Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 78207 

1A business combination for these purposes 

includes an assumption of deposits in addition to 

a merger or consolidation. 

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. 

6 89 FR 10010 (February 13, 2024). 

7Under the proposal, the provisions in 12 CFR 

5.13(a)(2) regarding adverse comments would no 

longer apply to business combination applications 

because they only apply to filings that qualify for 

expedited review. 

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: Final rule. 

SUMMARY: The OCC is adopting a final 

rule to amend its procedures for 

reviewing applications under the Bank 

Merger Act and adding, 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: The final rule is effective on 

January 1, 2025. 

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’’ 

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 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 reviewing these materials, the 

OCC determined that additional 

transparency about the standards and 

procedures that the agency applies 

when reviewing bank business 

combinations may be helpful to 

institutions and the public. 

To better reflect the OCC’s view that 

a business combination is a significant 

corporate transaction, the OCC proposed 

amendments to 12 CFR 5.33 to remove 

provisions related to expedited review 

and the use of streamlined 

applications.6 The OCC also proposed 

adding a policy statement at appendix A 

to 12 CFR part 5, subpart C, that would 

discuss both the general principles the 

agency uses to review applications 

under the BMA and how it considers 

financial stability, financial and 

managerial resources and future 

prospects, and convenience and needs 

factors. Proposed appendix A also 

described the criteria informing the 

OCC’s decision on whether to hold a 

public meeting on an application 

subject to the BMA. 

The OCC received 34 substantive 

written comments on this proposal from 

banks, trade groups, academics, and 

members of the public. Most 

commenters agreed that the OCC should 

update its merger regulations and 

guidelines, but expressed varying views 

on the proposed changes. The 

comments are addressed below with the 

relevant discussion of 12 CFR 5.33 and 

appendix A. After careful consideration 

of these comments, the OCC is adopting 

its proposed amendments to 12 CFR 

5.33 in final form and making minor, 

clarifying modifications to proposed 

appendix A. 

II. Description of the Final Policy 

Statement and Regulatory Amendments 

Regulatory Amendments 

The OCC proposed two substantive 

changes to its business combination 

regulation at 12 CFR 5.33. First, the OCC 

proposed removing the expedited 

review procedures in § 5.33(i). 

Paragraph (i) currently provides that a 

filing that qualifies either as a business 

reorganization as defined in § 5.33(d)(3) 

or for a streamlined application under 

§ 5.33(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).7

Some commenters opposed 

eliminating the expedited review 

procedures. These commenters argued 

that eliminating the expedited review 

procedures would unnecessarily 

increase the complexity and cost of the 

application process for categories of 

transactions that are unlikely to present 

issues under the BMA, such as 

reorganizations. Further, many 

commenters expressed concern that 

removing § 5.33(i) would increase the 

burden on smaller institutions, 

including community banks. Some of 

these commenters suggested that the 

OCC continue to allow expedited 

processing for banks under a certain 

size. Other commenters supported 

eliminating expedited review, stating 

that eliminating the possibility that an 

application will be deemed approved 

solely due to the passage of time is 

necessary to address the systemic risks 

posed by large banks and the harms of 

consolidation. Further, some 

commenters that supported eliminating 

expedited review noted that the current 

expedited review process fails to 

adequately prevent anti-competitive 

mergers and the proposed changes to 

the review process would allow for a 


ddrumheller on DSK120RN23PROD with RULES1
78208 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 

8See, e.g., 12 U.S.C. 215a (procedures for mergers 

resulting in a national bank). 9See, e.g., 12 U.S.C. 1828(c) (BMA). 10The public comment period is typically 30 

days. See 12 CFR 5.10(b)(1). 11See, e.g., Office of the Comptroller of the 

Currency, 2023 Annual Report, at 36. 

12 12 CFR 5.33(j) authorizes the 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 12 CFR 5.33(g)(4), 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. 

13Under 12 CFR 5.2(b), the OCC may adopt 

materially different procedures for a particular 

filing or class of filings as it deems necessary (e.g., 

in exceptional circumstances or for unusual 

transactions) after providing notice of the change to 

the filer and any other party that the OCC 

determines appropriate. For example, the OCC may 

use this authority, if appropriate, to reduce the 

information it requires in a transaction involving a 

failing bank, given the limited time available to 

prepare the application. 

more comprehensive evaluation of 

merger application. Nevertheless, some 

supportive commenters noted that the 

proposed changes, including the 

removal of expedited review, do not go 

far enough to effectively address the 

issues raised by large bank 

consolidations. 

The OCC reviews business 

combination applications to determine 

whether applicable procedural 8 and 

substantive 9 requirements are met. The 

only benefit conferred by the expedited 

review provisions in § 5.33(i) is that 

these applications are deemed approved 

as of the 15th day after the close of the 

comment period 10 unless the OCC takes 

action to remove the application from 

expedited review or extends the 

expedited review process. As described 

in the OCC’s Annual Report, Licensing 

Activity section, the OCC’s current 

target time frame for licensing decisions 

on merger applications is 45 days for 

expedited review and 60 days for 

standard review.11 However, as noted in 

§ 5.33(i), the OCC can remove an 

application from expedited review. 

Additionally, as noted in the OCC’s 

Annual Report, the OCC may extend the 

standard review target time frame if it 

needs additional information to reach a 

decision, process a group of related 

filings as a single transaction, or extend 

the public comment period. The OCC’s 

practice has been to approve or deny an 

application on expedited review within 

15 days after the close of the comment 

period or remove the application from 

expedited review. The OCC is not aware 

of any application for a business 

combination having been deemed 

approved solely due to the passage of 

time. Accordingly, the OCC does not 

expect that removing this provision will 

result in a significant change to the time 

in which the OCC processes merger 

applications. Instead, this change will 

more closely align the regulatory 

framework with the OCC’s current 

practices and promote transparency. 

Further, it is consistent with the OCC’s 

view that any business combination 

subject to a filing under § 5.33 is a 

significant corporate transaction 

requiring active OCC consideration and 

decisioning of the application. The 

principles underlying the expedited 

process in § 5.33(i) (i.e., transactions 

with certain indicators are likely to 

satisfy the statutory factors, do not 

otherwise raise supervisory or 

regulatory concerns, and therefore can 

be processed more expeditiously) are 

reflected in section II of the final 

appendix A. 

Second, the OCC proposed removing 

§ 5.33(j), which specifies four situations 

in which an applicant may use the 

OCC’s streamlined business 

combination application, rather than the 

Interagency Bank Merger Act 

Application.12 The streamlined 

application requests information about 

topics similar to those addressed in 

Interagency Bank Merger Act 

Application, but the former only 

requires an applicant to provide 

detailed information if the applicant 

answers in the affirmative to any one of 

a series of yes or no questions. 

Many commenters opposed 

eliminating the streamlined application. 

Commenters stated that it is easy to 

complete and generally more efficient. 

Commenters stated that its removal 

would lead to longer processing times 

and higher costs for applicants. Several 

commenters emphasized that 

eliminating the streamlined application 

would disproportionately affect smaller 

banks, which often have limited 

resources to devote to a more complex, 

administratively burdensome, and 

detailed application process. 

Commenters critical of eliminating the 

streamlined application focused on the 

increased burden of associated with the 

Interagency Bank Merger Act 

Application. On the other hand, some 

commenters supported removing the 

streamlined application, with one also 

supporting the adoption of a more 

robust interagency merger application 

that would include a question on 

community benefit agreements or 

commitments. 

The OCC believes that the more 

complete record created with the 

Interagency Bank Merger Act 

Application provides the appropriate 

basis for the OCC to consider a business 

combination application. Further, the 

removal of the streamlined business 

combination form should not 

significantly increase the burden on 

applicants. Although the Interagency 

Bank Merger Act Application requires 

the submission of additional 

information with the initial application, 

in practice, the OCC often requests 

additional information from many 

applicants, including those that file a 

streamlined application. Eliminating the 

streamlined application may decrease 

the likelihood the OCC requests 

additional information from applicants, 

which slows down the agency’s 

processing an application and increases 

the burden on applicants. Further, the 

OCC may tailor the information 

applicants must submit in the 

Interagency Bank Merger Act 

Application as appropriate to reduce the 

information that the applicant needs to 

provide.13 For example, there may be 

situations where a discussion of all 

items in the Interagency Bank Merger 

Act Application may not be appropriate, 

such as in a purchase and assumption 

transaction from an insured depository 

institution in Federal Deposit Insurance 

Corporation receivership. 

Additionally, the U.S. Small Business 

Administration’s (SBA’s) Office of 

Advocacy and one other commenter 

stated that the OCC’s Regulatory 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 78209 

14Proposed appendix A would not have 

addressed 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). 

15The OCC notes that the convenience and needs 

analysis is relevant to the competition analysis in 

some instances. Under 12 U.S.C. 1828(c)(5)(B), the 

OCC may approve a merger whose effect in any 

section of the country may be substantially to lessen 

competition or to tend to create a monopoly, or 

which in any other manner would be in restraint 

of trade if it finds that the anticompetitive effects 

of the proposed transaction are clearly outweighed 

in the public interest by the probable effect of the 

transaction in meeting the convenience and needs 

of the community to be served. 

16 12 CFR 5.13(a)(1) governs the OCC’s imposition 

of conditions to address a significant supervisory, 

Community Reinvestment Act (CRA), or 

compliance concern if the OCC determines that the 

conditions are necessary or appropriate to ensure 

that approval is consistent with relevant statutory 

and regulatory standards, including those designed 

to ensure the fair treatment of consumers and fair 

access to financial services, and OCC policies 

thereunder and safe and sound banking practices. 

The OCC imposes conditions on a case-by-case 

basis and makes a determination of appropriate 

conditions based on a merger’s facts and 

circumstances. 

Flexibility Act (RFA) certification in the 

proposal lacked a factual basis. The 

SBA’s Office of Advocacy and others 

recommended that the OCC continue to 

allow small entities to have access to 

expedited review and use the 

streamlined application form. 

Specifically with respect to the RFA 

certification, the commenters stated it 

lacked sufficient information about (1) 

the number of small entities that would 

be impacted (because the OCC only 

estimated the number of entities that 

apply for business combinations in a 

given year and did not explain how 

many of those entities were small 

entities) and (2) the basis for its 

conclusion that the impact on affected 

institutions would be de minimis. 

In response to these comments, the 

OCC has revised the number of small 

entities that will be impacted by this 

rulemaking. (This change is reflected in 

its discussion of the RFA below.) 

Further, as discussed above, the OCC’s 

process for reviewing business 

combination applications allows the 

agency to vary the information that 

applicants must submit on a case-bycase basis and to request additional 

information not required on the initial 

application, if necessary. The OCC also 

may remove an application from 

expedited review if it needs additional 

review time. Accordingly, the OCC 

expects these changes will have a de 

minimis impact on small entities. 

For the reasons discussed above, the 

final rule removes § 5.33(i) and (j) as 

proposed. Further, because 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 § 5.33(i), the 

final rule also removes § 5.33(d)(3). 

Policy Statement 

As discussed in Section I, 

Introduction, of proposed appendix A, 

the policy statement would have 

provided institutions and the public 

with a better understanding of how the 

OCC reviews applications subject to the 

BMA and thus provided greater 

transparency, facilitate interagency 

coordination, and enhance public 

engagement. Specifically, proposed 

appendix A would have outlined the 

general principles the OCC applies 

when reviewing applications and 

provided information about how the 

OCC considers the BMA statutory 

factors of financial stability, financial 

and managerial resources, and 

convenience and needs of the 

community.14 Proposed appendix A 

would have provided transparency 

regarding the public comment period 

and the factors the OCC considers in 

determining whether to hold public 

meetings. 

Commenters generally supported the 

OCC’s goals of increasing transparency; 

however, some commenters stated that 

by merely codifying current practices, 

the proposed appendix A did not go far 

enough in fulfilling the OCC’s statutory 

obligations in reviewing bank mergers 

or preventing anti-competitive mergers 

in the banking industry. Several 

commenters also urged the OCC to 

coordinate closely with other regulators, 

such as the Federal Deposit Insurance 

Corporation, in finalizing the proposed 

policy statement and in updating the 

1995 interagency document, Bank 

Merger Competitive Review— 

Introduction and Overview. 

Other commenters suggested that 

appendix A should address the 

uncertainty surrounding the processing 

considerations and timelines of the 

OCC’s review of BMA applications, 

noting that uncertainty in the timelines 

for regulatory approval could deter 

beneficial merger transactions. Several 

commenters offered additional ways to 

increase transparency, including by 

releasing some of the confidential 

supervisory information (e.g., ratings) 

that the OCC uses in evaluating the 

statutory factors, televising live coverage 

of internal OCC deliberations, making 

all agency requests for additional 

information and bank responses public, 

and responding to all comments raised 

by the public in merger approval orders. 

Several commenters suggested topics 

that the OCC should add to proposed 

appendix A. For example, several 

commenters suggested appendix A 

should provide details of the OCC’s 

analysis of the BMA statutory factor of 

competition, generally and particularly 

with regard to how improvements in 

convenience and needs can outweigh 

anticompetitive effects. These 

commenters provided several suggested 

approaches. Other commenters urged 

the OCC to be more transparent when an 

applicant withdraws an application. 

One commenter also suggested the OCC 

take steps to reduce ‘‘charter shopping.’’ 

Another commenter urged the OCC to 

avoid the use of non-standard 

conditions to approve problematic 

mergers. Some commenters expressed 

concerns with the OCC’s practice of 

holding prefiling meetings described in 

the Explanatory Calls or Meetings 

section of the ‘‘Business Combinations’’ 

booklet of the Comptroller’s Licensing 

Manual and were concerned that such 

communications could unduly 

influence the agency. Suggestions to 

resolve this issue included 

automatically making transcripts or 

summaries of the calls or meetings 

public or ending the practice of holding 

the meetings. 

The OCC is finalizing appendix A 

generally as proposed, with minor 

grammatical changes, except as noted 

below. The OCC intends for appendix A 

to provide substantive information on 

how it evaluates many of the BMA’s 

statutory factors. Given complexities of 

the competition factor review and the 

involvement of the Department of 

Justice, the OCC does not believe that 

appendix A is the appropriate vehicle 

for discussing its current approach to 

competition issues.15 The OCC’s 

existing regulations govern the 

standards for impositions of 

conditions.16 Similarly, the OCC does 

not intend appendix A to address OCC 

processing issues such as the disclosure 

of confidential supervisory information, 

the reasons for withdrawal of 

applications, its internal decisionmaking process, or its practice of 

holding pre-filing meetings. 

Accordingly, the OCC is finalizing 

Section I, Introduction, as proposed, 

with minor grammatical changes. 

Section II, General Principles of OCC 

Review, of proposed appendix A would 

have discussed the OCC’s review of and 

action on an application. Although, the 

OCC aims to act promptly on all 

applications, proposed appendix A 

identified certain indicators that, in the 

OCC’s experience, generally feature in 

applications that are consistent with 

approval. These indicators included: (i) 

attributes regarding the acquirer’s 


ddrumheller on DSK120RN23PROD with RULES1
78210 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 

17UFIRS is also known as the CAMELS rating 

system. The CAMELS component factors address 

capital, asset quality, management, earnings, 

liquidity, and sensitivity to market risk. 

18The ROCA System is the interagency uniform 

supervisory rating system for U.S. branches and 

agencies of foreign banking organizations. 

19The Basel Committee on Bank Supervision 

annually identifies certain banking organizations as 

global systemically important. 

20For 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). 

financial condition; size; Uniform 

Financial Institution Ratings System 

(UFIRS) 17 or risk management, 

operational controls, compliance, and 

asset quality (ROCA) 18 ratings; Uniform 

Interagency Consumer Compliance 

Rating System (CC Rating System) 

rating; Community Reinvestment Act 

(CRA) rating; the effectiveness of its 

Bank Secrecy Act/anti-money 

laundering program; and the absence of 

fair lending concerns; (ii) attributes 

regarding the 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 

have also recognized 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 have stated 

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 or 

worse; (iii) the acquirer has a consumer 

compliance rating of 3 or worse; (iv) the 

acquirer is a global systemically 

important banking organization (G–SIB), 

or subsidiary thereof; 19 (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; 20 (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; and (vi) multiple 

enforcement actions against the acquirer 

executed or outstanding during a threeyear period. 

Commenters expressed confusion 

about how these indicators apply and 

how the OCC’s reviews applications that 

meet some, but not all, of the indicators 

that generally feature in applications 

consistent with approval. For example, 

numerous commenters interpreted the 

proposed policy statement as indicating 

that the OCC would not approve an 

application if one of the first set of 

indicators was absent. Commenters also 

requested clarification about how an 

absence or resolution of any or most of 

the listed indicators of supervisory or 

regulatory concerns would expedite a 

positive decision on an application. 

The OCC understands the confusion 

of some commenters with respect to 

appendix A as proposed. In addition to 

the two categories of transactions 

recognized in proposed section II, there 

is a middle category of transactions that 

do not feature all of the indicators in the 

first category but also have none of the 

indicators that raise supervisory or 

regulatory concerns. The OCC believes 

that most transactions will be in this 

middle category and that many of these 

transactions are likely consistent with 

approval. 

The OCC is revising proposed 

appendix A to eliminate this confusion 

and clarify the significance of the two 

types of indicators. The final appendix 

A includes prefatory text that notes that 

applications that feature all of the first 

set of indicators tend to be more likely 

to withstand scrutiny and to be 

approved expeditiously. In the OCC’s 

experience, these indicators reflect a 

national bank or Federal savings 

association’s condition or other features 

that the OCC is likely to quickly find 

consistent with approval. However, 

these indicators are not required for a 

transaction to be approved. For 

example, the OCC has approved many 

transactions where the target is not an 

eligible depository institution and the 

acquirer brings the appropriate financial 

and managerial resources to bear to 

mitigate deficiencies at the target. 

With respect to the individual 

indicators, some commenters objected 

to $50 billion in total assets serving as 

a ceiling for transactions consistent with 

approval. One commenter requested 

that the OCC raise indicator to $100 

billion or more in total assets. Another 

commenter noted that having $50 

billion dollars as a threshold could 

prevent or make it more difficult for 

regional and midsized institutions to 

combine and compete with the largest 

banks. As clarified in final appendix A, 

the $50 billion indicator merely reflects 

the likelihood of an expeditious 

approval. The OCC recognizes that 

national banks and Federal savings 

associations with $50 billion or more in 

total assets tend to be more complex 

than smaller banks. For example, 

insured national banks and Federal 

savings associations with at least $50 

billion in total assets are subject to the 

OCC Guidelines Establishing 

Heightened Standards for Certain Large 

Insured National Banks, Insured Federal 

Savings Associations, and Insured 

Federal Branches. In light of the 

increased complexity of these 

institutions, the OCC may require 

additional time for review of the 

application. The OCC believes that 

many transactions where the resulting 

institution will have total assets of more 

than $50 billion are consistent with 

approval. Accordingly, the OCC is 

finalizing the indicator as proposed at 

$50 billion or more in total assets, as 

clarified by a modification to the 

prefatory text to the indicators. 

Two commenters expressed concern 

with the indicator focusing on 

transactions where the target’s total 

assets are less than or equal to 50 

percent of acquirer’s total assets. The 

indicator is not intended to discourage 

mergers of equals. It was included 

because, in the OCC’s supervisory 

experience, mergers between 

institutions of similar sizes are likely to 

require more review than transactions 

where the target is much smaller than 

the acquirer. In transactions with 

significant size disparities, the acquirer 

is more likely to use its existing 

policies, procedures, and control 

framework, with which the OCC is 

already familiar. Integration of two 

similarly sized institutions is more 

likely to result in more changes to 

resulting institution, which the OCC 

will need to review for consistency with 

the applicable BMA factors. The 

inclusion of this indicator simply 

highlights that applications for mergers 

between institutions that are similar in 

size may require additional time to 

assess but does not indicate that those 

applications will not be approved. The 

OCC is, however, deleting the word 

‘‘combined’’ referring to the target’s total 

assets in this indicator for clarity. The 

OCC is thus finalizing this indicator as 

proposed, as clarified by a modification 

of the prefatory text to the indicators 

which emphasizes that the first set of 

indicators are intended to identify 

applications that are more likely to 

withstand scrutiny and to be approved 

expeditiously. 

Commenters also asserted that the 

proposed indicators regarding lack of 

enforcement actions, lack of fair lending 

concerns, clear absence of a ‘‘significant 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 78211 

21See 12 CFR 5.13(a)(2)(ii) (describing comments 

that do not warrant removing a filing from 

expedited review). 

22Public Law 103–328, 108 Stat. 2338 (Sept. 29, 

1994). 

23 12 U.S.C. 1828(c)(13), 1831u(b)(2). 

24Public Law 111–203, 124 Stat. 1376 (July 21, 

2010). 

25See 12 U.S.C. 1852. 26 12 U.S.C. 2903(a)(2). 

adverse effect’’ on competition, and no 

adverse public comments are 

inconsistent with the applicable 

standards under the BMA. Other 

commenters supported these indicators 

but had additional suggestions 

including urging the OCC to include 

language about coordinating with the 

Consumer Financial Protection Bureau 

regarding fair lending and consumer 

protection matters; barring applicants 

with records of noncompliance with fair 

lending, CRA, and other consumer 

protection laws from being acquired; 

and requiring merging parties to 

undergo new fair lending and CRA 

reviews under heightened scrutiny. The 

OCC does not require that all of these 

indicators are present for a transaction 

to be consistent with the BMA’s 

statutory factors. Rather, the OCC can 

more quickly find that applications with 

all of these indicators are consistent 

with the BMA factors and approve the 

transactions. For example, a merger 

between two institutions without an 

overlapping footprint and few products 

in common will require less analysis 

with respect to competition compared to 

a merger between institutions with 

significant overlap. Similarly, the OCC 

approves mergers on which the public 

has commented after reviewing all 

comments. The OCC recognizes that 

while comments play an important role 

in the review process, some comments 

may fail to raise a significant 

supervisory, CRA, or compliance 

concern.21 The OCC does not expect 

such comments, on their own, to 

warrant less expeditious processing of 

the application. Therefore, OCC is 

finalizing these indicators as proposed, 

as clarified by a modification of the 

prefatory language to the indicators. 

With respect to the indicators of 

supervisory or regulatory concern, 

commenters expressed concern with 

any indication in the proposed 

appendix A that the acquirer is a G–SIB 

or subsidiary thereof would be unlikely 

to be consistent with approval. Some 

commenters noted that the indicator 

could restrict internal reorganizations 

by a G–SIB and its subsidiaries. 

Additionally, two commenters noted 

that Congress has already addressed 

large-bank concentration by prohibiting 

bank acquisitions based on deposit 

concentrations and that the OCC’s use of 

the G–SIB designation was inconsistent 

with Congressional intent. Other 

commenters expressed concern that the 

indicator could be interpreted to 

include proposed business 

combinations involving U.S.-based bank 

subsidiaries of non-U.S. G–SIBs. These 

commenters assert that applications for 

combinations involving such entities 

could bring diversity to the U.S. banking 

system. On the other hand, another 

commenter supported increased 

scrutiny of transactions involving G– 

SIBs but asserted that transactions 

undertaken by large, non-G–SIBs should 

also trigger enhanced scrutiny. 

The indicators of regulatory or 

supervisory concern do not preclude 

OCC approval of a BMA application by 

an institution that exhibits one or more 

of the indicators. For example, internal 

corporate reorganizations are frequently 

consistent with the BMA, 

notwithstanding many regulatory or 

supervisory concerns, particularly 

where the transaction enhances the 

resolvability of the institution. The OCC 

views these factors regarding size as 

independent from limits that Congress 

established in the BMA and the RiegleNeal Interstate Banking and Branching 

Efficiency Act of 1994 (Riegle-Neal).22

For certain interstate transactions, the 

BMA contains a national deposit cap, 

and Riegle-Neal has national and State 

deposit caps.23 Similarly, there is a 

liability cap imposed by the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act 24 that applies to both 

holding companies and banks.25 These 

are all limits that a bank may not exceed 

absent a specific statutory exception. In 

contrast, the G–SIB indicator in the 

proposal reflects the OCC’s supervisory 

experience with organizations of that 

size and the impact of size and 

complexity on the review of a business 

combination. 

Similarly, even though the U.S. 

operations of a foreign-based G–SIB may 

be smaller than those of domestic G– 

SIBs, the potential for supervisory 

issues remains high, particularly if the 

foreign G–SIB’s U.S. operations are 

material. G–SIBs are among the most 

complex financial institutions and, in 

the OCC’s supervisory experience, they 

often present supervisory issues such 

that inclusion of this indicator is 

warranted. The OCC recognizes, 

however, that G–SIB status is unlikely 

to be remediated. While the OCC 

continues to believe that the G–SIB 

indicator is appropriate, it will evaluate 

all applications from foreign and 

domestic G–SIBs on their individual 

merits and undertake a fulsome analysis 

under the BMA and other applicable 

law. 

Another commenter noted that a less 

than ‘‘Satisfactory’’ CRA rating should 

not preclude an internal reorganization 

that would simplify the banking 

organization and make it safer and 

sounder. Congress has mandated that 

the OCC consider an institution’s CRA 

rating when acting on any BMA 

application.26 The OCC recognizes that 

internal reorganizations present facts 

and analysis distinguishable from many 

other BMA applications, and while the 

inclusion of this indicator does not 

indicate those applications will not be 

approved, additional scrutiny may be 

warranted. In some instances, the 

benefits of a reorganization may 

overcome the less than ‘‘Satisfactory’’ 

CRA rating. Nevertheless, the OCC 

regards a less than ‘‘Satisfactory’’ CRA 

rating as raising significant regulatory or 

supervisory concerns and warranting 

inclusion on the list of indicators. One 

commenter also praised the inclusion of 

instances where an acquirer has 

experienced rapid growth as an 

indicator of supervisory or regulatory 

concern. 

The OCC is making one change to the 

indicator regarding open enforcement 

actions. Proposed appendix A was 

specific to Bank Secrecy Act/Antimoney Laundering or fair lending 

actions, including referrals or 

notifications to other agencies. The OCC 

is including all types of consumer 

compliance enforcement actions in final 

appendix A to reflect the seriousness of 

these types of enforcement actions. 

Accordingly, the OCC is generally 

finalizing these indicators as proposed, 

as clarified by a modification to the 

prefatory language to the indicators and 

the addition of consumer compliance 

enforcement actions. 

Section III, Financial Stability, of 

proposed appendix A would have 

provided 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 that 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 set forth 

in proposed appendix A is consistent 

with longstanding OCC practice and 


ddrumheller on DSK120RN23PROD with RULES1
78212 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 

27See, e.g., OCC Conditional Approval #1298 

(November 2022); OCC Corporate Decision #2012– 

05 (April 2012). 

28See, e.g., FRB Order No. 2012–2 (February 14, 

2012) at 30. 

29See, e.g., FRB Order No. 2021–04 (May 14, 

2021) at 24. 

30See, e.g., OCC Conditional Approval #1298 

(November 2022). 

31For example, many business combinations 

under the BMA are part of a larger transaction that 

requires a filing with the Board under the Bank 

Holding Company Act. 32 12 U.S.C. 1828(c)(5). 

principles.27 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 crossborder 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 have 

clarified 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 it, 

particularly if the proposed transaction 

involves a troubled target. Specifically, 

the OCC considers 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.28 The 

OCC also considers whether the 

proposed transaction would provide any 

stability benefits and the enhanced 

prudential standards that would be 

applicable as a result of the proposed 

transaction would offset any potential 

risks.29

Section III also would have noted 

that, consistent with current OCC 

practice,30 the OCC’s review of the 

financial 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 may include asset 

divestitures or higher minimum capital 

requirements and 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 any heightened standards 

applicable to the resulting institution 

pursuant to 12 CFR part 30, appendix D, 

‘‘OCC Guidelines Establishing 

Heightened Standards for Certain Large 

Insured National Banks, Insured Federal 

Savings Associations, and Insured 

Federal Branches’’ and the recovery 

planning standards applicable to the 

resulting institution pursuant to 12 CFR 

part 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 have 

stated that the OCC may consider the 

facts, circumstances, and 

representations of concurrent 

applications for related transactions, 

including the impact of the related 

transactions on the proposed 

transaction.31

Commenters generally supported the 

OCC’s goal of providing additional 

transparency about how the OCC 

considers the effect of a transaction on 

financial stability. However, some 

commenters criticized the OCC’s 

balancing test approach to evaluating 

financial stability as too lenient to 

protect financial institutions and the 

broader economy, especially for G–SIBs. 

These commenters noted that the OCC 

should not rely on enhanced prudential 

standards to offset risks. One 

commenter also objected to the OCC’s 

consideration of the financial stability 

risk associated with denying an 

application in the balancing test and 

noted that the OCC should use the 

supervisory process and not business 

combinations to address concerns about 

troubled institutions. Some commenters 

suggested options including other, 

scored risk factors like the list of 

systemic risk factors used to calculate 

the G–SIB surcharge in 12 CFR part 217, 

subpart H. Additionally, commenters 

expressed concern that the OCC’s 

review would consider the 

representations made in other pending 

applications and noted that applicants 

may not have detailed knowledge of 

pending or future applications. Another 

commenter suggested that the OCC 

revise proposed appendix A to promote 

more actively the acquisition of a 

troubled institution before it fails. One 

commenter suggested automatically 

categorizing transactions involving 

institutions below $10 billion in assets 

as low risk to financial stability unless 

specific factors suggest otherwise. Other 

commenters suggested that 

considerations of financial stability risks 

under the BMA must include an 

evaluation of climate-related financial 

risks and the impact of a resulting 

institution’s activities on financial 

stability in that regard. 

The proposed appendix A described 

the OCC’s long-standing approach to 

considering the risk to the stability of 

the financial system and would have 

provided additional clarity on the 

factors considered, the balancing test 

applied, and the possibility that the 

OCC may impose conditions in certain 

situations. Although the OCC’s 

considerations are not scored, the OCC 

considers each factor individually and 

in combination to develop a holistic 

view of the potential transaction’s effect 

on financial stability. The OCC believes 

this balancing test allows it to consider 

all factors relevant to financial stability 

and results in determinations that fully 

incorporate the effect of the transaction 

on financial stability. Additionally, the 

OCC’s review would have only 

considered the representations of other 

concurrent applications for related 

transactions, not unrelated applications 

that have no nexus to the application 

under consideration. 

The OCC is removing the word 

‘‘requirements’’ from the discussion of 

the OCC’s consideration of the impact of 

the proposed transaction in light of the 

standards applicable to the resulting 

institution’s recovery planning in 

Section III, Financial Stability, to more 

accurately describe the standards in 12 

CFR part 30, appendix E, ‘‘OCC 

Guidelines Establishing Standards for 

Recovery Planning by Certain Large 

Insured National Banks, Insured Federal 

Savings Associations, and Insured 

Federal Branches’’. The OCC is 

otherwise generally finalizing Section 

III, Financial Stability, as proposed. 

Section IV, Financial and Managerial 

Resources and Future Prospects, of 

proposed appendix A would have 

discussed 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.32 However, 

because these factors are directly related 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 78213 

33For 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). 

34 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). 

35These 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). 36See 12 CFR 5.13(b). 

to one another, the OCC also considers 

these factors holistically. This section of 

proposed appendix A would have 

described 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 have noted that 

the OCC would consider the size, 

complexity, and risk profile of the 

combining and resulting institutions. 

Further, proposed appendix A would 

have expanded the discussion in the 

Comptroller’s Licensing Manual about 

the types of transactions the OCC would 

normally not approve to provide 

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.33 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 have 

confirmed 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 have next discussed the OCC’s 

consideration of the financial resources, 

managerial resources, and future 

prospects factors. With respect to 

financial resources, proposed appendix 

A would have discussed 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 

6.4.34 Proposed appendix A also would 

have specified that the OCC closely 

scrutinizes transactions that increase the 

risk to the bank’s financial condition 

and resilience, including risk to the 

bank’s capital, liquidity, and earnings 

that can arise from any of the eight 

categories of risk included in the OCC’s 

Risk Assessment System.35 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 

have clarified 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 have also discussed the OCC’s 

approach to the managerial resources 

standard. 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. 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, as well as their 

component ratings under the CC Rating 

System, Uniform Rating System for 

Information Technology, and Uniform 

Interagency Trust Rating System, as 

applicable; and (ii) relevant Risk 

Assessment System (RAS) conclusions 

for the applicant as well as the RAS 

conclusions for an OCC-supervised 

target. The OCC also considers the 

context in which the rating or RAS 

element was assigned and any 

additional information resulting from 

ongoing supervision. Finally, proposed 

appendix A would have noted 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 have 

stated that the OCC considers whether 

the acquirer has conducted sufficient 

due diligence of the target depository 

institution to understand its business 

model, systems compatibility, and 

weaknesses. This consideration 

includes the acquirer’s plans and ability 

to address its own 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 

history of integrating combining 

institutions’ operations, including 

systems and information security 

processes, products, services, 

employees, and cultures. 

Proposed appendix A next would 

have discussed 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 and 

resilience. A critical component of these 

plans includes identifying overreliance 

on manual controls, strategies for 

automating critical processes, and 

capacity and modernization of aging 

and legacy information technology 

systems. The OCC may conduct 

additional reviews where there are 

concerns with systems integration and, 

in some cases, the OCC may impose 

conditions that are enforceable pursuant 

to 12 U.S.C. 1818 to address those 

concerns. The OCC may deny an 

application if the integration or other 

issues present significant supervisory 

concerns, and the issues cannot be 

resolved through appropriate conditions 

or otherwise.36

Finally, with regard to managerial 

resources, proposed appendix A would 

have described 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 


ddrumheller on DSK120RN23PROD with RULES1
78214 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 

37As 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. 

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 have discussed how the OCC 

considers the future prospects factor. 

The OCC considers this factor in light of 

its assessment of the institutions’ 

financial and managerial resources. The 

OCC also considers the proposed 

operations of the resulting institutions 

and the acquirer’s record of integrating 

acquisitions. Specifically, the OCC 

considers whether the integrated 

institution will be able to function 

effectively as a single entity. The OCC 

also considers the resulting institution’s 

business plan or strategy and 

management’s ability to implement it in 

a safe and sound manner. Finally, the 

OCC considers the combination’s 

potential impacts on the resulting 

institution’s continuity planning and 

operational resilience. 

One commenter highlighted the 

importance of assessing managerial 

resources and firm culture when 

considering an application under the 

BMA. This commenter urged the OCC to 

make it clear that, when considering the 

managerial resources factor, the OCC 

would take into consideration whether 

the acquirer and target have 

implemented governance solutions that 

generate outcomes that meet or exceed 

the OCC’s expectations and suggested 

using artificial intelligence and machine 

learning tools to do so. Other 

commenters suggested that an 

assessment of financial and managerial 

resources and future prospects should 

include climate-related financial risk 

expertise. Several other commenters 

suggested the OCC include a 

requirement that banks describe their 

efforts to promote gender, racial, and 

ethnic diversity in their boards, senior 

management, and branch personnel, 

with some commenters suggesting that 

such information be considered under 

the managerial resources factor. One 

commenter also suggested that 

applicants submit an integration plan as 

part of their application. Given the 

varied nature of institutions’ operations 

and proposed mergers, the OCC is 

declining to require these items as part 

of its review of all applications under 

the BMA. To the extent that it is 

relevant to any particular transaction, 

the OCC may, based on its supervisory 

expertise, request information on these 

or other items that are relevant to the 

financial and managerial and future 

prospects factors. 

The OCC is thus generally finalizing 

section IV as proposed with one 

addition to make explicit a 

consideration that was implicit in the 

proposal. The OCC is adding a new 

overarching consideration in section IV 

of appendix A. Specifically, section IV 

will state that the OCC considers the 

financial and managerial resources and 

future prospects factors within the 

context of the prevailing economic and 

operating environment. The OCC 

recognizes that the financial resources 

and future prospects of institutions, and 

those of community institutions in 

particular, are likely to be highly 

dependent on the economic and other 

environments within which they 

operate. As such, a combined 

institution’s financial resources and 

future prospects may in some cases be 

significantly greater than those of the 

individual institutions if no merger 

were to occur. 

Section V of proposed appendix A 

would have expanded 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 have clarified 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.37 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 also sought comment on 

whether to specify communities in 

addition to LMI communities as part of 

these considerations. 

Finally, section V of proposed 

appendix A would have clarified that 

the OCC’s forward-looking 

consideration of the convenience and 

needs factor under the BMA is separate 

and distinct from its consideration of an 

applicant’s CRA record of performance 

in helping to meet the credit needs of 

the relevant community, including LMI 

neighborhoods. 

Commenters expressed varying 

viewpoints on Section V, Convenience 

and Needs, of proposed appendix A. 

Some commenters criticized the OCC’s 

inclusion of job losses or reduced job 

opportunities, and one commenter 

stated that such consideration lacked a 

statutory basis and diverged from 

longstanding regulatory precedent. 

Other commenters encouraged the OCC 

to place greater emphasis on factors 

such as potential job losses; projected 

branch losses in LMI and majorityminority census tracts; impacts to 

communities of color and underserved 

census tracts, including small 

businesses in those communities; 

reduced reinvestment; increased fees; 

and other factors that could affect access 

to banking services when evaluating the 

community and needs factor. One 

commenter suggested the OCC consider 

past bank branch closures. Another 

commenter recommended that the OCC 

require applicants to submit a list of 

branch closures planned for the three 

years following the consummation of a 

merger and a discussion of the impact 

on local communities and stated that 

applicants should be prohibited from 

closing other branches for three years. 

Some commenters suggested that a 

merger should not be approved unless 

applicants can demonstrate that the 

transaction will better meet the 

convenience and needs of the 

community, with several commenters 

specifically noting that the OCC should 

only approve transactions that better 

serve vulnerable communities, 

including low-income communities and 

communities of color. Several 

commenters suggested that the OCC’s 

review of the convenience and needs 

factor should include broad 

consideration of the climate-related 

impact of the transaction, including 

financial risk, impacts resulting from 

bank activities that may impact climate 

change, and the climate related 

transition plans. One commenter 

suggested that the OCC should provide 

additional clarity on how it weighs the 

various impacts it considers. Other 

commenters noted that the OCC should 

specifically consider how the impacts of 

the expansion of digital banking affects 

underserved communities in the context 

of merger reviews. 

Several commenters emphasized the 

importance of community benefit 

agreements and plans and collaboration 

with community groups and urged the 

OCC to use its policy statement to 

elevate the importance of these 

agreements, plans, and collaborations. 

Suggestions included signaling that the 

OCC would enforce community benefit 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 78215 

38Additionally, one commenter recommended 

increased scrutiny of convenience and needs in 

transactions where credit unions acquire national 

banks because credit unions are not subject to CRA. 

The Federal Deposit Insurance Corporation, not the 

OCC, is the responsible agency for BMA 

transactions where national bank or Federal savings 

association assets and deposit liabilities are 

transferred to an institution that is not covered by 

the Deposit Insurance Fund, such as a credit union. 

See 12 U.S.C. 1828(c)(1)(C). To the extent an 

application with the OCC is required, such as a 

substantial asset change under 12 CFR 5.33, the 

OCC will examine the proposed transaction under 

all applicable standards. 

39See Comptroller’s Licensing Manual, ‘‘Business 

Combinations’’ (Jan. 2021) at 7. 

40While 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. 

41See 12 CFR 5.10(b)(1). 

42Specifically, 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. 

43For example, the OCC decennially reviews its 

regulations as required by the Economic Growth 

and Regulatory Paperwork Reduction Act. 12 U.S.C. 

Continued 

commitments made during merger 

applications or imposing a condition of 

approval on the acquirer requiring it to 

adhere to the elements of such 

commitments. Another commenter 

requested additional transparency with 

respect to conditional approvals for 

convenience and needs, CRA, or fair 

lending concerns.38

The OCC considers the convenience 

and needs factor in light of the specific 

facts of each transaction. The factors 

listed in proposed section V are 

indicators of whether the proposed 

transaction will enable the resulting 

institution to better meet the 

convenience and needs of its 

community. A net positive impact on its 

ability to meet the convenience and 

needs of community is, in the OCC’s 

experience, generally consistent with 

approval with respect to this factor. 

Applicants need not make a showing 

with respect to any or all of these items 

for the application to be consistent with 

approval. The OCC agrees with 

commenters that the BMA does not 

require consideration of particular facts 

such as job losses with respect to the 

convenience and needs of the 

community. Consistent with the BMA, 

the OCC will evaluate the facts of each 

application and determine whether 

particular items are relevant to its 

consideration of convenience and needs 

of the specific community to be served. 

For example, job losses or reduced job 

opportunities may have an impact on 

the local community as a whole in 

certain circumstances. Additionally, the 

OCC will consider any plans regarding 

the availability or cost of banking 

services or products to the community 

in the context of the communities 

affected, including LMI communities. 

Based on its supervisory experience, 

including its review of business 

combination applications, the OCC 

believes that the existing information 

requirements in the Interagency Bank 

Merger Act Application provide the 

appropriate initial level of information. 

The OCC may request additional 

information regarding branch closures 

or other facts impacting the convenience 

and needs of the community to be 

served. Further, the OCC believes that 

the items listed in proposed section V 

are appropriately tailored to cover the 

full range of BMA applications it 

receives. 

Another commenter suggested that 

unless material changes are expected 

post-consummation, the OCC should 

use the acquirer’s and target’s CRA 

ratings as the primary method of 

assessing a merger’s impact on the 

convenience and needs of the 

community. Other commenters asserted 

that CRA alone is not sufficient for 

determining a merger’s impact on the 

convenience and needs of the 

community. As discussed in the 

Business Combinations booklet of the 

Comptroller’s Licensing Manual, a CRA 

rating is based on past performance, 

while the convenience and needs factor 

is prospective.39 Accordingly, analysis 

of past CRA performance is not 

sufficient to analyze the prospective 

convenience and needs of the 

community. The OCC believes that 

section V correctly articulated this 

standard as proposed. 

The OCC is making clarifying edits to 

section V of appendix A. The OCC is 

changing the order of the discussion of 

an institution’s plans to close, 

consolidate, limit, or expand branches 

to have the activities in a more logical 

sequence. Likewise, with respect to 

credit availability, the OCC is specifying 

that it considers an institution’s plans to 

maintain, reduce, or improvement credit 

availability, including access to specific 

types of loans. Accordingly, the OCC is 

finalizing section V generally as 

proposed. 

Section VI, Public Comments and 

Meetings, of proposed appendix A 

would have provided additional details 

about the process and procedures 

relating to the OCC’s receipt of public 

comments and considerations related to 

public meetings and clarified the 

information contained within 12 CFR 

part 5 and the ‘‘Public Notice and 

Comments’’ booklet of the Comptroller’s 

Licensing Manual.40 Specifically, the 

public comments subsection would 

have articulated the circumstances 

under which the OCC may extend the 

usual 30-day comment period 41

pursuant to § 5.10(b)(2).42 It also would 

have provided 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. This 

could happen, for example, 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 have provided 

examples of extenuating circumstances 

when the OCC may determine that an 

extension is needed, including if a 

public meeting is held, the transaction 

is novel or complex, or a natural 

disaster has occurred that affects the 

public’s ability to timely submit 

comments. 

With respect to the discussion of 

public comments, some commenters 

supported the proposal’s discussion of 

how a comment period can be extended 

when a filer does not adequately 

respond to a commenter. However, 

other commenters expressed concern 

that the OCC’s ability to extend the 

comment period based on the 

completeness of a filer’s response to a 

comment may create a risk of 

commenters repeatedly filing comments 

in bad faith, which will result in delay. 

Two commenters suggested that the 

OCC consider extending the comment 

period in some instances, with one 

commenter suggesting that the OCC use 

an initial 60-day comment period for 

larger transactions. Other commenters 

also encouraged the OCC to minimize 

the negative impacts of prolonged 

review periods on affected communities 

and stakeholders. One commenter also 

requested that the OCC develop policies 

to address the abuse of the public 

comment process, including via the use 

of artificial intelligence. 

The OCC did not propose any changes 

to its regulations regarding its 

acceptance and review of public 

comments, which are broadly applicable 

to transactions covered by 12 CFR part 

5 and not only business combinations. 

The OCC periodically considers which 

of its regulations would benefit from 

proposed changes and will consider 

whether to propose changes to the 

public comment regulations at an 

appropriate time.43 The OCC is mindful 


ddrumheller on DSK120RN23PROD with RULES1
78216 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 

3311. See, e.g., Regulatory Publication and Review 

Under the Economic Growth and Regulatory 

Paperwork Reduction Act of 1996, 89 FR 8084 

(February 6, 2024). 

44See 12 U.S.C. 1828(c)(3). 

45OCC, CRA Performance Evaluations, https://

occ.gov/publications-and-resources/tools/index-crasearch.html. 

46OCC, Freedom of Information Act, https://foiapal.occ.gov/. 

47 44 U.S.C. 3501–3521. 

of the effects of the length of review 

periods on all relevant parties. The OCC 

uses the standard 30-day notice period 

prescribed by the BMA 44 and will 

extend the comment period pursuant to 

the factors discussed in section VI as 

appropriate. The OCC intends to act on 

applications in a timely fashion, 

consistent with a fulsome review of 

applications and safety and soundness. 

To clarify that the purpose of section VI 

is to address considerations regarding 

the public comment period and not the 

OCC’s acceptance and review of public 

comments, the OCC is revising the 

headings in section VI to specifically 

reference the public comment period. 

The proposed public meetings 

subsection of section VI would have 

stated 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 have clarified the criteria that 

inform 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, 

fair lending, or other pertinent 

supervisory records, as applicable. 

Several commenters proposed 

additional triggers for holding public 

meetings, including when there is a 

significant overlap in branch networks, 

when CRA ratings are lower in affected 

geographies, when the resulting entity 

will exceed a certain asset size, or when 

there is a merger protest. These 

commenters also suggested several ways 

that the OCC could improve outreach to 

underserved communities and dialogue 

about the impact of potential mergers. 

These included adopting a public 

registry for CRA examinations and 

mergers, improving the format of public 

meetings, and providing clearer 

information on regulatory websites on 

how to engage with regulators on 

particular mergers. One commenter 

objected to what it characterized as the 

OCC’s implication that input from the 

public could be harmful to the OCC’s 

decision-making process. This 

commenter suggested a public meeting 

should be held when requested. 

As discussed in proposed section VI, 

the OCC considers the significance of 

the transaction to the communities 

affected, as well as applicable CRA 

ratings. The OCC believes that these 

considerations are sufficiently broad to 

cover issues such as a significant 

overlap in branch networks. Further, the 

OCC believes that a decision to hold a 

public meeting should be based on the 

individual facts and circumstances of 

each proposed merger. For example, the 

considerations for whether to hold a 

public meeting on an internal corporate 

reorganization likely differ from those in 

a transaction between unaffiliated 

institutions. Additionally, the OCC 

believes that the fact that a comment is 

filed with respect to a proposed merger 

is insufficient alone to warrant a 

meeting. For example, through requests 

for additional information, the OCC can 

often obtain the information it needs to 

fully consider the comment without 

organizing a meeting. Consistent with 

applicable law, the OCC makes public 

all CRA performance evaluations on its 

website 45 and all applications under the 

BMA in its Freedom of Information Act 

Reading Room.46 While the OCC may 

consider additional methods to provide 

information to the public it believes that 

this issue is outside the scope of 

appendix A. Similarly, 12 CFR 5.11(i) 

provides the OCC with broad discretion 

in the conduct of public meetings. The 

OCC may tailor the format and structure 

of public meetings as needed based on 

the specific circumstance. The OCC 

believes that the information contained 

in proposed section VI is appropriate for 

general consideration of public 

meetings. Accordingly, besides the 

revision to the headings in section VI to 

specifically reference the public 

comment period, the OCC is generally 

finalizing section VI as proposed. 

IV. Regulatory Analysis 

A. Paperwork Reduction Act 

Under the Paperwork Reduction Act 

of 1995 (PRA),47 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 rule have been submitted to OMB 

under OMB control number 1557–0014 

(Licensing Manual). 

The final rule amends 12 CFR 5.33 by 

removing the expedited review 

procedures in § 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 final rule also removes 

the streamlined application in § 5.33(j), 

which removes 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 continue to be 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. 

All comments will become a matter of 

public record. Written comments and 

recommendations for the information 

collection should be sent within 30 days 

of publication of this notice. Comments 

on the collection of information should 

be sent to Chief Counsel’s Office, 

Attention: Comment Processing, Office 

of the Comptroller of the Currency, 

Attention: 1557–0014, 400 7th Street 

SW, Suite 3E–218, Washington, DC 

20219. Comments may also be sent to 

prainfo@occ.treas.gov or 

www.reginfo.gov/public/do/PRAMain. 

Find this information collection by 

selecting ‘‘Currently under 30-day 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 78217 

48 5 U.S.C. 601 et seq. 

49Based on data accessed using FINDRS on 

August 18, 2024. 

50The estimate of the number of small entities is 

based on the SBA’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 it should classify an OCCsupervised institution as a small entity. The OCC 

uses December 31, 2023, 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 SBA’s Table of Size Standards. 

51 2 U.S.C. 1532. 

52 2 U.S.C. 1535. 

Review—Open for Public Comments’’ or 

using the search function. 

B. Regulatory Flexibility Act 

The RFA 48 requires an agency, in 

connection with a proposal and final 

rule, to prepare and make available to 

the public a Regulatory Flexibility 

Analysis that describes the impact of the 

rule on small entities (defined by the 

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). 

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 included an RFA certification in 

the Federal Register along with its 

proposal. 

As discussed above, the SBA’s Office 

of Advocacy and one other commenter 

stated that the proposal’s RFA 

certification lacked a factual basis. The 

SBA’s Office of Advocacy, along with 

other commenters, recommended that 

the OCC continue to allow expedited 

review for applications from small 

entities and allow those entities to 

continue to use the streamlined 

application form. Specifically, with 

respect to the proposal’s RFA 

certification, the SBA’s Office of 

Advocacy’s comment and the other 

comment addressing the RFA stated that 

it lacked sufficient information about (1) 

the number of small entities that would 

be impacted because it only estimated 

the number of entities that would apply 

for business combinations in a given 

year and did not explain how many of 

those entities were small entities and (2) 

the basis for its conclusion that the 

impact on affected institutions would be 

de minimis. 

The OCC currently supervises 1,040 

institutions (commercial banks, trust 

companies, Federal savings 

associations, and branches or agencies 

of foreign banks),49 of which 

approximately 636 are small entities.50

As the SBA’s Office of Advocacy noted, 

all of the 636 small entities may have 

been impacted by the proposed rule to 

the extent that they elected to submit 

applications to the OCC for approval of 

business combination activities. 

However, in practice and based on the 

number of merger applications that the 

OCC has received annually over the past 

five years, the agency expects the 

annual impact of the final rulemaking 

could be 78 OCC-supervised small 

institutions in a given year, assuming 

that all merger applications are 

submitted by small banks. 

In terms of the potential economic 

impact of the final rule on affected 

institutions, the OCC does not expect 

that the changes will result in (1) a 

different outcome for merger 

applications or (2) additional burden on 

affected institutions. First, the final 

appendix A aims to provide 

transparency with respect to the OCC’s 

BMA review process, including 

consideration of certain statutory factors 

under the BMA. This should provide 

regulated institutions with additional 

clarity and transparency about the 

OCC’s decision-making process. Second, 

the removal of the expedited review 

process will likely not result in any 

change to the timing of the OCC’s 

processing of licensing applications. 

The only benefit conferred by the 

expedited review provisions in § 5.33(i) 

is that applications are deemed 

approved as of the 15th day after the 

close of the comment period unless the 

OCC takes action to remove the 

application from expedited review or 

extends the process. However, the OCC 

is not aware of an application for a 

business combination being deemed 

approved due to the passage of time 

under § 5.33(i). Third, the OCC expects 

that the removal of the streamlined 

application form will not result in a 

substantive impact on affected 

institutions or on the information 

collected. Although the Interagency 

Bank Merger Act Application requires 

the submission of additional 

documentation and information with 

the initial application, that 

documentation and information is 

largely related to the same categories of 

information. Further, in practice, the 

OCC may request additional information 

from applicants to enable it to conclude 

on the applicable statutory factors. 

Eliminating the streamlined application 

may decrease the likelihood the OCC 

needs to request additional information 

from applicants, which could otherwise 

slow down the processing of an 

application. The agency also does not 

expect that the removal of the 

streamlined application will result in a 

material change to the time it takes to 

OCC to respond to submitting banks 

and, therefore, does not expect any 

subsequent impact on bank operations 

that could otherwise result from a 

delayed response from the OCC. 

Accordingly, the OCC expects these 

changes to have a de minimis impact on 

small entities. 

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. Furthermore, 

the OCC considers 5 percent or more of 

OCC-supervised small entities to be a 

substantial number. At present, 32 OCCsupervised small entities constitute a 

substantial number. Therefore, the final 

rule will potentially affect a substantial 

number of OCC-supervised small 

entities in any given year. 

However, based on the thresholds for 

a significant economic impact, the OCC 

expects that, if implemented, the final 

rule will not have a significant 

economic impact on any small entities. 

For these reasons, the OCC certifies that 

the final rule would not have a 

significant economic impact on a 

substantial number of small entities. 

C. Unfunded Mandates Reform Act of 

1995 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 

(Unfunded Mandates Act) 51 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 $183 million) in 

any one year. If a budgetary impact 

statement is required, section 205 of the 

Unfunded Mandates Act 52 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 final rule once fully 

phased in will be de minimis. 

Furthermore, the rule’s changes are not 

new substantive or information 

requirements for OCC-supervised 

institutions but rather describe 


ddrumheller on DSK120RN23PROD with RULES1
78218 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 

53 12 U.S.C. 4802(a). 

54 12 U.S.C. 4802(b). 

55 5 U.S.C. 801 et seq. 

56 5 U.S.C. 801(a)(3). 57 5 U.S.C. 804(2). 

considerations and principles that guide 

the OCC’s review of applications under 

the BMA. Therefore, the OCC concludes 

that the final rule will not result in an 

expenditure of $183 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 (RCDRIA) 

of 1994 53 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 principles of 

safety and soundness and the public 

interest (1) any administrative burdens 

that the final rule would place on 

depository institutions, including small 

depository institutions and customers of 

depository institutions, and (2) the 

benefits of the final rule. 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.54 The OCC considered the 

changes made by this final rule and 

believes that the effective date of 

January 1, 2025, will provide OCCregulated institutions with adequate 

time to comply with the rule. The final 

rule will not impose any new 

administrative compliance 

requirements, and the administrative 

burdens from the removal of the 

Streamlined Application are de 

minimis. 

E. Congressional Review Act 

For purposes of the Congressional 

Review Act, the Office of Management 

and Budget (OMB) makes a 

determination as to whether a final rule 

constitutes a ‘‘major rule.’’ 55 If a rule is 

deemed a ‘‘major rule’’ by OMB, the 

Congressional Review Act generally 

provides that the rule may not take 

effect until at least 60 days following its 

publication.56

The Congressional Review Act defines 

a ‘‘major rule’’ as any rule that the 

Administrator of the Office of 

Information and Regulatory Affairs of 

the OMB finds has resulted in or is 

likely to result in: (1) an annual effect 

on the economy of $100,000,000 or 

more; (2) a major increase in costs or 

prices for consumers, individual 

industries, Federal, State, or local 

government agencies, or geographic 

regions; or (3) significant adverse effects 

on competition, employment, 

investment, productivity, innovation, or 

on the ability of United States-based 

enterprises to compete with foreignbased enterprises in domestic and 

export markets.57

As required by the Congressional 

Review Act, the OCC will submit the 

final rule and other appropriate reports 

to Congress and the Government 

Accountability Office for review. 

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 amends 12 CFR part 5 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 subpart C to 

read as follows: 

Appendix A to Subpart C of Part 5— 

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 how the Office of the 

Comptroller of the Currency (OCC) considers 

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 includes approval, 

denial, and requesting that an applicant 

withdraw the application because any 

shortcomings are unlikely to be resolved in 

a timely manner. Applications that tend to 

withstand scrutiny more easily and are more 

likely to be approved expeditiously generally 

feature all of the following indicators: 

1. The acquirer is well capitalized under 

§ 5.3, 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 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; 

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, fair 

lending, or consumer compliance actions, 

including enforcement actions, referrals, or 

notifications to other agencies. 

6. The acquirer has failed to adopt, 

implement, and adhere to all the corrective 

actions required by a formal enforcement 

action in a timely manner, or there have been 

multiple enforcement actions against the 

acquirer executed or outstanding during a 

three-year period. 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 78219 

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. 

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 part 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 applicable to the resulting 

institution’s recovery planning pursuant to 

12 CFR part 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 considers these factors within 

the context of the prevailing economic and 

operating environment. 

3. 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. 

4. 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. 

5. 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 


ddrumheller on DSK120RN23PROD with RULES1
78220 Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 

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. 

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, consolidate, limit, or 

expand 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. Any plans to maintain, reduce, or 

improve credit availability throughout the 

community, including, for example, access to 

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 related to the proposed business 

combination. 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 Comment Period and Public 

Meetings 

A. Public Comment Period 

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 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 89, No. 186 / Wednesday, September 25, 2024 / Rules and Regulations 78221 

1 5 U.S.C. 551 et seq. 

2 5 U.S.C. 553(b)(3)(A). 

3 5 U.S.C. 553(d). 

4 5 U.S.C. 553(a)(2). 

5 5 U.S.C. 603, 604. 

6 44 U.S.C. 3506; see 5 CFR part 1320, appendix 

A.1. 

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. 2024–21560 Filed 9–24–24; 8:45 am] 

BILLING CODE 4810–33–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 201 

[Docket No. R–183] 

RIN 7100 AG–80 

Regulation A: Extensions of Credit by 

Federal Reserve Banks 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Final rule. 

SUMMARY: The Board of Governors of the 

Federal Reserve System (‘‘Board’’) has 

adopted final amendments to its 

Regulation A to reflect the Board’s 

approval of a decrease in the rate for 

primary credit at each Federal Reserve 

Bank. The secondary credit rate at each 

Reserve Bank automatically decreased 

by formula as a result of the Board’s 

primary credit rate action. 

DATES: 

Effective date: This rule (amendments 

to part 201 (Regulation A)) is effective 

September 25, 2024. 

Applicability date: The rate changes 

for primary and secondary credit were 

applicable on September 19, 2024. 

FOR FURTHER INFORMATION CONTACT: M. 

Benjamin Snodgrass, Senior Counsel 

(202–263–4877), Legal Division, or 

Heather Ford, Group Manager (202– 

452–3674), Division of Monetary 

Affairs; for users of telephone systems 

via text telephone (TTY) or any TTYbased Telecommunications Relay 

Services, please call 711 from any 

telephone, anywhere in the United 

States; Board of Governors of the 

Federal Reserve System, 20th and C 

Streets NW, Washington, DC 20551. 

SUPPLEMENTARY INFORMATION: The 

Federal Reserve Banks make primary 

and secondary credit available to 

depository institutions as a backup 

source of funding on a short-term basis, 

usually overnight. The primary and 

secondary credit rates are the interest 

rates that the twelve Federal Reserve 

Banks charge for extensions of credit 

under these programs. In accordance 

with the Federal Reserve Act, the 

primary and secondary credit rates are 

established by the boards of directors of 

the Federal Reserve Banks, subject to 

review and determination of the Board. 

On September 18, 2024, the Board 

voted to approve a 0.50 percentage point 

decrease in the primary credit rate, 

thereby decreasing the primary credit 

rate from 5.50 percent to 5.00 percent. 

In addition, the Board had previously 

approved the renewal of the secondary 

credit rate formula, the primary credit 

rate plus 50 basis points. Under the 

formula, the secondary credit rate 

decreased by 0.50 percentage points as 

a result of the Board’s primary credit 

rate action, thereby decreasing the 

secondary credit rate from 6.00 percent 

to 5.50 percent. The amendments to 

Regulation A reflect these rate changes. 

The 0.50 percentage point decrease in 

the primary credit rate was associated 

with a 0.50 percentage point decrease in 

the target range for the federal funds rate 

(from a target range of 51⁄4 percent to 51⁄2

percent to a target range of 43⁄4 percent 

to 5 percent) announced by the Federal 

Open Market Committee on September 

18, 2024, as described in the Board’s 

amendment of its Regulation D 

published elsewhere in today’s Federal 

Register. 

Administrative Procedure Act 

In general, the Administrative 

Procedure Act (‘‘APA’’) 1 imposes three 

principal requirements when an agency 

promulgates legislative rules (rules 

made pursuant to Congressionally 

delegated authority): (1) publication 

with adequate notice of a proposed rule; 

(2) followed by a meaningful 

opportunity for the public to comment 

on the rule’s content; and (3) 

publication of the final rule not less 

than 30 days before its effective date. 

The APA provides that notice and 

comment procedures do not apply if the 

agency for good cause finds them to be 

‘‘unnecessary, impracticable, or contrary 

to the public interest.’’ 2 Section 553(d) 

of the APA also provides that 

publication at least 30 days prior to a 

rule’s effective date is not required for 

(1) a substantive rule which grants or 

recognizes an exemption or relieves a 

restriction; (2) interpretive rules and 

statements of policy; or (3) a rule for 

which the agency finds good cause for 

shortened notice and publishes its 

reasoning with the rule.3 The APA 

further provides that the notice, public 

comment, and delayed effective date 

requirements of 5 U.S.C. 553 do not 

apply ‘‘to the extent that there is 

involved . . . a matter relating to agency 

management or personnel or to public 

property, loans, grants, benefits, or 

contracts.’’ 4

Regulation A establishes the interest 

rates that the twelve Reserve Banks 

charge for extensions of primary credit 

and secondary credit. The Board has 

determined that the notice, public 

comment, and delayed effective date 

requirements of the APA do not apply 

to these final amendments to Regulation 

A. The amendments involve a matter 

relating to loans and are therefore 

exempt under the terms of the APA. 

Furthermore, because delay would 

undermine the Board’s action in 

responding to economic data and 

conditions, the Board has determined 

that ‘‘good cause’’ exists within the 

meaning of the APA to dispense with 

the notice, public comment, and 

delayed effective date procedures of the 

APA with respect to the final 

amendments to Regulation A. 

Regulatory Flexibility Analysis 

The Regulatory Flexibility Act 

(‘‘RFA’’) does not apply to a rulemaking 

where a general notice of proposed 

rulemaking is not required.5 As noted 

previously, a general notice of proposed 

rulemaking is not required if the final 

rule involves a matter relating to loans. 

Furthermore, the Board has determined 

that it is unnecessary and contrary to 

the public interest to publish a general 

notice of proposed rulemaking for this 

final rule. Accordingly, the RFA’s 

requirements relating to an initial and 

final regulatory flexibility analysis do 

not apply. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act (‘‘PRA’’) of 1995,6 the 

Board reviewed the final rule under the 

authority delegated to the Board by the 

Office of Management and Budget. The 

final rule contains no requirements 

subject to the PRA. 

List of Subjects in 12 CFR Part 201 

Banks, Banking, Federal Reserve 

System, Reporting and recordkeeping. 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Board is amending 12 

CFR chapter II as follows: 


ddrumheller on DSK120RN23PROD with RULES1