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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551

DIVISION OF BANKING

SUPERVISION AND REGULATION

DIVISION OF CONSUMER AND 

COMMUNITY AFFAIRS

SR 12-16

CA 12-12

November 26, 2012

TO THE OFFICER IN CHARGE OF SUPERVISION

 AT EACH FEDERAL RESERVE BANK

SUBJECT: Interagency Statement on Restrictions on Conversions of Troubled Banks

Applicability to Community Banking Organizations: This guidance applies to all state 

member banks, including those with $10 billion or less in consolidated assets.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance 

Corporation, and the Office of the Comptroller of the Currency (collectively, the agencies), in 

conjunction with the Conference of State Bank Supervisors, have issued the attached guidance to 

explain the procedures that the agencies will follow to implement section 612 of the Dodd-Frank 

Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), concerning certain charter 

conversions.

1

Section 612 of the Dodd-Frank Act (section 612) places restrictions on certain charter 

conversions. As explained in the attached statement, section 612 generally prohibits charter 

conversions by a national bank, state bank, or federal or state savings bank or savings association 

while the institution is subject to a cease and desist order (or other formal enforcement order) 

issued by, or a memorandum of understanding entered into with, its current federal banking 

agency or state bank supervisor with respect to a “significant supervisory matter” (collectively 

referred to as a “significant enforcement action”).2 The statute contains an exception to the 

prohibition that permits approval of a charter conversion if certain conditions are met, including 

that the federal banking agency or state banking supervisor that issued the significant 

enforcement action does not object to the conversion. 

 1 The various state banking supervisors may implement this policy statement through their individual licensing 

processes.

2 For state banks and state savings associations that wish to convert to a national bank, the charter conversion is also 

prohibited if the state bank or state savings association is subject to a final enforcement action by a State Attorney 

General. 
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The attached statement on conversions discusses section 612 mandates on notice and 

information-sharing requirements between the institution’s current and post-conversion federal 

banking regulators. Section 612(e)(1) of the Dodd-Frank Act provides that, at the time an 

insured depository institution files a conversion application with the prospective chartering 

authority, the institution must also send a copy of the conversion application to both its current 

federal banking agency and its prospective federal banking agency.

Insured depository institutions should consider the attached policy statement in 

connection with the guidance provided in the 2009 Federal Financial Institutions Examination 

Council (FFIEC) Statement on Regulatory Conversions (2009 interagency statement). The 2009 

interagency statement also highlights the importance of information sharing among agencies and 

state banking supervisors in their approach to regulatory conversion proposals.3

Questions regarding this guidance may be directed to Michael Sexton, Assistant Director, 

Domestic Banking Acquisitions and Activities, at (202) 452-3009, in the Division of Banking 

Supervision and Regulation. Questions may also be directed to Phyllis Harwell, Assistant 

Director, at (202) 452-3658, or Charles Fleet, Senior Supervisory Consumer Financial Services 

Analyst, at (202) 452-2776, in the Division of Consumer and Community Affairs. In addition, 

questions may be sent via the Board’s public website.4

Michael S. Gibson

Director

Division of Banking Supervision

and Regulation

Sandra F. Braunstein

Director

Division of Consumer

and Community Affairs

Attachment:

• Interagency Statement on Section 612 of the Dodd-Frank Act: Restrictions on 

Conversions of Troubled Banks

Cross-reference:

• 2009 FFIEC Statement on Regulatory Conversions

 3 The 2009 interagency statement focuses on institutions with less-than-satisfactory ratings. See the FFIEC press 

release dated July 1, 2009, for more information. 

4 See http://www.federalreserve.gov/apps/contactus/feedback.aspx.