This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

2027 

Vol. 87, No. 9 

Thursday, January 13, 2022 

1 12 U.S.C. 287 and 12 CFR 209.4(a). 

2 12 U.S.C. 333 and 12 CFR 209.4(b). The Federal 

Reserve Act and Regulation I allow a mutual 

savings bank to maintain a temporary ‘‘deposit’’ 

with a Reserve Bank in lieu of obtaining capital 

stock if the mutual savings bank is not permitted 

to purchase Reserve Bank stock under state law. 

However, if the relevant state law is not amended 

at the first session of the legislature after the bank 

is admitted to authorize the purchase of Reserve 

Bank stock, or if the bank fails to purchase the stock 

within six months of such amendment, the Reserve 

Bank will terminate the membership of the mutual 

savings bank. 12 U.S.C. 333; 12 CFR 209.2(a) and 

208.3(a)(1). 

3 12 U.S.C. 287 and 12 CFR 209.4(c)(2). 

4 12 U.S.C. 289 and 12 CFR 209.4(e). Regulation 

I generally defines total consolidated assets by 

reference to the total assets reported on a member 

bank’s most recent December 31 Call Report. 12 

CFR 209.1(d)(3). 

5 Id. 

6 12 CFR 209.4(a) and (b). 

7 Id. 

8See Federal Reserve, Reporting Forms at https:// 

www.federalreserve.gov/reportforms/forms/FR_

205620200115_f.pdf. 

9 12 CFR 209.3(d)(1) and (2). If the surviving or 

nonsurviving bank is a mutual savings bank that is 

not permitted to purchase Reserve Bank stock under 

state law, Regulation I instead directs the Reserve 

Bank to transfer or increase the member bank’s 

deposit obligation. Id. 

10Nonsurviving member banks use the FR 2086a 

reporting form to apply to cancel their stock 

subscriptions. https://www.federalreserve.gov/ 

reportforms/forms/FR_2086a20200115_f.pdf. 

11The surviving bank applies to adjust its stock 

subscription based on its anticipated post-merger 

capital and surplus or, in the case of a member bank 

that is a mutual savings bank, its anticipated postmerger total deposit liabilities. 

12 12 CFR 209.1(d)(3) and 209.3(d)(3). 

FEDERAL RESERVE SYSTEM 

12 CFR Part 209 

[Regulation I; Docket No. R–1745] 

RIN 7100–AG13 

Federal Reserve Bank Capital Stock 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Final rule. 

SUMMARY: The Board of Governors 

(Board) is publishing a final rule that 

amends Regulation I to automate nonmerger-related adjustments to member 

banks’ subscriptions to Federal Reserve 

Bank (Reserve Bank) capital stock. The 

final rule also makes certain technical 

amendments to Regulation I and 

conforming revisions to the FR 2056 

reporting form. 

DATES: Effective February 14, 2022. 

FOR FURTHER INFORMATION CONTACT: 

Evan Winerman, Senior Counsel (202– 

872–7578), Legal Division; or Kimberly 

Zaikov, Manager (202–452–2256), 

Reserve Bank Operations and Payments 

Systems Division. You may also contact 

us by email via https://

www.federalreserve.gov/apps/ 

ContactUs/feedback.aspx, choose Staff 

Group: Regulations. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Regulation I governs the issuance and 

cancellation of capital stock by the 

Reserve Banks. Under section 5 of the 

Federal Reserve Act and Regulation I, a 

member bank (other than a mutual 

savings bank) must subscribe to capital 

stock of the Reserve Bank of its district 

in an amount equal to 6 percent of the 

member bank’s capital and surplus.1

Similarly, under section 9 of the Federal 

Reserve Act and Regulation I, a member 

bank that is a mutual savings bank must 

subscribe to capital stock of the Reserve 

Bank of its district in an amount equal 

to six-tenths of 1 percent of its total 

deposit liabilities.2 The member bank 

must pay for one-half of this 

subscription on the date that the 

Reserve Bank approves its application 

for capital stock, while the remaining 

half of the subscription shall be subject 

to call by the Board.3

Under section 7 of the Federal 

Reserve Act and Regulation I, smaller 

member banks (currently those with 

$11.229 billion or less in total 

consolidated assets) receive a 6 percent 

annual dividend on their Reserve Bank 

stock.4 Other member banks receive a 

dividend at the lesser of (i) the annual 

rate equal to the high yield of the 10- 

year Treasury note auctioned at the last 

auction held prior to the payment of 

such dividend and (ii) an annual rate of 

6 percent.5

A. Non-Merger-Related Adjustments to 

Reserve Bank Stock Subscriptions 

Regulation I requires that a member 

bank apply to adjust its stock 

subscription ‘‘promptly after filing’’ its 

December 31 report of condition (Call 

Report).6 Additionally, a member bank 

must apply to adjust its stock 

subscription promptly after filing any 

other quarterly Call Report showing that 

the member bank has experienced an 

increase or decrease to its capital and 

surplus (or its total deposit liabilities for 

a mutual savings bank) requiring a 

change in excess of the lesser of 15 

percent or 100 shares of Reserve Bank 

capital stock.7 Member banks use the FR 

2056 reporting form to apply for 

adjustments to their stock 

subscriptions.8

B. Merger-Related Adjustments to 

Reserve Bank Stock Subscriptions 

Regulation I provides that, when two 

member banks merge or consolidate, the 

appropriate Reserve Banks shall cancel 

shares of the nonsurviving bank and 

credit shares to the surviving bank.9 In 

order to effectuate this requirement, the 

Reserve Banks direct surviving member 

banks to apply to adjust their stock 

subscriptions before they merge or 

consolidate with other member banks. 

Similarly, the Reserve Banks direct 

nonsurviving member banks to apply to 

cancel their stock subscriptions before 

they merge or consolidate with other 

member banks.10

Regulation I does not expressly 

require that a surviving member bank 

apply to adjust its stock subscription 

before it merges or consolidates with a 

nonmember bank. In practice, however, 

the Reserve Banks request that surviving 

member banks apply to adjust their 

stock subscriptions before they merge or 

consolidate with nonmember banks.11

This practice allows the Reserve Banks 

to make timely changes to the stock 

subscriptions of surviving member 

banks that merge or consolidate with 

nonmember banks. 

When a surviving member bank 

applies to adjust its stock subscription, 

it must state whether its total 

consolidated assets exceed $11.229 

billion.12 This requirement ensures that 

a Reserve Bank receives timely and 

accurate notice of whether a merger has 

caused a surviving member bank’s total 

consolidated assets to exceed $11.229 

billion, which (as noted above) 


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13 86 FR 19152 (April 13, 2021). 

14Similarly, the Board is automating the process 

for adjusting the deposit obligation of a mutual 

savings bank that has a deposit with the appropriate 

Reserve Bank in lieu of Reserve Bank capital stock. 

15Similarly, if a surviving bank is a mutual 

savings bank that is not permitted to purchase 

Reserve Bank stock under state law, the final rule 

will require the surviving bank to apply to adjust 

its deposit obligation. 

16Regulation I expressly requires that a 

nonsurviving member bank apply to cancel its stock 

subscription when it ‘‘is merged or consolidated 

into a nonmember bank.’’ 12 CFR 209.3(a). The final 

rule will expressly require that a nonsurviving 

member bank apply to cancel its stock subscription 

(or, in the case of a mutual savings bank that is not 

permitted to purchase Reserve Bank stock, transfer 

its deposit obligation) before merging or 

consolidating with another member bank. This 

amendment is consistent with the existing 

requirement in Regulation I that a member bank 

apply to cancel its stock subscription when it 

‘‘desires to withdraw from membership’’ or 

‘‘voluntarily . . . ceases business.’’ 12 CFR 209.3(a). 

17See 12 CFR 210.2(i)(1)(A). 

18For example, this requirement applies to a 

national bank that converts into a federal savings 

bank. 

19Under size standards established by the Small 

Business Administration, banks and other 

depository institutions are considered ‘‘small’’ if 

they have less than $600 million in assets. 13 CFR 

121.201. 

determines the dividend rate to which 

the member bank is entitled. 

II. Description of the Final Rule 

On April 13, 2021, the Board 

published a proposal to automate nonmerger-related adjustments to member 

banks’ subscriptions to Reserve Bank 

capital stock.13 The Board also proposed 

to clarify that a surviving member bank 

must apply to adjust its stock 

subscription before merging or 

consolidating with another bank. 

Finally, the Board proposed two 

technical amendments to Regulation I. 

The Board received no responsive 

comments on the proposal. The Board is 

finalizing the proposed amendments 

with certain technical clarifications. 

A. Automation of Non-Merger-Related 

Stock Adjustments 

As noted above, Regulation I currently 

requires that a member bank apply to 

adjust its stock subscription at least 

annually and sometimes quarterly. A 

member bank determines its required 

stock subscription based on its capital 

and surplus (or total deposit liabilities 

for a mutual savings bank) as reported 

in the member bank’s most recent Call 

Report. 

The Reserve Banks have developed 

software that automatically pulls the 

information needed to calculate member 

banks’ required stock subscriptions from 

Call Reports. The Board is therefore 

amending section 209.4 to automate the 

stock adjustment process. Specifically, 

the Reserve Banks will adjust a member 

bank’s stock subscription each time the 

member bank files a Call Report.14 This 

automated process will eliminate the 

need for member banks to file 

applications to adjust their stock 

subscriptions (except in the context of 

mergers, as described infra). 

The Board is also clarifying that, 

when a Reserve Bank issues stock to a 

member bank, the Reserve Bank will 

obtain payment for that stock by debit 

to an account on the Reserve Bank’s 

books or by other form of settlement to 

which the Reserve Bank agrees. 

B. Merger-Related Stock Adjustments 

As noted above, before two member 

banks merge or consolidate, the Reserve 

Banks direct the surviving member bank 

to apply to adjust its stock subscription 

and the nonsurviving member bank to 

apply to cancel its stock subscription. 

Similarly, before a member bank merges 

or consolidates with a nonmember bank, 

the Reserve Banks request that the 

surviving member bank apply to adjust 

its stock subscription. 

The Board is amending section 209.3 

to codify the Reserve Banks’ current 

practice of requesting pre-merger stock 

adjustment applications. The 

amendments will expressly require a 

surviving member bank to apply to 

adjust its stock subscription before 

merging or consolidating with another 

member bank or nonmember bank.15 16

This will ensure that the Reserve Banks 

make timely changes to the stock 

subscriptions of surviving member 

banks that merge or consolidate with 

other banks. 

Relatedly, the Board is making 

conforming amendments to two 

provisions of Regulation I (current 12 

CFR 209.1(d)(3) and 209.3(d)(3)) to 

clarify that, consistent with the existing 

text of Regulation I, a surviving member 

bank must state in its stock adjustment 

application whether its total 

consolidated assets exceed $11.229 

billion. 

C. Technical Amendments 

The Board proposed two technical 

amendments and is finalizing these 

amendments with a non-substantive 

clarification. The Board is also adopting 

a third, related technical amendment. 

Section 209.1(c) recognizes that a 

bank located in a United States 

dependency or possession may apply 

for membership, and a footnote in 

section 209.1(c) explains that such a 

bank ‘‘should communicate with the 

Federal Reserve Bank with which it 

desires to do business.’’ The Board is 

amending this footnote to clarify that a 

bank located in the Virgin Islands or 

Puerto Rico should communicate with 

the Federal Reserve Bank of New York, 

while a bank located in Guam, 

American Samoa, or the Northern 

Mariana Islands should communicate 

with the Federal Reserve Bank of San 

Francisco. The amendment will make 

this footnote in Regulation I consistent 

with a provision in the Board’s 

Regulation J that clarifies the Federal 

Reserve Districts in which banks from 

United States dependencies and 

possessions are deemed to be located.17

Section 209.3(a) requires that any 

bank that desires to withdraw from 

membership in the Federal Reserve 

System promptly file with its Reserve 

Bank an application for cancellation of 

all its Reserve Bank stock. The Board 

proposed to amend section 209.3(a) to 

clarify that, consistent with the Board’s 

current understanding, this requirement 

applies to any national bank that wants 

to convert into a ‘‘State nonmember 

bank.’’ The final rule clarifies that this 

requirement applies to a national bank 

that converts into any nonmember 

bank—not only a ‘‘State’’ nonmember 

bank.18

Relatedly, section 209.3(c) specifies 

that when a member bank merges into, 

consolidates with, or converts into a 

‘‘State nonmember bank,’’ the member 

bank’s stock shall be cancelled on the 

effective date of the merger, 

consolidation, or conversion. The final 

rule clarifies that a member bank’s stock 

shall be cancelled on the effective date 

of a member bank’s merger into, 

consolidation with, or conversion into 

any nonmember bank—not only a State 

nonmember bank. 

IV. Regulatory Analysis 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’), 5 U.S.C. 601 et seq., generally 

requires that an agency assess the 

impact a rule is expected to have on 

small entities.19 The RFA requires an 

agency either to provide a regulatory 

flexibility analysis or to certify that the 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

The Board did not receive any 

comments on its initial regulatory 

flexibility analysis. The Board certifies 

that the final rule will not have a 

significant economic impact on a 

substantial number of small entities. As 

described in the information above, the 

final rule will reduce reporting 

requirements for member banks by 

automating non-merger-related stock 

adjustments. Additionally, the final rule 

will require that a surviving stockholder 

apply to adjust its stock subscription 


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20Consistent with the current text of Regulation 

I, a surviving member bank would need to report 

in its stock adjustment application whether its total 

consolidated assets exceed $11.229 billion. See n. 

12, supra. Additionally, consistent with the current 

text of Regulation I, a nonsurviving member bank 

would need to apply to cancel its stock before 

merging or consolidating with another bank. See n. 

15, supra. 

before merging or consolidating with 

another bank.20 There are 

approximately 50 mergers each year in 

which the surviving stockholder is a 

member bank, and it will take a 

surviving stockholder approximately 30 

minutes to complete the paperwork 

associated with an adjustment to its 

stock subscription. Accordingly, the 

final rule will not have a significant 

economic impact on a substantial 

number of small entities. 

B. Paperwork Reduction Act 

Certain provisions of the final rule 

contain ‘‘collections of information’’ 

within the meaning of the Paperwork 

Reduction Act of 1995 (PRA) (44 U.S.C. 

3501–3521). The Board 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 Board 

reviewed the final rule under the 

authority delegated to the Board by 

OMB. The Board did not receive any 

specific comments on the PRA. 

The final rule contains revisions to 

sections 209.3 and 209.4 that automate 

non-merger-related adjustments to 

member banks’ subscriptions to Reserve 

Bank capital stock. Automating the 

adjustment process would reduce the 

frequency of reporting. To implement 

this requirement, the Board has 

extended for three years, with revision, 

the Federal Reserve Bank Stock 

Applications (FR 2030, FR 2030a, FR 

2056, FR 2086, FR2086a, 2087; OMB 

No. 7100–0042). The revisions would 

affect only the FR 2056. 

Adopted Revision, With Extension, of 

the Following Information Collection 

Report title: Federal Reserve Bank 

Stock Applications. 

Agency form numbers: FR 2030; FR 

2030a; FR 2056; FR 2086; FR 2086a; FR 

2087. 

OMB control number: 7100–0042. 

Frequency: On occasion. 

Respondents: New national banks, 

non-member state banks converting into 

national banks, member banks, and 

member banks converting into or 

merging into member or nonmember 

banks. 

Estimated number of respondents: FR 

2030, 4; FR 2030a, 7; FR 2056, 50; FR 

2086, 10; FR 2086a, 86; FR 2087, 1. 

Estimated average hours per response: 

0.5. 

Estimated annual burden hours: FR 

2030, 2; FR 2030a, 3.5; FR 2056, 25; FR 

2086, 5; FR 2086a, 43; FR 2087, 0.5. 

General description of report: Any 

national bank wanting to purchase stock 

in the Federal Reserve System, any 

member bank wanting to increase or 

decrease its Federal Reserve Bank stock 

holdings, or any bank wanting to cancel 

its stock holdings must file an 

application with the appropriate Federal 

Reserve Bank. The application forms for 

the initial subscription of Federal 

Reserve Bank stock filed by organizing 

national banks and nonmember state 

banks converting to national banks (FR 

2030 and 2030a, respectively) and the 

application forms for the cancellation of 

Federal Reserve Bank stock filed by 

liquidating member banks, member 

banks merging or consolidating with 

nonmember banks, and insolvent 

member banks (FR 2086, FR 2086a, and 

FR 2087, respectively) require one or 

more of the following: A resolution by 

the applying bank’s board of directors 

authorizing the transaction, an 

indication of the capital and surplus of 

the bank as of the date of application, 

a certification (by official signatures) of 

the resolution, and/or an indication of 

the number of shares and dollar amount 

of the Federal Reserve Bank stock to be 

purchased or cancelled. 

The application form for an interim 

adjustment in a member bank’s holdings 

of Federal Reserve Bank stock (FR 2056) 

requires an indication of the capital and 

surplus of the bank (or total deposit 

liabilities for a mutual savings bank) as 

of the date of application and an 

indication of the number of shares held 

and the number of shares to be acquired 

or canceled. A member bank must 

submit a completed FR 2056 form to 

correct a discrepancy between the 

amount of Federal Reserve Bank stock 

required to be held and the amount 

actually held by the member bank. The 

latter is determined through information 

that the member bank reports quarterly 

on the Consolidated Reports of 

Condition and Income (Call Report) 

(FFIEC 031, FFIEC 041, and FFIEC 051; 

OMB No. 7100–0036). 

Legal authorization and 

confidentiality: The Federal Reserve 

Bank Stock Applications are authorized 

pursuant to sections 9 and 11(a) of the 

FRA (12 U.S.C. 321 and 248(a)). 

Additionally, the FR 2030 and FR 2030a 

are specifically authorized by section 2 

of the FRA (12 U.S.C. 222 and 282), the 

FR 2056, FR 2086, and FR 2086a are 

authorized by section 5 of the FRA (12 

U.S.C. 287), and the FR 2087 is 

authorized by section 6 of the FRA (12 

U.S.C. 288). The FR 2030, FR 2030a, FR 

2056, FR 2086, FR 2086a, and FR 2087 

are mandatory. 

Individual respondents may request 

that information submitted to the Board 

in these applications be kept 

confidential on a case-by-case basis. 

Such applications may contain 

information related the business plans 

of the respondent. Under certain 

circumstances, this information may be 

withheld under exemption 4 of the 

Freedom of Information Act (FOIA), 

which protects privileged or 

confidential commercial or financial 

information (5 U.S.C. 552(b)(4)). These 

applications may also contain 

information of a personal nature the 

disclosure of which would result in a 

clearly unwarranted invasion of 

personal privacy, which may be 

protected under exemption 6 of the 

FOIA (5 U.S.C. 552(b)(6)). Additionally, 

exemption 8 of the FOIA (5 U.S.C. 

552(b)(8)) may apply to the extent the 

reported information is contained in or 

related to examination reports. 

Current actions: The Board has 

adopted amendments to Regulation I 

that automate non-merger-related 

adjustments to member banks’ 

subscriptions to Reserve Bank capital 

stock. 

Regulation I currently requires that a 

member bank apply to adjust its stock 

subscription at least annually and 

sometimes quarterly. A member bank 

determines its required stock 

subscription based on its capital and 

surplus (or total deposit liabilities for a 

mutual savings bank) as reported in the 

member bank’s most recent Call Report. 

The Reserve Banks have developed 

software that automatically pulls the 

information needed to calculate member 

banks’ required stock subscriptions from 

Call Reports. Accordingly, the Board 

adopted amendments to section 209.4 

that will automate non-merger-related 

stock adjustments. The Board also 

adopted amendments to section 209.3(d) 

that would require a surviving 

stockholder to apply to adjust its stock 

subscription before merging with 

another bank. 


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2030 Federal Register / Vol. 87, No. 9 / Thursday, January 13, 2022 / Rules and Regulations 

Consistent with these changes to 

Regulation I, the Board eliminated the 

requirement that member banks 

routinely submit FR 2056 reporting 

forms to adjust their stock subscriptions. 

The Board amended the FR 2056 

reporting form to clarify that the form 

should be filed only by a surviving 

member bank that merges or 

consolidates with another bank. 

List of Subjects in 12 CFR Part 209 

Banks and banking, Federal Reserve 

System, Reporting and recordkeeping 

requirements, Securities. 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Board will amend 

Regulation I, 12 CFR part 209, as 

follows: 

PART 209—FEDERAL RESERVE BANK 

CAPITAL STOCK (REGULATION I) 

■ 1. The authority citation for part 209 

continues to read as follows: 

Authority: 12 U.S.C. 12 U.S.C. 222, 248, 

282, 286–288, 289, 321, 323, 327–328, and 

466. 

■ 2. Revise the heading to part 209 to 

read as shown above. 

■ 3. Amend § 209.1 by revising 

paragraphs (c) and (d)(3) to read as 

follows. 

§ 209.1 Authority, purpose, scope, and 

definitions. 

* * * * * 

(c) Scope. This part applies to 

member banks of the Federal Reserve 

System, to national banks in process of 

organization, and to state banks 

applying for membership. National 

banks and locally-incorporated banks 

located in United States dependencies 

and possessions are eligible (with the 

consent of the Board) but not required 

to apply for membership under section 

19(h) of the Federal Reserve Act, 12 

U.S.C. 466.1

1A bank located in the Virgin Islands or 

Puerto Rico should communicate with the 

Federal Reserve Bank of New York regarding 

applications for membership under the 

provisions of section 19(h) of the Federal 

Reserve Act. A bank located in Guam, 

American Samoa, or the Northern Mariana 

Islands should communicate with the 

Federal Reserve Bank of San Francisco 

regarding applications for membership under 

the provisions of section 19(h) of the Federal 

Reserve Act. 

(d) * * * 

(3) Total consolidated assets means 

the total assets on the stockholder’s 

balance sheet as reported by the 

stockholder on its Consolidated Report 

of Condition and Income (Call Report) 

as of the most recent December 31, 

except in the case of: 

(i) A new member ‘‘total consolidated 

assets’’ means (until the next December 

31 Call Report becomes available) the 

total consolidated assets of the new 

member at the time of its application for 

capital stock; and 

(ii) A surviving stockholder after a 

merger ‘‘total consolidated assets’’ 

means (until the next December 31 Call 

Report becomes available) the total 

consolidated assets reported by that 

stockholder pursuant to § 209.3(d)(5). 

■ 4. Amend § 209.3 by: 

■ a. Revising the section heading; 

■ b. Revising paragraphs (a) and (c) and 

the paragraph (d) subject heading; 

■ c. Redesignating paragraphs (d)(1), (2), 

and (3) as paragraphs (d)(2), (3), and (5), 

respectively and adding new paragraph 

(d)(1) and paragraph (d)(4); and 

■ d. Revising newly redesignated 

paragraph (d)(5). 

The revisions and additions to read as 

follows: 

§ 209.3 Cancellation of Reserve Bank 

stock; mergers involving member banks. 

(a) Application for cancellation. Any 

bank that desires to withdraw from 

membership in the Federal Reserve 

System (including a national bank that 

wants to convert into a nonmember 

bank), voluntarily liquidates or ceases 

business, is merged or consolidated into 

a nonmember bank, or is involuntarily 

liquidated by a receiver or conservator 

or otherwise, shall promptly file with its 

Reserve Bank an application for 

cancellation of all its Reserve Bank 

stock (or withdrawal of its deposit, as 

the case may be) and payment therefor 

in accordance with § 209.4. 

* * * * * 

(c) Effective date of cancellation. 

Cancellation in whole of a bank’s 

Reserve Bank capital stock shall be 

effective, in the case of: 

(1) Voluntary withdrawal from 

membership by a state bank, as of the 

date of such withdrawal; 

(2) Merger into, consolidation with, or 

(for a national bank) conversion into, a 

nonmember bank, as of the effective 

date of the merger, consolidation, or 

conversion; and 

(3) Involuntary termination of 

membership, as of the date the Board 

issues the order of termination. 

(d) Exchange of stock on merger or 

change in location; stock adjustment 

upon merger with a nonmember bank; 

reporting of total consolidated assets 

following merger—(1) Applications. (i) 

Before a merger or consolidation of 

member banks, the nonsurviving 

member bank shall file an application 

with the appropriate Reserve Bank to 

cancel its shares of Reserve Bank stock 

(or in the case of a mutual savings bank 

not authorized to purchase Reserve 

Bank stock, shall file an application to 

transfer its deposit to the account of the 

surviving bank) and the surviving 

member bank shall file an application 

with the appropriate Reserve Bank for 

issue of a corresponding number of 

shares of Reserve Bank stock (or in the 

case of a mutual savings bank not 

authorized to purchase Reserve Bank 

stock, shall file an application to 

increase its deposit obligation). 

(ii) Before a merger or consolidation 

of a member bank and a nonmember 

bank, a surviving member bank shall file 

an application with the appropriate 

Reserve Bank to adjust its Reserve Bank 

capital stock subscription to equal six 

percent of the member bank’s 

anticipated post-merger capital and 

surplus, or, in the case of member bank 

that is a mutual savings bank, six-tenths 

of 1 percent of the member bank’s 

anticipated post-merger total deposit 

liabilities. A mutual savings bank not 

authorized to purchase Reserve Bank 

stock shall file an application to adjust 

its deposit obligation in a like manner. 

* * * * * 

(4) Merger with a nonmember bank. 

Upon a merger or consolidation of a 

member bank and a nonmember bank, 

the Reserve Bank will adjust the 

surviving member bank’s stock 

subscription to equal six percent of the 

member bank’s capital and surplus, or, 

in the case of a member bank that is a 

mutual savings bank, six-tenths of 1 

percent of the member bank’s total 

deposit liabilities. If a mutual savings 

bank has a deposit with the appropriate 

Reserve Bank in lieu of Reserve Bank 

capital stock, its deposit obligation shall 

be adjusted in a like manner. 

(5) Statement of total consolidated 

assets. When a member bank merges or 

consolidates with another bank and the 

surviving bank remains a Reserve Bank 

stockholder, the surviving stockholder 

must report whether its total 

consolidated assets exceed 

$11,229,000,000 in the application 

described in paragraph (d)(1) of this 

section. 

* * * * * 

■ 5. Amend § 209.4 by: 

■ a. Revising paragraphs (a) and (b) and 

paragraph (c)(1) introductory text; 

■ b. Redesignating paragraphs (c)(2) and 

(3) as paragraphs (c)(3) and (4), and 

adding a new paragraph (c)(2); and 

■ c. Revising paragraph (d)(1) 

introductory text. 

The revisions and addition read as 

follows: 


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1Public Law 101–410, 104 Stat. 890 (Oct. 5, 

1990), as amended by Public Law 104–134, title III, 

§ 31001(s)(1), 110 Stat. 1321–373 (Apr. 26, 1996); 

Public Law 105–362, title XIII, § 1301(a), 112 Stat. 

3293 (Nov. 10, 1998); Public Law 114–74, title VII, 

§ 701(b), 129 Stat. 599 (Nov. 2, 2015), codified at 

28 U.S.C. 2461 note. 

2Under the amended Inflation Adjustment Act, a 

CMP is defined as any penalty, fine, or other 

sanction that: (1) Either is for a specific monetary 

amount as provided by Federal law or has a 

maximum amount provided for by Federal law; (2) 

is assessed or enforced by an agency pursuant to 

Federal law; and (3) is assessed or enforced 

pursuant to an administrative proceeding or a civil 

action in the Federal courts. All three requirements 

must be met for a fine to be considered a CMP. 

3 12 U.S.C. 2277a–14(c). 

4 12 U.S.C. 2277a–14(d). 

5See Office of Mgmt. & Budget, Exec. Office of 

the President, OMB Memorandum No. M–22–07, 

Implementation of Penalty Inflation Adjustments 

for 2020, Pursuant to the Federal Civil Penalties 

Inflation Adjustment Act Improvements Act of 2015 

(December 15, 2021). 

§ 209.4 Amounts and payments for 

subscriptions and cancellations; timing and 

rate of dividends. 

(a) Amount of subscription. The total 

subscription of a member bank (other 

than a mutual savings bank) shall equal 

six percent of its capital and surplus as 

shown on its most recent Call Report. 

After a member bank files a Call Report, 

the appropriate Reserve Bank will adjust 

the member bank’s Reserve Bank capital 

stock subscription to equal six percent 

of the member bank’s capital and 

surplus. 

(b) Mutual savings banks. The total 

subscription of a member bank that is a 

mutual savings bank shall equal sixtenths of 1 percent of its total deposit 

liabilities as shown on its most recent 

Call Report. After a member bank that 

is a mutual savings bank files a Call 

Report, the appropriate Reserve Bank 

will adjust the member bank’s Reserve 

Bank capital stock subscription to equal 

six-tenths of 1 percent of the member 

bank’s total deposit liabilities. If a 

mutual savings bank has a deposit with 

the appropriate Reserve Bank in lieu of 

Reserve Bank capital stock, its deposit 

obligation shall be adjusted in a like 

manner. 

(c) * * * 

(1) When a Reserve Bank issues 

capital stock to a member bank (or 

accepts a deposit in lieu thereof), the 

member bank shall pay the Reserve 

Bank— 

* * * * * 

(2) A Reserve Bank shall obtain 

settlement for the payment described in 

paragraph (c)(1) of this section by debit 

to an account on the Reserve Bank’s 

books or other form of settlement to 

which the Reserve Bank agrees. 

* * * * * 

(d) * * * 

(1) When a Reserve Bank cancels 

Reserve Bank capital stock of a member 

bank, or (in the case of involuntary 

termination of membership) upon the 

effective date of cancellation specified 

in § 209.3(c)(3), the Reserve Bank 

shall— 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System. 

Ann Misback, 

Secretary of the Board. 

[FR Doc. 2022–00503 Filed 1–12–22; 8:45 am] 

BILLING CODE 6210–01–P 

FARM CREDIT SYSTEM INSURANCE 

CORPORATION 

12 CFR Part 1411 

RIN 3055–AA18 

Rules of Practice and Procedure; 

Adjusting Civil Money Penalties for 

Inflation 

AGENCY: Farm Credit System Insurance 

Corporation. 

ACTION: Final rule. 

SUMMARY: This rule implements 

inflation adjustments to civil money 

penalties (CMPs) that the Farm Credit 

System Insurance Corporation (FCSIC) 

may impose under the Farm Credit Act 

of 1971, as amended. These adjustments 

are required by 2015 amendments to the 

Federal Civil Penalties Inflation 

Adjustment Act of 1990. 

DATES: Effective date: This regulation is 

effective on January 13, 2022. 

Applicability date: The adjusted 

amounts of civil money penalties in this 

rule are applicable to penalties assessed 

on or after January 15, 2022, for conduct 

occurring on or after November 2, 2015. 

FOR FURTHER INFORMATION CONTACT: 

Lynn M. Powalski, General Counsel, 

Farm Credit System Insurance 

Corporation, 1501 Farm Credit Drive, 

McLean, Virginia 22102, (703) 883– 

4380, TTY (703) 883–4390. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Federal Civil Penalties Inflation 

Adjustment Act Improvements Act of 

2015 (the 2015 Act) amended the 

Federal Civil Penalties Inflation 

Adjustment Act of 1990 (the Inflation 

Adjustment Act) 1 to improve the 

effectiveness of civil monetary penalties 

and to maintain their deterrent effect. 

The Inflation Adjustment Act provides 

for the regular evaluation of CMPs and 

requires FCSIC, and every other Federal 

agency with authority to impose CMPs, 

to ensure that CMPs continue to 

maintain their deterrent values.2

FCSIC must enact regulations that 

annually adjust its CMPs pursuant to 

the inflation adjustment formula of the 

amended Inflation Adjustment Act and 

rounded using a method prescribed by 

the Inflation Adjustment Act. The new 

amounts are applicable to penalties 

assessed on or after January 15, 2022, for 

conduct occurring on or after November 

2, 2015. Agencies do not have discretion 

in choosing whether to adjust a CMP, by 

how much to adjust a CMP, or the 

methods used to determine the 

adjustment. 

II. CMPs Imposed Pursuant to Section 

5.65 of the Farm Credit Act 

First, section 5.65(c) of the Farm 

Credit Act, as amended (Act), provides 

that any insured Farm Credit System 

bank that willfully fails or refuses to file 

any certified statement or pay any 

required premium shall be subject to a 

penalty of not more than $100 for each 

day that such violations continue, 

which penalty FCSIC may recover for its 

use.3 Second, section 5.65(d) of the Act 

provides that, except with the prior 

written consent of the Farm Credit 

Administration, it shall be unlawful for 

any person convicted of any criminal 

offense involving dishonesty or a breach 

of trust to serve as a director, officer, or 

employee of any System institution.4

For each willful violation of section 

5.65(d), the institution involved shall be 

subject to a penalty of not more than 

$100 for each day during which the 

violation continues, which FCSIC may 

recover for its use. 

FCSIC’s current § 1411.1 provides that 

FCSIC can impose a maximum penalty 

of $217 per day for a violation under 

section 5.65(c) and (d) of the Act. 

III. Required Adjustments 

The 2015 Act requires agencies to 

make annual adjustments for inflation. 

Annual inflation adjustments are based 

on the percent change between the 

October Consumer Price Index for all 

Urban Consumers (CPI–U) preceding the 

date of the adjustment, and the prior 

year’s October CPI–U. Based on the CPI– 

U for October 2021, not seasonally 

adjusted, the cost-of-living adjustment 

multiplier for 2022 is 1.06222.5

Multiplying 1.06222 times the current 

penalty amount of $217, after rounding 

to the nearest dollar as required by the 


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