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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551 

DIVISION OF BANKING

SUPERVISION AND REGULATION

SR 11-13 

July 25, 2011 

TO THE OFFICER IN CHARGE OF SUPERVISION

 AT EACH FEDERAL RESERVE BANK

SUBJECT: Guidance Regarding Prior Notices with Respect to Dividend Declarations by 

Savings Association Subsidiaries of Savings and Loan Holding Companies

Effective July 21, 2011, any savings association that is a subsidiary of a savings and loan 

holding company (SLHC) must provide notice to the Board at least 30 days before declaring a 

dividend.1

 The duty to review and process these notices is one of the new responsibilities the 

Board assumed on July 21, 2011, as part of the supervisory and rulemaking authority previously 

held by the Office of Thrift Supervision (OTS) with respect to SLHCs.

The 30-day prior notice is required by statute.2

 The statute also provides that the 30-day 

period runs from the date the notice is submitted to the agency, and that a dividend declared 

during the review period or without filing the notice is null and void.

Procedural Operations

A prior notice with respect to a proposed dividend declaration must be filed with the 

appropriate Reserve Bank on the designated form.3

 Notices should be submitted to the 

Applications Units at each applicable Reserve Bank. In evaluating a savings association’s 

notice, the Reserve Bank should work closely with the savings association’s supervisor(s). 

Therefore, upon receiving a notice, the Reserve Bank should immediately transmit a copy of the 

 

1 12 USC 1467a(f); Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Pub. L. No. 111-203, 

Section 369(8)(K), 124 Stat. 1376 (July 21, 2010).

2 12 USC 1467a(f). Under the statute, a savings association that is a subsidiary of a mutual holding company must 

file its notice with both the Board and the savings association’s federal supervisor. 12 USC 1467a(o)(11).

3 Prior to July 21, 2011, the OTS used Form 1583 for all applications and notices involving capital distributions. It 

is expected that Form 1583 will be revised to reflect the Board's regulation governing dividends by savings 

association subsidiaries of SLHCs. Savings associations will continue to use OTS Form 1583 until such time as the 

form is updated. See Form 1583 – Capital Distribution. 

http://www.federalreserve.gov/reportforms/slhc/OTS_Form1583_20110721.pdf
 

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notice to the savings association’s supervisor(s)4 at the district or field office level, accompanied 

by a transmittal letter requesting comment within 15 calendar days. In addition, Reserve Bank 

supervision staff with direct inspection responsibility for the SLHC should be consulted to solicit 

their view of the request. Savings associations should be provided with contact information and 

relevant procedural expectations pertaining to the notification process. 

Review Standards

The Board expects to issue regulations implementing review standards for dividend 

notices submitted by savings associations that are subsidiaries of SLHCs. It is expected that the 

applicable regulation will provide that a dividend notice may be denied by the Board, or by a 

Reserve Bank after consultation with the Board, if: 

a. Following the dividend, the savings association will be less than adequately 

capitalized as set forth in applicable regulations under 12 USC 1831o; 

b. The proposed dividend raises safety or soundness concerns; or 

c. The proposed dividend violates: 

• a prohibition contained in any statute, regulation, enforcement action, or 

agreement between the savings association or SLHC of which it is a 

subsidiary and an appropriate Federal banking agency; 

• a condition imposed on the savings association or SLHC of which it is a 

subsidiary in an application or notice approved by an appropriate Federal 

banking agency; or 

• any formal or informal enforcement action involving the savings association 

or SLHC of which it is a subsidiary. 

A Reserve Bank will have delegated authority to issue a non-objection to a dividend 

notice or to deny such a notice. However, a Reserve Bank must consult with Board staff prior to 

denying a dividend notice or requesting withdrawal of such a notice. In evaluating a savings 

association’s notice, supervisory staff should evaluate the comprehensiveness and effectiveness 

of management’s capital planning and capital adequacy. Such evaluations may rely heavily on 

the findings and recommendations of the savings association’s primary federal or state regulator. 

In cases where the evaluations conducted by the Reserve Bank and the primary federal or state 

regulator result in an unresolved disagreement, Reserve Bank staff should consult with Board 

staff. In every case, the review of a savings association’s notice must be completed before the 

end of the statutory 30-day review period.

 

4

 If the notificant is a federal savings association, the Reserve Bank must send a copy of the notice along with a 

transmittal letter to the assistant deputy comptroller (ADC) of the appropriate Office of the Comptroller of the 

Currency (OCC) Supervisory Office. If the notificant is a federal savings association supervised by OCC Special 

Supervision, the Reserve Bank must send a copy of the notice to the ADC and Director of Special Supervision. If 

the notificant is a state savings association, the Reserve Bank must send a copy of the notice and a transmittal letter 

to both the appropriate Federal Deposit Insurance Corporation Regional/Area Director and the appropriate state 

supervisor. 
 

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Minimum Documentation Requirements

Supervisory staff should document their analyses of notices received and include such 

documentation in workpapers related to supervisory activities. Supervisory staff must document 

any denial or request for withdrawal of a notice. Documentation showing an appropriate 

evaluation of the savings association’s dividend notice, the primary supervisor’s evaluation and 

recommendation, and the Reserve Bank’s final determination provides the basis for constructive 

dialogue with the primary regulator and will support current and future supervisory evaluations 

of dividend notices submitted by the savings association. 

Questions regarding this letter should be directed to Kevin Bertsch, Associate Director, at 

(202) 452-5265; Vitus Ukwuoma, Manager, at (202) 452-3163; or William Tiernay, Senior 

Supervisory Financial Analyst, at (202) 872-7579, Community Banking Organizations, in the 

Division of Banking Supervision and Regulation; or Jeremy Kress, Attorney, at (202) 872-7589, 

in the Legal Division. 

Maryann F. Hunter

Acting Director