I 
113TH CONGRESS 
1ST SESSION H. R. 1603 
To support and promote community financial institutions in the mutual form, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 17, 2013 
Mr. GRIMM (for himself, Mr. KING of New York, and Mr. MEEKS) introduced 
the following bill; which was referred to the Committee on Financial Services 
A BILL 
To support and promote community financial institutions 
in the mutual form, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Mutual Community 
Bank Competitive Equality Act’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
(1) Mutual financial institutions have been an 
integral part of the American banking landscape for 
almost 200 years. 
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(2) Such institutions operate for the purpose of 
serving the local depositors and borrowers and the 
communities in which they operate. 
(3) Mutual banks play a critical role in encour-
aging thrift, providing home loans and loans for 
small businesses. 
(4) Mutual banks are among the strongest fi-
nancial institutions in the country and are charac-
terized by high capital ratios and conservative, com-
munity-focused management. 
(5) Congress deems it necessary to provide for 
the support and continued development of these vital 
community financial institutions. 
SEC. 3. MUTUAL NATIONAL BANKS AUTHORIZED. 
Chapter one of title XII of the Revised Statutes of 
the United States (12 U.S.C. 21 et seq.) is amended by 
inserting after section 5133 the following new section: 
‘‘SEC. 5133A. MUTUAL NATIONAL BANKS. 
‘‘(a) IN GENERAL.—Notwithstanding the section des-
ignated the ‘Third’ of section 5134, in order to provide 
mutual institutions for the deposit of funds, the extension 
of credit, and provision of other services, the Comptroller 
of the Currency may charter mutual national banks either 
de novo or through a conversion of any insured depository 
institution or any State mutual bank or credit union, sub-
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ject to regulations prescribed by the Comptroller of the 
Currency in accordance with this section. The powers con-
ferred by this section are intended to provide for the cre-
ation and maintenance of mutual national banks as bodies 
corporate existing in perpetuity for the benefit of their de-
positors and the communities in which they operate. 
‘‘(b) REGULATIONS.— 
‘‘(1) REGULATIONS OF THE COMPTROLLER.— 
The Comptroller of the Currency is authorized to 
prescribe appropriate regulations for the organiza-
tion, incorporation, governance, conversion, examina-
tion, operation, supervision, and regulation of mu-
tual national banks. 
‘‘(2) APPLICABILITY
OF
CAPITAL
STOCK
RE-
QUIREMENTS.—The Comptroller of the Currency 
shall prescribe regulations regarding appropriate 
capital substitutes for the requirements of this title 
with respect to capital stock, and limitations im-
posed on national banks under this title based on 
capital stock, as such requirements shall apply to 
mutual national banks. 
‘‘(c) DE NOVO CHARTERS.— 
‘‘(1) The Comptroller of the Currency is au-
thorized to issue a certificate of authority to com-
mence the business of banking to a mutual national 
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bank in accordance with the requirements set forth 
in section 5169, provided that references to ‘capital 
stock’ shall mean ‘pledged accounts, nonwithdraw-
able investment certificates, or similar instruments’ 
by the incorporators. 
‘‘(2) Upon the issuance of the certificate re-
quired by paragraph (1), the mutual national bank 
shall become a body corporate and the incorporators 
shall become the first board of directors, with the 
power and authority to manage the affairs of the 
bank as herein set forth. 
‘‘(d) CONVERSIONS.— 
‘‘(1) CONVERSION OF A MUTUAL DEPOSITORY 
TO A MUTUAL NATIONAL BANK.—Subject to such 
regulations as the Comptroller of the Currency may 
prescribe, any mutual depository may convert to a 
mutual national bank by filing with the Comptroller 
of the Currency a notice of its election to convert on 
a specified date that is not earlier than 30 days 
after the date on which the notice is filed, and the 
mutual depository shall be converted to a mutual na-
tional bank charter on the date specified in the no-
tice. 
‘‘(2) 
CONVERSION
TO
STOCK
NATIONAL 
BANK.—Subject to such regulations as the Comp-
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troller of the Currency may prescribe for the protec-
tion of depositors’ rights and for any other purpose 
the Comptroller of the Currency may consider ap-
propriate, any national bank that is organized in the 
mutual form under subsection (a) may reorganize on 
an equitable basis as a stock national bank. 
‘‘(3) CONVERSION TO STATE BANKS.—Any na-
tional mutual bank may convert to a State bank 
charter in accordance with regulations prescribed by 
the Comptroller of the Currency and applicable 
State law. 
‘‘(e) TERMINATING MUTUALITY.—If a mutual na-
tional bank elects to terminate mutuality, it must do so 
by— 
‘‘(1) liquidating; or 
‘‘(2) converting on an equitable basis to a na-
tional banking association operating in stock form. 
‘‘(f) STATUS AND RIGHTS OF MEMBERS.— 
‘‘(1) IN GENERAL.—In general, the status of a 
member is primarily that of a depositor and second-
arily that of a holder of an inchoate right to partici-
pate in the equity of a mutual national bank upon 
a liquidation or conversion in accordance with regu-
lations prescribed by the Comptroller of the Cur-
rency. 
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‘‘(2) MANDATORY RIGHTS.—Each member of a 
mutual national bank shall have the following rights: 
‘‘(A) Such rights as may be agreed upon, 
by contract, between the member and the mu-
tual national bank. 
‘‘(B) In the event the board of directors, in 
its sole discretion, determines a conversion of a 
mutual national bank to a national banking as-
sociation operating in stock form is in the best 
interests of the community in which the bank 
operates, then the members as of a record date 
set by the board of directors shall have the first 
right to subscribe for and purchase stock in the 
converted bank, on an equitable basis based on 
the amount of the deposit held by such member 
as of the record date. 
‘‘(C) In the event— 
‘‘(i) the board of directors, in its sole 
discretion, determines a liquidation of the 
mutual national bank is in the best inter-
ests of the community in which the bank 
operates, and such board of directors has 
adopted a plan of liquidation in accordance 
with regulations proscribed by the Comp-
troller of the Currency, and the Comp-
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troller of the Currency has approved if 
such plan; or 
‘‘(ii) if for any other reason the bank 
is liquidated by operation of law, 
then the members as of the date of liquidation 
shall have the right to have credited to their ac-
counts, on a pro rata basis, any residual assets 
left after the payment of all liabilities and ex-
penses, including expenses of liquidation of the 
mutual national bank. 
‘‘(g) MANAGEMENT OF THE BANK.—The board of di-
rectors shall have the entire management and control of 
the affairs of the mutual national bank. No depositor or 
borrower shall have the right to vote on any matter relat-
ing to the mutual national bank. Any voting rights of 
members prior to a conversion to a mutual national bank 
shall be extinguished upon a conversion to a mutual na-
tional bank. 
‘‘(h) MUTUAL HOLDING COMPANY FORMATION.—A 
mutual national bank may reorganize into the mutual 
holding company form of organization in accordance with 
regulations promulgated by the Comptroller of the Cur-
rency. 
‘‘(i) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
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‘‘(5) MEMBER.—The term ‘member’ means 
each insured account holder in a mutual depository’s 
savings, demand, or other authorized depository ac-
counts and each insured account holder in such an 
account in a depository subsidiary of a mutual bank 
holding company. The board of directors may adopt 
a bylaw setting a minimum dollar threshold to qual-
ify as a member up to $1,000. 
‘‘(6) MEMBERSHIP RIGHTS.—The term ‘mem-
bership rights’ means the rights of each member 
under this section. 
‘‘(j) CONFORMING REFERENCES.—Unless otherwise 
provided by the Comptroller of the Currency— 
‘‘(1) any reference in any Federal law to a na-
tional bank operating in stock form, including a ref-
erence to the term ‘national banking association’, 
‘member bank’, ‘national bank’, ‘national associa-
tion’, ‘bank’, ‘insured bank’, ‘insured depository in-
stitution’, or ‘depository institution’, shall be deemed 
to refer also to a mutual national bank; 
‘‘(2) any reference in any Federal law to the 
term ‘board of directors’, ‘director’, or ‘directors’ of 
a national bank operating in stock form shall be 
deemed to refer also to the board of a mutual na-
tional bank; and 
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‘‘(3) any terms in Federal law that may apply 
only to a national bank operating in stock form, in-
cluding the terms ‘stock’, ‘shares’, ‘shares of stock’, 
‘capital stock’, ‘common stock’, ‘stock certificate’, 
‘stock certificates’, ‘certificates representing shares 
of stock’, ‘stock dividend’, ‘transferable stock’, ‘each 
class of stock’, ‘cumulate such shares’, ‘par value’, 
‘preferred stock’ shall not apply to a mutual national 
bank, unless the Comptroller of the Currency deter-
mines that the context requires otherwise.’’. 
SEC. 4. MUTUAL INVESTMENT CERTIFICATES AUTHORIZED. 
Section 38(c)(1) of the Federal Deposit Insurance 
Act (12 U.S.C. § 1831o(c)(1)) is hereby amended by delet-
ing ‘‘subparagraph (B)(ii)’’ in paragraph ‘‘(A)’’ and in-
serting ‘‘subparagraph (B)(ii) and paragraph (C)’’ and by 
adding at the end of subparagraph (B)(ii) the following: 
‘‘(C)(i) Notwithstanding any other provi-
sion of law, a mutual depository, as defined in 
(12 U.S.C. 5133A(h)(3)), is authorized to issue 
Mutual Investment Certificates, which shall be 
included as Tier 1 capital for purposes of any 
capital standards issued by an appropriate Fed-
eral banking agency, provided that such certifi-
cates must be— 
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‘‘(I) nonvoting, except that the issuing 
mutual depository institution may permit 
voting in the event that— 
‘‘(aa) the mutual depository insti-
tution fails to pay dividends for a 
minimum of three consecutive divi-
dend periods, and then the holders of 
the class or classes of Mutual Invest-
ment Certificates granted such voting 
rights, and voting as a single class, 
with one vote for each outstanding 
certificate, may elect by a majority 
vote a maximum of one-third of the 
institution’s board of directors, the di-
rectors so elected to serve until the 
next annual meeting of the institution 
succeeding the payment of all current 
and past dividends; 
‘‘(bb) any merger, consolidation, 
or reorganization (except in a super-
visory case) is sought to be author-
ized, where the issuing institution is 
not the survivor, provided that the 
regulatory capital of the resulting in-
stitution available for payment of any 
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class of Mutual Investment Certifi-
cates on liquidation is less than the 
regulatory capital available for such 
class prior to the merger, consolida-
tion, or reorganization; 
‘‘(cc) any action is sought to be 
authorized which would create any 
class of Mutual Investment Certifi-
cates having a preference or priority 
over an outstanding class or classes of 
Mutual Investment Certificates; 
‘‘(dd) any action is sought to be 
authorized 
which 
would 
adversely 
change the specific terms of any class 
of Mutual Investment Certificates; 
‘‘(ee) action is sought to be au-
thorized which would increase the 
number of a class of Mutual Invest-
ment Certificates, or the number of a 
class of Mutual Investment Certifi-
cates ranking prior to or on parity 
with another class of Mutual Invest-
ment Certificates; or 
‘‘(ff) action is sought which 
would authorize the issuance of an ad-
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ditional class or classes of Mutual In-
vestment Certificates without the in-
stitution having met specific financial 
standards; 
‘‘(II) redeemable at the sole discretion 
of the Board of Directors of the mutual 
depository; and 
‘‘(III) provide that any dividends paid 
must be non-cumulative. 
‘‘(ii) Notwithstanding any other provision 
of law, nonwithdrawable accounts, pledged ac-
counts, mutual capital certificates, or similar 
instruments, authorized as of the date of the 
enactment of the Mutual Community Bank Eq-
uity Act, shall be included as Tier 1 capital for 
purposes of any capital standards issued by an 
appropriate Federal banking agency. 
‘‘(iii) The appropriate Federal banking 
agencies are hereby authorized to prescribe ap-
propriate regulations to implement these provi-
sions.’’. 
SEC. 5. PROTECTION OF MUTUAL DEPOSITORIES. 
(a) IN GENERAL.—Subsection (h) of section 10 of the 
Home Owners’ Loan Act (12 U.S.C. 1467a(h)) is amend-
ed— 
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(1) by striking ‘‘or’’ after the semicolon at the 
end of paragraph (2); 
(2) by striking the period at the end of para-
graph (3) and inserting ‘‘; or’’; and 
(3) by inserting after paragraph (3), the fol-
lowing new paragraph: 
‘‘(4) any company or any subsidiary of any 
company, any director, officer, employee, or person 
owning, controlling, or holding with the power to 
vote, or holding proxies representing more than 25 
percent of the voting shares, of such company or 
subsidiary, or any director, officer, employee, or per-
son acting in concert with such company or sub-
sidiary, to hold, solicit, or exercise any proxies in re-
spect of a savings association which is a mutual as-
sociation, with the view or intention to, directly or 
indirectly, control or attempt to control the mutual 
association.’’. 
(b) ENFORCEMENT ACTION.—Subsection (i) of sec-
tion 10 of the Home Owners’ Loan Act (12 U.S.C. 
1467a(i)) is amended by inserting after paragraph (3) the 
following new paragraph: 
‘‘(4) CIVIL ACTIONS BY ASSOCIATION.— 
‘‘(A) EQUITABLE RELIEF.—Any aggrieved 
mutual savings association may bring a civil ac-
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