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. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

12103

Vol. 60, No. 43

Monday, March 6, 1995

1Unless otherwise indicated, all references to

specific parts and sections in text will be to title 12

of the Code of Federal Regulations.

2A bank or other depository institution that

converts to a thrift charter is not a de novo

association, as that term is defined under the

current OTS Policy Statement. The definition

excludes ‘‘any entity the business of which has

been conducted previously under any charter or

conducted in substantially the same form as is

proposed to be conducted by the de novo

association.’’ See 12 CFR 571.6(g). Thus, the

provisions of the Policy Statement do not apply to

such conversions. The requirements of the qualified

thrift lender test do, however, apply. For purposes

of the qualified thrift lender test, the term ‘‘de novo

association’’ includes any newly chartered thrift

(including a bank that converts to a thrift charter).

This result is consistent with the intent and

purpose of the qualified thrift lender test. See OTS

Chief Counsel’s Op., March 11, 1992.

3Pub. L. No. 101–73, 103 Stat. 183 (1989).

4Pub. L. No. 102–242, 105 Stat. 2236 (1991).

5See OTS Thrift Bulletin No. 45 (April 25, 1990).

6 12 U.S.C.A. 1468 (West Supp. 1994).

7See 48 FR 51270 (November 7, 1983); 48 FR

54320 (December 2, 1983); 54 FR 49411 (November

30, 1989).

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Parts 543, 552, and 571

[No. 94–158]

RIN 1550–AA76

‘‘De Novo’’ Applications for a Federal

Savings Association Charter

AGENCY: Office of Thrift Supervision,

Treasury.

ACTION: Proposed rule.

SUMMARY: The Office of Thrift

Supervision (OTS or Office) is today

proposing a regulation incorporating,

with certain changes, its current

statement of policy on ‘‘de novo’’

applications for a federal savings

association charter (Policy Statement).

The proposed changes are intended not

only to make the Policy Statement into

a regulation, but also to conform it with

current law and to facilitate the

application process by simplifying the

regulatory scheme, thereby reducing the

cost of compliance.

The Federal Home Loan Bank Board

(FHLBB), the OTS’s predecessor agency,

originally promulgated the Policy

Statement to provide specific guidance

on the content of de novo applications.

Many provisions in the current Policy

Statement have, however, become

obsolete or redundant, or are otherwise

unnecessary, as a result of changes in

federal laws and regulations addressing

capital adequacy, business plans, officer

and director qualifications, insider

conflicts of interest and transactions

with affiliates. These revised statutes

and regulations now adequately address

many of the issues previously covered

by the Policy Statement. Because the

remaining revised OTS de novo

provisions contain requirements, not

merely guidance, the OTS believes that

they should be recodified as a

regulation.

DATES: Comments must be received on

or before May 5, 1995.

ADDRESSES: Send comments to Director,

Information Services Division, Office of

Thrift Supervision, 1700 G Street, NW.,

Washington, D.C. 20552, Attention

Docket No. 94–158. These submissions

may be hand-delivered to 1700 G Street,

NW., from 9:00 A.M. to 5:00 P.M. on

business days; they may be sent by

facsimile transmission to FAX Number

(202) 906–7755. Submissions must be

received by 5:00 P.M. on the day they

are due in order to be considered by the

OTS. Late-filed, misaddressed or

misidentified submissions will not be

considered in this rulemaking.

Comments will be available for

inspection at 1700 G Street, NW., from

1:00 P.M. until 4:00 P.M. on business

days. Visitors will be escorted to and

from the Public Reading Room at

established intervals.

FOR FURTHER INFORMATION CONTACT: Gary

Masters, Financial Analyst, Corporate

Activities Division (202) 906–6729;

Therese L. Monahan, Project Manager,

Thrift Policy (202) 906–5740; or Valerie

J. Lithotomos, Counsel (Banking and

Finance), (202) 906–6439, Regulations

and Legislation Division, Chief

Counsel’s Office, Office of Thrift

Supervision, 1700 G Street, NW.,

Washington, D.C. 20552.

SUPPLEMENTARY INFORMATION:

I. Introduction

The OTS today proposes a new

regulation to revise and update its

treatment of de novo applications for

federal savings association charters.

The FHLBB originally promulgated

the Policy Statement, which appears at

section 571.6 of the OTS’s rules,1 to

explain its policies relating to the

approval of insurance applications for

newly created, so-called de novo,

institutions. At that time, the FHLBB

was the operating head of the Federal

Savings and Loan Insurance

Corporation, the insurance fund for

thrifts, and de novo applications

included not only applications for

permission to organize and requests for

a federal charter, but also applications

for insurance of accounts.2 Sweeping

statutory reforms in the past few years,

particularly the Financial Institutions

Reform, Recovery, and Enforcement Act

of 1989 3 (FIRREA), and the Federal

Deposit Insurance Corporation

Improvement Act of 1991 4 (FDICIA),

have effected significant changes in the

structure of the agency and the scope of

its mission. For example, under

FIRREA, the OTS succeeded to the

chartering and supervisory functions of

the FHLBB, but the insurance function

was transferred to the Federal Deposit

Insurance Corporation (FDIC).

FIRREA and FDICIA have also

rewritten much of the substantive law

relevant to the OTS’s de novo approval

process. For instance, section 32 of the

Federal Deposit Insurance Act (FDIA),

which was added by section 914 of

FIRREA, requires officers and directors

for a de novo to be approved by the

OTS.5 In addition, the OTS’s regulations

regarding transactions with affiliates

and conflicts of interest have been

substantially revised due to the

incorporation, through section 11 of the

Home Owners’ Loan Act (HOLA),6 of

the substance of sections 23A, 23B,

22(g) and 22(h) of the Federal Reserve

Act (FRA). Finally, the OTS’s policy

concerning net worth maintenance

agreements also has changed; such

agreements are no longer required in the

context of de novo applications.

Although the Policy Statement has

been amended over the years to

integrate some of these changes in the

law,7 a thorough revision is now

warranted to conform the OTS’s de novo

chartering policies with the totality of

significant statutory and regulatory

changes that have recently occurred.
12104 Federal Register / Vol. 60, No. 43 / Monday, March 6, 1995 / Rules and Regulations

8 12 U.S.C.A. 1815(a)(2) (West 1989).

9 12 U.S.C.A. 1816 (West 1989).

10 12 U.S.C.A. 1815 (a)(1) (West Supp. 1994).

11 57 FR 12825 (April 13, 1992).

12 12 U.S.C.A. 1464(e) (West Supp. 1994).

13Community Reinvestment Act of 1977, Pub. L.

No. 95–128, tit. 8, sec. 802, 91 Stat. 1147 (codified

at 12 U.S.C. 2901, et seq. (1980)). 14 12 U.S.C.A. 1815(a)(2) (West 1989).

The OTS, therefore, proposes to remove

obsolete statutory references, eliminate

redundancy, enhance where possible

consistency with the policies of other

federal banking agencies, clarify the

OTS’s most recent policy

considerations, and generally provide

for more flexible standards for

processing applications for the

establishment of de novo federal savings

associations. The OTS also intends to

recodify these provisions as part of its

regulations on the incorporation of

federal savings associations.

II. Statutory and Regulatory

Requirements

A. Statutory Requirements

The statutory chartering and

insurance framework initially

established by FIRREA provided that

the FDIC could insure the accounts of a

de novo federal savings association

upon application by the savings

association and upon receipt by the

FDIC of a certificate issued by the

Director of the OTS.8 The OTS, as

chartering authority for federal savings

associations, was required to certify to

the FDIC that it had considered certain

factors, set forth at section 6 of the

Federal Deposit Insurance Act (FDIA),

in granting a federal thrift charter. These

factors included: (1) the financial

history and condition of the association;

(2) the adequacy of its capital structure;

(3) its future earnings prospects; (4) the

character and fitness of its proposed

management; (5) the risk presented to

the insurance fund; (6) the convenience

and needs of the community to be

served; and (7) whether the association’s

proposed corporate powers would be

consistent with the purposes of the

FDIA.9

FDICIA removed this certification

requirement. Instead, a de novo federal

savings association may obtain

insurance of its accounts ‘‘upon

application and examination by the

[FDIC] and approval by the [FDIC]

Board of Directors * * *.’’ 10 In acting

on the application for insurance, the

FDIC Board is required to consider the

statutory factors enumerated at section 6

of the FDIA and set forth above. FDICIA

made no changes to the section 6

factors. The FDIC has issued a

Statement of Policy Regarding

Applications for Deposit Insurance

(FDIC Policy Statement) which

establishes the standards used by the

FDIC in granting deposit insurance and

provides guidelines for making

applications for insured status.11

Although the OTS is no longer

required to certify to the FDIC that it has

considered the factors in section 6 of the

FDIA, section 5(e) of the HOLA 12

requires the OTS to make findings that

resemble the section 6 factors before

granting a federal charter. Section 5(e) of

the HOLA requires the OTS to

determine: (1) the character of the

organizers; (2) the need for the

association in the community to be

served; (3) the reasonable probability of

the association’s usefulness and success;

and (4) whether the association can be

established without undue injury to

existing local thrift and home financing

institutions. In addition, pursuant to the

Community Reinvestment Act of 1977 13

(CRA), the OTS must assess the new

institution’s proposed CRA statement

and plans for meeting the credit needs

of its community (including low- and

moderate-income neighborhoods) and

must take that assessment into account

in determining whether to grant a

charter.

B. Current OTS Policy Statement

Minimum Capitalization Requirement

and Business and Investment Plans. The

current OTS Policy Statement sets the

minimum level of capitalization for de

novo institutions at $3 million, with a

provision that the Office will consider

approving a de novo applicant having at

least $2 million if certain criteria are

met. Among those criteria are that the

applicant would be located in, and

intended to serve, an area with a

population not exceeding 50,000, and

that the applicant will be communityoriented.

The current OTS Policy Statement

provides that the Office must consider

certain factors in order for an applicant

to obtain insurance of accounts by the

FDIC. Among the factors to be

considered are the association’s future

earnings prospects, the general character

and fitness of the association’s

management, and the convenience and

needs of the community to be served.

The Office may grant a new charter only

if, among other things, in the judgment

of the Director a necessity exists for

such association in the community to be

served.

Policies Pertaining to Management

Officials. The current OTS Policy

Statement requires controlling

shareholders to personally agree to

maintain the association’s required

regulatory capital for a minimum of five

years. It also contains provisions

requiring the filing of a plan to identify

areas where conflicts of interest and

abuse of corporate opportunity may

occur.

Standard Approval Conditions.

Currently, standard conditions on

application approvals are not listed in

the policy statement. Standard

conditions, however, are imposed for all

approvals of de novo applications and

are contained in the OTS’s Applications

Processing Handbook.

III. Description of Proposed Revisions

A. Deletion of Obsolete Statutory

References and Deletion of Certain

Duplicative Factors

The proposal would delete obsolete

statutory references. Current § 571.6(b)

contains language requiring that the

OTS certify to the FDIC that it has

considered the factors listed under

section 5(a)(2) of the FDIA.14 Since

FDICIA eliminated this certification

requirement from the statute, we

propose a parallel deletion from the

rule. These pre-FDICIA certification

requirements are also contained in

§§ 543.2(g)(2) and 552.2–1(b)(2), which

address the organization of federal

mutual and federal stock institutions,

respectively. We similarly propose to

delete these sections in their entirety.

The proposal would also delete

current section 571.6(b)(2), which

contains language regarding certain

factors considered in evaluating

applications to organize a federal

savings association. Among others,

these factors require the agency to

consider whether there is a reasonable

probability of the association’s

usefulness and success, and whether, in

the judgment of the Director of the OTS,

a necessity exists for the association in

the community to be served. These

factors are duplicative of the factors that

already appear in sections 543.2(g)(1)

and 552.2–1(b)(1).

B. Other Proposed Revisions

Minimum Capitalization and

Business Plan Requirements. The

proposal revises the minimum

capitalization and business plan

requirements for de novo applicants.

When the Policy Statement was first

adopted, since de novo applicants did

not have a proven ‘‘track record’’ or a

supervisory history, the FHLBB believed

it was appropriate to set a minimum

level of capitalization for de novo

associations. In addition, the FHLBB
Federal Register / Vol. 60, No. 43 / Monday, March 6, 1995 / Rules and Regulations 12105

15See FDIC Policy Statement, 57 FR 12822 (April

13, 1992).

16See 12 CFR 571.6(d)(3)(iii).

17 12 U.S.C.A. 1831o(e)(2)(C) (West Supp. 1994).

18 12 CFR 565.5.

19 39 FR 6696 (February 22, 1974).

20See also OTS’s Statement Concerning the

Responsibilities of Directors and Officers of Insured

Depository Institutions (November 16, 1992).

21 12 U.S.C.A. 371c, 371c-1, 375 and 375b (West

1989 and Supp. 1994). See also 12 U.S.C.A. 1468

(West Supp. 1994).

22See 12 CFR 563.41, 563.42 and 563.43.

believed that de novo associations, as

new companies, presented risks not

associated with other institutions. These

minimum capitalization requirements

were intended to ensure that a de novo

institution commenced operations in a

safe and sound manner and to protect

the insurance fund. To the same end,

the FHLBB also required submission of

detailed information on the institution’s

business plan for its first few years of

operation, including descriptions of

proposed management, management

policies, investment policies and

operations.

Minimum capitalization and business

plan requirements remain appropriate

safeguards because of the absence, in

the case of a de novo, of any operating

or supervisory history. However, those

requirements would be revised by

today’s proposal.

Under the proposal, the standard

minimum capitalization requirement

would be decreased from $3 million to

$2 million. The OTS could impose a

higher or lower capital requirement on

a case-by-case basis. The proposal

would conform the minimum

capitalization requirement to that of the

insuring agency, the FDIC,15 while

providing flexibility and information

vital to the OTS in making its statutorily

required determinations. It also would

streamline the de novo application

process and reduce the financial burden

on applicants wishing to organize

federal de novo institutions.

In securities offerings for a de novo

institution, the OTS proposes that all

securities of a particular class in the

initial offering be sold at the same price.

The minimum initial capitalization is

the amount of proceeds net of all

incurred and anticipated securities

issuance expenses, organization

expenses, pre-opening expenses, or any

expenses paid (or funds advanced) by

organizers that are to be reimbursed

from the proceeds of the securities

offering.

The business plan provisions have

been revised to consolidate certain

provisions, to bring the requirements

up-to-date, and to delete obsolete

statutory references. The proposal

clarifies the required elements of the

business plan, including descriptions of

lending, leasing and investment activity,

plans for meeting the qualified thrift

lender requirements, deposit, savings

and borrowing activity, compliance

with the CRA, continuation or

succession of competent management,

and information on the proposed

institution’s ability to maintain required

minimum regulatory capital levels.

C. Policies Pertaining to Management

Officials

Capital Maintenance Requirements.

The proposal would delete the current

capital maintenance requirements in

order to conform to the current OTS

policy. Current § 571.6(d)(4) requires

controlling shareholders to agree to

maintain a de novo association’s

required regulatory capital level for a

minimum of five years. Controlling

shareholders are also prohibited from

pledging more than 50% of their stock

to secure borrowed funds to finance

their stock purchase for a period of three

years.16 Under the proposal, the

provisions requiring controlling

shareholders to execute capital

maintenance agreements have been

deleted and replaced by a new provision

that requires a certification by legal

counsel that the establishment of the de

novo institution has been consummated

in accordance with the provisions of all

applicable laws and regulations, the

application, and the Office’s order.

These changes will streamline the

application process, conform the

process to current OTS rules and policy

and will reduce the burden on

organizers of a federal de novo

institution.

Since 1991, it has been the OTS’s

policy generally not to require

prospectively the execution of capital

maintenance agreements by controlling

shareholders of a de novo institution.

Under the Prompt Corrective Action

provisions of section 38 of FDICIA,17

which were enacted in 1991, and as

implemented by OTS regulations,18 the

OTS may not approve a capital

restoration plan for any

‘‘undercapitalized’’ institution unless

each company that controls the

institution guarantees the institution’s

compliance with the plan until it has

been adequately capitalized for four

consecutive quarters and unless each

such company provides adequate

assurances of performance of the plan.

Thus, sufficient statutory and regulatory

protections currently exist to assure that

savings associations maintain adequate

capital and to deal with capital

deficiencies promptly and thoroughly.

Conflicts of Interest and Usurpation of

Corporate Opportunity. The proposal

would delete provisions requiring the

organizers of a de novo to file a plan

identifying areas where conflicts of

interest and abuse of corporate

opportunity may occur and describing

specific policies and actions that the

association will institute to avoid that

abuse. Existing statutory and regulatory

requirements obviate the need for this

information in the application process.

For instance, section 571.9, the OTS’s

‘‘Corporate Opportunity Statement of

Policy,’’ makes clear that directors,

officers and other persons having the

power to direct the management of a

savings association stand in a fiduciary

relationship to the association and its

accountholders or shareholders that

requires them to avoid conflicts of

interest and self-dealing.

The Corporate Opportunity Statement

of Policy prohibits usurpation of

corporate opportunities by insiders, if

taking advantage of a business

opportunity would breach their

fiduciary obligations. The purpose of

the Corporate Opportunity Statement of

Policy, which was intended ‘‘to codify

existing common law fiduciary

principles,’’ 19 is to protect savings

associations from managers and

controlling parties who might divert

beneficial business opportunities from

their savings associations to themselves

or their affiliates in violation of

applicable fiduciary rules.20

Concerns relating to the avoidance of

conflicts of interest and usurpation of

corporate opportunity are addressed not

only through the Corporate Opportunity

Statement of Policy, but also by the

statutory requirements governing

transactions between savings

associations and their affiliates and

insiders. Transactions with affiliates

and insider transactions at savings

associations have become subject to the

comprehensive statutory and regulatory

framework that applies to banks under

sections 23A, 23B, 22(g) and 22(h) of the

Federal Reserve Act 21 (FRA). These

sections of the FRA were made

applicable to savings associations by

provisions of FIRREA and by FDICIA.

The OTS has substantially revised its

regulations 22 to implement the statutory

restrictions of sections 23A, 23B, 22(g)

and 22(h) of the FRA.

The current statutory and regulatory

structure thus eliminates the need for a

separate statement of these restrictions

in rules governing the organization of de

novo institutions. Therefore, the

proposed regulation deletes the

requirements for the filing of plans for
12106 Federal Register / Vol. 60, No. 43 / Monday, March 6, 1995 / Rules and Regulations

23Section 32 of the FDIA, which was added by

FIRREA, requires certain savings associations and

thrift holding companies to notify the OTS and

provide it with relevant information prior to adding

or replacing directors or hiring senior executive

officers if, among other things, the association has

been chartered for less than two years. See 12

U.S.C.A. 1831i (West 1989); 58 FR 45421 (August

30, 1993) (OTS final rule implementing section 32);

OTS Thrift Bulletin No. 45 (April 25, 1990).

24 49 FR 41243 (October 22, 1984).

25 57 FR 12825 (April 13, 1992).

26 12 CFR 5.20(d)(3)(iv)(B).

avoidance of conflicts of interest and

usurpations of corporate opportunity.

Standard Approval Conditions. The

proposed rule revises and codifies the

standard approval conditions for de

novo institutions. The OTS has

generally imposed approval conditions

in order to ensure compliance with its

substantive regulations, to address

unique supervisory concerns, and to

impose subsequent oversight by the

OTS regional offices. However, a

number of these standard conditions,

such as those imposing specific controls

on insider and affiliate transactions,

have become redundant or obsolete. For

example, a previously imposed standard

condition required the submission of

extensive background material by

controlling shareholders, directors and

officers both prior to and after

consummation of the transaction.

Current statutory and policy

requirements already adequately

address this issue and a standard

condition is not necessary.23 However,

the proposal retains a requirement that

provides for the collection of

information on the performance of

management, which gives the OTS an

additional supervisory tool for

institutions without proven track

records.

Recodification of Requirements.

Under the proposed amendment, the

requirements for creation of a de novo

institution will be moved from part 571,

Statement of Policy, to part 543,

Incorporation, Organization, and

Conversion of Federal Mutual

Associations, and incorporated into part

552, Incorporation, Organization, and

Conversion of Federal Stock

Associations, by cross-reference to part

543. This recodification will make these

provisions easier to locate, as they will

be grouped with other federal savings

association regulations rather than with

policies affecting all savings

associations. Recodifying these

provisions as regulations should also

minimize any confusion about their

status as requirements, rather than only

guidance.

IV. Request for Comment

The OTS requests comments from

interested parties on all aspects of this

proposal. In addition, the OTS is

specifically soliciting comment on

whether or not there should be a

deletion or revision of the current

section 571.6(c), which contains

requirements regarding the composition

of the board of directors. This section

was added in 1984.24 It specifically

provides, among other things, that a

majority of the board of directors must

be representative of the state in which

the association is located, and that it

must be diversified and composed of

individuals with varied business and

professional experience. The FDIC

Policy Statement 25 and that of the

Office of the Comptroller of the

Currency (OCC) have similar

requirements. The OCC Policy

Statement states that local directors

encourage ‘‘community support.’’ 26 The

OTS is requesting comment on whether

the explicit requirements for a board of

directors with diverse backgrounds and

ties to the de novo’s home state continue

to serve a useful purpose. The OTS also

is requesting comment on the factors

currently in its Policy Statement that are

to be considered in judging whether the

board of directors meets these

requirements.

V. Executive Order 12866

The Director of the OTS has

determined that this proposed rule does

not constitute a ‘‘significant regulatory

action’’ for the purposes of Executive

Order 12866.

VI. Paperwork Reduction Act

The reporting requirements contained

in this proposed rule have been

submitted to the Office of Management

and Budget for review in accordance

with the Paperwork Reduction Act of

1980 (44 U.S.C. 3504(h)). Comments on

the collection of information should be

sent to the Office of Management and

Budget, Paperwork Reduction Project

(1550), Washington, D.C. 20503, with

copies to the Office of Thrift

Supervision, 1700 G Street, NW.,

Washington, D.C. 20552.

The reporting requirements in this

proposed rule are found in 12 CFR

543.3. The information is needed by the

OTS to reduce the risk of loss to newlychartered institutions and the Savings

Association Insurance Fund.

Estimated number of respondents: 10

Estimated average burden per

respondent: 110 hours

Estimated annual frequency of

responses: 1

Estimated total annual reporting burden:

1100 hours

VII. Regulatory Flexibility Act Analysis

Pursuant to section 605(b) of the

Regulatory Flexibility Act, the OTS

certifies that this proposed rule will not

have a significant economic impact on

a substantial number of small entities.

The proposal does not impose

additional burdens or requirements

upon a small entity that files an

application to become a de novo

institution.

List of Subjects

12 CFR Part 543

Reporting and recordkeeping

requirements, Savings associations.

12 CFR Part 552

Reporting and recordkeeping

requirements, Savings associations,

Securities.

12 CFR Part 571

Accounting, Conflicts of interest,

Investments, Reporting and

recordkeeping requirements, Savings

associations.

Accordingly, the Director, Office of

Thrift Supervision, hereby proposes to

amend parts 543, 552, and 571, chapter

V, title 12 of the Code of Federal

Regulations, as set forth below:

SUBCHAPTER C—REGULATIONS FOR

FEDERAL SAVINGS ASSOCIATIONS

PART 543—INCORPORATION,

ORGANIZATION, AND CONVERSION

OF FEDERAL MUTUAL

ASSOCIATIONS

1. The authority citation for part 543

continues to read as follows:

Authority: 12 U.S.C. 1462, 1462a, 1463,

1464, 1467a, 2901 et seq.

§ 543.2 [Amended]

2. Section 543.2 is amended by

removing and reserving paragraph (g)(2).

3. A new § 543.3 is added to read as

follows:

§ 543.3 ‘‘De Novo’’ applications for a

Federal savings association charter.

(a) Definitions. For purposes of this

section, the terms ‘‘de novo association’’

and ‘‘de novo applicant’’ mean any

savings and loan association, savings

association, or savings bank that has

submitted to the Office an application

for permission to organize a Federal

savings association, the business of

which has not been conducted

previously under any charter or

conducted in substantially the same

form as is proposed to be conducted by

the de novo association for a period of

three years.

(b) Minimum initial capitalization. (1)

A de novo association must have not
Federal Register / Vol. 60, No. 43 / Monday, March 6, 1995 / Rules and Regulations 12107

less than two million dollars in initial

capital stock (stock institutions) or

initial pledged savings or cash (mutual

institutions), except as provided in

paragraph (b)(2) of this section. The

minimum initial capitalization is the

amount of proceeds net of all incurred

and anticipated securities issuance

expenses, organization expenses, preopening expenses, or any expenses paid

(or funds advanced) by organizers that

are to be reimbursed from the proceeds

of a securities offering. In securities

offerings for a de novo institution, all

securities of a particular class in the

initial offering shall be sold at the same

price.

(2) On a case by case basis, the

Director may, for good cause, approve a

de novo applicant that has less than two

million dollars in initial capital or may

require an applicant to have more than

two million dollars in initial capital.

(c) Business and investment plans of

newly-chartered associations. (1) In

order for the Office to make the

determinations required under section

5(e) of the Home Owners’ Loan Act, a

de novo applicant for a Federal charter

shall submit a business plan describing,

for the first three years of operation, the

major areas of operation, including, but

not limited to:

(i) Lending, leasing and investment

activity, including plans for meeting

Qualified Thrift Lender requirements

within the timeframes established in 12

CFR 563.50(d);

(ii) Deposit, savings and borrowing

activity;

(iii) Interest-rate risk management;

(iv) Internal controls and procedures;

(v) A Community Reinvestment Act

statement, pursuant to 12 CFR part

563e, and plans for meeting the credit

needs of the proposed de novo’s

community (including low- and

moderate- income neighborhoods);

(vi) Projected statement of condition;

and

(vii) Projected statement of

operations.

(2) The business plan shall provide

for the continuation or succession of

competent management subject to the

approval of the Regional Director, and

shall further provide that any material

change in, or deviation from, the

business plan must receive the prior

approval of the Regional Director. The

business plan shall demonstrate the

proposed institution’s ability to

maintain required minimum regulatory

capital under 12 CFR parts 565 and 567

for the duration of the plan.

(d) Composition of the board of

directors. (1) A majority of a de novo

association’s board of directors must be

representative of the state in which the

savings association is located. The

Office generally will consider a director

to be representative of the state if such

director resides, works or maintains a

place of business in the state in which

the savings association is located. If the

association is located in a Metropolitan

Statistical Area (MSA), Primary

Metropolitan Statistical Area (PMSA) or

Consolidated Metropolitan Statistical

Area (CMSA) that incorporates portions

of more than one state, a director will

be considered representative of the

association’s state if he or she resides,

works or maintains a place of business

in the MSA, PMSA or CMSA in which

the association is located.

(2) The de novo association’s board of

directors must be diversified and

composed of individuals with varied

business and professional experience. In

addition, except in the case of a de novo

association that is wholly-owned by a

holding company, no more than onethird of a board of directors may be in

closely related businesses. The

background of each director must reflect

a history of responsibility and personal

integrity, and must show a level of

competence and experience sufficient to

demonstrate that such individual has

the ability to direct the policies of the

association in a safe and sound manner.

Where a de novo association is owned

by a holding company that does not

have substantial independent economic

substance, the foregoing standards will

be applied to the holding company.

(e) Management Officials. (1)

Proposed stockholders of ten percent or

more of the stock of a de novo

association will be considered

management officials of the association

for the purpose of the Office’s

evaluation of the character and

qualifications of the management of the

association. In connection with the

Office’s consideration of an application

for permission to organize and

subsequent to issuance of a Federal

savings association charter to the

association by the Office, any individual

or group of individuals acting in

concert, who owns or proposes to

acquire, directly or indirectly, ten

percent or more of the stock of an

association subject to this section, shall

submit a Biographical and Financial

Report to the Regional Director.

(2) Each new director of a de novo

institution shall sign an ‘‘Oath of

Director for Savings Associations.’’ The

original of the document, executed,

shall be submitted to the Regional

Director.

(f) Standard conditions. The following

are standard conditions that are

imposed in any Office approval order

relating to a de novo application:

(1) The de novo institution must

receive all required regulatory approvals

prior to the establishment of the de novo

institution, with copies of all such

approvals supplied to the appropriate

Regional Office.

(2) The de novo institution must

represent that there have been no

substantial changes with respect to the

de novo institution as disclosed in the

information currently before the Office,

including but not limited to changes in

directors, shareholders, or in the

business plan. The de novo institution

must also represent that no additional

information that would have a

materially adverse bearing on any

feature of the application has been

brought to the attention of the applicant.

(3) The de novo institution shall

provide for employment of senior

executive officers who shall be charged

with the full administrative and

managerial responsibilities of the de

novo institution under policies

established by its board of directors. The

performance of such individuals will be

periodically reviewed and their

continued employment will be subject

to approval by the appropriate Regional

Director, or his designee, for a period of

three years.

(4) If applicable, the de novo

institution shall submit to the

appropriate Regional Office a list of

stockholders of the de novo institution,

and holders of any stock options and/or

warrants, including each individual

stockholder’s name, address, amount of

stock purchased, and principals of

companies owning stock in the de novo

institution, total purchase price, and

any affiliation between stockholders.

(5) No later than 10 calendar days

from the date of the consummation of

the establishment or acquisition of the

de novo institution, the de novo

institution shall file, with the

appropriate Regional Office, a

certification by legal counsel stating the

effective date(s) of its insurance and its

opening, the exact number of shares of

stock, if applicable, of the de novo

institution, and that the establishment

(or acquisition, if appropriate) of the de

novo institution has been consummated

in accordance with the provisions of all

applicable laws and regulations, the

application, and the Office’s order.

(g) Supervisory transactions. This

section does not apply to any

application for a Federal savings

association charter submitted in

connection with a transfer or an

acquisition of the business or accounts

of a savings association if the Office

determines that such transfer or

acquisition is instituted for supervisory

purposes, or in connection with
12108 Federal Register / Vol. 60, No. 43 / Monday, March 6, 1995 / Rules and Regulations

applications for Federal charters for

interim de novo associations chartered

for the purpose of facilitating mergers or

holding company reorganizations.

PART 552—INCORPORATION,

ORGANIZATION, AND CONVERSION

OF FEDERAL STOCK ASSOCIATIONS

4. The authority citation for part 552

continues to read as follows:

Authority: 12 U.S.C. 1462, 1462a, 1463,

1464, 1467a.

§ 552.2–1 [Amended]

5. Section 552.2–1 is amended by

adding the phrase ‘‘and § 543.3’’ after

the phrase ‘‘of 543.2’’ in paragraph (a),

and by removing and reserving

paragraph (b)(2).

SUBCHAPTER D—REGULATIONS

APPLICABLE TO ALL SAVINGS

ASSOCIATIONS

PART 571—STATEMENTS OF POLICY

6. The authority citation for part 571

continues to read as follows:

Authority: 5 U.S.C. 552, 559; 12 U.S.C.

1462a, 1463, 1464.

§ 571.6 [Removed]

7. Section 571.6 is removed.

Dated: August 25, 1994.

By the Office of Thrift Supervision.

Jonathan L. Fiechter,

Acting Director.

[FR Doc. 95–5315 Filed 3–3–95; 8:45 am]

BILLING CODE 6720–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 11

Delegation of Authority

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Notice of delegation of

authority.

SUMMARY: The Administrator of the

Federal Aviation Administration (FAA)

is delegating the authority to deny a

petition for rulemaking to the Office or

Service that has jurisdiction over the

specific parts of Federal Aviation

Regulations (Title 14 of the Code of

Federal Regulations) for which a

petition is submitted. The Administrator

will continue to be the decision point

for petitions for reconsideration. This

delegation will enable the FAA to

respond more effectively to the large

number of petitions for rulemaking

submitted by the aviation community

and the general public.

EFFECTIVE DATE: March 6, 1995.

FOR FURTHER INFORMATION CONTACT:

Joseph Hawkins, Office of Rulemaking

(ARM–2), 800 Independence Avenue,

SW., Washington, DC 20591, telephone

(202) 267–9680.

SUPPLEMENTARY INFORMATION: The FAA

has over 130 petitions for rulemaking on

which it has been unable to take action

primarily due to higher priorities and

insufficient resources. Currently these

petitions must be reviewed personally

by the Administrator before action on

them is complete. This involves

significant participation of individuals

at all levels of the agency.

In the case of a grant of a petition,

personal involvement by the

Administrator is appropriate, since the

action of granting a petition results in

the initiation of rulemaking proposing

to amend a regulation. The authority to

issue regulations has not been delegated

below the level of the Administrator

except for routine rulemaking, such as

airworthiness directives and airspace

actions. However, in a case where the

responsible agency program office

determines that a petition should be

denied, it is unnecessary to require the

personal involvement of the

Administrator. For this reason, authority

to issue the denial of a petition for

rulemaking is being delegated to the

head of the FAA office or service

involved. This authority will be

exercised with the concurrence of the

Office of the Chief Counsel as to form

and legality. In a case where a petitioner

is not persuaded by the agency’s

rationale for denying the petition, the

petitioner may request reconsideration

of the denial by the Administrator.

Consistent with Vice President Gore’s

reinventing government initiatives and

the National Performance Review, the

Administrator is making this delegation

to streamline the process for addressing

petitions for rulemaking. It should

achieve the following results: (1) Faster

response to certain petitioners on the

merits of their petitions; (2) a reduction

in resources required for processing

petitions by eliminating certain levels of

review, unless such review becomes

necessary due to special circumstances;

(3) a reduction of the current backlog.

Rulemaking

The FAA also will initiate rulemaking

to amend 14 CFR part 11 (General RuleMaking Procedures) to reflect this

delegation of authority. This delegation,

however, is being made immediately in

order to begin improving the process as

quickly as possible.

Delegation

Accordingly, the authority to deny a

petition for rulemaking is hereby

delegated to the head of the FAA office

or service involved.

Issued in Washington, DC on February 14,

1995.

David R. Hinson,

Administrator.

[FR Doc. 95–5427 Filed 3–3–95; 8:45 am]

BILLING CODE 4910–13–M

14 CFR Part 71

[Airspace Docket No. 94–AAL–10]

Amendment to Class E Airspace;

Cordova, AK

AGENCY: Federal Aviation

Administration [FAA], DOT.

ACTION: Final rule.

SUMMARY: This amendment modifies the

Class E airspace area at Cordova, AK, to

accommodate Visual Flight Rules (VFR)

traffic in the Cordova area, landing and

departing from the Cordova Muni (CKU)

airport located about 10 miles west of

Merle K. ‘‘Mudhole’’ Smith (CDV)

airport. Due to terrain limitations, VFR

traffic must pass through the northern

portion of the Cordova Class E surface

area. When the Class E surface area is

below basic VFR and Special Visual

Flight Rule (SVFR) operations are being

conducted, numerous delays are

experienced. The area will be depicted

on aeronautical charts to provide a

reference for pilots operating under

VFR.

EFFECTIVE DATE: 0901 UTC, May 25,

1995.

FOR FURTHER INFORMATION CONTACT:

Robert C. Durand, AAL–531, 222 West

7th Avenue #14, Anchorage, AK, 99513–

7587; telephone: (907) 271–5898.

SUPPLEMENTARY INFORMATION:

History

On December 20, 1994, the FAA

proposed to amend part 71 of the

Federal Aviation Regulations (14 CFR

part 71) by modifying the Class E

surface area at Cordova, AK (60 FR

2044). The proposed action would

provide required controlled airspace for

Instrument Flight Rules (IFR)

procedures at the Merle K. ‘‘Mudhole’’

Smith Airport and allow Visual Flight

Rules (VFR) aircraft to proceed through

the northern portion of the existing

Cordova Class E surface area. The

reduction in Class E surface area will

segregate aircraft operating under VFR

conditions from aircraft operating under

IFR procedures. The area would be