Applications, Requests, Submittals, Delegations of Authority, and Notices Required to be Filed by Statute or Regulation

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 303

RIN 3064-AA54

Applications, Requests, Submittals, Delegations of Authority, and

Notices Required to be Filed by Statute or Regulation

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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SUMMARY: This regulation amends the FDIC's requirements for publishing

notice of the filing of an application for a merger transaction under

the Bank Merger Act. If an emergency exists requiring expeditious

action, an applicant will be required to publish only twice during the

statutory 10 day period, with the second publication on the 10th day or

the newspaper's publication date closest to 10 days after the first

publication, instead of daily for 10 days as required by the current

regulation. In non-emergency cases, the FDIC will require publication

only three times at approximately two week intervals, with the last

publication on the 30th day or the newspaper's publication date closest

to 30 days after the first publication, instead of once a week for five

consecutive weeks and, when published in a daily newspaper, on the 30th

day from first publication as required by the current regulation. The

regulation clarifies that the public comment period on the application

begins when the first notice is published and is a minimum of 30 days

for non-emergency merger transactions and a minimum of 10 days for

emergency merger transactions. This regulation also brings the FDIC's

notice requirements into greater conformance with those of the other

federal banking agencies, gives applicants more flexibility, and

lessens the regulatory burden imposed by the FDIC's current notice

requirements.

EFFECTIVE DATE: December 28, 1994

FOR FURTHER INFORMATION CONTACT: Jesse G. Snyder, Assistant Director,

Division of Supervision (202) 898-6915; or Ann Loikow, Counsel, Legal

Division, (202) 898-3796, FDIC, 550 17th Street, N.W., Washington,

D.C., 20429.

SUPPLEMENTARY INFORMATION:

Background

The Bank Merger Act (12 U.S.C. 1828(c)) (Act) prohibits any insured

depository institution from merging or consolidating with, or directly

or indirectly acquiring the assets or assuming the liabilities of,

another insured depository institution or any noninsured bank or

institution without the prior written approval of the responsible

federal banking agency. The Act requires notice of a proposed merger

transaction to be published prior to approval of the transaction and at

appropriate intervals during a period at least as long as that allowed

the Attorney General and other banking agencies to comment on the

competitive factors involved (12 U.S.C. 1828(c)(3)). Except when the

responsible agency finds that it must act immediately to prevent the

probable failure of a depository institution, in which case no public

notice is required, the statutory notice period is 30 days. If the

responsible agency advises the Attorney General and other banking

agencies of the existence of an emergency requiring expeditious action,

the notice period is 10 days (12 U.S.C. 1828(c)(4)).

This provision of law is implemented by Sec. 303.6(f) of the FDIC's

rules and regulations (12 CFR 303.6(f)). Those regulations currently

require applicants for non-emergency merger transactions to publish

notice of the filing of the application at least once a week on the

same day for five consecutive weeks and, when published in a daily

newspaper, on the 30th day from first publication. Where the FDIC's

Board of Directors (Board) determines that an emergency exists

requiring expeditious action, applicants must publish daily for at

least 10 days.

Proposed Rule

On June 9, 1993, the Board proposed amending Sec. 303.6(f) by

deleting the requirement that notice of non-emergency merger

transactions be published on the same day each week and that, if

published in a daily newspaper, notice be published on the 30th day.

The Board also proposed reducing the necessary publication in

emergencies requiring expeditious action to twice during a 10 day

period, first as soon as possible after the Corporation notified the

applicant that the merger would be processed as an emergency requiring

expeditious action and, second, on the newspaper's publication date one

week, or the day closest to one week, after the date of first

publication. The proposal also clarified that the public comment period

for merger transaction applications ran from the date of first

publication and would be a minimum of 30 days for non-emergency merger

transactions and a minimum of 10 days for emergency merger

transactions.

The FDIC proposed these amendments in order to lessen the

regulatory burden imposed on applicants, give applicants more

flexibility, particularly those in small communities that do not have a

daily newspaper, and bring its notice regulations into greater

conformance with those of the other federal banking agencies. These

purposes are consistent with Congress's direction in section 304 of the

recently enacted Riegle Community Development and Regulatory

Improvement Act of 1994, Pub. L. 103-325, 108 Stat. 2160, 2215-2216 (12

U.S.C. 4804). That section directs the FDIC and the other Federal

banking agencies ``to harmonize, to the extent practicable, any

inconsistent publication and public notice requirements.''

The FDIC invited public comment on the proposal, which was

published in the Federal Register on June 15, 1993 (58 FR 33050).

Public Comment Summary

The FDIC received eight comment letters, five from major bank

holding companies and three from banking trade associations. All

supported streamlining the notice requirements for merger transactions

and agreed that the proposal would reduce regulatory burdens and costs,

add flexibility, especially for applicants located in small

communities, and reduce delays without significantly affecting the

opportunity for public comment. Most commenters also encouraged the

FDIC to work with the other federal banking agencies toward achieving

greater consistency in notice requirements under the Act.

Alternate Regulatory Approaches

The FDIC examined the notice requirements of the other federal

banking agencies. Because some proposed merger transactions are part of

transactions subject to approval by more than one agency, different

notice requirements may apply. This can confuse applicants and delay

action on applications, which can have a particularly adverse impact on

transactions for which an emergency exists requiring expeditious

action.

The Comptroller of the Currency (OCC) currently requires three

publications for non-emergency merger transactions: first, the day the

application is filed and then at two-week intervals with the final

publication, if in a daily newspaper, on the 30th day or the closest

day after that. Where there is an emergency requiring expeditious

action, the OCC requires that notice be published twice, first on the

day a request for emergency processing is approved and, second, on the

10th day after the first publication or the closest day after that

(Comptroller's Manual for Corporate Activities, p. 112 (Jan. 1992)).

After the FDIC's notice of proposed rulemaking to revise its notice

requirements for merger transactions was published, the Board of

Governors of the Federal Reserve System revised its notice requirements

for non-emergency merger transactions to require that notice be

published on at least three occasions at appropriate intervals, with

the last publication at least 30 days after the first (58 FR 47985,

Sept. 14, 1993, codified as 12 CFR 262.3(b)(3)). The Board of Governors

may also modify or waive compliance with these requirements when

immediate action is necessary to prevent the probable failure of a bank

or bank holding company or an emergency exists requiring expeditious

action (12 CFR 225.14(h) and 262.3(l)).

The Office of Thrift Supervision (OTS) requires an applicant to

publish notice no more than three calendar days before or after filing

an application for a merger transaction and thereafter on a weekly

basis during the period allowed for furnishing competitive factors

reports (12 CFR 563.22(d)(2)(i)). The same rule applies regardless of

whether the required statutory period is 10 or 30 days. The FDIC's

proposed regulation proposed a similar once a week publication

requirement.

The Final Rule

After reviewing the comment letters and the other agencies'

publication requirements, the FDIC has decided to revise its proposal

to provide that, in non-emergency cases, the FDIC will require

publication only three times, at approximately two week intervals, with

the last publication on the 30th day or the newspaper's publication

date closest to 30 days after the first publication. If an emergency

exists requiring expeditious action, an applicant need publish only

twice during the statutory 10 day period, with the second publication

on the 10th day or the newspaper's publication date closest to 10 days

after the first publication. The regulation also clarifies that the

public comment period on an application begins when the first notice is

published and is a minimum of 30 days for non-emergency merger

transactions and a minimum of 10 days for emergency merger

transactions.

Responding to the tenor of the public comments, the final rule

increases applicant flexibility, further reduces regulatory burden and

costs and brings greater consistency with the notice requirements of

the other federal banking agencies. For non-emergency merger

transactions, the FDIC, like the OCC and the Board of Governors, will

require only three, instead of five publications. Similarly, like the

OCC and the OTS, the FDIC will require only two publications for

emergency merger transactions.

The final rule also retains the flexibility in timing provided in

the proposal. It requires an applicant to publish on the last day of

the applicable period or on the newspaper's publication date closest to

such date. This will allow banks to publish in a local weekly newspaper

even though the newspaper does not publish on the 10th or 30th day if

the weekly newspaper better serves a small community than the closest

daily newspaper. Because the regulation decouples the length of the

public comment period (a minimum of 10 or 30 days) from the publication

dates, publishing in a weekly newspaper would not automatically extend

the comment period. Thus, a bank publishing in a weekly newspaper could

publish its final notice of a non-emergency merger transaction on the

29th day (or 8th day for an emergency transaction), even though that is

prior to the expiration of the minimum comment period, since that would

be the newspaper's publication date closest to the 30th (or 10th) day

after the first publication.

In crafting the final regulation, the FDIC was concerned that the

opportunity for public comment on an application for a merger

transaction not be adversely affected. It should be noted that the

final rule does not affect the length of the statutory public comment

period; rather, it decreases the number of times publication is

required during the statutory periods and liberalizes when notice must

be published. The commenters agreed that frequency of required

publication could be reduced without adversely affecting the

opportunity for public comment.

Paperwork Reduction Act

No additional collections of information pursuant to Sec. 3504 of

the Paperwork Reduction Act (44 U.S.C. 3501 et seq.) are contained in

this notice. The Board concluded that the notices required of

depository institutions seeking approval of a merger transaction under

the final regulation will not constitute a ``collection of

information'' as defined in 5 CFR 1320.7. See also Dole v. United

Steelworkers of America, 110 S. Ct. 929, 938 (1990). Consequently, no

information has been submitted to the Office of Management and Budget

for review.

Regulatory Flexibility Act Statement

The Board hereby certifies that the final rule will not have a

significant adverse economic impact on a substantial number of small

entities within the meaning of the Regulatory Flexibility Act (5 U.S.C.

601 et seq.). Instead, it will reduce certain regulatory burdens and

costs for all depository institutions, including small depository

institutions, for which the FDIC is the responsible agency under the

Act and will have no particular adverse impact on other small entities.

Accordingly, the Act's requirements regarding an initial and final

regulatory flexibility analysis are not applicable.

Effective Date

The Board hereby finds that the 30 day delay in effective date

required under the Administrative Procedure Act, 5 U.S.C. 553(d), may

be waived for this final rule since the rule relieves a restriction. In

particular, it decreases the number of times an applicant must publish

notice of a proposed merger transaction and liberalizes when such

notice must be published. As a result, the final rule will be effective

upon publication in the Federal Register and will apply to all

applications for merger transactions filed on or after that date.

Section 302 of the RCDRIA, 12 U.S.C. 4802(b), requires that all new

regulations and amendments to regulations prescribed by a Federal

banking agency which impose additional reporting, disclosures, or other

new requirements on insured depository institutions shall take effect

on the first day of a calendar quarter. This provision was designed to

assist institutions by establishing a consistent date for complying

with new regulations so that institutions would be more regularly

informed of new rules and be able to effectuate necessary training,

software, and other operational modifications in an orderly manner.

However, this final rule does not impose additional regulatory

requirements, rather it relieves regulatory burden by decreasing

previously imposed requirements. As a result, an institution that has

complied with the FDIC's existing notice requirements will also have

complied with these amendments to those requirements. For these

reasons, the FDIC has determined that Sec. 302 of RCDRIA does not apply

and that this final regulation should become effective upon publication

in the Federal Register.

List of Subjects in 12 CFR Part 303

Administrative practice and procedure, Authority delegations

(Government agencies), Bank deposit insurance, Banks, banking,

Reporting and recordkeeping requirements, Savings associations.

For the reasons set forth in the preamble, the Board of Directors

of Federal Deposit Insurance Corporation amends part 303 of title 12 of

the Code of Federal Regulations as follows:

PART 303--APPLICATIONS, REQUESTS, SUBMITTALS, DELEGATIONS OF

AUTHORITY, AND NOTICES REQUIRED TO BE FILED BY STATUTE OR

REGULATION

1. The authority citation for Part 303 continues to read as

follows:

Authority: 12 U.S.C. 378, 1813, 1815, 1816, 1817(a)(2)(b),

1817(j), 1818, 1819 (``Seventh'', ``Eighth'' and ``Tenth''), 1828,

1831e, 1831o, 1831p-1(a); 15 U.S.C. 1607.

2. Section 303.6 is amended by revising paragraphs (f)(1)(i),

(f)(3), and (f)(4) to read as follows:

Sec. 303.6 Application procedures.

* * * * *

(f)* * *

(1)* * *

(i) In the case of applications in connection with a merger

transaction (as defined by the Bank Merger Act, 12 U.S.C. 1828(c)(3)),

unless the Corporation determines it must act immediately in order to

prevent the probable failure of one of the depository institutions

involved, the applicant must publish notice of the proposed transaction

on at least three occasions at approximately two week intervals in a

newspaper of general circulation in the community or communities where

the main offices of the banks or institutions involved are located, or

if there is no such newspaper in the community, then in the newspaper

of general circulation published nearest thereto. The last publication

of the notice shall appear on the 30th day or the newspaper's

publication date closest to 30 days after the first publication. The

public shall have a minimum of 30 days from the date of first

publication to comment on the application. Where the Corporation

determines that an emergency exists which requires expeditious action,

then notice shall be published twice during a 10 day period, first, as

soon as possible after the Corporation notifies the applicant that the

merger will be processed as an emergency requiring expeditious action

and, second, on the 10th day or the newspaper's publication date

closest to 10 days after the date of first publication. The public

shall have a minimum of 10 days from the date of first publication to

comment on the application. The published notice shall include the name

and main office location of all banks or institutions involved in the

transactions and the subject matter of the application. If it is

contemplated that the continuing bank will operate the offices of the

other depository institution(s) as branches, the following statement

shall be added to the notice:

It is contemplated that all of the offices of the above named

institutions will continue to be operated (with the exception of

[identity and location of each office which will not be operated]).

* * * * *

(3) Comments. Anyone who wishes to comment on an application may do

so by filing comments in writing with the appropriate regional director

at any time before the Corporation has completed processing the

application. Processing will be completed, for applications other than

applications to move a main office, to relocate a remote service

facility and to merge, not less than 15 days after the publication of

the notice required by paragraph (f)(1) of this section or 15 days

after the Corporation's receipt of the application, whichever is later;

for applications to move a main office or relocate a remote service

facility, not less than 21 days after the last publication or 21 days

after the Corporation's receipt of the application, whichever is later;

for merger applications for which the Corporation has not determined it

must act immediately in order to prevent the probable failure of one of

the depository institutions involved, not less than 30 days after the

first publication or, if the Corporation has determined that an

emergency exists which requires expeditious action, not less than 10

days after the first publication. This time period may be extended by

the appropriate regional director for good cause. Such regional

director shall report the reasons for such action to the Board of

Directors.

(4) Notice of right to comment. In order to fully apprise the

public of its rights under paragraph (f)(3) of this section, the notice

described in paragraph (f)(1) of this section shall include a statement

describing the right to comment upon, or protest the granting of, the

application. This notice shall consist of the following statement:

Any person wishing to comment on this application may file his

or her comments in writing with the regional director of the Federal

Deposit Insurance Corporation at its regional office (address of the

regional office) before processing of the application has been

completed. Processing will be completed no earlier than the (main

office moves and remote service facility relocations--21st; non-

emergency mergers--30th; emergency mergers--10th; other applications

described in paragraph (a) of this section--15th) day following

(mergers--the first required publication; all other applications

described in paragraph (a) of this section--either the date of the

last required publication or the date of receipt of the application

by the FDIC, whichever is later). The period may be extended by the

regional director for good cause. The nonconfidential portion of the

application file is available for inspection within one day

following the request for such file. It may be inspected in the

Corporation's regional office during regular business hours.

Photocopies of information in the nonconfidential portion of the

application file will be made available upon request. A schedule of

charges for such copies can be obtained from the regional office.

* * * *

By Order of the Board of Directors.

Dated at Washington, D.C. this 20th day of December, 1994.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Acting Executive Secretary.

[FR Doc. 94-31705 Filed 12-27-94; 8:45 am]

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