§ 5.23 Conversion to become a Federal savings association. ( a ) *Authority.* 12 U.S.C. 35, 1462a, 1463, 1464, 1467a, 2903, and 5412(b)(2)(B).
( b ) *Scope.* ( 1 ) This section describes procedures and standards governing OCC review and approval of an application by a mutual depository institution to convert to a Federal mutual savings association or an application by a stock depository institution to convert to a Federal stock savings association.
( 2 ) As used in this section, depository institution means any commercial bank (including a private bank), a savings bank, a trust company, a savings and loan association, a building and loan association, a homestead association, a cooperative bank, an industrial bank, or a credit union chartered in the United States and having its principal office located in the United States.
( c ) *Licensing requirements.* A depository institution that is mutual in form (“mutual depository institution”) must submit an application and obtain prior OCC approval to convert to a Federal mutual savings association. A stock depository institution must submit an application and obtain prior OCC approval to convert to a Federal stock savings association. At the time of conversion, the filer must have deposits insured by the FDIC. An institution that is not already insured by the FDIC must apply to the FDIC, and obtain FDIC approval, for deposit insurance before converting.
( d ) *Conversion of a mutual depository institution or a stock depository institution to a Federal savings association* — ( 1 ) *Policy.* Consistent with the OCC's chartering policy, it is OCC policy to allow conversion to a Federal savings association charter by another financial institution that can operate safely and soundly as a Federal savings association in compliance with applicable laws, regulations, and policies. This includes consideration of the factors set out in section 5(e) of the Home Owners' Loan Act, 12 U.S.C. 1464(e). The converting financial institution must obtain all necessary regulatory and shareholder or member approvals. The OCC may deny an application by any mutual depository institution or stock depository institution to convert to a Federal mutual savings association charter or Federal stock association charter, respectively, on the basis of the standards for denial set forth in § 5.13(b) or when conversion would permit the filer to escape supervisory action by its current regulators.
( 2 ) *Procedures* — ( i ) *Prefiling communications.* The filer should consult with the appropriate OCC licensing office prior to filing if it anticipates that its application will raise unusual or complex issues. If a prefiling meeting is appropriate, it will normally be held in the OCC licensing office where the application will be filed, but may be held at another location at the request of the filer.
( ii ) *Application.* A mutual depository institution or a stock depository institution must submit its application to convert to a Federal mutual savings association or Federal stock depository association, respectively, to the appropriate OCC licensing office and must send a copy of the application to its current appropriate Federal banking agency. The application must: ( A ) Identify each branch that the resulting financial institution expects to operate after conversion;
( B ) Include the institution's most recent audited financial statements (if any);
( C ) Include the latest report of condition and report of income (the most recent daily statement of condition will suffice if the institution does not file these reports);
( D ) Unless otherwise advised by the OCC in a prefiling communication, include an opinion of counsel that, in the case of State-chartered institutions, the conversion is not in contravention of applicable State law, or in the case of Federally-chartered institutions, the conversion is not in contravention of applicable Federal law;
( E ) State whether the institution wishes to exercise fiduciary powers after the conversion;
( F ) Identify all subsidiaries, service corporation investments, bank service company investments, and other equity investments that will be retained following the conversion, and provide the information and analysis of the subsidiaries' activities and the service corporation investments and other equity investments that would be required if the converting mutual institution or stock institution were a Federal mutual savings association or Federal stock savings association, respectively, establishing each subsidiary or making each service corporation or other equity investment pursuant to § 5.35, § 5.38, § 5.58, or § 5.59, or other applicable law and regulation;
( G ) Identify any nonconforming assets (including nonconforming subsidiaries) and nonconforming activities that the institution engages in and describe the plans to retain or divest those assets and activities;
( H ) Include a business plan if the converting institution has been operating for less than three years, plans to make significant changes to its business after the conversion, or at the request of the OCC;
( I ) Include a list of all outstanding conditions or other requirements imposed by the institution's current appropriate Federal banking agency and, if applicable, current State bank supervisor or State attorney-general in any cease and desist order, written agreement, other formal enforcement order, memorandum of understanding, approval of any application, notice or request, commitment letter, board resolution, or in any other manner, including the converting institution's analysis whether any such actions prohibit conversion under 12 U.S.C. 35, and the converting institution's plans regarding adhering to such conditions and requirements after conversion;
( J ) If the converting institution does not meet the qualified thrift lender test of 12 U.S.C. 1467a(m), include a plan to achieve compliance within a reasonable period of time and a request for an exception from the OCC;
( K ) Include a list of directors and senior executive officers, as defined in § 5.51, of the converting institution; and
( L ) Include a list of individuals, directors, and shareholders who directly or indirectly, or acting in concert with one or more persons or companies, or together with members of their immediate family, do or will own, control, or hold 10 percent or more of the institution's voting stock.
( iii ) The OCC may permit a Federal savings association to retain nonconforming assets of a converting institution for the time period prescribed by the OCC following a conversion, subject to conditions and an OCC determination of the carrying value of the retained assets consistent with the requirements of section 5(c) of the Home Owners' Loan Act (12 U.S.C. 1464(c)) relating to loans and investments. The OCC may permit a Federal savings association to continue nonconforming activities of a converting institution for the time period prescribed by the OCC following a conversion, subject to conditions.
( iv ) The OCC may require directors and senior executive officers of the converting institution to submit the Interagency Biographical and Financial Report, available at *www.occ.gov ,* and legible fingerprints.
( v ) Approval for an institution to convert to a Federal savings association expires if the conversion has not occurred within six months of the OCC's approval of the application, unless the OCC grants an extension of time.
( vi ) When the OCC determines that the filer has satisfied all statutory and regulatory requirements and any other conditions, the OCC issues a charter. The charter provides that the institution is authorized to begin conducting business as a Federal mutual savings association or a Federal stock savings association as of a specified date.
( 3 ) *Exceptions to rules of general applicability.* Sections 5.8, 5.10, and 5.11 do not apply to this section. However, if the OCC concludes that an application presents significant or novel policy, supervisory, or legal issues, the OCC may determine that any or all parts of §§ 5.8, 5.10, and 5.11 apply.
( 4 ) *Expedited review.* An application by an eligible bank to convert to a Federal savings association charter is deemed approved by the OCC as of the 45th day after the filing is received by the OCC, unless the OCC notifies the filer prior to that date that the filing has been removed from expedited review, or the expedited review process is extended, under § 5.13(a)(2).
( e ) *Conversion of a mutual depository institution to a Federal mutual savings association—supplemental rules.* In addition to the rules and procedures set forth in paragraph (d) of this section, a filer converting from a mutual depository institution to a Federal mutual savings association must comply with the following: After a Federal charter is issued to a converting institution, the association's members must after due notice, or upon a valid adjournment of a previous legal meeting, hold a meeting to elect directors and take care of all other actions necessary to fully effectuate the conversion and operate the association in accordance with law and these rules and regulations. Immediately thereafter, the board of directors must meet, elect officers, and transact any other appropriate business.
( f ) *Conversion of a national bank to a Federal stock savings association—supplemental rules* — ( 1 ) *Additional procedures.* A national bank may convert to a Federal stock savings association. In addition to the rules and procedures set forth in paragraph (d) of this section, a national bank that desires to convert to a Federal stock savings association must follow the requirements and procedures set forth in 12 U.S.C. 214a as if it were converting to a State bank and include in its application information demonstrating compliance with the applicable requirements of 12 U.S.C. 214a.
( 2 ) *Termination and change of status.* The appropriate OCC licensing office provides instructions to the converting national bank for terminating its status as a national bank and beginning its status as a Federal savings association.
( g ) *Continuation of business and entity.* The existence of the converting institution continues in the resulting Federal savings association. The resulting Federal savings association is considered the same business and entity as the converting institution, although as to rights, powers, and duties, the resulting Federal savings association is a Federal savings association. Any and all of the assets and other property (whether real, personal, mixed, tangible or intangible, including choses in action, rights, and credits) of the converting institution become assets and property of the resulting Federal savings association when the conversion occurs. Similarly, any and all of the obligations and debts of and claims against the converting institution become obligations and debts of and claims against the Federal savings association when the conversion occurs.
[80 FR 28430, May 18, 2015, as amended at 85 FR 80445, Dec. 11, 2020]