Securities of Nonmember Insured Banks

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 335

RIN 3064-AB32

Securities of Nonmember Insured Banks

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Proposed Rule.

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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is proposing

amendments to its securities disclosure regulations. The proposed

regulations relate to registration and reporting requirements for non-

member insured banks with securities registered under section 12 of the

Securities Exchange Act of 1934 (Exchange Act or Act).

Section 12(i) of the Exchange Act requires that the FDIC issue

regulations substantially similar to those of the Securities and

Exchange Commission (SEC) or publish its reasons for not doing so. The

proposed amendments are intended to comply with section 12(i) and to

update the regulations. The SEC has amended its Exchange Act

regulations, relating to Small Business Initiatives, Executive

Compensation Disclosure, and Regulation of Communications Among

Shareholders. The FDIC is proposing to amend its Exchange Act

regulations to incorporate, in substance, the SEC changes noted above.

In conjunction with this proposed rule, the FDIC also seeks written

comments from interested persons relative to the following: Should the

FDIC consider proposing a revision to its securities disclosure

regulation, to incorporate by cross-reference the comparable rules of

the SEC, rather than continue to maintain the separate but

substantially similar body of rules as is done presently?

DATES: Written comments must be received by the FDIC on or before July

1, 1994.

ADDRESSES: Written comments shall be addressed to the Office of the

Executive Secretary, Federal Deposit Insurance Corporation, 550 17th

Street NW., Washington, DC 20429. Comments may be hand-delivered to

Room F-400, 1776 F Street NW., Washington, DC on business days between

8:30 a.m. and 5 p.m. (FAX number: (202) 898-3838). Comments will be

available for inspection in room 7118, 550 17th Street NW., Washington,

DC between 9 a.m. and 4:30 p.m. on business days.

FOR FURTHER INFORMATION CONTACT: M. Eric Dohm, Staff Accountant,

Division of Supervision (202-898-8921) or Gerald J. Gervino, Senior

Attorney, Legal Division (202-898-3723), Federal Deposit Insurance

Corporation, 550 17th Street NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

Background

Section 12(i) of the Exchange Act grants authority to the FDIC to

promulgate regulations applicable to the securities of insured banks

(including foreign banks having an insured branch) which are neither

members of the Federal Reserve System nor District banks (Nonmember

Banks). These regulations must be substantially similar to the SEC's

regulations under sections 12 (securities registration), 13 (periodic

reporting), 14(a) (proxies and proxy solicitation), 14(c) (information

statements), 14(d) (tender offers), 14(f) (arrangements for changes in

directors), and 16 (beneficial ownership and reporting) of the Exchange

Act. Section 12(i) does not require the FDIC to promulgate

substantially similar regulations in the event that the FDIC finds that

implementation of such regulation is not necessary or appropriate in

the public interest or for protection of investors and the FDIC

publishes such findings with detailed reasons therefor in the Federal

Register. This proposed amendment is intended to satisfy that

requirement.

Amendments to Part 335

A. Small Business Initiatives

Recognizing that smaller banks are disproportionately affected by

complexities in the disclosure requirements of banks registered under

section 12 of the Exchange Act, the FDIC is proposing to amend its

regulations by permitting ``small business issuers'' (as defined under

the SEC's Exchange Act rules) to provide financial and other item

disclosure in conformance with Regulation S-B of the Securities and

Exchange Commission (17 CFR part 228) in lieu of certain disclosure

requirements in FDIC Forms F-1, F-2, F-4, F-5, F-5A and the annual

report to security holders. The definition of ``small business

issuer'', generally includes banks with annual revenues of less than

$25 million, whose voting stock does not have a public float of $25

million or more.

For additional information and discussion, reference is made to the

preamble contained in ``Small Business Initiatives'', SEC Release No.

34-30968, 57 FR 36442 (August 13, 1992); and in ``Additional Small

Business Initiatives'', SEC Release No. 34-32231, 58 FR 26509 (May 4,

1993).

B. Executive Compensation Disclosure

The SEC's regulations, as would be referenced by the FDIC's

Exchange Act rules, require disclosure of the compensation of the chief

executive officer (CEO) regardless of the amount of compensation, and

the four most highly compensated senior executive officers, excluding

the CEO, who earn more than $100,000 per year in salary and bonus.

Additionally, the regulations require a comprehensive three year

compensation table, a table which discloses awards granted pursuant to

long term incentive plans, and two disclosure tables relative to

options and stock appreciation rights. The SEC's regulations also

require:

(a) Disclosure of all forms of director compensation, employment

contracts and termination agreements which require payments in excess

of $100,000;

(b) A compensation committee report to shareholders which details

compensation policies and the basis for the CEO's compensation for the

last fiscal year;

(c) Proxy statement disclosure of the existence of certain

relationships between directors and the bank if specific circumstances

exist; and

(d) A graphical chart, which illustrates for the previous five

years, the cumulative total return to shareholders, of stock

appreciation and dividends.

For additional information and discussion, reference is made to the

preamble contained in ``Executive Compensation Disclosure'', SEC

Release No. 34-31327, 57 FR 48125 (October 21, 1992); in ``Executive

Compensation Disclosure'', SEC Release No. 34-32723, 58 FR 42882

(August 12, 1993); and in ``Executive Compensation Disclosure'', SEC

Release No. 34-33229, 58 FR 63010 (November 29, 1993).

C. Regulation of Communications Among Shareholders

The proposed amendments to the proxy rules and other related

provisions would generally improve the effectiveness of the proxy-

voting process and its effect on corporate governance of nonmember

insured banks subject to part 335. These proposed amendments are the

result of an effort to eliminate from the FDIC proxy rules, any

unnecessary regulatory impediments to communication among shareholders

and others and to the effective use of shareholder voting rights.

Accordingly, the FDIC proposes to revise its rules relative to the

solicitation of proxy authority to allow management and other persons

seeking proxy authority to get their case to the shareholders in a more

efficient and effective manner. The FDIC has determined that

modifications in the current rules are desirable to achieve the

purposes set forth in the Exchange Act.

The FDIC proposes to eliminate Form F-6--Form for Statement in

Election Contests (Sec. 335.221) and also proposes to adopt new Form F-

6A--Notice of Exempt Solicitation (Sec. 335.222). Disclosures relative

to each participant in an election contest, which were previously

provided on Forms F-6, are now required to be included on Form F-5--

Form for Proxy Statement (Sec. 335.212). Form F-6A requirements would

apply to large shareholders who are disinterested in the subject matter

of a shareholder vote and who are engaging in certain solicitations

which are exempt from the regulatory requirements of the proxy rules.

It should also be noted that the FDIC retains its existing rules

which generally require the filing of preliminary proxy material and

preliminary information statements with the FDIC for staff review and

comment, prior to distribution of the definitive materials. The FDIC

proposes to amend its rules however, to require that preliminary

materials be deemed immediately available for public inspection upon

filing, unless confidential treatment is obtained pursuant to

Sec. 335.204(f)(2).

The proposed amendments, if adopted, will make the FDIC's proxy and

related disclosure rules substantially similar to the SEC's recently

amended comparable rules. Prior to amendment of its rules, the SEC

conducted an extensive three-year examination focused on the role of

its former proxy and disclosure rules in impeding shareholder

communication and participation. As a result of its examination, the

SEC concluded that the demonstrated effect of its rules as previously

written was contrary to Congress's intent that the rules assure fair,

and effective shareholder suffrage. For additional information and

discussion, reference is made to the preamble contained in ``Regulation

of Communications Among Shareholders'', SEC Rel. No. 34-31326, 57 FR

48276 (October 22, 1992).

D. Other

As described previously, the FDIC proposes to eliminate Form F-6--

Form For Statement In Election Contests (Sec. 335.221) and also

proposes to adopt new Form F-6A--Notice Of Exempt Solicitation

(Sec. 335.222). In addition, several technical amendments are proposed

to correct various errors which appear in the Code of Federal

Regulations.

Request for Public Comment

The Board hereby requests comment on all aspects of the proposed

rule, particularly those specifically mentioned above. In conjunction

with this proposed rule, the FDIC also seeks written comments relative

to the following: Should the FDIC consider proposing a revision to Part

335, to incorporate by cross-reference the comparable rules of the SEC,

rather than continue to maintain the separate but substantially similar

body of rules contained in Part 335 as is done presently? Interested

persons are asked to address: (1) the benefits and disadvantages of

cross-referencing as a method for assuring substantial similarity

between the FDIC's and the SEC's regulations; (2) the potential cost

savings or cost burden of cross-referencing; (3) whether the FDIC

should continue to review preliminary proxy materials and information

statements; and (4) any other issues regarding a cross-referencing

proposal which commenters believe pertinent. Written comments are

invited to be submitted during a 60-day comment period.

Regulatory Flexibility Act

The Board hereby certifies that the proposed rule would not have a

significant economic impact on a substantial number of small entities

within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.). Therefore, the provisions of that Act relating to an initial and

final regulatory flexibility analysis (5 U.S.C. 603 and 604) do not

apply. This proposed rule would not impose significant burdens on

depository institutions of any size and would not have the type of

impact addressed by the Act.

Paperwork Reduction Act

The collection of information contained in this proposed rule has

been submitted to the Office of Management and Budget for review and

approval pursuant to the Paperwork Reduction Act of 1980 (44 U.S.C.

3501 et seq.). Comments on the accuracy of the burden estimate, and

suggestions for reducing the burden, should be directed to the Office

of Management and Budget, Paperwork Reduction Project (3064-0030),

Washington, DC 20503, with copies of such comments to Steven F. Hanft,

Office of the Executive Secretary, room F-400, 550 17th Street, NW.,

Washington, DC 20429.

The revisions to the collection of information in this proposed

rule are found in Sec. 335.102, Sec. 335.201, Sec. 335.202,

Sec. 335.203, Sec. 335.204, Sec. 335.205, Sec. 335.207, Sec. 335.210,

Sec. 335.212, Sec. 335.213, Sec. 335.214, Sec. 335.220, Sec. 335.221,

Sec. 335.222, Sec. 335.301, Sec. 335.309a, Sec. 335.310, Sec. 335.312,

Sec. 335.321, Sec. 335.330, Sec. 335.331, and Sec. 335.622. The most

significant of these revisions relate to executive compensation

disclosure, small business initiatives, and communications among

shareholders. The proposed rules remove Sec. 335.221, eliminating Form

F-6--Form For Statement In Election Contests. The previous disclosure

requirements of the Form F-6 are now included in Form F-5

(Sec. 335.212). The requirement to file Form F-6A--Notice Of Exempt

Solicitation (Sec. 335.222), is also added. It is estimated that,

relative to the proposed rule, the aggregate effect of all changes in

burden is de minimus and that the changes counterbalance each other.

The total estimated reporting burden for all collections of

information in this proposed regulation is summarized as follows:

Number of Respondents: 4,368.

Number of Responses Per Respondent: 1.42.

Total Annual Responses: 6,214.

Hours Per Response: 8.89.

Total Annual Burden Hours: 55,276.

Cost Benefit Analysis

These proposed amendments will significantly reduce the costs and

burdens that have been imposed on ``small business issuers'', those who

wish to communicate with shareholders, and others regarding management

performance and matters submitted to a shareholder vote. Costs will

also be reduced by the changes to the proxy statement delivery

requirements. The proposed amendments should result in cash and

manpower savings for ``small business issuers'' and all those who would

no longer be required to prepare and file proxy materials with the FDIC

pursuant to the proposed exemptions for solicitations not seeking proxy

authority. Even those who would be required to submit a Notice of

Exempt Solicitation (new Form F-6A) would have a significantly reduced

compliance burden. The proposed amendments to the shareholder list

provisions should not change substantially the costs or burdens to

either the bank registrant or the requesting party. While some

additional disclosure will be required relative to executive

compensation, stock performance, and tabulation procedures and voting

results, the overall cost resulting from these changes to banks should

be minimal and is outweighed in any event by the benefits to

shareholders and investors at large resulting from the enhanced

information.

Statutory Basis

The proposed amendments to the FDIC's rules under sections 12, 13,

14(a), 14(c), 14(d), 14(f) and 16 of the Exchange Act, are being

adopted by the FDIC pursuant to Exchange Act section 12(i).

List of Subjects in 12 CFR Part 335

Accounting, Banks, banking, Confidential business information,

Reporting and recordkeeping requirements, Securities.

Text of Proposed Rules

In accordance with the foregoing, part 335 of chapter III of title

12 of the Code of Federal Regulations is proposed to be amended as

follows:

PART 335--SECURITIES OF NONMEMBER INSURED BANKS

1. The authority citation for part 335 continues to read as

follows:

Authority: Sec. 12(i) of the Securities Exchange Act of 1934, as

amended (15 U.S.C. 78l(i)).

2. Section 335.102 is amended by revising the first sentence of

paragraph (y); by redesignating paragraphs (oo), (pp), (qq), (rr) and

(ss) as paragraphs (pp), (qq), (rr), (ss) and (tt); by adding a new

paragraph (oo); and by republishing newly designated paragraph (pp)

introductory text and revising newly designated paragraph (pp)(3) to

read as follows:

Sec. 335.102 Definitions.

* * * * *

(y) The term officer or principal officer or executive officer

means Chairman of the Board of Directors, Vice Chairman of the Board,

Chairman of the Executive Committee, President, Vice President (except

as indicated in the next sentence), Cashier, Treasurer, Secretary,

Comptroller, and any other person who participates in major

policymaking functions of the bank. * * *

* * * * *

(oo) The term Small Business Issuer shall be defined in the same

manner as currently defined in 17 CFR 240.12b-2.

(pp) The terms solicit and solicitation mean:

* * * * *

(3) The furnishing of a form of proxy or other communication to

security holders under circumstances reasonably calculated to result in

the procurement, withholding, or revocation of a proxy. The terms do

not apply, however, to:

(i) The furnishing of a form of proxy to a security holder upon the

unsolicited request of such security holder;

(ii) The performance by the bank of acts required by Sec. 335.210;

(iii) The performance by any person of ministerial acts on behalf

of a person soliciting a proxy; or

(iv) A communication by a security holder who does not otherwise

engage in a proxy solicitation (other than a solicitation exempt under

Sec. 335.202) stating how the security holder intends to vote and the

reasons therefor, provided that the communication:

(A) Is made by means of speeches in public forums, press releases,

published or broadcast opinions, statements, or advertisements

appearing in a broadcast media, or newspaper, magazine or other bona

fide publication disseminated on a regular basis;

(B) Is directed to persons to whom the security holder owes a

fiduciary duty in connection with the voting of securities of a bank

held by the security holder; or

(C) Is made in response to unsolicited requests for additional

information with respect to a prior communication by the security

holder made pursuant to this paragraph (pp)(3)(iv).

* * * * *

3. Section 335.201 is amended by revising the reference ``(See 12

CFR 335.102(gg) and (oo))'' in paragraph (a) to read ``(See

Sec. 335.102(gg) and (pp))''; and adding paragraph (d) to read as

follows:

Sec. 335.201 Requirement of statement.

* * * * *

(d) The provisions of paragraph (a) of this section shall not apply

to a communication made by means of speeches in public forums, press

releases, published or broadcast opinions, statements, or

advertisements appearing in a broadcast media, newspaper, magazine or

other bona fide publication disseminated on a regular basis, provided

that:

(1) No form of proxy, consent or authorization or means to execute

the same is provided to a security holder in connection with the

communication; and

(2) At the time the communication is made, a definitive proxy

statement is on file with the FDIC pursuant to Sec. 335.204(c).

4. Section 335.202 is amended by revising the introductory text;

adding new paragraph (f); and removing the Note at the end of the

section to read as follows:

Sec. 335.202 Exceptions.

The requirements of this subpart (except Secs. 335.204(l), 335.206,

and 335.210) shall not apply to the following:

* * * * *

(f) Any solicitation by or on behalf of any person who does not, at

any time during such solicitation, seek directly or indirectly, either

on its own or another's behalf, the power to act as proxy for a

security holder and does not furnish or otherwise request, or act on

behalf of a person who furnishes or requests, a form of revocation,

abstention, consent or authorization. Provided, however, that the

exemption set forth in this paragraph shall not apply to:

(1) The bank or an affiliate or associate of the bank (other than

an officer or director or any person serving in a similar capacity);

(2) An officer or director of the bank or any person serving in a

similar capacity engaging in a solicitation financed directly or

indirectly by the bank;

(3) An officer, director, affiliate or associate of a person that

is ineligible to rely on the exemption set forth in this paragraph

(other than persons specified in paragraph (b)(1)(i) of this section),

or any person serving in a similar capacity;

(4) Any nominee for whose election as a director proxies are

solicited;

(5) Any person soliciting in opposition to a merger,

recapitalization, reorganization, sale of assets or other extraordinary

transaction recommended or approved by the board of directors of the

bank who is proposing or intends to propose an alternative transaction

to which such person or one of its affiliates is a party;

(6) Any person who is required to report beneficial ownership of

the bank's equity securities on a Form F-11 (Sec. 335.407), unless such

person has filed a Form F-11 and has not disclosed pursuant to Item 4

thereto an intent, or reserved the right, to engage in a control

transaction, or any contested solicitation for the election of

directors;

(7) Any person who receives compensation from an ineligible person

directly related to the solicitation of proxies, other than pursuant to

Sec. 335.203(c);

(8) Any person who, because of a substantial interest in the

subject matter of the solicitation, is likely to receive a benefit from

a successful solicitation that would not be shared pro rata by all

other holders of the same class of securities, other than a benefit

arising from the person's employment with the bank; and

(9) Any person acting on behalf of any of the foregoing in

paragraphs (f)(1) through (8) of this section.

5. Section 335.203 is amended by adding a ``Note to Small Business

Issuers'' following the introductory text of paragraph (a); and

removing paragraph (c) and Instructions 1, 2 and 3 following paragraph

(c) to read as follows:

Sec. 335.203 Annual report to security holders to accompany

statements.

(a) * * *

Note to Small Business Issuers: A ``small business issuer'', as

defined under 17 CFR 240.12b-2 has the option of providing financial

and other item disclosure in conformance with Regulation S-B of the

Securities and Exchange Commission (17 CFR Part 228) in lieu of the

disclosure requirements set forth by paragraphs (a)(1) and (a)(3)

through (a)(8) of this section. If there is no comparable disclosure

requirement in Regulation S-B, a small business issuer need not

provide the information requested. The definition of ``small

business issuer'', generally includes banks with annual revenues of

less than $25 million, whose voting stock does not have a public

float of $25 million or more.

* * * * *

6. Section 335.204 is amended by revising paragraph (f); revising

the reference ``Sec. 335.220(e)'' to read ``Sec. 335.220(c)'' in each

place it appears in paragraph (h); and adding new paragraph (l), to

read as follows:

Sec. 335.204 Material required to be filed.

* * * * *

(f)(1) All copies of preliminary proxy statements and forms of

proxy filed pursuant to paragraph (a) of this section shall be clearly

marked ``Preliminary Copies'', and shall be deemed immediately

available for public inspection unless confidential treatment is

obtained pursuant to paragraph (f)(2) of this section.

(2) If action is to be taken with respect to any matter specified

in Item 12 of Form F-5, all copies of the preliminary proxy statement

and form of proxy filed pursuant to paragraph (a) of this section shall

be for the information of the FDIC only and shall not be deemed

available for public inspection until filed with the FDIC in definitive

form, provided that:

(i) The proxy statement does not relate to a matter or proposal

subject to Sec. 335.409; and

(ii) The filed material is marked ``Confidential, For Use of the

FDIC Only''. In any and all cases, such material may be disclosed to

any department or agency of the United States Government and to the

Congress, and the FDIC may make such inquiries or investigation in

regard to the material as may be necessary for an adequate review

thereof by the FDIC.

* * * * *

(l) Solicitations subject to Sec. 335.202(f). (1) Any person who:

(i) Engages in a solicitation pursuant to Sec. 335.202(f); and

(ii) At the commencement of that solicitation owns beneficially

securities of the class which is the subject of the solicitation with a

market value of over $5 million, shall furnish or mail to the FDIC, not

later than three days after the date the written solicitation is first

sent or given to any security holder, three copies of a statement

containing the information specified in the Notice of Exempt

Solicitation (Form F-6A, Sec. 335.222) which statement shall attach as

an exhibit all written soliciting materials. Three copies of an

amendment to such statement shall be furnished or mailed to the FDIC,

in connection with dissemination of any additional communications, not

later than three days after the date the additional material is first

sent or given to any security holder. Three copies of the Notice of

Exempt Proxy Solicitation and amendments thereto shall, at the same

time the materials are furnished or mailed to the FDIC, be furnished or

mailed to each national securities exchange upon which any class of

securities of the bank is listed and registered.

(2) Notwithstanding paragraph (l)(1) of this section, no such

submission need be made with respect to oral solicitations (other than

with respect to scripts used in connection with such oral

solicitations), speeches delivered in a public forum, press releases,

published or broadcast opinions, statements, and advertisements

appearing in a broadcast media, or a newspaper, magazine or other bona

fide publication disseminated on a regular basis.

7. Section 335.205 is amended by revising paragraphs (a)(3) and

(a)(4) to read as follows:

Sec. 335.205 Solicitation prior to furnishing required proxy

statement.

(a) * * *

(3) The identity of the participants in the solicitation (as

defined in Instruction 3 to Item 3 of Form F-5 (Sec. 335.212)) and a

description of their interests direct or indirect, by security holdings

or otherwise, are set forth in each communication published, sent or

given to security holders in connection with the solicitation; and

(4) A written proxy statement meeting the requirements of this

regulation is sent or given to security holders solicited pursuant to

this section at the earliest practicable date.

* * * * *

8. Section 335.207 is amended by revising paragraph (a); revising

the first sentence of paragraph (b)(1); redesignating paragraph (d)

introductory text and paragraphs (d)(1) through (d)(4) as paragraph

(d)(1) introductory text and paragraphs (d)(1)(i) through (d)(1)(iv);

republishing newly designated paragraph (d)(1) introductory text;

designating paragraph (d) concluding text as paragraph (d)(2) and

revising it; and adding a new paragraph (f), to read as follows:

Sec. 335.207 Requirements as to proxy.

(a) The form of proxy:

(1) Shall indicate in bold-face type whether or not the proxy is

solicited on behalf of the bank's board of directors or, if provided

other than by a majority of the board of directors, shall indicate in

bold face type the identity of the persons on whose behalf the

solicitation is made;

(2) Shall provide a specifically designated blank space for dating

the proxy; and

(3) Shall identify clearly and impartially each separate matter

intended to be acted upon, whether or not related to or conditioned on

the approval of other matters, and whether proposed by the bank or by

security holders. No reference need be made, however, to matters as to

which discretionary authority is conferred under paragraph (c) of this

section.

(b)(1) Means shall be provided in the form of proxy whereby the

person solicited is afforded an opportunity to specify by boxes a

choice between approval or disapproval of, or abstention with respect

to each separate matter referred to therein as intended to be acted

upon, other than elections to office. * * *

* * * * *

(d)(1) No proxy shall confer authority:

* * * * *

(2) A person shall not be deemed to be a bona fide nominee and he

shall not be named as such unless he has consented to being named in

the proxy statement and to serve if elected. Provided, however, That

nothing in this section shall prevent any person soliciting in support

of nominees who, if elected, would constitute a minority of the board

of directors, from seeking authority to vote for nominees named in the

bank's proxy statement, so long as the soliciting party:

(i) Seeks authority to vote in the aggregate for the number of

director positions then subject to election;

(ii) Represents that it will vote for all the bank nominees, other

than those bank nominees specified by the soliciting party;

(iii) Provides the security holder an opportunity to withhold

authority with respect to any other bank nominee by writing the name of

that nominee on the form of proxy; and

(iv) States on the form of proxy and in the proxy statement that

there is no assurance that the bank's nominees will serve if elected

with any of the soliciting party's nominees.

* * * * *

(f) No person conducting a solicitation subject to this subpart B

shall deliver a form of proxy, consent or authorization to any security

holder unless the security holder concurrently receives, or has

previously received, a definitive proxy statement that has been filed

with, or mailed for filing to, the FDIC pursuant to Sec. 335.204(c).

9. Section 335.210 is revised to read as follows:

Sec. 335.210 Obligations of banks to provide a list of, or mail

soliciting material to, security holders.

(a) If the bank has made or intends to make a proxy solicitation in

connection with a security holder meeting, upon the written request by

any record or beneficial holder of securities of the class entitled to

vote at the meeting to provide a list of security holders or to mail

the requesting security holder's materials, regardless of whether the

request references this section, the bank shall:

(1) Deliver to the requesting security holder within five business

days after receipt of the request:

(i) Notification as to whether the bank has elected to mail the

security holder's soliciting materials or provide a security holder

list if the election under paragraph (b) of this section is to be made

by the bank;

(ii) A statement of the approximate number of record holders and

beneficial holders, separated by type of holder and class, owning

securities in the same class or classes as holders which have been or

are to be solicited on management's behalf, or any more limited group

of such holders designated by the security holder if available or

retrievable under the bank's or its transfer agent's security holder

data systems; and

(iii) The estimated cost of mailing a proxy statement, form of

proxy or other communication to such holders, including to the extent

known or reasonably available, the estimated costs of any bank, broker,

and similar person through whom the bank has solicited or intends to

solicit beneficial owners in connection with the security holder

meeting or action;

(2) Perform the acts set forth in either paragraphs (a)(2)(i) or

(a)(2)(ii) of this section, at the bank's or requesting security

holder's option, as specified in paragraph (b) of this section:

(i) Mail copies of any proxy statement, form of proxy or other

soliciting material furnished by the security holder to the record

holders, including banks, brokers, and similar entities, designated by

the security holder. A sufficient number of copies must be mailed to

the banks, brokers and similar entities for distribution to all

beneficial owners designated by the security holder. The bank shall

mail the security holder material with reasonable promptness after

tender of the material to be mailed, envelopes or other containers

therefor, postage or payment for postage and other reasonable expenses

of effecting such mailing. The bank shall not be responsible for the

content of the material; or

(ii) Deliver the following information to the requesting security

holder within five business days of receipt of the request: A

reasonably current list of the names, addresses and security positions

of the record holders, including banks, brokers and similar entities,

holding securities in the same class or classes as holders which have

been or are to be solicited on management's behalf, or any more limited

group of such holders designated by the security holder if available or

retrievable under the bank's or its transfer agent's security holder

data systems; the most recent list of names, addresses and security

positions of beneficial owners as specified in Sec. 335.214(b), in the

possession, or which subsequently comes into the possession, of the

bank. All security holder list information shall be in the form

requested by the security holder to the extent that such form is

available to the bank without undue burden or expense. The bank shall

furnish the security holder with updated record holder information on a

daily basis or, if not available on a daily basis, at the shortest

reasonable intervals, provided, however, the bank need not provide

beneficial or record holder information more current than the record

date for the meeting or action.

(b) If the bank is soliciting or intends to solicit with respect to

a proposal that is subject to Sec. 335.409, the requesting security

holder shall have the option set forth in paragraph (a)(2) of this

section. With respect to all other requests pursuant to this section,

the bank shall have the option to either mail the security holder's

material or furnish the security holder list as set forth in paragraph

(a)(2) of this section.

(c) At the time of a list request, the security holder making the

request shall:

(1) If holding the bank's securities through a nominee, provide the

bank with a statement by the nominee or other independent third party,

or a copy of a current filing made with the FDIC and furnished to the

bank, confirming such holder's beneficial ownership; and

(2) Provide the bank with an affidavit, declaration, affirmation or

other similar document provided for under applicable state law

identifying the proposal or other corporate action that will be the

subject of the security holder's solicitation or communication and

attesting that:

(i) The security holder will not use the list information for any

purpose other than to solicit security holders with respect to the same

meeting or action by consent or authorization for which the bank is

soliciting or intends to solicit or to communicate with security

holders with respect to a solicitation commenced by the bank; and

(ii) The security holder will not disclose such information to any

person other than a beneficial owner for whom the request was made and

an employee or agent to the extent necessary to effectuate the

communication or solicitation.

(d) The security holder shall not use the information furnished by

the bank pursuant to paragraph (a)(2)(ii) of this section for any

purpose other than to solicit security holders with respect to the same

meeting for which the bank is soliciting or intends to solicit or to

communicate with security holders with respect to a solicitation

commenced by the bank; or disclose such information to any person other

than an employee, agent, or beneficial owner for whom a request was

made to the extent necessary to effectuate the communication or

solicitation. The security holder shall return the information provided

pursuant to paragraph (a)(2)(ii) of this section and shall not retain

any copies thereof or of any information derived from such information

after the termination of the solicitation.

(e) The security holder shall reimburse the reasonable expenses

incurred by the bank in performing the acts requested pursuant to

paragraph (a) of this section.

10. Section 335.212 is amended by adding in Form F-5 Proxy

Statement ``Note to Small Business Issuers'' after ``General

Instructions''; revising paragraph (a)(2) in Item 3, and adding

Instruction 3 to Item 3; revising paragraphs (a)(2) and (b) in Item 4,

and adding an instruction to Item 4; revising the text preceding the

table in paragraph (d)(2) in Item 5; revising paragraph (a) in Item 7;

removing paragraphs (b), (c), (d), (e), and (h), and all instructions

and general instructions to paragraphs (a), (b), (c), (d), (e), and (h)

in Item 7, and redesignating paragraphs (f), (g), and (i) of Item 7 as

paragraphs (b), (c), and (d), respectively; revising Item 9, the

instructions to Item 9, and Item 18; and removing the ``Option

Disclosure Instruction'' and the following option disclosure table

along with notes thereto, which follow Item 21, to read as follows:

Sec. 335.212 Form for proxy statement (Form F-5).

Form F-5--Proxy Statement

General Instructions

* * * * *

Note to Small Business Issuers: a ``small business issuer'', as

defined under 17 CFR 240.12b-2 has the option of providing financial

and other item disclosure in conformance with Regulation S-B of the

Securities and Exchange Commission (17 CFR Part 228) in lieu of the

disclosure requirements set forth in this section by Item 4,

paragraph (b)(1)(xi); Item 5, paragraph (d); Item 6, paragraphs (a)

through (d): Item 7, paragraphs (a) and (c); Item 8, paragraph (c);

Item 10, paragraph (b); Item 12, paragraphs (a)(3)(vi), (a)(5),

(a)(6), (a)(7), (b)(1) through (b)(8), (c)(1) through (c)(4), and

(e); and Item 13. If there is no comparable disclosure requirement

in Regulation S-B, a small business issuer need not provide the

information requested. The definition of ``small business issuer'',

generally includes banks with annual revenues of less than $25

million, whose voting stock does not have a public float of $25

million or more.

Information Required in Statement

* * * * *

Item 3--Persons Making the Solicitation.

(a) * * *

(1) * * *

(2) If the solicitation is made otherwise than by the bank, so

state and give the names of the participants in the solicitation, as

defined in paragraphs (a)(iii), (iv), (v) and (vi) of Instruction 3

to this item.

* * * * *

Instructions. * * *

3. For purposes of this Item 3 and Item 4 of this Form F-5:

(a) The terms ``participant'' and ``participant in a

solicitation'' include the following:

(i) The bank;

(ii) Any director of the bank, and any nominee for whose

election as a director proxies are solicited;

(iii) Any committee or group which solicits proxies, any member

of such committee or group, and any person whether or not named as a

member who, acting alone or with one or more other persons, directly

or indirectly takes the initiative, or engages, in organizing,

directing, or arranging for the financing of any such committee or

group;

(iv) Any person who finances or joins with another to finance

the solicitation of proxies, except persons who contribute not more

than $500 and who are not otherwise participants;

(v) Any person who lends money or furnishes credit or enters

into any other arrangements, pursuant to any contract or

understanding with a participant, for the purpose of financing or

otherwise inducing the purchase, sale, holding or voting of

securities of the bank by any participant or other persons, in

support of or in opposition to a participant; except that such terms

do not include a bank, broker or dealer who, in the ordinary course

of business, lends money or executes orders for the purchase or sale

of securities and who is not otherwise a participant; and

(vi) Any person who solicits proxies.

(b) The terms ``participant'' and ``participant in a

solicitation'' do not include:

(i) Any person or organization retained or employed by a

participant to solicit security holders and whose activities are

limited to the duties required to be performed in the course of such

employment;

(ii) Any person who merely transmits proxy soliciting material

or performs other ministerial or clerical duties;

(iii) Any person employed by a participant in the capacity of

attorney, accountant, or advertising, public relations or financial

adviser, and whose activities are limited to the duties required to

be performed in the course of such employment;

(iv) Any person regularly employed as an officer or employee of

the bank or any of its subsidiaries who is not otherwise a

participant; or

(v) Any officer or director of, or any person regularly employed

by, any other participant, if such officer, director or employee is

not otherwise a participant.

Item 4--Interest of Certain Persons in Matters To Be Acted Upon.

(a) Solicitations not subject to Sec. 335.220. * * *

(1) * * *

(2) If the solicitation is made otherwise than on behalf of the

bank, each participant in the solicitation, as defined in paragraphs

(a)(iii), (iv), (v), and (vi) of Instruction 3 to Item 3 of this

Form F-5.

* * * * *

(b) Solicitations subject to Sec. 335.220.

(1) Describe briefly any substantial interest, direct or

indirect, by security holdings or otherwise, of each participant as

defined in paragraphs (a)(ii), (iii), (iv), (v) and (vi) of

Instruction 3 to Item 3 of this Form F-5, in any matter to be acted

upon at the meeting, and include with respect to each participant

the following information, or a fair and accurate summary thereof:

(i) Name and business address of the participant.

(ii) The participant's present principal occupation or

employment and the name, principal business and address of any

corporation or other organization in which such employment is

carried on.

(iii) State whether or not, during the past ten years, the

participant has been convicted in a criminal proceeding (excluding

traffic violations or similar misdemeanors) and, if so, give dates,

nature of conviction, name and location of court, and penalty

imposed or other disposition of the case. A negative answer need not

be included in the proxy statement or other soliciting material.

(iv) State the amount of each class of securities of the bank

which the participant owns beneficially, directly or indirectly.

(v) State the amount of each class of securities of the bank

which the participant owns of record but not beneficially.

(vi) State with respect to all securities of the bank purchased

or sold within the past two years, the dates on which they were

purchased or sold and the amount purchased or sold on each such

date.

(vii) If any part of the purchase price or market value of any

of the shares specified in paragraph (b)(1)(vi) of this item is

represented by funds borrowed or otherwise obtained for the purpose

of acquiring or holding such securities, so state and indicate the

amount of the indebtedness as of the latest practicable date. If

such funds were borrowed or obtained otherwise than pursuant to a

margin account or bank loan in the regular course of business of a

bank, broker or dealer, briefly describe the transaction, and state

the names of the parties.

(viii) State whether or not the participant is, or was within

the past year, a party to any contract, arrangements or

understandings with any person with respect to any securities of the

bank, including, but not limited to joint ventures, loan or option

arrangements, puts or calls, guarantees against loss or guarantees

of profit, division of losses or profits, or the giving or

withholding of proxies. If so, name the parties to such contracts,

arrangements or understandings and give the details thereof.

(ix) State the amount of securities of the bank owned

beneficially, directly or indirectly, by each of the participant's

associates and the name and address of each such associate.

(x) State the amount of each class of securities of any parent

or subsidiary of the bank which the participant owns beneficially,

directly or indirectly.

(xi) Furnish for the participant and associates of the

participant the information required by Sec. 335.212, Item 7(c).

(xii) State whether or not the participant or any associates of

the participant have any arrangement or understanding with any

person--

(A) With respect to any future employment by the bank or its

affiliates; or

(B) With respect to any future transactions to which the bank or

any of its affiliates will or may be a party. If so, describe such

arrangement or understanding and state the names of the parties

thereto.

(2) With respect to any person, other than a director or

executive officer of the bank acting solely in that capacity, who is

a party to an arrangement or understanding pursuant to which a

nominee for election as director is proposed to be elected, describe

any substantial interest, direct or indirect, by security holdings

or otherwise, that such person has in any matter to be acted upon at

the meeting, and furnish the information called for by paragraphs

(b)(1)(xi) and (xii) of this item.

Instruction: For purposes of this Item 4, beneficial ownership

shall be determined in accordance with Sec. 335.403.

Item 5--Voting Securities and Principal Holders Thereof.

* * * * *

(d)(1) * * *

(2) Security ownership of management. Furnish the following

information, as of the most recent practicable date, in

substantially the tabular form indicated, as to each class of equity

securities of the bank or any of its parents or subsidiaries other

than directors' qualifying shares, beneficially owned by all

directors and nominees, naming them, each of the named executive

officers as defined in 17 CFR 229.402(a)(3), and directors and

executive officers of the bank as a group, without naming them. Show

in column (3) the total number of shares beneficially owned and in

column (4) the percent of class so owned. Of the number of shares

shown in column (3), indicate, by footnote or otherwise, the amount

of shares with respect to which such persons have a right to acquire

beneficial ownership as specified in Sec. 335.403(d)(1).

* * * * *

Item 7--Compensation and Other Transactions With Management and

Others.

* * * * *

(a) Compensation of directors and executive officers. Furnish

the information required by the applicable and currently effective

SEC regulations contained in Item 8 of SEC Schedule 14A (17 CFR

240.14a-101, Item 8).

* * * * *

Item 9--Compensation Plans.

If action is to be taken with respect to any plan pursuant to

which cash or noncash compensation may be paid or distributed,

furnish the following information:

(a) Plans subject to security holder action.

(1) Describe briefly the material features of the plan being

acted upon, identify each class of persons who will be eligible to

participate therein, indicate the approximate number of persons in

each such class, and state the basis of such participation.

(2)(i) In the tabular format specified below, disclose the

benefits or amounts that will be received by or allocated to each of

the following under the plan being acted upon, if such benefits or

amounts are determinable:

New Plan Benefits

------------------------------------------------------------------------

Dollar No. of

Plan name value ($) units

------------------------------------------------------------------------

CEO............................................. .......... ..........

A............................................... .......... ..........

B............................................... .......... ..........

C............................................... .......... ..........

D............................................... .......... ..........

Executive Group................................. .......... ..........

Non-Executive Director Group.................... .......... ..........

Non-Executive Officer Employee Group............ .......... ..........

------------------------------------------------------------------------

Instruction to New Plan Benefits Table: Additional columns should be

added for each plan with respect to which security holder action is to

be taken.

(ii) The table required by paragraph (a)(2)(i) of this item

shall provide information as to the following persons:

(A) Each person (stating name and position) specified in 17 CFR

229.402(a)(3);

(B) All current executive officers as a group;

(C) All current directors who are not executive officers as a

group; and

(D) All employees, including all current officers who are not

executive officers, as a group.

(iii) If the benefits or amounts specified in paragraph

(a)(2)(i) of this item are not determinable, state the benefits or

amounts which would have been received by or allocated to each of

the following for the last completed fiscal year if the plan had

been in effect, if such benefits or amounts may be determined, in

the table specified in paragraph (a)(2)(i) of this item:

(A) Each person (stating name and position) specified in 17 CFR

229.402(a)(3);

(B) All current executive officers as a group;

(C) All current directors who are not executive officers as a

group; and

(D) All employees, including all current officers who are not

executive officers, as a group.

(3) If the plan to be acted upon can be amended, otherwise than

by a vote of security holders, to increase the cost thereof to the

bank or to alter the allocation of the benefits as between the

persons and groups specified in paragraph (a)(2) of this item, state

the nature of the amendments which can be so made.

(b) Additional information regarding specified plans subject to

security holder action. (1) With respect to any pension or

retirement plan submitted for security holder action, state:

(i) The approximate total amount necessary to fund the plan with

respect to past services, the period over which such amount is to be

paid and the estimated annual payments necessary to pay the total

amount over such period; and

(ii) The estimated annual payment to be made with respect to

current services. In the case of a pension or retirement plan,

information called for by paragraph (a)(2) of this item may be

furnished in the format specified by 17 CFR 229.402(f)(1).

(2)(i) With respect to any specific grant of or any plan

containing options, warrants or rights submitted for security holder

action, state:

(A) The title and amount of securities underlying such options,

warrants or rights;

(B) The prices, expiration dates and other material conditions

upon which the options, warrants or rights may be exercised;

(C) The consideration received or to be received by the bank or

subsidiary for the granting or extension of the options, warrants or

rights;

(D) The market value of the securities underlying the options,

warrants, or rights as of the latest practicable date; and

(E) In the case of options, the federal income tax consequences

of the issuance and exercise of such options to the recipient and

the bank; and

(ii) State separately the amount of such options received or to

be received by the following persons if such benefits or amounts are

determinable:

(A) Each person (stating name and position) specified in 17 CFR

229.402(a)(3);

(B) All current executive officers as a group;

(C) All current directors who are not executive officers as a

group;

(D) Each nominee for election as a director;

(E) Each associate of any of such directors, executive officers

or nominees;

(F) Each other person who received or is to receive 5 percent of

such options, warrants or rights; and

(G) All employees, including all current officers who are not

executive officers, as a group.

Instructions to Item 9

1. The term ``plan'' as used in this item means any plan as

defined in 17 CFR 229.402(a)(7)(ii).

2. If action is to be taken with respect to a material amendment

or modification of an existing plan, the item shall be answered with

respect to the plan as proposed to be amended or modified and shall

indicate any material differences from the existing plan.

3. If the plan to be acted upon is set forth in a written

document, three copies thereof shall be filed with the FDIC at the

time copies of the proxy statement and form of proxy are first filed

pursuant to Sec. 335.204(a).

4. Paragraph (b)(2)(ii) of this item does not apply to warrants

or rights to be issued to security holders as such on a pro rata

basis.

* * * * *

Item 18. Voting Procedures.

As to each matter which is to be submitted to a vote of security

holders, furnish the following information:

(a) State the vote required for approval or election, other than

for the approval of auditors.

(b) Disclose the method by which votes will be counted,

including the treatment and effect of abstentions and broker non-

votes under applicable state law as well as bank charter and by-law

provisions.

* * * * *

11. Section 335.213 is amended by adding 2 paragraphs of text to

follow the existing text in the Note preceding Item 1 to read as

follows:

Sec. 335.213 Form for information statement (Form F-5A).

Form F-5A--Information Statement

Note: * * *

Except as otherwise specifically provided, where any item calls

for information for a specified period in regard to directors,

officers or other persons holding specified positions or

relationships, the information shall be given in regard to any

person who held any of the specified positions or relationships at

any time during the period. However, information need not be

included for any portion of the period during which such person did

not hold any such position or relationship provided a statement to

that effect is made.

Small Business Issuers: A ``small business issuer'', as defined

under 17 CFR 240.12b-2 has the option of providing financial and

other item disclosure in conformance with Regulation S-B of the

Securities and Exchange Commission (17 CFR Part 228) in lieu of the

following referenced disclosure requirements set forth in

Sec. 335.212 Item 4(b)(1)(xi); Item 5, paragraph (d); Item 6,

paragraphs (a) through (d); Item 7, paragraphs (a) and (c); Item 8,

paragraph (c); Item 10, paragraph (b); Item 12, paragraphs

(a)(3)(vi), (a)(5), (a)(6), (a)(7), (b)(1) through (b)(8), (c)(1)

through (c)(4), and (e); and Item 13. If there is no comparable

disclosure requirement in Regulation S-B, a small business issuer

need not provide the information requested. The definition of

``small business issuer'', generally includes banks with annual

revenues of less than $25 million, whose voting stock does not have

a public float of $25 million or more.

* * * * *

12. Section 335.214 is amended by revising the introductory text in

paragraph (a); by revising paragraphs (a)(1)(i)(A), (a)(3), (a)(4),

(a)(5), Note 2 and Note 3 to paragraph (a), paragraph (d), and adding a

new Note 4 to paragraph (a); by revising the reference ``17 CFR

240.14b-1(c) or 17 CFR 240.14b-2 (e)(2) and (3)'' in paragraph

(a)(1)(i)(C) to read ``17 CFR 240.14b-1(b)(3) or 17 CFR 240.14b-

2(b)(4)(ii) and (iii)''; by revising the reference ``17 CFR 240.14b-

1(c) and 17 CFR 240.14b-2 (e)(2) and (3)'' in paragraph (a)(1)(ii)(A),

the introductory text to paragraph (b), and paragraph (c) to read ``17

CFR 240.14b-1(b)(3) and 17 CFR 240.14b-2(b)(4)(ii) and (iii)''; by

revising the reference ``17 CFR 240.14b-2(a)(1)'' to read ``17 CFR

240.14b-2(b)(1)(i)'' in paragraph (a)(2); and by revising the reference

``17 CFR 240.14b-2(e)(1)'' to read ``17 CFR 240.14b-2(b)(4)(i)'' in

paragraph (b)(1) to read as follows:

Sec. 335.214 Obligation of banks in communicating with beneficial

owners.

(a) If the bank knows that securities of any class entitled to vote

at a meeting are held of record by a broker, dealer, bank, association

or other entity that exercises fiduciary powers in nominee name or

otherwise, the bank shall:

(1) * * *

(i) * * *

(A) Whether other persons are the beneficial owners of such

securities, and if so, the number of copies of the proxy and other

soliciting material (or if applicable, the number of copies of the

information statement) necessary to supply such material to such

beneficial owners.

* * * * *

(3)(i) Make the inquiry required by paragraph (a)(1) of this

section:

(A) If the bank intends to solicit proxies, consents or

authorizations:

(1) At least 20 business days prior to the record date of the

meeting of security holders; or

(2) If such inquiry is impracticable 20 business days prior to the

record date of a special meeting, as many days before the record date

as practicable; or

(3) If consents or authorizations are solicited, and such inquiry

is impracticable 20 days before the earliest date on which they may be

used to effect corporate action, as many days before that date as is

practicable; or

(4) At such later time as the rules of a national securities

exchange on which the class of securities in question is listed may

permit for good cause shown); or

(B) If the bank does not intend to solicit proxies, consents or

authorizations, the earlier of:

(1) At least 20 business days prior to the record date of the

meeting of security holders or the record date of written consents in

lieu of a meeting; or

(2) At least 20 business days prior to the date the information

statement is required to be sent or given pursuant to Sec. 335.201(b);

(ii) Provided however, That if a record holder or respondent bank

has informed the bank that a designated office(s) or department(s) is

to receive such inquiries, the inquiry shall be made to such designated

office(s) or department(s);

(4) Supply in a timely manner, each record holder and respondent

bank of whom the inquiries required by paragraphs (a)(1) and (a)(2) of

this section are made with copies of the proxy, other proxy soliciting

material (or if applicable, copies of the information statement), and/

or the annual report to security holders, in such quantities, assembled

in such form and at such place(s), as the record holder may reasonably

request in order to send such material to each beneficial owner of

securities who is to be furnished with such material by the record

holder or respondent bank; and

(5) Upon the request of any record holder or respondent bank that

is supplied with proxy soliciting material, information statements,

and/or annual reports to security holders pursuant to paragraph (a)(4)

of this section, pay its reasonable expenses for completing the mailing

of such material to beneficial owners.

* * * * *

Note 2: The attention of banks is called to the fact that each

broker, dealer, bank, association or other entity that exercises

fiduciary powers has an obligation under 17 CFR 240.14b-1 and 17 CFR

240.14b-2 (except as provided therein with respect to employee

benefit plan securities held in nominee name) and, with respect to

brokers and dealers, applicable self-regulatory requirements to

obtain and forward, within the time periods prescribed therein:

Proxies (or in lieu thereof requests for voting instructions) and

proxy soliciting materials (or if applicable, copies of the

information statement) to beneficial owners on whose behalf it holds

securities; and annual reports to security holders to beneficial

owners on whose behalf it holds securities, unless the bank has

notified the record holder or respondent bank that it has assumed

responsibility to mail such material to beneficial owners whose

names, addresses and securities positions are disclosed pursuant to

17 CFR 240.14b-1(b)(3) and 17 CFR 240.14b-2(b)(4)(ii) and (iii).

Note 3: The attention of banks is called to the fact that banks

have an obligation, pursuant to paragraph (d) of this section, to

cause proxies (or in lieu thereof requests for voting instructions),

proxy soliciting material (or if applicable, copies of the

information statement) and annual reports to security holders to be

furnished, in a timely manner, to beneficial owners of exempt

employee benefit plan securities.

Note 4: The requirement for sending an annual report to security

holders of record having the same address will be satisfied by

sending at least one report to a holder of record at that address

provided that those holders of record to whom the report is not sent

agree thereto in writing. This procedure is not available, however,

where banks, associations, other entities that exercise fiduciary

powers, brokers, dealers and other persons hold securities in

nominee accounts or ``street names'' on behalf of beneficial owners,

and such persons are not relieved of any obligation to obtain or

send such annual report to the beneficial owners.

* * * * *

(d) If a bank furnishes information statements to, or solicits

proxies, consents or authorizations from record holders and respondent

banks who hold securities on behalf of beneficial owners, the bank

shall cause proxies (or in lieu thereof requests for voting

instructions), proxy soliciting material (or if applicable, copies of

the information statement) and annual reports to security holders to be

furnished, in a timely manner, to beneficial owners of exempt employee

benefit plan securities.

13. Section 335.220 is amended by removing paragraphs (b) and (c)

and redesignating paragraphs (d) through (h) as paragraphs (b) through

(f), respectively; and revising newly redesignated paragraphs (b) and

(e), to read as follows:

Sec. 335.220 Special provisions applicable to election contests.

* * * * *

(b) Solicitations prior to furnishing required statement.

Notwithstanding the provisions of Sec. 335.201 a solicitation subject

to Sec. 335.220 may be made prior to furnishing security holders a

written statement containing the information specified in Form F-5 with

respect to such solicitation: Provided, That--

(1) No form of proxy is furnished to security holders prior to the

time the written proxy statement required by Sec. 335.201 is furnished

to security holders: Provided, however, That this paragraph (b)(1)

shall not apply where a proxy statement then meeting the requirements

of Form F-5 has been furnished to security holders by or on behalf of

the person making the solicitation;

(2) The identity of the participants in the solicitation (as

defined in Instruction 3 of Item 3 of Form F-5 (Sec. 335.212)) and a

description of their interests, direct or indirect, by security

holdings or otherwise, are set forth in each communication published,

sent or given to security holders in connection with the solicitation;

(3) A written proxy statement meeting the requirements of this

subpart B is sent or given to security holders solicited pursuant to

this paragraph (b) at the earliest practicable date.

* * * * *

(e) Application of Sec. 335.204. The provisions of Sec. 335.204(c)

through (f) shall apply, to the extent pertinent, to soliciting

material subject to paragraphs (c) and (d) of this section.

* * * * *

Sec. 335.221 [Removed and Reserved]

14. Section 335.221 (Form F-6) is removed and reserved.

15. Section 335.222 (Form F-6A) is added to subpart B to read as

follows:

Sec. 335.222 Notice of Exempt Solicitation to be included in

statements submitted by or on behalf of a person pursuant to

Sec. 335.204(l) (Form F-6A).

Form F-6A--Notice of Exempt Solicitation

1. Name and address of the Bank:

----------------------------------------------------------------------

2. Name of person relying on exemption:

----------------------------------------------------------------------

3. Address of person relying on exemption:

----------------------------------------------------------------------

4. Written materials. Attach written material required to be

submitted pursuant to Sec. 335.204(l).

16. Section 335.301 is amended by revising the reference ``(27 CFR

249.220f)'' to read ``(17 CFR 249.220f)''; and adding a ``Note to Small

Business Issuers'' immediately following the existing text to read as

follows:

Sec. 335.301 Requirement of registration statement.

* * * * *

Note to Small Business Issuers: a ``small business issuer'', as

defined under 17 CFR 240.12b-2 has the option of providing the

disclosure required by SEC Form 10-SB, optional form for the

registration of securities of a small business issuer (17 CFR

249.210b), in lieu of the disclosure requirements set forth in Form

F-1 (Sec. 335.309a). The definition of ``small business issuer'',

generally includes banks with annual revenues of less than $25

million, whose voting stock does not have a public float of $25

million or more.

17. Section 335.309a (Form F-1) is amended by adding a new

paragraph immediately preceding the ``General Instructions'' portion of

Form F-1; revising Item 7 and Item 8; and revising paragraphs 7(b)(1),

7(b)(2) and 7(c) under the heading ``Instructions as to Exhibits'' at

the end of the section, to read as follows:

Sec. 335.309a Form for registration of securities of a bank under

section 12(b) or section 12(g) of the Securities Exchange Act of 1934

(Form F-1).

Form F-1

* * * * *

Indicate by check mark if the bank, as a ``small business

issuer'' as defined under 17 CFR 240.12b-2, is providing alternative

disclosures as permitted for small business issuers in this Form F-

1. [ ]

* * * * *

Item 7--Compensation of Directors and Executive Officers

Set forth the same information as is required to be furnished by

item 7(a) of Form F-5 (Sec. 335.212).

Item 8--Interest of Management and Others in Certain Transactions

Set forth the same information for the past three years, as is

required to be furnished by items 7 (b), (c) and (d) of Form F-5

(Sec. 335.212).

Note: The information required by items 7 (b), (c) and (d) of

Form F-5 need not be included for any nominee for election as a

director.

* * * * *

Instructions as to Exhibits

* * * * *

7. (a) * * *

(b) * * *

(1) Directors, officers, promoters, voting trustees, or security

holders named in answer to item 5 are parties thereto except where

the contract merely involves purchase or sale of current assets

having a determinable market price, at such price.

(2) It calls for the acquisition or sale of fixed assets for a

consideration exceeding 15 percent of the value of all fixed assets

of the bank and its subsidiaries.

* * * * *

(c) Any management contract or any compensatory plan, contract

or arrangement, including but not limited to plans relating to

options, warrants or rights, pension, retirement or deferred

compensation or bonus, incentive or profit sharing (or if not set

forth in any formal document, a written description thereof) in

which any director or any of the named executive officers of the

bank, as defined by 17 CFR 229.402(a)(3), participates shall be

deemed material and shall be filed; and any other management

contract or any other compensatory plan, contract, or arrangement in

which any other executive officer of the bank participates shall be

filed unless immaterial in amount or significance except as follows:

Notwithstanding the above, any compensatory plan, contract, or

arrangement which pursuant to its terms is available to employees,

officers or directors generally and which in operation provides for

the same method of allocation of benefits between management and

nonmanagement participants.

* * * * *

18. Section 335.310 is amended by adding a ``Note to Small Business

Issuers'' immediately following paragraph (c) to read as follows:

Sec. 335.310 Requirement of annual reports and annual reports of

predecessors.

* * * * *

Note to Small Business Issuers: a ``small business issuer'', as

defined under 17 CFR 240.12b-2 has the option of providing the

disclosure required by SEC Form 10-KSB, optional form for annual and

transitional reports of small business issuers (17 CFR 249.310b), in

lieu of the disclosure requirements set forth in Form F-2

(Sec. 335.312). The definition of ``small business issuer'',

generally includes banks with annual revenues of less than $25

million, whose voting stock does not have a public float of $25

million or more.

19. Section 335.312 (Form F-2) is amended by adding a new paragraph

immediately following the second line entitled ``(Title of class)'' in

the introductory portion of Form F-2; adding to Item 11, new paragraph

(a)(3) to immediately precede the instruction to paragraph (a); and

revising paragraph (c)(3)(ii) of Item 11, to read as follows:

Sec. 335.312 Form for annual report of bank (Form F-2).

Form F-2--Annual Report Under Section 13 of the Securities Exchange Act

of 1934

* * * * *

Indicate by check mark if the bank, as a ``small business

issuer'' as defined under 17 CFR 240.12b-2, is providing alternative

disclosures as permitted for small business issuers in this Form F-

2. [ ]

* * * * *

Item 11--Exhibits, Financial Statement Schedules, and Reports on

Form F-3.

(a) * * *

(3) Those exhibits required by paragraph (c) of this Item 11.

Identify in the list each management contract or compensatory plan

or arrangement required to be filed as an exhibit to this form

pursuant to paragraph (c)(3)(ii) of this Item 11.

* * * * *

(c) * * *

(3) * * *

(ii) Any management contract or any compensatory plan, contract

or arrangement, including but not limited to plans relating to

options, warrants or rights, pension, retirement or deferred

compensation or bonus, incentive or profit sharing (or if not set

forth in any formal document, a written description thereof) in

which any director or any of the ``named executive officers'' of the

bank, as defined by 17 CFR 229.402(a)(3), participates shall be

deemed material and shall be filed; and any other management

contract or any other compensatory plan, contract, or arrangement in

which any other executive officer of the bank participates shall be

filed unless immaterial in amount or significance except as follows:

notwithstanding the above, any compensatory plan, contract, or

arrangement which pursuant to its terms is available to employees,

officers or directors generally and which in operation provides for

the same method of allocation of benefits between management and

nonmanagement participants.

* * * * *

20. Section 335.321 (Form F-3) is amended by revising paragraph (c)

and Instructions 3 and 4 of Item 9 to read as follows:

Sec. 335.321 Form for current report of a bank (Form F-3).

Form F-3.--Current Report

* * * * *

Item 9--Submission of Matters to a Vote of Security Holders.

* * * * *

(c) A brief description of each matter voted upon at the meeting

and state the number of votes cast for, against or withheld, as well

as the number of abstentions and broker non-votes, as to each such

matter, including a separate tabulation with respect to each nominee

for office.

* * * * *

Instructions

* * * * *

3. Paragraph (b) need not be answered if: Proxies for the

meeting were solicited pursuant to subpart B of this part; there was

no solicitation in opposition to the management's nominees as listed

in the proxy statement; and all of such nominees were elected. If

the bank did not solicit proxies and the board of directors as

previously reported to the FDIC was reelected in its entirety, a

statement to that effect in answer to paragraph (b) will suffice as

an answer thereto.

4. Paragraph (c) must be answered for all matters voted upon at

the meeting, including both contested and uncontested elections of

directors.

* * * * *

21. Section 335.330 is amended by adding a ``Note to Small Business

Issuers'' at the end of the section to read as follows:

Sec. 335.330 Quarterly reports.

* * * * *

Note to Small Business Issuers: a ``small business issuer'', as

defined under 17 CFR 240.12b-2 has the option of providing the

disclosure required by SEC Form 10-QSB, optional form for quarterly

and transitional reports of small business issuers (17 CFR

249.308b), in lieu of the disclosure requirements set forth in Form

F-4 (Sec. 335.330). The definition of ``small business issuer'',

generally includes banks with annual revenues of less than $25

million, whose voting stock does not have a public float of $25

million or more.

22. Section 335.331 is amended by adding a new paragraph

immediately following the line entitled ``(Former name, former address

and former fiscal year, if changed since last report)'' in the

introductory portion of Form F-4 to read as follows:

Sec. 335.331 Form for quarterly report of a bank (Form F-4).

Form F-4

* * * * *

Indicate by check mark if the bank, as a ``small business

issuer'' as defined under 17 CFR 240.12b-2, is providing alternative

disclosures as permitted for small business issuers in this Form F-

4. [ ]

* * * * *

23. Section 335.622 is amended by revising paragraph (g)(1) to read

as follows:

Sec. 335.622 General notes to statement of income.

* * * * *

(g) Disclosure of selected quarterly financial data in notes to

financial statements--(1) Exemption. This paragraph (g) shall not apply

unless the bank meets the tests prescribed by 17 CFR 229.302(a)(5).

* * * * *

By Order of the Board of Directors.

Dated at Washington, DC this 12th day of April, 1994.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Acting Executive Secretary.

[FR Doc. 94-9731 Filed 4-29-94; 8:45 am]

BILLING CODE 6714-01-P