52884 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Notices

important determinants in considering

convenience and needs. These

population figures should include not

only the present population but also

data on population trends for the future.

Population characteristics such as

income, age distribution, educational

level, occupation, and stability should

be considered.

(c) Competition—Some consideration

will be given to the adequacy or

inadequacy of existing bank facilities in

the community and in nearby

communities. The growth rate and size

of banks and other financial institutions

in the community or trade area may

provide meaningful indications of the

economic condition of the area and the

potential business for a branch. Other

financial institutions such as savings

and loan associations, credit unions,

finance companies, mortgage companies

and insurance companies may be

considered competing institutions to the

extent their services parallel those of the

branch.

(d) Other Supporting Data—The

extent of new or proposed residential,

commercial and industrial development

and construction is a significant

secondary consideration in resolving the

convenience and needs factor. Evidence

of plans for development of shopping

centers, apartment complexes and other

residential subdivisions, factories, or

other major facilities near the proposed

site of the branch are also relevant.

6. Consistency of Corporate Powers

This factor will rarely be applicable to

branch proposals, except in those

instances where a bank may

contemplate some additional corporate

power, not normally exercised by banks,

in connection with its application.

D. Statutory Factors—Application or

Notification To Establish Remote

Service Facility

In view of the nature of the remote

service facility, including that it offers

limited service and is generally an

unmanned electronic unit, the six

statutory factors will not be applied to

the same degree and extent as in the

case of a traditional branch. For

instance, with respect to the earnings

factor, detailed projections of deposits,

income and expenses are not necessary.

A determination that operating expenses

of the facility will not burden the bank’s

future earnings will generally suffice.

Similarly, detailed or extensive

economic information and demographic

data are not required when considering

the convenience and needs factor.

By order of the Board of Directors.

Dated at Washington, DC, this 23rd day of

September, 1997.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

[FR Doc. 97–26232 Filed 10–8–97; 8:45 am]

BILLING CODE 6714–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

Liability of Commonly Controlled

Depository Institutions

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Proposed statement of policy.

SUMMARY: The FDIC is revising the

Statement of Policy on Liability of

Commonly Controlled Depository

Institutions (Statement of Policy) which

sets forth the procedures and guidelines

the FDIC uses in assessing or waiving

liability against commonly controlled

depository institutions under section

5(e) of the Federal Deposit Insurance

Act. The revised Statement of Policy

removes the application procedures for

requesting a conditional waiver of the

cross-guaranty liability and incorporates

those same procedures into a proposed

section of the FDIC’s applications

regulation published for comment

elsewhere in today’s Federal Register.

DATES: Comments must be received by

January 7, 1998.

ADDRESSES: Send written comments to

Robert E. Feldman, Executive Secretary,

Attention: Comments/OES, Federal

Deposit Insurance Corporation, 550 17th

Street NW, Washington, DC 20429.

Comments may be hand delivered to the

guard station located at the rear of the

17th Street building (located on F

Street), on business days between 7 a.m.

and 5 p.m. (FAX number (202) 898–

3838; Internet address:

comments@FDIC.gov). Comments may

be inspected and photocopied at the

FDIC Public Information Center, Room

100, 801 17th Street NW, Washington,

DC, between 9 a.m. and 4:30 p.m. on

business days.

FOR FURTHER INFORMATION CONTACT:

Jesse Snyder, Assistant Director of

Operations, Division of Supervision

(202) 898–6915, or Grovetta N.

Gardineer, Counsel, Legal Division,

(202) 736–0665, Federal Deposit

Insurance Corporation, 550 17th Street,

NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION: Effective

April 1, 1997, the Board of Directors of

the FDIC revised the Statement of Policy

Regarding Liability of Commonly

Controlled Depository Institutions, 62

FR 15480. Such liability is a

consequence of section 5(e) of the

Federal Deposit Insurance Act (Act), 12

U.S.C. 1815(e), which was added by the

passage of section 206(a)(7) of the

Financial Institutions Reform, Recovery,

and Enforcement Act of 1989. Section

5(e) created liability for commonly

controlled insured depository

institutions for losses incurred or

anticipated by the FDIC in connection

with (i) the default of a commonly

controlled insured depository

institution; or (ii) any assistance

provided by the FDIC to any commonly

controlled insured depository

institution in danger of default. The

purpose of section 5(e) is to ensure that

the assets of healthy depository

institution subsidiaries within the same

holding company structure, or of a

healthy institution which controls a

failing institution, will be available to

the FDIC to help offset the cost of

resolving the failed subsidiary. While

the FDIC seeks to recover its losses

associated with failing institutions, it

also seeks to encourage the acquisition

of troubled institutions by those capable

of rehabilitating them and to avoid

instances in which the assessment of

liability against an otherwise healthy

institution will cause its failure, thus

exposing the FDIC and the insurance

funds to greater loss.

The revised Statement of Policy

contained information regarding the

content of requests for conditional

waiver of cross guaranty liability. The

revised Statement of Policy also

indicated that any changes in part 303

of the FDIC’s rules may necessitate

further revisions to the policy statement.

The decision has been made by the

FDIC that all information regarding

applications be addressed in revised

part 303 of the FDIC Rules and

Regulations (Rules). Accordingly, the

application procedures for requesting a

conditional waiver of cross guaranty

liability are being moved to part 303.

The appropriate section of part 303 that

discusses conditional waiver

applications will be referenced in the

revised Statement of Policy.

The Statement of Policy provides for

the issuance of a Notice of Assessment

of Liability, Findings of Fact and

Conclusions of Law, an Order to Pay

and a Notice of Hearing, a good faith

estimate of the FDIC’s loss, and the

determination of the method and

schedule of repayment. The liability

under the statute attaches at the time of

default of a commonly controlled

depository institution. The FDIC, in its

discretion, may assess liability for the

losses incurred by the default or for any

assistance provided by the FDIC to a

commonly controlled institution in

danger of default. Generally, liability
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Notices 52885

will be assessed against an institution

except in instances of the acquisition of

a distressed institution by an

unaffiliated entity prior to the default of

a commonly controlled institution. A

conditional waiver of the liability will

be considered when, as determined

within the sole discretion of the Board

of Directors of the FDIC, the exemption

is in the best interests of either of the

insurance funds administered by the

FDIC or where a waiver facilitates an

alternative that is in the best interests of

the FDIC. Institutions that believe that

an assessment of liability would be

inappropriate are required to submit

supporting documentation. The

contents of an application for requesting

a conditional waiver of liability will be

located in proposed § 303.245 of the

FDIC’s Rules, 12 CFR 303.245.

Commenters are invited to review the

proposed Statement of Policy in

conjunction with proposed § 303.245

published elsewhere in today’s Federal

Register.

For the above reasons, the FDIC

proposes the following Statement of

Policy:

Liability of Commonly Controlled

Depository Institutions

Introduction

Section 5(e) of the Federal Deposit

Insurance Act, as added by section

206(a)(7) of the Financial Institutions

Reform, Recovery, and Enforcement Act

of 1989, creates liability for commonly

controlled insured depository

institutions for losses incurred or

anticipated by the Federal Deposit

Insurance Corporation (FDIC) in

connection with: (i) The default of a

commonly controlled insured

depository institution; or (ii) any

assistance provided by the FDIC to any

commonly controlled insured

depository institution in danger of

default. In addition to certain statutory

exceptions and exclusions contained in

sections 5(e)(6), (7) and (8), the Act also

permits the FDIC, in its discretion, to

exempt any insured depository

institution from this liability if it

determines that such exemption is in

the ‘‘best interests of the Bank Insurance

Fund or the Savings Association

Insurance Fund’’.

The liability of an insured depository

institution attaches at the time of default

of a commonly controlled institution. It

is completely within the discretion of

the FDIC whether or not to issue a

notice of assessment to the liable

institution for the estimated amount of

the loss incurred by the FDIC.

Guidelines for Conditional Waiver of

Liability

The FDIC may, in its discretion,

choose not to assess liability based upon

analysis of a particular situation, and it

may entertain requests for waivers from

affiliated or unaffiliated parties of an

institution in default or in danger of

default. The determination of whether

an exemption is in the best interests of

either insurance fund rests solely with

the Board of Directors of the FDIC

(Board). Should the Board make such a

determination, a waiver will be issued

setting forth terms and conditions that

must be met in order to receive an

exemption from liability (conditional

waiver of liability). The following

guidelines apply to conditional waivers

of liability under the provisions of this

section:

(1) A conditional waiver of liability

will be considered in those cases where

the waiver facilitates an alternative that

would be in the best interests of the

FDIC; for example, the conditional

waiver may be granted when requisite

additional capital and managerial

resources are being provided which

substantially lessen exposure to the

affected insurance fund. When

conditional waivers are granted to an

otherwise unaffiliated acquire of a

failing or failed institution they will be

granted for a fixed period, generally not

to exceed a period of time reasonably

required for existing problems to be

identified and resolved.

(2) If one or more institutions in a

commonly controlled relationship is

otherwise solvent, well-managed and

viable, it may be in the best interest of

the FDIC to waive or reduce claims

against such entities. In determining

whether a conditional waiver is

appropriate, consideration will be given

to actions of a holding company which

contribute to or diminish the FDIC’s

losses, as well as proposals to

strengthen other weakened institutions,

if any.

(3) Procedures to request a

conditional waiver of liability are

contained in § 303.245 of the FDIC’s

Rules and Regulations, 12 CFR 303.245.

(4) In cases where an insured

depository institution is sold to an

acquire with no financial interest,

directly or indirectly, in the institution

prior to the acquisition, it is the general

policy of the FDIC to forego the issuance

of a notice of assessment to the acquire

and its affiliated institutions in the

event of a default of an insured

depository institution formerly affiliated

with the acquired institution. The FDIC

will review all such transactions prior to

making a final determination to forego

the issuance of the notice of assessment.

Guidelines for Assessment of Liability

Whenever the FDIC determines that

assessment of liability in connection

with a commonly controlled insured

depository institution(s) is appropriate,

a Notice of Assessment of Liability,

Findings of Fact and Conclusions of

Law, Order to Pay, and Notice of

Hearing (Notice of Assessment) will be

served upon the liable institution. In

assessing the amount of the FDIC’s loss

and the liable institution(s) method of

payment, the following guidelines shall

apply:

(1) A good faith estimate of the

amount of loss the FDIC will incur shall

be based upon (a) the actual sale or

calculation of loss from a review by the

FDIC of the assets and liabilities of the

institution prior to default or the

granting of assistance; or (b) any other

cost estimate bases as explained in the

Notice of Assessment.

(2) If there is more than one

commonly controlled depository

institution to be assessed, each such

institution is jointly and severally liable

for all losses; however, the FDIC shall

make a good faith estimate of the

liability of each institution as

determined by (a) first assessing an

initial amount on a pro rata capital basis

that brings about parity in the capital

ratios of the liable institutions and (b)

then apportioning any residual

assessment on a pro-rata size basis

utilizing the most recent Report of

Condition. Any final assessment can be

based on the estimated liability of each

institution by the FDIC and/or

negotiations with the liable institutions.

(3) In the event that any liable

institution is closed prior to paying an

assessment, the amount assessed or to

have been assessed against that

institution may be assessed against the

remaining liable institution(s).

(4) The FDIC, after consulting with

the appropriate Federal and State

financial institutions regulatory

agencies, shall establish in each case a

schedule for payment which may

include a lump sum reimbursement, as

well as procedures for receipt of such

payment.

(5) Once liability has attached, the

FDIC will consider information similar

to that provided with a request for a

conditional waiver of liability in

determining the amount of the

estimated loss to be assessed. Such

information may also include suggested

payment plans.

By order of the Board of Directors.

Dated at Washington, DC, this 23rd day of

September, 1997.
52886 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Notices

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

[FR Doc. 97–26231 Filed 10–8–97; 8:45 am]

BILLING CODE 6714–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

Applications To Relocate Main Office

or Branch Statement of Policy

(Includes Remote Service Facilities;

Rescission of Policy Statement)

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Proposed rescission of statement

of policy.

SUMMARY: As part of the FDIC’s

systematic review of its regulations and

written policies under section 303(a) of

the Riegle Community Development and

Regulatory Improvement Act of 1994

(CDRI), the FDIC proposes to rescind its

Statement of Policy ‘‘Applications to

Relocate a Main Office or Branch

(Includes Remote Service Facilities)’’

(Statement of Policy).

The Statement of Policy provides

information and guidance to state

nonmember banks planning to relocate

the bank’s main office or a branch. The

information and guidance is out-of-date.

The FDIC proposes to rescind the

Statement of Policy because proposed

revisions to its applications regulation

published elsewhere in today’s Federal

Register update the requirements and

sufficiently address all required

application procedures to relocate a

main office or a branch.

DATES: Comments must be submitted on

or before January 7, 1998.

ADDRESSES: Send written comments to

Robert E. Feldman, Executive Secretary,

Attention: Comments/OES, Federal

Deposit Insurance Corporation, 550 17th

Street, NW., Washington, DC 20429.

Comments may be hand-delivered to the

guard station at the rear of the 17th

Street building (located on F Street), on

business days between 7 a.m. and 5 p.m.

(Fax number (202) 898–3838; Internet

address: comments@fdic.gov).

Comments may be inspected and

photocopied in the FDIC Public

Information Center, Room 100, 801 17th

Street, NW., Washington, DC 20429,

between 9 a.m. and 4:30 p.m. on

business days.

FOR FURTHER INFORMATION CONTACT:

Jesse G. Snyder, Assistant Director,

(202/898–6915), Division of

Supervision; Susan van den Toorn,

Counsel, (202/898–8707), Legal

Division, FDIC, 550 17th Street, NW,

Washington, DC 20429.

SUPPLEMENTARY INFORMATION: The FDIC

is conducting a systematic review of its

regulations and written policies. Section

303(a) of the CDRI (12 U.S.C. 4803(a))

requires the FDIC to streamline and

modify its regulations and written

policies in order to improve efficiency,

reduce unnecessary costs, and eliminate

unwarranted constraints on credit

availability. Section 303(a) also requires

the FDIC to remove inconsistencies and

outmoded and duplicative requirements

from its regulations and written

policies. As part of this review, the FDIC

has determined that the Statement of

Policy is outmoded, and that the FDIC’s

written policies can be streamlined by

its elimination.

The FDIC developed the Statement of

Policy to provide general supervisory

information and guidance to state

nonmember banks relative to the

application process and the evaluation

of statutory factors in relocating main

office or branches. The FDIC last

amended the Statement of Policy

September 8, 1980. 2 FDIC Law,

Regulations, and Related Acts (FDIC)

5125.

In the time since the Statement of

Policy was last amended, the

application process for relocating

branches and main offices has changed

significantly. As a result, the

supervisory information and guidance

contained in the Policy Statement,

which although general in nature, are

now out-of-date.

As part of the FDIC’s comprehensive

review of its applications process,

elsewhere in today’s Federal Register,

the FDIC is proposing to amend part

303. The proposed revisions to part 303

cover the relocation of main offices and

branches in sufficient detail so as to

address the required application

procedures. Commenters are invited to

review subpart C of proposed part 303

in conjunction with the proposal to

rescind the Statement of Policy.

For the above reasons, the FDIC

proposes to rescind the following

Statement of Policy:

Applications To Relocate Main Office

or Branch (Includes Remote Service

Facilities)

A. Introduction

Section 18(d) of the Federal Deposit

Insurance Act (12 U.S.C. 1828(d);

hereafter the (Act) requires the prior

written consent of the Corporation

before any state nonmember insured

bank may move its main office or any

branch. In analyzing these applications,

the Corporation must evaluate each

application in relation to the six

statutory factors prescribed in section 6

of the Act (12 U.S.C. 1816) as well as the

requirements of the National Historic

Preservation Act, the National

Environmental Policy Act of 1969, and

the Community Reinvestment Act. The

six statutory factors under section 6 of

the Act are: the financial history and

condition of the bank, the adequacy of

its capital structure, its future earnings

prospects, the general character of

management, the convenience and

needs of the community to be served by

the bank, and whether its corporate

powers are consistent with the purposes

of the Act.

The degree and extent to which the

six statutory factors are applied in

reviewing relocation applications

depend largely upon the nature and

purpose of the relocation which, in the

majority of instances, are of two basic

types: (1) Relocations to a different

primary market area; and (2) relocations

within the same primary market area. It

is noteworthy that the Corporation will

analyze all relocation applications from

the standpoint of the convenience and

needs of the community the office is

leaving as well as the community to

which it is moving.

B. Procedures

Application forms to relocate and

instructions for their completion may be

obtained from the regional office of the

FDIC region in which the main office of

the applicant is located. Upon receipt of

an application which is found complete,

the regional director will notify the

bank, in writing, that the application

has been accepted for filing and the date

thereof. The procedures governing the

administrative processing of relocation

applications are contained in part 303 of

the Corporation’s rules and regulations

(12 CFR part 303), particularly §§ 303.3,

303.10, 303.11, 303.12, and 303.14.

Section 303.14 sets forth, among other

things, the procedures controlling

establishment of a public file,

publication requirements, and

consideration of comments and protests

received in connection with an

application.

The Corporation will normally not

render a decision on any relocation

application until the State Authority has

approved or expressed its intent to

approve the proposal; however,

applicants are encouraged to submit

their applications to the Corporation at

the same time an application is

forwarded to the State Authority in

order to promote concurrent and more

timely processing of the proposal.

Notification of the granting or denial

of an application will be provided

together with a statement supporting the

decision. Under § 303.10(e) within 15