Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.1

This handbook section provides guidance on applications filed by companies seeking to acquire 

control of a savings institution. It is important to note that the definition of savings institution 

includes a savings and loan holding company as defined at 12 C.F.R. § 574.2(q). This means that 

control of a savings institution can be acquired directly by acquisition of the institution's stock or 

indirectly through the acquisition of the stock of an existing savings and loan holding company. 

Office of Thrift Supervision (OTS) review is required for either type of acquisition. 

Written approval from OTS is required prior to a company acquiring control of a savings institution. 

OTS has the authority to prevent a company with questionable financial and managerial strength from 

acquiring an institution. In reviewing the managerial resources of an applicant, OTS must consider 

the competence, experience and integrity of the officers, directors, and principal shareholders of the 

applicant. 

In reviewing a holding company application, OTS must consider a potential acquiror's proposed plans 

for the operation of the institution, the competitive impact of an acquisition, and, in certain cases, the 

convenience and needs of the community to be served. OTS will also review a potential acquisition 

to determine whether it would be detrimental to the institution or to the insurance risk of the Federal 

Deposit Insurance Corporation (FDIC). 

12 C.F.R. § 574.4 includes a list of the circumstances under which a company is deemed to acquire 

control of a savings institution. For the purposes of the control regulations and application 

requirements, control of an institution is divided into two categories: conclusive control and 

rebuttable control. 

In general, a company is deemed to acquire conclusive control of a savings institution if it acquires 

more than 25 percent of a class of the institution's voting stock or controls the election of a majority 

of the directors of the institution. If a company proposes to acquire conclusive control, it must file a 

holding company application and receive approval from OTS prior to acquiring control. 

Rebuttable control occurs when 10 percent of any class of voting stock, or 25 percent of any class of 

stock, is acquired and a control factor exists (e.g. acquiror is one of the two largest holders of any 

class of stock). A detailed discussion of other control and rebuttable control factors is provided in 

Section 320 of this handbook. 

FILING REQUIREMENTS

Delegated Authority

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

delegated authority. Applications that are not delegated to the Regional Office are those that include: 

a significant issue of law or policy; foreign acquirors, insurance companies, investment companies, 

pension funds, investment advisors and securities firms that have not been previously approved by 

OTS; relate to permission to organize, conversions of state-chartered trust companies and non-bank 

banks to federal savings banks, and mutual to stock conversion applications; approval of requested 

waivers of statutes, regulations, OTS policy or significant application requirements; subject to 

adverse comments and have formal meetings; involve hostile or contested acquisitions, opposition 
Section: Holding Company Acquisition Guidelines Section 510

510.2 Applications Handbook April 2001 Office of Thrift Supervision

proxy solicitations or other potential acquisitions where there is a competing acquiror; involve 

person(s) subject to a pending notice of charges or formal investigation; include qualified stock 

issuances filed under 12 C.F.R. § 574.8; raise significant competitive factor issues; or involve the 

approval of non-cash capital contributions. See Delegation Section 040 of the handbook for 

information on the delegation process.

Expedited and Standard Processing Procedures

This application is not subject to the expedited processing procedures set forth in 12 C.F.R. Part 516. 

Accordingly, the application will be processed utilizing the procedures set forth in 12 C.F.R. § 574.6.

Prefiling Meeting Requirements 

It is the applicant’s responsibility to contact the Regional Office in a reasonable time period in 

advance of filing the application, to discuss whether a prefiling meeting will be required. Holding 

company applications have been identified as the type that may necessitate a prefiling meeting. The 

purpose of the meeting is to permit OTS and the applicant to identify any legal or policy issues before 

submission of the application, and enable the applicant to address these issues early in the process. 

The Regional Office has the discretion to require a prefiling meeting, and will work with the applicant 

to determine a schedule and forum for a meeting. The forum for the meeting will usually be in person 

at the Regional Office, although the Regional Office may consider meetings by telephone or video 

conferencing at its discretion on a case-by-case basis. OTS may decide not to accept a submitted 

application until the prefiling meeting requirements in 12 C.F.R. Part 516 are met, leading to 

significant delays in processing the application.

When a meeting is required, the applicant should contact the Regional Office to determine which 

individuals should be present at the meeting. These individuals will be expected to discuss the salient 

aspects of the proposed transaction. The applicant must submit a draft business plan to the Regional 

Office prior to the meeting in a time frame in advance of the meeting acceptable to the Regional 

Office. At a minimum, the plan should:

• Describe clearly and completely the projected operations and activities;

• Provide financial projections for a three-year period;

• Discuss the associated risks and the impact of the additional business activities on the 

institution;

• Identify any additional directors and/or senior executive officers that will be appointed as a 

result of the proposed transaction, with documentation to support that these individuals have 

the required qualifications and experience to prudently oversee the resulting operations; and,

• Demonstrate how the charter will serve the credit and lending needs in its target market.
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.3

Information and Form Requirements

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

12 C.F.R. Part 516. The applicant is required to file the original and two conformed copies of each 

application. If the applicant wishes to acquire a state-chartered institution, one additional copy should 

also be provided. All copies are to be clearly marked as to the type of filing, and should contain all 

exhibits and other pertinent documents. 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.

Immediately upon receiving an application relating to the acquisition of control of a state-chartered 

institution, the Regional staff should forward a copy of the application and allow 30 days for the state 

authority to review and provide comments. OTS should consider the views and recommendations of 

federal and state agencies in determining whether to disapprove a holding company acquisition.

Companies must file an H-(e) application to acquire any savings institution or savings and loan 

holding company. If an individual seeks to obtain control, the appropriate filing is a change in control 

notice. All acquisitions by a company will fall into one of the following five categories: 1) H-(e)1; 

2) H-(e)1-S; 3) H-(e)2; 4) H-(e)3; and 5) H-(e)4. While the requirements for each category of holding 

company acquisition are different, they are all set forth in one booklet of instructions, the Form H-(e) 

(OMB No. 1550-0015). 

• An H-(e)1 application is required when a company, other than a savings and loan or bank 

holding company, seeks to acquire one savings institution (i.e., a new unitary holding 

company is created or a trust that is not excluded from the definition of a savings and loan 

holding company (12 C.F.R. § 574.2(q)) acquires control of a savings institution).

• An H-(e)1-S application must be filed in situations where a savings institution proposes a 

corporate reorganization involving the formation of a shell holding company. This type of 

application has a 45-day automatic approval provision. In order for a transaction to qualify 

for processing as an H-(e)1-S, the applicant must meet the following requirements: 

∗ The creation of the holding company is the sole transaction included in the application 

(other than the creation of an interim institution that will disappear upon consummation 

of the transaction). An H-(e)1-S, however, can be filed in conjunction with an 

institution's standard mutual to stock conversion;

∗ The board of directors and executive officers of the holding company are individuals 

who, at the time of acquisition, are directors and executive officers of the institution;

∗ The acquisition raises no significant issues of law or policy; and

∗ The holding company agrees to comply with the conditions to be imposed in an approval 

of the transaction, pursuant to 12 C.F.R. § 574.7(a)(2)(F) and (G). 

• An H-(e)2 application must be filed by: (1) a savings and loan holding company seeking to 

acquire and hold separately one or more savings institutions, or (2) any company, except a 
Section: Holding Company Acquisition Guidelines Section 510

510.4 Applications Handbook April 2001 Office of Thrift Supervision

bank holding company, or subsidiary thereof, seeking to acquire more than one savings 

institution and hold the thrifts as separate entities. 

• An H-(e)3 application must be filed by: (1) a savings and loan holding company seeking to 

acquire through a merger, consolidation, or purchase of assets, a savings institution or 

uninsured institution or a savings and loan holding company; or (2) any company, other than 

a bank holding company, or subsidiary thereof, seeking to acquire through a merger, 

consolidation, or purchase of assets two or more savings institutions. 

• An H-(e)4 application is an information filing that must be filed in connection with a claim 

that a reorganization is exempt from prior written OTS approval. Such reorganizations must 

involve solely the acquisition of control of a savings institution by a newly formed company 

that is controlled by the same acquirors that controlled the savings institution for the 

immediately preceding three years. To qualify for this type of filing, the transaction can 

involve no other transactions, such as an assumption of a current owner's debt by the newly 

formed company. The H-(e)4 filing must be accepted before the company acquires control of 

the institution.

Based upon the type of filing, the applicant will be required to submit certain documents and 

information set forth in the H-(e) Application Package. Please see the chart in the General 

Instructions section to determine what items are required to be addressed by each applicant. The 

application form address eight categories of information requirements:

• Proposed Transaction(s)

• General Background

• Financial Resources (Including a Three-year Business Plan)

• Managerial Resources

• Future Prospects

• Convenience and Needs of the Community

• Competitive Factors

• Voting Trusts and Corporate Trustees

If the holding company application involves a foreign holding company, the foreign holding company 

must submit a Foreign Holding Company Agreement. (See Exhibit A.)

Additional forms to supplement the H-(e) Application Package may be necessary, i.e., forms seeking 

approval for permission to organize, subsidiaries, trust powers, biographical and financial reports 

complete with supporting documentation, and business plan. These forms and instructions are 

available on the OTS Website.
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.5

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. OTS will not treat as confidential the portion of an 

application describing the plan to meet the Community Reinvestment Act objectives. 

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 

The applicant shall publish notice of its intent to acquire a savings institution no earlier than three 

days before and no later than three days after filing the application, in accordance with the 

requirements of 12 C.F.R. § 574.6(d). For H-(e)3 applications, the applicant must also publish notice 

in accordance with the Bank Merger Act (BMA) (12 USC § 1828(c)(2)), as codified in 12 C.F.R. 

§ 563.22(e). 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 institution is 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).

OTS may require an applicant to publish a new public notice of the application in circumstances 

when an applicant submits a revision to the application, or submits new or additional information, or 

when a major issue of law or change in circumstance arises after filing the application. OTS has the 

discretion in these circumstances to require republication if it determines that the public has not had 

adequate notice and opportunity to comment on the application due to the substantial change. OTS 

will notify the applicant if a new public notice of a revised application must be published.

Additional public notice requirements may apply for transactions involving permission to organize or 

branch purchase applications filed pursuant to 12 C.F.R. §§ 543.2 and 563.22. Combined public 

notice may be published consistent with existing OTS policy. See Publication Forms Section 020 of 

the handbook for examples of publication language.

• Comment Procedures (H-(e)1, H-(e)1-S and H-(e)2 Applications)

Any person may submit a written comment supporting or opposing the application within 20 

days after the filing date of the application. Up to an additional 20 days to submit comments 
Section: Holding Company Acquisition Guidelines Section 510

510.6 Applications Handbook April 2001 Office of Thrift Supervision

may be obtained upon a showing of good cause, if a written request is received by OTS 

within the initial 20-day period. OTS will not consider any late filed comments unless: the 

commenter demonstrates good cause for why they could not submit a timely comment; or, 

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

disposition of the application. 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 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. 

• Comment Procedures (H-(e)3 Application)

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

H-(e)3 application within 30 days after the filing date of the application. OTS will not 

consider any late filed comments unless: the commenter demonstrates good cause for why 

they 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 30-day 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 their 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 conference or face-to-face meetings. OTS will inform the applicant and 
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.7

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, 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.

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.

Bank Holding Company Acquisitions

Bank holding companies and their subsidiaries are not subject to the requirements of section 10 of the 

Home Owners' Loan Act. As a result, bank holding companies and their subsidiaries are not required 

to file holding company applications with OTS to acquire savings institutions. However, bank 

holding companies seeking to acquire a savings institution are required to submit an application, 

pursuant to section 4(c)(8) of Bank Holding Company Act, to the Federal Reserve Board (FRB). The 
Section: Holding Company Acquisition Guidelines Section 510

510.8 Applications Handbook April 2001 Office of Thrift Supervision

FRB will then forward a copy of the application to OTS for comments and recommendations. In 

general, OTS will have 30 days to provide comments to the FRB, but the FRB may shorten the period 

in the case of an emergency situation.

Background Checks

OTS policy requires background investigations of all applicants, their affiliates, current and proposed 

senior executive officers and directors of the applicant, and any individuals or groups acing in concert 

who own or control, directly or indirectly, ten percent or more of the applicant’s stock. At a 

minimum, individuals must submit an Interagency Biographical and Financial form, FBI Fingerprint 

Card, and a Regulatory Bulletin (RB) 20 Certification Form. The RB-20 Certification Form should 

be submitted by the applicant and its affiliates in accordance with the bulletin. RB-20 authorizes OTS 

to request supplemental information from applicants if the information is useful in completing a 

thorough background investigation. Applicants can request a waiver from filing portions of this 

information by providing justification stating why this information is unduly burdensome or 

unnecessary. Waiver requests will only be granted in limited circumstances and consistent with 

current OTS policy. The Regional Office will conduct a background investigation in compliance with 

RB-20. If appropriate, the review may also require the Reviewing Analyst to contact other regulatory 

agencies to seek additional comments on the applicants, such as the functional regulator (i.e. state 

insurance regulator, SEC, NASD, etc.). Individuals must be fingerprinted by an independent third 

party unrelated to the individual or companies affiliated with the individual on fingerprint cards 

bearing the OTS identification number. Results of all background checks should be addressed in the 

Regional Office's digest.

Eligibility Examinations

In certain circumstances, OTS may have concerns regarding the qualifications of an acquirer to 

control a financial institution, related to existing operations that will become affiliated with the 

acquired institution, if issues involving the treatment of consumers, regulatory compliance, or other 

matters were identified during the background review. These types of circumstances may require 

OTS to perform an eligibility examination or to perform a review of parent or affiliated organizations. 

The examination procedures should be limited to those needed to assess the particular risks posed by 

the proposed transaction, or necessary to assess significant or novel issues relevant to the application.

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

examination 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 its eligibility examination. However, OTS may 

impose an hourly fee if the examination encounters significant problems that require additional 

review beyond the scope of a standard eligibility examination.
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.9

Transactions With Affiliates 

Sections 23A and 23B of the Federal Reserve Act, addressing transactions with affiliates, apply to 

savings institutions as if the savings institution were an FRB member bank. Implementing 

regulations are located at 12 C.F.R. §§ 563.41 and 563.42. These sections incorporate two special 

provisions, set forth at 12 U.S.C. § 1468(a)(1), that: 1) prohibit a savings institution from purchasing 

or investing in securities of an affiliate; and 2) allow loans to be made only to those affiliates engaged 

in activities permissible for bank holding companies. 

Bank Merger Act 

All applications filed under 12 C.F.R. Part 574 that involve mergers of savings institutions must also 

be reviewed and approved under the BMA. These filings include applications in which a savings and 

loan holding company proposes to acquire by merger, consolidation, or purchase of assets, a savings 

and loan institution and applications involving corporate reorganizations in which an interim 

institution is formed to facilitate the reorganization. Additionally, if an individual chooses to form an 

interim institution to accomplish an acquisition of control, the BMA, rather than the Change in Bank 

Control Act, would apply. 

The BMA states that OTS may not approve (1) 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 (2) 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. 

Applicants subject to the BMA are required to file four additional copies of the application with the 

Regional Director. 

The Regional Director should request a competitive factors report from the Attorney General of the 

Department of Justice (DOJ), the Office of the Comptroller of the Currency, the FRB, and the Federal 

Deposit Insurance Corporation (FDIC) within five calendar days after the receipt of an application. 

The above agencies should provide the requested reports within 30 calendar days. See Bank Merger 

Act Transmittal Forms Section 030 of the handbook for the form letters.

OTS must immediately notify the Attorney General of any approval of a proposed merger transaction 

that is subject to the BMA. The Regional Office should send such notice on the day that the merger is 

approved (See Bank Merger Act Transmittal Forms Section 030 of the Handbook for the form 

letters). 

Transactions requiring approval under the BMA may not be consummated prior to the 15th calendar 

day after the date of approval by OTS. The approval letter sent to the applicant should specify that 

consummation cannot take place before the appropriate date. 
Section: Holding Company Acquisition Guidelines Section 510

510.10 Applications Handbook April 2001 Office of Thrift Supervision

The DOJ has specified certain types of competitively neutral merger transactions that are subject to a 

streamlined processing procedure. These transactions include: (1) mergers between two or more 

savings institutions, if at least 50 percent of the voting stock of all of the institutions involved is 

controlled by the same company, person, or group of persons, or if one savings institution controls 

another; and (2) mergers between an interim savings institution and an existing savings institution to 

facilitate the formation of a unitary savings and loan holding company in a holding company 

reorganization. 

Upon receipt of an application involving a competitively neutral merger, the Regional Director should 

forward a letter to the DOJ stating that the application has been granted “interim approval” for 

purposes of the BMA. The letter should also request confirmation that the proposed transaction is 

subject to streamlined processing (See Bank Merger Act Transmittal Forms Section 030 of the 

handbook for the form letter). If the DOJ does not object to the merger transaction within the 30-day 

period, the merger may be consummated immediately upon OTS approval of the transaction 

(provided that final approval is granted after passage of the 30 day period). 

Prohibition on Offers to Acquire and Acquisitions of Stock for Three Years Following 

Conversion

If the target institution converted from the mutual to stock form of ownership within the previous 

three years, no person or company may, directly or indirectly, acquire or offer to acquire the 

beneficial ownership of more than ten percent of any class of the institution’s equity securities 

without OTS prior written approval. If a person or company violates this prohibition, the institution 

may not permit the person or company to vote shares in excess of ten percent, and may not count 

these shares in any shareholder vote.

Certain exceptions to the regulations governing offers to acquire stock within three years of 

conversion, are set forth at 12 C.F.R. § 563b.3(i). OTS may deny an notice filed under 12 C.F.R. 

§ 563b.3(i) if the proposed acquisition:

• Is contrary to the purposes of 12 C.F.R. Part 563b;

• Is manipulative or deceptive;

• Subverts the fairness of the conversion;

• Is likely to injure the institution;

• Is inconsistent with the institution’s plan to meet the credit and lending needs of its proposed 

market area;

• Otherwise violates law or regulation; or

• Does not prudently deploy the institution's conversion proceeds.

The primary purposes of this rule are to provide a reasonable period of time for the institution to 

prudently deploy the new capital according to its business plan, for it to acclimate to operating as a 

public company, and to do both without the distraction of considering takeover proposals. OTS does 
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.11

not believe acquisitions in the first three years following conversion are in the best interests of newly 

converted institutions, the communities the institutions serve, or the shareholders. In addition, OTS 

believes that the approval of friendly acquisitions may be inconsistent with the purposes of the 

conversion rules. As such, the standards for allowing such acquisitions are high and should not be 

approved unless there are significant risks to the institution operating on a stand-alone basis.

Exempt Transactions 

The following transactions are exempt from the application filing requirements of 12 C.F.R. 

§ 574.3(a): 

• Control of a savings institution acquired under the terms of a will creating a trust that is 

excluded from the definition of a savings and loan holding company (12 C.F.R. § 574.2(q));

• A reorganization in which a company, person or group of persons that have controlled a 

savings institution for more than three years, seek to establish a newly formed holding 

company that is controlled by the same person or group. (An H-(e)4 notification is required 

for these types of transactions);

• Control of a savings institution acquired by a bank holding company that is registered under 

and subject to the Bank Holding Company Act of 1956, or any company controlled by such 

bank holding company;

• Control of a savings institution acquired solely as the result of a pledge or hypothecation of 

stock to secure a loan, or the liquidation of a loan, made in the ordinary course of business;

• Control of a savings institution acquired through a percentage increase in stock ownership 

following a pro rata stock dividend or stock split, if the proportional interests of the recipients 

remain substantially the same;

• The acquisition of additional stock by a person after approval has been received under 

12 C.F.R. § 574.7, provided that the acquisition is consistent with any conditions or 

limitations imposed in connection with the approval and with the representations the acquiror 

made in the notice; 

• The acquisition of up to 25 percent of a class of stock by certain tax-qualified employee stock 

benefit plans; and

• The acquisition of up to 15 percent of the voting stock of any savings institution by a savings 

and loan holding company pursuant to a qualified stock issuance (12 C.F.R. § 574.8(a)). 

Prohibited Acquisitions 

OTS is prohibited, pursuant to 12 U.S.C. § 1467a(e)(3) and 12 C.F.R. § 574.3(e), from approving the 

formation of a multiple, multi-state holding company structure if a savings institution will become an 

affiliate of another savings institution with which it was not previously affiliated, except in the 

following situations:
Section: Holding Company Acquisition Guidelines Section 510

510.12 Applications Handbook April 2001 Office of Thrift Supervision

• The company, or a savings institution subsidiary of such company, is authorized to acquire 

control of a savings institution subsidiary, or to operate a home or branch office, in the 

additional state or states pursuant to Section 13(k) of the Federal Deposit Insurance Act;

• The company controls a savings institution subsidiary that operated a home or branch office 

in the additional state or states as of March 5, 1987; and

• The laws, of the state in which the institution to be acquired is located, permit a savings 

institution, chartered by such state, to be acquired by an institution chartered by the state 

where the acquiring holding company or institution is located, or by a holding company that 

controls such a state-chartered institution. 

Waivers 

In accordance with the provisions of 12 C.F.R. § 574.6(g), OTS may waive the publication, public 

comment, and disclosure requirements related to an application in a supervisory case. 

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, by both OTS-Washington and the Regional 

Office, 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 that involve specialty areas, such as trust activities or CRA 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 application being deemed complete, commencing the period for review. 
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.13

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 any additional information in response to any 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 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 the 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 filed application being deemed complete, commencing the period for review. 

If an eligibility examination is conducted, the application will not be deemed complete until it 

concludes the examination. In addition, OTS may request additional information as a result of the 

eligibility examination that must be submitted in accordance with the time frames set forth in this 

section.

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 notice is deemed approved automatically, and the applicant may thereafter 

consummate the transaction. If multiple applications are submitted in connection with one 

transaction, the applicable review period for all applications is the review period for the application 

with the longest review period, subject to statutory review periods.

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 
Section: Holding Company Acquisition Guidelines Section 510

510.14 Applications Handbook April 2001 Office of Thrift Supervision

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 shall be 

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

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.

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.

H-(e)1-S Applications

An H-(e)1-S application is deemed to be approved 45 calendar days after the application is properly 

filed unless prior to such date: (i) OTS requests additional information in writing; (ii) notifies the 

applicant that the application is materially deficient and will not be processed; or (iii) denies the 

application prior to that time. It should be noted that these applications are still subject to the 

publication requirements of the other long-form H-(e) applications. If a request for additional 

information is necessary, the application converts to an H-(e)1 and the applicant may be required to 

remit the difference in application fees. 

H-(e)4 Applications 

With respect to an H-(e)4 information filing, the Regional Director, or his/her designee has 30 

calendar days after the receipt of a filing to reject the assertion that a company qualifies for the 

exemption from filing an acquisition application. Although there is no publication requirement for 

these filings, OTS may request additional information in accordance with the time frames cited above 

for H-(e) applications. If OTS requests additional information, the 30-day review period will 

commence as of the date of receipt of a complete filing. Failure by OTS to notify applicants within 

the 30 day time period will result in the automatic acceptance of the exemption claim. 

Regulatory Criteria

The authority of OTS to act on a holding company acquisition is found in 12 USC § 1467a(e) and, in 

a transaction involving a merger or combination of depository institutions, 12 USC § 1828(c)(2) (the 

BMA). The regulations promulgated pursuant to these statutes include 12 C.F.R. Part 574 and the 
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.15

merger regulations, including 12 C.F.R. §§ 546.2, 552.13, and 563.22. OTS must consider the 

merger regulations in all H-(e)3 filings, as well as in all proposed acquisitions involving the merger of 

an interim institution and the target institution. Additionally, OTS must consider all holding company 

applications under the Community Reinvestment Act (CRA) of 1977, 12 USC §§ 2901-2905; as set 

forth in 12 C.F.R. Part 563e. 

Specifically, 12 C.F.R. § 574.7(c) sets forth the basic criteria upon which OTS may deny a holding 

company acquisition application. Accordingly, OTS may deny an application: 

• If OTS finds the financial and managerial resources and future prospects of the acquiror and 

the institution involved would be detrimental to the institution or to the insurance risk of the 

Savings Association Insurance Fund (SAIF) or Bank Insurance Fund (BIF). In the case of an 

H-(e)2 or H-(e)3 application, OTS must also consider the convenience and needs of the 

community; or

• If the applicant fails or refuses to furnish information requested by OTS.

OTS must deny a holding company application:

• If OTS finds the acquisition would result in a monopoly or would be in furtherance of any 

combination or conspiracy to monopolize or to attempt to monopolize the savings and loan 

business in any part of the United States, or if the effect of the acquisition 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 effects of the proposed acquisition are 

clearly outweighed in the public interest by the probable effect of the acquisition in meeting 

the convenience and needs of the community to be served;

• If the acquiror fails to provide adequate assurances to OTS that it will make available such 

information on the operations of the company, or any affiliate, that OTS determines to be 

appropriate to determine and enforce compliance with the HOLA; or

• In the case of an application submitted by a foreign bank, if the foreign bank is not subject to 

comprehensive supervision or regulation on a consolidated basis by appropriate authorities in 

the home country of the foreign bank.

In addition, applications subject to the Bank Merger Act will also be reviewed under the standards set 

forth in 12 C.F.R. § 563.22. While many standards are similar to those listed above, this section 

provides the standards under which OTS will review merger transactions, as well as certain 

information and filing requirements related to the transactions. Accordingly, OTS will also consider 

the following factors:

• The capital level of any resulting savings institution;

• The financial and managerial resources of the constituent institutions;

• The future prospects of the constituent institutions;

• The convenience and needs of the communities to be served;
Section: Holding Company Acquisition Guidelines Section 510

510.16 Applications Handbook April 2001 Office of Thrift Supervision

• 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 holding company applications, the proposed acquiror’s 

record in meeting the credit needs of its entire community, consistent with safe and sound operations, 

is a consideration in the approval of an application.

The presumptive disqualifiers set forth in 12 C.F.R. § 574.7(g) must be considered with respect to 

holding company applications. 12 C.F.R. § 574.7(g) sets forth a list of presumptive disqualifiers that, 

if applicable, could result in the disapproval of a potential acquiror's application. The purpose of 

these regulatory provisions is to put potential acquirors on notice as to the grounds upon which an 

application may be disapproved, unless adequately refuted. The following factors give rise to a 

rebuttable presumptive disqualifier:

• During the ten year period immediately preceding filing of the application, criminal, civil, or 

administrative judgments, consents, or orders, and any indictments, formal investigations, 

examinations, or civil or administrative proceedings (excluding routine or customary audits, 

inspections and investigations) that terminated in any agreements, undertakings, consents or 

orders, issued against, entered into by, or involving the acquiror or affiliates of the acquiror 

by any Federal or state court, any department, agency, or commission of the U.S. 

Government, any state or municipality, any Federal Home Loan Bank, any self-regulatory 

trade or professional organization, or any foreign government or governmental entity, that 

involve:

∗ Fraud, moral turpitude, dishonesty, breach of trust or fiduciary duties, organized crime, or 

racketeering;

∗ Violation of securities or commodities laws or regulations;

∗ Violation of depository institution laws or regulations;

∗ Violation of housing authority laws or regulations; or

∗ Violation of the rules, regulations, codes of conduct or ethics of self-regulatory trade, or 

professional organizations.

• Denial, or withdrawal after receipt of formal or informal notice of an intent to deny, by the 

acquiror or affiliates of the acquiror, of:

∗ Any application relating to the organization of a financial institution;

∗ An application to acquire any financial institution or holding company thereof under the 

Savings and Loan Holding Company Act or the Bank Holding Company Act;

∗ A notice relating to a change in control of any of the foregoing under the Change in 

Savings and Loan Control Act or the Change in Bank Control Act; or

∗ An application or notice under a state holding company or change in control statute.
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.17

• The acquiror or affiliate(s) of the acquiror were placed in receivership or conservatorship 

during the preceding ten years, or any management official of the acquiror was a management 

official or director (other than an official or director serving at the request of OTS, the FDIC, 

the former Resolution Trust Corporation, or the former Federal Savings and Loan Insurance 

Corporation) or controlling shareholder of a company or savings institution that was placed 

into receivership, conservatorship, or a management consignment program, or was liquidated 

during his or her tenure or control or within two years thereafter.

• Felony conviction of the acquiror, an affiliate of the acquiror, or a management official of the 

acquiror or its affiliate.

• Knowingly making any written or oral statement to OTS or any predecessor agency (or its 

delegate) in connection with an notice, notice or other filing under 12 C.F.R. Part 574 that is 

false or misleading with respect to a material fact or omits a material fact with respect to 

information furnished or requested in connection with such an application, notice, or other 

filing.

• Acquisition and retention of stock in the savings institution, at the time of submission of an 

application or notice, in violation of 12 C.F.R. § 574.3 or its predecessor sections.

• Liability for amounts of debt that, in the opinion of OTS, create excessive risks of default and 

pressure on the savings institution to be acquired.

• Acquisition of control would result in a significant change in the business strategy of the 

institution that would implement activities inconsistent with economical home financing.

The presence of any of these considerations may constitute grounds for disapproval of a proposed 

acquisition if not adequately addressed by the acquiror. In order to rebut a presumptive disqualifier 

on integrity grounds, an acquiror should submit materials proving that the conduct in question has 

ceased, has become irrelevant, or otherwise should not warrant a disapproval decision. With regard 

to financial factors, the submission of an acceptable business plan or the acquiror's commitment to 

raise additional capital (for the acquiror) may be sufficient to rebut a presumptive disqualifier.

Decision Guidelines

The statutory and regulatory requirements are designed to ensure the continued viability and safe and 

sound operation of the institution, following the acquisition. In general, OTS’s analysis should 

conclude that the acquiror has sufficient capital to consummate the acquisition, has the ability to 

provide funding, should the institution need additional capital. In addition, OTS should conclude that 

resulting management has the necessary expertise and controls to implement the business plan. In 

addition, OTS should conclude that the community will be served and that the transaction will be 

consummated in compliance with applicable rules and regulations. If, based upon the review, OTS 

has determined that the acquisition will adversely affect or jeopardize the financial well being of the 

institution or be detrimental to the community; a denial recommendation may be the course of action. 

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:
Section: Holding Company Acquisition Guidelines Section 510

510.18 Applications Handbook April 2001 Office of Thrift Supervision

∗ Appropriate and properly executed H-(e) application;

∗ Each newly appointed director/trustee, senior officer and new controlling shareholder(s) 

must submit an OTS Form 1623 (Interagency Biographical and Financial Report), 

properly executed RB-20 Certification and FBI Fingerprint Card;

∗ Resume or description of the managing officer’s qualifications and discussion of salary 

and benefits, if a change has incurred;

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

∗ Description of any proposed stock option plans;

∗ Three-year business plan;

∗ Charter and bylaws;

∗ Copies of all proposed contracts with affiliates, all contracts not in the ordinary course of 

business or in excess of 15 percent of the proposed operating budget;

∗ CRA plan; and

∗ The latest audit report and annual report to shareholders.

• Financial Resources 

∗ Does the applicant propose to borrow funds to finance the acquisition of a savings 

institution? If so, evaluate all existing debt of the acquiror and all proposed acquisition 

debt to determine whether the applicant's aggregate indebtedness will place an undue 

burden on the institution to pay dividends, management fees or upstream money in other 

ways. 

∗ If funds are to be borrowed, the applicant should provide specific information concerning 

the terms of the debt, including servicing requirements. 

∗ Does the applicant propose to replace the equity of the institution with debt or non-cash 

assets? 

∗ If the applicant plans to contribute non-cash assets, the applicant should provide an 

appraisal acceptable to OTS to support the value of the assets. 

∗ Are the non-cash assets of an intangible nature? If so, the reviewer should analyze the 

amount and specific character of the assets, the predictability of the projected income 

streams associated with the assets, and the existence of a market for the assets. 

∗ Does the acquisition involve a cash-out merger that will diminish the capital and liquidity 

positions of the resulting institution? 

∗ Does the acquiror propose to infuse sufficient capital so that the institution will meet its 

capital requirements under 12 C.F.R. Part 567.2? 

∗ Does the proposed business plan demonstrate compliance with OTS capital requirements 

over the three-year projections?
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.19

∗ Does the acquiror have sufficient capital resources necessary to fund the additional 

operations and offset potential adverse changes in market conditions or poor operating 

performance?

∗ Is capital adequate based upon business philosophy or for institutions with specialized 

operations or higher risk profiles (i.e. internet based banking)?

∗ If the applicant has more than one class of common stock, does any of the stock have 

characteristics similar to debt or preferred stock? 

∗ If the applicant has preferred stock outstanding, will the dividend requirements place an 

excessive burden on the institution's earnings or capital? 

∗ Has the acquiror submitted realistic unconsolidated cash flow and income projections 

showing its ability to service the acquisition debt and maintain the institution's capital at 

required levels? 

∗ Does the proposed capitalization of the holding company in a reorganization comply with 

the provisions of OTS capital distribution regulations (12 C.F.R. §§ 563.140 – 563.146)? 

Is such capitalization objectionable for supervisory reasons? 

∗ Is the acquisition tax-free? If not, would the tax liability significantly affect the financial 

position of the institution or the acquiror?

∗ Are income-producing subsidiaries of the institution being moved or placed directly 

under the holding company? If so, verify that the financial condition of the institution 

will not be affected in a materially adverse manner, and consider implications with 

respect to future transactions with affiliates. 

• Managerial Resources 

∗ Have any of the officers or directors of the holding company or any proposed 

management officials of the institution served as management officials or been 

controlling persons of another depository institution, or depository institution holding 

company? If so, have the appropriate regulatory agencies been contacted for comment on 

these individuals? 

∗ Did the background investigation indicate whether any of the officers, directors or 

management officials had been subject to any enforcement, criminal or questionable 

actions? If so, would these actions preclude any of these individuals from serving at the 

institution?

∗ Have the directors, major officers, and controlling persons of the applicant (and any 

affiliates) submitted Interagency Biographical and Financial Reports and executed 

Attachment A to RB-20? 

∗ Was any adverse information found in the background reviews not disclosed by any 

individual in their RB-20 Certification or on OTS Form 1623?

∗ Does the background information, provided with regard to the expertise of proposed 

management officials, indicate competence and sufficient relevant management 

experience to handle the duties and responsibilities to be assumed? 
Section: Holding Company Acquisition Guidelines Section 510

510.20 Applications Handbook April 2001 Office of Thrift Supervision

∗ Do any proposed employment agreements include the provisions required pursuant to 

12 C.F.R. § 563.39, and is executive compensation overall in compliance with the 

guidelines set forth in RB-27a? 

∗ Does the applicant have a plan for management succession at the institution?

∗ Will the board of directors have sufficient independence from its parent holding company 

to ensure that the institution will continue to operate without undue influence from its 

parent company and affiliates?

∗ Will the applicant and the institution comply with the Depository Institutions 

Management Interlocks Act, as implemented by 12 C.F.R. Part 563f, upon consummation 

of the proposed transaction? 

• Future Prospects 

The reviewer should conduct a thorough review of the business plan provided by the 

applicant. At a minimum, the reviewer should review the following items: 

∗ What are the applicant's plans for the operations of the institution? 

∗ Does the proposed business plan satisfy OTS requirements?

∗ Are the institution's new business plan and its underlying assumptions reasonable?

∗ Is there a need for the additional products and services in the institution’s market area?

∗ Can the additional operations be established without undue injury to other local thrift and 

home financing institutions?

∗ Do the proposed savings and lending services appear reasonable? Will the new activity 

increase the risk to the institution or to the SAIF or BIF? 

∗ Will the change in the business plan cause the institution to rely on the excessive use of 

brokered deposits?

∗ Do any new activities present unusually high elements of risk, such as a significant 

volume of sub-prime loans, speculative lending, or credit card activity?

∗ Will the proposed balance sheet and business strategy comply with the lending and 

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

∗ Does the acquiror have adequate managerial and financial resources to carry out its 

business plan proposals for the institution? 

∗ Does the application or business plan disclose recent changes in population, retail sales,

employment, office absorption rates, housing vacancy rates and major industry in the 

institution's market that could have a detrimental effect on the institution? 
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.21

• Competitive Effects 

If an application filed under 12 C.F.R. Part 574 is subject to the Bank Merger Act, the 

reviewer should request from the DOJ and the banking regulatory agencies a report on the 

competitive effects of the transaction (see the Bank Merger Act section of these guidelines). 

If a savings and loan holding company is acquiring an additional institution in a transaction 

that does not implicate the Bank Merger Act, the reviewer must request from the DOJ (but 

not the other banking regulatory agencies) a report on the competitive factors of the 

transaction.

∗ Do the competitive factors contained in the proposed acquisition exceed those found in 

12 C.F.R. § 563.22(f)(5-10)? Have reports from the other agencies been received that 

would indicate that the proposed transaction may have an anti-competitive effect? If so, 

the application becomes nondelegated and OTS-Washington will provide further analysis 

regarding the competitive effects of the proposal.

• Convenience and Needs of the Community (H-(e)2, H-(e)3 or H-(e)1 where a thrift holding 

company is acquiring a thrift) 

∗ Does the application substantiate that the proposed acquisition would maintain or 

improve the lending and deposit services offered to the community? 

∗ Does the application discuss any contemplated changes regarding physical facilities or 

hours of operation? 

∗ Does the acquisition appear to be consistent with evolving economic changes and growth 

in the community to be served by the institution? 

• Miscellaneous Guidelines 

∗ Did the background review of the acquiror and its affiliates disclose any enforcement, 

criminal or questionable actions? Did the review disclose violations that were considered 

systemic that could adversely impact the institution’s operations?

∗ Did the other regulators, including other functional regulators provide any adverse 

comments?

∗ Has the acquiror published notification of the filing within the time frames specified in 

12 C.F.R. § 574.6(d)?

∗ If the target institution was recently converted, has the acquiror filed and received 

approval of an application under 12 C.F.R. § 563b.3(i) prior to filing the notice? 

∗ Is the applicant currently in compliance with the provisions of 12 C.F.R. Part 574? 

Violations of 12 C.F.R. Part 574 must be addressed before OTS acts on an application.

∗ Have all appropriate companies and individuals joined in the filing? Ascertain whether 

any person or company controls the acquiror. Also determine whether the company 
Section: Holding Company Acquisition Guidelines Section 510

510.22 Applications Handbook April 2001 Office of Thrift Supervision

filing the application would be deemed to be acting in concert with another company or 

an individual who has not filed an application.

∗ Is the applicant engaged in any activities that would be impermissible for a savings and 

loan holding company? Section 10(c)(9)(A) of the HOLA provides that no company may 

directly or indirectly acquire control of a savings institution after May 4, 1999, unless the 

company is engaged directly or indirectly (including through a subsidiary other than a 

savings institution) only in activities that are permitted: (i) under section 10(c)(1)(C) or 

10(c)(2) of the HOLA, or (ii) under section 4(k) of the Bank Holding Company Act. 

Companies that were savings and loan holding companies on May 4, 1999 (or became 

savings and loan holding companies pursuant to an application pending with OTS on or 

before that date are not subject to section 10(c)(9)(A) or 10(c)(9)(B) of the HOLA, 

provided that they meet the requirement of sections 10(c)(9)(C)(i) and (ii) of the HOLA. 

∗ Does the application specify the amount of stock to be acquired?

∗ If the target institution converted within the previous three years, the applicant must 

address and consider the criteria for approval set forth at 12 C.F.R. § 563b.3(i)(5). 

∗ If the target is a stock institution that maintains a liquidation account pursuant to 

12 C.F.R. § 563b.3(f), the acquiror must maintain the liquidation account.

∗ Has the applicant failed to fulfill any commitments to or any conditions imposed by OTS 

in connection with a prior application?

∗ Does the transaction involve the formation of a multiple, multi-state holding company 

structure? If so, is the structure permissible pursuant to 12 C.F.R. § 574.3(e)?

∗ Will the target institution pay excessive fees in connection with its acquisition in 

comparison with those fees paid by the acquiring entity?

∗ Does the applicant own or control a business in which the institution may engage? If so, 

will a condition be imposed on the approval of the acquisition requiring the applicant to 

develop a conflict of interest statement?

∗ Are any of the presumptive disqualifiers relating to integrity or financial factors as set 

forth in 12 C.F.R. §§ 574.7(g)(1) and 574(g)(2) present? If so, has the applicant 

successfully rebutted these presumptions?

∗ If the institution will begin Internet operations, will the Internet banking activities be 

conducted in compliance with OTS and Interagency policy?

∗ Has the target institution received satisfactory CRA ratings? If not, has action been taken 

to correct the CRA deficiencies? 

∗ Will the proposed acquisition require an amendment to the target institution's CRA 

statement? For example, will the acquisition result in a change in the number or location 

of branch sites? Will the applicant need to revise the “local community” delineation? 

∗ If a proposed acquisition involves the merger of two or more operating institutions, has 

the applicant submitted a new CRA statement for the resulting institution? 
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.23

∗ Has the public submitted any CRA comments in connection with the subject application 

or in the recent past? 

Conditions

Standard Conditions

Listed below are the standard conditions of approval for this application type. If OTS imposes any 

additional or different conditions, they must be justified in the supporting documentation.

• The applicant must receive all required regulatory and shareholder approvals for the proposed 

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

consummation of the proposed transaction; 

• The applicant must consummate the proposed transaction within one hundred and twenty 

(120) calendar days from the date of the approval, unless the Regional Director, or his/her 

designee, grants and extension for good cause;

• (For applicants subject to the BMA.) The proposed merger must not be consummated prior 

to 15 calendar days after the date of approval;

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

financial officers of the proposed holding company and the institution 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 holding company and the 

institution as disclosed in the applications. If additional information having an adverse 

bearing on any feature of the applications are brought to the attention of the holding 

company, the institution, or OTS since the date of the financial statements submitted with the 

applications, the transaction must not be consummated unless the information is presented to 

the Regional Director, and the Regional Director provides written non-objection to 

consummation of the transaction;

• The holding company must advise the Regional Director in writing within 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 applications, and this Order;

• (For applicants subject to the BMA.) The holding company must advise, in writing, all 

depositors whose accounts increase above $100,000 as a result of the transaction, of the effect 

of the transaction on their insurance coverage within 30 calendar days of the effective date of 

the proposed transaction; 

• (If the application involves a potential tax liability and a certification has not been 

provided.) Prior to consummation of the acquisition, the Applicant must file with the 

Regional Director either a ruling from the Internal Revenue Service or an opinion of tax 

counsel acceptable to the Regional Director that states that the proposed transaction will not 

result in any significant tax liability to the institution; and

• (Acquisition of a converting or recently converted institution.) In the case of a holding 

company reorganization involving a converting or recently converted institution, approval is 
Section: Holding Company Acquisition Guidelines Section 510

510.24 Applications Handbook April 2001 Office of Thrift Supervision

conditioned on the applicant being subject to 12 C.F.R. §§ 563b.3(c)(9), (c)(17), (c)(18), 

(c)(19), (g)(1), (g)(4) and (i) to the same extent as the institution would be, and the applicant 

not taking any action that would prevent its shares from being listed from a National or 

Regional Securities Exchange or quoted or reported on the NASDAQ system. 

If an interim institution is formed to facilitate the acquisition, the following conditions are imposed 

with regard to the interim: 

• The organization of interim must be completed pursuant to 12 C.F.R. § 552.2-1(h);

• Upon completion of the organization of interim, the board of directors of interim and the 

institution must ratify the Agreement and Plan of Reorganization; 

• The proposed merger must be effective within 120 calendar days of the date of the approval

resolution; 

• No later than 5 calendar days after the date of consummation of the merger (of interim and 

institution), the institution must submit a certification of legal counsel stating the effective 

date of the merger and that the merger has been consummated in accordance with the 

Agreement and Plan of Reorganization; and

• Interim must not open for business. 

Nonstandard Conditions

It is not unusual for the approval of a holding company application to contain nonstandard conditions 

of approval. Additional conditions may be warranted in circumstances where the proposed 

acquisition is integrated with services or activities involving affiliates, where securities affiliates 

exist, where anti-tying issues are present, or due to unique characteristics or the risk profile of the 

resulting institution. All nonstandard conditions of approval must be supported with justification in 

the recommendation memorandum related to approval of the application. Listed below are examples 

of frequently seen nonstandard conditions:

• The institution must operate within the parameters of its business plan. The holding company 

and the institution must submit any proposed major deviations or material changes from the 

plan (including changes resulting from decisions made by the holding company), and in 

particular, those pertaining to cross-marketing by the institution and its affiliates, for the prior 

written non-objection of the Regional Director. The request for change must be submitted a 

minimum of 60 calendar days before the proposed change is implemented with a copy sent to 

the FDIC Regional Office. The institution must submit to the Regional Office quarterly 

variance reports on the business plan for the first three years of its operations.

• The institution must submit annual independent audit reports to the Regional Director for its 

first three fiscal years. These reports must be in compliance with the audit rules set forth at 

12 C.F.R. § 562.4.

• (Applied on a case-by-case basis, customarily used for holding company structures in 

which there is expected to be significant reliance on affiliates for certain services.) At 

least 40 percent of the institution’s board of directors must be individuals who are not officers 
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.25

or employees of the Applicants or affiliates thereof and have not otherwise been determined 

by the Regional Director to lack sufficient independence, and at least one member of the 

institution’s board of directors must be an individual who is not an officer, director or 

employee of the Applicants or any affiliate and who is not an officer or employee of the 

institution and has not otherwise been determined by the Regional Director to lack sufficient 

independence. At least 50 percent of the audit (OPTIONAL LANGUAGE (for trust only 

applicants): trust and investment) committee established by the institution must be 

directors who are not officers or employees of the institution, the Applicants or any affiliates 

and have not otherwise been determined by the Regional Director to lack sufficient 

independence. If compliance with this condition involves the selection of additional 

directors, each director must receive the prior written approval of the Regional Director.

• Within the first year of its operation, the proposed appointment of any permanent executive 

officers or directors of the institution is subject to the prior review and non-objection of the 

Regional Director.

• For the first eighteen months of operation, any contracts or agreements pertaining to 

transactions with affiliates, not yet submitted to the OTS for review, must be provided to the 

Regional Director at least 30 calendar days prior to execution and must receive his written 

non-objection prior to implementation.

• (If the Applicant utilizes purchase or push down accounting.) Within 120 calendar days 

from the date of consummation of the acquisition, the applicant must submit an opinion from 

its independent auditor, satisfactory to the Regional Director, that (i) indicates that the 

applicant consummated the transaction in accordance with generally accepted accounting 

principles; (ii) specifically describes, as of the effective date of the acquisition, any intangible 

assets, including goodwill, and discount of assets arising from the assets to be recorded; and 

(iii) substantiates the reasonableness of amounts attributed to intangible assets and the related 

amortization periods and methods. 

• (For institutions that will market its products through its affiliates or cross-market 

products.) The holding company, its affiliates and the institution must comply with the antitying restrictions of 12 U.S.C. §§ 1464(q) and 1467a(n) and must develop written procedures 

to effect such compliance. The procedures must be submitted for the review and nonobjection of the Regional Office at least 30 calendar days prior to the commencement of the 

cross-marketing activity.

• (For institutions that have “securities affiliate(s)”, as defined below, the following two 

conditions must be included.) A majority of the institution’s board of directors must not be 

comprised of individuals who are directors or employees of any affiliate of the institution that 

engages in securities brokerage, securities dealing, investment company, or investment 

advisor activities (Securities Affiliate(s)).

• The institution is prohibited from sharing common officers with any Securities Affiliate 

unless prior written approval is obtained from the Regional Director, which shall be based on 

criteria such as regulatory compliance, experience, character, integrity and the ability to 

perform both duties.
Section: Holding Company Acquisition Guidelines Section 510

510.26 Applications Handbook April 2001 Office of Thrift Supervision

Any nonstandard conditions incorporated into the approval letter must be summarized in the National 

Applications Tracking System record for the application. This requirement helps OTS to provide the 

public a complete listing of all applications approved with nonstandard conditions of approval.

Note: An H-(e)4 filing is not subject to conditional approval. The only action taken with respect to 

such filings is a legal determination as to whether the proposed reorganization qualifies for exempt 

status under 12 C.F.R. Part 574. If so, the company does not need to file any further information with 

OTS. 

RECORDKEEPING REQUIREMENTS

OTS is required to consolidate all correspondence related to the processing of the 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 approval order or letter will generally include conditions of approval. The Regional Office will 

monitor compliance with all 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.

OTS should notify the appropriate staff responsible for the supervision and examination of the 

institution regarding the action taken on an application. In addition, OTS 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

12 U.S.C. § 1467a Savings and Loan Holding Company Act 

12 U.S.C. § 1817(j) Change in Bank Control Act 

12 U.S.C. § 1828(c) Bank Merger Act 
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.27

12 U.S.C. §§ 1843(c), 1843(k) Bank Holding Company Act 

12 U.S.C. §§ 2901, et seq. Community Reinvestment Act 

12 U.S.C. §§ 3201, et seq. Depository Institution Management Interlocks Act

Regulations

12 C.F.R. Part 516 Applications Processing Guidelines 

12 C.F.R. § 541.18 Interim Federal Institution 

12 C.F.R. §§ 546, 552.13 Merger and Transfers of Assets and Liabilities and 

563.22

12 C.F.R. § 563.39 Employment Contracts 

12 C.F.R. § 563.41 Loans and other transactions with affiliates and 

subsidiaries

12 C.F.R. § 563.42 Additional standards applicable to transactions with 

affiliates and subsidiaries

12 C.F.R. § 563.43 Restrictions on Loans and Other Investments Involving 

Affiliated Persons 

12 C.F.R. §§ 563.140, et seq. Capital Distributions

12 C.F.R. § 563b.3(i)(3) Offers to Acquire Recently Converted Institutions

12 C.F.R. Part 563e Community Reinvestment Act 

12 C.F.R. Part 563f Management Interlocks 

12 C.F.R. Part 567 Capital Requirements 

12 C.F.R. Part 574 Acquisition of Control of Savings Institutions

12 C.F.R. Part 584 Savings and Loan Holding Companies

OTS Bulletins 

RB-20 Guidelines on Proper Investigation of Applicants and 

Increased Communications Between OTS and Other 

Financial Institution Regulatory Agencies

RB-27a Executive Compensation 

Thrift Bulletin 48-(current) Fees and Assessments

23A and 23B of the Federal Transactions with Affiliates

Reserve Act

Legal Alert Application of the Bank Merger Act to Merger 

Memorandum No. 10 and Purchase and Assumption 

Transactions Involving Savings Institutions (12/08/89)

Legal Alert Public Notice and Comment Period Under the 

Memorandum No. 17 Bank Merger Act (10/26/90)
Section: Holding Company Acquisition Guidelines Section 510

510.28 Applications Handbook April 2001 Office of Thrift Supervision

Other 

Comment Rulings 

Paragraph 11,467 Bank Merger Transactions: FDIC 

 Statement of Policy

Forms

OTS H-(e) Application Package

OTS Business Plan Guidelines

OTS Form 1623 Interagency Biographical and Financial Report
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.29

Exhibit A

FOREIGN HOLDING COMPANY AGREEMENT

This Agreement is made by and among (Non-Domestic Applicant), and 

(Applicant U.S.A., or collectively referred to as the Applicants), and the Office of Thrift Supervision 

(the OTS).

WHEREAS, Non-Domestic Applicant is a corporation duly organized under the law of the 

_________________;

WHEREAS, Applicant U.S.A. is a company duly organized under the laws of the State of 

_________________;

WHEREAS, the Non-Domestic Applicant and the Applicant U.S.A. jointly have submitted an 

application (“Application”) to the OTS for approval of the acquisition of the voting stock of 

__________________ (“Bancorp”), the holding company for _______________________ (“Savings 

Bank”), under the provisions of Section 10(e) of the Home Owners' Loan Act, (the “Act”), and 12 

C.F.R. Part 574 (the “Regulations”);

WHEREAS, the Act requires the Director to deny a holding company application if the acquiring 

company fails to provide adequate assurances to the Director that the company will make available to 

the Director such information on the operations or activities of the company, and any affiliate of the 

company, as the Director determines to be appropriate to determine and enforce compliance with the 

Act and any other statute or regulation administered by the OTS as now or hereafter in effect and 

applicable to the undersigned in its capacity as a savings and loan holding company; and

WHEREAS, the OTS has approved the Application, subject to certain stated conditions, including 

execution of this Agreement;

NOW THEREFORE, in consideration of the approval of the Application by the OTS, the parties do 

hereby agree as follows:

1. The Non-Domestic Applicant shall permit the OTS to examine it to such extent as the OTS 

may from time to time prescribe.

2. If for any reason the OTS is unable to perform the examinations referred to in 1. above, the 

Non-Domestic Applicant, at the request of the OTS, shall maintain at the home office of the 

Applicant U.S.A. such books, records and other information concerning the operation of the 

Non-Domestic Applicant as may be requested by the OTS. Such information shall be 

transmitted promptly after being requested by the OTS and shall be in such form and for such 

periods, and shall contain such methods of verification, as the OTS may direct without 

requiring the creation of records exclusively for this purpose.
Section: Holding Company Acquisition Guidelines Section 510

510.30 Applications Handbook April 2001 Office of Thrift Supervision

3. The Non-Domestic Applicant shall transmit to the OTS such periodic reports as may from 

time to time be requested by the OTS or the Regional Director of the appropriate Regional 

Office and as required by the applicable OTS regulations now or hereafter in effect. The 

Non-Domestic Applicant shall not be required to create records exclusively for this purpose. 

Such reports shall be transmitted promptly after request by the OTS and shall be in such form 

and for such periods, and shall contain such methods of verification, as the OTS may direct.

4. The Non-Domestic Applicant shall take all reasonable steps to permit the OTS to have access 

to any information or report with respect to any examination of it conducted by a federal or 

_____________________ regulatory agency or other foreign authority, so long as such 

access is not objected to by such authority, and provided further, that, consistent with U.S. 

law, the OTS will accord the same level of confidentiality to such reports as that accorded by 

the foreign authority.

5. The Non-Domestic Applicant shall execute within 30 days from the date of the approval of 

the Application and file with the OTS through its Regional Office, an irrevocable 

appointment, in form satisfactory to the OTS, of the President and/or any other officer of the 

Applicant U.S.A. as its agent for service of process. The Non-Domestic Applicant shall 

maintain an agent for service of process until the earlier of (i) the agreement of the OTS to 

termination of the appointment, or (ii) ten years after the release by OTS of the NonDomestic Applicant from registration as a savings and loan holding company as provided in 

Section 10(b)(6) of the Act. If the agent for service of process is replaced, the new 

appointment shall be executed as described herein within 30 days.

6. Within 30 days of the date of the approval of the Application, the chief executive officer, the 

chief financial officer, the senior executive vice president and the secretary, or their 

equivalents, of the Non-Domestic Applicant shall individually execute and file with the OTS 

through its Regional Office, irrevocable appointments, in form satisfactory to the OTS, of the 

President and/or any other officer of the Applicant U.S.A. as their agent for service of 

process for the purpose of any proceedings under the Act or the Federal Deposit Insurance 

Act and the rules and regulations promulgated pursuant thereto by the OTS and any other 

statute or regulation administered by the OTS as now or hereafter in effect, and applicable to 

such persons as officials of a savings and loan holding company, for so long as they serve in 

such capacity. The Non-Domestic Applicant shall notify the OTS of any changes in the 

individual holders of their listed offices, and any new holder of such office shall execute an 

appointment as herein prescribed within 30 days. If an agent for service of process is 

replaced, a new appointment shall be executed as herein prescribed within 30 days. Each 

appointment shall expire at such time as a particular officer of the Non-Domestic Applicant, 

as described above, leaves such office, unless such appointment is required to be maintained 

by statute.

7. The Non-Domestic Applicant agrees to cause the Applicant U.S.A. not to sell, pledge, 

hypothecate, or otherwise encumber or dispose of any shares of the outstanding capital stock 

of Bancorp, the Savings Bank or any subsidiary companies thereof, owned by the Applicant 

U.S.A. without the prior written approval of the OTS.
Section: Holding Company Acquisition Guidelines Section 510

Office of Thrift Supervision April 2001 Applications Handbook 510.31

8. The Non-Domestic Applicant consents to be bound by all applicable provisions of the Act; 

the Federal Deposit Insurance Act; and the rules and regulations promulgated pursuant 

thereto by the OTS and any other statute or regulation administered by the OTS as now or 

hereafter in effect and applicable to the undersigned in its capacity as a savings and loan 

holding company for so long as the Non-Domestic Applicant is a savings and loan holding 

company.

9. The Non-Domestic Applicant agrees that at any time during which it controls, directly or 

indirectly, the Savings Bank, the stock of such Savings Bank shall be held in the name of a 

savings and loan holding company which is organized under the laws of a state of the United 

States.

10. This Agreement shall be effective and binding upon the parties hereto and any assignee or 

successor in interest to any of said parties. Applicant U.S.A. agrees to take all reasonable 

steps within its power to secure compliance with the provisions of this Agreement by the 

Non-Domestic Applicant. As used in this Agreement, the terms “savings association,” 

“subsidiary,” “savings and loan holding company,” “affiliate,” “control,” and other terms 

listed in Section 10(a) of the Act shall have the meanings ascribed to said terms in that 

section, and the regulations of the OTS thereunder.

12. This Agreement is being required by the OTS as a condition of approving the Application 

filed by the Applicants. The provisions of this Agreement are intended to supplement and are 

not in derogation of, nor do they in any way limit or restrict, the rights and powers of the OTS 

under the Act, the Federal Deposit Insurance Act, and any other statute or regulation, as now 

or hereafter in effect, administered by the OTS.

IN WITNESS WHEREOF, the parties hereto, by the persons duly authorized whose signatures 

appear below, have respectively executed this Agreement in duplicate originals on the dates 

respectively set forth below, the date of this Agreement being the last of said dates.

Certified copies or appropriate resolutions of the respective boards of directors of the parties of the 

first part authorizing the execution of this Agreement are attached hereto and made a part hereof.

Date:___________________ (Company Name)

By: (Name, Title)

____________________________

Date:___________________ ____________________________

Director

Office of Thrift Supervision
Section: Mutual Holding Companies Section 520

Office of Thrift Supervision April 2001 Applications Handbook 520.1

To be provided.
Section: Savings and Loan Holding Company Section 530

Company Activities

Office of Thrift Supervision April 2001 Applications Handbook 530.1

This handbook section provides information on the business activities in which uninsured subsidiaries 

of certain savings and loan holding companies can engage. The provisions of 12 C.F.R. §§ 584.2-1 

and 584.2-2 prevent holding companies and their uninsured subsidiaries from engaging in activities 

that constitute a serious risk to the financial safety or stability of a savings institution subsidiary. 

FILING REQUIREMENTS

Delegated Authority

The Regional Office may process an application or notice to engage in permissible activities unless it 

presents issues of law or policy requiring OTS-Washington review. See Delegation Section (Section 

040) of the handbook for further information.

Expedited and Standard Processing Procedures

 

This type of application is not subject to the expedited processing procedures in 12 C.F.R. Part 516. 

Prefiling Meeting Requirements

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

Regional Office, particularly if the proposal represents a significant transaction, or involves unique or 

novel issues, to discuss whether a prefiling meeting would expedite the application process. 

Information and Form Requirements

Certain holding companies are exempt from the prior notice or application requirements of 12 C.F.R. 

§§ 584.2-1 and 584.2-2. An exempt holding company is:

• Any savings and loan holding company that controls only one savings institution and such 

institution is in compliance with the Qualified Thrift Lender (QTL) test; or 

• Any savings and loan holding company that controls more than one savings institution, if all, 

or all but one of the savings institution subsidiaries, were acquired pursuant to an acquisition 

under §§ Sections 13(c) or 13(k) of the Federal Deposit Insurance Act, or §§ 406(f) and 

408(m) of the National Housing Act, as in effect immediately prior to the date of enactment 

of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, and all savings 

institution subsidiaries are in compliance with the QTL.

 

In addition, certain nonexempt holding companies that received approval prior to March 5, 1987 to 

acquire control of a savings institution may engage in any activity, directly or indirectly, in which it 

was lawfully engaged on March 5, 1987, without notice or application to the OTS, provided:

 

• The holding company does not acquire control of a savings institution after August 10, 1987, 

unless pursuant to a supervisory acquisition; 
Section: Savings and Loan Holding Company Section 530

Company Activities

530.2 Applications Handbook April 2001 Office of Thrift Supervision

• The savings institution subsidiary continues to qualify as a domestic building and loan 

association under the Internal Revenue Code; 

• The holding company does not expand its activities beyond those permissible under 

12 C.F.R. § 584.2(b) after March 5, 1987; 

• The subsidiary institution does not increase the locations from which it does business, unless 

acquired through a supervisory acquisition as discussed previously; and 

• The savings institution subsidiary does not permit an overdraft on behalf of an affiliate.

All other savings and loan holding companies are considered to be nonexempt and subject to the prior 

notice or application requirements. Pursuant to 12 C.F.R. § 584.2(b), a nonexempt holding company 

may engage in the following activities without notice to the OTS:

• Furnishing or performing management services for a subsidiary savings institution; 

• Conducting an insurance agency or an escrow business;

• Holding, managing, or liquidating assets owned by or acquired from a subsidiary savings 

institution; 

• Holding or managing properties used or occupied by a subsidiary savings institution; and 

• Acting as trustee under a deed of trust. 

Furthermore, a nonexempt holding company may engage in any activity set forth in 12 C.F.R. 

§ 584.2-1 or any activities the Board of Governors of the Federal Reserve System has deemed 

permissible for bank holding companies pursuant to 12 C.F.R. §§ 225.24 and 225.28 unless the OTS, 

by regulation, prohibits or limits any such activity for savings and loan holding companies. Prior to 

engaging in any of these activities, a nonexempt holding company must comply with the prior notice 

or application provisions contained in 12 C.F.R. §§ 584.2-1(c) and 584.2-2(d).

A nonexempt holding company should file the original and two copies of the notice or letter 

application, and the applicable processing fee, with the Regional Office in accordance with 12 C.F.R. 

Part 516. Applicants that wish to apply for prescribed services or activities, pursuant to 12 C.F.R. 

§ 584.2-1, must file an OTS Form 1564, "Notice to Commence Prescribed Services or Activities for 

Savings and Loan Holding Companies." Applications filed under 12 C.F.R. § 584.2-2 to engage in 

permissible bank holding company activities should be made in letter form. Where an activity is 

described both in 12 C.F.R. § 584.2-1 and 12 C.F.R. § 584.2-2, the holding company may follow the 

notice procedures of 12 C.F.R. § 584.2-1. 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. The documents should be filed with the 

Regional Director, or his/her designee, of the Region where the principal office of the applicant’s 

subsidiary savings institution is located or, in some circumstances, with the Regional Office that has 

supervisory authority over the savings institution subsidiary (e.g., an institution may be 

geographically located within one Region, but supervised and examined out of a different Region as 

determined by the location of a "lead" institution within a multiple holding company structure). 
Section: Savings and Loan Holding Company Section 530

Company Activities

Office of Thrift Supervision April 2001 Applications Handbook 530.3

A filing under 12 C.F.R. § 584.2-1 or 584.2-2 should generally contain the following:

 

• Identification of the entity that will conduct the proposed activity and whether it is an existing 

entity proposing to expand business activities, a new company formed solely for the purpose 

of conducting the proposed activity, or whether it is to be acquired by the holding company or 

a subsidiary thereof; 

• Organizational history of the entity including where and when incorporated, discussion of 

management structure, description of existing lines of business and, if applicable, how the 

entity is regulated; 

• Discussion of ownership structure of the entity, its position within the holding company 

structure and identification of thrift affiliates within the organization; 

• Detailed description of the proposed activities including target market area and/or customer 

base. This section should also contain information to demonstrate that the entity possesses (or 

describe the manner in which it plans to obtain) adequate management expertise to properly 

conduct the new business activity. In instances where there are common management 

officials between the entity engaging in the new activity and the savings institution, 

applicants should address what effect, if any, the appropriation of management resources to 

the new activity will have on the degree of oversight afforded the savings institution; 

• Description of any transactions with the savings institution that are contemplated (e.g., 

services will be performed for or on behalf of the institution, institution will extend credit to 

the uninsured affiliate, lease of office space, etc.). Such transactions are governed by 

12 C.F.R. §§ 563.41 and 563.42. In addition, any other relationships or issues that may give 

rise to potential conflicts of interest should be fully disclosed and supplemented by a plan to 

avoid conflicts of interest; 

• Discussion of how the new activities will produce benefits to the public such as greater 

convenience, increased competition or gains in efficiency that outweigh possible adverse 

effects (e.g., undue concentration of resources, decreased or unfair competition, unsound 

financial policies). It should also be demonstrated that the conduct of the new activities would 

not directly or indirectly have an adverse effect upon the operations or competitive stance of 

the savings institution; and

• Documentation to support the authority to engage in or commence the proposed activities 

including, but not limited to, authorization under articles of incorporation and bylaws, 

Securities and Exchange Commission regulations, state licensing or other requirements. 

Additionally, in the case of applications under 12 C.F.R. § 584.2-2, applicants must provide 

reference to the specific regulatory provision or order under which the Board of Governors of 

the Federal Reserve System has recognized that the proposed activity is permissible for bank 

holding companies.

 
Section: Savings and Loan Holding Company Section 530

Company Activities

530.4 Applications Handbook April 2001 Office of Thrift Supervision

Financial statements as follows:

 

1. Unconsolidated and consolidated financial statements of the holding company and of the 

entity that will engage in the new activity as of a date within 90 days prior to the date of 

filing; 

2. If the statements provided above are not audited, audited statements of condition, as of a date 

within one year, should be filed. If the fiscal year of the holding company or subsidiary has 

ended within 90 days prior to the date of filing, audited statements may be as of the end of the 

preceding fiscal year; and

3. Three-year projected financial statements (balance sheet, income and expense, cash flow) of 

the holding company and of the entity that will engage in the new activity, on both a 

consolidated and unconsolidated basis, that reflect operating results from the new line of 

business.

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.

REVIEW GUIDELINES

Processing Procedures and Time Frames

For notices filed pursuant to 12 C.F.R § 584.2-1 

Within five business days of receipt of the notice and the filing fee, the Regional Office must notify 

the applicant of its receipt. The appropriate fee must accompany the notice in order for it to be 

considered filed. The activity or service may be commenced if the Regional Director, or his/her 

designee, does not take objection within 30 days of a properly filed notice for a de novo activity, or 

60 days in the case of an acquisition of a going concern.
Section: Savings and Loan Holding Company Section 530

Company Activities

Office of Thrift Supervision April 2001 Applications Handbook 530.5

For applications filed under 12 C.F.R. § 584.2-2

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

notify the applicant of its receipt. The appropriate application fee must accompany the application in 

order for it to be considered filed. 

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 timely review all requests for a waiver of an application requirement that certain 

information be supplied. 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 any 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 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 the 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.
Section: Savings and Loan Holding Company Section 530

Company Activities

530.6 Applications Handbook April 2001 Office of Thrift Supervision

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

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

Once the application has been deemed complete, there is a 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. If multiple applications are submitted in connection with 

one transaction, the applicable review period for all applications is the review period for the 

application with the longest review period, subject to statutory review periods.

During the review period, the 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, you 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, the application may be deemed 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.

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

 

In evaluating notices submitted pursuant to 12 C.F.R § 584.2-1, the OTS must find that the activity is 

one of the listed activities, and would be a proper incident to the operations of savings institutions and 

would not be detrimental to the interest of savings account holders. 

In evaluating applications filed under 12 C.F.R. § 584.2-2, the OTS will consider whether the activity 

is one of the activities permitted under 12 C.F.R. §§ 225.24 and 225.28, and can reasonably be 

expected to produce benefits to the public that outweigh the possible adverse effects of permitting the 

activity. The analysis will also include an evaluation of the financial and managerial resources of the 

applicant, including its subsidiaries and the effect of the proposed transaction on those resources. 
Section: Savings and Loan Holding Company Section 530

Company Activities

Office of Thrift Supervision April 2001 Applications Handbook 530.7

Decision Guidelines

 

In evaluating a notice or application to engage in a new activity by a savings and loan holding 

company, the OTS will consider the effects of the activity on the overall operations of the applicant 

and its subsidiary institution(s). The evaluation will include the availability of experienced 

management to conduct the activity, the overall risk the activity poses to the applicant and the 

subsidiary institution(s), any contemplated intercompany relationships involving the subsidiary 

institution(s), and the reliance, if any on any resources of the subsidiary institution(s) the applicant 

anticipates necessary to conduct the activity. In conducting the analysis the OTS will take into 

consideration the following:

• Is the activity within 12 C.F.R. § 584.2-1 (notice) or 12 C.F.R. § 584.2-2 (application)?

• Can the activity reasonably be expected to provide benefits, such as greater convenience, 

increased competition, or gains in efficiency, to the public that would outweigh any possible

adverse effects, such as undue concentration of resources, decreased or unfair competition, or 

conflicts of interest? 

• Does the managerial and financial resources of the holding company, its subsidiaries, and any 

company to be acquired appear sufficient to support the conduct of the activity?

• Is the activity properly incidental to the operations of savings institutions and is not 

detrimental to the interests of savings accountholders?

• Will the expansion of business activities, and conduct of such activities, pose serious direct or 

indirect risk to the financial safety or stability of the savings institution? 

• Is the financial position of the holding company and its uninsured subsidiaries adequate to 

absorb capitalization, acquisition and/or start-up costs and to support conduct of the activity, 

while preserving the holding company's ability to provide a positive or neutral effect on the 

savings institution subsidiary (e.g., the institution is allowed to operate with marginal or 

inadequate capital while the holding company appropriates funds to expand other business 

activities)?

• Will the holding company have the ability to comply with any capital maintenance 

agreement, after giving effect to the effect of the new activity on it operations (both on a 

start-up and pro-forma basis)? 

• Does it appear the savings institution may be relied upon to support operations of the 

uninsured affiliate or to service related debt obligations of the parent (pressure for increasing 

levels of dividends to be upstreamed to the parent)? 

• Will the attention of common management be channeled away from the affairs of the savings 

institution to such an extent that it will adversely effect the institution's operations?

• What are the effects of potential conflicts of interest? 

• What is the track record of the holding company and its subsidiaries in meeting projected 

operating results, in dealing with the savings institution, and in the area of regulatory 

compliance?
Section: Savings and Loan Holding Company Section 530

Company Activities

530.8 Applications Handbook April 2001 Office of Thrift Supervision

Conditions

 

There are no standard conditions imposed in these filings. Nonstandard conditions may be imposed 

on a case by case basis. If nonstandard conditions are recommended, the Regional Office’s digest 

must include appropriate justification for imposing such conditions. Any nonstandard conditions 

incorporated into the approval letter must be summarized in the National Applications Tracking 

System record for the application. 

 

RECORDKEEPING REQUIREMENTS

The OTS should 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 manner in which the new activity is conducted and its effect upon the resources of the holding 

company and upon the savings institution's operations should be followed through the normal course 

of monitoring and examining the holding company organization. It should be noted that, where there 

is reasonable cause to believe that continuation of any activity, or ownership or control of any 

uninsured subsidiary, constitutes a serious risk to the financial safety, soundness or stability of the 

savings institution subsidiary and is inconsistent with the sound operations of the institution, the 

holding company may be ordered (upon notice and opportunity for hearing) to terminate any activity 

or ownership of any uninsured subsidiary.

The appropriate staff responsible for the supervision and examination of the institution and holding 

company should be notified of the action taken on an application and provided with copies of the 

approval letter. If an application is approved, the first examination of the institution following the 

approval should include a review of compliance with any 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.
Section: Savings and Loan Holding Company Section 530

Company Activities

Office of Thrift Supervision April 2001 Applications Handbook 530.9

INFORMATION SOURCES

 

Statutes

 

12 U.S.C. § 1467a(a) Home Owners' Loan Act, Definitions

12 U.S.C. § 1467a(c) Home Owners' Loan Act, Holding Company Activities

12 U.S.C. § 1467a(m) Home Owners' Loan Act, Qualified Thrift 

LenderRequirements

12 U.S.C. § 1843 Bank Holding Company Act of 1956, Section 4(c)(8) 

(Interests in Nonbanking Organizations)

 

Regulations

12 C.F.R. § 225.23 Federal Reserve Board Regulations for Bank Holding 

Companies (List of 

 Permissible Nonbanking Activities)

12 C.F.R. § 225.25 Federal Reserve Board Regulations for Bank Holding 

Companies (Activities approved on a case-by-case basis)

12 C.F.R. § 563.50 Qualified Thrift Lender Status

12 C.F.R. § 584.2(a) Prohibited Activities

12 C.F.R. § 584.2(b) Activities Permissible for all Holding Companies 

12 C.F.R. § 584.2a Exempt Savings and Loan Holding Companies and 

Grandfathered Activities 

12 C.F.R. § 584.2-1 Prescribed Services and Activities of Savings and Loan 

Holding Companies 

12 C.F.R. § 584.2-2 Permissible Nonbanking Activities of Savings and Loan 

Holding Companies

 

Forms

OTS Form 1564