This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

7979 

Vol. 86, No. 21 

Wednesday, February 3, 2021 

1 85 FR 40794 (July 7, 2020). 12 CFR 7.1024 was 

previously codified at 12 CFR 7.1000. 

2 85 FR 83686 (December 22, 2020). 

3Because the redesignation of 12 CFR 7.1000 as 

12 CFR 7.1024 takes effect on April 1, 2021, the 

regulatory text of this proposed rule must reflect 

this as an addition rather than an amendment. The 

final rule will reflect the change as an amendment. 

4The other three purposes all relate to the 

national bank authority to own property taken for 

Continued 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 7 

[Docket No. OCC–2020–0045] 

RIN 1557–AF07 

National Bank and Federal Savings 

Association Premises 

AGENCY: Office of the Comptroller of the 

Currency (OCC), Treasury. 

ACTION: Notice of proposed rulemaking 

with request for public comment. 

SUMMARY: The OCC is inviting comment 

on a proposed rule that would modify 

the requirements for national bank and 

Federal savings association premises. 

DATES: Comments must be received by 

March 22, 2021. 

ADDRESSES: You may submit comments 

to the OCC by any of the methods set 

forth below. Commenters are 

encouraged to submit comments 

through the Federal eRulemaking Portal, 

if possible. Please use the title ‘‘National 

Bank and Federal Savings Association 

Premises’’ to facilitate the organization 

and distribution of the comments. You 

may submit comments by any of the 

following methods: 

• Federal eRulemaking Portal— 

‘‘Regulations.gov’’: Go to 

www.regulations.gov. Enter ‘‘Docket ID 

OCC–2020–0045’’ in the Search Box and 

click ‘‘Search.’’ Click on ‘‘Comment 

Now’’ to submit public comments. 

• Click on the ‘‘Help’’ tab on the 

Regulations.gov home page to get 

information on using Regulations.gov, 

including instructions for submitting 

public comments. 

• Mail: Chief Counsel’s Office, 

Attention: Comment Processing, Office 

of the Comptroller of the Currency, 400 

7th Street SW, Suite 3E–218, 

Washington, DC 20219. 

• Hand Delivery/Courier: 400 7th 

Street SW, Suite 3E–218, Washington, 

DC 20219. 

Instructions: You must include 

‘‘OCC’’ as the agency name and ‘‘Docket 

ID OCC–2020–0045’’ in your comment. 

Instructions: You must include 

‘‘OCC’’ as the agency name and ‘‘Docket 

ID OCC–2020–0045’’ in your comment. 

In general, the OCC will enter all 

comments received into the docket and 

publish the comments on the 

Regulations.gov website without 

change, including any business or 

personal information provided such as 

name and address information, email 

addresses, or phone numbers. 

Comments, including attachments and 

other supporting materials, are part of 

the public record and subject to public 

disclosure. Do not include any 

information in your comment or 

supporting materials that you consider 

confidential or inappropriate for public 

disclosure. 

You may review comments and other 

related materials that pertain to this 

rulemaking action by the following 

methods: 

• Viewing Comments Electronically: 

Go to www.regulations.gov. Enter 

‘‘Docket ID OCC–2020–0045’’ in the 

Search box and click ‘‘Search.’’ Click on 

‘‘Open Docket Folder’’ on the right side 

of the screen. Comments and supporting 

materials can be viewed and filtered by 

clicking on ‘‘View all documents and 

comments in this docket’’ and then 

using the filtering tools on the left side 

of the screen. 

• Click on the ‘‘Help’’ tab on the 

Regulations.gov home page to get 

information on using Regulations.gov. 

The docket may be viewed after the 

close of the comment period in the same 

manner as during the comment period. 

FOR FURTHER INFORMATION CONTACT: 

Matthew Tynan, Counsel; Sarah Turney, 

Counsel; Henry Barkhausen, Counsel; 

Chief Counsel’s Office (202) 649–5490; 

Office of the Comptroller of the 

Currency, 400 7th Street SW, 

Washington, DC 20219. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

The Office of the Comptroller of the 

Currency (OCC) is issuing a notice of 

proposed rulemaking to amend its 

regulations on national bank or Federal 

savings association ownership of real 

property. The OCC also proposes to 

consolidate 12 CFR 7.3001 on sharing 

national bank or Federal savings 

association space and employees with 

the rule covering ownership of property. 

The OCC proposes to continue to cover 

the national bank and Federal savings 

association charters under the same 

regulation, but, because different 

statutory regimes cover each charter, the 

OCC seeks comment on whether to 

apply different requirements to national 

banks and Federal savings associations. 

II. Background 

The OCC periodically reviews its 

regulations to eliminate outdated or 

otherwise unnecessary regulatory 

provisions and, where possible, to 

clarify or revise requirements imposed 

on national banks and Federal savings 

associations. As part of the periodic 

review that resulted in recent 

amendments to 12 CFR part 7, which 

take effect on April 1, 2021, the OCC 

determined that it would propose 

revisions to the rules governing national 

bank and Federal savings association 

premises currently codified at 12 CFR 

7.1000, which the recent amendments to 

12 CFR part 7 redesignated as to 12 CFR 

7.1024.1 The OCC determined that the 

regulation may need significant revision 

and that such revisions may involve 

significant policy considerations. To 

consider the matter more fully and 

ensure the greatest benefit from public 

comment, the OCC chose to propose 

revisions to redesignated 12 CFR 7.1024 

separately from the revisions to 12 CFR 

part 7 finalized in 2020.2 Because of the 

redesignation of 12 CFR 7.1000 as 12 

CFR 7.1024, this proposed rule refers to 

12 CFR 7.1024.3

National bank ownership of real estate 

is governed by 12 U.S.C. 29, an original 

component of the National Bank Act. 

Twelve U.S.C. 29 generally prohibits 

national banks from purchasing, 

holding, or conveying real estate except 

for a list of four exclusive exceptions. 

The first such purpose covers the 

authority of a national bank to hold real 

property ‘‘[s]uch as shall be necessary 

for its accommodation in the transaction 

of its business.’’ 4 As stated by the 


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7980 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules 

debts previously contracted and other such means 

of securing debts. The proposed rule would not 

affect the ability of national banks to rely on these 

other purposes in 12 U.S.C. 29. The proposed rule 

would only interpret and implement the meaning 

of the first purpose (‘‘Such as shall be necessary for 

its accommodation in the transaction of its 

business’’). 

5Union National Bank v. Matthews, 98 U.S. 621, 

626 (1878) (‘‘to keep the capital of the banks 

flowing in the daily channels of commerce; to deter 

them from embarking in hazardous real estate 

speculations; and to prevent the accumulation of 

large masses of such property in the banks’ hands, 

to be held, as it were, in mortmain’’). 

6Brown v. Schleier, 118 F. 981, 984 (8th Cir. 

1902), aff’d 194 U.S. 18 (1904). 

7 80 FR 28346, 28377 (May 18, 2015). 

8Public Law 111–203, 124 Stat. 1376 (2010). 

9See footnote 7. 

10 Id. 

11OCC Interpretive Letter No. 1053 (Jan. 31, 2006) 

(‘‘Neither the OCC nor the courts have established 

a single occupancy percentage test . . .’’). 

12Outstanding precedent includes OCC 

Interpretive Letter No. 1072 (Sept. 15, 2006) 

(permitting a bank to lease out a portion of its 

existing premises to retail businesses in 

arrangements under which approximately 50 

percent of the premises would be used by the bank 

for its banking business); OCC Interpretive Letter 

No. 1053 (Jan. 31, 2006) (describing OCC analysis 

of permissibility of premises in OCC Interpretive 

Letter No. 1045 and 1044); OCC Interpretive Letter 

No. 1045 (Dec. 5, 2005) (permitting a national bank 

to establish a hotel on its premises, of which the 

bank intended to use more than 50 percent of the 

occupancy for out-of-area bank employees, 

members of the bank’s board of directors, and 

selected vendors, shareholders, customers, and 

other visitors on bank-related business); OCC 

Interpretive Letter No. 1044 (Dec. 5, 2005) 

(permitting a national bank to establish a mixed-use 

office, hotel, and residences facility on its premises, 

in which the bank would use less than 50 percent 

of the premises for banking purposes); OCC 

Interpretive Letter No. 1043 (July 8, 1993) 

(permitting a national bank to lease to third parties 

a bank condominium when it is not being used for 

bank purposes); OCC Interpretive Letter No. 1042 

(Jan. 21, 1993) (permitting a bank to retain a 

condominium used only for bank purposes); OCC 

Interpretive Letter No. 1034 (April 1, 2005) 

(permitting a national bank to construct new 

facilities on existing premises real estate, use less 

than 50 percent of the premises for bank purposes, 

and lease unused space as excess bank premises); 

Conditional Approval No. 298 (Dec. 15, 1998) 

(permitting a bank to use less than 50 percent of 

office premises for its banking business); 

Interpretive Letter No. 758 (April 5, 1996) 

(permitting a national bank to lease out a portion 

of its real estate held as premises for employee 

recreation purposes to a third party to remove a hill 

and mine granite deposits). As discussed below, 

this proposed rule would supersede existing 

precedent to the extent it is inconsistent with the 

proposed rule. However, the proposed rule would 

not necessarily supersede precedent that is 

consistent with the requirements of the proposed 

rule or precedent that addresses issues not covered 

by the proposed rule. The OCC requests comment 

on whether and how outstanding precedent should 

be affected by the proposed rule. 

13Former 12 CFR 560.37. In 2011, the OCC 

republished OTS regulations set out in Chapter V 

of Title 12, including 12 CFR 560.37, with OCC part 

numbers changing the ‘‘5’’ to a ‘‘1’’. 12 CFR 560.37 

became 12 CFR 160.37. 76 FR 48950 (August 9, 

2011). 12 CFR 160.37 was subsequently removed 

when Federal savings associations were integrated 

into the national bank rule. Prior OTS guidance 

provided that a building would be a Federal savings 

association’s premises if the association used 25 

percent or more of the building. OTS Handbook, 

Section 252, Fixed Assets, April 1999, p.31 

(rescinded). 

Supreme Court, this statute was 

designed to promote the safety and 

soundness of national banks by 

discouraging real estate speculation, and 

was also designed to protect the 

national economy and consumers by 

preventing banks from holding masses 

of property for their own account.5

Consistent with the statutory 

framework, a national bank investing in 

property should be doing so ‘‘in good 

faith, solely with a view of obtaining an 

eligible location’’ and not for the 

purpose of speculating or investing in 

real estate as a landlord.6

Federal savings association ownership 

of premises is governed by the Home 

Owners Loan Act (HOLA). Although the 

HOLA does not specifically address a 

Federal savings association’s investment 

in banking premises and there is no 

prohibition in the HOLA similar to 12 

U.S.C. 29, historically, the Federal 

Home Loan Bank Board (FHLBB), the 

Office of Thrift Supervision (OTS), and 

the OCC have interpreted the HOLA to 

permit Federal savings associations to 

hold real estate only for their offices and 

related facilities with permission to rent 

or sell excess space in their offices and 

facilities and the OCC has issued 

regulations governing a Federal savings 

association’s investment in banking 

premises pursuant to general 

supervisory and rulemaking authority 

under the HOLA.7 After Title III of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act 8 transferred to 

the OCC all functions of the former OTS 

and the Director of the OTS relating to 

Federal savings associations, the OCC 

began reviewing its rules governing 

national banks and Federal savings 

associations to determine which rules 

were appropriate to integrate into a 

single set of rules for both national 

banks and savings associations.9 After 

this review, the OCC did not find 

substantive differences between the 

then-banking premises rules and related 

OTS guidance governing national banks 

and Federal savings associations and 

determined that, as a supervisory 

matter, it was appropriate to apply the 

rule governing national banks to both 

national banks and Federal savings 

associations.10

The OCC implemented 12 CFR 7.1024 

to cover national bank and Federal 

savings association ownership of real 

estate for their own use. However, 12 

CFR 7.1024 does not provide a full set 

of standards implementing the 

requirements of 12 U.S.C. 29 and the 

HOLA regarding national bank and 

Federal savings association premises. 

Rather, 12 CFR 7.1024 is an interpretive 

rule that codifies specific OCC 

interpretations of 12 U.S.C. 29. Thus, 

although the rule contains a list of types 

of real estate that the OCC has found 

permissible for national bank and 

Federal savings association ownership, 

that list is not exhaustive. Moreover, 

significant standards relating to the 

permissibility of real estate ownership, 

such as the minimum percentage of 

bank occupancy required for a building 

to qualify as premises, are not addressed 

anywhere in OCC regulation. 

Instead, the OCC has long deferred to 

court cases and published OCC 

precedent to cover the field of 

requirements for national bank and 

Federal savings association ownership 

of premises. The OCC historically chose 

not to define specific limitations for 

standards, such as percentages of 

occupancy,11 instead relying on 

principles drawn from precedent to 

preserve a flexible approach to new 

national bank proposals while ensuring 

those principles continue to reflect the 

purposes behind 12 U.S.C. 29.12 The 

OTS similarly did not set percentages of 

occupancy within its premises 

regulation for Federal savings 

associations.13

Although this precedent-based 

approach provides flexibility, it comes 

with several limitations. First, since 

precedent is necessarily responsive to 

presented facts, reliance on precedent 

means there is no clear rule to give 

notice to banks or the public of what 

forms of real estate ownership are 

permissible for a bank. Published OCC 

precedent by its nature typically 

describes fact patterns found to be 

permissible. Therefore, reliance on 

precedent alone makes it difficult for 

the industry and the public to 

understand what set of facts would be 

impermissible. Given the time and effort 

often required to plan an investment in 

premises, delays and uncertainty caused 

by unclear legal standards can be 

problematic. 

Second, national bank premises 

precedent was largely formed at a time 

when the banking industry was different 

than the one in existence today. Many 

of the most important cases decided on 

premises occurred at a time when most 

banks operated entirely out of a single 

headquarters. The principles drawn 

from those cases remain relevant in the 

present day, but the reality of a modern 

large bank is very different than a bank 

that existed prior to interstate 

branching. Bank premises rules in the 

present day must apply to both 


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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules 7981 

14 61 FR 66561, 66579 (Dec. 18, 1996) (‘‘A federal 

savings association may invest in real estate 

(improved or unimproved) to be used for office and 

related facilities of the association, or for such office 

and related facilities and for rental or sale, if such 

investment is made and maintained under a 

prudent program of property acquisition to meet the 

federal savings association’s present needs or its 

reasonable future needs for office and related 

facilities. A federal savings association may not 

make an investment that would cause the 

outstanding book value of all such investments 

(including investments under § 559.4(e)(2) of this 

chapter) to exceed its total capital.’’). 

community banks, some operating out 

of a single building or few buildings, 

and large banks with tens of thousands 

of employees and operations in all fifty 

states. 

Finally, commercial real estate itself 

has changed greatly in the past several 

decades in ways that are difficult to 

square with premises precedent. The 

majority of OCC and OTS premises 

precedent concerns either branches or 

standalone office space, as those were 

the typical premises arrangements for 

banking operations in the 20th century. 

Recent years have seen the growth of 

mixed-use developments combining 

office space with retail space, 

residential space, and other uses not 

typically found in a traditional office 

building. Some industries have moved 

towards a comprehensive campus 

arrangement providing employees with 

amenities and working arrangements 

previously not present in an office 

environment. Finally, with the 

development of robust teleconferencing 

and the arrival of the COVID–19 

pandemic, many companies are moving 

towards offsite, shared, or virtual work 

spaces. It is increasingly difficult for 

national banks and Federal savings 

associations to rely on precedent 

focusing on traditional office 

arrangements to determine whether and 

to what extent they may own mixed-use 

developments, install amenities to 

compete with those offered by other 

industries (including technology 

companies), or make use of alternative 

work arrangements. 

For these reasons, the OCC proposes 

these revisions to 12 CFR 7.1024 to 

codify and clarify a transparent and 

consistent set of principles for national 

bank and Federal savings association 

premises. The OCC intends these 

regulations to meet the needs of modern 

national banks and Federal savings 

associations while ensuring consistent 

application of and adherence to the 

limitations of 12 U.S.C. 29 and the 

HOLA. 

Question One: Although current OCC 

regulations and the proposal cover both 

the national bank and Federal savings 

association charters in one section, 

there are differences in the statutory 

regimes covering each charter. Would it 

be preferable to apply different 

requirements to Federal savings 

association premises? Specifically, 

should the proposed rule apply only to 

national banks? If so, what requirements 

should apply to Federal savings 

associations? Should the OCC continue 

to apply the current requirements to 

Federal savings associations even if it 

adopts the proposed rule with respect to 

national banks? Should the OCC adopt 

a requirement for Federal savings 

associations that is similar to or 

identical to the requirement in effect 

before the integration of national bank 

and Federal savings association 

requirements? 14 Also, should the 

proposed rule apply to federal branches 

and agencies of foreign banks regulated 

by the OCC? If so, should modified 

requirements be applied to such 

branches and agencies? 

III. The Proposed Rule 

The OCC is proposing to revise 

§ 7.1024 to provide general standards 

the OCC will use in determining 

whether the acquisition and holding of 

real estate is necessary for the 

transaction of a national bank’s or 

Federal savings association’s business. 

Revisions include implementing an 

occupancy test and excess capacity 

standards that would allow national 

banks and Federal savings associations 

to ascertain better whether an 

acquisition or holding of real estate is 

permissible under 12 U.S.C. 29 or the 

HOLA. The OCC has determined that 

national banks and the public would 

benefit from clear standards related to 

the requirements and expectations for 

real estate to be considered necessary 

for the transaction of a national bank’s 

or Federal savings association’s business 

as required by 12 U.S.C. 29 or the 

HOLA. Current § 7.1024 and various 

legal interpretations provided examples 

of permissible holdings, but the OCC 

has determined that, for the reasons 

articulated above, these examples do not 

provide general principles national 

banks could apply to new acquisitions. 

Without clear principles, there is the 

potential for inconsistent application of 

12 U.S.C. 29, the HOLA, and 12 CFR 

7.1024. The proposed revisions are 

intended to provide for more consistent 

application of 12 U.S.C. 29, the HOLA, 

and 12 CFR 7.1024. 

Definitions (§ 7.1024(a)) 

Proposed § 7.1024(a) provides certain 

definitions used in the proposed rule. 

Bank occupied office premises is 

defined in proposed § 7.1024(a)(1) as 

bank occupied premises containing 

offices where professional or clerical 

duties are performed. 

Bank occupied premises is defined in 

proposed § 7.1024(a)(2) as real estate 

acquired and held in good faith in 

which more than 50 percent of each 

building or severable piece of land is 

used by bank persons, including 

facilities that may be operated by third 

parties to provide amenities and 

services to bank persons or otherwise 

facilitate bank business operations. This 

definition encompasses a variety of 

factual situations, including a bank’s 

acquisition of a single premises building 

or a bank’s development of a premises 

campus. As reflected in the above 

definition, in any factual situation the 

OCC would apply the 50 percent 

occupancy standard to each building or 

severable piece of land. In order for a 

building or severable piece of land to be 

considered bank occupied premises, 

more than 50 percent of the space must 

be used by, or for, bank persons to 

facilitate bank business operations. 

Space that facilitates bank business 

operations would include facilities 

operated by third parties to provide 

amenities and services to bank persons 

that facilitate bank business operations; 

examples of such facilities include an 

office gym, cafeteria, daycare, or 

printing center. In calculating the 

occupancy percentage, the national 

bank or Federal savings association 

would look at each building or severable 

piece of land using the amount of space 

that is used by or for bank persons as 

the numerator and the overall space of 

the building or severable piece of land 

as the denominator. As an example, a 

national bank or Federal savings 

association that acquires and holds a 

building in good faith and in which the 

national bank or Federal savings 

association uses 4,000 square feet of the 

6,000 square foot building for a bank 

branch, bank offices, gym for bank 

persons’ use, and cafeteria for bank 

persons’ use, the occupancy percentage 

would be approximately 67 percent and 

the national bank or Federal savings 

association could rent the remaining 

2,000 square feet of the building, for 

example as ground floor retail space, in 

order to avoid economic loss or waste in 

the real estate consistent with 

§ 7.1024(c). 

Question Two: The OCC requests 

comment on whether 50 percent is the 

appropriate percentage for bank 

occupied premises. Should the 

percentage be higher, such as 75 

percent, or lower, such as 25 percent? 

The OCC requests comments on all 

possible percentage limitations and 

particularly the range of percentages 

between 25 and 75. Why should the 


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7982 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules 

15 12 U.S.C. 29 provides that national banks may 

only ‘‘purchase, hold, and convey real estate’’ for 

four specific purposes. The OCC interprets the 

words ‘‘purchase, hold, and convey’’ to encompass 

all forms of real estate acquisition, ownership, and 

transfer. The proposed rule would use the words 

‘‘acquire, hold, or convey’’ to make clear that all 

forms of real estate acquisition and ownership 

would be covered by the proposed rule. Depending 

on the circumstances, the words ‘‘acquire, hold, or 

convey’’ may include real estate obtained by a 

national bank or Federal savings association via 

lease. 

16The excess capacity doctrine holds that a bank 

properly acquiring an asset to conduct its banking 

business is permitted, under its incidental powers, 

to make full economic use of the property if using 

the property solely for banking purposes would 

leave the property underutilized. See OCC 

Conditional Approval No. 361 (Mar. 3, 2000). In 

2002, the OCC distilled this doctrine in a regulation 

that allowed national banks to sell excess electronic 

capacity, including data processing services. 12 

CFR 7.5004. This regulation relied on the previous 

history of allowing the sale of excess real property. 

67 FR 34992, 34995 (May 17, 2002). The current 

proposal for the treatment of excess capacity in the 

real estate context is consistent with the distillation 

set forth in the electronic capacity rule. 

17See 12 U.S.C. 24 (Seventh) and 29; Perth 

Amboy National Bank v. Brodsky, 207 F. Supp. 785, 

788 (S.D.N.Y. 1962) (‘‘It is clear beyond cavil that 

the statute [12 U.S.C. 29] permits a national bank 

to lease or construct a building, in good faith, for 

banking purposes, even though it intends to occupy 

only a part thereof and to rent out a large part of 

the building to others.’’). 

18Brown v. Schleier, 118 F. 981, 984 (8th Cir. 

1902). (‘‘. . . provided, always, that it acts in good 

faith, solely with a view of obtaining an eligible 

location, and not with a view of investing its funds 

in real property or embarking them in speculations 

in real estate.’’). 

percentage be higher or lower than 50 

percent? 

Question Three: The OCC requests 

comment on whether ground floor retail 

space rented to a third party should be 

treated differently under the occupancy 

percentage calculation. For example, 

should ground floor retail space that is 

intended primarily for bank persons use 

be included in the numerator of the 

calculation even if third parties 

incidentally use the space? Should 

‘‘primarily’’ be defined as more than 50 

percent of use by bank persons? Or, 

should ground floor retail space that is 

not intended primarily for bank persons 

be excluded entirely from the 

occupancy percentage calculation as an 

incident of sound facilities management 

so that it would be included in neither 

the numerator nor the denominator? Or 

should retail space that is intended, but 

not primarily intended, for bank persons 

be excluded from the numerator but 

included in the denominator? Should 

other adjustments be made to the 

calculation? Should unused or less-used 

spaces (such as stairwells, lobbies, and 

maintenance areas) be excluded from 

the numerator, denominator, or both? 

Question Four: How should land 

obtained by a national bank or Federal 

savings association as lessee be treated? 

The proposed rule would treat all land 

obtained by the bank through lease for 

use as premises as subject to the rule 

and its calculation requirements. 

Should certain types of leases (e.g., 

operating leases or capital leases) be 

treated differently or excluded from the 

calculation? 

Bank persons is defined in proposed 

§ 7.1024(a)(3) as a national bank’s or 

Federal savings association’s employees, 

contractors, consultants, vendors, and 

any other individuals who are engaged 

in the national bank’s or Federal savings 

association’s business. 

Impermissible premises is defined in 

proposed § 7.1024(a)(4) as real estate 

that is not bank occupied premises or 

that otherwise does not conform with 

the requirements of this section. 

Impermissible premises is any property 

not expressly permitted under this 

section, including real estate in which 

the national bank or Federal savings 

association uses 50 percent or less of the 

building or severable piece of land for 

bank persons or the facilitation of bank 

business operations. Impermissible 

premises would also include real estate 

in which a national bank or Federal 

savings association occupies 50 percent 

or more but does not comply with the 

excess space and capacity provisions of 

proposed § 7.1024(c). Real estate held 

under the transition provision in 

proposed § 7.1024(g) would not be 

considered impermissible premises. 

Shared space is defined in proposed 

§ 7.1024(a)(5) as bank occupied office 

premises that a national bank or Federal 

savings association shares with a third 

party to enhance the national bank’s or 

Federal savings association’s business 

operations. The OCC is proposing to 

remove the shared space provisions 

from 12 CFR 7.3001 and instead include 

them in proposed § 7.1024(e) to 

eliminate confusion regarding the 

interaction of the shared space 

provisions with the permissibility 

provisions of 12 CFR 7.1024. These 

proposed provisions are substantively 

unchanged from the current rule. 

Investments in Real Estate Necessary for 

the Transaction of Business (§ 7.1024(b)) 

Proposed § 7.1024(b) provides that a 

national bank or Federal savings 

association may acquire, hold, or 

convey real estate for use as bank 

occupied premises.15 Under the 

proposed rule, bank occupied premises 

would be considered real estate 

necessary for the transaction of a 

national bank’s or Federal savings 

association’s business, and thus a 

national bank or Federal savings 

association would be permitted to 

acquire, hold, and convey real estate 

that is included within the definition of 

bank occupied premises. 

Excess Space or Capacity (§ 7.1024(c)) 

Proposed § 7.1024(c) sets forth the 

principles of the excess capacity 

doctrine 16 recognizing national banks’ 

and Federal savings associations’ need 

to optimize the value of bank property 

by authorizing national banks and 

Federal savings associations to sell or 

lease excess space or capacity in that 

property.17 Although national banks 

and Federal savings associations may 

sell or lease excess capacity or space in 

property, the property must have been 

legitimately acquired for banking 

purposes, meaning the national bank or 

Federal savings association must 

acquire or hold such property because 

of its suitability for use in banking 

operations or by bank persons and not 

as a means to invest the bank’s funds in 

real property or to speculate in real 

estate.18

Proposed § 7.1024(c)(1) provides that 

a national bank or Federal savings 

association may, in order to optimize 

the use of bank occupied premises or 

avoid economic loss or waste, permit 

third parties to use excess space or 

capacity in real estate legitimately 

acquired or developed by the national 

bank or Federal savings association for 

its banking business. The proposal also 

provides that such excess space or 

capacity must have a nexus with the 

transaction of bank business or bank 

operations such that it is acquired or 

held to provide the national bank or 

Federal savings association with a 

business location rather than as an 

investment in real estate. A national 

bank or Federal savings association 

must be able to demonstrate a nexus 

between its ownership of the property 

and the transaction of its business or 

bank operations. One way to 

demonstrate such a nexus would be for 

the national bank or Federal savings 

association to show in its business plan 

how the property supports its business. 

Demonstrating that there is a nexus 

between the ownership of property and 

the transaction of its business allows the 

national bank or Federal savings 

association to demonstrate that such 

property was acquired or developed in 

good faith and not for a speculative 

purpose, consistent with statutory 

requirements. Although a national bank 

or Federal savings association may sell 

or lease excess space or capacity 

legitimately acquired or developed, a 

national bank or Federal savings 

association acquiring or developing 


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19National banks and Federal savings 

associations are often key anchors in a local 

community and can be called on to play an 

important role in life-cycle events, for example 

supplying the use of a conference room or the 

institution’s board room for a funeral viewing or 

community celebration during business hours. 

Occasional use of facilities for such purpose is 

entirely consistent with the institution’s role in the 

local community and is not inconsistent with 

section 29 or 1464 and this proposed rule. 

space in order to serve as a landlord to 

tenants using space unrelated to the 

transaction of its business or bank 

operations (for example, a grocery store 

or a branded hotel) would likely not 

meet this requirement as the national 

bank or Federal savings association 

would not merely be avoiding economic 

waste in acquiring or developing real 

estate for such purposes but likely 

actively investing in real estate for a 

speculative non-banking purpose. In the 

case of leasing space to tenants such as 

a grocery store or a branded hotel, the 

national bank or Federal savings 

association would likely derive 

significant revenue related to such 

activity and would need to demonstrate 

that the real estate was not acquired 

primarily for its lease income but rather 

because of its suitability for bank 

purposes or use by bank persons. A 

national bank or Federal savings 

association can only lease legitimate 

excess space or capacity, and if real 

estate is acquired or developed in a 

volume or manner that is not consistent 

with the bank’s operations or business, 

for example as set forth in its business 

plan, such real estate was likely not 

legitimately acquired or developed, and 

thus would be impermissible. 

Excess space is space in bank 

occupied premises that is not being 

used by bank persons or for bank 

operations. Excess capacity in bank 

occupied premises can be either 

temporal or space-based. An example of 

temporal excess capacity is a bank 

auditorium that is used after bank 

business hours by members of the local 

community. An example of space-based 

excess capacity is a call center in which 

the bank needs space for 100 employees 

during eight months of the year but only 

needs space for 80 employees during the 

remaining four months of the year. In 

both examples, the space can be used by 

non-bank persons as long as the space 

was legitimately acquired or developed 

by the bank for its operations or 

business as required by § 7.1024(c)(1). 

Proposed § 7.1024(c)(2) discusses 

situations in which legitimate excess 

space or capacity may be used by third 

parties. Section § 7.1024(c)(2)(i) through 

(iv) have analogous provisions in the 

excess capacity provisions for electronic 

activities located in 12 CFR 7.5004. 

Section 7.1024(c)(2)(i) provides that 

excess space or capacity can be used by 

third parties to the extent that the real 

estate acquired is consistent with the 

real estate available in the market. For 

example, if a national bank or Federal 

savings association is located in an area 

in which strip malls are the 

predominant type of commercial real 

estate, then a national bank or Federal 

savings association may be able to 

acquire a strip mall if the national bank 

or Federal savings association would 

occupy greater than 50 percent of the 

space and lease out the remaining space. 

However, as the national bank or 

Federal savings association must have 

good faith and a non-speculative 

purpose in order for real estate to be 

legitimately acquired, a national bank or 

Federal savings association would need 

to analyze carefully whether this 

requirement would be met if many 

smaller strip malls than the one it 

acquired were available or if there were 

many free standing buildings more 

appropriately sized for bank purposes 

available in the market. 

Section 7.1024(c)(2)(ii) provides that a 

national bank or Federal savings 

association may acquire and retain 

additional space or capacity, beyond its 

present needs, if it is reasonably 

necessary for planned future expansion 

or to meet the bank’s future expected 

banking needs as long as the bank uses 

the additional space or capacity in the 

real estate acquired for future bank 

expansion within five years. A national 

bank or Federal savings association may 

acquire real estate intended to be used 

for future banking purposes and may 

permit third parties to use this excess 

space or capacity, but the national bank 

or Federal savings association must use 

this real estate for banking purposes 

within five years of acquisition. The 

OCC understands that it is prudent for 

a national bank or Federal savings 

association to plan for future expansion 

and use, so a national bank or Federal 

savings association may legitimately 

acquire and develop real estate intended 

for future use as long as that real estate 

is used by the national bank or Federal 

savings association within five years of 

its acquisition or development. If the 

property does not become bank 

occupied premises within five years, it 

will become Other Real Estate Owned 

(OREO) and, subject to 12 U.S.C. 29 for 

national banks and 12 CFR 34.82 for 

national banks and Federal savings 

associations, must be disposed of within 

five years of becoming OREO, unless the 

bank requests an extension of up to an 

additional five years. 

Proposed § 7.1024(c)(2)(iii) provides 

that a national bank or Federal savings 

association may lease excess capacity 

resulting from a fluctuation caused by 

the bank’s need to use the full capacity 

of a space during peak periods but not 

in other off-peak periods. This situation 

is similar to the example discussed 

above related to a call center which the 

bank uses all 100 available seats during 

eight months of the year but only used 

80 during the other four months. The 

bank may allow third parties to use the 

excess 20 seats in its call center 

provided the capacity was legitimately 

acquired for bank operations and does 

not impede the safe and sound 

operation of the bank. 

Proposed § 7.1024(c)(2)(iv) provides 

that a national bank or Federal savings 

association may lease excess capacity or 

space that is no longer needed due to a 

decline in the level of banking 

operations. In this situation, a bank 

acquired real estate for use in its 

banking operations and, based on a 

decline in bank activity or operation, no 

longer needs all of the space. The nexus 

between national bank or Federal 

savings association ownership of a 

building and its banking operations 

becomes clearer the closer the bank’s 

occupancy approaches one hundred 

percent. As with excess capacity in data 

processing, the OCC presumes a certain 

percentage of use of the property to be 

permissible. The bank may allow third 

parties to use the space provided the 

bank still otherwise occupies more than 

50 percent of the real estate as required 

by § 7.1024(a)(2). 

Question Five: Should the OCC permit 

a national bank or Federal savings 

association to lease out more than 50 

percent of its premises on a temporary 

basis, provided that the national bank 

brings its percentage of occupancy back 

to at least 50 percent by a certain time 

period? 

Question Six: Should the OCC impose 

additional time-based limitations on a 

bank’s ability to lease out excess space 

or capacity? For example, should a bank 

be permitted to lease out 50 percent of 

its space for a limited period (for 

example, five years) but be subject to a 

higher usage requirement (for example, 

75 percent) on an ongoing basis? 

Question Seven: Should certain uses 

be permissible but subject to a timebased limit? 

Proposed § 7.1024(c)(2)(v) provides 

that a national bank or Federal savings 

association may permit third parties to 

use bank occupied premises after bank 

business hours.19 For example, a bank 

may permit community members to use 

a bank auditorium or conference center 

after bank business hours. After hours 


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7984 Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Proposed Rules 

20Brown v. Schleier, 118 F. 981, 984 (8th Cir. 

1902), aff’d 194 U.S. 18 (1904). 

use by third parties will not affect the 

bank occupied premises calculation. 

The OCC recognizes that often 

national banks and Federal savings 

associations are asked or required by 

outside parties, such as a local 

government, to make commitments to 

allow third party or public use in order 

to acquire or hold real estate. When 

such commitments are requested or 

required, the national bank or Federal 

savings association should inform the 

appropriate OCC supervisory office of 

such requests and share such 

commitments and other relevant 

information with the appropriate OCC 

supervisory office. 

Impermissible Premises (§ 7.1024(d)) 

Proposed § 7.1024(d) provides that a 

national bank or Federal savings 

association may not acquire or hold 

impermissible premises. Proposed 

§ 7.1024(a)(4) defines impermissible 

premises as real estate that is not bank 

occupied premises or that otherwise 

does not conform with the requirements 

of this section. If the real estate 

acquisition or holding would not 

conform with the requirements of 

§ 7.1024, then it would be 

impermissible. 

Question Eight: Should the OCC 

include specific examples in § 7.1024(d) 

of impermissible premises? If so, what 

examples should be included? Should 

large retail operations, such as grocery 

stores, be specifically impermissible? 

Should commercial lodging (rental 

apartments, branded hotels) be 

specifically impermissible? 

Question Nine: Courts have explained 

that, under 12 U.S.C. 29, national banks 

investing in property should be doing so 

‘‘in good faith, solely with a view of 

obtaining an eligible location’’ and not 

for the purpose of speculating or 

investing in real estate as a 

landlord.20 Should the final rule retain 

the good faith requirement to ensure 

that national banks and Federal savings 

associations are only permitted to 

acquire additional real estate with the 

intention of using it as premises? 

Should the final rule make further 

clarification that national banks and 

Federal savings associations would not 

be permitted to obtain real estate with 

the intention of using part of the real 

estate for a non-premises purpose on an 

indefinite basis? 

Sharing National Bank or Federal 

Savings Association Space and 

Employees in Jointly Held Bank 

Occupied Premises (§ 7.1024(e)) 

Proposed § 7.1024(e) substantially 

imports current 12 CFR 7.3001 

concerning the sharing of national bank 

or Federal savings association space and 

employees in jointly held bank 

occupied office premises covering 

situations where a bank and another 

business jointly hold and share the same 

space as opposed to a bank leasing a 

separate space within a building to a 

third party. Proposed § 7.1024(e) 

provides guidance on how to share 

offices and employees in a manner that 

protects customers and is consistent 

with safe and sound banking practices. 

The proposed rule would not alter or 

affect existing precedent applicable to 

12 CFR 7.3001. Proposed § 7.1024(e)(4), 

like current 12 CFR 7.3001(d), provides 

that in conducting sharing 

arrangements, national banks and 

Federal savings associations would be 

required to ensure that each 

arrangement complies with all 

applicable laws or regulations. Proposed 

§ 7.1024(e)(4), like current 12 CFR 

7.3001(d), lists three requirements, 

which are illustrative and not 

exhaustive. 

Permissible Means of Holding Real 

Estate and Fixed Assets (§ 7.1024(f)) 

Proposed § 7.1024(f) provides 

technical information related to 

permissible means of holding real estate 

and fixed assets. These provisions are 

substantially similar to the provisions in 

current 12 CFR 7.1024(a)(3), (b), and (c). 

Transition (§ 7.1024(g)) 

Proposed § 7.1024(g) provides that as 

of XX, 20XX, a national bank or Federal 

savings association that holds an 

investment in real estate, fixed assets, 

banking premises, or other real property 

that complies with the legal 

requirements in effect prior to XX, 

20XX, but would violate any provision 

of proposed § 7.1024, would be 

permitted to continue to hold the 

investment in accordance with the prior 

legal requirements. However, a national 

bank or Federal savings association 

holding such an investment cannot 

modify, expand, or improve the 

investment, except for routine 

maintenance, without the prior approval 

of the appropriate OCC supervisory 

office. Proposed § 7.1024(g) grandfathers 

national banks or Federal savings 

associations that currently have 

permissible real estate investments that 

would no longer be permissible under 

the proposed revisions. The proposed 

rule would supersede outstanding OCC 

precedent (and former OTS precedent) 

in this area to the extent it is 

inconsistent with the proposed rule. 

While national banks and Federal 

savings associations would be able to 

continue to rely on this precedent, 

including interpretive letters, with 

respect to current real estate 

investments, national banks and Federal 

savings associations would not be able 

to rely on this precedent with respect to 

future real estate investments. The 

proposed rule would not affect 

outstanding precedent regarding 12 CFR 

7.1000 or 12 CFR 7.3001. 

Question Ten: The OCC requests 

comment on the appropriate parameters 

of a national bank or Federal savings 

association’s ability to hold real estate 

subject to the transition rule in 

§ 7.1024(g). Specifically, should a 

renewal, modification, or termination of 

a lease constitute a ‘‘modification’’ 

subject to the transition rule? Should 

other activities besides ‘‘routine 

maintenance’’ be permitted under the 

transition rule? 

IV. Administrative Law Matters 

Paperwork Reduction Act. In 

accordance with the requirements of the 

Paperwork Reduction Act of 1995 

(PRA), 44 U.S.C. 3501 et seq., the OCC 

may not conduct or sponsor, and 

respondents are not required to respond 

to, an information collection unless it 

displays a currently valid Office of 

Management and Budget (OMB) control 

number. The OCC has reviewed the 

notice of proposed rulemaking and 

determined that it would not introduce 

any new or revise any existing 

collection of information pursuant to 

the PRA. Therefore, no submission will 

be made to OMB for review. 

Regulatory Flexibility Act. The 

Regulatory Flexibility Act (RFA), 5 

U.S.C. 601 et seq., requires an agency, 

in connection with a proposed rule, to 

prepare an Initial Regulatory Flexibility 

Analysis describing the impact of the 

proposed rule on small entities (defined 

by the Small Business Administration 

(SBA) for purposes of the RFA to 

include commercial banks and savings 

institutions with total assets of $600 

million or less and trust companies with 

total assets of $41.5 million of less) or 

to certify that the proposed rule would 

not have a significant economic impact 

on a substantial number of small 

entities. The OCC currently supervises 

approximately 745 small entities. The 

OCC expects that all of these small 

entities would be impacted by the 

proposed rule. Because the proposed 

rule applies to all OCC-supervised 

depository institutions, the proposed 


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rule would affect all small OCCsupervised entities, and thus a 

substantial number of them. 

Unfunded Mandates Reform Act. 

Consistent with the Unfunded Mandates 

Reform Act of 1995 (UMRA), 2 U.S.C. 

1532, the OCC considers whether the 

proposed rule includes a Federal 

mandate that may result in the 

expenditure by state, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million adjusted 

for inflation (currently $157 million) in 

any one year. The OCC estimates the 

expenditures that may be associated 

with compliance costs for this proposed 

rule, if implemented, would be as much 

as $412,000. The estimate for 

expenditures is for modifying a bank’s 

policies and procedures on premises. 

However, it should be noted that the 

proposed rule does not require banks to 

modify their policies and procedures. 

Therefore, the OCC concludes that 

implementation of the proposed rule 

would not result in an expenditure of 

$157 million or more annually by state, 

local, and tribal governments, or by the 

private sector. 

Riegle Community Development and 

Regulatory Improvement Act. Pursuant 

to section 302(a) of the Riegle 

Community Development and 

Regulatory Improvement Act of 1994 

(RCDRIA), 12 U.S.C. 4802(a), in 

determining the effective date and 

administrative compliance requirements 

for new regulations that impose 

additional reporting, disclosure, or other 

requirements on insured depository 

institutions, the OCC must consider, 

consistent with principles of safety and 

soundness and the public interest, any 

administrative burdens that such 

regulations would place on depository 

institutions, including small depository 

institutions, and customers of 

depository institutions, as well as the 

benefits of such regulations. In addition, 

section 302(b) of RCDRIA, 12 U.S.C. 

4802(b), requires new regulations and 

amendments to regulations that impose 

additional reporting, disclosures, or 

other new requirements on insured 

depository institutions generally to take 

effect on the first day of a calendar 

quarter that begins on or after the date 

on which the regulations are published 

in final form. Although the proposed 

rule does not impose additional 

reporting, disclosures, or other new 

requirements on insured depository 

institutions, the OCC invites comments 

that will inform its consideration of the 

administrative burdens and the benefits 

of its proposal, as well as the effective 

date of the final rule. 

List of Subjects in 12 CFR Part 7 

Computer technology, Credit, 

Derivatives, Federal savings 

associations, Insurance, Investments, 

Metals, National banks, Reporting and 

recordkeeping requirements, Securities, 

Security bonds. 

Authority and Issuance 

For the reasons stated in the 

preamble, the OCC proposes to amend 

12 CFR part 7 as follows. 

PART 7—ACTIVITIES AND 

OPERATIONS 

■ 1. The authority citation for part 7 

continues to read as follows: 

Authority: 12 U.S.C. 1 et seq., 25b, 29, 71, 

71a, 92, 92a, 93, 93a, 95(b)(1), 371, 371d, 481, 

484, 1463, 1464, 1465, 1818, 1828(m) and 

5412(b)(2)(B). 

■ 2. Amend Part 7 by adding § 7.1024 to 

read as follows: 

§ 7.1024 National bank or Federal savings 

association ownership of property. 

(a) Definitions. 

(1) Bank occupied office premises 

means bank occupied premises 

containing offices where professional or 

clerical duties are performed. 

(2) Bank occupied premises means 

real estate acquired and held in good 

faith and in which more than 50 percent 

of each building or severable piece of 

land is, or consistent with paragraph 

(c)(2)(ii) of this section—, will be used 

by bank persons for the transaction of a 

national bank’s or Federal savings 

association’s business, including 

facilities that may be operated by third 

parties to provide amenities and 

services to bank persons or otherwise 

facilitate national bank or Federal 

savings association business operations. 

(3) Bank persons mean a national 

bank or Federal savings association’s 

employees, contractors, consultants, 

vendors, and any other individuals who 

are engaged in the national bank or 

Federal savings association’s business. 

(4) Impermissible premises means real 

estate that is not bank occupied 

premises or that otherwise does not 

conform with the requirements of this 

section. 

(5) Shared space means bank 

occupied office premises that a national 

bank or Federal savings association 

shares with a third party to enhance the 

national bank’s business operations. 

(b) Investment in real estate necessary 

for the transaction of business. A 

national bank or Federal savings 

association may acquire, hold, or 

convey real estate for use as bank 

occupied premises. 

(c) Excess space and capacity. 

(1) A national bank or Federal savings 

association may, in order to optimize 

the use of bank occupied premises or 

avoid economic loss or waste, permit 

third parties to use excess space or 

capacity in real estate legitimately 

acquired or developed by the national 

bank or Federal savings association for 

its banking business. Such excess space 

or capacity must have a nexus with the 

transaction of the bank’s business or 

bank operations for the national bank or 

Federal savings association such that it 

is acquired or held to provide the bank 

with a business location rather than as 

an investment in real estate. 

(2) With respect to bank occupied 

premises, legitimate excess space or 

capacity that may be used by third 

parties can arise in a variety of 

situations, including the following: 

(i) Due to the characteristics of the 

real estate available in the market, the 

space or capacity to meet a national 

bank or Federal savings association’s 

requirements exceeds its present needs; 

(ii) The acquisition and retention of 

additional space or capacity, beyond 

present needs, reasonably may be 

necessary for planned future expansion 

or to meet a national bank’s or Federal 

savings association’s expected future 

banking needs as long as the national 

bank or Federal savings association uses 

the additional capacity in the real estate 

acquired for future national bank or 

Federal savings association expansion 

or banking needs within five years; 

(iii) Requirements for capacity 

fluctuate because a national bank or 

Federal savings association may need to 

use the full capacity of a space during 

peak periods resulting in periods when 

its capacity is underutilized; 

(iv) After the initial acquisition of real 

estate thought to be fully needed for 

banking operations, a national bank or 

Federal savings association experiences 

a decline in the level of banking 

operations or an increase in efficiency 

resulting in underutilized space or 

capacity; and 

(v) A national bank or Federal savings 

association has capacity to allow third 

parties after-hours use of bank occupied 

premises. 

(d) Impermissible premises. A 

national bank or Federal savings 

association may not acquire, hold, or 

convey impermissible premises, except 

as otherwise permitted by 12 U.S.C. 29 

or 1464, respectively, or other 

applicable law. 

(e) Sharing national bank space and 

employees in jointly held bank occupied 

office premises. 

(1) Shared space. A national bank or 

Federal savings association may share 

space in bank occupied office premises 


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jointly held with one or more other 

businesses. 

(2) Shared employees. When sharing 

space with other businesses as 

described in paragraph (e)(1) of this 

section, a national bank or Federal 

savings association may provide, under 

one or more written agreements between 

the national bank or Federal savings 

association, the other business, and 

their employees, that: 

(i) A national bank or Federal savings 

association employee may act as agent 

for the other business; or 

(ii) An employee of the other business 

may act as agent for the national bank 

or Federal savings association. 

(3) Supervisory conditions. When a 

national bank or Federal savings 

association engages in arrangements of 

the types listed in paragraphs (e)(1) and 

(2) of this section, the national bank or 

Federal savings association must ensure: 

(i) The other business is 

conspicuously, accurately, and 

separately identified; 

(ii) Shared employees clearly and 

fully disclose the nature of their agency 

relationship to customers of the national 

bank or Federal savings association and 

of the other businesses so that 

customers will know the identity of the 

national bank, Federal savings 

association, or other business that is 

providing the product or service; 

(iii) The arrangement does not 

constitute a joint venture or partnership 

with the other business under 

applicable state law; 

(iv) All aspects of the relationship 

between the national bank or Federal 

savings association and the other 

business are conducted at arm’s length, 

unless a special arrangement is 

warranted because the other business is 

a subsidiary of the national bank or 

Federal savings association; 

(v) Security issues arising from the 

activities of the other business on the 

premises are addressed; 

(vi) The activities of the other 

business do not adversely affect the 

safety and soundness of the national 

bank or Federal savings association; 

(vii) The shared employees or the 

entity for which they perform services 

are duly licensed or meet qualification 

requirements of applicable statutes and 

regulations pertaining to agents or 

employees of such other business; and 

(viii) The assets and records of the 

parties are segregated. 

(4) Other legal requirements. When 

entering into arrangements of the types 

described in paragraphs (e)(1) and (2) of 

this section, and in conducting 

operations pursuant to those 

arrangements, a national bank or 

Federal savings association must ensure 

that each arrangement complies with all 

applicable laws and regulations. If the 

arrangement involves an affiliate or a 

shareholder, director, officer, or 

employee of the national bank or 

Federal savings association: 

(i) The national bank or Federal 

savings association must ensure 

compliance with all applicable statutory 

and regulatory provisions governing 

national bank or Federal savings 

association transactions with these 

persons or entities; 

(ii) The parties must comply with all 

applicable fiduciary duties; and 

(iii) The parties, if they are in 

competition with each other, must 

consider limitations, if any, imposed by 

applicable antitrust laws. 

(f) Permissible means of holding real 

estate and fixed assets. 

(1) Permissible means of holding. A 

national bank or Federal savings 

association may acquire and hold real 

estate under paragraph (b) of this 

section by any reasonable and prudent 

means, including ownership in fee, a 

leasehold estate, or in an interest in a 

cooperative. A national bank or Federal 

savings association may hold this real 

estate directly or through one or more 

subsidiaries. A national bank or Federal 

savings association may organize a bank 

occupied premises subsidiary as a 

corporation, partnership, limited 

liability company, or any other similar 

entity. 

(2) Fixed assets. A national bank or 

Federal savings association may own 

fixed assets necessary for the transaction 

of its business, such as fixtures, 

furniture, and data processing 

equipment. 

(3) Investment in banking premises. 

(i) Premises investment and approval. 

A national bank or Federal savings 

association must comply with the 

investment and approval requirements 

for investment in banking premises in 

12 CFR 5.37(d). 

(ii) Option to purchase. An 

unexercised option to purchase banking 

premises or stock in a corporation 

holding banking premises is not an 

investment in banking premises. 

However, a national bank or Federal 

savings association seeking to exercise 

such an option must comply with the 

requirements in 12 CFR 5.37(d). 

(g) Transition. If, on XX, 20XX, a 

national bank or Federal savings 

association holds an investment in real 

estate, fixed assets, banking premises, or 

other real property that complies with 

the legal requirements in effect prior to 

XX, 20XX, but would violate any 

provision of this section, the national 

bank or Federal savings association may 

continue to hold such investment in 

accordance with the prior legal 

requirements. However, a national bank 

or Federal savings association that holds 

such an investment may not modify, 

expand, or improve this investment, 

except for routine maintenance, without 

the prior approval of the appropriate 

OCC supervisory office. 

§ 7.3001 [Removed] 

■ 3. Remove § 7.3001. 

Brian P. Brooks, 

Acting Comptroller of the Currency. 

Editorial Note: This document was 

received at the Office of the Federal Register 

on December 31, 2020. 

[FR Doc. 2020–29277 Filed 2–2–21; 8:45 am] 

BILLING CODE 4810–33–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–119890–18] 

RIN 1545–BP92 

Section 42, Low-Income Housing 

Credit Average Income Test 

Regulations; Hearing 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Proposed rule; notice of hearing. 

SUMMARY: This document provides a 

notice of public hearing on proposed 

regulations setting forth guidance on the 

average income test for purposes of the 

low-income housing credit. 

DATES: The public hearing is being held 

on Wednesday, March 24, 2021 at 12 

p.m. The IRS must receive speakers’ 

outlines of the topics to be discussed at 

the public hearing by Friday, March 5, 

2021. If no outlines are received by 

March 5, 2021, the public hearing will 

be cancelled. 

ADDRESSES: The public hearing is being 

held by teleconference. Individuals who 

want to testify (by telephone) at the 

public hearing must send an email to 

publichearings@irs.gov to receive the 

telephone number and access code for 

the hearing. The subject line of the 

email must contain the regulation 

number [REG–119890–18] and the word 

TESTIFY. For example, the subject line 

may say: Request to TESTIFY at Hearing 

for REG–119890–18. The email must 

include the name(s) of the speaker(s) 

and title(s). Send outline submissions 

electronically via the Federal 

eRulemaking Portal at 

www.regulations.gov (IRS REG–119890– 

18). The email must be received by 

March 5, 2021. 


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