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FEDERAL DEPOSIT INSURANCE CORPORATION

RIN 3064-ZA31

Request for Comment on Proposed Statement of Policy on Bank 

Merger Transactions

FEDERAL AGENCY: 

Federal Deposit Insurance Corporation (FDIC)

ACTION TYPE: 

Proposed Statement of Policy. 

SUMMARY: 

The FDIC invites comments on a proposed Statement of Policy (SOP) on Bank Merger 

Transactions (Proposed SOP) that is relevant to all insured depository institutions (IDIs). The 

Proposed SOP would replace the FDIC’s current SOP on Bank Merger Transactions (Current 

SOP) and proposes a principles-based overview that describes the FDIC’s administration of its 

responsibilities under the Bank Merger Act (BMA). The Proposed SOP focuses on the scope of 

transactions subject to FDIC approval, the FDIC’s process for evaluating merger applications, 

and the principles that guide the FDIC’s consideration of the applicable statutory factors as set 
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forth in the BMA. The Supplementary Information section below contains explanatory content, 

including historical data, to provide additional context for the Proposed SOP. 

DATES: 

Comments must be received by [60 days from date of publication]. 

ADDRESSES: 

You may submit comments, identified by 3064-ZA31, by any of the following methods: 

• Agency Website: http://www.fdic.gov/regulations/laws/federal/. Follow the instructions for 

submitting comments on the Agency Web site. 

• Email: Comments@fdic.gov. Include the RIN: 3064-ZA31 in the subject line of the 

message.

• Mail: Debra Buie Decker, Executive Secretary, Attention: Comments-RIN: 3064-ZAXX, 

Federal Deposit Insurance Corporation, 550 17th Street, NW, Washington, DC, 20429. 

• Hand Delivery: Comments may be hand-delivered to the guard station at the rear of the 550 

17th Street, NW, building (located on F Street) on business days between 7:00 a.m. and 5:00 

p.m. 
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• Instructions: All comments related to this Proposed SOP must include the agency name and 

3064-ZA31. All comments received will be posted without change to 

http://www.fdic.gov/regulations/laws/federal/—including any personal information 

provided—for public inspection. Paper copies of public comments may be ordered from the 

FDIC Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA, 

22226, or by telephone at (877) 275-3342 or (703) 562-2200.

FOR FURTHER INFORMATION CONTACT:

George Small, Senior Examination Specialist (347) 267-2453, gsmall@fdic.gov, Division of 

Risk Management Supervision; Annmarie Boyd, Senior Counsel (202) 898-3714, 

aboyd@fdic.gov, Benjamin Klein, Supervisory Counsel (202) 898-7027, bklein@fdic.gov, Legal 

Division; Jessica Thurman, Chief (202) 898-3579, jthurman@fdic.gov, Division of Depositor 

and Consumer Protection; Mark Haley, Chief (917) 320-2911, mahaley@fdic.gov, Division of 

Complex Institution Supervision and Regulation; and Ryan Singer, Chief (202) 898-7532, 

rsinger@fdic.gov, Division of Insurance and Research. 

SUPPLEMENTARY INFORMATION:

I. Background

The Bank Merger Act (BMA), Section 18(c) of the Federal Deposit Insurance Act (FDI 

Act), prohibits an insured depository institution (IDI) from engaging in a merger transaction 

without regulatory approval. The FDIC is one of three federal banking agencies with 
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responsibility for evaluating transactions subject to the BMA. The FDIC has jurisdiction to act 

on merger applications that involve an IDI and any non-insured entity, notwithstanding the IDI’s 

charter.1 The FDIC also has jurisdiction to act on merger applications that solely involve IDIs in 

which the acquiring, assuming, or resulting institution is a state nonmember bank or state savings 

association (FDIC-supervised institution).2

 

In order to implement its responsibilities under the BMA, the FDIC has codified 

regulations; issued a Statement of Policy (SOP); and published the Applications Procedures 

Manual (APM). The FDIC’s APM provides application-processing instructions for the FDIC’s 

professional staff assigned to review, evaluate, and process applications, notices, and other 

requests submitted to the FDIC. The APM includes a section on processing merger applications 

that provides detailed procedural instructions to staff, as well as information regarding the 

assessment of each statutory factor. In 2019, the FDIC published the APM to its external 

website to provide greater transparency regarding the FDIC’s internal application processes. In 

light of prospective changes to the bank merger process, additional revisions are planned for the 

APM chapter on mergers. Finally, together with the other federal banking agencies, the FDIC 

has issued an interagency application form, which includes a supplemental section specific to the 

FDIC. Concurrent with this Proposed SOP, the FDIC is seeking comment on proposed revisions 

to its supplemental section to the interagency form.3

 

 

1 12 U.S.C. § 1828(c)(1).

2 12 U.S.C. § 1828(c)(2).

3 [Insert cross reference to supplement PRA notice]
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The current SOP on Bank Merger Transactions (Current SOP), last amended in 2008, 

addresses the FDIC’s process for reviewing proposed merger applications in the context of the 

applicable statutory factors.4 Since the Current SOP was last revised, the BMA has been 

amended and significant changes have occurred in the banking industry and financial system, 

including continued growth and consolidation. This growth and consolidation, which has been 

ongoing for the past several decades, has significantly reduced the number of smaller banking 

organizations, increased the number of large and systemically important banking organizations, 

and contributed to the need for a review of the regulatory framework that applies to bank merger 

transactions subject to the BMA.5

The number of large IDIs, especially IDIs with total assets of $100 billion or more, has 

grown considerably over the past few decades. This is due to a combination of factors, including 

consolidation in the banking sector (fueled in part by mergers and acquisitions), the easing of 

interstate banking restrictions,6 and organic growth. As of December 31, 2004, there were only 

12 IDIs with total assets greater than $100 billion; however, that number increased to 33 by 

December 31, 2023. Of the 33 IDIs with total assets greater than $100 billion, nine were owned 

by the eight U.S. bank holding companies designated as U.S. Global Systemically Important 

Banks (GSIBs), and four were owned by foreign banking organizations designated as foreign 

GSIBs.7 While IDIs with total assets of more than $100 billion as of December 31, 2023, 

 

4 FDIC Statement of Policy on Bank Merger Transactions.

5 12 U.S.C. 1828(c). 6 Prior to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, Public Law 103– 328, many 

states did not permit intra-state or interstate branching, and interstate branch branching was not federally sanctioned. 

Following the passage of this law, many multi-bank holding companies with subsidiary IDIs with different home 

states chose to consolidate existing bank charters. 

7 See Financial Stability Board 2022 list of GSIBs available at https:// www.fsb.org/wpcontent/uploads/P211122.pdf. Of the 33 IDIs with greater than $100 billion in assets as of December 31, 2023, nine 
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comprised less than one percent of the total number of IDIs, they held approximately 71 percent 

of total industry assets and approximately 68 percent of domestic deposits. 

 

The FDIC has a responsibility to promote public confidence in the banking system, 

maintain financial stability, and resolve failing IDIs. Given the increased number, size, and 

complexity of large banks, greater attention to the financial stability risks that could arise from a 

merger involving a large bank is warranted. In particular, the failure of a large IDI could present 

greater challenges to the FDIC’s resolution and receivership functions, and could present a 

broader financial stability threat. For various reasons, including their size, sources of funding, 

and other organizational complexities, the resolution of large IDIs can present significant risk to 

the Deposit Insurance Fund (DIF), as well as material operational risk for the FDIC. In addition, 

as a practical matter, the size of an IDI may limit the resolution options available to the FDIC in 

the event of failure.

After the 2008 financial crisis, the Dodd-Frank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act) amended the BMA to include, for the first time, a factor related 

to the risk to the stability of the United States (U.S.) banking or financial system (financial 

stability factor). The FDIC is seeking public comment on the SOP’s approach to the financial 

stability factor, which integrates and builds upon the FDIC’s existing framework for assessing 

this factor. 

 

were owned by the eight U.S. bank holding companies designated as U.S. GSIBs, and four were owned by foreign 

banking organizations designated as foreign GSIBs. 
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On July 9, 2021, an Executive Order addressed the impact that consolidation may have 

on maintaining a competitive marketplace. The Executive Order also addressed the impact that 

consolidation may have on maintaining a fair, open, and competitive marketplace, as well as the 

impact on the welfare of workers, farmers, small businesses, startups, and consumers. The FDIC 

continues to coordinate with the Department of Justice (DOJ) and the other federal banking 

agencies in modernizing bank merger oversight.8

On March 31, 2022, the FDIC published in the Federal Register a request for information 

and comment (RFI) regarding the application of the laws, practices, rules, regulations, guidance, 

and SOP that apply to merger transactions subject to FDIC approval.9

 The RFI requested 

comments regarding the effectiveness of the FDIC’s existing framework in meeting the 

requirements of the BMA. After review of the public comments received in response to the RFI, 

the FDIC determined that it is both timely and appropriate to review its regulatory framework for 

merger transactions as outlined in the Current SOP. The Proposed SOP was drafted in 

consideration of the comments received regarding the RFI and is being published in the Federal 

Register to obtain further input from interested parties. 

 

8 Executive Order 14036 “Promoting Competition in the American Economy” July 9, 2021. On December 18, 2023, 

the DOJ and the Federal Trade Commission (FTC) jointly released the 2023 Merger Guidelines (guidelines). These 

guidelines build upon, expand, and clarify frameworks set out in previous versions. 

9 87 FR 18740 (March 31, 2022). 
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II. Summary of Comments

While not all of the questions described in the RFI are pertinent to the SOP, the FDIC is 

summarizing the comments received to provide transparency with respect to the overall process 

for developing updated merger-related policies and procedures. The FDIC received 33 comment 

letters in response to the RFI.10 The majority of RFI commenters (25 or 76 percent) were in 

favor of at least some changes to the FDIC’s merger review processes. Six RFI commenters (18 

percent) were against changes to the FDIC’s merger review processes, and two RFI commenters 

(6 percent) were neither in favor of, nor against, changes to the FDIC’s merger review processes. 

 

Among RFI commenters in favor of updating the FDIC’s processes that apply to merger 

transactions, four common themes for potential changes were observed: (i) amend the calculation 

of market concentration and the competitive effects analysis; (ii) enhance the analysis of the 

convenience and needs of the community to be served factor; (iii) establish risk criteria and 

thresholds for the analysis of the financial stability factor; and (iv) create a de minimis exception 

(or presumption of approval) for mergers involving small and mid-sized IDIs. 

Some RFI commenters suggested the need for an interagency approach to the 

development of any new merger regulations, guidelines, and instructions, and noted that any new 

elements should be applied prospectively. RFI commenters also suggested enhancing the 

public’s ability to review and comment on proposed mergers, including making the information 

 

10 Request for Information and Comment on Rules, Regulations, Guidance, and Statements of Policy Regarding 

Bank Merger Transactions. See 87 FR 18740. 
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exchange (questions posed and responses received between the FDIC and applicants) a part of 

the public record. Finally, RFI commenters requested that the FDIC review, to the extent 

possible, the effects of past mergers to evaluate the appropriateness of any revised merger 

guidelines. These RFI commenters requested that the FDIC make the results of the evaluation 

public and apply the results to future merger decisions. 

Six RFI commenters were against updating the FDIC’s merger related processes. In 

general, these RFI commenters argued that the FDIC’s current framework for reviewing 

proposed merger transactions was sound and that revisions might harm the banking sector. More 

specifically, some RFI commenters argued that any change to the competitive review would 

make bank mergers more difficult; and such changes risked disproportionately impacting 

community, mid-size, and regional banks. 

Multiple RFI commenters suggested revisions to the receipt and compilation of the 

FDIC’s Summary of Deposits (SOD) data, and amendments to the calculations to improve the 

quality, accuracy, and consistency of the data used to calculate the Herfindahl–Hirschman Index 

(HHI).11 The RFI commenters broadly agreed that the increased presence of non-bank firms, 

including those specializing in financial technology (fintech), and increased consolidation within 

the banking industry necessitate revision to the evaluative considerations for competitive effects 

 

11 The HHI is calculated by squaring the market share of each firm competing in the market and then summing the 

resulting numbers. For example, for a market consisting of four firms with shares of 30, 30, 20, and 20 percent, the 

HHI is 2,600 (302 + 302 + 202 + 202 = 2,600). The HHI calculation can also be applied to other relevant 

Consolidated Reports of Condition categories or other appropriate sources of data, aside from deposits. For 

example, the HHI analysis may also include data relative to commercial and industrial loans.
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to reflect the economic realities and the industry’s competitive landscape. Some RFI 

commenters posited that deposit data for institutions that rely on technology-based delivery 

channels are not dependent on their branch locations. 

Multiple RFI commenters stated that the HHI threshold for prospective competitive 

effects concerns should be increased from its current limit. These RFI commenters contended 

that the HHI screens applied to the banking industry were stricter than those that had been 

applied in any other industry. In the opinion of these RFI commenters, raising the HHI would 

account for the growing competition that IDIs with physical branches face from competitors with 

different business models, including fintech firms and digital banks. 

Conversely, other RFI commenters suggested the overall HHI threshold should be 

lowered, and the threshold for a change in HHI should be revised from the current level. These 

RFI commenters suggested that mergers disproportionally affect low- to moderate-income and/or 

minority communities, and therefore, the threshold (and any change in it) must be lowered to 

appropriately capture competitive effects. 

Some RFI commenters suggested consideration of alternate measures of concentration 

and/or evaluating the HHI of other asset or product categories such as business loans or 

residential lending. In addition, multiple RFI commenters requested that the FDIC revise the 

SOD data collection and calculation to improve precision. These RFI commenters suggested that 

the FDIC: (i) differentiate corporate and centrally booked deposits from retail deposits; (ii) 

amend methods and reporting standards, and provide more guidance on how a reporting entity 
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attributes deposits to branches; (iii) include more data on depositors in certain circumstances in 

order to increase geographic specificity; and (iv) add data on thrifts, credit unions, fintech firms, 

farm credit banks, and online entities that serve customers in the relevant market.

Multiple RFI commenters recommended revisions to the analysis of the convenience and 

needs of the community to be served statutory factor. In general, these RFI commenters 

recommended that the FDIC focus the analysis on the additive benefits of the merger transaction 

for consumers, particularly in low- to moderate-income and minority communities; and place 

higher burden on applicants to demonstrate the public interest benefits of the transaction. 

Concerns with regard to the impact of branch closings were noted. A few RFI commenters 

suggested that the applicant should be required to submit a full plan related to branch closings. 

 

Approximately half of the RFI commenters requested that the federal banking agencies 

establish specific stability risk considerations (e.g. size, substitute providers, interconnectedness, 

complexity, and cross-border activities) and formalize thresholds (such as total asset metrics) for 

developing a resolution plan for large bank mergers. 

About one quarter of RFI commenters noted a perceived burden on small institutions. 

These RFI commenters requested that the FDIC create a small bank de minimis exception 

whereby small bank mergers would be presumed not to create monopolies or have 

anticompetitive effects if they meet certain prudential thresholds that can only be overturned 

based on other criteria such as the results of the competitive effects analysis.
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In general, RFI comments were mixed on the following topics: (i) whether there is a 

presumption of approval for merger applications; (ii) whether the existing framework considers 

all aspects of the BMA; and (iii) whether prudential considerations or “bright lines” should be 

developed for any of the statutory factors. Many of the comments, as well as new questions that 

the FDIC has developed in response to public comments on the RFI, are addressed in this 

preamble. 

III. Description of the Proposed Statement of Policy 

Overall Changes in the Proposed SOP

The Proposed SOP reflects regulatory, legislative, and industry changes since the SOP 

was last published for comment in 1997. Further, the Proposed SOP includes new content to 

make it more principles based, communicates the FDIC Board’s expectations regarding the 

evaluation of merger applications filed pursuant to the BMA, and describes the types of merger 

applications for which the FDIC is the responsible agency. 

The Proposed SOP does not include the application procedures narrative that is included 

in the Current SOP. The APM describes procedural matters such as application filing, expedited 

processing and notification to the Attorney General. The Proposed SOP includes a separate 

discussion of each statutory factor, including: competitive effects, financial and managerial 

resources, future prospects, convenience and needs of the community to be served, risk to the 

stability of the U. S. banking or financial system, and effectiveness in combatting money 
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laundering. In addition, the Proposed SOP includes a declarative statement for each statutory 

factor to highlight the Board’s expectations and accompanying narrative to describe the 

analytical considerations for the evaluation of each factor. While historical performance 

provides contextual insight into the evaluation of these factors, the SOP affirms that the 

evaluations are forward looking. A detailed discussion of each statutory factor follows this 

section.

The FDIC seeks comment on all aspects of the Proposed SOP.

Question: 

1. Does the structure of the Proposed SOP effectively present the FDIC’s expectations with 

regard to review and evaluation of merger applications? If not, please describe how the 

structure could be improved. 

Jurisdiction and Scope

The Proposed SOP clarifies the circumstances in which FDIC approval is required in 

connection with a proposed merger transaction. The FDIC plays an important role in the 

administration of the BMA, which is codified in the FDI Act and covers a broad range of 

transactions.12 Specifically, Section 18(c)(1) of the BMA requires FDIC approval in connection 

 

12 The broad scope of transactions expressly subject to FDIC approval under the BMA evinces a clear congressional 

intent for the FDIC to review a wide array of transactions between IDIs and non-insured entities that have the 

potential to affect the safety and soundness of a resultant IDI or increase the potential liability of the Deposit 

Insurance Fund.
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with transactions in which an IDI: (A) merges or consolidates with any non-insured bank or 

institution,13 (B) assumes liability to pay any deposits or similar liabilities in a non-insured bank 

or institution,14 or (C) transfers assets to any non-insured bank or institution in consideration of 

an assumption of deposit liabilities of the IDI.15 The FDIC’s authority extends to a variety of 

transactions between an IDI and a non-insured entity, which are “merger transactions” for the 

purposes of the BMA, even if the transaction is not legally structured as a merger.16 

Mergers and Consolidations Involving IDIs and Non-Insured Entities 

Section 18(c)(1)(A) of the BMA prohibits an IDI from merging or consolidating with a 

non-insured entity without the FDIC’s approval. Neither the BMA nor the FDIC Rules and 

Regulations define the terms “merge” or “consolidate.”17 The FDIC implements the BMA by 

emphasizing a transaction’s substance over its form and asserting jurisdiction over transactions 

that substantively result in a merger (merger in substance). The FDIC interprets the term 

“merge” in the BMA to encompass all transactions that result in an IDI substantively and 

effectively combining with a non-insured entity, regardless of whether the transaction is 

 

13 12 U.S.C. § 1828(c)(1)(A). A non-insured entity refers to any entity that is not FDIC insured. Although there is 

no definition of the term “non-insured institution” in the BMA, it has long been the FDIC's interpretation that the 

term includes any non-insured entity with which an IDI can legally merge. Notably, although federally insured 

credit unions are insured by the National Credit Union Administration, such credit unions are not IDIs for the 

purposes of the FDI Act, see 12 U.S.C. §§ 1813(a)-(c), and any merger transaction between an IDI and a credit 

union is therefore subject to FDIC approval under the BMA.

14 12 U.S.C. § 1828(c)(1)(B). 15 12 U.S.C. § 1828(c)(1)(C). The statutory requirements of 12 U.S.C. § 1828(c)(1) originate from the Banking Act 

of 1935. Pub L. 74-305§101 (adopting Section 12B(v)(4) of the Federal Reserve Act). 16 12 U.S.C. § 1828(c)(1)-(3). 17 A consolidation generally is a combination of the assets and liabilities of two or more IDIs into a newly chartered 

IDI, and the extinguishment or cancellation of the charters of the other institutions. Although rare, the FDIC would 

consider two institutions substantively combining with a newly created third institution to be a consolidation in 

substance. 
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structured as a merger or asset acquisition. 

Although acquisitions of assets are not specifically enumerated as a category of 

transactions subject to FDIC approval under the BMA, an IDI’s acquisition of assets from a 

non-insured entity could be the substantive equivalent of a transaction legally structured as a 

merger. For example, this occurs when the acquired assets constitute all, or substantially all, of 

the non-insured entity’s assets or business enterprise and if the non-insured entity dissolves, is 

rendered a shell, or otherwise substantially ceases its main business operations or enterprise. 

This applies when there is a transfer of all, or substantially all, of a non-insured entity’s assets to 

an IDI, regardless of whether: (i) such transactions consist of an assumption of identified 

liabilities, (ii) the assets acquired are tangible or intangible (without regard to whether the assets 

would be considered assets under generally accepted accounting principles), or (iii) such 

acquisitions occur as a single transaction or over the course of a series of transactions. 

Excluding transactions that are mergers in substance involving IDIs and non-insured entities 

from FDIC review would be inconsistent with the purposes of the BMA by overlooking 

transactions that could affect the safety and soundness of an IDI and increase the risk to the 

DIF.

The Proposed SOP clarifies the applicability of Section 18(c)(1)(A) of the BMA by 

emphasizing that the scope of merger transactions subject to approval encompasses transactions 

that take other forms, including purchase and assumption transactions that are mergers in 

substance. The Proposed SOP provides an example of a transaction that is a merger in 

substance, and is therefore subject to the BMA, such as when an IDI absorbs all (or 
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substantially all) of a target entity’s assets and the target entity dissolves or otherwise ceases 

engaging in the acquired lines of business. 

 

Questions: 

2. How can the FDIC increase clarity to interested parties regarding the applicability of the 

BMA to a merger in substance?

3. What additional clarity should the FDIC provide regarding the circumstances in which a 

transaction is subject to FDIC approval under the BMA, including transactions involving an 

IDI and a non-insured entity that is not a traditional financial institution, such as a fintech 

firm, whose assets may be primarily intangible in nature?

Assumptions of Deposits by IDIs From Non-Insured Entities 

Section 18(c)(1)(B) of the BMA prohibits an IDI from assuming liability to pay any

deposits made in, or similar liabilities of, any non-insured bank or entity.18 The scope of this 

provision depends on the meaning of deposit (or other similar liability) and on the interpretation 

of what constitutes an IDI’s assumption of such a deposit (or other similar liability). Section 

3(l) of the FDI Act defines “deposit” broadly. In addition to the definition generally 

encompassing unpaid balances of money, the definition expressly includes a variety of other 

 

18 12 U.S.C. § 1828(c)(1)(B)(emphasis added). 
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instruments, including trust funds and escrow funds.19 

In addition to the breadth of the definition of “deposit,” the FDIC broadly interprets what 

it means to assume liability to pay such deposits for the purposes of Section 18(c)(1)(B) of the 

BMA in order to prevent circumvention of the provision. Specifically, the applicability of 

Section 18(c)(1)(B) does not depend on the existence of a formal written agreement between an 

IDI and a non-insured entity to transfer deposit liabilities. In cases where an IDI and a noninsured entity cooperate to arrange a transfer of deposits from a non-insured entity to an IDI, the 

FDIC will generally consider such an orchestration to constitute an assumption of deposits or 

other similar liabilities for the purposes of Section 18(c)(1)(B).20 

Unlike the applicability of Section 18(c)(1)(A) of the BMA to asset acquisitions, which 

depends in part on the acquisition of “all or substantially all” of a non-insured entity’s assets, 

the applicability of Section 18(c)(1)(B) does not depend on a finding that an IDI assumes all, or 

substantially all, of a non-insured entity’s deposits or similar liabilities. The assumption of any

deposits or other similar liabilities is sufficient to implicate Section 18(c)(1)(B).

The FDIC takes the view that any expansion of an IDI’s deposit base via acquisition 

would be subject to approval under the BMA. As discussed above, when an IDI assumes 

liability to pay a deposit or other similar liability from a non-insured entity, FDIC approval is 

required under Section 18(c)(1)(B). As discussed later in this section, when an FDIC-

 

19 See 12 U.S.C. § 1813(l). Section 18(c)(1)(B) also includes liabilities that would be deposits except for the 

provision in Section 3(l)(5) of the FDI Act. 20 See id.
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supervised IDI assumes liability to pay a deposit from another IDI, FDIC approval is required 

under Section 18(c)(2)(C). The FDIC clarifies that the BMA would not necessarily be 

implicated by an organic expansion of an IDI’s deposit base, such as when a depositor or a 

nonaffiliated third party that acts as agent, custodian, or trustee for a depositor, elects—at their 

initiative—to establish a deposit relationship with the IDI or to place deposits with the IDI. 

However, in cases where the agent, custodian, or trustee itself serves as a depository, a transfer 

of deposits for which it has liability to pay to an IDI would be subject to FDIC approval under 

the BMA. Furthermore, if customers are solicited to transfer their deposits to an IDI in 

connection with, or in relation to, an arrangement or agreement to which that IDI is party, the 

IDI is expected to seek approval under the BMA in connection with the ultimate transfer of 

such deposits. 

The Proposed SOP seeks to capture and convey the broad applicability of Section 

18(c)(1)(B) of the BMA by affirming that an FDIC-supervised IDI’s assumption of a deposit 

from another IDI, or any IDI’s assumption of a deposit from a non-FDIC insured entity, is 

likewise subject to FDIC approval even in the absence of an express agreement for a direct 

assumption. The Proposed SOP highlights the broad definition of “deposit” in Section 3(l) of 

the FDI Act, and notes that the definition extends beyond traditional demand deposits to 

include, among other things, trust funds, and escrow funds. 

Question: 

4. Does the Proposed SOP sufficiently alert interested parties to the range of transactions that 
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could be subject to FDIC approval under Section 18(c)(1)(B) of the BMA? If not, please 

comment on how the range of transactions could be more clearly articulated. 

Asset and Deposit Transfers from IDIs to Non-Insured Entities 

Section 18(c)(1)(C) of the BMA prohibits an IDI from transferring assets to any noninsured bank or entity in consideration of the assumption for any portion of the deposits made in 

such IDI. Generally, when an IDI transfers deposits to a non-insured entity, an application to 

the FDIC would be necessary under Section 18(c)(1)(C) since such transfers are typically 

accompanied by a transfer of assets, even if such assets consist only of cash. As with Section 

18(c)(1)(B), the applicability of Section 18(c)(1)(C) is broad given the scope of the FDI Act’s 

definition of deposit. Furthermore, similar to the FDIC’s approach to Section 18(c)(1)(B), the 

FDIC generally views an orchestration of a transfer of deposits from an IDI to a non-insured 

entity to be subject to FDIC approval under Section 18(c)(1)(C), even in the absence of an 

express agreement.

Although parties seeking to engage in transferring customer accounts that consist of both 

custodial and deposit relationships may characterize the transaction solely as a transfer of 

custodial relationships, such transactions implicate the BMA if they also result in a transfer of 

the deposit relationship. It has therefore been the view of the FDIC that the BMA is implicated 

if an IDI transfers deposit relationships concurrent with, or subsequent to, a transfer of the 

custodial relationship. Accordingly, where customers have both a custodial and depository 

relationship with an IDI, an IDI may not evade the BMA by transferring custodial rights to a 
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third party that, in its newly acquired custodial capacity, causes the customer’s depository 

relationship to be transferred either to itself or to another entity. This is true even if such 

transfer was ostensibly at the direction of a non-insured entity pursuant to custodial rights 

acquired from the IDI. 

The Proposed SOP communicates the FDIC’s policy with regard to transfers of deposits 

from IDIs to non-insured entities by stating that a transfer of deposits from any IDI to a noninsured entity is subject to FDIC approval. 

Question: 

5. What additional clarity, if any, is needed to make interested parties aware of the 

circumstances in which FDIC approval would be required in connection with a transfer of 

deposits from an IDI to a non-insured entity? 

Merger Transactions Solely Involving Insured Depository Institutions 

Section 18(c)(2)(C) of the BMA generally prohibits an IDI from merging or 

consolidating with any other IDI or, either directly or indirectly, acquiring the assets of, or 

assuming liability to pay any deposits made in, any other IDI except with the prior written 

approval of the FDIC if the acquiring, assuming, or resulting bank is a state nonmember bank or 

state savings association.21 If the acquiring, assuming, or resulting bank is a national bank or 

 

21 12 U.S.C. § 1828(c)(2)(C). 
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federal savings association, the approval of the Office of the Comptroller of the Currency 

(OCC) is required, and if it is a state member bank, the approval of the Board of Governors of 

the Federal Reserve System (FRB) is required.22 

As with transactions involving IDIs and non-insured entities, the FDIC considers that a 

transaction in which an IDI absorbs another IDI by acquiring all, or substantially all, of its 

assets would be subject to FDIC approval under Section 18(c)(2)(C) of the BMA. It is less 

common for the FDIC to evaluate whether a large-scale transaction exclusively among IDIs 

constitutes a merger in substance since such transactions typically include an assumption of 

deposits, which is itself a sufficient basis to implicate Section 18(c)(2). As previously stated, 

the breadth of the FDIC’s definition of “deposit” causes Section 18(c)(2) to encompass a wide 

range of transactions, and the FDIC similarly takes a broad view as to what constitutes a direct 

or indirect assumption of liability to pay deposits.

The foregoing discussion addresses the FDIC’s policy with regard to the applicability of 

the BMA to a wide variety of transactions. However, the FDIC emphasizes that this is not an 

exhaustive overview of potential transactions that are subject to FDIC approval under the BMA. 

Interested parties should be alert to the FDIC’s policies of emphasizing a transaction’s 

substance over its form, its interest in preventing evasion of the BMA, and of the scope of the 

 

22 12 U.S.C. § 1828(c)(2)(A)-(B).
Page 22 of 93

terms used in Sections 18(c)(1) and 18(c)(2) of the BMA. 

Overview of the Application Process 

The Proposed SOP describes the FDIC’s expectations for application processing, 

emphasizing the utility of the pre-filing process and the importance of filing a substantially 

complete application. The Proposed SOP alerts applicants to the FDIC’s expectation that all 

submitted materials, including the financial projections and any related analyses, be well 

supported and sufficiently detailed. In addition, the Proposed SOP emphasizes the importance 

of the narrative supporting the rationale for the proposed transaction, and communicates the 

FDIC’s expectation that the narrative be supported by studies, surveys, analyses and reports, 

including those prepared by or for officers, directors, or deal team leads. 

Merger Application Adjudication 

Generally, if all statutory factors are favorably resolved, and all other regulatory 

requirements are satisfied, the FDIC will approve the merger application. Approvals will be 

subject to the standard conditions detailed in Section 303.2(bb) of the FDIC Rules and 

Regulations and any non-standard conditions deemed appropriate by the FDIC. However, the 

FDIC will not use conditions or written agreements that may be required as part of the 

conditions, as a means for favorably resolving any statutory factors that otherwise present 

material concerns. The Order and Basis for Approval (Order) will be posted to the FDIC’s 

Decisions on Bank Applications page. 
Page 23 of 93

The Order will address all statutory factors, as well as summarize information regarding 

any Community Reinvestment Act (CRA) protests. The FDIC will summarize the related 

analysis and conclusions and include any conditions imposed in conjunction with the approval. 

Finally, the SOP articulates certain elements that may result in unfavorable findings and would 

require action by the Board of Directors on the application. This commentary presents a 

general overview of the potential scenarios and fact patterns that would present significant 

challenges to favorable findings on the statutory factors. The FDIC may not be able to find 

favorably on any given statutory factor (or therefore approve the application) if there are 

unresolved deficiencies, issues, or concerns (including with respect to any public comments), or 

the lack of sustained performance under corrective programs particularly when the transaction 

implicates the areas that are the subject of the corrective program.

 

Merger Application Activity

To provide some perspective on the volume and types of filings subject to FDIC review 

and action, the tables in Appendix A to this preamble were developed regarding the volume, 

disposition, and size of merger transactions processed by the FDIC from January 1, 2004, 

through December 31, 2023. In total, the FDIC processed 2,497 merger applications that were 

either “bank-to-bank” merger applications solely involving IDIs where the resulting institution 

was an FDIC-supervised institution or that involved an IDI and a credit union or other non-
Page 24 of 93

insured institution.23 This does not include pending applications or applications for corporate 

reorganizations or interim mergers.24

As shown in Table 1, the volume of bank-to-bank merger applications processed by the 

FDIC has ranged between 49 and 152 annually from 2004 through 2023. The annual average 

number of such applications processed during this period was 110. Of the 2,209 bank-to-bank 

applications processed over the referenced period, 92.9 percent (2,054) were approved, 5.4 

percent (116) were withdrawn at the applicant’s discretion, 1.7 percent (39) were returned due to 

insufficient information provided in the application submission, and none were denied. 

Applicants that choose to withdraw an application frequently do so before receiving a public 

denial. As described in the APM,25 when applications are recommended for denial, FDIC staff 

are directed to contact applicants, describe the concerns, and provide a final opportunity to 

provide additional information that might influence the decision. The APM also states that at its 

discretion, the FDIC may offer the applicants the opportunity to withdraw the application. If an 

applicant withdraws their filing, the FDIC Board of Directors may release a statement regarding 

the concerns with the transaction if such a statement is considered to be in the public interest for 

purposes of creating transparency for the public and future applicants. 

 

23 As of December 31, 2023, there were 17 pending bank-to-bank merger applications and ten pending merger 

applications that involve a credit union or other non-insured institution. Data regarding FDIC-processed merger 

applications involving credit unions and other non-insured entities is provided as Tables 3-6 in Appendix A to this 

preamble. Table 7 in Appendix A provides data regarding the number of IDIs acquired by FDIC-supervised banks 

or savings associations, or by credit unions in purchase and assumption transactions.

24 A corporate reorganization is a merger transaction that involves solely an IDI and one or more of its affiliates. 

Corporate reorganizations may include transactions where two IDIs merge immediately following a merger between 

two bank holding companies. An interim merger transaction is a merger transaction between an IDI and a newly 

formed IDI that is established solely to facilitate a corporate reorganization. From the beginning of 2004 through 

December 31, 2023, the FDIC processed 2,008 corporate reorganizations and 483 interim mergers. As of December 

31, 2023, there were nine pending corporate reorganization applications and five pending interim merger 

applications.

25 See APM, Section 1.3, “Denials and Disapprovals.”
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Table 2 provides a breakdown of the bank-to-bank merger applications processed during 

this period by the size of the resulting IDI. Approximately 93.0 percent (2,055) of applications 

received and acted upon, and 95.0 percent of applications approved, were for IDIs that would be 

$10 billion or less in asset size following the proposed merger. Of the 2,054 approved 

applications, approximately 4.4 percent (91) involved resulting IDIs with an asset size between 

$10 billion and $100 billion in total assets, and 0.3 percent (seven) were in excess of $100 

billion.

Statutory Factors

Monopolistic or Anticompetitive Effects 

The federal banking agencies are prohibited from approving a merger that would result in 

a monopoly, or which would be in furtherance of any combination or conspiracy to monopolize 

or to attempt to monopolize the business of banking in the United States.26 There is no exception 

to this prohibition. Furthermore, the federal banking agencies are prohibited from approving a 

merger that does not constitute a monopoly or conspiracy to monopolize, but that would 

nonetheless substantially lessen competition, tend to create a monopoly, or otherwise be in 

restraint of trade, unless the anticompetitive effects of the transaction are clearly outweighed in 

the public interest by the probable effect of the transaction in meeting the convenience and needs 

 

26 12 U.S.C. 1828(c)(5)(A).
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of the community to be served.27 For example, this public interest exception may apply where a 

transaction is necessary to prevent the probable failure of an IDI. 

The FDIC conducts its own independent analysis to ensure compliance with the BMA’s 

prohibition against the approval of any merger transaction that would result in a monopoly or be 

in furtherance of an attempt to monopolize the business of banking in any part of the U.S.28 In 

situations where a transaction would not result in a monopoly but where anticompetitive effects 

are nonetheless identified, the FDIC will evaluate whether the applicants have established that 

the benefits to the convenience and needs of the community will clearly outweigh any 

anticompetitive effects. 

The way in which the convenience and needs of the community to be served is 

juxtaposed against the antitrust competitive standard is important. A non-monopolistic yet 

anticompetitive merger can only be approved in situations where the proponents to the 

transaction can establish that the advantage of the merger for the convenience and needs of the 

community clearly outweighs the anticompetitive effects. This creates a heavy burden for the 

proponents of a merger to support that the benefits to the community outweigh identified 

anticompetitive concerns. A favorable finding on the convenience and needs of the community 

to be served factor may not support approval of the application when anticompetitive effects are 

identified.

 

27 12 U.S.C. 1828(c)(5)(B). 28 12 U.S.C. 1828(c)(5)(A). In addition to the BMA’s prohibition against approving merger transactions that would 

result in a monopoly, the BMA generally prohibits the federal banking agencies from approving an interstate merger 

that would result in an IDI (together with its affiliates) controlling more than 10 percent of the total amount of 

deposits of IDIs in the U.S. See 12 U.S.C. 1828(c)(13).
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In addition to its own independent analysis, the BMA requires the FDIC to request a 

competitive factors report from the Attorney General for any merger between an IDI and a nonaffiliated entity, unless the FDIC finds that it must act immediately in order to prevent the 

probable failure of an IDI involved in the transaction.29 The FDIC may consult with the DOJ on 

mergers that may raise competitive concerns. In cases where the FDIC considers proposed 

divestitures of business lines, branches, or portions thereof to mitigate anticompetitive effects, 

the FDIC will generally expect such divestitures to be completed before allowing the merger to 

be consummated. Additionally, to promote the ongoing competitiveness of the divested business 

lines, branches, or portions thereof, the FDIC will generally require that the selling institution 

will neither enter into non-compete agreements with any employee of the divested entity nor 

enforce any existing non-compete agreements with any of those entities.

The Proposed SOP does not include any bright lines or specific metrics for which it is 

presumed that the transaction would be considered anticompetitive. A few RFI commenters 

suggested that the FDIC develop a benchmark asset size at or below which there is no 

presumption of non-competitive effects. The Proposed SOP does not include such metrics or 

benchmarks, as it is important to maintain flexibility to appropriately evaluate the facts and 

circumstances of each application filed.

The Proposed SOP reaffirms the FDIC’s commitment to undertaking a thorough review 

of the potential competitive effects of a proposed merger transaction. As described in the 

 

29 12 U.S.C. 1828(c)(4). 
Page 28 of 93

Proposed SOP, the FDIC will tailor its evaluation of competitive effects to consider all relevant 

market participants (local, regional, and national). The Proposed SOP establishes the relevant 

geographic markets as the areas where the merging entities have a physical presence in the form 

of an office (generally a main office or a branch). It also notes that the market may include areas 

where the merging entities do not have a physical presence, but may still provide products and 

services. The Proposed SOP outlines the FDIC’s approach to considering product markets. The 

FDIC uses deposits as an initial proxy for commercial banking products and services, but it will 

tailor the product market definition to individual products as needed. In its analysis, the FDIC 

uses proxies that reasonably reflect the competitive dynamics of the market, including deposit 

and loan activity. However, the Proposed SOP notes that the FDIC will, if appropriate, utilize 

additional analytical methods, data sources, or geographic or product market definitions in order 

to assess the competitive effects of a proposed merger when practicable and relevant with 

consideration given to whether consumers retain meaningful choices. 

Consistent with the approach of the DOJ and the other federal banking agencies, the 

FDIC uses deposits as reported in the SOD data submitted by IDIs (and compiled by the FDIC), 

as a general proxy for the product market and then calculates the resulting market concentration 

and change in market concentration in each relevant geographic market using the HHI 

calculation. The FDIC initially focuses on the respective shares of total deposits held by the 

merging IDIs and the various other participants with offices in the relevant geographic market(s) 

to measure market concentration. Multiple RFI commenters suggested that the analysis of 

competition should include the influence of thrifts, credit unions, fintech firms, Farm Credit 

System institutions, and other online entities that offer products and services in the relevant 
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market. The Proposed SOP affirms that the FDIC considers the influence of these entities when 

evaluating competitive effects. Some RFI commenters suggested alternatives to the HHI 

calculation such as the Hall-Tideman Index (HTI)30 or the comprehensive industrial 

concentration index (CCI).31 The Proposed SOP indicates that the FDIC will consider other 

products in its competitive analysis, but does not incorporate any specific alternatives to the HHI 

calculation. 

Several RFI commenters requested changes to how the FDIC compiles SOD data, such as 

assigning online accounts to the account owner’s residence, rather than the main office of the 

entity receiving the deposit. Additionally, RFI commenters requested that the FDIC amend both 

the methods and reporting standards for SOD data, and provide more guidance and instruction 

regarding how a reporting entity attributes deposits to branches to enhance geographic 

specificity. The Proposed SOP indicates that, as applicable, the FDIC will take into account any 

additional data sources, appropriate analytical approaches, or additional products beyond 

deposits to fully assess the competitive effects of the transaction. Further, to the extent that 

amendments or revisions to the SOD’s reporting requirements, standards, and methods are 

considered, they will be published in a separate request for industry comment and feedback. 

The relevant geographic markets are the areas where the merging entities have 

overlapping branch footprints, and generally correspond with the geographic markets defined by 

the FRB. The Proposed SOP notes that on a case-by-case basis, the FDIC may consider 

 

30 The HTI is used to measure the concentration (or unequal distribution) of n market participants, who each have 

a market share hi and a rank i (ordered according to decreasing market shares). 31 The CCI is the sum of the proportional share of the leading IDI and the summation of the squares of the 

proportional sizes of each IDI, weighted by a multiplier reflecting the proportional size of the rest of the industry.
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alternative or additional geographic and product markets. A few RFI commenters suggested that 

the FDIC should conduct a separate analysis of the competitive impact in rural areas, minority 

markets, or low- to moderate-income communities when relevant. While the Proposed SOP does 

not specifically address analytics of rural, minority, or low- to moderate-income communities, it 

does affirm that the FDIC will use a geographic market with a scope that is suited to the products 

or services offered or planned. 

RFI commenters were split on changes to the HHI; some RFI commenters suggested that 

the overall threshold should be raised, while others suggested that the overall level should be 

lowered. Similar differences were also noted with respect to the change in the HHI calculation; 

some RFI commenters suggested that the current change threshold be increased, while others 

believed it should be lowered or reflect any point change. Some RFI commenters suggested that 

the HHI should be calculated for certain types of loans such as residential or small business 

loans, rather than (or in addition to) deposits. The Proposed SOP does not address the 

calculation of the HHI or the attendant thresholds. The Proposed SOP notes that the FDIC will 

consider additional methods of assessing the competitive nature of markets for relevant products 

or services, as necessary or appropriate. The FDIC plans to coordinate with other appropriate 

agencies regarding any potential changes to the calculation of, or thresholds for, HHI usage. 

Questions: 

6. To what extent is the FDIC’s approach to analyzing the competitive effects of a proposed 

merger transaction appropriate? 
Page 31 of 93

7. What changes to the current approach should the FDIC consider to better reflect present-day 

competitive conditions? 

8. Should the HHI be a definitive factor in making a determination? In other words, should the 

FDIC find favorably regarding competitive effects if the proposed merger does not exceed 

the defined banking-specific HHI thresholds? If not, why not? 

9. How should the Proposed SOP specifically address the ways to calculate the competitive 

effects of mergers of IDIs with non-insured entities, whether credit unions, financial services 

entities, bank service corporations, or other entities? 

10. What additional information should the FDIC provide about the circumstances under which it 

will consider products other than deposits and loans for transparency and so that filers may 

provide a more complete initial submission?

11. Is the geographic market definition outdated? If so, why? How should the definition be 

updated and why? 

12. Would it be appropriate to define relevant geographic markets by reference to markets in 

which the merging institutions have delineated CRA assessment areas, including both 

facility-based assessment areas and retail lending assessment areas?
Page 32 of 93

13. Would it be appropriate to define relevant geographic markets by reference to markets in 

which the merging institutions have delineated CRA assessment areas?

14. Other than the HHI, what tools could be used to assess market concentration and why would 

such tools be appropriate? 

15. How should the Proposed SOP specifically address analytics for rural, minority, or low- to 

moderate-income communities? What type of analytical standards or criteria would be 

appropriate? 

16. How can the FDIC’s review address competitive effects beyond geographic markets? For 

example, commenters are invited to provide their views on any concerns that might typically 

be associated with mergers that result in a large institution of a certain asset size, and are 

further invited to identify what asset size thresholds (e.g., $50 billion, $100 billion, $250 

billion, etc.) are most likely to present such concerns. In addition, commenters are invited to 

provide detailed views on the nature of competitive concerns that are associated with mergers 

that involve a large institution absorbing a community bank. 

Financial Resources and Managerial Resources and Future Prospects

 

The BMA requires the federal banking agencies to take into account the financial and 

managerial resources and future prospects of the existing and proposed institutions involved in a 

merger transaction. 
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Financial Resources

The FDIC assesses the financial history, condition, and performance of each entity 

involved in the merger transaction, as well as the combined financial resources of the resulting 

IDI. The assessment of financial resources includes an analysis of capital, asset quality, 

earnings, liquidity, and sensitivity to market risk. The FDIC will consider the liquidity risk of 

the resultant IDI, including the extent of its projected reliance on uninsured deposits and its 

contingency funding strategies. An IDI’s overreliance on uninsured deposits or non-core 

funding sources may not be consistent with a favorable finding on this statutory factor. 

Overall, the FDIC expects that the resulting IDI will reflect sound financial performance 

and condition consistent with the IDI’s size, complexity, and risk profile. Generally, the FDIC 

will not find favorably on this factor if the merger would result in a larger, weaker IDI from an 

overall financial perspective. 

RFI commenters were split on whether bright lines or formally defined metrics should be 

developed and implemented for the evaluation of this factor. Several RFI commenters desired to 

have defined ratings and benchmarks formally articulated, and requested that merging entities 

meeting these defined standards should have a streamlined review or a presumption of approval. 

The Proposed SOP does not include specific requirements for a favorable finding on this factor, 

as the FDIC believes each transaction should be evaluated based on the facts and circumstances 

presented in the application, and any determination on the filing should be specific to that 
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transaction. The incorporation or adoption of formal metrics restricts the FDIC’s ability to 

effectively analyze the findings regarding the statutory factors and make informed 

determinations and recommendations based on those findings. 

If the proposed merger involves an operating non-insured entity, the FDIC will consider 

the entity’s operational activities and performance record when evaluating financial resources. 

The FDIC will review audited financial statements (covering at least three years, unless the 

entity’s operating history is shorter) including details regarding any deferred tax assets or 

liabilities, intangible assets, contingent liabilities, and any recent or pending legal or regulatory 

actions. The FDIC may also require an identification of, and accounting for, low quality assets, 

including independent appraisals or valuations to support the projected value of any businesses 

or assets expected to transfer to the resultant IDI upon consummation of the merger. 

The FDIC’s evaluation of financial resources also will consider the current and projected 

financial impact of any related entities on the IDI, including the parent organization and any key 

affiliates. For each relevant entity, the FDIC will consider, among other items, the size and 

scope of operations, capital position, quality of assets, overall financial performance and 

condition, compliance and regulatory history, primary revenue and expense sources, and funding 

strategies. 

Depending on the anticipated risk profile of the resulting IDI, the FDIC may impose, as a 

non-standard condition, capital requirements that are higher than applicable capital standards. 

Further, as appropriate, the FDIC may impose a non-standard condition that requires the 
Page 35 of 93

resulting IDI and other applicable parties (such as certain affiliates or investors) to enter into one 

or more written agreements that may address, as applicable, capital maintenance requirements, 

liquidity or funding support, affiliate transactions, and other relevant items. 

Managerial Resources

The FDIC assesses the managerial resources of the existing entities involved in a merger 

transaction, as well as the proposed management of the resulting IDI. The FDIC expects that the 

proposed directors, officers, and as appropriate, principal shareholders (collectively, 

management) possess the capabilities to administer the resultant IDI’s affairs in a safe and sound 

manner. The background and experience of each member of the proposed management team 

will be reviewed relative to the size, complexity, and risk profile of the resulting IDI. The 

capability of management to identify, measure, monitor, and control risks and ensure an efficient 

operation in compliance with applicable laws and regulations are important facets of the 

evaluation of managerial resources. 

A few RFI commenters requested that specific performance standards (such as the 

management component rating) for small and mid-sized institutions should be publicly stated, 

and entities in compliance with these standards that meet certain other metrics (such as total asset 

size) would have a presumption of approval or streamlined review protocols. As previously 

stated, the Proposed SOP does not include specific performance metrics or bright lines for any of 

the statutory factors in order to maintain flexibility in the analysis and to ensure each proposed 

transaction is evaluated on its merits, facts, and circumstances.
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The FDIC will review supervisory assessments of management made by the relevant 

prudential regulators. This includes the current and historical management ratings for any IDI 

involved in the proposed merger, and the managerial performance and supervisory record of any 

subsidiaries and affiliates. The FDIC will evaluate the extent and effect of any organizational 

relationships on the IDI, while also considering the operating history, risk management, and 

control environment of the parent organization. Inherent in these considerations are the 

condition, performance, risk profile, and prospects of the organization as a whole, as well as the 

capacity of management to successfully implement the resulting IDI’s strategic (or business) 

plan. 

The evaluation of managerial resources includes an assessment of each entity’s record of 

compliance with respect to consumer protection, fair lending, and other relevant consumer laws 

and regulations. The FDIC will review supervisory assessments of management made by the 

relevant regulators. In addition, the FDIC will analyze the record of compliance with consumer 

laws and regulations, the compliance management system for each of the IDIs, as well as the 

compliance management rating system for the resulting IDI, to ensure that there are appropriate 

controls to identify, monitor, and address consumer compliance risks. Consideration is also 

given to the consumer compliance rating pursuant to the Uniform Interagency Consumer 

Compliance Rating System and the CRA. 32 

 

32 Uniform Interagency Consumer Compliance Rating System, 81 Fed. Reg. 79473, (Nov. 14, 2016). Community 

Reinvestment Act ratings are defined in Appendix A of Part 345 of the FDIC Rules and Regulations.
Page 37 of 93

 The FDIC expects management to develop and implement effective plans and strategies, 

and the resulting IDI to have sufficient managerial and operational capacity, to integrate the 

acquired entity. Effective integration includes, but is not limited to, human capital; products and 

services; operating systems, policies, and procedures; internal controls and audit coverage; 

physical locations; information technology; and risk management programs. In conjunction with 

the integration, the FDIC expects a resulting IDI to have the managerial and operational capacity, 

and to devote adequate resources, to ensure full and timely compliance with any outstanding 

corrective programs or supervisory recommendations. 

Various other matters are also pertinent to the evaluation of managerial resources. The 

FDIC will consider the breadth and depth of management, including the adequacy of succession 

planning; responsiveness to issues or supervisory recommendations raised by regulators or 

auditors; existing or pending formal or informal enforcement actions; management’s 

performance with respect to information technology, consumer protection, and other specialty or 

functional areas; recent rapid growth and the record of management in overseeing and 

controlling risks associated with such growth; and the reasonableness of fees, expenses, and 

other payments made to insiders. 

Future Prospects

The FDIC evaluates the future prospects of the existing and proposed entities involved in 

a merger transaction. As part of this evaluation, the FDIC will review the submitted business (or 

strategic) plan, including pro-forma financial projections and related assumptions to assess 
Page 38 of 93

whether the resulting IDI will be able to operate in a safe and sound manner on a sustained basis 

following consummation of the merger. Any accompanying valuations (such as those related to 

the target entity, goodwill, or other assets) will also be reviewed to ensure that the applicant 

adequately supports that the resulting IDI will maintain an acceptable risk profile. 

The FDIC will consider the economic environment, the competitive landscape, the 

acquiring IDI’s history in integrating merger targets, the anticipated scope of the resulting IDI’s 

operations and the quality of its supporting infrastructure, and any other relevant factors. Any 

significant planned changes to the resulting IDI’s strategies, operations, products or services, 

activities, income or expense levels, or other key elements of its business will be closely 

assessed. 

 

Questions: 

17. To what extent is the FDIC’s evaluation of financial resources appropriate, and what 

additional items, if any, should be considered? 

18. To what extent is the FDIC’s evaluation of managerial resources appropriate, and what 

additional items, if any, should be considered? 

19. To what extent is the FDIC’s evaluation of future prospects appropriate, and what additional 

items, if any, should be considered? 
Page 39 of 93

Convenience and Needs of the Community to be Served

The BMA requires the federal banking agencies to take into account the convenience and 

needs of the community to be served when evaluating a merger transaction.33 One of the items 

considered in connection with this factor is each IDI’s CRA performance evaluation record and 

any comments submitted by the public on the application. The FDIC provides the public the 

ability to search pending merger applications submitted to the FDIC and allows comments on 

merger applications to be submitted electronically during the comment period. A few RFI 

commenters suggested that the FDIC update its website to facilitate the public’s ability to review 

and comment on applications; and that the FDIC should post any regulatory questions or 

information requests to the applicants, and any applicant responses to its website. The FDIC is 

considering enhancing the current website to include information regarding public comments 

received on applications. 

Several RFI commenters requested that approval should be conditioned upon the 

fulfillment of a strategy to address the convenience and needs of the community, and that 

regulatory approval or non-objection should be sought when the resultant IDI deviates from the 

submitted plan. The Proposed SOP describes the analytical considerations, but does not require 

a separate strategy to address the convenience and needs of the community. However, the 

applicant is expected to provide forward-looking information to the FDIC for the purposes of 

evaluating the benefits of the merger on the community to be served. As appropriate, claims and 

commitments made by the applicant to the FDIC may be included in the Order and Basis for 

 

33 12 USC 1828(c)(5). 
Page 40 of 93

Approval, and the FDIC’s ongoing supervisory efforts will evaluate the IDI’s adherence to any 

such claims and commitments.

Multiple RFI commenters raised concerns with reliance on only the most recent CRA 

evaluation. One RFI commenter noted that an Outstanding CRA rating on two out of the most 

recent three CRA evaluations should be a predicate to obtain regulatory approval for a merger; 

and another RFI commenter requested a three-year average score for the CRA rating as a 

benchmark. Some RFI commenters stated the CRA rating should be no less than Outstanding, 

with a minimum of Satisfactory ratings on component categories. A few RFI commenters 

requested that a presumptive denial should be established if the CRA rating is not currently (or 

over a recent, multi-year average period) at least Outstanding with Satisfactory component 

ratings. The Proposed SOP does not establish specific CRA rating benchmarks or bright lines in 

order to maintain flexibility in the analysis and to ensure each proposed transaction is evaluated 

on its merits, facts, and circumstances. However, a less than Satisfactory rating or significant 

deterioration in CRA performance may present significant concerns in resolving this factor. The 

FDIC’s review is not limited to the CRA record of the institutions and will encompass a broad 

review of the institutions’ existing products and services and whether the products and services 

proposed by the applicants will meet the convenience and needs of the community to be served. 

 

In addition, the FDIC will consider the record of each institution in complying with 

consumer protection requirements and maintaining a sound and effective compliance 

management system. This review will include consideration of any existing orders, ongoing 

enforcement actions, and pending reviews or investigations of violations of consumer protection 
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laws and regulations. A less than satisfactory consumer compliance rating may present 

significant concerns in resolving this factor. 

The FDIC will evaluate the community to be served broadly, which will include the 

proposed assessment area(s), retail delivery systems, populations in affected communities, and 

identified needs for banking services. The FDIC expects that a merger between IDIs will enable 

the resulting IDI to better meet the convenience and the needs of the community to be served 

than would occur absent the merger. The FDIC expects applicants to demonstrate how the 

transaction will benefit the community such as through higher lending limits, greater access to 

existing products and services, introduction of new or expanded products or services, reduced 

prices and fees, increased convenience in utilizing the credit and banking services and facilities 

of the resulting IDI, or other means. Several RFI commenters suggested that a higher burden 

should be placed on the applicant to demonstrate the public benefits of the transaction. Multiple 

RFI commenters stated that the FDIC should focus the analysis on the additive benefits of the 

transaction for consumers, particularly those in low- to moderate-income and minority 

communities. Numerous RFI commenters indicated that a community benefit plan should be 

required, as should mandatory public hearings to discuss the impact on the relevant communities. 

Further, several RFI commenters stated that a cost/benefit analysis of the proposed merger 

should be prepared and included in the publicly available application materials. The Proposed 

SOP outlines the FDIC Board’s expectations with regard to the public benefits of the transaction, 

but does not require public benefit statements or plans to be established. 
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In addition to the CRA and consumer compliance ratings and performance, the FDIC will 

also consider the resulting assessment area(s) and branch locations, as well as the impact of 

branch closings or consolidations, particularly on low- and moderate-income neighborhoods or 

designated areas. The application form solicits information regarding projected or anticipated 

branch expansions, closings, or consolidations. Generally, the FDIC considers a substantially 

complete merger application to include, among other items, at least three years of information 

regarding projected branch expansions, closings, or consolidations. Some RFI commenters 

suggested that the projected impact of prospective branch closings should be closely scrutinized, 

and that public meetings and community hearings should be conducted to discuss the impact of 

the proposed closings. The Proposed SOP states that any proposed or expected closures, 

including the timing of each closure, the effect on the availability of products and services, 

particularly to low- or moderate-income individuals or designated areas, any job losses or lost 

job opportunities from branching changes, and the broader effects on the convenience and needs 

of the community to be served will be closely evaluated. Applications that project material 

reductions in service to low- and moderate-income communities or consumers will generally 

result in unfavorable findings. A favorable finding on this factor may not necessarily be 

sufficient for approval of the application when anticompetitive effects are noted. 

Further, the Proposed SOP advises applicants to be prepared to make commitments 

regarding future retail banking services in the community to be served for at least three years 

following consummation of the merger. The Proposed SOP places an affirmative expectation on 

applicants to provide specific and forward-looking information to enable the FDIC to evaluate 

the expected impact of the merger on convenience and needs of the community to be served. In 
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certain cases, the FDIC may hold hearings or other proceedings in connection with evaluating a 

merger application The Proposed SOP provides that the FDIC will generally consider it is in the 

public interest to hold a hearing for merger applications resulting in an IDI with greater than $50 

billion in assets or for which a significant number of CRA protests are received. The FDIC may 

also hold public or private meetings to receive input on the transaction. The decision to hold 

such meetings depends on issues raised during the comment period and the significance of the 

merger transaction to the public interest, the banking industry, and communities affected. 

Questions: 

20. How could the Proposed SOP more effectively describe the FDIC’s expectations with regard 

to its review of the convenience and needs factor, and what notable considerations, if any, are 

overlooked? 

21. What are the pros and cons of providing forward-looking information? What are some 

specific challenges and difficulties that applicants might experience when providing 

information concerning projected or anticipated branch expansion, closings, or 

consolidations for the first three years following consummation of the merger? 

22. What are the pros and cons of holding a hearing for merger applications resulting in an IDI 

with greater than $50 billion in assets or for which a significant number of CRA protests are 

received? For what other situations, in addition to those described, would it generally be in 

the public interest to hold hearings? 
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23. How can the FDIC best consider comments and feedback from the public in the context of 

evaluating the convenience and needs of the community to be served, consistent with the 

BMA’s public notice requirements? 

24. What are the benefits of imposing a non-standard condition that captures the affirmative 

commitments an IDI has made to the FDIC to serve the needs of its community?

25. In addition to the methods described, how should the FDIC consider an institution’s CRA 

performance in the context of an application subject to the BMA? 

26. What additional information should be included in the application materials to enable a more 

comprehensive review of branch closings or consolidations? What additional information 

should be included in application materials related to retail delivery systems? 

27. What additional benefits to the community could be specified in the SOP beyond those 

already detailed?

28. What other elements should be considered in the evaluation of the convenience and needs of 

the community with respect to mergers?

29. What types of merger transactions may present unique factors that the FDIC should consider 

in its evaluation of the convenience and needs of the community to be served? For example, 
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are there special considerations that should be considered in connection with transactions in 

which a community bank is absorbed by a larger institution? 

Risk to the Stability of the United States Banking or Financial System

The Dodd-Frank Act amended the BMA to require the responsible agency to consider the 

risk to the stability of the U.S. banking or financial system when evaluating a proposed bank 

merger.34 The FDIC expects that the resulting IDI will not materially increase the risk to the 

stability of the U.S. banking or financial system. Multiple RFI commenters noted the FDIC’s 

Current SOP does not incorporate this statutory factor. Additionally, while some RFI 

commenters asked for more clarity and transparency regarding the FDIC’s financial stability 

analysis, others objected to changing the existing regulatory framework. Finally, some RFI 

commenters asserted that recent large mergers have increased concentration within the banking 

sector and have created more systemic risk, while others presented positions that attempt to 

refute this assertion. The Proposed SOP largely builds upon the financial stability criteria 

previously employed in practice by the FDIC, FRB, and OCC since passage of the Dodd-Frank 

Act, and clarifies the FDIC’s perspective when conducting the analysis.35 

The Proposed SOP details the considerations that the FDIC uses to determine whether a 

resulting IDI’s systemic footprint would be such that its financial distress or failure could 

compromise the stability of the U.S. banking or financial system. While many RFI commenters 

 

34 12 USC § 1828(c)(5). 35 See, e.g., Order and Basis for Corporation approval of BB&T’s application for consent to merger with SunTrust 

Bank. Refer to FDIC Press Release PR-111-2019: https://www.fdic.gov/news/press-releases/2019/pr19111.html. 
Page 46 of 93

addressed entities other than a resulting IDI (e.g., bank holding companies and broker-dealer 

subsidiaries), the Proposed SOP considers financial stability influences primarily from the 

perspective of the resulting IDI. Where appropriate, the FDIC’s analysis will take into account 

the facts and circumstances of parent companies and affiliates. Proposed transactions that solely 

involve affiliates that were related at the time a merger application is filed generally will not 

raise concerns with regard to this factor. However, each such proposal will be reviewed to 

ensure that the resulting IDI would not present any new or unforeseen stability risks that may not 

have existed when the merging entities operated on a standalone basis.

In evaluating the risk to the stability of the U.S. banking or financial system, the 

Proposed SOP identifies the following: (i) the size of the entities involved in the transaction; (ii) 

the availability of substitute providers for any critical products and services to be offered by the 

resulting IDI; (iii) the resulting IDI’s degree of interconnectedness with the U.S. banking or 

financial system; (iv) the extent to which the resulting IDI contributes to the U.S. banking or 

financial system’s complexity; and (v) the extent of the resulting IDI’s cross-border activities. 

These items are addressed in more detail below:

Size. The distress or failure of an IDI is more likely to adversely impact the banking or 

financial system if the IDI’s activities comprise a relatively large share of system-wide activities. 

Upon financial distress or failure, a larger IDI may present greater challenges to replacing or 

substituting the services and products it provides, as compared with smaller institutions, thereby 

potentially increasing the possibility for the IDI’s distress or failure to disrupt the broader 

system. Additionally, the negative effects to the banking or financial system caused by stress at 
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a single large institution may be greater than the impact of simultaneous stress at multiple 

smaller institutions engaged in business lines similar to those of their larger peer. The majority 

of comments regarding financial stability focused on the resulting IDI’s asset size with many 

concerned about not creating institutions that are “too big to fail.” Numerous RFI commenters 

suggested the imposition of asset limits, thresholds, or other quantitative measures that would be 

applicable to IDIs of a certain size, and suggested that any analysis start with certain 

presumptions. Others stated that any limits or presumptions with respect to asset size would be 

contrary to the plain language of the BMA, have anticompetitive results, and could even serve to 

“insulate” the largest banks. Some RFI commenters suggested the imposition of enhanced 

capital requirements in lieu of size limitations.

With respect to these suggestions, the FDIC believes that the asset size of a resulting IDI 

should not serve as the sole basis for evaluating this statutory factor. Rather, size is only one of 

several important considerations that needs to be evaluated in the context of the other criteria. 

However, transactions that result in a large IDI (e.g., in excess of $100 billion) are more likely to 

present potential financial stability concerns with respect to substitute providers, 

interconnectedness, complexity, and cross-border activities, and will be subject to added 

scrutiny. The FDIC takes the view that the failure of a larger IDI with a traditional community 

bank business model may pose significantly different resolvability and stability risks than a 

smaller IDI with one or more complex business lines, large derivative exposures, or extensive 

cross-border operations. 
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Availability of substitute providers. The purpose of considering the availability of 

substitute providers is to understand whether an inability or unwillingness by a resulting IDI to 

continue providing specific products or services could be disruptive to the U.S. banking or 

financial system. The FDIC considers whether the resulting IDI provides critical products or 

services that may be difficult to replace or substitute, or conducts activities that comprise a 

relatively large share of the relevant activity in the banking or financial system. Concerns are 

heightened, and may preclude favorable resolution of this factor, in situations where there are 

limited readily available substitutes, as relied upon services may be disrupted or discontinued if 

the resulting IDI encounters financial distress or fails. Several RFI commenters recommended 

that specific risk factors be developed to address the availability of substitute providers; 

however, the Proposed SOP does not include specific targets or bright lines regarding the 

consideration and assessment of this factor. 

Interconnectedness. The purpose of considering interconnectedness is to assess the 

degree to which the resulting IDI may be engaged in transactions with other financial system 

participants and the risk that exposures to the resulting IDI of creditors, counterparties, investors, 

or other market participants could affect U.S. banking or financial system stability. The purpose 

of considering the effects of asset liquidation by the resulting IDI as a component of 

interconnectedness is to assess whether, following the proposed merger, the resulting IDI would 

hold assets that, if liquidated quickly, could significantly disrupt the operation of key markets or 

cause significant losses or funding problems for other firms with similar holdings. The analysis 

of interconnectedness specifically contemplates intra-financial system assets and liabilities; 
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exposures to creditors and counterparties; the potential volatility of the resulting IDI’s funding 

structure; and the potential results of rapid asset liquidation. 

A resulting IDI may present greater risk from a stability perspective if key aspects of its 

business (including any on- or off-balance sheet activities) are highly interconnected with other 

financial system participants. For example, securities contracts, commodity contracts, forward 

contracts, repurchase agreements, swap agreements, inter-affiliate guarantees, and other similar 

contracts which the FDI Act refers to collectively as “qualified financial contracts”36 are all 

examples of interconnected exposures within the U.S. banking or financial system. A high 

volume of such contracts may equate to a higher degree of potential systemic spillover effects if 

the resulting IDI, or its parent or affiliates, are unable to perform.

Increased Complexity. Under the Proposed SOP, evaluation of the resulting IDI’s 

contribution to the U.S banking or financial system’s complexity would consider the full scope 

of the resulting IDI’s operations. This includes the resulting IDI’s business lines, products and 

services, on- and off-balance sheet activities, delivery channels, and any material affiliate or 

other third-party relationships. One RFI commenter stated that many large regional banks do not 

have complex operations and have recently reduced their level of complexity. The FDIC 

considers an important part of the complexity analysis to be the potential financial stability 

consequences of the resulting IDI failing and being placed into a receivership under Section 11 

of the FDI Act. The FDIC is responsible for resolving the resulting IDI in a way least costly to 

the DIF. 

 

36 12 USC § 1821(e)(8)(d)(i).
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The FDIC has several options for carrying out the resolution of an IDI. First, the FDIC 

can sell some or most of the assets of the failed IDI to a healthy acquiring IDI, which would also 

generally assume all of the deposits or only the insured deposits of the failed IDI along with 

some or most of the remaining liabilities. This is generally called a “purchase and assumption 

transaction.” Second, a special type of purchase and assumption transaction used when 

additional time is needed to market a failed IDI is referred to as a “bridge bank.” A bridge bank 

is a bank chartered by the OCC and temporarily owned and operated by the FDIC to bridge the 

time between the date of failure and the date of sale to an acquiring IDI. Use of a bridge bank 

enhances the FDIC’s ability to pursue options that could involve the sale to multiple acquirers, 

and/or spinning off some remaining streamlined operations as a restructured entity with ongoing 

viability depending on which strategy is most desirable. The final option is executing an insured 

deposit payout. However, in deciding which option to pursue, the FDIC must show how it 

would meet the least cost test set forth in Section 13(c)(4) of the FDI Act. Additionally, 

regardless of the strategy selected, the challenges associated with resolving a large bank would 

be significant, both operationally and financially. 

In addition to the resolution challenges presented based on size, many regional IDIs 

present complexities such as large branch networks, substantial information technology systems, 

millions of account holders, and heavy reliance on uninsured deposits. Further, cross-border 

operations or key dependencies on non-affiliated entities can raise additional challenges to 

effecting an orderly and least costly resolution. 
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The failure of a larger IDI with a traditional community bank business model may present 

significantly different resolvability and stability risks than a smaller IDI with a complex 

businesses model. Staff from the FDIC’s Division of Resolutions and Receiverships and (if 

appropriate) the Division of Complex Institution Supervision and Resolution will identify 

potential purchasers for the resulting IDI or its component parts, and identify resolution 

impediments that could impact the stability of the U.S. banking or financial system. Some 

potential resolution impediments include the resulting IDI’s organizational structure and the 

necessity and difficulty of: (i) continuing the IDI’s operations and activities until they can be 

sold or wound down, (ii) marketing and selling key business lines and asset portfolios at the least 

cost to the DIF,37 and (iii) separating business lines and other assets to enable their sale or other 

disposition. While the FDIC would perform this analysis on the IDI, it would also take into 

account possible alternative resolution strategies and scenarios. This process could consider the 

presence of support agreements from the resulting IDI’s ultimate parent company, strengthened 

risk governance procedures, and capital maintenance requirements for the IDI. Several RFI 

commenters suggested formal thresholds should be developed (such as total asset metrics) for 

when a resolution plan should be required. Such thresholds have not been incorporated into the 

Proposed SOP as each prospective resolution presents unique facts and circumstances, and the 

FDIC does not believe a one size fits all approach to the resolution process is appropriate. 

While the vast majority of IDIs that the FDIC has resolved have been relatively small in 

size (assets under $10 billion), experience has shown that the failure of a larger IDI can have a 

 

37 Id.
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contagion effect. Two recent examples that illustrate the systemic risk associated with the failure 

of a large regional IDI are Silicon Valley Bank (SVB) and Signature Bank. 

SVB, with $209 billion in assets as of December 31, 2022, failed on March 10, 2023. 

SVP’s depositors were primarily commercial and private banking clients, mostly linked to 

businesses financed through venture capital. Total assets grew rapidly, coinciding with rapid 

growth in the innovation economy and a significant increase in the valuation placed on public 

and private companies. The resulting influx of deposits was largely invested in medium- and 

long-term Treasury and Agency securities. 

On March 8, 2023, Silvergate Bank, with $11.3 billion in assets as of December 31, 

2022, and a business model focused almost exclusively on providing services to digital asset 

firms, announced its self-liquidation.38 On that same day, SVB announced that it had sold 

substantially its entire available-for-sale securities portfolio at a loss. Many of SVB’s venture 

capital customers took to social media to urge companies to move their deposit accounts out of 

SVB. The deposit run, coupled with insufficient liquidity to meet the demands of depositors and 

other creditors, resulted in its failure. 

On March 12, 2023, just two days after the failure of SVB, Signature Bank, with $110 

billion in assets at year-end 2022, was closed and the FDIC was appointed as receiver. Signature 

 

38 Following the collapse of digital asset exchange FTX in November 2022, Silvergate Bank experienced a rapid 

loss of deposits, which necessitated the sale of debt securities to cover deposit withdrawals. The securities sales 

resulted in substantial losses. The troubles experienced by Silvergate Bank demonstrated the impact of a lack of 

diversification, aggressive growth, maturity mismatches in a rising interest rate environment, and inadequate 

management of liquidity risk. Many of these same risks were also present at SVB.
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Bank implemented an operating model that shared risk characteristics with SVB. Like SVB, 

Signature Bank grew rapidly, held deposit accounts for crypto-asset firms, and was heavily 

reliant on uninsured deposits for funding. As word of SVB’s problems began to spread, 

Signature Bank began to experience contagion effects with deposit outflows. Signature Bank 

failed as withdrawal requests mounted beyond its ability to pay. 

Because of these failures, and the fact that other institutions were experiencing stress, 

serious concerns arose about a broader economic spillover. As such, the FDIC invoked the 

systemic risk exception under Section 13 of the FDI Act in winding down SVB and Signature 

Bank.39 These failures demonstrate the implications that IDIs with assets over $100 billion can 

have on financial stability. As of December 2023, the failures of SVB and Signature Bank have 

resulted in an estimated cost of $21.8 billion and $1.8 billion, respectively, to the DIF.40

Additional examples that highlight the impact of a larger IDI failure on the DIF are the 

failures of Washington Mutual Bank and IndyMac Bank in 2008. Washington Mutual Bank 

(Washington Mutual), with over $300 billion in assets at the time of its failure in September 

2008, was the largest thrift institution in the United States and the sixth largest IDI. Its failure 

was the largest in the FDIC’s history in terms of the IDI’s asset size. Several factors made it 

possible for Washington Mutual to fail with no loss to the DIF and no loss imposed on its $45 

billion of uninsured deposits, which approximated 24 percent of total deposits. First, there was 

 

39 As a general rule, Section 13(c)(4) of the FDI Act requires the FDIC to resolve failed IDIs at the least cost to the 

DIF, but provides an exception for instances where the failure would have serious adverse effects on economic 

conditions or financial stability, and any action to be taken would avoid or mitigate such adverse effects.

40 See 2023 FDIC Annual Report, at https://www.fdic.gov/about/financial-reports/reports/2023annualreport/2023-

arfinal.pdf. 
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an acquirer with the capacity to assume all the assets and all the deposits through a traditional 

purchase and assumption transaction. This acquirer could act quickly at the time of failure 

because it had previously performed due diligence on Washington Mutual for a potential open 

bank acquisition. Second, Washington Mutual had a substantial volume of unsecured debt – 

$13.8 billion, or 4.5 percent of total assets – which was available to absorb losses in resolution. 

This loss absorbing capacity was essential to meeting the least cost test and for uninsured 

depositors to avoid taking a loss. Absent these factors, the FDIC likely would have had to 

establish a bridge bank and take over the operation of the failed institution. The failure of 

Washington Mutual in that scenario would have depleted the DIF, and uninsured depositors 

would likely have had to take a loss in order to meet the least cost test. Imposing losses on 

uninsured deposits could have had a significantly destabilizing effect, especially given the 

stressed economic and financial environment in September 2008. The only way to avoid that 

outcome would have been for the FDIC to exercise the systemic risk exception. 

When IndyMac Bank – a $30 billion thrift – failed in July 2008, it had no unsecured debt 

and there was no viable acquirer. The FDIC established a bridge bank and uninsured depositors 

realized losses.41 IndyMac Bank was the most costly failure in the FDIC’s history up to that 

point, resulting in a $12.4 billion loss to the DIF. If these conditions were to repeat for an 

institution several times larger, the effects could be significant for U.S. financial stability.

Cross-Border Activities. The purpose of considering cross-border activities is to assess 

the degree to which coordination of the resulting IDI’s supervision and resolution could be 

 

41 Uninsured deposits totaled $2.6 billion, which was almost 14 percent of total deposits. 
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complicated by different legal requirements, geopolitical events, and competing national 

interests, leading to increased potential for spillover effects. A high degree of cross-border 

activity by the resulting IDI presents significant challenges to supervising and examining the 

operations of IDIs and their subsidiaries. Historically, cross-border operations present 

significant challenges to supervision and examination, and cross-border proceedings can be slow, 

cumbersome, and require significant amounts of coordination between different resolution 

authorities with differing objectives and administrators. Accordingly, the FDIC would determine 

if the resulting IDI’s cross-border activities represent a significant component of operations; and 

if so, whether the activities present a high degree of cross-jurisdictional claims, liabilities, and 

other impediments to effective supervision and resolution. The Proposed SOP affirms that such 

activities may present challenges from both supervisory and resolution perspectives given the 

potential exposure to differing legal requirements, geopolitical events, and competing national 

interests.

Other Financial Stability Considerations

RFI commenters suggested that the FDIC impose various requirements upon large newly 

merged IDIs such as a requirement to submit resolution plans, a single-point-of entry resolution 

strategy, enhanced capital levels, total loss absorbing capacity standards, and other quantitative 

measures. With respect to these comments, the Proposed SOP does not include such 

requirements, in order to enable the FDIC to retain flexibility to review and evaluate the facts 

and circumstances appropriate to the application. For example, the FDIC may consider 
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previously filed resolution plans (if any)42 relevant to any IDI that may be party to a bank merger 

application. Resolution plans submitted are highly relevant and those submitted by large IDIs 

are intended to enable the FDIC, as receiver, to provide customers prompt access to their insured 

deposits and maximize the return from the sale or disposition of the bank’s assets. These 

resolution plans include information pertaining to the bank’s organizational structure, core 

business lines, information technology, funding needs, and other data to assist in the sale or 

disposition of the bank’s deposit franchise, business lines, and material assets. 

The FDIC will closely assess the degree to which the resulting IDI’s potential financial 

distress or failure could cause other IDIs with similar activities or business profiles to experience 

a loss of market confidence, falling asset values, or liquidity stress and decreased funding 

options. Further, the FDIC may consider the resulting IDI’s regulatory framework post-merger; 

however, the resulting framework cannot solely ameliorate other identified financial stability 

concerns. 

In addition to the items previously noted, the FDIC will evaluate any additional elements 

that may affect the risk to the U.S. banking or financial system stability. This may include the 

resulting IDI’s regulatory framework; however, the framework alone would not result in a 

favorable finding on this factor when other financial stability concerns exist. As appropriate, 

 

42 This would include resolution plans filed under Part 381 of the FDIC Rules and Regulations (those filed under 

Section 165(d) of the Dodd-Frank Act), as well as those filed under 12 CFR 360.10 (IDI Plans). Section 165(d) 

resolution plans typically include details of the firm’s structure, assets, and obligations; information on how the 

depository subsidiaries are protected from risks posed by its non-bank affiliates; and information on the firm’s crossguarantees, counterparties, and processes for determining to whom collateral has been pledged. IDI Plans typically 

include information and analysis on the IDI that better enable the FDIC to resolve the IDI under the FDI Act.
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consideration may be given to the merging IDIs’ records with respect to cybersecurity as well as 

their stress-testing results. For example, the FDIC evaluates the IDI’s record of preventing data 

breaches and responding to and preventing cybersecurity threats. 

Questions: 

30. How could the FDIC enhance its approach to evaluating risk to the stability of the U.S. 

banking or financial system? 

31. Should the FDIC adopt size thresholds (other than the proposed $100 billion threshold) 

related to financial stability? If so, why, and what size thresholds would be appropriate to 

identify transactions that present concerns for this statutory factor? 

32. Should the FDIC consider a quantitative risk indicator for overall financial stability? If so, 

how should this indicator be calculated, and what historical data would support the validity 

of its usage? 

33. How should the FDIC measure the potential impact (e.g., financial, economic, or other) of a 

resulting IDI on the banking or financial system? 

34. When measuring the potential impact of a merger, what potential scenarios or assumptions 

regarding financial and economic conditions would be appropriate, regarding both the merger 

transaction parties and the overall banking and financial systems? 
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35. What, if any, additional criteria should be included in the evaluation of the financial stability 

risk factor?

36. How should the FDIC assess whether a change in the overall risk to financial stability is 

problematic? Should the FDIC place more emphasis on the creation of new risk to financial 

stability, an increase to existing risk, or both? If so, what emphasis should be placed and 

why?

Effectiveness in Combatting Money Laundering Activities

In every case, the BMA directs the responsible agency to consider the effectiveness of 

any IDI involved in the proposed merger transaction in combatting money laundering activities, 

including in overseas branches.43 The FDIC expects that the resulting IDI will operate under a 

satisfactory anti-money laundering (AML)/countering the financing of terrorism (CFT) program 

commensurate with its risk profile and business (or strategic) plan.44 

As part of its evaluation of this factor, the FDIC will undertake a comprehensive analysis 

of each entity’s record with regard to AML/CFT. Among other relevant items, the FDIC will 

consider each entity’s overseas branch operations; policies, procedures, and processes; risk 

management programs; supervisory record, including compliance with the Bank Secrecy Act 

 

43 12 USC 1828(c)(11). 44 The Anti-Money Laundering Act of 2020 (the AML Act), amended subchapter II of chapter 53 of title 31 United 

States Code (the legislative framework commonly referred to as the Bank Secrecy Act or BSA). The AML Act 

requires the Financial Crimes Enforcement Network (FinCEN), in consultation with federal functional regulators, to 

promulgate AML/CFT regulations. Due to the addition of the CFT, and for consistency with FinCEN, the FDIC 

will use the term AML/CFT (which includes BSA) when referring to, issuing, or amending regulations to address 

the requirements of the AML Act of 2020.
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(BSA) and its implementing regulations; and remediation efforts pursuant to any outstanding 

corrective programs. Significant unresolved AML/CFT deficiencies, or an outstanding or 

proposed formal or informal enforcement action that includes provisions related to AML/CFT, is 

generally inconsistent with a favorable resolution of this factor. One RFI commenter suggested a 

bar on the approval of any mergers where an IDI “has been found guilty of AML misconduct in 

the previous five years.” No such bar has been included in the Proposed SOP to retain flexibility 

in evaluating the merits of each proposed transaction. 

Questions: 

37. What additional items should the FDIC evaluate as it relates to the respective merger parties’ 

AML/CFT programs? 

38. If one party to the transaction has a less than satisfactory AML/CFT compliance program, 

how much emphasis should be placed on the resultant IDI’s AML/CFT compliance program 

and its plan for integrating the target entity? 

Other Matters and Considerations

With regard to interstate mergers, the Proposed SOP states that the FDIC will ensure that 

the additional requirements and restrictions of Section 44 are satisfied.45

 

45 See 12 U.S.C.1831u. 
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The SOP highlights other matters and considerations, such as filings from non-banks46 or 

banks that are not traditional community bank47 applicants, as well as applications from 

operating non-insured entities. 

While the Proposed SOP is solely an FDIC issuance, the FDIC is working collaboratively 

with the relevant federal agencies to review and evaluate existing merger--related regulations, 

guidance, and instruction. Several RFI commenters requested that any amendments to any new 

merger regulations, guidelines, and instructions should be applied on an interagency basis, and 

any changes should be made prospectively. Regarding the roles of the federal banking agencies, 

several RFI commenters requested that the Consumer Financial Protection Bureau (CFPB) be 

consulted on all mergers, or at least all mergers for which the CFPB has an examination interest. 

A similar number of RFI commenters presented the opposite position and noted that the CFPB 

should not be consulted in any capacity, as that is not their congressional mandate. Several RFI 

commenters noted that state regulatory and supervisory authorities should be consulted, such as 

state financial regulators, state Attorney’s General, and courts. The Proposed SOP does not 

specifically address the CFPB by name, but as previously stated, the FDIC works collaboratively 

 

46 A “non-bank” refers to an IDI that is a “bank” for purposes of the FDI Act, but not for purposes of the BHCA. 

Non-banks may be owned by parent companies that are not subject to the BHCA and therefore may not regulated or 

supervised by the FRB. Existing insured non-banks include IDIs that are controlled by parent organizations engaged 

in a variety of commercial activities. These include industrial banks and industrial loan companies, trust and credit 

card banks organized under the Competitive Equality Banking Act, and other IDIs, such as municipal deposit banks. 47 In contrast to a traditional community bank, an IDI that is not a traditional community bank generally: (1) focuses 

on products, services, activities, market segments, funding, or delivery channels other than local lending and deposit 

taking; (2) pursues a broad geographic footprint (such as operating nationwide from a limited number of offices); (3) 

pursues a monoline, limited, or specialty business model; or (4) operates within an organizational structure that 

involves significant affiliate or other third-party relationships (other than common relationships such as audit, 

human resources, or core information technology processing services). A non-community bank may or may not 

operate under a non-bank charter. Specialty (sometimes referred to as “niche”) IDIs are less-diversified and usually 

considered “non-community” in nature given the concentrated business focus or emphasis on specialized activities.
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with the other federal regulators, as well as the relevant state authorities when processing merger 

applications.

Finally, RFI commenters requested that the FDIC review, to the extent possible, the 

effects of past mergers to evaluate the appropriateness of merger guidelines; and make the results 

of the evaluation public and apply the results to future merger decisions. The FDIC is 

considering this recommendation. 

Question: 

39. Are there other elements of the Proposed SOP that would benefit from additional clarity? If 

so, please provide details and explain how the elements may be clarified. 

IV. Administrative Law Matters

In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA),48

the agencies may not conduct or sponsor, and the respondent is not required to respond to, an 

information collection unless it displays a currently valid Office of Management and Budget 

(OMB) control number. 

 

48 44 U.S.C. 3501-3521.
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The proposed SOP does not create any new or revise any existing collections of 

information under the PRA. Therefore, no information collection request will be submitted to 

the OMB for review. [PLACEHOLDER The FDIC is separately requesting comment on 

proposed changes to the FDIC Supplement to the interagency Bank Merger Act application 

form.]
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Appendix A – Merger Application Activity49

TABLE 1: Number and Disposition 

Regular Merger Applications50 

(Bank-to-Bank) 

1/1/2004 - 12/31/2023

Year APPROVE RETURN WITHDRAW Totals

2004 145 2 2 149

2005 103 1 3 107

2006 137 3 7 147

2007 143 2 1 146

2008 99 - 10 109

2009 66 2 11 79

2010 86 5 5 96

2011 84 1 13 98

2012 135 6 11 152

2013 133 7 10 150

2014 136 - 11 147

2015 135 - 5 140

2016 108 - 4 112

2017 96 1 4 101

2018 118 2 5 125

2019 94 3 - 97

2020 58 1 6 65

2021 88 1 - 89

2022 44 - 7 51

2023 46 2 1 49

Totals 2,054 39 116 2,209

 

49 Source of data in Tables 1-7: FDIC. 50 Merger applications may be returned if they are not substantially complete. At its discretion, the FDIC may offer 

an applicant an opportunity to withdraw an application. Applicants may withdraw an application at any time if they 

elect not to pursue the transaction. In some cases, in anticipation of a denial recommendation, applicants choose to 

withdraw their filing. The number of mergers that occur in a given year may differ from the number of mergers 

approved by the FDIC that same year, as a merger may not be consummated in the same year it is approved. 

A regular merger is generally a combination of the assets and liabilities of two or more unaffiliated IDIs under one 

IDI’s charter with the extinguishment or cancellation of the charter(s) of the other IDI(s). For purposes of these 

tables, “Bank to Bank” refers to a merger when all of the parties involved are IDIs and the resulting IDI is a state 

nonmember bank or state savings association; “Involving Credit Unions” refers to a merger that involves the 

combination of any IDI with a credit union; and “Involving Uninsured Entities” refers to a merger that involves the 

combination of any IDI with an uninsured entity. 
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TABLE 2: Number and Disposition 

Regular Merger Applications by Asset Size of Resultant IDI 

(Bank-to-Bank) 

1/1/2004 - 12/31/2023

Asset Size of Resultant IDI APPROVE RETURN WITHDRAW Totals

No Reported Assets 3 13 34 50

Assets > $0 and <= $10 Billion 1,953 26 76 2,055

Assets > $10 Billion and <= $100 Billion 91 - 6 97

Assets > $100 Billion 7 - - 7 

Totals 2,054 39 116 2,209

TABLE 3: Number and Disposition 

Regular Merger Applications 

(Involving Credit Unions)

1/1/2004 - 12/31/2023

Year APPROVE RETURN WITHDRAW Totals

2004 1 - - 1 

2005 2 - - 2 

2006 2 - 1 3 

2007 1 - - 1 

2008 - - - 0 

2009 - - - 0 

2010 2 - - 2 

2011 2 - - 2 

2012 4 - - 4 

2013 7 - - 7 

2014 3 - 1 4 

2015 2 - - 2 

2016 7 - - 7 

2017 5 - 1 6 

2018 12 - 2 14

2019 17 - - 17

2020 13 - 4 17

2021 8 3 1 12

2022 19 - 2 21

2023 14 - - 14

Totals 121 3 12 136
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TABLE 4: Number and Disposition 

Regular Merger Applications by Asset Size of Resultant IDI 

(Involving Credit Unions) 

1/1/2004 - 12/31/2023

Asset Size of Resultant Institution APPROVE RETURN WITHDRAW Totals

No Reported Assets - - 2 2 

Assets > $0 and <= $10 Billion 115 3 10 126

Assets > $10 Billion and <= $100 Billion 5 - - 5 

Assets > $100 Billion 1 - - 1 

Totals 121 3 12 136

TABLE 5: Number and Disposition

Regular Merger Applications

(Involving Uninsured Entities)

1/1/2004 - 12/31/2023

Year APPROVE RETURN WITHDRAW Totals

2004 6 2 1 9 

2005 6 - - 6 

2006 15 - 2 17

2007 2 - 1 3 

2008 5 - 2 7 

2009 2 2 1 5 

2010 2 - 1 3 

2011 - - - 0 

2012 4 - 4 8 

2013 2 - 1 3 

2014 5 - 1 6 

2015 2 - 1 3 

2016 10 3 1 14

2017 8 1 2 11

2018 11 - 1 12

2019 14 1 - 15

2020 6 - 2 8 

2021 10 - 1 11

2022 5 - 3 8 

2023 1 1 1 3 

Totals 116 10 26 152
Page 66 of 93

 

51 Only includes transactions in which the resulting institution was an FDIC-supervised state nonmember bank or 

state savings association, or in which an IDI sold substantially all of its assets to a credit union and ceased operation.

TABLE 6: Number and Disposition 

Regular Merger Applications by Asset Size of Resultant IDI 

(Involving Uninsured Entities) 

1/1/2004 - 12/31/2023

Asset Size of Resultant IDI APPROVE RETURN WITHDRAW Totals

No Reported Assets 1 7 8 16

Assets > $0 and <= $10 Billion 92 2 15 109

Assets > $10 Billion and <= $100 Billion 20 1 - 21

Assets > $100 Billion 3 - 3 6 

Totals 116 10 26 152

TABLE 7: Number of IDIs Acquired 

Purchase & Assumption Transactions51

1/1/2004 – 12/31/2023

Year Number

2004 128

2005 132

2006 167

2007 148

2008 130

2009 91

2010 104

2011 106

2012 112

2013 152

2014 146

2015 161

2016 159

2017 134

2018 149

2019 151

2020 99

2021 94

2022 75

2023 78

Total 2,516
Page 67 of 93

V. Proposed Statement of Policy

The text of the proposed Statement of Policy follows:

FDIC Statement of Policy on Bank Merger Transactions 

I. Introduction

This Statement of Policy (SOP) communicates the FDIC Board of Directors’ 

expectations and views regarding applications filed pursuant to Section 18(c) of the Federal 

Deposit Insurance Act (FDI Act), which is referred to herein as the Bank Merger Act (BMA). 

The SOP reflects the FDIC’s interpretations of the BMA and its implementing regulations. The 

structure of the SOP follows the BMA’s core statutory provisions, and its content highlights the 

principles that guide the FDIC’s evaluation of the statutory factors for a merger application.

The BMA prohibits an insured depository institution (IDI) from engaging in a merger 

transaction without regulatory approval. It identifies the types of undertakings that constitute 

“merger transactions” and outlines which of the three federal banking agencies is the 

“responsible agency” for acting on a given merger application.1 In addition, the BMA sets forth 

advance public notice requirements2 and generally requires the responsible agency to request a 

report on the competitive factors for a merger transaction from the Attorney General.3

 

1 12 U.S.C. § 1828(c)(1) and (2).

2 12 U.S.C. § 1828(c)(3).

3 12 U.S.C. § 1828(c)(4). 
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The BMA generally prohibits the responsible agency from approving a monopolistic or 

otherwise anticompetitive merger transaction.4 In addition to competitive considerations, the 

BMA requires the relevant agency to evaluate a merger transaction in light of 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 (U.S.) banking or financial system,5 and the effectiveness of the IDIs involved in the 

merger transaction in combatting money laundering.6

II. Jurisdiction and Scope

The FDIC is one of three federal banking agencies with responsibility for evaluating 

transactions subject to the BMA. The FDIC has jurisdiction to act on merger applications that 

involve an IDI and any non-insured entity,7 and those that solely involve IDIs in which the 

acquiring, assuming, or resulting institution is an FDIC-supervised institution.8

The BMA requires regulatory approval for any merger transaction involving an IDI.9 The 

applicability of the BMA will depend on the facts and circumstances of the proposed transaction. 

In addition to transactions that combine institutions into a single legal entity through merger or 

consolidation, the scope of merger transactions subject to approval under the BMA encompasses 

 

4 12 U.S.C. § 1828(c)(5).

5 Ibid. 6 12 U.S.C. §1828(c)(11). 

7 12 U.S.C. § 1828(c)(1). A non-insured entity refers to any entity that is not FDIC insured. 8 The Office of the Comptroller of the Currency has jurisdiction for any merger transaction between IDIs in which 

the acquiring, assuming, or resulting institution is a national bank or a federal savings association. The Board of 

Governors of the Federal Reserve System (FRB) has jurisdiction for any merger transaction between IDIs in which 

the acquiring, assuming, or resulting institution is a state-chartered bank that is a member of the Federal Reserve 

System. The FRB also has approval authority under the Bank Holding Company Act for mergers involving bank 

holding companies and the Home Owners’ Loan Act for mergers involving savings and loan holding companies. 

Merger transactions that are subject to the FDIC’s review may also be subject to the review of state authorities. 9 12 U.S.C. 1828(c). 
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transactions that take other forms, including purchase and assumption transactions or other 

transactions that are mergers in substance, and assumptions of deposits or other similar 

liabilities.10 

The FDIC considers transactions to be mergers in substance when a target would no 

longer compete in the market, regardless of whether the target plans to liquidate immediately 

after consummating the transaction. An example of a transaction that is a merger in substance, 

and therefore subject to the BMA, is when an IDI absorbs all (or substantially all) of a target 

entity’s assets and the target entity dissolves (or otherwise ceases to engage in the acquired lines 

of business). 

An FDIC-supervised IDI’s assumption of a deposit from another IDI, or any IDI’s 

assumption of a deposit from a non-insured entity, is likewise subject to FDIC approval even in 

the absence of an express agreement for a direct assumption. Similarly, a transfer of deposits 

from any IDI to a non-insured entity is subject to FDIC approval.11 The definition of “deposit” 

per Section 3(l) of the FDI Act is broad and extends beyond traditional demand deposits to 

include trust funds and escrow funds, among other items. 

 

Merger and other corporate transactions may be conducted through a single transaction or 

through a series of related transactions that each require an application, such as transactions 

effected through interim institutions. In all cases, the FDIC will evaluate the substance of all of 

 

10 A merger that includes the establishment or relocation of branches is also subject to approval under 12 U.S.C. § 

1828(d).

11 12 U.S.C. § 1828(c)(1)(C). 
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the facts and circumstances of the transaction and any related transactions, identify which aspects 

of the transaction(s) are subject to FDIC approval, and fully evaluate the statutory factors 

applicable to each transaction.

Overview of the Application Process

The FDIC encourages prospective applicants to engage in a pre-filing process to discuss 

regulatory expectations. It is particularly important for the application to be substantially 

complete when initially filed.12 The quality and comprehensiveness of a filing are critical to the 

FDIC’s evaluation of the application under the statutory factors and other regulatory 

requirements.13 The FDIC expects all submitted materials, including the financial projections 

and any related analyses, to be well supported and sufficiently detailed. The narrative describing 

the analysis and evaluation of the transaction should be supported by studies, surveys, analyses 

and reports, including those prepared by or for officers, directors, or deal team leads. Incomplete 

filings or non-responsiveness to additional information requests are substantial impediments to 

the FDIC’s ability to fully evaluate and resolve the statutory factors. 

Public feedback is an important component of the FDIC’s review of a merger application. 

Section 18(c)(3) of the FDI Act requires that public notice of the proposed merger transaction be 

published in an approved form and at appropriate intervals in a newspaper or newspapers of 

general circulation. A list of pending merger applications subject to the Community 

 

12 As noted in Section 1.1 of the Applications Procedures Manual, a filing that is not substantially complete lacks the 

substance necessary for the FDIC to evaluate the statutory factors.

13 Regulatory requirements for merger applications are provided in Part 303 of the FDIC Rules and Regulations

(including Subparts A and D) and any other federal or state regulations, statutes, or laws applicable to the filing.
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Reinvestment Act (CRA) is available on the FDIC’s website using the Applications in Process 

Subject to the CRA Report Selection Options.

14 In all cases, the FDIC will review and evaluate 

any public comments received regarding the merger application, and will provide the applicant 

an opportunity to respond to any comment that is determined to be a CRA protest.15 The FDIC 

will also consider the views of each relevant federal and state agency. Generally, the FDIC will 

not approve a merger application if adverse CRA comments have not been resolved.16 In certain 

cases, the FDIC may hold hearings or other proceedings in connection with evaluating a merger 

application.17 

Section 18(c)(4) of the FDI Act requires the FDIC to request a competitive factors report 

from the Attorney General of the United States for any merger transaction between an IDI and a 

non-affiliated entity, unless the FDIC finds that it must act immediately in order to prevent the 

probable failure of an IDI involved in the transaction.18 As circumstances warrant, the 

Department of Justice (DOJ) and the FDIC will coordinate the review when there are concerns or 

questions regarding the competitive effects of the transaction. As described below, the FDIC 

undertakes an independent review consistent with the statutory factors of the BMA. 

 

14 Applications In Process Subject to the CRA Report Selection Options, https://cra.fdic.gov/ 15 12 CFR 303.2(l) defines the term “CRA protest” to mean any adverse comment from the public related to a 

pending filing that raises a negative issue relative to the CRA, whether or not it is labeled a protest and whether or 

not a hearing is requested. An “adverse comment” is defined under Section 303.2(c) of the FDIC Rules and 

Regulations, as any objection, protest, or other adverse written statement submitted by an interested party relating to 

a filing.

16 See 12 CFR 303.2(c) and 303.2(l). 17 See 12 CFR 303.10. 18 12 U.S.C. § 1828(c)(4). In addition to acting to prevent the probable failure of an IDI, Section 18(c)(4)(C) of the 

FDI Act includes exceptions for merger transactions involving solely an IDI and one or more of its affiliates. 
Page 72 of 93

Merger Application Adjudication 

Generally, if all statutory factors are favorably resolved, and all other regulatory 

requirements are satisfied, the FDIC will approve the merger application. Approvals will be 

subject to the standard conditions detailed in Section 303.2(bb) of the FDIC Rules and 

Regulations and any non-standard conditions deemed appropriate by the FDIC. However, the 

FDIC will not use conditions as a means for favorably resolving any statutory factors that 

otherwise present material concerns. The Order and Basis for Approval (Order) will be posted to 

the FDIC’s Decisions on Bank Applications webpage.19 The Order will address all statutory 

factors, as well as summarize information regarding any CRA protests. The FDIC will 

summarize the related analysis and conclusions and include any conditions imposed in 

conjunction with the approval. 

The FDIC’s publicly available Delegations of Authority set forth criteria that must be 

satisfied in order for staff in the FDIC Regional Offices or Washington Office to approve a 

merger application.20 Notably, the Board of Directors reserves the authority to deny any merger 

application or act on certain types of proposed transactions, including any transaction for which 

one or more statutory factors are unfavorably resolved. 

Generally, applications will present significant concerns and will likely result in 

unfavorable findings with regard to one or more statutory factors if they include the following 

circumstances:

 

19 Decisions on Bank Applications, https://www.fdic.gov/regulations/laws/bankdecisions/merger/ 20 Refer to https://www.fdic.gov/regulations/laws/matrix/delegations-filings.pdf
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• Non-compliance with applicable federal or state statutes, rules, or regulations (this includes, 

for example, transactions that would exceed the 10 percent nationwide deposit limit, as well 

as both issued and pending enforcement actions); 

• Unsafe or unsound condition relating to the existing IDIs or the resulting IDI; 

• Less than satisfactory examination ratings, including for any specialty areas (i.e., information 

technology or trust examinations); 

• Significant concerns regarding financial performance or condition, risk profile, or future 

prospects; 

• Inadequate management, including significant turnover, weak or poor corporate governance, 

or lax oversight and administration; or 

• Incomplete, unsustainable, unrealistic or unsupported projections, analyses, and/or 

assumptions. 

 

Additionally, the FDIC may not be able to find favorably on any given statutory factor 

(and the application as a whole) if there are unresolved deficiencies, issues, or concerns 

(including with respect to any public comments). A lack of sustained performance under 

corrective programs will also be inconsistent with a favorable finding on one or more statutory 

factors, particularly when the transaction implicates the areas that are the subject of the 

corrective program. Further, the inability or unwillingness of the applicant to agree to proposed 

conditions or execute written agreements, if deemed necessary, will result in unfavorable 

findings and would require action by the Board of Directors on the application. 
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If FDIC staff finds unfavorably on one or more statutory factors based on the application 

review, staff generally will recommend denial of the application. At the FDIC’s discretion, 

applicants may be offered the opportunity to withdraw the filing. If an applicant withdraws their 

filing, the Board of Directors may release a statement regarding the concerns with the transaction 

if such a statement is considered to be in the public interest for purposes of creating transparency 

for the public and future applicants. 

III. Statutory Factors

Merger applications are evaluated under the framework of statutory factors as described 

in the BMA. Generally, the BMA prohibits approval of monopolistic or otherwise 

anticompetitive transactions; and requires the responsible agency to consider specific statutory 

factors related to financial and managerial resources and future prospects, convenience and needs 

of the community to be served, combatting money laundering, and financial stability. The BMA 

also prohibits interstate mergers in which the resulting IDI would control more than 10 percent 

of the deposits of IDIs in the United States.21 Evaluations of each statutory factor consider the 

respective entities’ supervisory record, potential risks and compensating controls, and any other 

available information deemed appropriate. 

 

21 12 U.S.C. §§ 1828(c)(5), 1828(c)(11), and 1828(c)(13). 
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Monopolistic or Anticompetitive Effects

The FDIC strives to ensure that resulting institutions continue as participants in a 

competitive environment. Section 18(c)(5) of the BMA prohibits the FDIC from approving a 

merger transaction that would result in a monopoly or would be in furtherance of an attempt to 

monopolize the business of banking in any part of the U.S. The BMA also prohibits the FDIC 

from approving a merger transaction that may substantially lessen competition in any section of 

the country, unless 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.22 For example, such a circumstance may exist where a 

transaction is necessary to prevent the probable failure of an IDI. 

The FDIC will evaluate the competitive effects of a proposed merger in a manner that is 

most relevant to each transaction. Consistent with the majority of merger transactions typically 

presented to the FDIC, the FDIC generally employs a framework for evaluating competitive 

effects involving a transaction between IDIs with traditional community banking operations 

within their local geographic markets. However, the FDIC will tailor its evaluation to consider 

the size and competitive effects of the resulting IDI. Additionally, the FDIC will consider all 

relevant market participants. For example, the FDIC may include any other financial service 

providers that the FDIC views as competitive with the merging entities, including providers 

located outside the geographic market when it is evident that such providers materially influence 

the market. Further, in cases involving merging entities with specialty lines of business or non-

 

22 12 U.S.C. § 1828(c)(5). 
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traditional products, services, or delivery methods, the FDIC will take into account any 

additional data sources or appropriate analytical approaches to fully assess the competitive 

effects of the transaction. 

In assessing competitive effects, the FDIC considers concentrations with respect to both 

geographic and product markets. The FDIC identifies all relevant geographic markets (local, 

regional, and national) based on the geographic areas in which the merging entities operate and 

in which customers may practically turn to competitors for alternative products and services.23 

The FDIC uses deposits as an initial proxy for commercial banking products and services. The 

FDIC will initially measure the respective shares of total deposits held by the merging entities 

and the various other participants with offices in the geographic market. The FDIC evaluates the 

market concentration and change in market concentration in each geographic and product 

market.24 

In addition, the FDIC will consider concentrations beyond those based on deposits. As 

appropriate, the FDIC may consider concentrations in any specific products or customer 

segments, such as, for example, the volume of small business or residential loan originations or 

activities requiring specialized expertise. Additionally, when relevant, the analysis may 

incorporate other products offered by the merging entities with consideration given to whether 

consumers retain meaningful choices. In its analysis, the FDIC will evaluate a market with a 

scope that is appropriate to the products or services offered or planned. Moreover, the FDIC will 

 

23 See United States v. Philadelphia National Bank, 374 U.S. 321 (1963).

24 Indicators of market concentration and change in concentration include calculations using the HerfindahlHirschman Index (HHI). 
Page 77 of 93

consider the emergence of new competitors for products or services in relevant markets; and the 

expansion of products and services offered by the merging entities and other market participants. 

Finally, as necessary or appropriate, the FDIC will consider other products or services and 

additional methods of assessing the competitive nature of markets. In particular, the FDIC may 

consider information on the pricing of products and services to assess the competitive effects of a 

proposed merger when practicable and relevant.

The FDIC may require divestitures of business lines, branches, or portions thereof as a 

means to mitigate competitive concerns before allowing the merger to be consummated. In such 

cases, the FDIC will generally require that the selling institution will not enter into non-compete 

agreements with any employee of the divested entity nor enforce any existing non-compete 

agreements with any of those entities.

Nationwide Deposit Cap 

The BMA prohibits approval of an interstate merger that results in an IDI (and its 

affiliates) controlling more than 10 percent of the total deposits of IDIs in the U.S.25 This 

prohibition does not apply to transactions that involve one or more IDIs in default or in danger of 

default. Consistent with the competitive effects review, the FDIC will use the most current 

Summary of Deposits data to confirm the nationwide deposit share of the resulting IDI following 

the proposed transaction. 

 

25 12 U.S.C. § 1828(c)(13).
Page 78 of 93

Financial Resources 

The BMA requires the responsible agency to consider the financial resources of the 

existing and proposed entities involved in a merger transaction.26 The FDIC expects that the 

resulting IDI will reflect sound financial performance and condition.27 Generally, the FDIC will 

not find favorably on the financial resources factor if the merger would result in a weaker IDI 

from an overall financial perspective.

A critical component of the analysis of financial resources is the resultant IDI’s ability to

meet applicable capital standards (including maintenance of appropriate allowances for loan or 

credit losses). Depending on the anticipated risk profile of the resulting IDI, the FDIC may 

impose, as a non-standard condition, capital requirements that are higher than applicable capital 

standards.28 Further, as appropriate, the FDIC may impose a non-standard condition that 

requires the resulting IDI and other relevant parties (such as certain affiliates or investors) to 

enter into one or more written agreements that address, as applicable, capital maintenance 

requirements, liquidity or funding support, affiliate transactions, and other relevant provisions. 

The FDIC also expects the resulting IDI to maintain sufficient liquidity and appropriate funding 

strategies given its size, complexity, and risk profile. 

 

26 12 U.S.C. § 1828(c)(5). 27 This evaluation encompasses capital, asset quality, earnings, liquidity, and sensitivity to market risk, as described 

in the Uniform Financial Institution Rating System (UFIRS); see 61 Fed Reg. 67021 (December 19, 1996). 28 Refer to the applicable capital regulations for the relevant parties. The minimum capital ratios for FDICsupervised institutions are set forth at 12 CFR 324.10, and the capital measures and capital category definitions for 

the purposes of Prompt Corrective Action are set forth at 12 CFR 324.403 for FDIC-supervised institutions. 
Page 79 of 93

The FDIC will also consider the current and projected financial impact of any related 

entities on the IDI, including the parent organization and any key affiliates. For each relevant 

entity, the FDIC will consider, among other items, the size and scope of operations, capital 

position, quality of assets, overall financial performance and condition, compliance and 

regulatory history, primary revenue and expense sources, and funding strategies. 

Managerial Resources

The BMA requires the responsible agency to consider the managerial resources of the 

existing and proposed entities involved in a merger transaction.29 The FDIC expects that the 

directors, officers, and as appropriate, principal shareholders (collectively, management) possess 

the capabilities to administer the resultant IDI’s affairs in a safe and sound manner, and 

effectively implement post-merger integration plans and strategies. 

The capability of management to identify, measure, monitor, and control risks and ensure 

a safe and sound operation in compliance with applicable laws and regulations is included in the 

evaluation of managerial resources. The FDIC will consider the background and experience of 

each member of management relative to the size, complexity, and risk profile of the resulting 

IDI, including the managerial performance and supervisory record of affiliates and subsidiaries. 

The FDIC will review supervisory assessments of management made by the relevant 

regulatory authorities, as well as the nature and extent of organizational relationships. The FDIC 

 

29 12 U.S.C. § 1828(c)(5).
Page 80 of 93

will also evaluate the effect of such relationships on the IDI, as well as the operating history, risk 

management, and control environment of the parent organization. Inherent in these 

considerations are the condition, performance, risk profile, and prospects of the organization as a 

whole, as well as the consistency of the proposed merger with the resulting IDI’s strategic (or 

business) plan. 

The FDIC will assess each IDI’s record of compliance with respect to consumer 

protection, fair lending, and other relevant consumer laws and regulations. The FDIC will 

analyze the compliance management system of each of the IDIs, as well as the compliance 

management system for the resulting IDI to ensure that appropriate controls will be implemented 

to identify, monitor, and address consumer compliance risks. Consideration will also be given to 

the consumer compliance rating pursuant to the Uniform Interagency Consumer Compliance 

Rating System and the CRA rating.30 

Additional managerial resource considerations include: 

• The supervisory history of each entity involved in the proposed merger, including the 

management rating31 for any IDI involved in the transaction; 

• The breadth and depth of management, and adequacy of succession planning; 

• Management’s responsiveness to issues or supervisory recommendations raised by regulators 

or auditors; 

• Any existing or pending enforcement actions; 

 

30 81 Fed. Reg. 79473, (Nov. 14, 2016). 31 The management rating is defined in the UFIRS.
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• Any issues or concerns with regard to specialty areas including information technology, trust, 

consumer compliance, CRA, or Anti-Money Laundering (AML)/countering the financing of 

terrorist activities (CFT);32 and 

• The reasonableness of fees, expenses, and other payments made to insiders. 

• Recent rapid growth and the record of management in overseeing and controlling risks 

associated with such growth. 

The FDIC expects management to develop and implement effective plans and strategies, 

and the resulting IDI to have the managerial and operational capacity to integrate the acquired 

entity. Effective integration includes, but is not limited to, human capital; products and services; 

operating systems, policies, and procedures; internal controls and audit coverage; physical 

locations; information technology; and risk management programs. In conjunction with the 

integration, the FDIC expects a resulting IDI to have the managerial and operational capacity, 

and to devote adequate resources, to ensure full and timely compliance with any outstanding 

corrective programs or supervisory recommendations. 

 

32 The Anti-Money Laundering Act of 2020 (the AML Act), amended subchapter II of chapter 53 of title 31 United 

States Code (the legislative framework commonly referred to as the Bank Secrecy Act or BSA). The AML Act 

requires the Financial Crimes Enforcement Network (FinCEN), in consultation with federal functional regulators, to 

promulgate AML/CFT regulations. Due to the addition of the CFT, and for consistency with FinCEN, the FDIC 

will use the term AML/CFT (which includes BSA) when referring to, issuing, or amending regulations to address 

the requirements of the AML Act of 2020.
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Future Prospects 

 The BMA requires the responsible agency to consider the future prospects of the existing 

and proposed entities involved in a merger transaction.33 The FDIC expects that the resulting 

IDI will operate in a safe and sound manner on a sustained basis following consummation of the 

merger. Among other items, the FDIC will consider the economic environment, the competitive 

landscape, the acquiring IDI’s history in integrating merger targets and managing growth, the 

anticipated scope of the resulting IDI’s operations, the quality of its supporting infrastructure, 

and other pertinent factors. Any significant planned changes to the resulting IDI’s strategies, 

operations, products or services, activities, income or expense levels, or other key elements of its 

business will be closely assessed. The FDIC will review the pro forma financial projections, the 

underlying assumptions, and any accompanying valuations (such as those related to the target 

entity, goodwill, or other assets) to ensure they demonstrate and support that the resulting IDI 

will maintain an acceptable risk profile. 

Convenience and Needs of the Community to be Served

The BMA requires the responsible agency to consider the convenience and needs of the 

community to be served when evaluating a merger transaction.34 The FDIC expects that a 

merger between IDIs will enable the resulting IDI to better meet the convenience and the needs 

of the community to be served than would occur absent the merger. Applicants are expected to 

demonstrate how the transaction will benefit the public through higher lending limits, greater 

 

33 12 U.S.C. § 1828(c)(5). 34 12 U.S.C. §§ 2902(3)(E) and 2903(a)(2).
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access to existing products and services, introduction of new or expanded products or services, 

reduced prices and fees, increased convenience in utilizing the credit and banking services and 

facilities of the resulting IDI, or other means. 

The FDIC expects applicants to provide specific and forward-looking information to 

enable the FDIC to evaluate the expected benefits of the merger on the convenience and needs of 

the community to be served. As appropriate, claims and commitments made to the FDIC to 

support the FDIC’s evaluation of the expected benefits of the merger may be included in the 

Order, and the FDIC’s ongoing supervisory efforts will evaluate the IDI’s adherence with any 

such claims and commitments. The FDIC will evaluate the community to be served broadly, 

which will include the proposed assessment area(s), retail delivery systems, populations in 

affected communities, and identified needs for banking services. 

As part of its evaluation, the FDIC will review the CRA record of the institutions. The 

CRA requires the FDIC to take into account each IDI’s record of meeting the credit needs of its 

entire community, including low- and moderate-income neighborhoods, consistent with the safe 

and sound operation of such institution.35 As such, the FDIC will consider each institution’s 

CRA performance evaluation record of helping to meet the credit needs of its assessment areas, 

including low- and moderate-income neighborhoods, and record of community development 

activity, as applicable. A less than Satisfactory historical rating or significant deterioration in 

CRA performance will generally result in unfavorable findings. The FDIC’s review is not 

limited to the CRA record of the institutions and will encompass a broad review of the 

 

35 12 U.S.C. §§ 2902(3)(E) and 2903(a)(2).
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institutions’ existing products and services and whether the products and services proposed by 

the applicants will meet the convenience and needs of the community to be served.

In addition, the FDIC will consider the record of each institution in complying with 

consumer protection requirements and maintaining a sound and effective compliance 

management system. This review will include consideration of any existing or pending orders, 

ongoing enforcement actions, and pending reviews or investigations of violations of consumer 

protection laws and regulations. A less than Satisfactory consumer compliance rating36 may 

present significant concerns in resolving this factor.

The CRA assessment area(s) and branch locations resulting from the merger are 

evaluated as part of this factor. The assessment area(s) should be delineated in accordance with 

Part 345 of the FDIC Rules and Regulations (or other appropriate regulations), and should not 

reflect illegal discrimination. The FDIC will evaluate all projected or anticipated branch 

expansion, closings, or consolidations for the first three years following consummation of the 

merger.37 Branch closings are subject to both Section 42 of the FDI Act and the Interagency 

Policy Statement Concerning Branch Closing Notices and Policies.

38 Information regarding any 

proposed or expected closures, including the timing of each closure, the effect on the availability 

of products and services, particularly to low- or moderate-income individuals or designated 

areas, any job losses or lost job opportunities from branching changes, and the broader effects on 

 

36 Uniform Interagency Consumer Compliance Rating System, 81 Fed. Reg. 79473, (Nov. 14, 2016). 37 Generally, the FDIC considers a substantially complete merger application to include, among other items, at least 

three years of information regarding projected branch expansions, closings, or consolidations. Short-distance 

consolidations that may not be subject to Section 42 outside of a merger context should be included in this 

information. 

38 64 Fed. Reg. 34845, (June 29, 1999)
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the convenience and needs of the community to be served will be closely evaluated. 

Applications that project material reductions in service to low- and moderate-income 

communities or consumers will generally result in unfavorable findings. 

The FDIC will consider all substantive public comments received in accordance with 

Section 303.9 of the FDIC Rules and Regulations, as well as the views of relevant state and 

federal regulators regarding the ability of the applicant to meet the convenience and needs of the 

community to be served. Non-standard conditions may be imposed, as appropriate, in response 

to CRA weaknesses, relevant regulator input, bank commitments, or public comments. The 

FDIC will consider whether it is in the public interest to hold a hearing for merger applications, 

and generally expects to hold a hearing for any application resulting in an IDI with greater than 

$50 billion in assets or for which a significant number of CRA protests are received. The FDIC 

may also hold public or private meetings to receive input on the transaction. The decision to 

hold such meetings depend on issues raised during the comment period and the significance of 

the merger transaction to the public interest, to the banking industry, and communities affected. 

As noted above, the BMA prohibits the FDIC from approving a merger transaction that 

may substantially lessen competition in any section of the country, unless 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.39 

In situations where anticompetitive effects are identified, the FDIC will evaluate whether the 

applicant has established that the benefits to the convenience and needs of the community will 

 

39 12 U.S.C. § 1828(c)(5). 
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clearly outweigh the anticompetitive effects. A favorable finding on the convenience and needs 

of the community to be served factor may not support approval of the application when 

anticompetitive effects are identified. 

Risk to the Stability of the United States Banking or Financial System

Section 604 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act) amended the BMA to require the FDIC to consider the risk posed by a merger 

transaction to the stability of the U.S. banking or financial system. The FDIC expects that the 

resulting IDI (or consolidated company) will not materially increase the risk to the stability of 

the U.S. banking or financial system.40 Consistent with the other federal banking agencies,41 the 

FDIC evaluates this factor with respect to the following:

• The size of the entities involved in the transaction; 

• The availability of substitute providers for any critical products or services to be offered by 

the resulting IDI;

• The resulting IDI’s degree of interconnectedness with the U.S. banking or financial system; 

• The extent to which the resulting IDI contributes to the U.S. banking or financial system’s 

complexity; and

• The extent of the resulting IDI’s cross-border activities.

 

40 12 U.S.C. 1828(c)(5). 41 The FDIC will consider data collected by the Federal Reserve to monitor the systemic risk profile of the 

institutions, which are subject to enhanced prudential standards under Section 165 of the Dodd-Frank Act. 
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Generally, the FDIC will not view the size of the entities involved in a proposed merger 

transaction as a sole basis for determining the risk to the U.S. banking or financial system’s 

stability. However, transactions that result in a large IDI (e.g., in excess of $100 billion) are 

more likely to present potential financial stability concerns with respect to substitute providers, 

interconnectedness, complexity, and cross border activities, and will be subject to added scrutiny. 

The FDIC will consider the nature and scope of operations of the target entity, the resulting IDI, 

and any other elements that may also influence the risk to the U.S. banking or financial system’s 

stability.

With regard to substitute providers, the FDIC will consider whether the resulting IDI 

provides critical products or services that may be difficult to replace, or conducts activities 

(including specific business lines) that comprise a relatively large share of system-wide 

activities. Concerns are heightened, and may preclude favorable resolution of this factor, in 

situations where there are limited readily available substitutes, as relied upon services may be 

disrupted or discontinued if the resulting IDI encounters financial distress or fails. 

In assessing the resulting IDI’s interconnectedness, the FDIC will consider the degree to 

which the merging entities are engaged in transactions or relationships with IDIs, affiliates of 

banking organizations, or other financial service providers. Consideration will be given to 

whether any exposures with creditors, counterparties, investors, or other market participants 

could affect the U.S. banking or financial system. A resulting IDI may present financial stability 

concerns if key aspects of its business (including any on- or off-balance sheet activities) are 

highly interconnected with other financial system participants.
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The FDIC’s evaluation of the resulting IDI’s contribution to the U.S banking or financial 

system’s complexity will consider the full scope of the IDI’s operations. This includes the IDI’s 

business lines, products and services, on- and off-balance sheet activities, branch network and 

delivery channels, number of account holders (including the volume of uninsured deposits), 

extent of information technology systems, and any material affiliate or other third-party 

relationships. As part of evaluating the resulting IDI’s impact on complexity, the FDIC will also 

consider its resolvability in a potential failure situation. The FDIC may not be able to find 

favorably on this factor when the resultant IDI’s organizational and funding structure preclude its 

ability to: (i) continue operations and activities until they can be sold or wound down, (ii) sell 

key business lines or large asset portfolios, and (iii) be marketed for sale in a manner that limits 

the potential for losses to the Deposit Insurance Fund.42 

The extent of a resulting IDI’s cross-border activities may also have implications with 

regard to a favorable finding on this factor. The FDIC will consider whether cross-border 

activities comprise a material component of the resulting IDI’s operations and present a 

significant degree of cross-jurisdictional claims or liabilities. Such activities may present 

challenges from both supervisory and resolution perspectives given the potential exposure to 

differing legal requirements, geopolitical events, and competing national interests.

 

42 In addition to considering the FDIC’s potential role as receiver of the resulting IDI under Section 11 of the FDI 

Act, it will also take into account possible alternative resolution scenarios. 
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Other Stability Considerations 

The above list of items is not exhaustive. The FDIC will evaluate any additional 

elements that may affect the risk to the U.S. banking or financial system’s stability. This may 

include the resulting IDI’s regulatory framework; however, the framework alone would not 

result in a favorable finding on this factor when other financial stability concerns exist. As 

appropriate, consideration may be given to the merging IDIs’ records with respect to 

cybersecurity and stress-testing results. The FDIC may also evaluate the degree to which the 

resultant IDI’s potential financial distress or rapid liquidation could cause other market 

participants with similar activities or business profiles to experience a loss of market confidence, 

falling asset values, or decreased funding options. 

Proposed transactions that solely involve affiliates that were related at the time a merger 

application is filed generally will not raise concerns with regard to this factor. However, each 

proposal will be reviewed to ensure that the resulting IDI would not present any new or 

unforeseen financial stability risks that may not have existed when the merging entities operated 

as affiliates or on a standalone basis.

Effectiveness in Combatting Money Laundering Activities

The BMA requires the responsible agency to consider the effectiveness of any IDI 

involved in a merger transaction in combatting money-laundering activities, including in 
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overseas branches.43 The FDIC expects that approved merger transactions will result in 

institutions with effective programs to combat money laundering (Anti-Money Laundering or 

AML) and counter the financing of terrorism (CFT). A favorable finding on this factor will be 

based on a comprehensive evaluation of each entity’s AML/CFT program that includes overseas 

branches; policies, procedures, and processes; risk management programs; the supervisory record 

of each participating entity, the entity’s compliance with Bank Secrecy Act (BSA) and its 

implementing regulations; and remediation efforts pursuant to an outstanding corrective 

program.44 In all cases, the FDIC will consider whether the resulting IDI has developed an 

appropriate plan for the integration of the combined operations into a single, comprehensive, and 

effective program to combat money laundering and terrorist financing. Additionally, the FDIC 

expects the applicant to demonstrate how the resulting IDI will comply with the BSA and its 

implementing regulations following consummation of the merger. 

Significant unresolved AML/CFT concerns or uncorrected problems, or an outstanding or 

proposed formal or informal enforcement action that includes provisions related to AML/CFT, 

will generally result in unfavorable findings on this factor. In limited cases, sufficient mitigating 

factors may support a favorable finding, such as when an acquirer with a strong AML/CFT 

program replaces a target entity’s less than satisfactory program and presents an appropriate plan 

to address the target entity’s deficiencies.

 

43 12 U.S.C. § 1828(c)(11). 44 An IDI under an outstanding formal enforcement action should make substantial progress to correct problem(s) 

addressed in the action. Progress should be sufficient to determine that the AML/CFT program is now adequate. 
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IV. Other Matters and Considerations

Interstate Merger Transactions 

In cases where Section 44 of the FDI Act applies to an interstate merger transaction, the 

FDIC will ensure that the additional requirements and restrictions of Section 44 are satisfied.45

Applications Involving Non-Banks or Banks that are Not Traditional Community Banks 

Historically, most merger transactions considered by the FDIC have involved traditional 

community banks. In general, traditional community banks focus on providing the banking 

services, including loans and core deposits, typically relied on by individuals and businesses in 

their local communities. However, merger applications may also involve non-banks46 or banks 

that are not traditional community banks, which may involve more complexity than a traditional 

community bank in terms of its business model, products, services, activities, market segments, 

funding, delivery channels, geographic footprint, operations, or intercompany or other third-party 

relationships. Merger applications where the resulting IDI will be a non-bank or not a traditional 

community bank are subject to the same statutory factors as any other merger application. 

However, the FDIC will appropriately tailor its review to the nature, complexity, and scale of the 

entities involved in the transaction and the underlying business model. The FDIC’s Washington 

 

45 See 12 U.S.C.1831u. 46 A “non-bank” refers to an IDI that is a bank for purposes of the FDI Act, but that is not a bank for purposes of the 

Bank Holding Company Act (BHCA). Non-banks may be owned by parent companies that are not subject to the 

BHCA, and therefore may not regulated or supervised by the FRB. 
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Office or Board of Directors reserve authority to act on certain merger applications that do not 

involve traditional community banks. 

Applications Involving Operating Non-Insured Entities

Applications may involve an existing IDI merging with an operating entity that is not 

FDIC-insured. Operating non-insured entities may vary widely in the type of business and 

activities conducted (e.g., credit unions, which typically offer products and services consistent 

with a traditional community bank, mortgage companies, financing companies, payment services 

firms, or other types of entities whose business model may have elements more consistent with 

that of a non-community bank). Merger applications that involve an operating non-insured entity 

are subject to the same statutory factors as any other merger application. However, in reviewing 

such applications, the FDIC will consider the nature and complexity of the non-insured entity, its 

scale relative to the existing IDI, its current condition and historical performance, and any other 

relevant information regarding the entity’s operations or risk profile. 

The FDIC will review audited financial statements (covering at least three years, unless 

the entity’s operating history is shorter) and assess any deferred tax assets or liabilities, 

intangible assets, contingent liabilities, and any recent or pending legal or regulatory actions. 

Further, independent appraisals or valuations may be necessary to support the projected value of 

any business (or assets) expected to be transferred from the operating non-insured entity to the 

resultant IDI through the merger transaction.
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V. Resources

FDIC Bank Application Resource page, https://www.fdic.gov/regulations/applications/resources/

FDIC Regional Offices, https://www.fdic.gov/about/contact/directory/region.html

FDIC Law, Regulations, Related Acts, https://www.fdic.gov/regulations/laws/rules/

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

Section 42 of the FDI Act, 12 U.S.C. 1831r-1

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

12 CFR Part 303, Subparts A and D

Interagency Policy Statement Concerning Branch Closing Notices and Policies, 64 Fed. Reg. 

34845, (June 29, 1999)

Applications Procedures Manual (APM), 

https://www.fdic.gov/regulations/applications/resources/apps-proc-manual/index.html

Section 1 of the FDIC APM, https://www.fdic.gov/regulations/applications/resources/apps-procmanual/section-01-01-overview.pdf 

Section 4 of the FDIC Application Procedures Manual, 

https://www.fdic.gov/regulations/applications/resources/apps-proc-manual/section-04-

mergers.pdf 

FDIC Delegations of Authority – Filings, https://www.fdic.gov/regulations/laws/matrix/index.html

Interagency Bank Merger Act Form, https://www.fdic.gov/formsdocuments/f6220-01.pdf 

Deposit Market Share Reports - Summary of Deposits, http://www2.fdic.gov/sod 

Federal Reserve Bank of St. Louis, Competitive Analysis and Structure Source Instrument for 

Depository Institutions, https://cassidi.stlouisfed.org/index