52810 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Parts 303, 337, 341, 346, 348,

and 359

RIN 3064–AC02

Applications, Requests, Submittals,

Delegations of Authority, and Notices

Required To Be Filed by Statute or

Regulation; Unsafe and Unsound

Banking Practices; Registration of

Transfer Agents; Foreign Banks;

Management Official Interlocks;

Golden Parachute and Indemnification

Payments

AGENCY: Federal Deposit Insurance

Corporation (FDIC).

ACTION: Proposed rule.

SUMMARY: The FDIC is proposing to

amend its regulations governing

application, notice and request

procedures and delegations of authority

by streamlining, modernizing and

clarifying current policies and practices.

Specifically, the FDIC proposes to offer

qualifying well-capitalized and wellmanaged insured depository institutions

and their holding companies expedited

review procedures for several major

types of filings, including deposit

insurance, merger and branch

applications. The agency also proposes

to centralize substantially all filing

procedures found throughout its rules

within the regulation for ease of

reference. Furthermore, the FDIC

proposes to reorganize the requirements

for each major application or notice type

into a separate regulatory subpart that

will contain all information necessary to

submit a filing to the agency, as well as

any relevant internal agency delegations

of authority to approve or deny

submissions. In addition, the agency is

incorporating statutory changes to its

application procedures made by the

Economic Growth and Regulatory

Paperwork Reduction Act of 1996.

Finally, the FDIC is proposing technical

amendments to related regulations to

conform these changes.

This action is being taken in

accordance with section 303(a) of the

Riegle Community Development and

Regulatory Improvement Act of 1994

which requires the federal banking

agencies to review and streamline their

regulations and policies in order to

improve efficiency, reduce unnecessary

costs, eliminate unwarranted constraints

on credit availability, and remove

inconsistencies and outmoded and

duplicative requirements.

The proposal seeks to reduce burden

on insured depository institutions by

imposing regulatory requirements only

where needed to address safety and

soundness concerns or accomplish other

statutory responsibilities of the FDIC.

The proposed rule also strives to more

closely align the FDIC’s application

processing regulations with those of the

other federal banking agencies.

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 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:

Division of Supervision: Cary H. Hiner,

Associate Director, (202) 898–6814;

Jesse G. Snyder, Assistant Director,

(202) 898–6915; Mark S. Schmidt,

Assistant Director, (202) 898–6918.

Division of Compliance and Consumer

Affairs: Steven D. Fritts, Associate

Director, (202) 942–3454, and Louise N.

Kotoshirodo, Review Examiner, (202)

942–3599. Legal Division: Susan van

den Toorn, Counsel, Regulation and

Legislation Section, (202) 898–8707, and

Nancy Schucker Recchia, Counsel,

Regulation and Legislation Section,

(202) 898–8885. For administrative

enforcement issues: Grovetta N.

Gardineer, Counsel, Compliance and

Enforcement Section, (202) 736–0665,

and Philip P. Houle, Counsel,

Compliance and Enforcement Section,

(202) 736–0758. For foreign bank

activities (Subpart J): Jamey G. Basham,

Counsel, Regulation and Legislation

Section, Legal Division (202) 898–7265,

and Christie A. Sciacca, Assistant

Director, Division of Supervision (202)

898–3671, Federal Deposit Insurance

Corporation, 550 17th Street, NW.,

Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

I. Background

Part 303 of the FDIC’s regulations (12

CFR part 303) generally describes the

procedures to be followed by both the

FDIC and applicants with respect to

applications, notices, or requests

required to be filed by statute or

regulation. Additional information

concerning processing is contained in

related FDIC statements of policy. Part

303 also sets forth delegations of

authority from the FDIC’s Board of

Directors to the Directors of the Division

of Supervision (DOS), the Division of

Compliance and Consumer Affairs

(DCA), the General Counsel of the Legal

Division, the Executive Secretary, and,

in some cases, their designees to act on

certain applications, notices, requests,

and enforcement matters.

The FDIC is proposing comprehensive

revisions to part 303 as part of a

systematic review of its regulations and

policy statements undertaken in

accordance with section 303(a) of the

Riegle Community Development and

Regulatory Improvement Act of 1994

(CDRIA) (12 U.S.C. 4803(a)). Section

303(a) of CDRIA requires the FDIC, the

Office of the Comptroller of the

Currency, the Board of Governors of the

Federal Reserve System, and the Office

of Thrift Supervision (federal banking

agencies) to streamline and modify their

regulations and written policies in order

to improve efficiency, reduce

unnecessary costs, and eliminate

unwarranted constraints on credit

availability. The statute also requires

each of the federal banking agencies to

remove inconsistencies and outmoded

and duplicative requirements from their

regulations and written policies.

To initiate its CDRIA review, the FDIC

published in the Federal Register a

notice soliciting comment on its

regulations and written policies. 60 FR

62345, December 6, 1995. In response to

that request, the FDIC received four

comments regarding part 303 and one

comment concerning a related policy

statement.

One commenter wrote that electronic

filing of various reports and documents

has the potential to reduce burden

arising from compliance with filing

requirements. In particular, the

commenter noted that other

governmental agencies already have

recognized the benefits of electronic

filing and that certain application

procedures, such as applications to

establish or relocate an office and

applications relating to mergers are

well-suited for electronic filing. The

FDIC is working the other federal

banking agencies in an attempt to adopt

uniform filing forms for common

applications and to have such forms

filed electronically where possible.

Another commenter suggested that

with regard to applications by insured

state nonmember banks to establish a

branch, move its main office, or relocate

a branch pursuant to § 303.2(c), the

regulations should reduce the regulatory

burden of setting up shared automated

teller machines (ATMs). Applications

are no longer required for ATMs and
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52811

remote service units (RSUs) as a result

of section 2205 of the Economic Growth

and Regulatory Paperwork Reduction

Act of 1996 (EGRPRA) (Pub. L. 104–208,

110 Stat. 3009), which excluded ATMs

and RSUs from the definition of a

‘‘domestic branch’’ under section 3(o) of

the FDI Act (12 U.S.C. 1831(o)).

Therefore, the definition of ‘‘branch’’ in

proposed § 303.41 excludes ATMs and

RSUs.

With regard to section 32 notices

(change in director or senior executive

officer), a commenter suggested that

exceptions be carved out for two of the

three statutory triggering events. Section

32 of the Federal Deposit Insurance Act

(FDI Act) required prior notice from a

depository institution or holding

company that (1) was chartered less

than two years; (2) had undergone a

change in control within the preceding

two years; or (3) was not in compliance

with minimum capital requirements or

was otherwise in ‘‘troubled condition.’’

Section 2209 of EGRPRA subsequently

amended section 32 by eliminating the

prior notice requirement for institutions

and holding companies that are

chartered for less than two years or that

have undergone a change in control

within the preceding two years.

However, institutions and holding

companies that are not in compliance

with minimum capital requirements or

are otherwise in ‘‘troubled condition’’

remain subject to the prior notice

requirement. As a result, this comment

has been rendered moot.

One commenter questioned why

current § 303.2(a)(4) includes a

requirement that an application by an

insured state nonmember bank to

establish a branch, move its main office

or relocate a branch contain a statement

as to whether or not the site is included

in or is eligible for inclusion in the

National Register of Historic Places,

including evidence that clearance has

been obtained from the State Historic

Preservation Officer (SHPO). As a

federal agency, the FDIC is subject to the

National Historic Preservation Act

(NHPA) (16 U.S.C. 470 et seq.) which

creates a mandatory review and

consultation process for Federal

undertakings that may affect properties

included in or eligible for inclusion in

the National Register of Historic Places

maintained by the Secretary of the

Interior. In order to comply with NHPA,

the FDIC currently requests applicants

to state whether the site is included in,

or eligible for inclusion in the National

Register and to provide evidence that

clearance has been obtained from the

SHPO. See 12 CFR § 303.2(a)(4).

However, the proposed filing

procedures at § 303.42(b)(5) modify the

current requirements to provide that

applicants submit a statement that

clearance has been or will be obtained

from the SHPO. In addition, the FDIC is

undertaking a review of its statement of

policy on the National Historic

Preservation Act of 1966 as part of the

CDRIA review process and is exploring

the possibility of entering into a

programmatic agreement with the

Advisory Council on Historic

Preservation which would greatly

streamline the historic preservation

review process, especially for those

applications which do not involve a

historic site. The FDIC expects to issue

a revised statement of policy on NHPA

in 1998.

Finally, the comment received on the

FDIC’s written policies concerned the

statement of policy on Applications for

Deposit Insurance. Discussion of the

comment is contained in the revised

statement of policy on Applications for

Deposit Insurance published elsewhere

in today’s Federal Register.

The proposed revisions to part 303

seek to reduce regulatory burden on

insured depository institutions,

particularly upon state nonmember

banks supervised by the FDIC. The

proposed rule also strives to more

closely align the FDIC’s application

processing regulations with those of the

other federal banking agencies.

Furthermore, the proposal reflects

changes to the FDIC’s application

procedures made by EGRPRA.

II. Discussion

The proposed regulation meets the

goals of section 303(a) of CDRIA in

several important ways.

• New expedited processing

procedures have been introduced for six

application types which represent the

majority of all filings (applications for

deposit insurance, mergers, branches,

consent to exercise trust powers,

retirement of capital, and certain foreign

banking activities).

During the first six months of 1997,

the FDIC acted on 1615 applications,

notices and requests. Approximately

1500 or 93 percent of these filings were

of the type for which expedited

processing or notice procedures would

be available under this proposal. Under

present regulations, only 130 of the

filings acted upon during the first six

months of 1997 actually took the form

of notices with clear time frames for

regulatory action. In addition to

reducing processing time for filings

submitted by well managed and well

capitalized banks, the proposed

expedited procedures will add more

certainty to the timing of regulatory

decision. This new approach will allow

the FDIC to focus its resources on

applications that do not fall within the

new expedited review procedure and

are therefore more likely to present

safety and soundness risks or raise CRA

or compliance concerns.

• The processing of some

applications has been structured to act

like notices. For example, applications

to establish a branch or to relocate a

main office or branch processed under

expedited procedures will generally be

deemed approved 21 days after receipt

of a substantially complete application.

Branch related applications represented

more than 50 percent of all applications

acted upon by the FDIC in the first six

months of 1997.

• Regulations and guidelines issued

by the federal banking agencies

implementing common statutes have

been made more uniform. This is

particularly true for filings regarding

mergers, changes in bank control, and

changes in director or senior executive

officer.

• Filing contents have been clarified

and streamlined wherever practical.

Examples include applications for a

merger which qualifies as a corporate

reorganization, a temporary office in an

emergency or disaster situation,

applications for deposit insurance for an

interim institution in connection with a

related merger transaction, and

applications for continuation for deposit

insurance by a state bank withdrawing

from the Federal Reserve System.

• The procedural requirements for

virtually all applications and notices

have been centralized in part 303.

Subpart A of the proposed regulation

contains the general rules applicable to

all filings. Each subpart that follows

contains all of the procedural

requirements for a particular application

type. For example, subpart C on

branching contains definitions

applicable to that subpart, filing

procedures, processing procedures,

public notice provisions and delegations

of authority. Subpart M contains

miscellaneous filings that do not merit

separate subparts. Subpart N contains

all administrative enforcement action

delegations.

• Delegations of authority from the

FDIC’s Board of Directors to the

Directors of DOS, DCA, the General

Counsel of the Legal Division, and the

Executive Secretary to act on certain

applications, notices, requests, and

enforcement matters have been

reviewed and updated.

• Duplicative and outdated material

has been deleted from existing part 303.

An example is eliminating application

procedures for the establishment or

relocation of a remote service facility,
52812 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

1An FDIC-assigned composite UFIRS rating may

be based on the FDIC’s own examination, or based

on the review of examination reports prepared by

state banking authorities or the other federal

banking agencies.

which is no longer required pursuant to

section 2205 of EGRPRA.

Concurrently with this proposal to

amend part 303, the FDIC is publishing

elsewhere in today’s Federal Register

two revised statements of policy on

Applications for Deposit Insurance and

Bank Merger Transactions for comment.

The FDIC is also proposing elsewhere in

today’s Federal Register to rescind its

statements of policy on Applications to

Establish a Domestic Branch and

Applications to Relocate Main Office or

Branch, and to amend its statement of

policy on Liability of Commonly

Controlled Depository Institutions. The

latter policy statement is being amended

to move the application procedures to

request a waiver of cross-guaranty

liability from the policy statement to

proposed part 303. It is recommended

that interested parties read those policy

statements in conjunction with the

proposed regulatory text of part 303 and

submit combined comments to the

agency, if practicable.

In addition, the FDIC has already

rescinded the following policy

statements related to part 303 as

unnecessary or duplicative:

• Changes in Control in Insured State

Nonmember Banks (62 FR 24927, May

7, 1997)

• Applications, Legal Fees, and Other

Expenses (62 FR 15479, April 1, 1997)

• Eligibility to Make Application to

Become an Insured Bank Under Section

5 of the Federal Deposit Insurance Act

(62 FR 15706, April 2, 1997)

The FDIC rescinded the first two

statements of policy because any

necessary substantive information

contained in them has been moved to

the proposed regulation or other policy

statements. The third statement of

policy was rescinded because the

analysis was based on a provision of the

FDI Act that was repealed by the

Federal Deposit Insurance Corporation

Improvement Act of 1991 (Pub. L. 102–

242, 105 Stat. 2236).

III. Proposed Rule

The discussion below identifies and

explains significant proposed changes to

part 303. The FDIC requests general

comments on all aspects of the proposed

regulation as well as specific comments

on certain issues as noted throughout

the preamble. To aid the reader, a

derivation table follows the preamble

which relates the sections of proposed

part 303 to current part 303, as well as

other sections of the FDIC regulations

which are being relocated to part 303.

A. Subpart A—Rules of General

Applicability

Subpart A of part 303 clarifies and

simplifies the rules generally applicable

to processing of applications, notices

and requests (filings) required by

regulation or statute by reorganizing the

definitions and general rules of

procedure currently found in § 303.0

and § 303.6, respectively, into one

subpart. Subpart A also explains the

availability of expedited processing for

an ‘‘eligible depository institution’’

(defined in proposed § 303.2(r)) and the

criteria under which the FDIC may

remove a filing from expedited

processing. Further, subpart A contains

general principles governing delegations

of authority from the Board of Directors

to certain FDIC officials, most of which

are currently contained in § 303.10(a)

and § 303.11 (a) and (b).

The availability of expedited

procedures for several major types of

filings (deposit insurance, branches, and

mergers) as well as some other filings

(for example, consent to exercise trust

powers and reduce/retire capital stock

or capital debt instruments) will reduce

burden upon the banking industry by

enabling banks and thrifts to undertake

corporate activities more quickly.

Expedited processing will also

introduce more certainty into the

application process for both applicants

and interested parties by establishing

fixed timeframes for decision and

receipt of comment letters. Furthermore,

centralizing in one subpart general

information that was previously

scattered throughout part 303 will make

part 303 much easier to use for the

public, bankers, attorneys and

regulators.

In addition to reorganizing existing

regulatory text into one subpart, subpart

A also updates terminology, streamlines

procedures, and reflects current FDIC

policies and practices.

Definitions. Subpart A alphabetizes

the definitions currently set forth in

§ 303.0 and adds several new

definitions.

New definitions of ‘‘applicant’’ and

‘‘filing’’ were added for ease of drafting

regulatory text and to add clarity and

consistency. ‘‘Applicant’’ is intended to

replace the terms ‘‘insured depository

institution,’’ ‘‘state nonmember bank’’ or

‘‘individual’’ where they appear

throughout part 303. The scope section

of each subpart will explain whether

particular filing procedures are

applicable to all insured depository

institutions or only to state nonmember

banks. The term ‘‘filing’’ is intended to

provide a convenient way to collectively

refer to applications, notices, or

requests, where appropriate throughout

part 303. New definitions were also

added for ‘‘application’’ and ‘‘notice’’ to

clarify the distinctions between those

types of filings.

A definition of ‘‘insider’’ was added

to avoid duplication in several subparts.

The current definition of ‘‘protest’’

found in § 303.0(b)(30) has been

replaced with three terms (‘‘comment,’’

‘‘adverse comment,’’ and ‘‘CRA

protest’’) to distinguish among the types

of comments that DOS and DCA may

receive in connection with a pending

filing. The term ‘‘deputy director’’ has

been defined to include deputy

directors of both DOS and DCA to

reflect those positions. Also, a definition

has been added for ‘‘General Counsel’’

of the FDIC. Further, the various types

of Section 8 enforcement orders have

been grouped under one category

‘‘Section 8 orders’’.

A new definition of ‘‘eligible

depository institution’’ has been added

to establish criteria that institutions

must meet to qualify for expedited

processing, as discussed below.

Definitions of ‘‘Associate General

Counsel for Compliance and

Enforcement,’’ ‘‘regional manager,’’ and

‘‘remote service facility’’ are being

removed as obsolete or no longer

necessary.

Expedited processing. Subpart A sets

forth the general procedures for

expedited processing, for which only an

eligible depository institution qualifies.

Proposed § 303.2(r) of subpart A defines

the term ‘‘eligible depository

institution’’ as a depository institution

that meets the following five criteria: (1)

Received an FDIC-assigned composite

Uniform Financial Institutions Rating

System (UFIRS) rating of 1 or 2 as a

result of its most recent federal or state

examination; 1 (2) received at least a

satisfactory CRA rating from its primary

federal regulator at its last examination;

(3) received a compliance rating of 1 or

2 from its primary federal regulator at its

last examination; (4) is well-capitalized;

and (5) is not subject to any corrective

or supervisory order or agreement.

Although an institution must have a

satisfactory or better CRA rating in order

to qualify for expedited processing for

any filing, the CRA performance of an

institution will serve as a basis for

decision only in connection with

‘‘applications for a deposit facility’’ as

required by section 2903(2) of the

Community Reinvestment Act (12

U.S.C. 2903(2)). Proposed § 303.5 sets
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52813

forth those relevant filings for which an

institution’s CRA record will be taken

into account (deposit insurance,

mergers, and establishment or relocation

of a branch or main office, including the

relocation of an insured branch of a

foreign bank). The FDIC believes that

these five criteria for eligibility are

appropriate to ensure that only wellcapitalized, well-managed institutions

that do not present any supervisory,

compliance or CRA concerns receive

expedited processing. The FDIC

specifically requests comment on

whether these standards for eligibility

are appropriate.

It should be noted that the FDIC

recently issued two proposed rules for

comment which would revise and

consolidate its international banking

regulations (12 CFR part 347) and

regulations governing the activities and

investments of insured state banks and

savings associations (12 CFR part 362).

62 FR 37748, July 16, 1997; 62 FR

47969, Sept. 12, 1997. These proposals

also contain expedited procedures and

definitions of an ‘‘eligible’’ type of

institution which generally parallel

proposed § 303.2(r) of subpart A, but

add two additional criteria: (1) That the

institution has been chartered and

operating for at least three years; and (2)

that the institution received a rating of

1 or 2 under the ‘‘management’’

component rating of the UFIRS at its

most recent examination. The additional

criteria may be appropriate in

connection with the part 347 and 362

proposals to the extent that the

eligibility criteria govern substantive

issues beyond the question of whether

an application should receive expedited

processing. The FDIC will evaluate the

necessity of the additional criteria in the

context of parts 347 and 362 as it goes

forward with those rulemakings.

Under § 303.11(c) of the proposed

rule, expedited processing will be

automatically given to institutions

meeting the definition of an ‘‘eligible

depository institution’’ (with a few

exceptions where other conditions

apply) upon determination by the

appropriate regional director (DOS).

Therefore, an applicant need not request

expedited processing or even identify

itself as an eligible institution. A filing

may be removed from expedited

processing pursuant to proposed

§ 303.11(c)(2) if: (1) For filings subject to

public notice, an adverse comment is

received that warrants additional

investigation or review; (2) for filings

subject to evaluation of CRA

performance, a CRA protest is received

that warrants additional investigation or

review, or the appropriate regional

director (DCA) determines that the filing

presents a significant CRA or

compliance concern; (3) for any filing,

the appropriate regional director (DOS)

determines that the filing presents a

significant supervisory concern, or

raises a significant legal or policy issue;

or (4) for any filing, the appropriate

regional director (DOS) determines that

other good cause exists for removal. If

a filing is removed from expedited

processing, the applicant will be

promptly informed in writing of the

reason. For filings which the

appropriate regional director has not

been delegated authority to approve, the

filing will generally be removed from

expedited processing.

Computation of time. Previously, part

303 simply contained a cross-reference

to § 308.12, which governs computation

of time for purposes of the FDIC’s rules

of administrative procedure. The

proposed rule clarifies that the FDIC

uses a calendar day rule and begins

computing the relevant period on the

day after an event occurs (for example,

the day after receipt of a filing or

newspaper publication).

Effect of CRA performance on filings.

This new section clearly states that CRA

performance will be considered in

connection with applications to

establish a domestic branch or relocate

a domestic branch or main office,

merger applications, and deposit

insurance applications, and clarifies

that CRA applies to applications to

relocate an insured branch of a foreign

bank. Although this information is

currently contained in part 345

(Community Reinvestment Act), the

FDIC believes that an explicit statement

concerning the filings covered by CRA

better serves the public and the banking

industry than providing a crossreference.

Public notice. Current § 303.6(f)(4)

reproduces a notice that institutions are

required to use when publishing notice

of a filing in a local newspaper. Under

§ 303.7(c) of the proposed rule,

applicants are offered the choice of a

sample notice or a list of contents which

may be used to draft a notice tailored to

the needs of the institution. This choice

is designed to reduce burden on the

banking industry by providing more

flexibility.

Proposed § 303.7(b) adds a new

provision requiring confirmation of

publication. Promptly after publication,

the applicant must mail or otherwise

deliver a copy of the newspaper notice

to the appropriate regional director

(DOS). This is designed to avoid

possible delays in processing if a

defective notice is discovered.

Proposed § 303.7(d) reduces burden

by providing that an applicant may

publish a single public notice for

multiple transactions provided that the

notice includes an explanation of how

the transactions are related and states

the closing date of the longest public

comment period that will apply.

Further, § 303.7(e) of the proposed rule

states that the FDIC may accept the

publication of a single joint notice

containing information required by both

the FDIC and another federal banking

agency or state banking authority

provided that the notice states that

comments must be submitted to both

agencies.

Public comments. Current

§ 303.6(f)(3) permits interested parties to

comment upon a pending filing until

the date of final disposition. Proposed

§ 303.9(a) provides that comments

would be accepted only during a

defined comment period in order to add

certainty to the filing process for both

the public and the applicant. Closing

the comment period on a date certain

eliminates the risk of final action being

delayed due to a late comment or of

final action being taken while a

comment is in the process of being

transmitted to the FDIC.

In order to provide the public with

adequate time to submit meaningful

comments, proposed § 303.9(b)(2) grants

the appropriate regional director (DOS)

three bases upon which to extend or

reopen the public comment period: (1)

If the applicant fails to file all required

information on a timely basis to permit

review by the public or makes a request

for confidential treatment not granted by

the FDIC that delays the public

availability of that information; (2) if

any person requesting an extension of

time satisfactorily demonstrates to the

FDIC that additional time is necessary to

develop factual information that may

materially affect the application; or (3)

for good cause. Good cause is currently

the only basis for extension of the

comment period under § 303.6(f)(3).

Further, proposed § 303.9(b)(4)

clarifies that the FDIC will provide

copies of all comments to the applicant

and that the applicant will be given an

opportunity to respond.

Hearings and other meetings.

Proposed § 303.10 simplifies the current

rules concerning hearing procedures

contained in § 303.6 (h), (i), and (j) and

updates those provisions to reflect

current FDIC practices.

Decisions on filings. Proposed

§ 303.11 sets forth new provisions

concerning multiple transactions,

abandonment of filings, and

nullification of decisions. With regard to

multiple transactions, if all related

transactions have been granted

expedited processing, then the longest
52814 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

expedited processing time will govern

for all transactions. The proposed rule

also codifies current FDIC practice

concerning abandonment of filings. If an

applicant does not provide additional

information requested by the FDIC

within the time period specified, the

FDIC may notify the applicant that the

filing has been deemed abandoned and

processing has been discontinued. The

proposal also contains three

nullification provisions. The FDIC may

nullify a decision on a filing if: (1) The

agency becomes aware of any material

misrepresentation or omission after

rendering a decision; (2) the agency is

not informed by the applicant of a

subsequent material change in

circumstances prior to rendering a

decision; or (3) the decision is contrary

to law, regulation, or FDIC policy, or

granted due to clerical or administrative

error, or a material mistake of law or

fact. The FDIC believes these provisions

are useful additions to part 303.

Appeals and petitions for

reconsideration. Current § 303.6(e)

contains the FDIC’s procedures

governing petitions for reconsideration

of a denied filing. Proposed § 303.11(f)

would clarify that these procedures

cover only requests for reconsideration

of filings that do not otherwise have

appeal procedures provided by other

regulation or written guidance, and that

decisions to deny a hearing request are

nonappealable.

As proposed, § 303.11(f)(2) provides

that within 15 days of receipt of notice

from the FDIC that its filing has been

denied, an applicant may file a petition

with the appropriate regional director

containing either a resolution of the

board of directors of the applicant

authorizing filing, if the applicant is a

corporation or other entity, or a letter

signed by the individual(s) filing the

petition, if the applicant is not a

corporation or other entity. As under the

existing rule, the filing must contain

substantive information that for good

cause was not previously set forth in the

filing and specific reasons why the FDIC

should reconsider its prior decision.

A regional director or deputy regional

director (DOS or DCA) may approve, but

not deny, a petition for reconsideration.

However, the Director or Deputy

Director (DOS or DCA) may approve or

deny a petition. If the petition is

granted, the filing will be reconsidered

by the Board of Directors if the filing

was originally denied by the Board of

Directors or denied by the Director,

Deputy Director, or an associate director

(DOS or DCA). The Director or Deputy

Director (DOS or DCA) will reconsider

the filing if the filing was originally

denied by a regional director or deputy

regional director. Proposed § 303.11(f)

also clarifies that a decision on a

petition for reconsideration by the

Director or Deputy Director (DOS or

DCA) is a final agency decision and is

not appealable to the Board of Directors.

The FDIC specifically seeks comment

on its new petition for reconsideration

procedures, which are designed to

provide a more objective review. It

should be noted that the FDIC has

separate appeal procedures regarding

material supervisory determinations

such as examination ratings, material

disputed asset classifications,

determinations regarding violations of

laws and regulations, etc. which were

published in the Federal Register on

March 25, 1995. 60 FR 15923. In

addition, procedures for requesting a

review of assessment risk classification

and for revision of computation of

quarterly assessment payments are

contained in part 327. Therefore,

proposed § 303.11(f) applies only to

filings as that term is defined in part

303.

General delegations of authority.

Proposed § 303.12 contains the general

principles governing delegations of

authority from the Board of Directors to

FDIC officials. Some, but not all, of

these principles are currently contained

in §§ 303.10(a) and 303.11 (a) and (b).

This proposed section states that the

Board does not delegate its authority

regarding matters covered in the FDIC’s

regulations unless such a delegation is

specifically made. However, in matters

where the Board has neither specifically

delegated nor retained authority, FDIC

officials may take action with respect to

matters which generally involve

conditions or circumstances requiring

prompt action to protect the interests of

the FDIC and to achieve flexibility and

expedition in the exercise of FDIC

functions under part 303. Delegations

are to be broadly construed in favor of

the existence of authority in FDIC

officials who act under delegated

authority, and any exercise of delegated

authority by an official is conclusive

evidence of that official’s authority. The

purpose of this broad construction is to

promote the efficient operation of the

FDIC, to allow the public to rely on

actions of FDIC officials, and to

discourage frivolous challenges to the

exercise of delegated authority.

Delegations of authority to DOS and

DCA officials. Proposed § 303.13

contains delegations of authority to DOS

and DCA officials to enable them to

carry out the FDIC’s applications

function.

Where a CRA protest is filed and

remains unresolved, proposed

§ 303.13(a) delegates authority to the

regional director or deputy regional

director (DCA) to concur that approval

of any filing subject to CRA is consistent

with the purposes of CRA. Previously,

receipt of a CRA protest caused a filing

to be forwarded to Washington for

review. This change in policy is

expected to improve and expedite

decision making by placing it closer to

the source.

For purposes of determining when to

commence processing of a filing,

proposed § 303.13(b) delegates authority

to DOS officials to determine whether a

filing is substantially complete. This

provision also is intended to clarify that

the standard to initiate the processing

period is the receipt of a substantially

complete filing.

Proposed § 303.13(c) contains a

delegation of authority permitting DOS

officials to enter into memoranda of

agreement pursuant to regulations of the

Advisory Council on Historic

Preservation which implement the

National Historic Preservation Act

(NHPA). This provision is currently

found in § 303.8(g) of the FDIC’s

regulations and facilitates the agency’s

ability to comply with NHPA.

B. Subpart B—Deposit Insurance

Since passage of the Federal Deposit

Insurance Corporation Improvement Act

of 1991 (Pub. L. 102–242, 105 Stat.

2236), all proposed depository

institutions or existing noninsured

depository institutions that desire

federal deposit insurance have been

required to apply to the FDIC. This

includes all nationally chartered banks,

state or federally chartered savings

associations, and state chartered banks,

including state member banks.

Subpart B reorganizes and clarifies

the filing and processing procedures for

an applicant to follow in applying for

deposit insurance for a proposed or

existing noninsured depository

institution, for an interim depository

institution (when required), and for

continuation of deposit insurance for a

state bank upon withdrawing from

membership in the Federal Reserve

System. The proposal updates the

regulation to reflect current statutory

requirements and current FDIC policy

for processing such applications.

Subpart B also sets forth the delegations

of authority and criteria under which

DOS may approve such applications.

The proposed rule should be read in

conjunction with the FDIC’s revised

policy statement on Applications for

Deposit Insurance found elsewhere in

today’s Federal Register. Substantive

changes to the regulatory text are

discussed below.
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52815

Expedited processing. Under

expedited processing, an application for

deposit insurance for a proposed

depository institution which will be a

subsidiary of an ‘‘eligible depository

institution’’ or an ‘‘eligible holding

company’’ will be processed within 60

days of receipt of a substantially

complete application or 20 days after

publication, whichever is later.

Currently, deposit insurance

applications are processed within 120

days. See FDIC Financial Institutions

Letter 26–96 dated May 6, 1996. An

eligible depository institution is defined

in proposed § 303.2(r). An eligible

holding company is defined in proposed

§ 303.22(a) as a bank or thrift holding

company which has consolidated assets

of $150 million or more; has an assigned

composite rating of 2 or better; and has

at least 75 percent of its consolidated

depository institution assets in eligible

depository institutions. If the FDIC does

not act within the expedited processing

period, it does not constitute an

automatic or default approval. Public

comment is invited on the definition of

eligible holding company and the time

frame for processing applications for

deposit insurance under expedited

review.

Public notice and comment period.

Current regulations state that notice

shall be published on the date the

application is mailed or delivered to the

regional director or not more than 30

days prior to that date. Under proposed

§ 303.23(a), notice would be published

as close as practicable to the filing date

but not more than five days before the

filing date. This provides assurance that

the public portion of the application file

will be available for inspection during

the comment period.

Currently, the notice informs the

public that comments may be filed with

the regional director at any time before

processing of the application has been

completed and that processing will not

be completed earlier than the 15th day

following either the date of publication

or date of receipt of the application,

whichever is later. Proposed § 303.23(a)

would require that interested parties file

comments with the regional director on

or before the 15th day following the date

of publication. Closing the comment

period eliminates the risk of final action

being delayed due to a late comment or

of final action being taken while a

comment is in the mail to the FDIC. The

proposed 15-day comment period is

considered adequate time for an

interested party to provide comments.

Also, the regional director may extend

or reopen the comment period for good

cause, such as when an interested party

cannot provide comments within the 15

days for reasons beyond the party’s

control. Comment is invited on the

adequacy of the 15 day comment period,

especially in light of the ability of

regional directors to extend or reopen

the comment period under § 303.9(b)(2).

Application for deposit insurance for

an interim depository institution. An

interim depository institution is defined

in proposed § 303.24(a) as an institution

formed or organized solely to facilitate

a merger transaction which will be

reviewed by one of the four federal

banking agencies and that the

institution will not open for business.

The filing will consist of a brief letter

application and a copy of the related

merger transaction. Also, newspaper

publication requirements concerning

the application for deposit insurance for

an interim is being eliminated as

unnecessary since public notice would

be required for the merger transaction,

which is considered to be the primary

transaction. It is anticipated that the

FDIC will consult with the federal

banking agency reviewing the merger

application and that final action on the

deposit insurance application will be

taken within 21 days after receipt of a

substantially complete application. If

additional review by the FDIC is

warranted, the applicant will be so

advised in writing.

Continuation of deposit insurance

upon withdrawing from membership in

the Federal Reserve System. Procedures

are being simplified. Under § 303.25 of

the proposal, the applicant would file a

letter application containing the

information specified in the regulation,

including a new requirement that the

application must contain a statement by

the bank’s management that there are no

current outstanding or proposed

corrective programs or supervisory

agreements with the Federal Reserve

System. If such programs or agreements

exist, the application must contain a

statement that the bank’s board of

directors is willing to enter into a

similar agreement with the FDIC which

would become effective upon the date of

withdrawal from the Federal Reserve

System. The regional director would

notify the applicant in writing within 15

days of the date a substantially complete

application is received that deposit

insurance will continue upon

termination of membership in the

Federal Reserve System or that

additional review will be necessary. If

additional review is warranted, the

regional director would inform the

applicant in writing of the reasons and

inform the applicant that it will be

notified in writing of the FDIC’s final

decision regarding continuation of

deposit insurance. Upon further review,

the regional director may approve the

continuation of deposit insurance or, if

denial is deemed warranted, forward a

recommendation for action by the FDIC

Board of Directors.

Other changes. Current

§ 303.7(d)(1)(ii) lists a number of

specific criteria that must be met before

delegated authority can be exercised.

The criteria relate to initial

capitalization, legal fees and other

expenses, projected profitability,

investment in fixed assets and financial

arrangements involving insiders,

including stock financing arrangements.

These criteria, which have been updated

to reflect current policy, are discussed

in the revised policy statement on

Applications for Deposit Insurance

which is simply cross-referenced in the

proposed rule to avoid duplication.

Current § 303.7(d)(1)(iii)(A) states that

authority to approve an application for

deposit insurance may not be delegated

to the regional director or deputy

regional director where a protest under

the Community Reinvestment Act (CRA)

is filed. This provision is being revised

to permit approval of a CRA-protested

application by the regional director

(DOS) or deputy regional director (DOS)

where the protest has been reviewed by

DCA, the regional director (DCA) or

deputy regional director (DCA) concurs

that approval is consistent with the

purposes of the CRA, and the applicant

agrees in writing to any conditions

imposed regarding the CRA.

Section 303.7(d)(1)(iii)(B) of the

current regulation states that the

authority to approve an application may

not be delegated to a regional director or

deputy regional director where: (1)

There is direct or indirect financing by

proposed directors, officers or 5 percent

or more shareholders of more than 75

percent of the purchase price of the

stock subscribed by any one

shareholder; (2) there is aggregate

financing of stock subscriptions in

excess of 50 percent of the total capital

offered; or (3) warehoused or trusteed

stock exceeds 10 percent of initial

capital funds. This provision is being

eliminated because the revised policy

statement contains a comprehensive

discussion of financing that the FDIC

believes provides adequate guidance. If

proposed financing is not within the

established guidelines, the regional

director will forward a recommendation

to the Director (DOS).

A new provision found at

§ 303.26(d)(2) would permit DOS to

impose a condition which requires the

maintenance of a leverage capital ratio

of at least 8 percent throughout the first

three years of operation of a depository

institution while also providing an
52816 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

adequate allowance for loan and lease

losses. This clarifies the FDIC’s longstanding position that the minimum

ratio of 8 percent is to be maintained

throughout the first three years of

operation rather than only requiring that

the ratio be at least 8 percent at the end

of the third year of operation.

Under current § 303.7(d)(2)(i),

authority to approve applications for

deposit insurance by operating

noninsured institutions is delegated to

the regional director (DOS) or deputy

regional director (DOS) only for those

applicant institutions with total assets

of less than $250 million. There is no

such restriction on the authority of the

Director or Deputy Director (DOS).

Accordingly, this size limitation is being

eliminated from the proposed

regulation.

Other minor changes are made within

the subpart to facilitate reorganization

and clarification to produce a more

concise and user-friendly regulation.

C. Subpart C—Establishment and

Relocation of Domestic Branches and

Offices

Subpart C reorganizes and clarifies

the portion of part 303 that implements

section 18(d) of the FDI Act which

requires insured state nonmember banks

to obtain the prior written consent of the

FDIC in order to establish a domestic

branch, relocate the main office, or

relocate a branch. The most significant

changes from the current regulation are

provisions implementing expedited

processing for eligible depository

institutions, the addition of several new

definitions, and the exclusion of remote

service units, including automated teller

machines and automated loan

machines, from the definition of a

branch. As proposed, applications filed

by eligible depository institutions will

be deemed approved 21 days after

receipt of a substantially complete

application, or 5 days after the

expiration of the comment period,

whichever is later. Additional technical

requirements regarding the expedited

procedure apply to interstate branch

applications. The average processing

time for branch applications during the

first six months of 1997 was 30 days. In

addition to expedited processing, the

proposed subpart contains two special

provisions which provide further

regulatory relief. One of these

provisions gives advance consent for the

relocation of a branch or main office in

the event of a disaster or emergency and

the other provision allows the regional

director to waive publication required

in the case of a redesignation of a main

office and existing branch.

A section has also been added to

allow the regional director (DOS) to

approve an application under this

subpart that is the subject of an

unresolved CRA protest, provided the

regional director (DCA) finds that

approval of the application would be

consistent with the purposes of CRA

and the applicant agrees in writing to

any nonstandard conditions imposed

regarding CRA. This provision is

expected improve decision making by

placing it closer to the actual decision

maker and avoiding unnecessary delays.

In addition, the subpart adds provisions

which implement relevant portions of

the FDI Act regarding the establishment

of interstate branches and implements

changes contained in section 2205 of

EGRPRA.

Finally, as part of the systematic

review of its written policies pursuant

to CDRIA, the FDIC is proposing

elsewhere in today’s Federal Register to

rescind its Statement of Policy of

Applications to Relocate a Main Office

or Branch and Statement of Policy on

Applications to Establish a Domestic

Branch. Both statements are considered

obsolete and unnecessary in view of the

comprehensive approach taken in

subpart C.

Scope. Proposed § 303.40 limits the

scope of this subpart to applications

regarding the establishment of domestic

branches, and the relocation of a main

office or domestic branch, including

provisions regarding interstate

branching. Excluded from the scope of

the subpart are filings for the approval

of the acquisition and establishment of

branches in connection with a bank

merger transaction. Proposed

regulations for such filings are found in

subpart D. The scope of the subpart also

does not include filings by insured

branches of foreign banks to relocate a

branch or filings by state nonmember

banks to establish a foreign branch.

Proposed regulations regarding foreign

banks and branches are contained in

subpart J.

Interstate branching. The Riegle-Neal

Interstate Banking and Branching

Efficiency Act of 1994 (Interstate Act)

(Pub. L. 103–328, 108 Stat. 2338)

became effective on September 29, 1994,

and, among other things, amended the

FDI Act to establish a federal framework

for interstate branching effective June 1,

1997. Among the new interstate

branching authorities added by the

Interstate Act are a provision regarding

the retention of branches after an

interstate relocation of a main office and

a provision regarding interstate

branching through de novo branches.

Section 102(b)(3) of the Interstate Act

adds a new paragraph (3) to section

18(d) of the FDI Act that permits a state

nonmember bank, after the relocation of

its main office to another state, to retain

branches in its former home state. Home

state means the state by which a state

bank is chartered. This authority is,

however, subject to certain limitations.

A bank relocating its main office from

one state to another may retain its

branches in the original state only to the

extent that the bank would be

authorized, as a bank chartered in the

new state, to establish or acquire those

branches. As of June 1, 1997, an out-ofstate bank may establish branches in

another state only if it is authorized to

establish such branches (i) as de novo

branches under section 18(d)(4)(A) of

the FDI Act, (ii) as a result of an

interstate merger transaction under

section 44 of the FDI Act, or (iii) as a

result of an emergency assisted

transaction under section 13(f) or 13(k)

of the FDI Act. In effect, this provision

means that a state nonmember bank can

relocate its main office to another state

and retain its existing branches in the

original state if it could, as a bank

chartered in the new state, establish

those branches in the original state.

Therefore, if the bank were considered

to be chartered in such new state and

could, with such other-state charter,

establish those branches in the original

state by means of an interstate de novo

branch transaction, an interstate merger,

or an emergency assisted transaction,

then it can retain those branches.

Accordingly, the proposed rule includes

a requirement that an applicant seeking

to relocate its main office interstate

indicate whether the applicant intends

to retain its existing home state

branches.

Section 103(b) of the Interstate Act

adds a new paragraph (4) to section

18(d) of the FDI Act that permits,

subject to certain requirements and

conditions, interstate branching through

de novo branches. Under this authority

the FDIC may approve an application by

a state nonmember bank to establish and

operate a de novo branch in a state that

is not the bank’s home state and in

which the bank does not currently

maintain a branch. In order to grant

such approval, the FDIC must: (i)

Determine that the host state (the state

in which the bank seeks to establish a

branch) has in effect a law that applies

equally to all banks and expressly

permits all out-of-state banks to

establish de novo branches in such

state, (ii) determine that the applicant

has complied with the host state’s filing

requirements and has submitted to the

host state a copy of the application it

filed with the FDIC, (iii) determine that
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52817

the applicant is adequately capitalized

and will continue to be adequately

capitalized and adequately managed

upon consummation of the transaction,

and (iv) take the applicant’s CRA record

into consideration. Except for item (ii)

in the foregoing listing, the FDIC

generally has the resources needed to

make the determinations required.

Accordingly, among the application

procedures included in this proposed

rule is the requirement that the

applicant request that the host state

confirm in writing to the FDIC that the

applicant has complied with the host

state’s filing requirements and has

submitted a copy of its application with

the FDIC to the host state supervisor.

Definitions. In § 303.41 of the

proposal, the FDIC has added

definitions for ‘‘messenger service,’’

‘‘mobile,’’ ‘‘temporary,’’ and ‘‘seasonal

branches’’ and, as noted above, ‘‘de

novo’’ branches as well as definitions of

‘‘home state’’ and ‘‘host state’’ . In an

effort to promote uniformity and

increase the use of common terms, the

definitions used in this subpart are

similar to those used by other federal

banking agencies.

With regard to the definition of

‘‘branches,’’ the proposed regulation at

§ 303.41(a) clarifies that remote service

units, including automated loan

machines, are not branches. The

exclusion of automated teller machines

and remote service units is a result of

statutory changes contained in section

2205 of EGRPRA.

The definition of ‘‘messenger

services’’ in § 303.41(a)(1) provides that

branch applications will be required

only for those messenger services

operated by a bank or an affiliate that

picks up and delivers items relating to

transactions between the bank and its

customer in which deposits are

received, checks paid or money lent. A

messenger service established and

operated by a non-affiliated third party

generally does not constitute a branch

for purposes of this subpart. Banks

contracting with third parties for such

services should consult with the

appropriate regional director (DOS) to

determine if the messenger service

constitutes a branch.

Section 303.41(a)(2) defines ‘‘mobile

branch’’ as a branch service that does

not have a permanent site and includes

a vehicle that travels to various public

locations and enables the applicant

bank to conduct banking business with

its customers. Because of the mobility

inherent in such branches, they may

serve regularly scheduled locations or

may be open at irregular times and

locations.

The definition of ‘‘temporary branch’’

contained in § 303.41(a)(3) clarifies that

a bank may operate such a branch as a

public service such as during an

emergency or disaster to provide

necessary banking services. A temporary

branch can be approved for a period not

to exceed one year. Such a time period

should provide sufficient time for the

applicant to restore appropriate services

to the community.

The definition of ‘‘seasonal branch’’

in § 303.41(a)(4) provides that such a

branch operate at periodically recurring

intervals, such as during state fairs. This

definition differs from the temporary

branch in that once an application is

approved for a seasonal branch, the

applicant bank may return to that site

on a recurring basis without the need to

reapply.

‘‘Branch relocation’’ is defined in

§ 303.41(b) as a move within the same

immediate neighborhood of the existing

branch that does not substantially affect

the nature of the business of the branch

or the customers of the branch. Moving

a branch to another location outside its

immediate neighborhood is considered

the establishment of a new branch and

the closing of an existing branch.

The proposed regulation at § 303.41(c)

defines a ‘‘de novo branch’’ to mean a

branch of a bank which is originally

established by the bank and which does

not become a branch of such bank as a

result of the acquisition, conversion,

merger, or consolidation of an insured

depository institution or a branch of an

insured depository institution.

Definitions are also proposed for

‘‘home state’’ and ‘‘host state’’ at

§ 303.41 (d) and (e). A home state means

the state by which the bank is chartered

and host state means a state, other than

the home state of the bank, in which the

bank maintains, or seeks to establish

and maintain, a branch.

Filing procedures. The proposed

regulation also changes various

application requirements. Changes

address the timing of filing, the

submission of copies of the publication,

the inclusion of the geographic area in

which a messenger service will operate,

the inclusion of the community or

communities in which a mobile branch

will operate, and whether the mobile

branch will serve various regularly

scheduled locations or be open at

irregular times and locations.

As proposed in § 303.42, an applicant

must submit a letter application on the

date the notice required by proposed

§ 303.44 is published or within 5 days

after the date of the last required

publication. Previously, applicants

could file up to 30 days subsequent to

the first publication date. By filing

applications 5 days after the date of the

last newspaper publication, banks are

able to submit all copies of the

newspaper publications required by the

proposed regulation and the public will

have the assurance that the application

will be on file during the comment

period.

Proposed § 303.42(b)(7) has been

added to require applicants to submit a

copy of each newspaper publication in

addition to providing the date of

publication and the name and address

of the newspaper. In the past, applicants

have been required to immediately

notify the FDIC after the publication.

Submitting a copy of the newspaper

notice allows FDIC to verify publication

and the contents of the notice.

The proposed regulation at

§ 303.42(b)(2) clarifies the filing

procedures for messenger services and

mobile branches. Since messenger

services by their very nature are not

serving a fixed location, the designation

of a specific site for operation is not

practical. Rather these types of branches

will operate in defined geographic areas,

such as a neighborhood, city or county.

By approving such applications on a

geographic area, banks will be able to

operate freely without reapplying for

changes to schedules. Filings relative to

mobile branches however must disclose

the community or communities to be

served and the intention to serve

defined locations on a regular schedule

or to be open at varing times and

locations. Knowledge of the community

or communities to be served assists the

FDIC in determining compliance with

the applicable statutory and regulatory

provisions relating to branch filings.

Applicants must, however, reapply

when the geographic area to be served

changes.

Processing. Pursuant to proposed

§ 303.43(a), the FDIC proposes to

expedite processing for eligible

depository institutions. It is the FDIC’s

intent to reduce regulatory burden for

well-run, well-managed institutions by

providing expeditious approvals of

routine applications to establish a

branch or to relocate the main office or

branch.

Pursuant to expedited processing

procedures contained in proposed

§ 303.11(c), an application submitted by

an eligible depository institution as

defined in proposed § 303.2(r) will be

acknowledged in writing by the FDIC

and will receive expedited processing

unless the FDIC removes the application

from expedited processing for any of the

reasons set forth in § 303.11(c)(2).

Section 303.43(a) provides that the FDIC

may remove an application from

expedited processing at any time before
52818 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

the approval date and will promptly

notify the applicant in writing of the

reason for such action. Absent such

removal, an application processed

under expedited processing will be

deemed approved on the latest of the

following: (1) The 21st day after receipt

of a substantially complete application

by the FDIC, (2) the 5th day after

expiration of the comment period

described in § 303.44 of this proposal, or

(3) in the case of an application to

establish and operate a de novo branch

in a state that is not the applicant’s

home state and in which the applicant

does not maintain a branch, the 5th day

after the FDIC receives from the host

state confirmation that the applicant has

both complied with the filing

requirements of the host state and

submitted a copy of the application with

the FDIC to the host state bank

supervisor.

The automatic approval date for an

application under expedited procedures

provides an applicant with a firm date

by which its application will be

approved. Under the existing regulation,

the FDIC can approve applications

immediately after expiration of the

comment period, but applications can

also be approved much later.

For applicants not eligible for

expedited processing, the FDIC will

provide the applicant with written

notification of the final action taken

with regard to the particular application

as soon as a decision is rendered.

Public notice requirements. The

proposed regulation at § 303.44

generally would amend and clarify the

publication requirements relating to

relocating a main office and establishing

or relocating branch offices. It also

provides for a specific time frame in

which comments must be received.

The proposed section retains current

newspaper publication requirements

contained in § 303.6(f)(1)(ii) of the

existing regulation, except for relocation

of branches which will now require

publication only in the community

which the branch serves. A branch

relocation can only occur in the same

immediate neighborhood; hence,

publication is needed in only one

newspaper since it is likely that the one

newspaper will cover all of the affected

community. In such cases, the FDIC has

deemed publication in the community

in which the home office is located

unnecessary. Furthermore, a single

publication is consistent with the

requirements of the other federal

banking agencies. Section 303.44(a)

continues the existing requirement that

for applications to relocate a main

office, publication must be made at least

once each week on the same day for two

consecutive weeks.

Currently in § 303.6, individuals may

comment until processing of the

application is completed. In order to

eliminate the uncertainty regarding the

close of the comment period, it is

proposed that the comment period be

limited as specified in § 303.44.

Proposed § 303.44 provides that

comments must be received by the

appropriate regional director (DOS)

within 15 days of the date of the last

newspaper publication. Proposed

§ 303.9 provides for extension or

reopening of the comment period in

certain situations.

Special provisions. Section 303.45 of

the proposed regulation adds several

new provisions regarding procedures for

opening temporary branches in

emergency or disaster situations, redesignating a main office, and providing

for the expiration of approved

applications.

The proposed regulation at § 303.45(a)

clarifies procedures relating to

establishing temporary branches in

emergency or disaster situations. The

current regulation on branching

contains no specific guidance on this

issue. The FDIC recognizes the need in

limited circumstances, such as

emergency or disaster situations, where

there exists a clear public need to

continue banking services, that

applicants may not be in a position to

follow the normal application

procedures for relocation of a main

office or branch. As a result, the

proposed regulation provides that in the

case of an emergency or disaster at a

main office or branch which requires

that an office be immediately relocated

to a temporary location, the applicant

notify the appropriate regional director

(DOS) within 3 days of such temporary

location. In such limited cases, the FDIC

will accept initial notification by

whatever means appropriate. The FDIC

is making this limited exception to

allow for the public’s need to have

uninterrupted access to banking

services. Such prior consent to relocate

the office is appropriate because it may

not always be possible for a bank to

comply with the normal application

procedures for relocating a main office

or branch in such circumstances.

The proposal further provides that

within 10 days of the temporary

relocation resulting from the emergency

or disaster, the bank shall submit a

written filing to the appropriate regional

director (DOS) that identifies the nature

of the emergency or disaster, specifies

the location of the temporary branch,

and provides an estimate of the duration

the bank plans to operate the temporary

branch. Finally, depending on the

particular circumstances, as part of the

review process, the appropriate regional

director (DOS) may waive public notice

requirements.

Section 303.45(b) of the proposed

regulation provides that in cases where

an applicant desires to designate an

existing branch as its main office and

redesignate its main office as a branch,

an application must be submitted to

relocate the main office and to establish

or relocate a branch, as appropriate. The

appropriate regional director (DOS) may

waive the public notice requirements in

instances where an application presents

no significant or novel policy,

supervisory, CRA, compliance, or legal

concern. Such waiver will be granted

only within the applicant’s home state.

With regard to the expiration of

approvals, applications which have

been approved by the FDIC to establish

branches and to relocate main offices

and branches currently have no

expiration date. The FDIC believes that

approvals should not remain in effect

indefinitely because circumstances

surrounding an application may change

over time. Therefore, proposed

§ 303.45(c) provides that approval of an

application expires if a branch has not

commenced business or if a relocation

has not been completed within 18

months of approval.

Delegation of authority. Section

303.46 of the proposed regulations adds

a delegation for the appropriate regional

director to approve interstate branches.

Additionally, the proposed regulation

provides for a delegation to permit

approval of a CRA-protested application

by the regional director (DOS) or deputy

regional director (DOS) where the

protest has been reviewed by DCA, and

the regional director (DCA) or deputy

regional director (DCA) concurs that

approval is consistent with the purposes

of the CRA, and the applicant agrees in

writing to any conditions imposed

regarding CRA.

New § 303.46(c)(8) makes clear that

the Board of Directors has not delegated

authority to approve a branch

application by a bank which the FDIC

has determined is not reasonably

helping to meet the credit needs of the

community served by the bank in a host

state pursuant to section 109 of the

Riegle-Neal Interstate Banking and

Branching Efficiency Act of 1994 (12

U.S.C. 1835a).

The proposed regulation provides that

appropriate regional directors may

exercise delegated authority to act on

applications for establishment of

temporary branches or messenger

services without a favorable resolution

of the statutory factors in section 6 of
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52819

2The Board does not believe that it is consistent

with the language or intent of the FDI Act to insure

without FDIC approval an institution resulting from

a combination of institutions that themselves have

never been granted deposit insurance by the FDIC.

the FDI Act. This delegation recognizes

the limited nature of these types of

branches.

The proposed regulation eliminates

an obsolete delegation of authority

relating to applications to establish and

operate new teller’s windows, drive-in

facilities, or any like office, as an

adjunct to the main office or branch

(including offices not considered

branches under state law). Applications

to establish a new teller’s window,

drive-in facility, or any like offices are

required when such a facility is a

branch office. If such facilities are

extensions of already approved main

office and branches, no application to

establish the facility is necessary.

Other changes. Several other changes

are proposed that affect the new subpart

C. These modifications involve

changing the term ‘‘move a main office’’

to ‘‘relocate the main office,’’ changing

the term ‘‘courier service’’ to

‘‘messenger service,’’ and deleting

provisions relating to remote service

facilities.

Public comment. In addition to

seeking public comments on the above

revisions to subpart C associated with

the establishment of branches and

relocation of branches and the main

office, the FDIC also seeks specific

public comments on the following

issues.

Comment period: Since the FDIC is

proposing in § 303.44(b) to change from

a comment period that was essentially

open-ended in current § 303.6 to a

specific time frame (i.e., 15 days), the

FDIC seeks comment on whether a 30-

day comment period is more

appropriate than the proposed 15 days

and if so, the reasons why 15 days

would not be a feasible period of time

within which to submit comments.

Mobile branch applications: The FDIC

is proposing that the geographic

location for a mobile branch be

designated as to which community or

communities are to be served. The FDIC

seeks comment on whether such a

designation is appropriate. The FDIC

also seeks comment on whether a new

application should be required if a

change is made in the community or

communities to be served.

D. Subpart D—Mergers

Subpart D covers transactions subject

to FDIC approval under the Bank Merger

Act (12 U.S.C. 1828(c)). This includes

mergers, consolidations, and similar

transactions involving insured

depository institutions (collectively,

‘‘mergers’’). This subpart gathers

together from various sections of part

303 the existing provisions governing

merger applications and reorganizes

them to make the regulatory

requirements easier to understand.

Substantive changes have been made in

processing procedures to reduce

regulatory burden.

The principal changes proposed in

subpart D include the addition of an

expedited processing procedure

(proposed § 303.64(a)); the modification

and centralization of various definitions

applicable to merger transactions, such

as replacement of the term ‘‘phantom

merger’’ used only by the FDIC with the

more commonly-used ‘‘interim merger’’

(proposed § 303.61(c)); and the addition

of references to other statutory or

regulatory provisions often applicable to

merger transactions. These references,

included at § 303.62(b), are to the

interstate merger provisions of section

44 of the FDI Act (12 U.S.C. 1831u),

applications for deposit insurance,

insurance fund conversion transactions,

branch closings, prompt corrective

action considerations, and certification

of assumption of deposit liabilities.

The most significant change from the

existing merger approval regulations is

the proposed expedited processing

procedure. This procedure would be

available for transactions to which all

parties are eligible depository

institutions (as defined in proposed

§ 303.2(r)), and immediately following

which the resulting institution would be

well-capitalized. Under expedited

processing, which is generally

applicable only to merger applications

that can be approved under delegated

authority, the application would be

acted upon by the latest of 45 days after

the FDIC receives a substantially

complete application; 10 days after the

last newspaper publication of the notice

of the proposed merger; 5 days after the

FDIC receives the Attorney General’s

comments on the competitive impact of

the merger; or, for an interstate merger,

5 days after the FDIC confirms that the

applicant has satisfactorily complied

with the filing requirements of the

resulting institution’s host state. An

application that otherwise qualifies for

expedited processing may be removed

from such treatment for the reasons

stated in subpart A, at proposed

§ 303.11(c)(2).

Among the new references mentioned

above, the reference to deposit

insurance applications at proposed

§ 303.62(b)(2) clarifies that the FDIC will

not require a deposit insurance

application to secure insurance coverage

for an institution resulting from a

statutory merger between a federallychartered interim institution and an

FDIC-insured institution, even if the

resulting institution will operate under

the interim federal charter. However,

the FDIC will continue to require an

application for deposit insurance if the

entity merging with the interim federal

institution is not insured and the parties

wish the resulting institution to be

insured.2

In addition to reorganizing and

enhancing the merger application

provisions to make them easier to use,

the proposal reduces the procedural

burden on applicants. For example, in

addition to establishing an expedited

processing procedure, the proposal

would no longer call for copies of the

charter or articles of incorporation of the

resulting institution to be routinely

submitted with a merger application.

The proposal also simplifies the

application requirements for mergers

between institutions that are commonlyowned outside of a bank holding

company structure by treating such

transactions as ‘‘corporate

reorganizations’’ (proposed § 303.61(b)).

Further, in order to add predictability

to the procedure for receiving and

reviewing public comment on proposed

mergers, the proposal provides that the

comment period for non-emergency

transactions will end on the 35th day

after the applicant’s first newspaper

publication of notice of the merger

(proposed § 303.65(d)). This period

provides additional time for interested

parties to respond to the final

publication which occurs approximately

on the 30th day. No change is being

made to the public notice requirements

for transactions determined to be an

emergency requiring expeditious action.

The proposal also relaxes the FDIC’s

current practice of requiring that the

first newspaper notice of the merger not

be published until after the merger

application is filed with the FDIC.

Under the proposal, the applicant may

publish its first notice up to 5 days

before filing with the FDIC (proposed

§ 303.65(a)(1)).

With regard to CRA considerations,

the proposal would expand the existing

delegation to permit approval of a CRAprotested application by the regional

director (DOS) or deputy regional

director (DOS) where the protest has

been reviewed by DCA, the regional

director (DCA) or deputy regional

director (DCA) concurs that approval is

consistent with the purposes of the

CRA, and the applicant agrees in writing

to any conditions imposed regarding the

CRA (proposed § 303.66(b)(5)). This

would modify the existing merger

regulations, which provide that mergers
52820 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

that are the subject of an unresolved

CRA protest may be approved under

delegated authority by senior

supervisory officials in Washington, but

may not be acted upon at the regional

level.

The proposed rule eliminates

consideration and favorable resolution

of compliance with the National

Environmental Policy Act (NEPA) (42

U.S.C. 4321 et seq.) as a criteria for DOS

officials to exercise delegated authority

to approve a merger transaction. This

provision is currently found in

§ 303.7(b)(7)(ii). The FDIC has found

that the physical environment is

unlikely to be affected by the FDIC’s

consideration of bank merger

transactions and that, typically, the

provisions of the NEPA would not be

implicated. Since the FDIC is in the

process of reviewing its policy

statement on NEPA, the agency believes

it is not advisable to include a reference

to NEPA in the proposed regulatory text.

The FDIC invites comment on all

aspects of the proposed revisions to the

merger provisions of part 303.

Comments are more specifically invited

regarding the expansion of the term

‘‘corporate reorganization,’’ elements of

the expedited processing procedures as

proposed for merger applications, and

the inclusion of cross-references to

related provisions. In addition,

comment is sought on the proposal to

require that comments regarding a

particular merger application be filed

with the FDIC no later than the 35th day

after the first publication of notice of the

merger.

E. Subpart E—Change in Bank Control

The FDIC proposes to reorganize,

clarify, and simplify its regulation

implementing the Change in Bank

Control Act of 1978. The proposed

changes, developed in consultation with

the other federal banking agencies,

attempt to harmonize the scope and

procedural requirements of the FDIC’s

regulation with those of the other

federal banking agencies and to reduce

unnecessary burden.

The proposal defines the previously

undefined term ‘‘acting in concert’’ to

clarify the scope of the regulation. It

also incorporates the current FDIC

position that the acquisition of a loan in

default that is secured by voting shares

of an insured state nonmember bank is

presumed to be an acquisition of the

underlying shares. Further, the proposal

lengthens the period of time for

notifying the FDIC from 30 to 90 days

for shares acquired in satisfaction of a

debt previously contracted in good faith

or through testate or intestate succession

or a bona fide gift. In the case of shares

acquired in satisfaction of a debt

previously contracted, the proposal

adds language that reflects FDIC

practice of requiring the acquiror of a

defaulted loan secured by a controlling

amount of a state nonmember bank’s

voting securities to file a notice before

the loan is acquired.

The proposal also would reduce

regulatory burden on persons whose

ownership percentage increases as the

result of a redemption of voting shares

by the issuing bank or the action of a

third party not within the acquiring

person’s control. In these situations, the

proposal would permit the person

affected by the bank or third party

action to file a notice within 90 calendar

days after receiving notice of the

transaction. Currently, these persons

must file notice under the Change in

Bank Control Act prior to the action that

increases the person’s percentage

ownership, and, because these persons

cannot control the third party action

that causes the increased percentage

ownership, they are often put in

violation of the Change in Bank Control

Act and the FDIC’s Rules and

Regulations.

The FDIC also proposes to provide

more flexible timing for newspaper

announcements of filings under the

Change in Bank Control Act by

permitting notificants to publish the

announcement as close as practicable to

filing the notice of change in control.

The proposed rule removes the

requirement that the notificant have

confirmation that the FDIC has accepted

the notice before publishing the

announcement.

The FDIC also proposes to delete the

provision governing notices filed in

contemplation of a public tender offer

which permits an acquiror to delay

publication of the newspaper

announcement. None of the other

federal banking agencies has such a

provision.

The FDIC invites comment on all of

its proposed revisions to the regulation

implementing the Change in Bank

Control Act. In particular, the FDIC

requests comment on whether the

definition of ‘‘acting in concert’’ is

appropriate, and whether there is reason

to retain the public tender offer

provision.

F. Subpart F—Change of Director or

Senior Executive Officer

Section 32 of the FDI Act (12 U.S.C.

1831i) requires certain insured

depository institutions and their

depository institution holding

companies to provide at least 30 days’

prior notice to the appropriate federal

banking agency before adding any

individual to the board of directors or

employing any individual as a senior

executive officer. The agency may issue

a notice of disapproval prior to

expiration of the 30-day period if it

determines, based upon the proposed

individual’s competence, experience,

character or integrity, that it would not

be in the best interests of the depositors

or the public to permit the individual to

be employed by, or associated with, the

institution. Section 32 permits the

agency to waive the prior notice

requirement, but the agency may still

disapprove an individual’s association

with the institution within 30 days after

granting such a waiver.

Until recently, section 32 required

prior notice from a depository

institution or holding company that was

chartered less than two years; had

undergone a change in control within

the preceding two years; or was not in

compliance with minimum capital

requirements or was otherwise in

‘‘troubled condition.’’ Section 2209 of

EGRPRA amended section 32 by

eliminating the prior notice requirement

for institutions and holding companies

that are chartered for less than two years

or that have undergone a change in

control within the preceding two years.

However, institutions and holding

companies that are not in compliance

with minimum capital requirements or

are otherwise in ‘‘troubled condition’’

remain subject to the prior notice

requirement. In addition, EGRPRA

provides that prior notice will be

required if the agency determines, in

connection with its review of a capital

restoration plan required under section

38 of the FDI Act (governing prompt

corrective action) or otherwise, that

such prior notice is appropriate. Also,

the EGRPRA amendments provide the

agencies with more latitude to

determine the prior notice period and

allow the agencies up to 90 days to issue

a notice of disapproval.

The FDIC published an interim rule

implementing section 32 as applied to

insured state nonmember banks on

December 27, 1989 (54 FR 53040) and

requested comments. The interim rule,

which added a new § 303.14 to part 303

of the FDIC’s regulations, remains in

effect. Only seven commenters

responded, and the principal issues

raised concerned the definitions of

‘‘change in control’’ and ‘‘troubled

condition.’’ Objections to the definition

of change in control have been rendered

moot by the EGRPRA amendments since

a change of control within the preceding

two years is no longer a triggering event

for a section 32 notice. Two commenters

objected to the definition of ‘‘troubled

condition.’’ One objected to an insured
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52821

state nonmember bank being considered

in troubled condition if it is subject to

a cease-and-desist order on the grounds

that not all such orders result from

safety and soundness concerns and/or

financial difficulties. The other

commenter objected to the fact that an

insured state nonmember bank can be

designated in troubled condition based

upon a visitation, examination, or report

of condition. The proposed rule clearly

indicates that only a cease and desist

order or written agreement that requires

action to improve financial condition of

the bank triggers the designation of

troubled condition. However, such

designation may also be made based

upon an examination or report of

condition. The FDIC believes that it is

appropriate to use all information it

deems reliable in making such a

designation.

The proposed regulation reflects the

EGRPRA amendments to section 32 and

reorganizes, clarifies, and simplifies

notice procedures. The proposal also

strives to harmonize the procedural

requirements of the FDIC’s regulation

with those of the other federal banking

agencies and to reduce any unnecessary

regulatory burden.

Although the EGRPRA amendments

appear to provide the agencies with

authority to increase the prior notice

period to 90 days, the FDIC proposes to

retain the 30-day prior notice currently

required by § 303.14. This established

30-day regulatory period has proven

sufficient to process the majority of

filings, and reflects the FDIC’s time line

for processing section 32 notices

adopted in FDIC Financial Institutions

Letter 26–96 dated May 6, 1996.

However, the agency proposes to amend

the regulation to allow the agency to

take an additional period of up to 60

days, if necessary, to issue a notice of

disapproval. It is anticipated that this

additional 60-day period would be used

infrequently. In all such cases, the

notificant will be advised in writing

prior to expiration of the 30-day prior

notice period of the reason the FDIC

could not take action and of the

projected additional time needed.

Other than the revisions prompted by

the EGRPRA amendments, there is little

substantive change to the FDIC’s

regulation. Current § 303.14(c)(2)(ii)

provides that if a new member of a

bank’s board of directors is elected at a

shareholder’s meeting, prior notice is

automatically waived. However, notice

must be filed with the appropriate

regional director (DOS) within 48 hours

after the election. Proposed

§ 303.103(c)(2) modifies this provision

slightly to clarify that the automatic

waiver applies to new board members

not proposed by management and to

state that the notice must be submitted

within two business days, rather than 48

hours. Section 308.12 of the FDIC’s

regulations, which governs computation

of processing time for purposes of part

303, refers to time in increments of days

and not hours. This modification results

in a more liberal computation of

processing time in that intervening

Saturdays, Sundays and federal

holidays are not counted.

The FDIC invites public comment on

retention of the 30-day processing

timeframe (subject to a possible 60-day

extension) and the change in the

automatic waiver filing period. The

agency also welcomes suggestions for

further reducing unnecessary burden on

insured state nonmember banks when

reviewing changes in officers and

directors, consistent with the

requirements of section 32.

G. Activities and Investments of Insured

State Banks

Subpart G is reserved for filing

procedures related to activities and

equity investments of insured state

banks which are currently contained in

part 362 (12 CFR part 362). Part 362

implements section 24 of the FDI Act

(12 U.S.C. 1831a), which was created by

the Federal Deposit Insurance

Corporation Improvement Act of 1991

(Pub. L. 102–242, 105 Stat. 2236), and

governs the circumstances in which

insured state banks may engage in

activities which are not permissible for

national banks.

The FDIC recently issued a notice of

proposed rulemaking to make

comprehensive revisions to part 362. 62

FR 47969, Sept. 12, 1997. In connection

with these revisions, the FDIC proposes

to eliminate certain application

procedures which are outdated, and also

to authorize certain activities to be

approved by the FDIC on an expedited

basis. The FDIC cannot determine at this

time whether its 362 proposal or this

notice of proposed rulemaking to revise

part 303 will be finalized first, but it is

the FDIC’s intent to place the part 362

application procedures relating to state

bank activities in subpart G of part 303

at such time as both rules are final. In

order to deal with this problem, the

application procedures which

implement the proposed revisions to

part 362 concerning state bank activities

are contained in subpart E of the 362

proposal. If the 362 proposal is finalized

before this 303 proposal, insured state

banks operating under the revised part

362 will look to subpart E of part 362

for application procedures until such

time as part 303 is finalized, at which

point the FDIC will transfer the

application procedures from subpart E

of part 362 to subpart G of part 303. If

the 303 proposal is finalized first,

insured state banks operating under the

current version of part 362 will continue

to look to the current version of part 362

itself for application procedures until

the revisions to part 362 are finalized,

and the application procedures which

are proposed as subpart E of part 362

will be finalized as subpart G of part

303. Members of the public taking an

interest in the FDIC’s application

procedures for the activities of insured

state banks under part 362 should

review the part 362 proposal for the

specifics of such application

procedures.

H. Subpart H—Filings by Savings

Associations

The FDIC is also reserving subpart H

for filing procedures related to activities

of insured state savings associations and

subsidiaries of insured savings

associations, which are currently

contained in § 303.13 of part 303 (12

CFR 303.13). Section 303.13 implements

sections 28 and 18(m) of the FDI Act (12

U.S.C. 1831(e) and 12 U.S.C. 1828(m)),

which were both created by the

Financial Institutions Reform, Recovery,

and Enforcement Act of 1989 (Pub. L.

101–73, 103 Stat. 484). Section 303.13

governs the circumstances in which a

state savings association may engage in

activities which are not permissible for

a federal savings association, and also

requires all insured savings associations

to notify the FDIC prior to establishing

a subsidiary or engaging in new

activities through a subsidiary.

As part of the FDIC’s recently-issued

notice of proposed rulemaking to revise

part 362, discussed above, the FDIC has

proposed to address the substantive

issues covered by § 303.13 as subparts C

and D of a revised part 362. The

proposal harmonizes, to the extent

possible given the underlying statutes,

the treatment of activities of insured

state banks and the activities of insured

state savings associations. In connection

with these revisions, the FDIC proposes

to eliminate certain application

procedures which are outdated, and also

to authorize certain activities to be

approved by the FDIC on an expedited

basis. The FDIC cannot determine at this

time whether its 362 proposal or this

notice of proposed rulemaking to revise

part 303 will be finalized first, but it is

the FDIC’s intent to place the part 362

application procedures relating to

savings associations in subpart H of part

303 at such time as both rules are final.

In order to deal with this problem, the

application procedures which

implement the proposed revisions to
52822 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

3These are the procedures for: (1) Establishing,

moving, or closing a foreign branch of a state

nonmember bank; (2) investment by state

nonmember banks in foreign organizations; (3)

exemptions from the insurance requirement for a

state branch of a foreign bank; and (4) approval for

an insured state branch of a foreign bank to conduct

activities not permissible for federal branches.

4An application to establish a foreign branch is

not an ‘‘application for a deposit facility’’ covered

by the CRA, and the FDIC will therefore only take

the insured state nonmember bank’s CRA rating

into account for purposes of determining whether

the application receives expedited processing under

part 362 concerning savings associations

are contained in subpart F of the 362

proposal. If the 362 proposal is finalized

before this 303 proposal, existing

§ 303.13 will be rescinded in connection

with finalizing part 362. Savings

associations operating under the revised

part 362 will look to subpart F of part

362 for application procedures until

such time as part 303 is finalized, at

which point the FDIC will transfer the

application procedures from subpart F

of part 362 to subpart H of part 303. If

the 303 proposal is finalized first,

existing § 303.13 will be preserved

without substantive change on an

interim basis in connection with

finalizing part 303. Savings associations

operating under § 303.13 will continue

to look to § 303.13 for application

procedures until the revisions to part

362 are finalized. In connection with

finalizing part 362, § 303.13 will be

rescinded, and the application

procedures which are proposed as

subpart F of part 362 will be finalized

as subpart H of part 303. Members of the

public taking an interest in the FDIC’s

application procedures for the activities

of insured savings associations and their

subsidiaries should review the part 362

proposal for the specifics of such

application procedures.

I. Subpart I—Mutual-to-Stock

Conversions

The FDIC is proposing to move the

notice requirements for mutually owned

state-chartered savings banks that

propose to convert to stock form from

§ 303.15 to a separate subpart I. These

notice requirements were adopted in

final form on January 1, 1995. The

intended effect of the rules is to ensure

that mutual-to-stock conversions of

FDIC regulated institutions do not raise

safety and soundness concerns,

breaches of fiduciary duty, or other

violations of law. The substantive

regulation regarding mutual-to-stock

conversions would remain in § 333.4 of

this chapter.

The FDIC also is proposing to provide

for delegated authority in its mutual-tostock conversion regulations. Some

members of the industry have

commented that the FDIC takes longer

than necessary to act on conversion

transactions. At the present time, all

conversion notices are reviewed by the

FDIC Board of Directors. The FDIC has

gained considerable experience in

reviewing notices to convert and the

Board believes it is now appropriate to

delegate authority to the Director and

the Deputy Director (DOS) to issue

notices of intent not to object. Such a

delegation would apply only when the

proposed conversion is determined not

to pose a risk to the converting

institution’s safety and soundness,

violate any law or regulation, present a

breach of fiduciary duty, or raise any

unique legal or policy issues. The Board

believes that this delegation will allow

the FDIC to act more promptly on

routine notices and ease regulatory

burden.

No other changes in procedures are

being proposed. The public is invited to

comment on any changes the FDIC

could make to ease regulatory burden

while ensuring that conversions do not

raise supervisory concerns.

J. Subpart J—Foreign Bank Activities

Proposed subpart J addresses

application requirements relating to the

foreign activities of insured state

nonmember banks and the U.S.

activities of insured branches of foreign

banks. The FDIC is proposing to make

these application requirements easier to

use and more streamlined by

centralizing them in subpart J. Under

the FDIC’s current rules, these

application requirements are located in

various subsections of three different

regulations: 12 CFR part 303, 12 CFR

part 346, and 12 CFR part 347. The FDIC

also is proposing to further streamline

processing for several of these

application requirements.

On July 15, 1997, the FDIC published

a Notice of Proposed Rulemaking (part

347 NPR) which requests public

comment on an FDIC proposal to revise

the FDIC’s rules on the foreign activities

of insured state nonmember banks and

the U.S. activities of insured branches of

foreign banks. 62 FR 37748. Subpart D

of the part 347 NPR includes four

proposed application procedures

designed to work with the substantive

revisions made to the FDIC’s

international banking regulations under

the part 347 NPR.3 The FDIC cannot

determine at this time whether the part

347 NPR or this notice of proposed

rulemaking to revise part 303 (part 303

NPR) will be finalized first. To deal with

the possibility that the part 303 NPR

may be finalized before the part 347

NPR is finalized, this part 303 NPR

contains interim versions of the same

application procedures contained in

subpart D of the part 347 NPR. The

interim versions proposed here are

designed to work with the existing

versions of the FDIC’s international

banking regulations, and are different in

several respects from the application

procedures contained in subpart D of

the part 347 NPR. Therefore, members

of the public taking an interest in the

FDIC’s application procedures for

international banking issues should

review the part 347 NPR as well as this

part 303 NPR.

If this part 303 NPR is finalized first,

the four interim application procedures

will remain in effect only until the part

347 NPR is finalized. In connection with

finalizing the part 347 NPR, the FDIC

will transfer the application procedures

in subpart D of the part 347 NPR to

subpart J of part 303 and rescind the

interim procedures. If the part 347 NPR

is finalized first, the interim procedures

in this part 303 NPR will never be

finalized, and the FDIC will make

necessary technical amendments to

transfer the application procedures in

subpart D of the part 347 NPR to subpart

J of part 303.

This part 303 NPR also contains two

application procedures which are not of

an interim nature: the procedure for

moving an insured branch of a foreign

bank, and the procedure for mergers

involving an insured branch of a foreign

bank. These two procedures are not

impacted by the part 347 NPR.

Interim Application Procedures

Establishing, moving, or closing a

foreign branch of a state nonmember

bank. Section 18(d)(2) of the FDI Act (12

U.S.C. 1828(d)(2)) and § 347.3 require an

insured state nonmember bank to obtain

the FDIC’s prior written consent before

establishing a branch located outside

the United States, its territories, Puerto

Rico, Guam, American Samoa, the Trust

Territory of the Pacific Islands, or the

Virgin Islands. Applications for these

foreign branches are currently treated

under the same process applicable for

domestic branches under § 303.2. The

FDIC proposes to treat foreign branches

separately, since foreign branch

applications are not legally required to

be subjected to analysis under the CRA

or factors under section 6 of the FDI Act,

as is the case for domestic branches.

Under § 303.182 as proposed, the

FDIC would give its general consent for

an eligible depository institution (as

defined by § 303.2(r)) to establish

additional foreign branches in any

jurisdiction in which the bank already

operates a branch, or to move a branch

within the jurisdiction.4 Also, an
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52823

the general consent and expedited processing

procedures.

5The World Heritage List was established under

the terms of The Convention Concerning the

Protection of World Culture and Natural Heritage

adopted in November, 1972 at a General Conference

of the United Nations Education, Scientific and

Cultural Organization. Current versions of the list

are on the Internet at http://www.unesco.org/whc/

heritage.htm, or may be obtained from the FDIC

Public Information Center, Room 100, 801 17th

Street, NW, Washington, DC 20429.

eligible depository institution that

operates branches in two or more

foreign jurisdictions may establish

additional branches conducting

approved activities in additional foreign

jurisdictions under expedited

processing procedures permitting the

eligible depository institution to

establish the branch 45 days after

submitting its application to the FDIC.

The FDIC is proposing these general

consent and expedited processing

procedures because an insured state

nonmember bank meeting the

requirements of the provisions

ordinarily should have sufficient

familiarity with the implications of

foreign branching, and be of sufficiently

sound overall condition, that extensive

FDIC review is not required. The FDIC

retains the option to suspend these

procedures as to any institutions for

which this is not the case. For

applicants seeking to establish a branch

in an additional jurisdiction, the FDIC

may also remove an applicant from

expedited processing for any of the

grounds specified in § 303.11(c) follows:

(1) If the FDIC determines the filing

presents a significant supervisory

concern; (2) raises a significant legal or

policy issue; or (3) if the FDIC

determines other good cause exists for

removal. The FDIC will promptly

provide the applicant with a written

explanation if the FDIC decides to

remove a filing from expedited

processing.

General consent and expedited

processing are also inapplicable in any

case presenting either of two special

circumstances. Since the FDIC must

have access to information about a

foreign branch’s activities in order to

effectively supervise the institution,

general consent or expedited processing

do not apply if the law or practice of the

foreign jurisdiction would limit the

FDIC’s access to information for

supervisory purposes. In such cases, the

FDIC must have an opportunity to fully

analyze the extent of the confidentiality

conferred under foreign law and

whether it would, in light of all the

circumstances, impair the FDIC’s ability

to carry out its responsibilities as a bank

supervisor. In addition, if the proposed

foreign branch has a direct adverse

impact on a site which is on the World

Heritage List 5 or the foreign

jurisdiction’s equivalent of the National

Register of Historic Places (National

Register), the FDIC may need an

opportunity to evaluate the proposal in

light of section 402 of the National

Historic Preservation Act Amendments

of 1989 (NHPA Amendments Act) (16

U.S.C. 470a–2).

Proposed § 303.182 also requires an

insured state nonmember bank which

closes a foreign branch to notify the

appropriate regional director (DOS) that

it has done so. This notice stems from

the current requirement for such notice

under § 347.3. The FDIC has previously

determined that Congress did not intend

section 42 of the FDI Act on branch

closings to apply to foreign branches.

Finally, proposed § 303.182 sets out the

procedures for applications which are

not eligible for the general consent or

expedited processing procedures.

Acquisition of stock of foreign banks

or other financial entities by an insured

state nonmember bank. Section 18(l) of

the FDI Act (12 U.S.C. 1828(l)) and

§ 347.4 require an insured state

nonmember bank to obtain the FDIC’s

prior written consent before acquiring

an ownership interest in a foreign bank

or other financial entity. The current

application procedures are set out in

§ 303.5(d). Since the current substantive

provisions governing foreign investment

at § 347.4 provide only relatively

general guidance about the conduct of

such activities, it is not possible for the

FDIC to implement general consent and

expedited processing procedures on an

interim basis, and proposed § 303.183

contains no substantive changes from

the current procedures. However, in

connection with the FDIC’s revisions of

the foreign investment rules in the part

347 NPR, the FDIC has proposed general

consent and expedited processing

procedures.

Exemptions from the insurance

requirement for a state branch of a

foreign bank. Section 346.6 requires an

uninsured state branch of a foreign bank

to obtain the FDIC’s consent if the

branch proposes to accept initial

deposits of less than $100,000 and such

deposits are not otherwise exempted

from the definition of retail deposit

taking activity under § 346.6(a). The

current application procedures are set

out in § 346.6(b). These procedures need

no substantive revision at this time,

because the procedures were recently

reviewed and amended by the FDIC as

a result of amendments to the

International Banking Act of 1978, Pub.

L. 95–369, 92 Stat. 607 (12 U.S.C. 310l

et seq.) made by the Riegle-Neal

Interstate Banking and Branching

Efficiency Act of 1994, Pub. L. 103–328,

108 Stat. 2338 (Interstate Act). 61 FR

5671 (Feb. 14, 1996).

Approval for an insured state branch

of a foreign bank to conduct activities

not permissible for a federal branch.

Section 346.101 requires an insured

state branch of a foreign bank to obtain

the FDIC’s permission to conduct any

type of activity which is not permissible

for a federal branch of a foreign bank.

The current application procedures are

set out in § 346.101 itself, which was

recently adopted. 59 FR 60703 (Nov. 28,

1994). Thus, proposed § 303.187 does

not make any substantive changes from

the current procedures on an interim

basis.

Noninterim Application Procedures

Moving an insured branch of a foreign

bank. Section 18(d)(1) of the FDI Act

requires any insured branch of a foreign

bank which wishes to move from one

location to another to obtain the FDIC’s

prior written consent. Applications for

these insured branches currently are

treated under the same process

applicable to domestic branches of

insured state nonmember banks under

§ 303.2. Since the FDIC’s consent to

these applications is legally subject to

the same statutory considerations as

applications to establish or relocate a

domestic branch or to relocate the main

office of an insured state nonmember

bank, the FDIC is proposing an

application process in § 303.184 which

parallels proposed subpart C. This

includes expedited processing for an

eligible insured branch. Subpart J

contains a proposed definition of

‘‘eligible insured branch’’ which

parallels the general § 303.2(r) definition

of ‘‘eligible depository institution,’’ with

appropriate changes to take into account

the different supervisory rating system

and capital requirements applicable to

insured branches.

Mergers involving an insured branch

of a foreign bank. An insured branch of

a foreign bank meets the definition of an

insured depository institution under

section 3 of the FDI Act (12 U.S.C. 1813)

and is therefore subject to the Bank

Merger Act. The FDIC’s current rules

and regulations do not include a

specific application process for

approvals of merger transactions

involving an insured branch. In order to

give insured branches conducting

merger transactions which are subject to

FDIC approval the benefit of the same

streamlined application processing

proposed for domestic institutions in

subpart D, proposed § 303.185 contains

appropriate cross-references to subpart
52824 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

6 If the foreign bank parent itself is not primarily

engaged in business in the United States, and is

involved in some merger or other combination

outside the United States which does not result in

a corresponding merger transaction in the United

States with respect to an insured branch, section

18(c)(11) provides that no approval is required,

since no party to the transaction is primarily

engaged in business in the United States.

D. Section 303.185 clarifies that an

eligible insured branch as defined in

subpart J generally is eligible for the

expedited processing available to an

eligible depository institution in subpart

D. Similarly, § 303.185 clarifies that a

transaction in which an insured branch

is merged with other branches, agencies,

or subsidiaries in the United States of

the same foreign bank parent is eligible

for disposition under the enhanced

delegations applicable to corporate

reorganizations.6

Section 303.185 also incorporates a

point explained in Advisory Opinion

FDIC–96–12 (May 13, 1996) concerning

the treatment of an insured branch

under section 44 of the FDI Act (12

U.S.C. 1831u) as added by section 102

of the Interstate Act. Section 44 permits

the responsible federal regulator to

approve an interstate merger transaction

involving the acquisition of a branch of

an insured bank without the acquisition

of the entire bank, but approval is

possible only if the state in which the

branch is located expressly permits outof-state banks to acquire a branch of the

bank without acquiring an entire bank.

In contrast, section 44 permits the

responsible federal regulator to approve

an interstate merger transaction

involving the acquisition of an entire

bank if the state in which the bank is

located has not adopted legislation to

opt out of interstate mergers. Section

303.185 treats interstate mergers

involving an insured branch under the

latter approach. Express state authority

permitting out-of-state banks to acquire

a branch of the bank without acquiring

the entire bank is required only if a

foreign bank has more than one insured

branch in the affected state and

proposes to sell fewer than all of them

to the same acquiror. If such state

authority does not exist, the FDIC

requires the foreign bank to sell all of its

insured branches in that state to the

same affiliated or unaffiliated acquiror.

As is explained in Advisory Opinion

FDIC–96–12, the statute and definitions

used in section 44 do not provide a

conclusive answer to this issue, but the

FDIC’s approach gives effect to all of the

language and purposes of the Interstate

Act.

K. Subpart K—Prompt Corrective Action

Section 38 of the FDI Act, which

governs prompt corrective action,

restricts or prohibits certain activities

based on an institution’s capital

category, and requires an insured

institution to submit a capital

restoration plan when it becomes

undercapitalized. On September 15,

1992, the FDIC approved a final

interagency rule implementing the

requirements of prompt corrective

action. The final rule, which became

effective December 19, 1992, amended

part 325 of the agency’s regulations by

defining five capital categories for

purposes of implementing the prompt

corrective action requirements. 57 FR

44900 (Sept. 29, 1992).

In conjunction with interagency

action, the FDIC on January 26, 1993,

approved amendments to part 303 to

implement certain application

procedures relating to prompt corrective

action. The application procedures

outlined in § 303.5(e) relate solely to

activities that are prohibited unless

prior written consent is granted by the

appropriate agency. In addition, a new

§ 303.7(f)(1)(ix) was added to part 303

which provides delegation of authority

to act on applications seeking prior

consent to engage in certain restricted

activities which are filed pursuant to the

prompt corrective action regulations.

These revisions to part 303 became

effective on February 12, 1993. 58 FR

8219 (Feb. 12, 1993).

Subpart K does not substantially

amend current procedures. The only

substantive change is that a new

paragraph has been added as § 303.207.

This new section is derived from section

38(i)(2)(G) of the FDI Act, and relates to

paying interest on new or renewed

liabilities at a rate that would increase

the institution’s weighted average cost

of funds to a level significantly

exceeding the prevailing rates of interest

on insured deposits in the institution’s

normal market area. Current § 303.5(e)

contains a reference to activities listed

in sections 38(i)(2) (A) through (F) of

section 38, and the addition of item G

completes the list of the seven activities

which are prohibited for critically

undercapitalized institutions unless

prior FDIC approval has been granted.

As part of the reorganization of part

303, delegations previously contained in

§ 303.7(f)(ix) have been consolidated

into subpart K and delegations

previously contained in § 303.9(h),

regarding directives and capital plans

pursuant to section 38 of the FDI Act,

have been consolidated with

enforcement related delegations in

subpart N. As subpart K applies only to

the application process, it does not

affect the general prompt corrective

action regulations adopted as a part of

the interagency rulemaking process.

L. Subpart L—Section 19 of the FDI Act

(Consent to Service of Persons

Convicted of Certain Criminal Offenses)

Section 19 of the FDI Act prohibits

any person convicted of any crime

involving dishonesty, breach of trust, or

money laundering, or who has agreed to

enter into a pretrial diversion or similar

program in connection with a

prosecution for any such offense, from

(i) continuing as or becoming an

institution-affiliated party, (ii) owning

or controlling directly or indirectly an

insured depository institution, or (iii)

otherwise participating in the conduct

of the affairs of FDIC-insured depository

institutions, without the FDIC’s prior

written consent.

Proposed subpart L does not

substantially amend current section 19

application procedures, but rather

brings together in one place information

on section 19 which was previously

contained in various sections of part

303. However, proposed § 303.222 has

been added to clarify the FDIC’s

position that the prior consent of the

FDIC is required before a person

approved under section 19 to participate

in the affairs of a particular institution

may participate in the affairs of another

insured institution. Delegations of

authority to act upon applications filed

pursuant to section 19 remains

unchanged.

On July 24, 1997, the FDIC Board of

Directors published for comment a

proposed Statement of Policy on Section

19 which contains interpretations of the

statutory language (62 FR 39840). Issues

addressed in the statement of policy

include what constitutes participation,

who is a ‘‘person’’ under the statute, the

meaning of ‘‘own’’ or ‘‘control,’’

procedures for filing a section 19

application, and the standards for

granting consent to a section 19

application. The proposed rule should

be read in conjunction with the

proposed policy statement for a fuller

understanding of the FDIC’s position on

section 19.

M. Subpart M—Other Filings

This subpart contains the procedural

requirements and delegations of

authority for miscellaneous filings

which do not warrant treatment as

separate subparts. In many instances,

there were no regulations or guidelines

established regarding procedures or

content for submitting a filing to the

FDIC. In addition, it was often unclear

when the filing requirements were
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52825

applicable. Under proposed subpart M,

all information relating to a particular

filing has been brought together in a

self-contained section under a

standardized format. The FDIC believes

that this will simplify the filing process

for prospective applicants by setting

forth this information in a single

location.

Under the proposal, new expedited

review procedures will be offered for

applications to reduce or retire capital

stock or capital debt instruments and

applications to exercise trust powers.

Expedited processing for brokered

deposit waivers has been retained yet

modified to parallel the requirements

for an ‘‘eligible depository institution’’

in proposed § 303.2(r), with the

exception of the well-capitalized

criteria.

Application procedures currently

found in part 359 (golden parachutes

and indemnification payments) are

being moved to subpart M. In addition,

procedures for requesting a conditional

waiver of cross-guaranty liability are

being moved from the FDIC’s Statement

of Policy Regarding Liability of

Commonly Controlled Depository

Institutions to proposed subpart M.

Finally, specific procedures are being

added to address requests for relief from

reimbursement under the Truth in

Lending Act and Regulation Z.

Reduce or retire capital stock or

capital debt instruments. Section

303.241 reorganizes, clarifies and

simplifies procedures for applications to

reduce or retire capital stock, notes or

debentures pursuant to section 18(i)(1)

of the FDI Act (12 U.S.C. 1828(i)(1)).

Filing instructions are currently

contained in the standard instructions

for all applications for which no form of

application has been prescribed (12 CFR

303.5(b)). Authority to approve or deny

such applications is currently delegated

at § 303.7(f)(1)(iii).

Under expedited processing, an

application by an eligible depository

institution (as defined in proposed

§ 303.2(r)) will be deemed approved 20

days after receipt by the appropriate

FDIC regional director (DOS), unless the

applicant is notified that the FDIC has

removed the application from expedited

processing. A recent increase in the

number of applications to reduce or

retire capital stock, notes or debt

indicates to the FDIC that expedited

processing will simplify and streamline

the process for and be of benefit to state

nonmember banks. The 20-day

automatic approval period is based

upon the processing time established in

the FDIC’s Application Processing Time

Lines (FIL–26–96, May 6, 1996) and is

supported by the average processing

time for approval of these types of

requests during 1996.

The information requested under the

proposal is the basic information that is

necessary to process a request pursuant

to section 18(i)(1) of the FDI Act and is

included to provide guidance to

prospective applicants. The filing

procedures and information requested

do not impose additional requirements

upon applicants but simply clarify

existing practice.

Exercise of trust powers. Currently,

§§ 303.5(b) and 303.7(a)(2) contain the

general application procedures for the

FDIC’s prior approval to exercise trust

powers. Sections 333.1, 333.2 and

333.101 provide the substantive basis

for requesting such applications.

The FDIC proposes to amend part 303

to create a new section relating to trust

applications that would bring together

all the trust application procedures as

well as the related delegations of

authority into one centralized location.

The proposal contains two exceptions to

the application requirements. The first

exception allows a state nonmember

bank that received authority to exercise

trust powers from its chartering

authorities prior to December 1, 1950 to

exercise trust powers without the FDIC’s

consent. The second exception permits

an insured depository institution to

continue to conduct trust activities

pursuant to authority granted by its

chartering authority following a charter

conversion or withdrawal from

membership in the Federal Reserve

System.

The proposed procedures would

require applicants to complete a trust

application form obtained from any

FDIC regional office and provides

expedited processing for eligible

depository institutions as defined in

proposed § 303.2(r). Under expedited

processing, an eligible institution’s trust

application will be deemed approved 30

days after receipt by the appropriate

FDIC regional director, unless the

applicant is advised in writing that its

filing has been removed from expedited

processing. For applications not

processed pursuant to the expedited

processing procedures, the FDIC will

provide written notification of the final

action taken with regard to the filing.

Brokered deposit waivers. The FDIC is

proposing to reorganize its regulations

regarding applications to accept

brokered deposits by adequately

capitalized insured depository

institutions. The application procedures

would be placed in this subpart M and

the substantive rules regarding the

acceptance of brokered deposits would

remain in § 337.6. Procedures would not

be substantially altered.

Applicants for a brokered deposit

waiver cannot meet the strict definition

of an ‘‘eligible depository institution’’

set forth in proposed § 303.2(r),

regarding institutions eligible for

expedited processing. The definition in

§ 303.2(r) requires eligible depository

institutions to be ‘‘well capitalized.’’

Well capitalized institutions are not

required to apply for a waiver prior to

accepting brokered deposits. Therefore,

for the purpose of determining

eligibility for expedited processing for

this subsection only, an adequately

capitalized institution which otherwise

meets the standards of § 303.2(r) will be

deemed to be an eligible depository

institution. Under the current

regulation, any institution with a

composite rating of 1 or 2 is eligible for

expedited processing. The definition

contained in § 303.2(r) contains

additional qualifications for eligibility.

The FDIC does not believe that there is

a compelling reason to use a

substantially different definition of

eligibility for this subsection than that

used for all other types of applications

for which expedited procedures are

available.

In moving the application procedures

to part 303, the proposal would amend

paragraph (c) of § 337.6 by referring the

applicant to § 303.243 for filing

instructions. Paragraphs (d) and (e) of

§ 337.6 would be deleted because the

information in those paragraphs

(involving filing procedures, delegations

of authority, and expedited processing

procedures) would appear in § 303.243.

Golden parachutes and severance

plan payments. The FDIC is proposing

to revise its regulations regarding

applications to make excess

nondiscriminatory severance plan

payments and golden parachute

payments by insured depository

institutions or depository institution

holding companies. The FDIC’s

regulations with respect to such

payments are codified at part 359.

Generally, troubled depository

institutions as defined in the regulations

are prohibited under part 359 from

making severance plan payments and

golden parachute payments, unless the

institution obtains the consent of its

primary federal regulator and, in certain

circumstances, the FDIC.

Under the proposal, the substantive

rules with respect to making such

payments would remain unchanged in

part 359 of the FDIC’s regulations. The

only changes to part 359 would appear

in § 359.6, which involves ‘‘Filing

instructions.’’ First, a reference to new

§ 303.244 of the FDIC’s regulations

would be added. Second, a sentence

specifying the necessary elements of an
52826 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

application would be deleted from

§ 359.6. These elements and the

procedures for obtaining the consent of

the FDIC would be set forth in the new

§ 303.244. The necessary elements

would be expanded from two items to

five items in § 303.244 in order to assist

an applicant in preparing a complete

filing. The filing procedures and

information requested do not impose

additional requirements upon

applicants, but simply clarify existing

requirements.

Waiver of liability for commonly

controlled depository institutions. The

application procedures for an insured

depository institution to request a

waiver of liability pursuant to section

5(e) of the FDI Act are new (12 U.S.C.

1815(e)). The FDIC Board of Directors

recently approved revisions to the

Statement of Policy Regarding Liability

of Commonly Controlled Depository

Institutions (62 FR 15480, April 1,

1997), which provides guidance to the

industry as to the manner in which the

FDIC will administer the provisions of

section 5(e) of the FDI Act. The

statement of policy is being further

revised elsewhere in today’s Federal

Register to move the procedures for

requesting a conditional waiver of the

cross-guaranty liability to proposed

§ 303.245 and to include a crossreference to § 303.245.

Insurance fund conversions. The FDIC

is proposing to revise its regulations

regarding filings for insurance fund

conversions at § 303.246. The proposed

revisions would reformat the filing

requirements and delete references to

and procedures regarding insurance

fund conversions qualifying as

exceptions to the insurance fund

conversion moratorium imposed in

section 5(d) of the FDI Act (12 U.S.C.

1815(d)(2)(A)(ii)). Such references and

procedures are no longer necessary

because the insurance fund conversion

moratorium expired in the last quarter

of l996 when the Savings Association

Insurance Fund reached its designated

reserve ratio.

Conversion with diminution of

capital. Section 303.247 reorganizes and

clarifies filing procedures pursuant to

section 18(i)(2) of the FDI Act (12 U.S.C.

1828(i)(2)) to convert from an insured

federal depository institution to a state

nonmember bank where the capital

stock or surplus of the resulting bank

will be less than the capital stock or

surplus, respectively, of the converting

institution at the time of the

shareholder’s meeting approving such

conversion. Filing instructions are

currently contained in § 303.3(c) and

§ 303.5(b).

The information requested of the

applicant under the proposal is the

basic information that is necessary to

process a request pursuant to section

18(i)(2) of the FDI Act. The filing

procedures and information requested

do not impose additional requirements

upon applicants but simply clarify

existing requirements.

A delegation of authority has been

added to § 303.247 to allow the Director,

Deputy Director, or where confirmed in

writing, an associate director, regional

director or deputy regional director

(DOS) to approve conversions with

diminution of capital. Authority to deny

is delegated only to the Director and

Deputy Director (DOS). At present, there

is no delegated authority.

Continue or resume status as an

insured institution following

termination under section 8 of the FDI

Act. Proposed § 303.248 covers

applications by depository institutions

for permission to continue or resume

their insured status after termination of

insurance under section 8 of the FDI Act

(12 U.S.C. 1818). This section covers

institutions whose deposit insurance

continues in effect for any purpose or

for any length of time under the terms

of an FDIC order terminating deposit

insurance. However, it does not cover

any operating non-insured depository

institution which was previously

insured by the FDIC or any non-insured,

non-operating depository institution

whose charter has not been surrendered

or revoked. Institutions not covered by

this section would be required to file a

de novo application for FDIC insurance.

The contents of the filing under this

section have been streamlined to require

all relevant facts and reasons for the

request and a certified copy of the

resolution authorizing the request by the

institution’s board of directors.

Truth in Lending Act—Requests for

relief from reimbursement and

reconsiderations of denials. Proposed

§ 303.249 is intended to apply to

requests for relief from reimbursement

involving the Truth in Lending Act (15

U.S.C. 1601 et seq.) and Regulation Z

(12 CFR 226) (Truth in Lending cases).

Currently, no specific procedures or

timeframes are provided for Truth in

Lending cases in part 303. Requests for

relief from reimbursement are addressed

pursuant to the procedures in § 303.6

which apply generally to applications,

and requests for reconsideration of a

request for relief following denial must

be filed within 15 days under § 303.6(e),

which governs petitions for

reconsideration. Proposed § 303.249 sets

forth new procedures specifically for

Truth in Lending cases and provides

that applicants may file initial requests

for relief within 60 days after receipt of

the compliance report of examination

containing the request to conduct a file

search and make restitution to affected

customers. Requests for reconsideration

following denial will continue to be

handled under the FDIC’s general

petition for reconsideration provision,

located at proposed § 303.11(f), which

requires filing within 15 days of receipt

of denial.

Modifications of conditions. Section

303.250 reorganizes and clarifies the

procedures for requests to modify a

previously issued FDIC approval of a

filing. The instructions for these

requests are currently contained in

§ 303.5(b). The relevant delegation of

authority to approve or to deny such

filings is contained in existing

§ 303.7(f)(l)(iv).

The information requested of the

applicant under the proposal is the

basic information that is necessary to

process a request of this nature. The

filing procedures and information

requested do not impose additional

requirements upon applicants, but

simply clarify existing requirements.

However, a new criteria for exercise of

delegated authority by DOS officials is

being added requiring Legal Division

consultation to modify conditions if

Legal Division consultation was

required in connection with the original

filing.

During 1995, the FDIC approved 15

requests to modify a prior approval,

with an average processing time of 11

days. During 1996, the FDIC approved

14 such requests, with an average

processing time of 15 days. Given the

low volume of activity and the prompt

processing of those requests, the FDIC

believes that the creation of special

expedited procedures is not warranted.

Extensions of time. Section 303.251

reorganizes and clarifies the procedures

for requests seeking an extension of time

to fulfill a condition required in an

approval issued by the FDIC, or to

consummate a transaction which was

the subject of an approval by the FDIC.

The instructions for these requests are

currently contained in § 303.5(b). The

relevant delegation of authority to

approve or to deny such filings is

contained in existing § 303.8(a).

The information requested of the

applicant under the proposal is the

basic information that is necessary to

process a request of this nature. The

filing procedures and information

requested do not impose additional

requirements upon applicants, but

simply clarify existing requirements.

During 1995, the FDIC approved 31

requests for an extension of time, with

an average processing time of 10 days.
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52827

During 1996, the FDIC approved 31

such requests, with an average

processing time of 13 days. Given the

low volume of activity and the prompt

processing of those requests, the FDIC

believes that the creation of special

expedited procedures is not warranted.

N. Subpart N—Enforcement Delegations

Subpart N makes several significant

changes to the FDIC’s enforcement

delegations of authority, as described

below.

Section 8(a) notices of intention to

terminate insured status. Under current

§ 303.9(a), authority has been delegated

to the Director of DOS to issue

notifications to primary regulator

(NPRs) under section 8(a) of the FDI Act

(12 U.S.C. 1818(a)), with Legal Division

concurrence. If unsafe or unsound

conditions or practices and violations of

law cited in an NPR are not corrected,

a notice of intention to terminate

insured status (NIT) may be issued.

The Director of DOS, pursuant to an

agreement with the Board of Directors,

has not exercised delegated authority to

issue NPRs, and has brought all such

cases to the Board of Directors.

Currently, when the Board issues an

NPR, it also authorizes the Executive

Secretary, with Legal Division

concurrence, to issue an NIT, after being

informed by DOS that an institution has

not corrected the conditions, practices

and/or violations of law cited in the

NPR. Proposed § 303.262 would largely

codify existing FDIC practice by

delegating authority to issue NITs, but

would modify existing FDIC practice by

allowing the Director of DOS to issue

NITs with Legal Division concurrence.

This would speed matters since the

Executive Secretary now relies on

information received from DOS prior to

issuing NITs.

Section 8(g) suspension and removal

actions. Currently, authority is

delegated to the Director and Deputy

Director (DOS and DCA) and, when

confirmed in writing by the Director, to

an associate director, to issue orders of

suspension or prohibition to any

institution-affiliated party who is

charged in any information, indictment

or complaint, or who is convicted of or

enters into a pretrial diversion or similar

program, regarding any criminal offense

cited in or covered by section 8(g) of the

FDI Act, when such institution-affiliated

party consents to the suspension or

prohibition. Proposed § 303.266(b)

contains a new delegation to issue

orders of prohibition or suspension

under section 8(g), regardless of whether

or not the institution-affiliated party

consents to the order, if the criminal

offense is one for which section 8(g)

mandates suspension or prohibition.

The FDIC believes that such a

delegation is appropriate since no

discretion to issue this type of order is

provided in the statute.

Consent section 8(q) orders

terminating insured status. Section 8(q)

of the FDI Act, 12 U.S.C. 1818(q),

authorizes the issuance of consent

orders terminating deposit insurance of

an institution whose deposits have been

assumed by another institution, whether

by way of merger, consolidation,

statutory assumption, or contract.

Proposed § 303.268 codifies the current

delegation of authority to the Executive

Secretary of the FDIC to issue consent

orders pursuant to section 8(q) of the

Act. This authority was contained in a

June 13, 1989 resolution of the Board of

Directors and was not previously

codified in part 303.

Civil money penalties. Proposed

§ 303.269 clarifies the FDIC’s

delegations of authority relating to the

issuance of final orders to pay civil

money penalties, whether or not a

notice of charges has been issued in a

case. Proposed § 303.269 also authorizes

the Director (DOS) and Director (DCA)

to take joint action where violations for

which civil money penalties are

authorized involved both safety and

soundness and consumer compliance

matters. The proposal further delegates

the authority to levy and enforce civil

money penalties for the late, inaccurate,

false or misleading filing of Reports of

Condition and Income, Home Mortgage

Disclosure Act Reports, CRA loan data

reports (see 12 CFR 345.42), and all

other required reports.

Section 5(e) assessments of

commonly-controlled institutions.

Section 5(e) of the FDI Act, 12 U.S.C.

1815(e), permits the FDIC to recoup the

amount of loss to the deposit insurance

funds resulting from the failure of

affiliated institutions or assistance

provided to affiliated institutions.

Proposed § 303.270 sets forth the

authority to issue notices of assessment

under section 5(e) of the Act, also

known as cross-guaranty assessments..

This authority was not previously

codified in 12 CFR part 303. The

addition of this provision and the

delegations of authority to the Director,

Deputy Director and, where confirmed

in writing, to an associate director of

DOS to issue notices of assessment of

liability, reflect the actual practice of the

Board of Directors. Additionally,

proposed § 303.278(j) provides that the

Board expressly retains authority on

whether or not to waive cross-guaranty

assessments. This provision is new and

was not previously codified in part 303.

Section 10(c) investigations. The legal

authority of the General Counsel to

issue orders of investigation pursuant to

section 10(c) of the FDI Act contained

in proposed § 303.272(b) is being

expanded to include sections 8 through

13 of the FDI Act (12 U.S.C. 1818–1823)

in order to cover post-conservatorship

or post-receivership investigations

conducted by the FDIC in connection

with the possible liability of directors,

officers, and other institution-affiliated

parties. The requirement of the

concurrent certification of the General

Counsel for certain orders of

investigation issued by the Director and

Deputy Director of the Division of

Resolutions and Receiverships is being

added to be consistent with the current

requirement for orders issued in certain

specified situations by the Directors and

Deputy Directors of DOS and DCA.

Acceptance of written agreements.

Proposed § 303.274 continues in effect

FDIC delegations of authority on

acceptance of written agreements in lieu

of orders to terminate deposit insurance

and to issue cease-and-desist orders

under sections 8 (a) and (b) of the Act

(12 U.S.C. 1818 (a) and (b)). The

Director (DOS) has delegated authority

to enter into written agreements relating

to section 8(a) of the Act and relating to

safety and soundness matters under

section 8(b) of the Act, while the

Director (DCA) has authority to enter

into written agreements under section

8(b) of the Act relating to consumer

compliance matters. Proposed

§ 303.274(c) adds a new provision not

previously codified in part 303, giving

authority to the Director and Deputy

Director (DOS) and (DCA) and, where

confirmed in writing by the appropriate

Director, to an associate director, or to

the appropriate regional director or

deputy regional director to enter into

written agreements with insured

institutions and institution-affiliated

parties that contain conditions that must

exist before the FDIC may issue a

statement of non-objection to a filing

under part 303.

Termination of pending actions—

general. Proposed § 303.275 adds a new

paragraph (h) which clarifies the time

frames in which pending enforcement

actions may be terminated or dismissed

pursuant to delegated authority. The

section provides that any pending

enforcement action may be terminated

or dismissed by the Director or Deputy

Director of DOS or DCA, as appropriate,

before the commencement of a hearing

on the merits by an administrative law

judge. Once a hearing on the merits has

begun, the pending action may be

dismissed or terminated by stipulation

or consent of the affected parties no
52828 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

later than 14 days after the

administrative law judge has closed the

record of the hearing. After this time,

only the FDIC Board of Directors may

terminate or dismiss an enforcement

action. This provision was not

previously codified in part 303.

Standards governing modification

and termination of section 8(e)

prohibition orders. The delegation of

authority to the Director and Deputy

Director (DOS) and (DCA), as

appropriate and if confirmed in writing,

to the associate director to modify and

terminate orders of removal or

prohibition under section 8(e) of the FDI

Act (12 U.S.C. 1818(e)) may be found in

proposed § 303.276(e). Proposed

§ 303.276(e) adds the standards

articulated by the Board in FDIC

enforcement decisions under which a

removal or prohibition order may be

modified or terminated. Those

standards are as follows: (1) The

respondent has demonstrated his/her

fitness to participate in any manner in

the conduct of the affairs of an insured

depository institution, (2) the

respondent has shown that his/her

participation would not pose a risk to

the institution’s safety and soundness,

and (3) the respondent has proven that

his/her participation would not erode

public confidence in the institution.

Proposed § 303.276(e) also delegates

authority to grant consent pursuant to

section 8(e)(7)(B) of the Act for the

modification of termination of

outstanding section 8(e) orders issued

by another federal financial regulator.

These provisions are new and were not

previously codified in part 303.

Enforcement authority vested in

General Counsel. Proposed subpart N

would vest authority in the General

Counsel or, where confirmed in writing

by the General Counsel, his or her

designee, to provide Legal Division

concurrence regarding all enforcement

actions. This change reflects the General

Counsel’s position as the head of the

Legal Division with ultimate

prosecutorial authority over all

enforcement actions.

IV. Other Regulatory Changes

A. Part 337 (Unsafe and Unsound

Banking Practices)

The FDIC is proposing to amend

§ 337.6, which governs the acceptance

of brokered deposits by insured

depository institutions. A well

capitalized insured depository

institution may accept brokered

deposits without restriction by § 337.6

while an undercapitalized institution

may not accept brokered deposits under

any circumstances. In the case of an

adequately capitalized insured

depository institution, a brokered

deposit can be accepted but only if the

institution has obtained a waiver from

the FDIC. Under the proposal, the

procedures for obtaining a waiver would

be moved from § 337.6 to 12 CFR part

303. An institution seeking a waiver

would be referred by § 337.6(c) to

§ 303.243. Paragraphs (d) and (e) of

§ 337.6 would be deleted because the

information in those paragraphs

(involving filing procedures, delegations

of authority and expedited processing

procedures) would appear in § 303.243.

Paragraph (f) would be deleted because

the 60-day transition rule prescribed by

that paragraph (for the period beginning

on June 16, 1992) is obsolete.

Additionally, § 337.6 would be

amended to reflect certain changes in

the statutory definition of ‘‘deposit

broker.’’ Prior to these changes, the term

‘‘deposit broker’’ included ‘‘any insured

depository institution’’ that solicits

deposits by offering interest rates that

significantly exceed the prevailing rates

offered by other insured depository

institutions in the same market area

‘‘having the same type of charter.’’

Through the Riegle Community

Development and Regulatory

Improvement Act of 1994 (see Pub. L.

103–325, 108 Stat. 2160, Sec. 337),

Congress made two changes to this

statutory definition. First, Congress

changed ‘‘any insured depository

institution’’ to ‘‘any insured depository

institution that is not well capitalized.’’

The effect of this change was to relieve

well capitalized institutions of the

burden of reporting deposits with high

interest rates as brokered deposits.

Second, Congress removed the phrase,

‘‘having the same type of charter.’’ The

effect of this change was to require a

comparison between the interest rates of

all insured depository institutions

within a market area (as opposed to

insured depository institutions with a

particular type of charter). See 12 U.S.C.

1831f(g)(3). Under the proposal, the

amended statutory language would be

incorporated in the FDIC’s regulatory

definition of ‘‘deposit broker’’ at

§ 337.6(a)(5)(iii).

B. Part 346 (Foreign Banks)

The FDIC is proposing to move

current § 303.8(f) from part 303 to part

346, without substantive change.

Section 303.8(f) contains delegations for

the Division of Supervision to accept

the pledge agreements by which insured

branches of foreign banks pledge assets

for the benefit of the FDIC, to be used

in the event the FDIC becomes obligated

to pay the insured deposits of the

insured branch. Section 303.8(f) also

authorizes the General Counsel or

designee to alter the model deposit

agreement used. The FDIC is proposing

to move the delegation to part 346 for

ease of reference, in order to locate the

delegation with the substantive pledge

requirements to which the delegation

applies. The delegation would be added

as a new paragraph at the end of

§ 346.19 on pledge of assets.

C. Part 359 (Golden Parachute and

Indemnification Payments)

The FDIC is proposing to amend 12

CFR part 359 by moving certain

information from § 359.6 (‘‘Filing

instructions’’) to 12 CFR part 303. The

substantive rules in part 359 would

remain unchanged. These rules govern

the making of excess nondiscriminatory

severance plan payments and golden

parachute payments by insured

depository institutions or depository

institution holding companies.

Generally, troubled depository

institutions are prohibited under part

359 from making such payments unless

the institution obtains the consent of the

FDIC and/or the institution’s primary

federal regulator. Under the proposal, an

institution seeking the consent of the

FDIC would be referred by § 359.6 to

§ 303.244. Also, a listing of the

necessary elements of an application

would be moved from § 359.6 to

§ 303.244. These elements would be

expanded in order to assist an applicant

in preparing a complete filing.

V. Regulatory Text Deleted From

Proposed Part 303

Some matters currently addressed in

part 303 are not being included in the

proposed revisions to part 303 because

these matters will be covered elsewhere

or are no longer needed. Those items are

summarized below:

Section 303.2(c)—Special procedures

for remote service facilities. Notice

procedures for remote service facilities,

along with related delegations of

authority and the definition of ‘‘remote

service facility’’ have been deleted

because EGRPRA excludes such

facilities from the definition of a branch.

Section 303.11(c)—Request for review.

This section merely states that an

aggrieved party may request the Board

of Directors to review any action taken

under authority delegated under

§§ 303.7, 303.8, and 303.9. Numerous

avenues already exist for appeal, such as

those found under proposed § 303.11(f)

(Appeals and petitions for

reconsideration) and part 308 (Uniform

Rules of Practice and Procedure). Broad

authority to challenge delegations of

authority seems unnecessary and is not

in keeping with the Board’s recent
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52829

7The RFA defines the term ‘‘small entity’’ in 5

U.S.C. 601 by reference to definitions published by

the Small Business Administration. The Small

Business Administration has defined a ‘‘small

entity’’ for banking purposes as a national or

commercial bank, savings institution or credit

union with less than $100 million in assets. See 13

CFR 121.201.

resolution on delegations of authority

which has been codified in part in

proposed § 303.12 (General rules

governing delegations of authority).

Section 303.12—OMB control number

assigned pursuant to the Paperwork

Reduction Act. This section is being

deleted in its entirety because this same

material also appears in § 304.7, Display

of control numbers, of this chapter.

Several delegations of authority are

also being eliminated:

Sections 303.7(f)(1)(vii) and

303.7(f)(2)(i)—Delegations regarding the

Depository Institutions Management

Interlocks Act. These delegations are

being moved to part 348 (Management

Official Interlocks) of this chapter.

Section 303.8(b)—Disclosure laws and

regulations. The delegations related to

part 335 (Securities of nonmember

insured banks) are now contained in

part 335 of this chapter. The delegations

to administer part 341 (Registration of

Securities Transfer Agents) are being

moved to part 341 of this chapter.

Section 303.8(c)—Security devices

and procedures and bank service

arrangements. This is a delegation to

administer the provisions of part 326

(Minimum Security Devices and

Procedures). There are no longer any

application procedures related to part

326, so therefore no delegations of

authority are required.

Section 303.8(d)—In emergencies.

This is a delegation to staff to manage

the FDIC’s affairs in the event an enemy

attack renders the Board of Directors

unable to perform its normal

management functions. This delegation

is being transferred to an internal Board

resolution.

Section 303.8(h)—Application or

notices for membership or resumption

of business. This delegation permits

DOS officials to provide comments to

other federal regulators on applications

or notices for membership in the

Federal Reserve System, or for

conversion of a state bank to a national

bank. This delegation is being deleted as

unnecessary since it is done as a matter

of practice.

Section 303.8(i)—Depository

Institutions Disaster Relief Act of 1992

(DIDRA). The provisions of DIDRA that

were the subject of these delegations

have expired.

VI. Initial Regulatory Flexibility

Analysis

The Regulatory Flexibility Act (5

U.S.C. 601–612) (RFA) requires an

agency to publish an initial regulatory

flexibility analysis, except to the extent

provided in 5 U.S.C. 605(b), whenever

the agency is required to publish a

general notice of proposed rulemaking

for a proposed rule. Pursuant to

subsections 603 (b) and (c) of the RFA,

the FDIC provides the following initial

regulatory flexibility analysis:

Reasons why agency action is being

considered. The ‘‘Supplementary

Information’’ section above contains this

information.

Statement of objectives of and legal

basis for proposed rule. The

‘‘Supplementary Information’’ section

above contains this information.

Description and estimate of the

number of small entities to which the

proposed rule applies. The proposed

rule applies generally to the

approximately 6,300 state nonmember

banks for which the FDIC is the primary

federal regulator, regardless of size. As

of June 26, 1997, there were 6,265 such

institutions, 4,316 of which were small

entities as defined by the RFA.7 In

addition, as indicated in the Scope

paragraphs of the pertinent subparts,

certain of the subparts apply to all

depository institutions insured by the

FDIC, regardless of size. As of June 26,

1997, there were 11,220 such

institutions, 6,926 of which were small

entities as defined by the RFA. Subpart

B (Deposit Insurance) also applies to

proposed depository institutions and

operating noninsured institutions that

seek to apply for FDIC deposit

insurance, regardless of size. Based

upon recent experience, the FDIC

estimates that the proposed rule will

affect a total of approximately 200 such

entities per year, nearly all of which the

FDIC would expect to be small entities

as defined by the RFA. In limited

circumstances, certain subparts apply

more generally to other entities or

persons, as defined by the respective

subparts, making applications to the

FDIC, regardless of size. Quantification

of the number of such persons or small

entities who will be affected by the

proposed rule is not practicable. The

FDIC believes that any economic impact

on such small entities will be beneficial

because the proposed rule serves to

reduce regulatory burden. The FDIC

invites the public to comment on this

conclusion and will carefully review all

comments received prior to issuing the

final regulation.

Projected reporting, recordkeeping

and other compliance requirements of

the proposed rule. The proposed rule

reorganizes, clarifies and simplifies the

rules applicable to the processing of

applications, notices and requests, and

updates the regulation to reflect recent

statutory changes. The FDIC expects

that these proposed changes will reduce

industry costs associated with

regulatory filings and will decrease

processing time associated with such

filings. For example, branch

applications for eligible institutions

generally will be deemed approved 21

days after filing and expedited

procedures have been introduced for

certain merger and deposit insurance

applications. Consistent with statutory

amendments, the proposed rule

eliminates the need for banks that have

undergone a recent change in control or

have been operating less than two years

to file notices to add a director or senior

executive officer, thus substantially

reducing the number of required filings.

Reorganization of part 303 so that all

information relevant to the filing and

processing of each particular

application type in one concise subpart

also serves to lessen burden. The

proposed rule also more closely aligns

the procedural requirements of the

FDIC’s regulations with those of the

other federal banking agencies, thus

reducing the burden which may be

associated with interpreting the rules of

more than one federal banking agency.

Identification of federal rules which

may duplicate, overlap or conflict with

the proposed rule. The ‘‘Supplementary

Information’’ above contains this

information.

Discussion of significant alternatives

to proposed rule. The FDIC believes that

the proposed rule is an alternative to the

existing part 303 and provides economic

benefits to small entities. The proposed

rule reorganizes and consolidates the

existing rule to make it easier for

affected small entities to use. The

reporting requirements have been

clarified and simplified as a result of the

FDIC’s experience in administering the

existing part 303. By streamlining

application procedures and granting

eligible depository institutions

expedited processing of certain filings,

the proposed rule enables small entities

that qualify as eligible depository

institutions to operate more efficiently.

By reducing the regulatory burden

associated with application procedures,

the proposed rule reduces the resources

small entities will have to devote to

regulatory compliance. Because the

majority of the filings required by the

proposed rule are required by statute,

elimination of the rule is not a viable

alternative. The FDIC has carefully

reviewed each of the existing filing and

processing procedures and, where the

applicable statutes provide some
52830 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

flexibility, the FDIC proposes to revise

existing part 303 in a way it believes

best serves to reduce regulatory burden

and streamline processing without

compromising the safety and soundness

of the banking industry.

The FDIC invites the public to

comment on whether the proposed rule

reduces regulatory burden and to

provide the FDIC with suggested

alternatives to those set forth in the

proposed rule. The FDIC will carefully

review all comments received prior to

issuing the final regulation.

VII. Paperwork Reduction Act

The collections of information

contained in this proposed rule and

identified below have been submitted to

the Office of Management and Budget

(OMB) for review and approval in

accordance with the requirements of the

Paperwork Reduction Act of 1995 (PRA)

(44 U.S.C. 3501 et seq.). Comments are

invited on: (a) Whether the collection of

information is necessary for the proper

performance of the FDIC’s functions,

including whether the information has

practical utility; (b) the accuracy of the

estimates of the burden of the

information collection; (c) ways to

enhance the quality, utility, and clarity

of the information to be collected; and

(d) ways to minimize the burden of the

information collection on respondents,

including through the use of automated

collection techniques or other forms of

information technology.

Comments should be addressed to the

Office of Information and Regulatory

Affairs, Office of Management and

Budget, Attention: Desk Officer

Alexander Hunt, New Executive Office

Building, Room 3208, Washington, DC

20503, with copies of such comments to

Steven F. Hanft, Assistant Executive

Secretary (Regulatory Analysis), Federal

Deposit Insurance Corporation, Room

F–4080, 550 17th Street NW,

Washington, DC 20429. All comments

should refer to ‘‘Part 303.’’ OMB is

required to make a decision concerning

the collections of information contained

in the proposed regulations between 30

and 60 days after the publication of this

document in the Federal Register.

Therefore, a comment to OMB is best

assured of having its full effect if OMB

receives it within 30 days of this

publication. This does not affect the

deadline for the public to comment to

the FDIC on the proposed regulation.

Subpart C (Establishment and

Relocation of Domestic Branches and

Offices)

Section 18(d)(1) of the FDI Act (12

U.S.C. 1828(d)(1)) provides that no state

nonmember insured bank shall establish

and operate any new domestic branch or

move its main office or any such branch

from one location to another without the

prior written consent of the FDIC after

considering the factors enumerated in

section 6 of the FDI Act (12 U.S.C.

1816). Subpart C of the proposed

regulation sets forth the application

requirements and procedures for

insured state nonmember banks to

establish a branch, relocate a main

office, and relocate a branch subject to

the approval by the FDIC. The

information collected is used by the

FDIC to evaluate the statutory factors

and determine whether to grant consent.

This collection of information has been

approved by OMB under clearance

number 3064–0070 through May 31,

1998. Public comment regarding this

collection is being solicited because the

proposed regulation would modify the

OMB-approved collection by addressing

the establishment and relocation of

interstate branches and deleting remote

service facilities from the section 18(d)

application requirements.

Estimate of Annual Burden

Number of applications: 1,750.

Number of hours to prepare an

application: 5.

Total annual burden hours: 8,750.

Subpart M (Other Filings); Section

303.242 (Exercise Trust Powers)

Section 333.2 of the FDIC’s

regulations (12 CFR 333.2) prohibits any

insured state nonmember bank from

changing the general character of its

business without the prior written

consent of the FDIC. The exercise of

trust powers by a bank is usually

considered to be a change in the general

character of a bank’s business if the

bank did not exercise those powers

previously because trust powers create a

new fiduciary relationship. Therefore,

unless a bank is currently exercising

trust powers, it must file a formal

application to obtain the FDIC’s written

consent to exercise trust powers.

Section 303.242 of the proposed

regulation sets forth the application

procedures relating to the FDIC’s prior

approval to exercise trust powers. Each

application submitted by a bank is

evaluated by the FDIC to verify the

qualifications of bank management to

administer a trust department to ensure

that the bank’s financial condition will

not be jeopardized as a result of trust

operations. This collection of

information has been approved by OMB

under clearance number 3064–0025

through December 31, 1997. Public

comment is being solicited because the

collection is being modified to simplify

and clarify the ‘‘Application for Consent

to Exercise Trust Powers’’ form, and to

eliminate a number of items of

information required under the current

form. In addition, the collection is being

modified so that an ‘‘eligible depository

institution’’ as defined in § 303.2(r) of

the proposal will file an abbreviated

application and will receive expedited

processing by the FDIC.

Estimate of Annual Burden

Number of applications from ‘‘eligible

depository institutions’’: 31.

Average number of hours to prepare

an application: 8.

Annual burden hours: 248.

Number of applications from

institutions that do not qualify as

‘‘eligible depository institutions’’: 5.

Average number of hours to prepare

an application: 24.

Annual burden hours: 120.

Total number of applications: 36.

Total annual burden hours: 368.

Other Collections of Information

Proposed part 303 addresses

collections of information in addition to

subpart C and subpart M collections

discussed above. Subpart B (Deposit

Insurance) addresses a collection

approved by OMB under clearance

number 3064–0001 which expires on

July 31, 2000. Subpart D (Mergers)

addresses a collection approved by

OMB under clearance number 3064–

0015 which expires on September 30,

1998. The merger application collection

will be the subject of an interagency

solicitation of public comment

concerning the PRA aspects of a single,

interagency form for affiliated and

nonaffiliated mergers. Subpart E

(Change in Bank Control) addresses a

collection approved by OMB under

clearance number 3064–0019 which

expires on January 31, 2000. Subpart F

(Change of Director or Senior Executive

Officer) addresses a collection approved

by OMB under clearance number 3064–

0097 which expires on January 31, 2000.

Subpart G (Activities and Investments of

Insured State Banks), addresses a

collection approved by OMB under

clearance number 3064–0111, and

Subpart H (Filings by Savings

Associations), addresses a collection

approved under clearance number

3064–0104. Public comment about these

two collections was sought in a notice

of proposed rulemaking regarding 12

CFR part 362, ‘‘Activities of Insured

State Banks and Insured Savings

Associations.’’ 62 FR 47969, Sept. 12,

1997.

Subpart I (Mutual-to-Stock

Conversions) addresses a collection

approved by OMB under clearance

number 3064–0117 which expires on
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52831

July 31, 2000. Subpart J (Foreign Bank

Activities) addresses two collections

approved by OMB under clearance

numbers 3064–0114 and 3064–0125,

both of which expire on July 31, 2000.

Subpart K (Prompt Corrective Action)

addresses a collection approved by

OMB under clearance number 3064–

0115 which expires on July 31, 1999.

Subpart L (Section 19) addresses a

collection approved by OMB under

clearance number 3064–0018 which

expires on July 31, 2000. Subpart M

(Other Filings) § 303.241 (Reduce or

retire capital stock or capital debt

instruments) addresses a collection

approved by OMB under clearance

number 3064–0079 which expires on

October 31, 1997. Public comment was

sought about this collection on July 29,

1997 (62 FR 40525). A submission to

renew 3064–0079 without change will

be made to OMB in early October, 1997

at which time further comment will be

solicited. Subpart M (Other Filings)

§ 303.243 (Brokered deposits) addresses

a collection approved by OMB under

clearance number 3064–0099 which

expires on August 31, 1998.

The FDIC has reviewed these other

collections of information and has

concluded that either the proposed part

303 does not change the collection of

information as approved by OMB in a

way that requires that public comment

be solicited or that the proposed

changes have already been incorporated

into recent OMB PRA submissions.

Public comment and OMB review of

these collections will occur as part of

the regular cycle of review under the

PRA. Nonetheless, the FDIC welcomes

comment about the PRA aspects of this

proposed regulation or any subpart of it.

Comment specifically about PRA related

issues should identify the Paperwork

Reduction Act and any particular

subpart and/or collection for which

consideration is desired.

VIII. Derivation Table

This table directs readers to the

provision(s) of the former regulation, if

any, upon which the provision in the

proposed rule is based.

Proposed Provision Original Provision Comments

303.1 ............................................................................................ 303.0(a) ....................................................................................... Revised.

303.2 ............................................................................................ 303.0(b) ....................................................................................... No change.

(a) ................................................................................................. 303.0(b)(13) ................................................................................. No change.

(b) ................................................................................................. 303.0(b)(29) ................................................................................. No change.

(c) ................................................................................................. 303.0(b)(30) ................................................................................. Revised.

(d) ................................................................................................. 303.0(b)(25) ................................................................................. No change.

(e) ................................................................................................. ...................................................................................................... Added.

(f) .................................................................................................. ...................................................................................................... Added.

(g) ................................................................................................. 303.0(b)(12) ................................................................................. Revised.

(h) ................................................................................................. 303.0(b)(6) ................................................................................... No change.

(i) .................................................................................................. 303.0(b)(26) ................................................................................. No change.

(j) .................................................................................................. ...................................................................................................... Added.

(k) ................................................................................................. 303.0(b)(1) ................................................................................... No change.

(l) .................................................................................................. 303.0(b)(30) ................................................................................. Revised.

(m) ................................................................................................ ...................................................................................................... Added.

(n) ................................................................................................. 303.0(b)(8) ................................................................................... Revised.

(o) ................................................................................................. 303.0(b)(3) ................................................................................... No change.

(p) ................................................................................................. 303.0(b)(2) ................................................................................... No change.

(q) ................................................................................................. 303.0(b) (4), (5) ........................................................................... No change.

(r) .................................................................................................. ...................................................................................................... Added.

(s) ................................................................................................. ...................................................................................................... Added.

(t) .................................................................................................. ...................................................................................................... Added.

(u) ................................................................................................. ...................................................................................................... Added.

(v) ................................................................................................. 303.0(b)(14) ................................................................................. No change.

(w) ................................................................................................ ...................................................................................................... Added.

303.2(x) ........................................................................................ ...................................................................................................... Added.

(y) ................................................................................................. ...................................................................................................... Added.

(z) ................................................................................................. 303.0(b)(24) ................................................................................. No change.

(aa) ............................................................................................... 303.0(b)(17) ................................................................................. No change.

(bb) ............................................................................................... 303.0(b)(15) ................................................................................. No change.

(cc) ............................................................................................... 303.0(b)(11) ................................................................................. No change.

(dd) ............................................................................................... 303.0(b)(7), (9) ............................................................................ Revised.

(ee)(1) .......................................................................................... 303.0(b)(16) ................................................................................. No change.

(2) ................................................................................................. 303.0(b)(18) ................................................................................. No change.

(3) ................................................................................................. 303.0(b)(19) ................................................................................. No change.

(4) ................................................................................................. 303.0(b)(20) ................................................................................. No change.

(5) ................................................................................................. 303.0 b(21) .................................................................................. No change.

(6) ................................................................................................. 303.0 b(22) .................................................................................. No change.

(ff) ................................................................................................. 303.0(b)(31) ................................................................................. No change.

(gg) ............................................................................................... 303.0(b)(27) ................................................................................. Amended.

(hh) ............................................................................................... 303.0(b)(28) ................................................................................. Amended.

303.3 ............................................................................................ 303.0(a) ....................................................................................... Revised.

303.4 ............................................................................................ 303.6(l) ......................................................................................... Added.

303.5 ............................................................................................ ...................................................................................................... Added.

303.6 ............................................................................................ 303.6(b) ....................................................................................... Revised.

303.7(a) ........................................................................................ 303.6 (a), (c) ................................................................................ Revised.

(b) ................................................................................................. 303.6(f) ........................................................................................ Revised.

(c) ................................................................................................. ...................................................................................................... Added.

(d) ................................................................................................. ...................................................................................................... Added.

303.8(a) ........................................................................................ 303.6(g)(1), (2) ............................................................................ Revised.

(b) ................................................................................................. 303.6(g)(3) ................................................................................... Revised.

303.9(a) ........................................................................................ 303.6(f)(3) .................................................................................... Revised.
52832 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

Proposed Provision Original Provision Comments

303.9(b)(1) ................................................................................... ...................................................................................................... Added.

(2) ................................................................................................. 303.6(f)(4) .................................................................................... Revised.

(3) ................................................................................................. 303.6(f)(5) .................................................................................... No change.

(4) ................................................................................................. ...................................................................................................... Added.

303.10(a) ...................................................................................... ...................................................................................................... Added.

(b), (c) .......................................................................................... 303.6(h) ....................................................................................... Revised.

(d) ................................................................................................. ...................................................................................................... Added.

(e) ................................................................................................. 303.6(i) ......................................................................................... Revised.

(f) .................................................................................................. 303.6(i)(2) .................................................................................... Revised.

(g) ................................................................................................. 303.6(j)(5) .................................................................................... Revised.

(h) ................................................................................................. 303.6(j)(1–4) ................................................................................ Revised.

(i) .................................................................................................. 303.6(j)(6) .................................................................................... Revised.

(j) .................................................................................................. 303.6(h)(3) ................................................................................... Revised.

(k) ................................................................................................. 303.6(k) ........................................................................................ Revised.

(l) .................................................................................................. 303.6(l) ......................................................................................... Revised.

(m) ................................................................................................ 303.6(m) ...................................................................................... Revised.

303.11(a) ...................................................................................... 303.6(d) ....................................................................................... Revised.

(b) ................................................................................................. ...................................................................................................... Added.

(c) ................................................................................................. ...................................................................................................... Added.

(d) ................................................................................................. ...................................................................................................... Added.

(e) ................................................................................................. ...................................................................................................... Added.

(f) .................................................................................................. 303.6(e) ....................................................................................... Revised.

(g) ................................................................................................. ...................................................................................................... Added.

303.12(a) ...................................................................................... 303.11(a) ..................................................................................... Added.

(b) ................................................................................................. ...................................................................................................... Revised.

(c), (d) .......................................................................................... 303.10(a) ..................................................................................... Revised.

(e), (f) ........................................................................................... 303.11(a)(1) ................................................................................. Revised.

(g) ................................................................................................. ...................................................................................................... Added.

303.13 .......................................................................................... 303.8(g) ....................................................................................... No change.

303.20 .......................................................................................... 303.1 ............................................................................................ Revised.

303.21 .......................................................................................... 303.1 ............................................................................................ Revised.

303.22 .......................................................................................... ...................................................................................................... Added.

303.23(a) ...................................................................................... 303.6(f)(1) .................................................................................... Revised.

(b) ................................................................................................. 303.6(f)(1)(ii) ................................................................................ No change.

303.24 .......................................................................................... ...................................................................................................... Added.

303.25 .......................................................................................... ...................................................................................................... Added.

303.26(a)(1) ................................................................................. 303.7(d)(1) ................................................................................... Revised.

303.26(a)(2) ................................................................................. 303.7(f)(1)(vi) ............................................................................... Revised.

303.26(b) ...................................................................................... 303.7(d)(2) ................................................................................... Revised.

(c) ................................................................................................. 303.7(d)(3) ................................................................................... Revised.

(d) ................................................................................................. 303.7(b)(4) ................................................................................... Revised.

303.27 .......................................................................................... 303.10(b)(2) ................................................................................. Revised.

303.40(a) ...................................................................................... 303.2 ............................................................................................ Amended

(b),(c),(d) ...................................................................................... ...................................................................................................... Added.

303.41(a) ...................................................................................... 303.2(a) (footnote 2) .................................................................... Revised.

(b) ................................................................................................. 303.2(a) ....................................................................................... No change.

(c),(d),(e) ...................................................................................... ...................................................................................................... Added.

303.42(a), (b), (c), (d) .................................................................. 303.2(a) ....................................................................................... Revised.

303.43(a), (b) ............................................................................... ...................................................................................................... Added.

303.44(a) ...................................................................................... 303.6(f)(1) .................................................................................... Revised.

(b) ................................................................................................. 303.6(f)(3), (4) ............................................................................. Revised.

(c) ................................................................................................. 303.6(f)(2) .................................................................................... Revised.

303.45(a), (b), (c) ......................................................................... ...................................................................................................... Added.

303.46(a), (b), (c), (d) .................................................................. 303.7(a) ....................................................................................... Revised.

303.60 .......................................................................................... ...................................................................................................... Added.

303.61(a) ...................................................................................... 303.3(a), (b) ................................................................................. Revised.

(b) ................................................................................................. 303.7(f)(1)(v) ................................................................................ Revised.

(c) ................................................................................................. 303.7(f)(1)(v) ................................................................................ Revised.

(d) ................................................................................................. 303.3(d) ....................................................................................... Revised.

(e) ................................................................................................. ...................................................................................................... Added.

303.62(a) ...................................................................................... 303.3 ............................................................................................ Revised.

(b) ................................................................................................. ...................................................................................................... Added.

303.63(a) ...................................................................................... 303.3(a), (e) ................................................................................. Revised.

(b) ................................................................................................. 303.3(a) ....................................................................................... Revised.

(c) ................................................................................................. ...................................................................................................... Added.

(d) ................................................................................................. 303.3(d) ....................................................................................... Revised.

303.64(a), (b) ............................................................................... ...................................................................................................... Added.

303.65(a), (b), (c), (d) .................................................................. 303.6(f)(1), (3) ............................................................................. Revised.

303.66(a)(1) ................................................................................ 303.7(b), (f) .................................................................................. Revised.

(2), (3) .......................................................................................... ...................................................................................................... Added.

(b) ................................................................................................. 303.7(b) ....................................................................................... Revised.

(c) ................................................................................................. 303.7(b)(2), (5) ............................................................................ Revised.

(d) ................................................................................................. 303.7(f)(v), (vi) ............................................................................. Revised.

(e) ................................................................................................. 303.10(b)(i), (iii), (iv) .................................................................... Revised.
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52833

Proposed Provision Original Provision Comments

(f) .................................................................................................. 303.7(b)(3) ................................................................................... Revised.

(g) ................................................................................................. 303.8(e) ....................................................................................... Revised.

303.67 .......................................................................................... 303.10(b)(1) ................................................................................. Revised.

303.80 .......................................................................................... ...................................................................................................... Added.

303.81(a) ...................................................................................... 303.4(a) ....................................................................................... Revised.

(b) ................................................................................................. ...................................................................................................... Added.

(c) ................................................................................................. 303.4(a) footnote 3 ...................................................................... No change.

(d) ................................................................................................. 303.4(a) footnote 4 ...................................................................... No change.

303.82(a) ...................................................................................... ...................................................................................................... Added.

(b) ................................................................................................. 303.4(a) ....................................................................................... Revised.

(c) ................................................................................................. ...................................................................................................... Added.

(e), (d) .......................................................................................... 303.4(a) ....................................................................................... Revised.

303.83(a)(1) thru (b)(1) ................................................................ 303.4(c) ........................................................................................ Revised.

(b)(2), (3) ...................................................................................... ...................................................................................................... Added.

303.84(a) ...................................................................................... 303.4(b)(1) ................................................................................... Revised.

(b) ................................................................................................. 303.4(b)(5) ................................................................................... No change.

303.85(a), (b), (c) ......................................................................... ...................................................................................................... Added.

303.86(a)(1), (2) ........................................................................... 303.4(b)(2)(i) ................................................................................ Revised.

(a)(3) ............................................................................................ ...................................................................................................... Added.

(a)(4), (5) ...................................................................................... 303.4(b)(3)(ii) ............................................................................... Revised.

(a)(6) ............................................................................................ 303.4(b)(6) ................................................................................... Revised.

303.87(a) ...................................................................................... 303.7(c) ........................................................................................ Revised.

303.100 ........................................................................................ ...................................................................................................... Added.

303.101(a) .................................................................................... ...................................................................................................... Added.

(b) ................................................................................................. 303.14(a)(3) ................................................................................. Revised.

(c) ................................................................................................. 303.14(a)(4) ................................................................................. Revised.

303.102(a) .................................................................................... 303.14(b) ..................................................................................... Revised.

(b) ................................................................................................. 303.14(b) ..................................................................................... No change.

(c) ................................................................................................. 303.14(c)(2) ................................................................................. No change.

303.103(a) .................................................................................... 303.14(c)(1) ................................................................................. Revised.

(b) ................................................................................................. 303.14(c)(4) ................................................................................. Revised.

(c) ................................................................................................. 303.14(c)(2) ................................................................................. Revised.

(d) ................................................................................................. 303.14(d) ..................................................................................... Revised.

303.104 ........................................................................................ 303.14(e) ..................................................................................... Revised.

303.160 ........................................................................................ ...................................................................................................... Added.

303.161 ........................................................................................ 303.15(a) ..................................................................................... Revised.

303.162 ........................................................................................ 303.15(a), (b) ............................................................................... Revised.

303.163(a) .................................................................................... 303.15(c)(1) ................................................................................. No change.

(b) ................................................................................................. 303.15(c)(2) ................................................................................. No change.

(c), (d),(e),(f) ................................................................................. 303.15(d) ..................................................................................... No change.

303.164 ........................................................................................ ...................................................................................................... Added.

303.180 ........................................................................................ ...................................................................................................... Added.

303.181 ........................................................................................ ...................................................................................................... Added.

303.182 ........................................................................................ 303.2 ............................................................................................ Revised.

303.183 ........................................................................................ 303.5(d), 303.7(f)(2)(ii) ................................................................ Revised.

303.184 ........................................................................................ 303.2, 303.6, 303.7 ..................................................................... Revised.

303.185 ........................................................................................ ...................................................................................................... Added.

303.186 ........................................................................................ 346.6(b) ....................................................................................... Revised.

303.187 ........................................................................................ 346.101 ........................................................................................ Revised.

303.200 ........................................................................................ ...................................................................................................... Added.

303.201 ........................................................................................ 303.5(e) ....................................................................................... No change.

303.202 ........................................................................................ 303.5(e) ....................................................................................... No change.

303.203 ........................................................................................ 303.5(e)(1) ................................................................................... No change.

303.204 ........................................................................................ 303.5(e)(2) ................................................................................... No change.

303.205 ........................................................................................ 303.5(e)(3) ................................................................................... No change.

303.206 ........................................................................................ 303.5(e)(4) ................................................................................... No change.

303.207 ........................................................................................ 303.5(e)(5) ................................................................................... Amended.

303.208 ........................................................................................ 303.7(f)(ix) ................................................................................... No change.

303.220 ........................................................................................ ...................................................................................................... Added.

303.221 ........................................................................................ ...................................................................................................... Added.

303.222 ........................................................................................ ...................................................................................................... Added.

303.223 ........................................................................................ ...................................................................................................... Added.

303.224(a),(b),(c),(d) .................................................................... 303.7(e) ....................................................................................... Amended.

(e) ................................................................................................. 303.10(b)(3) ................................................................................. No change.

303.240 ........................................................................................ ...................................................................................................... Added.

303.241(a) .................................................................................... ...................................................................................................... Added.

(b),(c),(d) ...................................................................................... 303.5(b) ....................................................................................... Revised.

(e),(f),(g) ....................................................................................... ...................................................................................................... Added.

(h) ................................................................................................. 303.7(f)(1)(iii) ............................................................................... No change

303.242(a) .................................................................................... ...................................................................................................... Added.

(b),(c),(d) ...................................................................................... 303.5(b) ....................................................................................... Revised.

(e)(f) ............................................................................................. ...................................................................................................... Added

(g)(h) ............................................................................................ 303.7(a)(2) ................................................................................... No change

303.243(a),(b),(c) ......................................................................... 337.6(d),(e) .................................................................................. No change.
52834 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

Proposed Provision Original Provision Comments

(d),(e),(f) ....................................................................................... ...................................................................................................... Added.

(g) ................................................................................................. 337.6 (c),(e) ................................................................................. No change.

(h) ................................................................................................. 337.6 (e), 303.7(f)(1)(viii) ............................................................. Revised.

303.244(a), (b), (c), (d), (e) .......................................................... 359 ............................................................................................... Revised.

(f) .................................................................................................. 303.7(g) ....................................................................................... No change.

303.245 ........................................................................................ ...................................................................................................... Added.

303.246(a),(b),(c),(d) .................................................................... 303.5(a) ....................................................................................... Revised.

(e) ................................................................................................. ...................................................................................................... Added.

(f) .................................................................................................. 303.7(f)(4) .................................................................................... Revised.

303.247 ........................................................................................ 303.3(c) ........................................................................................ Revised.

303.248 ........................................................................................ 303.5(c) ........................................................................................ Revised.

303.249 ........................................................................................ ...................................................................................................... Added.

303.250(a),(b),(c),(d),(e) .............................................................. ...................................................................................................... Added.

(f) .................................................................................................. 303.7(f)(14)(iv) ............................................................................. Revised.

303.251(a),(b),(c),(d),(e) .............................................................. ...................................................................................................... Added.

(f) .................................................................................................. 303.8(a) ....................................................................................... No change.

303.260 ........................................................................................ ...................................................................................................... Added.

303.261 ........................................................................................ 303.9(a) ....................................................................................... Revised.

303.262 ........................................................................................ ...................................................................................................... Added.

303.263 ........................................................................................ 303.9(b) ....................................................................................... Revised.

303.264 ........................................................................................ 303.9(c) ........................................................................................ Revised.

303.265 ........................................................................................ 303.9(d) ....................................................................................... Revised.

303.266 ........................................................................................ 303.9(e) ....................................................................................... Revised.

303.267 ........................................................................................ 303.9(f) ........................................................................................ Revised.

303.268 ........................................................................................ ...................................................................................................... Added.

303.269 ........................................................................................ 303.9(g) ....................................................................................... Revised.

303.270 ........................................................................................ ...................................................................................................... Added.

303.271 ........................................................................................ 303.9(h) ....................................................................................... Revised.

303.272 ........................................................................................ 303.9(i) ......................................................................................... Revised.

303.273 ........................................................................................ 303.9(k) ........................................................................................ Revised.

303.274 ........................................................................................ 303.9(l) ......................................................................................... Revised.

303.275 ........................................................................................ 303.9(m) ...................................................................................... Revised.

303.276 ........................................................................................ 303.9(n) ....................................................................................... Revised.

303.277 ........................................................................................ 303.9(o) ....................................................................................... Revised.

303.278 ........................................................................................ 303.10(c) ...................................................................................... Revised.

List of Subjects

12 CFR Part 303

Administrative practice and

procedure, Authority delegations

(Government agencies), Bank deposit

insurance, Banks, banking, Bank merger,

Branching, Foreign branches, Foreign

investments, Golden parachute

payments, Insured branches, Interstate

branching, Reporting and recordkeeping

requirements.

12 CFR Part 337

Banks, banking, Reporting and

recordkeeping requirements, Savings

associations, Securities.

12 CFR Part 341

Banks, banking, Reporting and

recordkeeping requirements, Securities.

12 CFR Part 346

Bank deposit insurance, Foreign

banking, Reporting and recordkeeping

requirements.

12 CFR Part 348

Antitrust, Banks, banking, Holding

companies.

12 CFR Part 359

Banks, banking, Golden parachute

payments, Indemnity payments.

For the reasons set forth in the

preamble and under the authority of 12

U.S.C. 1819(a)(Tenth), the FDIC Board

of Directors hereby proposes to amend

12 CFR chapter III as follows:

1. Part 303 is revised to read as

follows:

PART 303—FILING PROCEDURES

AND DELEGATIONS OF AUTHORITY

Sec.

303.0 Scope.

Subpart A—Rules of General Applicability

Sec.

303.1 Scope.

303.2 Definitions.

303.3 General filing procedures.

303.4 Computation of time.

303.5 Effect of Community Reinvestment

Act performance on filings.

303.6 Investigations and examinations.

303.7 Public notice requirements.

303.8 Public access to filing.

303.9 Comments.

303.10 Hearings and other meetings.

303.11 Decisions.

303.12 General rules governing delegations

of authority.

303.13 Delegations of authority to officials

in the Division of Supervision and the

Division of Compliance and Consumer

Affairs.

Subpart B—Deposit Insurance

303.20 Scope.

303.21 Filing procedures.

303.22 Processing.

303.23 Public notice requirements.

303.24 Application for deposit insurance

for an interim institution.

303.25 Continuation of deposit insurance

upon withdrawing from membership in

the Federal Reserve System.

303.26 Delegation of authority.

303.27 Authority retained by the FDIC

Board of Directors.

Subpart C—Establishment and Relocation

of Domestic Branches and Offices

303.40 Scope.

303.41 Definitions.

303.42 Filing procedures.

303.43 Processing.

303.44 Public notice requirements.

303.45 Special provisions.

303.46 Delegation of authority.

Subpart D—Mergers

303.60 Scope.

303.61 Definitions.

303.62 Transactions requiring prior

approval.

303.63 Filing procedures.

303.64 Processing.
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52835

303.65 Public notice requirements.

303.66 Delegation of authority.

303.67 Authority retained by the FDIC

Board of Directors.

Subpart E—Change in Bank Control

303.80 Scope.

303.81 Definitions.

303.82 Transactions requiring prior notice.

303.83 Transactions not requiring prior

notice.

303.84 Filing procedures.

303.85 Processing.

303.86 Public notice requirements.

303.87 Delegation of authority.

Subpart F—Change of Director or Senior

Executive Officer

303.100 Scope.

303.101 Definitions.

303.102 Filing procedures.

303.103 Processing and waiver of prior

notice.

303.104 Delegation of authority.

Subpart G—Activities and Investments of

Insured State Banks [Reserved]

Subpart H—Filings by Savings

Associations [Reserved]

Subpart I—Mutual-to-Stock Conversions

303.160 Scope.

303.161 Filing procedures.

303.162 Content of notice.

303.163 Processing.

303.164 Delegation of authority.

Subpart J—Foreign Bank Activities

303.180 Scope.

303.181 Definitions.

303.182 Establishing, moving or closing a

foreign branch of a state nonmember

bank.

303.183 Acquisition of stock of foreign

banks or other financial entities by an

insured state nonmember bank.

303.184 Moving an insured branch of a

foreign bank.

303.185 Mergers involving an insured

branch of a foreign bank.

303.186 Exemptions from insurance

requirement for a state branch of a

foreign bank.

303.187 Approval of an insured state

branch of a foreign bank to conduct

activities not permissible for federal

branches.

Subpart K—Prompt Corrective Action

303.200 Scope.

303.201 Filing procedures.

303.202 Processing.

303.203 Applications for capital

distribution.

303.204 Applications for acquisitions,

branching, and new lines of business.

303.205 Applications for bonuses and

increased compensation for senior

executive officers.

303.206 Application for payment of

principal or interest on subordinated

debt.

303.207 Restricted activities for critically

undercapitalized institutions.

303.208 Delegation of authority.

Subpart L—Section 19 of the FDI Act

(Consent to Service of Persons Convicted

of Certain Criminal Offenses)

303.220 Scope.

303.221 Filing procedures.

303.222 Service at another insured

depository institution.

303.223 Applicant’s right to hearing

following denial.

303.224 Delegation of authority.

Subpart M—Other Filings

303.240 General.

303.241 Reduce or retire capital stock or

capital debt instruments.

303.242 Exercise of trust powers.

303.243 Brokered deposit waivers.

303.244 Golden parachute and severance

plan payments.

303.245 Waiver of liability for commonly

controlled depository institutions.

303.246 Insurance fund conversions.

303.247 Conversion with diminution of

capital.

303.248 Continue or resume status as an

insured institution following termination

under section 8 of the FDI Act.

303.249 Truth in Lending Act—Relief from

reimbursement.

303.250 Modification of conditions.

303.251 Extension of time.

Subpart N—Enforcement Delegations

303.260 Scope.

303.261 Issuance of notification to primary

regulator under section 8(a) of the FDI

Act (12 U.S.C. 1818(a)).

303.262 Issuance of notice of intention to

terminate insured status under section

8(a) of the FDI Act (12 U.S.C. 1818(a)).

303.263 Cease-and-desist actions under

section 8(b) of the FDI Act (12 U.S.C.

1818(b)).

303.264 Temporary cease-and-desist orders

under section 8(c) of the FDI Act (12

U.S.C. 1818(c)).

303.265 Removal and prohibition actions

under section 8(e) of the FDI Act (12

U.S.C. 1818(e)).

303.266 Suspension and removal action

under section 8(g) of the FDI Act (12

U.S.C. 1818(g)).

303.267 Termination of insured status

under section 8(p) of the FDI Act (12

U.S.C. 1818(p)).

303.268 Termination of insured status

under section 8(q) of the FDI Act (12

U.S.C. 1818(q)).

303.269 Civil money penalties.

303.270 Notices of assessment under

section 5(e) of the FDI Act (12 U.S.C.

1815(e)).

303.271 Prompt corrective action directives

and capital plans under section 38 of the

FDI Act (12 U.S.C. 1831o) and part 325

of this chapter.

303.272 Investigations under section 10(c)

of the FDI Act (12 U.S.C. 1820(c)).

303.273 Unilateral settlement offers.

303.274 Acceptance of written agreements.

303.275 Modifications and terminations of

enforcement actions and orders.

303.276 Enforcement of outstanding

enforcement orders.

303.277 Compliance plans under section 39

of the FDI Act (12 U.S.C. 1831p-1)

(standards for safety and soundness) and

part 308 of this chapter.

303.278 Enforcement matters where

authority is not delegated.

Authority: 12 U.S.C. 378, 1813, 1815, 1816,

1817, 1818, 1819, (Seventh and Tenth), 1820,

1828, 1831e, 1831p-l, 1835a, 3104, 3105,

3108; 15 U.S.C. 1601–1607.

§ 303.0 Scope.

(a) This part generally describes the

procedures to be followed by both the

FDIC and applicants with respect to

applications, requests, or notices

required to be filed by statute or

regulation. Additional details

concerning processing are explained in

related FDIC statements of policy. This

part also sets forth delegations of

authority from the FDIC’s Board of

Directors to the Directors of the Division

of Supervision (DOS), the Division of

Compliance and Consumer Affairs

(DCA), the General Counsel of the Legal

Division, the Executive Secretary, and,

in some cases, their designees to act on

certain applications, notices, requests,

and enforcement matters.

(b) Additional application procedures

may be found in the following FDIC

regulations:

(1) 12 CFR part 327—Assessments

(Request for review of assessment risk

classification);

(2) 12 CFR part 328—Advertisement

of Membership (Application for

temporary waiver of advertising

requirements);

(3) 12 CFR part 345—Community

Reinvestment (CRA strategic plans and

requests for designation as a wholesale

or limited purpose institution);

(4) 12 CFR part 348—Management

Official Interlocks (Exemption request).

Subpart A—Rules of General

Applicability

§ 303.1 Scope.

Subpart A prescribes the general

procedures for submitting applications,

notices, and requests (collectively,

‘‘filings’’) to the FDIC which are

required by statute or regulation. This

subpart also prescribes the procedures

to be followed by the FDIC, applicants

and interested parties during the

process of considering a filing,

including public notice and comment.

This subpart further explains the

availability of expedited processing for

eligible depository institutions (defined

in § 303.2(r)). Finally, this subpart sets

forth general principles governing

delegations of authority by the FDIC’s

Board of Directors.

§ 303.2 Definitions.

For purposes of this part:
52836 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

(a) Act or FDI Act means the Federal

Deposit Insurance Act (12 U.S.C. 1811 et

seq.).

(b) Adjusted part 325 total assets

means adjusted 12 CFR part 325 total

assets as calculated and reflected in the

FDIC’s Reports of Examination.

(c) Adverse comment means any

objection, protest, or other adverse

written statement submitted by an

interested party relative to a filing. The

term adverse comment shall not include

any comment concerning the

Community Reinvestment Act (CRA),

fair lending, consumer protection, or

civil rights that the appropriate regional

director or deputy regional director

(DCA) determines to be frivolous (for

example, raising issues between the

commenter and the applicant that have

been resolved). The term adverse

comment also shall not include any

other comment that the appropriate

regional director or deputy regional

director (DOS) determines to be

frivolous (for example, a nonsubstantive comment submitted

primarily as a means of delaying action

on the filing).

(d) Amended order to pay means an

order to forfeit and pay civil money

penalties, the amount of which has been

changed from that assessed in the

original notice of assessment of civil

money penalties.

(e) Applicant means a person or entity

that submits a filing to the FDIC.

(f) Application means a submission

requesting FDIC approval to engage in

various corporate activities and

transactions.

(g) Appropriate FDIC region,

appropriate FDIC regional office,

appropriate regional director,

appropriate deputy regional director,

appropriate regional counsel mean,

respectively, the FDIC region, and the

FDIC regional office, regional director,

deputy regional director, and regional

counsel, which the FDIC designates as

follows:

(1) When an institution or proposed

institution that is the subject of a filing

or administrative action is not and will

not be part of a group of related

institutions, the appropriate region for

the institution and any individual

associated with the institution is the

FDIC region in which the institution or

proposed institution is or will be

located; or

(2) When an institution or proposed

institution that is the subject of a filing

or administrative action is or will be

part of a group of related institutions,

the appropriate region for the institution

and any individual associated with the

institution is the FDIC region in which

the group’s major policy and decision

makers are located, or any other region

the FDIC designates on a case-by-case

basis.

(h) Associate director means any

associate director of the Division of

Supervision (DOS) or the Division of

Compliance and Consumer Affairs

(DCA) or, in the event such titles

become obsolete, any official of

equivalent authority within the

respective divisions.

(i) Book capital means total equity

capital which is comprised of perpetual

preferred stock, common stock, surplus,

undivided profits and capital reserves,

as those items are defined in the

instructions of the Federal Financial

Institutions Examination Council

(FFIEC) for the preparation of

Consolidated Reports of Condition and

Income for insured banks.

(j) Comment means any written

statement of fact or opinion submitted

by an interested party relative to a filing.

(k) Corporation, FDIC means the

Federal Deposit Insurance Corporation.

(l) CRA protest means any adverse

comment from the public related to a

pending filing which raises a negative

issue relative to the Community

Reinvestment Act (CRA) (12 U.S.C. 2901

et seq.), whether or not it is labeled a

protest and whether or not a hearing is

requested.

(m) Deputy Director means the Deputy

Director of the Division of Supervision

(DOS) or the Deputy Director of the

Division of Compliance and Consumer

Affairs (DCA) or, in the event such titles

become obsolete, any official of

equivalent or higher authority within

the respective divisions.

(n) Deputy regional director means

any deputy regional director of the

Division of Supervision (DOS) or the

Division of Compliance and Consumer

Affairs (DCA) or, in the event such titles

become obsolete, any official of

equivalent authority within the same

FDIC region of DOS or DCA.

(o) DCA means the Division of

Compliance and Consumer Affairs or, in

the event the Division of Compliance

and Consumer Affairs is reorganized,

such successor division.

(p) DOS means the Division of

Supervision or, in the event the Division

of Supervision is reorganized, such

successor division.

(q) Director means the Director of the

Division of Supervision (DOS) or the

Director of the Division of Compliance

and Consumer Affairs (DCA) or, in the

event such titles become obsolete, any

official of equivalent or higher authority

within the respective divisions.

(r) Eligible depository institution

means a depository institution that

meets the following criteria:

(1) Received an FDIC-assigned

composite rating of 1 or 2 under the

Uniform Financial Institutions Rating

System (UFIRS) as a result of its most

recent federal or state examination;

(2) Received a satisfactory or better

Community Reinvestment Act (CRA)

rating from its primary federal regulator

at its most recent examination;

(3) Received a compliance rating of 1

or 2 from its primary federal regulator

at its most recent examination;

(4) Is well capitalized as defined in

the appropriate capital regulation and

guidance of the institution’s primary

federal regulator; and

(5) Is not subject to a cease and desist

order, consent order, prompt corrective

action directive, written agreement,

memorandum of understanding, or

other administrative agreement with its

primary federal regulator or chartering

authority.

(s) Filing means an application, notice

or request submitted to the FDIC under

this part.

(t) General Counsel means the head of

the Legal Division of the FDIC or any

official within the Legal Division

exercising equivalent authority for

purposes of this part.

(u) Insider means a person who is or

is proposed to be a director, officer, or

incorporator of an applicant; a

shareholder who directly or indirectly

controls 10 percent or more of any class

of the applicant’s outstanding voting

stock; or the associates or interests of

any such person.

(v) Institution-affiliated party shall

have the same meaning as provided in

section 3(u) of the Act (12 U.S.C.

1813(u)).

(w) NEPA means the National

Environmental Policy Act of 1969 (42

U.S.C. 4321 et seq.)

(x) NHPA means the National Historic

Preservation Act of 1966 (16 U.S.C. 470

et seq.)

(y) Notice means a submission

notifying the FDIC that a depository

institution intends to engage in or has

commenced certain corporate activities

or transactions.

(z) Notice of assessment of civil

money penalties means a notice of

assessment of civil money penalties,

findings of fact and conclusions of law,

and order to pay issued pursuant to

sections 7(a)(1), 7(j)(15), 8(i) or 18(h) of

the Act (12 U.S.C. 1817(a)(1),

1817(j)(15), 1818(i), or 1828(h)), section

106(b) of the Bank Holding Company

Act (12 U.S.C. 1972), section 910(d) of

the International Lending Supervision

Act of 1983 (12 U.S.C. 3909), or any

other provision of law providing for the

assessment of civil money penalties by

the FDIC.
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(aa) Notice of charges means a notice

of charges and of hearing setting forth

the allegations of unsafe or unsound

practices or violations and fixing the

time and place of the hearing issued

under section 8(b) of the Act (12 U.S.C.

1818(b)).

(bb) Notice to primary regulator

means the notice described in section

8(a)(2)(A) of the Act concerning

termination of deposit insurance (12

U.S.C. 1818(a)(2)(A)).

(cc) Regional counsel means a

regional counsel of the Legal Division

or, in the event the title becomes

obsolete, any official of equivalent

authority within the Legal Division. The

authority delegated to a regional counsel

may be exercised, when confirmed in

writing by the regional counsel, by a

deputy regional counsel, or any official

of equivalent or higher authority in the

Supervision and Legislation Branch of

the Legal Division.

(dd) Regional director means any

regional director in the Division of

Supervision (DOS) or the Division of

Compliance and Consumer Affairs

(DCA), or in the event such titles

become obsolete, any official of

equivalent authority within the

respective divisions.

(ee) Section 8 orders:

(1) Section 8(a) order means an order

terminating the insured status of a

depository institution under section 8(a)

of the Act (12 U.S.C. 1818(a)).

(2) Section 8(b) order, cease-anddesist order means a final order to cease

and desist issued under section 8(b) of

the Act (12 U.S.C. 1818(b)).

(3) Section 8(c) order, temporary

cease-and-desist order means a

temporary order to cease and desist

issued under section 8(c) of the Act (12

U.S.C. 1818(c)).

(4) Section 8(e) order means a final

order of removal or prohibition issued

under section 8(e) of the Act (12 U.S.C.

1818(e)).

(5) Section 8(e)(3) order, temporary

order of suspension means a temporary

order of suspension or prohibition

issued under section 8(e)(3) of the Act

(12 U.S.C. 1818(e)(3)).

(6) Section 8(g) order means an order

of suspension or order of prohibition

issued under section 8(g) of the Act (12

U.S.C. 1818(g)).

(ff) Standard conditions means the

conditions that any FDIC official acting

under delegated authority may impose

as a matter of routine when approving

a filing, whether or not the applicant

has agreed to their inclusion. The

following conditions, or variations

thereof, are standard conditions:

(1) That the applicant has obtained all

necessary and final approvals from the

appropriate federal or state authority or

other applicable authority;

(2) That if the transaction does not

take effect within a specified time

period, or unless, in the meantime, a

request for an extension of time has

been approved, the consent granted

shall expire at the end of the said time

period;

(3) That until the conditional

commitment of the FDIC becomes

effective, the FDIC retains the right to

alter, suspend or withdraw its

commitment should any interim

development be deemed to warrant such

action; and

(4) In the case of a merger transaction

(as defined in § 303.61(a) of this part),

including a corporate reorganization,

that the proposed transaction not be

consummated before the 30th calendar

day (or shorter time period as may be

prescribed by the FDIC with the

concurrence of the Attorney General)

after the date of the order approving the

merger.

(gg) Tier 1 capital shall have the same

meaning as provided in § 325.2(t) of this

chapter (12 CFR 325.2(t)).

(hh) Total assets shall have the same

meaning as provided in § 325.2(v) of

this chapter (12 CFR 325.2(v)).

§ 303.3 General filing procedures.

Unless stated otherwise, filings

should be submitted to the appropriate

regional director (DOS). Forms and

instructions for submitting filings may

be obtained from any FDIC regional

office (DOS). If no form is prescribed,

the filing should be in writing; be signed

by the applicant or a duly authorized

agent; and contain a concise statement

of the action requested. For specific

filing and content requirements, consult

the specific subparts of this part. The

FDIC may require the applicant to

submit additional information.

§ 303.4 Computation of time.

For purposes of this part, the FDIC

begins computing the relevant period on

the day after an event occurs (e.g., the

day after a substantially complete filing

is received by the FDIC or the day after

publication begins) through the last day

of the relevant period. When the last

day is a Saturday, Sunday or federal

holiday, the period runs until the end of

the next business day.

§ 303.5 Effect of Community Reinvestment

Act performance on filings.

Among other factors, the FDIC takes

into account the record of performance

under the Community Reinvestment Act

(CRA) of each applicant in considering

a filing for approval of:

(a) The establishment of a domestic

branch;

(b) The relocation of the bank’s main

office or a domestic branch;

(c) The relocation of an insured

branch of a foreign bank;

(d) A transaction subject to the Bank

Merger Act; and

(e) Deposit insurance.

§ 303.6 Investigations and examinations.

The Board of Directors, Directors of

(DOS) or (DCA), their associate

directors, or the appropriate regional

director or appropriate deputy regional

director (DOS) or (DCA) acting under

delegated authority may examine or

investigate and evaluate facts related to

any filing under this chapter to the

extent necessary to reach an informed

decision and take any action necessary

or appropriate under the circumstances.

§ 303.7 Public notice requirements.

(a) General. The public must be

provided with prior notice of a filing to

establish a domestic branch, relocate a

domestic branch or the main office,

relocate an insured branch of a foreign

bank, engage in a merger or other

business combination, initiate a change

of control transaction, or request deposit

insurance. The public has the right to

comment on, or to protest, these types

of proposed transactions during the

relevant comment period. In order to

fully apprise the public of this right, an

applicant shall publish a public notice

of its filing in a newspaper of general

circulation. For specific publication

requirements, consult subparts B

(deposit insurance), C (branches and

relocations), D (mergers), E (change in

bank control), and J (foreign bank

activities).

(b) Confirmation of publication. The

applicant shall mail or otherwise deliver

a copy of the newspaper notice to the

appropriate regional director (DOS)

promptly after publication.

(c) Content of notice. (1) The public

notice referred to in paragraph (a) of this

section shall consist of the following:

(i) Name and address of the

applicant(s). In the case of an

application for deposit insurance for a

de novo bank, the names of all

organizers or incorporators. In the case

of an application to establish a branch,

include the location of the proposed

branch or, in the case of an application

to relocate a branch, include the current

and proposed address of the branch. In

the case of a merger application, include

the names of all parties to the

transaction. In the case of a notice of

acquisition of control, the name(s) of the

acquiring parties. In the case of an

application to relocate an insured

branch of a foreign bank, include the
52838 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

current and proposed address of the

branch.

(ii) Type of filing being made;

(iii) Name of the depository

institution(s) that is the subject matter of

the filing;

(iv) That the public may submit

comments to the appropriate FDIC

regional director (DOS);

(v) The address of the appropriate

FDIC regional office (DOS) where

comments may be sent (the same

location as that where the filing will be

made);

(vi) The closing date of the public

comment period as specified in the

appropriate subpart; and

(vii) That the nonconfidential

portions of the application are on file in

the regional office and are available for

public inspection during regular

business hours.

(2) Alternatively, paragraphs (b)(1)

(iv) through (vii) of this section may be

satisfied through use of the following

notice:

Any person wishing to comment on this

application may file his or her comments in

writing with the regional director (DOS) of

the Federal Deposit Insurance Corporation at

its regional office [insert address of regional

office]. If any person desires to protest the

granting of this application, he or she has a

right to do so if he or she files a written

comment with the regional director by the

[insert closing date of the public comment

period specified in the appropriate subpart of

part 303]. The non-confidential portions of

the application are on file in the regional

office and are available for public inspection

during regular business hours.

(d) Multiple transactions. The FDIC

may consider more than one

transaction, or a series of transactions,

to be a single filing for purposes of the

publication requirements of this section.

When publishing a single public notice

for multiple transactions, the applicant

shall explain in the public notice how

the transactions are related and state the

closing date of the longest public

comment period that shall apply to all

of the related transactions.

(e) Joint public notices. For a

transaction subject to public notice

requirements by the FDIC and another

federal or state banking authority, the

FDIC will accept publication of a single

joint notice containing all the

information required by both the FDIC

and the other federal agency or state

banking authority, provided that the

notice states that comments must be

submitted to both the FDIC and, if

applicable, the other federal or state

banking authority.

§ 303.8 Public access to filing.

(a) General. For filings subject to a

public notice requirement, any person

may inspect or request a copy of the

non-confidential portions of a filing (the

public file) until 180 days following

final disposition of a filing. The public

file generally consists of portions of the

filing, supporting data, supplementary

information, and comments submitted

by interested persons (if any) to the

extent that the documents have not been

afforded confidential treatment. To view

or request photocopies of the public file,

an oral or written request should be

submitted to the appropriate regional

director. The public file will be

produced for review not more than one

business day after receipt by the

regional office. The FDIC may impose a

fee for photocopying in accordance with

§ 309.5(c) of this chapter and with the

rates the FDIC publishes annually in the

Federal Register.

(b) Confidential treatment. (1) The

applicant may request that specific

information be treated as confidential.

The following information generally is

considered confidential:

(i) Personal information, the release of

which would constitute a clearly

unwarranted invasion of privacy;

(ii) Commercial or financial

information, the disclosure of which

would result in substantial competitive

harm to the submitter; and

(iii) Information the disclosure of

which could seriously affect the

financial condition of any depository

institution.

(2) If an applicant requests

confidential treatment for information

that the FDIC does not consider to be

confidential, the FDIC may include that

information in the public file after

notifying the applicant. On its own

initiative, the FDIC may determine that

certain information should be treated as

confidential and withhold that

information from the public file. A

written request for information withheld

from the public file, or copies of the

public file following closure of the file

180 days after final disposition, should

be submitted pursuant to the Freedom

of Information Act (5 U.S.C. 552) to the

FDIC, Office of the Executive Secretary,

550 17th Street, NW., Washington, DC

20429.

§ 303.9 Comments.

(a) Submission of comments. For

filings subject to a public notice

requirement, any person may submit

comments to the appropriate FDIC

regional director (DOS) during the

comment period.

(b) Comment period. (1) General.

Consult specific subparts of this part for

the comment period applicable to a

particular filing.

(2) Extension. The appropriate

regional director or deputy regional

director (DOS) may extend or reopen the

comment period if:

(i) The applicant fails to file all

required information on a timely basis

to permit review by the public or makes

a request for confidential treatment not

granted by the FDIC that delays the

public availability of that information;

(ii) Any person requesting an

extension of time satisfactorily

demonstrates to the FDIC that additional

time is necessary to develop factual

information that the FDIC determines

may materially affect the application; or

(iii) The appropriate regional director

or deputy regional director (DOS)

determines that other good cause exists.

(3) Solicitation of comments.

Whenever appropriate, the regional

director (DOS) may solicit comments

from any person or institution which

might have an interest in or be affected

by the pending filing.

(4) Applicant response. The FDIC will

provide copies of all comments received

to the applicant and may give the

applicant an opportunity to respond.

§ 303.10 Hearings and other meetings.

(a) Matters covered. This section

covers hearings and other proceedings

in connection with filings for or by:

(1) Deposit insurance by a proposed

new depository institution or operating

non-insured institution;

(2) An insured state nonmember bank

to establish a domestic branch or to

relocate a main office or domestic

branch;

(3) Relocation of an insured branch of

a foreign bank;

(4) (i) Merger or consolidation which

requires the FDIC’s prior approval under

the Bank Merger Act (12 U.S.C. 1828(c));

(ii) Except as otherwise expressly

provided, the provisions of this § 303.10

shall not be applicable to any proposed

merger transaction which the FDIC

Board of Directors determines must be

acted upon immediately to prevent the

probable default of one of the

institutions involved or must be

handled with expeditious action due to

an existing emergency condition, as

permitted by the Bank Merger Act (12

U.S.C. 1828(c)(6)); and

(5) Any other purpose or matter

which the FDIC Board of Directors in its

sole discretion deems appropriate.

(b) Hearing requests. Before the end of

the comment period, any person may

submit to the appropriate regional

director (DOS) a written request for a

hearing on a filing. The request must

describe the nature of the issues or facts

to be presented and the reasons why

written submissions would be
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52839

insufficient to make an adequate

presentation of those issues or facts to

the FDIC. A person requesting a hearing

shall simultaneously submit a copy of

the request to the applicant.

(c) Action on a hearing request. The

regional director (DOS) may grant or

deny a request for a hearing and may

limit the issues that he or she deems

relevant or material. The FDIC generally

grants a hearing request only if it

determines that written submissions

would be insufficient or that a hearing

otherwise would be in the public

interest.

(d) Denial of a hearing request. If the

regional director (DOS) denies a hearing

request, he or she shall notify the person

requesting the hearing of the reason for

the denial. A decision to deny a hearing

request shall be a final agency

determination that is not appealable to

the Board of Directors.

(e) FDIC procedures prior to the

hearing. (1) Notice of hearing. The FDIC

shall issue a notice of hearing if it grants

a request for a hearing or orders a

hearing because it is in the public

interest. The notice of hearing shall state

the subject and date of the filing, the

time and place of the hearing, and the

issues to be addressed. The FDIC shall

send a copy of the notice of hearing to

the applicant, to the person requesting

the hearing, and to anyone else

requesting a copy.

(2) Presiding officer. The FDIC shall

appoint a presiding officer to conduct

the hearing, who will usually be the

appropriate regional director (DOS). The

presiding officer is responsible for all

procedural questions not governed by

this § 303.10.

(f) Participation in the hearing. Any

person who wishes to appear

(participant) shall notify the appropriate

regional director (DOS) of his or her

intent to participate in the hearing no

later than 10 days from the date that the

FDIC issues the Notice of Hearing. At

least 5 days before the hearing, each

participant shall submit to the

appropriate regional director (DOS), as

well as to the applicant and any other

person as required by the FDIC, the

names of witnesses, a statement

describing the proposed testimony of

each witness, and one copy of each

exhibit the participant intends to

present.

(g) Transcripts. The FDIC shall

arrange for a hearing transcript. The

person requesting the hearing and the

applicant each shall bear the cost of one

copy of the transcript for his or her use

unless such cost is waived by the

presiding officer and incurred by the

FDIC.

(h) Conduct of the hearing. (1)

Presentations. Subject to the rulings of

the presiding officer, the applicant and

participants may make opening and

closing statements and present

witnesses, material, and data.

(2) Information submitted. Any

person presenting material shall furnish

one copy to the FDIC, one copy to the

applicant, and one copy to each

participant.

(3) Laws not applicable to hearings.

The Administrative Procedure Act (5

U.S.C. 551 et seq.), the Federal Rules of

Evidence (28 U.S.C. Appendix), the

Federal Rules of Civil Procedure (28

U.S.C. Rule 1 et seq.), and the FDIC’s

Rules of Practice and Procedure (12 CFR

part 308) do not govern hearings under

this § 303.10.

(i) Closing the hearing record. At the

applicant’s or any participant’s request,

or at the FDIC’s discretion, the FDIC

may keep the hearing record open for up

to 10 days following the FDIC’s receipt

of the transcript. The FDIC shall resume

processing the filing after the record

closes.

(j) Informal proceedings. The FDIC

may arrange for an informal proceeding

with an applicant and other interested

parties in connection with a filing,

either upon receipt of a written request

for such a meeting made during the

comment period, or upon the FDIC’s

own initiative. No later than 10 days

prior to an informal proceeding, the

appropriate regional director (DOS)

shall notify the applicant and each

person who requested a hearing or oral

presentation of the date, time, and place

of the proceeding. The proceeding may

assume any form, including a meeting

with FDIC representatives at which

participants will be asked to present

their views orally. The appropriate

regional director (DOS) or (DCA) may

hold separate meetings with each of the

participants.

(k) Disposition and notice thereof.

The FDIC shall notify the applicant and

all participants of the final disposition

of a filing and shall provide a statement

of the reasons for the final disposition.

(l) Computation of time. In computing

periods of time under this section, the

provisions of § 308.12 of the FDIC’s

Rules of Practice and Procedure (12 CFR

308.12) shall apply.

(m) Authority retained by FDIC Board

of Directors to modify procedures. The

FDIC Board of Directors may delegate

authority by resolution on a case-bycase basis to the presiding officer to

adopt different procedures in individual

matters and on such terms and

conditions as the Board of Directors

determines in its discretion. Such

resolution shall be made available for

public inspection and copying in the

Office of the Executive Secretary under

the Freedom of Information Act (5

U.S.C. 552(a)(2)).

§ 303.11 Decisions.

(a) General procedures. The FDIC may

approve, conditionally approve, deny,

or not object to a filing after appropriate

review and consideration of the record.

The FDIC will promptly notify the

applicant and any person who makes a

written request of the final disposition

of a filing. If the FDIC denies a filing,

the FDIC will immediately notify the

applicant in writing of the reasons for

the denial.

(b) Authority retained by FDIC Board

of Directors to modify procedures. In

acting on any filing under this part, the

FDIC Board of Directors may by

resolution adopt procedures which

differ from those contained in this part

when it deems it necessary or in the

public interest to do so. Such resolution

shall be made available for public

inspection and copying in the Office of

the Executive Secretary under the

Freedom of Information Act (5 U.S.C.

552(a)(2)).

(c) Expedited processing. (1) A filing

submitted by an eligible depository

institution as defined in § 303.2(r) of

this part will receive expedited

processing as specified in the

appropriate subparts of this part unless

the appropriate regional director or

deputy regional director (DOS) chooses

to remove the filing from expedited

processing for the reasons set forth in

paragraph (c)(2) of this section. Except

for filings made pursuant to subpart J

(foreign bank activities), expedited

processing will not be available for any

filing that the appropriate regional

director (DOS) does not have delegated

authority to approve.

(2) Removal of filing from expedited

processing. The appropriate regional

director or deputy regional director

(DOS) may remove a filing from

expedited procedures at any time prior

to final disposition if:

(i) For filings subject to public notice

under § 303.7, an adverse comment is

received that warrants additional

investigation or review;

(ii) For filings subject to evaluation of

CRA performance under § 303.5, a CRA

protest is received that warrants

additional investigation or review, or

the appropriate regional director (DCA)

determines that the filing presents a

significant CRA or compliance concern;

(iii) For any filing, the appropriate

regional director (DOS) determines that

the filing presents a significant

supervisory concern, or raises a

significant legal or policy issue; or
52840 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

(iv) For any filing, the appropriate

regional director (DOS) determines that

other good cause exists for removal.

(3) For purposes of this section, a

significant CRA concern includes but is

not limited to a determination by the

appropriate regional director (DCA) that,

although a depository institution may

have an institution-wide rating of

satisfactory, a depository institution’s

CRA rating is less than satisfactory in a

state or multi-state metropolitan

statistical area (MSA), or a depository

institution’s CRA performance is less

than satisfactory in an MSA or in the

non-MSA portion of a state in which it

seeks to expand through approval of an

application for a deposit facility as

defined in 12 U.S.C. 2902(3).

(4) If the FDIC determines that it is

necessary to remove a filing from

expedited review procedures pursuant

to paragraph (c)(2) of this section, the

FDIC promptly will provide the

applicant with a written explanation.

(d) Multiple transactions. If the FDIC

is considering related transactions, some

or all of which have been granted

expedited processing, then the longest

processing time for any of the related

transactions shall govern for purposes of

approval.

(e) Abandonment of filing. A filing

must contain all information set forth in

the applicable subpart of this part. To

the extent necessary to evaluate a filing,

the FDIC may require an applicant to

provide additional information. If

information requested by the FDIC is

not provided within the time period

specified by the agency, the FDIC may

deem the filing abandoned and shall

provide written notification to the

applicant and any interested parties that

submitted comments to the FDIC that

the file has been closed.

(f) Appeals and petitions for

reconsideration—(1) General. Appeal

procedures for a denial of a change in

bank control (subpart E), change in

senior executive officer or board of

directors (subpart F) or denial of an

application pursuant to section 19 of the

FDI Act (subpart L) are contained in 12

CFR part 308, subparts D, L, and M,

respectively. For all other filings

covered by this chapter for which

appeal procedures are not provided by

regulation or other written guidance, the

procedures specified in paragraphs (f)

(2) through (5) of this section shall

apply. A decision to deny a request for

a hearing is a final agency determination

that is not appealable to the Board of

Directors pursuant to § 303.10(d) of this

part.

(2) Filing procedures. Within 15 days

of receipt of notice from the FDIC that

its filing has been denied, any applicant

may file a petition for reconsideration

with the appropriate regional director

(DOS), if the filing initially was

submitted to DOS, or the appropriate

regional director (DCA), if the filing

initially was submitted to DCA.

(3) Content of filing. A petition for

reconsideration must contain the

following information:

(i) A resolution of the board of

directors of the applicant authorizing

filing of the petition, if the applicant is

a corporation or other entity, or a letter

signed by the individual(s) filing the

petition, if the applicant is not a

corporation or other entity;

(ii) Relevant, substantive information

that for good cause was not previously

set forth in the filing; and

(iii) Specific reasons why the FDIC

should reconsider its prior decision.

(4) Delegation of authority. (i)

Authority is delegated to the Director

and Deputy Director (DOS) and (DCA),

as appropriate and, where confirmed in

writing by the appropriate Director, to

an associate director and the

appropriate regional director and

deputy regional director, to grant a

petition for reconsideration, after

consultation with the Legal Division.

(ii) Authority is delegated to the

Director and Deputy Director (DOS) and

(DCA), as appropriate, to deny a petition

for reconsideration, after consultation

with the Legal Division.

(iii) Notwithstanding paragraphs

(F)(4) (i) and (ii) of § 303.11, no

reconsideration of a filing that originally

required Legal Division concurrence

may be acted upon without Legal

Division concurrence.

(5) Procedures for reconsideration of

filings. If a petition for reconsideration

is granted, the filing will be

reconsidered by:

(i) The Board of Directors, if the filing

was originally denied by the Board of

Directors or denied by the Director or

Deputy Director or an associate director

(DOS) or (DCA); or

(ii) The Director or Deputy Director

(DOS) or (DCA), if the filing was

originally denied by a regional director

or deputy regional director.

(6) Final decision. Decisions made on

a petition for reconsideration by the

Director or Deputy Director (DOS) or

(DCA) are final agency decisions and are

not appealable to the Board of Directors.

(g) Nullification of decision—(1)

Material misrepresentation or omission.

If the FDIC subsequently becomes aware

of any material misrepresentation or

omission after the agency has rendered

a decision on a filing, the FDIC may

nullify its decision by providing written

notification to the applicant of the

determination and the reason therefor.

Any person responsible for any material

misrepresentation or omission in a filing

or supporting materials may be subject

to an enforcement action and other

penalties, including criminal penalties

provided in Title 18 of the United States

Code.

(2) Material change in circumstances.

If the FDIC is not informed by the

applicant of a subsequent material

change in circumstances prior to

rendering a decision on a filing (for

example, a material change in a

business plan, or the financial condition

of the depository institution), the FDIC

may nullify its decision in the manner

described in paragraph (g)(1) of this

section.

(3) Other nullifications. The FDIC may

nullify any decision on a filing that is

contrary to law, regulation or FDIC

policy, or granted due to clerical or

administrative error, or a material

mistake of law or fact.

§ 303.12 General rules governing

delegations of authority.

(a) Scope. This section contains

general rules governing the FDIC Board

of Director’s delegations of authority

under this chapter. These principles are

procedural in nature only and are not

substantive standards. All delegations of

authority, confirmations, limitations,

revisions, and rescissions under this

chapter must be in writing and

maintained with the Office of the

Executive Secretary.

(b) Authority not delegated. Except as

otherwise expressly provided, the FDIC

Board of Directors does not delegate its

authority.

(1) The FDIC Board of Directors

retains and does not delegate the

authority to act on agreements with

foreign regulatory or supervisory

authorities, matters that would establish

or change existing Corporation policy,

matters that might attract unusual

attention or publicity, or involve an

issue of first impression

notwithstanding any existing delegation

of authority.

(2) The FDIC Board of Directors

retains the authority to act on any filing

or enforcement matter upon which any

member of the Board of Directors wishes

to act, even if the authority to act on

such filing or enforcement matter has

been delegated.

(c) Exercise of delegated authority not

mandated. Any FDIC official with

delegated authority under this chapter

may elect not to exercise that authority.

(d) Action by FDIC officials. In matters

where the FDIC Board of Directors has

neither specifically delegated nor

retained authority, FDIC officials may

take action with respect to matters
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52841

which generally involve conditions or

circumstances requiring prompt action

to protect the interests of the FDIC and

to achieve flexibility and expedition in

its operations and the exercise of FDIC

functions under this part.

(e) Construction. The delegations of

authority contained in this chapter are

to be broadly construed in favor of the

existence of authority in FDIC officials

who act under delegated authority. Any

exercise of delegated authority by an

FDIC official is conclusive evidence of

that official’s authority.

(f) Written confirmations, limitations,

revisions or rescissions. Where the FDIC

Board of Directors has delegated

authority to the Director (DOS), Director

(DCA) or the General Counsel, or their

respective designees, each shall have

the right to confirm, limit, revise, or

rescind any delegation of authority

issued or approved by them,

respectively, to any subordinate

official(s).

§ 303.13 Delegations of authority to

officials in the Division of Supervision and

the Division of Compliance and Consumer

Affairs.

(a) CRA protests. Where a CRA protest

is filed and remains unresolved,

authority is delegated to the Director

and Deputy Director (DCA) and, where

confirmed in writing by the Director, to

an associate director or the appropriate

regional director or deputy regional

director to concur that approval of any

filing subject to CRA is consistent with

the purposes of CRA.

(b) Adequacy of filings. Authority is

delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director, to

determine whether a filing is

substantially complete for purposes of

commencing processing.

(c) National Historic Preservation Act.

Authority is delegated to the Director

and Deputy Director (DOS) and, where

confirmed in writing by the Director, to

an associate director and the

appropriate regional director and

deputy regional director, to enter into

memoranda of agreement pursuant to

regulations of the Advisory Council on

Historic Preservation which implement

the National Historic Preservation Act of

1966 (16 U.S.C. 470).

Subpart B—Deposit Insurance

§ 303.20 Scope.

This subpart sets forth the procedures

for applying for deposit insurance for a

proposed depository institution or an

operating noninsured depository

institution under section 5 of the FDI

Act (12 U.S.C. 1815). It also sets forth

the procedures for requesting

continuation of deposit insurance for a

state bank withdrawing from

membership in the Federal Reserve

System and for interim institutions

chartered to facilitate a merger

transaction. Related delegations of

authority are also set forth.

§ 303.21 Filing procedures.

(a) Applications for deposit insurance

shall be filed with the appropriate

regional director (DOS). The relevant

application forms and instructions for

applying for deposit insurance for an

existing or proposed depository

institution may be obtained from any

FDIC regional office (DOS).

(b) Application for deposit insurance

for an interim depository institution

shall be filed and processed in

accordance with the procedures set

forth in § 303.24 of this subpart. An

interim depository institution is defined

as an institution formed or organized

solely for the purpose of facilitating a

merger transaction which will be

reviewed by a responsible agency as

defined in section 18(c)(2) of the FDI

Act.

(c) A request for continuation of

deposit insurance upon withdrawing

from membership in the Federal Reserve

System shall be in letter form and shall

provide the information prescribed in

§ 303.25 of this subpart.

§ 303.22 Processing.

(a) Expedited processing for proposed

institutions. (1) An application for

deposit insurance for a proposed

institution which will be a subsidiary of

an eligible depository institution as

defined in § 303.2(r) of this part or an

eligible holding company will be

acknowledged in writing by the FDIC

and will receive expedited processing,

unless the applicant is notified in

writing to the contrary and provided

with the basis for that decision. An

eligible holding company is defined as

a bank or thrift holding company that

has consolidated assets of $150 million

or more, has an assigned composite

rating of 2 or better, and has at least 75

percent of its consolidated depository

institution assets comprised of eligible

depository institutions. The FDIC may

remove an application from expedited

processing for any of the reasons set

forth in § 303.11(c)(2) of this part.

(2) Under expedited processing, the

FDIC will take action on an application

within 60 days of receipt of a

substantially complete application, or

20 days after publication, whichever is

later. Final action may be withheld until

the FDIC has assurance that permission

to organize the proposed institution will

be granted by the chartering authority.

Notwithstanding paragraph (a)(1) of this

section, if the FDIC does not act within

the expedited processing period, it does

not constitute an automatic or default

approval.

(b) Standard processing. For those

applications that are not processed

pursuant to the expedited procedures,

the FDIC will provide the applicant

with written notification of the final

action as soon as the decision is

rendered.

§ 303.23 Public notice requirements.

(a) De novo institutions and operating

noninsured institutions. The applicant

shall publish a notice, as prescribed in

§ 303.7 of this part, in a newspaper of

general circulation in the community in

which the main office of the depository

institution is or will be located. Notice

shall be published as close as

practicable to, but no sooner than five

days before, the date the application is

mailed or delivered to the regional

director (DOS). Comments by interested

parties must be received by the

appropriate regional director (DOS)

within 15 days following the date of

publication, unless the comment period

has been extended or reopened in

accordance with § 303.9(b)(2) of this

part.

(b) Exceptions to public notice

requirements. No publication shall be

required in connection with the granting

of insurance to a new depository

institution established pursuant to the

resolution of a failed depository

institution, or to an interim depository

institution formed or organized solely to

facilitate a merger transaction, or for a

request for continuation of federal

deposit insurance by a state bank

withdrawing from membership in the

Federal Reserve System.

§ 303.24 Application for deposit insurance

for an interim institution.

(a) Content of application. A letter

application for deposit insurance for an

interim institution, accompanied by a

copy of the related merger application,

shall be filed with the appropriate

regional director. The letter application

should briefly describe the transaction

and contain a statement that deposit

insurance is being requested for an

interim institution formed or organized

solely for the purpose of facilitating a

merger transaction which will be

reviewed by a federal banking agency

other than the FDIC and that the

institution will not open for business.

(b) Processing. An application for

deposit insurance for an interim

depository institution will be
52842 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

acknowledged in writing by the FDIC.

Final action will be taken within 21

days after receipt of a substantially

complete application, unless the

applicant is notified in writing that

additional review is warranted. If the

FDIC does not act within the expedited

processing period, it does not constitute

an automatic or default approval.

§ 303.25 Continuation of deposit insurance

upon withdrawing from membership in the

Federal Reserve System.

(a) Content of application. To

continue its insured status upon

withdrawal from membership in the

Federal Reserve System, a state bank

must submit a letter application to the

appropriate regional director (DOS). A

complete application shall consist of the

following information:

(1) A copy of the letter, and any

attachments thereto, sent to the Federal

Reserve setting forth the bank’s

intention to terminate its membership;

(2) A copy of the letter from the

Federal Reserve acknowledging the

bank’s notice to terminate membership;

(3) A statement regarding any

anticipated changes in the bank’s

general business plan during the next

12-month period; and

(4)(i) A statement by the bank’s

management that there are no

outstanding or proposed corrective

programs or supervisory agreements

with the Federal Reserve System.

(ii) If such programs or agreements

exist, a statement by applicant that its

Board of Directors is willing to enter

into a similar supervisory agreement

with the FDIC which would become

effective upon withdrawal from the

Federal Reserve System.

(b) Processing. An application for

deposit insurance under this section

will be acknowledged in writing by the

FDIC. The appropriate regional director

(DOS) shall notify the applicant, within

15 days of receipt of a substantially

complete application, either that federal

deposit insurance will continue upon

termination of membership in the

Federal Reserve System or that

additional review is warranted and the

applicant will be notified, in writing, of

the FDIC’s final decision regarding

continuation of deposit insurance. If the

FDIC does not act within the expedited

processing period, it does not constitute

an automatic or default approval.

§ 303.26 Delegation of authority.

(a) Proposed depository institutions.

(1) Authority is delegated to the Director

and the Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director and the

appropriate regional director and

deputy regional director, to approve

applications for deposit insurance for

proposed depository institutions. For

the Director, Deputy Director or

associate director (DOS) to exercise this

authority, paragraphs (a)(1)(i) through

(a)(1)(iv) of this section must be satisfied

and the applicant shall have agreed in

writing to comply with any conditions

imposed by the delegate, other than

those listed in paragraph (d) of this

section which may be imposed without

the applicant’s consent. For the regional

director or deputy regional director

(DOS) to exercise this authority,

paragraphs (a)(1)(i) through (a)(1)(v) of

this section must be satisfied and the

applicant shall have agreed in writing to

comply with any conditions imposed by

the delegate, other than those listed in

paragraph (d) of this section which may

be imposed without the applicant’s

consent.

(i) The factors set forth in section 6 of

the Act (12 U.S.C. 1816) have been

considered and favorably resolved;

(ii) No unresolved management

interlocks, as prohibited by the

Depository Institution Management

Interlocks Act (12 U.S.C. 3201 et seq.),

part 348 of this chapter or any other

applicable implementing regulation,

exist;

(iii) The application is in conformity

with the standards and guidelines for

the granting of deposit insurance

established in the FDIC statement of

policy ‘‘Applications for Deposit

Insurance’’ (2 FDIC Law, Regulations

and Related Acts (FDIC) 5349); and

(iv) Compliance with the CRA, the

NEPA, the NHPA and any applicable

related regulations, including 12 CFR

part 345, has been considered and

favorably resolved; and

(v) No CRA protest as defined in

§ 303.2(l) of this part has been filed

which remains unresolved or, where

such a protest has been filed and

remains unresolved, the Director (DCA),

Deputy Director (DCA), an associate

director (DCA) or the appropriate

regional director (DCA) or deputy

regional director (DCA) concurs that

approval is consistent with the purposes

of the CRA and the applicant agrees in

writing to any conditions imposed

regarding the CRA.

(2) Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director and the

appropriate regional director and

deputy regional director, to approve

applications for deposit insurance filed

by or on behalf of proposed interim

depository institutions formed or

organized solely for the purpose of

facilitating a merger transaction which

will be reviewed by a responsible

agency as defined in section 18(c)(2) of

the FDI Act.

(b) Operating noninsured depository

institutions. Authority is delegated to

the Director and the Deputy Director

(DOS) and, where confirmed in writing

by the Director, to an associate director

and the appropriate regional director

and deputy regional director, to approve

applications for deposit insurance by

operating noninsured depository

institutions. For the delegate to exercise

this authority, the following criteria

must be satisfied and the applicant shall

have agreed in writing to comply with

any condition imposed by the delegate,

other than those listed in paragraph (d)

of this section which may be imposed

without the applicant’s consent:

(1) The applicant is determined to be

eligible for federal deposit insurance for

the class of institution to which the

applicant belongs in the state (as

defined in 12 U.S.C. 1813(a)) in which

the applicant is located;

(2) The factors set forth in section 6

of the Act (12 U.S.C. 1816) have been

considered and favorably resolved;

(3) No unresolved management

interlocks, as prohibited by the

Depository Institution Management

Interlocks Act (12 U.S.C. 3201 et seq.),

part 348 of this chapter or any other

applicable implementing regulation,

exist;

(4) The application is in conformity

with the standards and guidelines for

the granting of deposit insurance to

operating noninsured depository

institutions established in the FDIC

policy statement ‘‘Applications for

Deposit Insurance’’ (2 FDIC Law,

Regulations and Related Acts (FDIC)

5349);

(5) Compliance with the CRA, the

NEPA, the NHPA, and any applicable

related regulations, including 12 CFR

part 345, has been considered and

favorably resolved; and

(6) No CRA protest as defined in

§ 303.2(l) of this part has been filed

which remains unresolved or, where

such a protest has been filed and

remains unresolved, the Director (DCA),

Deputy Director (DCA), an associate

director (DCA) or the appropriate

regional director (DCA) or deputy

regional director (DCA) concurs that

approval is consistent with the purposes

of the CRA and the applicant agrees in

writing to any conditions imposed

regarding the CRA.

(c) Continuation of deposit insurance

upon withdrawing from membership in

the Federal Reserve System. Authority is

delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52843

director and the appropriate regional

director and deputy regional director to

approve continuation of federal deposit

insurance where the applicant has

agreed in writing to comply with any

conditions imposed by the delegate,

other than the standard conditions

defined in § 303.2(ff) of this part which

may be imposed without the applicant’s

written consent.

(d) Conditions that may be imposed

under delegated authority. Following

are conditions which may be imposed

by a delegate in approving applications

for deposit insurance without affecting

the authority granted under paragraphs

(a) and (b) of this section:

(1) The applicant will provide a

specific amount of initial paid-in

capital;

(2) With respect to a proposed

depository institution that has applied

for deposit insurance pursuant to this

subpart, the Tier 1 capital to assets

leverage ratio (as defined in the

appropriate capital regulation and

guidance of the institution’s primary

federal regulator) will be maintained at

not less than eight percent throughout

the first three years of operation and

that an adequate allowance for loan and

lease losses will be provided;

(3) Any changes in proposed

management or proposed ownership to

the extent of 10 or more percent of

stock, including new acquisitions of or

subscriptions to 10 or more percent of

stock shall be approved by the FDIC

prior to the opening of the depository

institution;

(4) The applicant will adopt an

accrual accounting system for

maintaining the books of the depository

institution;

(5) Where applicable, deposit

insurance will not become effective

until the applicant has been granted a

charter as a depository institution, has

authority to conduct a depository

institution business, and its

establishment and operation as a

depository institution have been fully

approved by the appropriate state and/

or federal supervisory authority;

(6) Where deposit insurance is

granted to an interim institution formed

or organized solely to facilitate a related

transaction, deposit insurance will only

become effective in conjunction with

consummation of the related

transaction;

(7) Where applicable, a registered or

proposed bank holding company, or a

registered or proposed thrift holding

company, has obtained approval of the

Board of Governors of the Federal

Reserve System or the Office of Thrift

Supervision to acquire voting stock

control of the proposed depository

institution prior to its opening;

(8) Where applicable, the applicant

has submitted any proposed contracts,

leases, or agreements relating to

construction or rental of permanent

quarters to the appropriate regional

director for review and comment;

(9) Where applicable, full disclosure

has been made to all proposed directors

and stockholders of the facts concerning

the interest of any insider in any

transactions being effected or then

contemplated, including the identity of

the parties to the transaction and the

terms and costs involved. An insider is

one who is or is proposed to be a

director, officer, or incorporator of an

applicant; a shareholder who directly or

indirectly controls 10 or more percent of

any class of the applicant’s outstanding

voting stock; or the associates or

interests of any such person;

(10) The person(s) selected to serve as

the principal operating officer(s) shall

be acceptable to the regional director;

(11) The applicant will have adequate

fidelity coverage;

(12) The depository institution will

obtain an audit of its financial

statements by an independent public

accountant annually for at least the first

three years after deposit insurance is

effective, furnish a copy of any reports

by the independent auditor (including

any management letters) to the

appropriate FDIC regional office within

15 days after their receipt by the

depository institution and notify the

appropriate FDIC regional office within

15 days when a change in its

independent auditor occurs; and

(13) Any standard condition defined

in § 303.2(ff) of this part.

§ 303.27 Authority retained by the FDIC

Board of Directors.

Without limiting the Board of

Director’s authority, the Board of

Directors retains authority to deny

applications for deposit insurance and

approve applications for deposit

insurance where the applicant does not

agree in writing to comply with any

condition imposed by the FDIC, other

than the standard conditions listed in

§§ 303.2(ff) and 303.26(d) of this part,

which may be imposed without the

applicant’s written consent.

Subpart C—Establishment and

Relocation of Domestic Branches and

Offices

§ 303.40 Scope.

(a) General. This subpart sets forth the

application requirements and

procedures and the delegation of

authority for insured state nonmember

banks to establish a branch, relocate a

main office, and relocate a branch

subject to the approval by the FDIC

pursuant to sections 13(f), 13(k), 18(d)

and 44 of the FDI Act.

(b) Mergers. Applications for approval

of the acquisition and establishment of

branches in connection with a merger

transaction under section 18(c) of the

FDI Act (12 U.S.C. 1828(c)), are

processed in accordance with subpart D

(Mergers) of this part.

(c) Insured branches of foreign banks

and foreign branches of domestic banks.

Applications regarding insured

branches of foreign banks and foreign

branches of domestic banks are

processed in accordance with subpart J

(Foreign Bank Activities) of this part.

(d) Interstate acquisition of individual

branch. Applications requesting

approval of the interstate acquisition of

an individual branch or branches

located in a state other than the

applicant’s home state without the

acquisition of the whole bank are

treated as interstate bank merger

transactions under section 44 of the FDI

Act (12 U.S.C. 1831a(u)), and are

processed in accordance with subpart D

(Mergers) of this part.

§ 303.41 Definitions.

For purposes of this subpart:

(a) Branch includes any branch bank,

branch office, additional office, or any

branch place of business located in any

State of the United States or in any

territory of the United States, Puerto

Rico, Guam, American Samoa, the Trust

Territory of the Pacific Islands, the

Virgin Islands, and the Northern

Mariana Islands at which deposits are

received or checks paid or money lent.

A branch does not include an automated

teller machine, an automated loan

machine, or a remote service unit. The

term branch also includes the following:

(1) A messenger service that is

operated by a bank or its affiliate that

picks up and delivers items relating to

transactions in which deposits are

received or checks paid or money lent.

A messenger service established and

operated by a non-affiliated third party

generally does not constitute a branch

for purposes of this subpart. Banks

contracting with third parties to provide

messenger services should consult with

the appropriate regional director (DOS)

to determine if the messenger service

constitutes a branch.

(2) A mobile branch, other than a

messenger service, that does not have a

single, permanent site and uses a

vehicle that travels to various locations

to enable the public to conduct banking

business. A mobile branch may serve

defined locations on a regular schedule
52844 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

or may serve a defined area at varying

times and locations.

(3) A temporary branch that operates

for a limited period of time not to

exceed one year as a public service,

such as during an emergency or disaster

situation.

(4) A seasonal branch that operates at

various periodically recurring intervals,

such as during state and local fairs,

college registration periods, and other

similar occasions.

(b) Branch relocation means a move

within the same immediate

neighborhood of the existing branch that

does not substantially affect the nature

of the business of the branch or the

customers of the branch. Moving a

branch to a location outside its

immediate neighborhood is considered

the closing of an existing branch and the

establishment of a new branch.

(c) De novo branch means a branch of

a bank which is established by the bank

as a branch and does not become a

branch of such bank as a result of:

(1) The acquisition by the bank of an

insured depository institution or a

branch of an insured depository

institution; or

(2) The conversion, merger, or

consolidation of any such institution or

branch.

(d) Home state means the state by

which the bank is chartered.

(e) Host state means a state, other than

the home state of the bank, in which the

bank maintains, or seeks to establish

and maintain, a branch.

§ 303.42 Filing procedures.

(a) General. An applicant shall submit

an application to the appropriate

regional director (DOS) on the date the

notice required by § 303.44 of this

subpart is published, or within 5 days

after the date of the last required

publication.

(b) Content of filing. A complete letter

application shall include the following

information:

(1) A statement of intent to establish

a branch, or to relocate the main office

or a branch;

(2) The exact location of the proposed

site including the street address. With

regard to messenger services, specify the

geographic area in which the services

will be available. With regard to a

mobile branch, specify the community

or communities in which the vehicle

will operate and the intention to:

(i) Serve defined locations on a

regular schedule; or

(ii) Be open at varying times and

locations; or

(iii) A combination of paragraphs

(b)(2)(i) and (b)(2)(ii) of this section;

(3) Details concerning any

involvement in the proposal by an

insider of the bank as defined in

§ 303.2(u) of this part, including any

financial arrangements relating to fees,

the acquisition of property, leasing of

property, and construction contracts;

(4) A statement on the impact of the

proposal on the human environment,

including, information on compliance

with local zoning laws and regulations

and the effect on traffic patterns, for

purposes of complying with the

applicable provisions of the NEPA;

(5) A statement as to whether or not

the site is included in or is eligible for

inclusion in the National Register of

Historic Places, including a statement

that clearance has been or will be

obtained from the State Historic

Preservation Officer for purposes of

complying with applicable provisions of

the NHPA;

(6) Comments on any changes in

services to be offered, the community to

be served, or any other effect the

proposal may have on the applicant’s

compliance with the CRA;

(7) A copy of each newspaper

publication required by § 303.44 of this

subpart, the name and address of the

newspaper, and date of the publication;

(8) When an application is submitted

to establish and operate a de novo

branch in a state that is not the

applicant’s home state and in which the

applicant does not maintain a branch, a

statement that the applicant has

requested that the host state provide to

the appropriate regional director (DOS)

written confirmation:

(i) That the applicant has complied

with that state’s filing requirements; and

(ii) That the applicant has also

submitted to the host state bank

supervisor a copy of the filing with the

FDIC to establish and operate a de novo

branch.

(9) When an application is submitted

to relocate the main office of the

applicant from one state to another, a

statement of the applicant’s intent

regarding retention of branches in the

state where the main office exists prior

to relocation.

(c) Undercapitalized institutions.

Applications to establish a branch by

applicants subject to section 38 of the

FDI Act (12 U.S.C. 1831o) also should

provide the information required by

§ 303.204 of this part. Applications

pursuant to sections 38 and 18(d) of the

FDI Act (12 U.S.C. 1831o and 1828(d))

may be filed concurrently or as a single

application.

(d) Additional information. The

appropriate regional director (DOS) may

request additional information to

complete processing.

§ 303.43 Processing.

(a) Expedited processing for eligible

depository institutions. An application

filed under this subpart by an eligible

depository institution as defined in

§ 303.2(r) of this part will be

acknowledged in writing by the FDIC

and will receive expedited processing,

unless the applicant is notified in

writing to the contrary and provided

with the basis for that decision. The

FDIC may remove an application from

expedited processing for any of the

reasons set forth in § 303.11(c)(2) of this

part. Absent such removal, an

application processed under expedited

processing will be deemed approved on

the latest of the following:

(1) The 21st day after receipt by the

FDIC of a substantially complete filing;

(2) The 5th day after expiration of the

comment period described in § 303.44

of this part; or

(3) In the case of an application to

establish and operate a de novo branch

in a state that is not the applicant’s

home state and in which the applicant

does not maintain a branch, the 5th day

after the FDIC receives confirmation

from the host state that the applicant

has both complied with the application

requirements of the host state and

submitted a copy of the application with

the FDIC to the host state bank

supervisor.

(b) Standard processing. For those

applications which are not processed

pursuant to the expedited procedures,

the FDIC will provide the applicant

with written notification of the final

action as soon as the decision is

rendered.

§ 303.44 Public notice requirements.

(a) Newspaper publications. For

applications to establish or relocate a

branch, a notice as described in

§ 303.7(b) of this part shall be published

once in a newspaper of general

circulation. For applications to relocate

a main office, notice shall be published

at least once each week on the same day

for two consecutive weeks. The required

publication shall be made in the

following communities:

(1) To establish a branch. In the

community in which the main office is

located and in the communities to be

served by the branch (including

messenger services and mobile

branches).

(2) To relocate a main office. In the

community in which the main office is

currently located and in the community

to which the main office proposes to

relocate.

(3) To relocate a branch. In the

community in which the branch is

located.
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52845

(b) Public comments. Comments by

interested parties must be received by

the appropriate regional director (DOS)

within 15 days after the date of the last

newspaper publication required by

paragraph (a) of this section, unless the

comment period has been extended or

reopened in accordance with

§ 303.9(b)(2) of this part.

(c) Lobby notices. In the case of

applications to relocate a main office or

a branch, a copy of the required

newspaper publication shall be posted

in the public lobby of the office to be

relocated for at least 15 days beginning

with the date of the last published

notice required by paragraph (a) of this

section.

§ 303.45 Special provisions.

(a) Emergency or disaster events. (1)

In the case of an emergency or disaster

at a main office or a branch which

requires that an office be immediately

relocated to a temporary location,

applicants shall notify the appropriate

regional director (DOS) within 3 days of

such temporary relocation.

(2) Within 10 days of the temporary

relocation resulting from an emergency

or disaster, the bank shall submit a

written application to the appropriate

regional director (DOS), that identifies

the nature of the emergency or disaster,

specifies the location of the temporary

branch, and provides an estimate of the

duration the bank plans to operate the

temporary branch.

(3) As part of the review process, the

appropriate regional director (DOS) will

determine on a case by case basis

whether additional information is

necessary and may waive public notice

requirements.

(b) Redesignation of main office and

existing branch. In cases where an

applicant desires to redesignate its main

office as a branch and redesignate an

existing branch as the main office, an

application shall be submitted to

relocate the main office and to relocate

or establish a branch as appropriate. The

appropriate regional director (DOS) may

waive the public notice requirements in

instances where an application presents

no significant or novel policy,

supervisory, CRA, compliance or legal

concerns. Such waiver will be granted

only to a redesignation within the

applicant’s home state.

(c) Expiration of approval. Approval

of an application expires if a branch has

not commenced business or if a

relocation has not been completed

within 18 months after date of approval.

§ 303.46 Delegation of authority.

(a) Approval of applications. (1)

Where the applicant agrees in writing to

comply with any conditions imposed by

the delegate, other than the standard

conditions defined in § 303.2(ff) of this

part which may be imposed without the

applicant’s written consent, authority is

delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director, to

approve the applications listed in this

paragraph (a)(1). For the Director,

Deputy Director or associate director

(DOS) to exercise this authority,

paragraphs (c)(1) through (c)(4) and

(c)(6) through (c)(7) of this section must

be satisfied. For the regional director or

deputy regional director (DOS) to

exercise this authority, criteria in

paragraphs (c) (1)–(7) of this section

must be satisfied.

(i) Establish a branch;

(ii) Establish and operate a de novo

branch in a state that is not the

applicant’s home state and in which the

applicant does not maintain a branch;

(iii) Relocate a main office; and

(iv) Relocate a branch; or

(2) Where the applicant does not agree

in writing to comply with any condition

imposed by the delegate, authority is

delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director to approve the applications

listed in paragraph (a)(1) of this section.

(b) Denial of applications. (1)

Authority is delegated to the Director

and Deputy Director (DOS) and, where

confirmed in writing by the Director, to

an associate director and the

appropriate regional director and

deputy regional director, to deny an

application to establish a temporary

branch.

(2) Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director to deny

applications for consent to:

(i) Establish a branch;

(ii) Establish and operate a de novo

branch in a state that is not the

applicant’s home state and in which the

applicant does not maintain a branch;

(iii) Relocate a main office; and

(iv) Relocate a branch.

(c) Criteria for delegated authority.

The following criteria must be satisfied

before the authority delegated in

paragraph (a) of this section may be

exercised:

(1) The factors set forth in section 6

of the FDI Act (12 U.S.C. 1816) have

been considered and favorably resolved

except that this criterion does not apply

to applications to establish messenger

services and temporary branches;

(2) The applicant meets the capital

requirements set forth in 12 CFR part

325 and the FDIC’s ‘‘Statement of Policy

on Capital Adequacy’’ (12 CFR part 325,

appendix B) or agrees in writing to

increase capital so as to be in

compliance with the requirements of 12

CFR part 325 before or at the

consummation of the transaction which

is the subject of the filing, except that

this criterion does not apply to

applications to establish messenger

services and temporary branches, or to

relocate branches or main offices;

(3) Any financial arrangements which

have been made in connection with the

proposed branch or relocation and

which involve the applicant’s insiders

are fair and reasonable in comparison to

similar arrangements that could have

been made with independent third

parties;

(4) Compliance with the CRA, the

NEPA, the NHPA, and any applicable

related regulations, including 12 CFR

part 345, has been considered and

favorably resolved;

(5) No CRA protest as defined in

§ 303.2(l) of this part has been filed

which remains unresolved or, where

such a protest has been filed and

remains unresolved, the Director (DCA),

Deputy Director (DCA), an associate

director (DCA) or the appropriate

regional director (DCA) or deputy

regional director (DCA) concurs that

approval is consistent with the purposes

of the CRA and the applicant agrees in

writing to any conditions imposed

regarding the CRA;

(6) An applicant with one or more

existing branches in a state other than

the applicant’s home state has not failed

the credit needs test in a host state

under section 109 of the Riegle-Neal

Interstate Banking and Branching

Efficiency Act of 1994 (12 U.S.C. 1835a).

(7) Additionally, for applications

submitted to establish and operate a de

novo branch in a state that is not the

applicant’s home state and in which the

applicant does not maintain a branch:

(i) Receipt by the appropriate regional

director (DOS) of the host state’s written

confirmation that the applicant has

complied with that state’s filing

requirements and that the applicant also

has submitted to the host state bank

supervisor a copy of its FDIC filing to

establish and operate a de novo branch;

(ii) Determination by the FDIC that

the applicant is adequately capitalized

as of the date of the filing and will

continue to be adequately capitalized

and adequately managed upon

consummation of the transaction;

(iii) Confirmation that the host state

has in effect a law that meets the

requirements of section 18(d)(4)(A) of
52846 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

the FDI Act (12 U.S.C. 1828(d)(4)(A));

and

(iv) Compliance with section 44(b)(3)

of the FDI Act (12 U.S.C. 1831u(b)(3));

and

(8) Additionally, for applications

submitted to relocate a main office from

one state to another where the applicant

seeks to retain branches in the state

where the applicant’s main office exists

prior to an interstate relocation of the

main office, confirmation that the filing

meets the requirements of section

18(d)(3)(B) of the FDI Act (12 U.S.C.

1828(d)(3)(B)).

Subpart D—Mergers

§ 303.60 Scope.

This subpart sets forth the application

requirements, procedures, and

delegations of authority for transactions

subject to FDIC approval under the Bank

Merger Act, section 18(c) of the FDI Act

(12 U.S.C. 1828(c)).

§ 303.61 Definitions.

For purposes of this subpart:

(a) Merger includes any transaction in

which an insured depository institution:

(1) Merges or consolidates with any

other insured depository institution or,

either directly or indirectly, acquires the

assets of, or assumes liability to pay any

deposits made in, any other insured

depository institution; or

(2) Merges or consolidates with any

noninsured bank or institution or

assumes liability to pay any deposits

made in, or similar liabilities of, any

noninsured bank or institution, or

transfers assets to any noninsured bank

or institution in consideration of the

assumption of liability for any portion

of the deposits made in such insured

depository institution.

(b) Corporate reorganization means a

merger between commonly-owned

institutions, between an insured

depository institution and its

subsidiary, or between an insured

depository institution and its holding

company, provided that the merger

would have no effect on competition or

otherwise have significance under the

statutory standards set forth in section

18(c) of the FDI Act (12 U.S.C. 1828(c)).

For purposes of this paragraph,

institutions are commonly-owned if

more than 50 percent of the voting stock

of each of the institutions is owned by

the same company, individual, or group

of closely-related individuals acting in

concert.

(c) Interim merger means a merger

(other than a purchase and assumption

transaction) between an operating

depository institution and a newlyformed depository institution or

corporation that will not open for

business and that exists solely for the

purpose of facilitating a corporate

reorganization.

(d) Optional conversion (Oakar

transaction) means a merger in which an

insured depository institution assumes

deposit liabilities insured by the deposit

insurance fund (either the Bank

Insurance Fund (BIF) or the Savings

Association Insurance Fund (SAIF)) of

which that assuming institution is not a

member, and elects not to convert the

insurance covering the assumed

deposits. Such transactions are covered

by section 5(d)(3) of the FDI Act (12

U.S.C. 1815(d)(3)).

(e) Resulting institution refers to the

surviving institution upon

consummation of a merger.

§ 303.62 Transactions requiring prior

approval.

(a) Mergers. The following

transactions require the prior written

approval of the FDIC under this subpart:

(1) Any merger, including any

corporate reorganization, interim

merger, or optional conversion, in

which the resulting institution is to be

an insured state nonmember bank; and

(2) Any merger, including any

corporate reorganization or interim

merger, that involves an uninsured bank

or institution.

(b) Related provisions. Transactions

covered by this subpart also may be

subject to other provisions or

application requirements, including the

following:

(1) Interstate mergers. Interstate

mergers between insured banks are

subject to the provisions of section 44 of

the FDI Act (12 U.S.C. 1831u). In the

case of a merger that consists of the

acquisition of a branch without

acquisition of the bank, the branch is

treated for section 44 purposes as a bank

whose home state is the state in which

the branch is located.

(2) Deposit insurance. An application

for deposit insurance will be required in

connection with a merger between a

state-chartered interim institution and

an insured depository institution if the

related merger application is being acted

upon by a federal banking agency other

than the FDIC. If the FDIC is the federal

banking agency responsible for acting

on the related merger application, a

separate application for deposit

insurance is not necessary. Procedures

for applying for deposit insurance are

set forth in subpart B of this part. An

application for deposit insurance will

not be required in connection with a

merger of a federally-chartered interim

institution and an insured institution,

even if the resulting institution is to

operate under the charter of the federal

interim institution.

(3) Deposit insurance fund

conversions. Procedures for conversion

transactions involving the transfer of

deposits from BIF to SAIF or from SAIF

to BIF are set forth in subpart M of this

part at § 303.246.

(4) Branch closings. Branch closings

in connection with a merger are subject

to the notice requirements of section 42

of the FDI Act (12 U.S.C. 1831r–1),

including requirements for notice to

customers. These requirements are

addressed in the Interagency Policy

Statement Concerning Branch Closings

Notices and Policies (2 FDIC Law,

Regulations and Related Acts (FDIC)

5391).

(5) Undercapitalized institutions.

Applications for a merger by applicants

subject to section 38 of the FDI Act (12

U.S.C. 1831o) should also provide the

information required by § 303.204 of

this part. Applications pursuant to

sections 38 and 18(c) of the FDI Act (12

U.S.C, 1831o and 1828(c)) may be filed

concurrently or as a single application.

(6) Certification of assumption of

deposit liability. An insured depository

institution assuming deposit liabilities

of another insured institution must

provide certification of assumption of

deposit liability to the FDIC in

accordance with 12 CFR part 307.

§ 303.63 Filing procedures.

(a) General. Applications required

under this subpart shall be filed with

the appropriate regional director (DOS).

The appropriate forms and instructions,

including instructions concerning

notice to depositors where applicable,

may be obtained upon request from any

DOS regional office.

(b) Mergers. Applications for approval

of mergers shall be accompanied by

copies of all agreements or proposed

agreements relating to the merger and

any other information requested by the

FDIC.

(c) Interim mergers. Applications for

approval of interim mergers and any

related deposit insurance applications

shall be made by filing the forms and

other documents required by paragraphs

(a) and (b) of this section and such other

information as may be required by the

FDIC for consideration of the request for

deposit insurance.

(d) Optional conversions.

Applications for optional conversions

shall include a statement that the

proposed merger is a transaction

covered by section 5(d)(3) of the FDI Act

(12 U.S.C. 1815(d)(3)).
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52847

§ 303.64 Processing.

(a) Expedited processing for eligible

depository institutions. (1) General. An

application filed under this subpart by

an eligible depository institution as

defined in § 303.2(r) of this part and

which meets the additional criteria in

paragraph (a)(4) of this section will be

acknowledged by the FDIC in writing

and will receive expedited processing,

unless the applicant is notified in

writing to the contrary and provided

with the basis for that decision. The

FDIC may remove an application from

expedited processing for any of the

reasons set forth in § 303.11(c)(2) of this

part.

(2) Under expedited processing, the

FDIC will take action on an application

by the date that is the latest of:

(i) 45 days after the date of the FDIC’s

receipt of a substantially complete

merger application; or

(ii) 10 days after the date of the last

notice publication required under

§ 303.65 of this subpart; or

(iii) 5 days after receipt of the

Attorney General’s report on the

competitive factors involved in the

proposed transaction; or

(iv) For an interstate merger subject to

the provisions of section 44 of the FDI

Act (12 U.S.C. 1831u), 5 days after the

FDIC confirms that the applicant has

satisfactorily complied with the filing

requirements of the resulting

institution’s host state.

(3) Notwithstanding paragraph (a)(1)

of this section, if the FDIC does not act

within the expedited processing period,

it does not constitute an automatic or

default approval.

(4) Qualifications.—(i) Criteria. The

FDIC will process an application using

expedited procedures if:

(A) All parties to the merger are

eligible depository institutions as

defined in § 303.2(r) of this part; and

(B) Immediately following the merger,

the resulting institution will be ‘‘well

capitalized’’ pursuant to subpart B of

part 325 of this chapter (12 CFR part

325).

(b) Standard processing. For those

applications not processed pursuant to

the expedited procedures, the FDIC will

provide the applicant with written

notification of the final action taken by

the FDIC on the application as soon as

the decision is rendered.

§ 303.65 Public notice requirements.

(a) General. Except as provided in

paragraph (b) of this section, an

applicant for approval of a merger must

publish notice of the proposed

transaction on at least three occasions at

approximately two-week intervals in a

newspaper of general circulation in the

community or communities where the

main offices of the merging institutions

are located or, if there is no such

newspaper in the community, then in

the newspaper of general circulation

published nearest thereto.

(1) First publication. The first

publication of the notice should be as

close as practicable to the date on which

the application is filed with the FDIC,

but no more than 5 days prior to the

filing date.

(2) Last publication. The last

publication of the notice shall be on the

30th day after the first publication or, if

the newspaper does not publish on the

30th day, on the newspaper’s

publication date that is closest to the

30th day.

(b) Exceptions.—(1) Emergency

requiring expeditious action. If the FDIC

determines that an emergency exists

requiring expeditious action, notice

shall be published twice during a 10-

day period. The first notice shall be

published as soon as possible after the

FDIC notifies the applicant of such

determination. The second notice shall

be published on the 10th day after the

first publication or, if the newspaper

does not publish on the 10th day, on the

newspaper’s publication date that is

closest to the 10th day.

(2) Probable failure. If the FDIC

determines that it must act immediately

to prevent the probable failure of one of

the institutions involved in a proposed

merger, publication is not required.

(c) Content of notice.—(1) General.

The notice shall conform to the public

notice requirements set forth in § 303.7

of this part.

(2) Branches. If it is contemplated that

the resulting institution will operate

offices of the other institution(s) as

branches, the following statement shall

be included in the notice required in

section § 303.7(b):

It is contemplated that all offices of the

above-named institutions will continue to be

operated (with the exception of [insert

identity and location of each office that will

not be operated]).

(3) Emergency requiring expeditious

action. If the FDIC determines that an

emergency exists requiring expeditious

action, the notice shall specify as the

closing date of the public comment

period the date that is the 10th day after

the date of the first publication.

(d) Public comments. Comments must

be received by the regional director

(DOS) within 35 days after the first

publication of the notice, unless the

comment period has been extended or

reopened in accordance with

§ 303.9(b)(2). If the FDIC has determined

that an emergency exists requiring

expeditious action, comments must be

received by the regional director within

10 days after the first publication.

§ 303.66 Delegation of authority.

(a) General.—(1) Bank Merger Act

approval. Subject to paragraphs (a)(3)

and (e) of this section, authority is

delegated in paragraphs (b), (c), and (d)

of this section to the designated FDIC

officials to approve under the Bank

Merger Act any application filed under

this subpart for approval of a merger for

which the specified criteria are satisfied.

(2) Interstate merger approval. With

respect to an interstate merger covered

by section 44 of the FDI Act (12 U.S.C.

1831u), in addition to the authority

delegated to any official in paragraph

(b), (c), or (d) of this section to approve

the merger under the Bank Merger Act,

authority is also delegated to such

official to approve the merger under

section 44. This delegation is subject to

paragraph (a)(3) of this section and to

the condition that the merger is eligible

for FDIC approval under section 44.

(3) Combined approvals. The

delegations in paragraphs (a)(2), (b), (c),

and (d) of this section do not apply to

an interstate bank merger covered both

by section 44 and by the Bank Merger

Act, unless the merger is being

approved pursuant to delegated

authority under both section 44 and the

Bank Merger Act.

(b) Basic delegation. Authority is

delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director, and the appropriate regional

director and deputy regional director to

approve applications under the Bank

Merger Act. For the Director, Deputy

Director or associate director (DOS) to

exercise this authority, paragraphs (b)

(1) through (4) and (b)(6) of this section

must be satisfied. For the regional

director or deputy regional director

(DOS) to exercise this authority,

paragraphs (b)(1) through (b)(6) of this

section must be satisfied.

(1) The resulting institution would

meet all applicable capital requirements

upon consummation of the transaction

(or, where the resulting entity is an

insured branch of a foreign bank, would

be in compliance with 12 CFR 346.20

upon consummation of the transaction);

and

(2) The factors set forth in section

18(c)(5) of the Act (12 U.S.C. 1828(c)(5))

have been considered and favorably

resolved; and

(3)(i) The merging institutions do not

operate in the same relevant geographic

market(s); or

(ii) In each relevant geographic market

in which more than one of the merging
52848 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

institutions operate, the resulting

institution upon consummation of the

merger would hold no more than 15

percent of the total deposits held by

banks and/or other depository

institutions (as appropriate) in the

market; or

(iii) In each relevant geographic

market in which more than one of the

merging institutions operate, the

resulting institution upon

consummation of the merger would

hold no more than 25 percent of the

total deposits held by banks and/or

other depository institutions (as

appropriate) in the market, and the

Attorney General has notified the FDIC

in writing that the proposed merger

would not have a significantly adverse

effect on competition; and

(4) Compliance with the CRA and any

applicable related regulations, including

12 CFR part 345, has been considered

and favorably resolved; and

(5) No CRA protest as defined in

§ 303.2(l) of this part has been filed

which remains unresolved or, where

such a protest has been filed and

remains unresolved, the Director (DCA),

Deputy Director (DCA), associate

director (DCA), the appropriate regional

director (DCA), or deputy regional

director (DCA) concurs that approval is

consistent with the purposes of the

CRA, and the applicant agrees in writing

to any conditions imposed regarding the

CRA; and

(6) The applicant agrees in writing to

comply with any conditions imposed by

the delegate, other than the standard

conditions defined in § 303.2(ff) of this

part, which may be imposed without the

applicant’s written consent.

(c) Additional delegations. In addition

to the delegations otherwise provided

for in this section, and subject to the

criteria set forth in paragraphs (b)(1), (2),

(4) and (6) of this section, authority is

delegated to the Director and to the

Deputy Director (DOS) and, where

confirmed in writing by the Director, to

an associate director, to approve an

application for a merger upon the

consummation of which the resulting

institution would hold not more than 35

percent of the total deposits held by

banks and/or other depository

institutions (as appropriate) in any

relevant geographic market in which

more than one of the merging

institutions operate, and the Attorney

General has notified the FDIC in writing

that the merger would not have a

significantly adverse effect on

competition.

(d) Corporate reorganizations; interim

mergers.—(1) Basic delegation. In

addition to the delegations otherwise

provided for in this section, authority is

delegated to the Director and to the

Deputy Director (DOS) and, where

confirmed in writing by the Director, to

an associate director and the

appropriate regional director and

deputy regional director, to approve:

(i) An application for a corporate

reorganization that satisfies the criteria

set forth in paragraphs (b) (5) and (6) of

this section; and

(ii) Any related application for

deposit insurance.

(2) Additional delegation. Authority is

further delegated to the Director and

Deputy Director (DOS) and, where

confirmed in writing by the Director, to

an associate director to approve:

(i) An application for corporate

reorganization that satisfies the criteria

set forth in paragraphs (b)(6) of this

section and as to which a CRA protest

as defined in § 303.2(l) of this part has

been filed which remains unresolved;

and

(ii) Any related application for

deposit insurance.

(e) Limitations. The delegations in

paragraphs (b) through (d) of this

section do not apply if:

(1) The Attorney General of the

United States has determined that the

merger would have a significantly

adverse effect on competition; or

(2) The FDIC has made a

determination pursuant to section (c)(6)

of the Bank Merger Act (12 U.S.C.

1828(c)(6)) that an emergency exists

requiring expeditious action or that the

transaction must be consummated

immediately in order to avoid a

probable failure.

(f) Review of competitive factors

reports. In deciding whether to approve

a merger under the authority delegated

by this section, the delegate shall review

any reports provided by the Attorney

General of the United States, the

Comptroller of the Currency, the Board

of Governors of the Federal Reserve

System, or the Director of the Office of

Thrift Supervision in response to a

request by the FDIC for reports on the

competitive factors involved in the

proposed merger. If the Attorney

General has not provided a competitive

factors report and if the delegation

criterion specified in either paragraph

(b)(3) (i) or (ii) of this section is

satisfied, the delegate may request from

the FDIC’s General Counsel or designee

a written opinion as to whether the

proposed merger may have a

significantly adverse effect on

competition.

(g) Competitive factor reports

provided by the FDIC. Authority is

delegated to the Director and the Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director, to

furnish requested reports to the Board of

Governors of the Federal Reserve

System, the Comptroller of the

Currency, or the Director of the Office

of Thrift Supervision on the competitive

factors involved in any merger subject to

approval by one of those agencies, if the

delegate is of the view that the proposed

merger would not have a substantially

adverse effect on competition.

§ 303.67 Authority retained by the FDIC

Board of Directors

Without limiting the authority of the

Board of Directors, the Board of

Directors retains authority to act on

applications covered by this subpart if

the criteria or other conditions for

delegation are not satisfied. This

includes the retention of authority to

deny applications for merger

transactions. It further includes

retention of authority to approve

applications for merger transactions

where:

(a) The limitations specified in

§ 303.66(e) preclude action under

delegated authority;

(b) The applicant does not agree in

writing to comply with any conditions

imposed by the delegate, other than the

standard conditions defined in

§ 303.2(ff) of this part, which may be

imposed without the applicant’s written

consent; or

(c) The resulting institution, upon

consummation of a merger other than a

corporate reorganization, would have

more than 35 percent of the total

deposits held by banks and/or other

depository institutions (as appropriate)

in any relevant geographic market in

which more than one of the merging

institutions operate.

Subpart E—Change in Bank Control

§ 303.80 Scope.

This subpart sets forth the procedures

for submitting a notice to acquire

control of an insured state nonmember

bank pursuant to the Change in Bank

Control Act of 1978, section 7(j) of the

FDI Act (12 U.S.C. 1817(j)), and

delegations of authority regarding such

filings.

§ 303.81 Definitions.

For purposes of this subpart:

(a) Acquisition means a purchase,

assignment, transfer, pledge or other

disposition of voting shares, or an

increase in percentage ownership of an

insured state nonmember bank resulting

from a redemption of voting shares.

(b) Acting in concert means knowing

participation in a joint activity or

parallel action towards a common goal
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52849

of acquiring control of an insured state

nonmember bank, whether or not

pursuant to an express agreement.

(c) Control means the power, directly

or indirectly, to direct the management

or policies of an insured bank or to vote

25 percent or more of any class of voting

shares of an insured bank.

(d) Person means an individual,

corporation, partnership, trust,

association, joint venture, pool,

syndicate, sole proprietorship,

unincorporated organization, and any

other form of entity; and a voting trust,

voting agreement, and any group of

persons acting in concert.

§ 303.82 Transactions requiring prior

notice.

(a) Prior notice requirement. Any

person acting directly or indirectly, or

through or in concert with one or more

persons, shall give the FDIC 60 days

prior written notice, as specified in

§ 303.84 of this subpart, before acquiring

control of an insured state nonmember

bank, unless the acquisition is exempt

under § 303.83.

(b) Acquisitions requiring prior

notice.—(1) Acquisition of control. The

acquisition of control, unless exempted,

requires prior notice to the FDIC.

(2) Rebuttable presumption of control.

The FDIC presumes that an acquisition

of voting shares of an insured state

nonmember bank constitutes the

acquisition of the power to direct the

management or policies of an insured

bank requiring prior notice to the FDIC,

if, immediately after the transaction, the

acquiring person (or persons acting in

concert) will own, control, or hold with

power to vote 10 percent or more of any

class of voting shares of the institution,

and if:

(i) The institution has registered

shares under section 12 of the Securities

Exchange Act of 1934 (15 U.S.C. 78l); or

(ii) No other person will own, control

or hold the power to vote a greater

percentage of that class of voting shares

immediately after the transaction. If two

or more persons, not acting in concert,

each propose to acquire simultaneously

equal percentages of 10 percent or more

of a class of voting shares of an insured

state nonmember bank, each such

person shall file prior notice with the

FDIC.

(c) Acquisitions of loans in default.

The FDIC presumes an acquisition of a

loan in default that is secured by voting

shares of an insured state nonmember

bank to be an acquisition of the

underlying shares for purposes of this

section.

(d) Other transactions. Transactions

other than those set forth in paragraph

(b)(2) of this section resulting in a

person’s control of less than 25 percent

of a class of voting shares of an insured

state nonmember bank are not deemed

by the FDIC to constitute control for

purposes of the Change in Bank Control

Act.

(e) Rebuttal of presumptions. Prior

notice to the FDIC is not required for

any acquisition of voting shares under

the presumption of control set forth in

this section, if the FDIC finds that the

acquisition will not result in control.

The FDIC will afford any person seeking

to rebut a presumption in this section an

opportunity to present views in writing

or, if appropriate, orally before its

designated representatives at an

informal conference.

§ 303.83 Transactions not requiring prior

notice.

(a) Exempt transactions. The

following transactions do not require

notice to the FDIC under this subpart:

(1) The acquisition of additional

voting shares of an insured state

nonmember bank by a person who:

(i) Held the power to vote 25 percent

or more of any class of voting shares of

that institution continuously since

March 9, 1979, or since that institution

commenced business, whichever is

later; or

(ii) Is presumed, under § 303.82(b)(2)

of this subpart, to have controlled the

institution continuously since March 9,

1979, if the aggregate amount of voting

shares held does not exceed 25 percent

or more of any class of voting shares of

the institution or, in other cases, where

the FDIC determines that the person has

controlled the bank continuously since

March 9, 1979;

(2) The acquisition of additional

shares of a class of voting shares of an

insured state nonmember bank by any

person (or persons acting in concert)

who has lawfully acquired and

maintained control of the institution (for

purposes of § 303.82 of this subpart)

after complying with the procedures of

the Change in Bank Control Act to

acquire voting shares of the institution

under this subpart;

(3) Acquisitions of voting shares

subject to approval under section 3 of

the Bank Holding Company Act (12

U.S.C. 1842(a)), section 18(c) of the FDI

Act (12 U.S.C. 1828(c)), or section 10 of

the Home Owners’ Loan Act (12 U.S.C.

1467a);

(4) Transactions exempt under the

Bank Holding Company Act:

foreclosures by institutional lenders,

fiduciary acquisitions by banks, and

increases of majority holdings by bank

holding companies described in

sections 2(a)(5), 3(a)(A), or 3(a)(B)

respectively of the Bank Holding

Company Act (12 U.S.C. 1841(a)(5),

1842(a)(A), and 1842(a)(B));

(5) A customary one-time proxy

solicitation;

(6) The receipt of voting shares of an

insured state nonmember bank through

a pro rata stock dividend; and

(7) The acquisition of voting shares in

a foreign bank, which has an insured

branch or branches in the United States.

(This exemption does not extend to the

reports and information required under

paragraphs 9, 10, and 12 of the Change

in Bank Control Act of 1978 (12 U.S.C.

1817(j) (9), (10), and (12)).)

(b) Prior notice exemption. (1) The

following acquisitions of voting shares

of an insured state nonmember bank,

which otherwise would require prior

notice under this subpart, are not

subject to the prior notice requirements

if the acquiring person notifies the

appropriate regional director (DOS)

within 90 calendar days after the

acquisition and provides any relevant

information requested by the regional

director (DOS):

(i) The acquisition of voting shares

through inheritance;

(ii) The acquisition of voting shares as

a bona fide gift; or

(iii) The acquisition of voting shares

in satisfaction of a debt previously

contracted in good faith, except that the

acquiror of a defaulted loan secured by

a controlling amount of a state

nonmember bank’s voting securities

shall file a notice before the loan is

acquired.

(2) The following acquisitions of

voting shares of an insured state

nonmember bank, which otherwise

would require prior notice under this

subpart, are not subject to the prior

notice requirements if the acquiring

person notifies the appropriate regional

director (DOS) within 90 calendar days

after receiving notice of the acquisition

and provides any relevant information

requested by the regional director

(DOS):

(i) A percentage increase in

ownership of voting shares resulting

from a redemption of voting shares by

the issuing bank; or

(ii) The sale of shares by any

shareholder that is not within the

control of a person resulting in that

person becoming the largest

shareholder.

(3) Nothing in paragraph (b)(1) of this

section limits the authority of the FDIC

to disapprove a notice pursuant to

§ 303.85(c) of this subpart.

§ 303.84 Filing procedures.

(a) Filing notice. (1) A notice required

under this subpart shall be filed with

the appropriate regional director (DOS)
52850 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

and shall contain all the information

required by paragraph 6 of the Change

in Bank Control Act, section 7(j) of the

FDI Act (12 U.S.C. 1817(j)(6)), or

prescribed in the designated interagency

form which may be obtained from any

FDIC regional office.

(2) The FDIC may waive any of the

informational requirements of the notice

if the FDIC determines that it is in the

public interest.

(3) A notificant shall notify the

appropriate regional director (DOS)

immediately of any material changes in

a notice submitted to the regional

director (DOS), including changes in

financial or other conditions.

(4) When the acquiring person is an

individual, or group of individuals

acting in concert, the requirement to

provide personal financial data may be

satisfied by a current statement of assets

and liabilities and an income summary,

as required in the designated

interagency form, together with a

statement of any material changes since

the date of the statement or summary.

The regional director (DOS),

nevertheless, may request additional

information if appropriate.

(b) Other laws. Nothing in this

regulation shall affect any obligation

which the acquiring person(s) may have

to comply with the federal securities

laws or other laws.

§ 303.85 Processing.

(a) Acceptance of notice. The 60-day

notice period specified in § 303.82 of

this subpart shall commence on the date

of receipt of a substantially complete

notice. The regional director (DOS) shall

notify the person or persons submitting

a notice under this subpart in writing of

the date the notice is accepted for

processing. The FDIC may request

additional relevant information at any

time.

(b) Time period for FDIC action.—(1)

Consummation of acquisition. (i) The

notificant(s) may consummate the

proposed acquisition 60 days after

submission to the regional director

(DOS) of a substantially complete notice

under paragraph (a) of this section,

unless within that period the FDIC

disapproves the proposed acquisition or

extends the 60-day period.

(ii) The notificant(s) may consummate

the proposed transaction before the

expiration of the 60-day period if the

FDIC notifies the notificant(s) in writing

of its intention not to disapprove the

acquisition.

(c) Disapproval of acquisition of

control. Subpart D of 12 CFR part 308

sets forth the rules of practice and

procedure for a notice of disapproval.

§ 303.86 Public notice requirements.

(a) Publication.—(1) Newspaper

announcement. Any person(s) filing a

notice under this subpart shall publish

an announcement soliciting public

comment on the proposed acquisition.

The announcement shall be published

in a newspaper of general circulation in

the community in which the home

office of the state nonmember bank to be

acquired is located. The announcement

shall be published as close as is

practicable to the date the notice is filed

with the appropriate regional director

(DOS), but in no event more than 10

calendar days before or after the filing

date.

(2) Contents of newspaper

announcement. The newspaper

announcement shall conform to the

public notice requirements set forth in

§ 303.7 of this part.

(3) Delay of publication. The FDIC

may permit delay in the publication

required by this section if the FDIC

determines, for good cause shown, that

it is in the public interest to grant such

a delay. Requests for delay of

publication may be submitted to the

appropriate regional director (DOS).

(4) Shortening or waiving notice. The

FDIC may shorten the public comment

period to a period of not less than 10

days, or waive the public comment or

newspaper publication requirements of

this paragraph, or act on a notice before

the expiration of a public comment

period, if it determines in writing either

that an emergency exists or that

disclosure of the notice, solicitation of

public comment, or delay until

expiration of the public comment period

would seriously threaten the safety or

soundness of the bank to be acquired.

(5) Consideration of public comments.

In acting upon a notice filed under this

subpart, the FDIC shall consider all

public comments received in writing

within 20 days following the required

newspaper publication or, if the FDIC

has shortened the public comment

period pursuant to paragraph (a)(4) of

this section, within such shorter period.

(6) Publication if filing is subsequent

to acquisition of control. (i) Whenever a

notice of a proposed acquisition of

control is not filed in accordance with

the Change in Bank Control Act and

these regulations, the acquiring

person(s) shall, within 10 days of being

so directed by the FDIC, publish an

announcement of the acquisition of

control in a newspaper of general

circulation in the community in which

the home office of the state nonmember

bank to be acquired is located.

(ii) The newspaper announcement

shall contain the name(s) of the

acquiror(s), the name of the depository

institution involved, and the date of the

acquisition of the stock. The

announcement shall also contain a

statement indicating that the FDIC is

currently reviewing the acquisition of

control. The announcement also shall

state that any person wishing to

comment on the change in control may

do so by submitting written comments

to the appropriate regional director

(DOS) of the FDIC (give address of

regional office) within 20 days following

the required newspaper publication.

§ 303.87 Delegation of authority.

(a) Authority is delegated to the

Director and the Deputy Director (DOS)

and, where confirmed in writing by the

Director, to an associate director and the

appropriate regional director and

deputy regional director, to issue a

written notice of the FDIC’s intent not

to disapprove an acquisition of control

of an insured state nonmember bank.

(b) The authority delegated by

paragraph (a) of this section shall

include the power to:

(1) Act in situations where

information is submitted on acquisitions

arising out of events beyond the

person’s control, as set forth in

§ 303.83(b) of this subpart;

(2) Extend notice periods;

(3) Determine whether a notice should

be filed under section 7(j) of the Act (12

U.S.C. 1817(j)) by a person acquiring

less than 25 percent of any class of

voting shares of an insured state

nonmember bank; and

(4) Delay or waive publication, waive

or shorten the public comment period,

or act on a proposed acquisition of

control prior to the expiration of the

public comment period, as provided in

§§ 303.86(a) (3) and (4) of this subpart.

(c) Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director, to

disapprove an acquisition of control of

an insured state nonmember bank.

Subpart F—Change of Director or

Senior Executive Officer

§ 303.100 Scope.

This subpart sets forth the

circumstances under which an insured

state nonmember bank must notify the

FDIC of a change in any member of its

board of directors or any senior

executive officer and the procedures for

filing such notice, as well as applicable

delegations of authority. This regulation

implements section 32 of the FDI Act

(12 U.S.C. 1831i).

§ 303.101 Definitions.

For purposes of this subpart:
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52851

(a) Director means a person who

serves on the board of directors or board

of trustees of an insured state

nonmember bank, except that this term

does not include an advisory director

who:

(1) Is not elected by the shareholders;

(2) Is not authorized to vote on any

matters before the board of directors or

board of trustees or any committee

thereof;

(3) Solely provides general policy

advice to the board of directors or board

of trustees and any committee thereof;

and

(4) Has not been identified by the

FDIC as a person who performs the

functions of a director for purposes of

this subpart.

(b) Senior executive officer means a

person who holds the title of president,

chief executive officer, chief operating

officer, chief managing official (in an

insured state branch of a foreign bank),

chief financial officer, chief lending

officer, or chief investment officer, or,

without regard to title, salary, or

compensation, performs the function of

one or more of these positions. Senior

executive officer also includes any other

person identified by the FDIC, whether

or not hired as an employee, with

significant influence over, or who

participates in, major policymaking

decisions of the insured state

nonmember bank.

(c) Troubled condition means any

insured state nonmember bank that:

(1) Has a composite rating, as

determined in its most recent report of

examination of 4 or 5 under the Uniform

Financial Institutions Rating System

(UFIRS), or in the case of an insured

state branch of a foreign bank, an

equivalent rating;

(2) Is subject to a proceeding initiated

by the FDIC for termination or

suspension of deposit insurance;

(3) Is subject to a cease-and-desist

order or written agreement issued by

either the FDIC or the appropriate state

banking authority that requires action to

improve the financial condition of the

bank or is subject to a proceeding

initiated by the FDIC or state authority

which contemplates the issuance of an

order that requires action to improve the

financial condition of the bank, unless

otherwise informed in writing by the

FDIC; or

(4) Is informed in writing by the FDIC

that it is in troubled condition for

purposes of the requirements of this

subpart on the basis of the bank’s most

recent report of condition or report of

examination, or other information

available to the FDIC.

§ 303.102 Filing procedures.

(a) Insured state nonmember banks.

An insured state nonmember bank shall

give the FDIC written notice, as

specified in paragraph (c)(1) of this

section, at least 30 days prior to adding

or replacing any member of its board of

directors, employing any person as a

senior executive officer of the bank, or

changing the responsibilities of any

senior executive officer so that the

person would assume a different senior

executive officer position, if:

(1) The bank is not in compliance

with all minimum capital requirements

applicable to the bank as determined on

the basis of the bank’s most recent

report of condition or report of

examination;

(2) The bank is in troubled condition;

or

(3) The FDIC determines, in

connection with its review of a capital

restoration plan required under section

38(e)(2) of the FDI Act (12 U.S.C.

1831o(e)(2)) or otherwise, that such

notice is appropriate.

(b) Insured branches of foreign banks.

In the case of the addition of a member

of the board of directors or a change in

senior executive officer in a foreign

bank having an insured state branch, the

notice requirement shall not apply to

such additions and changes in the

foreign bank parent, but only to changes

in senior executive officers in the state

branch.

(c)(1) Content of filing. The notice

required by paragraph (a) of this section

shall be filed with the appropriate

regional director (DOS) and shall

contain information pertaining to the

competence, experience, character, or

integrity of the individual with respect

to whom the notice is submitted, as

prescribed in the designated interagency

form which is available from any FDIC

regional office. The regional director or

his or her designee may require

additional information.

(2) Modification. The FDIC may

modify or accept other information in

place of the requirements of paragraph

(c)(1) of this section for a notice filed

under this subpart.

§ 303.103 Processing and waiver of prior

notice.

(a) Processing. The 30-day notice

period specified in § 303.102(a) shall

begin on the date substantially all

information required to be submitted by

the notificant pursuant to

§ 303.102(c)(1) is received by the

appropriate regional director (DOS). The

regional director shall notify the bank

submitting the notice of the date on

which the notice is accepted for

processing and of the date on which the

30-day notice period will expire. If

processing cannot be completed within

30 days, the notificant will be advised

in writing, prior to expiration of the 30-

day period, of the reason for the delay

in processing and of the additional time

period, not to exceed 60 days, in which

processing will be completed.

(b) Commencement of service.—(1) At

expiration of period. A proposed

director or senior executive officer may

begin service after the end of the 30-day

period or any other additional period as

provided under paragraph (a) of this

section, unless the FDIC disapproves the

notice before the end of the period.

(2) Prior to expiration of period. A

proposed director or senior executive

officer may begin service before the end

of the 30-day period or any additional

time period as provided under

paragraph (a) of this section, if the FDIC

notifies the bank and the individual in

writing of the FDIC’s intention not to

disapprove the notice.

(c) Waiver of prior notice. (1) Waiver

requests. The FDIC may permit an

individual, upon petition by the bank to

the appropriate regional director (DOS),

to serve as a senior executive officer or

director before filing the notice required

under this subpart if the FDIC finds that:

(i) Delay would threaten the safety or

soundness of the bank;

(ii) Delay would not be in the public

interest; or

(iii) Other extraordinary

circumstances exist that justify waiver

of prior notice.

(2) Automatic waiver. In the case of

the election of a new director not

proposed by management at a meeting

of the shareholders of an insured state

nonmember bank, the prior 30-day

notice is automatically waived and the

individual immediately may begin

serving, provided that a complete notice

is filed with the appropriate regional

director (DOS) within two business days

after the individual’s election.

(3) Effect on disapproval authority. A

waiver shall not affect the authority of

the FDIC to disapprove a notice within

30 days after a waiver is granted under

paragraph (c)(1) of this section or the

election of an individual who has filed

a notice and is serving pursuant to an

automatic waiver under paragraph (c)(2)

of this section.

(d) Notice of disapproval. The FDIC

may disapprove a notice filed under

§ 303.102 if the FDIC finds that the

competence, experience, character, or

integrity of the individual with respect

to whom the notice is submitted

indicates that it would not be in the best

interests of the depositors of the bank or

in the best interests of the public to

permit the individual to be employed
52852 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

by, or associated with, the bank. Subpart

L of 12 CFR part 308 sets forth the rules

of practice and procedure for a notice of

disapproval.

§ 303.104 Delegation of authority.

The following authority is delegated

to the Director and Deputy Director

(DOS) and, where confirmed in writing

by the Director, to an associate director

and the appropriate regional director or

deputy regional director to:

(a) Designate an insured state

nonmember bank as being in troubled

condition;

(b) Grant waivers of the prior notice

requirement;

(c) Extend the 30-day processing

period for an additional period of up to

60 days in the event of extenuating

circumstances; and

(d) Issue notices of disapproval or

notices of intent not to disapprove

under this subpart.

Subpart G—Activities and Investments

of Insured State Banks [Reserved]

Subpart H—Filings by Savings

Associations [Reserved]

Subpart I—Mutual-to-Stock

Conversions

§ 303.160 Scope.

This subpart sets forth the notice

requirements which must be met by

mutually owned state-chartered savings

banks that propose to convert to stock

form, and the related delegations of

authority. The substantive requirements

governing such conversions are

contained in § 333.4 of this chapter.

§ 303.161 Filing procedures.

A notice shall be filed in letter form

with the appropriate regional director

(DOS) at the same time as the

conversion application materials are

filed with the institution’s primary state

regulator.

§ 303.162 Content of notice.

The notice shall provide a description

of the proposed conversion and include

all materials that have been filed with

any state or federal banking regulator

and any state or federal securities

regulator. Copies of all agreements

entered into as part of the mutual-tostock conversion between the institution

and its officers, directors or trustees,

and any agreements entered into with

any other institution and/or its

successors must be provided. An

insured mutual savings bank chartered

by a state that does not require the filing

of an application to convert from mutual

to stock form that proposes to convert to

stock form shall notify the FDIC of the

proposed conversion and provide any

materials requested by the FDIC.

§ 303.163 Processing.

(a) The FDIC shall review the

materials submitted by the institution

seeking to convert from mutual to stock

form. The FDIC, in its discretion, may

request any additional information it

deems necessary to evaluate the

proposed conversion and the institution

promptly shall provide such

information to the FDIC. Among the

factors to be reviewed by the FDIC are:

(1) The use of the proceeds from the

sale of stock, as set forth in the business

plan;

(2) The adequacy of the disclosure

materials;

(3) The participation of depositors in

approving the transaction;

(4) The form of the proxy statement

required for the vote of the depositors/

members on the conversion;

(5) Any increased compensation and

other remuneration (including stock

grants, stock option rights and other

similar benefits) to be granted to officers

and directors/trustees of the bank in

connection with the conversion;

(6) The adequacy and independence

of the appraisal of the value of the

mutual savings bank for purposes of

determining the price of the shares of

stock to be sold;

(7) The process by which the bank’s

trustees approved the appraisal, the

pricing of the stock and the

compensation arrangements for insiders;

(8) The nature and apportionment of

stock subscription rights; and

(9) The bank’s plans to fulfill its

commitment to serving the convenience

and needs of its community.

(b) Additional considerations. In

reviewing the materials required to be

submitted under this section, the FDIC

will take into account the extent to

which the proposed conversion

conforms with the various provisions of

the mutual-to-stock conversion

regulations of the Office of Thrift

Supervision (OTS) (12 CFR part 563b),

as currently in effect at the time the

FDIC reviews the required materials

related to the proposed conversion. Any

non-conformity with those provisions

will be closely reviewed. Conformity

with the OTS requirements will not be

sufficient for FDIC regulatory purposes

if the FDIC determines that the

proposed conversion would pose a risk

to the institution’s safety or soundness,

violate any law or regulation or present

a breach of fiduciary duty.

(c) Notification of completed filing of

materials. The FDIC shall notify the

institution when all the required

materials related to the proposed

conversion have been filed with the

FDIC and the notice is thereby complete

for purposes of computing the time

periods designated in paragraphs (d)

and (f) of this section.

(d) Notice of intent not to object. If the

FDIC determines, in its discretion, that

the proposed conversion would not

pose a risk to the institution’s safety or

soundness, violate any law or regulation

or present a breach of fiduciary duty,

then the FDIC shall issue to the bank

seeking to convert, within 60 days of

receipt of a substantially complete

notice of proposed conversion or within

20 days after the last applicable state or

other federal regulator has approved the

proposed conversion, whichever is later,

a notice of intent not to object to the

proposed conversion. The FDIC may, in

its discretion, extend by written notice

to the institution the initial 60-day

period by an additional 60 days.

(e) Letter of objection. If the FDIC

determines, in its discretion, that the

proposed conversion poses a risk to the

institution’s safety or soundness,

violates any law or regulation or

presents a breach of fiduciary duty, then

the FDIC shall issue a letter to the

institution stating its objection(s) to the

proposed conversion and advising the

institution that the conversion shall not

be consummated until such letter is

rescinded. A copy of the letter of

objection shall be furnished to the

institution’s primary state regulator and

any other state or federal banking

regulator and state or federal securities

regulator involved in the conversion.

The letter of objection shall advise the

institution of its right to petition the

FDIC for reconsideration under

§ 303.11(f) of this part. Such action shall

not, in any way, prohibit the FDIC from

taking any other action(s) that it may

deem necessary.

(f) Consummation of the conversion.

An institution may consummate the

proposed conversion upon either:

(1) The receipt of a notice of intent

not to object; or

(2) The expiration of the 60-day

period following receipt of a

substantially complete notice by the

FDIC or the 20-day period after the last

applicable state or other federal

regulator has approved the proposed

conversion, whichever is later, unless

the FDIC issues a notice of objection

before the end of that period. If a notice

of objection is issued, the conversion

shall not be consummated until such

letter is rescinded. The FDIC may, in its

discretion, extend by written notice to

the institution the initial 60-day period

by an additional 60 days.
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52853

§ 303.164 Delegation of authority.

(a) Authority is delegated to the

Director and Deputy Director (DOS) to

issue a notice of intent not to object to

a proposed conversion transaction that

is determined not to pose a risk to the

institution’s safety or soundness, violate

any law or regulation, present a breach

of fiduciary duty, and not to raise any

unique legal or policy issues. Such

authority will be exercised in

accordance with the time periods

contained in § 303.163(d) of this

subpart, unless the bank seeking to

convert agrees to a longer time period.

(b) Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director and the

appropriate regional director and

deputy regional director to accept

notices of intent to convert to stock form

and to extend the initial 60-day period

within which FDIC may object by an

additional 60 days.

Subpart J—Foreign Bank Activities

§ 303.180 Scope.

This subpart sets forth procedures for

complying with application

requirements relating to the foreign

activities of insured state nonmember

banks and the U.S. activities of insured

branches of foreign banks and

delegations of authority.

§ 303.181 Definitions.

For the purposes of this subpart, the

following additional definitions apply:

(a) Board of Governors means the

Board of Governors of the Federal

Reserve System.

(b) Comptroller means the Office of

the Comptroller of the Currency.

(c) Eligible insured branch. An

insured branch will be treated as an

eligible depository institution within

the meaning of § 303.2(r) of this part if

the insured branch:

(1) Received an FDIC-assigned

composite ROCA rating of 1 or 2 as a

result of its most recent federal or state

examination, and the FDIC,

Comptroller, or Board of Governors have

not expressed concern about the

condition or operations of the foreign

banking organization or the support it

offers the branch;

(2) Received a satisfactory or better

Community Reinvestment Act (CRA)

rating from its primary federal regulator

at its most recent examination;

(3) Received a compliance rating of 1

or 2 from its primary federal regulator

at its most recent examination;

(4) Is well capitalized as defined in

subpart B of part 325 of this chapter;

and

(5) Is not subject to a cease and desist

order, consent order, prompt corrective

action directive, written agreement,

memorandum of understanding, or

other administrative agreement with any

U.S. bank regulatory authority.

(d) Federal branch means a federal

branch of a foreign bank as defined by

§ 346.1 of this chapter.

(e) Foreign bank means a foreign bank

as defined by § 346.1 of this chapter.

(f) Foreign branch means a foreign

branch of an insured state nonmember

bank as defined by § 347.2 of this

chapter.

(g) Insured branch means an insured

branch of a foreign bank as defined by

§ 346.1 of this chapter.

(h) State branch means a state branch

of a foreign bank as defined by § 346.1

of this chapter.

§ 303.182 Establishing, moving or closing

a foreign branch of a state nonmember

bank.

(a) General consent to expand within

a country. (1) General consent of the

FDIC is granted under § 347.3 of this

chapter for an eligible depository

institution to establish additional

foreign branches conducting activities

authorized by § 347.3 in any foreign

country in which the bank already

operates one or more foreign branches,

or to move an existing foreign branch

within a foreign country.

(2) Notice procedures for general

consent. The eligible depository

institution must provide the appropriate

regional director (DOS) written notice

within 30 days of taking such action,

and include the location of the foreign

branch, including a street address, and

a statement that the foreign branch has

not been located on a site on the World

Heritage List or on the foreign country’s

equivalent of the National Register of

Historic Places (National Register), in

accordance with section 402 of the

National Historic Preservation Act

Amendments of 1980 (NHPA

Amendments Act) (16 U.S.C. 470a–2).

The appropriate regional director will

provide written acknowledgment of

receipt of the notice.

(b) Filing procedures for other branch

establishments. (1) Where to file. An

insured state nonmember bank seeking

to establish a foreign branch other than

under paragraph (a) of this section must

submit an application to the appropriate

regional director (DOS).

(2) Content of filing. A complete letter

filing must contain the following

information:

(i) The exact location of the foreign

branch, including a street address, and

a statement whether the foreign branch

will be located on a site on the World

Heritage List or on the foreign country’s

equivalent of the National Register, in

accordance with section 402 of the

NHPA Amendments Act;

(ii) Details concerning any

involvement in the proposal by an

insider of the applicant, including any

financial arrangements relating to fees,

the acquisition of property, leasing of

property, and construction contracts;

(iii) A brief description of the

applicant’s business plan with respect

to the foreign branch; and

(iv) A brief description of the

activities of the branch, and to the

extent any activities are not authorized

by § 347.3 of this chapter, the

applicant’s reasons why they should be

approved.

(3) Additional information. The

appropriate regional director (DOS) may

request additional information to

complete processing.

(c) Processing.—(1) Expedited

processing for eligible depository

institutions. An application filed by an

eligible depository institution as defined

in § 303.2(r) of this part that operates

foreign branches in two or more

territories or foreign countries to

establish a foreign branch that conducts

activities authorized by § 347.3 of this

chapter in an additional foreign country

will be acknowledged in writing by the

FDIC and will receive expedited

processing, unless the applicant is

notified in writing to the contrary and

provided with the basis for that

decision. The FDIC may remove an

application from expedited processing

for any of the reasons set forth in

§ 303.11(c)(2) of this part. Absent such

removal, an application processed

under expedited processing is deemed

approved 45 days after the FDIC’s

receipt of a substantially complete

application.

(2) Standard processing. For those

applications which are not processed

pursuant to the expedited procedures,

the FDIC will provide the applicant

with written notification of the final

action taken as soon as the decision is

rendered.

(d) Exceptions to general consent and

expedited processing. (1) Upon notice to

an insured state nonmember bank, the

FDIC may modify or suspend the

availability of its general consent or

expedited processing under this section.

(2) General consent or expedited

processing under this section does not

apply in any case in which:

(i) The foreign branch would be

located on a site on the World Heritage

List or on the foreign country’s

equivalent of the National Register in

accordance with section 402 of the

NHPA Amendments Act; or
52854 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

(ii) Any applicable law or practice in

the relevant foreign country would limit

the FDIC’s access to information for

supervisory purposes.

(e) Closing. Within 30 days after it

closes a foreign branch, an insured state

nonmember bank must advise the

appropriate regional director (DOS) by

letter of the name, location, and date of

closing of the closed branch.

(f) Delegation of authority. Authority

is delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director to

approve an application under paragraph

(c) of this section if the following

criteria are satisfied:

(1) The requirements of section 402

the NHPA Amendments Act have been

favorably resolved; and

(2) The applicant will only conduct

activities authorized by § 347.3 of this

chapter.

§ 303.183 Acquisition of stock of foreign

banks or other financial entities by an

insured state nonmember bank.

(a) Definition. For purposes of this

section only, a foreign bank or other

financial entity means a foreign bank or

other financial entity as defined by

§ 347.2 of this chapter.

(b) Filing procedures.—(1) Where to

file. An application by an insured state

nonmember bank to acquire or hold an

ownership interest in a foreign bank or

other financial entity, as required by

§ 347.4 of this chapter, must be filed in

writing with the appropriate regional

director (DOS).

(2) Content of filing. A complete letter

filing must contain full information

concerning the foreign bank or other

financial entity, including the following

information:

(i) The cost, number, class of shares

to be acquired, and the proposed

carrying value of such shares on the

books of the insured state nonmember

bank;

(ii) A recent balance sheet and income

statement of the foreign bank or other

financial entity;

(iii) A brief description of the foreign

bank’s or other financial entity’s

business (including full information

concerning any direct or indirect

business transacted in the United

States);

(iv) Lists of directors and principal

officers (with address and principal

business affiliation of each) and of all

shareholders known to hold 10 percent

or more of any class of the foreign

bank’s or other financial entity’s stock

or other evidence of ownership, and the

amount held by each; and

(v) Information concerning the rights

and privileges of the various classes of

shares outstanding.

(3) Additional information. The

appropriate regional director (DOS) may

request additional information to

complete processing.

(c) Processing. The FDIC will provide

the applicant with written notification

of the final action taken.

(d) Delegations of authority. Authority

is delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director, to approve or deny

applications submitted under this

section for the acquisition and holding

of stock or other evidences of ownership

of a foreign bank or other financial

entity that result in the state

nonmember bank having a less than 25

percent ownership interest in such bank

or other financial entity.

§ 303.184 Moving an insured branch of a

foreign bank.

(a) Filing procedures.—(1) Where and

when to file. An application by an

insured branch of a foreign bank seeking

the FDIC’s consent to move from one

location to another, as required by

section 18(d)(1) of the FDI Act (12

U.S.C. 1828(d)(1)), must be submitted in

writing to the appropriate regional

director (DOS) on the date the notice

required by paragraph (c) of this section

is published, or within 5 days after the

date of the last required publication.

(2) Content of filing. A complete letter

filing must include the following

information:

(i) The exact location of the proposed

site, including the street address;

(ii) Details concerning any

involvement in the proposal by an

insider of the insured branch, including

any financial arrangements relating to

fees, the acquisition of property, leasing

of property, and construction contracts;

(iii) A statement of the impact of the

proposal on the human environment,

including information on compliance

with local zoning laws and regulations

and the effect on traffic patterns, for

purposes of complying with the

applicable provisions of the NEPA;

(iv) A statement as to whether the site

is included in or is eligible for inclusion

in the National Register of Historic

Places, including a statement that

clearance has been or will be obtained

from the State Historic Preservation

Officer, for purposes of complying with

the applicable provisions of the NHPA;

(v) Comments on any changes in

services to be offered, the community to

be served, or any other effect the

proposal may have on the applicant’s

compliance with the CRA; and

(vi) A copy of the newspaper

publication required by paragraph (c) of

this section, as well as the name and

address of the newspaper and the date

of the publication.

(3) Comptroller’s application. If the

applicant is filing an application with

the Comptroller which contains the

information required by paragraph (a)(2)

of this section, the applicant may

submit a copy to the FDIC in lieu of a

separate application.

(4) Additional information. The

appropriate regional director (DOS) may

request additional information to

complete processing.

(b) Processing.—(1) Expedited

processing for eligible insured branches.

An application filed by an eligible

insured branch as defined in

§ 303.181(c) of this part will be

acknowledged in writing by the FDIC

and will receive expedited processing,

unless the applicant is notified to the

contrary and provided with the basis for

that decision. The FDIC may remove an

application from expedited processing

for any of the reasons set forth in

§ 303.11(c)(2) of this part. Absent such

removal, an application processed

under expedited processing will be

deemed approved on the latest of the

following:

(i) The 21st day after the FDIC’s

receipt of a substantially complete

application; or

(ii) The 5th day after expiration of the

comment period described in paragraph

(c) of this section.

(2) Standard processing. For those

applications that are not processed

pursuant to the expedited procedures,

the FDIC will provide the applicant

with written notification of the final

action as soon as the decision is

rendered.

(c) Publication requirement and

comment period.—(1) Newspaper

publications. The applicant must

publish a notice of its proposal to move

from one location to another, as

described in § 303.7(b), in a newspaper

of general circulation in the community

in which the insured branch is located

prior to its being moved and in the

community to which it is to be moved.

The notice must include the insured

branch’s current and proposed

addresses.

(2) Public comments. All public

comments must be received by the

appropriate regional director (DOS)

within 15 days after the date of the last

newspaper publication required by

paragraph (c)(1) of this section, unless

the comment period has been extended

or reopened in accordance with

§ 303.9(b)(2).
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52855

(3) Lobby notices. If the insured

branch has a public lobby, a copy of the

newspaper publication must be posted

in the public lobby for at least 15 days

beginning on the date of the publication

required by paragraph (c)(1) of this

section.

(d) Delegation of authority. (1)

Authority is delegated to the Director

and Deputy Director (DOS) and, where

confirmed in writing by the Director, to

an associate director and the

appropriate regional director and

deputy regional director to approve an

application under this section. For the

Director, Deputy Director or associate

director (DOS) to exercise this authority,

paragraphs (d)(1)(i) through (d)(1)(iv)

and (d)(1)(vi) of this section must be

satisfied. For the regional director or

deputy regional director (DOS) to

exercise this authority, paragraphs

(d)(1)(i) through (d)(1)(vi) of this section

must be satisfied.

(i) The factors set forth in section 6 of

the FDI Act (12 U.S.C. 1816) have been

considered and favorably resolved;

(ii) The applicant is at least

adequately capitalized as defined in

subpart B of part 325 of this chapter;

(iii) Any financial arrangements

which have been made in connection

with the proposed relocation and which

involve the applicant’s directors,

officers, major shareholders, or their

interests are fair and reasonable in

comparison to similar arrangements that

could have been made with

independent third parties;

(iv) Compliance with the CRA, the

NEPA, the NHPA and any applicable

related regulations, including 12 CFR

part 345, has been considered and

favorably resolved;

(v) No CRA protest as defined in

§ 303.2(l) of this part has been filed

which remains unresolved or, where

such a protest has been filed and

remains unresolved, the Director (DCA),

Deputy Director (DCA), an associate

director (DCA) or the appropriate

regional director or deputy regional

director (DCA) concurs that approval is

consistent with the purposes of the CRA

and the applicant agrees in writing to

any conditions imposed regarding the

CRA; and

(vi) The applicant agrees in writing to

comply with any conditions imposed by

the delegate, other than the standard

conditions defined in § 303.2(ff) of this

part which may be imposed without the

applicant’s written consent.

(2) Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director, to

approve applications under this section

which meet all criteria in paragraph

(d)(1) of this section except that the

applicant does not agree in writing to

comply with any condition imposed by

the delegate, other than the standard

conditions defined in § 303.2(ff) which

may be imposed without the applicant’s

written consent; or

(3) Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director, to

deny applications under this section.

§ 303.185 Mergers involving an insured

branch of a foreign bank.

(a) Applicability of subpart D. Mergers

requiring the FDIC’s prior approval as

set forth in § 303.62 of this part include

any merger in which the resulting

institution is an insured branch of a

foreign bank which is not a federal

branch, or any merger which involves

any insured branch and any uninsured

institution. In such cases:

(1) References to an eligible

depository institution in subpart D of

this part include an eligible insured

branch as defined in § 303.181 of this

subpart;

(2) The definition of a corporate

reorganization in § 303.61(b) of this part

includes a merger between an insured

branch and other branches, agencies, or

subsidiaries in the United States of the

same foreign bank; and

(3) For the purposes of § 303.62(b)(1)

of this part on interstate mergers, a

merger transaction involving an insured

branch is one involving the acquisition

of a branch of an insured bank without

the acquisition of the bank for purposes

of section 44 of the FDI Act (12 U.S.C.

1831u) only when the merger

transaction involves fewer than all the

insured branches of the same foreign

bank in the same state.

§ 303.186 Exemptions from insurance

requirement for a state branch of a foreign

bank.

(a) Filing procedures.—(1) Where to

file. An application by a state branch for

consent to operate as a noninsured state

branch, as required by § 346.6(b) of this

chapter, must be submitted in writing to

the appropriate regional director (DOS).

(2) Content of filing. A complete letter

filing must include the following

information:

(i) The kinds of deposit activities in

which the state branch proposes to

engage;

(ii) The expected source of deposits;

(iii) The manner in which deposits

will be solicited;

(iv) How the activity will maintain or

improve the availability of credit to all

sectors of the United States economy,

including the international trade finance

sector;

(v) That the activity will not give the

foreign bank an unfair competitive

advantage over United States banking

organizations; and

(vi) A resolution by the applicant’s

board of directors, or evidence of

approval by senior management if a

resolution is not required pursuant to

the applicant’s organizational

documents, authorizing the filing of the

application.

(2) Additional information. The

appropriate regional director (DOS) may

request additional information to

complete processing.

(b) Processing. The FDIC will provide

the applicant with written notification

of the final action taken.

§ 303.187 Approval for an insured state

branch of a foreign bank to conduct

activities not permissible for federal

branches.

(a) Filing procedures.—(1) Where to

file. An application by an insured state

branch seeking approval to conduct

activities not permissible for a federal

branch, as required by § 346.101(a) of

this chapter, must be submitted in

writing to the appropriate regional

director (DOS).

(2) Content of filing. A complete letter

filing must include the following

information:

(i) A brief description of the activity,

including the manner in which it will

be conducted and an estimate of the

expected dollar volume associated with

the activity;

(ii) An analysis of the impact of the

proposed activity on the condition of

the United States operations of the

foreign bank in general and of the

branch in particular, including a copy of

the feasibility study, management plan,

financial projections, business plan, or

similar document concerning the

conduct of the activity;

(iii) A resolution by the applicant’s

board of directors, or evidence of

approval by senior management if a

resolution is not required pursuant to

the applicant’s organizational

documents, authorizing the filing of the

application;

(iv) A statement by the applicant of

whether it is in compliance with

§§ 346.19 and 346.20 of this chapter,

Pledge of assets and Asset maintenance,

respectively;

(v) A statement by the applicant that

it has complied with all requirements of

the Board of Governors concerning

applications to conduct the activity in

question and the status of each such

application, including a copy of the

Board of Governors’ disposition of such

application, if applicable; and
52856 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

(vi) A statement of why the activity

will pose no significant risk to the Bank

Insurance Fund.

(3) Board of Governors application. If

the application to the Board of

Governors contains the information

required by paragraph (a) of this section,

the applicant may submit a copy to the

FDIC in lieu of a separate letter

application.

(4) Additional information. The

appropriate regional director (DOS) may

request additional information to

complete processing.

(b) Divestiture or cessation.—(1)

Where to file. Divestiture plans

necessitated by a change in law or other

authority, as required by § 346.101(f) of

this chapter, must be submitted in

writing to the appropriate regional

director (DOS).

(2) Content of filing. A complete letter

filing must include the following

information:

(i) A detailed description of the

manner in which the applicant proposes

to divest itself of or cease the activity in

question; and

(ii) A projected timetable describing

how long the divestiture or cessation is

expected to take.

(3) Additional information. The

appropriate regional director (DOS) may

request additional information to

complete processing.

(c) Delegation of authority. Authority

is delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director, to

approve plans of divestiture and

cessation submitted pursuant to

paragraph (b) of this section.

Subpart K—Prompt Corrective Action

§ 303.200 Scope.

(a) General. (1) This subpart covers

applications filed pursuant to section 38

of the FDI Act (12 U.S.C. 1831o), which

requires insured depository institutions

that are not adequately capitalized to

receive approval prior to engaging in

certain activities. Section 38 restricts or

prohibits certain activities and requires

an insured depository institution to

submit a capital restoration plan when

it becomes undercapitalized. The

restrictions and prohibitions become

more severe as an institution’s capital

level declines.

(2) Definitions for the capital

categories referenced in this Prompt

Corrective Action subpart may be found

in subpart B of part 325 of this chapter,

§ 325.103(b) for banks and § 325.103(c)

for insured branches of foreign banks.

(b) Institutions covered. Restrictions

and prohibitions contained in subpart B

of part 325 of this chapter apply

primarily to insured state nonmember

banks and insured branches of foreign

banks, as well as to directors and senior

executive officers of those institutions.

Portions of subpart B of part 325 of this

chapter also apply to all insured

depository institutions that are deemed

to be critically undercapitalized.

§ 303.201 Filing procedures.

Applications shall be filed with the

appropriate regional director (DOS). The

application shall contain the

information specified in each respective

section of this subpart, and shall be in

letter form as prescribed in § 303.3 of

this part. Additional information may be

requested by the FDIC. Such letter shall

be signed by the president, senior officer

or a duly authorized agent of the

insured depository institution and be

accompanied by a certified copy of a

resolution adopted by the institution’s

board of directors or trustees

authorizing the application.

§ 303.202 Processing.

The FDIC will provide the applicant

with a subsequent written notification

of the final action taken as soon as the

decision is rendered.

§ 303.203 Applications for capital

distribution.

(a) Scope. An insured state

nonmember bank and any insured

branch of a foreign bank shall submit an

application for capital distribution if,

after having made a capital distribution,

the institution would be

undercapitalized, significantly

undercapitalized, or critically

undercapitalized.

(b) Content of filing. An application to

repurchase, redeem, retire or otherwise

acquire shares or ownership interests of

the insured depository institution shall

describe the proposal, the shares or

obligations which are the subject

thereof, and the additional shares or

obligations of the institution which will

be issued in at least an amount

equivalent to the distribution. The

application also shall explain how the

proposal will reduce the institution’s

financial obligations or otherwise

improve its financial condition. If the

proposed action also requires an

application under section 18(i) of the

FDI Act (12 U.S.C. 1828(i)) as

implemented by § 303.241 of this part

regarding prior consent to retire capital,

such application should be filed

concurrently with, or made a part of, the

application filed pursuant to section 38

of the FDI Act (12 U.S.C. 1831o).

§ 303.204 Applications for acquisitions,

branching, and new lines of business

(a) Scope. (1) Any insured state

nonmember bank and any insured

branch of a foreign bank which is

undercapitalized or significantly

undercapitalized, and any insured

depository institution which is critically

undercapitalized, shall submit an

application to engage in acquisitions,

branching or new lines of business.

(2) A new line of business will

include any new activity exercised

which, although it may be permissible,

has not been exercised by the

institution.

(b) Content of filing. Applications

shall describe the proposal, state the

date the institution’s capital restoration

plan was accepted by its primary federal

regulator, describe the institution’s

status toward implementing the plan,

and explain how the proposed action is

consistent with and will further the

achievement of the plan or otherwise

further the purposes of section 38 of the

FDI Act. If the FDIC is not the

applicant’s primary federal regulator,

the application also should state

whether approval has been requested

from the applicant’s primary federal

regulator, the date of such request and

the disposition of the request, if any. If

the proposed action also requires

applications pursuant to section 18 (c)

or (d) of the FDI Act (mergers and

branches) (12 U.S.C. 1828 (c) or (d)),

such applications should be filed

concurrently with, or made a part of, the

application filed pursuant to section 38

of the FDI Act (12 U.S.C. 1831o).

§ 303.205 Applications for bonuses and

increased compensation for senior

executive officers.

(a) Scope. Any insured state

nonmember bank or insured branch of

a foreign bank that is significantly or

critically undercapitalized, or any

insured state nonmember bank or any

insured branch of a foreign bank that is

undercapitalized and which has failed

to submit or implement in any material

respect an acceptable capital restoration

plan, shall submit an application to pay

a bonus or increase compensation for

any senior executive officer.

(b) Content of filing. Applications

shall list each proposed bonus or

increase in compensation, and for the

latter shall identify compensation for

each of the twelve calendar months

preceding the calendar month in which

the institution became undercapitalized.

Applications also shall state the date the

institution’s capital restoration plan was

accepted by the FDIC, and describe any

progress made in implementing the

plan.
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§ 303.206 Application for payment of

principal or interest on subordinated debt.

(a) Scope. Any critically

undercapitalized insured depository

institution shall submit an application

to pay principal or interest on

subordinated debt.

(b) Content of filing. Applications

shall describe the proposed payment

and provide an explanation of action

taken under section 38(h)(3)(A)(ii) of the

FDI Act (action instead of receivership

or conservatorship). The application

also shall explain how such payments

would further the purposes of section 38

of the FDI Act (12 U.S.C. 1831o).

Existing approvals pursuant to requests

filed under section 18(i)(1) of the FDI

Act (12 U.S.C. 1828(i)(1)) (capital stock

reductions or retirements) shall not be

deemed to be the permission needed

pursuant to section 38.

§ 303.207 Restricted activities for critically

undercapitalized institutions.

(a) Scope. Any critically

undercapitalized insured depository

institution shall submit an application

to engage in certain restricted activities.

(b) Content of filing. Applications to

engage in any of the following activities,

as set forth in sections 38(i)(2)(A)

through (G) of the FDI Act, shall

describe the proposed activity and

explain how the activity would further

the purposes of section 38 of the FDI

Act (12 U.S.C. 1831o):

(1) Enter into any material transaction

other than in the usual course of

business including any action with

respect to which the institution is

required to provide notice to the

appropriate federal banking agency.

Materiality will be determined on a

case-by-case basis;

(2) Extend credit for any highly

leveraged transaction (as defined in part

325 of this chapter);

(3) Amend the institution’s charter or

bylaws, except to the extent necessary to

carry out any other requirement of any

law, regulation, or order;

(4) Make any material change in

accounting methods;

(5) Engage in any covered transaction

(as defined in section 23A(b) of the

Federal Reserve Act (12 U.S.C. 371c(b));

(6) Pay excessive compensation or

bonuses. Part 359 of this chapter

provides guidance for determining

excessive compensation. The FDIC will

consider the existing compensation

levels of an institution’s executive

officers directors and principal

shareholders (as defined in Regulation

O, 12 CFR part 215) on a case-by-case

basis, and will require prior written

approval for any change in their

compensation levels; or

(7) Pay interest on new or renewed

liabilities at a rate that would increase

the institution’s weighted average cost

of funds to a level significantly

exceeding the prevailing rates of interest

on insured deposits in the institution’s

normal market area. Section 337.6 of

this chapter (Brokered deposits)

provides guidance for defining the

relevant terms of this provision;

however this provision does not

supersede the general prohibitions

contained in § 337.6.

§ 303.208 Delegation of authority.

Authority is delegated to the Director

and Deputy Director (DOS) and, where

confirmed in writing by the Director, to

an associate director and the

appropriate regional director and

deputy regional director, to approve or

deny the following applications,

requests or petitions submitted pursuant

to this subpart:

(a) Applications filed pursuant to

section 38 of the FDI Act (12 U.S.C.

1831o) (prompt corrective action),

including applications to make a capital

distribution;

(b) Applications for acquisitions,

branching, and new lines of business

(except that the delegation is limited to

the authority as delegated to approve or

deny any concurrent application filed

pursuant to section 18(c) or (d) of the

FDI Act (12 U.S.C. 1828(c) or (d));

(c) Applications to pay a bonus or

increase compensation;

(d) Applications for an exception to

pay principal or interest on

subordinated debt; and

(e) Applications by critically

undercapitalized insured depository

institutions to engage in any restricted

activity listed in this subpart.

Subpart L—Section 19 of the FDI Act

(Consent to Service of Persons

Convicted of Certain Criminal

Offenses)

§ 303.220 Scope.

This subpart covers applications

under section 19 of the FDI Act (12

U.S.C. 1829).

Pursuant to section 19, any person

who has been convicted of any criminal

offense involving dishonesty, breach of

trust, or money laundering, or has

agreed to enter into a pretrial diversion

or similar program in connection with a

prosecution for such offense, may not

become, or continue as, an institutionaffiliated party of an insured depository

institution; own or control, directly or

indirectly, any insured depository

institution; or otherwise participate,

directly or indirectly, in the conduct of

the affairs of any insured depository

institution without the prior written

consent of the FDIC.

§ 303.221 Filing procedures.

(a) Regional office. An application

under section 19 shall be filed with the

appropriate FDIC regional director

(DOS).

(b) Contents of filing. Application

forms may be obtained from any FDIC

regional office. The FDIC may require

additional information beyond that

sought in the form or questionnaire, as

warranted, in individual cases.

§ 303.222 Service at another insured

depository institution.

In the case of a person who has

already been approved by the FDIC

under this subpart or section 19 of the

Act in connection with a particular

insured depository institution, such

person may not become an institution

affiliated party, or own or control

directly or indirectly another insured

depository institution, or participate in

the conduct of the affairs of another

insured depository institution, without

the prior written consent of the FDIC.

§ 303.223 Applicant’s right to hearing

following denial.

An applicant may request a hearing

following a denial of an application in

accordance with the provisions of part

308 of this chapter.

§ 303.224 Delegation of authority.

(a) Approvals. Authority is delegated

to the Director and Deputy Director

(DOS) or, where confirmed in writing by

the Director, to an associate director or

to the appropriate regional director or

deputy regional director, to approve

applications made by insured

depository institutions pursuant to

section 19 of the FDI Act, after

consultation with the Legal Division;

provided however, that authority may

not be delegated to the regional director

or deputy regional director where the

applicant’s primary supervisory

authority interposes any objection to

such application.

(b) Denials. Authority is delegated to

the Director and Deputy Director (DOS)

or, where confirmed in writing by the

Director, to an associate director, to

deny applications made by insured

depository institutions pursuant to

section 19 of the Act.

(c) Concurrent legal certification. The

authority to deny applications delegated

under this section shall be exercised

only upon the concurrent certification

by the General Counsel or, where

confirmed in writing by the General

Counsel, his or her designee, that the

action taken is not inconsistent with

section 19 of the FDI Act.
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(d) Conditions on application

approvals. Regional directors and

deputy regional directors acting under

delegated authority under this subpart

may impose any of the following

conditions on the approval of

applications, as appropriate in

individual cases:

(1) A participant or institutionaffiliated party of an institution shall be

bonded to the same extent as others in

similar positions; and/or

(2) When deemed necessary, the prior

consent of the appropriate regional

director (DOS) shall be required for any

proposed significant changes in duties

and/or responsibilities of the person

who is the subject of the application.

(e) Authority not delegated by FDIC

Board of Directors. The FDIC Board of

Directors has not delegated its authority

to consider and act upon an application

under section 19 of the FDI Act after a

hearing held in accordance with the

provisions of part 308 of this chapter.

Subpart M—Other Filings

§ 303.240 General.

This subpart sets forth the filing

procedures to be followed when seeking

the FDIC’s consent to engage in certain

activities or accomplish other matters as

specified in the individual sections

contained herein. For those matters

covered by this subpart that also have

substantive FDIC regulations or related

statements of policy, references to the

relevant regulations or statements of

policy are contained in the specific

sections.

§ 303.241 Reduce or retire capital stock or

capital debt instruments.

(a) Scope. This section contains the

procedures to be followed by an insured

state nonmember bank to seek the prior

approval of the FDIC to reduce the

amount or retire any part of its common

or preferred stock, or to retire any part

of its capital notes or debentures

pursuant to section 18(i)(1) of the Act

(12 U.S.C. 1828(i)(1)).

(b) Filing procedures. Applicants shall

submit a letter application to the

appropriate regional director (DOS).

(c) Content of filing. The application

shall contain the following:

(1) The type and amount of the

proposed change to the capital structure

and the reason for the change;

(2) A schedule detailing the present

and proposed capital structure;

(3) The time period that the proposal

will encompass;

(4) If the proposal involves a series of

transactions affecting Tier 1 capital

components which will be

consummated over a period of time

which shall not exceed 12 months, the

application shall certify that the insured

depository institution will maintain

itself as a well capitalized institution as

defined in part 325 of this chapter, both

before and after each of the proposed

transactions;

(5) If the proposal involves the

repurchase of capital instruments, the

amount of the repurchase price and the

basis for establishing the fair market

value of the repurchase price;

(6) A statement that the proposal will

be available to all holders of a particular

class of outstanding capital instruments

on an equal basis, and if not, the details

of any restrictions; and

(7) The date that the applicant’s board

of directors approved the proposal.

(d) Additional information. The FDIC

may request additional information at

any time during processing of the

application.

(e) Undercapitalized institutions.

Procedures regarding applications by an

undercapitalized insured depository

institution to retire capital stock or

capital debt instruments pursuant to

section 38 of the FDI Act (12 U.S.C.

1831o) are set forth in subpart K

(Prompt Corrective Action), § 303.203 of

this part. Applications pursuant to

section 38 and 18(i) may be filed

concurrently, or as a single application.

(f) Expedited processing for eligible

depository institutions. An application

filed under this section by an eligible

depository institution as defined in

§ 303.2(r) of this part will be

acknowledged in writing by the FDIC

and will receive expedited processing,

unless the applicant is notified in

writing to the contrary and provided

with the basis for that decision. The

FDIC may remove an application from

expedited processing for any of the

reasons set forth in § 303.11(c)(2) of this

part. Absent such removal, an

application processed under expedited

processing will be deemed approved 20

days after the FDIC’s receipt of a

substantially complete application.

(g) Standard processing. For those

applications that are not processed

pursuant to expedited procedures, the

FDIC will provide the applicant with

written notification of the final action as

soon as the decision is rendered.

(h) Delegation of authority. Authority

is delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director, to

approve or deny an application

pursuant to section 18(i)(1) of the FDI

Act (12 U.S.C. 1828(i)) to reduce the

amount or retire any part of common or

preferred capital stock, or to retire any

part of capital notes or debentures.

§ 303.242 Exercise of trust powers.

(a) Scope. This section contains the

procedures to be followed by a state

nonmember bank to seek the FDIC’s

prior consent to exercise trust powers.

The FDIC’s prior consent to exercise

trust powers is not required in the

following circumstances:

(1) Where a state nonmember bank

received authority to exercise trust

powers from its chartering authority

prior to December 1, 1950; or

(2) Where an insured depository

institution continues to conduct trust

activities pursuant to authority granted

by its chartering authority subsequent to

a charter conversion or withdrawal from

membership in the Federal Reserve

System.

(b) Filing procedures. Applicants

should submit to the appropriate

regional director (DOS) a completed

form, ‘‘Application for Consent To

Exercise Trust Powers.’’ This form may

be obtained from any FDIC regional

office.

(c) Content of filing. The filing should

consist of the completed trust

application form.

(d) Additional information. The FDIC

may request additional information at

any time during processing of the filing.

(e) Expedited processing for eligible

depository institutions. An application

filed under this section by an eligible

depository institution as defined in

§ 303.2(r) of this part will be

acknowledged in writing by the FDIC

and will receive expedited processing,

unless the applicant is notified in

writing to the contrary and provided

with the basis for that decision. The

FDIC may remove an application from

expedited processing for any of the

reasons set forth in § 303.11(c)(2) of this

part. Absent such removal, an

application processed under expedited

procedures will be deemed approved 30

days after the FDIC’s receipt of a

substantially complete application.

(f) Standard processing. For those

applications that are not processed

pursuant to the expedited procedures,

the FDIC will provide the applicant

with written notification of the final

action as soon as the decision is

rendered.

(g) Delegation of authority. (1) Where

the criteria listed in paragraph (g)(2) of

this section are satisfied and the

applicant agrees in writing to comply

with any conditions imposed by the

approving FDIC official, other than the

standard conditions defined in

§ 303.2(ff) of this part, which may be

imposed without the applicant’s written
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52859

consent, authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director and the

appropriate regional director and

deputy regional director, to approve

applications for the FDIC’s consent to

exercise trust powers.

(2) The following criteria must be

satisfied before the authority delegated

in paragraph (g)(1) of this section may

be exercised:

(i) The factors set forth in section 6 of

the FDI Act (12 U.S.C. 1816) have been

considered and favorably resolved;

(ii) The proposed management of the

trust business is determined to be

capable of satisfactorily handling the

anticipated business; and

(iii) The applicant’s board of directors

formally has adopted the FDIC

Statement of Principles of Trust

Department Management available from

any FDIC regional office.

(h) Denials and certain conditional

approvals. Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director to:

(1) Deny applications for trust powers;

and

(2) Approve applications for trust

powers where the criteria listed in

paragraph (g)(2) of this section are

satisfied but the applicant does not

agree in writing to comply with any

condition imposed by the delegate,

other than the standard conditions

defined in § 303.2(ff) of this part which

may be imposed without the applicant’s

written consent.

§ 303.243 Brokered deposit waivers.

(a) Scope. Pursuant to section 29 of

the FDI Act (12 U.S.C. 1831f) and

§ 337.6 of this chapter, an adequately

capitalized insured depository

institution may not accept, renew or roll

over any brokered deposits unless it has

obtained a waiver from the FDIC. A well

capitalized insured depository

institution may accept brokered

deposits without a waiver, and an

undercapitalized insured depository

institution may not accept, renew or roll

over any brokered deposits under any

circumstances. This section contains the

procedures to be followed to file with

the FDIC for a brokered deposit waiver.

The FDIC will provide notice to the

depository institution’s appropriate

federal banking agency and any state

regulatory agency, as appropriate, that a

request for a waiver has been filed and

will consult with such agency or

agencies, prior to taking action on the

institution’s request for a waiver. Prior

notice and/or consultation shall not be

required in any particular case if the

FDIC determines that the circumstances

require it to take action without giving

such notice and opportunity for

consultation.

(b) Filing procedures. Applicants

should submit a letter application to the

appropriate regional director (DOS).

(c) Content of filing. The application

should contain the following:

(1) The time period for which the

waiver is requested;

(2) A statement of the policy

governing the use of brokered deposits

in the institution’s overall funding and

liquidity management program;

(3) The volume, rates and maturities

of the brokered deposits held currently

and anticipated during the waiver

period sought, including any internal

limits placed on the terms, solicitation

and use of brokered deposits;

(4) How brokered deposits are costed

and compared to other funding

alternatives and how they are used in

the institution’s lending and investment

activities, including a detailed

discussion of asset growth plans;

(5) Procedures and practices used to

solicit brokered deposits, including an

identification of the principal sources of

such deposits;

(6) Management systems overseeing

the solicitation, acceptance and use of

brokered deposits;

(7) A recent consolidated financial

statement with balance sheet and

income statements; and

(8) The reasons the institution

believes its acceptance, renewal or

rollover of brokered deposits would

pose no undue risk.

(d) Additional information. The FDIC

may request additional information at

any time during processing of the

application.

(e) Expedited processing for eligible

depository institutions. An application

filed under this section by an eligible

depository institution as defined in this

§ 303.243(e) will be acknowledged in

writing by the FDIC and will receive

expedited processing, unless the

applicant is notified in writing to the

contrary and provided with the basis for

that decision. For the purpose of this

section, an applicant will be deemed an

eligible depository institution if it

satisfies all of the criteria contained in

§ 303.2(r) except that the applicant may

be adequately capitalized rather than

well capitalized. The FDIC may remove

an application from expedited

processing for any of the reasons set

forth in § 303.11(c)(2) of this part.

Absent such removal, an application

processed under expedited procedures

will be deemed approved 21 days after

the FDIC’s receipt of a substantially

complete application.

(f) Standard processing. For those

filings which are not processed

pursuant to the expedited procedures,

the FDIC will provide the applicant

with written notification of the final

action as soon as the decision is

rendered.

(g) Conditions for approval. A waiver

issued pursuant to this section shall:

(1) Be for a fixed period, generally no

longer than two years, but may be

extended upon refiling; and

(2) May be revoked by the FDIC at any

time by written notice to the institution.

(h) Delegation of authority. Authority

is delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director, to

approve or deny brokered deposit

waiver applications. Based upon a

preliminary review, any delegate may

grant a temporary waiver for a short

period in order to facilitate the orderly

processing of a filing for a waiver.

§ 303.244 Golden parachute and

severance plan payments.

(a) Scope. Pursuant to section 18(k) of

the FDI Act (12 U.S.C. 1828(k)) and part

359 of this chapter (12 CFR part 359),

an insured depository institution or

depository institution holding company

may not make golden parachute

payments or excess nondiscriminatory

severance plan payments unless the

depository institution or holding

company obtains permission to make

such payments in accordance with the

rules contained in part 359 of this

chapter. This section contains the

procedures to file for the FDIC’s consent

when such consent is necessary under

part 359 of this chapter, as described

below:

(1) Golden parachute payments. A

golden parachute payment is defined in

§ 359.1(f)(1) of this chapter as a payment

by a troubled insured depository

institution or troubled depository

institution holding company. A troubled

insured depository institution or a

troubled depository institution holding

company is prohibited from making

golden parachute payments unless it

obtains the consent of the appropriate

federal banking agency and the written

concurrence of the FDIC. Therefore, in

the case of golden parachute payments,

the procedures in this section apply to

all troubled insured depository

institutions and troubled depository

institution holding companies.

(2) Excess nondiscriminatory

severance plan payments. In the case of

excess nondiscriminatory severance

plan payments as provided by

§ 359.1(f)(2)(v) of this chapter, the
52860 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

FDIC’s consent is necessary for state

nonmember banks that meet the criteria

set forth in § 359.1(f)(1)(ii) of this

chapter. In addition, the FDIC’s consent

is required for all insured depository

institutions or depository institution

holding companies that meet the same

criteria and seek to make payments in

excess of the 12-month amount

specified in § 359.1(f)(2)(v).

(b) Filing procedures. Applicants

should submit a letter application to the

appropriate FDIC regional director

(DOS).

(c) Content of filing. The application

should contain the following:

(1) The reasons why the applicant

seeks to make the payment;

(2) An identification of the

institution-affiliated party who will

receive the payment;

(3) A copy of any contract or

agreement regarding the subject matter

of the filing;

(4) The cost of the proposed payment

and its impact on the institution’s

capital and earnings; and

(5) The reasons why consent to the

payment should be granted.

(d) Additional information. The FDIC

may request additional information at

any time during processing of the filing.

(e) Processing. The FDIC will provide

the applicant with a subsequent written

notification of the final action taken as

soon as the decision is rendered.

(f) Delegation of authority. Authority

is delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director, to

approve or to deny filings to make:

(1) Excess nondiscriminatory

severance plan payments as provided by

12 CFR 359.1(f)(2)(v); and

(2) Golden parachute payments

permitted by 12 CFR 359.4.

§ 303.245 Waiver of liability for commonly

controlled depository institutions.

(a) Scope. Section 5(e) of the FDI Act

(12 U.S.C. 1815(e)) creates liability for

commonly controlled insured

depository institutions for losses

incurred or anticipated to be incurred

by the FDIC in connection with the

default of a commonly controlled

insured depository institution or 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 FDI 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 (BIF) or the Savings Association

Insurance Fund (SAIF). This section

describes procedures to request a

conditional waiver of liability pursuant

to 12 U.S.C. 1815(e)(5)(A).

(b) Definition. Conditional waiver of

liability means an exemption from

liability pursuant to section 5(e) of the

FDI Act (12 U.S.C. 1815(e)) subject to

terms and conditions.

(c) Filing procedures. Applicants

should submit a letter application to the

appropriate regional director (DOS).

(d) Content of filing. The application

should contain the following

information:

(1) The basis for requesting a waiver;

(2) The existence of any significant

events (e.g., change of control, capital

injection, etc.) that may have an impact

upon the applicant and/or any

potentially liable institution;

(3) Current, and if applicable, pro

forma financial information regarding

the applicant and potentially liable

institution(s); and

(4) The benefits to the appropriate

FDIC insurance fund resulting from the

waiver and any related events.

(e) Additional information. The FDIC

may request additional information at

any time during the processing of the

filing.

(f) Processing. The FDIC will provide

the applicant with written notification

of the final action as soon as the

decision is rendered.

(g) Failure to comply with terms of

conditional waiver. In the event a

conditional waiver of liability is issued,

failure to comply with the terms

specified therein may result in the

termination of the conditional waiver of

liability. The FDIC reserves the right to

revoke the conditional waiver of

liability after giving the applicant

written notice of such revocation and a

reasonable opportunity to be heard on

the matter.

(h) Authority retained by FDIC Board

of Directors. The FDIC Board of

Directors retains the authority to act on

any application for waiver of liability of

commonly controlled depository

institutions.

§ 303.246 Insurance fund conversions.

(a) Scope. This section contains the

procedures to be followed by an insured

depository institution to seek the FDIC’s

prior approval to engage in an insurance

fund conversion that involves the

transfer of deposits between the SAIF

and the BIF. Optional conversion

transactions, commonly referred to as

Oakar transactions, pursuant to section

5(d)(3) of the FDI Act (12 U.S.C.

1815(d)(3)) which do not involve the

transfer of deposits between the SAIF

and the BIF are governed by the

procedures set forth in subpart D

(Merger Transactions) of this part.

(b) Filing procedures. Applicants

should submit a letter application to the

appropriate FDIC regional director

(DOS). The filing should be signed by

representatives of each institution

participating in the transaction.

Insurance fund conversions which are

proposed in conjunction with a merger

application filed pursuant to section

18(c) of the FDI Act (12 U.S.C. 1828(c))

should be included with that filing.

(c) Content of filing. The application

should include the following

information:

(1) A description of the transaction;

(2) The amount of deposits involved

in the conversion transaction;

(3) A pro forma balance sheet and

income statement for each institution

upon consummation of the transaction;

and

(4) Certification by each party to the

transaction that applicable entrance and

exit fees will be paid pursuant to part

312 of this chapter.

(d) Additional information. The FDIC

may request additional information at

any time during processing of the filing.

(e) Processing. The FDIC will provide

the applicant with written notification

of the final action as soon as the

decision is rendered.

(f) Delegation of authority. Authority

is delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director, to

approve or deny filings for insurance

fund conversions involving the transfers

of deposits between the Savings

Association Insurance Fund and the

Bank Insurance Fund.

§ 303.247 Conversion with diminution of

capital.

(a) Scope. This section contains the

procedures to be followed by an insured

federal depository institution seeking

the prior written consent of the FDIC

pursuant to section 18(i)(2) of the FDI

Act (12 U.S.C. 1828(i)(2)) to convert

from an insured federal depository

institution to an insured state

nonmember bank (except a District

bank) where the capital stock or surplus

of the resulting bank will be less than

the capital stock or surplus,

respectively, of the converting

institution at the time of the

shareholders’ meeting approving such

conversion.

(b) Filing procedures. Applicants

should submit a letter application to the

appropriate regional director (DOS).
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52861

(c) Content of filing. The application

should contain the following

information:

(1) A description of the proposed

transaction;

(2) A schedule detailing the present

and proposed capital structure; and

(3) A copy of any documents

submitted to the state chartering

authority with respect to the charter

conversion.

(d) Additional information. The FDIC

may request additional information at

any time during the processing.

(e) Processing. The FDIC will provide

the applicant with written notification

of the final action as soon as the

decision is rendered.

(f) Delegation of authority—(1)

Approvals. Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director and the

appropriate regional director and

deputy regional director, to approve

applications to convert with diminution

of capital.

(2) Denials. Authority is delegated to

the Director and Deputy Director (DOS)

and, where confirmed in writing by the

Director, to an associate director to deny

applications to convert with diminution

of capital.

§ 303.248 Continue or resume status as an

insured institution following termination

under section 8 of the FDI Act.

(a) Scope. This section relates to

applications by depository institutions

whose insured status has been

terminated under section 8 of the FDI

Act (12 U.S.C. 1818) for permission to

continue or resume its status as an

insured depository institution. This

section covers institutions whose

deposit insurance continues in effect for

any purpose or for any length of time

under the terms of an FDIC order

terminating deposit insurance, but does

not cover operating non-insured

depository institutions which were

previously insured by the FDIC, or any

non-insured, non-operating depository

institution whose charter has not been

surrendered or revoked.

(b) Filing procedures. Applicants

should submit a letter application to the

appropriate regional director (DOS).

(c) Content of filing. The filing should

contain the following information:

(1) A complete statement of the action

requested, all relevant facts, and the

reason for such requested action; and

(2) A certified copy of the resolution

of the depository institution’s board of

directors authorizing submission of the

filing.

(d) Additional information. The FDIC

may request additional information at

any time during processing of the filing.

(e) Processing. The FDIC will provide

the applicant with written notification

of the final action as soon as the

decision is rendered.

(f) Authority retained by FDIC Board

of Directors. The FDIC Board of

Directors retains the authority to act on

any application to continue or resume

status as an insured institution

following termination under section 8 of

the FDI Act.

§ 303.249 Truth in Lending Act—Relief

from reimbursement.

(a) Scope. This process applies to

requests for relief from reimbursement

pursuant to the Truth in Lending Act

(15 U.S.C. 1601 et seq.) and Regulation

Z (12 CFR part 226).

(b) Procedures to be followed in filing

initial requests for relief. Requests for

relief from reimbursement should be

filed with the appropriate regional

director (DCA) within 60 days after

receipt of the compliance report of

examination containing the request to

conduct a file search and make

restitution to affected customers. The

filing should contain a complete and

concise statement of the action

requested, all relevant facts, the reasons

and analysis relied upon as the basis for

such requested action, and all

supporting documentation.

(c) Additional information. The FDIC

may request additional information at

any time during processing of any such

requests.

(d) Processing. The FDIC will

acknowledge receipt of the request and

provide the applicant with a subsequent

written notification of its determination

as soon as the decision is rendered.

(e) Delegation of authority—(1) Denial

of initial requests for relief. Authority is

delegated to the Director and Deputy

Director (DCA), and where confirmed in

writing by the Director, to an associate

director, or to the appropriate regional

director or deputy regional director, to

deny requests for relief from the

requirements for reimbursement under

section 608(a)(2) of the Truth in Lending

Simplification and Reform Act (15

U.S.C. 1607(e)(2)); provided however,

that a regional director or deputy

regional director is not authorized to

deny any request where the estimated

amount of reimbursement is greater than

$25,000.

(2) Approval of initial requests for

relief. Authority is delegated to the

Director and Deputy Director (DCA),

and where confirmed in writing by the

director, to a deputy director or an

associate director to approve requests

for relief from the requirements for

reimbursement under section 608(a)(2)

of the Truth in Lending Simplification

and Reform Act (15 U.S.C. 1607(a)(2)).

(f) Legal concurrence. The authority

delegated under this section shall be

exercised only upon concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

or, in cases where a regional director or

deputy regional director denies requests

for relief, by the appropriate regional

counsel, that the action taken is not

inconsistent with the Truth in Lending

Simplification and Reform Act.

(g) Procedures to be followed in filing

requests for reconsideration. Within 15

days of receipt of written notice that its

request for relief has been denied, the

requestor may petition the appropriate

regional director (DCA) for

reconsideration of such request in

accordance with the procedures set

forth in § 303.11(f) of this part.

§ 303.250 Modification of conditions.

(a) Scope. This section contains the

procedures to be followed by an insured

depository institution to seek the prior

consent of the FDIC to modify the

requirements of a prior approval of a

filing issued by the FDIC.

(b) Filing procedures. Applicants

should submit a letter application to the

appropriate FDIC regional director

(DOS).

(c) Content of filing. The application

should contain the following

information:

(1) A description of the original

approval;

(2) A description of the modification

requested; and

(3) The reason for the request.

(d) Additional information. The FDIC

may request additional information at

any time during processing of the filing.

(e) Processing. The FDIC will provide

the applicant with a subsequent written

notification of the final action as soon

as the decision is rendered.

(f) Delegation of authority. Authority

is delegated to the Director and Deputy

Director (DOS) and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director, to

approve or deny requests to modify the

requirements of a prior approval of a

filing issued by the FDIC subject to the

following criteria:

(1) The Legal Division is consulted to

the same extent as was required for

approval of the original filing; and

(2) The approving delegate had the

authority to approve the original filing.

§ 303.251 Extension of time.

(a) Scope. This section contains the

procedures to be followed by an insured
52862 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

depository institution to seek the prior

consent of the FDIC for additional time

to fulfill a condition required in an

approval of a filing issued by the FDIC

or to consummate a transaction which

was the subject of an approval by the

FDIC.

(b) Filing procedures. Applicants

should submit a letter application to the

appropriate regional director (DOS).

(c) Content of filing. The application

should contain the following

information:

(1) A description of the original

approval;

(2) Identification of the original time

limitation;

(3) The additional time period

requested; and

(4) The reason for the request.

(d) Additional information. The FDIC

may request additional information at

any time during processing of the filing.

(e) Processing. The FDIC will provide

the applicant with written notification

of the final action as soon as the

decision is rendered.

(f) Delegation of authority. (1) Except

as provided in paragraph (f)(2) of this

section, authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director and the

appropriate regional director and

deputy regional director, to approve or

deny requests for extensions of time

within which to perform acts or fulfill

conditions required by a prior FDIC

action on a filing of the insured

depository institution.

(2) Limits on exercise of delegated

authority. (i) Extensions of time

approved may not exceed one year.

(ii) Notwithstanding the delegations

in paragraph (f)(1) of this section, no

delegate shall have the authority to deny

an extension of time request unless that

delegate has the authority under this

part to deny the original filing upon

which the extension of time is

predicated.

Subpart N—Enforcement Delegations

§ 303.260 Scope.

This subpart contains delegations of

authority relating to the initiation,

prosecution, and settlement of

administrative enforcement actions

under the FDI Act and other laws and

regulations enforced by the FDIC,

including investigations and subpoenas.

§ 303.261 Issuance of notification to

primary regulator under section 8(a) of the

FDI Act (12 U.S.C. 1818(a)).

(a) Book capital less than 2 percent.

Authority is delegated to the Director

and Deputy Director (DOS), and where

confirmed in writing by the Director, to

an associate director or to the

appropriate regional director or deputy

regional director, to issue notifications

to primary regulator when the

respondent depository institution’s book

capital is less than 2 percent of total

assets; provided that authority may not

be delegated to the regional director or

deputy regional director whenever the

respondent depository institution has

issued any mandatory convertible debt

or any form of Tier 2 capital (such as

limited life preferred stock,

subordinated notes and debentures).

(b) Tier 1 capital less than 2 percent.

Authority is delegated to the Director

and Deputy Director (DOS) and, where

confirmed in writing by the Director, to

an associate director, to issue

notifications to primary regulator when

the respondent depository institution’s

adjusted Tier 1 capital is less than 2

percent of adjusted part 325 total assets

as defined in § 303.2(b) of this part.

(c) Legal concurrence. The authority

delegated under this section shall be

exercised only upon concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

or, in cases where a regional director or

deputy regional director issues

notifications to primary regulator, by the

appropriate regional counsel, that the

allegations contained in the findings of

violations of law or regulation and/or

unsafe or unsound practices and/or

unsafe or unsound condition, if proven,

constitute a basis for the issuance of a

notification to primary regulator

pursuant to section 8(a) of the FDI Act

(12 U.S.C. 1818(a)).

§ 303.262 Issuance of notice of intention to

terminate insured status under section 8(a)

of the FDI Act (12 U.S.C. 1818(a)).

(a) General. Authority is delegated to

the Director and Deputy Director (DOS),

and where confirmed in writing by the

Director, to an associate director, to

issue notices of intent to terminate

insured status when the respondent

depository institution has failed to

correct any violations of law or

regulation and/or unsafe or unsound

practices and/or unsafe or unsound

condition as specified in the relevant

notification to primary regulator.

(b) Legal concurrence. The authority

delegated under this section shall be

exercised only upon concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

that the allegations contained in the

findings in the notice of intention to

terminate insured status of violations of

law or regulation and/or unsafe or

unsound practices and/or unsafe or

unsound condition, if proven, constitute

a basis for termination of the insured

status of the respondent depository

institution pursuant to section 8(a) of

the FDI Act (12 U.S.C. 1818(a)).

§ 303.263 Cease-and-desist actions under

section 8(b) of the FDI Act (12 U.S.C.

1818(b)).

(a) General. Authority is delegated to

the Director and Deputy Director (DOS),

to the Director and Deputy Director

(DCA), and where confirmed in writing

by the appropriate Director, to an

associate director or to the appropriate

regional director or deputy regional

director to issue:

(1) Notices of charges; and

(2) Cease-and-desist orders (with or

without a prior notice of charges) where

the respondent depository institution or

individual respondent consents to the

issuance of the cease-and-desist order

prior to the filing by an administrative

law judge of proposed findings of fact,

conclusions of law and recommended

decision with the Executive Secretary of

the FDIC.

(b) Joint DOS–DCA action. The

Director (DOS) and the Director (DCA)

may issue a joint notice of charges or

cease-and-desist order under this

section, where such notice or order

addresses both safety and soundness

and consumer compliance matters. A

joint notice or order will require the

signatures of both Directors or their

Deputy Directors or associate directors,

regional directors or deputy regional

directors.

(c) Legal concurrence. The authority

delegated under this section shall be

exercised only upon concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

or, in cases where a regional director or

deputy regional director issues the

notice of charges or the stipulated ceaseand-desist order, by the appropriate

regional counsel, that the allegations

contained in the notice of charges, if

proven, constitute a basis for the

issuance of a section 8(b) order, or that

the stipulated cease-and-desist order is

authorized under section 8(b) of the FDI

Act, and, upon its effective date, shall

be a cease-and-desist order which has

become final for purposes of

enforcement pursuant to the FDI Act.

§ 303.264 Temporary cease-and-desist

orders under section 8(c) of the FDI Act (12

U.S.C. 1818(c)).

(a) General. Authority is delegated to

the Director and Deputy Director (DOS)

and to the Director and Deputy Director

(DCA), and where confirmed in writing
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52863

by the appropriate Director, to an

associate director, to issue temporary

cease-and-desist orders.

(b) Joint DOS-DCA action. The

Director (DOS) and the Director (DCA)

may issue a joint temporary cease-anddesist order where such order addresses

both safety and soundness and

consumer compliance matters. A joint

notice or order will require the

signatures of both Directors or their

Deputy Directors or associate directors.

(c) Legal concurrence. The authority

delegated under this section shall be

exercised only upon concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

that the action is not inconsistent with

section 8(c) of the FDI Act (12 U.S.C.

1818(c)) and the temporary cease-anddesist order is enforceable in a United

States District Court.

§ 303.265 Removal and prohibition actions

under section 8(e) of the FDI Act (12 U.S.C.

1818(e)).

(a) General. Authority is delegated to

the Director and Deputy Director (DOS)

or the Director and Deputy Director

(DCA) and, where confirmed in writing

by the appropriate Director, to an

associate director, to issue:

(1) Notices of intention to remove an

institution-affiliated party from office or

to prohibit an institution-affiliated party

from further participation in the

conduct of the affairs of an insured

depository institution pursuant to

sections 8(e)(1) and (2) of the FDI Act

(12 U.S.C. 1818(e)(1) and (2)), and

temporary orders of suspension

pursuant to section 8(e)(3) of the FDI

Act (12 U.S.C. 1818(e)(3)); and

(2) Orders of removal, suspension or

prohibition from participation in the

conduct of the affairs of an insured

depository institution where the

institution-affiliated party consents to

the issuance of such orders prior to the

filing by an administrative law judge of

proposed findings of fact, conclusions of

law and a recommended decision with

the Executive Secretary of the FDIC.

(b) Joint DOS-DCA action. The

Director (DOS) and the Director (DCA)

may issue joint notices and orders

pursuant to this section where such

notice or order addresses both safety

and soundness and consumer

compliance matters. A joint notice or

order will require the signatures of both

directors or their deputy directors or

associate directors.

(c) Legal concurrence. The authority

delegated under this section shall be

exercised only upon concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

that the allegations contained in the

notice of intent, if proven, constitute a

basis for the issuance of a notice of

intent pursuant to section 8(e) of the FDI

Act, or that the stipulated section 8(e)

order is not inconsistent with section

8(e) of the FDI Act, and, upon issuance,

shall be an order which has become

final for purposes of enforcement

pursuant to the FDI Act.

§ 303.266 Suspension and removal action

under section 8(g) of the FDI Act (12 U.S.C.

1818(g)).

(a) General. Authority is delegated to

the Director and Deputy Director (DOS),

to the Director and Deputy Director

(DCA), and where confirmed in writing

by the appropriate Director, to an

associate director, to issue orders of

suspension or prohibition to an

institution-affiliated party who is

charged in any information, indictment,

or complaint, or who is convicted of or

enters a pretrial diversion or similar

program, as to any criminal offense

cited in or covered by section 8(g) of the

FDI Act, when such institution-affiliated

party consents to the suspension or

prohibition.

(b) Delegation of authority where

suspension or prohibition mandated.

Authority is delegated to the Director

and Deputy Director (DOS), to the

Director and Deputy Director (DCA),

and where confirmed in writing by the

appropriate Director, to an associate

director, to issue orders of suspension

and prohibition to any institutionaffiliated party who is charged in any

information, indictment, or complaint,

or who is convicted or enters a pretrial

diversion or similar program, as to any

criminal offense involving mandatory

suspension or prohibition under

sections 8(g)(1)(A)(ii) and (C)(ii) of the

FDI Act (12 U.S.C. 1818(g)(1)(A)(ii) and

(C)(ii)), whether or not such institutionaffiliated party consents to the

suspension or prohibition.

(c) Joint DOS-DCA action. The

Director (DOS) and the Director (DCA)

may issue joint orders pursuant to this

section where such order addresses both

safety and soundness and consumer

compliance matters. A joint order will

require the signatures of both Directors

or their Deputy Directors or associate

directors.

(d) Legal concurrence. The authority

delegated under this section shall be

exercised only upon concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

that the action taken is not inconsistent

with section 8(g) of the FDI Act (12

U.S.C. 1818(g)) and the order is

enforceable in a United States District

Court pursuant to sections 8(i) and 8(j)

of the FDI Act (12 U.S.C. 1818(i) and (j)).

§ 303.267 Termination of insured status

under section 8(p) of the FDI Act (12 U.S.C.

1818(p)).

(a) General. Authority is delegated to

the Executive Secretary to issue consent

orders terminating the insured status of

insured depository institutions that

have ceased to engage in the business of

receiving deposits other than trust funds

pursuant to section 8(p) of the FDI Act

(12 U.S.C. 1818(p)).

(b) DOS and legal concurrence. The

authority delegated under this section

shall be exercised only upon the

recommendation and concurrence of the

Director or Deputy Director (DOS) or,

when confirmed in writing by the

Director, an associate director, and upon

the certification of the General Counsel

or, where confirmed in writing by the

General Counsel, by his or her designee,

that the action taken is not inconsistent

with section 8(p) of the FDI Act (12

U.S.C. 1818(p)).

§ 303.268 Termination of insured status

under section 8(q) of the FDI Act (12 U.S.C.

1818(q)).

(a) General. Authority is delegated to

the Executive Secretary to issue consent

orders terminating the insured status of

an insured depository institution where

the liabilities of the insured institution

for deposits shall have been assumed by

another insured depository institution

or depository institutions, whether by

way of merger, consolidation, or other

statutory assumption, or pursuant to

contract, pursuant to section 8(q) of the

FDI Act (12 U.S.C. 1818(q)).

(b) DOS and legal concurrence. The

authority delegated under this section

shall be exercised only upon the

recommendation and concurrence of the

Director or Deputy Director (DOS) or,

when confirmed in writing by the

Director, an associate director, and upon

the certification of the General Counsel

or, where confirmed in writing by the

General Counsel, by his or her designee,

that the action taken is not inconsistent

with section 8(q) of the FDI Act (12

U.S.C. 1818(q)).

§ 303.269 Civil money penalties.

(a) General. Except as provided

otherwise in this section, authority is

delegated to the Director and Deputy

Director (DOS), to the Director and

Deputy Director (DCA), and where

confirmed in writing by the appropriate

Director, to an associate director, to

issue:

(1) Notice of assessment of civil

money penalties; and
52864 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

(2) Final orders to pay (with or

without a prior notice of assessment of

civil money penalty) where the insured

depository institution or institutionaffiliated party consents to the issuance

of the order to pay and waives, as

applicable, receipt of a notice of

assessment of civil money penalty and

the right to an administrative hearing.

(b) Legal concurrence. The authority

delegated under paragraph (a) of this

section shall be exercised only upon

concurrent certification by the General

Counsel or, where confirmed in writing

by the General Counsel, by his or her

designee, that the allegations contained

in the notice of assessment, if proven,

constitute a basis for assessment of civil

money penalties, or that the stipulated

final order to pay is authorized under

the FDI Act, and upon its effective date,

shall be an order to pay which has

become final for purposes of

enforcement pursuant to the FDI Act.

(c) Joint DOS–DCA action. The

Director (DOS) and the Director (DCA)

may issue joint notices pursuant to

paragraph (a) of this section where such

notice addresses both safety and

soundness and consumer compliance

matters. A joint notice will require the

signatures of both Directors or their

Deputy Directors or associate directors.

(d) Required reports. (1) Authority is

delegated to the General Counsel or his

or her designee for the levying and

enforcement of civil money penalties

under:

(i) Section 7(a)(1) of the FDI Act (12

U.S.C. 1817(a)(1)) for the late,

inaccurate, false or misleading filing of

Reports of Condition and Reports of

Income;

(ii) Section 8(i) of the FDI Act (12

U.S.C. 1818(i)) for the late, inaccurate,

false or misleading filing of Home

Mortgage Disclosure Act (HMDA)

reports;

(iii) Section 8(i) of the FDI Act (12

U.S.C. 1818(i)) for the late, inaccurate,

false or misleading filing of Community

Reinvestment Act (CRA) loan data

reports; and

(iv) Such other reports as the Board of

Directors may require.

(2) In the exercise of this delegated

authority, the General Counsel or his or

her designee shall consult with the

appropriate Director, Deputy Director,

or associate director before imposing

any penalty.

§ 303.270 Notices of assessment under

section 5(e) of the FDI Act (12 U.S.C.

1815(e)).

(a) General. Authority is delegated to

the Director and Deputy Director (DOS),

and where confirmed in writing by the

Director, to an associate director, to

issue notices of assessment of liability to

commonly controlled insured

depository institutions for the estimated

amount of loss to the deposit insurance

funds.

(b) Legal concurrence. The authority

delegated under this section shall be

exercised only upon concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

that the action taken is not inconsistent

with section 5(e) of the FDI Act (12

U.S.C. 1815(e)).

§ 303.271 Prompt corrective action

directives and capital plans under section

38 of the FDI Act (12 U.S.C. 1831o) and part

325 of this chapter.

(a) General—Notices, directives and

orders. Authority is delegated to the

Director and Deputy Director (DOS), and

where confirmed in writing by the

Director, to an associate director, or to

the appropriate regional director or

deputy regional director, to accept,

reject, require new or revised capital

restoration plans, or make any other

determinations with respect to the

implementation of capital restoration

plans and, in accordance with subpart Q

of part 308 of this chapter, to issue:

(1) Notices of intent to issue capital

directives;

(2) Directives to insured state

nonmember banks that fail to maintain

capital in accordance with the

requirements contained in part 325 of

this chapter;

(3) Notices of intent to issue prompt

corrective action directives, except

directives issued pursuant to section

38(f)(2)(F)(ii) of the FDI Act (12 U.S.C.

1831(f)(2)(F)(ii));

(4) Directives to insured depository

institutions pursuant to section 38 of the

FDI Act (12 U.S.C. 1831o), with or

without the consent of the respondent

bank to the issuance of the directive,

except directives issued pursuant to

section 38(f)(2)(F)(ii) of the FDI Act (12

U.S.C. 1831o(f)(2)(F)(ii));

(5) Directives to insured depository

institutions requiring immediate action

or imposing proscriptions pursuant to

section 38 of the FDI Act (12 U.S.C.

1831o) and part 325 of this chapter, and

in accordance with the requirements

contained in § 308.201(a)(2) of this

chapter;

(6) Notices of intent to reclassify

insured banks pursuant to §§ 325.103(d)

and 308.202 of this chapter;

(7) Directives to reclassify insured

banks pursuant to §§ 325.103(d) and

308.202 of this chapter with the consent

of the respondent bank to the issuance

of the directive; and

(8) Orders on request for informal

hearings to reconsider reclassifications

and designate the presiding officer at

the hearing pursuant to § 308.202 of this

chapter.

(b) Notices—Dismissal of director and

officer. Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director, to:

(1) Issue notices of intent to issue a

prompt corrective action directive

ordering the dismissal from office of a

director or senior executive officer

pursuant to section 38(f)(2)(F)(ii) of the

FDI Act (12 U.S.C. 1831o(f)(2)(F)(ii)) and

in accordance with the requirements

contained in § 308.203 of this chapter;

(2) Issue directives ordering the

dismissal from office of a director or

senior executive officer pursuant to

section 38(f)(2)(F)(ii) of the FDI Act (12

U.S.C. 1831o(f)(2)(F)(ii)); and

(3) Issue orders of dismissal from

office of a director or senior executive

officer pursuant to section 38(f)(2)(F)(ii)

of the FDI Act (12 U.S.C.

1831o(f)(2)(F)(ii)) where the individual

consents to the issuance of such order

prior to the filing of a recommendation

by the presiding officer with the FDIC.

(c) Reclassification of institution other

than on basis of capital. Authority is

delegated to the Director and Deputy

Director (DOS), and where confirmed in

writing by the Director, to an associate

director, to:

(1) Act on recommended decisions of

presiding officers pursuant to a request

for reconsideration of a reclassification

in accordance with the requirements

contained in § 308.202 of this chapter;

and

(2) Act on requests for rescission of a

reclassification.

(d) Appeals of immediately effective

PCA directives. Authority is delegated to

the Director and Deputy Director (DOS),

and where confirmed in writing by the

Director, to an associate director, to act

on appeals from immediately effective

directives issued pursuant to section 38

of the FDI Act (12 U.S.C. 1831o) and

§ 308.201 of this chapter.

(e) Informal hearings. Authority is

delegated to the Executive Secretary of

the FDIC to issue orders for informal

hearings and designate presiding

officers on directives issued pursuant to

section 38(f)(2)(F)(ii) of the FDI Act (12

U.S.C. 1831o(f)(2)(F)(ii)).

(f) Legal concurrence. The authority

delegated under this section shall be

exercised only upon the concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

or, in cases where a regional director or

deputy regional director issues a notice,

directive, or order, by the appropriate

regional counsel, that the action taken is
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52865

not inconsistent with section 38 of the

FDI Act (12 U.S.C. 1831o) and part 325

of this chapter.

§ 303.272 Investigations under section

10(c) of the FDI Act (12 U.S.C. 1820(c)).

(a) Authority of division directors.

Authority is delegated to the Director

and Deputy Director (DOS), to the

Director and Deputy Director (DCA), to

the Director and Deputy Director of the

Division of Resolutions and

Receiverships, and where confirmed in

writing by the appropriate Director, to

an associate director, or to the

appropriate regional director and

deputy regional director, to issue an

order of investigation pursuant to

section 10(c) of the FDI Act (12 U.S.C.

1820(c)) and subpart K of part 308 of

this chapter (12 CFR 308.144 through

308.150).

(b) Authority of General Counsel.

Authority is delegated to the General

Counsel, and where confirmed in

writing by the General Counsel, to his

or her designee, to issue an order of

investigation pursuant to sections 8

through 13 of the FDI Act (12 U.S.C.

1818–1823), as appropriate, and subpart

K of part 308 of this chapter (12 CFR

308.144 through 308.150).

(c) Concurrence in certain situations.

In issuing an order of investigation that

pertains to an open insured depository

institution or an institution making

application to become an insured

depository institution, or a postconservatorship or post-receivership

order of investigation, the authority

delegated under this section shall be

exercised only upon the concurrent

execution of the order of investigation

by the Director or Deputy Director

(DOS), or the Director or Deputy

Director (DCA), or the Director or

Deputy Director of the Division of

Resolutions and Receiverships, their

respective associate directors, and the

General Counsel or his or her designee.

In the case of a joint order of

investigation, such authority shall be

exercised only upon the concurrent

execution of the order of investigation

by both Directors or Deputy Directors, or

their associate directors, and upon the

certification and execution of the order

by the General Counsel or his or her

designee.

§ 303.273 Unilateral settlement offers.

(a) General. Authority is delegated to

the Director and Deputy Director (DOS),

to the Director and Deputy Director

(DCA), and where confirmed in writing

by the appropriate Director, to an

associate director, to accept, deny or

enter into negotiations for or regarding

settlement and settlement offers with

insured depository institutions, or with

an institution-affiliated party, pertaining

to or arising in connection with a

proceeding under part 308 of this

chapter. In cases where a proceeding

under part 308 of this chapter was

issued jointly by DOS and DCA, both

Directors or Deputy Directors, or their

associate directors, must agree to accept,

deny or enter into negotiations

regarding settlement and settlement

offers with insured depository

institutions or with an institutionaffiliated party.

(b) Legal concurrence. The authority

delegated under this section shall be

exercised only upon concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

that the action taken is not inconsistent

with the FDI Act.

§ 303.274 Acceptance of written

agreements.

(a) Written agreements under section

8(a) of the FDI Act. Authority is

delegated to the Director and Deputy

Director (DOS), and where confirmed in

writing by the Director, to an associate

director, to accept or enter into any

written agreements with insured

depository institutions, or any

institution-affiliated party pertaining to

any matter which may be addressed by

the FDIC pursuant to section 8(a) of the

FDI Act (12 U.S.C. 1818(a)).

(b) Written agreements in lieu of

cease-and-desist orders. Authority is

delegated to the Director and Deputy

Director (DOS) and to the Director and

Deputy Director (DCA), and where

confirmed in writing by the appropriate

Director, to an associate director, to

accept or enter into any written

agreements with insured depository

institutions, or any institution-affiliated

party pertaining to any safety and

soundness or consumer compliance

matter which may be addressed by the

FDIC pursuant to section 8(b) of the FDI

Act (12 U.S.C. 1818(b)) or any other

provision of the FDI Act which

addresses safety and soundness or

consumer compliance matters. In cases

which would address both safety and

soundness and consumer compliance

matters, the Directors, or their

designees, may accept or enter into joint

written agreements with insured

depository institutions or any

institution-affiliated party.

(c) Written agreements as conditions

attendant to FDIC filings contained in

this part. Authority is delegated to the

Director and Deputy Director (DOS), and

to the Director and Deputy Director

(DCA) and, where confirmed in writing

by the appropriate Director, to an

associate director, or to the appropriate

regional director or deputy regional

director, to accept or enter into any

written agreements with insured

depository institutions, any institutionaffiliated party or any other petitioner

which contains conditions precedent to

the FDIC’s non-objection to a filing

pursuant to this part.

(d) Legal concurrence. The authority

delegated under this section shall be

exercised only upon concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

that the action taken is not inconsistent

with the FDI Act.

§ 303.275 Modifications and terminations

of enforcement actions and orders.

(a) Termination of section 8(a) (12

U.S.C. 1818(a)) orders and agreements.

Authority is delegated to the Director

and Deputy Director (DOS) and, where

confirmed in writing by the Director, to

an associate director, or to the

appropriate regional director or deputy

regional director, to terminate

outstanding section 8(a) orders and

agreements and to terminate actions and

agreements which are pending pursuant

to section 8(a) of the FDI Act when the

depository institution is closed by a

federal or state authority or merges into

another institution.

(b) Termination of section 8(a) (12

U.S.C. 1818(a)) notification to primary

regulator issued by Board of Directors.

Authority is delegated to the Director

and Deputy Director (DOS), and where

confirmed in writing by the Director, to

an associate director, or to the

appropriate regional director or deputy

regional director, to terminate

notifications to primary regulator issued

by the Board of Directors pursuant to

section 8(a) of the FDI Act where the

respondent depository institution is in

material compliance with such

notification or for good cause shown.

(c) Termination of section 8(a) (12

U.S.C. 1818(a)) notice of intent to

terminate insured status. In cases where

the Board of Directors has issued a

notice of intent to terminate insured

status pursuant to section 8(a) of the FDI

Act, authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director, or to

the appropriate regional director or

deputy regional director, to terminate

the actions pending pursuant to such

notice of intent to terminate insured

status where the respondent depository

institution is in material compliance

with the applicable notification to

primary regulator or for good cause

shown.
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(d) Sections 8(b) and 8(c)(12 U.S.C.

1818(b) and (c)) actions and orders. (1)

Authority is delegated to the Director

and Deputy Director (DOS) and to the

Director and Deputy Director (DCA), as

appropriate and, where confirmed in

writing by the appropriate Director, to

an associate director, or to the

appropriate regional director or deputy

regional director, to terminate

outstanding section 8(b) and section 8(c)

orders and agreements and to terminate

actions and agreements which are

pending pursuant to sections 8(b) and

8(c) of the FDI Act when the depository

institution is closed by a federal or state

authority or merges into another

institution. In cases where a joint order

was issued by DOS and DCA, both

Directors, or their Deputy Directors or

associate directors, or the appropriate

regional directors or deputy regional

directors, must execute the order of

termination.

(2) Authority is delegated to the

Director and Deputy Director (DOS) and

to the Director and Deputy Director

(DCA), as appropriate, and where

confirmed in writing by the appropriate

Director, to an associate director, or to

the appropriate regional director or

deputy regional director, to terminate

outstanding section 8(b) orders issued

by the Board of Directors either where

material compliance with the section

8(b) order has been achieved by the

respondent depository institution or

individual respondent or for good cause

shown. In cases where an order issued

by the Board of Directors addresses both

safety and soundness and consumer

compliance matters, both Directors or

Deputy Director, or the designees of the

Directors, must execute the order of

termination.

(e) Modification and termination of

section 8(e) (12 U.S.C. 1818(e)) orders

and actions. Authority is delegated to

the Director and Deputy Director (DOS)

and the Director and Deputy Director

(DCA), as appropriate, and where

confirmed in writing by the appropriate

Director, to an associate director, to

modify or terminate outstanding section

8(e) orders and pending actions and to

grant consent under section 8(e)(7)(B) of

the Act (12 U.S.C. 1818(e)(7)(B)) for the

modification or termination of an

outstanding section 8(e) order issued by

another Federal financial institution

regulatory agency where:

(1) The respondent has demonstrated

his or her fitness to participate in any

manner in the conduct of the affairs of

an insured depository institution;

(2) The respondent has shown that his

or her participation would not pose a

risk to the institution’s safety and

soundness; or

(3) The respondent has proven that

his or her participation would not erode

public confidence in the institution.

(f) Modification and termination of

section 8(g) (12 U.S.C. 1818(g)) orders

and actions. Pursuant to section 8(j) of

the FDI Act (12 U.S.C. 1818(j)),

authority is delegated to the Director

and Deputy Director (DOS) and the

Director and Deputy Director (DCA), as

appropriate, and where confirmed in

writing by the appropriate Director, to

an associate director, to approve

requests for modifications or

terminations of section 8(g) orders

issued by either the Board of Directors

or under delegated authority.

(g) Other matters not specifically

addressed. For all outstanding or

pending notices, actions, orders,

directives and agreements not

specifically addressed in this subpart,

the delegations of authority contained in

this subpart shall include the authority

to modify or terminate any outstanding

or pending notice, order, directive or

agreement issued pursuant to delegated

authority, as may be appropriate.

(h) Termination of pending actions—

general. Any pending enforcement

action may be dismissed or terminated

by the Director or Deputy Director of

DOS or DCA, as appropriate, at any time

prior to the commencement of a hearing

on the merits by an administrative law

judge. Once a hearing on the merits has

been convened by an administrative law

judge, a pending enforcement action

may be dismissed or terminated by

stipulation or consent of the affected

parties no later than 14 days after the

administrative law judge has closed the

record of the hearing. Only the FDIC

Board of Directors may terminate or

dismiss an enforcement action more

than 14 days after the record has been

closed by an administrative law judge.

(i) Legal concurrence. Any dismissals,

modifications or terminations pursuant

to this section shall be exercised only

upon concurrent certification by the

General Counsel or, where confirmed in

writing by the General Counsel, by his

or her designee, or, in cases where a

regional director or deputy regional

director acts under delegated authority,

by the appropriate regional counsel, that

the action taken is not inconsistent with

the FDI Act.

§ 303.276 Enforcement of outstanding

enforcement orders.

After consultation with the Director

(DOS) or the Director (DCA), or a

Deputy Director or an associate director,

or the appropriate regional director or

deputy regional director, as may be

appropriate, the General Counsel or

designee is authorized to initiate and

prosecute any action to enforce any

effective and outstanding order or

temporary order issued under 12 U.S.C.

1817, 1818, 1820, 1828, 1829, 1831l,

1831o, 1972, or 3909, or any provision

thereof, in the appropriate United States

District Court.

§ 303.277 Compliance plans under section

39 of the FDI Act (12 U.S.C. 1831p–1)

(standards for safety and soundness) and

part 308 of this chapter.

(a) Compliance plans. Authority is

delegated to the Director and Deputy

Director (DOS), and where confirmed in

writing by the Director, to an associate

director, or to the appropriate regional

director or deputy regional director, to

accept, to reject, to require new or

revised compliance plans, or to make

any other determinations with respect to

the implementation of compliance plans

pursuant to subpart R of part 308 of this

chapter.

(b) Notices, orders, and other action.

Authority is delegated to the Director

and Deputy Director (DOS) and, where

confirmed in writing by the Director, to

an associate director, to:

(1) Issue notices of intent to issue an

order requiring the bank to correct a

safety and soundness deficiency or to

take or refrain from taking other actions

pursuant to section 39 of the FDI Act (12

U.S.C. 1831p-1) and in accordance with

the requirements contained in

§ 308.304(a)(1) of this chapter;

(2) Issue an order requiring the bank

immediately to correct a safety and

soundness deficiency or to take or

refrain from taking other actions

pursuant to section 39 of the FDI Act (12

U.S.C. 1831p–1) and in accordance with

the requirements contained in

§ 308.304(a)(2) of this chapter; and

(3) Act on requests for modification or

rescission of an order.

(c) Legal concurrence—compliance

plans. The authority delegated under

this section as to compliance plans shall

be exercised only upon the concurrent

certification by the General Counsel or,

where confirmed in writing by the

General Counsel, by his or her designee,

or, in cases where a regional director or

deputy regional director accepts, rejects

or requires new or revised compliance

plans or makes any other

determinations with respect to

compliance plans, by the appropriate

regional counsel, that the action taken is

not inconsistent with the FDI Act.

(d) Legal concurrence—notices and

orders. The authority delegated under

this section as to notices and orders

shall be exercised only upon the

concurrent certification by the General

Counsel or, where confirmed in writing

by the General Counsel, by his or her
Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules 52867

designee that the allegations contained

in the notice of intent, if proven,

constitute a basis for the issuance of a

final order pursuant to section 39 of the

FDI Act or that the issuance of a final

order is not inconsistent with section 39

of the FDI Act or that the stipulated

section 39 order is not inconsistent with

section 39 of the FDI Act and is an order

which has become final for purposes of

enforcement pursuant to the FDI Act.

§ 303.278 Enforcement matters where

authority is not delegated.

Without limiting the Board of

Directors’ authority, the Board of

Directors has retained the authority to

act upon the following enforcement

matters:

(a) Notifications to primary regulator

under section 8(a) of the FDI Act (12

U.S.C. 1818(a)) when the respondent

bank’s book capital is at or above 2

percent of total assets and adjusted Tier

1 capital is at or above 2 percent of

adjusted part 325 total assets as defined

in § 303.2(b) of this part;

(b) Orders terminating insured status

under section 8(a) of the FDI Act (12

U.S.C. 1818(a));

(c) Cease-and-desist orders under

section 8(b) of the FDI Act (12 U.S.C.

1818(b)) when the respondent

depository institution or individual

does not consent to the issuance of such

orders;

(d) Temporary orders of suspension

and prohibition under section 8(e) of the

FDI Act (12 U.S.C. 1818(e));

(e) Orders of removal, suspension or

prohibition from participation in the

conduct of the affairs of an insured

depository institution under section 8(e)

of the FDI Act (12 U.S.C. 1818(e)) when

the individual does not consent to the

issuance of such orders;

(f) Orders of suspension or

prohibition to an indicted director,

officer or person participating in the

conduct of the affairs of an insured

depository institution and orders of

removal or prohibition to a convicted

director, officer or person participating

in the conduct of the affairs of an

insured depository institution under

section 8(g) of the FDI Act (12 U.S.C.

1818(g)) when such director, officer or

person does not consent to the

suspension or removal;

(g) Final orders to pay civil money

penalties where respondents do not

consent to the assessment of civil

money penalties and hearings have been

held;

(h) Denials of requests for

modifications or terminations of orders

issued pursuant to section 8(g) of the

FDI Act;

(i) Grants or denials of requests for

reinstatement to office, whether or not

an informal hearing has been requested,

pursuant to § 308.203 of this chapter;

and

(j) Grants or denials of requests for

waivers of liability of commonly

controlled insured depository

institutions as to assessments under

section 5(e) of the FDI Act (12 U.S.C.

1815(e)).

PART 337—UNSAFE AND UNSOUND

BANKING PRACTICES

2. The authority citation for part 337

is revised to read as follows:

Authority: 12 U.S.C. 375a(4), 375b, 1816,

1818(a), 1818(b), 1819, 1820(d)(10), 1821f,

1828(j)(2), 1831, 1831f–l.

3. Section 337.6 is amended by

revising paragraph (a)(5)(iii), adding a

sentence at the end of paragraph (c),

removing paragraphs (d) and (e), and

redesignating paragraphs (g) and (h) as

(d) and (e), respectively, to read as

follows:

§ 337.6 Brokered deposits.

(a) * * *

(5) * * *

(iii) Notwithstanding paragraph

(a)(5)(ii) of this section, the term deposit

broker includes any insured depository

institution that is not well capitalized,

and any employee of any such insured

depository institution, which engages,

directly or indirectly, in the solicitation

of deposits by offering rates of interest

(with respect to such deposits) which

are significantly higher than the

prevailing rates of interest on deposits

offered by other insured depository

institutions in such depository

institution’s normal market area.

* * * * *

(c) * * * For filing requirements,

consult 12 CFR 303.243.

* * * * *

PART 341—REGISTRATION OF

TRANSFER AGENTS

4. The authority citation for part 341

continues to read as follows:

Authority: Secs. 2, 3, 17, 17A and 23(a),

Securities Exchange Act of 1934, as amended

(15 U.S.C. 78b, 78c, 78q, 78q–1 and 78w(a)).

5. Section 341.7 is added to read as

follows:

§ 341.7 Delegation of authority.

(a) Except as provided in paragraph

(b) of this section, authority is delegated

to the Director and Deputy Director

(DOS) and, where confirmed in writing

by the Director, to an associate director

and appropriate regional director and

deputy regional director, to act on

disclosure matters under and pursuant

to sections 17 and 17A of the Securities

Exchange Act of 1934 (15 U.S.C. 78).

(b) Authority to act on disclosure

matters is retained by the Board of

Directors when such matters involve

exemption from registration

requirements pursuant to section

17A(c)(1) of the Securities Exchange Act

of 1934 (15 U.S.C. 78q–1(c)(1)).

PART 346—FOREIGN BANKS

6. The authority citation for part 346

continues to read as follows:

Authority: 12 U.S.C. 1813, 1815, 1817,

1819, 1820, 3103, 3104, 3105, 3108.

7. Section 346.19 of subpart C is

amended by adding a new paragraph

(e)(14) to read as follows:

§ 346.19 Pledge of assets.

* * * * *

(e) * * *

(14) Delegation of authority. (i)

Authority is delegated to the Director

and Deputy Director of the Division of

Supervision and, where confirmed in

writing by the Director, to an associate

director and the appropriate regional

director and deputy regional director of

the region in which the insured branch

is located, to enter into pledge

agreements with foreign banks and

depositories under this section. This

authority also shall extend to the power

to revoke such approval and require the

dismissal of the depository.

(ii) Authority is delegated to the

General Counsel or designee to modify

the terms of the model deposit

agreement used under this section.

* * * * *

PART 348—MANAGEMENT OFFICIAL

INTERLOCKS

8. The authority citation for part 348

continues to read as follows:

Authority: 12 U.S.C. 3207, 12 U.S.C.

1823(k).

9. Section 348.9 is added to read as

follows:

§ 348.9 Delegation of authority.

(a) Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director and

appropriate regional director and

deputy regional director, to approve or

deny requests to establish management

official interlocks pursuant to § 348.6 or

section 205(8) of the Depository

Institutions Management Interlocks Act

(except that a regional director or

deputy regional director may deny such

a request only if the request was made

pursuant to 348.6(b)(4)); and
52868 Federal Register / Vol. 62, No. 196 / Thursday, October 9, 1997 / Proposed Rules

(b) Authority is delegated to the

Director and Deputy Director (DOS) and,

where confirmed in writing by the

Director, to an associate director to deny

a request to establish a management

official interlock pursuant to any

provision of either § 348.6 or section

205(8) of the Depository Institutions

Management Interlocks Act.

PART 359—GOLDEN PARACHUTE

AND INDEMNIFICATION PAYMENTS

10. The authority citation for part 359

continues to read as follows:

Authority: 12 U.S.C. 1828(k).

11. Section 359.6 is revised to read as

follows:

§ 359.6 Filing instructions.

Requests to make excess

nondiscriminatory severance plan

payments pursuant to § 359.1(f)(2)(v)

and golden parachute payments

permitted by § 359.4 shall be submitted

in writing to the appropriate regional

director (DOS). For filing requirements,

consult 12 CFR 303.244. In the event

that the consent of the institution’s

primary federal regulator is required in

addition to that of the FDIC, the

requesting party shall submit a copy of

its letter to the FDIC to the institution’s

primary federal regulator. In the case of

national banks, such written requests

shall be submitted to the OCC. In the

case of state member banks and bank

holding companies, such written

requests shall be submitted to the

Federal Reserve district bank where the

institution or holding company,

respectively, is located. In the case of

savings associations and savings

association holding companies, such

written requests shall be submitted to

the OTS regional office where the

institution or holding company,

respectively, is located. In cases where

only the prior consent of the

institution’s primary federal regulator is

required and that agency is not the

FDIC, a written request satisfying the

requirements of this section shall be

submitted to the primary federal

regulator as described in this section.

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. 97–26235 Filed 10–8–97; 8:45 am]

BILLING CODE 6714–01–P