This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

10010 

Vol. 89, No. 30 

Tuesday, February 13, 2024 

1A business combination for these purposes 

includes assumption of deposits in addition to 

mergers or consolidations. 

2 12 U.S.C. 1828(c)(5), (11). 

3 12 U.S.C. 1828(c)(4). 

4 12 CFR 5.8(b), 5.10(b)(1). 

5 12 CFR 5.11. 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 5 

[Docket ID OCC–2023–0017] 

RIN 1557–AF24 

Business Combinations Under the 

Bank Merger Act 

AGENCY: Office of the Comptroller of the 

Currency (OCC), Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The OCC is inviting comment 

on a proposed rule to increase the 

transparency of the standards that apply 

to the agency’s review of business 

combinations involving national banks 

and Federal savings associations. In 

particular, the proposed rule would 

amend the procedures and would add, 

as an appendix, a policy statement that 

summarizes the principles the OCC uses 

when it reviews proposed bank merger 

transactions under the Bank Merger Act. 

DATES: Comments must be received by 

April 15, 2024. 

ADDRESSES: Commenters are encouraged 

to submit comments through the Federal 

eRulemaking Portal. Please use the title 

‘‘Business Combinations under the Bank 

Merger Act’’ to facilitate the 

organization and distribution of the 

comments. You may submit comments 

by any of the following methods: 

• Federal eRulemaking Portal— 

‘‘Regulations.gov’’: 

Go to https://regulations.gov/. Enter 

‘‘Docket ID OCC–2023–0017’’ in the 

Search Box and click ‘‘Search.’’ Public 

comments can be submitted via the 

‘‘Comment’’ box below the displayed 

document information or by clicking on 

the document title and then clicking the 

‘‘Comment’’ box on the top-left side of 

the screen. For help with submitting 

effective comments, please click on 

‘‘Commenter’s Checklist.’’ For 

assistance with the Regulations.gov site, 

please call 1–866–498–2945 (toll free) 

Monday–Friday, 9 a.m.–5 p.m. ET, or 

email regulationshelpdesk@gsa.gov. 

• Mail: Chief Counsel’s Office, 

Attention: Comment Processing, Office 

of the Comptroller of the Currency, 400 

7th Street SW, Suite 3E–218, 

Washington, DC 20219. 

• Hand Delivery/Courier: 400 7th 

Street SW, Suite 3E–218, Washington, 

DC 20219. 

Instructions: You must include 

‘‘OCC’’ as the agency name and ‘‘Docket 

ID OCC–2023–0017’’ in your comment. 

In general, the OCC will enter all 

comments received into the docket and 

publish the comments on the 

Regulations.gov website without 

change, including any business or 

personal information provided such as 

name and address information, email 

addresses, or phone numbers. 

Comments received, including 

attachments and other supporting 

materials, are part of the public record 

and subject to public disclosure. Do not 

include any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

You may review comments and other 

related materials that pertain to this 

action by any of the following methods: 

• Viewing Comments Electronically— 

Regulations.gov: 

Go to https://regulations.gov/. Enter 

‘‘Docket ID OCC–2023–0017’’ in the 

Search box and click ‘‘Search’’. Click on 

the ‘‘Dockets’’ tab and then the 

document’s title. After clicking the 

document’s title, click the ‘‘Browse All 

Comments’’ tab. Comments can be 

viewed and filtered by clicking on the 

‘‘Sort By’’ drop-down on the right side 

of the screen or the ‘‘Refine Comments 

Results’’ options on the left side of the 

screen. Supporting materials can be 

viewed by clicking on the ‘‘Browse 

Documents’’ tab. Click on the ‘‘Sort By’’ 

drop-down on the right side of the 

screen or the ‘‘Refine Results’’ options 

on the left side of the screen checking 

the ‘‘Supporting & Related Material’’ 

checkbox. For assistance with the 

Regulations.gov site, please call 1–866– 

498–2945 (toll free) Monday–Friday, 9 

a.m.–5 p.m. ET, or email 

regulationshelpdesk@gsa.gov. 

The docket may be viewed after the 

close of the comment period in the same 

manner as during the comment period. 

FOR FURTHER INFORMATION CONTACT: 

Valerie Song, Assistant Director, 

Christopher Crawford, Special Counsel, 

Elizabeth Small, Counsel, Chief 

Counsel’s Office 202–649–5490; or Yoo 

Jin Na, Director for Licensing Activities 

202–649–6260, Office of the 

Comptroller of the Currency, 400 7th 

Street SW, Washington, DC 20219. If 

you are deaf, hard of hearing, or have a 

speech disability, please dial 7–1–1 to 

access telecommunications relay 

services. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Bank Merger Act (BMA), section 

18(c) of the Federal Deposit Insurance 

Act (12 U.S.C. 1828(c)), and the OCC’s 

implementing regulation, 12 CFR 5.33, 

govern the OCC’s review of business 

combinations of national banks and 

Federal savings associations with other 

insured depository institutions 

(institutions) that result in a national 

bank or Federal savings association.1

Under the BMA, the OCC must consider 

the following factors: competition, the 

financial and managerial resources and 

future prospects of the existing and 

proposed institutions, the convenience 

and needs of the community to be 

served, the risk to the stability of the 

United States banking or financial 

system, and the effectiveness of any 

insured depository institution involved 

in combatting money laundering 

activities, including in overseas 

branches.2 The BMA generally requires 

public notice of the transaction to be 

published for 30 days.3 OCC regulations 

require the public notice include 

essential details about the transaction 

and instructions for public comment. 

The regulations incorporate the 

statutory 30-day public notice period 

and provide a 30-day public comment 

period, which the OCC may extend.4

The OCC may also hold a public 

hearing, public meeting, or private 

meeting on an application.5

The OCC has issued several 

publications that provide additional 

information about the procedures that 

the OCC follows in reviewing and acting 

on proposed business combinations. For 

example, the ‘‘Business Combinations’’ 


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6The provisions in 12 CFR 5.13(a)(2) regarding 

adverse comments would no longer apply to 

business combination applications as these 

provisions are applicable only to filings qualifying 

for expedited review. 

7See, e.g., 12 U.S.C. 215a (procedures for mergers 

resulting in a national bank). 

8See, e.g., 12 U.S.C. 1828(c) (BMA). 

9Paragraph (j) authorizes use of a streamlined 

application if: (i) At least one party to the 

transaction is an eligible bank or eligible savings 

association, and all other parties to the transaction 

are eligible banks, eligible savings associations, or 

eligible depository institutions, the resulting 

national bank or resulting Federal savings 

association will be well capitalized immediately 

following consummation of the transaction, and the 

total assets of the target institution are no more than 

50 percent of the total assets of the acquiring bank 

or Federal savings association, as reported in each 

institution’s Consolidated Report of Condition and 

Income filed for the quarter immediately preceding 

the filing of the application; (ii) The acquiring bank 

or Federal savings association is an eligible bank or 

eligible savings association, the target bank or 

savings association is not an eligible bank, eligible 

savings association, or an eligible depository 

institution, the resulting national bank or resulting 

Federal savings association will be well capitalized 

immediately following consummation of the 

transaction, and the filers in a prefiling 

communication request and obtain approval from 

the appropriate OCC licensing office to use the 

streamlined application; (iii) The acquiring bank or 

Federal savings association is an eligible bank or 

eligible savings association, the target bank or 

savings association is not an eligible bank, eligible 

savings association, or an eligible depository 

institution, the resulting bank or resulting Federal 

savings association will be well capitalized 

immediately following consummation of the 

transaction, and the total assets acquired do not 

exceed 10 percent of the total assets of the acquiring 

national bank or acquiring Federal savings 

association, as reported in each institution’s 

Consolidated Report of Condition and Income filed 

for the quarter immediately preceding the filing of 

the application; or (iv) In the case of a transaction 

under § 5.33(g)(4) of this section, the acquiring bank 

is an eligible bank, the resulting national bank will 

be well capitalized immediately following 

consummation of the transaction, the filers in a 

prefiling communication request and obtain 

approval from the appropriate OCC licensing office 

to use the streamlined application, and the total 

assets acquired do not exceed 10 percent of the total 

assets of the acquiring national bank, as reported in 

the bank’s Consolidated Report of Condition and 

Income filed for the quarter immediately preceding 

the filing of the application. 

10Under 12 CFR 5.2(b), the OCC may adopt 

materially different procedures for a particular 

filing, or class of filings as it deems necessary, for 

example, in exceptional circumstances or for 

unusual transactions, after providing notice of the 

change to the filer and to any other party that the 

OCC determines should receive notice. The OCC 

may use this authority, if appropriate, to reduce 

informational requirements in transactions 

involving a failing bank due to the short time for 

preparation of applications. 

booklet of the Comptroller’s Licensing 

Manual details the OCC’s review of 

applications under the BMA. The 

‘‘Public Notice and Comments’’ booklet 

of the Comptroller’s Licensing Manual 

sets forth policies and requirements 

related to the public notice and 

comment process, including hearings 

and meetings. The Comptroller’s 

Licensing Manual provides OCC staff, 

institutions, and the public with 

information about the procedures 

applicable to corporate applications 

filed with the OCC. 

After completing a review of these 

materials, the OCC has determined that 

additional transparency regarding the 

standards and procedures that the 

agency applies to its review of bank 

business combinations may be helpful 

to institutions and to the public. For 

example, the Comptroller’s Licensing 

Manual does not describe all of the 

OCC’s considerations regarding the 

BMA statutory factors and its related 

processes such as the considerations for 

holding public meetings. 

To better reflect the OCC’s view that 

a business combination is a significant 

corporate transaction, the OCC is 

proposing amendments to 12 CFR 5.33 

to remove provisions related to 

expedited review and the use of 

streamlined applications. Additionally, 

to provide additional clarity and 

guidance to national banks, Federal 

savings associations, other institutions, 

and the public, the OCC is proposing to 

add a policy statement as appendix A to 

12 CFR part 5, subpart C, that would 

discuss general principles the OCC uses 

in its review of applications under the 

BMA and discuss the OCC’s 

consideration of the financial stability, 

financial and managerial resources and 

future prospects, and convenience and 

needs factors. Proposed appendix A 

would also discuss the criteria 

informing the OCC’s decision on 

whether to hold a public meeting on an 

application subject to the BMA. 

II. Description of the Proposed Policy 

Statement and Regulatory Amendments 

Regulatory Amendments 

The OCC is proposing two substantive 

changes to its business combination 

regulation, 12 CFR 5.33. First, the OCC 

proposes to remove the expedited 

review procedures in § 5.33(i). 

Paragraph (i) currently provides that a 

filing that qualifies as a business 

reorganization as defined in paragraph 

(d)(3) or that qualifies as a streamlined 

application under paragraph (j) is 

deemed approved as of the 15th day 

after the close of the comment period, 

unless the OCC notifies the applicant 

that the filing is not eligible for 

expedited review, or the expedited 

review process is extended, under 

§ 5.13(a)(2).6

The OCC reviews business 

combination applications to determine 

whether applicable procedural 7 and 

substantive 8 requirements are met. The 

OCC believes that any business 

combination subject to a filing under 

§ 5.33 is a significant corporate 

transaction requiring OCC decisioning, 

which should not be deemed approved 

solely due to the passage of time. The 

principles currently articulated by 

§ 5.33(i), such as certain transactions 

possessing indicators that are likely to 

satisfy statutory factors and do not 

otherwise raise supervisory or 

regulatory concerns, are contained 

within section II of proposed appendix 

A and will continue to guide OCC 

processing of business combination 

applications. As the term ‘‘business 

reorganization’’ as defined in 

§ 5.33(d)(3) is only used to define a class 

of applications eligible for expedited 

review under paragraph (i), the OCC 

also proposes to remove paragraph 

(d)(3). 

Second, the OCC proposes to remove 

§ 5.33(j). Paragraph (j) currently 

specifies four situations in which an 

applicant may use the OCC’s 

streamlined business combination 

application rather than the full 

Interagency Bank Merger Act 

Application.9 The streamlined 

application requests information about 

similar topics as the Interagency Bank 

Merger Act Application, but it only 

requires an applicant to provide 

detailed information if the applicant 

answers yes to one of a series of yes or 

no questions. A transaction eligible for 

a streamlined application also currently 

qualifies for expedited review, which 

the OCC proposes to remove. Given the 

nature of review of business 

combinations, the factors for which are 

discussed in proposed appendix A, it 

appears that the fuller record provided 

through the Interagency Bank Merger 

Act Application provides the 

appropriate basis for the OCC to review 

a business combination application. 

Further, the removal of the streamlined 

business combination form should not 

significantly increase the burden on 

applicants because information 

requested in the Interagency Bank 

Merger Act Application may be tailored 

as appropriate. For example, there may 

be situations where discussion of all 

items in the Interagency Bank Merger 

Act Application may not be appropriate, 

such as purchase and assumption 

transactions from an insured depository 

institution in Federal Deposit Insurance 

Corporation receivership. In these 

circumstances, the OCC can use its 

discretion to reduce the information that 

the applicant needs to provide to the 

OCC.10 As the entirety of paragraph (j) 

concerns the streamlined application, 

the OCC also proposes removing 

paragraph (j). 


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10012 Federal Register / Vol. 89, No. 30 / Tuesday, February 13, 2024 / Proposed Rules 

11Proposed appendix A would not address the 

BMA statutory factors of competition and the 

effectiveness of any insured depository institution 

involved in combatting money laundering 

activities, including in overseas branches. 12 U.S.C. 

1828(c)(5), (11). The OCC’s review of the 

competition factor is guided by the process 

described in the interagency document, Bank 

Merger Competitive Review—Introduction and 

Overview (1995), Department of Justice, Antitrust 

Division. See https://www.justice.gov/sites/default/ 

files/atr/legacy/2007/08/14/6472.pdf. The Federal 

Financial Institution Examination Council’s Bank 

Secrecy Act/Anti-Money Laundering Examination 

Manual details the OCC’s examination of 

institutions’ anti-money laundering activities. See 

https://bsaaml.ffiec.gov/manual. 

12UFIRS is also known as the CAMELS system. 

13The ROCA System is the interagency uniform 

supervisory rating system for U.S. branches and 

agencies of foreign banking organizations. 

14The Basel Committee on Bank Supervision 

annually identifies banking organizations as global 

systemically important. 

15For example, the OCC is required to institute 

an enforcement action or make a referral if it makes 

certain supervisory findings with respect to the 

Bank Secrecy Act or fair lending laws. See, e.g., 12 

U.S.C. 1818(s)(3); 15 U.S.C. 1691e(g). 

16See, e.g., OCC Conditional Approval #1298 

(November 2022); OCC Corporate Decision #2012– 

05 (April 2012). 

17See, e.g., FRB Order No. 2012–2 at 30 

18See, e.g., FRB Order No. 2021–04 (May 14, 

2021) at 24. 

19See, e.g., OCC Conditional Approval #1298 

(November 2022). 

Policy Statement 

As discussed in Section I, 

Introduction, of proposed appendix A, 

the proposed policy statement would 

provide institutions and the public with 

a better understanding of how the OCC 

reviews applications subject to the BMA 

and thus provide greater transparency, 

facilitate interagency coordination, and 

enhance public engagement. To this 

end, proposed appendix A would 

expand upon the information currently 

included in the Comptroller’s Licensing 

Manual. Specifically, proposed 

appendix A would outline general 

principles the OCC applies when 

reviewing applications and provide 

information about how the OCC 

considers the BMA statutory factors of 

financial stability, financial and 

managerial resources, and convenience 

and needs of the community.11

Additionally, proposed appendix A 

would provide transparency regarding 

the public comment period and the 

factors the OCC considers in 

determining whether to hold public 

meetings. 

Section II, General Principles of OCC 

Review, of proposed appendix A would 

discuss the OCC’s review of an action 

on applications. Overall, the OCC aims 

to act promptly on all applications. This 

section of proposed appendix A would 

indicate that potential actions by the 

OCC include approval, denial, or 

requesting that an applicant withdraw 

the application because any 

shortcomings are unlikely to be resolved 

in a timely manner. Proposed appendix 

A identifies certain indicators that, in 

the OCC’s experience, applications that 

are consistent with approval generally 

feature. These indicators include: (i) 

attributes regarding the acquirer’s 

financial condition, size, Uniform 

Financial Institution Ratings System 

(UFIRS) 12 or risk management, 

operational controls, compliance, and 

asset quality (ROCA) 13 ratings, Uniform 

Interagency Consumer Compliance 

Rating System (CC Rating System) 

rating, Community Reinvestment Act 

(CRA) rating, the effectiveness of the 

Bank Secrecy Act/anti-money 

laundering program, and the absence of 

fair lending concerns; (ii) the attributes 

regarding target’s size and status as a 

eligible depository institution, as 

defined in § 5.3; (iii) the transaction 

clearly not having a significant adverse 

effect on competition; and (iv) the 

absence of significant CRA or consumer 

compliance concerns, as indicated in 

any comments or supervisory 

information. 

The General Principles of OCC Review 

section of proposed appendix A would 

also recognize that there are indicators 

that raise supervisory or regulatory 

concerns. Based on the OCC’s 

experience, if any of these indicators are 

present, the OCC is unlikely to find the 

statutory factors under the BMA to be 

consistent with approval unless and 

until the applicant has adequately 

addressed or remediated the concern. 

Proposed appendix A would state that 

these indicators include: (i) the acquirer 

has a CRA rating of Needs to Improve 

or Substantial Noncompliance; (ii) the 

acquirer has a UFIRS or ROCA 

composite or management rating of 3 

worse; (iii) a consumer compliance 

rating of 3 or worse; (iv) the acquirer is 

a global systemically important banking 

organization, or subsidiary thereof; 14 (v) 

the acquirer has an open or pending 

Bank Secrecy Act/Anti-money 

Laundering enforcement or fair lending 

action, including referrals or 

notification to other agencies; 15 (v) 

failure by the acquirer to adopt, 

implement, and adhere to all the 

corrective actions required by a formal 

enforcement action in a timely manner; 

or (vi) multiple enforcement actions 

against the acquirer executed or 

outstanding during a three-year period. 

Section III, Financial Stability, of 

proposed appendix A would provide 

additional information about how the 

OCC considers ‘‘the risk to the stability 

of the United States banking or financial 

system’’ as required by the BMA, 

including (i) the factors the OCC 

considers, which are currently 

described in the ‘‘Business 

Combinations’’ booklet of the 

Comptroller’s Licensing Manual; (ii) the 

balancing test the OCC applies; and (iii) 

the OCC’s ability to consider imposing 

conditions on the approval of any such 

transaction. The OCC’s approach to 

considering the risk to the stability of 

the financial system that would be set 

forth in proposed appendix A is 

consistent with longstanding OCC 

practice and principles.16 Specifically, 

the OCC considers (i) whether the size 

of the combined institutions would 

result in material increases in risk to 

financial stability; (ii) any potential 

reduction in the availability of 

substitute providers for the services 

offered by the combining institutions; 

(iii) whether the resulting institution 

would engage in any business activities 

or participate in markets in a manner 

that, in the event of financial distress of 

the resulting institution, would cause 

significant risks to other institutions; 

(iv) the extent to which the combining 

institutions contribute to the complexity 

of the financial system; (v) the extent of 

cross-border activities of the combining 

institutions; (vi) whether the proposed 

transaction would increase the relative 

degree of difficulty of resolving or 

winding up the resulting institution’s 

business in the event of failure or 

insolvency; and (vii) any other factors 

that could indicate that the transaction 

poses a risk to the U.S. banking or 

financial system. 

Section III, Financial Stability, of 

proposed appendix A would clarify that 

the OCC applies a balancing test when 

considering the financial stability factor 

and weighs the financial stability risk of 

approving the proposed transaction 

against the financial stability risk of 

denying the proposed transaction, 

particularly if the proposed transaction 

involves a troubled target. Specifically, 

the OCC would consider each factor 

individually and in combination. Even 

if only a single factor indicates a risk to 

the stability of the U.S. banking or 

financial system, the OCC may 

determine that the proposal would have 

an adverse effect on the stability of the 

U.S. banking or financial system.17 The 

OCC would also consider whether the 

proposed transaction would provide any 

stability benefits and whether enhanced 

prudential standards applicable as a 

result of the proposed transaction would 

offset any potential risks.18

Section III also would note that, 

consistent with current OCC practice,19

the OCC’s review of the financial 


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20For example, many business combinations 

under the BMA are part of a larger transaction 

requiring a filing with the Board under the Bank 

Holding Company Act. 

21 12 U.S.C. 1828(c)(5). 

22For example, in a reverse triangular merger, a 

holding company may acquire an institution and 

merge its existing subsidiary into the newly 

acquired institution, which survives as a subsidiary 

of the holding company. See Comptroller’s 

Licensing Manual, ‘‘Business Combinations’’ at 23 

(January 2021). 

23 12 U.S.C. 1831o(e)(4). The OCC may only 

approve a combination application by an 

undercapitalized institution if the agency has 

accepted the institution’s capital restoration plan 

and determines that the proposed combination is 

consistent with and will further the achievement of 

the plan or if the Board of Directors of the Federal 

Deposit Insurance Corporation determines that the 

proposed combination will further the purposes of 

12 U.S.C.1831o. 12 U.S.C. 1831o(e)(4)(A)–(B). 

24These are credit, interest rate, liquidity, price, 

operational, compliance, strategic, and reputation 

risks. See Comptroller’s Handbook, ‘‘Bank 

Supervision Process’’ at 26–28 (Version 1.1, 

September 2019). 

stability factors may result in a decision 

to approve a proposed transaction, 

subject to conditions that are 

enforceable under 12 U.S.C. 1818. These 

conditions, which may include asset 

divestitures or higher minimum capital 

requirements, are intended to address 

and mitigate financial stability risk 

concerns. 

Further, the OCC’s review of the 

financial stability factors considers the 

impact of the proposed transaction in 

the context of the recovery planning 

standards applicable to the resulting 

institution pursuant to 12 CFR 30, 

appendix D, ‘‘OCC Guidelines 

Establishing Heightened Standards for 

Certain Large Insured National Banks, 

Insured Federal Savings Associations, 

and Insured Federal Branches’’ and any 

heightened standards requirements 

applicable to the resulting institution 

pursuant to 12 CFR 30, appendix E, 

‘‘OCC Guidelines Establishing 

Standards for Recovery Planning by 

Certain Large Insured National Banks, 

Insured Federal Savings Associations, 

and Insured Federal Branches.’’ Section 

III also would state that the OCC may 

consider the facts, circumstances, and 

representations of concurrent 

applications for related transactions, 

including considering the impact of the 

related transactions to the proposed 

transaction under review by the OCC.20

Section IV, Financial and Managerial 

Resources and Future Prospects of 

proposed appendix A would discuss the 

BMA’s requirement that the OCC 

consider the managerial resources, 

financial resources, and future prospects 

of any proposed transaction. Under the 

BMA, the OCC must consider each of 

these factors independently for both the 

combining and resulting institutions.21

However, because these factors are 

directly related to one another, the OCC 

also considers these factors holistically. 

This section of proposed appendix A 

would describe the overarching 

considerations of the OCC’s review of 

these factors and provide additional 

details about what the OCC considers 

while reviewing these factors. The 

overarching considerations of this 

proposed section would note that the 

OCC will consider the size, complexity, 

and risk profile of the combining and 

resulting institutions. 

Further, proposed appendix A 

expands on the discussion in the 

Comptroller’s Licensing Manual about 

the types of transactions the OCC would 

normally not approve by providing 

additional details about acquirer 

characteristics with respect to financial 

and managerial resources and future 

prospects that are less likely to result in 

an approval. Specifically, the OCC is 

less likely to approve an application 

when the acquirer (i) has a less than 

satisfactory supervisory record, 

including its financial and managerial 

resources; (ii) has experienced rapid 

growth; (iii) has engaged in multiple 

acquisitions with overlapping 

integration periods; (iv) has failed to 

comply with conditions imposed in 

prior OCC licensing decisions; or (v) is 

functionally the target in the 

transaction.22 The OCC also normally 

does not approve a combination that 

would result in a depository institution 

with less than adequate capital, less 

than satisfactory management, or poor 

earnings prospects. 

Finally, this subsection would 

confirm the OCC’s practice of 

considering all comments on proposed 

transactions, including those on 

financial and managerial resources and 

future prospects. To the extent public 

comments address issues involving 

confidential supervisory information, 

however, the OCC generally would not 

discuss or otherwise disclose 

confidential supervisory information in 

public decision letters. 

Section IV of proposed appendix A 

would next discuss the OCC’s 

consideration of the individual financial 

resources, managerial resources, and 

future prospects factors. With respect to 

financial resources, proposed appendix 

A would discuss the OCC’s review of 

pro forma capital levels. Additionally, 

the OCC is generally prohibited by 

statute from approving business 

combination applications filed by an 

institution that is undercapitalized as 

defined in 12 CFR 6.4.23 Proposed 

Appendix A also would specify that the 

OCC closely scrutinizes transactions 

that increase the risk to the bank’s 

financial condition and resilience, 

including risk to bank capital, liquidity, 

and earnings that can arise from any of 

the eight categories of risk included in 

the OCC’s Risk Assessment System.24

Further, with respect to the financial 

resources factor, the OCC considers the 

ability of management to address 

increased risks that would result from 

the transaction. Finally, proposed 

appendix A would clarify that a 

transaction involving an acquirer with a 

strong supervisory record is more likely 

to satisfy the review factors. By contrast, 

a transaction involving an acquirer with 

a recent less than satisfactory 

supervisory record is less likely to 

satisfy this factor. 

Section IV of proposed appendix A 

would discuss the OCC’s approach to 

considering the managerial resources 

standard. The OCC would consider the 

supervisory record and current 

condition of both the acquirer and target 

to determine if the resulting institutions 

will have sufficient managerial 

resources. For example, a significant 

number of matters requiring attention 

(MRA), or lack thereof, may impact the 

determination as to whether there are 

sufficient managerial resources. The 

OCC also reviews (i) both institutions’ 

management ratings under the UFIRS or 

ROCA system, and component ratings 

under the CC Rating System, Uniform 

Rating System for Information 

Technology, and Uniform Interagency 

Trust Rating System, as applicable; and 

(ii) relevant the Risk Assessment System 

(RAS) conclusions for the applicant as 

well as the RAS conclusions for an 

OCC-supervised target. The OCC would 

consider the context in which the rating 

or RAS element was assigned and any 

additional information resulting from 

ongoing supervision. Finally, proposed 

appendix A would note that less than 

satisfactory ratings at the target do not 

preclude the approval of a transaction, 

provided that the acquirer can employ 

sufficiently robust risk management and 

financial resources to correct the 

weaknesses. 

Proposed appendix A would state that 

the OCC considers whether the acquirer 

has conducted sufficient due diligence 

of the target depository institution to 

understand the business model, systems 

compatibility, and weaknesses of the 

target. This includes the acquirer’s plans 

and ability to address its previously 

identified weaknesses, remediate the 

target’s weaknesses, and exercise 

appropriate risk management for the 

size, complexity, and risk profile of the 

resulting institution. Similarly, the OCC 

considers the acquirer’s plans for and 


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25See 12 CFR 5.13(b). 

26As the OCC’s review of this factor is with 

respect to the resulting institution, it necessarily 

includes review of the record, products, and 

services of both the acquirer and target. 

27While the BMA does not require the OCC to 

hold meetings or hearings, 12 CFR 5.11 describes 

the consideration and procedures for public 

hearings and notes the availability of several other 

types of meetings. The OCC considers three options 

for seeking oral input: (1) public hearing, (2) public 

meeting, and (3) private meeting. 

28See 12 CFR 5.10(b)(1). 

29Specifically, part 5 notes that the OCC may 

extend the comment period when: (1) a filer fails 

to file all required publicly available information on 

a timely basis or makes a request for confidential 

treatment not granted by the OCC; (2) a person 

requesting an extension demonstrates to the OCC 

that additional time is necessary to develop factual 

information the OCC determines is necessary to 

consider the filing; and (3) the OCC determines that 

other extenuating circumstances exist. 

history of integrating combining 

institutions’ operations, including 

systems and information security 

processes, products, services, 

employees, and cultures. 

Proposed appendix A next would 

discuss the OCC’s consideration of the 

acquirer’s plans to identify and manage 

systems compatibility and integration 

issues, such as information technology 

compatibility and implications for 

business continuity resilience. A critical 

component of these plans includes the 

identification of overreliance on manual 

controls, strategies for automating 

critical processes, and capacity and 

modernization of aging and legacy 

information technology systems. 

Additional OCC review may be required 

where there are concerns with systems 

integration, and, in some cases, the OCC 

may impose conditions, enforceable 

pursuant to 12 U.S.C. 1818, to address 

those concerns. The OCC may deny an 

application if the integration issues or 

other issues present significant 

supervisory concerns, and the issues 

cannot be resolved through appropriate 

conditions or otherwise.25

Finally, with regard to managerial 

resources, proposed appendix A would 

describe the OCC’s consideration of the 

proposed governance structure of the 

resulting institution. This includes 

consideration of (i) governance in 

decision-making processes, the board 

management oversight structure, and 

the risk management system, including 

change management; and (ii) the 

expansion of existing activities, 

introduction of new or more complex 

products or lines of business, and 

implications for managing existing and 

acquired subsidiaries and equity 

investments. When applicable, the 

resulting institution’s governance is also 

considered in the context of the 

institution’s relationship with its 

holding company and the scope of the 

holding company’s activities. 

Section IV of proposed appendix A 

also would discuss how the OCC 

considers the future prospects factor. 

The OCC would consider this factor in 

light of its assessment of the 

institutions’ financial and managerial 

resources. The OCC also would consider 

the proposed operations of the resulting 

institutions and the acquirer’s record of 

integrating acquisitions. Specifically, 

the OCC would consider whether the 

integrated institution will be able to 

function effectively as a single entity. 

The OCC also would consider the 

resulting institution’s business plan or 

strategy and management’s ability to 

implement it in a safe and sound 

manner. Finally, the OCC would 

consider the combination’s potential 

impacts on the resulting institution’s 

continuity planning and operational 

resilience. 

Section V, Convenience and Needs of 

proposed appendix A would expand on 

the discussion in the Comptroller’s 

Licensing Handbook of the OCC’s 

consideration of the probable effects of 

the proposed business combination on 

the community to be served. 

Specifically, this section would clarify 

that the OCC’s consideration of the 

impacts of any proposed combination 

on the convenience and needs of the 

community is prospective and considers 

the likely impact on the community of 

the resulting institution after the 

transaction is consummated.26 For this 

factor, the OCC considers, among other 

things (i) the proposed changes to 

branch locations, branching services, 

banking services or products, or credit 

availability offered by the target and 

acquirer, including in low- or moderateincome (LMI) communities, (ii) any job 

losses or lost job opportunities from 

branching changes, and (iii) any 

community investment or development 

initiatives, including particularly those 

that support affordable housing and 

small businesses. With respect to (i) 

above, the OCC is also considering, and 

welcomes comment on, whether to 

specify communities in addition to LMI 

communities as part of these 

considerations. 

Finally, Section V of proposed 

appendix A would clarify that the 

OCC’s forward-looking consideration of 

the convenience and needs factor under 

the BMA is separate and distinct from 

its consideration of the CRA record of 

performance of an applicant in helping 

to meet the credit needs of the relevant 

community, including LMI 

neighborhoods. 

Section VI, Public Comments and 

Meetings, of proposed appendix A 

would provide additional details about 

the process and procedures relating to 

the OCC’s receipt of public comments 

and the OCC’s considerations related to 

public meetings and clarifies the 

information contained within 12 CFR 

part 5 and the ‘‘Public Notice and 

Comments’’ booklet of the Comptroller’s 

Licensing Manual.27 Specifically, the 

public comments subsection would 

articulate the circumstances under 

which the OCC may extend the 

comment period from the usual 30-day 

comment period 28 pursuant to 

§ 5.10(b)(2).29 It also would provide 

additional clarity by noting that the 

OCC may find that additional time is 

necessary to develop factual 

information, and thus warrant extending 

the comment period, if a filer’s response 

to a comment does not fully address the 

matters raised in the comment, and the 

commenter requests an opportunity to 

respond. This subsection also would 

provide examples of extenuating 

circumstances when the OCC may 

determine that an extension is needed, 

including, for example, if a public 

meeting is held, the transaction is novel 

or complex, or a natural disaster has 

occurred affecting the public’s ability to 

timely submit comment. 

The public meetings subsection of 

Section VI would state that when 

determining whether to hold a public 

meeting, the OCC balances the public’s 

interest in the transaction with the value 

or harm of a public meeting to the 

decision-making process. Proposed 

appendix A would also clarify criteria 

informing the OCC’s decision on 

whether to hold a public meeting. The 

criteria include (i) the public’s interest 

in the transaction; (ii) the 

appropriateness of a public meeting to 

document or clarify issues raised during 

the public comment process; (iii) the 

significance of the transaction to the 

banking industry; (iv) the significance of 

the transaction to the communities 

affected; (v) the potential value of any 

information that could be gathered and 

documented during a public meeting; 

and (vi) the acquirer’s and target’s CRA, 

consumer compliance, and fair lending, 

or other pertinent supervisory records, 

as applicable. 

III. Request for Comments 

The OCC encourages comment on any 

aspect of this proposal and especially on 

the specific issues discussed in this 

SUPPLEMENTARY INFORMATION section. 


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30 44 U.S.C. 3501–3521. 

31The OCC’s estimate of the number of small 

entities is based on the Small Business 

Administration’s size thresholds for commercial 

banks and savings institutions, and trust 

companies, which are $850 million and $47 

million, respectively. Consistent with the General 

Principles of Affiliation 13 CFR 121.103(a), the OCC 

counts the assets of affiliated financial institutions 

when determining if we should classify an OCCsupervised institution as a small entity. The OCC 

used December 31, 2022, to determine size because 

a ‘‘financial institution’s assets are determined by 

averaging the assets reported on its four quarterly 

financial statements for the preceding year.’’ See 

footnote 8 of the U.S. Small Business 

Administration’s Table of Size Standards. 

32The OCC received 51 merger applications in 

2019, 36 in 2020, 46 in 2021, 36 in 2022, and 18 

in 2023. For further details, see https://

www.occ.gov/publications-and-resources/ 

publications/annual-report/files/2023-annualreport.pdf, https://www.occ.gov/publications-andresources/publications/annual-report/files/2022- 

annual-report.pdf, https://www.occ.gov/ 

publications-and-resources/publications/annualreport/files/2021-annual-report.pdf, https://

www.occ.gov/publications-and-resources/ 

publications/annual-report/files/2020-annualreport.pdf, and https://www.occ.gov/publicationsand-resources/publications/annual-report/files/ 

2019-annual-report.pdf. 

33The same information is collected through both 

the streamlined and regular merger application 

review processes. The streamlined application 

generally asks yes or no questions about the same 

type of information requested on the interagency 

application, and if an applicant answers yes, then 

the applicant needs to provide additional detail. 

34 In general, the OCC classifies the economic 

impact on an individual small entity as significant 

if the total estimated impact in one year is greater 

than 5 percent of the small entity’s total annual 

salaries and benefits or greater than 2.5 percent of 

the small entity’s total non-interest expense. 

IV. Regulatory Analysis 

A. Paperwork Reduction Act 

Under the Paperwork Reduction Act 

of 1995 (PRA),30 the OCC may not 

conduct or sponsor, and a respondent is 

not required to respond to, an 

information collection unless it displays 

a currently valid Office of Management 

and Budget (OMB) control number. The 

information collection requirements in 

this proposed rule have been submitted 

to OMB under OMB control number 

1557–0014 (Licensing Manual). 

The proposal would amend 12 CFR 

5.33, by removing the expedited review 

procedures in section 5.33(i), which 

currently allow an application to be 

deemed approved by the OCC as of the 

15th day after the close of the comment 

period, unless the OCC notifies the filer 

that the filing is not eligible for 

expedited review, or the expedited 

review process is extended. The 

proposal also removes the streamlined 

application in section 5.33(j), which 

would remove the ability of eligible 

institutions to file for certain types of 

business combinations using a 

streamlined application form. 

Title: Licensing Manual. 

OMB control number: 1557–0014. 

Frequency of Response: Occasional. 

Affected Public: National banks and 

Federal savings associations. 

The changes to the burden of the 

Licensing Manual are de minis and 

continue to be: 

Estimated Number of Respondents: 

3,694. 

Estimated Total Annual Burden: 

12,481.15. 

Comments are invited on: 

(a) Whether the collections of 

information are necessary for the proper 

performance of the agency functions, 

including whether the information has 

practical utility; 

(b) The accuracy of the agency 

estimates of the burden of the 

information collections, including the 

validity of the methodology and 

assumptions used; 

(c) Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; 

(d) Ways to minimize the burden of 

the information collections on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology; 

and 

(e) Estimates of capital or start-up 

costs and costs of operation, 

maintenance, and purchase of services 

to provide information. 

B. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

5 U.S.C. 601 et seq., requires an agency, 

in connection with a proposed rule, to 

prepare an Initial Regulatory Flexibility 

Analysis describing the impact of the 

rule on small entities (defined by the 

Small Business Administration (SBA) 

for purposes of the RFA to include 

commercial banks and savings 

institutions with total assets of $850 

million or less and trust companies with 

total assets of $47 million or less) or to 

certify that the proposed rule would not 

have a significant economic impact on 

a substantial number of small entities. 

However, under section 605(b) of the 

RFA, this analysis is not required if an 

agency certifies that the rule would not 

have a significant economic impact on 

a substantial number of small entities 

and publishes its certification and a 

short explanatory statement in the 

Federal Register along with its rule. 

The OCC currently supervises 1,057 

institutions (commercial banks, trust 

companies, federal savings associations, 

and branches or agencies of foreign 

banks) of which approximately 661 are 

small entities.31 The OCC estimates that 

on average, 38 OCC-supervised 

institutions could be impacted by the 

rule in a given year. This is based on a 

five-year average of the number of 

business combination applications 

submitted to the OCC from 2019 

through 2023.32

In terms of the potential impact of the 

proposed changes on affected 

institutions, the OCC does not expect 

that the changes would: (1) result in a 

different decision outcome for the 

merger application by the OCC or (2) 

result in a burden on affected 

institutions. First, proposed appendix A 

would seek to provide transparency 

with respect to the OCC’s BMA review 

process including the OCC’s 

consideration of certain statutory factors 

under the BMA, which should provide 

regulated institutions with additional 

clarity and transparency about the 

OCC’s decision-making process. Second, 

the removal of the expedited review 

process would potentially affect OCC 

staff, but not affect banks, as the scope 

of information to be submitted by banks 

would not change. And third, the OCC 

expects that the removal of the 

streamlined application process would 

not result in a substantive impact on 

affected institutions or on the 

information collected, as the 

streamlined application and the 

interagency BMA application requests 

substantively the same information.33

Therefore, the OCC expects the impact 

to affected OCC-supervised institutions 

would likely be de minimis. For these 

reasons, the OCC certifies that the 

proposed rule would not have a 

significant economic impact on a 

substantial number of small entities.34

C. Unfunded Mandates Reform Act of 

1995 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 

(Unfunded Mandates Act) (2 U.S.C. 

1532) requires that the OCC prepare a 

budgetary impact statement before 

promulgating a rule that includes any 

Federal mandate that may result in the 

expenditure by state, local, and Tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

(adjusted annually for inflation, 

currently $182 million) in any one year. 

If a budgetary impact statement is 

required, section 205 of the Unfunded 

Mandates Act (2 U.S.C. 1535) also 

requires the OCC to identify and 

consider a reasonable number of 

regulatory alternatives before 

promulgating a rule. 

The OCC estimates that the annual 

aggregate cost of the proposal once fully 

phased in would de minimis. 

Furthermore, the proposed changes are 


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35 12 U.S.C. 4802(a). 

36 12 U.S.C. 4802(b). 

not new requirements for OCCsupervised institutions, but rather 

describe considerations and principles 

that guide the OCC’s review of 

applications under the BMA. Therefore, 

the OCC concludes that the proposed 

rule would not result in an expenditure 

of $182 million or more annually by 

state, local, and tribal governments, or 

by the private sector. 

D. Riegle Community Development and 

Regulatory Improvement Act of 1994 

Pursuant to section 302(a) of the 

Riegle Community Development and 

Regulatory Improvement Act of 1994 

(RCDRIA),35 in determining the effective 

date and administrative compliance 

requirements for new regulations that 

impose additional reporting, disclosure, 

or other requirements on insured 

depository institutions, the OCC must 

consider, consistent with the principle 

of safety and soundness and the public 

interest, any administrative burdens that 

such regulations would place on 

depository institutions, including small 

depository institutions, and customers 

of depository institutions, as well as the 

benefits of such regulations. In addition, 

section 302(b) of RCDRIA, requires new 

regulations and amendments to 

regulations that impose additional 

reporting, disclosures, or other new 

requirements on insured depository 

institutions generally to take effect on 

the first day of a calendar quarter that 

begins on or after the date on which the 

regulations are published in final form, 

with certain exceptions, including for 

good cause.36

The OCC requests comment on any 

administrative burdens that the 

proposed rule would place on 

depository institutions, including small 

depository institutions, and their 

customers, and the benefits of the 

proposed rule that the OCC should 

consider in determining the effective 

date and administrative compliance 

requirements for a final rule. 

List of Subjects in 12 CFR Part 5 

Administrative practice and 

procedure, National banks, Reporting 

and recordkeeping requirements, 

Savings associations, Securities. 

For the reasons set forth in the 

preamble, OCC proposes to amend 

chapter I of title 12 of the Code of 

Federal Regulations as follows: 

PART 5—RULES, POLICIES, AND 

PROCEDURES FOR CORPORATE 

ACTIVITIES 

■ 1. The authority citation for part 5 

continues to read as follows: 

Authority: 12 U.S.C. 1 et seq., 24a, 35, 93a, 

214a, 215, 215a, 215a–1, 215a–2, 215a–3, 

215c, 371d, 481, 1462a, 1463, 1464, 1817(j), 

1831i, 1831u, 2901 et seq., 3101 et seq., 3907, 

and 5412(b)(2)(B). 

§ 5.33 [Amended] 

■ 2. Section 5.33 is amended by 

removing and reserving paragraphs 

(d)(3), (i), and (j). 

■ 3. Add appendix A to part 5, subpart 

C to read as follows: 

Appendix A: Policy Statement 

Regarding Statutory Factors Under the 

Bank Merger Act 

I. Introduction 

The purpose of this policy statement is to 

provide insured depository institutions 

(institutions) and the public with a better 

understanding of the Office of the 

Comptroller of the Currency’s (OCC’s) 

consideration of certain statutory factors 

under the Bank Merger Act (BMA), 12 U.S.C. 

1828(c). The matters discussed in this 

statement are intended to provide greater 

transparency, facilitate interagency 

coordination, and enhance public 

engagement. 

II. General Principles of OCC Review 

The OCC aims to act promptly on all 

applications. The agency’s range of potential 

actions on applications include approval, 

denial, and requesting that an applicant 

withdraw the application because any 

shortcomings are unlikely to be resolved in 

a timely manner. Applications that are 

consistent with approval generally feature all 

of the following indicators: 

1. The acquirer is well capitalized under 

§ 5.3 of this part and the resulting institution 

will be well capitalized; 

2. The resulting institution will have total 

assets less than $50 billion; 

3. The acquirer has a Community 

Reinvestment Act (CRA) rating of 

Outstanding or Satisfactory; 

4. The acquirer has composite and 

management ratings of 1 or 2 under the 

Uniform Financial Institution Ratings System 

(UFIRS) or ROCA rating system; 

5. The acquirer has a consumer compliance 

rating of 1 or 2 under the Uniform 

Interagency Consumer Compliance Rating 

System (CC Rating System), if applicable; 

6. The acquirer has no open formal or 

informal enforcement actions; 

7. The acquirer has no open or pending fair 

lending actions, including referrals or 

notifications to other agencies; 

8. The acquirer is effective in combatting 

money laundering activities; 

9. The target’s combined total assets are 

less than or equal to 50% of acquirer’s total 

assets; 

10. The target is an eligible depository 

institution as defined in § 5.3 of this part; 

11. The proposed transaction clearly would 

not have a significant adverse effect on 

competition; 

12. The OCC has not identified a 

significant legal or policy issue; and 

13. No adverse comment has raised a 

significant CRA or consumer compliance 

concern. 

If certain indicators that raise supervisory 

or regulatory concerns are present, the OCC 

is unlikely to find that the statutory factors 

under the BMA are consistent with approval 

unless and until the applicant has adequately 

addressed or remediated the concern. The 

following are examples of indicators that 

raise supervisory or regulatory concerns: 

1. The acquirer has a CRA rating of Needs 

to Improve or Substantial Noncompliance. 

2. The acquirer has a consumer compliance 

rating of 3 or worse. 

3. The acquirer has UFIRS or ROCA 

composite or management ratings of 3 or 

worse or the most recent report of 

examination otherwise indicates that the 

acquirer is not financially sound or well 

managed. 

4. The acquirer is a global systemically 

important banking organization, or 

subsidiary thereof. 

5. The acquirer has open or pending Bank 

Secrecy Act/Anti-money Laundering 

enforcement or fair lending actions, 

including referrals or notifications to other 

agencies. 

6. Failure by the acquirer to adopt, 

implement, and adhere to all the corrective 

actions required by a formal enforcement 

action in a timely manner; or multiple 

enforcement actions against the acquirer 

executed or outstanding during a three-year 

period. 

III. Financial Stability 

A. Factors Considered 

The BMA requires the OCC to consider 

‘‘the risk to the stability of the United States 

banking or financial system’’ when reviewing 

transactions subject to the Act. In reviewing 

a BMA application under this factor, the OCC 

considers the following factors: 

1. Whether the proposed transaction would 

result in a material increase in risks to 

financial system stability due to an increase 

in size of the combining institutions. 

2. Whether the proposed transaction would 

result in a reduction in the availability of 

substitute providers for the services offered 

by the combining institutions. 

3. Whether the resulting institution would 

engage in any business activities or 

participate in markets in a manner that, in 

the event of financial distress of the resulting 

institution, would cause significant risks to 

other institutions. 

4. Whether the proposed transaction would 

materially increase the extent to which the 

combining institutions contribute to the 

complexity of the financial system. 

5. Whether the proposed transaction would 

materially increase the extent of cross-border 

activities of the combining institutions. 

6. Whether the proposed transaction would 

increase the relative degree of difficulty of 

resolving or winding up the resulting 

institution’s business in the event of failure 

or insolvency. 


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7. Any other factors that could indicate 

that the transaction poses a risk to the U.S. 

banking or financial system. 

B. Balancing Test 

1. In general: The OCC applies a balancing 

test when considering the factors in section 

III(A) of this appendix in light of all the facts 

and circumstances available regarding the 

proposed transaction, including weighing the 

financial stability risk posed by the proposed 

transaction against the financial stability risk 

posed by denial of the proposed transaction, 

particularly if the proposed transaction 

involves a troubled target. The OCC 

considers each factor both individually and 

in combination with others. Even if only a 

single factor indicates that the proposed 

transaction would pose a risk to the stability 

of the U.S. banking or financial system, the 

OCC may determine that there would be an 

adverse effect of the proposal on the stability 

of the U.S. banking or financial system. 

Finally, the OCC also considers whether the 

proposed transaction would provide any 

stability benefits and whether enhanced 

prudential standards applicable as a result of 

the proposed transaction would offset any 

potential risks. 

2. Conditions: The OCC’s review of the 

financial stability factors will include, as 

appropriate, whether to impose conditions 

on approval of the transaction. The OCC may 

impose conditions, enforceable under 12 

U.S.C. 1818, to address and mitigate financial 

stability risk concerns, such as requiring 

asset divestitures by the resulting institution, 

imposing higher minimum capital 

requirements, or imposing other financial 

stability related conditions. 

3. Recovery planning and heightened 

standards: The OCC’s review of the financial 

stability factors will consider the impact of 

the proposed transaction in light of: 

b. Standards applicable to the resulting 

institution pursuant to 12 CFR 30, appendix 

D, ‘‘OCC Guidelines Establishing Heightened 

Standards for Certain Large Insured National 

Banks, Insured Federal Savings Associations, 

and Insured Federal Branches’’; and 

c. Standards requirements applicable to the 

resulting institution’s recovery planning 

pursuant to 12 CFR 30, appendix E, ‘‘OCC 

Guidelines Establishing Standards for 

Recovery Planning by Certain Large Insured 

National Banks, Insured Federal Savings 

Associations, and Insured Federal Branches’’. 

4. Concurrent filings: the OCC’s review of 

the financial stability factors may consider 

the facts, circumstances, and representations 

of concurrent filings for related transactions, 

including the impact of the related 

transactions to the proposed transaction 

under review by the OCC. 

IV. Financial and Managerial Resources and 

Future Prospects 

The OCC is required by the BMA to 

consider the managerial resources, financial 

resources, and future prospects of the 

combining and the resulting institutions. The 

OCC considers each of these factors 

independently for both the combining and 

resulting institutions. However, because 

these factors are directly related to one 

another, the OCC also considers these factors 

holistically. 

A. Overarching Considerations 

1. The OCC tailors its consideration of the 

financial and managerial resources and 

future prospects of the combining and 

resulting institutions, to their size, 

complexity, and risk profile. 

2. The OCC is more likely to approve 

combinations where the acquirer has 

sufficient financial and managerial resources 

to ensure safe and sound operations of the 

resulting institution than when: 

a. The acquirer has a less than satisfactory 

supervisory record, including its financial 

and managerial resources; 

b. The acquirer has experienced rapid 

growth; 

c. The acquirer has engaged in multiple 

acquisitions with overlapping integration 

periods; 

d. The acquirer has failed to comply with 

conditions imposed in prior OCC licensing 

decisions; or 

e. The acquirer is functionally the target in 

the transaction. 

3. The OCC normally does not approve a 

combination that would result in a 

depository institution with less than 

adequate capital or liquidity, less than 

satisfactory management, or poor earnings 

prospects. 

4. The OCC considers all comments 

received on proposed business combinations. 

However, the OCC’s consideration of an 

institution’s financial and managerial 

resources and future prospects are 

necessarily based on confidential supervisory 

information. While the OCC will provide an 

appropriate discussion of comments 

pertaining to the financial resources, 

managerial resources, and future prospects 

factors, it will generally not discuss or 

otherwise disclose confidential supervisory 

information in public decision letters. 

B. Individual Factors 

1. Financial Resources: 

a. The OCC reviews the existing and 

proposed institutions’ current and pro forma 

capital levels. 

i. The OCC reviews for compliance with 

the applicable capital ratios required by 12 

CFR part 3 and the Prompt Corrective Action 

capital categories established by 12 CFR 6.4. 

ii. The OCC may not approve a 

combination application filed by an insured 

depository institution that is 

undercapitalized as defined in 12 CFR 6.4 

unless it has approved the institution’s 

capital restoration plan or the Board of 

Directors of the Federal Deposit Insurance 

Corporation has determined that the 

transaction would fulfill the purposes of 12 

U.S.C. 1831o. 

b. The OCC closely scrutinizes transactions 

that increase the risk to the bank’s financial 

condition and resilience, including bank 

capital, liquidity, and earnings that can arise 

from any of the eight categories of risk 

included in the OCC’s Risk Assessment 

System: credit, interest rate, liquidity, price, 

operational, compliance, strategic, and 

reputation. 

c. In relation to the financial resources 

factor, the OCC considers management’s 

ability to address increased risks that would 

result from the transaction. 

d. A transaction involving an acquirer with 

a strong supervisory record relative to 

capital, liquidity, and earnings is more likely 

to satisfy the review factors. By contrast, a 

transaction involving an acquirer with a 

recent less than satisfactory financial or 

supervisory record is less likely to satisfy this 

factor. 

2. Managerial Resources: The OCC 

considers several factors when considering 

the managerial resources of the institutions. 

a. The OCC considers the supervisory 

record and current condition of both the 

acquirer and target to determine if the 

resulting institutions will have sufficient 

managerial resources to manage the resulting 

institution. 

i. A significant number of MRAs suggests 

there may be insufficient managerial 

resources. Additionally, the OCC considers 

both institutions’ management ratings under 

the UFIRS or ROCA system and component 

ratings under the CC Rating System, Uniform 

Rating System for Information Technology, 

and Uniform Interagency Trust Rating 

System, as applicable. 

ii. When applicable, the OCC also 

considers the relevant Risk Assessment 

System (RAS) conclusions for the combining 

institutions. 

iii. The OCC considers the context in 

which a rating or RAS element was assigned 

and any additional information resulting 

from ongoing supervision. 

iv. Less than satisfactory ratings at the 

target do not preclude the approval of a 

transaction, provided that the acquirer can 

employ sufficiently robust risk management 

and financial resources to correct the 

weaknesses at the target. 

b. The OCC considers whether the acquirer 

has conducted sufficient due diligence of the 

target depository institution to understand 

the business model, systems compatibility, 

and weaknesses of the target. To facilitate the 

OCC’s review, the acquirer’s management 

team should demonstrate its plans and ability 

to address the acquirer’s previously 

identified weaknesses, remediate the target’s 

weaknesses, and exercise appropriate risk 

management for the size, complexity, and 

risk profile of the resulting institution. 

c. The OCC also considers the acquirer’s 

analysis and plans to integrate the combining 

institutions’ operations, including systems 

and information security processes, products, 

services, employees, and cultures. The OCC’s 

consideration and degree of scrutiny reflects 

the applicant’s track record with information 

technology governance, business continuity 

resilience, and, as applicable, integrating 

acquisitions. 

d. The OCC considers the acquirer’s plans 

to identify and manage systems compatibility 

and integration issues, such as information 

technology compatibility and the 

implications for business continuity 

resilience. Any combination in which the 

OCC identifies systems integration concerns 

may lead to additional review. 

i. A critical component of these plans 

includes the acquirer’s identification and 

assessment of overreliance on manual 

controls, strategies for automating critical 

processes, and the strategies and capacity for 

modernization of aging and legacy 

information technology systems. 


lotter on DSK11XQN23PROD with PROPOSALS1
10018 Federal Register / Vol. 89, No. 30 / Tuesday, February 13, 2024 / Proposed Rules 

ii. The OCC may impose conditions, 

enforceable pursuant to 12 U.S.C. 1818, if it 

determines that information technology 

systems compatibility and integration 

represent a supervisory significant concern. 

These conditions may include requirements 

and time frames for specific remedial actions 

and specific measures for assessing and 

evaluating the depository institution’s 

systems integration progress. 

iii. The OCC may deny the application if 

the integration issues or other issues present 

significant supervisory concerns, and the 

issues cannot be resolved through 

appropriate conditions or otherwise. 

e. The OCC also considers the proposed 

governance structure of the resulting 

institution. This includes governance in 

decision-making processes, the board 

management oversight structure, and the risk 

management system, including change 

management. This also includes expansion of 

existing activities, introduction of new or 

more complex products or lines of business, 

and implications for managing existing and 

acquired subsidiaries and equity 

investments. When applicable, the resulting 

institution’s governance is also considered in 

the context of the institution’s relationship 

with its holding company and the scope of 

the holding company’s activities. 

3. Future Prospects: 

a. The OCC considers the resulting 

institution’s future prospects in light of its 

assessment of the institutions’ financial and 

managerial resources. 

b. The OCC also considers the proposed 

operations of the resulting institution. The 

OCC’s consideration and degree of scrutiny 

reflects the acquirer’s record of integrating 

acquisitions. 

i. The OCC considers whether the 

integration of the combining institutions 

would allow it to function effectively as a 

single unit. 

ii. The OCC considers the resulting 

institution’s business plan or strategy and 

management’s ability to implement it in a 

safe and sound manner. 

iii. The OCC also considers the 

combination’s potential impact on the 

resulting institution’s continuity planning 

and operational resilience. 

V. Convenience and Needs 

A. The OCC considers the probable effects 

of the proposed business combination on the 

community to be served. Review of the 

convenience and needs factor is prospective 

and considers the likely impact on the 

community of the resulting institution after 

the transaction is consummated, including 

but not limited to: 

1. any plans to close, expand, consolidate, 

or limit branches or branching services, 

including in low- or moderate-income (LMI) 

areas; 

2. any plans to reduce the availability or 

increase the cost of banking services or 

products, or plans to provide expanded or 

less costly banking services or products to 

the community; 

3. credit availability throughout the 

community, including, for example, home 

mortgage, consumer, small business, and 

small farm loans; 

4. job losses or reduced job opportunities 

from branch staffing changes, including 

branch closures or consolidations; 

5. community investment or development 

initiatives, including, for example, 

community reinvestment, community 

development investment, and community 

outreach and engagement strategies; and 

6. efforts to support affordable housing 

initiatives and small businesses. 

B. The OCC considers comments received 

during the comment period and information 

provided during any public hearing or 

meeting for proposed business combinations. 

To the extent public comments or 

discussions address issues involving 

confidential supervisory information, 

however, the OCC generally will not discuss 

or otherwise disclose that confidential 

supervisory information in public decision 

letters and forums. 

C. The OCC considers the CRA record of 

performance of an applicant in evaluating a 

business combination application. The OCC’s 

forward-looking evaluation of the 

convenience and needs factor under the BMA 

is separate and distinct from its consideration 

of the CRA record of performance of an 

applicant in helping to meet the credit needs 

of the relevant community, including LMI 

neighborhoods. 

VI. Public Comments and Meetings 

A. Public Comments 

1. Unless an exception applies, a 

combination under the BMA is subject to a 

30-day comment period following 

publication of the notice of the proposed 

combination. The OCC may extend the 

comment period in certain instances: 

a. when a filer fails to file all required 

publicly available information on a timely 

basis or makes a request for confidential 

treatment not granted by the OCC; 

b. when requested and the OCC determines 

that additional time is necessary to develop 

factual information necessary to consider the 

filing; and 

c. when the OCC determines that other 

extenuating circumstances exist. 

2. The OCC may find that additional time 

is necessary to develop factual information if 

a filer’s response to a comment does not fully 

address the matters raised in the comment, 

and the commenter requests an opportunity 

to respond. 

3. Examples of extenuating circumstances 

necessitating an extension include: 

a. transactions in which public meetings 

are held to allow for public comment after 

the meeting; 

b. unusual transactions (e.g., novel or 

complex transactions); and 

c. natural or other disasters occurring in 

geographic regions affecting the public’s 

ability to timely submit comments. 

B. Public Meetings 

1. While the BMA does not require the 

OCC to hold meetings or hearings, the OCC 

has three methods for seeking oral input: (1) 

public hearing, (2) public meeting, and (3) 

private meeting. Public meetings are the 

most-employed public option. 

2. The OCC will balance the public’s 

interest in the transaction with the value or 

harm of a public meeting to the decisionmaking process (e.g., although there may be 

increased public interest in a transaction, a 

public meeting will not be held if it would 

not inform the OCC’s decision on an 

application or would otherwise harm the 

decision-making process). 

3. Criteria informing the OCC’s decision on 

whether to hold public meetings include: 

a. the extent of public interest in the 

proposed transaction. 

b. whether a public meeting is appropriate 

in order to document or clarify issues 

presented by a particular transaction based 

on issues the public raises during the public 

comment process. 

c. whether a public meeting would provide 

useful information that the OCC would not 

otherwise be able to obtain in writing. 

d. the significance of the transaction to the 

banking industry. Relevant considerations 

may include the asset sizes of the institutions 

involved (e.g., resulting institution will have 

$50 billion or more in total assets), and 

concentration of the resulting institution in 

one or more markets. 

e. the significance of the transaction to the 

communities affected. Relevant 

considerations may include the effects of the 

transaction on the convenience and needs of 

the community to be served, including a 

consideration of a bank’s CRA strategy and 

the extent to which the acquirer and target 

are currently serving the convenience and 

needs of their communities. 

f. the acquirer’s and target’s CRA, 

consumer compliance, fair lending, and other 

pertinent supervisory records, as applicable. 

Michael J. Hsu, 

Acting Comptroller of the Currency. 

[FR Doc. 2024–02663 Filed 2–12–24; 8:45 am] 

BILLING CODE 4810–33–P 

DEPARTMENT OF TRANSPORTATION 

Federal Highway Administration 

23 CFR Part 490 

[FHWA Docket No. FHWA–2023–0014] 

RIN 2125–AG06 

National Performance Management 

Measures; Extenuating Circumstances, 

Highway Performance Monitoring 

System Data Field Names, Safety 

Performance Measure, Pavement 

Condition Measure, and Freight 

Performance Measure 

AGENCY: Federal Highway 

Administration (FHWA), U.S. 

Department of Transportation (DOT). 

ACTION: Proposed rule; extension of 

comment period. 

SUMMARY: The FHWA is extending the 

comment period for a notice of 

proposed rulemaking (NPRM) and 

request for comments, which was 

published on January 25, 2024. The 


lotter on DSK11XQN23PROD with PROPOSALS1