# Integration of National Bank and Federal Savings Association Regulations: Licensing Rules

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2014-11473

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** June 10, 2014
- **Citation:** 79 FR 33260

## Text

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Parts 4, 5, 7, 14, 32, 34, 100, 116, 143, 144, 145, 146, 150, 152, 159, 160, 161, 162, 163, 174, 192, 193
[Docket ID OCC-2014-0007]
RIN 1557-AD80
Integration of National Bank and Federal Savings Association Regulations: Licensing Rules

AGENCY:

Office of the Comptroller of the Currency, Treasury.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Office of the Comptroller of the Currency (OCC) is proposing to integrate its rules relating to policies and procedures for corporate activities and transactions involving national banks and Federal savings associations, to revise some of these rules in order to eliminate unnecessary requirements consistent with safety and soundness, and to make other technical and conforming changes. The OCC also is proposing amendments to update its rules for agency organization and function.

DATES:

Comments must be received on or before August 11, 2014.

ADDRESSES:

You may submit comments to the OCC by any of the methods set forth below. Paper mail in Washington, DC and at the OCC may be subject to delay, however, and the OCC encourages commenters to submit comments through the Federal eRulemaking Portal or by email. For comments submitted to the OCC, please use the title “Integration of National Bank and Savings Association Regulations: Licensing Rules” to facilitate the organization and distribution of these comments.

•
Federal eRulemaking Portal:
Go to
www.regulations.gov,
enter “Docket ID OCC-2014-0007” in the Search Box, and click “Search”. You can filter results by using the filtering tools on the left side of the screen. Click on “Comment Now” to submit public comments. Alternatively, click on the “Help” tab on the site's home page to get information on using this site, including instructions for submitting public comments.

•
Email:
Submit comments at
regs.comments@occ.treas.gov.

•
Paper Mail:
Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219.

•
Hand Delivery/Courier:
400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219.

•
Fax:
(571) 465-4326.

Instructions:
Include “OCC” as the agency name and “Docket ID OCC-2014-0007” in each comment. In general, the OCC will enter each comment received into the docket and publish each comment on the Regulations.gov Web site without change, including any business or personal information, name and address, email addresses, and phone numbers. Comments received, including attachments and other supporting material, are part of the public record and subject to public disclosure. Do not enclose any information in a comment or supporting material that is confidential or inappropriate for public disclosure.

You may review all comments received by the OCC and related materials by the following methods:

•
Viewing Comments Electronically:
Go to
www.regulations.gov,
enter “Docket ID OCC-2014-0007” in the Search box, and click “Search”. Comments can be filtered using the filtering tools on the left side of the screen. Alternatively, click on the “Help” tab on the site's home page to get information on using this site, including instructions for viewing public comments, other supporting and related material, and the complete docket after the close of the comment period.

•
Viewing Comments in Person:
You may inspect and photocopy comments in person at the OCC, 400 7th Street SW., Washington, DC 20219. For security reasons, you first must call (202) 649-6700 to make an appointment. Upon arrival at the OCC, you must present a valid government-issued photo identification and submit to a security screening.

•
Docket:
You may also view or request available background documents and project summaries using the methods described above.

FOR FURTHER INFORMATION CONTACT:

For additional information, contact Heidi Thomas, Special Counsel; Melissa Lisenbee, Law Clerk; or Stuart Feldstein, Director, Legislative and Regulatory Activities Division, (202) 649-5490, for persons who are deaf or hard of hearing, TTY, (202) 649-5597; or Kevin Corcoran, Assistant Director, or Richard Cleva, Senior Counsel, Bank Activities and Structure, (202) 649-5500, or Stephen Lybarger, Deputy Comptroller for Licensing, (202) 649-6319, Office of the Comptroller of the Currency, 400 7th Street SW., Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

I. Background

Title III of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Public Law 111-203, 124 Stat. 1376 (2010), transferred to the OCC all functions of the former Office of Thrift Supervision (OTS) and the Director of the OTS relating to Federal savings associations. As a result, the OCC is now responsible for the ongoing examination, supervision, and regulation of Federal savings associations, in addition to national banks and Federal branches and agencies. With a few exceptions, the OCC has one set of rules applicable to national banks and another set of rules applicable to Federal savings associations, or, where appropriate, to all savings associations.
1

The OCC is now reviewing its rules to determine whether it is appropriate to integrate them into a single set of rules for both national banks and savings associations, taking into account consistency with the underlying statutes that apply to each type of institution. The key objectives of this review are to reduce regulatory duplication, promote fairness in supervision, eliminate unnecessary burden consistent with safety and soundness, and create efficiencies for both national banks and savings associations, as well as the OCC.
2

In

addition, the OCC is in the latter stages of developing an electronic applications filing system capable of handling applications and other filings from both national banks and Federal savings associations. Accordingly, another important objective of this proposal is to complete the integration of our licensing rules expeditiously so that we can include these integrated rules in this new applications system.

1
Title III of the Dodd-Frank Act transferred the functions of the former OTS relating to state savings associations to the Federal Deposit Insurance Corporation (FDIC). Dodd-Frank Act, section 312(b)(2)(C), 12 U.S.C. 5412(b)(2)(C). The Act also transferred to the OCC the rulemaking authority of the OTS relating to all savings associations, both State and Federal, unless rulemaking authority is provided to another agency by a specific statute.
See
Dodd-Frank Act, section 312(b)(2)(B)(i)(II), 12 U.S.C. 5412(b)(2)(B)(i)(II). On July 21, 2011, the OCC issued an interim final rule and request for comments that restated the former OTS regulations as 12 CFR parts 100 through 197, with nomenclature and other technical changes.
See
76 FR 48950 (Aug. 9, 2011). The FDIC has identified a number of independent bases for rulemaking authority for State savings associations in some cases. Where there is no such independent rulemaking authority, the FDIC will enforce applicable OCC regulations for State savings associations.

2
Concurrent with our integration of national bank and Federal savings association rules, the OCC also is reviewing OTS-issued supervisory policies to integrate them into the OCC's policy framework and to rescind any issuances that are duplicative, outdated, or replaced by other supervisory guidance. Our goal is to produce uniform policies for national banks and Federal savings associations, while recognizing differences that exist in statute. This policy review is occurring in conjunction with this integration rulemaking project. Many OTS-issued supervisory policies already have been integrated, rescinded, or replaced by new or existing OCC guidance. We will update this policy guidance, as appropriate, to reflect the integration of OCC rules as of the effective date of the final rules. Until that time, the Dodd-Frank Act provides

that all such OTS issuances continue in effect until modified, terminated, set aside, or superseded.
See
Dodd-Frank Act section 316(b)(2) (12 U.S.C. 5414(b)(2)); OCC Bulletins 2011-47 (Dec. 11, 2011), 2012-2 (Jan. 06, 2012), 2012-3 (Jan. 06, 2012), 2012-15 (May 17, 2012), and 2013-34 (Nov. 20); and
www.occ.gov/publications/publications-by-type/comptrollers-handbook/index-comptrollers-handbook.html.

Based on this review of our national bank and savings association rules, the OCC is proposing to integrate its rules relating to corporate activities and transactions involving national banks and Federal savings associations (licensing rules).
3

This integration would create, where possible, filing parity for all activities and transactions addressed in the OCC's licensing rules. The OCC believes that it is more equitable and efficient to have a single filing and review process for corporate activities and transactions of national banks and Federal savings associations.

3
The OCC previously has issued rulemakings that integrated, or proposed to integrate, its rules for national banks and Federal savings associations relating to lending limits, capital, flood insurance, and safety and soundness standards.
See
78 FR 37930 (June 25, 2013); 78 FR 62018 (Oct. 11, 2013), 78 FR 65108 (October 30, 2013), and 79 FR 4282 (Jan. 27, 2014), respectively. Furthermore, the OCC recently issued a final rule that integrates its rules relating to consumer protection in insurance sales, Bank Secrecy Act compliance, management interlocks, appraisals, disclosure and reporting of Community Reinvestment Act (CRA)-related agreements, and the Fair Credit Reporting Act.
See
79 FR 28393 (May 16, 2014). Because the OCC and the OTS adopted these rules on an interagency basis with other Federal regulators, the OCC did not make any substantive changes to these rules.

II. Review Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996

The OCC also will be participating in an interagency review of regulations pursuant to section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA).
4

EGRPRA requires the Federal Financial Institutions Examination Council (FFIEC) and the OCC, the FDIC, and the Board of Governors of the Federal Reserve System (Federal Reserve Board) (collectively, the Agencies) to conduct a review of all their regulations to identify outdated, unnecessary, or unduly burdensome regulations applicable to insured depository institutions. The FFIEC and the Agencies must conduct this review at least once every 10 years, and the next review must be completed by December 31, 2016. Over the next two years the OCC, FDIC and Federal Reserve Board will issue joint notices requesting comments on their rules pursuant to EGRPRA. The EGRPRA contemplates that the Agencies will initiate appropriate rulemakings to change or eliminate outdated, unnecessary, or unduly burdensome rules, as appropriate, based on the comments received.

4
12 U.S.C. 3311.

The Agencies published the first EGRPRA notice on June 4, 2014.
5

This interagency notice requests comments on three categories of rules, including the Agencies' licensing rules. Thus, the timing of the OCC's licensing integration review and the EGRPRA review of licensing rules overlaps. To ensure that the OCC's final licensing rules take account of all comments we receive, the OCC will consider comments received on both this Notice of Proposed Rulemaking (NPRM) and this first EGRPRA notice when finalizing its licensing integration rule.

5
79 FR 32172.

To minimize the potential for overlap and confusion going forward, and to afford the OCC the benefit of public comment through the EGRPRA process on potential ways to streamline and reduce burden for all of our rules, the OCC does not intend to publish further integration-specific proposals until the Agencies have completed the EGRPRA notice process. However, as has been the practice since the OCC assumed supervisory oversight of Federal savings associations, the OCC will continue to evaluate whether to integrate rules as they are otherwise revised (for example, as we did when amending the OCC's lending limits rules to conform to the Dodd-Frank Act).
6

6

See
78 FR 37930 (June 25, 2013).

III. Overview of the Proposal

Part 5 sets forth the OCC's rules, policies and procedures for national bank corporate activities and transactions. Subpart A sets forth the generally applicable rules and procedures, while subparts B through D contain the rules for national bank initial activities, the expansion of activities, and other changes in activities and operations. Subpart E addresses a national bank's payment of dividends, and subpart F addresses Federal branches and agencies. The OCC's equivalent rules, policies and procedures for Federal savings associations are dispersed throughout parts 100-199, with the generally applicable rules and procedures in part 116. The OCC proposes to revise part 5 to include the rules applicable to Federal savings associations and, to the extent appropriate, to delete the corresponding provisions found in parts 100 through 199.

The proposal would consolidate most licensing provisions for Federal savings associations into the existing national bank rule in part 5 of the OCC's regulations and would eliminate parts 116, 146, 152, 159, 174 and the corresponding provision in parts 143, 144, 145, 150, 160, and 163. These combined rules would be as follows:

• Rules of general applicability (subpart A)

• Organizing a national bank or Federal savings association (§ 5.20)

• Conversion from a national bank or Federal savings association (§ 5.25)

• Fiduciary powers of national banks or Federal savings associations (§ 5.26)

• Business combinations involving a national bank or Federal savings association (§ 5.33)

• Bank service company investments of a national bank or Federal savings association (§ 5.35)

• Investment in national bank or Federal savings association premises (§ 5.37)

• Change in location of a main office of a national bank or home office of Federal savings association (§ 5.40)

• Corporate title of a national bank or Federal savings association (§ 5.42)

• Voluntary liquidation of a national bank or Federal savings association (§ 5.48)

• Change in control of a national bank or Federal savings association; reporting of stock loans (§ 5.50)

• Changes in directors and senior executive officers of a national bank or Federal savings association (§ 5.51)

• Change of address of national bank or Federal savings association (§ 5.52)

• Substantial asset change by a national bank or Federal savings association (§ 5.53)

In other cases, we propose separate rules for national banks and Federal savings association in part 5 because the rules do not apply to both charters, are better organized as separate rules, or because their differences and complexity make integration difficult. The new Federal savings association rules would be as follows:

• Federal mutual savings association charters and bylaws (§ 5.21)

• Federal stock savings association charters and bylaws (§ 5.22)

• Conversion to become a Federal savings association (§ 5.23)

• Establishment, acquisition, and relocation of a branch of a Federal savings association (§ 5.31)

• Operating subsidiaries of a Federal savings association (§ 5.38)

• Increases in permanent capital of a Federal savings association (§ 5.45)

• Capital distributions by a Federal savings association (§ 5.55)

• Inclusion of subordinated debt securities and mandatorily redeemable preferred stock as supplementary (tier 2) capital (§ 5.56)

• Pass-through investments by a Federal savings association (§ 5.58)

• Service corporations of a Federal savings association (§ 5.59)

The remaining rules in part 5 would continue to be applicable only to national banks, with the exception of subpart E. (Subpart E applies only to Federal branches and agencies, and we do not propose to amend it in this proposal.) We propose to revise some of these rules to be consistent with the changes proposed for Federal savings associations, revise the titles of some of these rules to reflect the inclusion of rules applicable to Federal savings associations in part 5, and to make other technical changes. These national bank-only rules would be as follows:

• Establishment, acquisition, and relocation of a branch of a national bank (§ 5.30)

• Expedited procedures for certain reorganizations of a national bank (§ 5.32)

• Operating subsidiaries of a national bank (§ 5.34)

• Other equity investments by a national bank (§ 5.36)

• Financial subsidiaries of a national bank (§ 5.39)

• Changes in permanent capital of a national bank (§ 5.46)

• National bank subordinated debt as capital (§ 5.47)

• Conversion to become a national bank (§ 5.24)

• Payment of Dividends by National Banks, Subpart E

In addition to the placement and integration of Federal savings association rules, this proposal would make substantive changes to the OCC's licensing rules in order to eliminate unnecessary requirements or further the safe and sound operation of the institutions the OCC supervises. Furthermore, the proposal would make conforming and technical changes to the rules in parts 5, 7, and 34 and in various provisions of parts 100 through 199 to reflect the movement of the licensing rules for savings associations to part 5, to adjust section titles, and to conform cross-references. In particular, the OCC is proposing to replace, where appropriate, references to “bank” with “national bank,” the term that parallels “Federal savings association.” Finally, the proposal would amend the OCC's licensing rules to make consistent the OCC office to which a national bank or Federal savings association must file its notice or application. Specifically, the proposal would amend each rule in part 5 to direct such filings to the institution's appropriate OCC licensing office or appropriate OCC supervisory office, as applicable, and, in clarifying amendments, would update the description of the OCC's supervisory structure in part 4.

A detailed description of each amendment in this NPRM is set forth below in Section IV of the preamble. Section V of the preamble summarizes the significant changes for national banks and Federal savings associations that would result from this NPRM. Section VIII of the preamble contains a redesignation table that indicates changes in the numbering of the rules as proposed. Sections V and VIII may be used as a quick-reference guide to our rulemaking and are intended to assist national banks and Federal savings associations, especially community institutions, in understanding the changes we propose.

IV. Description of the Proposed Rule

A. Part 4—District Offices (§ 4.5)

Part 4 comprises regulations on a range of topics, including regulations pertaining to the OCC's organizational structure. Section 4.4 describes the role of the OCC's Washington office. Section 4.5 describes the role of the OCC's district and field offices and sets forth the address of, and the geographical area covered by, each district office. However, § 4.4 and § 4.5 do not completely describe all of the OCC's supervisory offices. The OCC proposes to amend 12 CFR part 4 by restructuring 12 CFR 4.5 to reflect more accurately the current supervisory structure for national banks and Federal savings associations. Specifically, the proposal revises § 4.5 to include a description and address of the OCC's Midsize Bank Supervision program, and to provide that the district offices supervise community banks not otherwise supervised by the Washington office or Midsize Bank Supervision. The proposal also replaces the outdated reference to “duty stations” with the currently used “field office satellite offices.”

B. Part 5—Rules, Policies, and Procedures for Corporate Activities Rules of General Applicability (Part 5, Subpart A)

Twelve CFR part 5, subpart A, and 12 CFR part 116 set forth the OCC's generally applicable rules and procedures for processing filings
7

related to corporate activities and transactions of national banks and Federal savings associations, respectively. Both sets of regulations include filing requirements and explain where and how to file. The OCC believes that it is more efficient to have a single filing process for national banks and Federal savings associations, where possible, and proposes to amend subpart A to apply to both sets of institutions and to remove part 116. The OCC also proposes additional substantive and technical subpart A changes, as explained below.

7
Current rules use slightly different terminology for national banks and Federal savings associations. Under 12 CFR 5.3(i), a “filing” is an application or notice submitted under part 5. Twelve CFR 116.1(a) uses the word “application” to mean an application, notice or filing related to a Federal savings association. In this preamble, when it is not necessary to distinguish among the three, we use the word “filing” to refer to an application, notice, or filing.

§ 5.2 Rules of General Applicability.
Current rules differ with respect to the scope and applicability of the generally applicable licensing procedures for national banks and Federal savings associations. The national bank rule at 12 CFR 5.2(a) states that the subpart A procedures apply to all part 5 filings, unless otherwise stated.
8

Section 5.2(b) states that the OCC may adopt materially different procedures if it provides notice to affected parties. In contrast, the Federal savings association rule at § 116.1 states that the part 116 prefiling and filing procedures and the rules on OCC review apply to all required filings related to Federal savings associations, but that the publication requirements and the comment and meeting procedures apply only when an OCC regulation specifically incorporates these procedures or the OCC otherwise requires. Section 116.1(b) also specifies that part 116 does not apply to filings related to transactions under sections 13(c) or (k) of the Federal Deposit Insurance Act (FDI Act);
9

certain final agency action requests; certain requests related to litigation, enforcement proceedings, or supervisory directives or agreements; or applications filed

under an OCC regulation that prescribes other application processing procedures and time frames.

8
Certain substantive activity or transaction rules in part 5 specify that one or more of the procedures in subpart A do not apply. In some cases, the rule specifies other procedures.

9
12 U.S.C. 1823(c) and (k).

As proposed, all subpart A procedures would apply to all part 5 OCC filings, unless the substantive rule specifically exempts the filing or the OCC states otherwise. This change would create filing parity for all national banks and Federal savings association activities and transactions addressed in proposed part 5. The effect of this change on a specific activity or transaction is discussed below, in the context of that activity or transaction.

Section 5.2(c) also states that the Comptroller's Licensing Manual (Manual) provides additional filing information and is available on-line and, for a fee, in print. The OCC proposes to revise this provision to state only that the Manual is available on-line. This proposed revision reflects the OCC's decision to stop printing the Manual in hard copy, in order to reduce paper consumption and to ensure that the public receives only the most up-to-date information. The OCC also is in the process of updating the Manual, as well as filing forms, to contain information on both national bank and Federal savings association filings. As indicated earlier in this preamble discussion, we also anticipate updating our electronic filing system so that a single system can receive filings from both national banks and Federal savings associations.

Finally, § 5.2(d) states that the OCC may permit electronic filing for any class of filings. In order to reflect the agency's move toward the more efficient and less costly electronic filings, we propose to revise this provision to state that the OCC encourages all filings to be made electronically.

§ 5.3 Definitions.
Section 5.3 contains definitions of terms used throughout part 5. The OCC is proposing amendments to this section as part of the proposal to address both national bank and Federal savings association filings in part 5. For example, we propose to amend the definition of “capital and surplus” to include reference to Federal savings associations.
10

10
We note that the OCC issued a final rule on October 11, 2013 that, among other things, integrates the OCC's national bank and Federal savings association capital rules. This integration has a two-tier effective date, with the integration complete for all savings associations on January 1, 2015.
See
78 FR 62018. The OCC issued an interim final rule on February 28, 2014 that amends the OCC's rules, including part 5, to reflect this integration. 79 FR 11300.

The OCC also proposes to amend the § 5.3 definition of “eligible bank” to add “eligible savings associations.” Currently, an “eligible bank” is a national bank that (1) is well capitalized under the OCC's Prompt Corrective Action (PCA) regulations, (2) has a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (CAMELS), (3) has an “Outstanding” or “Satisfactory” CRA rating, and (4) is not subject to a cease and desist order, consent order, formal written agreement, or PCA directive, or, if it is, the OCC has informed the bank that it may nonetheless be treated as an “eligible bank.” Under certain of the substantive activity or transaction rules in part 5, an eligible bank may receive expedited review of a filing in the manner set out in the rule. Section 5.13(a)(2) sets out additional information about the expedited review process.

Part 116 also has an expedited review process for certain filings. Specifically, § 116.5 provides that a Federal savings association filing will receive expedited treatment unless: (1) It has a composite or compliance rating below 2 or a CRA rating of Needs to Improve or Substantial Noncompliance, (2) it fails any part 3 or 167 capital requirement, as applicable, and has been notified that it is in troubled condition,
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(3) it does not have a composite, compliance, or CRA rating, or (4) the applicable regulation does not specifically state that expedited treatment is available.

11
“Troubled condition” is currently defined at 12 CFR 163.555.

The OCC proposes to amend § 5.3 by defining “eligible bank or eligible savings association” (instead of “eligible bank”) and by adding an OCC compliance rating of 1 or 2 to the eligibility requirements for all institutions. This proposal will create parity for all OCC filings with respect to the criteria that a filing must satisfy to receive expedited processing. Furthermore, because some limited purpose banks, such as trust banks, are not subject to the CRA, the proposal also would clarify that the CRA rating component applies only if the CRA is applicable to the institution.

The addition of the OCC compliance rating would be a change for national banks, but not for Federal savings associations. The OCC believes that a bank's compliance with statutes and regulations, particularly consumer-related laws, should be a factor imposed by regulation in determining whether a bank may qualify for expedited treatment. Furthermore, as explained in greater detail below, because § 5.13(a)(2) permits the OCC to remove a filing from expedited review if it raises certain issues, including compliance concerns,
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this proposal would not be a significant change for national banks and would in fact provide more certainty regarding their eligibility for expedited review.

12
In addition, § 5.2(b) provides the OCC with the authority to make exceptions for particular filings, where appropriate.

With respect to Federal savings associations, the proposal may result in changes for some filings because the criteria in §§ 5.3 and 116.5 are not identical. Under the current rules, the two tests are similar in that they both require a composite CAMELS rating of 1 or 2 and a CRA rating of outstanding or satisfactory. In addition, if an institution has not received a rating, it is not eligible for expedited treatment under either set of current rules and would remain ineligible under the proposed rule. However, there are some differences. The first difference involves the capital requirement. Under the current savings association rule, both well and adequately capitalized institutions are eligible for expedited treatment. Under the proposal, only savings associations that are well capitalized would qualify for expedited review. The OCC proposes to apply the well capitalized requirement to savings associations because, in the OCC's experience, national banks and Federal savings associations that are less than well capitalized are more likely than other institutions to present supervisory concerns such that expedited review is not necessarily appropriate. This requirement may exclude some savings associations that qualify for expedited treatment under the current rule.

A second difference involves the supervisory condition of the savings association. Under the current savings association rule, the institution must not have been notified it is in troubled condition, while under the proposal, an eligible savings association must not be subject to certain orders, agreements or directives. Although different, these supervisory condition tests generally should have similar outcomes.

The OCC also proposes to amend the definition of “eligible depository institution” to address the fact that either a national bank or a Federal savings association may enter into a transaction with an eligible depository institution, consistent with the changes proposed to 12 CFR 5.33 and discussed elsewhere in this rulemaking.

Another proposed change is to the § 5.3 definition of “notice.” Section 5.3 defines a notice as a submission informing the OCC that a national bank intends to engage in or has commenced certain corporate activities or

transactions. Under § 5.3, an “application” is a submission requesting prior OCC approval to engage in various corporate activities and transactions. The two definitions suggest that a “notice” does not require OCC approval. However, the rules use the term “notice” in several different ways. In some rules, a “notice” is the same as an application in that the filer must obtain prior OCC approval before engaging in the activity or transaction. In other rules, a “notice” is similar to an application in that, while the OCC does not “approve” the filing, the OCC may disapprove it. In still other rules, the notice only informs the OCC that the filer intends to engage in or has engaged in a transaction. The OCC may review the notice, but there is no requirement of prior OCC approval. Some of the latter notices can be filed after-the-fact. We propose to add provisions to § 5.3(j) to clarify the scope of “notice,” as well as adding Federal savings associations to § 5.3(j).

The OCC also proposes to strike the § 5.3 definition of “appropriate district office” and, instead, to define “appropriate OCC licensing office” as described at OCC.gov and “appropriate OCC supervisory office” as described in subpart A of 12 CFR part 4. This change will eliminate confusion caused by the current definition with respect to where a filing should be made. Conforming changes are proposed throughout part 5.

Another proposed change is to the current definition of “short-distance relocation,” a term that is used in current national bank branch and main office relocations regulations.
13

The OCC proposes to amend this definition to reference both national bank main office relocations and Federal savings association home office relocations, consistent with the changes proposed in 12 CFR 5.40 and discussed elsewhere in this rulemaking.
14

13

See
12 CFR 5.30(h)(2) and 12 CFR 5.40(d)(5)(ii), respectively.

14
As explained in the discussion of the proposed changes to 12 CFR 5.40, the Federal savings association home office is the equivalent of a national bank main office.

The current “short-distance relocation” definition also references whether a branch is located within a “central city of a MSA (metropolitan statistical area).” The Office of Management and Budget (OMB), which designates MSAs, uses the term “principal city” in describing MSAs.
15

The OCC proposes to amend its current rule to use the term “principal city,” thereby bringing the rule into conformity with the MSA terminology used by OMB. In addition, we propose to strike the § 5.3 definition of “central city” and add a definition of “principal city.” “Principal city” will be defined as an area designated as such by OMB. These changes have no material effect. Under this proposal, this definition will apply to Federal savings associations without any other change to the current regulatory language. The current Federal savings association regulation uses the term “principal city.”

15

See, e.g., www.ffiec.gov/Geocode/help1.aspx
(referencing MSAs and principal cities).

Under this proposal, other definitions also will apply to Federal savings association filings without any language changes. These include the definitions of “applicant,” “application,” “depository institution,” and “filing.” Other non-substantive and technical changes are proposed to § 5.3. As noted above, the effect, if any, of a proposed § 5.3 change is discussed in the context of the substantive provision at issue.

§ 5.4 Filing required.
Section 5.4(a) directs a depository institution to file an application or notice with the OCC to engage in national bank activities and transactions described in part 5. As a result of the other proposed changes to part 5, this directive would apply to Federal savings associations with respect to part 5 transactions and activities. No change is needed to the regulatory language in § 5.4 to achieve this result.

Section 5.4(b) states that forms and instructions for filings are available in the Manual or from an OCC district office. The OCC proposes to revise this section to reflect the fact that the Manual is now available only on-line. As noted above, the OCC will be updating this Manual and it will contain information on both national bank and Federal savings association filings.

Section 5.4(c) states that, at a filer's request, the OCC may accept another agency's form or filing if it contains substantially the same information required by the OCC. Section 116.25(c), which allows the OCC to waive certain filing requirements, has been used for this same purpose with respect to Federal savings association filings. Under proposed § 5.4(c), this option will remain available for both national banks and Federal savings associations with no changes to the regulatory text.

Section 5.4(d) directs a filer to submit a filing or other submission to the OCC's Director for District Licensing at the appropriate district office, unless directed otherwise in a pre-filing communication. For Federal savings associations, § 116.40(a) directs filings to the Director for District Licensing at the appropriate OCC licensing office or the OCC licensing office at OCC headquarters. In addition, under § 116.40(b), if a filing involves significant issues of law or policy, or if the applicable regulation or form so directs, the applicant must also file copies at the OCC headquarters licensing office.

As proposed, § 5.4(d) directs that part 5 filings and related submissions be addressed to the appropriate OCC licensing or appropriate OCC supervisory office (unless the OCC advises otherwise through a pre-filing communication) and states that the relevant addresses are on the OCC's Internet Web page,
www.OCC.gov.

Furthermore, the OCC's current rules do not specify the number of copies of a filing that must be provided to the OCC. This information generally is stated on the form itself or in the Manual. In contrast, § 116.40(a) states that Federal savings association filers must submit to the appropriate licensing office or the OCC licensing office at headquarters the original form plus the number of copies specified on the application. If none is specified, § 116.40(a) directs applicants to submit the original plus two copies. The OCC is removing this requirement and, instead, directs Federal savings association filers to consult the appropriate form and the Manual for information on the number of required copies.

Section 5.4(e) permits an applicant to incorporate by reference relevant, current information contained in another OCC application or filing, provided that the material (1) is attached to the application, (2) is current, and (3) is responsive to the requested information. The filing must clearly indicate that the information is incorporated and include a cross-reference to the incorporated information. With respect to Federal savings association filings, § 116.25(c), which allows the OCC to waive certain filing requirements, is currently used to allow incorporation by reference. Moreover, the Federal savings association filing forms themselves typically provide for incorporating by reference other documents. As proposed, § 5.4(e) would apply to all filings with the OCC, without any change to the regulatory language and with no material change to affected institutions or persons.

Finally, § 116.15(b)(2) encourages all applicants to contact the appropriate OCC licensing office to determine whether the applicant must attend a prefiling meeting or whether the submission of a draft business plan or other information would expedite the application review process. Section 116.20 describes the required contents

of a draft business plan.
16

In contrast, part 5, subpart A does not include rules on prefiling meetings, although specific activity or transaction rules may address these meetings,
17

and the OCC may request such a meeting on a case-by-case basis under § 5.2(b). Subpart A also does not address the submission of business plans to the OCC.

16
Certain Federal savings association activity and transaction rules also address these meetings.
See, e.g.,
12 CFR 116.15(a)(1) (discussing prefiling meetings when organizing a Federal savings association).

17

See, e.g.,
12 CFR 5.20(i) (discussing prefiling meetings when organizing a national bank); 12 CFR 5.24(d)(2) (discussing prefiling meetings when converting to a national bank); and 12 CFR 116.15(a)(1) (discussing prefiling meetings when organizing a Federal savings association).

The OCC has found that prefiling meetings, as well as the submission of business plans or other information before such meetings, often result in a more efficient review process. In order to highlight this opportunity, the OCC proposes to revise subpart A by adding a new § 5.4(f) that encourages application filers to contact the OCC to determine the need for a prefiling meeting, regardless of whether a prefiling meeting is specifically required by another regulation. This new provision also states that the OCC will decide on a case-by-case basis whether a meeting is necessary and states that the prior submission of a draft business plan or other relevant information may expedite the process. Unlike part 116, however, the proposal does not specify what must be included in a draft business plan because the OCC does not believe that this level of detail is necessary in regulatory text. The proposed rule does note, however, that information on model business plans can be found in the Manual.

§ 5.5 Filing fees.
Section § 5.5 states that an applicant shall submit filing fees in the form of a check made payable to the OCC. The rule also states that the OCC publishes a fee schedule annually and does not generally refund filing fees. Section 116.45(a)(3) addresses the payment of Federal savings association filings fees, directing applicants to submit fees to the appropriate OCC licensing office and permitting fees to be paid by check, money order, cashier's check, or wire transfer.

Under this proposal, § 5.5 will apply to all fees paid to the OCC and will be revised to state that fees may be paid by check, money order, cashier's check, or wire transfer. This statement is consistent with both the current Federal savings association rule and the OCC's ability to accept these forms of payment from all filers. The section also will state that additional filing fee information, including where to submit the fee, can be found in the Manual. Finally, as a technical amendment, the OCC proposes to remove the word “annually” from the § 5.5 description of when it publishes a fee schedule, to clarify that, as stated in 12 CFR 8.8, the OCC may publish an interim or amended filing fee schedule, in addition to its annual publication.

§ 5.7 Investigations.
Section 5.7 states that the OCC may examine or investigate and evaluate facts related to a filing to the extent necessary to reach an informed decision. Section 116.230 has a somewhat narrower scope and time frame, providing that the OCC may conduct an eligibility examination at any time before it deems an application complete. As proposed, § 5.7 would apply to all filings received by the OCC, including those related to Federal savings associations, because the OCC believes that the more flexible approach in § 5.7 is preferable.

Section 5.7 also states that, as described in 12 CFR 8.6, the OCC has the authority to assess fees for special examinations and investigations. Section 8.6 is currently applicable to both national banks and Federal savings associations and related filings, as a result of the July 21, 2011 final rule,
18

discussed above. As a result, the application of § 5.7 under this proposal to Federal savings association filings will be a technical change only.

18
76 FR 43549.

§ 5.8 Public notice.
Under § 5.8(a), on the date of filing or as soon as practicable before or after filing, a national bank applicant shall publish a public notice in a general circulation newspaper in the community in which the applicant proposes to engage in business. The rules do not specify the language in which the notice must be published.

Under § 116.60, a Federal savings association applicant shall publish notice no earlier than seven days before and no later than the date of the filing. Under § 116.80, this notice must be published in an English-language newspaper unless the OCC determines that the primary language of a significant number of adult residents of the community is not English, in which case the agency may require the applicant simultaneously to publish one or more additional notices in the appropriate language or languages.

Under this proposal, § 5.8(a) would apply to all applicants. As a result, Federal savings associations would no longer have to publish a public notice within the seven days before the filing date but may publish as soon as practicable before or after filing, unless otherwise required.
19

This change would provide Federal savings association filers with the same flexibility that national bank filers have with respect to when to publish a public notice while still providing the public with timely notice.

19
Certain activities and transactions are exempt from the § 5.8 notice requirements and subject to other notice requirements.
See, e.g.,
12 CFR 5.50(g) (notice of change in bank control).

In addition, the OCC proposes to add to § 5.8(a) the requirements in § 116.80 that notices must be published in English and, if the OCC determines it is necessary, also in other languages. As a result, national bank filers would be required to publish their notices in English and may be required simultaneously to publish in languages other than English, as is currently the case for Federal savings associations. This change will further ensure that interested persons have meaningful access to the § 5.8(a) notice.

Section 5.8(b) now states that a public notice must include: (1) A statement that a filing is being made, (2) the date of the filing, (3) the applicant's name, (4) the subject matter of the filing, (5) a statement that the public may submit comments to the OCC and where such comments should be sent, (6) the comment period closing date, and (7) any other information that the OCC requires. Section § 116.55 requires that similar, but not identical, information be included in a public notice.

The OCC proposes to revise § 5.8(b) to include Federal savings associations and to add some requirements to the notice included in § 116.55. As a result, in addition to what § 5.8(b) currently requires, a public notice related to a national bank filing also would be required to include (1) the name of the institution that is the subject of the filing, (2) a statement that the public portion of the filing is available on request, and (3) the address of the applicant. The public notice also would need to state that the public may submit comments to the appropriate OCC
licensing
office and provide the address of this office. A public notice related to a Federal savings association filing, in addition to the information currently required under § 116.55, also would need to include a specific statement that a filing is being made and the date of the filing. The OCC believes that proposed § 5.8(b) would provide the public with the full range of helpful information and treat all part 5 filings consistently, while requiring negligible additional work from filers. We also propose other minor technical changes to § 5.8(b).

Section 5.8(c) currently requires a filer to confirm that the § 5.8(a) notice has been published by delivering to the OCC a statement of the date of publication, the name and address of the paper in which notice was published, and a copy of the notice. Federal savings association filers are required to do the same, although this requirement is set forth on the application itself and not included in the regulatory text. The OCC proposes to apply § 5.8(c) to both national bank and Federal savings association filings pursuant to part 5.

Section 5.8(d) currently states that the OCC may consider more than one transaction, or a series of transactions, to be a single filing for purposes of the publication requirements of this section. When filing a single public notice for multiple transactions, the filer shall explain in the notice how the transactions are related. Although this is not specifically permitted under part 116, it has been an accepted practice for Federal savings association filings. Under this rulemaking, both national banks and Federal savings associations may continue to engage in this practice, which eliminates unnecessary publications while ensuring that the public's need for notice is met.

Under § 5.8(e), upon the request of an applicant for a transaction subject to a public notice requirement of both the OCC and another Federal agency, the OCC may accept publication of a single joint notice containing the information required by both the OCC and the other Federal agency, provided that the notice states that comments must be submitted to both the OCC and, if applicable, the other Federal agency. For example, a merger filing where there is an application to the OCC for approval of the merger and a filing with the FDIC for approval under the Bank Merger Act when the merger is between an insured national bank and an entity that is not FDIC-insured. Although there is no specific part 116 provision addressing this practice, the OCC has permitted such joint notices for Federal savings associations. As part of the integration of Federal savings associations into part 5, the OCC also will accept joint public notices for both national bank and Federal savings association transaction or activity applications. This provision would benefit filers and serve the public's needs.

Section 5.8(f) allows the OCC to require or give public notice and request comment on any filing and in any manner that it determines is appropriate for a particular filing. There is no specific equivalent to this provision in part 116. As part of this proposal, this provision would apply to both national banks and Federal savings association filings, allowing the OCC to ensure that the notice provided to the public is appropriate for each filing.

Finally, § 116.240(b) provides that, prior to the end of the applicable review period, if the OCC determines that an issue of law or change in circumstances has arisen that will substantially affect an application, it may require an applicant to publish, among other things, a new public notice. Although no specific national bank rule provides for this result, the OCC has a similar practice for national bank filings. In order to codify and clarify this practice, the OCC proposes to add a new § 5.8(g) that states that the OCC, at its discretion, may require an applicant to publish a new public notice if (1) the applicant submits either a revised filing or new or additional information related to a filing, (2) there is a major issue of law or a change in circumstances arises after a filing, or (3) the agency determines that a new public notice is appropriate. This provision does not represent a material change for either national bank or Federal savings association filers.

§ 5.9 Public availability.
Section 5.9 addresses both access to the public portion of a filing and the confidential treatment that may be provided to certain information in a filing. Specifically, § 5.9(a) states that the OCC will provide a copy of the public portion of a
pending
filing in response to a written request made to the appropriate district office. A person may submit a written request to the OCC's Communication's Division for a copy of the public portion of a
decided
or
closed
application. In either case, the OCC may impose a fee for the copy. Section 5.9(b) explains that a public file consists of the portions of the filing, supporting data, supplementary information, and information submitted by interested persons to the extent that these items have not been afforded confidential treatment.

Section 5.9(c) addresses the confidential treatment of information included in a filing, explaining both that an applicant and an interested person submitting information may request that specific information be treated as confidential under the Freedom of Information Act (FOIA) (5 U.S.C. 552) and how to make this request. The provision also states that if the OCC does not consider the information to be confidential, the agency may include that information in the public portion of a filing after providing notice to the submitter. It also permits the OCC to determine, on its own initiative, that certain information should be treated as confidential and to withhold that information from the public file.

Section 116.35 addresses the public and confidential aspects of a Federal savings association filing. Paragraph (a) states that the OCC generally makes part 116 submissions available to the public but may keep portions confidential. Section 116.35(b) provides that an applicant may request confidential treatment of certain portions of a filing and explains specifically how to make this request. It also states that the OCC will not treat as confidential the portion of a filing that describes how an applicant plans to meet its CRA objectives and notes that the agency will advise an applicant before it makes information designated as confidential available to the public.

Under this proposal, § 5.9 would apply to all filings made pursuant to part 5, as revised. This revision is not intended to result in material changes for either national bank or Federal savings association filings. It should be noted that although § 5.9 does not explicitly address the OCC's treatment of filing information about how a filer plans to meet its CRA objectives, the OCC does not treat this information as confidential. The proposal contains other minor changes to §§ 5.9(a) and (c), including which OCC office a request should be submitted either to obtain the public portion of a decided or closed application or to withhold information from a public file.

§ 5.10 Comments.
Section 5.10(a) provides that during the comment period, any person may submit a comment to the appropriate district office. Section 5.10(b)(1) provides that, unless otherwise stated, the comment period runs for 30 days after publication of the § 5.8(a) public notice. Under § 5.10(b)(2), the OCC may extend the comment period if an applicant either fails to file in a timely manner all required publicly available information or makes a request for confidential treatment that is not granted by the OCC and that delays the public availability of information. The comment period also may be extended to develop factual information needed to consider the application or if the OCC determines that other extenuating circumstances exist. In addition, the rule provides that the OCC may give an applicant an opportunity to respond to comments received during the comment period.

The Federal savings association rules are much more detailed, particularly with respect to application comments. Section 116.110 provides that any person may comment on a filing and § 116.120(a) states that a comment

should include all relevant facts supporting the commenter's position. It further provides that a comment should address at least one reason why the OCC may deny the application under relevant law, recite facts and data supporting these reasons, and discuss how the approval could harm the commenter or any community. Under § 116.120(b), any request for a meeting must be included with the comment. Section 116.130 states that a commenter must file with the appropriate OCC licensing office and further directs that a copy of any written comment shall simultaneously be provided to the applicant. Under § 116.140, a commenter must file a comment within 30 days after publication of the initial public notice and further states that the OCC may consider later filed comments if the comment will assist in the disposition of the application.

The OCC has found that the less detailed and prescriptive approach in the current part 5 rules works well for both filers and the public and proposes to apply § 5.10 to all filings received by the OCC, with one clarification. This application would result in two changes with respect to Federal savings association filings. First, the proposal does not specify what information should be included in a comment. Second, a commenter on a Federal savings association filing would not be required to provide a copy of the comment to the Federal savings association. Instead, the Federal savings association would obtain a copy of the public portion of any comment from the OCC. The proposal would clarify that comments relating to either a national bank or a Federal savings association should be submitted to the appropriate OCC licensing office, as provided in the current Federal savings association rule.

As both sets of current rules include a 30-day comment period that begins when the public notice is published, the proposal generally does not affect the length of the comment period. In addition, although neither current nor proposed § 5.10(b) expressly states that the OCC can consider late-filed comments, as is stated in § 116.140, the OCC's practice generally has been to consider all comments, including late-filed comments.

The OCC proposes other changes to § 5.10 that would affect both national banks and Federal savings associations. First, as revised, § 5.10(b)(1) would provide that the OCC may require a new comment period of up to 30 days if a new public notice is required under proposed § 5.8(g). This change is necessary to provide interested parties with an opportunity to comment when a new notice is published, which, as explained in the discussion of proposed § 5.8(g), may be required in certain circumstances. Finally, a minor change is proposed to § 5.10(b)(2) to clarify that the OCC can extend any comment period, either an original or a new comment period.

§ 5.11 Hearings and other meetings.
Pursuant to § 5.11(a), any person can request a hearing on a filing by submitting to the appropriate district office a description of the issues or facts to be presented and explaining why a written submission is not adequate. The requestor must simultaneously provide the request to the applicant. As noted above, under § 116.120(b), a request for a meeting must be included in a comment and explain why written submissions are insufficient. Also under § 116.130, this comment and hearing request must be filed with the appropriate OCC licensing office, with a copy to the applicant.

As proposed, § 5.11(a) would apply to all OCC hearing requests. Therefore, a person seeking a hearing on a filing pertaining to a Federal savings association would no longer be required to request a hearing as part of a comment submission, and a hearing request would be submitted to the appropriate OCC office. This revision would provide added flexibility to those requesting hearings related to Federal savings association filings.

Section 5.11(b) states that the OCC may grant or deny a hearing request, limit the issues to those it deems relevant or material, and order a hearing in the public's interest. Under § 5.11(c), if the OCC denies a hearing request, the agency will notify the requestor of the reason for the denial. Sections 116.170(a) and (b) are substantively the same as §§ 5.11(b) and (c). Under this proposal, §§ 5.11(b) and (c) would apply to all hearings with no substantive change for affected parties.

Section § 5.11(d) describes the OCC's pre-hearing procedures. Specifically, under § 5.11(d)(1), if the OCC decides to hold a hearing, it sends a Notice of Hearing to the applicant, the person requesting the hearing, and anyone else who requests a copy. The Notice states the subject and date of the filing, the time and place of the hearing, and the issues to be addressed at the hearing. Section 5.11(d)(2) states that the OCC appoints a presiding officer to conduct a hearing.

There are no equivalent provisions in the Federal savings association regulations. Instead, § 116.170(a) states that the OCC may either grant a meeting request or hold one on its own initiative, and it may limit the issues considered at a meeting to those it deems relevant or material. Under this proposal, § 5.11(d)(1) will apply to all part 5 OCC hearings and all interested persons will receive a Notice of Hearing when a hearing is scheduled. This revision ensures that all interested parties are notified of an upcoming hearing. The OCC also proposes to amend § 5.11(d)(1) to state, as in § 116.170(a), that the agency may limit the issues considered at a hearing to those it determines are relevant or material.

Section 5.11(e) states that a person who wishes to appear at a hearing shall notify the appropriate district office within 10 days of when the OCC issues a Notice of Hearing. It also requires, at least five days before the hearing, that each participant submit the names of witnesses and one copy of each exhibit to be presented, to the OCC, the applicant, and any other person the OCC requires. There are no equivalent rules in the Federal savings association regulations. As proposed, § 5.11(e) would be applicable to all persons who wish to appear at an OCC hearing. Section 5.11(e) allows the OCC and other persons to prepare for a hearing and yields a more efficient and productive hearing.

Section 5.11(f) explains that the OCC arranges for a hearing transcript and states that the person requesting a hearing generally bears the cost of one copy of the transcript. There is no equivalent part 116 provision. The OCC proposes to apply this provision to all OCC hearings and also to replace the “generally bears” phrase with “may be required to bear.” This change reflects the fact that the OCC generally has not passed this cost onto a hearing requestor but, in certain cases, may find it appropriate to do so. Although this is a technical change with respect to national bank filers, a person requesting a hearing on a filing pertaining to a Federal savings association should be aware that, under this proposal, a hearing transcript will be prepared and that the requestor may be required to pay its cost.

Section 5.11(g) explains how a part 5 hearing is conducted, providing generally that the applicant and participants may make opening statements and present witnesses, material, and data. It also requires a copy of any documentary material to be provided to the OCC, the applicant, and each participant. In contrast, the § 116.180 procedures for Federal savings association hearings provide that the OCC may conduct a meeting in any format, including telephone conferences, face-to-face meetings, or

formal meeting. In addition, both §§ 5.11(g) and 116.180 provide that the Administrative Procedure Act, the Federal Rules of Evidence, the Federal Rules of Civil Procedure, and the OCC's relevant rules of practice and procedure (12 CFR part 19 and part 109, respectively) do not apply to these hearings.

Under this proposal, § 5.11(g) would apply to all subpart A hearings. As a result, all applicants and hearing participants may be permitted to make opening statements and to present witnesses, material, and data. Any person presenting documentary material at a hearing must furnish a copy to the OCC, the applicant, and each participant.

The OCC also proposes to add a new paragraph § 5.11(g)(4), stating that the OCC may conduct a meeting in any format that it determines is appropriate, including a telephone conference, a face-to-face meeting, or a more formal meeting. This new provision, which mirrors § 116.180(a), is not a change to what is permissible for the OCC, but rather highlights the options available to the agency.

Under § 5.11(h), at an applicant's or participant's request, the OCC may keep the hearing record open for up to 14 days following its receipt of the hearing transcript. The agency resumes processing the filing after the record closes. Section 116.190 states that if the OCC conducts a meeting, it may suspend the applicable filing time frames. If suspended, the time period will resume when the OCC determines that the record has been sufficiently developed to support a determination on the issue(s) considered at the meeting.

Under this proposal, § 5.11(h) will apply with respect to all filings on which a hearing is held. As a result, all applicants, commenters, and other interested persons should be aware that the hearing record may be kept open for up to 14 days following receipt of the transcript, after which the OCC will resume processing the filing. The OCC believes that the public and affected parties benefit from knowing how long the record will remain open, following a hearing.

Finally, § 5.11(i) addresses meetings other than hearings that the OCC may hold in connection with an application. Section 5.11(i)(1) states that the OCC may hold a public meeting, either in response to a written request received during the comment period or on its own initiative. These public meetings are arranged and presided over by a presiding officer. Alternatively, under § 5.11(i)(2), the OCC may arrange a private meeting with an applicant or other interested parties to clarify and narrow the issues and to facilitate the resolution of the issues. As noted above, § 116.180 states that the OCC may conduct meetings related to Federal savings association filings in any format.

Under this proposal, § 5.11(i) would apply to all applications received by the OCC and does not represent a change from what is currently permitted for filings related to Federal savings associations. In addition, the OCC proposes to add paragraph (i)(3) to § 5.11, stating that the OCC may limit the issues considered at a meeting to those it determines to be relevant or material. This provision is substantively the same as the provision the agency proposes to add to § 5.11(d) (regarding hearings) and permits the agency to ensure that meetings are meaningful and efficient. The OCC also proposes minor, clarifying changes to § 5.11(i).

Section 116.185 states that the OCC will not approve or deny an application at a meeting. Although no similar language is included in either current or proposed § 5.11, it is the OCC's practice not to decide on applications at hearings or other meetings. While hearings and meetings provide an opportunity for interested persons to share information with the OCC, the OCC considers information obtained at a hearing together with other materials and information pertaining to the application, before rendering a decision. Decisions on filings are discussed in greater detail below.

In addition, § 116.190 explains that if the OCC decides to conduct a meeting, it may suspend the application processing time frames. Although the part 5, subpart A, rules do not state this directly, current and proposed § 5.10(b)(2) allow the OCC to extend a comment period when necessary, current and proposed § 5.11(h) allow the OCC to keep a hearing record open for 14 days after a hearing and resume processing the filing only when the record closes, and proposed § 5.13(a)(2) allows the OCC to extend the expedited review period in certain circumstances or remove a filing from expedited review when necessary. These provisions provide the OCC with the tools it needs to adjust the processing time frames when appropriate, while balancing the need for interested persons to have a predictable set of procedures on which to rely.

§ 5.12 Computation of time.
In computing the relevant time periods related to a national bank filing, the OCC includes the day of the act or event (
e.g.,
the date an application is received by the OCC) and the last day of a time period, regardless of whether that day is a Saturday, Sunday, or legal holiday. Under § 116.10, in computing the relevant time period with respect to a Federal savings association filing, the OCC does not include the day of the act or the event that commences the time period. When the last day is a Saturday, Sunday or Federal holiday, the time period runs until the end of the next day that is not a Saturday, Sunday or Federal holiday.

Efficiency would be promoted by a single set of time computation rules for OCC filings. Accordingly, the OCC proposes to change § 5.12 to mirror the current Federal savings association rule. As a result, when computing time for national bank filings, the day of the act would no longer be included and the time period would no longer end on a Saturday, Sunday, or Federal holiday but would end on the next day that is not a Saturday, Sunday or Federal holiday. It also should be noted that proposed § 5.12 replaces “legal holiday” with “Federal holiday,” consistent with the current Federal savings association rule, to eliminate confusion when a legal state holiday is not also a Federal holiday.

§ 5.13 Decisions.
Under § 5.13(a), the OCC may approve or deny a national bank filing based on its review and consideration of the record, including the activities, resources, or condition of a filer's affiliate to the extent relevant. Under § 5.13(a)(1), it may impose conditions on an approval, including to address significant supervisory, CRA (if applicable), or compliance concerns.

Section 5.13(a)(2) explains the OCC expedited review process for filings concerning “eligible” banks, as defined in § 5.3. Specifically, these filings are deemed approved a certain number of days after the filing date or the close of the public comment period (or extension of the comment period under § 5.10), unless, prior to this date, the OCC notifies the filer otherwise. The number of days after which a particular filing is deemed approved varies depending on the activity or transaction at issue and is set out in the substantive part 5 rule for that particular activity or transaction.
20

20
For example, § 5.20(j) provides that certain applications to establish a national bank are deemed preliminarily approved as of the 15th day after the close of the public comment period or the 45th day after the filing is received by the OCC, whichever is later, unless the OCC takes certain action to remove the filing from expedited review.

Under § 5.13(a)(2)(i), the OCC may extend the expedited review period for filings subject to CRA up to 10 days if the OCC receives comments containing certain assertions about the bank's CRA

performance. Section 5.13(a)(2)(ii) states that the OCC will remove a filing from expedited review if a filing or a comment raises a significant supervisory, CRA (if applicable), compliance, legal, or policy concern or issue. If this removal happens, the OCC will provide a written explanation. Section 5.13(a)(2)(iii) explains that not all adverse comments cause the OCC to extend the expedited review period or remove a filing from expedited review.

Finally, § 5.13(a)(2)(iv) provides that if a filing is dependent upon the approval of another filing, or if multiple requests for approval are combined in a single application, none of the filings is deemed approved unless all of the applications are subject to expedited review procedures and the longest time period expires without the OCC issuing a decision or notifying the bank that the filings are not eligible for expedited review.

Filings that are not eligible for or do not receive expedited review are considered under the standard review process. The process and timeframes associated with the standard review process vary depending on the nature and circumstances of a filing and are set forth in the applicable substantive activity or transaction rule.

Section 5.13(b) explains that the OCC may deny a filing if a significant supervisory, CRA, compliance, legal, or policy concern exists or if an applicant fails to provide the OCC with information that it requests. Pursuant to § 5.13(c), a filing must contain the information required in the applicable substantive part 5 activity or transaction rule, and the OCC may require additional information as well. Section 5.13(c) further provides that the OCC may deem a filing abandoned if information that is required or requested is not provided within a specified time period and may return a filing found to be materially deficient.

Section 5.13(d) explains that the OCC will notify a filer and other interested party (or parties) of the final disposition of a filing, including a notification confirming expedited review. If a filing is denied, the OCC will explain why. Under § 5.13(e), the OCC will make a decision public if it represents new or changed policy or issues of general interest. In rendering decisions, the OCC also may elect not to disclose information that it deems to be private or confidential.

Section 5.13(f) explains that a filer can appeal a decision by writing to the Deputy Comptroller for Licensing or the OCC Ombudsman (or, in some cases, to the Chief Counsel). Section § 5.13(g) explains that when the OCC approves or conditionally approves a filing, the agency generally gives the filer a specified period of time in which to commence the activity and generally does not grant extensions.

Finally, § 5.13(h) states that the OCC can nullify a filing decision if, for example, it discovers a misrepresentation or omission in a filing or supporting material after it renders a filing decision. A person responsible for a material misrepresentation or omission may be subject to various sanctions, including criminal penalties. The OCC also may nullify a filing decision that is contrary to law, regulation, or OCC policy or that was granted due to clerical or administrative error or a material mistake of law or fact.

Pursuant to part 116, a savings association filing may receive either expedited treatment or standard treatment. If a filer is eligible for expedited treatment, as determined under § 116.5, it may file its application in the form of a notice. Pursuant to § 116.200, 30 days after filing a notice, the filer may engage in the proposed activity or transaction unless the OCC (1) requests additional information,
21

(2) determines that standard treatment is appropriate, (3) suspends the applicable time frame under § 116.190, or (4) disapproves the notice.

21
Section 116.200(a) explains the sequence of events and timing when the OCC requests additional information about a notice.

Pursuant to § 116.25, a filer files a standard application if it is not eligible for expedited treatment. Under § 116.210, within 30 calendar days after receiving a standard application, the OCC will (1) notify the applicant that the application is complete and review will commence, (2) request more information, or (3) determine that the application is materially deficient, in which case, the OCC will not process the filing. If the OCC takes no action, an application is deemed complete and the review period begins. Under § 116.270, this review period is generally 60 calendar days after an application is complete but may be extended. For example, under § 116.270(c), the OCC may extend the review period for up to 30 days for any reason or for as long as needed if the application presents a significant issue of law or policy requiring additional time to resolve. In either situation, the OCC must provide a written notification of any extension.

Section 116.280 explains that the OCC will approve or deny an application before the end of the applicable review period and will notify applicants of the decision. If the OCC fails to notify an applicant, under § 116.280(b), the application is approved.

Section 116.220 provides a detailed explanation of how the OCC will process an application if it requests more information to complete a filing, including the time frames within which certain actions must be taken. Section 116.240(a) explains that even if an application is deemed complete under § 116.210, the OCC may still require the filer to provide additional information to resolve or clarify an issue presented by the application. Or, if the OCC determines that a major issue or law or change of circumstances has arisen, it may notify the filer that the application is now incomplete and require a new public notice to be filed under § 116.250. Under § 116.290, an application that is not approved or denied within two calendar years of filing is deemed withdrawn, subject to certain exceptions.

As is clear, the OCC has two different, albeit similar, sets of application processing procedures. In order to gain the efficiencies inherent in administering a single set of procedures and to create parity for OCC-regulated institutions, the OCC proposes to apply § 5.13 to all OCC filings. As a result, Federal savings association filers will need to determine whether a filing is eligible for expedited review under subpart A based on the proposed § 5.3(h) definition of “eligible bank or eligible savings association.” The OCC does not anticipate that there will be a significant difference in which filings are eligible for expedited review under the current and proposed rules because, as explained above, the criteria in § 5.3 and § 116.5 are substantively similar.

Unlike § 116.200, part 5, subpart A, does not state the applicable expedited review time frames. These time frames are unique to the type of activity or transaction and set out in the relevant part 5 section detailing that activity or transaction. If a filing is not eligible for expedited review, the filer will have to follow the standard review procedures set out in the rules applicable to the particular activity or transaction at issue.

In addition, as part of this rulemaking, the OCC is proposing other changes to § 5.13, which would apply to filings related to both national banks and Federal savings associations. Specifically, it proposes to add a statement to the § 5.13(a) introductory language providing that when reviewing a filing, the OCC may consider information available from any source, including any comments submitted by interested parties or views expressed by

interested parties at meetings with the OCC.

With respect to § 5.13(a)(2) concerning expedited review, the OCC proposes to strike the § 5.13(a)(2) clause that states that the OCC grants eligible banks expedited review within a specified time, “including any extension of the comment period granted pursuant to § 5.10.” This change reflects the fact that when the OCC grants an extension of the comment period under § 5.10, a filing is no longer considered under the expedited review procedures. The circumstances that lead to an extended comment period are generally not compatible with expedited review.

In addition, as discussed above, § 5.13(a)(2)(i) provides that the OCC may extend the expedited review period for a filing subject to CRA for up to 10 days if a comment makes certain assertions about CRA and § 5.13(a)(2)(ii) provides that the OCC will remove a filing from expedited review if the filing presents significant supervisory, CRA, compliance, legal or policy concerns or issues and explains specifically what constitutes a significant CRA concern in this context. The OCC proposes to combine §§ 5.13(a)(2)(i) and (ii) into proposed § 5.13(a)(2)(i) that addresses both extending the expedited review period and removing a filing from expedited review and to strike the description of CRA-related assertions in comments and what constitutes a significant CRA concern. These changes would simplify § 5.13(a)(2) and are not intended to have a substantive effect on expedited review procedures. Comments and concerns about CRA will continue to be given the same weight. Other minor, technical, or conforming changes are also proposed to § 5.13.

Finally, as part of this rulemaking, the OCC proposes to delete part 116 in its entirety.
Organizing a National Bank or Federal Savings Association; Federal Savings Association Charters and Bylaws (§ 5.20, new § 5.21, new § 5.22)

Twelve CFR 5.20 sets forth the requirements and procedures involved in organizing a
de novo
national bank. Specifically, § 5.20(e) provides that the OCC will verify that organizers have fulfilled certain statutory requirements such as filing articles of association with the OCC, § 5.20(f) sets forth policy considerations that the OCC considers in evaluating an application, § 5.20(g) discusses the OCC's requirements with respect to the organizing group, § 5.20(h) lists requirements for the organizers' business plan or operating plan, § 5.20(i) lists the procedures that the organizers must follow, § 5.20(j) specifies the requirements for expedited review of an application, and § 5.20(l) lists requirements for the establishment of special purpose banks.

Corresponding rules applicable to organizing Federal savings associations are set forth in three CFR parts: Part 143, Federal Mutual Savings Associations—Incorporation, Organization, and Conversion; part 144, Federal Mutual Savings Associations—Charter and Bylaws; and part 152, Federal Stock Associations—Incorporation, Organization, and Conversion. In addition, § 163.1 imposes certain rules concerning a Federal savings association's charter and bylaws.

Part 143 sets forth the requirements and procedures for organizing a Federal mutual savings association. For example, §§ 143.2 and 143.3 describe the requirements for applying for a Federal mutual savings association charter and the factors the OCC will consider in such an application. Section 143.4 provides that the OCC's approval of the application constitutes the issuance of a charter and § 143.5 specifies the initial steps the organizers must undertake after issuance of the charter. Certain provisions of part 143 set forth rules and prohibitions, such as § 143.1(a), which prohibits a Federal savings association from adopting a title that misrepresents the nature of the institution or the services it offers, and § 143.6, which prohibits a Federal savings association from transacting any business other than as provided in part 143. Finally, § 143.7 clarifies that part 143 does not apply to a Federal savings association chartered in connection with a Federal savings association in default or in danger of default.

Part 144 covers the charter and bylaws of Federal mutual savings associations. Section 144.1 sets forth the form and required provisions of the charter, § 144.2 lists the requirements for amending a charter, and § 144.4 states that the issuance of a Federal mutual savings association charter constitutes the incorporation of that association. Section 144.5 sets forth the required provisions of the bylaws and §§ 144.6 and 144.7 set forth rules with respect to the effect of a change to a charter or bylaws subsequent to a Federal mutual savings association's transaction; and the availability of the charter and bylaws.

Part 152 sets forth the requirements and procedures for organizing a Federal stock savings association and also contains the requirements for the charter and bylaws of Federal stock savings associations, as well as related matters including shareholders, board of directors, and officers. More specifically, § 152.1 describes the initial steps organizers must take in establishing a Federal stock savings association and also indicates the factors the OCC will consider in such an application; § 152.3 sets forth the form and required provisions of the charter; § 152.4 lists the requirements for amending a charter; § 152.5 covers the bylaws of Federal stock savings associations; §§ 152.6, 152.7 and 152.8 address shareholders, the board of directors, and officers, respectively; and § 152.9 covers certificates for shares and their transfer.

Section 163.1 requires a
de novo
Federal savings association to file its charter and bylaws with the OCC prior to commencing operations and requires a Federal savings association to make its charter and bylaws available to accountholders.

Many of the procedures organizers must follow to charter a national bank or Federal savings association are substantively similar, with only minor differences. With respect to many of these regulations, the OCC believes these rules should be coordinated and harmonized in order to promote consistency and equal treatment between the two types of institutions and to remove unnecessary regulatory burden where possible. These goals are accomplished by amending § 5.20 to include Federal savings associations, adding to § 5.20 some provisions that address the organizing process currently in parts 143 and 152, and removing other provisions in part 143, 152, and 163 that address the organizing process (§§ 143.2 through 143.7, 152.1 and 152.2, and 163.1).

The regulations for national banks and those for Federal savings associations treat the provisions related to “organizing documents” (organization certificate and articles of association for national banks, charter for Federal savings associations, and bylaws) differently.
22

For national banks, there are several applicable statutes, but few regulations.
23

For

Federal savings associations, there are no statutory requirements, but §§ 144.1 and 152.3 contain specific language and requirements to be used for the charter of Federal mutual savings associations and Federal stock savings associations, respectively, and §§ 144.2 and 152.4 contain specific requirements for the bylaws of Federal mutual savings associations and Federal stock savings associations, respectively. Also, the charter provisions for Federal mutual savings associations are substantially different from national banks and Federal stock savings associations. These differences stem from the unique characteristics of Federal mutual charters, such as the inability of members to communicate directly with each other (because membership is based on the depository relationship) under § 144.8, the use of “running proxies,” and the potential that certain charter or bylaw provisions could later affect a mutual-to-stock conversion by the association. These characteristics require a need to place greater controls over changes to the Federal mutual charter in order to prevent the inappropriate transfer of the association's equity and to prevent the introduction of provisions that may impede a mutual-to-stock conversion.

22
It may be helpful to clarify terminology. For national banks, the term “charter” is used to refer to the certificate of authority to commence banking issued by the OCC under 12 U.S.C. 27. A national bank's “articles of association” is similar to a business corporation's articles of incorporation setting out the general features of the business's organizational structure and purpose. A Federal savings association's “charter” issued by the OCC under 12 U.S.C. 1464(a)(2) is the agency's authorization to engage in business as a savings association, but it also contains provisions comparable to a national bank's articles of association.

23
Additional guidance for national banks is provided by sample articles and bylaws in the Comptroller's Licensing Manual (
www.occ.gov/publications/publications-by-type/licensing-manuals/index-licensing-manuals.html#sd
) and by

review of the proposed documents during the application process.

In order to preserve the enforceability of the Federal savings association charter and bylaw requirements and to ensure the necessary controls unique to the Federal mutual savings association charter, the OCC believes it is necessary and appropriate to continue to include separate provisions concerning a Federal savings association's charter and bylaws.

Therefore, the OCC proposes to amend 12 CFR part 5, subpart B, by: (1) Revising § 5.20 to apply to both national banks and Federal savings associations and to make certain other changes as described below; (2) adding a new § 5.21 (based on part 144) to specify the language and requirements for the Federal mutual savings association charter, bylaws, and charter amendments and to require a Federal mutual savings association to make its charter and bylaws available to accountholders; and (3) adding a new § 5.22 (based on §§ 152.3 through 152.11) to specify the language and requirements for the Federal stock savings association charter, bylaws, charter amendments, and related matters. In addition, the OCC proposes to amend parts 143, 144, 152, and 163 by rescinding various provisions in those parts concerning charters and bylaws.

As a result of this rulemaking, organizers of
de novo
Federal savings associations and national banks and existing Federal savings associations and national banks should be aware of the proposed changes that are detailed below.

Applying Existing National Bank Requirements to Federal Savings Associations.
The majority of the proposed changes to § 5.20 apply existing requirements for organizing a national bank to organizing a Federal savings association by inserting “Federal savings association” where appropriate. Most of these amendments will result in little or no change to existing practices concerning an application to charter a Federal savings association. However, potential organizers should carefully review the following amendments that would change the current process.

First, under the proposal, an application to charter a Federal savings association would be subject to the two-part approval process contained in § 5.20(i)(5). Based on statute and longstanding practice, the OCC uses a two-part approval process for
de novo
national bank charters. After an application is filed, if the OCC determines it meets the applicable standards, the OCC issues a “preliminary approval.” Once it has received this approval, the national bank in organization proceeds to take the steps needed to organize, raise capital, obtain any other regulatory approvals, and generally become ready to commence business. Many of these steps are not specified in § 5.20 but instead are provided in the OCC's preliminary approval and in the Charters Booklet of the Comptroller's Licensing Manual. The OCC issues a “final approval” and the national bank's charter only after all these steps are concluded, including compliance with any conditions imposed in the preliminary approval. Under the current Federal savings association rule, the OCC issues only one approval before it issues the charter but this approval is subject to the institution completing various post-approval organizational steps and other requirements before it can commence business. These steps and requirements are specified in §§ 143.4, 143.5, 143.6, and 152.1(c) through 152.1(i). We propose to remove these provisions because they will no longer be necessary since final approval will be granted only after all organizational steps and other requirements are met. The two processes in practice may not be different, but use of a formal two-part approval framework provides more certainty and reduces any risk of an institution inadvertently operating before it has completed all required steps. Applying the bank rule's two-step approval process to savings associations also will enhance consistency between the chartering application process for national banks and Federal savings associations.

Second, § 5.20(i)(5)(iv) provides that preliminary approval expires if the national bank has not raised the required capital within twelve months or has not commenced business within eighteen months. Sections 143.5(d) and 152.1(i) provide that a Federal savings association's charter becomes void if organization is not completed within six months after approval. The proposal would amend § 5.20(i)(5)(iv) to apply the same twelve- and eighteen-month expiration periods to Federal savings associations, rather than the six-month period.

Third, the OCC proposes to amend § 5.20(j), which allows for expedited review of an application to establish a full-service national bank filed by a bank holding company with a lead depository institution that is an eligible depository institution. We propose to add Federal savings associations and savings and loan holding companies. The current regulations for chartering a
de novo
Federal savings association do not have a comparable expedited review process. We also propose to limit the availability of this expedited review to applications to charter a national bank or Federal savings association where the existing lead depository institution is an eligible national bank or eligible Federal savings association. In those cases, the OCC will have knowledge and experience of the holding company's and lead institution's operations. In cases where a state institution is the lead depository institution, the OCC would not have that knowledge and experience, and we believe expedited review would not be appropriate.

Fourth, the proposal would add Federal savings associations to § 5.20(k)(3), which addresses investments in bankers' banks and § 5.20(l), which addresses chartering special purpose institutions. These provisions reflect authority that national banks and Federal savings associations possess.

Fifth, parts 143, 144, 152, and 163 contain various filing procedural matters. As discussed above, this proposed rule amends part 5, subpart A, rules of general applicability, to include filing rules and procedures for Federal savings associations for all matters

covered by part 5. Thus, once Federal savings associations are included in § 5.20 and new §§ 5.21 and 5.22 are added to part 5, filings related to the organizing process and to charters and bylaws will be governed by the filing provisions in subpart A. We therefore have not included the filing procedures provisions in parts 143, 144, 152, and 163 in the amendments to § 5.20, or in new §§ 5.21 and 5.22.

Amendments that Specifically Cover Federal Savings Association Matters.
The OCC is proposing to incorporate certain provisions contained in parts 143 and 152 into § 5.20. Specifically, with respect to an application to organize a Federal savings association, section 5(e) of the Home Owners' Loan Act (HOLA)
24

requires the OCC to consider whether: (1) The applicants are of good character and responsibility; (2) there is a need for the association in the community to be served; (3) there is a reasonable probability of usefulness and success; and (4) there will be undue injury to existing local thrift and home financing institutions. These criteria are included in § 143.2(g)(1) and § 152.1(b)(1), and this proposed rule adds them to § 5.20(e).

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12 U.S.C. 1464(e).

Sections 143.2(g)(2)(i) and 152.1(b)(3)(i) provide that approval of an application to organize a Federal mutual or stock savings association, respectively, is conditioned on OCC receipt of written confirmation from the FDIC that accounts will be insured. Similar requirements appear in §§ 143.5(c) and 152.1(f) (when a charter is issued, a Federal savings association, or a Federal stock savings association, respectively, must promptly meet all requirements necessary to obtain FDIC insurance of its accounts), as well as §§ 143.5(d) and 152.1(h)(1) (organization of a Federal savings association, or a Federal stock savings association, respectively, is complete when, among other things, the OCC receives confirmation of FDIC insurance).

For these reasons, the OCC is proposing in § 5.20(e)(3) to retain the requirement that all Federal savings associations be insured by the FDIC. Nonetheless, we invite further comment on this matter.

Proposals to Apply Federal Savings Association Application Requirements to National Bank Applications.
The OCC is proposing to amend § 5.20 to apply certain requirements applicable to Federal savings associations to both national banks and Federal savings associations. First, § 143.1(a) prohibits a Federal savings association from adopting a title that misrepresents the nature of the institution or the services it offers. The OCC believes that incorporating such a provision in a regulation is good public policy because it protects both customers and the institution. Therefore, the OCC proposes to amend § 5.20(e)(1) to apply this requirement to both Federal savings associations and national banks.

Second, § 143.3(b)(1) requires that all securities of a particular class in an initial offering must be sold at the same price. The proposal would amend § 5.20(i)(5)(iii) to apply this requirement to both Federal savings associations and national banks. Such a requirement promotes fairness and uniformity, does not allow insiders to gain an unfair advantage over other shareholders, and discourages the formation of an institution for speculative purposes. Moreover, the FDIC also imposes this requirement in determining whether to approve an application for deposit insurance.
25

25
FDIC Statement of Policy on Applications for Deposit Insurance. 63 FR 44752, 44757 (August 20, 1998).

Third, §§ 143.5(d) and § 152.1(i) require that, in the event the organization of a Federal savings association is not completed, all cash collected on subscriptions shall be returned. The proposal would amend § 5.20(i)(5)(iv) to apply this requirement to both Federal savings associations and national banks.

Proposals to Eliminate Certain Federal Savings Association Approval Criteria.
Sections 143.2(g)(1) and 152.1(b)(1) require the OCC to consider whether the Federal savings association will provide credit for housing in a safe and sound manner and whether the factors in § 143.3 (regarding capitalization, business and investment plans, the board of directors, management) will be met. These approval criteria are not statutorily required. In most cases, these factors are similar to factors the OCC currently considers either under § 5.20 or as a matter of practice. Moreover, provision of housing credit also is addressed by the lending and investment provisions of 12 U.S.C. 1464(c) and the qualified thrift lender test of 12 U.S.C. 1467a(m). Therefore, the OCC is not proposing to include these provisions in § 5.20.

The OCC is proposing to rescind provisions of parts 143 and 152 that are redundant, unnecessary, or no longer appropriate. For example, the OCC is proposing to rescind §§ 143.7 and 152.17, which exempt from the requirements of parts 143 and 157 Federal stock associations created in connection with an association in default or in danger of default. These provisions are not necessary in light of the FDIC's authority, as part of the resolution process, to create new and bridge Federal savings associations under 12 U.S.C. 1821(m) and (n).

Similarly, the OCC proposes to rescind § 143.3(f), which provides that the normal requirements that apply to an application to charter a Federal savings association do not apply to a supervisory transaction. This provision is not necessary because the OCC has the ability to waive such requirements under 12 CFR 5.2(b). Also, the OCC proposes to rescind the requirements in §§ 143.5(c) and 152.1(f) for a proposed Federal savings association to promptly qualify as a member of a Federal Home Loan Bank. The HOLA no longer requires such membership.

Proposals to Reflect Current OCC Policy or Practice.
The OCC is proposing several amendments that would update § 5.20 to reflect current OCC policy or practice. Specifically, the proposal would amend § 5.20(f)(1) to update the OCC's general policy in making determinations regarding charter applications to reflect the OCC's statutory mission as amended in section 314 of the Dodd-Frank Act.
26

26
12 U.S.C. 1.

Second, § 5.20(g)(2) notes that, as a condition of a charter approval, the OCC retains the right to object to the hiring of any officer or appointment or election of any director for a two-year period from the date the institution commences business. We propose to clarify that, in appropriate instances, the OCC may impose this condition for a longer period. This regulatory change reflects current authority and practice.

Third, § 5.20(g)(3)(ii) requires a proposed director to be able to supply or have a realistic plan to enable the institution to obtain capital when needed. The OCC is proposing to clarify that this requirement applies to the proposed directors as a group, rather than each director individually.

Federal Mutual Savings Association Charter, Bylaws and Related Provisions.
As discussed above, the OCC believes it is necessary and appropriate to continue to include separate regulations setting forth the provisions concerning a Federal savings association's charter and bylaws. With respect to Federal mutual savings associations, these provisions are currently in part 144. The OCC is proposing to add a new § 5.21, “Federal Mutual Savings Associations Charters and Bylaws,” which will incorporate most of part 144.

Proposed § 5.21(d) sets forth exceptions to the rules of general

applicability. More specifically, it provides that §§ 5.8 through 5.11 do not apply to this section. These sections provide for public notice, public availability, comments and hearings on an application. The OCC believes it is not appropriate to subject the charter and bylaws requirements to these provisions. This belief is consistent with current requirements for Federal mutual savings associations as well as national banks.

Proposed § 5.21(e) prescribes the language and requirements for a Federal mutual savings association charter and is substantively identical to § 144.1. Proposed §§ 5.21(f) through (h) cover matters related to charter amendments and are substantively identical to § 144.2. Proposed § 5.21(i) requires a Federal mutual savings association to make its charter, bylaws, and all amendments available to accountholders at all times in each savings association office, and to deliver to any accountholders a copy of the charter, bylaws or amendments, upon request. This provision is substantively identical to § 144.7.
27

27

See
related discussion concerning 12 CFR 163.1(b)
infra.

Proposed § 5.21(j) would specify the language and requirements for Federal mutual savings association bylaws. This proposed new paragraph reflects the provisions in § 144.5.

Section 144.5(b)(11) provides that directors may only be removed “for cause” as defined in § 163.39 of this chapter, by a vote of the holders of a majority of the shares then entitled to vote at an election of directors,” and § 144.5(b)(10) provides that “[a]ny officer may be removed by the board of directors with or without cause, but such removal, other than for cause, shall be without prejudice to the contractual rights, if any of the person so removed.” For ease of use, the OCC is proposing to include the definition of “for cause” in proposed § 5.21(j)(1)(x)(B), the first time it appears in § 5.21, rather than cross-referencing § 163.39. Where the term “cause” is used elsewhere in § 5.21, and in § 5.22, for Federal stock savings associations, the regulation references the definition at § 5.21(j)(1)(x)(B).

The OCC believes that many of the bylaw provisions in § 144.5 are unnecessarily detailed or self-evident. Therefore, the proposal does not include the following provisions.
28

28
Federal mutual savings associations would not be required to amend existing bylaws to conform to these changes.

Section 144.5(b)(1) discusses the annual meeting of members. It provides, among other things, that the meeting be held “as designated by its board of directors, at a location within the state that constitutes the principal place of business of the association, or at any other any convenient place the board of directors may designate.” Proposed § 5.21(j)(1)(i) does not include the requirement that the meeting be held in the state that constitutes the principal place of business of the association. The OCC believes that this requirement introduces unnecessary detail into the regulation, and that in certain cases there may be locations outside the state constituting the association's principal place of business at which the annual meeting may be held that are appropriately convenient to members.

Section 144.5(b)(2) provides, among other things, that the subject matter of a special shareholder meeting must be established in the notice for such meeting. The OCC believes this provision is self-evident and unnecessarily detailed and proposes not to include this requirement in § 5.21(j).

Section 144.5(b)(3) covers the requirements for providing notice of meetings to members. Among other things, it provides that notice must be provided at a member's last address appearing on the books of the association. The OCC believes this provision merely states the obvious and proposes not to include this requirement in § 5.21(j)(1)(iii).

Section 144.5(b)(4) states that the purpose of determining the record date is to determine the “members entitled to notice of or to vote at any meeting of members or any adjournment thereof, or in order to make a determination of members for any other proper purpose.” The OCC believes this provision is self-evident and proposes not to include this requirement in § 5.21(j)(1)(iv).

Section 144.5(b)(6) provides that procedures must be established for voting by proxy pursuant to the rules and regulations of the OCC, “including the placing of such proxies on file with the secretary of the association, for verification, prior to the convening of such meeting.” The OCC believes the inclusion language is self-evident and unnecessarily detailed and proposes not to include this requirement in § 5.21(j)(1)(vi).

Section 144.5(b)(9) provides that board of director meetings “shall be under the direction of a chairman, appointed annually by the board; or in the absence of the chairman, the meetings shall be under the direction of the president.” The OCC believes this provision is unnecessarily detailed and proposes not to include this requirement in § 5.21(j)(1)(ix).

Section 144.5(b)(10) provides, among other things, that “[a]ll officers and agents of the association, as between themselves and the association, shall have such authority and perform such duties in the management of the association as may be provided in the bylaws, or as may be determined by resolution of the board of directors not inconsistent with the bylaws. In the absence of any such provision, officers shall have such powers and duties as generally pertain to their respective offices.” The OCC believes this provision is unnecessary and self-evident and proposes not to include this requirement in § 5.21(j)(1)(x).

Section 144.5(b)(11) covers vacancies, resignation, and removal of directors. Proposed § 5.21(j)(1)(xi) does not include the requirements in § 144.5(b)(11) that directors be elected by ballot and that resignation of a director be by written notice. The OCC believes that these provisions are self-evident.

Section 144.5(b)(12) covers the powers of the board of directors. It provides, among other things, that a board may, by resolution, “appoint from among its members and remove an executive committee and one or more other committees, which committee[s] shall have and may exercise all the powers of the board between the meetings or the board; but no such committee shall have the authority of the board to amend the charter or bylaws, adopt a plan of merger, consolidation, dissolution, or provide for the disposition of all or substantially all the property and assets of the association. Such committee shall not operate to relieve the board, or any member thereof, of any responsibility imposed by law.” This section further provides that a board may fix the compensation of directors, officers, and employees. The OCC believes these provisions are self-evident and unnecessarily detailed and therefore proposes not to include these requirements in § 5.21(j)(1)(xii).

Section 144.5(b)(14) provides in part that procedures for the introduction of new business at the annual meeting may require that such new business be stated in writing and filed with the secretary prior to the annual meeting at least 30 days prior to the date of the annual meeting. The OCC believes this provision is overly detailed and unnecessary. Accordingly, the OCC is proposing not to include this provision in § 5.21(j)(1)(xiv).

Finally, § 144.5(b)(16) provides that the bylaws may address age limitations for directors or officers as long as they are consistent with applicable Federal

law, rules or regulations. The OCC believes this provision is self-evident and unnecessary and therefore is proposing not to include this provision in § 5.21(j)(1)(xvi).

Federal Stock Savings Association Charter, Bylaws and Related Provisions.
The provisions concerning the charter and bylaws of a Federal stock savings association, as well as related provisions, are currently in §§ 152.3 through 152.9. The OCC is proposing to add a new § 5.22, “Federal Stock Savings Associations Charters and Bylaws,” which will incorporate most of §§ 152.3 through 152.9.

Proposed § 5.22(d) sets forth exceptions to the rules of general applicability. More specifically, it provides that §§ 5.8 through 5.11 do not apply to this section. These sections provide for public notice, public availability, comments and hearings on an application. The OCC believes it is not appropriate to subject the charter and bylaws requirements to these provisions. This belief is consistent with current requirements for Federal savings associations as well as national banks.

Proposed § 5.22(e) prescribes the language and requirements for a Federal stock savings association charter and is substantively identical to § 152.3. Proposed §§ 5.22 (f) through (i) cover matters related to charter amendments and are substantively identical to § 152.4, with the addition of one provision. Section 152.4(b)(8) provides that a Federal stock savings association may amend its charter by adding certain anti-takeover provisions following mutual to stock conversions. One such provision is a prohibition on a person acquiring more than 10 percent of any class of equity securities of the association, unless “the purchase of shares [is] by a tax-qualified employee stock benefit plan which is exempt from the approval requirements under § 174.3(c)(2)(i)(D) of the OCC's regulations.” The OCC proposes to eliminate the cross-reference and include the appropriate language in § 5.22(g)(8). The OCC does not intend for this amendment to have any substantive effect.

Proposed § 5.22(j) would specify the requirements for adopting and filing Federal stock savings association bylaws. This proposed new paragraph reflects the provisions in § 152.5 with two exceptions. The first sentence of § 152.5(a) provides that “[a]t its first organizational meeting, the board of directors of a Federal stock association shall adopt a set of bylaws for the administration and regulation of its affairs.” The third sentence requires the bylaws to contain sufficient provisions to govern the association in accordance with the requirements of other sections of part 152 and prohibits the bylaws from containing a provision that is inconsistent with those sections or with applicable laws, rules, regulations or the association's charter. The OCC believes that these two provisions are unnecessarily detailed and self-evident and is therefore proposing not to include these provisions in proposed § 5.22(i).

The OCC is proposing to add a new § 5.22(k) to address shareholder meetings and related matters. This proposed new paragraph reflects the provisions in § 152.6 with two exceptions. Section 152.6(a) provides, among other things, that shareholder meetings must be held in the state in which the association has its principal place of business. With respect to shareholder voting by proxy, § 152.6(f) provides, in part, that a “proxy may designate as holder a corporation, partnership or company as defined in part 174 of this chapter, or other person.” Proposed § 5.22(k) does not include these provisions because the OCC believes they are unnecessary.
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Federal stock savings associations would not be required to amend their existing bylaws to conform to these changes.

The OCC is proposing to add a new § 5.22(l) addressing matters involving a Federal stock savings association's board of directors. This proposed new paragraph reflects the provisions in § 152.7, with certain exceptions. Section 152.7(b) sets forth the permissible number and terms of directors to be included in an association's bylaws. It provides, among other things, that in “the case of a converting or newly chartered association where all directors shall be elected at the first election of directors, if a staggered board is chosen, the terms shall be staggered in length from one to three years.” Section 152.7(g) addresses matters concerning executive and other committees of a board of directors. It provides in pertinent part that each committee, to the extent provided in the resolution or bylaws of the association, shall have and may exercise all of the authority of the board of directors, subject to certain exceptions. The OCC believes these provisions are overly detailed and unnecessary. Accordingly, proposed §§ 5.22(l)(2) and (7), respectively, do not include these provisions.

The OCC is proposing to add a new § 5.22(m) addressing matters involving a Federal stock savings association's officers. This proposed new paragraph is substantively identical to § 152.8, with one exception. Section 152.8 mandates that a Federal stock savings association have certain officers. It further provides that the “board of directors may also elect or authorize the appointment of such other officers as the business of the association may require. The officers shall have such authority and perform such duties as the board of directors may from time to time authorize or determine. In the absence of action by the board of directors, the officers shall have such powers and duties as generally pertain to their respective offices.” The OCC believes that the quoted provision is self-evident and unnecessary and therefore is not including it in new § 5.22(m).

The OCC is proposing to add a new § 5.22(n) concerning stock certificates. This proposed new paragraph is substantively identical to § 152.9, with one exception. Section 152.9(a) provides in pertinent part that the “certificates shall be signed by the chief executive officer or by any other officer of the association authorized by the board of directors, attested by the secretary or an assistant secretary, and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar other than the association itself or one of its employees. Each certificate for shares of capital stock shall be consecutively numbered or otherwise identified.” The OCC believes this provision is overly detailed and is proposing not to include it in new § 5.22(n)(1).

Federal Savings Association Charter and Bylaws Availability Requirement.
Section 163.1(b) requires each Federal savings association to cause a true copy of its charter and bylaws and all amendments thereto to be available to accountholders at all times in each office of the savings association, and to deliver to any accountholders a copy of such charter and bylaws or amendments thereto, upon request. As discussed above, § 144.7 imposes the same requirement, but is applicable only to Federal mutual savings associations.

There is no comparable requirement for national banks and the OCC believes this provision is no longer necessary for Federal stock savings associations, as this information is relatively easy for accountholders of these types of institutions to obtain. Conversely, accountholders of Federal mutual savings associations may not have easy access to these documents in light of the inability of accountholders to communicate directly with each other under § 144.8. Accordingly, the proposal would continue applying this requirement only with respect to

Federal mutual savings associations under new § 5.21(i).

Disposition of current Federal savings association organization, charter, and bylaws provisions.
The proposed amendments discussed above would remove from Title 12 of the Code of Federal Regulations §§ 143.2 through 143.7, all of part 144 except § 144.8, § 152.1(b)(1), §§ 152.1(c) through 152.1(i), §§ 152.2 through 152.9, § 152.17, § 163.1(b), and §§ 163.22(b)(1)(ii) and (b)(2).

Section 144.8, which addresses communication between members of a Federal mutual savings association, is not a licensing regulation and does not involve an application process. The OCC proposes leaving it unchanged. Because it will be the only section that remains in part 144, the OCC proposes renaming part 144 as part 144—Federal mutual savings associations—communication between members.

Other provisions of § 152.2, which provides procedures for the organization of interim Federal savings associations, are addressed in revisions to the business combinations regulation—§ 5.33, described below. The remaining provisions of part 143, part 152, and part 163 contain other provisions applicable to Federal mutual and stock savings associations. The OCC is proposing to rescind some of these provisions elsewhere in this proposal.

Charter Conversions (New § 5.23, § 5.24, New § 5.25)

Twelve CFR 5.24 sets forth the rules and procedures that a state bank, state savings association, or Federal savings association must follow to convert to a national bank and for a national bank to convert to a state bank or Federal or state savings association. The OCC's rules for a mutual depository institution to convert to a Federal mutual savings association are at 12 CFR 143.8 through 143.14 and the rules for a stock form depository institution to convert to a Federal stock savings association are at 12 CFR 152.18. The rules for a Federal savings association to convert to a national bank or state bank are set forth at 12 CFR 152.19 and 163.22(b)(1)(ii) and (b)(2). While there are some differences in procedures, as discussed below, the rules for national banks and Federal savings associations are substantively similar.

The OCC proposes to simplify this regulatory framework by (1) revising § 5.24 to include only rules for converting into a national bank, (2) placing all rules for converting into a Federal savings association (either stock or mutual) in new § 5.23, and (3) placing rules for conversion from national bank and Federal savings association charters in new § 5.25. The agency also proposes additional substantive and technical changes to these rules. The substantive changes include provisions implementing section 612 of the Dodd-Frank Act, which prohibits conversions from state to Federal charter, or Federal to state charter, in certain circumstances and adds requirements to the conversion process. The changes to the OCC's regulations implementing section 612 are discussed as a group later in the preamble.

Conversion to a national bank charter.
As part of the reorganization of the conversion rules, the OCC proposes to move the rules governing a national bank converting to a state bank or Federal savings association from § 5.24 to a new § 5.25. As a result, § 5.24 would apply only to conversions to become a national bank. The OCC also proposes to make several other changes in § 5.24.

Specifically, the proposal adds “stock state savings associations” to the description of the types of institutions that can apply to convert to a national bank and the word “stock” before the phrase “Federal savings associations” throughout revised § 5.24. Stock state savings associations currently are included in the rule because they are within the definition of “state bank” incorporated from 12 U.S.C. 214(a). We are proposing to add the express term both in the interest of eliminating any confusion and because section 612 added the term “state savings association” to 12 U.S.C. 35. We are adding the term “stock” to Federal savings association for clarity as well. National banks are corporate bodies, and so a mutual institution cannot become a national bank unless it has first changed into corporate form under other law. These changes merely clarify the existing regulation and would have no substantive impact.

In § 5.24(d), which states the OCC's policy for approving and disapproving conversions to national bank charters, the proposal adds a statement that the institution seeking to convert to a national bank charter must obtain all necessary regulatory and shareholder approvals. Although this requirement is not new, it was not previously stated in § 5.24. There is a similar provision in the current Federal savings association regulation, § 143.8(a)(2). The OCC is continuing it for Federal savings associations in proposed § 5.23, and has determined it would be helpful to include it for national banks as well.

The proposal also clarifies the information the applicant must include in the application. First, proposed § 5.24(e)(2)(vii) would add bank service company investments and other equity investments to the current requirement to identify subsidiaries. This requirement reflects the current practice of the OCC to review the legal permissibility for the converted national bank to continue to hold these other investments when evaluating a conversion application. Second, proposed § 5.24(e)(2)(ix) would require the application to include a business plan if the converting institution has been operating for less than three years, plans to make significant changes to its business after the conversion, or at the request of the OCC. The OCC currently requests this information on a case-by-case basis. However, the OCC

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2014-11473. Public record. Not legal advice.