylaws of the association; recommending to 
the stockholders a plan of merger, consolidation, or conversion; the 
sale, lease, or other disposition of all, or substantially all, of the 
property and assets of the association otherwise than in the usual and 
regular course of its business; a voluntary dissolution of the 
association; a revocation of any of the foregoing; or the approval of a 
transaction in which any member of the executive committee, directly or 
indirectly, has any material beneficial interest. The designation of 
any committee and the delegation of authority thereto shall not operate 
to relieve the board of directors, or any director, of any 
responsibility imposed by law or regulation.
    (8) Notice of special meetings. Written notice of at least 24 hours 
regarding any special meeting of the board of directors or of any 
committee designated thereby shall be given to each director in 
accordance with the bylaws, although such notice may be waived by the 
director. The attendance of a director at a meeting shall constitute a 
waiver of notice of such meeting, except where a director attends a 
meeting for the express purpose of objecting to the transaction of any 
business because the meeting is not lawfully called or convened. 
Neither the business to be transacted at, nor the purpose of, any 
meeting need be specified in the notice or waiver of notice of such 
meeting. The bylaws may provide for electronic participation at a 
meeting.
    (9) Action without a meeting. Any action required or permitted to 
be taken by the board of directors at a meeting may be taken without a 
meeting if a consent in writing, setting forth the actions so taken, 
shall be signed by all of the directors.
    (10) Presumption of assent. A director of the association who is 
present at a meeting of the board of directors at which action on any 
association matter is taken shall be presumed to have assented to the 
action taken unless his or her dissent or abstention shall be entered 
in the minutes of the meeting or unless a written dissent to such 
action shall be filed with the person acting as the secretary of the 
meeting before the adjournment thereof or shall be forwarded by 
registered mail to the secretary of the association within five days 
after the date on which a copy of the minutes of the meeting is 
received. Such right to dissent shall not apply to a director who voted 
in favor of such action.
    (11) Age limitation on directors. A Federal association may provide 
a bylaw on age limitation for directors. Bylaws on age limitations must 
comply with all Federal laws, rules and regulations.
    (m) Officers. (1) Positions. The officers of the association shall 
be a president, one or more vice presidents, a secretary, and a 
treasurer or comptroller, each of whom shall be elected by the board of 
directors. The board of directors may also designate the chairman of 
the board as an officer. The offices of the secretary and treasurer or 
comptroller may be held by the same person and the vice president may 
also be either the secretary or the treasurer or comptroller. The board 
of directors may designate one or more vice presidents as executive 
vice president or senior vice president.
    (2) Removal. Any officer may be removed by the board of directors 
whenever in its judgment the best interests of the association will be 
served thereby; but such removal, other than for cause, as termination 
for cause is defined in Sec.  5.21(j)(1)(x)(B), shall be without 
prejudice to the contractual rights, if any, of the person so removed. 
Employment contracts shall conform with 12 CFR 163.39.
    (3) Age limitation on officers. A Federal association may provide a 
bylaw on age limitation for officers. Bylaws on age limitations must 
comply with all Federal laws, rules, and regulations.
    (n) Certificates for shares and their transfer--(1) Certificates 
for shares. Certificates representing shares of capital stock of the 
association shall be in such form as shall be determined by the board 
of directors and approved by the OCC. The name and address of the 
person to whom the shares are issued, with the number of shares and 
date of issue, shall be entered on the stock transfer books of the 
association. All certificates surrendered to the association for 
transfer shall be cancelled and no new certificate shall be issued 
until the former certificate for a like number of shares shall have 
been surrendered and cancelled, except that in the case of a lost or 
destroyed certificate a new certificate may be issued upon such terms 
and indemnity to the association as the board of directors may 
prescribe.
    (2) Transfer of shares. Transfer of shares of capital stock of the 
association shall be made only on its stock transfer books. Authority 
for such transfer shall be given only by the holder of record or by a 
legal representative, who shall furnish proper evidence of such 
authority, or by an attorney authorized by a duly executed power of 
attorney and filed with the association. The transfer shall be made 
only on surrender for cancellation of the certificate for the shares. 
The person in whose name shares of capital stock stand on the books of 
the association shall be deemed by the association to be the owner for 
all purposes.
0
9. Section 5.23 is added to read as follows:


Sec.  5.23  Conversion to Become a Federal Savings Association.

    (a) Authority. 12 U.S.C. 1462a, 1463, 1464, 1467a, 2903, and 
5412(b)(2)(B).
    (b) Scope. (1) This section describes procedures and standards 
governing OCC review and approval of an application by a mutual 
depository institution to convert to a Federal mutual savings 
association or an application by a stock depository institution to 
convert to a Federal stock savings association.
    (2) As used in this section, depository institution means any 
commercial bank (including a private bank), a savings bank, a trust 
company, a savings and loan association, a building and loan 
association, a homestead association, a cooperative bank, an industrial 
bank or a credit union, chartered in the United States and having its 
principal office located in the United States.
    (c) Licensing requirements. A depository institution that is mutual 
in form (```mutual depository institution'') shall submit an 
application and obtain prior OCC approval to convert to a Federal 
mutual savings association. A stock depository institution shall submit 
an application and obtain prior OCC approval to convert to a Federal 
stock association. At the time of conversion, the applicant must have 
deposits insured by the Federal Deposit Insurance Corporation (FDIC). 
An institution that is not already insured by the FDIC must apply to 
the FDIC, and obtain FDIC approval, for deposit insurance before 
converting.
    (d) Conversion of a mutual depository institution or a stock 
depository institution to a Federal savings association.--(1) Policy. 
Consistent with the OCC's chartering policy, it is OCC policy to allow 
conversion to a Federal

[[Page 33342]]

savings association charter by another financial institution that can 
operate safely and soundly as a Federal savings association in 
compliance with applicable laws, regulations, and policies. This 
includes consideration of the factors set out in section 5(e) of the 
Home Owners' Loan Act, 12 U.S.C. 1464(e). The converting financial 
institution must obtain all necessary regulatory and shareholder or 
member approvals. The OCC may deny an application by any mutual 
depository institution or stock depository institution to convert to a 
Federal mutual savings association charter or Federal stock association 
charter, respectively, on the basis of the standards for denial set 
forth in Sec.  5.13(b) or when conversion would permit the applicant to 
escape supervisory action by its current regulators.
    (2) Procedures. (i) Prefiling communications. The applicant should 
consult with the appropriate OCC licensing office prior to filing if it 
anticipates that its application will raise unusual or complex issues. 
If a prefiling meeting is appropriate, it will normally be held in the 
OCC licensing office where the application will be filed, but may be 
held at another location at the request of the applicant.
    (ii) Application. A mutual depository institution or a stock 
depository institution shall submit its application to convert to a 
Federal mutual savings association or Federal stock depository 
association, respectively, to the appropriate OCC licensing office and 
shall send a copy of the application to its current appropriate Federal 
banking agency. The application must:
    (A) Be signed by the president or other duly authorized officer;
    (B) Identify each branch that the resulting financial institution 
expects to operate after conversion;
    (C) Include the institution's most recent audited financial 
statements (if any);
    (D) Include the latest report of condition and report of income 
(the most recent daily statement of condition will suffice if the 
institution does not file these reports);
    (E) Unless otherwise advised by the OCC in a prefiling 
communication, include an opinion of counsel that, in the case of 
state-chartered institutions, the conversion is not in contravention of 
applicable state law, or in the case of Federally-chartered 
institutions, the conversion is not in contravention of applicable 
Federal law;
    (F) State whether the institution wishes to exercise fiduciary 
powers after the conversion;
    (G) Identify all subsidiaries, service corporation investments, 
bank service company investments, and other equity investments that 
will be retained following the conversion, and provide the information 
and analysis of the subsidiaries' activities and the service 
corporation investments and other equity investments that would be 
required if the converting mutual institution or stock institution were 
a Federal mutual savings association or Federal stock savings 
association, respectively, establishing each subsidiary or making each 
service corporation or other equity investment pursuant to Sec. Sec.  
5.35, 5.36, 5.38, or 5.59, or other applicable law and regulation;
    (H) Identify any nonconforming assets (including nonconforming 
subsidiaries) and nonconforming activities that the institution engages 
in, and describe the plans to retain or divest those assets and 
activities;
    (I) Include a business plan if the converting institution has been 
operating for less than three years, plans to make significant changes 
to its business after the conversion, or at the request of the OCC;
    (J) Include a list of all outstanding conditions or other 
requirements imposed by the institution's current appropriate Federal 
banking agency and, if applicable, current state bank supervisor or 
state attorney-general in any cease and desist order, written 
agreement, other formal enforcement order, memorandum of understanding, 
approval of any application, notice or request, commitment letter, 
board resolution, or in any other manner, including the converting 
institution's analysis whether any such actions prohibit conversion 
under 12 U.S.C. 35, and the converting institution's plans regarding 
adhering to such conditions and requirements after conversion; and
    (K) If the converting institution does not meet the qualified 
thrift lender test of 12 U.S.C. 1467a(m), include a plan to achieve 
compliance within a reasonable period of time and a request for an 
exception from the OCC.
    (iii) The OCC may permit a Federal savings association to retain 
nonconforming assets of a converting institution for the time period 
prescribed by the OCC following a conversion, subject to conditions and 
an OCC determination of the carrying value of the retained assets 
consistent with the requirements of section 5(c) of the HOLA relating 
to loans and investments. The OCC may permit a Federal savings 
association to continue nonconforming activities of a converting 
institution for the time period prescribed by the OCC following a 
conversion, subject to conditions.
    (iv) Approval for an institution to convert to a Federal savings 
association expires if the conversion has not occurred within six 
months of the OCC's approval of the application, unless the OCC grants 
an extension of time.
    (v) When the OCC determines that the applicant has satisfied all 
statutory and regulatory requirements and any other conditions, the OCC 
issues a charter. The charter provides that the institution is 
authorized to begin conducting business as a Federal mutual savings 
association or a Federal stock savings association as of a specified 
date.
    (3) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to this section. However, if the OCC 
concludes that an application presents significant or novel policy, 
supervisory, or legal issues, the OCC may determine that any or all 
parts of Sec. Sec.  5.8, 5.10, and 5.11 apply.
    (4) Expedited review. An application by an eligible national bank 
to convert to a Federal savings association charter is deemed approved 
by the OCC as of the 60th day after the filing is received by the OCC, 
unless the OCC notifies the applicant prior to that date that the 
filing is not eligible for expedited review under Sec.  5.13(a)(2).
    (e) Conversion of a mutual depository institution to a Federal 
mutual savings association--supplemental rules. In addition to the 
rules and procedures set forth in Sec.  5.23(d), an applicant 
converting from a mutual depository institution to a mutual savings 
association shall comply with the following: After a Federal charter is 
issued to a converting institution, the association's members shall 
after due notice, or upon a valid adjournment of a previous legal 
meeting, hold a meeting to elect directors and take care of all other 
actions necessary to fully effectuate the conversion and operate the 
association in accordance with law and these rules and regulations. 
Immediately thereafter, the board of directors shall meet, elect 
officers, and transact any other appropriate business.
    (f) Continuation of business and entity. The existence of the 
converting institution shall continue in the resulting Federal savings 
association. The resulting Federal savings association shall be 
considered the same business and entity as the converting institution, 
although as to rights, powers, and duties, the resulting Federal 
savings association is a Federal savings association. Any and all of 
the assets and other property (whether real, personal, mixed, tangible 
or intangible,

[[Page 33343]]

including choses in action, rights, and credits) of the converting 
institution become assets and property of the resulting Federal savings 
association when the conversion occurs. Similarly, any and all of the 
obligations and debts of and claims against the converting institution 
become obligations and debts of and claims against the Federal savings 
association when the conversion occurs.
0
10. Section 5.24 is revised to read as follows:


Sec.  5.24.  Conversion to Become a National Bank.

    (a) Authority. 12 U.S.C. 35, 93a, 214a, 214b, 214c, and 2903.
    (b) Licensing requirements. A state bank, a stock state savings 
association, or a Federal stock savings association shall submit an 
application and obtain prior OCC approval to convert to a national bank 
charter.
    (c) Scope. (1) This section describes procedures and standards 
governing OCC review and approval of an application by a state bank, a 
stock state savings association, or a Federal stock savings association 
to convert to a national bank charter.
    (2) As used in this section, state bank includes a state bank as 
defined in 12 U.S.C. 214(a).
    (d) Policy. Consistent with the OCC's chartering policy, it is OCC 
policy to allow conversion to a national bank charter by another 
financial institution that can operate safely and soundly as a national 
bank in compliance with applicable laws, regulations, and policies. A 
converting financial institution also must obtain all necessary 
regulatory and shareholder approvals. The OCC may deny an application 
by any state bank, stock state savings association, and any Federal 
stock savings association to convert to a national bank charter on the 
basis of the standards for denial set forth in Sec.  5.13(b), or when 
conversion would permit the applicant to escape supervisory action by 
its current regulators.
    (e) Procedures--(1) Prefiling communications. The applicant should 
consult with the appropriate OCC licensing office prior to filing if it 
anticipates that its application will raise unusual or complex issues. 
If a prefiling meeting is appropriate, it will normally be held at the 
OCC licensing office where the application will be filed, but may be 
held at another location at the request of the applicant.
    (2) Application. A state bank, a stock state savings association, 
or a Federal stock savings association shall submit its application to 
convert to a national bank to the appropriate OCC licensing office and 
send a copy to its current appropriate Federal banking agency. The 
application must:
    (i) Be signed by the president or other duly authorized officer;
    (ii) Identify each branch that the resulting bank expects to 
operate after conversion;
    (iii) Include the institution's most recent audited financial 
statements (if any);
    (iv) Include the latest report of condition and report of income 
(the most recent daily statement of condition will suffice if the 
institution does not file these reports);
    (v) Unless otherwise advised by the OCC in a prefiling 
communication, include an opinion of counsel that, in the case of a 
state bank, the conversion is not in contravention of applicable state 
law, or in the case of a Federal stock savings association, the 
conversion is not in contravention of applicable Federal law;
    (vi) State whether the institution wishes to exercise fiduciary 
powers after the conversion;
    (vii) Identify all subsidiaries, bank service company investments, 
and other equity investments that will be retained following the 
conversion, and provide the information and analysis of the 
subsidiaries' activities, the bank service company investments, and the 
other equity investments that would be required if the converting bank 
or savings association were a national bank establishing each 
subsidiary or making each bank service company investment or other 
equity investment pursuant to Sec. Sec.  5.34, 5.35, 5.36, 5.39, 12 CFR 
part 1, or other applicable law and regulation;
    (viii) Identify any nonconforming assets (including nonconforming 
subsidiaries) and nonconforming activities that the institution engages 
in and describe the plans to retain or divest those assets and 
activities;
    (ix) Include a business plan if the converting institution has been 
operating for fewer than three years or plans to make significant 
changes to its business after the conversion; and
    (x) List all outstanding conditions or other requirements imposed 
by the institution's current appropriate Federal banking agency and, if 
applicable, current state bank supervisor or state attorney-general in 
any cease and desist order, written agreement, other formal enforcement 
order, memorandum of understanding, approval of any application, notice 
or request, commitment letter, board resolution, or in any other 
manner, including the converting institution's analysis whether the 
conversion is prohibited under 12 U.S.C. 35, and state the 
institution's plans regarding adhering to such conditions or 
requirements after conversion.
    (3) The OCC may permit a national bank to retain nonconforming 
assets of a state bank or stock state savings association, subject to 
conditions and an OCC determination of the carrying value of the 
retained assets, pursuant to 12 U.S.C. 35. The OCC may permit a 
national bank to continue nonconforming activities of a state bank or 
stock state savings association, or to retain the nonconforming assets 
or nonconforming activities of a Federal stock savings association, for 
a reasonable period of time following a conversion, subject to 
conditions imposed by the OCC.
    (4) Approval for an institution to convert to a national bank 
expires if the conversion has not occurred within six months of the 
OCC's approval of the application, unless the OCC grants an extension 
of time.
    (5) When the OCC determines that the applicant has satisfied all 
statutory and regulatory requirements, including those set forth in 12 
U.S.C. 35, and any other conditions, the OCC issues a charter 
certificate. The certificate provides that the institution is 
authorized to begin conducting business as a national bank as of a 
specified date.
    (f) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to this section. However, if the OCC 
concludes that an application presents significant or novel policy, 
supervisory, or legal issues, the OCC may determine that any or all of 
Sec. Sec.  5.8, 5.10, and 5.11 apply.
    (g) Expedited review. An application by an eligible savings 
association to convert to a national bank charter is deemed approved by 
the OCC as of the 60th day after the filing is received by the OCC, 
unless the OCC notifies the applicant prior to that date that the 
filing is not eligible for expedited review under Sec.  5.13(a)(2).
    (h) Continuation of business and corporate entity. The corporate 
existence of the converting institution shall continue in the resulting 
national bank. The resulting national bank shall be considered the same 
business and corporate entity as the converting institution, although 
as to rights, powers, and duties, the resulting national bank is a 
national bank. Any and all of the assets and other property (whether 
real, personal, mixed, tangible or intangible, including choses in 
action, rights, and credits) of the converting institution become 
assets and property of the resulting national bank when the conversion 
occurs.

[[Page 33344]]

Similarly, any and all of the obligations and debts of and claims 
against the converting institution become obligations and debts of and 
claims against the national bank when the conversion occurs.
0
11. Section 5.25 is added to read as follows:


Sec.  5.25   Conversion from a National Bank or Federal Savings 
Association.

    (a) Authority. 12 U.S.C. 93a, 214a, 214b, 214c, 214d, 1462a, 1463, 
1464, and 5412(b)(2)(B).
    (b) Licensing Requirement. A national bank shall give notice to the 
OCC before converting to a state bank (including a state bank as 
defined in 214(a)), a state savings association, or a Federal savings 
association. A Federal savings association shall give notice to the OCC 
before converting to a state savings association, a state bank, or a 
national bank. A Federal mutual savings association that plans to 
convert to a stock state bank or a national bank must first convert to 
a Federal stock savings association under 12 CFR part 192.
    (c) Scope. This section describes the procedures for a national 
bank seeking to convert to a state bank or a state savings association 
or for a Federal savings association seeking to convert to a state 
savings association or a state bank. In addition, this section, along 
with procedures in 5.24 and 5.23, describes procedures for conversions 
between national banks and Federal stock savings associations.
    (d) Conversions of a national bank to a state bank or state savings 
association or of a Federal savings association to a state savings 
association or state bank--(1) Procedure for national banks. A national 
bank may convert to a state bank (including a state bank as defined in 
214(a)) or a state savings association in accordance with 12 U.S.C. 
214a and 214c, without prior OCC approval, subject to compliance with 
12 U.S.C. 214d. Termination of a national bank's status as a national 
bank occurs upon the bank's completion of the requirements of 12 U.S.C. 
214a, and upon the OCC's receipt of the bank's national bank charter in 
connection with the consummation of the conversion.
    (2) Procedure for Federal savings associations. A Federal savings 
association may convert to a state savings association or to a state 
bank, without prior OCC approval, subject to compliance with 12 U.S.C. 
1464(i)(6). Termination of a Federal savings association's status as a 
Federal savings association occurs upon receipt of the Federal savings 
association's charter in connection with the consummation of the 
conversion.
    (3) Notice of intent. (i) A national bank that desires to convert 
to a state bank (including a state bank as defined in 214(a)) or state 
savings association, or a Federal savings association that desires to 
convert to a state savings association or a state bank, shall submit a 
notice of intent to convert to the appropriate OCC licensing office. 
The national bank or Federal savings association shall file this notice 
with the OCC at the time it files a conversion application with the 
appropriate state authority or the prospective appropriate Federal 
banking agency. The national bank or Federal savings association also 
shall transmit a copy of the conversion application to the prospective 
appropriate Federal banking agency if it has not already done so.
    (ii) The notice shall include:
    (A) A copy of the conversion application; and
    (B) An analysis demonstrating that the conversion is in compliance 
with laws of the applicable jurisdictions regarding the permissibility, 
requirements, and procedures for conversions, including any applicable 
stockholder or account holder approval requirements.
    (4) Consultation. The OCC may consult with the appropriate state 
authorities or the prospective appropriate Federal banking agency 
regarding the proposed conversion.
    (5) Termination of status. After receipt of the notice, the 
appropriate OCC licensing office provides instructions to the national 
bank or Federal savings association for terminating its status as a 
national bank or Federal savings association.
    (e) Conversions between national banks and Federal savings 
associations--(1) National bank to Federal savings association. (i) A 
national bank may convert to a Federal stock savings association. A 
national bank that desires to convert to a Federal stock savings 
association shall follow the requirements and procedures set forth in 
12 U.S.C. 214a as if it were converting to a state bank and submit a 
notice to the appropriate OCC licensing office demonstrating compliance 
with the applicable requirements of 12 U.S.C. 214a.
    (ii) A national bank desiring to convert to a Federal stock savings 
association shall also file an application for prior OCC approval to 
convert under 12 CFR 5.23.
    (2) Federal savings association to a national bank. (i) A Federal 
stock savings association may convert to a national bank. A Federal 
savings association that desires to convert to a national bank shall 
submit a notice to the appropriate OCC licensing office demonstrating 
compliance with laws of the applicable jurisdictions regarding the 
permissibility, requirements, and procedures for conversions, including 
any applicable stockholder or account holder approval requirements.
    (ii) A Federal stock savings association that desires to convert to 
a national bank shall also file an application for prior OCC approval 
to convert under 12 CFR 5.24.
    (3) Termination and change of status. The appropriate OCC licensing 
office provides instructions to the converting national bank or Federal 
savings association for terminating its status as a national bank or 
Federal savings association and beginning its status as a Federal 
savings association or national bank, respectively.
    (f) Exceptions to rules of general applicability. Sections 5.5 
through 5.8 and 5.10 through 5.13 do not apply to this section.
0
12. Section 5.26 is revised to read as follows:


Sec.  5.26  Fiduciary powers of national banks and Federal savings 
associations.

    (a) Authority. 12 U.S.C. 92a and 1462a, 1463, 1464(n), and 
5412(b)(2)(B).
    (b) Licensing requirements. A national bank or Federal savings 
association must submit an application and obtain prior approval from, 
or in certain circumstances file a notice with, the OCC in order to 
exercise fiduciary powers. No approval or notice is required in the 
following circumstances:
    (1) Where two or more national banks consolidate or merge, and any 
of the national banks has, prior to the consolidation or merger, 
received OCC approval to exercise fiduciary powers and that approval is 
in force at the time of the consolidation or merger, the resulting 
national bank may exercise fiduciary powers in the same manner and to 
the same extent as the national bank to which approval was originally 
granted;
    (2) Where two or more Federal savings associations consolidate or 
merge, and any of the Federal savings associations has, prior to the 
consolidation or merger, received approval from the OCC or the Office 
of Thrift Supervision to exercise fiduciary powers and that approval is 
in force at the time of the consolidation or merger, the resulting 
Federal savings association may exercise fiduciary powers in the same 
manner and to the same extent as the Federal savings association to 
which approval was originally granted;
    (3) Where a national bank with prior OCC approval to exercise 
fiduciary

[[Page 33345]]

powers is the resulting bank in a merger or consolidation with a state 
bank, state savings association, or Federal savings association and the 
national bank will exercise fiduciary powers in the same manner and to 
the same extent to which approval was originally granted; and
    (4) Where a Federal savings association with prior approval from 
the OCC or the Office of Thrift Supervision to exercise fiduciary 
powers is the resulting savings association in a merger or 
consolidation with a state bank, state savings association, or national 
bank and the Federal savings association will exercise fiduciary powers 
in the same manner and to the same extent to which approval was 
originally granted.
    (c) Scope. This section sets forth the procedures governing OCC 
review and approval of an application, and in certain cases the filing 
of a notice, by a national bank or Federal savings association to 
exercise fiduciary powers. Fiduciary activities of national banks are 
subject to the provisions of 12 CFR part 9. Fiduciary activities of 
Federal savings associations are subject to the provisions of 12 CFR 
part 150.
    (d) Policy. The exercise of fiduciary powers is primarily a 
management decision of the national bank or Federal savings 
association. The OCC generally permits a national bank or Federal 
savings association to exercise fiduciary powers if the bank or savings 
association is operating in a satisfactory manner, the proposed 
activities comply with applicable statutes and regulations, and the 
bank or savings association retains qualified fiduciary management.
    (e) Procedure--(1) General. The following institutions must obtain 
approval from the OCC in order to offer fiduciary services to the 
public: (i) A national bank or Federal savings association without 
fiduciary powers:
    (ii) A national bank without fiduciary powers that desires to 
exercise fiduciary powers as the resulting bank after merging with a 
state bank, state savings association, or Federal savings association 
with fiduciary powers or a Federal savings association without 
fiduciary powers that desires to exercise fiduciary powers as the 
resulting savings association after merging with a state bank, state 
savings association or national bank;
    (iii) A national bank that results from the conversion of a state 
bank or a state or Federal savings association that was exercising 
fiduciary powers prior to the conversion or a Federal savings 
association that results from a conversion of a state or national bank 
or a state savings association that was exercising fiduciary powers 
prior to the conversion; and
    (iv) A national bank or Federal savings association that has 
received approval from the OCC to offer limited fiduciary services that 
desires to offer full fiduciary services.
    (2) Application. (i) Except as provided in paragraph (e)(2)(ii) of 
this section, a national bank or Federal savings association that 
desires to exercise fiduciary powers shall submit to the OCC an 
application requesting approval. The application must contain:
    (A) A statement requesting full or limited powers (specifying which 
powers);
    (B) A statement that the capital and surplus of the national bank 
or Federal savings association is not less than the capital and surplus 
required by state law of state banks, trust companies, and other 
corporations exercising comparable fiduciary powers;
    (C) Sufficient biographical information on proposed trust 
management personnel to enable the OCC to assess their qualifications;
    (D) A description of the locations where the national bank or 
Federal savings association will conduct fiduciary activities;
    (E) If requested by the OCC, an opinion of counsel that the 
proposed activities do not violate applicable Federal or state law, 
including citations to applicable law; and
    (F) Any other information necessary to enable the OCC to 
sufficiently assess the factors described in (e)(2)(iii).
    (ii) If approval to exercise fiduciary powers is desired in 
connection with any other transaction subject to an application under 
this part, the applicant covered under paragraph (e)(1)(ii), 
(e)(1)(iii), or (e)(1)(iv) of this section may include a request for 
approval of fiduciary powers, including the information required by 
paragraph (e)(2)(i) of this section, as part of its other application. 
The OCC does not require a separate application requesting approval to 
exercise fiduciary powers under these circumstances.
    (iii) When reviewing any application filed under this section, the 
OCC considers factors such as the following:
    (A) The financial condition of the national bank or Federal savings 
association;
    (B) The adequacy of the national bank's or Federal savings 
association's capital and surplus and whether it is sufficient under 
the circumstances and not less than the capital and surplus required by 
state law or state banks, trust companies, and other corporations 
exercising comparable fiduciary powers;
    (C) The character and ability of proposed trust management, 
including qualifications, experience, and competency. The OCC must 
approve any trust management change the bank or savings association 
makes prior to commencing trust activities;
    (D) The adequacy of the proposed business plan, if applicable;
    (E) The needs of the community to be served; and
    (F) Any other factors or circumstances that the OCC considers 
proper.
    (3) Expedited review. An application by an eligible national bank 
or eligible Federal savings association to exercise fiduciary powers is 
deemed approved by the OCC as of the 30th day after the application is 
received by the OCC, unless the OCC notifies the bank or savings 
association prior to that date that the filing is not eligible for 
expedited review under Sec.  5.13(a)(2).
    (4) Permit. Approval of an application under this section 
constitutes a permit under 12 U.S.C. 92a for national banks and 12 
U.S.C. 1464(n) for Federal savings associations to conduct the 
fiduciary powers requested in the application.
    (5) Notice required. A national bank or Federal savings association 
that has ceased to conduct previously approved fiduciary powers for 18 
consecutive months must provide the OCC with a notice describing the 
nature and manner of the activities proposed to be conducted and 
containing the information required by paragraph (e)(2)(i) of this 
section 60 days prior to commencing any fiduciary activity.
    (6) Notice of fiduciary activities in additional states. (i) No 
further application under this section is required when a national bank 
or Federal savings association with existing OCC approval to exercise 
fiduciary powers plans to engage in any of the activities specified in 
Sec.  9.7(d) of this chapter or to conduct activities ancillary to its 
fiduciary business, in a state in addition to the state described in 
the application for fiduciary powers that the OCC has approved.
    (ii) Unless the national bank or Federal savings association 
provides notice through other means (such as a merger application), the 
national bank or Federal savings association shall provide written 
notice to the OCC no later than ten days after it begins to engage in 
any of the activities specified in Sec.  9.7(d) of this chapter in a 
state in addition to the state described in the application for 
fiduciary powers that the OCC has approved. The written notice must 
identify the new state or states involved, identify the fiduciary 
activities to be conducted, and describe the extent to which the 
activities differ materially from the fiduciary activities

[[Page 33346]]

the national bank or Federal savings association previously conducted.
    (iii) No notice is required if the national bank or Federal savings 
association is conducting only activities ancillary to its fiduciary 
business through a trust representative office or otherwise.
    (7) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to this section. However, if the OCC 
concludes that an application presents significant or novel policy, 
supervisory, or legal issues, the OCC may determine that any or all 
parts of Sec. Sec.  5.8, 5.10, and 5.11 apply.
    (8) Expiration of approval. Approval expires if a national bank or 
Federal savings association does not commence fiduciary activities 
within 18 months from the date of approval, unless the OCC grants an 
extension of time.
0
13. Section 5.30 is revised to read as follows:


Sec.  5.30  Establishment, acquisition, and relocation of a branch of a 
national bank.

    (a) Authority. 12 U.S.C. 1-42 and 2901-2907.
    (b) Licensing requirements. A national bank shall submit an 
application and obtain prior OCC approval in order to establish or 
relocate a branch.
    (c) Scope--(1) General. This section describes the procedures and 
standards governing OCC review and approval of an application by a 
national bank to establish a new branch or to relocate a branch.
    (2) Branch established through a conversion or business 
combination. The standards of this section governing review and 
approval of applications by the OCC and, as applicable, 12 U.S.C. 
36(b), but not the application procedures set forth in this section, 
apply to branches acquired or retained in a conversion approved under 
12 CFR 5.24 or a business combination approved under Sec.  5.33. A 
branch acquired or retained in a conversion or business combination is 
subject to the application procedures set forth in Sec. Sec.  5.24 or 
5.33.
    (d) Definitions--(1) Branch includes any branch bank, branch 
office, branch agency, additional office, or any branch place of 
business established by a national bank in the United States or its 
territories at which deposits are received, checks paid, or money lent.
    (i) A branch established by a national bank includes a mobile 
facility, temporary facility, intermittent facility, drop box or a 
seasonal agency as described in 12 U.S.C. 36(c).
    (ii) A facility otherwise described in this paragraph (d)(1) is not 
a branch if:
    (A) The bank establishing the facility does not permit members of 
the public to have physical access to the facility for purposes of 
making deposits, paying checks, or borrowing money (e.g., an office 
established by the bank that receives deposits only through the mail); 
or
    (B) It is located at the site of, or is an extension of, an 
approved main office or branch office of the national bank. The OCC 
determines whether a facility is an extension of an existing main 
office or branch office on a case-by-case basis. For this purpose, the 
OCC will consider a drive-in or pedestrian facility located within 500 
feet of a public entrance to an existing main office or branch office 
to be an extension of the existing main office or branch office, 
provided the functions performed at the drive-in or pedestrian facility 
are limited to functions that are ordinarily performed at a teller 
window.
    (iii) A branch does not include an automated teller machine (ATM), 
a remote service unit (such as an automated loan machine or personal 
computer used in providing financial services), a loan production 
office, a deposit production office, a trust office, an administrative 
office, a data processing office, or any other office that does not 
engage in any of the activities in paragraph (d)(1) of this section.
    (2) Home state means the state in which the national bank's main 
office is located.
    (3) Intermittent branch means a branch that is operated by a 
national bank for one or more limited periods of time to provide branch 
banking services at a specified recurring event, on the grounds or 
premises where the event is held or at a fixed site adjacent to the 
grounds or premises where the event is held, and exclusively during the 
occurrence of the event. Examples of an intermittent branch include the 
operation of a branch on the campus of, or at a fixed site adjacent to 
the campus of, a specific college during school registration periods; 
or the operation of a branch during a state fair on state fairgrounds 
or at a fixed site adjacent to the fairgrounds.
    (4) Messenger service has the meaning set forth in 12 CFR 7.1012.
    (5) Mobile branch is a branch of a national bank, other than a 
messenger service branch, that does not have a single, permanent site, 
and includes a vehicle that travels to various public locations to 
enable customers to conduct their banking business. A mobile branch may 
provide services at various regularly scheduled locations or it may be 
open at irregular times and locations such as at county fairs, sporting 
events, or school registration periods. A branch license is needed for 
each mobile unit.
    (6) Temporary branch means a branch of a national bank that is 
located at a fixed site and which, from the time of its opening, is 
scheduled to, and will, permanently close no later than a certain date 
(not longer than one year after the branch is first opened) specified 
in the branch application and the public notice.
    (e) Policy. In determining whether to approve an application to 
establish or relocate a branch, the OCC is guided by the following 
principles:
    (1) Maintaining a safe and sound banking system;
    (2) Encouraging a national bank to provide fair access to financial 
services by helping to meet the credit needs of its entire community;
    (3) Ensuring compliance with laws and regulations; and
    (4) Promoting fair treatment of customers including efficiency and 
better service.
    (f) Procedures--(1) General. Except as provided in paragraph (f)(2) 
of this section, each national bank proposing to establish a branch 
shall submit to the appropriate OCC licensing office a separate 
application for each proposed branch.
    (2) Messenger services. A national bank may request approval, 
through a single application, for multiple messenger services to serve 
the same general geographic area. (See 12 CFR 7.1012). Unless otherwise 
required by law, the bank need not list the specific locations to be 
served.
    (3) Jointly established branches. If a national bank proposes to 
establish a branch jointly with one or more national banks or other 
depository institutions, only one of the national banks must submit a 
branch application. The national bank submitting the application may 
act as agent for all national banks in the group of depository 
institutions proposing to share the branch. The application must 
include the name and main office address of each national bank in the 
group.
    (4) Intermittent branches. Prior to operating an intermittent 
branch, a national bank shall file a branch application and publish 
notice in accordance with Sec.  5.8, both of which shall identify the 
event at which the branch will be operated; designate a location for 
operation of the branch which shall be on the grounds or premises at 
which the event is held or on a fixed site adjacent to those grounds or 
premises; and specify the approximate time period during which the 
event will be held and during which

[[Page 33347]]

the branch will operate, including whether operation of the branch will 
be on an annual or otherwise recurring basis. If the branch is 
approved, then the bank need not obtain approval each time it seeks to 
operate the branch in accordance with the original application and 
approval.
    (5) Authorization. The OCC authorizes operation of the branch when 
all requirements and conditions for opening are satisfied.
    (6) Expedited review. An application submitted by an eligible bank 
to establish or relocate a branch is deemed approved by the OCC as of 
the 15th day after the close of the applicable public comment period or 
the 45th day after the filing is received by the OCC (or in the case of 
a short-distance relocation the 30th day after the filing is received 
by the OCC), whichever is later, unless the OCC notifies the bank prior 
to that date that the filing is not eligible for expedited review, or 
the expedited review process is extended, under Sec.  5.13(a)(2). An 
application to establish or relocate more than one branch is deemed 
approved by the OCC as of the 15th day after the close of the last 
public comment period.
    (g) Interstate branches. A national bank that seeks to establish 
and operate a de novo branch in any state other than the bank's home 
state or a state in which the bank already has a branch shall satisfy 
the standards and requirements of 12 U.S.C. 36(g).
    (h) Exceptions to rules of general applicability. (1) A national 
bank filing an application for a mobile branch or messenger service 
branch shall publish a public notice, as described in Sec.  5.8, in the 
communities in which the bank proposes to engage in business.
    (2) The comment period on an application to engage in a short-
distance relocation is 15 days.
    (3) The OCC may waive or reduce the public notice and comment 
period, as appropriate, with respect to an application to establish a 
branch to restore banking services to a community affected by a 
disaster or to temporarily replace banking facilities where, because of 
an emergency, the bank cannot provide services or must curtail banking 
services.
    (4) The OCC may waive or reduce the public notice and comment 
period, as appropriate, for an application by a national bank with a 
CRA rating of Satisfactory or better to establish a temporary branch 
which, if it were established by a state bank to operate in the manner 
proposed, would be permissible under state law without state approval.
    (i) Expiration of approval. Approval expires if a branch has not 
commenced business within 18 months after the date of approval unless 
the OCC grants an extension.
    (j) Branch closings. A national bank shall comply with the 
requirements of 12 U.S.C. 1831r-1 with respect to procedures for branch 
closings.
0
14. Section 5.31 is added to read as follows:


Sec.  5.31  Establishment, acquisition, and relocation of a branch and 
establishment of an agency office of a Federal savings association.

    (a) Authority. 12 U.S.C. 1462a, 1463, 1464. 2901-2907 and 
5412(b)(2)(B).
    (b) Licensing requirements. A Federal savings association shall 
submit an application and obtain prior OCC approval in order to 
establish or relocate a branch or to establish an agency office or 
conduct additional activities at an agency office, if required under 
this section.
    (c) Scope--(1) General. This section describes the procedures and 
standards governing OCC review and approval of an application by a 
Federal savings association to establish a new branch or to relocate a 
branch and the circumstances in which a Federal savings association may 
establish or relocate a branch without application to the OCC. It also 
describes the authority of a Federal savings association to establish 
an agency office.
    (2) Branch established through a conversion or business 
combination. The standards of this section governing review and 
approval of applications by the OCC, but not the application procedures 
set forth in this section, apply to branches acquired or retained in a 
conversion approved under 12 CFR 5.23 or a business combination 
approved under 12 CFR 5.33. A branch acquired or retained in a 
conversion or business combination is subject to the application 
procedures set forth in Sec. Sec.  5.23 or 5.33.
    (3) Branching by savings associations in the District of Columbia. 
This section also implements section 5(m) of the HOLA, 12 U.S.C. 
1464(m), addressing branching by savings associations in the District 
of Columbia.
    (d) Definitions--(1) A branch office of a Federal savings 
association for purposes of this section is a branch office as defined 
in 12 CFR 145.92(a).
    (2) Home state means the state in which the Federal savings 
association's home office is located.
    (e) Policy. In determining whether to approve an application to 
establish or relocate a branch, the OCC is guided by the following 
principles:
    (1) Maintaining a safe and sound banking system;
    (2) Encouraging a Federal savings association to provide fair 
access to financial services by helping to meet the credit needs of its 
entire community;
    (3) Ensuring compliance with laws and regulations; and
    (4) Promoting fair treatment of customers including efficiency and 
better service.
    (f) Procedures--(1) Application requirements. (i) Except as 
provided in paragraph (f)(2) of this section, each Federal savings 
association proposing to establish or relocate a branch shall submit to 
the appropriate OCC licensing office a separate application for each 
proposed branch.
    (ii) Authorization. The OCC authorizes operation of the branch when 
all requirements and conditions for opening are satisfied.
    (iii) Expedited review. An application submitted by an eligible 
Federal savings association to establish or relocate a branch is deemed 
approved by the OCC as of the 15th day after the close of the 
applicable public comment period or the 45th day after the filing is 
received by the OCC, whichever is later, unless the OCC notifies the 
savings association prior to that date that the filing is not eligible 
for expedited review, or the expedited review process is extended, 
under Sec.  5.13(a)(2). An application to establish or relocate more 
than one branch is deemed approved by the OCC as of the 15th day after 
the close of the last public comment period.
    (2) Exceptions. A Federal savings association is not required to 
submit an application and receive OCC approval under the following 
circumstances:
    (i) Drive-in or pedestrian offices. A Federal savings association 
may establish a drive-in or pedestrian office that is located within 
500 feet of a public entrance to its existing home or branch office, 
provided the functions performed at the office are limited to functions 
that are ordinarily performed at a teller window.
    (ii) Short-distance relocation. A Federal savings association may 
change the permanent location of an existing branch office to a site 
that is within the market area and short-distance location area, as 
defined in Sec.  5.3(l).
    (iii) Highly-rated Federal savings associations. A Federal savings 
association that is an eligible savings association as defined in Sec.  
5.3(g) may change the permanent location of, or establish a new, branch 
office if it meets all of the following requirements:
    (A) It published a public notice under Sec.  5.8 of its intent to 
change the location of the branch office or establish a new

[[Page 33348]]

branch office. The public notice must be published at least 35 days 
before the proposed action establishment or relocation. If the notice 
is published more than 12 months before the proposed action, the 
publication is invalid.
    (B) If the Federal savings association intends to change the 
location of an existing branch office, it must post a notice of its 
intent in a prominent location in the existing office to be relocated. 
This notice must be posted for 30 days from the date of publication of 
the initial public notice described in paragraph (f)(2)(iii)(A) of this 
section.
    (C)(1) No person files a comment opposing the proposed action 
within 30 days after the date of the publication of the public notice; 
or
    (2) A person files a comment opposing the proposed action and the 
OCC determines that the comment raises issues that are not relevant to 
the approval standards for an application for a branch or that OCC 
action in response to the comment is not required.
    (g) Exceptions to rules of general applicability. (1) The OCC may 
waive or reduce the public notice and comment period, as appropriate, 
with respect to an application to establish a branch to restore banking 
services to a community affected by a disaster or to temporarily 
replace banking facilities where, because of an emergency, the savings 
association cannot provide services or must curtail banking services.
    (2) The OCC may waive or reduce the public notice and comment 
period, as appropriate, for an application by a Federal savings 
association with a CRA rating of Satisfactory or better to establish a 
temporary branch which, if it were established by a state bank to 
operate in the manner proposed, would be permissible under state law 
without state approval.
    (h) Expiration of approval. Approval expires if a branch has not 
commenced business within 18 months after the date of approval unless 
the OCC grants an extension.
    (i) Branch closings. A Federal savings association shall comply 
with the applicable requirements of 12 U.S.C. 1831r-1 with respect to 
procedures for branch closings.
    (j) Section 5(m) of the HOLA. (1) Under section 5(m)(1) of the HOLA 
(12 U.S.C. 1464(m)(1)), no savings association may establish or move 
any branch in the District of Columbia or move its principal office in 
the District of Columbia without the OCC's prior written approval.
    (2) Any Federal savings association that must obtain approval of 
the OCC under 12 U.S.C. 1464(m)(1) shall follow the application 
procedures of this section. Any state savings association that must 
obtain approval of the OCC under 12 U.S.C. 1464(m)(1) shall follow the 
application procedures of this section as if it were a Federal savings 
association.
    (k) Agency offices. (1) General. A Federal savings association may 
establish or maintain an agency office to engage in one or more of the 
following activities:
    (i) Servicing, originating, or approving loans and contracts;
    (ii) Managing or selling real estate owned by the Federal savings 
association; and
    (iii) Conducting fiduciary activities or activities ancillary to 
the association's fiduciary business in compliance with Sec.  5.26(e).
    (2) Additional services--(i) General. A Federal savings association 
may request, and the OCC may approve, any service not listed in 
paragraph (k)(1) of this section, except for payment on savings 
accounts.
    (ii) Application required. A Federal savings association desiring 
to engage in such additional services shall submit an application to 
the appropriate OCC licensing office.
    (iii) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to filings under this paragraph 5.31(k)(2). 
However, if the OCC concludes that an application presents significant 
or novel policy, supervisory, or legal issues, the OCC may determine 
that some or all provisions in Sec. Sec.  5.8, 5.10, and 5.11 apply.
    (3) Records. A Federal savings association must maintain records of 
all business it transacts at an agency office. It must maintain these 
records at the agency office, and must transmit copies to a home or 
branch office.
0
15. Section 5.32 is amended by:
0
a. Adding paragraph (d)(4): and
0
b. Removing, in paragraph (h)(2), the phrase ``to the appropriate 
district office'' and inserting in its place the phrase ``to the 
appropriate OCC licensing office''.
    The addition reads as follows:


Sec.  5.32  Expedited procedures for certain reorganizations of a 
national bank.

* * * * *
    (d) * * *
    (4) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to this section. However, if the OCC 
concludes that an application presents significant or novel policy, 
supervisory, or legal issues, the OCC may determine that some or all 
provisions in Sec. Sec.  5.8, 5.10, and 5.11 apply.
* * * * *
0
16. Section 5.33 is revised to read as follows:


Sec.  5.33  Business combinations involving a national bank or Federal 
savings association.

    (a) Authority. 12 U.S.C. 24(Seventh), 93a, 181, 214a, 214b, 215, 
215a, 215a-1, 215a-3, 215b, 215c, 1462a, 1463, 1464, 1467a, 1828(c), 
1831u, 2903, and 5412(b)(2)(B).
    (b) Scope. This section sets forth the provisions governing 
business combinations and the standards for:
    (1) OCC review and approval of an application by a national bank or 
a Federal savings association for a business combination resulting in a 
national bank or Federal savings association; and
    (2) Requirements of notices and other procedures for national banks 
and Federal savings associations involved in other combinations in 
which a national bank or Federal savings association is not the 
resulting institution.
    (c) Licensing requirements. As prescribed by this section, a 
national bank or Federal savings association shall submit an 
application and obtain prior OCC approval for a business combination 
when the resulting institution is a national bank or Federal savings 
association. As prescribed by this section, a national bank or Federal 
savings association shall give notice to the OCC prior to engaging in 
an other combination where the resulting institution will not be a 
national bank or Federal savings association.\1\ A national bank shall 
submit an application and obtain prior OCC approval for any merger 
between the national bank and one or more of its nonbank affiliates.
---------------------------------------------------------------------------

    \1\ Other combination transactions do not require an application 
under this section. However, some may require an application under 
12 CFR 5.53.
---------------------------------------------------------------------------

    (d) Definitions--For purposes of this Sec.  5.33:
    (1) Bank means any national bank or any state bank.
    (2) Business combination means:
    (i) Any merger or consolidation between a national bank or a 
Federal savings association and one or more depository institutions or 
state trust companies, in which the resulting institution is a national 
bank or Federal savings association;
    (ii) In the case of a Federal savings association, any merger or 
consolidation with a credit union in which the resulting institution is 
a Federal savings association;

[[Page 33349]]

    (iii) In the case of a national bank, any merger between a national 
bank and one or more of its nonbank affiliates;
    (iv) The acquisition by a national bank or a Federal savings 
association of all, or substantially all, of the assets of another 
depository institution;
    (v) The assumption by a national bank or a Federal savings 
association of any deposit liabilities of another insured depository 
institution or any deposit accounts or other liabilities of a credit 
union or any other institution that will become deposits at the 
national bank or Federal savings association; or
    (vi) The acquisition by a national bank or a Federal savings 
association of all, or substantially all, of the assets, or the 
assumption of all or substantially all of the liabilities, of any 
company other than a depository institution, if the acquisition would 
cause the assets of the national bank or Federal savings association to 
increase by twenty-five percent or more.
    (3) Business reorganization means either:
    (i) A business combination between eligible banks and eligible 
savings associations, or between an eligible bank or an eligible 
savings association and an eligible depository institution, that are 
controlled by the same holding company or that will be controlled by 
the same holding company prior to the combination; or
    (ii) A business combination between an eligible bank or an eligible 
savings association and an interim national bank or interim Federal 
savings association chartered in a transaction in which a person or 
group of persons exchanges its shares of the eligible bank or eligible 
savings association for shares of a newly formed holding company and 
receives after the transaction substantially the same proportional 
share interest in the holding company as it held in the eligible bank 
or eligible savings association (except for changes in interests 
resulting from the exercise of dissenters' rights), and the 
reorganization involves no other transactions involving the bank or 
savings association.
    (4) Company means a corporation, limited liability company, 
partnership, business trust, association, or similar organization.
    (5) For business combinations under Sec.  5.33(g)(4) and (5), a 
company or shareholder is deemed to control another company if:
    (i) Such company or shareholder, directly or indirectly, or acting 
through one or more other persons owns, controls, or has power to vote 
25 percent or more of any class of voting securities of the other 
company, or
    (ii) Such company or shareholder controls in any manner the 
election of a majority of the directors or trustees of the other 
company. No company shall be deemed to own or control another company 
by virtue of its ownership or control of shares in a fiduciary 
capacity.
    (6) Credit union means a financial institution subject to 
examination by the National Credit Union Administration Board.
    (7) Home state means:
    (i) With respect to a national bank, the state in which the main 
office of the national bank is located,
    (ii) With respect to a Federal savings association, the state in 
which the home office of the Federal savings association is located, 
and
    (iii) With respect to a state bank, a state savings association, or 
a state trust company, the state by which the bank, savings 
association, or trust company is chartered.
    (8) Interim national bank or interim Federal savings association 
means a national bank or Federal savings association that does not 
operate independently but exists solely as a vehicle to accomplish a 
business combination.
    (9) Nonbank affiliate of a national bank means any company (other 
than a bank or Federal savings association) that controls, is 
controlled by, or is under common control with the national bank.
    (10) Other combination means:
    (i) Any merger or consolidation between a national bank or a 
Federal savings association and one or more depository institutions or 
state trust companies, in which the resulting institution is not a 
national bank or Federal savings association;
    (ii) In the case of a Federal stock savings association, any merger 
or consolidation with a credit union in which the resulting institution 
is a credit union;
    (iii) The transfer by a national bank or a Federal savings 
association of any deposit liabilities to another insured depository 
institution, a credit union or any other institution; or
    (iv) The acquisition by a national bank or a Federal savings 
association of all, or substantially all, of the assets, or the 
assumption of all or substantially all of the liabilities, of any 
company other than a depository institution, if the acquisition would 
cause the assets of the national bank or Federal savings association to 
increase by less than twenty-five percent.
    (11) Savings association and state savings association have the 
meaning set forth in section 3(b)(1) of the Federal Deposit Insurance 
Act, 12 U.S.C. 1813(b)(1).
    (12) State trust company means a trust company organized under 
state law that is not engaged in the business of receiving deposits, 
other than trust funds.
    (e) Policy. (1) Factors. (i) General. When the OCC evaluates any 
application for a business combination, the OCC considers the following 
factors:
    (A) The capital level of any resulting national bank or Federal 
savings association;
    (B) The conformity of the transaction to applicable law, 
regulation, and supervisory policies;
    (C) The purpose of the transaction;
    (D) The impact of the transaction on safety and soundness of the 
national bank or Federal savings association; and
    (E) The effect of the transaction on the national bank or Federal 
savings association's shareholders, depositors, other creditors, and 
customers.
    (ii) Bank Merger Act. When the OCC evaluates an application for a 
business combination under the Bank Merger Act, the OCC also considers 
the following factors:
    (A) Competition. (1) The OCC considers the effect of a proposed 
business combination on competition. The applicant shall provide a 
competitive analysis of the transaction, including a definition of the 
relevant geographic market or markets. An applicant may refer to the 
Manual for procedures to expedite its competitive analysis.
    (2) The OCC will deny an application for a business combination if 
the combination would result in a monopoly or would be in furtherance 
of any combination or conspiracy to monopolize or attempt to monopolize 
the business of banking in any part of the United States. The OCC also 
will deny any proposed business combination whose effect in any section 
of the United States may be substantially to lessen competition, or 
tend to create a monopoly, or which in any other manner would be in 
restraint of trade, unless the probable effects of the transaction in 
meeting the convenience and needs of the community clearly outweigh the 
anticompetitive effects of the transaction. For purposes of weighing 
against anticompetitive effects, a business combination may have 
favorable effects in meeting the convenience and needs of the community 
if the depository institution being acquired has limited long-term 
prospects, or if the resulting national bank or Federal savings 
association will provide significantly improved, additional, or less 
costly services to the community.

[[Page 33350]]

    (B) Financial and managerial resources and future prospects. The 
OCC considers the financial and managerial resources and future 
prospects of the existing or proposed institutions.
    (C) Convenience and needs of community. The OCC considers the 
probable effects of the business combination on the convenience and 
needs of the community served. The applicant shall describe these 
effects in its application, including any planned office closings or 
reductions in services following the business combination and the 
likely impact on the community. The OCC also considers additional 
relevant factors, including the resulting national bank's or Federal 
savings association's ability and plans to provide expanded or less 
costly services to the community.
    (D) Money laundering. The OCC considers the effectiveness of any 
insured depository institution involved in the business combination in 
combating money laundering activities, including in overseas branches.
    (E) Financial stability. The OCC considers the risk to the 
stability of the United States banking and financial system.
    (F) Deposit concentration limit. The OCC will not approve a 
transaction that would violate the deposit concentration limit in 12 
U.S.C. 1828(c)(13) for certain interstate merger transactions.
    (iii) Community Reinvestment Act. When the OCC evaluates an 
application for a business combination under the Community Reinvestment 
Act, the OCC also considers the performance of the applicant and the 
other depository institutions involved in the business combination in 
helping to meet the credit needs of the relevant communities, including 
low- and moderate-income neighborhoods, consistent with safe and sound 
banking practices.
    (2) Acquisition and retention of branches. An applicant shall 
disclose the location of any branch it will acquire and retain in a 
business combination, including approved but unopened branches. The OCC 
considers the acquisition and retention of a branch under the standards 
set out in Sec.  5.30, but it does not require a separate application 
under Sec.  5.30.
    (3) Subsidiaries. (i) An applicant must identify any subsidiary, 
financial subsidiary investment, bank service company investment, 
service corporation investment, or other equity investment to be 
acquired in a business combination and state the activities of each 
subsidiary or other company in which the applicant would be acquiring 
an investment. The OCC does not require a separate application or 
notice under Sec. Sec.  5.34, 5.35, 5.36, 5.38, 5.39, 5.58, and 5.59.
    (ii) An national bank applicant proposing to acquire, through a 
business combination, a subsidiary, financial subsidiary investment, 
bank service company investment, service corporation investment, or 
other equity investment of any entity other than a national bank must 
provide the same information and analysis of the subsidiary's 
activities, or of the investment, that would be required if the 
applicant were establishing the subsidiary, or making such investment, 
pursuant to Sec. Sec.  5.34, 5.35, 5.36, or 5.39.
    (iii) A Federal savings association applicant proposing to acquire, 
through a business combination, a subsidiary, bank service company 
investment, service corporation investment, or other equity investment 
of any entity other than a Federal savings association must provide the 
same information and analysis of the subsidiary's activities, or of the 
investment, that would be required if the applicant were establishing 
the subsidiary, or making such investment, pursuant to Sec. Sec.  5.35, 
5.38, 5.58, or 5.59.
    (4) Interim national bank or interim Federal savings association--
(i) Application. An applicant for a business combination that plans to 
use an interim national bank or interim Federal savings association to 
accomplish the transaction shall file an application to organize an 
interim national bank or interim Federal savings association as part of 
the application for the related business combination.
    (ii) Conditional approval. The OCC grants conditional preliminary 
approval to form an interim national bank or interim Federal savings 
association when it acknowledges receipt of the application for the 
related business combination.
    (iii) Corporate status. An interim national bank or interim Federal 
savings association becomes a legal entity and may enter into legally 
valid agreements when it has filed, and the OCC has accepted, the 
interim national bank's duly executed articles of association and 
organization certificate or the Federal savings association's charter 
and bylaws. OCC acceptance occurs:
    (A) On the date the OCC advises the interim national bank that its 
articles of association and organization certificate are acceptable or 
advises the interim Federal savings association that its charter and 
bylaws are acceptable; or
    (B) On the date the interim national bank files articles of 
association and an organization certificate that conform to the form 
for those documents provided by the OCC in the Manual or the date the 
interim Federal savings association files a charter and bylaws that 
conform to the requirements set out in this part 5.
    (iv) Other corporate procedures. An applicant should consult the 
Manual to determine what other information is necessary to complete the 
chartering of the interim national bank as a national bank or the 
interim Federal savings association as a Federal savings association.
    (5) Nonconforming assets. (i) An applicant shall identify any 
nonconforming activities and assets, including nonconforming 
subsidiaries, of other institutions involved in the business 
combination that will not be disposed of or discontinued prior to 
consummation of the transaction. The OCC generally requires a national 
bank or Federal savings association to divest or conform nonconforming 
assets, or discontinue nonconforming activities, within a reasonable 
time following the business combination.
    (ii) Any resulting Federal savings association shall conform to the 
requirements of sections 5(c) and 10(m) of the Home Owners' Loan Act 
(12 U.S.C. 1464(c) and 1467a(m)) within the time period prescribed by 
the OCC.
    (6) Fiduciary powers. (i) An applicant shall state whether the 
resulting national bank or Federal savings association intends to 
exercise fiduciary powers pursuant to Sec.  5.26(b). (ii) If an 
applicant intends to exercise fiduciary powers after the combination 
and requires OCC approval for such powers, the applicant must include 
the information required under Sec.  5.26(e)(2).
    (7) Expiration of approval. Approval of a business combination, and 
conditional approval to form an interim national bank or interim 
Federal savings association, if applicable, expires if the business 
combination is not consummated within six months after the date of OCC 
approval, unless the OCC grants an extension of time.
    (8) Adequacy of disclosure. (i) An applicant shall inform 
shareholders of all material aspects of a business combination and 
shall comply with any applicable requirements of the Federal securities 
laws and securities regulations of the OCC. Accordingly, an applicant 
shall ensure that all proxy and information statements prepared in 
connection with a business combination do not contain any untrue or 
misleading statement of a material fact, or omit to state a material 
fact necessary in order to make the statements made, in the light of 
the circumstances under which they were made, not misleading.

[[Page 33351]]

    (ii) A national bank or Federal savings association applicant with 
one or more classes of securities subject to the registration 
provisions of section 12(b) or (g) of the Securities Exchange Act of 
1934, 15 U.S.C. 78l(b) or 78l(g), shall file preliminary proxy material 
or information statements for review with the Director, Securities and 
Corporate Practices Division, OCC, Washington, DC 20219. Any other 
applicant shall submit the proxy materials or information statements it 
uses in connection with the combination to the appropriate OCC 
licensing office no later than when the materials are sent to the 
shareholders.
    (f) Exceptions to rules of general applicability--(1) National bank 
or Federal savings association applicant--(i) In general. Sections 5.8, 
5.10, and 5.11 do not apply to this section. However, if the OCC 
concludes that an application presents significant or novel policy, 
supervisory, or legal issues, the OCC may determine that some or all 
provisions in Sec. Sec.  5.8, 5.10 and 5.11 apply.
    (ii) Statutory notice. If an application is subject to the Bank 
Merger Act or to another statute that requires notice to the public, a 
national bank or Federal savings association applicant shall follow the 
public notice requirements contained in 12 U.S.C. 1828(c)(3) or the 
other statute and sections 5.8(b) through 5.8(e), 5.10, and 5.11.
    (2) Interim national bank or interim Federal savings association. 
Sections 5.8, 5.10, and 5.11 do not apply to an application to organize 
an interim national bank or interim Federal savings association. 
However, if the OCC concludes that an application presents significant 
or novel policy, supervisory, or legal issues, the OCC may determine 
that any or all parts of Sec. Sec.  5.8, 5.10, and 5.11 apply. The OCC 
treats an application to organize an interim national bank or interim 
Federal savings association as part of the related application to 
engage in a business combination and does not require a separate public 
notice and public comment process.
    (3) State bank, or state savings association, state trust company, 
or credit union as resulting institution. Sections 5.7 through 5.13 do 
not apply to transactions covered by paragraphs (g)(6) or (g)(7) of 
this section.
    (g) Provisions governing consolidations and mergers with different 
types of entities--(1) Consolidations and mergers under 12 U.S.C. 215 
or 215a of a national bank with other national banks and state banks as 
defined in 12 U.S.C. 215b(1) resulting in a national bank. (i) A 
national bank entering into a consolidation or merger authorized 
pursuant to 12 U.S.C. 215 or 215a, respectively, is subject to the 
approval procedures and requirements with respect to treatment of 
dissenting shareholders set forth in those provisions.
    (ii) Any national bank that will not be the resulting bank in a 
consolidation or merger under 12 U.S.C. 215 or 215a shall provide a 
notice to the OCC under paragraph (k) of this section.
    (2) Consolidations and mergers of a national bank with Federal 
savings associations under 12 U.S.C. 215c resulting in a national bank. 
(i) With the approval of the OCC, any national bank and any Federal 
savings association may consolidate or merge with a national bank as 
the resulting institution by complying with the following procedures:
    (A) A national bank entering into the consolidation or merger shall 
follow the procedures of 12 U.S.C. 215 or 215a, respectively, as if the 
Federal savings association were a national bank.
    (B)(1) A Federal savings association entering into the 
consolidation or merger shall comply with the requirements of paragraph 
(n) of this section and follow the procedures set out in paragraph (o) 
of this section and shall provide a notice to the OCC under paragraph 
(k) of this section.
    (2) For purposes of this paragraph (g)(2), a combination in which a 
national bank acquires all or substantially all of the assets, or 
assumes all or substantially all of the liabilities, of a Federal 
savings association shall be treated as a consolidation for the Federal 
savings association.
    (ii) (A) National bank shareholders who dissent from a plan to 
consolidate may receive in cash the value of their national bank shares 
if they comply with the requirements of 12 U.S.C. 215 as if the Federal 
savings association were a national bank.
    (B) Federal savings association shareholders who dissent from a 
plan to merge or consolidate may receive in cash the value of their 
Federal savings association shares if they comply with the requirements 
of 12 U.S.C. 215 or 215a as if the Federal savings association were a 
national bank.
    (C) The OCC will conduct an appraisal or reappraisal of the value 
of the national bank or Federal savings association held by dissenting 
shareholders in accordance with the provisions of 12 U.S.C. 215 or 
215a, as applicable, except that the costs and expenses of any 
appraisal or reappraisal may be apportioned and assessed by the 
Comptroller as he or she may deem equitable against all or some of the 
parties. In making this determination the Comptroller shall consider 
whether any party has acted arbitrarily or not in good faith in respect 
to the rights provided by this paragraph.
    (iii) The consolidation or merger agreement must address the effect 
upon, and the terms of the assumption of, any liquidation account of 
any participating institution by the resulting institution.
    (3) Consolidation or merger of a Federal savings association with 
another Federal savings association, a national bank, a state bank, a 
state savings bank, a state savings association, a state trust company, 
or a credit union resulting in a Federal savings association--(i) With 
the approval of the OCC, a Federal savings association may consolidate 
or merge with another Federal savings association, a national bank, a 
state bank, a state savings association, a state trust company, or a 
credit union with the Federal savings association as the resulting 
institution by complying with the following procedures:
    (A)(1) The applicant Federal savings association shall comply with 
the requirements of paragraph 5.33(n) and follow the procedures set out 
in paragraph 5.33(o).
    (2) For purposes of this paragraph (g)(3), a combination in which a 
Federal savings association acquires all or substantially all of the 
assets, or assumes all or substantially all of the liabilities, of 
another other participating institution shall be treated as a 
consolidation for the acquiring Federal savings association and as a 
consolidation by a Federal savings association whose assets are 
acquired, if any.
    (B)(1) A national bank entering into a merger or consolidation with 
a Federal savings association when the resulting institution will be a 
Federal savings association shall comply with the requirements of 12 
U.S.C. 214a and 12 U.S.C. 214c as if the Federal savings association 
were a state bank. However, for these purposes the references in 12 
U.S.C. 214c to ``law of the State in which such national banking 
association is located'' and ``any State authority'' mean ``laws and 
regulations governing Federal savings associations'' and ``Office of 
the Comptroller of the Currency'' respectively. The national bank also 
shall provide a notice to the OCC under paragraph (k) of this section.
    (2) National bank shareholders who dissent from a plan to merge or 
consolidate may receive in cash the value of their national bank shares 
if they comply with the requirements of

[[Page 33352]]

12 U.S.C. 214a as if the Federal savings association were a state bank. 
The OCC will conduct an appraisal or reappraisal of the value of the 
national bank shares held by dissenting shareholders in accordance with 
the provisions of 12 U.S.C. 214a, except that the costs and expenses of 
any appraisal or reappraisal may be apportioned and assessed by the 
Comptroller as he or she may deem equitable against all or some of the 
parties. In making this determination the Comptroller shall consider 
whether any party has acted arbitrarily or not in good faith in respect 
to the rights provided by this paragraphs.
    (C)(1) A Federal savings association entering into a merger or 
consolidation with another Federal savings association when the 
resulting institution will be the other Federal savings association 
shall comply with the requirements of paragraph (n) of this section and 
the procedures of paragraph (o) of this section and shall provide a 
notice to the OCC under paragraph (k) of this section.
    (2) Federal savings association shareholders who dissent from a 
plan to merge or consolidate may receive in cash the value of their 
Federal savings association shares if they comply with the requirements 
of 12 U.S.C. 214a as if the other Federal savings association were a 
state bank. The OCC will conduct an appraisal or reappraisal of the 
value of the Federal savings association shares held by dissenting 
shareholders in accordance with the provisions of 12 U.S.C. 214a, 
except that the costs and expenses of any appraisal or reappraisal may 
be apportioned and assessed by the Comptroller as he or she may deem 
equitable against all or some of the parties. In making this 
determination the Comptroller shall consider whether any party has 
acted arbitrarily or not in good faith in respect to the rights 
provided by this paragraph.
    (3) The plan of merger or consolidation must provide the manner of 
disposing of the shares of the resulting Federal savings association 
not taken by the dissenting shareholders of the Federal savings 
association.
    (D)(1) A state bank, state savings association, state trust 
company, or credit union entering into a consolidation or merger with a 
Federal savings association when the resulting institution will be a 
Federal savings association shall follow the procedures for such 
consolidations or mergers set out in the law of the state or other 
jurisdiction under which the state bank, state savings association, 
state trust company, or credit union is organized.
    (2) The rights of dissenting shareholders and appraisal of 
dissenters' shares of stock in the state bank, state savings 
association, or state trust company, entering into the consolidation or 
merger shall be determined in the manner prescribed by the law of the 
state or other jurisdiction under which the state bank, state savings 
association, or state trust company is organized.
    (ii) The consolidation or merger agreement must address the effect 
upon, and the terms of the assumption of, any liquidation account of 
any participating institution by the resulting institution.
    (4) Mergers of a national bank with its nonbank affiliates under 12 
U.S.C. 215a-3 resulting in a national bank. (i) With the approval of 
the OCC, a national bank may merge with one or more of its nonbank 
affiliates, with the national bank as the resulting institution, in 
accordance with the provisions of this paragraph, provided that the law 
of the state or other jurisdiction under which the nonbank affiliate is 
organized allows the nonbank affiliate to engage in such mergers. If 
the national bank is an insured bank, the transaction is also subject 
to approval by the FDIC under the Bank Merger Act, 12 U.S.C. 1828(c).
    (ii) A national bank entering into the merger shall follow the 
procedures of 12 U.S.C. 215a as if the nonbank affiliate were a state 
bank, except as otherwise provided herein.
    (iii) A nonbank affiliate entering into the merger shall follow the 
procedures for such mergers set out in the law of the state or other 
jurisdiction under which the nonbank affiliate is organized.
    (iv) The rights of dissenting shareholders and appraisal of 
dissenters' shares of stock in the nonbank affiliate entering into the 
merger shall be determined in the manner prescribed by the law of the 
state or other jurisdiction under which the nonbank affiliate is 
organized.
    (v) The corporate existence of each institution participating in 
the merger shall be continued in the resulting national bank, and all 
the rights, franchises, property, appointments, liabilities, and other 
interests of the participating institutions shall be transferred to the 
resulting national bank, as set forth in 12 U.S.C. 215a(a), (e), and 
(f) in the same manner and to the same extent as in a merger between a 
national bank and a state bank under 12 U.S.C. 215a(a), as if the 
nonbank affiliate were a state bank.
    (5) Mergers of an uninsured national bank with its nonbank 
affiliates under 12 U.S.C. 215a-3 resulting in a nonbank affiliate. (i) 
With the approval of the OCC, a national bank that is not an insured 
bank as defined in 12 U.S.C. 1813(h) may merge with one or more of its 
nonbank affiliates, with the nonbank affiliate as the resulting entity, 
in accordance with the provisions of this paragraph, provided that the 
law of the state or other jurisdiction under which the nonbank 
affiliate is organized allows the nonbank affiliate to engage in such 
mergers.
    (ii) A national bank entering into the merger shall follow the 
procedures of 12 U.S.C. 214a, as if the nonbank affiliate were a state 
bank, except as otherwise provided in this section.
    (iii) A nonbank affiliate entering into the merger shall follow the 
procedures for such mergers set out in the law of the state or other 
jurisdiction under which the nonbank affiliate is organized.
    (iv)(A) National bank shareholders who dissent from an approved 
plan to merge may receive in cash the value of their national bank 
shares if they comply with the requirements of 12 U.S.C. 214a as if the 
nonbank affiliate were a state bank. The OCC may conduct an appraisal 
or reappraisal of dissenters' shares of stock in a national bank 
involved in the merger if all parties agree that the determination is 
final and binding on each party and agree on how the total expenses of 
the OCC in making the appraisal will be divided among the parties and 
paid to the OCC.
    (B) The rights of dissenting shareholders and appraisal of 
dissenters' shares of stock in the nonbank affiliate involved in the 
merger shall be determined in the manner prescribed by the law of the 
state or other jurisdiction under which the nonbank affiliate is 
organized.
    (v) The corporate existence of each entity participating in the 
merger shall be continued in the resulting nonbank affiliate, and all 
the rights, franchises, property, appointments, liabilities, and other 
interests of the participating national bank shall be transferred to 
the resulting nonbank affiliate as set forth in 12 U.S.C. 214b, in the 
same manner and to the same extent as in a merger between a national 
bank and a state bank under 12 U.S.C. 214a, as if the nonbank affiliate 
were a state bank.
    (6) Consolidation or merger under 12 U.S.C. 214a of a national bank 
with a state bank resulting in a state bank as defined in 12 U.S.C. 
214(a)--(i) Policy. Prior OCC approval is not required for the merger 
or consolidation of a national bank with a state bank as defined in 12 
U.S.C. 214(a) Termination of a national bank's existence and status as 
a national banking association is automatic, and its charter cancelled, 
upon completion of the statutory and regulatory

[[Page 33353]]

requirements for engaging in the consolidation or merger and 
consummation of the consolidation or merger.
    (ii) Procedures. A national bank desiring to merge or consolidate 
with a state bank as defined in 12 U.S.C. 214(a) when the resulting 
institution will be a state bank shall comply with the requirements and 
follow the procedures of 12 U.S.C. 214a and 214c and shall provide 
notice to the OCC under paragraph (k) of this section.
    (iii) Dissenters' rights and appraisal procedures. National bank 
shareholders who dissent from a plan to merge or consolidate may 
receive in cash the value of their national bank shares if they comply 
with the requirements of 12 U.S.C. 214a. The OCC conducts an appraisal 
or reappraisal of the value of the national bank shares held by 
dissenting shareholders as provided for in 12 U.S.C. 214a.
    (iv) Liquidation account. The consolidation or merger agreement 
must address the effect upon, and the terms of the assumption of, any 
liquidation account of any participating institution by the resulting 
institution.
    (7) Consolidation or merger of a Federal savings association with a 
state bank, state savings bank, state savings association, state trust 
company, or credit union resulting in a state bank, state savings bank, 
state savings association, state trust company, or credit union--(i) 
Policy. Prior OCC approval is not required for the merger or 
consolidation of a Federal savings association with a state bank, state 
savings bank, state savings association, state trust company, or credit 
union when the resulting institution will be a state institution or 
credit union. Termination of a national bank's or Federal savings 
association's existence and status as a national banking association or 
Federal savings association is automatic, and its charter cancelled, 
upon completion of the statutory and regulatory requirements for 
engaging in the consolidation or merger and consummation of the 
consolidation or merger.
    (ii) Procedures. (A) A Federal savings association desiring to 
merge or consolidate with a state bank, state savings bank, state 
savings association, state trust company, or credit union when the 
resulting institution will be a state institution or credit union shall 
comply with the requirements of paragraph (n) of this section and the 
procedures of paragraph (o) of this section and shall provide notice to 
the OCC under paragraph (k) of this section.
    (B) For purposes of this paragraph (g)(7), a combination in which a 
state bank, state savings bank, state savings association, state trust 
company, or credit union acquires all or substantially all of the 
assets, or assumes all or substantially all of the liabilities, of a 
Federal savings association shall be treated as a consolidation by the 
Federal savings association.
    (iii) Dissenters' rights and appraisal procedures. (A) Federal 
savings association shareholders who dissent from a plan to merge or 
consolidate may receive in cash the value of their Federal savings 
association shares if they comply with the requirements of 12 U.S.C. 
214a as if the Federal savings association were a national bank. The 
OCC conducts an appraisal or reappraisal of the value of the Federal 
savings association shares held by dissenting shareholders only if all 
parties agree that the determination will be final and binding. The 
parties shall also agree on how the total expenses of the OCC in making 
the appraisal will be divided among the parties and paid to the OCC.
    (B) The plan of merger or consolidation must provide the manner of 
disposing of the shares of the resulting state institution not taken by 
the dissenting shareholders of the Federal savings association.
    (iv) Liquidation account. The consolidation or merger agreement 
must address the effect upon, and the terms of the assumption of, any 
liquidation account of any participating institution by the resulting 
institution.
    (h) Interstate combinations under 12 U.S.C. 1831u. A business 
combination between insured banks with different home states under the 
authority of 12 U.S.C. 1831u must satisfy the standards and 
requirements and comply with the procedures of 12 U.S.C. 1831u and 
either 12 U.S.C. 215, 215a, and 215a-1, as applicable, if the resulting 
bank is a national bank, or 12 U.S.C. 214a, 214b, and 214c if the 
resulting bank is a state bank. For purposes of 12 U.S.C. 1831u, the 
acquisition of a branch without the acquisition of all or substantially 
all of the assets of a bank is treated as the acquisition of a bank 
whose home state is the state in which the branch is located.
    (i) Expedited review for business reorganizations and streamlined 
applications. A filing that qualifies as a business reorganization as 
defined in paragraph (d)(2) of this section, or a filing that qualifies 
as a streamlined application as described in paragraph (j) of this 
section, is deemed approved by the OCC as of the 45th day after the 
application is received by the OCC, or the 15th day after the close of 
the comment period, whichever is later, unless the OCC notifies the 
applicant that the filing is not eligible for expedited review, or the 
expedited review process is extended, under Sec.  5.13(a)(2). An 
application under this paragraph must contain all necessary information 
for the OCC to determine if it qualifies as a business reorganization 
or streamlined application.
    (j) Streamlined applications. (1) An applicant may qualify for a 
streamlined business combination application in the following 
situations:
    (i) At least one party to the transaction is an eligible bank or 
eligible Federal savings association, and all other parties to the 
transaction are eligible banks, eligible Federal savings associations, 
or eligible depository institutions, the resulting national bank or 
resulting Federal savings association will be well capitalized 
immediately following consummation of the transaction, and the total 
assets of the target institution are no more than 50 percent of the 
total assets of the acquiring bank or Federal savings association, as 
reported in each institution's Consolidated Report of Condition and 
Income filed for the quarter immediately preceding the filing of the 
application;
    (ii) The acquiring bank or Federal savings association is an 
eligible bank or eligible Federal savings association, the target bank 
or savings association is not an eligible bank, eligible Federal 
savings association, or an eligible depository institution, the 
resulting national bank or resulting Federal savings association will 
be well capitalized immediately following consummation of the 
transaction, and the applicants in a prefiling communication request 
and obtain approval from the appropriate OCC licensing office to use 
the streamlined application;
    (iii) The acquiring bank or Federal savings association is an 
eligible bank or eligible Federal savings association, the target bank 
or savings association is not an eligible bank, eligible Federal 
savings association, or an eligible depository institution, the 
resulting bank or resulting Federal savings association will be well 
capitalized immediately following consummation of the transaction, and 
the total assets acquired do not exceed 10 percent of the total assets 
of the acquiring national bank or acquiring Federal savings 
association, as reported in each institution's Consolidated Report of 
Condition and Income filed for the quarter immediately preceding the 
filing of the application; or
    (iv) In the case of a transaction under paragraph (g)(4) of this 
section, the acquiring bank is an eligible bank, the resulting national 
bank will be well

[[Page 33354]]

capitalized immediately following consummation of the transaction, the 
applicants in a prefiling communication request and obtain approval 
from the appropriate OCC licensing office to use the streamlined 
application, and the total assets acquired do not exceed 10 percent of 
the total assets of the acquiring national bank, as reported in the 
bank's Consolidated Report of Condition and Income filed for the 
quarter immediately preceding the filing of the application.
    (2) Notwithstanding paragraph (j)(1) of this section, an applicant 
does not qualify for a streamlined business combination application if 
the transaction is part of a conversion under part 192 of this chapter.
    (3) When a business combination qualifies for a streamlined 
application, the applicant should consult the Manual to determine the 
abbreviated application information required by the OCC. The OCC 
encourages prefiling communications between the applicants and the 
appropriate OCC licensing office before filing under paragraph (j) of 
this section.
    (k) Exit notice to OCC--(1) Notice required. As provided in 
paragraphs (g)(1)(ii), (g)(2)(i)(B), (g)(3)(i)(B)(1), (g)(3)(i)(C)(1), 
(g)(6)(ii), and (g)(7)(ii) of this section, a national bank or Federal 
savings association engaging in a consolidation or merger in which it 
is not the applicant and the resulting institution must file a notice 
rather than an application to the appropriate OCC licensing office 
advising of its intention.
    (2) Timing of notice. The national bank or Federal savings 
association shall submit the notice at the time the application to 
merge or consolidate is filed with the responsible agency under the 
Bank Merger Act, 12 U.S.C. 1828(c), or if there is no such filing then 
no later than 30 days prior to the effective date of the merger or 
consolidation.
    (3) Content of Notice. The notice shall include the following: 
(i)(A) A short description of the material features of the transaction, 
the identity of the acquiring institution, the identity of the state or 
Federal regulator to whom the application was made, and the date of the 
application; or
    (B) A copy of a filing made with another Federal or state 
regulatory agency seeking approval from that agency for the transaction 
under the Bank Merger Act or other applicable statute:
    (ii) The planned consummation date for the transaction;
    (iii) Information to demonstrate compliance by the national bank or 
Federal savings association with applicable requirements to engage in 
the transactions (e.g., board approval or shareholder or accountholder 
requirements); and
    (iv) If the national bank or Federal savings association submitting 
the notice maintains a liquidation account established pursuant to part 
192 of this chapter, the notice must state that the resulting 
institution will assume such liquidation account.
    (4) Termination of status. The national bank or Federal savings 
association shall advise the OCC when the transaction is about to be 
consummated. Termination of a national bank's or Federal savings 
association's existence and status as a national banking association or 
Federal savings association is automatic, and its charter cancelled, 
upon completion of the statutory and regulatory requirements and 
consummation of the consolidation or merger. When the national bank or 
Federal savings association files the notice under paragraph (k)(2) of 
this section, the OCC provides instructions to the national bank or 
Federal savings association for terminating its status as a national 
bank or Federal savings, including surrendering its charter to the OCC 
immediately after consummation of the transaction.
    (5) Expiration. If the action contemplated by the notice is not 
completed within six months after the OCC's receipt of the notice, a 
new notice must be submitted to the OCC, unless the OCC grants an 
extension of time.
    (l) Mergers and consolidations; transfer of assets and liabilities 
to the resulting institution. (1) In any consolidation or merger in 
which the resulting institution is a national bank or Federal savings 
association, on the effective date of the merger or consolidation, all 
assets and property (real, personal and mixed, tangible and intangible, 
choses in action, rights, and credits) then owned by each participating 
institution or which would inure to any of them, shall, immediately by 
operation of law and without any conveyance, transfer, or further 
action, become the property of the resulting national bank or Federal 
savings association. The resulting national bank or Federal savings 
association shall be deemed to be a continuation of the entity of each 
participating institution, the rights and obligations of which shall 
succeed to such rights and obligations and the duties and liabilities 
connected therewith.
    (2) The authority in paragraph (l)(1) is in addition to any 
authority granted by applicable statutes for specific transactions and 
is subject to the National Bank Act, the Home Owners' Loan Act, and 
other applicable statutes.
    (m) Certification of combination; effective date. (1) When a 
national bank or Federal savings association is the applicant and will 
be the resulting entity in a consolidation or merger, after receiving 
approval from the OCC, it shall complete any remaining steps needed to 
complete the transaction, provide the OCC with a certification that all 
other required regulatory or shareholder approvals have been obtained, 
and inform the OCC of the planned consummation date.
    (2) When the transaction is consummated, the applicant shall notify 
the OCC of the consummation date. The OCC will issue a letter 
certifying that the combination was effective on the date specified in 
the applicant's notice.
    (n) Authority for and certain limits on business combinations by 
Federal savings associations (1) Federal savings associations may enter 
into business combinations only in accordance with this section, the 
Bank Merger Act, and sections 5(d)(3)(A) and 10(s) of the Home Owners' 
Loan Act.
    (2) A Federal savings association may consolidate or merge with 
another depository institution, a state trust company or a credit 
union, or may engage in another business combination listed in 
paragraphs (d)(2)(iv), (v) and (vi) of this section or an other 
combination listed in paragraph (d)(10), provided that:
    (i) The combination is in compliance with, and receives all 
approvals required under, any applicable statutes and regulations;
    (ii) Any resulting Federal savings association meets the 
requirements for insurance of accounts; and
    (iii) If any combining savings association is a mutual savings 
association, the resulting institution shall be a mutually held savings 
association, unless:
    (A) The transaction is approved under part 192 governing mutual to 
stock conversions; or
    (B) The transaction involves a mutual holding company 
reorganization under 12 U.S.C. 1467a(o).
    (3) Where the resulting institution is a Federal mutual savings 
association, the OCC may approve a temporary increase in the number of 
directors of the resulting institution provided that the association 
submits a plan for bringing the board of directors into compliance with 
the requirements of Sec.  5.21(e) within a reasonable period of time.
    (4)(i) The Federal savings associations described in paragraph 
(m)(4)(ii) below must provide affected accountholders

[[Page 33355]]

with a notice of a proposed account transfer and an option of retaining 
the account in the transferring Federal savings association. The notice 
must allow affected accountholders at least 30 days to consider whether 
to retain their accounts in the transferring Federal savings 
association.
    (ii) The following savings associations must provide the notices:
    (A) A Federal mutual savings association transferring account 
liabilities to an institution the accounts of which are not insured by 
the Deposit Insurance Fund or the National Credit Union Share Insurance 
Fund; and
    (B) Any Federal mutual savings association transferring account 
liabilities to a stock form depository institution.
    (o) Procedural requirements for Federal savings association 
approval of combinations--(1) Board approval. Before a Federal savings 
association files a notice or application for any consolidation or 
merger, the combination and combination agreement must be approved by 
majority vote of the entire board of each constituent Federal savings 
association in the case of Federal stock savings associations or a two-
thirds vote of the entire board of each constituent Federal savings 
association in the case of Federal mutual savings associations;
    (2) Change of name or home office. If the name the resulting 
Federal savings association or the location of the home office of the 
resulting Federal savings association will be changed as a result of 
the business combination, the resulting Federal savings association 
shall amend its charter accordingly;
    (3) Shareholder vote--(i) General rule. Except as otherwise 
provided in this paragraph (n)(3), an affirmative vote of two-thirds of 
the outstanding voting stock of any constituent Federal stock savings 
association shall be required for approval of a consolidation or 
merger. If any class of shares is entitled to vote as a class pursuant 
to Sec.  152.4 of this part, an affirmative vote of a majority of the 
shares of each voting class and two-thirds of the total voting shares 
shall be required. The required vote shall be taken at a meeting of the 
savings association.
    (ii) General exception. Stockholders of the resulting Federal stock 
savings association need not authorize a consolidation or merger if:
    (A) It does not involve an interim Federal savings association or 
an interim state savings association;
    (B) The association's charter is not changed;
    (C) Each share of stock outstanding immediately prior to the 
effective date of the consolidation or merger is to be an identical 
outstanding share or a treasury share of the resulting Federal stock 
savings association after such effective date; and
    (D) Either:
    (1) No shares of voting stock of the resulting Federal stock 
savings association and no securities convertible into such stock are 
to be issued or delivered under the plan of combination, or
    (2) The authorized unissued shares or the treasury shares of voting 
stock of the resulting Federal stock savings association to be issued 
or delivered under the plan of combination, plus those initially 
issuable upon conversion of any securities to be issued or delivered 
under such plan, do not exceed 15% of the total shares of voting stock 
of such association outstanding immediately prior to the effective date 
of the consolidation or merger.
    (iii) Exceptions for certain combinations involving an interim 
association. Stockholders of a Federal stock savings association need 
not authorize by a two-thirds affirmative vote consolidations or 
mergers involving an interim Federal savings association or interim 
state savings association when the resulting Federal stock savings 
association is acquired pursuant to the regulations of the Board of 
Governors of the Federal Reserve System at 12 CFR 238.15(e) (relating 
to the creation of a savings and loan holding company by a savings 
association). In those cases, an affirmative vote of 50 percent of the 
shares of the outstanding voting stock of the Federal stock savings 
association plus one affirmative vote shall be required. If any class 
of shares is entitled to vote as a class pursuant to Sec.  5.22(g) of 
this part, an affirmative vote of 50 percent of the shares of each 
voting class plus one affirmative vote shall be required. The required 
votes shall be taken at a meeting of the association.
    (4) Mutual member vote. Notwithstanding any other provision of this 
section, the OCC may require that a consolidation, merger or other 
business combination be submitted to the voting members of any mutual 
savings association participating in the proposed transaction at duly 
called meetings and that the transaction, to be effective, must be 
approved by such voting members.
0
17. Section 5.34 is revised to read as follows:


Sec.  5.34  Operating subsidiaries of a national bank.

    (a) Authority. 12 U.S.C. 24 (Seventh), 24a, 25b, 93a, 3101 et seq.
    (b) Licensing requirements. A national bank must file a notice or 
application as prescribed in this section to acquire or establish an 
operating subsidiary, or to commence a new activity in an existing 
operating subsidiary.
    (c) Scope. This section sets forth authorized activities and 
application or notice procedures for national banks engaging in 
activities through an operating subsidiary. The procedures in this 
section do not apply to financial subsidiaries authorized under Sec.  
5.39. Unless provided otherwise, this section applies to a Federal 
branch or agency that acquires, establishes, or maintains any 
subsidiary that a national bank is authorized to acquire or establish 
under this section in the same manner and to the same extent as if the 
Federal branch or agency were a national bank, except that the 
ownership interest required in paragraphs (e)(2) and (e)(5)(i)(B) of 
this section shall apply to the parent foreign bank of the Federal 
branch or agency and not to the Federal branch or agency. The OCC may, 
at any time, limit a national bank's investment in an operating 
subsidiary or may limit or refuse to permit any activities in an 
operating subsidiary for supervisory, legal, or safety and soundness 
reasons.
    (d) Definitions. For purposes of this Sec.  5.34:
    (1) Authorized product means a product that would be defined as 
insurance under section 302(c) of the Gramm-Leach-Bliley Act (Pub. L. 
106-102, 113 Stat. 1338, 1407) (GLBA) (15 U.S.C. 6712) that, as of 
January 1, 1999, the OCC had determined in writing that national banks 
may provide as principal or national banks were in fact lawfully 
providing the product as principal, and as of that date no court of 
relevant jurisdiction had, by final judgment, overturned a 
determination by the OCC that national banks may provide the product as 
principal. An authorized product does not include title insurance, or 
an annuity contract the income of which is subject to treatment under 
section 72 of the Internal Revenue Code of 1986 (26 U.S.C. 72).
    (2) Well capitalized means the capital level described in 12 CFR 
6.4 or, in the case of a Federal branch or agency, the capital level 
described in 12 CFR 4.7(b)(1)(iii).
    (3) Well managed means, unless otherwise determined in writing by 
the OCC:
    (i) In the case of a national bank:
    (A) The national bank has received a composite rating of 1 or 2 
under the

[[Page 33356]]

Uniform Financial Institutions Rating System in connection with its 
most recent examination; or
    (B) In the case of any national bank that has not been examined, 
the existence and use of managerial resources that the OCC determines 
are satisfactory.
    (ii) In the case of a Federal branch or agency:
    (A) The Federal branch or agency has received a composite ROCA 
supervisory rating (which rates risk management, operational controls, 
compliance, and asset quality) of 1 or 2 at its most recent 
examination; or
    (B) In the case of a Federal branch or agency that has not been 
examined, the existence and use of managerial resources that the OCC 
determines are satisfactory.
    (e) Standards and requirements--(1) Authorized activities. (i) A 
national bank may conduct in an operating subsidiary activities that 
are permissible for a national bank to engage in directly either as 
part of, or incidental to, the business of banking, as determined by 
the OCC, or otherwise under other statutory authority, including:
    (A) Providing authorized products as principal; and
    (B) Providing title insurance as principal if the national bank or 
subsidiary thereof was actively and lawfully underwriting title 
insurance before November 12, 1999, and no affiliate of the national 
bank (other than a subsidiary) provides insurance as principal. A 
subsidiary may not provide title insurance as principal if the state 
had in effect before November 12, 1999, a law which prohibits any 
person from underwriting title insurance with respect to real property 
in that state.
    (ii) In addition to OCC authorization, before it begins business an 
operating subsidiary also must comply with other laws applicable to it 
and its proposed business, including applicable licensing or 
registration requirements, if any, such as registration requirements 
under securities laws.
    (2) Qualifying subsidiaries. (i) An operating subsidiary in which a 
national bank may invest includes a corporation, limited liability 
company, limited partnership, or similar entity if:
    (A) The bank has the ability to control the management and 
operations of the subsidiary, and no other person or entity has the 
ability to control the management or operations of the subsidiary;
    (B) The parent bank owns and controls more than 50 percent of the 
voting (or similar type of controlling) interest of the operating 
subsidiary, or the parent bank otherwise controls the operating 
subsidiary and no other party controls a percentage of the voting (or 
similar type of controlling) interest of the operating subsidiary 
greater than the bank's interest; and
    (C) The operating subsidiary is consolidated with the bank under 
Generally Accepted Accounting Principles (GAAP).
    (ii) However, the following subsidiaries are not operating 
subsidiaries subject to this section:
    (A) A subsidiary in which the bank's investment is made pursuant to 
specific authorization in a statute or OCC regulation (e.g., a bank 
service company under 12 U.S.C. 1861 et seq. or a financial subsidiary 
under section 5136A of the Revised Statutes (12 U.S.C. 24a)); and
    (B) A subsidiary in which the bank has acquired, in good faith, 
shares through foreclosure on collateral, by way of compromise of a 
doubtful claim, or to avoid a loss in connection with a debt previously 
contracted.
    (iii) Notwithstanding the requirements of paragraph (e)(2)(i),
    (A) A national bank must have reasonable policies and procedures to 
preserve the limited liability of the bank and its operating 
subsidiaries; and
    (B) OCC regulations shall not be construed as requiring a national 
bank and its operating subsidiaries to operate as a single entity.
    (3) Examination and supervision. An operating subsidiary conducts 
activities authorized under this section pursuant to the same 
authorization, terms and conditions that apply to the conduct of such 
activities by its parent national bank, unless otherwise specifically 
provided by statute, regulation, or published OCC policy, including 
sections 1044(e) and 1045 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (12 U.S.C. 25b) with respect to the application 
of state law. If the OCC determines that the operating subsidiary is 
operating in violation of law, regulation, or written condition, or in 
an unsafe or unsound manner or otherwise threatens the safety or 
soundness of the bank, the OCC will direct the bank or operating 
subsidiary to take appropriate remedial action, which may include 
requiring the bank to divest or liquidate the operating subsidiary, or 
discontinue specified activities. OCC authority under this paragraph is 
subject to the limitations and requirements of section 45 of the 
Federal Deposit Insurance Act (12 U.S.C. 1831v) and section 115 of the 
Gramm-Leach-Bliley Act (12 U.S.C. 1820a).
    (4) Consolidation of figures--(i) National banks. Pertinent book 
figures of the parent national bank and its operating subsidiary shall 
be combined for the purpose of applying statutory or regulatory 
limitations when combination is needed to effect the intent of the 
statute or regulation, e.g., for purposes of 12 U.S.C. 56, 59, 60, 84, 
and 371d.
    (ii) Federal branches or agencies. Transactions conducted by all of 
a foreign bank's Federal branches and agencies and State branches and 
agencies, and their operating subsidiaries, shall be combined for the 
purpose of applying any limitation or restriction as provided in 12 CFR 
28.14.
    (5) Procedures--(i) Application required. (A) Except for an 
operating subsidiary that qualifies for the notice procedures in 
paragraph (e)(5)(ii) of this section or is exempt from notice or 
application requirements under paragraph (e)(5)(vi) of this section, a 
national bank must first submit an application to, and receive prior 
approval from, the OCC to establish or acquire an operating subsidiary 
or to perform a new activity in an existing operating subsidiary.
    (B) The application must explain, as appropriate, how the bank 
``controls'' the enterprise, describing in full detail structural 
arrangements where control is based on factors other than bank 
ownership of more than 50 percent of the voting interest of the 
subsidiary and the ability to control the management and operations of 
the subsidiary by holding voting interests sufficient to select the 
number of directors needed to control the subsidiary's board and to 
select and terminate senior management. In the case of a limited 
partnership or limited liability company that does not qualify for the 
notice procedures set forth in paragraph (e)(5)(ii), the bank must 
provide a statement explaining why it is not eligible. The application 
also must include a complete description of the bank's investment in 
the subsidiary, the proposed activities of the subsidiary, the 
organizational structure and management of the subsidiary, the 
relations between the bank and the subsidiary, and other information 
necessary to adequately describe the proposal. To the extent that the 
application relates to the initial affiliation of the bank with a 
company engaged in insurance activities, the bank must describe the 
type of insurance activity in which the company is engaged and has 
present plans to conduct. The bank must also list for each State the 
lines of business for which the company holds, or will hold, an 
insurance license, indicating the State where the company holds a

[[Page 33357]]

resident license or charter, as applicable. The application must state 
whether the operating subsidiary will conduct any activity at a 
location other than the main office or a previously approved branch of 
the bank. The OCC may require an applicant to submit a legal analysis 
if the proposal is novel, unusually complex, or raises substantial 
unresolved legal issues. In these cases, the OCC encourages applicants 
to have a pre-filing meeting with the OCC. Any bank receiving approval 
under this paragraph is deemed to have agreed that the subsidiary will 
conduct the activity in a manner consistent with published OCC 
guidance.
    (ii) Notice process only for certain qualifying filings. (A) Except 
for an operating subsidiary that is exempt from notice or application 
procedures under paragraph (e)(5)(vi) of this section, a national bank 
that is ``well capitalized'' and ``well managed'' may establish or 
acquire an operating subsidiary, or perform a new activity in an 
existing operating subsidiary, by providing the appropriate OCC 
licensing office written notice prior to, or within 10 days after, 
acquiring or establishing the subsidiary, or commencing the new 
activity, if:
    (1) The activity is listed in paragraph (e)(5)(v) of this section;
    (2) The entity is a corporation, limited liability company, or 
limited partnership; and
    (3) The bank:
    (i) Has the ability to control the management and operations of the 
subsidiary by holding voting interests sufficient to select the number 
of directors needed to control the subsidiary's board and to select and 
terminate senior management (or, in the case of a limited partnership 
or a limited liability company, has the ability to control the 
management and operations of the subsidiary by controlling the 
selection and termination of senior management), and no other person or 
entity has the ability to control the management or operations of the 
subsidiary;
    (ii) Holds more than 50 percent of the voting, or equivalent, 
interests in the subsidiary, and, in the case of a limited partnership 
or limited liability company, the bank or an operating subsidiary 
thereof is the sole general partner of the limited partnership or the 
sole managing member of the limited liability company, provided that 
under the partnership agreement or limited liability company agreement, 
limited partners or other limited liability company members have no 
authority to bind the partnership or limited liability company by 
virtue solely of their status as limited partners or members; and
    (iii) Is required to consolidate its financial statements with 
those of the subsidiary under Generally Accepted Accounting Principles.
    (B) The written notice must include a complete description of the 
bank's investment in the subsidiary and of the activity conducted and a 
representation and undertaking that the activity will be conducted in 
accordance with OCC policies contained in guidance issued by the OCC 
regarding the activity. To the extent that the notice relates to the 
initial affiliation of the bank with a company engaged in insurance 
activities, the bank must describe the type of insurance activity in 
which the company is engaged and has present plans to conduct. The bank 
also must list for each State the lines of business for which the 
company holds, or will hold, an insurance license, indicating the State 
where the company holds a resident license or charter, as applicable. 
Any bank receiving approval under this paragraph is deemed to have 
agreed that the subsidiary will conduct the activity in a manner 
consistent with published OCC guidance.
    (iii) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to this section. However, if the OCC 
concludes that an application presents significant or novel policy, 
supervisory, or legal issues, the OCC may determine that some or all 
provisions in Sec. Sec.  5.8, 5.10, and 5.11 apply.
    (iv) OCC review and approval. The OCC reviews a national bank's 
application to determine whether the proposed activities are legally 
permissible under Federal banking laws and to ensure that the proposal 
is consistent with safe and sound banking practices and OCC policy and 
does not endanger the safety or soundness of the parent national bank. 
As part of this process, the OCC may request additional information and 
analysis from the applicant.
    (v) Activities eligible for notice. The following activities 
qualify for the notice procedures in paragraph (e)(5)(ii) of this 
section, provided the activity is conducted pursuant to the same terms 
and conditions as would be applicable if the activity were conducted 
directly by a national bank:
    (A) Holding and managing assets acquired by the parent bank or its 
operating subsidiaries, including investment assets and property 
acquired by the bank through foreclosure or otherwise in good faith to 
compromise a doubtful claim, or in the ordinary course of collecting a 
debt previously contracted;
    (B) Providing services to or for the bank or its affiliates, 
including accounting, auditing, appraising, advertising and public 
relations, and financial advice and consulting;
    (C) Making loans or other extensions of credit, and selling money 
orders, savings bonds, and travelers checks;
    (D) Purchasing, selling, servicing, or warehousing loans or other 
extensions of credit, or interests therein;
    (E) Providing courier services between financial institutions;
    (F) Providing management consulting, operational advice, and 
services for other financial institutions;
    (G) Providing check guaranty, verification and payment services;
    (H) Providing data processing, data warehousing and data 
transmission products, services, and related activities and facilities, 
including associated equipment and technology, for the bank or its 
affiliates;
    (I) Acting as investment adviser (including an adviser with 
investment discretion) or financial adviser or counselor to 
governmental entities or instrumentalities, businesses, or individuals, 
including advising registered investment companies and mortgage or real 
estate investment trusts, furnishing economic forecasts or other 
economic information, providing investment advice related to futures 
and options on futures, and providing consumer financial counseling;
    (J) Providing tax planning and preparation services;
    (K) Providing financial and transactional advice and assistance, 
including advice and assistance for customers in structuring, 
arranging, and executing mergers and acquisitions, divestitures, joint 
ventures, leveraged buyouts, swaps, foreign exchange, derivative 
transactions, coin and bullion, and capital restructurings;
    (L) Underwriting and reinsuring credit related insurance to the 
extent permitted under section 302 of the GLBA (15 U.S.C. 6712);
    (M) Leasing of personal property and acting as an agent or adviser 
in leases for others;
    (N) Providing securities brokerage or acting as a futures 
commission merchant, and providing related credit and other related 
services;
    (O) Underwriting and dealing, including making a market, in bank 
permissible securities and purchasing and selling as principal, asset 
backed obligations;
    (P) Acting as an insurance agent or broker, including title 
insurance to the extent permitted under section 303 of the GLBA (15 
U.S.C. 6713);

[[Page 33358]]

    (Q) Reinsuring mortgage insurance on loans originated, purchased, 
or serviced by the bank, its subsidiaries, or its affiliates, provided 
that if the subsidiary enters into a quota share agreement, the 
subsidiary assumes less than 50 percent of the aggregate insured risk 
covered by the quota share agreement. A ``quota share agreement'' is an 
agreement under which the reinsurer is liable to the primary insurance 
underwriter for an agreed upon percentage of every claim arising out of 
the covered book of business ceded by the primary insurance underwriter 
to the reinsurer;
    (R) Acting as a finder pursuant to 12 CFR 7.1002 to the extent 
permitted by published OCC precedent for national banks; \2\
---------------------------------------------------------------------------

    \2\ See, e.g., the OCC's monthly publication ``Interpretations 
and Actions.'' Beginning with the May 1996 issue, the OCC's Web site 
provides access to electronic versions of ``Interpretations and 
Actions'' (www.occ.gov).
---------------------------------------------------------------------------

    (S) Offering correspondent services to the extent permitted by 
published OCC precedent for national banks;
    (T) Acting as agent or broker in the sale of fixed or variable 
annuities;
    (U) Offering debt cancellation or debt suspension agreements;
    (V) Providing real estate settlement, closing, escrow, and related 
services; and real estate appraisal services for the subsidiary, parent 
bank, or other financial institutions;
    (W) Acting as a transfer or fiscal agent;
    (X) Acting as a digital certification authority to the extent 
permitted by published OCC precedent for national banks, subject to the 
terms and conditions contained in that precedent;
    (Y) Providing or selling public transportation tickets, event and 
attraction tickets, gift certificates, prepaid phone cards, promotional 
and advertising material, postage stamps, and Electronic Benefits 
Transfer (EBT) script, and similar media, to the extent permitted by 
published OCC precedent for national banks, subject to the terms and 
conditions contained in that precedent;
    (Z) Providing data processing, and data transmission services, 
facilities (including equipment, technology, and personnel), databases, 
advice and access to such services, facilities, databases and advice, 
for the parent bank and for others, pursuant to 12 CFR 7.5006 to the 
extent permitted by published OCC precedent for national banks;
    (AA) Providing bill presentment, billing, collection, and claims-
processing services;
    (BB) Providing safekeeping for personal information or valuable 
confidential trade or business information, such as encryption keys, to 
the extent permitted by published OCC precedent for national banks;
    (CC) Providing payroll processing;
    (DD) Providing branch management services;
    (EE) Providing merchant processing services except when the 
activity involves the use of third parties to solicit or underwrite 
merchants; and
    (FF) Performing administrative tasks involved in benefits 
administration.
    (vi) No application or notice required. A national bank may acquire 
or establish an operating subsidiary, or perform a new activity in an 
existing operating subsidiary, without filing an application or 
providing notice to the OCC, if the bank is well managed and well 
capitalized and the:
    (A) Activities of the new subsidiary are limited to those 
activities previously reported by the bank in connection with the 
establishment or acquisition of a prior operating subsidiary;
    (B) Activities in which the new subsidiary will engage continue to 
be legally permissible for the subsidiary;
    (C) Activities of the new subsidiary will be conducted in 
accordance with any conditions imposed by the OCC in approving the 
conduct of these activities for any prior operating subsidiary of the 
bank;
    (D) The standards set forth in paragraphs (e)(5)(ii)(A)(2) and (3) 
of this section are satisfied.
    (vii) Fiduciary powers. (A) If an operating subsidiary proposes to 
accept fiduciary appointments for which fiduciary powers are required, 
such as acting as trustee or executor, then the national bank must have 
fiduciary powers under 12 U.S.C. 92a and the subsidiary also must have 
its own fiduciary powers under the law applicable to the subsidiary.
    (B) Unless the subsidiary is a registered investment adviser, if an 
operating subsidiary proposes to exercise investment discretion on 
behalf of customers or provide investment advice for a fee, the 
national bank must have prior OCC approval to exercise fiduciary powers 
pursuant to Sec.  5.26 and 12 CFR part 9.
    (viii) Expiration of approval. Approval expires if the national 
bank has not established or acquired the operating subsidiary, or 
commenced the new activity in an existing operating subsidiary within 
12 months after the date of the approval, unless the OCC shortens or 
extends the time period.
    (6) Grandfathered operating subsidiaries. Notwithstanding the 
requirements for a qualifying operating subsidiary in Sec.  5.34(e)(2) 
and unless otherwise notified by the OCC with respect to a particular 
operating subsidiary, an entity that a national bank lawfully acquired 
or established as an operating subsidiary before April 24, 2008 may 
continue to operate as a national bank operating subsidiary under this 
section, provided that the bank and the operating subsidiary were, and 
continue to be, conducting authorized activities in compliance with the 
standards and requirements applicable when the bank established or 
acquired the operating subsidiary.
    (7) Annual Report on Operating Subsidiaries--(i) Filing 
requirement. Each national bank shall prepare and file with the OCC an 
Annual Report on Operating Subsidiaries containing the information set 
forth in paragraph (e)(7)(ii) of this section for each of its operating 
subsidiaries that:
    (A) Is not functionally regulated within the meaning of section 
5(c)(5) of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 
1844(c)(5)); and
    (B) Does business directly with consumers in the United States. For 
purposes of paragraph (e)(7) of this section, an operating subsidiary, 
or any subsidiary thereof, does business directly with consumers if, in 
the ordinary course of its business, it provides products or services 
to individuals to be used primarily for personal, family, or household 
purposes.
    (ii) Information required. The Annual Report on Operating 
Subsidiaries must contain the following information for each covered 
operating subsidiary listed:
    (A) The name and charter number of the parent national bank;
    (B) The name (include any ``dba'' (doing business as), abbreviated 
names, or trade names used to identify the operating subsidiary when it 
does business directly with consumers), mailing address (include the 
street address or post office box, city, state, and zip code), email 
address (if any), and telephone number of the operating subsidiary;
    (C) The principal place of business of the operating subsidiary, if 
different from the address provided pursuant to paragraph (e)(7)(ii)(B) 
of this section; and
    (D) The lines of business in which the operating subsidiary is 
doing business directly with consumers by designating the appropriate 
code contained in appendix B (NAICS Activity Codes for Commonly 
Reported Activities) to the Instructions for Preparation of Report of 
Changes in Organizational Structure, Form FR Y-10, a copy of which is 
set forth on the OCC's Web site at www.occ.gov. If the operating 
subsidiary

[[Page 33359]]

is engaged in an activity not set forth in this list, a national bank 
shall report the code 0000 and provide a brief description of the 
activity.
    (iii) Filing time frames and availability of information. Each 
national bank's Annual Report on Operating Subsidiaries shall contain 
information current as of December 31st for the year prior to the year 
the report is filed. The national bank shall submit its Annual Report 
on Operating Subsidiaries on or before January 31st each year. The 
national bank may submit the Annual Report on Operating Subsidiaries 
electronically or in another format prescribed by the OCC. The OCC will 
make available to the public the information contained in the Annual 
Report on Operating Subsidiaries at www.helpwithmybank.gov.
0
18. Section 5.35 is revised to read as follows:


Sec.  5.35  Bank service company investments by a national bank or 
Federal savings association investment.

    (a) Authority. 12 U.S.C. 93a, 1462a, 1463, 1464, 1861-1867, 
5412(b)(2)(B).
    (b) Licensing requirements. Except where otherwise provided, a 
national bank or Federal savings association shall submit a notice and 
obtain prior OCC approval to invest in the equity of a bank service 
company or to perform new activities in an existing bank service 
company.
    (c) Scope. This section describes the procedures and requirements 
regarding OCC review and approval of a notice by a national bank or 
Federal savings association to invest in the equity of a bank service 
company. The OCC may, at any time, limit a national bank's or Federal 
savings association's investment in a bank service company or may limit 
or refuse to permit any activities in any bank service company for 
which a national bank or Federal savings association is the principal 
investor for supervisory, legal, or safety and soundness reasons.
    (d) Definitions--(1) Bank service company means a corporation or 
limited liability company organized to provide services authorized by 
the Bank Service Company Act, 12 U.S.C. 1861 et seq., all of whose 
capital stock is owned by one or more insured depository institutions 
in the case of a corporation, or all of the members of which are one or 
more insured depository institutions in the case of a limited liability 
company.
    (2) Limited liability company means any company, partnership, 
trust, or similar business entity organized under the law of a State 
(as defined in section 3 of the Federal Deposit Insurance Act) which 
provides that a member or manager of such company is not personally 
liable for a debt, obligation, or liability of the company solely by 
reason of being, or acting as, a member or manager of such company.
    (3) Depository institution for purposes of this section, means, 
except when such term appears in connection with the term `insured 
depository institution', an insured bank (as defined in section 3 of 
the Federal Deposit Insurance Act), a savings association (as defined 
in section 3 of the Federal Deposit Insurance Act), a financial 
institution subject to examination by the appropriate Federal banking 
agency or the National Credit Union Administration Board, or a 
financial institution the accounts or deposits of which are insured or 
guaranteed under state law and are eligible to be insured by the 
Federal Deposit Insurance Corporation or the National Credit Union 
Administration Board.
    (4) Insured depository institution, for purposes of this section, 
has the same meaning as in section 3 of the Federal Deposit Insurance 
Act.
    (5) Invest includes making any advance of funds to a bank service 
company, whether by the purchase of stock, the making of a loan, or 
otherwise, except a payment for rent earned, goods sold and delivered, 
or services rendered before the payment was made.
    (6) Principal investor means the insured depository institution 
that has the largest amount invested in the equity of a bank service 
company. In any case where two or more insured depository institutions 
have equal amounts invested and no other insured depository institution 
has a larger amount invested, the bank service company shall designate 
one of those insured depository institutions as its principal investor.
    (e) Standards and requirements. A national bank or Federal savings 
association may invest in a bank service company that conducts 
activities described in paragraphs (f)(3) and (f)(4) of this section 
and activities (other than taking deposits) permissible for the 
national bank or Federal savings association and other insured 
depository institution shareholders or members of the bank service 
company.
    (f) Procedures--(1) OCC notice and approval required. Except as 
provided in paragraphs, (f)(3) and (f)(4) of this section, a national 
bank or Federal savings association that intends to invest in the 
equity of a bank service company, or to perform new activities in an 
existing bank service company, must submit a notice to and receive 
prior approval from the OCC. The notice must include the information 
required by paragraph (g) of this section. The OCC approves or denies a 
proposed investment within 60 days after the filing is received by the 
OCC, unless the OCC notifies the bank prior to that date that the 
filing presents a significant supervisory or compliance concern, or 
raises a significant legal or policy issue.
    (2) Expedited Review for certain activities. (i) A notice to invest 
in the equity of a bank service company, or to perform new activities 
in an existing bank service company, that meets the requirements of 
this paragraph is deemed approved by the OCC as of the 30th day after 
the notice is received by the OCC, unless the OCC notifies the filer 
prior to that date that the filing is not eligible for expedited review 
or the expedited review process is extended. Any bank or savings 
association making an investment pursuant to this paragraph is deemed 
to have agreed that the bank service company will conduct the activity 
in a manner consistent with the published OCC guidance.
    (ii) A notice is eligible for expedited review if all of the 
following requirements are met:
    (A) The national bank or Federal savings association is ``well 
capitalized'' and ``well managed'' as defined in Sec.  5.34(d) or Sec.  
5.38(d), as applicable; and
    (B) The bank service company engages only in activities that are 
permissible for the bank service company under 12 U.S.C. 1864 and that 
are listed in Sec.  5.34(e)(5)(v) or Sec.  5.38(d), as applicable.
    (3) Investments requiring no approval or notice. A national bank or 
Federal savings association does not need to submit a notice or obtain 
OCC approval to invest in a bank service company, or to perform a new 
activity in an existing bank service company, if the bank service 
company will provide only the following services only for depository 
institutions: Check and deposit posting and sorting; computation and 
posting of interest and other credits and charges; preparation and 
mailing of checks, statements, notices, and similar items; or any other 
clerical, bookkeeping, accounting, statistical, or similar functions.
    (4) Federal Reserve approval. A national bank or Federal savings 
association also may, with the approval of the Board of Governors of 
the Federal Reserve System (Federal Reserve Board), invest in the 
equity of a bank service company that provides any other service 
(except deposit taking) that the Federal Reserve Board has determined, 
by regulation, to be permissible for a bank holding company under 12 
U.S.C. 1843(c)(8).

[[Page 33360]]

    (5) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to a request for approval to invest in a 
bank service company. However, if the OCC concludes that an application 
presents significant or novel policy, supervisory, or legal issues, the 
OCC may determine that any or all provisions of Sec. Sec.  5.8, 5.10, 
and 5.11 apply.
    (g) Required information. A notice required under paragraph (f)(1), 
of this section must contain the following:
    (1) The name and location of the bank service company;
    (2) A complete description of the activities the bank service 
company will conduct and a representation and undertaking that the 
activities will be conducted in accordance with OCC guidance. To the 
extent the notice relates to the initial affiliation of the bank or 
savings association with a company engaged in insurance activities, the 
bank or savings association should describe the type of insurance 
activity that the company is engaged in and has present plans to 
conduct. The bank or savings association must also list for each state 
the lines of business for which the company holds, or will hold, an 
insurance license, indicating the state where the company holds a 
resident license or charter, as applicable;
    (3) A complete description of the bank's or savings association's 
investment in the bank service company and information demonstrating 
that the bank or savings association will comply with the investment 
limitations of paragraph (i) of this section; and
    (4) Information demonstrating that the bank service company will 
perform only those services that each insured depository institution 
shareholder or member is authorized to perform under applicable Federal 
or State law and will perform such services only at locations in a 
State in which each such shareholder or member is authorized to perform 
such services unless performing services that are authorized by the 
Federal Reserve Board under the authority of 12 U.S.C. 1865(b).
    (h) Examination and supervision. Each bank service company in which 
a national bank or Federal savings association is the principal 
investor is subject to examination and supervision by the OCC in the 
same manner and to the same extent as that national bank or Federal 
savings association. OCC authority under this paragraph is subject to 
the limitations and requirements of section 45 of the Federal Deposit 
Insurance Act (12 U.S.C. 1831v) and section 115 of the Gramm-Leach-
Bliley Act (12 U.S.C. 1820a).
    (i) Investment limitations. A national bank or Federal savings 
association may not invest more than ten percent of its capital and 
surplus in a bank service company. In addition, the bank's or savings 
association's total investments in all bank service companies may not 
exceed five percent of the bank's or savings association's total 
assets.
0
19. Section 5.36 is amended by:
0
a. Revising the section heading;
0
b. In paragraphs (d)(1), (e), and (g)(1), by removing the phrase ``the 
appropriate district office'' and adding in its place the phrase ``the 
appropriate OCC licensing office''.
    The revision reads as follows:


Sec.  5.36  Other equity investments by a national bank.

* * * * *
0
20. Section 5.37 is revised to read as follows:


Sec.  5.37  Investment in national bank or Federal savings association 
premises.

    (a) Authority. 12 U.S.C. 29, 93a, 317d, 1464(c)(2), 1464(c)(4)(B), 
1828(m), and 5412(b)(2)(B).
    (b) Scope. This section addresses a national bank's or Federal 
savings association's investment in banking premises and other 
premises-related investments, loans, or indebtedness. This section also 
sets forth the quantitative investment limitations and procedures 
governing the OCC's review and approval of an application by a national 
bank or Federal savings association to invest in these premises.
    (c) Definitions. The following definitions apply for purposes of 
this section.
    (1) Banking premises includes:
    (i) Premises that are owned and occupied (or to be occupied, if 
under construction) by a national bank or Federal savings association, 
its respective branches, or its consolidated subsidiaries;
    (ii) Capitalized leases and leasehold improvements, vaults, and 
fixed machinery and equipment;
    (iii) Remodeling costs to existing premises;
    (iv) Real estate acquired and intended, in good faith, for use in 
future expansion; or
    (v) Parking facilities that are used by customers or employees of 
the national bank or Federal savings association.
    (2) Capital stock means, for national banks and Federal stock 
savings associations, the amount of common stock outstanding and 
unimpaired plus the amount of perpetual preferred stock outstanding and 
unimpaired. With respect to Federal mutual savings associations, 
``capital stock'' should be read to mean the amount of the 
association's retained earnings.
    (3) Capital and surplus means:
    (i) A national bank's or Federal savings association's Tier 1 and 
Tier 2 capital calculated under the OCC's risk-based capital standards 
applicable to the institution as reported in the bank's or savings 
association's Consolidated Reports of Condition and Income (Call 
Reports) filed under 12 U.S.C. 161 or 12 U.S.C. 1464(v), respectively; 
plus
    (ii) The balance of a national bank's or Federal savings 
association's allowance for loan and lease losses not included in the 
bank's or savings association's Tier 2 capital, for purposes of the 
calculation of risk-based capital described in paragraph (c)(3)(i) of 
this section, as reported in the national bank's or Federal savings 
association's Call Reports filed under 12 U.S.C. 161 or 1464(v), 
respectively.
    (d) Procedure--(1) Premises application--(i) When required. A 
national bank or Federal savings association shall submit an 
application to the appropriate OCC supervisory office to invest in 
banking premises, or in the stock, bonds, debentures, or other such 
obligations of any corporation holding the premises of the national 
bank or Federal savings association, or to make loans to or upon the 
security of the stock of such corporation, if the aggregate of all such 
investments and loans, together with the indebtedness incurred by any 
such corporation that is an affiliate of the national bank or Federal 
savings association, as defined in 12 U.S.C. 221a or 12 U.S.C. 1462, 
respectively, will exceed the amount of the capital stock of the 
national bank or Federal savings association, or, in the case of a 
Federal mutual savings association the amount of retained earnings.
    (ii) Contents of premises application. The application must 
include:
    (A) A description of the national bank's or Federal savings 
association's present investment in banking premises;
    (B) The investment in banking premises that the national bank or 
Federal savings association intends to make, and the business reason 
for making the investment; and
    (C) The amount by which the national bank's or Federal savings 
association's aggregate investment will exceed the amount of the 
national bank's or Federal stock savings association's capital stock, 
or, in the case of a Federal mutual savings association, the amount of 
retained earnings.
    (2) Approval of premises application. An application from a 
national bank or Federal savings association to invest in banking 
premises or in certain banking

[[Page 33361]]

premises-related investments, loans or indebtedness, as described in 
paragraph (d)(1)(i) of this section, is deemed approved as of the 30th 
day after the filing is received by the OCC, unless the OCC notifies 
the national bank or Federal savings association prior to that date 
that the filing presents a significant supervisory or compliance 
concern, or raises a significant legal or policy issue. An approval for 
a specified amount under this section remains valid up to that amount 
until the OCC notifies the national bank or Federal savings association 
otherwise.
    (3) Premises notice process--(i) General rule. Notwithstanding 
paragraph (d)(1)(i) of this section, a national bank or Federal savings 
association that is rated 1 or 2 under the Uniform Financial 
Institutions Rating System (CAMELS) may make an aggregate investment in 
banking premises up to 150 percent of the national bank's or Federal 
savings association's capital and surplus without the OCC's prior 
approval, provided that the national bank or Federal savings 
association is well capitalized as defined in 12 CFR parts 6 and will 
continue to be well capitalized after the investment or loan is made. 
However, the national bank or Federal savings association shall notify 
the appropriate OCC supervisory office in writing of the investment 
within 30 days after the investment or loan is made. The written notice 
must include a description of the national bank's or Federal savings 
association's investment or loan.
    (ii) Exception. If a Federal savings association that would 
otherwise be eligible for the premises notice process described in 
paragraph (d)(3)(i) proposes to establish or acquire a subsidiary to 
make an investment in banking premises, or if investing in banking 
premises would be a new activity for such a subsidiary, the Federal 
savings association would not be eligible for the premises notice 
process and would be required to comply with the provisions of Sec.  
5.59 in the case of a service corporation, or Sec.  5.38 in the case of 
an operating subsidiary.
    (4) Service corporation. A Federal savings association that invests 
in banking premises through a service corporation is not subject to the 
premises application and premises notice requirements of paragraph (d) 
of this section; however, it must include this investment when 
calculating the quantitative limitations in paragraph (d) of this 
section, and must comply with 12 CFR 5.59.
    (5) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to this section. However, if the OCC 
concludes that an application presents significant or novel policy, 
supervisory, or legal issues, the OCC may determine that any or all 
parts of Sec. Sec.  5.8, 5.10, and 5.11 apply.
    (e) Transition. If, on June 10, 2014, a Federal savings association 
holds an investment in banking premises that complies with the legal 
requirements in effect on the day prior to June 10, 2014 but would 
violate any provision of this section, the Federal savings association 
may continue to hold such banking premises in accordance with the prior 
legal requirements. However, a Federal savings association that holds 
such banking premises shall not modify, expand or improve these 
premises, except for routine maintenance, without the prior approval of 
the appropriate OCC supervisory office.
0
21. Section 5.38 is added to read as follows:


Sec.  5.38  Operating subsidiaries of a Federal savings association.

    (a) Authority. 12 U.S.C. 1462a, 1463, 1464, 1465, 1828, 
5412(b)(2)(B).
    (b) Licensing requirements. A Federal savings association must file 
an application as prescribed in this section to acquire or establish an 
operating subsidiary, or to commence a new activity in an existing 
operating subsidiary.
    (c) Scope. This section sets forth authorized activities and 
application procedures for Federal savings associations engaging in 
activities through an operating subsidiary. The OCC may, at any time, 
limit a Federal savings association's investment in an operating 
subsidiary or may limit or refuse to permit any activities in an 
operating subsidiary for supervisory, legal, or safety and soundness 
reasons.
    (d) Definitions. For purposes of this Sec.  5.38:
    (1) Well capitalized means the capital level described in 12 CFR 
6.4.
    (2) Well managed means, unless otherwise determined in writing by 
the OCC:
    (i) The Federal savings association has received a composite rating 
of 1 or 2 under the Uniform Financial Institutions Rating System in 
connection with its most recent examination; or
    (ii) In the case of any Federal savings association that has not 
been examined, the existence and use of managerial resources that the 
OCC determines are satisfactory.
    (e) Standards and requirements--(1) Authorized activities. (i) A 
Federal savings association may conduct in an operating subsidiary 
activities that are permissible for a Federal savings association to 
engage in directly.
    (ii) In addition to OCC authorization, before it begins business an 
operating subsidiary also must comply with other laws applicable to it 
and its proposed business, including applicable licensing or 
registration requirements, if any, such as registration requirements 
under securities laws.
    (2) Qualifying subsidiaries. (i) An operating subsidiary in which a 
Federal savings association may invest includes a corporation, limited 
liability company, limited partnership, or similar entity if:
    (A) The savings association has the ability to control the 
management and operations of the subsidiary, and no other person or 
entity has the ability to control the management or operations of the 
subsidiary;
    (B) The parent savings association owns and controls more than 50 
percent of the voting (or similar type of controlling) interest of the 
operating subsidiary, or the parent savings association otherwise 
controls the operating subsidiary and no other party controls a 
percentage of the voting (or similar type of controlling) interest of 
the operating subsidiary greater than the savings association's 
interest; and
    (C) The operating subsidiary is consolidated with the savings 
association under Generally Accepted Accounting Principles (GAAP).
    (ii) However, the following subsidiaries are not operating 
subsidiaries subject to this section:
    (A) A subsidiary in which the savings association's investment is 
made pursuant to specific authorization in a statute or OCC regulation 
(e.g., a service corporation under 12 U.S.C. 1464(c)(4) or a bank 
service company under 12 U.S.C. 1861 et seq.); and
    (B) A subsidiary in which the savings association has acquired, in 
good faith, shares through foreclosure on collateral, by way of 
compromise of a doubtful claim, or to avoid a loss in connection with a 
debt previously contracted.
    (iii) Notwithstanding the requirements of paragraph (e)(2)(i) of 
this section,
    (A) a Federal savings association must have reasonable policies and 
procedures to preserve the limited liability of the savings association 
and its operating subsidiaries; and
    (B) OCC regulations shall not be construed as requiring a Federal 
savings association and its operating subsidiaries to operate as a 
single entity.
    (3) Examination and supervision. An operating subsidiary conducts 
activities authorized under this section pursuant

[[Page 33362]]

to the same authorization, terms and conditions that apply to the 
conduct of such activities by its parent Federal savings association, 
unless otherwise specifically provided by statute, regulation, or 
published OCC policy, including section 1046 of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (12 U.S.C. 1465) with respect 
to the application of state law. If the OCC determines that the 
operating subsidiary is operating in violation of law, regulation, or 
written condition, or in an unsafe or unsound manner or otherwise 
threatens the safety or soundness of the savings association, the OCC 
will direct the savings association or operating subsidiary to take 
appropriate remedial action, which may include requiring the savings 
association to divest or liquidate the operating subsidiary, or 
discontinue specified activities. OCC authority under this paragraph is 
subject to the limitations and requirements of section 45 of the 
Federal Deposit Insurance Act (12 U.S.C. 1831v) and section 115 of the 
Gramm-Leach-Bliley Act (12 U.S.C. 1820a).
    (4) Consolidation of figures. (i) Except as provided in paragraph 
(e)(4)(ii) of this section, pertinent book figures of the parent 
Federal savings association and its operating subsidiary shall be 
combined for the purpose of applying statutory or regulatory 
limitations when combination is needed to effect the intent of the 
statute or regulation, e.g., for purposes of 12 U.S.C. 1464(c) and 
1464(u).
    (ii) Consolidation for purposes of calculating portfolio assets and 
qualified thrift investments is subject to 12 U.S.C. 1467a(m)(5).
    (5) Procedures--(i) Application required. (A) A Federal savings 
association must first submit an application to, and receive prior 
approval from, the OCC to establish or acquire an operating subsidiary, 
or to perform a new activity in an existing operating subsidiary.
    (B) The application must explain, as appropriate, how the savings 
association ``controls'' the enterprise, describing in full detail 
structural arrangements where control is based on factors other than 
savings association ownership of more than 50 percent of the voting 
interest of the subsidiary and the ability to control the management 
and operations of the subsidiary by holding voting interests sufficient 
to select the number of directors needed to control the subsidiary's 
board and to select and terminate senior management. In the case of a 
limited partnership or limited liability company that does not qualify 
for the expedited review procedure set forth in paragraph (e)(5)(ii) of 
this section, the savings association must provide a statement 
explaining why it is not eligible. The application also must include a 
complete description of the savings association's investment in the 
subsidiary, the proposed activities of the subsidiary, the 
organizational structure and management of the subsidiary, the 
relations between the savings association and the subsidiary, and other 
information necessary to adequately describe the proposal. To the 
extent that the application relates to the initial affiliation of the 
savings association with a company engaged in insurance activities, the 
savings association must describe the type of insurance activity in 
which the company is engaged and has present plans to conduct. The 
savings association must also list for each State the lines of business 
for which the company holds, or will hold, an insurance license, 
indicating the State where the company holds a resident license or 
charter, as applicable. The application must state whether the 
operating subsidiary will conduct any activity at a location other than 
the home office or a previously approved branch of the savings 
association. The OCC may require an applicant to submit a legal 
analysis if the proposal is novel, unusually complex, or raises 
substantial unresolved legal issues. In these cases, the OCC encourages 
applicants to have a pre-filing meeting with the OCC. Any savings 
association receiving approval under this paragraph is deemed to have 
agreed that the subsidiary will conduct the activity in a manner 
consistent with published OCC guidance.
    (ii) Expedited review. (A) An application to establish or acquire 
an operating subsidiary, or to perform a new activity in an existing 
operating subsidiary, that meets the requirements of this paragraph is 
deemed approved by the OCC as of the 30th day after the filing is 
received by the OCC, unless the OCC notifies the applicant prior to 
that date that the filing is not eligible for expedited review, or the 
expedited review process is extended under Sec.  5.13(a)(2). Any 
savings association receiving approval under this paragraph is deemed 
to have agreed that the subsidiary will conduct the activity in a 
manner consistent with published OCC guidance.
    (B) An application is eligible for expedited review if all of the 
following requirements are met:
    (1) The savings association is ``well capitalized'' and ``well 
managed'';
    (2) The activity is listed in paragraph (e)(5)(v) this section;
    (3) The entity is a corporation, limited liability company, or 
limited partnership; and
    (4) The savings association:
    (i) Has the ability to control the management and operations of the 
subsidiary by holding voting interests sufficient to select the number 
of directors needed to control the subsidiary's board and to select and 
terminate senior management (or, in the case of a limited partnership 
or a limited liability company, has the ability to control the 
management and operations of the subsidiary by controlling the 
selection and termination of senior management), and no other person or 
entity has the ability to control the management or operations of the 
subsidiary;
    (ii) Holds more than 50 percent of the voting, or equivalent, 
interests in the subsidiary, and, in the case of a limited partnership 
or limited liability company, the savings association or an operating 
subsidiary thereof is the sole general partner of the limited 
partnership or the sole managing member of the limited liability 
company, provided that under the partnership agreement or limited 
liability company agreement, limited partners or other limited 
liability company members have no authority to bind the partnership or 
limited liability company by virtue solely of their status as limited 
partners or members; and
    (iii) Is required to consolidate its financial statements with 
those of the subsidiary under Generally Accepted Accounting Principles.
    An applicant proposing to qualify for expedited review must include 
in the application all necessary information showing the application 
meets the requirements.
    (iii) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to this section. However, if the OCC 
concludes that an application presents significant or novel policy, 
supervisory, or legal issues, the OCC may determine that some or all 
provisions in Sec. Sec.  5.8, 5.10, and 5.11 apply.
    (iv) OCC review and approval. The OCC reviews a Federal savings 
association's application to determine whether the proposed activities 
are legally permissible under Federal savings association law and to 
ensure that the proposal is consistent with safe and sound banking 
practices and OCC policy and does not endanger the safety or soundness 
of the parent Federal savings association. As part of this process, the 
OCC may request additional information and analysis from the applicant.

[[Page 33363]]

    (v) Activities eligible for expedited review. The following 
activities qualify for the expedited review procedures in paragraph 
(e)(5)(ii) of this section, provided the activity is conducted pursuant 
to the same terms and conditions as would be applicable if the activity 
were conducted directly by a Federal savings association:
    (A) Holding and managing assets acquired by the parent savings 
association or its operating subsidiaries, including investment assets 
and property acquired by the savings association through foreclosure or 
otherwise in good faith to compromise a doubtful claim, or in the 
ordinary course of collecting a debt previously contracted;
    (B) Providing services to or for the savings association or its 
affiliates, including accounting, auditing, appraising, advertising and 
public relations, and financial advice and consulting;
    (C) Making loans or other extensions of credit, and selling money 
orders and travelers checks;
    (D) Purchasing, selling, servicing, or warehousing loans or other 
extensions of credit, or interests therein;
    (E) Providing management consulting, operational advice, and 
services for other financial institutions;
    (F) Providing check payment services;
    (G) Acting as investment adviser (including an adviser with 
investment discretion) or financial adviser or counselor to 
governmental entities or instrumentalities, businesses, or individuals, 
including advising registered investment companies and mortgage or real 
estate investment trusts;
    (H) Providing financial and transactional advice and assistance, 
including advice and assistance for customers in structuring, 
arranging, and executing mergers and acquisitions, divestitures, joint 
ventures, leveraged buyouts, swaps, foreign exchange, derivative 
transactions, coin and bullion, and capital restructurings;
    (I) Underwriting and reinsuring credit life and disability 
insurance;
    (J) Leasing of personal property;
    (K) Providing securities brokerage;
    (L) Underwriting and dealing, including making a market, in savings 
association permissible securities and purchasing and selling as 
principal, asset backed obligations;
    (M) Acting as an insurance agent or broker for credit life, 
disability, and unemployment insurance; single property interest 
insurance; and title insurance;
    (N) Offering correspondent services to the extent permitted by 
published OCC precedent for Federal savings associations;
    (O) Acting as agent or broker in the sale of fixed annuities;
    (P) Offering debt cancellation or debt suspension agreements;
    (Q) Providing escrow services;
    (R) Acting as a transfer agent; and
    (S) Providing or selling postage stamps.
    (vi) Redesignation. A Federal savings association that proposes to 
redesignate a service corporation as an operating subsidiary must 
submit a notification to the OCC at least 30 days prior to the 
redesignation date. The notification must include a description of how 
the redesignated service corporation meets all of the requirements of 
this section to be an operating subsidiary, a resolution of the savings 
association's board of directors approving the redesignation, and the 
proposed effective date of the redesignation. The savings association 
may effect the redesignation on the proposed date unless the OCC 
notifies the savings association otherwise prior to that date. The OCC 
may require an application if the redesignation presents policy, 
supervisory, or legal issues.
    (vii) Fiduciary powers. (A) If an operating subsidiary proposes to 
accept fiduciary appointments for which fiduciary powers are required, 
such as acting as trustee or executor, then the Federal savings 
association must have fiduciary powers under 12 U.S.C. 1464(n) and the 
subsidiary also must have its own fiduciary powers under the law 
applicable to the subsidiary.
    (B) Unless the subsidiary is a registered investment adviser, if an 
operating subsidiary proposes to exercise investment discretion on 
behalf of customers or provide investment advice for a fee, the Federal 
savings association must have prior OCC approval to exercise fiduciary 
powers pursuant to Sec.  5.26 (or a predecessor provision) and 12 CFR 
part 150.
    (viii) Expiration of approval. Approval expires if the Federal 
savings association has not established or acquired the operating 
subsidiary, or commenced the new activity in an existing operating 
subsidiary within 12 months after the date of the approval, unless the 
OCC shortens or extends the time period.
    (6) Grandfathered operating subsidiaries. Notwithstanding the 
requirements for a qualifying operating subsidiary in Sec.  5.38(e)(2) 
and unless otherwise notified by the OCC with respect to a particular 
operating subsidiary, an entity that a Federal savings association 
lawfully acquired or established as an operating subsidiary before June 
10, 2014 may continue to operate as a Federal savings association 
operating subsidiary under this section, provided that the savings 
association and the operating subsidiary were, and continue to be, 
conducting authorized activities in compliance with the standards and 
requirements applicable when the savings association established or 
acquired the operating subsidiary.
    (7) Issuances of securities by operating subsidiaries. An operating 
subsidiary shall not state or imply that the securities it issues are 
covered by Federal deposit insurance. An operating subsidiary shall not 
issue any security the payment, maturity, or redemption of which may be 
accelerated upon the condition that the controlling Federal savings 
association is insolvent or has been placed into receivership. For as 
long as any securities are outstanding, the controlling Federal savings 
association must maintain all records generated through each securities 
issuance in the ordinary course of business, including but not limited 
to a copy of the prospectus, offering circular, or similar document 
concerning such issuance, and make such records available for 
examination by the OCC.
    (8) Annual Report on Operating Subsidiaries--(i) Filing 
requirement. Each Federal savings association shall prepare and file 
with the OCC an Annual Report on Operating Subsidiaries containing the 
information set forth in paragraph (e)(8)(ii) of this section for each 
of its operating subsidiaries that:
    (A) Is not functionally regulated within the meaning of section 
5(c)(5) of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 
1844(c)(5)); and
    (B) Does business directly with consumers in the United States. For 
purposes of paragraph (e)(8) of this section, an operating subsidiary, 
or any subsidiary thereof, does business directly with consumers if, in 
the ordinary course of its business, it provides products or services 
to individuals to be used primarily for personal, family, or household 
purposes.
    (ii) Information required. The Annual Report on Operating 
Subsidiaries must contain the following information for each covered 
operating subsidiary listed:
    (A) The name and charter number of the parent Federal savings 
association;
    (B) The name (include any ``dba'' (doing business as), abbreviated 
names, or trade names used to identify the operating subsidiary when it 
does business directly with consumers), mailing address (include the 
street address or post office box, city, state,

[[Page 33364]]

and zip code), email address (if any), and telephone number of the 
operating subsidiary;
    (C) The principal place of business of the operating subsidiary, if 
different from the address provided pursuant to paragraph (e)(8)(ii)(B) 
of this section; and
    (D) The lines of business in which the operating subsidiary is 
doing business directly with consumers by designating the appropriate 
code contained in appendix B (NAICS Activity Codes for Commonly 
Reported Activities) to the Instructions for Preparation of Report of 
Changes in Organizational Structure, Form FR Y-10, a copy of which is 
set forth on the OCC's Web site at www.occ.gov. If the operating 
subsidiary is engaged in an activity not set forth in this list, a 
Federal savings association shall report the code 0000 and provide a 
brief description of the activity.
    (iii) Filing time frames and availability of information. Each 
Federal savings association's Annual Report on Operating Subsidiaries 
shall contain information current as of December 31st for the year 
prior to the year the report is filed. The Federal savings association 
shall submit its first Annual Report on Operating Subsidiaries (for 
information as of December 31, 20----) to the OCC on or before January 
31, 20----, and on or before January 31st each year thereafter. The 
Federal savings association may submit the Annual Report on Operating 
Subsidiaries electronically or in another format prescribed by the OCC. 
The OCC will make available to the public the information contained in 
the Annual Report on Operating Subsidiaries at www.helpwithmybank.gov.
0
22. Section 5.39 is amended by:
0
a. Revising the section heading; and
0
b. In paragraphs (i)(1)(i) and (ii), and (i)(2), removing the phrase 
``the appropriate district office'' and adding in its place the phrase 
``the appropriate OCC licensing office''.
    The revision reads as follows:


Sec.  5.39  Financial subsidiaries of a national bank.

* * * * *
0
23. Section 5.40 is revised to read as follows:


Sec.  5.40  Change in location of main office or home office.

    (a) Authority. 12 U.S.C. 30, 93a, 1462a, 1463, 1464, 1828, 2901-
2907 and 5412(b)(2)(B).
    (b) Scope. This section describes OCC procedures and approval 
standards for an application or a notice by a national bank to change 
the location of its main office or by a Federal savings association to 
change the location of its home office.\3\ A national bank or Federal 
savings association shall follow the procedures described in paragraph 
(c) of this section to relocate its main office or home office, as 
applicable.
---------------------------------------------------------------------------

    \3\ A national bank's main office is the place identified in the 
bank's original organization certificate under 12 U.S.C. 22 or the 
subsequent location to which the main office has been changed under 
this Sec.  5.40, 12 U.S.C. 30(b), or other applicable law, as 
reflected in the national bank's amended articles of association. A 
Federal savings association's home office is the office identified 
as such in the savings association's original charter or the 
subsequent location to which the home office has been changed under 
this Sec.  5.40, or other applicable law, as reflected in the 
savings association's amended charter. These terms are functionally 
the same but are used in our regulations in order to be consistent 
with the relevant statutes that govern national banks and Federal 
savings associations, respectively.
---------------------------------------------------------------------------

    (c) Licensing requirements and procedures--(1) Main office or home 
office relocation to an authorized branch location within city, town, 
or village limits. A national bank or Federal savings association may 
change the location of its main office or home office, as applicable, 
to an authorized branch location (approved or existing branch site) 
within the limits of the same city, town, or village. The national bank 
or Federal savings association shall give prior notice to the 
appropriate OCC licensing office before the relocation. The notice must 
include the new address of the main office or home office, as 
applicable, and the effective date of the relocation.
    (2) To any other location--(i) National banks. A national bank 
shall submit an application to the appropriate OCC licensing office and 
obtain prior OCC approval to relocate its main office to any other 
location in the city, town, or village in which the main office of the 
bank is located other than an authorized branch location or to any 
other location within 30 miles of the limits of such city, town, or 
village. If relocating the main office outside the limits of its city, 
town, or village, a national bank shall also obtain the approval of 
shareholders owning two-thirds of the voting stock of the bank and 
shall amend its articles of association.
    (ii) Federal savings associations. A Federal savings association 
shall submit an application to the appropriate OCC licensing office and 
obtain prior OCC approval to relocate its home office to any location 
other than an authorized branch location within the city, town, or 
village in which the home office of the savings association is located. 
If relocating the home office outside the limits of its city, town, or 
village, a Federal savings association shall amend its charter.
    (3) Establishment of a branch at site of former main office or home 
office. A national bank or Federal savings association desiring to 
establish a branch at its former main office or home office location, 
as applicable, shall follow the provisions of Sec.  5.30 or Sec.  5.31, 
respectively.
    (4) Expedited review. A main office or home office relocation 
application submitted by an eligible bank or eligible Federal savings 
association under paragraph (c)(2) of this section is deemed approved 
by the OCC as of the 15th day after the close of the public comment 
period or the 45th day after the filing is received by the OCC (or in 
the case of a short-distance relocation the 30th day after the filing 
is received by the OCC), whichever is later, unless the OCC notifies 
the bank or savings association prior to that time that the filing is 
not eligible for expedited review, or the expedited review period is 
extended, under Sec.  5.13(a)(2).
    (5) Exceptions to rules of general applicability. (i) Sections 5.8, 
5.9, 5.10, and 5.11 do not apply to a main office or home office 
relocation to an authorized branch location within the limits of the 
city, town, or village as described in paragraph (c)(1) of this 
section. However, if the OCC concludes that the notice under paragraph 
(c)(1) of this section presents a significant or novel policy, 
supervisory, or legal issue, the OCC may determine that any or all 
parts of Sec. Sec.  5.8, 5.9, 5.10, and 5.11 apply.
    (ii) The comment period on any application filed under paragraph 
(c)(2) of this section to engage in a short-distance relocation of a 
main office or home office is 15 days.
    (d) Expiration of approval. Approval expires if the national bank 
or Federal savings association has not opened its main office or home 
office, as applicable, at the relocated site within 18 months of the 
date of approval, unless the OCC grants an extension.
0
24. Section 5.42 is revised to read as follows:


Sec.  5.42  Corporate title of a national bank or Federal savings 
association.

    (a) Authority. 12 U.S.C. 21a, 30, 93a, 1462a, 1463, 1464, 1467a, 
2901 et. seq. and, 5412(b)(2)(B).
    (b) Scope. This section describes the method by which a national 
bank or Federal savings association may change its corporate title.
    (c) Standards--(1) A national bank or Federal savings association 
may change its corporate title provided that the new title complies 
with applicable laws, including 18 U.S.C. 709, regarding false 
advertising and the misuse of names to

[[Page 33365]]

indicate a Federal agency, and any applicable OCC guidance.
    (2) For a national bank, the new title must include the word 
``national.''
    (d) Procedures--(1) Notice process. A national bank or Federal 
savings association shall promptly notify the appropriate OCC licensing 
office if it changes its corporate title. The notice must contain the 
old and new titles and the effective date of the change.
    (2) Amendment to articles of association. A national bank whose 
corporate title is specified in its articles of association shall amend 
its articles, in accordance with the procedures of 12 U.S.C. 21a, to 
change its title.
    (3) Amendment to charter. A Federal savings association shall 
change its title by amending its charter in accordance with 12 CFR 5.21 
or 5.22, as applicable.
    (4) Exceptions to rules of general applicability. Sections 5.8, 
5.9, 5.10, 5.11, and 5.13(a) do not apply to a national bank or Federal 
savings association's change of corporate title. However, if the OCC 
concludes that the application presents a significant or novel policy, 
supervisory, or legal issue, the OCC may determine that any or all 
parts of Sec. Sec.  5.8, 5.9, 5.10, 5.11, and 5.13(a) apply.
0
25. Section 5.45 is added to read as follows:


Sec.  5.45  Increases in permanent capital of a Federal stock savings 
association.

    (a) Authority. 12 U.S.C. 1462a, 1463, 1464, 1467a, 1831o and 
5412(b)(2)(B).
    (b) Licensing requirements. Generally a Federal savings association 
is not required to apply for an increase in capital unless the method 
of increase itself requires a filing (such as issuance of a new class 
of stock). However, in certain circumstances, a Federal stock savings 
association is required to submit an application and obtain OCC 
approval.
    (c) Scope. This section describes procedures and standards relating 
to a transaction resulting in an increase in a Federal stock savings 
association's permanent capital.
    (d) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to increases in a Federal stock savings 
association's permanent capital.
    (e) Definitions. For the purposes of this section the following 
definitions apply:
    (1) Capital plan means a plan describing the manner and schedule by 
which a Federal savings association will attain specified capital 
levels or ratios and a capital restoration plan filed with the OCC 
under 12 U.S.C. 1831o and 12 CFR 6.5.
    (2) Capital stock means the total amount of common stock and 
preferred stock.
    (3) Capital surplus means the total of:
    (i) The amount paid in on capital stock in excess of the par or 
stated value;
    (ii) Direct capital contributions representing the amounts paid in 
to the Federal stock savings association other than for capital stock;
    (iii) The amount transferred from retained net income; and
    (iv) The amount transferred from retained net income reflecting 
stock dividends.
    (4) Permanent capital means the sum of capital stock and capital 
surplus.
    (5) Retained net income means the net income of a specified period 
less the amount of all dividends and other capital distributions 
declared in that period.
    (f) Policy. In determining whether to approve a proposed increase 
in a Federal stock savings association's permanent capital, the OCC 
considers whether the change is:
    (1) Consistent with law, regulation, and OCC policy thereunder;
    (2) Provides an adequate capital structure; and
    (3) If appropriate, complies with the savings association's capital 
plan.
    (g) Procedures--(1) When prior approval is required. A Federal 
stock savings association must submit an application to the appropriate 
OCC licensing office and obtain prior OCC approval to increase its 
permanent capital if the savings association is:
    (i) Required to receive OCC approval pursuant to letter, order, 
directive, written agreement or otherwise;
    (ii) Selling common or preferred stock for consideration other than 
cash; or
    (iii) Receiving a material noncash contribution to capital surplus.
    (2) Content of application. The application must:
    (i) Describe the type and amount of the proposed change in 
permanent capital and explain the reason for the change;
    (ii) In the case of a material noncash contribution to capital, 
provide a description of the method of valuing the contribution; and
    (iii) State if the savings association is subject to a capital plan 
with the OCC and how the proposed change would conform to a capital 
plan or if a capital plan is otherwise required in connection with the 
proposed change in permanent capital.
    (3) Expedited review. An eligible savings association's application 
is deemed approved by the OCC 15 days after the date the OCC receives 
the application, unless the OCC notifies the savings association prior 
to that date that the application is not eligible for expedited review, 
or the expedited review process is extended, under Sec.  5.13(a)(2).
    (4) Notice of increase. (i) After a savings association completes 
an increase in capital it shall submit a notice to the appropriate OCC 
licensing office. The notice must contain:
    (A) The amount, including the par value of the stock, and effective 
date of the increase;
    (B) A certification that the funds have been paid in, if 
applicable; and
    (C) A statement that the savings association has complied with all 
laws, regulations and conditions imposed by the OCC.
    (5) Expiration of approval. Approval expires if a national bank has 
not completed its change in permanent capital within one year of the 
date of approval.
    (h) Offers and sales of stock. A savings association shall comply 
with the Securities Offering Disclosure Rules in 12 CFR part 197 for 
offers and sales of common and preferred stock.
    (i) Shareholder approval. A savings association shall obtain the 
necessary shareholder approval required by statute for any change in 
its permanent capital.
0
26. Section 5.46 is revised to read as follows:


Sec.  5.46  Changes in permanent capital of a national bank.

    (a) Authority. 12 U.S.C. 21a, 51a, 51b, 51b-1, 52, 56, 57, 59, 60, 
and 93a.
    (b) Licensing requirements. A national bank shall submit an 
application and obtain OCC approval to decrease its permanent capital. 
Generally, a national bank need only submit a notice to increase its 
permanent capital, although, in certain circumstances, a national bank 
shall be required to submit an application and obtain OCC approval.
    (c) Scope. This section describes procedures and standards relating 
to a transaction resulting in a change in a national bank's permanent 
capital.
    (d) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to changes in a national bank's permanent 
capital.
    (e) Definitions. For the purposes of this section the following 
definitions apply:
    (1) Capital plan means a plan describing the manner and schedule by 
which a national bank will attain specified capital levels or ratios 
and a capital restoration plan filed with the OCC under 12 U.S.C. 1831o 
and 12 CFR 6.5.

[[Page 33366]]

    (2) Capital stock means the total amount of common stock and 
preferred stock.
    (3) Capital surplus means the total of:
    (i) The amount paid in on capital stock in excess of the par or 
stated value;
    (ii) Direct capital contributions representing the amounts paid in 
to the national bank other than for capital stock;
    (iii) The amount transferred from undivided profits; and
    (iv) The amount transferred from undivided profits reflecting stock 
dividends.
    (4) Permanent capital means the sum of capital stock and capital 
surplus.
    (f) Policy. In determining whether to approve a proposed change to 
a national bank's permanent capital, the OCC considers whether the 
change is:
    (1) Consistent with law, regulation, and OCC policy thereunder;
    (2) Provides an adequate capital structure; and
    (3) If appropriate, complies with the bank's capital plan.
    (g) Increases in permanent capital--(1) Approval--(i) Prior 
approval not required. If a national bank is not required to file an 
application and obtain prior approval under paragraph (g)(1)(ii) of 
this section, the bank need not submit an application. It must submit 
the notice of capital increase under paragraph (i)(3) of this section. 
The increase in capital is deemed approved by the OCC as of the date 
the increase was made, once the bank has filed the notice of capital 
increase and the OCC certifies the increase, as provided in paragraph 
(i)(3).
    (ii) Prior approval required. A national bank must submit an 
application under paragraph (i)(1) of this section and obtain prior OCC 
approval to increase its permanent capital if the bank is:
    (A) Required to receive OCC approval pursuant to letter, order, 
directive, written agreement or otherwise;
    (B) Selling common or preferred stock for consideration other than 
cash; or
    (C) Receiving a material noncash contribution to capital surplus. 
The bank also must submit the notice of capital increase under 
paragraph (i)(3) of this section.
    (2) Preferred stock. Notwithstanding paragraph (g)(1)(i) of this 
section, in the case of a sale of preferred stock, the national bank 
shall also submit provisions in the articles of association concerning 
preferred stock dividends, voting and conversion rights, retirement of 
the stock, and rights to exercise control over management to the 
appropriate OCC licensing office prior to the sale of the preferred 
stock. The provisions will be deemed approved by the OCC within 15 days 
of its receipt, unless the OCC notifies the applicant otherwise, 
including a statement of the reason for the delay.
    (h) Decreases in permanent capital. A national bank shall submit an 
application and obtain prior approval under paragraph (i)(1) or (i)(2) 
of this section for any reduction of its permanent capital.
    (i) Procedures--(1) Prior approval. A national bank proposing to 
make a change in its permanent capital that requires prior OCC approval 
under paragraphs (g) or (h) of this section shall submit an application 
to the appropriate OCC licensing office. The application must:
    (i) Describe the type and amount of the proposed change in 
permanent capital and explain the reason for the change;
    (ii) In the case of a reduction in capital, provide a schedule 
detailing the present and proposed capital structure;
    (iii) In the case of a material noncash contribution to capital, 
provide a description of the method of valuing the contribution; and
    (iv) State if the bank is subject to a capital plan with the OCC 
and how the proposed change would conform to a capital plan or if a 
capital plan is otherwise required in connection with the proposed 
change in permanent capital.
    (2) Expedited review. An eligible bank's application is deemed 
approved by the OCC 15 days after the date the OCC receives the 
application described in paragraph (i)(1) of this section, unless the 
OCC notifies the bank prior to that date that the application is not 
eligible for expedited review, or the expedited review process is 
extended, under Sec.  5.13(a)(2). An eligible bank seeking to decrease 
its capital may request OCC approval for up to four consecutive 
quarters. An eligible bank may decrease its capital pursuant to such a 
plan only if the bank maintains its eligible bank status before and 
after each decrease in its capital.
    (3) Notice of increase. (i) After a bank completes an increase in 
capital it shall submit a notice to the appropriate OCC licensing 
office. The notice must be acknowledged before a notary public by the 
bank's president, vice president, or cashier and contain:
    (A) A description of the transaction, unless already provided 
pursuant to paragraph (i)(1) of this section;
    (B) The amount, including the par value of the stock, and effective 
date of the increase;
    (C) A certification that the funds have been paid in, if 
applicable;
    (D) A certified copy of the amendment to the articles of 
association, if required; and
    (E) A statement that the bank has complied with all laws, 
regulations and conditions imposed by the OCC.
    (ii) After it receives the notice of capital increase, the OCC 
issues a certification specifying the amount of the increase and the 
effective date (i.e., the date on which the increase occurred). In the 
case of a capital increase for which prior approval was not required 
pursuant to paragraph (g)(i)(i), the increase is deemed certified by 
the OCC seven days after receipt of the notice if the OCC has not 
issued a certification prior to that date.
    (4) Notice of decrease. A national bank that decreases its capital 
in accordance with paragraphs (i)(1) or (i)(2) of this section shall 
notify the appropriate OCC licensing office following the completion of 
the transaction.
    (5) Expiration of approval. Approval expires if a national bank has 
not completed its change in permanent capital within one year of the 
date of approval.
    (j) Offers and sales of stock. A national bank shall comply with 
the Securities Offering Disclosure Rules in 12 CFR part 16 for offers 
and sales of common and preferred stock.
    (k) Shareholder approval. A national bank shall obtain the 
necessary shareholder approval required by statute for any change in 
its permanent capital.
0
27. Section 5.47 is amended by:
0
a. Revising the section heading; and
0
b. In paragraphs (f)(1) and (g), removing the phrase ``the appropriate 
district office'' and adding in its place the phrase ``the appropriate 
OCC licensing office''.
    The revision reads as follows:


Sec.  5.47  National bank subordinated debt as capital.

* * * * *
0
28. Section 5.48 is revised to read as follows:


Sec.  5.48  Voluntary liquidation of a national bank or Federal savings 
association.

    (a) Authority. 12 U.S.C. 93a, 181, 182, 1463, 1464, and 
5412(b)(1)(B).
    (b) Licensing requirements. A national bank or a Federal savings 
association considering going into voluntary liquidation shall provide 
preliminary notice to the OCC. The bank or savings association shall 
also file a notice with the OCC once a liquidation plan is definite. 
The bank or savings association may not begin liquidation unless the

[[Page 33367]]

OCC has notified it that the OCC does not object to the liquidation 
plan.
    (c) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to a voluntary liquidation. However, if the 
OCC concludes that the notice presents significant or novel policy, 
supervisory or legal issues, the OCC may determine that any or all 
parts of Sec. Sec.  5.8, 5.10, and 5.11 apply.
    (d) Standards--(1) In general. In reviewing a proposed liquidation 
plan, the OCC will consider:
    (i) The purpose of the liquidation;
    (ii) Its impact on the safety and soundness of the national bank or 
Federal savings association; and
    (iii) Its impact on the bank's or savings association's depositors, 
other creditors, and customers.
    (2) National banks. For national banks, the OCC also will review 
liquidation plans for compliance with 12 U.S.C. 181 and 182.
    (3) Federal mutual savings associations. For Federal mutual savings 
associations, the OCC also will assess the advisability of, and 
alternatives to, liquidation and the effect of liquidation on all 
concerned.
    (e) Procedure--(1) Preliminary notice of voluntary liquidation. A 
national bank or Federal savings association that is considering going 
into voluntary liquidation shall provide preliminary notice to the 
appropriate OCC licensing office.
    (2) Submission of liquidation plan and nonobjection--(A) After a 
national bank or Federal savings association provides preliminary 
notice under paragraph (e)(1) of this section, if the bank or savings 
association plans to proceed with liquidation, it shall submit a 
voluntary liquidation plan to the OCC. A liquidation plan may be 
effected in whole or part through purchase and assumption transactions.
    (B) The national bank or Federal savings association must receive 
the OCC's supervisory non-objection to the liquidation plan before 
beginning the liquidation.
    (3) Notice upon commencing liquidation--(i) General. When the board 
of directors and the shareholders of a solvent national bank or Federal 
savings association, or in the case of a Federal mutual savings 
association, the board of directors and the members, have voted to 
voluntarily liquidate, the bank or savings association shall:
    (A) File a notice with the appropriate OCC Licensing Office; and
    (B) provide notice to depositors, other known creditors, and known 
claimants of the bank or savings association.
    (ii) National banks. A vote to liquidate a national bank must 
comply with 12 U.S.C. 181. In addition, a national bank shall publish 
notice in accordance with 12 U.S.C. 182.
    (iii) Federal savings associations. A Federal savings association 
shall publish public notice if so directed by the OCC.
    (4) Report of condition. The national bank's or Federal savings 
association's liquidating agent or committee shall submit a report to 
the appropriate OCC Licensing Office at the start of liquidation 
showing the bank's or savings association's balance sheet as of the 
start of liquidation. The liquidating national bank or Federal savings 
association shall submit reports of the condition of its commercial, 
trust, and other departments to the appropriate OCC Licensing Office by 
filing the quarterly Consolidated Reports of Condition and Income (Call 
Reports).
    (5) Report of progress. The national bank's or Federal savings 
association's liquidating agent or committee shall submit a ``Report of 
Progress of Liquidation'' annually to the appropriate OCC Licensing 
Office until the liquidation is complete.
    (6) Final report. The national bank's or Federal savings 
association's liquidating agent or committee shall submit a final 
report at the conclusion of liquidation showing that all creditors have 
been satisfied, remaining assets have been distributed to shareholders, 
resolutions to dissolve the bank or savings association have been 
adopted, and the bank or savings association has been dissolved. The 
national bank or Federal savings association also shall return its 
charter certificate to the OCC.
    (f) Expedited liquidations in connection with acquisitions--(1) 
General. When an acquiring depository institution in a business 
combination purchases all the assets, and assumes all the liabilities, 
including all contingent liabilities, of a target national bank or 
Federal savings association, the target national bank or Federal 
savings association may be dissolved immediately after the combination. 
However, if any liabilities will remain in the target national bank or 
Federal savings association, then the standard liquidation procedures 
apply. This paragraph (f) does not apply to dissolutions of Federal 
mutual savings associations, which are subject to the standard 
liquidation procedures.
    (2) Procedure. After its board of directors and shareholders have 
voted to liquidate and the national bank or Federal savings association 
has notified the appropriate OCC licensing office of its plans, the 
bank or savings association may surrender its charter and dissolve 
immediately, if:
    (i) The acquiring depository institution certifies to the OCC that 
it has purchased all the assets and assumed all the liabilities, 
including all contingent liabilities, of the national bank or Federal 
savings association in liquidation; and
    (ii) The acquiring depository institution and the national bank or 
Federal savings association in liquidation have published notice that 
the bank or savings association will dissolve after the purchase and 
assumption to the acquiror. This notice shall be included in the notice 
and publication for the purchase and assumption required under the Bank 
Merger Act, 12 U.S.C. 1828(c).
0
29. Section 5.50 is revised to read as follows:


Sec.  5.50  Change in control of a national bank or Federal savings 
association; reporting of stock loans.

    (a) Authority. 12 U.S.C. 93a, 1817(j), and 1831aa.
    (b) Licensing requirements. Any person seeking to acquire control 
of a national bank or Federal savings association shall provide 60 days 
prior written notice of a change in control to the OCC, except where 
otherwise provided in this section.
    (c) Scope--(1) General. This section describes the procedures and 
standards governing OCC review of notices for a change in control of a 
national bank or Federal savings association and reports of stock 
loans.
    (2) Exempt transactions. The following transactions are not subject 
to the requirements of this section:
    (i) The acquisition of additional shares of a national bank or 
Federal savings association by a person who:
    (A) Has, continuously since March 9, 1979, (or since that 
institution commenced business, if later) held power to vote 25 percent 
or more of the voting securities of that bank or Federal savings 
association; or
    (B) Under paragraph (f)(2)(ii) of this section, would be presumed 
to have controlled that bank or Federal savings association 
continuously since March 9, 1979, if the transaction will not result in 
that person's direct or indirect ownership or power to vote 25 percent 
or more of any class of voting securities of the national bank or 
Federal savings association; or, in other cases, where the OCC 
determines that the person has controlled the bank or savings 
association continuously since March 9, 1979;
    (ii) Unless the OCC otherwise provides in writing, the acquisition 
of

[[Page 33368]]

additional shares of a national bank or Federal savings association by 
a person who has lawfully acquired and maintained continuous control of 
the bank or Federal savings association under paragraph (f) of this 
section after complying with the procedures and filing the notice 
required by this section;
    (iii) A transaction subject to approval under section 3 of the Bank 
Holding Company Act, 12 U.S.C. 1842, section 18(c) of Federal Deposit 
Insurance Act, 12 U.S.C. 1828(c), or section 10 of the Home Owners' 
Loan Act (HOLA), 12 U.S.C. 1467a;
    (iv) Any transaction described in section 2(a)(5) or 3(a)(A) or (B) 
of the Bank Holding Company Act, 12 U.S.C. 1841(a)(5) and 1842(a)(A) 
and (B), by a person described in those provisions;
    (v) A customary one-time proxy solicitation or receipt of pro rata 
stock dividends; and
    (vi) The acquisition of shares of a foreign bank that has a 
Federally licensed branch in the United States. This exemption does not 
extend to the reports and information required under paragraph (i) of 
this section.
    (3) Prior notice exemption. The following transactions are not 
subject to the prior notice requirements of this section but are 
otherwise subject to this section, including filing a notice and paying 
the appropriate filing fee, within 90 calendar days after the 
transaction occurs:
    (i) The acquisition of control as a result of acquisition of voting 
shares of a national bank or Federal savings association through 
testate or intestate succession;
    (ii) The acquisition of control as a result of acquisition of 
voting shares of a national bank or Federal savings association as a 
bona fide gift;
    (iii) The acquisition of voting shares of a national bank or 
Federal savings association resulting from a redemption of voting 
securities;
    (iv) The acquisition of control of a national bank or Federal 
savings association as a result of actions by third parties (including 
the sale of securities) that are not within the control of the 
acquiror; and
    (v) The acquisition of control as a result of the acquisition of 
voting shares of a national bank or Federal savings association in 
satisfaction of a debt previously contracted in good faith.
    (A) ``Good faith'' means that a person must either make, renew, or 
acquire a loan secured by voting securities of a national bank or 
Federal savings association in advance of any knowledge of a default or 
of the substantial likelihood that a default is forthcoming. A person 
who purchases a previously defaulted loan, or a loan for which there is 
a substantial likelihood of default, secured by voting securities of a 
national bank or Federal savings association may not rely on this 
paragraph (c)(3)(v) to foreclose on that loan, seize or purchase the 
underlying collateral, and acquire control of the national bank or 
Federal savings association without complying with the prior notice 
requirements of this section.
    (B) To ensure compliance with this section, the acquiror of a 
defaulted loan secured by a controlling amount of a national bank's or 
a Federal savings association's voting securities shall file a notice 
prior to the time the loan is acquired unless the acquiror can 
demonstrate to the satisfaction of the OCC that the voting securities 
are not the anticipated source of repayment for the loan.
    (d) Definitions. As used in this section:
    (1) Acquire when used in connection with the acquisition of stock 
of a national bank or Federal savings association means obtaining 
ownership, control, power to vote, or sole power of disposition of 
stock, directly or indirectly or through one or more transactions or 
subsidiaries, through purchase, assignment, transfer, pledge, exchange, 
succession, or other disposition of voting stock, including:
    (i) An increase in percentage ownership resulting from a 
redemption, repurchase, reverse stock split or a similar transaction 
involving other securities of the same class, and
    (ii) The acquisition of stock by a group of persons and/or 
companies acting in concert, which shall be deemed to occur upon 
formation of such group.
    (2) Acting in concert means:
    (i) Knowing participation in a joint activity or parallel action 
towards a common goal of acquiring control whether or not pursuant to 
an express agreement; or
    (ii) A combination or pooling of voting or other interests in the 
securities of an issuer for a common purpose pursuant to any contract, 
understanding, relationship, agreement, or other arrangement, whether 
written or otherwise.
    (3) Company means any corporation, partnership, trust, association, 
joint venture, pool, syndicate, unincorporated organization, joint-
stock company or similar organization.
    (4) Control means the power, directly or indirectly, to direct the 
management or policies of a national bank or Federal savings 
association or to vote 25 percent or more of any class of voting 
securities of a national bank or Federal savings association.
    (5) Controlling shareholder means any person who directly or 
indirectly or acting in concert with one or more persons or companies, 
or together with members of his or her immediate family, owns, 
controls, or holds with power to vote 10 percent or more of the voting 
stock of a company or controls in any manner the election or 
appointment of a majority of the company's board of directors.
    (6) Federal savings association means a Federal savings association 
or a Federal savings bank chartered under section 5 of the HOLA.
    (7) Immediate family includes a person's spouse, father, mother, 
stepfather, stepmother, brother, sister, stepbrother, stepsister, 
children, stepchildren, grandparent, grandchildren, father-in-law, 
mother-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-
law, and the spouse of any of the forgoing.
    (8) Insured depository institution means an insured depository 
institution as defined in 12 U.S.C. 1813(c)(2).
    (9) Management official means any president, chief executive 
officer, chief operating officer, vice president, director, partner, or 
trustee, or any other person who performs or has a representative or 
nominee performing similar policymaking functions, including executive 
officers of principal business units or divisions or subsidiaries who 
perform policymaking functions, for a national bank, savings 
association, or a company, whether or not incorporated.
    (10) Notice means a filing by a person in accordance with paragraph 
(f) of this section.
    (11) Person means an individual or a corporation, partnership, 
trust, association, joint venture, pool, syndicate, sole 
proprietorship, unincorporated organization, or any other form of 
entity, and includes voting trusts and voting agreements and any group 
of persons acting in concert.
    (12) Similar organization for purposes of paragraph (d)(3) of this 
section means a combination of parties with the potential for or 
practical likelihood of continuing rather than temporary existence, 
where the parties thereto have knowingly and voluntarily associated for 
a common purpose pursuant to identifiable and binding relationships 
which govern the parties with respect to either:
    (i) The transferability and voting of any stock or other indicia of 
participation in another entity, or

[[Page 33369]]

    (ii) Achievement of a common or shared objective, such as to 
collectively manage or control another entity.
    (13) Stock means common or preferred stock, general or limited 
partnership shares or interests, or similar interests.
    (14) Voting securities means:
    (i) Shares of stock, if the shares or interests, by statute, 
charter, or in any manner, allow the holder to vote for or select 
directors (or persons exercising similar functions) of the issuing 
national bank or Federal savings association, or to vote on or to 
direct the conduct of the operations or other significant policies of 
the issuing national bank or Federal savings association. However, 
preferred stock or similar interests are not voting securities if:
    (A) Any voting rights associated with the shares or interests are 
limited solely to voting rights customarily provided by statute 
regarding matters that would significantly affect the rights or 
preference of the security or other interest. This includes the 
issuance of additional amounts of classes of senior securities, the 
modification of the terms of the security or interest, the dissolution 
of the issuing national bank, or the payment of dividends by the 
issuing national bank or Federal savings association when preferred 
dividends are in arrears;
    (B) The shares or interests are a passive investment or financing 
device and do not otherwise provide the holder with control over the 
issuing national bank or Federal savings association; and
    (C) The shares or interests do not allow the holder by statute, 
charter, or in any manner, to select or to vote for the selection of 
directors (or persons exercising similar functions) of the issuing 
national bank or Federal savings association.
    (ii) Securities, other instruments, or similar interests that are 
immediately convertible, at the option of the owner or holder thereof, 
into voting securities.
    (e) Policy--(1) General. The OCC seeks to enhance and maintain 
public confidence in the banking system by preventing a change in 
control of a national bank or Federal savings association that could 
have serious adverse effects on a national bank's or Federal savings 
association's financial stability or management resources, the 
interests of the bank's or Federal savings association's customers, the 
Deposit Insurance Fund, or competition.
    (2) Acquisitions subject to the Bank Holding Company Act. (i) If 
corporations, partnerships, certain trusts, associations, and similar 
organizations, that are not already bank holding companies, are not 
required to secure prior Federal Reserve Board approval to acquire 
control of a bank under section 3 of the Bank Holding Company Act, 12 
U.S.C. 1842, other than indirectly through the acquisition of shares of 
a bank holding company, they are subject to the notice requirements of 
this section.
    (ii) Certain transactions, including foreclosures by depository 
institutions and other institutional lenders, fiduciary acquisitions by 
depository institutions, and increases of majority holdings by bank 
holding companies, are described in sections 2(a)(5)(D) and 3(a)(A) and 
(B) of the Bank Holding Company Act, 12 U.S.C. 1841(a)(5)(D) and 12 
U.S.C. 1842(a)(A) and (B), but do not require the Federal Reserve 
Board's prior approval. For purposes of this section, they are 
considered subject to section 3 of the Bank Holding Company Act, 12 
U.S.C. 1842, and do not require either a prior or subsequent notice to 
the OCC under this section.
    (3) Assessing financial condition. In assessing the financial 
condition of the acquiring person, the OCC weighs any debt servicing 
requirements in light of the acquiring person's overall financial 
strength; the institution's earnings performance, asset condition, 
capital adequacy, and future prospects; and the likelihood of the 
acquiring party making unreasonable demands on the resources of the 
institution.
    (f) Procedures--(1) Exceptions to rules of general applicability. 
Sections 5.8(a), 5.9, 5.10, 5.11, and 5.13(a) through (f) do not apply 
to filings under this section. When complying with Sec.  5.8(b) no 
address is required for a notice filed by one or more individuals under 
this section.
    (2) Who must file. (i) Any person seeking to acquire the power, 
directly or indirectly, to direct the management or policies, or to 
vote 25 percent or more of a class of voting securities of a national 
bank or Federal savings association, shall file a notice with the OCC 
60 days prior to the proposed acquisition, unless the acquisition is 
exempt under paragraph (c)(2) of this section.
    (ii) The following persons shall be presumed to be acting in 
concert for purposes of this section:
    (A) A company and any controlling shareholder, partner, trustee or 
management official of such company if both the company and the person 
own stock in the national bank or Federal savings association;
    (B) A person and the members of the person's immediate family;
    (C) Companies under common control;
    (D) Persons that have made, or propose to make, a joint filing 
under section 13 or 14 of the Securities Exchange Act of 1934, and the 
rules thereunder promulgated by the Securities and Exchange Commission;
    (E) A person or company will be presumed to be acting in concert 
with any trust for which such person or company serves as trustee, 
except that a tax-qualified employee stock benefit plan as defined in 
Sec.  192.2(a)(39) shall not be presumed to be acting in concert with 
its trustee or person acting in a similar fiduciary capacity solely for 
the purposes of determining whether to combine the holdings of a plan 
and its trustee or fiduciary; and
    (F) Persons that are parties to any agreement, contract, 
understanding, relationship, or other arrangement, whether written or 
otherwise, regarding the acquisition, voting or transfer of control of 
voting securities of a national bank or Federal savings association, 
other than through a revocable proxy in connection with a proxy 
solicitation for the purposes of conducting business at a regular or 
special meeting of the institution, if the proxy terminates within a 
reasonable period after the meeting.
    (iii) The OCC presumes, unless rebutted, that an acquisition or 
other disposition of voting securities through which any person 
proposes to acquire ownership of, or the power to vote, ten percent or 
more of a class of voting securities of a national bank or Federal 
savings association is an acquisition by a person of the power to 
direct the bank's or savings association's management or policies if:
    (A) The securities to be acquired or voted are subject to the 
registration requirements of section 12 of the Securities Exchange Act 
of 1934, 15 U.S.C. 78l; or
    (B) Immediately after the transaction no other person will own or 
have the power to vote a greater proportion of that class of voting 
securities.
    (iv) The OCC will consider a rebuttal of the presumption of control 
where the person or company intends to have no more than one 
representative on the board of directors of the national bank or 
Federal savings association.
    (v) The presumption of control may not be rebutted if the total 
equity investment by the person or company in the national bank or 
Federal savings association, including 15 percent or more of any class 
of voting securities, equals or exceeds one third of the total equity 
of the national bank or Federal savings association.
    (vi) Other transactions resulting in a person's control of less 
than 25 percent

[[Page 33370]]

of a class of voting securities of a national bank or Federal savings 
association are not deemed by the OCC to result in control for purposes 
of this section.
    (vii) If two or more persons, not acting in concert, each propose 
to acquire simultaneously equal percentages of ten percent or more of a 
class of a national bank's or Federal savings association's voting 
securities, and either the acquisitions are of a class of securities 
subject to the registration requirements of section 12 of the 
Securities Exchange Act of 1934, 15 U.S.C. 78l, or immediately after 
the transaction no other shareholder of the national bank or Federal 
savings association would own or have the power to vote a greater 
percentage of the class, each of the acquiring persons shall either 
file a notice or rebut the presumption of control.
    (viii) An acquiring person may seek to rebut a presumption 
established in paragraph (f)(2)(ii) or (iii) of this section by 
presenting relevant information in writing to the appropriate OCC 
Licensing office. The OCC shall respond in writing to any person that 
seeks to rebut the presumption of control or the presumption of 
concerted action. No rebuttal filing is effective unless the OCC 
indicates in writing that the information submitted has been found to 
be sufficient to rebut the presumption of control.
    (3) Filings. (i) The OCC does not accept a notice of a change in 
control unless it is technically complete, i.e., the information 
provided is responsive to every item listed in the notice form and is 
accompanied by the appropriate fee.
    (A) The notice must contain the information required under 12 
U.S.C. 1817(j)(6)(A), and the information prescribed in the Interagency 
Biographical and Financial Report. This form is available from the OCC. 
The OCC may waive any of the informational requirements of the notice 
if the OCC determines that it is in the public interest.
    (B) When the acquiring person is an individual, or group of 
individuals acting in concert, the requirement to provide personal 
financial data may be satisfied with a current statement of assets and 
liabilities and an income summary, together with a statement of any 
material changes since the date of the statement or summary. However, 
the OCC may require additional information, if appropriate.
    (ii) The OCC has 60 days from the date it declares the notice to be 
technically complete to review the notice.
    (A) When the OCC declares a notice technically complete, the 
appropriate OCC licensing office sends a letter of acknowledgment to 
the applicant indicating the technically complete date.
    (B) As set forth in paragraph (g) of this section, the applicant 
shall publish an announcement within 10 days of filing the notice with 
the OCC. The publication of the announcement triggers a 20-day public 
comment period. The OCC may waive or shorten the public comment period 
if an emergency exists. The OCC also may shorten the comment period for 
other good cause. The OCC may act on a proposed change in control prior 
to the expiration of the public comment period if the OCC makes a 
written determination that an emergency exists.
    (C) An applicant shall notify the OCC immediately of any material 
changes in a notice submitted to the OCC, including changes in 
financial or other conditions that may affect the OCC's decision on the 
filing.
    (iii) Within the 60-day period, the OCC may inform the applicant 
that the acquisition has been disapproved, has not been disapproved, or 
that the OCC will extend the 60-day review period for up to an 
additional 30 days. The period or the OCC's review of a notice may be 
further extended not to exceed two additional times for not more than 
45 days each time if:
    (A) The OCC determines that any acquiring party has not furnished 
all the information required under this part;
    (B) In the OCC's judgment, any material information submitted is 
substantially inaccurate;
    (C) The OCC has been unable to complete an investigation of each 
acquirer because of any delay caused by, or the inadequate cooperation 
of, such acquirer; or
    (D) The OCC determines that additional time is needed to 
investigate and determine that no acquiring party has a record of 
failing to comply with the requirements of subchapter II of chapter 53 
of title 31 of the United States Code.
    (iv) The applicant may request a hearing by the OCC within 10 days 
of receipt of a disapproval (see 12 CFR part 19, subpart H, for hearing 
initiation procedures). Following final agency action under 12 CFR part 
19, further review by the courts is available. (See 12 U.S.C. 
1817(j)(5))
    (4) Conditional actions. The OCC may impose conditions on its 
action not to disapprove a notice to assure satisfaction of the 
relevant statutory criteria for non-objection to a notice.
    (5) Disapproval of notice. The OCC may disapprove a notice if it 
finds that any of the following factors exist:
    (i) The proposed acquisition of control would result in a monopoly 
or would be in furtherance of any combination or conspiracy to 
monopolize or to attempt to monopolize the business of banking in any 
part of the United States;
    (ii) The effect of the proposed acquisition of control in any 
section of the country may be substantially to lessen competition or to 
tend to create a monopoly or the proposed acquisition of control 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;
    (iii) Either the financial condition of any acquiring person or the 
future prospects of the institution is such as might jeopardize the 
financial stability of the bank or Federal savings association or 
prejudice the interests of the depositors of the bank or Federal 
savings association;
    (iv) 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 
Federal savings association, or in the interest of the public, to 
permit that person to control the bank or Federal savings association;
    (v) An acquiring person neglects, fails, or refuses to furnish the 
OCC all the information it requires; or
    (vi) The OCC determines that the proposed transaction would result 
in an adverse effect on the Deposit Insurance Fund.
    (6) Disapproval notification. If the OCC disapproves a notice, it 
will notify the proposed acquiring person in writing within three days 
after the decision containing a statement of the basis for disapproval.
    (g) Disclosure--(1) Announcement. The applicant shall publish an 
announcement in a newspaper of general circulation in the community 
where the affected national bank or Federal savings association is 
located within ten days of filing. The OCC may authorize a delayed 
announcement if an immediate announcement would not be in the public 
interest.
    (i) In addition to the information required by Sec.  5.8(b), the 
announcement must include the name of the national bank or Federal 
savings association named in the notice and the comment period (i.e., 
20 days from the date of the

[[Page 33371]]

announcement). The announcement also must state that the public portion 
of the notice is available upon request.
    (ii) Notwithstanding any other provisions of this paragraph (g), if 
the OCC determines in writing that an emergency exists and that the 
announcement requirements of this paragraph (g) would seriously 
threaten the safety and soundness of the national bank or Federal 
savings association to be acquired, including situations where the OCC 
must act immediately in order to prevent the probable failure of a 
national bank or Federal savings association, the OCC may waive or 
shorten the publication requirement.
    (2) Release of information. (i) Upon the request of any person, the 
OCC releases the information provided in the public portion of the 
notice and makes it available for public inspection and copying as soon 
as possible after a notice has been filed. In certain circumstances the 
OCC may determine that the release of the information would not be in 
the public interest. In addition, the OCC makes a public announcement 
of a technically complete notice, the disposition of the notice, and 
the consummation date of the transaction, if applicable, in the OCC's 
``Weekly Bulletin.''
    (ii) The OCC handles requests for the non-public portion of the 
notice as requests under the Freedom of Information Act, 5 U.S.C. 552, 
and other applicable law.
    (h) Reporting requirement. After the consummation of the change in 
control, the national bank or Federal savings association shall notify 
the OCC in writing of any changes or replacements of its chief 
executive officer or of any director occurring during the 12-month 
period beginning on the date of consummation. This notice must be filed 
within 10 days of such change or replacement and must include a 
statement of the past and current business and professional 
affiliations of the new chief executive officers or directors.
    (i) Reporting of stock loans--(1) Requirements. (i) Any foreign 
bank, or any affiliate thereof, shall file a consolidated report with 
the appropriate OCC supervisory office of the national bank or Federal 
savings association if the foreign bank or any affiliate thereof, has 
credit outstanding to any person or group of persons that, in the 
aggregate, is secured, directly or indirectly, by 25 percent or more of 
any class of voting securities of the same national bank or Federal 
savings association.
    (ii) The foreign bank, or any affiliate thereof, shall also file a 
copy of the report with its appropriate OCC supervisory office if that 
office is different from the national bank's or Federal savings 
association's appropriate OCC supervisory office. If the foreign bank, 
or any affiliate thereof, is not supervised by the OCC, it shall file a 
copy of the report filed with the OCC with its appropriate Federal 
banking agency.
    (iii) Any shares of the national bank or Federal savings 
association held by the foreign bank, or any affiliate thereof, as 
principal must be included in the calculation of the number of shares 
in which the foreign bank or any affiliate thereof has a security 
interest for purposes of paragraph (h)(1)(i) of this section.
    (2) Definitions. For purposes of this paragraph (h) of this 
section:
    (i) Foreign bank and affiliate have the same meanings as in section 
1 of the International Banking Act of 1978, 12 U.S.C. 3101.
    (ii) Credit outstanding includes any loan or extension of credit; 
the issuance of a guarantee, acceptance, or letter of credit, including 
an endorsement or standby letter of credit; and any other type of 
transaction that extends credit or financing to a person or group of 
persons.
    (iii) Group of persons includes any number of persons that a 
foreign bank, or an affiliate thereof, has reason to believe:
    (A) Are acting together, in concert, or with one another to acquire 
or control shares of the same insured national bank or Federal savings 
association, including an acquisition of shares of the same national 
bank or Federal savings association at approximately the same time 
under substantially the same terms; or
    (B) Have made, or propose to make, a joint filing under 15 U.S.C. 
78m regarding ownership of the shares of the same depository 
institution.
    (3) Exceptions. Compliance with paragraph (i)(1) of this section is 
not required if:
    (i) The person or group of persons referred to in paragraph (h)(1) 
of this section has disclosed the amount borrowed and the security 
interest therein to the appropriate OCC licensing office in connection 
with a notice filed under this section or any other application filed 
with the appropriate OCC licensing office as a substitute for a notice 
under this section, such as for a national bank or Federal savings 
association charter; or
    (ii) The transaction involves a person or group of persons that has 
been the owner or owners of record of the stock for a period of one 
year or more or, if the transaction involves stock issued by a newly 
chartered bank or Federal savings association, before the bank's or 
Federal savings association's opening.
    (4) Report requirements. (i) The consolidated report must indicate 
the number and percentage of shares securing each applicable extension 
of credit, the identity of the borrower, and the number of shares held 
as principal by the foreign bank and any affiliate thereof.
    (ii) The foreign bank and all affiliates thereof shall file the 
consolidated report in writing within 30 days of the date on which the 
foreign bank or affiliate thereof first believes that the security for 
any outstanding credit consists of 25 percent or more of any class of 
voting securities of a national bank or Federal savings association.
    (5) Other reporting requirements. A foreign bank or any affiliate 
thereof, supervised by the OCC and required to report credit 
outstanding secured by the shares of a depository institution to 
another Federal banking agency also shall file a copy of the report 
with its appropriate OCC supervisory office.
0
30. Section 5.51 is revised to read as follows:


Sec.  5.51  Changes in directors and senior executive officers of a 
national bank or Federal savings association.

    (a) Authority. 12 U.S.C. 1831i and 12 U.S.C. 5412(b)(2)(B).
    (b) Scope. This section describes the circumstances when a national 
bank or a Federal savings association must notify the OCC of a change 
in its directors and senior executive officers, and the OCC's authority 
to disapprove those notices.
    (c) Definitions. (1) Director means an individual who serves on the 
board of directors of a national bank or a Federal savings association, 
except:
    (i) A director of a foreign bank that operates a Federal branch; 
and
    (ii) An advisory director who does not have the authority to vote 
on matters before the board of directors or any committee of the board 
of directors and provides solely general policy advice to the board of 
directors or any committee.
    (2) Federal savings association means a Federal savings association 
or Federal savings bank chartered under 12 U.S.C. 1464.
    (3) National bank includes a Federal branch for purposes of this 
section only.
    (4) Senior executive officer means the president, chief executive 
officer, chief operating officer, chief financial officer, chief 
lending officer, chief investment officer, and any other individual the 
OCC identifies in writing to the national bank or Federal savings 
association who exercises significant influence over, or

[[Page 33372]]

participates in, major policy making decisions of the national bank or 
Federal savings association without regard to title, salary, or 
compensation. The term also includes employees of entities retained by 
a national bank or Federal savings association to perform such 
functions in lieu of directly hiring the individuals, and, with respect 
to a Federal branch operated by a foreign bank, the individual 
functioning as the chief managing official of the Federal branch.
    (5) Technically complete notice means a notice that provides all 
the information requested in paragraph (e)(2) of this section, 
including complete explanations where material issues arise regarding 
the competence, experience, character, or integrity of proposed 
directors or senior executive officers, and any additional information 
that the OCC may request following a determination that the notice was 
not technically complete.
    (6) Technically complete notice date means the date on which the 
OCC has received a technically complete notice.
    (7) Troubled condition means a national bank or Federal savings 
association that
    (i) Has a composite rating of 4 or 5 under the Uniform Financial 
Institutions Rating System (CAMELS);
    (ii) Is subject to a cease and desist order, a consent order, or a 
formal written agreement, unless otherwise informed in writing by the 
OCC; or
    (iii) Is informed in writing by the OCC that, based on information 
pertaining to such national bank or Federal savings association, it has 
been designated in ``troubled condition'' for purposes of this section.
    (d) Prior notice. A national bank or Federal savings association 
shall provide written notice to the OCC at least 90 calendar days 
before adding or replacing any member of its board of directors, 
employing any individual as a senior executive officer of the national 
bank or Federal savings association, or changing the responsibilities 
of any senior executive officer so that the individual would assume a 
different senior executive officer position, if:
    (1) The national bank or Federal savings association is not in 
compliance with minimum capital requirements applicable to such 
institution, as prescribed in 12 CFR part 3 or part 167, as applicable, 
or is otherwise in troubled condition; or
    (2) The OCC determines, in writing, in connection with the review 
by the agency of the plan required under section 38 of the Federal 
Deposit Insurance Act (12 U.S.C. 1831o), or otherwise, that such prior 
notice is appropriate.
    (e) Procedures--(1) Filing notice. A national bank or Federal 
savings association shall file a notice with its appropriate 
supervisory office. When a national bank or Federal savings association 
files a notice, the individual to whom the filing pertains shall attest 
to the validity of the information pertaining to that individual. The 
90-day review period begins on the technically complete notice date.
    (2) Content of notice. (i) The notice must include:
    (A) The information required under 12 U.S.C. 1817(j)(6)(A), and the 
information prescribed in the Interagency Notice of Change in Director 
or Senior Executive Officer, the biographical and certification 
portions of the Interagency Biographical and Financial Report 
(``IBFR''), and unless otherwise determined by the OCC in writing, the 
financial portion of the IBFR. These forms are available from the OCC;
    (B) Legible fingerprints of the individual, except that 
fingerprints are not required for any individual who, within the three 
years immediately preceding the initial submission date of the notice 
currently under review, has been the subject of a notice filed with the 
OCC or the OTS pursuant to 12 U.S.C. 1831i, or this section, and has 
previously submitted fingerprints; and
    (C) Such other information required by the OCC.
    (ii) Modification of content requirements. The OCC may require or 
accept other information in place of the content requirements in 
paragraph (e)(2)(i) of this section.
    (3) Requests for additional information. (i) Following receipt of a 
technically complete notice, the OCC may request additional 
information. Such request must be in writing, must explain why the 
information is needed, and must specify a time period during which the 
information must be provided.
    (ii) If the national bank or Federal savings association cannot 
provide the information requested by the OCC within the time specified 
in paragraph (e)(3)(i) of this section, the national bank or Federal 
savings association may request in writing that the OCC suspend 
processing of the notice. The OCC will advise the national bank or 
Federal savings association in writing whether the suspension request 
is granted and, if granted, the length of the suspension.
    (iii) If the national bank or Federal savings association fails to 
provide the requested information within the time specified in 
paragraphs (e)(3)(i) or (ii) of this section, the OCC may deem the 
filing abandoned under Sec.  5.13(c) or may review the notice based on 
the information provided.
    (4) Notice of disapproval. The OCC may disapprove an individual 
proposed as a member of the board of directors or as a senior executive 
officer if the OCC determines on the basis of the individual's 
competence, experience, character, or integrity that it would not be in 
the best interests of the depositors of the national bank or Federal 
savings association or the public to permit the individual to be 
employed by, or associated with, the national bank or Federal savings 
association. The OCC must send a written notice of disapproval to both 
the national bank or Federal savings association and the individual 
stating the basis for disapproval.
    (5) Notice of intent not to disapprove. An individual proposed as a 
member of the board of directors or as a senior executive officer may 
begin service before the expiration of the review period if the OCC 
notifies the individual and the national bank or Federal savings 
association in writing that the OCC does not disapprove the proposed 
director or senior executive officer and all other applicable legal 
requirements are satisfied.
    (6) Waiver of prior notice--(i) Waiver request. (A) A national bank 
or Federal savings association may send a letter to the appropriate 
supervisory office requesting a waiver of the prior notice requirement.
    (B) The OCC may grant the waiver if it issues a written finding 
that:
    (1) Delay could adversely affect the safety and soundness of the 
national bank or Federal savings association;
    (2) Delay would not be in the public interest; or
    (3) Other extraordinary circumstances justify waiver of prior 
notice.
    (C) The OCC will determine the length of the waiver on a case-by-
case basis. All waivers that the OCC grants under this paragraph (e)(6) 
are subject to the condition that the national bank or Federal savings 
association shall file a technically complete notice under this section 
within the time period specified by the OCC.
    (D) Subject to paragraph (e)(6)(i)(C) of this section, the proposed 
individual may assume the position on an interim basis until the 
earliest of the following events:
    (1) The individual and the national bank or the Federal savings 
association receive a notice of intent not to disapprove, at which time 
the individual may assume the position on a permanent basis, provided 
all other

[[Page 33373]]

applicable legal requirements are satisfied;
    (2) The individual and the national bank or the Federal savings 
association receive a notice of disapproval within 90 calendar days 
after the submission of a technically complete notice. In this event 
the individual shall immediately resign from the position upon receipt 
of the notice of disapproval and may assume the position on a permanent 
basis only if the notice of disapproval is reversed on appeal and all 
other applicable legal requirements are satisfied; or
    (3) The OCC does not act within 90 calendar days after the 
submission of a technically complete notice. In this event, the 
individual may assume the position on a permanent basis 91 calendar 
days after the submission of a technically complete notice.
    (E) If the technically complete notice is not filed within the time 
period specified in the waiver, the proposed individual shall 
immediately resign his or her position. Thereafter, the individual may 
assume the position only after a technically complete notice has been 
filed, all other applicable requirements are satisfied, and:
    (1) The national bank or the Federal savings association receives a 
notice of intent not to disapprove;
    (2) The review period expires; or
    (3) A notice of disapproval has been overturned on appeal as set 
forth in paragraph (f) of this section.
    (F) Notwithstanding the grant of a waiver, the OCC has authority to 
issue a notice of disapproval within 30 days of the expiration of such 
waiver.
    (ii) Automatic waiver. An individual who has been elected to the 
board of directors of a national bank or Federal savings association 
may serve as a director on an interim basis before a notice has been 
filed under this section, provided the individual was not nominated by 
management, and the national bank or Federal savings association 
submits a notice under this section not later than seven days after the 
individual has been notified of the election. The individual may serve 
on an interim basis until the occurrence of the earliest of the events 
described in paragraphs (e)(6)(i)(D)(1), (2), or (3) of this section.
    (7) Commencement of service. An individual proposed as a member of 
the board of directors or as a senior executive officer who satisfies 
all other applicable legal requirements may assume the office on a 
permanent basis:
    (i) Prior to the expiration of the review period, only if the OCC 
notifies the national bank or Federal savings association in writing 
that the OCC does not disapprove the proposed director or senior 
executive officer pursuant to paragraph (e)(5) of this section; or
    (ii) Following the expiration of the review period, unless:
    (A) The OCC issues a written notice of disapproval during the 
review period; or
    (B) The national bank or Federal savings association does not 
provide additional information within the time period required by the 
OCC pursuant to paragraph (e)(3) of this section and the OCC deems the 
notice to be abandoned pursuant to Sec.  5.13(c).
    (8) Exceptions to rules of general applicability. Sections 5.8, 
5.10, 5.11, and 5.13(a) through (f) do not apply to a notice for a 
change in directors and senior executive officers, except that Sec.  
5.13(c) shall apply to the extent provided for in paragraphs 
(e)(3)(iii) and (e)(7) of this section.
    (f) Appeal. (1) If the national bank or Federal savings 
association, the proposed individual, or both, disagree with a 
disapproval, they may seek review by appealing the disapproval to the 
Comptroller, or an authorized delegate, within 15 days of the receipt 
of the notice of disapproval. The national bank or Federal savings 
association or the individual may appeal on the grounds that the 
reasons for disapproval are contrary to fact or insufficient to justify 
disapproval. The appellant shall submit all documents and written 
arguments that the appellant wishes to be considered in support of the 
appeal.
    (2) The Comptroller, or an authorized delegate, may designate an 
appellate official who was not previously involved in the decision 
leading to the appeal at issue. The Comptroller, an authorized 
delegate, or the appellate official considers all information submitted 
with the original notice, the material before the OCC official who made 
the initial decision, and any information submitted by the appellant at 
the time of the appeal.
    (3) The Comptroller, an authorized delegate, or the appellate 
official shall independently determine whether the reasons given for 
the disapproval are contrary to fact or insufficient to justify the 
disapproval. If either is determined to be the case, the Comptroller, 
an authorized delegate, or the appellate official may reverse the 
disapproval.
    (4) Upon completion of the review, the Comptroller, an authorized 
delegate, or the appellate official shall notify the appellant in 
writing of the decision. If the original decision is reversed, the 
individual may assume the position in the national bank or Federal 
savings association for which he or she was proposed.
0
31. Section 5.52 is revised to read as follows:


Sec.  5.52  Change of address of a national bank or Federal savings 
association.

    (a) Authority. 12 U.S.C. 93a, 161, 481, 1462a, 1463, 1464 and 
5412(b)(2)(B).
    (b) Scope. This section describes the obligation of a national bank 
or a Federal savings association to notify the OCC of any change in its 
address.
    (c) Notice process. (1) Any national bank with a change in the 
address of its main office or in its post office box or a Federal 
savings association with a change in the address of its home office or 
post office box shall send a written notice to the appropriate OCC 
licensing office.
    (2) No notice is required if the change in address results from a 
transaction approved under this part or if notice has been provided 
pursuant to Sec.  5.40(b) with respect to the relocation of a main 
office or home office to a branch location in the same city, town or 
village.
    (d) Exceptions to rules of general applicability. Sections 5.8, 
5.9, 5.10, 5.11, and 5.13 do not apply to changes in a national bank's 
or Federal savings association's address.
0
32. Section 5.53 is revised to read as follows:


Sec.  5.53  Substantial asset change by a national bank or Federal 
savings association.

    (a) Authority. 12 U.S.C. 93a, 1818, 1462a, 1463, 1464, 1467a, and 
5412(b)(2)(B).
    (b) Scope. This section requires a national bank or a Federal 
savings association to obtain the approval of the OCC for a substantial 
asset change.
    (c) Definition--(1) In general. Except as provided in paragraph 
(c)(2), substantial asset change means:
    (i) The sale or other disposition of all, or substantially all, of 
the national bank's or Federal savings association's assets in a 
transaction or a series of transactions;
    (ii) After having sold or disposed of all, or substantially all, of 
its assets, subsequent purchases or other acquisitions or other 
expansions of the national bank's or Federal savings association's 
operations;
    (iii) Any other purchases, acquisitions or other expansions of 
operations that are part of a plan to increase the size of the national 
bank or Federal savings association by more than 25 percent in a one 
year period; or
    (iv) Any other material increase or decrease in the size of the 
national bank

[[Page 33374]]

or Federal savings association or a material alteration in the 
composition of the types of assets or liabilities of the national bank 
or Federal savings association (including the entry or exit of business 
lines), on a case-by-case basis, as determined by the OCC.
    (2) Exceptions. The term ``substantial asset change'' does not 
include, and this section does not apply, to a change in composition of 
all, or substantially all, of a bank's or savings association's assets:
    (i) That the bank or savings association undertakes in response to 
direction from the OCC (e.g., in an enforcement action pursuant to 12 
U.S.C. 1818);
    (ii) That is part of a voluntary liquidation under 12 CFR 5.48, if 
the bank or savings association in liquidation has obtained approval 
for its plan of liquidation under 12 CFR 5.48 and has stipulated in its 
notice of liquidation to the OCC that its liquidation will be 
completed, the bank or savings association dissolved and its charter 
returned to the OCC within one year of the date it filed the notice of 
liquidation, unless the OCC extends the time period;
    (iii) That occurs as a result of a bank's or savings association's 
ordinary and ongoing business of originating and securitizing loans; or
    (iv) That are subject to OCC approval under another application to 
the OCC.
    (d) Procedures--(1) Consultation. A national bank or Federal 
savings association considering a transaction or series of transactions 
that may constitute a material change under paragraph (c)(1)(iv) of 
this section must consult with the appropriate OCC supervisory office 
for a determination whether the OCC will require an application under 
this section. In determining whether to require an application, the OCC 
considers the size and nature of the transaction and the condition of 
the institutions involved.
    (2) Approval requirement. A national bank or Federal savings 
association must file an application and obtain the prior written 
approval of the OCC before engaging in a substantial asset change.
    (3) Factors--(i) General. (A) In determining whether to approve an 
application under paragraph (d)(1) of this section, the OCC considers 
the following factors:
    (1) The capital level of any resulting national bank or Federal 
savings association;
    (2) The conformity of the transaction to applicable law, 
regulation, and supervisory policies;
    (3) The purpose of the transaction;
    (4) The impact of the transaction on safety and soundness of the 
national bank or Federal savings association; and
    (5) The effect of the transaction on the national bank or Federal 
savings association's shareholders, depositors, other creditors, and 
customers.
    (B) The OCC may deny the application if the transaction would have 
a negative effect in any of these respects.
    (ii) Additional factors. The OCC's review of any substantial asset 
change that involves the purchase or other acquisition or other 
expansions of the bank's or savings association's operations will 
include, in addition to the foregoing factors, the factors governing 
the organization of a bank or savings association under Sec.  5.20.
    (e) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply with respect to applications filed pursuant 
to this section. However, if the OCC concludes that an application 
presents significant or novel policy, supervisory, or legal issues, the 
OCC may determine that some or all of the provisions of Sec. Sec.  5.8, 
5.10, and 5.11 apply.
0
33. Section 5.55 is added to read as follows:


Sec.  5.55  Capital Distributions by a Federal Savings Association.

    (a) Authority. 12 U.S.C. 1462a, 1463, 1464, 1467a, 1831o, and 
5412(b)(2)(B).
    (b) Licensing requirements. A Federal savings association must file 
an application or notice before making a capital distribution, as 
provided in this section.
    (c) Scope. This section applies to all capital distributions by a 
Federal savings association and sets forth the procedures and standards 
relating to a capital distribution.
    (d) Definitions. The following definitions apply to this section:
    (1) Affiliate means an affiliate, as defined under regulations of 
the Board of Governors of the Federal Reserve System regarding 
transactions with affiliates, 12 CFR part 223 (Regulation W).
    (2) Capital means total capital, as computed under 12 CFR part 3 or 
part 167, as applicable.
    (3) Capital distribution means:
    (i) A distribution of cash or other property to owners of a Federal 
savings association made on account of their ownership, but excludes:
    (A) Any dividend consisting only of the shares of the savings 
association or rights to purchase the shares; or
    (B) If the savings association is a Federal mutual savings 
association, any payment that the savings association is required to 
make under the terms of a deposit instrument and any other amount paid 
on deposits that the OCC determines is not a distribution for the 
purposes of this section;
    (ii) A Federal savings association's payment to repurchase, redeem, 
retire or otherwise acquire any of its shares or other ownership 
interests; any payment to repurchase, redeem, retire, or otherwise 
acquire debt instruments included in its total capital under 12 CFR 
part 3 or part 167, as applicable; and any extension of credit to 
finance an affiliate's acquisition of the savings association's shares 
or interests;
    (iii) Any direct or indirect payment of cash or other property to 
owners or affiliates made in connection with a corporate restructuring. 
This includes the Federal savings association's payment of cash or 
property to shareholders of another association or to shareholders of 
its holding company to acquire ownership in that association, other 
than by a distribution of shares;
    (iv) Any other distribution charged against a Federal savings 
association's capital accounts if the savings association would not be 
well capitalized, as set forth in 12 CFR 6.4, following the 
distribution; and
    (v) Any transaction that the OCC determines, by order or 
regulation, to be in substance a distribution of capital.
    (4) Net income means a Federal savings association's net income 
computed in accordance with generally accepted accounting principles.
    (5) Retained net income means a Federal savings association's net 
income for a specified period less total capital distributions declared 
in that period.
    (6) Shares means common and preferred stock, and any options, 
warrants, or other rights for the acquisition of such stock. The term 
``share'' also includes convertible securities upon their conversion 
into common or preferred stock. The term does not include convertible 
debt securities prior to their conversion into common or preferred 
stock or other securities that are not equity securities at the time of 
a capital distribution.
    (e) Filing requirements--(1) Application required. A Federal 
savings association must file an application with the OCC if:
    (i) The savings association is not an eligible savings association;
    (ii) The total amount of all of the savings association's capital 
distributions (including the proposed capital distribution) for the 
applicable calendar year exceeds its net income for that year to date 
plus retained net income for the preceding two years;

[[Page 33375]]

    (iii) The savings association would not be at least adequately 
capitalized, as set forth in 12 CFR 6.4, as applicable, following the 
distribution; or
    (iv) The savings association's proposed capital distribution would 
violate a prohibition contained in any applicable statute, regulation, 
or agreement between the savings association and the OCC or the OTS, or 
violate a condition imposed on the savings association in an 
application or notice approved by the OCC or the OTS.
    (2) Notice required. Unless it is required to file an application 
under paragraph (e)(1) of this section, a Federal savings association 
that is an eligible savings association must file a notice with the OCC 
if:
    (i) The savings association would not remain well capitalized, as 
set forth under 12 CFR 6.4, or would otherwise not remain an eligible 
savings association following the distribution;
    (ii) The savings association's proposed capital distribution would 
reduce the amount of or retire any part of its common or preferred 
stock or retire any part of debt instruments such as notes or 
debentures included in capital under 12 CFR part 3 or part 167, as 
applicable, (other than regular payments required under a debt 
instrument approved under 5.56;
    (iii) The savings association's proposed capital distribution is 
payable in property other than cash;
    (iv) The savings association is a direct or indirect subsidiary of 
a mutual savings and loan holding company; or
    (v) The savings association is a direct or indirect subsidiary of a 
company that is not a savings and loan holding company.
    (3) No prior notice required. A Federal savings association does 
not need to file a notice or an application with the OCC before making 
a capital distribution if the Federal savings association is not 
required to file an application under paragraph (e)(1) or a notice 
under paragraph (e)(2) of this section.
    (4) Informational copy of notice required. If the Federal savings 
association is a subsidiary of a savings and loan holding company that 
is filing a notice with the Board of Governors of the Federal Reserve 
System (Board) for a dividend solely under 12 U.S.C. 1467a(f) and not 
also under 12 U.S.C. 1467a(o)(11), and neither an application under 
paragraph (e)(1) nor a notice under paragraph (e)(2) is required, then 
the savings association must provide an informational copy to the OCC 
of the notice filed with the Board, at the same time the notice is 
filed with the Board.
    (f) Filing format--(1) Contents. The notice or application must:
    (i) Be in narrative form;
    (ii) Include all relevant information concerning the proposed 
capital distribution, including the amount, timing, and type of 
distribution; and
    (iii) Demonstrate compliance with Sec.  5.55(h).
    (2) Schedules. The notice or application may include a schedule 
proposing capital distributions over a specified period, not to exceed 
12 months.
    (3) Combined filings. A Federal savings association may combine the 
notice or application required under Sec.  5.55(e) with any other 
notice or application, if the capital distribution is a part of, or is 
proposed in connection with, another transaction requiring a notice or 
application under this chapter. If submitting a combined filing, the 
Federal savings association must state that the related notice or 
application is intended to serve as a notice or application under this 
section.
    (g) Filing procedures--(1) Application. When a Federal savings 
association is required to file an application under paragraph (e)(1) 
of this section, it must file the application at least 30 days before 
the proposed declaration of dividend or approval of the proposed 
capital distribution by its board of directors. The Federal savings 
association shall not effect the proposed declaration of dividend or 
approval of the proposed capital distribution unless it has received 
prior written approval of the OCC.
    (2) Prior notice with expedited review. A Federal savings 
association that is an eligible savings association and that is 
required to file a notice under paragraph (e)(2) must file the notice 
at least 30 days before the proposed declaration of dividend or 
approval of the proposed capital distribution by its board of 
directors. The notice is deemed approved by the OCC upon the expiration 
of 30 days after the filing date of the notice unless, before the 
expiration of that time period, the OCC notifies the Federal savings 
association that:
    (i) Additional information is required to supplement the notice;
    (ii) The notice is not eligible for expedited review, or the 
expedited reviewed process is extended, under 5.13(a)(2); or
    (iii) The notice is disapproved.
    (h) OCC review of capital distributions. The OCC reviews 
applications and notices submitted pursuant to paragraphs (g)(1) and 
(g)(2) of this section. The OCC may disapprove the notice or deny the 
application in whole or in part, if it makes any of the following 
determinations:
    (1) The Federal savings association will be undercapitalized, 
significantly undercapitalized, or critically undercapitalized as set 
forth in 12 CFR 6.4, as applicable, following the capital distribution. 
If so, the OCC will determine if the capital distribution is permitted 
under 12 U.S.C. 1831o(d)(1)(B).
    (2) The proposed capital distribution raises safety or soundness 
concerns.
    (3) The proposed capital distribution violates a prohibition 
contained in any statute, regulation, agreement between the Federal 
savings association and the OCC or the OTS, or a condition imposed on 
the Federal savings association in an application or notice approved by 
the OCC or the OTS. If so, the OCC will determine whether it may permit 
the capital distribution notwithstanding the prohibition or condition.
    (i) Exceptions to rules of general applicability. Sections 5.8, 
5.10, and 5.11 do not apply to capital distributions made by Federal 
savings associations.
0
34. Section 5.56 is added to read as follows:


Sec.  5.56  Inclusion of subordinated debt securities and mandatorily 
redeemable preferred stock as Federal savings association supplementary 
(tier 2) capital.

    (a) Applicability and scope--(1) Applicability. (i) For purposes of 
this section, an advanced approaches savings association means a 
Federal savings association that is subject to 12 CFR part 3, subpart 
E, and a non-advanced approaches savings association means a Federal 
savings association that is not subject to 12 CFR part 3, subpart E.
    (ii) An advanced approaches savings association, beginning on March 
31, 2014, must comply with paragraphs (h) through (q) of this section.
    (iii) A non-advanced approaches savings association, prior to 
January 1, 2015, must comply with paragraphs (a) through (g) of this 
section. Beginning on January 1, 2015, a non-advanced approaches 
savings association must comply with paragraphs (h) through (q) of this 
section.
    (2) Scope. Prior to January 1, 2015, a non-advanced approaches 
savings association must comply with paragraphs (a) through (g) of this 
section in order to include subordinated debt securities or mandatorily 
redeemable preferred stock (``covered securities'') in supplementary 
capital (tier 2 capital) under part 167 of this chapter. If a savings 
association does not include covered securities in supplementary

[[Page 33376]]

capital, it is not required to comply with this section. Covered 
securities not included in tier 2 capital are subject to the 
requirements of Sec.  163.80.
    (b) Application and notice procedures--(1) Application. Unless a 
Federal savings association is an eligible savings association filing a 
notice under paragraph (b)(2) of this section, it must file an 
application seeking the OCC's approval of the inclusion of covered 
securities in supplementary capital. The savings association may file 
its application before or after it issues covered securities, but may 
not include covered securities in supplementary capital until the OCC 
approves the application.
    (2) Notice with expedited review. An eligible savings association 
must file a notice seeking the OCC's approval of the inclusion of 
covered securities in supplementary capital. The savings association 
may file its notice before or after it issues covered securities, but 
may not include covered securities in supplementary capital until the 
OCC approves the notice. The OCC is deemed to have approved the notice 
upon the expiration of 30 days after the filing date of the notice 
unless, before the expiration of that time period, the OCC notifies the 
Federal savings association that:
    (i) Additional information is required to supplement the notice;
    (ii) The notice is not eligible for expedited review, or the 
expedited reviewed process is extended, under Sec.  5.13(a)(2); or
    (iii) The OCC denies the notice.
    (3) Securities offering rules. A savings association must also 
comply with the securities offering rules at 12 CFR part 197 by filing 
an offering circular for a proposed issuance of covered securities, 
unless the offering qualifies for an exemption under that part.
    (c) Securities requirements. To be included in supplementary 
capital, covered securities must meet the following requirements:
    (1) Form. (i) Each certificate evidencing a covered security must:
    (A) Bear the following legend on its face, in bold type: ``This 
security is not a savings account or deposit and it is not insured by 
the United States or any agency or fund of the United States;''
    (B) State that the security is subordinated on liquidation, as to 
principal, interest, and premium, to all claims against the savings 
association that have the same priority as savings accounts or a higher 
priority;
    (C) State that the security is not secured by the savings 
association's assets or the assets of any affiliate of the savings 
association. An affiliate means any person or company that controls, is 
controlled by, or is under common control with the savings association;
    (D) State that the security is not eligible collateral for a loan 
by the savings association;
    (E) State the prohibition on the payment of dividends or interest 
at 12 U.S.C. 1828(b) and, in the case of subordinated debt securities, 
state the prohibition on the payment of principal and interest at 12 
U.S.C. 1831o(h), 12 CFR 3.11, and any other relevant restrictions;
    (F) For subordinated debt securities, state or refer to a document 
stating the terms under which the savings association may prepay the 
obligation; and
    (G) State or refer to a document stating that the savings 
association must obtain OCC's approval before the voluntary prepayment 
of principal on subordinated debt securities, the acceleration of 
payment of principal on subordinated debt securities, or the voluntary 
redemption of mandatorily redeemable preferred stock (other than 
scheduled redemptions), if the savings association is undercapitalized, 
significantly undercapitalized, or critically undercapitalized as 
described in Sec.  6.4 of this chapter, fails to meet the regulatory 
capital requirements at 12 CFR part 167, or would fail to meet any of 
these standards following the payment.
    (ii) A Federal savings association must include such additional 
statements as the OCC may prescribe for certificates, purchase 
agreements, indentures, and other related documents.
    (2) Maturity requirements. Covered securities must have an original 
weighted average maturity or original weighted average period to 
required redemption of at least five years.
    (3) Mandatory prepayment. Subordinated debt securities and related 
documents may not provide events of default or contain other provisions 
that could result in a mandatory prepayment of principal, other than 
events of default that:
    (i) Arise from the Federal savings association's failure to make 
timely payment of interest or principal;
    (ii) Arise from its failure to comply with reasonable financial, 
operating, and maintenance covenants of a type that are customarily 
included in indentures for publicly offered debt securities; or
    (iii) Relate to bankruptcy, insolvency, receivership, or similar 
events.
    (4) Indenture. (i) Except as provided in paragraph (c)(4)(ii) of 
this section, a Federal savings association must use an indenture for 
subordinated debt securities. If the aggregate amount of subordinated 
debt securities publicly offered (excluding sales in a non-public 
offering as defined in 12 CFR 197.4) and sold in any consecutive 12-
month or 36-month period exceeds $5,000,000 or $10,000,000 respectively 
(or such lesser amount that the Securities and Exchange Commission 
shall establish by rule or regulation under 15 U.S.C. 77ddd), the 
indenture must provide for the appointment of a trustee other than the 
savings association or an affiliate of the savings association (as 
defined in paragraph (c)(1)(i)(C) of this section) and for collective 
enforcement of the security holders' rights and remedies.
    (ii) A Federal savings association is not required to use an 
indenture if the subordinated debt securities are sold only to 
accredited investors, as that term is defined in 15 U.S.C. 77d(6). A 
savings association must have an indenture that meets the requirements 
of paragraph (c)(4)(i) of this section in place before any debt 
securities for which an exemption from the indenture requirement is 
claimed, are transferred to any non-accredited investor. If a savings 
association relies on this exemption from the indenture requirement, it 
must place a legend on the debt securities indicating that an indenture 
must be in place before the debt securities are transferred to any non-
accredited investor.
    (d) Review by the OCC. (1) In reviewing notices and applications 
under this section, the OCC will consider whether:
    (i) The issuance of the covered securities is authorized under 
applicable laws and regulations and is consistent with the savings 
association's charter and bylaws.
    (ii) The savings association is at least adequately capitalized 
under Sec.  6.4 of this chapter and meets the regulatory capital 
requirements at part 167 of this chapter.
    (iii) The savings association is or will be able to service the 
covered securities.
    (iv) The covered securities are consistent with the requirements of 
this section.
    (v) The covered securities and related transactions sufficiently 
transfer risk from the Deposit Insurance Fund.
    (vi) The OCC has no objection to the issuance based on the savings 
association's overall policies, condition, and operations.
    (2) The OCC's approval or non-objection is conditioned upon no 
material changes to the information disclosed in the application or 
notice submitted to the OCC. The OCC may impose such additional 
requirements or

[[Page 33377]]

conditions as it may deem necessary to protect purchasers, the savings 
association, the OCC, or the Deposit Insurance Fund.
    (e) Amendments. If a Federal savings association amends the covered 
securities or related documents following the completion of the OCC's 
review, it must obtain the OCC's approval or non-objection under this 
section before it may include the amended securities in supplementary 
capital.
    (f) Sale of covered securities. The Federal savings association 
must complete the sale of covered securities within one year after the 
OCC's approval or non-objection under this section. A savings 
association may request an extension of the offering period by filing a 
written request with the OCC. The savings association must demonstrate 
good cause for the extension and file the request at least 30 days 
before the expiration of the offering period or any extension of the 
offering period.
    (g) Reports. A Federal savings association must file the following 
information with the OCC within 30 days after the savings association 
completes the sale of covered securities includable as supplementary 
capital. If the savings association filed its application or notice 
following the completion of the sale, it must submit this information 
with its application or notice:
    (1) A written report indicating the number of purchasers, the total 
dollar amount of securities sold, the net proceeds received by the 
savings association from the issuance, and the amount of covered 
securities, net of all expenses, to be included as supplementary 
capital;
    (2) Three copies of an executed form of the securities and a copy 
of any related documents governing the issuance or administration of 
the securities; and
    (3) A certification by the appropriate executive officer indicating 
that the savings association complied with all applicable laws and 
regulations in connection with the offering, issuance, and sale of the 
securities.
    (h) Scope. (1) Beginning March 14, 2014, an advanced approaches 
savings association must comply with paragraphs (h) through (q) of this 
section in order to include subordinated debt securities or mandatorily 
redeemable preferred stock (``covered securities'') in tier 2 capital 
under 12 CFR 3.20(d) and to prepay covered securities included in tier 
2 capital.
    (2) Beginning January 1, 2015, a non-advanced approaches savings 
association must comply with paragraphs (h) through (q) of this section 
in order to include covered securities in tier 2 capital under 12 CFR 
3.20(d) and to prepay covered securities included in tier 2 capital. A 
Federal savings association that does not include covered securities in 
tier 2 capital is not required to comply with this section. Covered 
securities not included in tier 2 capital are subject to the 
requirements of Sec.  163.80.
    (3) For purposes of this section, mandatorily redeemable preferred 
stock means mandatorily redeemable preferred stock that was issued 
before July 23, 1985 or issued pursuant to regulations and memoranda of 
the Federal Home Loan Bank Board and approved in writing by the Federal 
Savings and Loan Insurance Corporation for inclusion as regulatory 
capital before or after issuance.
    (i) [Reserved]
    (j) Application and notice procedures--(1) Application or notice to 
include covered securities in tier 2 capital--(i) Application. Unless a 
Federal savings association is an eligible savings association filing a 
notice under paragraph (j)(ii) of this section, it must file an 
application seeking the OCC's approval of the inclusion of covered 
securities in tier 2 capital. The savings association may file its 
application before or after it issues covered securities, but may not 
include covered securities in tier 2 capital until the OCC approves the 
application.
    (ii) Notice with expedited review. An eligible savings association 
must file a notice seeking the OCC's approval of the inclusion of 
covered securities in tier 2 capital. The savings association may file 
its notice before or after it issues covered securities, but may not 
include covered securities in tier capital until the OCC approves the 
notice. The OCC is deemed to have approved the notice upon the 
expiration of 30 days after the filing date of the notice unless, 
before the expiration of that time period, the OCC notifies the Federal 
savings association that
    (A) Additional information is required to supplement the notice;
    (B) The notice is not eligible for expedited review, or the 
expedited reviewed process is extended, under Sec.  5.13(a)(2); or
    (C) The OCC denies the notice.
    (iii) Securities offering rules. A savings association also must 
comply with the securities offering rules at 12 CFR part 197 by filing 
an offering circular for a proposed issuance of covered securities, 
unless the offering qualifies for an exemption under that part.
    (2) Application required to prepay covered securities included in 
tier 2 capital--(i) General. A Federal savings association must file an 
application to, and receive prior approval from, the OCC before 
prepaying covered securities included in tier 2 capital. For purposes 
of this requirement, prepayment includes acceleration of a covered 
security, repurchase of a covered security, redemption of a covered 
security prior to maturity, and exercising a call option in connection 
with a covered security.
    (ii) Prepayment in the form of a call option. (A) If the prepayment 
will be in the form of a call option, the application must include:
    (1) A statement explaining why the Federal savings association 
believes that following the proposed prepayment the savings association 
would continue to hold an amount of capital commensurate with its risk; 
or
    (2) A description of the replacement capital instrument that meets 
the criteria for tier 1 or tier 2 capital under 12 CFR 3.20, including 
the amount of such instrument, and the time frame for issuance.
    (B) Notwithstanding paragraph (j)(1)(ii) of this section, if the 
OCC conditions approval of prepayment in the form of a call option on a 
requirement that a Federal savings association must replace the covered 
security with a covered security of an equivalent amount that satisfies 
the requirements for a tier 1 or tier 2 instrument, the savings 
association must file an application to issue the replacement covered 
security and must receive prior OCC approval.
    (k) General requirements. A covered security issued under this 
section must satisfy the requirements for tier 2 capital in 12 CFR 
3.20(d).
    (l) Securities requirements for inclusion in tier 2 capital. To be 
included in tier 2 capital, covered securities must satisfy the 
requirements in 12 CFR 3.20(d). In addition, such covered securities 
must meet the following requirements:
    (1) Form. (i) Each certificate evidencing a covered security must:
    (A) Bear the following legend on its face, in bold type: ``This 
security is not a savings account or deposit and it is not insured by 
the United States or any agency or fund of the United States;''
    (B) State that the security is subordinated on liquidation, as to 
principal, interest, and premium, to all claims against the savings 
association that have the same priority as savings accounts or a higher 
priority;
    (C) State that the security is not secured by the savings 
association's

[[Page 33378]]

assets or the assets of any affiliate of the savings association. An 
affiliate means any person or company that controls, is controlled by, 
or is under common control with the savings association;
    (D) State that the security is not eligible collateral for a loan 
by the savings association;
    (E) State the prohibition on the payment of dividends or interest 
at 12 U.S.C. 1828(b) and, in the case of subordinated debt securities, 
state the prohibition on the payment of principal and interest at 12 
U.S.C. 1831o(h), 12 CFR 3.11, and any other relevant restrictions;
    (F) For subordinated debt securities, state or refer to a document 
stating the terms under which the savings association may prepay the 
obligation; and
    (G) Where applicable, state or refer to a document stating that the 
savings association must obtain OCC's prior approval before the 
acceleration of payment of principal or interest on subordinated debt 
securities, redemption of subordinated debt securities prior to 
maturity, repurchase of subordinated debt securities, or exercising a 
call option in connection with a subordinated debt security.
    (ii) A Federal savings association must include such additional 
statements as the OCC may prescribe for certificates, purchase 
agreements, indentures, and other related documents.
    (2) Indenture. (i) Except as provided in paragraph (c)(4)(ii) of 
this section, a Federal savings association must use an indenture for 
subordinated debt securities. If the aggregate amount of subordinated 
debt securities publicly offered (excluding sales in a non-public 
offering as defined in 12 CFR 197.4) and sold in any consecutive 12-
month or 36-month period exceeds $5,000,000 or $10,000,000 respectively 
(or such lesser amount that the Securities and Exchange Commission 
shall establish by rule or regulation under 15 U.S.C. 77ddd), the 
indenture must provide for the appointment of a trustee other than the 
savings association or an affiliate of the savings association (as 
defined in paragraph (c)(1)(i)(C) of this section) and for collective 
enforcement of the security holders' rights and remedies.
    (ii) A Federal savings association is not required to use an 
indenture if the subordinated debt securities are sold only to 
accredited investors, as that term is defined in 15 U.S.C. 77d(6). A 
savings association must have an indenture that meets the requirements 
of paragraph (c)(4)(i) of this section in place before any debt 
securities for which an exemption from the indenture requirement is 
claimed, are transferred to any non-accredited investor. If a savings 
association relies on this exemption from the indenture requirement, it 
must place a legend on the debt securities indicating that an indenture 
must be in place before the debt securities are transferred to any non-
accredited investor.
    (m) Review by the OCC. (1) In reviewing notices and applications 
under this section, the OCC will consider whether:
    (i) The issuance of the covered securities is authorized under 
applicable laws and regulations and is consistent with the savings 
association's charter and bylaws;
    (ii) The savings association is at least adequately capitalized 
under Sec.  6.4 of this chapter and meets the regulatory capital 
requirements at 12 CFR 3.10;
    (iii) The savings association is or will be able to service the 
covered securities;
    (iv) The covered securities are consistent with the requirements of 
this section;
    (v) The covered securities and related transactions sufficiently 
transfer risk from the Deposit Insurance Fund; and
    (vi) The OCC has no objection to the issuance based on the savings 
association's overall policies, condition, and operations.
    (2) The OCC's approval or non-objection is conditioned upon no 
material changes to the information disclosed in the application or 
notice submitted to the OCC. The OCC may impose such additional 
requirements or conditions as it may deem necessary to protect 
purchasers, the savings association, the OCC, or the Deposit Insurance 
Fund.
    (n) Amendments. If a Federal savings association amends the covered 
securities or related documents following the completion of the OCC's 
review, it must obtain the OCC's approval or non-objection under this 
section before it may include the amended securities in tier 2 capital.
    (o) Sale of covered securities. The Federal savings association 
must complete the sale of covered securities within one year after the 
OCC's approval or non-objection under this section. A savings 
association may request an extension of the offering period by filing a 
written request with the OCC. The savings association must demonstrate 
good cause for the extension and file the request at least 30 days 
before the expiration of the offering period or any extension of the 
offering period.
    (p) Issuance of a replacement regulatory capital instrument in 
connection with exercising a call option. Pursuant to 12 CFR 
3.20(d)(1)(v)(C), the OCC may require a Federal savings association 
seeking prior approval to exercise a call option in connection with a 
covered security included in tier 2 capital to issue a replacement 
covered security of an equivalent amount that qualifies as tier 1 or 
tier 2 capital under 12 CFR 3.20. If the OCC imposes such a 
requirement, the savings association must complete the sale of such 
covered prior to, or immediately after, the prepayment.\4\
---------------------------------------------------------------------------

    \4\ A Federal savings association may replace tier 2 capital 
instruments concurrent with the redemption of existing tier 2 
capital instruments.
---------------------------------------------------------------------------

    (q) Reports. A Federal savings association must file the following 
information with the OCC within 30 days after the savings association 
completes the sale of covered securities includable as tier 2 capital. 
If the savings association filed its application or notice following 
the completion of the sale, it must submit this information with its 
application or notice:
    (1) A written report indicating the number of purchasers, the total 
dollar amount of securities sold, the net proceeds received by the 
savings association from the issuance, and the amount of covered 
securities, net of all expenses, to be included as tier 2 capital;
    (2) Three copies of an executed form of the securities and a copy 
of any related documents governing the issuance or administration of 
the securities; and
    (3) A certification by the appropriate executive officer indicating 
that the savings association complied with all applicable laws and 
regulations in connection with the offering, issuance, and sale of the 
securities.
0
35. Section 5.58 is added to read as follows:


Sec.  5.58  Pass-through investments by a Federal savings association.

    (a) Authority. 12 U.S.C. 1462a, 1463, 1464, 1828, 5412(b)(2)(B).
    (b) Scope. Federal savings associations are permitted to make 
various types of equity investments pursuant to 12 U.S.C. 1464 and 
other statutes, including pass-through investments authorized under 12 
CFR 160.32(a). These investments are in addition to those subject to 
Sec. Sec.  5.35, 5.37, 5.38, and 5.59. This section describes the 
procedure governing the filing of the application or notice that the 
OCC requires in connection with certain of these investments. The OCC 
may review other permissible equity investments on a case-by-case 
basis.
    (c) Licensing requirements. A Federal savings association must file 
a notice or

[[Page 33379]]

application as prescribed in this section to make a pass-through 
investment authorized under 12 CFR 160.32(a).
    (d) Definitions. For purposes of this Sec.  5.58:
    (1) Enterprise means any corporation, limited liability company, 
partnership, trust, or similar business entity.
    (2) Well capitalized means the capital level described in 12 CFR 
6.4.
    (3) Well managed has the meaning set forth in Sec.  5.38(d)(2) for 
Federal savings associations.
    (e) Pass-through investments; notice procedure. A Federal savings 
association may make a pass-through investment, directly or through its 
operating subsidiary, in an enterprise that engages in the activities 
described in paragraph (e)(2) of this section by filing a written 
notice. The Federal savings association must file this written notice 
with the appropriate OCC licensing office no later than 10 days after 
making the investment. The written notice must:
    (1) Describe the structure of the investment and the activity or 
activities conducted by the enterprise in which the Federal savings 
association is investing. To the extent the notice relates to the 
initial affiliation of the Federal savings association with a company 
engaged in insurance activities, the savings association should 
describe the type of insurance activity that the company is engaged in 
and has present plans to conduct. The Federal savings association must 
also list for each state the lines of business for which the company 
holds, or will hold, an insurance license, indicating the state where 
the company holds a resident license or charter, as applicable;
    (2) State (i) which paragraphs of Sec.  5.38(e)(5)(v) describe the 
activity or (ii) state that, and describe how, the activity is 
substantively the same as that contained in published OCC precedent for 
Federal savings associations, including published former OTS precedent, 
approving a pass-through investment by a Federal savings association or 
its operating subsidiary, state that the activity will be conducted in 
accordance with the same terms and conditions applicable to the 
activity covered by the precedent, and provide the citation to the 
applicable precedent;
    (3) Certify that the Federal savings association is well managed 
and well capitalized at the time of the investment;
    (4) Describe how the Federal savings association has the ability to 
prevent the enterprise from engaging in an activity that is not set 
forth in Sec.  5.38(e)(5)(v) or not contained in published OCC 
precedent for Federal savings associations, including published former 
OTS precedent, approving a pass-through investment by a Federal savings 
association or its operating subsidiary, or how the savings association 
otherwise has the ability to withdraw its investment;
    (5) Describe how the investment is convenient and useful to the 
Federal savings association in carrying out its business and not a mere 
passive investment unrelated to the savings association's banking 
business;
    (6) Certify that the Federal savings association's loss exposure is 
limited as a legal matter and that the savings association does not 
have unlimited liability for the obligations of the enterprise; and
    (7) Certify that the enterprise in which the Federal savings 
association is investing agrees to be subject to OCC supervision and 
examination, subject to the limitations and requirements of section 45 
of the Federal Deposit Insurance Act (12 U.S.C. 1831v) and section 115 
of the Gramm-Leach-Bliley Act (12 U.S.C. 1820a).
    (f) Pass-through investments; application procedure--(1) 
Investments not qualifying for notice procedure. A Federal savings 
association must file an application and obtain prior approval before 
making or acquiring, either directly or through an operating 
subsidiary, a pass-through investment in an enterprise if the pass-
through investment does not qualify for the notice procedure set forth 
in paragraph (e) of this section because the savings association is 
unable to make the representation required by paragraph (e)(2) or the 
certification required by paragraph (e)(3) of this section. The 
application must include the information required in paragraphs (e)(1) 
and (e)(4) through (e)(7) of this section and paragraphs (e)(2) or 
(e)(3) of this section, as appropriate. If the Federal savings 
association is unable to make the representation set forth in paragraph 
(e)(2) of this section, the savings association's application must 
explain why the activity in which the enterprise engages is a 
permissible activity for a Federal savings association and why the 
applicant should be permitted to hold a pass-through investment in an 
enterprise engaged in that activity. A Federal savings association may 
not make a pass-through investment if it is unable to make the 
representations and certifications specified in paragraphs (e)(1) and 
(e)(4) through (e)(7) of this section.
    (2) Investments requiring a filing under 12 U.S.C. 1828(m). 
Notwithstanding any other provision in this section, if an enterprise 
in which a Federal savings association proposes to invest would be a 
subsidiary of the Federal savings association for purposes of 12 U.S.C. 
1828(m) and the enterprise would not be an operating subsidiary or a 
service corporation, the Federal savings association must file an 
application with the OCC under this paragraph (f)(2) at least 30 days 
prior to making the investment and obtain prior approval from the OCC 
before making the investment. The application must include the 
information required in paragraphs (e)(1) and (e)(4) through (e)(7) of 
this section and paragraphs (e)(2) or (e)(3) of this section, if 
applicable. If the Federal savings association is unable to make the 
representation set forth in paragraph (e)(2) of this section, the 
savings association's application must explain why the activity in 
which the enterprise engages is a permissible activity for a Federal 
savings association and why the applicant should be permitted to hold a 
pass-through investment in an enterprise engaged in that activity. A 
Federal savings association may not make a pass-through investment if 
it is unable to make the representations and certifications specified 
in paragraphs (e)(1) and (e)(4) through (e)(7) of this section.
    (g) Pass-through investments in entities holding assets in 
satisfaction of debts previously contracted. Certain pass-through 
investments may be eligible for expedited treatment where the Federal 
savings association's investment is in an entity holding assets in 
satisfaction of debts previously contracted or the savings association 
acquires shares of a company in satisfaction of debts previously 
contracted.
    (1) Notice required. A Federal savings association that is well 
capitalized and well managed may acquire a pass-through investment, 
directly or through its operating subsidiary, in an enterprise that 
engages in the activities of holding and managing assets acquired by 
the parent savings association through foreclosure or otherwise in good 
faith to compromise a doubtful claim, or in the ordinary course of 
collecting a debt previously contracted, by filing a written notice in 
accordance with this paragraph (g)(1)(i). The activities of the 
enterprise must be conducted pursuant to the same terms and conditions 
as would be applicable if the activity were conducted directly by a 
Federal savings association. The Federal savings association must file 
the written notice with the appropriate OCC licensing office no later 
than 10 days after making

[[Page 33380]]

the pass-through investment. This notice must include a complete 
description of the Federal savings association's investment in the 
enterprise and the activities conducted, a description of how the 
savings association plans to divest the pass-through investment or the 
underlying assets within applicable statutory time frames, and a 
representation and undertaking that the savings association will 
conduct the activities in accordance with OCC policies contained in 
guidance issued by the OCC regarding the activities. Any Federal 
savings association receiving approval under this paragraph (g)(1)(i) 
is deemed to have agreed that the enterprise will conduct the activity 
in a manner consistent with published OCC guidance.
    (2) No notice or application required. A Federal savings 
association is not required to file a notice or application under this 
Sec.  5.58 if it acquires a non-controlling investment in shares of a 
company through foreclosure or otherwise in good faith to compromise a 
doubtful claim, or in the ordinary course of collecting a debt 
previously contracted.
    (h) Additional exception to filing requirement. A Federal savings 
association may make a pass-through investment without filing a notice 
or application to the OCC if all of the following conditions are met:
    (1) The investment is in an investment company the portfolio of 
which consists exclusively of assets that the Federal savings 
association may hold directly;
    (2) The Federal savings association is not investing more than 10% 
of its total capital in one company;
    (3) The book value of the Federal savings association's aggregate 
non-controlling investments does not exceed 25% of its total capital 
after making the investment;
    (4) The investment would not give Federal savings association 
direct or indirect control of the company; and
    (5) The Federal savings association's liability is limited to the 
amount of its investment.
    (i) Exceptions to rules of general applicability. Sections 5.8, 
5.9, 5.10, and 5.11 of this part do not apply to filings for pass-
through investments.
0
36. Section 5.59 is added to read as follows:


Sec.  5.59  Service corporations of Federal savings associations.

    (a) Authority. 12 U.S.C. 1462a, 1463, 1464, 1828, 5412(b)(2)(B).
    (b) Licensing requirements. When required by section 18(m) of the 
Federal Deposit Insurance Act, a Federal savings association must file 
an application as prescribed in this section to:
    (1) Acquire or establish a service corporation; or
    (2) Commence a new activity in an existing service corporation 
subsidiary.
    (c) Scope. This section sets forth the OCC's requirements regarding 
service corporations of Federal savings associations, and sets forth 
procedures governing OCC review and approval of filings by Federal 
savings associations to establish or acquire service corporations and 
filings by Federal savings associations to conduct new activities in 
existing service corporation subsidiaries, pursuant to the authority 
provided in section 5(c)(4)(B) of the Home Owners' Loan Act, 12 U.S.C. 
1464(c)(4)(B).
    (d) Definitions. (1) Control has the meaning set forth at 12 U.S.C. 
1841 and the Federal Reserve Board's regulations thereunder, at 12 CFR 
part 225.
    (2) GAAP-consolidated subsidiary means a service corporation in 
which a Federal savings association has a direct or indirect ownership 
interest and whose assets are consolidated with those of the savings 
association for purposes of reporting under Generally Accepted 
Accounting Principles (``GAAP'').
    (3) Ownership interest means any equity interest in a business 
organization, including stock, limited or general partnership 
interests, or shares in a limited liability company.
    (4) Service corporation means any entity that satisfies all of the 
requirements for service corporations in 12 U.S.C. 1464(c)(4)(B) and 
this part, and that is designated by the investing Federal savings 
association as a service corporation pursuant to this section. A 
service corporation may be a first-tier service corporation of a 
Federal savings association or may be a lower-tier service corporation.
    (5) Service corporation subsidiary means a service corporation of a 
Federal savings association that is controlled by that savings 
association.
    (e) Standards and requirements.--(1) Ownership. Only Federal or 
state-chartered savings associations with home offices in the state 
where the relevant Federal savings association has its home office may 
have an ownership interest in a first-tier service corporation. A 
Federal savings association need not have any minimum percentage 
ownership interest or have control of a service corporation in order to 
designate an entity as a service corporation.
    (2) Geographic restrictions. A first-tier service corporation must 
be organized under the laws of the state where the relevant Federal 
savings association's home office is located.
    (3) Authorized activities. A service corporation may engage in any 
of the designated permissible service corporation activities listed in 
paragraph (f) of this section, subject to any applicable filing 
requirement under paragraph (h) of this section. In addition, a Federal 
savings association may request OCC approval for a service corporation 
to engage in any other activity reasonably related to the activities of 
financial institutions.
    (4) Investment limitations. A Federal savings association's 
investment in service corporations is subject to the limitations set 
forth in paragraph (g) of this section. The assets of a Federal savings 
association's service corporations are not subject to the investment 
limitations applicable to the savings association under section 5(c) of 
the HOLA.
    (5) Form of organization. A service corporation may be organized as 
a corporation, or may be organized in any other organizational form 
that provides the same protections as the corporate form of 
organization, including limited liability.
    (6) Qualified thrift lender test. In accordance with 12 U.S.C. 
1467a(m)(5), a Federal savings association may determine whether to 
consolidate the assets of a particular service corporation for purposes 
of calculating qualified thrift investments. If a service corporation's 
assets are not consolidated with the assets of the Federal savings 
association for that purpose, the savings association's investment in 
the service corporation will be considered in calculating the savings 
association's qualified thrift investments.
    (7) Supervisory, legal or safety or soundness considerations. (i) 
Each service corporation must be well managed and operate safely and 
soundly. In addition, each service corporation must pursue financial 
policies that are safe and consistent with the purposes of savings 
associations. Each service corporation must maintain sufficient 
liquidity to ensure its safe and sound operation.
    (ii) The OCC may, at any time, limit a Federal savings 
association's investment in a service corporation, or limit or refuse 
to permit any activity of a service corporation, for supervisory, 
legal, or safety or soundness reasons.
    (8) Separate corporate identity. Federal savings associations and 
service corporations thereof must be operated in a manner that 
demonstrates to the public that each maintains a separate

[[Page 33381]]

corporate existence. Each must operate so that:
    (i) Their respective business transactions, accounts, and records 
are not intermingled;
    (ii) Each observes the formalities of their separate corporate 
procedures;
    (iii) Each is held out to the public as a separate enterprise; and
    (iv) Unless the parent Federal savings association has guaranteed a 
loan to the service corporation, all borrowings by the service 
corporation indicate that the savings association is not liable.
    (9) Issuances of securities by service corporations. A service 
corporation shall not state or imply that the securities it issues are 
covered by Federal deposit insurance. A service corporation subsidiary 
shall not issue any security the payment, maturity, or redemption of 
which may be accelerated upon the condition that the controlling 
Federal savings association is insolvent or has been placed into 
receivership. For as long as any securities are outstanding, the 
controlling Federal savings association must maintain all records 
generated through each securities issuance in the ordinary course of 
business, including but not limited to a copy of the prospectus, 
offering circular, or similar document concerning such issuance, and 
make such records available for examination by the OCC.
    (f) Authorized service corporation activities. Subject to the prior 
filing requirements set forth in paragraph (h) of this section and the 
provisions of paragraph (e)(3) of this section, a service corporation 
may engage in the following activities:
    (1) Any activity that all Federal savings associations may conduct 
directly.
    (2) Business and professional services. Service corporations may 
engage in the following activities only when such activities are 
limited to financial documents or financial clients or are generally 
finance-related:
    (i) Accounting or internal audit;
    (ii) Advertising, market research and other marketing;
    (iii) Clerical;
    (iv) Consulting;
    (v) Courier;
    (vi) Data processing;
    (vii) Data storage facilities operation and related services;
    (viii) Office supplies, furniture, and equipment purchasing and 
distribution;
    (ix) Personnel benefit program development or administration;
    (x) Printing and selling forms that require Magnetic Ink Character 
Recognition (MICR) encoding;
    (xi) Relocation of personnel;
    (xii) Research studies and surveys;
    (xiii) Software development and systems integration; and
    (xiv) Remote service unit operation, leasing, ownership or 
establishment.
    (3) Credit-related activities. (i) Abstracting;
    (ii) Acquiring and leasing personal property;
    (iii) Appraising;
    (iv) Collection agency;
    (v) Credit analysis;
    (vi) Check or credit card guaranty and verification;
    (vii) Escrow agent or trustee (under deeds of trust, including 
executing and delivery of conveyances, reconveyances and transfers of 
title); and
    (viii) Loan inspection.
    (4) Consumer services. (i) Financial advice or consulting;
    (ii) Foreign currency exchange;
    (iii) Home ownership counseling;
    (iv) Income tax return preparation;
    (v) Postal services;
    (vi) Stored value instrument sales;
    (vii) Welfare benefit distribution;
    (viii) Check printing and related services; and
    (ix) Remote service unit operation, leasing, ownership, or 
establishment.
    (5) Real estate related services. (i) Acquiring real estate for 
prompt development or subdivision, for construction of improvements, 
for resale or leasing to others for such construction, or for use as 
manufactured home sites, in accordance with a prudent program of 
property development;
    (ii) Acquiring improved real estate or manufactured homes to be 
held for rental or resale, for remodeling, renovating or demolishing 
and rebuilding for resale or rental, or to be used for offices and 
related facilities of a stockholder of the service corporation;
    (iii) Maintaining and managing real estate; and
    (iv) Real estate brokerage for property owned by a savings 
association that owns capital stock of the service corporation, or a 
lower-tier service corporation in which the service corporation 
invests.
    (6) Securities activities, liquidity management, and coins. (i) 
Execution of transactions in securities on an agency or riskless 
principal basis solely upon the order and for the account of customers 
or the provision of investment advice. The service corporation must 
register with the Securities and Exchange Commission and state 
securities regulators, as required by applicable Federal and state law 
and regulations;
    (ii) Liquidity management;
    (iii) Issuing notes, bonds, debentures, or other obligations or 
securities;
    (iv) Purchase or sale of coins issued by the U.S. Treasury.
    (7) Investments. (i) Tax-exempt bonds used to finance residential 
real property for family units;
    (ii) Tax-exempt obligations of public housing agencies used to 
finance housing projects with rental assistance subsidies;
    (iii) Small business investment companies and new markets venture 
capital companies licensed by the U.S. Small Business Administration;
    (iv) Rural business investment companies; and
    (v) Investing in savings accounts of an investing thrift.
    (8) Community development investments. Community development 
investments that are permissible under part 24 of this Chapter.
    (9) Charitable activities. Establishing or acquiring a corporation 
that is recognized by the Internal Revenue Service as organized for 
charitable purposes under 26 U.S.C. 501(c)(3) of the Internal Revenue 
Code and making a reasonable contribution to capitalize it, provided 
that the corporation engages exclusively in activities designed to 
promote the well-being of communities in which the owners of the 
service corporation operate.
    (10) Activities conducted as agent. Activities conducted on behalf 
of a customer on other than an ``as principal'' basis.
    (11) Incidental activities. Activities reasonably incident to those 
listed in paragraphs (f)(1) through (f)(10) of this section if the 
service corporation engages in those activities.
    (g) Limitations on investments in service corporations--(1) 
General. Under the authority of section 5(c)(4)(B) of the HOLA, a 
Federal savings association may invest up to 3 percent of its assets in 
the capital stock, obligations, and other securities of service 
corporations. Any investment that would cause a Federal savings 
association's investment in service corporations, in the aggregate, to 
exceed 2 percent of assets, or made while the savings association's 
investments in service corporations exceeds 2 percent of assets, must 
serve primarily community, inner city, or community development 
purposes consistent with Sec.  24.6. A Federal savings association must 
designate the investments serving those purposes.
    (2) Loans. In addition to the amounts that a Federal savings 
association may invest under paragraph (g)(1), and to the extent that a 
Federal savings association has authority under other provisions of 
section 5(c) of the HOLA and OCC regulations thereunder, and available

[[Page 33382]]

capacity within any applicable investment limits, a Federal savings 
association may make loans to any service corporation subject to the 
following conditions:
    (i) Loans to service corporations other than a GAAP-consolidated 
subsidiary are subject to the lending limits in part 32 of this 
chapter.
    (ii) The OCC may limit the amount of loans to any service 
corporation where safety and soundness considerations warrant such 
action.
    (3) Definition. For purposes of this paragraph, the terms ``loans'' 
and ``obligations'' include all loans and other debt instruments 
(except accounts payable incurred in the ordinary course of business 
and paid within 60 days) and all guarantees or take-out commitments of 
such loans or debt instruments.
    (4) GAAP-consolidated subsidiaries. Both debt and equity 
investments in service corporations that are GAAP-consolidated 
subsidiaries are considered investments in subsidiaries for purposes of 
the capital regulations applicable to Federal savings associations.
    (h) Filing requirements--(1) Application. (i) When required by 
section 18(m) of the Federal Deposit Insurance Act, a Federal savings 
association must file an application at least 30 days before: (A) 
Acquiring or establishing a service corporation; or (B) commencing a 
new activity in an existing service corporation subsidiary.
    (ii) The application must include a complete description of the 
savings association's investment in the service corporation, the 
proposed activities of the service corporation, the organizational 
structure and management of the service corporation, the relations 
between the savings association and the service corporation, and other 
information necessary to adequately describe the proposal. If the 
service corporation proposes to engage in insurance activities, the 
savings association must describe the type of insurance activity in 
which the service corporation proposes to engage. The savings 
association must also list for each State the lines of business for 
which the company holds, or will hold, an insurance license, indicating 
the State where the service corporation holds a resident license or 
charter, as applicable. The OCC may require an applicant to submit a 
legal analysis if the proposal is novel, unusually complex, or raises 
substantial unresolved legal issues. In these cases, the OCC encourages 
applicants to have a pre-filing meeting with the OCC. Any savings 
association receiving approval under this paragraph is deemed to have 
agreed that the service corporation will conduct the activity in a 
manner consistent with published OCC guidance.
    (2) Expedited review. (i) An application to establish or acquire a 
service corporation, or to perform a new activity in an existing 
service corporation subsidiary, that meets the requirements of this 
paragraph is deemed approved by the OCC as of the 30th day after the 
filing is received by the OCC, unless the OCC notifies the applicant 
prior to that date that the filing is not eligible for expedited review 
under 5.13(a)(2). Any savings association receiving approval under this 
paragraph is deemed to have agreed that the service corporation will 
conduct the activity in a manner consistent with published OCC 
guidance.
    (ii) An application is eligible for expedited review if the 
following requirements are met:
    (A) The savings association is ``well capitalized'' and ``well 
managed''; and
    (B) The service corporation engages only in one or more of the 
preapproved activities listed in Sec.  5.59(f).
    (3) OCC review and approval. The OCC reviews a Federal savings 
association's application to determine whether the proposal is legally 
permissible and to ensure that the proposal is consistent with the 
requirements of this section, safe and sound banking practices and OCC 
policy and does not endanger the safety or soundness of the parent 
Federal savings association. As part of this process, the OCC may 
request additional information and analysis from the applicant.
    (4) Redesignation. A Federal savings association that proposes to 
redesignate an operating subsidiary as a service corporation must 
submit a notification to the OCC at least 30 days prior to the 
redesignation date. The notification must include a description of how 
the redesignated entity will meet all of the requirements of this 
section, a resolution of the savings association's board of directors 
approving the redesignation, and the proposed effective date of the 
redesignation. The savings association may effect the redesignation on 
the proposed date unless the OCC notifies the savings association 
otherwise prior to that date. The OCC may require an application if the 
redesignation presents policy, supervisory, or legal issues.
    (5) Exception to rules of general applicability. Sections 5.8, 5.10 
and 5.11 do not apply to this section. However, if the OCC concludes 
that an application presents significant or novel policy, supervisory, 
or legal issues, the OCC may determine that some or all provisions in 
Sec. Sec.  5.8, 5.10, and 5.11 apply.
    (i) Exercise of salvage powers through service corporations.--(1) 
In accordance with this section, a Federal savings association may 
exercise its salvage power to make a contribution or a loan (including 
a guarantee of a loan made by any other person) to a service 
corporation (``salvage investment'') that exceeds the maximum amount 
otherwise permitted under law or regulation. A Federal savings 
association must notify the appropriate supervisory office at least 30 
days before making such a salvage investment. The notification must 
demonstrate:
    (i) The salvage investment protects the savings association's 
interest in the service corporation;
    (ii) The salvage investment is consistent with safety and 
soundness; and
    (iii) The savings association considered alternatives to the 
salvage investment and determined that such alternatives would not 
adequately satisfy paragraphs (i)(1)(i) and (ii) of this section.
    (2) If the OCC notifies the Federal savings association within 30 
days of the filing of the notification that the notification presents 
supervisory concerns, or raises significant issues of law or policy, 
the Federal savings association must apply for and receive the OCC's 
prior written approval before making the salvage investment.
    (3) If a service corporation is a GAAP-consolidated subsidiary, the 
salvage investment will be considered an investment in a subsidiary for 
purposes of 12 CFR part 3 or part 167, as applicable.
    (j) Failure to comply with the requirements applicable to service 
corporations. If a service corporation fails to meet any of the 
requirements of this section, the Federal savings association must 
notify the appropriate OCC licensing office. Unless the Federal savings 
association is otherwise advised by the OCC, if the service corporation 
cannot comply with the requirements of this section within 90 days of 
failing to meet such requirements, or otherwise resolve such failure to 
comply with this section, the Federal savings association must promptly 
dispose of its investment in the service corporation.
    (k) Annual Report on Service Corporations (1) Filing requirement. 
Each Federal savings association shall prepare and file with the OCC an 
Annual Report on Service Corporations containing the information set 
forth in paragraph (k)(2) of this section for each

[[Page 33383]]

of its service corporation subsidiaries that: (i) Is not functionally 
regulated within the meaning of section 5(c)(5) of the Bank Holding 
Company Act of 1956, as amended (12 U.S.C. 1844(c)(5)); and
    (ii) Does business directly with consumers in the United States. 
For purposes of this paragraph, a service corporation does business 
directly with consumers if, in the ordinary course of its business, it 
provides products or services to individuals to be used primarily for 
personal, family, or household purposes.
    (2) Information required. The Annual Report on Service Corporations 
must contain the following information for each covered service 
corporation subsidiary listed: (i) The name and charter number of the 
parent Federal savings association; (ii) The name (include any ``dba'' 
(doing business as), abbreviated names, or trade names used to identify 
the service corporation when it does business directly with consumers), 
mailing address (include the street address or post office box, city, 
state, and zip code), email address (if any), and telephone number of 
the service corporation; (iii) The principal place of business of the 
service corporation; (iv) The lines of business in which the service 
corporation is doing business directly with consumers by designating 
the appropriate code contained in appendix B (NAICS Activity Codes for 
Commonly Reported Activities) to the Instructions for Preparation of 
Report of Changes in Organizational Structure, Form FR Y-10, a copy of 
which is set forth on the OCC's Web site at www.occ.gov. If the service 
corporation is engaged in an activity not set forth in this list, a 
Federal savings association shall report the code 0000 and provide a 
brief description of the activity; and (v) The nature of the Federal 
savings association's ownership interest in the service corporation.
    (3) Filing time frames and availability of information. Each 
Federal savings association's Annual Report on Service Corporations 
shall contain information current as of December 31st for the year 
prior to the date the report is filed. The Federal savings association 
shall submit its first Annual Report on Service Corporations (for 
information as of December 31, 201x) to the OCC on or before January 
31, 201x, and on or before January 31st each year thereafter. The 
Federal savings association may submit the Annual Report on Service 
Corporations electronically or in another format prescribed by the OCC. 
The OCC will make available to the public the information contained in 
the Annual Report on Service Corporations on its Web site at 
www.occ.gov.
0
37. The heading of subpart E of part 5 is revised to read as follows:

Subpart E--Payment of Dividends by National Banks


Sec.  5.64  [Amended]

0
38. Paragraph (c)(3) of Sec.  5.64 is amended by removing the phrase 
``the appropriate district office'' and inserting in its place the 
phrase ``the appropriate OCC supervisory office''.

PART 7--ACTIVITIES AND OPERATIONS

0
39. The authority citation for part 7 is revised as set forth below.

    Authority:  12 U.S.C. 1 et seq., 25b, 29(First), 71, 71a, 92, 
92a, 93, 93a, 371d, 481, 484, 1818, 1464(a), 1464(c)(4)(B), 1828(m), 
and 5412(b)(2)(B).

0
40. The heading of part 7 is revised to read as set forth above.
0
41. The heading of subpart A to part 7 is revised to read as follows:

Subpart A--National Bank and Federal Savings Association Powers

* * * * *
0
42. Section 7.1000 is revised to read as follows:


Sec.  7.1000  National bank or Federal savings association ownership of 
property.

    (a) Investment in real estate necessary for the transaction of 
business--(1) General. A national bank or Federal savings association 
may invest in real estate that is necessary for the transaction of its 
business.
    (2) Type of real estate. Real estate investments permissible under 
this section include:
    (i) Premises that are owned and occupied (or to be occupied, if 
under construction) by the national bank or Federal savings 
association, or its respective branches or consolidated subsidiaries;
    (ii) Real estate acquired and intended, in good faith, for use in 
future expansion;
    (iii) Parking facilities that are used by customers or employees of 
the national bank or Federal savings association, or its respective 
branches or consolidated subsidiaries;
    (iv) Residential property for the use of officers or employees of 
the national bank or Federal savings association who are:
    (A) Located in remote areas where suitable housing at a reasonable 
price is not readily available; or
    (B) Temporarily assigned to a foreign country, including foreign 
nationals temporarily assigned to the United States; and
    (v) Property for the use of national bank or Federal savings 
association officers, employees, or customers, or for the temporary 
lodging of such persons in areas where suitable commercial lodging is 
not readily available, provided that the purchase and operation of the 
property qualifies as a deductible business expense for Federal tax 
purposes.
    (3) Permissible means of holding. (i) A national bank or Federal 
savings association may acquire and hold real estate under this 
paragraph (a) by any reasonable and prudent means, including ownership 
in fee, a leasehold estate, or in an interest in a cooperative. The 
national bank or Federal savings association may hold this real estate 
directly or through one or more subsidiaries. The national bank or 
Federal savings association may organize a banking premises subsidiary 
as a corporation, partnership, or similar entity (e.g., a limited 
liability company).
    (ii) A Federal savings association also may acquire and hold 
banking premises through a service corporation in accordance with 12 
CFR 5.59.
    (b) Fixed assets. A national bank or Federal savings association 
may own fixed assets necessary for the transaction of its business, 
such as fixtures, furniture, and data processing equipment.
    (c) Investment in banking premises--(1) Investment limitation. 
Twelve CFR 5.37(d)(1)(i) and (d)(3)(i) provide quantitative investment 
limitations that govern when OCC approval is required for a national 
bank or Federal savings association to invest in banking premises.
    (2) Premises approval. (i) A national bank or Federal savings 
association shall seek approval from the OCC in accordance with 12 CFR 
5.37(d).
    (ii) A Federal savings association that invests in banking premises 
through a service corporation shall comply with the quantitative 
limitations in 12 CFR 5.37(d) and, to the extent applicable, 12 CFR 
5.59.
    (3) Option to purchase. An unexercised option to purchase banking 
premises or stock in a corporation holding banking premises is not an 
investment in banking premises. However, a national bank or Federal 
savings association seeking to exercise such an option must comply with 
the requirements in 12 CFR 5.37(d).
    (d) Future national bank or Federal savings association expansion. 
A national bank or Federal savings association normally should use real 
estate acquired for future national bank

[[Page 33384]]

or Federal savings association expansion within five years. After 
holding such real estate for one year, the national bank or Federal 
savings association shall state, by resolution of its board of 
directors or an appropriately authorized bank or savings association 
official or subcommittee of the board, definite plans for its use. The 
resolution or other official action must be available for inspection by 
OCC examiners.
    (e) Transition. If, on June 10, 2014, a Federal savings association 
holds an investment in real estate, fixed assets, banking premises, or 
other real property that complies with the legal requirements in effect 
prior to June 10, 2014, but would violate any provision of this section 
or Sec.  5.37, the savings association may continue to hold such 
investment in accordance with the prior legal requirements. However, a 
Federal savings association that holds such an investment shall not 
modify, expand or improve this investment, except for routine 
maintenance, without the prior approval of the appropriate OCC 
supervisory office.
0
43. The section heading for Sec.  7.1003 is revised to read as follows:


Sec.  7.1003  Money lent by a national bank at banking offices or at 
facilities other than banking offices.

* * * * *
0
44. The section heading for Sec.  7.1004 is revised to read as follows:


Sec.  7.1004  Loans originating at facilities other than banking 
offices of a national bank.

* * * * *
0
45. The section heading for Sec.  7.1005 is revised to read as follows:


Sec.  7.1005  Credit decisions at other than banking offices of a 
national bank.

* * * * *
0
46. The section heading for Sec.  7.1006 is revised to read as follows:


Sec.  7.1006  Loan agreement providing for a national bank share in 
profits, income, or earnings or for stock warrants.

* * * * *
0
47. The section heading for Sec.  7.1007 is revised to read as follows:


Sec.  7.1007  National Bank Acceptances.

* * * * *
0
48. The section heading for Sec.  7.1008 is revised to read as follows:


Sec.  7.1008  Preparation by a national bank of income tax returns for 
customers or public.

* * * * *
0
49. The section heading for Sec.  7.1012 is revised to read as follows:


Sec.  7.1012  Establishment, operation or use of a messenger service by 
a national bank.

* * * * *
0
50. The section heading for Sec.  7.1014 is revised to read as follows:


Sec.  7.1014  Sale money orders at nonbanking outlets by a national 
bank.

* * * * *
0
51. The section heading for Sec.  7.1015 is revised to read as follows:


Sec.  7.1015  National bank receipt of stock from a small business 
investment company.

* * * * *
0
52. The section heading for Sec.  7.1016 is revised to read as follows:


Sec.  7.1016  Independent undertakings issued by a national bank to pay 
against documents.

* * * * *
0
53. The section heading for Sec.  7.1018 is revised to read as follows:


Sec.  7.1018  National bank automatic payment plan accounts.

* * * * *
0
54. The section heading for Sec.  7.1020 is revised to read as follows:


Sec.  7.1020  Purchase of open accounts by a national bank.

* * * * *
0
55. The title of subpart B of part 7 is revised to read as follows:

Subpart B--National Bank Corporate Practices

* * * * *
0
56. The title of subpart C of part 7 is revised to read as follows:

Subpart C--Operations

* * * * *
0
57. The section heading for Sec.  7.3000 is revised to read as follows:


Sec.  7.3000  National bank hours and closings.

* * * * *
0
58. Section 7.3001 is revised to read as follows:


Sec.  7.3001  Sharing national bank or Federal association space and 
employees.

    (a) Sharing space. A national bank or Federal savings association 
may:
    (1) Lease excess space on national bank or Federal savings 
association premises to one or more other businesses (including other 
financial institutions);
    (2) Share space jointly held with one or more other businesses; or
    (3) Offer its services in space owned by or leased to other 
businesses.
    (b) Sharing employees. When sharing space with other businesses as 
described in paragraph (a) of this section, a national bank or Federal 
savings association may provide, under one or more written agreements 
between the national bank or Federal savings association, the other 
businesses, and their employees, that:
    (1) A national bank or Federal savings association employee may act 
as agent for the other business; or
    (2) An employee of the other business may act as agent for the 
national bank or Federal savings association.
    (c) Supervisory conditions. When a national bank or Federal savings 
association engages in arrangements of the types listed in paragraphs 
(a) and (b) of this section, the national bank or Federal savings 
association shall ensure that:
    (1) The other business is conspicuously, accurately, and separately 
identified;
    (2) Shared employees clearly and fully disclose the nature of their 
agency relationship to customers of the national bank or Federal 
savings association and of the other businesses so that customers will 
know the identity of the national bank, Federal savings association, or 
other business that is providing the product or service;
    (3) The arrangement does not constitute a joint venture or 
partnership with the other business under applicable state law;
    (4) All aspects of the relationship between the national bank or 
Federal savings association and the other business are conducted at 
arm's length, unless a special arrangement is warranted because the 
other business is a subsidiary of the national bank or Federal savings 
association;
    (5) Security issues arising from the activities of the other 
business on the premises are addressed;
    (6) The activities of the other business do not adversely affect 
the safety and soundness of the national bank or Federal savings 
association;
    (7) The shared employees or the entity for which they perform 
services are duly licensed or meet qualification requirements of 
applicable statutes and regulations pertaining to agents or employees 
of such other business; and
    (8) The assets and records of the parties are segregated.
    (d) Other legal requirements. When entering into arrangements of 
the types described in paragraphs (a) and (b) of this section, and in 
conducting operations pursuant to those arrangements, a national bank 
or Federal savings association must ensure that each arrangement 
complies with all applicable laws and regulations. If the arrangement 
involves an affiliate or a shareholder, director, officer or

[[Page 33385]]

employee of the national bank or Federal savings association:
    (1) The national bank or Federal savings association must ensure 
compliance with all applicable statutory and regulatory provisions 
governing national bank or Federal savings association transactions 
with these persons or entities;
    (2) The parties must comply with all applicable fiduciary duties; 
and
    (3) The parties, if they are in competition with each other, must 
consider limitations, if any, imposed by applicable antitrust laws.
    (e) Transition. If, on June 10, 2014, a Federal savings association 
shares space or employees with another business under an agreement that 
complies with the legal requirements that were in effect prior to June 
10, 2014 but which would violate any provision of this section, the 
Federal savings association may continue sharing under the existing 
agreement but it may not amend, renew, or extend the agreement without 
prior approval of the appropriate OCC supervisory office.
0
59. The section heading for Sec.  7.4000 is revised to read as follows:


Sec.  7.4000   Visitorial powers with respect to national banks.

* * * * *
0
60. The section heading for Sec.  7.4001 is revised to read as follows:


Sec.  7.4001   Charging interest by national banks at rates permitted 
competing institutions; charging interest to corporate borrowers.

* * * * *


Sec.  7.4003  [Amended]

0
61. Section 7.4003 is amended by:
0
a. Removing the word ``and'' before the phrase ``automated device for 
receiving deposits''; and
0
b. Adding the phrase ``, personal computer, telephone, and other 
similar electronic devices'' after the phrase ``automated device for 
receiving deposits''.
0
62. The section heading for Sec.  7.4005 is revised to read as follows:


Sec.  7.4005  Combination of national bank loan production office, 
deposit production office, and remote service unit.

* * * * *
0
63. The section heading for Sec.  7.4007 is revised to read as follows:


Sec.  7.4007  Deposit-taking by national banks.

* * * * *
0
64. The section heading for Sec.  7.4008 is revised to read as follows:


Sec.  7.4008  Lending by national banks.

* * * * *
0
65. The heading of subpart E to part 7 is revised to read as follows:

Subpart E--National Bank Electronic Activities

* * * * *

PART 14--CONSUMER PROTECTION IN SALES OF INSURANCE

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

    Authority:  12 U.S.C. 1 et seq., 24(Seventh), 92, 93a, 1462a, 
1463, 1464, 1818, 1831x, and 5412(b)(2)(B).


0
67. Section 14.10(b) is amended by removing the phrase ``Sec.  159.3(h) 
of this chapter'' and adding in its place the phrase ``Sec.  5.38(e)(3) 
of this chapter''.

PART 32--LENDING LIMITS


Sec.  32.1  Authority, purpose and scope.

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

    Authority:  12 U.S.C. 1 et seq., 12 U.S.C. 84, 93a, 1462a, 1463, 
1464(u), and 5412(b)(2)(B).


0
69. Section 32.3(d)(2) is revised to read as follows:


Sec.  32.3  Lending limits.

* * * * *
    (d) * * *
    (2) Loans by savings associations to develop domestic residential 
housing units. (i) Subject to paragraph (d)(2)(ii) of this section, a 
savings association may make loans to one borrower to develop domestic 
residential housing units, not to exceed the lesser of $30,000,000 or 
30 percent of the savings association's unimpaired capital and 
unimpaired surplus, including all loans and extensions of credit 
subject to paragraph (a) of this section, provided that:
    (A) The savings association is, and continues to be, in compliance 
with 12 CFR part 3, part 167, part 390, subpart Z, or part 324, as 
applicable;
    (B) Upon application by a savings association under paragraph 
(d)(2)(iv) of this section, the appropriate Federal banking agency 
permits, subject to conditions it may impose, the savings association 
to use the higher limit set forth under this paragraph (d)(2)(i);
    (C) The loans and extensions of credit made under this paragraph 
(d)(2)(i) of this section to all borrowers do not, in aggregate, exceed 
150 percent of the savings association's unimpaired capital and 
unimpaired surplus; and
    (D) The loans and extensions of credit made under paragraph 
(d)(2)(i) of this section comply with the applicable loan-to-value 
requirements.
    (ii) The authority of a savings association to make a loan or 
extension of credit under the exception in paragraph (d)(2)(i) of this 
section ceases immediately upon the association's failure to comply 
with any one of the requirements set forth in paragraph (d)(2)(i) of 
this section or any condition(s) set forth in an order issued by the 
appropriate Federal banking agency under paragraphs (d)(2)(i)(B) and 
(d)(2)(iv) of this section.
    (iii) As used in this section, the term ``to develop'' includes 
each of the various phases necessary to produce housing units as an end 
product, such as acquisition, development and construction; development 
and construction; construction; rehabilitation; and conversion; and the 
term ``domestic'' includes units within the fifty states, the District 
of Columbia, Puerto Rico, the Virgin Islands, Guam, and the Pacific 
Islands;
    (iv) Procedures--(A) Federal savings associations--(1) Application. 
A Federal savings association must submit an application to, and 
receive approval from, the appropriate OCC supervisory office before 
using the higher limit set forth under paragraph (d)(2)(i) of this 
section. The supervisory office may approve a completed application if 
it finds that approval is consistent with safety and soundness. To be 
deemed complete, the application must include:
    (i) If applicable, certification that the savings association is an 
``eligible savings association'';
    (ii) A demonstration that the savings association meets the 
requirements of paragraphs (d)(2)(i)(A), (C), and (D) of this section;
    (iii) A copy of a written resolution by a majority of the savings 
association's board of directors approving the use of the limits 
provided in paragraphs (d)(2)(i) of this section, and confirming the 
terms and conditions for use of this lending authority; and
    (iv) A description of how the board will exercise its continuing 
responsibility to oversee the use of this lending authority.
    (2) Expedited review. An application by an eligible savings 
association is deemed approved as of the 30th day after the application 
is received by the OCC, unless before that date the OCC informs the 
savings association it must obtain prior written approval from the OCC.
    (B) State savings associations. A state savings association shall 
seek approval to use the higher limit set forth under paragraph 
(d)(2)(i) of this section from its appropriate Federal banking agency, 
under the rules and procedures

[[Page 33386]]

established by the appropriate Federal banking agency.
* * * * *
0
70. Section 32.7(b) is amended by removing the phrase ``An eligible 
bank or eligible savings association'' and inserting in its place the 
phrase ``An eligible national bank or eligible savings association''.

PART 34--REAL ESTATE LENDING AND APPRAISALS

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

    Authority:  12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1463, 1464, 
1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., 5412(b)(2)(B) 
and 15 U.S.C. 1639h.


Sec.  34.84  [Removed]

0
72. Section 34.84 is removed.

PART 100--RULES APPLICABLE TO SAVINGS ASSOCIATIONS

0
73. The authority citation for part 100 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 5412(b)(2)(B), 5414(b)(2).


Sec.  100.1  [Amended]

0
74. Section 100.1 is amended by removing the phrase ``The regulations 
set forth in parts 100 through 197 of this chapter'' and adding in its 
place the phrase ``The regulations set forth in parts 1 through 197 of 
this chapter, as applicable, with respect to savings associations''.


Sec.  100.2  [Amended]

0
75. Section 100.2 is amended by removing the phrase ``any provision of 
parts 100 through 197'' and adding in its place the phrase ``any 
provision of parts 1 through 197 of this chapter, as applicable, with 
respect to Federal savings associations''.

PART 116--[REMOVED]

0
76. Part 116 is removed.

PART 143--FEDERAL SAVINGS ASSOCIATIONS--GRANDFATHERED AUTHORITY

0
77. The authority citation for part 143 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 2901 et seq., 
5412(b)(2)(B).

0
78. The heading of part 143 is revised as set forth above.


143.1 through 143.11 and 143.14  [Removed]

0
79. Sections 143.1 through 143.11 and 143.14 are removed.

PART 144--FEDERAL MUTUAL SAVINGS ASSOCIATIONS-- COMMUNICATION 
BETWEEN MEMBERS

0
80. The authority citation for part 144 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 2901 et seq., 
5412(b)(2)(B).

0
81. The heading of part 144 is revised to read as set forth above.


Sec. Sec.  144.1 through 144.7  [Removed]

0
82. Sections 144.1 through 144.7 are removed.

PART 145--FEDERAL SAVINGS ASSOCIATIONS--OPERATIONS

0
83. The authority citation for part 145 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1828. 5412(b)(2)(B).


Sec.  145.91 and Sec. Sec.  145.93 through 145.96  [Removed]

0
84. Sections 145.91 and 145.93 through 145.96 are removed.


Sec.  145.92  [Amended]

0
85. Section 145.92(b) is amended by removing the phrase ``at Sec. Sec.  
145.93 and 145.95 of this chapter'' and adding in its place the phrase 
``at Sec.  5.31 of this chapter''.

PART 146--[REMOVED]

0
86. Part 146 is removed.

PART 150--FIDUCIARY POWERS OF FEDERAL SAVINGS ASSOCIATIONS

0
87. The authority citation for part 150 continues to read as follows:

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

0
88. Section 150.70 is revised to read as follows:


Sec.  150.70  Must I obtain OCC approval or file a notice before I 
exercise fiduciary powers?

    Except for fiduciary activities subject solely to subpart E, you 
should refer to 12 CFR 5.26 to determine if you must obtain OCC 
approval or file a notice with the OCC before you exercise fiduciary 
powers. A Federal savings association may not exercise fiduciary powers 
unless it obtains prior approval from the OCC to the extent required 
under 12 CFR 5.26.


Sec. Sec.  150.80 through 150.125  [Removed]

0
89. Sections 150.80 through 150.125 are removed.


Sec.  150.130  [Amended]

0
90. Paragraph (a) of Sec.  150.130 is amended by removing the phrase 
``in subpart A of this part'' and adding in its place the phrase ``in 
Sec.  5.26 of this chapter''.

PART 152--[REMOVED]

0
91. Part 152 is removed.

PART 159--[REMOVED]

0
92. Part 159 is removed.

PART 160--LENDING AND INVESTMENT

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

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


Sec.  160.30  [Amended]

0
94. Footnote 16 to Sec.  160.30 is amended by removing the phrase 
``part 159 of this chapter'' and adding in its place ``Sec.  5.59 of 
this chapter''.
0
95. Section 160.32 is amended by:
0
a. Revising paragraph (b); and
0
b. Removing paragraph (c).
    The revision reads as follows:


Sec.  160.32  Pass-through investments.

* * * * *
    (b) Your pass-through investments are subject to the requirements 
and filing procedures of 12 CFR 5.36.
0
96. Section 160.35(d)(3) is amended by revising the second sentence to 
read as follows:


Sec.  160.35  Adjustments to home loans.

* * * * *
    (d) * * *
    (3) * * * If the OCC provides such notice to the Federal savings 
association, the Federal savings association may not use that index 
unless it applies for and receives the OCC's prior written approval.


Sec.  160.37  [Removed]

0
97. Section 160.37 is removed.

PART 161--DEFINITIONS FOR REGULATIONS AFFECTING ALL SAVINGS 
ASSOCIATIONS

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

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


Sec.  161.45  [Amended]

0
99. Section 161.45 is amended by removing the phrase ``under part 159 
of this chapter'' and adding in its place ``under Sec.  5.59 of this 
chapter''.

PART 162--REGULATORY REPORTING STANDARDS

0
100. The authority citation for part 162 continues to read as follows:


[[Page 33387]]


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


Sec.  162.4  [Amended]

0
101. Section 162.4(b) is amended by removing the phrase ``, as defined 
at Sec.  116.5(c) of this chapter'' and adding in its place the phrase 
``under the Uniform Financial Institutions Rating System''.

PART 163--SAVINGS ASSOCIATIONS--OPERATIONS

0
102. The authority citation for part 163 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1817, 1820, 1828, 
1831o, 3806, 5101 et seq., 5412(b)(2)(B); 31 U.S.C. 5318; 42 U.S.C. 
4106.


Sec.  163.1  [Removed]

0
103. Section 163.1 is removed.


Sec.  163.22  [Removed]

0
104. Section 163.22 is removed.


Sec.  163.81  [Removed]

0
105. Section 163.81 is removed.

Part 163, Subpart E [Removed]

0
106. Subpart E of part 163 is removed.

Part 163, Subpart H [Removed]

0
107. Subpart H of part 163, consisting of Sec. Sec.  163.550 through 
163.590, is removed.

PART 174--[REMOVED]

0
108. Part 174 is removed.

PART 192--CONVERSIONS FROM MUTUAL TO STOCK FORM

0
109. The authority citation for part 192 continues to read as follows:

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

0
110. Section 192.25 is amended by:
0
a. Revising the definition of Acting in concert; and
0
b. Amending the definition of Control by removing the phrase ``in part 
174 of this chapter'' and adding in its place the phrase ``in Sec.  
5.50 of this chapter''.
    The revision reads as follows:


Sec.  192.25  What definitions apply to this part?

* * * * *
    Acting in concert has the same meaning as in Sec.  5.50(d)(2) of 
this chapter. The rebuttable presumptions of Sec.  5.50(f)(2) of this 
chapter, other than Sec.  5.50(f)(2)(ii)(A) and (B) of this chapter, 
apply to the share purchase limitations at Sec. Sec.  192.355 through 
192.395.
* * * * *


Sec.  192.180  [Amended]

0
111. Section Sec.  192.180 is amended in paragraph (a) by removing the 
phrase ``in subpart B of part 116 of this chapter'' and adding in its 
place ``in Sec.  5.8 of this chapter''.


Sec.  192.185  [Amended]

0
112. Section 192.185 is amended by removing the phrase ``in subpart C 
of part 116 of this chapter'' and adding in its place ``in Sec.  5.10 
of this chapter''.


Sec.  192.430  [Amended]

0
113. Section 192.430 is amended in paragraphs (a) and (c) by:
0
a. Removing the phrase ``part 152 of this chapter'' and adding in its 
place ``Sec.  5.22 of this chapter''; and
0
b. Removing the sentence ``See 12 CFR 152.4(b)(8).'' and adding in its 
place ``See Sec.  5.22(g)(7).''.


Sec.  192.510  [Amended]

0
114. Paragraph (c)(1) of Sec.  192.510, is amended by removing the 
phrase ``at part 163, subpart E of this chapter'' and adding in its 
place ``at Sec.  5.55 of this chapter''.


Sec.  192.520  [Amended]

0
115. Paragraph (c) of Sec.  192.520, is amended by removing the phrase 
``under part 163, subpart E of this chapter'' and adding in its place 
``under Sec.  5.55 of this chapter''.


Sec.  192.525  [Amended]

0
116. Section 192.525 is amended by:
0
a. In paragraph (b), removing the phrase ``under Sec. Sec.  174.4(a) 
and (b) of this chapter'' and adding in its place ``under Sec.  5.50 of 
this chapter''; and
0
b. In paragraph (c)(5), removing the phrase ``under part 174 of this 
chapter'' and adding in its place ``under Sec.  5.50 of this chapter''.


Sec.  192.660  [Amended]

0
117. Paragraph (g)(2) of Sec.  192.660 is amended by removing the 
phrase ``under part 174 of this chapter'' and adding in its place 
``under Sec.  5.50 of this chapter''.

PART 193--ACCOUNTING REQUIREMENTS

0
118. The authority citation for part 193 continues to read as follows:

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


Sec.  193.101  [Amended]

0
119. In paragraph (c) of Sec.  193.101, remove the phrase ``and Sec.  
163.81 of this chapter'' and add in its place the phrase ``and Sec.  
5.56 of this chapter''.

    Dated: May 13, 2014.
Thomas J. Curry,
Comptroller of the Currency.
[FR Doc. 2014-11473 Filed 6-9-14; 8:45 am]
BILLING CODE 4810-01-P