Section: Conversion to a National or State Bank Section 210

Office of Thrift Supervision April 2001 Applications Handbook 210.1

This handbook section provides information regarding the requirements and procedures to be used in 

reviewing applications and notifications filed by institutions to convert to national or state banks.

12 C.F.R. §§ 563.22(b)(1)(ii) and 563.22(b)(2) set forth OTS regulatory requirements with respect to 

the direct or indirect conversion by an institution to a bank charter. Details of the regulatory criteria 

for these filings and the factors that OTS should consider prior to taking action on a conversion filing 

are discussed below.

FILING REQUIREMENTS

Delegated Authority

Generally, applications and notifications for these transactions may be processed by the Regional 

Office under delegated authority. However, certain situations may cause a filing to be nondelegated 

including transactions raising significant issues of law or policy. See Delegation Section (Section 

040) of the handbook for further information. 

Expedited and Standard Processing Procedures

OTS processes applications using two procedures, expedited treatment and standard treatment. 

Institutions eligible for expedited treatment may file a notification under 12 C.F.R. § 563.22(b)(1)(ii). 

Institutions not eligible for expedited treatment must file an application under 12 C.F.R. 

§ 563.22(b)(2). 

Expedited Processing 

The institution is eligible for expedited treatment if it satisfies all of the following criteria:

1. Has a composite CAMELS rating of “1” or “2;”

2. Has a CRA rating of “Satisfactory” or better;

3. Has a Compliance rating of “1” or “2;”

4. Meets or exceeds the minimum capital requirements set forth in 12 C.F.R. Part 567; and

5. Has not been notified that it is in troubled condition. 

If the institution qualifies for expedited processing, a 30-day notification is filed with the appropriate 

Regional Office. OTS considers a filing to be appropriately filed when the application filing fee and 

sufficient information to evaluate the proposal was received from the applicant in its notification. 

Standard Processing

If the applicant does not qualify for expedited processing, it must file an application subject to 

standard application processing time frames. Specifically, the institution is subject to standard 

processing if any of the following conditions exist regarding the institution:
Section: Conversion to a National or State Bank Section 210

210.2 Applications Handbook April 2001 Office of Thrift Supervision

1. Has a composite CAMELS rating of “3,” “4” or “5;”

2. Has a less than “Satisfactory” CRA rating;

3. Has a Compliance rating of “3,” “4” or “5;”

4. Has inadequate capital or fails at least one of its capital requirements;

5. Has been notified that it is in troubled condition;

6. The applicant is not a savings institution; or

7. The applicant has not received a composite CAMELS rating, a CRA rating, or a compliance 

rating from any federal banking regulator.

Please refer to the Processing Procedures and Time Frames discussion of this section for more 

information on applicable time frames for applications.

Prefiling Meeting Requirements

Prefiling meetings are not required for this filing. However, applicants are encouraged to contact the 

Regional Office, particularly in the event the transaction involves unique or novel issues, to determine 

if a prefiling meeting will expedite the application review process.

Information and Form Requirements

All institutions (both Federal and state) must file either an application or a notification with OTS 

before converting to a state or national bank. 

If delegated, all applications and notifications should be filed with the appropriate Regional Office in 

accordance with 12 C.F.R. Part 516. The applicant should file the original and two copies of the 

application or notification and application fee with the appropriate Regional Office. The original 

filing, all copies, and all exhibits and other pertinent documents must be clearly marked and captioned 

as to the type of filing. One copy must contain original signatures on all executed documents. For 

applications that are not delegated to the Regional Office, an additional three copies of the application 

should be filed with the Applications Filing Room in OTS-Washington.

Expedited Filing 

An institution eligible for expedited treatment should file OTS Form 1585 – Notification of Intention 

to Convert to or Combine with a Bank. 

In addition, the filing should include:

• A copy of the filing made with the federal or state regulatory agency that must approve the 

conversion;

• Information to demonstrate compliance with applicable stockholder or accountholder 

approval requirements; and
Section: Conversion to a National or State Bank Section 210

Office of Thrift Supervision April 2001 Applications Handbook 210.3

• A statement that the resulting institution will assume the liquidation account of the institution, 

if applicable.

Standard Filing 

An institution subject to standard processing procedures should file OTS Form 1589 – Transfer 

Application. 

In addition, the filing should include: 

1. A copy of the filing made with the federal or state regulatory agency that must approve the 

conversion;

2. Sufficient detail and information addressing the criteria set forth in 12 C.F.R. § 563.22(d);

3. Information to demonstrate compliance with applicable stockholder or accountholder 

approval requirements; and

4. A statement that the resulting institution will assume the liquidation account of the institution, 

if applicable.

Confidentiality

The applicant must submit in writing, concurrently with the submission of the notification or 

application, any requests to keep specific portions of the filing confidential. In accordance with the 

Freedom of Information Act, the request should discuss the justification for the requested treatment 

and should specifically demonstrate the harm (e.g., to competitive position, invasion of privacy) that 

would result from the public release of information. 

Information for which confidential treatment is requested should be: (i) specifically identified in the 

public portion of the filing by reference to the confidential section; (ii) separately bound; and (iii) 

labeled “confidential.” The applicant should follow these same procedures when filing supplemental 

information to the filing. OTS will determine whether information designated as confidential must be 

made available to the public under the Freedom of Information Act. OTS will advise the institution 

before it makes information designated as confidential available to the public.

REVIEW GUIDELINES

Processing Procedures and Time Frames

As noted in the Delegated Authority section, certain applications are not subject to delegated 

authority and are processed concurrently with OTS-Washington staff. As a general matter, 

correspondence from OTS regarding filings that are nondelegated will be transmitted from 

OTS-Washington. Correspondence on delegated filings will generally come from the Regional 

Office.
Section: Conversion to a National or State Bank Section 210

210.4 Applications Handbook April 2001 Office of Thrift Supervision

Within five business days of receipt of the notification or application and the application fee, the 

Regional Office must notify the applicant of the filing’s receipt. The appropriate application fee must 

accompany each filing in order for it to be considered filed. For nondelegated applications, the 

application will not be considered filed until received by both OTS-Washington and the Regional 

Office.

Applications under Standard Treatment

Within 30 calendar days of receipt of a properly submitted application, OTS shall take the following 

actions.

• Deem the application complete;

• Request, in writing, any additional information necessary to deem the application complete; 

or

• Decline to further process the application if it is deemed by OTS to be materially deficient 

and/or substantially incomplete.

Failure by OTS to act within 30 calendar days of receipt of the application for processing shall result 

in the filed application being deemed complete, commencing the period for review. 

OTS must review requests for a waiver of an application requirement that certain information be 

supplied, in a timely manner. Unless OTS requests, in writing, additional information about the 

waiver request, or denies the waiver request, the waiver request shall be deemed granted.

If additional information is requested, a response must be submitted within 30 calendar days of the 

letter requesting such information. The applicant may, in writing, request a brief extension of the 

30-calendar day period for responding to a request for additional information, prior to the expiration 

of the 30-calendar day time period. OTS, at its option, may grant the applicant a limited extension of 

time in writing. Failure to respond to a written request for additional information within 30 calendar 

days of such request may be deemed to constitute withdrawal of the application or may be treated as 

grounds for denial or disapproval of the application. 

After the timely filing of additional information in response to an initial or subsequent request by 

OTS for additional information, OTS has 15 calendar days to review the additional information for 

completeness or appropriateness and take the one of the following actions.

• Request, in writing, any additional information necessary to deem the application complete;

• Deem the application complete; or 

• Decline to further process the application if it is deemed by OTS to be materially deficient 

and/or substantially incomplete.

The 15-day review period commences when OTS receives a response that purports to respond to all 

questions in the information request. OTS may extend the 15-day review period for an additional 
Section: Conversion to a National or State Bank Section 210

Office of Thrift Supervision April 2001 Applications Handbook 210.5

15 calendar days, if OTS requires the additional time to review the response. OTS will notify the 

applicant that it has extended the period before the end of the initial 15-day period.

Failure by OTS to act within 15 calendar days of receipt of the additional information shall result in 

the application being deemed complete, commencing the period for review. 

Once the application has been deemed complete, there is a 60-calendar day review period at which 

time OTS will take into consideration all factors present in the application and render a decision 

thereon. If, upon expiration of the 60-day review period (assuming no extension has been granted) 

OTS has failed to act, the application is deemed approved automatically, and the applicant may 

thereafter consummate the transaction. 

During the review period, OTS may request additional information if the information is necessary to 

resolve or clarify the issues presented in the application. OTS may also notify the applicant that the 

application is incomplete and require that the applicant submit additional information to complete the 

application. The review period can be extended an additional 30 calendar days if OTS determines 

that additional time will be required to analyze the proposed transaction. In such cases, OTS must 

notify an applicant prior to the expiration of the period for review. In situations in which an 

application presents a significant issue of law or policy, OTS may extend the applicable period for 

review of such application beyond the time period for review. In these cases, written notification 

shall be provided to an applicant no later than the expiration of the time period.

Under 12 C.F.R. § 516.290, if OTS has not acted on a pending application within two calendar years 

after the filing date, OTS may deem the application withdrawn unless OTS determines that the 

applicant is actively pursuing a final determination on the application. Applications that are subject 

to this withdrawal provision are those that have failed to timely take action such as filing required 

additional information, or OTS has suspended processing of an application based on circumstances 

that are, in whole or in part, within the applicant’s control and have failed to take reasonable steps to 

resolve these circumstances.

Notifications under Expedited Treatment 

OTS must be notified of a proposed conversion by an institution to a bank charter at least 30 days 

prior to the effective date of the transaction, but not later than the date on which an application 

relating to the proposed transaction is filed with the primary regulator of the resulting institution. 

Within five business days of receipt of the notification and fee, OTS must notify the applicant of the 

notification's receipt. The appropriate fee must accompany each notification in order for the filing to 

be considered filed.

The applicant may engage in the proposed charter conversion upon the expiration of 30 calendar days 

after the filing date of its notification, unless OTS, before expiration of that time period, requests in 

writing any additional information necessary to supplement the notification. If supplemental 

information is requested, the applicant will have 30 days to provide such information. The 30-day 

time frame will begin anew upon receipt of such information.
Section: Conversion to a National or State Bank Section 210

210.6 Applications Handbook April 2001 Office of Thrift Supervision

12 C.F.R. § 563.22(h)(1) provides that OTS may, upon request or on its own initiative, shorten the 

30-day prior notification requirement for these filings. 

For purposes of calculating processing time frames, OTS does not include the day of the act or event, 

in determining the date the time period commences. In determining the conclusion of a time period, 

when the last day of the time period is a Saturday, Sunday, or a Federal holiday, the last day will 

become the next day that is not a Saturday, Sunday, or Federal holiday.

Regulatory Criteria

For a notification filed under this section, OTS will consider the notification to be properly filed if:

• The institution has demonstrated compliance with stockholder or accountholder approval 

requirements.

• The institution has confirmed that any liquidation account will be assumed by the resulting 

financial institution.

For an application filed under this section, OTS will take into account the following factors set forth 

in 12 C.F.R. § 563.22(d)(1):

• The capital level of the institution;

• The financial and managerial resources of the institution;

• The future prospects of the institution;

• The convenience and needs of the communities to be served;

• The conformity of the transaction to applicable law, regulation, and supervisory policies; and

• Factors relating to the fairness of and disclosure concerning the transaction.

Decision Guidelines

The primary federal regulator is responsible for administering the provisions of the Bank Merger Act, 

if applicable, and ensuring the transaction meets all applicable statutory and regulatory requirements,

i.e., competitive, legal, or financial. OTS considers this type of transaction as a business decision of 

the savings institution. However, in the event that supervisory concerns are present with respect to 

the operations of the savings institution, OTS should contact the primary regulator for the resulting 

institution to discuss such concerns and current or potential enforcement actions. In addition, if OTS 

is aware of issues that may affect the converting institution’s financial, managerial, future prospects, 

ability to serve the community, and proper disclosure, OTS should also consult the primary regulator. 

In evaluating the application or notification, OTS should take into consideration the following:

• Are there any current, pending or potential supervisory concerns or enforcement actions 

involving the savings institution? If so, has the regulatory agency for the converting 

institution been notified of the concerns or enforcement actions?
Section: Conversion to a National or State Bank Section 210

Office of Thrift Supervision April 2001 Applications Handbook 210.7

• Has the applicant demonstrated compliance with applicable stockholder or accountholder 

approval requirements?

• Has the applicant confirmed that any liquidation account will be assumed by the converted 

institution?

Conditions

In acknowledging a notification filed under this section, OTS will advise the institution that:

• The institution must advise the Regional Director in writing within 5 calendar days after the 

conversion of the effective date of the conversion.

• The institution must surrender its charter to OTS-Washington as soon as practicable after the 

conversion.

For applications filed under this section, OTS will impose the two requirements listed above as 

standard conditions. In addition, OTS may condition the approval of an application with nonstandard 

conditions. Any conditions imposed will be based on the individual circumstances surrounding the 

institution and the transaction itself. In circumstances where nonstandard conditions are involved, all 

nonstandard conditions must be supported with justification in the recommendation memorandum 

related to approval of the application. Any nonstandard conditions incorporated into the approval 

letter must be summarized in the National Applications Tracking System record for the application.

RECORDKEEPING REQUIREMENTS

OTS is required to consolidate all correspondence related to the processing of the notification or 

application into a file copy to be sent to a central file. Both the Regional Office and OTS-Washington 

will maintain a separate file copy for nondelegated filings. The file copy must include a copy of the 

original filing including all exhibits, all amendments, all internal and external correspondence 

between interested parties, all documentation associated with the review and analysis of the filing, 

and all decision, recommendation memorandum, and compliance material. The file copy must be 

organized and separated into public and confidential material, and clearly identified as such. The 

public and confidential sections must be arranged in chronological order. 

MONITORING AND CONTROL

The Regional Office will monitor compliance with any conditions imposed in connection with the 

approval of an application under this section. The applicant must submit evidence of satisfaction of 

the conditions included in the approval order or letter to the Regional Office within the stated time 

frames.

The Regional Office should notify the appropriate staff responsible for the supervision and 

examination of the institution regarding the action taken on an application. In addition, the Regional 

Office should provide the appropriate staff with copies of the approval order or letter. If an 

application is approved, the first examination of the institution following the approval should include 
Section: Conversion to a National or State Bank Section 210

210.8 Applications Handbook April 2001 Office of Thrift Supervision

a review of compliance with all conditions of approval and any changes in operations as a result of 

the transaction.

A review of the application file should be made after all compliance material is received to ensure 

that the file is complete. Any deficiencies should be corrected before the file is sent to storage.

OTS-Washington may conduct a post audit review of the application in the Regional Office, 

including a review of the documentation maintained in the application file.

INFORMATION SOURCES

Statutes

Section 5(d)(2) and (3) FDIA (12 USC § 1815)

Regulations

12 C.F.R. Part 516

12 C.F.R. § 552.2-7

12 C.F.R. § 563.22

OTS Bulletins

Thrift Bulletin 48-17

OTS Forms 

Form 1585

Form 1589
Section: Combination with a National or State Bank Section 220

Office of Thrift Supervision April 2001 Applications Handbook 220.1

This handbook section provides information regarding the requirements and procedures to be used in 

reviewing filings by an institution to combine with a national or state bank in which the thrift 

institution does not survive.

12 C.F.R. § 563.22(b)(1)(i) sets forth Office of Thrift Supervision (OTS) regulatory requirements 

with respect to such combination filings. Details of the regulatory criteria and the factors that OTS 

should consider prior to taking action on a combination filing are discussed below.

FILING REQUIREMENTS

Delegated Authority

Notifications for these transactions may be processed by the Regional Office under delegated 

authority. See Delegation Section (Section 040) of the handbook for further information. 

Processing Procedures

All filings made under this section are subject to a 30-day notification. A notification should be filed 

with the appropriate Regional Office. OTS considers a filing to be appropriately filed when sufficient 

information to evaluate the proposal was received from the applicant in its notification. Please refer 

to the Processing Procedures and Time Frames discussion of this section for more information on 

processing procedures and applicable time frames for notification.

Notifications submitted by institutions are deemed “applications” for purposes of statutory and 

regulatory requirements referring to applications.

Prefiling Meeting Requirements

Prefiling meetings are not required for this filing. However, applicants are encouraged to contact the 

Regional Office, particularly in the event the transaction involves unique or novel issues, to determine 

if a prefiling meeting will expedite the application review process.

Information and Form Requirements

All notifications should be filed with the appropriate Regional Office in accordance with 12 C.F.R. 

Part 516. The applicant should file the original and two copies of the notification with the application 

filing fee with the appropriate Regional Office. The original filing, all copies, and all exhibits and 

other pertinent documents must be clearly marked and captioned as to the type of filing. One copy 

must contain original signature on all executed documents. 

All institutions proposing to combine with a national or state bank under this section should file OTS 

Form 1585 – Notification of Intention to Convert to or Combine with a Bank. 

In addition, the filing should include:
Section: Combination with a National or State Bank Section 220

220.2 Applications Handbook April 2001 Office of Thrift Supervision

• A copy of the filing made with the federal or state regulatory agency that must approve the 

combination. 

• A statement that the resulting institution will assume the liquidation account of the applicant 

institution, if applicable. 

• Information to demonstrate compliance with applicable stockholder or accountholder 

approval requirements. 

Confidentiality

The applicant must submit in writing, concurrently with the submission of the notification, any 

requests to keep specific portions of the notification confidential. In accordance with the Freedom of 

Information Act, the request should discuss the justification for the requested treatment and should 

specifically demonstrate the harm (e.g., to competitive position, invasion of privacy) that would result 

from the public release of information. 

Information for which confidential treatment is requested should be: (i) specifically identified in the 

public portion of the application by reference to the confidential section; (ii) separately bound; and 

(iii) labeled “confidential.” The applicant should follow these same procedures when filing 

supplemental information to the application. OTS will determine whether information designated as 

confidential must be made available to the public under the Freedom of Information Act. OTS will 

advise the applicant before it makes information designated as confidential available to the public.

REVIEW GUIDELINES

Processing Procedures and Time Frames

OTS must be notified of a proposed combination under this section at least 30 days prior to the 

effective date of the transaction, but not later than the date on which an application relating to the 

proposed transaction is filed with the primary regulator of the resulting institution. 

Within five business days of receipt of the notification and fee, OTS must notify the applicant of the 

notification's receipt. The appropriate fee must accompany each notification in order for the filing to 

be considered filed.

The applicant may consummate the transaction upon the expiration of 30 calendar days after the filing 

date of its notification, unless OTS requests in writing any additional information necessary to 

supplement the notification. 

12 C.F.R. § 563.22(h)(1) provides that OTS may, upon request or on its own initiative, shorten the 

30-day prior notification requirement for these filings. 

For purposes of calculating processing time frames, OTS does not include the day of the act or event, 

in determining the date the time period commences. In determining the conclusion of a time period, 

when the last day of the time period is a Saturday, Sunday, or a Federal holiday, the last day will 

become the next day that is not a Saturday, Sunday, or Federal holiday.
Section: Combination with a National or State Bank Section 220

Office of Thrift Supervision April 2001 Applications Handbook 220.3

Regulatory Criteria

For a notification filed under this section, the OTS will consider the notification to be properly filed 

if: 

• The institution has demonstrated compliance with stockholder or accountholder approval 

requirements.

• The institution has confirmed that any liquidation account will be assumed by the resulting 

financial institution.

Decision Guidelines

The primary federal regulator is responsible for administering the provisions of the Bank Merger Act, 

and ensuring the transaction meets all applicable statutory and regulatory requirements, i.e., 

competitive, legal, or financial. OTS considers this type of transaction as a business decision of the 

savings institution. However, in the event that supervisory concerns are present with respect to the 

operations of the savings institution, OTS should contact the primary regulator for the resulting 

institution to discuss such concerns and any current or potential enforcement actions. In evaluating 

the notification, OTS should take into consideration the following: 

• Are there any pending or potential supervisory concerns or enforcement actions involving the 

savings institution? If so, has the regulatory agency for the resulting institution been notified 

of the concerns or enforcement actions?

• Has the applicant demonstrated compliance with applicable stockholder or accountholder 

approval requirements?

• Has the applicant confirmed that any liquidation account will be assumed by the resulting 

financial institution?

Conditions

Generally, OTS, in acknowledging the notification, will advise the institution that: 

• The institution must advise the Regional Director in writing within 5 calendar days after the 

combination of the effective date of the combination. 

• The institution must surrender its charter to OTS-Washington as soon as practicable after the 

combination.

RECORDKEEPING REQUIREMENTS

OTS is required to consolidate all correspondence related to the processing of the notification or 

application into a file copy to be sent to a central file. The file copy must include a copy of the 
Section: Combination with a National or State Bank Section 220

220.4 Applications Handbook April 2001 Office of Thrift Supervision

original filing including all exhibits, all amendments, all internal and external correspondence 

between interested parties, and all documentation associated with the review and analysis of the 

filing. The file copy must be organized and separated into public and confidential material, and 

clearly identified as such. The public and confidential sections must be arranged in chronological 

order. 

MONITORING AND CONTROL

The Regional Office should notify the appropriate staff responsible for the supervision and 

examination of the institution regarding the action taken on an application. In addition, the Regional 

Office should provide the appropriate staff with copies of the approval letter. 

A review of the application file should be made after all compliance material is received to ensure 

that the file is complete. Any deficiencies should be corrected before the file is sent to storage.

OTS-Washington may conduct a post audit review of the application in the Regional Office, 

including a review of the documentation maintained in the application file.

INFORMATION SOURCES

Statutes

Section 5(d)(2) and (3) FDIA (12 USC § 1815)

Section 18(c) FDIA (12 USC § 1828(c))

Regulations

12 C.F.R. Part 516

12 C.F.R. § 552.13

12 C.F.R. § 563.22

OTS Bulletins

Thrift Bulletin 48-17

OTS Forms

Form 1585
Section: Mergers with FDIC-Insured Depository Section 230

Institutions and non-FDIC Insured Entities

In which a Savings Institution Survives

Office of Thrift Supervision April 2001 Applications Handbook 230.1

This handbook section provides information regarding the filing of applications involving the mergers 

of savings institutions with FDIC-insured depository institutions (including other savings institutions 

and banks). A savings institution is the surviving entity in these types of transactions. 12 C.F.R. 

§ 563.22(a)(1) sets forth OTS regulatory requirements with respect to these types of transactions. 

Transactions in which a thrift institution merges with an FDIC-insured depository institution must 

also be reviewed by OTS under the Bank Merger Act (Section 18(c) of the Federal Deposit Insurance 

Act). As discussed in more detail below, there are additional filing and publication requirements for 

these types of transactions.

In addition, this handbook section provides information about the filing of applications involving the 

combinations of savings institutions with depository institutions not insured by FDIC, including 

noninsured OCC-chartered trust companies, state chartered trust companies, and credit unions. A 

savings institution is the surviving entity in these types of transactions. 12 C.F.R. § 563.22(c) sets 

forth OTS regulatory requirements with respect to these types of transactions.

FILING REQUIREMENTS

Delegated Authority

Generally, applications filed under this section may be processed by the Regional Office under 

delegated authority. However, certain situations may cause a filing to be nondelegated, including: (i) 

transactions raising significant issues of law or policy; (ii) transactions that are hostile or contested; 

(iii) transactions that raise significant competitive factors issues; and (iv) transactions involving CRA 

protests. See Delegations Section of the handbook (Section 040) for further information.

Expedited and Standard Processing Procedures

Applications filed under 12 C.F.R. § 563.22(a)(1) are not subject to the expedited processing 

procedures set forth in 12 C.F.R. Part 516. These applications will be processed utilizing the 

procedures set forth in 12 C.F.R. §§ 516.210-516.290. For combinations filed under 563.22(a)(1), 

there is a 30-day automatic approval process set forth in 12 C.F.R. § 563.22(f) which applies in 

certain situations. Details of this provision are discussed below in the Processing Procedures and 

Time Frames section. 

Applications filed under Section 563.22(c) to acquire non-FDIC insured depository institutions are 

technically subject to either expedited or standard treatment as set forth in 12 C.F.R. Part 516. 

However, for most of these types of filings, OTS requires an application as opposed to a notice filing 

and the standard processing procedures apply. The Regional Office will advise the applicant whether 

a filing will be processed according to expedited or standard processing procedures.

As discussed in more detail below, OTS does make a distinction between expedited and standard 

filers for the purposes of determining certain time frames in the processing of combination 

applications. 
Section: Mergers with FDIC-Insured Depository Section 230

Institutions and non-FDIC Insured Entities

In which a Savings Institution Survives

230.2 Applications Handbook April 2001 Office of Thrift Supervision

An institution is deemed an expedited filer if it:

1. Has a composite CAMELS rating of “1” or “2;”

2. Has a CRA rating of “Satisfactory” or better;

3. Has a Compliance rating of “1” or “2;”

4. Meets or exceeds the minimum capital requirements set forth in 12 C.F.R. Part 567; and

5. Has not been notified that it is in troubled condition. 

An institution is deemed a standard filer if it:

1. Has a composite CAMELS rating of “3,” “4” or “5;”

2. Has a less than “Satisfactory” CRA rating;

3. Has a Compliance rating of “3,” “4” or “5;”

4. Has inadequate capital or fails at least one of its capital requirements;

5. Has been notified that it is in troubled condition;

6. The applicant is not a savings institution; or

7. The applicant has not received a composite CAMELS rating, a CRA rating, or a compliance 

rating from any federal banking regulator.

Prefiling Meeting Requirements

Prefiling meetings are not required for this filing. However, applicants are encouraged to contact the 

Regional Office, particularly in the event the transaction involves unique or novel issues, to determine 

if a prefiling meeting will expedite the application review process.

Information and Form Requirements

An institution planning to combine with another insured institution or a noninsured depository 

institution must file an application with OTS. If the transaction involves two savings institutions, 

both institutions must receive OTS approval; however, OTS will permit a joint filing by the two 

institutions. 

If delegated, the application should be filed with the appropriate Regional Office in accordance with 

12 C.F.R. Part 516. The applicant should file the original and two copies of the application and the 

application filing fee with the Regional Office. The original filing, all copies, and all exhibits and 

other pertinent documents must be clearly marked and captioned as to the type of filing. One copy 

must contain original signatures on all executed documents. For applications that are not delegated to 

the Regional Office, an additional three copies of the application should be filed with the 

Applications Filing Room in OTS-Washington.
Section: Mergers with FDIC-Insured Depository Section 230

Institutions and non-FDIC Insured Entities

In which a Savings Institution Survives

Office of Thrift Supervision April 2001 Applications Handbook 230.3

Applicants subject to the Bank Merger Act (BMA) are required to file four additional copies of the 

application with the Regional Director. These copies should be distributed by the Regional Office to 

the Department of Justice, Office of the Comptroller of the Currency, Federal Reserve Board, and 

Federal Deposit Insurance Corporation.

If the applicant proposes to combine with an FDIC-insured institution and will be the surviving 

institution of the merger, the applicant should file an application on Form 1639 – Interagency Bank 

Merger Act Application. As indicated above, if the applicant proposes to merge with another savings 

institution, the other savings institution must also file with OTS. Two OTS-regulated entities may 

make a joint filing and submit the appropriate information for each institution. 

If the applicant proposes to combine with a non-FDIC insured depository institution and will be the 

surviving institution of the merger, the applicant should file either an application on Form 1589 –

Transfer Application or a notice on Form 1584 – Notice Filing Pursuant to 12 C.F.R. § 563.22(c). 

(As indicated earlier, OTS will generally require the filing of an application on Form 1589.)

The application should include the following information if it has not otherwise been provided in 

connection with the application form:

• Sufficient information for OTS to understand the financial condition of the applicant after the 

merger. If the resulting institution will undergo major changes in its operations as a result of 

the combination, OTS may require the submission of a complete business plan for the 

resulting institution. The applicant should contact the appropriate Regional Office to 

determine if a business plan will be required;

• Sufficient information for OTS to address the criteria set forth in 12 C.F.R. § 563.22(d)(1) 

and (2);

• Any employment agreements being entered into or amended in connection with the 

transaction; 

• If the applicant is combining with a non-savings institution or a non-FDIC-insured institution, 

the application should:

∗ Address if the target institution has assets or conducts activities that are not 

permissible for a federal savings institution under Section 5(c) of HOLA. If the 

applicant proposes to retain any nonconforming assets pursuant to Section 5(c)(5) of 

HOLA, a waiver should be requested in the application. The Regional Office has the 

ability to grant up to two years for the resulting institution to conform its assets to the 

requirements of HOLA; and

∗ Include detailed calculations that verify that the resulting institution will continue to 

meet the Qualified Thrift Lender (QTL) test subsequent to the combination. If the 

resulting institution requests a waiver of the QTL requirements, the application 

becomes nondelegated.
Section: Mergers with FDIC-Insured Depository Section 230

Institutions and non-FDIC Insured Entities

In which a Savings Institution Survives

230.4 Applications Handbook April 2001 Office of Thrift Supervision

• The application should indicate if actions are required by any other regulatory agencies. If 

so, the applicant should specify the agencies, filings, and actions; and 

• If the transaction will involve the closing of one or more branch offices, the information 

required by OTS should be provided. (See Branch Closing section below.)

If the applicant is paying cash to shareholders of the other entity or its holding company, the payment 

may constitute a capital distribution under 12 C.F.R. § 563.141(c). If so, the application should state 

that it is also serving as the capital distribution filing.

Confidentiality

The applicant must submit in writing, concurrently with the submission of the application, any 

requests to keep specific portions of the application confidential. In accordance with the Freedom of 

Information Act, the request should discuss the justification for the requested treatment and should 

specifically demonstrate the harm (e.g., to competitive position, invasion of privacy) that would result 

from the public release of information. 

Information for which confidential treatment is requested should be: (i) specifically identified in the 

public portion of the application by reference to the confidential section; (ii) separately bound; and 

(iii) labeled “confidential.” The applicant should follow these same procedures when filing 

supplemental information to the application. OTS will determine whether information designated as 

confidential must be made available to the public under the Freedom of Information Act. OTS will 

advise the applicant before it makes information designated as confidential available to the public.

Special Considerations

Publication Requirements

Unless OTS finds that it must act immediately to prevent the default of one of the insured depository 

institutions involved, the applicant must publish notice of its intent to combine with an FDIC-insured 

institution no earlier than seven days before and no later than the date of filing of the application, in 

accordance with the requirements of 12 C.F.R. Part 516 Subpart A. In addition to the initial 

publication, the applicant must publish on a weekly basis for a 30-day period. Notice must be 

published in a newspaper printed in the English language and having a general circulation in the 

community in which the home office of the resulting savings institution is to be located. If the 

Regional Office determines that the primary language of a significant number of adult residents of the 

community is a language other than English, the applicant may also be required to publish notice 

simultaneously in the appropriate language(s). A sample publication notice may be found in the 

Publication Forms section of the handbook (Section 020). 

Comment Procedures

Any person may submit a written comment to the Regional Office supporting or opposing a 

combination within the publication period. OTS will not consider any late filed comments unless the 
Section: Mergers with FDIC-Insured Depository Section 230

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Office of Thrift Supervision April 2001 Applications Handbook 230.5

commenter demonstrates good cause for why he/she could not submit a timely comment, or OTS 

concludes that the comment addresses a significant regulatory concern and will assist in the 

disposition of the combination application. OTS can extend the comment period with demonstrated 

good cause for why a commenter was unable to submit a timely comment. The duration of an 

extension request is subject to the discretion of OTS on a case-by-case basis, after consideration of 

the unique circumstances of each extension request.

The comment should recite relevant facts, including any demographic, economic or financial data 

supporting the commenter's position. If the commenter opposes the application, the comment should 

also: 1) address at least one reason for denial based upon regulatory criteria for denial; 2) support the 

reason for denial with relevant facts and supporting data; and 3) address how the approval of the 

application is harmful to the community or the commenter. While OTS will accept and consider all 

comments, including those that do not meet all of the content criteria, commenters are encouraged to 

include all relevant information and arguments. The commenter may also request an informal 

meeting pursuant to 12 C.F.R. §§ 516.120 and 516.170 with his/her comment, along with a 

description of the issues and facts to be discussed and justification for why written submissions are 

insufficient to adequately address those facts or issues.

If the commenter has filed a written request for a meeting and the request contains the required 

information set forth in 12 C.F.R. § 516.120(b), OTS will arrange a meeting. If an informal meeting 

is requested, the commenter must simultaneously send a copy of the written request to the applicant. 

OTS will generally provide an applicant an appropriate opportunity and period of time to respond to 

submitted comments.

OTS will facilitate the informal meeting between the applicant, the commenter(s) and any other 

interested person(s). OTS has discretion to determine the format of the meeting, including telephone 

conferences or face-to-face meetings. OTS will inform the applicant and commenters requesting an 

informal meeting of its decision on a request for a meeting, or of its decision to hold an informal 

meeting on its own initiative. OTS may also invite any other interested persons to attend. OTS will 

inform the participants of the date, time, location and format for the meeting in reasonable time in 

advance. OTS anticipates that informal meetings will be sufficient to facilitate the resolution of 

issues in most cases.

If an informal meeting fails to facilitate the resolution of issues to the satisfaction of any participant in 

an informal meeting, OTS may proceed to conduct a formal meeting before a presiding officer upon 

the filing of a request. Any participant requesting a formal meeting pursuant to 12 C.F.R. §§ 516.170 

and 516.180, should submit a request to OTS within three days after the informal meeting, and 

provide copies of its request to the other participants of the informal meeting. The request must 

describe the nature of the issues or facts to be presented and must demonstrate that material issues or 

facts have not been adequately addressed by the informal meeting, and that a formal meeting is 

necessary to develop a record sufficient to support a determination on those facts or issues. OTS will 

not arrange an informal meeting where a request is clearly frivolous or clearly lacking a factual basis. 

OTS may elect to hold a formal meeting on its own initiative if deemed necessary to assist in the 

disposition of the application or issues raised by the application.
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230.6 Applications Handbook April 2001 Office of Thrift Supervision

OTS will issue a Notice of Formal Meeting if it decides to hold a formal meeting, and send the notice 

to the applicant, to any person requesting a formal meeting, and to any interested person, in its 

discretion, it desires to invite. Any person receiving the Notice of Formal Meeting must notify OTS 

within ten days of receipt of the notice of their intent to participate in the meeting. All participants in 

the formal meeting must provide the names of their presenters and copies of proposed exhibits to 

OTS, to the applicant, and to any other person designated by OTS, no later than five days before the 

date of the formal meeting. All presenters of documentary material must furnish copies of the 

material to OTS and to each other participant. OTS will arrange for a transcript of the meeting, with 

each participant bearing the cost of any copies of the transcript it requests for its use.

OTS anticipates that most formal meetings will follow an informal meeting. Accordingly, OTS will 

not grant a request for a formal meeting unless an informal meeting has occurred. However, OTS has 

the authority to conduct a formal meeting without holding an informal meeting if the meeting is 

beneficial to the review process and will facilitate a resolution of the issues raised by application.

If OTS has arranged an informal or formal meeting, the processing time frames for the application are 

suspended until OTS determines that a sufficient record has been developed to address the issues 

raised in the comments.

Eligibility Examinations

OTS may conduct an eligibility examination of non-OTS-regulated depository institutions proposing 

to merge with OTS-regulated institutions. For depository institutions that have recently been 

examined by a federal or state banking or trust regulator and received satisfactory ratings (CAMELS 

1 or 2, Compliance 1 or 2, CRA Outstanding or Satisfactory, Trust 1 or 2), OTS may not require an 

eligibility examination, unless the application raises a material issue not addressed by the report of 

examination. Also, when the most recent safety and soundness examination is older than six months, 

OTS will consider the need for an eligibility examination due to the age of the existing examination 

report. Absent these concerns, OTS will generally rely on the most recent report of examination as 

part of its review of the application.

The Regional Office should determine the need for an eligibility examination as early in the 

application process as possible. The eligibility examination may include on- or off-site activities. 

Prior to commencing the on-site work, OTS will forward a Preliminary Examination Response Kit 

(PERK) requesting more detailed information that should be made available to the examiners upon 

their arrival. OTS does not normally charge a fee for an eligibility examination. However, OTS may 

impose an hourly fee if the examiners encounter significant problems that require additional review 

beyond the scope of a standard eligibility examination.

Branch Closings

The closing of one or more branch offices may be involved in connection with a combination 

transaction. Section 42 of the Federal Deposit Insurance Act and OTS Transmittal 220, dated June 

30, 1999, provide information on branch closing notices and procedures.
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Office of Thrift Supervision April 2001 Applications Handbook 230.7

The institution that is closing a branch must: 

A. No later than 90 days prior to closing:

• Provide a notice to OTS describing the reasons for the closing and providing 

statistical or other information supporting the reasons. The notice should also include 

copies of the institution’s branch closing policy statement.

• Provide a notice of the branch closing to the branch’s customers either in a regular 

account statement or in a separate mailing.

B. No later than 30 days prior to closing:

• Post a notice in a conspicuous manner on the premises of the branch proposed to be 

closed.

Trust Operations

If the target institution is a federal institution that has been approved to exercise trust powers, the 

acquiror may continue to exercise trust powers. Also, if the acquiror is a state chartered savings 

institution, it does not need to file a trust application. However, if the applicant is merging with or 

acquiring a trust operation and has not previously been approved to exercise the appropriate type of 

trust powers or has not been approved to exercise trust powers in the state in which they will now be 

exercised, a trust powers application must be filed. See Section 620 of the handbook for guidance on 

the processing of trust powers applications.

REVIEW GUIDELINES

Processing Procedures and Time Frames

As noted in the Delegated Authority section, certain applications are not subject to delegated 

authority and are processed concurrently with OTS-Washington staff. As a general matter, 

correspondence from OTS regarding applications that are nondelegated will be transmitted from 

OTS-Washington. Correspondence on delegated applications will generally come from the Regional 

Office.

Within five business days of receipt of the application and the application fee, the Regional Office 

must notify the applicant of the application's receipt. The appropriate application fee must 

accompany each application in order for it to be considered filed. For nondelegated applications, the 

application will not be considered filed until received by both OTS-Washington and the Regional 

Office.

For nondelegated applications that involve specialty areas, such as CRA, trust, or insurance issues, a 

copy of the application must be provided to the corresponding OTS-Washington specialist.
Section: Mergers with FDIC-Insured Depository Section 230

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230.8 Applications Handbook April 2001 Office of Thrift Supervision

Within 30 calendar days of receipt of a properly submitted application, OTS shall take the following 

actions.

• Deem the application complete;

• Request, in writing, any additional information necessary to deem the application complete; 

or

• Decline to further process the application if it is deemed by OTS to be materially deficient 

and/or substantially incomplete.

Failure by OTS to act within 30 calendar days of receipt of the application for processing shall result 

in the filed application being deemed complete, commencing the period for review. 

OTS must review requests for a waiver of an application requirement that certain information be 

supplied, in a timely manner. Unless OTS requests, in writing, additional information about the 

waiver request, or denies the waiver request, the waiver request shall be deemed granted.

If additional information is requested, a response must be submitted within 30 calendar days of the 

letter requesting such information. The applicant may, in writing, request a brief extension of the 

30-calendar day period for responding to a request for additional information, prior to the expiration 

of the 30-calendar day time period. OTS, at its option, may grant the applicant a limited extension of 

time in writing. Failure to respond to a written request for additional information within 30 calendar 

days of such request may be deemed to constitute withdrawal of the application or may be treated as 

grounds for denial or disapproval of the application. 

After the timely filing of additional information in response to an initial or subsequent request by 

OTS for additional information, OTS has 15 calendar days to review the additional information for 

completeness or appropriateness and take the one of the following actions.

• Request, in writing, any additional information necessary to deem the application complete;

• Deem the application complete; or 

• Decline to further process the application if it is deemed by OTS to be materially deficient 

and/or substantially incomplete.

The 15-day review period commences when OTS receives a response that purports to respond to all 

questions in the information request. OTS may extend the 15-day review period for an additional 15 

calendar days, if OTS requires the additional time to review the response. OTS will notify the 

applicant that it has extended the period before the end of the initial 15-day period.

Failure by OTS to act within 15 calendar days of receipt of the additional information shall result in 

the application being deemed complete, commencing the period for review. 
Section: Mergers with FDIC-Insured Depository Section 230

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Office of Thrift Supervision April 2001 Applications Handbook 230.9

Applications filed to combine with an FDIC-insured institution under 563.22(a)(1) are deemed to be 

automatically approved 30 calendar days after OTS sends written notice that the application is 

complete, unless:

• The acquiring institution does not meet the criteria for expedited treatment under § 516.5;

• The Regional Office recommends to OTS-Washington the imposition of nonstandard 

conditions prior to approving the application;

• OTS suspends the applicable time frames under § 516.190;

• OTS raises objections to the transaction;

• The resulting savings institution would be one of the largest depository institutions competing 

in the relevant geographic market (see 12 C.F.R. §§ 563.22(f)(5)-(f)(7) for further details);

• The Herfindahl-Hirschman Index (HHI) in the relevant geographic area was more than 1800 

before the transaction and the increase in the HHI used by the transaction would be 50 or 

more;

• In a transaction involving potential competition, OTS determines that the acquiring institution 

is one of three or fewer potential entrants into the relevant geographic area;

• The acquiring institution has assets of $1 billion or more and proposes to acquire assets of $1 

billion or more;

• The resulting institution has a composite CRA rating of less than satisfactory, or is otherwise 

seriously deficient with respect to OTS nondiscrimination regulations and the deficiencies 

have not been resolved to the satisfaction of OTS;

• The transaction involves any supervisory or assistance agreement with OTS or FDIC;

• The transaction is part of a conversion under 12 C.F.R. Part 563b;

• The transaction raises a significant issue of law or policy; OR

• The transaction is opposed by any constituent institution or contested by a competing 

acquiror.

Applications that do not qualify for the 30-day automatic approval are subject to the 60-calendar day 

review period during which time OTS will take into consideration all factors present in the 

application and render a decision thereon. If, upon expiration of the 60-day review period (assuming 

no extension has been granted) OTS has failed to act, the application is deemed approved 

automatically, and the applicant may thereafter consummate the transaction.

During the review period, OTS may request additional information if the information is necessary to 

resolve or clarify the issues presented in the application. OTS may also notify the applicant that the 

application is incomplete and require that the applicant submit additional information to complete the 

application. The review period can be extended an additional 30 calendar days if OTS determines 

that additional time will be required to analyze the proposed transaction. In such cases, OTS must 

notify an applicant prior to the expiration of the period for review. In situations in which an 
Section: Mergers with FDIC-Insured Depository Section 230

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230.10 Applications Handbook April 2001 Office of Thrift Supervision

application presents a significant issue of law or policy, OTS may extend the applicable period for 

review of such application beyond the time period for review. In these cases, written notice must be 

provided to an applicant no later than the expiration of the time period.

Under 12 C.F.R. § 516.290, if OTS has not acted on a pending application within two calendar years 

after the filing date, OTS may deem the application withdrawn unless OTS determines that the 

applicant is actively pursuing a final determination on the application. Applications that are subject 

to this withdrawal provision are those that have failed to timely take action such as filing required 

additional information, or OTS has suspended processing of an application based on circumstances 

that are, in whole or in part, within the applicant’s control and have failed to take reasonable steps to 

resolve these circumstances.

Notices under Expedited Treatment

If OTS determines that a combination filing under 563.22(c) may be processed under expedited 

treatment, OTS must be notified of the transaction at least 30 days prior to the effective date.

Within five business days of receipt of the notice and fee, OTS must notify the applicant of the 

notice's receipt. The appropriate fee must accompany each notice in order for the filing to be 

considered filed.

The applicant may engage in the proposed activities upon the expiration of 30 calendar days after the 

filing date of its notice, unless OTS takes one of the following actions before expiration of that time 

period:

• Requests, in writing, any additional information necessary to supplement the notification;

• Notifies the applicant that the notice is subject to standard treatment as it raises a supervisory 

concern, raises a significant issue of law or policy, or requires significant additional 

information;

• Suspends the time frames pursuant to 12 C.F.R. § 516.190; or

• Disapproves of the notice.

Failure by OTS to act within 30 calendar days of receipt of the notice for processing shall result in the 

filed notice being accepted. If supplemental information is requested, the applicant will have 30 days 

to provide such information. The 30-day time frame will begin anew upon receipt of such 

information.

For purposes of calculating processing time frames, OTS does not include the day of the act or event, 

in determining the date the time period commences. In determining the conclusion of a time period, 

when the last day of the time period is a Saturday, Sunday, or a Federal holiday, the last day will 

become the next day that is not a Saturday, Sunday, or Federal holiday.
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Office of Thrift Supervision April 2001 Applications Handbook 230.11

Bank Merger Act

The Bank Merger Act (BMA) states that OTS may not approve: (i) any proposed merger transaction 

that 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; or (ii) any merger transaction the 

effect of which, in any section of the country, may be to substantially lessen competition, tend to 

create a monopoly or, in any other manner, restrain trade, unless OTS finds that the anticompetitive 

effects of the proposed transaction are 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. Additionally, 

the BMA requires that OTS take into consideration the financial and managerial resources, future 

prospects of the existing and proposed institutions, and the convenience and needs of the community 

to be served. 

Unless it has been determined that immediate action is necessary and competitive factors reports have 

therefore been dispensed with, the reviewer must send a copy of the application (provided by the 

applicant as detailed above) to and request reports on the competitive factors involved from the 

Attorney General (Department of Justice); the Comptroller of the Currency; the appropriate Federal 

Reserve Bank; and the Federal Deposit Insurance Corporation. Generally, the reports should be 

furnished by the agencies within 30 calendar days of request. However, in certain emergency 

situations this time frame may be lessened to ten days (see § 563.22(e)(2)).

For certain transactions that are inherently competitively neutral, the Department of Justice has 

agreed to allow OTS to use a streamlined processing procedure. Such transactions include: (i) 

mergers between savings associations if at least 50 percent of the voting stock of the involved 

institutions is owned by the same company, person, or group of persons and/or companies acting in 

concert, or if one of the savings associations controls the other; (ii) the purchase of assets and 

assumption of liabilities of branch offices, if a single savings and loan holding company owns more 

than 50 percent of the outstanding voting stock of each of the savings associations involved in the 

transaction; and (iii) mergers between an interim savings association and an existing savings 

association to facilitate the formation of a unitary savings and loan holding company.

For competitively neutral transactions the initial letter sent with the application copy to the 

Department of Justice will indicate that the transaction is deemed to have received “interim approval” 

and request confirmation that the application is subject to the special processing procedure. Provided 

OTS’s final approval of the application is granted after passage of 30 days from the filing date, the 

transaction may be consummated immediately upon approval as opposed to waiting 15 days after 

approval as required under ordinary BMA transactions. 

Immediately upon approval of an application, OTS must provide a letter to the Attorney General/DOJ 

informing it of the approval and including a copy of the approval letter/order.

Sample BMA letters for each of the above scenarios are included in the Bank Merger Act Transmittal 

Forms Section of the handbook (Section 030). 
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230.12 Applications Handbook April 2001 Office of Thrift Supervision

Regulatory Criteria

The authority of OTS to act on a combination application involving an FDIC-insured institution is set 

forth in 12 USC § 1828(c)(2) and 12 C.F.R. § 563.22. Additionally, OTS must consider combination 

applications under the Community Reinvestment Act of 1977, 12 USC §§ 2901-2905, as set forth in 

12 C.F.R. Part 563e.

For all applications filed under 12 C.F.R. Section 563.22(a) and (c), OTS will consider the following 

criteria.

• The capital level of the resulting savings institution;

• Managerial resources of the constituent institutions;

• The financial resources and future prospects of the constituent institutions;

• The convenience and needs of the communities to be served;

• The conformity of the transaction to applicable law, regulation, and supervisory policies; and

• Factors relating to the fairness of and disclosure concerning the transaction.

With regard to the effect of the CRA on combination applications, the resulting institution’s record in 

meeting the credit needs of its community, consistent with safe and sound operations, is a 

consideration in approval of the application.

Decision Guidelines

The statutory and regulatory requirements for determining whether OTS should approve a merger 

application are designed to ensure the viability and safe and sound operation of the resulting savings 

institution. In general, the analysis should conclude that capital of the resulting institution is 

sufficient to support the operations of the merged entity and that management has the necessary 

expertise and controls to implement the business plan of the resulting institution. OTS should 

conclude that the community will be served and that the transaction will comply with applicable rules 

and regulations. In addition, the transaction should be fair to all parties concerned (savings account 

holders, borrowers, creditors, and stockholders of each savings association). OTS should consider the 

following factors in analyzing the application to determine if the transaction satisfies the applicable 

statutory and regulatory criteria for approval:

• Did the applicant submit the following forms and information?

∗ OTS Form 1639, OTS Form 1584, or OTS Form 1589;

∗ Copies of proposed employment contracts and evidence of regulatory compliance;

∗ Pro forma financial information, including capital calculations, showing the impact of the 

combination on the resulting institution and for the first year following the combination;

∗ If required by OTS, a three-year business plan for the resulting institution;
Section: Mergers with FDIC-Insured Depository Section 230

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Office of Thrift Supervision April 2001 Applications Handbook 230.13

∗ Additional copies of the application to be forwarded to the Department of Justice and 

other banking regulators for review under the Bank Merger Act;

∗ If there will be any changes in market area to be served, an amended CRA plan for the 

resulting institution;

∗ If applicable, a branch closing notice; and

∗ Information to demonstrate that the application meets relevant approval standards.

• If the merging institution is not an OTS-regulated entity, has the Regional Office contacted 

the appropriate regulator to discuss the supervisory and examination background of the 

institution? Has the Regional Office obtained and reviewed examination reports from the 

primary federal or state regulator? 

• If there is not a recent examination of the institution to be acquired and merged or if there are 

significant risks to be acquired or unresolved regulatory concerns, has the Regional Office 

conducted an eligibility examination of the institution?

• Has the applicant made the appropriate branch closing notification to customers, if 

applicable?

• Has the applicant complied with the HOLA, and all other laws, rules, and regulations and 

policies of the OTS concerning combinations?

• Does the application include a narrative summary of the plan or merger, including a full 

description of the basic terms and conditions of the plan?

• Does the transaction appear to be the result of arms’ length bargaining?

• Does the application include evidence of approval of members or stockholders, as applicable?

• Do the resulting board of directors and senior management have the qualifications and 

experience necessary to operate the institution in a safe and sound manner?

• Is compensation, including deferred compensation, to be paid to officers, directors, and 

controlling persons of the disappearing institution by the resulting institution reasonable?

• Are any proposed increases in compensation to officers and directors of the disappearing 

institution reasonable? Note that an increase in excess of the greater of 15 percent or $10,000 

gives rise to a presumption of unreasonableness and sale of control. Sufficient information 

should be submitted to rebut this presumption (for example, increased responsibilities and 

duties of management).

• Will an advisory board be elected? If so, members should not be elected for a term greater 

than 1 year.

• Does the application describe and justify the duties and responsibilities and any compensation 

to be paid to the advisory board?

• Are advisory board fees reasonable? Note that advisory board fees in excess of 115 percent 

of directors’ fees paid by the disappearing savings institution prior to the transaction will give 

rise to a presumption of unreasonableness and sale of control. Sufficient information should 
Section: Mergers with FDIC-Insured Depository Section 230

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230.14 Applications Handbook April 2001 Office of Thrift Supervision

be provided to rebut this presumption (for example, increased responsibilities and duties of 

the directors).

• Do proposed employment agreements comply with the requirements of 12 C.F.R. § 563.39 

and RB 27-a?

• Will the balance sheet and business strategy of the merged institution comply with the 

lending and investment limitations of Section 5(c) of HOLA and 12 C.F.R. Part 560?

• Has the applicant provided financial projections for the combined institution that are 

reasonable and well supported?

• Is the transaction consistent with the applicant’s business objectives?

• Has the applicant provided for appropriate management and policies for any significant new 

activities or risks to be assumed?

• How does the transaction change the institution’s risk profile?

• Will future operations be profitable?

• Does the application provide information concerning the accounting and tax treatment of the 

transaction?

• Is the resulting institution’s establishment or operation of additional branches consistent with 

OTS’s branching policy statement (12 C.F.R. § 556.5) and Section 5(r) of HOLA?

• Are the fees to be paid for any professional services in connection with the transaction fair? 

• Do the financial projections demonstrate compliance with OTS capital requirements?

• Is capital adequate based on the proposed business philosophy of the resulting institution?

• If a capital distribution is proposed in connection with a combination, can the distribution be 

paid under 12 C.F.R. § 563.141(c)? 

• Does the applicant indicate that QTL compliance will be maintained?

• Does the resulting institution have a satisfactory history of compliance with the CRA and a 

reasonable plan to meet its obligations under the CRA in the future?

• If the transaction will result in any lessening of competition in any section of the country, are 

the anticompetitive effects clearly outweighed by the probable effect of the transaction in 

meeting the convenience and needs of the communities to be served?

• Has OTS received responses from the Department of Justice and the banking regulators 

regarding the competitive factors involved in the transaction? 

• Will the resulting savings institution meet the identified convenience and needs in the target 

market, including the low- and moderate-income needs?

• Will the resulting institution continue to provide credit for housing consistent with safe and 

sound banking principles? 
Section: Mergers with FDIC-Insured Depository Section 230

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Office of Thrift Supervision April 2001 Applications Handbook 230.15

Conditions

Generally, the following conditions will be imposed on any approval for a savings institution to 

combine with an FDIC-insured or a non-FDIC insured depository institution.

• The Savings Bank must receive all required regulatory approvals for the proposed transaction 

and submit copies of all such approvals to the Regional Director prior to consummation of the 

proposed transaction;

• The proposed transaction must be consummated no earlier than 15 calendar days (if subject to 

BMA) and no later than 120 calendar days from the date of the approval letter;

• On the business day prior to the date of consummation of the proposed transaction, the chief 

financial officer of the Savings Bank must certify in writing to the Regional Director that no 

material adverse events or material adverse changes have occurred with respect to the 

financial condition or operation of the Savings Bank as disclosed in the application;

• The Savings Bank must advise the Regional Director in writing within five (5) calendar days 

after the effective date of the proposed transaction: (a) of the effective date of the proposed 

transaction and (b) that the transaction was consummated in accordance with all applicable 

laws and regulations, the application, and the approval letter; and

• The Savings Bank shall advise each accountholder whose withdrawable accounts would 

increase above $100,000 as a result of the transaction of the effect on their insurance 

coverage no later than thirty (30) days after the effective date.

OTS may impose certain nonstandard conditions in connection with a merger transaction. All 

nonstandard conditions of approval must be supported with justification in the recommendation 

memorandum related to approval of the application. All nonstandard conditions incorporated into the 

approval letter must be summarized in the National Applications Tracking System for the application. 

Listed below are examples of frequently imposed nonstandard conditions:

• The institution must comply with the asset investment limitations contained in Section 

5(c)(2)(D) of HOLA within 2 years.

• The institution must obtain the written approval of the Regional Director prior to execution or 

implementation of any employment agreements to be entered into in connection with the 

transaction.

RECORDKEEPING REQUIREMENTS

OTS is required to consolidate all correspondence related to the processing of the notice or 

application into a file copy to be sent to a central file. Both the Regional Office and OTS-Washington 

will maintain a separate file copy for nondelegated filings. The file copy must include a copy of the 

original filing including all exhibits, all amendments, all internal and external correspondence 

between interested parties, all documentation associated with the review and analysis of the filing, 

and all decision, recommendation memorandum, and compliance material. The file copy must be 
Section: Mergers with FDIC-Insured Depository Section 230

Institutions and non-FDIC Insured Entities

In which a Savings Institution Survives

230.16 Applications Handbook April 2001 Office of Thrift Supervision

organized and separated into public and confidential material, and clearly identified as such. The 

public and confidential sections must be arranged in chronological order. 

MONITORING AND CONTROL

The Regional Office will monitor compliance with any conditions imposed in connection with an 

application’s approval. The applicant must submit evidence of satisfaction of the conditions included 

in the approval order or letter to the Regional Office within the stated time frames.

The Regional Office should notify the appropriate staff responsible for the supervision and 

examination of the institution regarding the action taken on an application. In addition, the Regional 

Office should provide the appropriate staff with copies of the approval order or letter. If an 

application is approved, the first examination of the institution following the approval should include 

a review of compliance with all conditions of approval and any changes in operations as a result of 

the transaction.

A review of the application file should be made after all compliance material is received to ensure 

that the file is complete. Any deficiencies should be corrected before the file is sent to storage.

OTS-Washington may conduct a post audit review of the application in the Regional Office, 

including a review of the documentation maintained in the application file.

INFORMATION SOURCES

Statutes

Section 3(l) FDIA (12 USC § 1813(l))

Section 3(p) FDIC (12 USC § 1813(p))

Section 5(c) HOLA (12 USC § 1464(5)(c))

Sections 5(d)(2) and (3) FDIA (12 USC § 1815)

Section 5(r) HOLA (12 USC § 1464(r))

Section 10(m) HOLA (12 USC § 1467a)

Section 18(c) FDIA (12 USC § 1828(c))

Section 42 FDIA (12 USC § 1831r-1)

12 USC §§ 2901-2905

Regulations

12 C.F.R. Part 516

12 C.F.R. Part 546

12 C.F.R. § 552.13

12 C.F.R. § 556.5

12 C.F.R. § 563.22

12 C.F.R. § 563.39

12 C.F.R. § 563.141(c)
Section: Mergers with FDIC-Insured Depository Section 230

Institutions and non-FDIC Insured Entities

In which a Savings Institution Survives

Office of Thrift Supervision April 2001 Applications Handbook 230.17

12 C.F.R. § 330.4 (FDIC’s Deposit Insurance Coverage regulations)

12 C.F.R. Part 563e

OTS Bulletins/Memoranda/Orders

Transmittal 220, June 30, 1999

Regulatory Bulletin 27a, March 5, 1993

Legal Alert Memo 10, December 8, 1989

Legal Alert Memo 17, October 26, 1990

Order No. 95-177, September 26, 1995

Thrift Bulletin 48-17

Other

FDIC Deposit Summary - Can be accessed from the FDIC’s web page. Specific address: 

www.fdic.gov/news/publications/public/index.html#statistical

U.S. Department of Justice Merger Guidelines, June 14, 1982

OTS Forms

Form 1584

Form 1589

Form 1639
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

Office of Thrift Supervision April 2001 Applications Handbook 240.1

This handbook section provides information regarding the filing of applications involving: (i) a 

savings institution’s purchase of less than all or substantially all of the assets of another FDIC insured 

depository institution; (ii) a savings institution’s assumption of the liability to pay any deposit made 

in any other FDIC-insured depository institution; and (iii) the sale of assets and the assumption of 

liabilities by a savings institution in bulk and not in the ordinary course of business. These 

transactions include branch purchases/sales between thrifts, branch purchases/sales between a bank 

and a savings institution, and purchases of trust accounts from an FDIC-insured entity. 12 C.F.R. 

§§ 563.22(a)(2) and (c) set forth OTS regulatory requirements with respect to these types of 

transactions. 

Transactions under § 563.22(a)(2) in which a savings institution assumes deposit liabilities from 

another FDIC-insured depository institution must also be reviewed by OTS under the Bank Merger 

Act (Section 18(c) of the Federal Deposit Insurance Act). As discussed in more detail below, there 

are additional filing and publication requirements for these types of transactions.

In addition, this handbook section provides information about the filing of applications involving the 

purchase of assets and/or assumption of liabilities by savings institutions from non-FDIC insured 

depository institutions. 12 C.F.R. § 563.22(c) sets forth OTS regulatory requirements with respect to 

these types of transactions.

Transactions involving whole entity combinations or the purchase of substantially all of the assets of 

an FDIC-insured depository institution are not covered by this handbook section. (See Section 230 of 

the handbook for information concerning those types of transactions).

FILING REQUIREMENTS

Delegated Authority

Generally, applications filed under this section may be processed by the Regional Office under 

delegated authority. However, certain situations may cause a filing to be nondelegated, including: 

(i) transactions raising significant issues of law or policy; (ii) transactions that are hostile or 

contested; (iii) transactions that raise significant competitive factors issues; and (iv) transactions 

involving CRA protests. See Delegations Section of the handbook (Section 040) for further 

information.

Expedited and Standard Processing Procedures

Applications filed under 12 C.F.R. § 563.22(a)(2) to assume liability to pay deposits in any insured 

depository institution are not subject to the expedited processing procedures set forth in 12 C.F.R. 

Part 516. These applications will be processed utilizing the procedures set forth in 12 C.F.R. 

§§ 516.210-516.290. For transactions filed under 563.22(a)(2), there is a 30-day automatic approval 

process set forth in 12 C.F.R. § 563.22(f) which applies in certain situations. Details of this provision 

are discussed below in the Processing Procedures and Time Frames section. 
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

240.2 Applications Handbook April 2001 Office of Thrift Supervision

Applications filed under § 563.22(c) by a savings institution which involve the sale of assets and/or 

the transfer of liabilities to a depository institution, or the bulk purchase or sale of assets or liabilities 

not made in the ordinary course of business from both insured and noninsured depository institutions 

may be processed under expedited or standard treatment as set forth in 12 C.F.R. Part 516. 

An institution is deemed an expedited filer if it:

1. Has a composite CAMELS rating of “1” or “2;”

2. Has a CRA rating of “Satisfactory” or better;

3. Has a Compliance rating of “1” or “2;”

4. Meets or exceeds the minimum capital requirements set forth in 12 C.F.R. Part 567; and

5. Has not been notified that it is in troubled condition. 

An institution is deemed a standard filer if it:

1. Has a composite CAMELS rating of “3,” “4” or “5;”

2. Has a less than “Satisfactory” CRA rating;

3. Has a Compliance rating of “3,” “4” or “5;”

4. Has inadequate capital or fails at least one of its capital requirements;

5. Has been notified that it is in troubled condition;

6. The applicant is not a savings institution; or

7. The applicant has not received a composite CAMELS rating, a CRA rating, or a compliance 

rating from any federal banking regulator.

Prefiling Meeting Requirements

Prefiling meetings are not required for these filings. However, applicants are encouraged to contact 

the Regional Office, particularly in the event the transaction involves unique or novel issues, to 

determine if a prefiling meeting will expedite the application review process.

Information and Form Requirements

An institution proposing to assume deposit liabilities from another insured depository institution 

under 12 C.F.R. § 563.22(a)(2) must file an application with OTS. If the transaction involves two 

savings institutions, both institutions must receive OTS approval; however, OTS will permit a joint 

filing by the two institutions. 
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

Office of Thrift Supervision April 2001 Applications Handbook 240.3

In addition, an institution proposing to sell assets and transfer liabilities to another insured depository 

institution, or to engage in a transaction involving the bulk purchase or sale of assets or liabilities not 

made in the ordinary course of business to either an insured or a noninsured depository institution 

must make the appropriate filing with OTS. 

If delegated, the application should be filed with the appropriate Regional Office in accordance with 

12 C.F.R. Part 516. The applicant should file the original and two copies of the application and the 

application filing fee with the Regional Office. The original filing, all copies, and all exhibits and 

other pertinent documents must be clearly marked and captioned as to the type of filing. One copy 

must contain original signatures on all executed documents. For applications that are not delegated to 

the Regional Office, an additional three copies of the application should be filed with the 

Applications Filing Room in OTS-Washington.

Applicants subject to the Bank Merger Act (BMA) are required to file four additional copies of the 

application with the Regional Director. These copies should be distributed by the Regional Office to 

the Department of Justice, Office of the Comptroller of the Currency, Federal Reserve Board, and 

Federal Deposit Insurance Corporation.

If the applicant proposes to assume deposits from another FDIC-insured depository institution under 

563.22(a), the applicant should file an application on Form 1639 – Interagency Bank Merger Act 

Application. As indicated above, if the applicant proposes to assume deposit liabilities from another 

savings institution, the other savings institution must also file with OTS. Two OTS-regulated entities 

may make a joint filing and submit the appropriate information for each institution.

If the applicant proposes to sell assets and/or transfer liabilities to another depository institution, or to 

engage in the bulk purchase or sale of assets or liabilities not made in the ordinary course of business 

to either an insured or noninsured depository institutions under 563.22(c), it should file either an 

application on Form 1589 (Transfer Application) or a notice on Form 1584 (Notice Filing Pursuant to 

12 C.F.R. § 563.22(c)).

For applications filed under either §§ 563.22(a)(2) or (c), the applicant should include the following 

information if it has not otherwise been provided in connection with the application forms:

• Sufficient information for OTS to understand the financial condition of the applicant after the 

transaction. If the institution will undergo major changes in its operations as a result of the 

transaction, OTS may require the submission of a complete business plan for the applicant 

institution. The applicant should contact the appropriate Regional Office to determine if a 

business plan will be required;

• Sufficient information for OTS to address the criteria set forth in 12 C.F.R. § 563.22(d)(1) 

and (2);

• If the applicant is purchasing assets and/or assuming liabilities from a non-savings institution 

or a non-FDIC-insured institution, the application should:
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

240.4 Applications Handbook April 2001 Office of Thrift Supervision

∗ Provide verification that the institution will continue to comply with the lending and 

investment limitations of Section 5(c) of HOLA; and

∗ Include detailed calculations that verify that the applicant institution will continue to meet 

the Qualified Thrift Lender (QTL) test subsequent to the transaction. 

• Any employment agreements being entered into or amended in connection with the 

transaction; and 

• The application should indicate if actions are required by any other regulatory agencies. If 

so, the applicant should specify the agencies, filings, and actions. 

Confidentiality

The applicant must submit in writing, concurrently with the submission of the application, any 

requests to keep specific portions of the application confidential. In accordance with the Freedom of 

Information Act, the request should discuss the justification for the requested treatment and should 

specifically demonstrate the harm (e.g., to competitive position, invasion of privacy) that would result 

from the public release of information. 

Information for which confidential treatment is requested should be: (i) specifically identified in the 

public portion of the application by reference to the confidential section; (ii) separately bound; and 

(iii) labeled “confidential.” The applicant should follow these same procedures when filing 

supplemental information to the application. OTS will determine whether information designated as 

confidential must be made available to the public under the Freedom of Information Act. OTS will 

advise the applicant before it makes information designated as confidential available to the public.

Special Considerations

For applications filed to assume the deposit liabilities of another insured depository institution, the 

following publication requirements and comment procedures apply. Filings under 563.22(c) are not 

subject to these requirements. 

Publication Requirements

Unless OTS finds that it must act immediately to prevent the default of one of the savings institutions 

involved, the applicant must publish notice of its intent to assume liability to pay deposits made in an 

FDIC-insured depository no earlier than seven days before and no later than the date of filing of the 

application, in accordance with the requirements of 12 C.F.R. Part 516 Subpart A. In addition to the 

initial publication, the applicant must publish on a weekly basis for a 30-day period. Notice must be 

published in a newspaper printed in the English language and having a general circulation in the 

community in which the home office of the resulting savings institution is to be located. If the 

Regional Office determines that the primary language of a significant number of adult residents of the 
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

Office of Thrift Supervision April 2001 Applications Handbook 240.5

community is a language other than English, the applicant may also be required to publish notice 

simultaneously in the appropriate language(s). A sample publication notice may be found in the 

Publication Forms section of the handbook (Section 020). 

Comment Procedures

Any person may submit a written comment to the Regional Office supporting or opposing a 

transaction within the publication period. OTS will not consider any late filed comments unless the 

commenter demonstrates good cause for why he/she could not submit a timely comment, or OTS 

concludes that the comment addresses a significant regulatory concern and will assist in the 

disposition of the application. OTS can extend the comment period with demonstrated good cause for 

why a commenter was unable to submit a timely comment. The duration of an extension request is 

subject to the discretion of OTS on a case-by-case basis, after consideration of the unique 

circumstances of each extension request.

The comment should recite relevant facts, including any demographic, economic or financial data 

supporting the commenter's position. If the commenter opposes the application, the comment should 

also: 1) address at least one reason for denial based upon regulatory criteria for denial; 2) support the 

reason for denial with relevant facts and supporting data; and 3) address how the approval of the 

application is harmful to the community or the commenter. While OTS will accept and consider all 

comments, including those that do not meet all of the content criteria, commenters are encouraged to 

include all relevant information and arguments. The commenter may also request an informal 

meeting pursuant to 12 C.F.R. §§ 516.120 and 516.170 with his/her comment, along with a 

description of the issues and facts to be discussed and justification for why written submissions are 

insufficient to adequately address those facts or issues.

If the commenter has filed a written request for a meeting and the request contains the required 

information set forth in 12 C.F.R. § 516.120(b), OTS will arrange a meeting. If an informal meeting 

is requested, the commenter must simultaneously send a copy of the written request to the applicant. 

OTS will generally provide an applicant an appropriate opportunity and period of time to respond to 

submitted comments.

OTS will facilitate the informal meeting between the applicant, the commenter(s) and any other 

interested person(s). OTS has discretion to determine the format of the meeting, including telephone 

conferences or face-to-face meetings. OTS will inform the applicant and commenters requesting an 

informal meeting of its decision on a request for a meeting, or of its decision to hold an informal 

meeting on its own initiative. OTS may also invite any other interested persons to attend. OTS will 

inform the participants of the date, time, location and format for the meeting in reasonable time in 

advance. OTS anticipates that informal meetings will be sufficient to facilitate the resolution of 

issues in most cases.

If an informal meeting fails to facilitate the resolution of issues to the satisfaction of any participant in 

an informal meeting, OTS may proceed to conduct a formal meeting before a presiding officer upon 

the filing of a request. Any participant requesting a formal meeting pursuant to 12 C.F.R. §§ 516.170 
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

240.6 Applications Handbook April 2001 Office of Thrift Supervision

and 516.180, should submit a request to OTS within three days after the informal meeting, and 

provide copies of its request to the other participants of the informal meeting. The request must 

describe the nature of the issues or facts to be presented and must demonstrate that material issues or 

facts have not been adequately addressed by the informal meeting, and that a formal meeting is 

necessary to develop a record sufficient to support a determination on those facts or issues. OTS will 

not arrange an informal meeting where a request is clearly frivolous or clearly lacking a factual basis. 

OTS may elect to hold a formal meeting on its own initiative if deemed necessary to assist in the 

disposition of the application or issues raised by the application.

OTS will issue a Notice of Formal Meeting if it decides to hold a formal meeting, and send the notice 

to the applicant, to any person requesting a formal meeting, and to any interested person, in its 

discretion, it desires to invite. Any person receiving the Notice of Formal Meeting must notify OTS 

within ten days of receipt of the notice of their intent to participate in the meeting. All participants in 

the formal meeting must provide the names of their presenters and copies of proposed exhibits to 

OTS, to the applicant, and to any other person designated by OTS, no later than five days before the 

date of the formal meeting. All presenters of documentary material must furnish copies of the 

material to OTS and to each other participant. OTS will arrange for a transcript of the meeting, with 

each participant bearing the cost of any copies of the transcript it requests for its use.

OTS anticipates that most formal meetings will follow an informal meeting. Accordingly, OTS will 

not grant a request for a formal meeting unless an informal meeting has occurred. However, OTS has 

the authority to conduct a formal meeting without holding an informal meeting if the meeting is 

beneficial to the review process and will facilitate a resolution of the issues raised by application.

OTS has arranged an informal or formal meeting, the processing time frames for the If application are 

suspended until OTS determines that a sufficient record has been developed to address the issues 

raised in the comments.

Eligibility Examinations

If a non-OTS-regulated depository institution proposes to transfer a significant level of assets and/or 

liabilities to an OTS-regulated institution, OTS may conduct an eligibility examination or review of 

the assets and/or liabilities being transferred. For depository institutions that have recently been 

examined by a federal or state banking or trust regulator and received satisfactory ratings (CAMELS 

1 or 2, Compliance 1 or 2, CRA Outstanding or Satisfactory, Trust 1 or 2), OTS may decide not to 

require an eligibility examination, unless the application raises a material issue not addressed by the 

report of examination. Also, when the most recent safety and soundness examination is older than six 

months, OTS will consider the need for an eligibility examination due to the age of the existing 

examination report. Absent these concerns, OTS will generally rely on the most recent report of 

examination as part of its review of the application.

The Regional Office should determine the need for an eligibility examination as early in the 

application process as possible. The eligibility examination may include on- or off-site activities. 

Prior to commencing the on-site work, OTS will forward a Preliminary Examination Response Kit 
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

Office of Thrift Supervision April 2001 Applications Handbook 240.7

(PERK) requesting more detailed information that should be made available to the examiners upon 

their arrival. OTS does not normally charge a fee for an eligibility examination. However, OTS may 

impose an hourly fee if the examiners encounter significant problems that require additional review 

beyond the scope of a standard eligibility examination.

Accountholder Notification

If an institution has filed an application to transfer deposit liabilities to another depository institution, 

the institution must notify an affected accountholder of the proposed account transfer and advise the 

accountholder of the option of retaining the account in the applicant institution under the following 

circumstances:

• The applicant will be transferring account liabilities to an institution that does not have its 

accounts insured by the FDIC or the National Credit Union Share Insurance Fund; or

• The applicant is a mutual savings institution and proposes to transfer account liabilities to a 

stock depository institution.

The notice should allow an affected accountholder at least 30 days to consider whether to retain 

accounts in the transferring savings institution.

Trust Operations

If the applicant is acquiring trust assets from a depository institution and has not previously been 

approved to exercise the appropriate type of trust powers or has not been approved to exercise trust 

powers in the state in which they will now be exercised, a trust powers application must be filed. 

However, if the applicant is a state chartered savings institution and is acquiring trust assets, it does 

not need to file a trust application. See Section 620 of the handbook for guidance on the processing 

of trust powers applications.

REVIEW GUIDELINES

Processing Procedures and Time Frames

As noted in the Delegated Authority section, certain applications are not subject to delegated 

authority and are processed concurrently with OTS-Washington staff. As a general matter, 

correspondence from OTS regarding applications that are nondelegated will be transmitted from 

OTS-Washington. Correspondence on delegated applications will generally come from the Regional 

Office.

Within five business days of receipt of the application and the application fee, the Regional Office 

must notify the applicant of the application's receipt. The appropriate application fee must 

accompany each application in order for it to be considered filed. For nondelegated applications, the 
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

240.8 Applications Handbook April 2001 Office of Thrift Supervision

application will not be considered filed until received by both OTS-Washington and the Regional 

Office.

For nondelegated applications that involve specialty areas, such as CRA, trust, or insurance issues, a 

copy of the application must be provided to the corresponding OTS-Washington specialist.

Within 30 calendar days of receipt of a properly submitted application, OTS shall take the following

actions.

• Deem the application complete;

• Request, in writing, any additional information necessary to deem the application complete; 

or

• Decline to further process the application if it is deemed by OTS to be materially deficient 

and/or substantially incomplete.

Failure by OTS to act within 30 calendar days of receipt of the application for processing shall result 

in the filed application being deemed complete, commencing the period for review. 

OTS must review requests for a waiver of an application requirement that certain information be 

supplied, in a timely manner. Unless OTS requests, in writing, additional information about the 

waiver request, or denies the waiver request, the waiver request shall be deemed granted.

If additional information is requested, a response must be submitted within 30 calendar days of the 

letter requesting such information. The applicant may, in writing, request a brief extension of the 

30-calendar day period for responding to a request for additional information, prior to the expiration 

of the 30-calendar day time period. OTS, at its option, may grant the applicant a limited extension of 

time in writing. Failure to respond to a written request for additional information within 30 calendar 

days of such request may be deemed to constitute withdrawal of the application or may be treated as 

grounds for denial or disapproval of the application. 

After the timely filing of additional information in response to an initial or subsequent request by 

OTS for additional information, OTS has 15 calendar days to review the additional information for 

completeness or appropriateness and take the one of the following actions.

• Request, in writing, any additional information necessary to deem the application complete;

• Deem the application complete; or 

• Decline to further process the application if it is deemed by OTS to be materially deficient 

and/or substantially incomplete.

The 15-day review period commences when OTS receives a response that purports to respond to all 

questions in the information request. OTS may extend the 15-day review period for an additional 15 
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

Office of Thrift Supervision April 2001 Applications Handbook 240.9

calendar days, if OTS requires the additional time to review the response. OTS will notify the 

applicant that it has extended the period before the end of the initial 15-day period.

Failure by OTS to act within 15 calendar days of receipt of the additional information shall result in 

the application being deemed complete, commencing the period for review. 

Applications filed to assume deposits from an FDIC-insured institution under 563.22(a)(2) are 

deemed to be automatically approved 30 calendar days after OTS sends written notice that the 

application is complete, unless:

• The acquiring institution does not meet the criteria for expedited treatment under § 516.5;

• The Regional Office recommends to OTS-Washington the imposition of nonstandard 

conditions prior to approving the application;

• OTS suspends the applicable time frames under § 516.190;

• OTS raises objections to the transaction;

• The resulting savings institution would be one of the largest depository institutions competing 

in the relevant geographic market (see 12 C.F.R. §§ 563.22(f)(5)-(f)(7) for further details);

• The Herfindahl-Hirschman Index (HHI) in the relevant geographic area was more than 1800 

before the transaction and the increase in the HHI used by the transaction would be 50 or 

more;

• In a transaction involving potential competition, OTS determines that the acquiring institution 

is one of three or fewer potential entrants into the relevant geographic area;

• The acquiring institution has assets of $1 billion or more and proposes to acquire assets of $1 

billion or more;

• The resulting institution has a composite CRA rating of less than satisfactory, or is otherwise 

seriously deficient with respect to OTS nondiscrimination regulations and the deficiencies 

have not been resolved to the satisfaction of OTS;

• The transaction involves any supervisory or assistance agreement with OTS or FDIC;

• The transaction is part of a conversion under 12 C.F.R. Part 563b;

• The transaction raises a significant issue of law or policy; or

• The transaction is opposed by any constituent institution or contested by a competing 

acquiror.

Applications that do not qualify for the 30-day automatic approval are subject to the 60-calendar day 

review period during which time OTS will take into consideration all factors present in the 

application and render a decision thereon. If, upon expiration of the 60-day review period (assuming 

no extension has been granted) OTS has failed to act, the application is deemed approved 

automatically, and the applicant may thereafter consummate the transaction.
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

240.10 Applications Handbook April 2001 Office of Thrift Supervision

During the review period, OTS may request additional information if the information is necessary to 

resolve or clarify the issues presented in the application. OTS may also notify the applicant that the 

application is incomplete and require that the applicant submit additional information to complete the 

application. The review period can be extended an additional 30 calendar days if OTS determines 

that additional time will be required to analyze the proposed transaction. In such cases, OTS must 

notify an applicant prior to the expiration of the period for review. In situations in which an 

application presents a significant issue of law or policy, OTS may extend the applicable period for 

review of such application beyond the time period for review. In these cases, written notice must be 

provided to an applicant no later than the expiration of the time period.

Under 12 C.F.R. § 516.290, if OTS has not acted on a pending application within two calendar years 

after the filing date, OTS may deem the application withdrawn unless a determination is made that the 

applicant is actively pursuing a final determination on the application. Applications that are subject 

to this withdrawal provision are those that have failed to timely take action such as filing required 

additional information, or OTS has suspended processing of an application based on circumstances 

that are, in whole or in part, within the applicant’s control and have failed to take reasonable steps to 

resolve these circumstances.

Notices under Expedited Treatment

If OTS determines that a filing under 563.22(c) may be processed under expedited treatment, OTS 

must be notified of the transaction at least 30 days prior to the effective date.

Within five business days of receipt of the notice and fee, OTS must notify the applicant of the 

notice's receipt. The appropriate fee must accompany each notice in order for the filing to be 

considered filed.

The applicant may engage in the proposed activities upon the expiration of 30 calendar days after the 

filing date of its notice, unless OTS takes one of the following actions before expiration of that time 

period:

• Requests, in writing, any additional information necessary to supplement the notification;

• Notifies the applicant that the notice is subject to standard treatment as it raises a supervisory 

concern, raises a significant issue of law or policy, or requires significant additional 

information;

• Suspends the time frames pursuant to 12 C.F.R. § 516.190; or

• Disapproves of the notice.

Failure by OTS to act within 30 calendar days of receipt of the notice for processing shall result in the 

filed notice being accepted. If supplemental information is requested, the applicant will have 30 days 
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

Office of Thrift Supervision April 2001 Applications Handbook 240.11

to provide such information. The 30-day time frame will begin anew upon receipt of such 

information.

For purposes of calculating all processing time frames, OTS does not include the day of the act or 

event, in determining the date the time period commences. In determining the conclusion of a time 

period, when the last day of the time period is a Saturday, Sunday, or a Federal holiday, the last day 

will become the next day that is not a Saturday, Sunday, or Federal holiday.

Bank Merger Act

The Bank Merger Act (BMA) states that OTS may not approve: (i) any proposed merger transaction 

that 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; or (ii) any merger transaction the 

effect of which, in any section of the country, may be to substantially lessen competition, tend to 

create a monopoly or, in any other manner, restrain trade, unless OTS finds that the anticompetitive 

effects of the proposed transaction are 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. Additionally, 

the BMA requires that OTS take into consideration the financial and managerial resources, future 

prospects of the existing and proposed institutions, and the convenience and needs of the community 

to be served. The BMA applies to all applications filed under 563.22(a)(2).

Unless it has been determined that immediate action is necessary and competitive factors reports have 

therefore been dispensed with, the reviewer must send a copy of the application (provided by the 

applicant as detailed above) to and request reports on the competitive factors involved from the 

Attorney General (Department of Justice); the Comptroller of the Currency; the appropriate Federal 

Reserve Bank; and the Federal Deposit Insurance Corporation. Generally, the reports should be 

furnished by the agencies within 30 calendar days of request. However, in certain emergency 

situations this time frame may be lessened to ten days (see § 563.22(e)(2)).

For certain transactions that are inherently competitively neutral, the Department of Justice has 

agreed to allow OTS to use a streamlined processing procedure. Such transactions include: 

(i) mergers between savings associations if at least 50 percent of the voting stock of the involved 

institutions is owned by the same company, person, or group of persons and/or companies acting in 

concert, or if one of the savings associations controls the other; (ii) the purchase of assets and 

assumption of liabilities of branch offices, if a single savings and loan holding company owns more 

than 50 percent of the outstanding voting stock of each of the savings associations involved in the 

transaction; and (iii) mergers between an interim savings association and an existing savings 

association to facilitate the formation of a unitary savings and loan holding company.

For competitively neutral transactions the initial letter sent with the application copy to the 

Department of Justice will indicate that the transaction is deemed to have received “interim approval” 

and request confirmation that the application is subject to the special processing procedure. Provided 

OTS’s final approval of the application is granted after passage of 30 days from the filing date, the 
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

240.12 Applications Handbook April 2001 Office of Thrift Supervision

transaction may be consummated immediately upon approval as opposed to waiting 15 days after 

approval as required under ordinary BMA transactions. 

Immediately upon approval of an application, OTS must provide a letter to the Attorney General/DOJ 

informing it of the approval and including a copy of the approval letter/order.

Sample BMA letters for each of the above scenarios are included in the Bank Merger Act Transmittal 

Forms Section of the handbook (Section 030).

Regulatory Criteria 

The authority of OTS to act on an application by a savings institution under this section is set forth in 

12 USC §§ 1828(c)(2) and (c)(5) and 12 C.F.R. § 563.22. Additionally, if a savings institution will 

be purchasing assets and/or assuming deposit liabilities, OTS must consider these applications under 

the Community Reinvestment Act of 1977, 12 USC §§ 2901-2905, as set forth in 12 C.F.R. Part 

563e.

For all applications filed under 12 C.F.R. §§ 563.22(a) and (c), OTS will consider the following 

criteria.

• The capital level of the applicant savings institution; 

• Managerial resources of the applicant savings institution;

• The financial resources and future prospects of the applicant savings institution;

• The convenience and needs of the communities to be served;

• The conformity of the transaction to applicable law, regulation, and supervisory policies; and

• Factors relating to the fairness of and disclosure concerning the transaction.

With regard to the effect of the CRA on purchase and/or assumption applications, the applicant 

institution’s record in meeting the credit needs of its community, consistent with safe and sound 

operations, is a consideration in approval of the application.

Decision Guidelines

The statutory and regulatory requirements for determining whether OTS should approve an 

application by a savings institution to purchase or sell assets and/or assume or transfer liabilities from 

a depository institution are designed to ensure the viability and safe and sound operation of the 

applicant savings institution. In general, the analysis should conclude that capital is sufficient to 

support the operations of the institution following the transaction and that management has the 

necessary expertise and controls to implement the business plan of the institution. OTS should 

conclude that the community will be served and that the transaction will comply with applicable rules 
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

Office of Thrift Supervision April 2001 Applications Handbook 240.13

and regulations. In addition, the transaction should be fair to all parties concerned (savings account 

holders, borrowers, creditors, and stockholders of each savings association). OTS should consider the 

following factors in analyzing the application to determine if the transaction satisfies the applicable 

statutory and regulatory criteria for approval:

• Did the applicant submit the following forms and information?

∗ OTS Form 1639, OTS Form 1584, or OTS Form 1589;

∗ Copies of proposed employment contracts and evidence of regulatory compliance;

∗ Pro forma financial information, including capital calculations, showing the impact of the 

transaction on the applicant institution and for the first year following the transaction; 

∗ If required by OTS, a three-year business plan for the applicant institution;

∗ Additional copies of the application to be forwarded to the Department of Justice and 

other banking regulators for review under the Bank Merger Act;

∗ If there will be any changes in market area to be served, an amended CRA plan for the 

resulting institution; and

∗ Information to demonstrate that the application meets relevant approval standards.

• If a non-OTS regulated depository institution proposes to sell a significant level of assets 

and/or transfer a significant level of liabilities to an OTS-regulated institution, has the 

Regional Office contacted the appropriate regulator to discuss the supervisory and 

examination background of the selling or transferring institution? Has the Regional Office 

obtained and reviewed examination reports from the primary federal or state regulator, if 

appropriate?

• If there is not a recent examination of the institution that proposes to transfer a significant 

level of assets and/or liabilities to an OTS-regulated institution, has an eligibility examination 

or review (onsite or offsite) of those assets or liabilities been completed, if appropriate?

• Has the applicant made the appropriate notification to accountholders if required by 12 

C.F.R. § 563.22(e)(5)? 

• Has the applicant complied with the HOLA, and all other laws, rules, and regulations and 

policies of the OTS concerning purchase and assumption transactions?

• Does the application include a full description of the basic terms and conditions of the

transaction?

• Does the transaction appear to be the result of arms’ length bargaining?

• Does the board of directors and senior management have the qualifications and experience 

necessary to operate the applicant institution in a safe and sound manner?
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

240.14 Applications Handbook April 2001 Office of Thrift Supervision

• Are any proposed increases in compensation reasonable? Note that an increase in excess of 

the greater of 15 percent or $10,000 gives rise to a presumption of unreasonableness and sale 

of control. Sufficient information should be submitted to rebut this presumption (for 

example, increased responsibilities and duties of management).

• Will an advisory board be elected? If so, members should not be elected for a term greater 

than 1 year.

• Does the application describe and justify the duties and responsibilities and any compensation 

to be paid to the advisory board?

• Are advisory board fees reasonable? Note that advisory board fees in excess of 115 percent 

of directors’ fees paid by the selling savings institution prior to the transaction will give rise 

to a presumption of unreasonableness and sale of control. Sufficient information should be 

provided to rebut this presumption (for example, increased responsibilities and duties of the 

directors).

• Do proposed employment agreements comply with the requirements of 12 C.F.R. § 563.39 

and RB 27-a?

• Will the balance sheet and business strategy of the applicant institution comply with the 

lending and investment limitations of Section 5(c) of HOLA and 12 C.F.R. Part 560 

following the transaction?

• Has the applicant provided financial projections that are reasonable and well supported?

• Is the transaction consistent with the applicant’s business objectives?

• Has the applicant provided for appropriate management and policies for any significant new 

activities or risks to be assumed?

• How does the transaction change the institution’s risk profile?

• Will future operations be profitable?

• Does the application provide information concerning the accounting and tax treatment of the 

transaction?

• Is the applicant’s proposed operation of any additional branches consistent with OTS’s 

branching policy statement (12 C.F.R. § 556.5) and Section 5(r) of HOLA?

• Are the fees to be paid for any professional services in connection with the transaction fair? 

• Do the financial projections demonstrate compliance with OTS capital requirements?

• Is capital adequate based on the proposed business philosophy of the applicant institution?

• Does the applicant indicate that QTL compliance will be maintained?

• Does the applicant institution have a satisfactory history of compliance with the CRA and a 

reasonable plan to meet its obligations under the CRA in the future?
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

Office of Thrift Supervision April 2001 Applications Handbook 240.15

• If the transaction will result in any lessening of competition in any section of the country, are 

the anticompetitive effects clearly outweighed by the probable effect of the transaction in 

meeting the convenience and needs of the communities to be served?

• Has OTS received responses from the Department of Justice and the banking regulators 

regarding the competitive factors involved in the transaction? 

• Will the applicant savings institution meet the identified convenience and needs in the target 

market, including the low- and moderate-income needs after the transaction is completed?

• Will the applicant institution continue to provide credit for housing consistent with safe and 

sound banking principles? 

Conditions

Generally, the following conditions will be imposed on any approval of an application for a savings 

institution to purchase or sale assets and/or assume or transfer liabilities from a depository institution:

• The Savings Bank must receive all required regulatory approvals for the proposed transaction 

and submit copies of all such approvals to the Regional Director prior to consummation of the 

proposed transaction;

• The proposed transaction must be consummated no earlier than 15 calendar days (if subject to 

BMA) and no later than 120 calendar days from the date of the approval letter;

• On the business day prior to the date of consummation of the proposed transaction, the chief 

financial officer of the Savings Bank must certify in writing to the Regional Director that no 

material adverse events or material adverse changes have occurred with respect to the 

financial condition or operation of the Savings Bank as disclosed in the application;

• The Savings Bank must advise the Regional Director in writing within five (5) calendar days 

after the effective date of the proposed transaction: (a) of the effective date of the proposed 

transaction and (b) that the transaction was consummated in accordance with all applicable 

laws and regulations, the application, and the approval letter; and

• The Savings Bank shall advise each accountholder whose withdrawable accounts would 

increase above $100,000 as a result of the transaction of the effect on their insurance 

coverage no later than thirty (30) days after the effective date.

OTS may impose certain nonstandard conditions in connection with a purchase or assumption 

transaction. Any nonstandard conditions imposed will be based on the individual circumstances 

surrounding the institution and the transaction itself. In circumstances where nonstandard conditions 

will be imposed, they must be supported with justification in the recommendation memorandum 

related to approval of the application. Any nonstandard conditions incorporated into the approval 

letter must be summarized in the National Applications Tracking System record for the application.
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

240.16 Applications Handbook April 2001 Office of Thrift Supervision

RECORDKEEPING REQUIREMENTS

OTS is required to consolidate all correspondence related to the processing of the notice or 

application into a file copy to be sent to a central file. Both the Regional Office and OTS-Washington 

will maintain a separate file copy for nondelegated filings. The file copy must include a copy of the 

original filing including all exhibits, all amendments, all internal and external correspondence 

between interested parties, all documentation associated with the review and analysis of the filing, 

and all decision, recommendation memorandum, and compliance material. The file copy must be 

organized and separated into public and confidential material, and clearly identified as such. The 

public and confidential sections must be arranged in chronological order. 

MONITORING AND CONTROL

The Regional Office will monitor compliance with any conditions imposed in connection with an 

application’s approval. The applicant must submit evidence of satisfaction of the conditions included 

in the approval order or letter to the Regional Office within the stated time frames.

The Regional Office’s applications staff should notify the appropriate staff responsible for the 

supervision and examination of the institution regarding the action taken on an application. In 

addition, the Regional applications staff should provide the appropriate staff with copies of the 

approval order or letter. If an application is approved, the first examination of the institution 

following the approval should include a review of compliance with all conditions of approval and any 

changes in operations as a result of the transaction.

A review of the application file should be made after all compliance material is received to ensure 

that the file is complete. Any deficiencies should be corrected before the file is sent to storage.

OTS-Washington may conduct a post audit review of the application in the Regional Office, 

including a review of the documentation maintained in the application file.

INFORMATION SOURCES

Statutes

Section 3(l) FDIA (12 USC § 1813(l))

Section 3(p) FDIA (12 USC § 1813(p))

Section 5(c) HOLA (12 USC § 1464(c))

Sections 5(d)(2) and (3) FDIA (12 USC § 1815)

Section 5(r) HOLA (12 USC § 1464(r))

Section 10(m) HOLA (12 USC § 1467a)

Section 18(c) FDIA (12 USC § 1828(c))

Section 42 FDIA (12 USC § 1831r-1)

12 USC §§ 2901-2905
Section: Purchase or Sale of Assets and/or Section 240

Assumption or Transfer of Liabilities

By a Savings Institution from FDIC-Insured

And Non-FDIC Insured Depository Institutions

Office of Thrift Supervision April 2001 Applications Handbook 240.17

Regulations

12 C.F.R. Part 516

12 C.F.R. § 556.5

12 C.F.R. § 563.22

12 C.F.R. § 563.39

12 C.F.R. § 330.4 (FDIC’s Deposit Insurance Coverage regulations)

12 C.F.R. Part 563e

OTS Bulletins/Memoranda/Orders

Transmittal 220, June 30, 1999

Regulatory Bulletin 27a, March 5, 1993

Legal Alert Memo 10, December 8, 1989

Legal Alert Memo 17, October 26, 1990

Order No. 95-177, September 26, 1995

Thrift Bulletin 48-17

Other

FDIC Deposit Summary - Can be accessed from the FDIC’s web page. Specific address: 

www.fdic.gov/news/publications/public/index.html#statistical

U.S. Department of Justice Merger Guidelines, June 14, 1982

OTS Forms

Form 1584

Form 1589

Form 1639