[Federal Register Volume 80, Number 22 (Tuesday, February 3, 2015)]
[Proposed Rules]
[Pages 5694-5699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-02040]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 /
Proposed Rules
[[Page 5694]]
FEDERAL RESERVE SYSTEM
12 CFR Parts 217, 225, and 238
[Regulations Q, Y, and LL; Docket No. R-1509]
RIN 1700-AE 30
Small Bank Holding Company Policy Statement; Capital Adequacy of
Board-Regulated Institutions; Bank Holding Companies; Savings and Loan
Holding Companies; Changes to Reporting Requirements
AGENCY: Board of Governors of the Federal Reserve System (Board).
ACTION: Notice of proposed rulemaking; changes to reporting
requirements.
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SUMMARY: The Board is proposing to raise the asset size threshold for
determining applicability of the Board's Small Bank Holding Company
Policy Statement (Regulation Y, Appendix C) (Policy Statement) to $1
billion from $500 million and to expand the scope of the Policy
Statement to include savings and loan holding companies that also meet
the Policy Statement's requirements. The Board is also proposing to
make related and conforming revisions to: Regulation Y and Regulation
LL, the Board's regulations governing the operations and activities of
bank holding companies and savings and loan holding companies,
respectively; and Regulation Q, the Board's regulatory capital
regulation. Finally, to reduce burden on small non-complex holding
companies, the Board is proposing to change the reporting requirements
for bank holding companies and savings and loan holding companies that
meet the requirements of the Policy Statement (as proposed).
DATES: Comments on the proposal must be received on or before March 5,
2015. Comments on the Paperwork Reduction Act burden estimates must be
received on or before April 6, 2015.
ADDRESSES: You may submit comments, identified by Docket No. R-1509 and
RIN No. 7100-AE 30, by any of the following methods:
Agency Web site: http://www.federalreserve.gov. Follow the
instructions for submitting comments at http://www.federalreserve.gov/apps/foia/proposedregs.aspx.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Email: [email protected]. Include the
docket number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Robert deV. Frierson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue NW.,
Washington, DC 20551.
All public comments will be made available on the Board's Web site
at http://www.federalreserve.gov/apps/foia/proposedregs.aspx as
submitted, unless modified for technical reasons. Accordingly, comments
will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room
MP-500 of the Board's Martin Building (20th and C Streets NW.,
Washington, DC 20551) between 9:00 a.m. and 5:00 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Constance M. Horsley, Assistant
Director, (202) 452-5239, Cynthia Ayouch, Manager, (202) 452-2204,
Thomas Boemio, Manager, (202) 452-2982, Douglas Carpenter, Senior
Supervisory Financial Analyst, (202) 452-2205, or Page Conkling,
Supervisory Financial Analyst, (202) 912-4647, Division of Banking
Supervision and Regulation; Laurie Schaffer, Associate General Counsel,
(202) 452-2272, or Tate Wilson, Counsel, (202) 452-3696, Legal
Division; Board of Governors of the Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. The Proposal
III. Administrative Law Matters
A. Regulatory Flexibility Act
B. Paperwork Reduction Act
C. Solicitation of Comments on Use of Plain Language
I. Background
The Board issued the Policy Statement in 1980 to facilitate the
transfer of ownership of small community-based banks in a manner
consistent with bank safety and soundness. The Board generally has
discouraged the use of debt by bank holding companies to finance the
acquisition of banks or other companies because high levels of debt at
a bank holding company can impair the ability of the bank holding
company to serve as a source of strength to its subsidiary banks. The
Board has recognized, however, that small bank holding companies have
less access to equity financing than larger bank holding companies and
that, therefore, the transfer of ownership of small banks often
requires the use of acquisition debt. Accordingly, the Board adopted
the Policy Statement to permit the formation and expansion of small
bank holding companies with debt levels that are higher than typically
permitted for larger bank holding companies. The Policy Statement
contains several conditions and restrictions designed to ensure that
small bank holding companies that operate with the higher levels of
debt permitted by the Policy Statement do not present an undue risk to
the safety and soundness of their subsidiary banks.
Currently, the Policy Statement applies to bank holding companies
with pro forma consolidated assets of less than $500 million that: (i)
Are not engaged in significant nonbanking activities either directly or
through a nonbank subsidiary; (ii) do not conduct significant off-
balance sheet activities (including securitization and asset management
or administration) either directly or through a nonbank subsidiary; \1\
and (iii) do not have a material amount of debt or equity securities
outstanding (other than trust preferred securities) that are registered
with the Securities and Exchange Commission (the foregoing enumerated
items referred to hereafter as Qualitative Requirements). Under the
Policy Statement, bank holding companies that
[[Page 5695]]
meet the Qualitative Requirements (qualifying small bank holding
companies) may use debt to finance up to 75 percent of the purchase
price of an acquisition (that is, they may have a debt-to-equity ratio
of up to 3:1), but are subject to a number of ongoing requirements. The
principal ongoing requirements are that a qualifying small bank holding
company: (i) Reduce its parent company debt in such a manner that all
debt is retired within 25 years of being incurred; (ii) reduce its
debt-to equity ratio to .30:1 or less within 12 years of the debt being
incurred; (iii) ensure that each of its subsidiary insured depository
institutions is well capitalized; and (iv) refrain from paying
dividends until such time as it reduces its debt-to-equity ratio to
1.0:1 or less. The Policy Statement also specifically provides that a
qualifying small bank holding company may not use the expedited
applications procedures or obtain a waiver of the stock redemption
filing requirements applicable to bank holding companies under the
Board's Regulation Y (12 CFR 225.4(b), 225.14, and 225.23) unless the
bank holding company has a pro forma debt-to-equity ratio of 1.0:1 or
less.
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\1\ The examples provided in the Policy Statement--
securitization and asset management or administration--are not
exhaustive and simply highlight off-balance sheet activities that
may involve substantial risk. Other activities may present similar
concerns. See also 71 FR 9897, 9899, fn. 2 (February 28, 2006) (2006
Final Rule).
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II. The Proposal
New Asset Threshold of $1 Billion
On December 18, 2014, Public Law 113-250 (the Act) was enacted and
became immediately effective.\2\ The Act directs the Board to publish
in the Federal Register proposed revisions to the Policy Statement that
provide that the Policy Statement shall apply to bank holding companies
and savings and loan holding companies that have pro forma consolidated
assets of less than $1 billion. The Board last raised the asset limit
in 2006 when it increased it from $150 million to $500 million.\3\ The
Board is proposing to increase the asset threshold consistent with the
Act. The Board is not proposing any modifications to the Qualitative
Requirements at this time.
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\2\ To enhance the ability of community financial institutions
to foster economic growth and serve their communities, boost small
businesses, increase individual savings, and for other purposes,
Public Law 113-250 (December 18, 2014) (Pub. L. 113-250).
\3\ See 2006 Final Rule.
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Policy Statement's Application to Savings and Loan Holding Companies
The Act also directs the Board to propose revisions to the Policy
Statement that would extend its application to certain savings and loan
holding companies. Accordingly, the Board is proposing that a savings
and loan holding company would be subject to the Policy Statement if
the entity has less than $1 billion in total consolidated assets and
satisfies each of the Qualitative Requirements as if the savings and
loan holding company were a bank holding company.
The Policy Statement currently applies only to bank holding
companies. The Board proposes to apply the Policy Statement to savings
and loan holding companies by adding new section 238.9 to Subpart A of
Regulation LL. The new section would apply the Policy Statement to a
savings and loan holding company with less than $1 billion in total
consolidated assets and that meets the Qualitative Requirements as if
it were a bank holding company.
This change requires other modifications to the Policy Statement to
take account of the status of savings associations under the Bank
Holding Company Act of 1956, as amended (BHC Act). The first
Qualitative Requirement uses the terms ``nonbanking activities'' and
``nonbank subsidiary'' to refer to the activities of a bank holding
company. Under the BHC Act, however, control of a savings association
by a bank holding company is considered a nonbanking activity.\4\
Because savings and loan holding companies control savings
associations, all of their activities including the control of savings
associations would be considered nonbanking activities under the Policy
Statement.
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\4\ See 12 U.S.C. 1841(c)(2)(B), 1841(j), and 1843(i)(1).
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This outcome would be inconsistent with Congressional intent to
apply the Policy Statement to savings and loan holding companies.\5\
The Board therefore proposes to treat subsidiary savings association of
savings and loan holding companies as if they were banks for purposes
of applying the Policy Statement.
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\5\ See, e.g., Public Law 113-250, sec. 2(b).
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As is the case with bank holding companies, whether a savings and
loan holding company engages in ``significant'' nonbanking activities
will depend on the scope of the activities of the savings and loan
holding company, the nature and level of risk of the activities, the
condition of the savings and loan holding company, and other criteria
as appropriate.\6\ Consistent with the Policy Statement's provisions
for bank holding companies, the Board also proposes to retain the right
to exclude any savings and loan holding company, regardless of size,
from the Policy Statement if the Board determines that such action is
warranted for supervisory purposes.
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\6\ For purposes of applying the Policy Statement to savings and
loan holding companies, the term ``nonbank subsidiary'' as used in
the Policy Statement would refer to a subsidiary of a savings and
loan holding company other than a savings association or a
subsidiary of a savings association.
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Regulation Q Change
The Board proposes to revise Regulation Q to conform the language
in part 217 to reflect the proposed additional section to Regulation LL
(section 238.9).
Conforming Amendments
A number of reporting, filing, and other provisions in Regulations
Y and LL are triggered by the consolidated asset threshold established
by the Policy Statement. The Board proposes to make technical and
conforming amendments to these provisions to provide that qualifying
small bank holding companies and savings and loan holding companies may
take advantage of the streamlined informational, notice, and other
requirements embodied in these rules. These technical and conforming
amendments will provide relief to most bank holding companies and
savings and loan holding companies with less than $1 billion of
consolidated total assets. The proposed rule would make the following
changes:
In section 217.1(c)(1)(iii), revise Regulation Q (12 CFR
part 217) to exclude a savings and loan holding company that is subject
to the proposed revised Policy Statement through proposed section 238.9
of the Board Regulation LL (12 CFR part 238).
In section 225.2(r), footnote 2, revise the footnote
describing the application of the definition of ``well-capitalized'' in
the Board's Regulation Y (12 CFR part 225) to entities subject to the
proposed revised Policy Statement to reflect the proposed revised total
assets threshold of less than $1 billion.
In section 225.4(b)(2)(iii), increase the threshold for
the different pro forma financial information required of smaller bank
holding companies compared to larger bank holding companies under
section 225.4(b)(1) of the Board's Regulation Y from total assets of
less than $500 million to total assets of less than $1 billion.
In section 225.14(a)(1)(v), increase the threshold for the
different pro forma financial information required of smaller bank
holding companies compared to larger bank holding companies under
section 225.14 of the Board's Regulation Y from total assets of less
than $500 million to total assets of less than $1 billion.
In section 225.17(a)(6), footnote 6, increase the total
asset threshold for application of the footnote related to
demonstrating that debt incurred will
[[Page 5696]]
not unduly burden the bank holding company from total assets of less
than $500 million to total assets of less than $1 billion.
In section 225.23(a)(1)(iii), increase the threshold for
the different pro forma financial information required of smaller bank
holding companies compared to larger bank holding companies under
section 225.23 of the Board's Regulation Y from total assets of less
than $500 million to total assets of less than $1 billion.
Regulatory Reporting Changes
In order to assist the Federal Reserve in monitoring the financial
health and operations of bank holding companies, the Board requires all
bank holding companies and savings and loan holding companies to file
certain reports with the Federal Reserve. Those reports include the
Financial Statements for Holding Companies (FR Y-9 series of reports;
OMB No. 7100-0128). Currently, savings and loan holding companies with
consolidated assets of less than $500 million and bank holding
companies with consolidated assets of less than $500 million that also
meet Qualitative Requirements submit limited summary parent-only
financial data semiannually on the FR Y-9SP. Currently, savings and
loan holding companies with consolidated assets of $500 million or more
and bank holding companies with consolidated assets of $500 million or
more that are not subject to the Policy Statement submit consolidated
financial data on the FR Y-9C and parent-only financial data on the FR
Y-9LP, both quarterly.
The Board proposes to change the filing requirements for bank
holding companies and savings and loan holding companies with $500
million or more but less than $1 billion in total consolidated
assets.\7\ These institutions would not be required to file the FR Y-9C
and the FR Y-9LP (including regulatory capital information) and would
begin filing the FR Y-9SP if they also meet the Qualitative
Requirements. These changes are proposed to be consistent with the
changes to law and the Policy Statement and also to reduce regulatory
reporting burden for these smaller institutions. Since most bank
holding companies with less than $1 billion in total consolidated
assets have limited activities outside of their banks, the Board
believes relying on detailed quarterly bank data on the Consolidated
Reports of Condition and Income (FFIEC 041; OMB No. 7100-0036) is
sufficient for supervisory purposes.
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\7\ Pursuant to Paperwork Reduction Act's emergency review
process, 44 U.S.C. 3507(j), the Board is filing an emergency
clearance review to change these reporting requirements for bank
holding companies and savings and loan holding companies with $500
million or more but less than $1 billion in total consolidated
assets to reduce burden on small BHCs and SLHCs immediately. The
change implemented through the emergency clearance process would be
effective immediately for six months. The Board is now proposing to
make the change permanent and invites public comment.
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Comments
The Board invites comments on all aspects of this proposal.
Interested parties are encouraged to provide comments on the proposed
$1 billion asset size threshold adjustment, the Policy Statement's
application to savings and loan holding companies, related and
conforming amendments to Regulations Y and LL, the revision to
Regulation Q, and the proposed changes to regulatory reporting.
III. Administrative Law Matters
A. Regulatory Flexibility Act Analysis
The Board is providing an initial regulatory flexibility analysis
with respect to this proposal. As discussed above, the proposal would
reduce regulatory burden on small entities by excluding many bank
holding companies and savings and loan holding companies with total
consolidated assets of less than $1 billion that meet the Qualitative
Requirements from the application of the Board's Regulation Q. In
addition, the proposal would reduce the burden of regulatory reporting
for bank holding companies and savings and loan holding companies with
total consolidated assets of less than $1 billion that meet the
Qualitative Requirements by requiring these entities to file the semi-
annual FR Y-9SP rather than the quarterly FR Y-9C and FR Y-9LP.
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA),
generally requires that an agency prepare and make available an initial
regulatory flexibility analysis in connection with a notice of proposed
rulemaking. Under regulations issued by the Small Business
Administration, a small bank holding company, bank, or savings and loan
holding company is defined as having assets of $550 million or less
(collectively, small banking organizations).\8\ As of June 30, 2014,
there were approximately 3,719 small bank holding companies and 254
small savings and loan holding companies.
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\8\ See 13 CFR 121.201. Effective July 14, 2014, the Small
Business Administration revised the size standards for banking
organizations to $550 million in assets from $500 million in assets.
79 FR 33647 (June 12, 2014).
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The proposed rule would impact small bank holding companies with
total consolidated assets of $500 to $550 million that meet the
Qualitative Requirements by providing an exclusion from Regulation Q
and the requirement to file the FR Y-9C and FR Y-9LP. The proposed rule
would impact all small savings and loan holding companies (those with
$550 million or less in assets) that meet the Qualitative Requirements,
are currently subject to Regulation Q, and are required to file the FR
Y-9C or FR Y-9LP. These small bank holding companies and small savings
and loan holding companies would instead be subject to the Policy
Statement and would be required to file the FR Y-9SP, a significant
reduction in burden. The Board believes that most affected small
banking organizations already hold more capital than required under
Regulation Q, so the burden reduction from the exclusion from
Regulation Q is primarily related to compliance and systems. In
addition, affected small banking organizations would be able to take
advantage of the applications processing procedures provided to
qualifying companies under the Policy Statement.
There are no significant alternatives to the proposed rule that
would have less economic impact on small banking organizations, and the
proposed rule would significantly reduce burden on nearly all small
banking organizations. As discussed above, the projected reporting,
recordkeeping, and other compliance requirements of the proposed rule
are a material reduction from existing requirements. The Board does not
believe that the proposed rule duplicates, overlaps, or conflicts with
any other Federal rules. In light of the foregoing, the Board does not
believe that the proposed rule, if adopted in final form, would have a
significant economic impact on a substantial number of small banking
organizations. Nonetheless, the Board seeks comment on whether the
proposed rule would impose undue burdens on, or have unintended
consequences for, small banking organizations, and whether there are
ways such potential burdens or consequences could be minimized in a
manner consistent with the purpose of the proposed rule. A final
regulatory flexibility analysis will be conducted after consideration
of comments received during the public comment period.
B. Paperwork Reduction Act
In accordance with section 3512 of the Paperwork Reduction Act of
1995
[[Page 5697]]
(44 U.S.C. 3501-3521) (PRA), the Board may not conduct or sponsor, and
a respondent is not required to respond to, an information collection
unless it displays a currently valid Office of Management and Budget
(OMB) control number. The OMB control number is 7100-0128. The Board
reviewed the proposed rulemaking under the authority delegated to the
Board by OMB. The proposed rulemaking contains requirements subject to
the PRA. The reporting requirements are found in sections
211.26(c)(2)(i)(A), 217.1(c)(1)(iii), 225.2(r)(footnote 2),
225.4(b)(2)(iii), 225.14(a)(1)(v), 225.17(a)(6)(footnote 6), and
225.23(a)(1)(iii), 238.9.
Comments are invited on:
(a) Whether the proposed collections of information are necessary
for the proper performance of the Federal Reserve's functions,
including whether the information has practical utility;
(b) The accuracy of the Federal Reserve's estimate of the burden of
the proposed information collections, 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 collections 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.
All comments will become a matter of public record. Comments on
aspects of this notice that may affect reporting, recordkeeping, or
disclosure requirements and burden estimates should be sent to:
Secretary, Board of Governors of the Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551. A copy of the comments may also be
submitted to the OMB desk officer: By mail to U.S. Office of Management
and Budget, 725 17th Street NW., #10235, Washington, DC 20503 or by
facsimile to 202-395-5806, Attention, Agency Desk Officer.
Proposed Revisions, With Extension, to the Following Information
Collection
Title of Information Collection: Consolidated Financial Statements
for Holding Companies; Parent Company Only Financial Statements for
Large Holding Companies; Parent Company Only Financial Statements for
Small Holding Companies; Financial Statements for Employee Stock
Ownership Plan Holding Companies; and Supplement to the Consolidated
Financial Statements for Holding Companies.
Agency Form Number: FR Y-9C; FR Y-9LP; FR Y-9SP; FR Y-9ES; and FR
Y-9CS.
OMB Control Number: 7100-0128.
Frequency of Response: Quarterly, semiannually, annually, and on
occasion.
Affected Public: Businesses or other for-profit.
Respondents: Bank holding companies, savings and loan holding
companies, and securities holding companies (collectively, holding
companies).
Abstract: On December 18, 2014, Public Law 113-250 was signed into
law and became effective immediately, which directs the Board to
propose revisions to the Policy Statement to raise the total
consolidated asset limit in the Policy Statement from $500 million to
$1 billion, and expand the scope of the Policy Statement to include
savings and loan holding companies.
Pursuant to the PRA's emergency review process, 44 U.S.C. 3507(j),
the Board is filing an emergency clearance review to (1) increase the
asset size threshold for filing the FR Y-9C and FR Y-9LP from $500
million to $1 billion in total consolidated assets (which also
effectively exempted holding companies with total consolidated assets
of less than $1 billion from reporting regulatory capital on Schedule
HC-R, Regulatory Capital, Part I) and (2) and increase the asset-size
threshold for filing the FR Y-9SP from under $500 million to under $1
billion in total consolidated assets. In the emergency submission, the
burden for the FR Y-9C, FR Y-9LP, and FR Y-9SP related to the threshold
changes, would decrease by 96,619 hours. The change implemented through
the emergency clearance process would be effective for six months. The
Board is now proposing to make the change permanent and welcomes public
comment on any aspect of this information collection. The burden
estimates below reflect the updated number from the total emergency
clearance review.
Estimated Paperwork Burden
Estimated Burden per Response:
FR Y-9C (non-Advanced Approaches bank holding companies)--48.84
hours;
FR Y-9C (Advanced Approaches bank holding companies)--50.09 hours;
FR Y-9LP--5.25 hours;
FR Y-9SP--5.40 hours;
FR Y-9ES--0.5 hours; and
FR Y-9CS--0.5 hours.
Number of respondents:
FR Y-9C (non-Advanced Approaches bank holding companies)--644;
FR Y-9C (Advanced Approaches bank holding companies)--12;
FR Y-9LP--818;
FR Y-9SP--4,390;
FR Y-9ES--86; and
FR Y-9CS--236.
Total estimated annual burden:
FR Y-9C (non-Advanced Approaches bank holding companies)--125,812
hours;
FR Y-9C (Advanced Approaches bank holding companies)--2,404 hours;
FR Y-9LP--17,178 hours;
FR Y-9SP--47,412 hours;
FR Y-9ES--43 hours; and
FR Y-9CS--472 hours. (Total burden 193,321 hours)
C. Plain Language
Section 722 of the Gramm-Leach-Bliley Act requires the Federal
banking agencies to use ``plain language'' in all proposed and final
rules published after January 1, 2000. In light of this requirement,
the Board has sought to present the proposed rule in a simple and
straightforward manner. The Board invites comments on whether there are
additional steps it could take to make the rule easier to understand.
List of Subjects
12 CFR Part 217
Administrative practice and procedure, Banks, banking, Capital,
Federal Reserve System, Holding companies, Reporting and recordkeeping
requirements, Securities.
12 CFR Part 225
Administrative practice and procedure, Banks, banking, Federal
Reserve System, Holding companies, Reporting and recordkeeping
requirements.
12 CFR Part 238
Administrative practice and procedure, Banks, banking, Federal
Reserve System, Holding companies, Reporting and recordkeeping
requirements.
Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the preamble, chapter II of title 12
of the Code of Federal Regulations is proposed to be amended as set
forth below:
PART 217--CAPITAL ADEQUACY OF BANK HOLDING COMPANIES, SAVINGS AND
LOAN HOLDING COMPANIES, AND STATE MEMBER BANKS (REGULATION Q)
0
1. The authority citation for part 217 continues to read as follows:
[[Page 5698]]
Authority: 12 U.S.C. 248(a), 321-338a, 481-486, 1462a, 1467a,
1818, 1828, 1831n, 1831o, 1831p-1, 1831w, 1835, 1844(b), 1851, 3904,
3906-3909, 4808, 5365, 5368, 5371.
0
2. In Sec. 217.1, revise paragraph (c)(1)(iii) to read as follows:
Sec. 217.1 Purpose, applicability, reservations of authority, and
timing.
* * * * *
(c) * * *
(1) * * *
(iii) A covered savings and loan holding company domiciled in the
United States, other than a savings and loan holding company that has
total consolidated assets of less than $1 billion and meets the
requirements of 12 CFR part 225, appendix C, as if the savings and loan
holding company were a bank holding company and the savings association
were a bank. For purposes of compliance with the capital adequacy
requirements and calculations in this part, savings and loan holding
companies that do not file the FR Y-9C should follow the instructions
to the FR Y-9C.
* * * * *
PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL
(REGULATION Y)
0
3. The authority citation for part 225 continues to read as follows:
Authority: 12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p-1,
1843(c)(8), 1844(b), 1972(1), 3106, 3108, 3310, 3331-3351, 3906,
3907, and 3909; 15 U.S.C. 1681s, 1681w, 6801 and 6805.
0
4. In Sec. 225.2, paragraph (r), revise footnote 2 to read as follows:
Sec. 225.2 Definitions.
* * * * *
(r) * * *
\2\ For purposes of this subpart and subparts B and C of this
part, a bank holding company with consolidated assets of less than
$1 billion that is subject to the Small Bank Holding Company Policy
Statement in appendix C of this part will be deemed to be ``well-
capitalized'' if the bank holding company meets the requirements for
expedited/waived processing in appendix C.
* * * * *
5. In Sec. 225.4, revise paragraph (b)(2)(iii) to read as follows:
Sec. 225.4 Corporate practices.
* * * * *
(b) * * *
(2) * * *
(iii)(A) If the bank holding company has consolidated assets of $1
billion or more, consolidated pro forma risk-based capital and leverage
ratio calculations for the bank holding company as of the most recent
quarter, and, if the redemption is to be debt funded, a parent-only pro
forma balance sheet as of the most recent quarter; or
(B) If the bank holding company has consolidated assets of less
than $1 billion, a pro forma parent-only balance sheet as of the most
recent quarter, and, if the redemption is to be debt funded, one-year
income statement and cash flow projections.
* * * * *
0
6. In Sec. 225.14, revise paragraph (a)(1)(v) to read as follows:
Sec. 225.14 Expedited action for certain bank acquisitions by well-
run bank holding companies.
* * * * *
(a) * * *
(1) * * *
(v)(A) If the bank holding company has consolidated assets of $1
billion or more, an abbreviated consolidated pro forma balance sheet as
of the most recent quarter showing credit and debit adjustments that
reflect the proposed transaction, consolidated pro forma risk-based
capital ratios for the acquiring bank holding company as of the most
recent quarter, and a description of the purchase price and the terms
and sources of funding for the transaction;
(B) If the bank holding company has consolidated assets of less
than $1 billion, a pro forma parent-only balance sheet as of the most
recent quarter showing credit and debit adjustments that reflect the
proposed transaction, and a description of the purchase price, the
terms and sources of funding for the transaction, and the sources and
schedule for retiring any debt incurred in the transaction;
* * * * *
0
7. In Sec. 225.17, paragraph (a)(6), revise footnote 6 to read as
follows:
Sec. 225.17 Notice procedure for one-bank holding company formations.
(a) * * *
(6) * * *
\6\ For a banking organization with consolidated assets, on a
pro forma basis, of less than $1 billion (other than a banking
organization that will control a de novo bank), this requirement is
satisfied if the proposal complies with the Board's Small Bank
Holding Company Policy Statement (appendix C of this part).
* * * * *
0
8. In Sec. 225.23, revise paragraph (a)(1)(iii) to read as follows:
Sec. 225.23 Expedited action for certain nonbanking proposals by
well-run bank holding companies.
(a) * * *
(1) * * *
(iii) If the proposal involves an acquisition of a going concern:
(A) If the bank holding company has consolidated assets of $1
billion or more, an abbreviated consolidated pro forma balance sheet
for the acquiring bank holding company as of the most recent quarter
showing credit and debit adjustments that reflect the proposed
transaction, consolidated pro forma risk-based capital ratios for the
acquiring bank holding company as of the most recent quarter, a
description of the purchase price and the terms and sources of funding
for the transaction, and the total revenue and net income of the
company to be acquired;
(B) If the bank holding company has consolidated assets of less
than $1 billion, a pro forma parent-only balance sheet as of the most
recent quarter showing credit and debit adjustments that reflect the
proposed transaction, a description of the purchase price and the terms
and sources of funding for the transaction and the sources and schedule
for retiring any debt incurred in the transaction, and the total
assets, off-balance sheet items, revenue and net income of the company
to be acquired;
(C) For each insured depository institution whose Tier 1 capital,
total capital, total assets or risk-weighted assets change as a result
of the transaction, the total risk-weighted assets, total assets, Tier
1 capital and total capital of the institution on a pro forma basis;
* * * * *
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9. In part 225, appendix C, before the heading ``1. Applicability of
Policy Statement'', add a paragraph to read as follows:
Appendix C to Part 225--Small Bank Holding Company Policy Statement
Policy Statement on Assessment of Financial and Managerial Factors
* * * * *
This policy statement applies only to bank holding companies
with pro forma consolidated assets of less than $1 billion that (i)
are not engaged in significant nonbanking activities either directly
or through a nonbank subsidiary; (ii) do not conduct significant
off-balance sheet activities (including securitization and asset
management or administration) either directly or through a nonbank
subsidiary; and (iii) do not have a material amount of debt or
equity securities outstanding (other than trust preferred
securities) that are registered with the Securities and Exchange
Commission. The Board may in its discretion exclude any bank holding
company, regardless of asset size, from the policy statement if such
action is warranted for supervisory purposes.
* * * * *
[[Page 5699]]
PART 238--SAVINGS AND LOAN HOLDING COMPANIES (REGULATION LL)
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10. The authority citation for part 238 continues to read as follows:
Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1462, 1462a, 1463,
1464, 1467, 1467a, 1468, 1813, 1817, 1829e, 1831i, 1972; 15 U.S.C.
78l.
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11. In subpart A, add new Sec. 238.9 to read as follows:
Sec. 238.9 Small Bank Holding Company Policy Statement.
(a) The Board's Small Bank Holding Company Policy Statement (12 CFR
part 225, appendix C) (Policy Statement) applies to savings and loan
holding companies as if they were bank holding companies. To qualify or
rely on the Policy Statement, savings and loan holding companies must
meet all qualifying requirements in the Policy Statement as if they
were a bank holding company. For purposes of applying the Policy
Statement, the term ``nonbank subsidiary'' as used in the Policy
Statement refers to a subsidiary of a savings and loan holding company
other than a savings association or a subsidiary of a savings
association.
(b) The Board may exclude any savings and loan holding company,
regardless of asset size, from the Policy Statement under paragraph (a)
of this section if the Board determines that such action is warranted
for supervisory purposes.
By order of the Board of Governors of the Federal Reserve
System, January 29, 2015.
Michael Lewandowski,
Associate Secretary of the Board.
[FR Doc. 2015-02040 Filed 1-30-15; 11:15 am]
BILLING CODE 6210-01-P