Licensing Amendments

Published date02 April 2020
Citation85 FR 18728
Record Number2020-04938
SectionProposed rules
CourtThe Comptroller Of The Currency Office
Federal Register, Volume 85 Issue 64 (Thursday, April 2, 2020)
[Federal Register Volume 85, Number 64 (Thursday, April 2, 2020)]
                [Proposed Rules]
                [Pages 18728-18782]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2020-04938]
                [[Page 18727]]
                Vol. 85
                Thursday,
                No. 64
                April 2, 2020
                Part IVDepartment of the Treasury-----------------------------------------------------------------------Office of the Comptroller of the Currency-----------------------------------------------------------------------12 CFR Part 5Licensing Amendments; Proposed Rule
                Federal Register / Vol. 85 , No. 64 / Thursday, April 2, 2020 /
                Proposed Rules
                [[Page 18728]]
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                DEPARTMENT OF THE TREASURY
                Office of the Comptroller of the Currency
                12 CFR Part 5
                [Docket ID OCC-2019-0024]
                RIN 1557-AE71
                Licensing Amendments
                AGENCY: Office of the Comptroller of the Currency, Treasury.
                ACTION: Notice of proposed rulemaking.
                -----------------------------------------------------------------------
                SUMMARY: The Office of the Comptroller of the Currency (OCC) is
                proposing to amend its rules relating to policies and procedures for
                corporate activities and transactions involving national banks and
                Federal savings associations to update and clarify the policies and
                procedures, eliminate unnecessary requirements consistent with safety
                and soundness, and make other technical and conforming changes.
                DATES: Comments must be received on or before May 4, 2020.
                ADDRESSES: Commenters are encouraged to submit comments through the
                Federal eRulemaking Portal or email, if possible. Please use the title
                ``Licensing Amendments'' to facilitate the organization and
                distribution of the comments. You may submit comments by any of the
                following methods:
                 Federal eRulemaking Portal--Regulations.gov Classic or
                Regulations.gov Beta Regulations.gov Classic: Go to https://www.regulations.gov/. Enter ``Docket ID OCC-2019-0024'' in the Search
                Box and click ``Search.'' Click on ``Comment Now'' to submit public
                comments. For help with submitting effective comments please click on
                ``View Commenter's Checklist.'' Click on the ``Help'' tab on the
                Regulations.gov home page to get information on using Regulations.gov,
                including instructions for submitting public comments.
                 Regulations.gov Beta: Go to https://beta.regulations.gov/ or click
                ``Visit New Regulations.gov Site'' from the Regulations.gov classic
                homepage. Enter ``Docket ID OCC-2019-0024'' in the Search Box and click
                ``Search.'' Public comments can be submitted via the ``Comment'' box
                below the displayed document information or click on the document title
                and click the ``Comment'' box on the top-left side of the screen. For
                help with submitting effective comments please click on ``Commenter's
                Checklist.'' For assistance with the Regulations.gov Beta site please
                call (877)-378-5457 (toll free) or (703) 454-9859 Monday-Friday, 9am-
                5pm ET or email to [email protected].
                 Email: [email protected].
                 Mail: Chief Counsel's Office, Attention: Comment
                Processing, Office of the Comptroller of the Currency, 400 7th Street
                SW, suite 3E-218, Washington, DC 20219.
                 Hand Delivery/Courier: 400 7th Street SW, suite 3E-218,
                Washington, DC 20219.
                 Fax: (571) 465-4326.
                 Instructions: You must include ``OCC'' as the agency name and
                ``Docket ID OCC-2019-0024'' in your comment. In general, the OCC will
                enter all comments received into the docket and publish the comments on
                the Regulations.gov website without change, including any business or
                personal information provided such as name and address information,
                email addresses, or phone numbers. Comments received, including
                attachments and other supporting materials, are part of the public
                record and subject to public disclosure. Do not include any information
                in your comment or supporting materials that you consider confidential
                or inappropriate for public disclosure.
                 You may review comments and other related materials that pertain to
                this rulemaking action by any of the following methods:
                 Viewing Comments Electronically--Regulations.gov Classic
                or Regulations.gov Beta: Regulations.gov Classic: Go to https://www.regulations.gov/. Enter ``Docket ID OCC-2019-0024'' in the Search
                box and click ``Search.'' Click on ``Open Docket Folder'' on the right
                side of the screen. Comments and supporting materials can be viewed and
                filtered by clicking on ``View all documents and comments in this
                docket'' and then using the filtering tools on the left side of the
                screen. Click on the ``Help'' tab on the Regulations.gov home page to
                get information on using Regulations.gov. The docket may be viewed
                after the close of the comment period in the same manner as during the
                comment period.
                 Regulations.gov Beta: Go to https://beta.regulations.gov/ or click
                ``Visit New Regulations.gov Site'' from the Regulations.gov classic
                homepage. Enter ``Docket ID OCC-2019-0024'' in the Search Box and click
                ``Search.'' Click on the ``Comments'' tab. Comments can be viewed and
                filtered by clicking on the ``Sort By'' drop-down on the right side of
                the screen or the ``Refine Results'' options on the left side of the
                screen. Supporting Materials can be viewed by clicking on the
                ``Documents'' tab and filtered by clicking on the ``Sort By'' drop-down
                on the right side of the screen or the ``Refine Results'' options on
                the left side of the screen.'' For assistance with the Regulations.gov
                Beta site please call (877)-378-5457 (toll free) or (703) 454-9859
                Monday-Friday, 9am-5pm ET or email to
                [email protected].
                 The docket may be viewed after the close of the comment period in
                the same manner as during the comment period.
                 Viewing Comments Personally: You may personally inspect
                comments at the OCC, 400 7th Street SW, Washington, DC 20219. For
                security reasons, the OCC requires that visitors make an appointment to
                inspect comments. You may do so by calling (202) 649-6700 or, for
                persons who are deaf or hearing impaired, TTY, (202) 649-5597. Upon
                arrival, visitors will be required to present valid government-issued
                photo identification and submit to security screening in order to
                inspect comments.
                FOR FURTHER INFORMATION CONTACT: For additional information, contact
                Christopher Crawford, Counsel, Valerie Song, Assistant Director, Rima
                Kundnani, Senior Attorney, or Heidi Thomas, Special Counsel, (202) 649-
                5490, Chief Counsel's Office; or Karen Marcotte, Director for Licensing
                Activities, (202) 649-7297, Office of the Comptroller of the Currency,
                400 7th Street SW, Washington, DC 20219. For persons who are deaf or
                hearing impaired, TTY, (202) 649-5597.
                SUPPLEMENTARY INFORMATION:
                I. Background
                 The OCC periodically reviews its regulations to eliminate outdated
                or otherwise unnecessary provisions and to clarify or revise
                requirements imposed on national banks and Federal savings associations
                where possible and when not inconsistent with safety and soundness.
                These reviews are in addition to the OCC's decennial review of its
                regulations as required by the Economic Growth and Regulatory Paperwork
                Reduction Act (EGRPRA) \1\ As part of this process, the OCC is
                proposing to revise its rules in 12 CFR
                [[Page 18729]]
                part 5 relating to requirements for national banks and Federal savings
                associations that seek to engage in certain corporate transactions or
                activities.
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                 \1\ Public Law 104-208 (1996), codified at 12 U.S.C. 3311(b).
                Section 2222 of EGRPRA requires that, at least once every 10 years,
                the OCC along with the other Federal banking agencies and the
                Federal Financial Institutions Examination Council (FFIEC) conduct a
                review of their regulations to identify outdated or otherwise
                unnecessary regulatory requirements imposed on insured depository
                institutions. Specifically, EGRPRA requires the agencies to
                categorize and publish their regulations for comment, eliminate
                unnecessary regulations to the extent that such action is
                appropriate, and submit a report to Congress summarizing their
                review. The agencies completed their second EGRPRA review on March
                30, 2017 and published their report in the Federal Register. 82 FR
                15900 (March 30, 2017).
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                 Part 5 addresses the range of an institution's existence from
                chartering to dissolution and includes, among other things, business
                combinations, branching matters, operating subsidiaries, and dividend
                payments. In some cases, a bank is required to apply to engage in a
                certain transaction or activity while in other situations a bank must
                submit a notice to the OCC either for informational purposes or as a
                means for providing the OCC with the opportunity to object to the
                transaction or activity.
                II. Description of the Proposed Rule
                Rules of General Applicability (Part 5, Subpart A)
                 Twelve CFR part 5, subpart A, sets forth the OCC's generally
                applicable rules and procedures for corporate activities and
                transactions of national banks and Federal savings associations. The
                OCC proposes substantive and technical changes to subpart A as
                explained below.
                 Rules of General Applicability (Sec. 5.2) Section 5.2(a) states
                that the procedures in subpart A apply to all part 5 filings, unless
                otherwise stated. Section 5.2(b) provides that the OCC may adopt
                materially different procedures for a particular filing or class of
                filings in exceptional circumstances or for unusual transactions after
                providing notice to the applicant and any other party that the OCC
                determines should receive notice. The OCC is proposing to increase its
                flexibility to address unusual situations by adding language to clarify
                that it may adopt materially different procedures as it deems
                necessary, for example, in exceptional circumstances or for unusual
                transactions. As discussed below, the OCC also is proposing to change
                the term ``applicant'' to ``filer'' in this section.
                 Definitions (Sec. 5.3) Section 5.3 defines terms that are used
                throughout part 5. The OCC is proposing several new definitions to this
                section. First, the OCC is proposing definitions for ``nonconforming
                assets'' and ``nonconforming activities.'' The OCC uses, but does not
                define, these terms in Sec. Sec. 5.23 and 5.24 (conversions to a
                Federal savings association or national bank, respectively) and Sec.
                5.33 (business combinations). The OCC proposes these definitions to
                mean assets or activities that are impermissible for a national bank or
                a Federal savings association to hold or conduct, as applicable, or if
                permissible, are nonetheless held or conducted in a manner that exceeds
                limits applicable to national banks or Federal savings associations.
                Under this proposed definition, the term ``assets'' would include a
                national bank's or Federal savings association's investments in
                subsidiaries or other entities.
                 Second, the OCC proposes to define the term ``previously approved
                activity'' to mean, in the case of a national bank, an activity
                approved in published OCC precedent for a national bank, an operating
                subsidiary of a national bank, or a non-controlling investment of a
                national bank; and in the case of a Federal savings association, an
                activity approved in published OCC or OTS precedent for a Federal
                savings association, an operating subsidiary of a Federal savings
                association, or a pass-through investment of a Federal savings
                association. The OCC is proposing this definition to provide more
                clarity given the repeated use of this standard in Sec. Sec. 5.34,
                5.36, 5.38, and 5.58.\2\
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                 \2\ For references to previously approved activities, national
                banks and Federal savings associations may consult the OCC's
                publications Comparison of the Powers of National Banks and Federal
                Savings Associations, available at https://www.occ.gov/publications-and-resources/publications/banker-education/files/pub-comparison-powers-national-banks-fed-sav-assoc.pdf, and Activities Permissible
                for National Banks and Federal Savings Associations, Cumulative,
                available at https://www.occ.gov/publications-and-resources/publications/banker-education/files/pub-activities-permissible-for-nat-banks-fed-saving.pdf.
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                 Third, the OCC proposes to define ``well capitalized'' in Sec.
                5.3. The OCC uses the term ``well capitalized'' throughout part 5
                differently. For example, for national banks and Federal savings
                associations various sections of part 5 apply the definition of well
                capitalized that is used in 12 CFR 6.4. For Federal branches and
                agencies, Sec. Sec. 5.34, 5.35, and 5.36 apply the standard in 12 CFR
                4.7(b)(1)(iii) to qualify for an 18-month examination cycle. Finally,
                for an insured depository institution that is not a national bank or
                Federal savings association, Sec. 5.39 applies the applicable standard
                promulgated by the appropriate Federal banking agency under 12 U.S.C.
                1831o. The OCC proposes to remove this inconsistency by adding a
                definition of ``well capitalized'' to Sec. 5.3 that would apply to all
                of part 5 and removing the duplicative definitions included in the
                various sections. Where appropriate, provisions in part 5 would cross-
                reference to this new definition.
                 Fourth, the OCC proposes to add the term ``well managed'' to Sec.
                5.3. Currently, part 5 contains two different definitions of ``well
                managed.'' Consistent with section 5136A of the Revised Statutes (12
                U.S.C. 24a), Sec. 5.39 generally defines ``well managed'' for purposes
                of financial subsidiaries as a 1 or 2 composite rating under the
                Uniform Financial Institutions Rating System and at least a rating of 2
                for management. By contrast, Sec. Sec. 5.34 and 5.38, governing
                national bank and Federal savings association operating subsidiaries,
                respectively, generally define ``well managed'' as a 1 or 2 composite
                rating without reference to the management rating. Sections 5.35 (bank
                service company investments), 5.36 (other equity investments by a
                national bank), and 5.58 (Federal savings association pass-through
                investments) cross-reference to the Sec. Sec. 5.34 or 5.38 definition.
                Additionally, Sec. 5.59(h)(2)(ii)(A) requires a Federal savings
                association to be well managed to be eligible for expedited review.
                 The OCC is proposing a single definition of ``well managed''
                applicable throughout part 5 to eliminate confusion between the two
                definitions and to further the OCC's supervisory objectives.\3\ The
                financial subsidiary statute, 12 U.S.C. 24a, defines ``well managed''
                to include the management rating, and the OCC proposes to use this
                definition. The proposal uses an equivalent definition for Federal
                branches and agencies of foreign banks which is a composite ROCA
                supervisory rating (which rates risk management, operational controls,
                compliance and assets quality) of 1 or 2, and at least a rating of 2
                for risk management. Further, the OCC believes that a national bank,
                Federal savings association, or Federal branch or agency with a 2
                composite rating but a 3 management, or risk management, rating
                warrants additional scrutiny. The OCC believes that these changes will
                enhance bank safety and soundness and provide a clearer and more
                consistent standard for national banks.
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                 \3\ There is one instance of the term ``well managed'' in part 5
                that does not follow this definition. Specifically, 12 CFR
                5.59(e)(7)(i) requires that each Federal savings association ``be
                well managed and operate safely and soundly.'' This provision is not
                directly applicable to any filing procedures but is rather a general
                statement of appropriate management and safety and soundness
                standards. For example, pursuant to Sec. 5.59(e)(7)(ii) the OCC may
                limit a Federal savings association's investment in a service
                corporation, or limit or refuse to permit any activity of a service
                corporation, for supervisory, legal, or safety or soundness reasons.
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                 The OCC also is considering amending the definition of ``short-
                distance relocation.'' Currently, moving the premises of a branch or
                main office of a national bank or a branch or home
                [[Page 18730]]
                office of a Federal savings association is a short-distance relocation
                if the move is within: (1) A one-thousand foot-radius of the site if
                the branch, main office, or home office is located within a principal
                city of a metropolitan statistical area (MSA); (2) a one-mile radius of
                the site if the branch, main office, or home office is not located
                within a principal city but is located within an MSA; or (3) a two-mile
                radius of the site if the branch, main office, or home office is not
                located within an MSA. Under the branch relocation provisions in Sec.
                5.30 (national banks) and Sec. 5.31 (Federal savings associations) and
                the main office and home office relocation provisions in Sec. 5.40,
                short-distance relocations have a shorter public comment and OCC
                approval period than other relocations. Additionally, the OCC generally
                equates the short-distance relocation provision to be equivalent to a
                ``relocation'' for the purposes of branch closing under section 42 of
                the Federal Deposit Insurance Act (FDI Act) (12 U.S.C. 1831r-1).
                 The OCC has never adjusted the distances in the definition of
                short-distance relocation, and the distances do not necessarily reflect
                the individual circumstances of each bank location. Because of the
                changes in branching activities, locations, and usage since 1996, such
                as the increased use of electronic banking, the OCC is considering
                expanding the distances for short-distance relocations to allow
                national banks and Federal savings associations greater flexibility in
                their office locations and to reduce regulatory burden for these types
                of relocations. Specifically, the OCC is considering expanding the
                distances in the definition to: (1) A two-thousand foot radius within a
                principal city of an MSA; (2) a two-mile radius not within a principal
                city but within an MSA; and (3) a four-mile radius not within an MSA.
                However, any amendment to this definition would provide that this
                increase in distance would not apply to a branch that would be
                relocated from a low- or moderate-income area to a non-low- or
                moderate-income area. For such relocations, the current definition of a
                short-distance relocation would continue to apply. The OCC invites
                comment on whether the OCC should amend Sec. 5.3 to adjust the
                distances included in the definition of short-distance relocation and
                if so whether the increase suggested above would be appropriate or
                whether an alternate increase in distance would better reduce
                regulatory burden on national banks and Federal savings associations
                while providing appropriate notice to customers.
                 Finally, the OCC is proposing technical changes to Sec. 5.3.
                First, current Sec. 5.3 defines ``applicant'' as a ``person or entity
                that submits a notice or application to the OCC under'' part 5.
                However, this usage of the term ``applicant' is confusing because it
                covers persons who submit an application or a notice. Accordingly, the
                OCC proposes to change the term ``applicant'' to ``filer'' to more
                clearly cover both a person who files an application or a notice. The
                proposal would make conforming changes throughout part 5.
                 Second, the proposal would add a new definition for ``Appropriate
                Federal banking agency'' that cross-references the definition contained
                in section 3(q) of the FDI Act, 12 U.S.C. 1813(q).
                 Third, the proposal would add a new definition clarifying that
                ``MSA'' means metropolitan statistical area as defined by the Director
                of the Office of Management and Budget (OMB).\4\
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                 \4\ According to the OMB,''[t]he general concept of a
                metropolitan statistical area is that of an area containing a large
                population nucleus and adjacent communities that have a high degree
                of integration with that nucleus.'' 75 FR 37246 (June 28, 2010).
                These standards are then applied to census data to delineate the
                metropolitan statistical areas.
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                 Fourth, part 5 currently defines ``notice'' to mean a submission
                notifying the OCC that a national bank or Federal savings association
                intends to engage in or has commenced certain activities or
                transactions. The definition notes that the specific meaning depends on
                context and ``may require the filer to obtain prior OCC approval before
                engaging in the activity or transaction.'' As described later in this
                Supplementary Information, the OCC is proposing to change the term
                ``notice'' to ``application'' for activities or transactions that
                require prior OCC approval. Therefore, the OCC proposes to remove the
                quoted language from the definition.
                 Fifth, the OCC proposes adding abbreviations for the former OTS,
                the Federal Deposit Insurance Corporation (FDIC), and generally
                accepted accounting principles as used in the United States (GAAP) to
                make their use consistent throughout part 5.
                 Finally, to reflect the more current regulatory drafting style, the
                OCC proposes to remove the paragraph designations in Sec. 5.3 and to
                make conforming changes to cross-references throughout 12 CFR part 5.
                 Filing required (Sec. 5.4) Section 5.4 requires depository
                institutions to file applications or notices with the OCC to engage in
                certain corporate activities and transactions and provides general
                information on this filing requirement. Section 5.4(f) currently
                encourages a potential filer to contact the appropriate OCC licensing
                office to determine the need for a prefiling meeting, and it
                specifically provides that the OCC decides whether to require a
                prefiling meeting on a case-by-case basis. The OCC is proposing to
                provide more general guidance on when a filer should seek a prefiling
                meeting with the OCC. Specifically, the OCC proposes to include a new
                sentence advising potential filers with novel, complex, or unique
                proposals to contact the appropriate OCC licensing office early in the
                development of the proposal to help identify and consider relevant
                policy issues.
                 Additionally, the OCC proposes to move the certification
                requirement in current Sec. 5.13(h) to new Sec. 5.4(g). Current Sec.
                5.13(h) requires filers to certify that material submitted to the OCC
                contains no material misrepresentations or omissions. The OCC also may
                review and verify any information filed in connection with a notice or
                an application. Section 5.13(h) further provides that material
                misrepresentations or omissions may be subject to enforcement actions
                and other penalties, including criminal penalties under 18 U.S.C. 1001.
                As discussed below, the OCC is proposing to revise Sec. 5.13(h) to
                clarify the procedures regarding nullification of decisions. The
                certification requirement in Sec. 5.13(h) does not fit well in the
                revised provision so the OCC is proposing to move it to Sec. 5.4 with
                other provisions relating to the form of the filing.
                 Filing fees (Sec. 5.5) Section 5.5(a) provides the procedure for
                submitting filing fees to the OCC. The current rule requires payment to
                the OCC by check, money order, cashier's check, or wire transfer. The
                OCC is proposing to update this provision by providing that a filer can
                pay the fees by check payable to the OCC or by other means acceptable
                to the OCC. The OCC does not currently charge filing fees for licensing
                filings and is not proposing any fees as part of this rulemaking.
                 Investigations (Sec. 5.7) Section 5.7 provides the OCC with
                examination and investigation authority related to a filing. As
                discussed in the OCC's Licensing Manual, the OCC routinely engages in
                background investigations of filers and other individuals involved in
                filings for new charters, changes in bank control, and changes in
                directors and senior executive officers. As part of these background
                investigations, the OCC collects fingerprints and submits them to the
                Federal Bureau of
                [[Page 18731]]
                Investigation for a national criminal history background check. The OCC
                is proposing to add a new paragraph (b) to Sec. 5.7 to codify this
                procedure. The OCC also is proposing conforming changes to other
                sections in part 5 to clarify when it collects fingerprints.
                 Public availability, Comments, and Hearings and other meetings
                (Sec. Sec. 5.9, 5.10, 5.11) Section 5.9 addresses the public
                availability and confidential treatment of filings. Section 5.10
                provides the process for public comment periods and the submission of
                public comments. Section 5.11 provides the process for hearings and
                public and private meetings. The OCC is proposing to change the terms
                ``application'' to ``filing'' and ``applicant'' to ``filer'' in these
                sections to reflect the more general terminology proposed in this rule.
                Furthermore, each of these sections currently uses the term
                ``interested persons'' to refer to persons other than the filer who
                seek to interact with a filing or related procedure. The OCC
                understands the term ``interested persons'' to mean any person who is
                or may wish to be involved in the licensing process. Such a person may,
                but need not, have any particular financial, pecuniary, or other
                interest in the transaction itself, the filer, or other party to the
                transaction. The OCC invites comment about whether the term
                ``interested persons'' is sufficiently clear, or whether a change in
                terminology would be helpful to indicate the breadth of this provision.
                 Decisions (Sec. 5.13) Section 5.13 contains the OCC's procedures
                for acting on a filing. Paragraph (a)(2) of this section provides the
                procedures for the OCC's expedited review, including extending the time
                frame for reviewing or removing a filing from expedited review. The OCC
                may change the expedited review procedures if it concludes that the
                filing, or an adverse comment regarding the filing, presents a
                significant supervisory, Community Reinvestment Act (CRA) (if
                applicable), or compliance concern or raises a significant legal or
                policy issue requiring additional OCC review. However, paragraph
                (a)(2)(ii) provides that the OCC will not change the expedited
                procedures if it determines, among other things, that an adverse
                comment does not raise a significant supervisory, CRA (if applicable),
                or compliance concern or a significant legal or policy issue, or is
                frivolous or filed primarily as a means of delaying action on the
                filing. The OCC proposes to add non-substantive comments to this list
                to better align the regulation with OCC policy and processes. The OCC
                also proposes to specify that it considers a comment to be ``non-
                substantive'' if it is: (1) A generalized opinion that a filing should
                or should not be approved; or (2) a conclusory statement, lacking
                factual or analytical support. The OCC intends to apply this non-
                substantive standard to all comments that it reviews. This change would
                provide a clear standard for commenters submitting views on a filing.
                 Section 5.13(a)(2)(ii) also provides that the OCC will not change
                the expedited procedures if the adverse comment raises a CRA concern
                that the OCC determines has been satisfactorily resolved. The rule
                states that the OCC considers a CRA concern to be satisfactorily
                resolved if the OCC previously reviewed (e.g., in an examination or
                application) a concern presenting substantially the same issue in
                substantially the same assessment area during substantially the same
                time, and the OCC determines that the concern would not warrant denial
                or imposition of a condition on approval of the application. The OCC
                proposes to amend this provision to expand what is meant by
                ``previously reviewed'' to include other supervisory activity and to
                provide that the OCC's review may occur in a prior filing.
                 The OCC also proposes to amend the introductory text to paragraph
                (a)(2) to reflect that some expedited review procedures in part 5 do
                not require the national bank or Federal savings association to be an
                eligible bank or eligible savings association, as defined in Sec. 5.3.
                The proposed rule also would clarify paragraphs (a)(2)(i) and (ii) by
                revising the punctuation and sentence structure so that it is easier to
                read.
                 Paragraph (h) of Sec. 5.13 provides that the OCC may nullify a
                decision on a filing if: (1) The OCC discovers a material
                misrepresentation or omission after the OCC has rendered a decision on
                the filing; (2) the decision is contrary to law, regulation, or OCC
                policy; or (3) the OCC granted the decision due to clerical or
                administrative error or a material mistake of law or fact. The OCC's
                decisions on filings generally contain a statement that the ``OCC may
                modify, suspend or rescind this approval if a material change in the
                information on which the OCC relied occurs prior to the date of the
                transaction to which the decision pertains.''
                 The OCC proposes to revise paragraph (h) to clarify when the OCC
                may nullify a decision. The revised provision would state that the OCC
                may nullify a decision on a filing either prior to or after
                consummation of the transaction. The proposed rule also would clarify
                that the OCC may nullify a decision based on a material
                misrepresentation or omission in any information provided to the OCC in
                the filing or supporting materials. The OCC is also proposing a new
                paragraph (i) that would provide that the OCC may modify, suspend, or
                rescind a decision on a filing if a material change in the information
                or circumstance on which the OCC relied occurs prior to the date of the
                consummation of the transaction to which the decision pertains.
                 These revisions are intended to clarify that nullification is based
                on the facts, law, and policy as they existed at the time of the OCC's
                decision. By contrast, modification, suspension, or rescission is based
                on a change in facts or circumstance from the time of the OCC's
                decision until consummation of the transaction to which the decision
                pertains. The OCC welcomes comment on how it could further clarify
                these procedures.
                 As indicated previously in this Supplementary Information, the
                proposed rule would move the provisions in current Sec. 5.13(h)
                regarding certification of the submitted filing and penalties for
                material misrepresentation and omissions in a filing to new paragraph
                Sec. 5.4(g).
                Organizing a National Bank or Federal Savings Association (Sec. 5.20)
                 Section 5.20 provides the procedures and requirements involved in
                organizing a de novo national bank or Federal savings association. The
                OCC is proposing two new definitions to Sec. 5.20(d). First, the OCC
                would define ``principal shareholder'' as a person who directly or
                indirectly or acting in concert with one or more persons or companies,
                or together with members of their immediate family, will own, control,
                or hold 10 percent or more of the stock of the proposed national bank
                or Federal savings association. This definition is consistent with the
                definition used in the ``Background Investigations'' booklet of the
                Comptroller's Licensing Manual and the instructions for the Interagency
                Biographical and Financial Report.\5\ The OCC is proposing this
                definition in conjunction with provisions related to background checks
                and fingerprint collections in proposed Sec. 5.20(i)(3), discussed
                below.
                ---------------------------------------------------------------------------
                 \5\ The Interagency Biographical and Financial Report is
                available on the OCC's website at https://www.occ.gov/static/licensing/form-ia-biographical-financial-report.pdf.
                ---------------------------------------------------------------------------
                 Second, the OCC proposes to clarify that the term ``organizer''
                means a member of the organizing group. This definition is not clearly
                stated in Sec. 5.20.
                [[Page 18732]]
                 Paragraph (i) contains procedures for filing a charter application.
                The OCC proposes a new paragraph (i)(3) requiring each proposed
                organizer, director, executive officer, or principal shareholder to
                submit to the OCC the information prescribed in the Interagency
                Biographical and Financial Report and legible fingerprints. New
                paragraph (i)(3) also would permit the OCC to request additional
                information, if appropriate, and waive the requirements of that
                paragraph if the OCC determines it to be in the public interest. As
                discussed in the ``Charters'' booklet of the Comptroller Licensing
                Manual, the OCC generally conducts routine background checks on
                insiders, including proposed organizers, directors, executive officers,
                and controlling shareholders. The OCC revision, consistent with the
                background investigation changes in proposed Sec. 5.7(b), would codify
                this process and authorize the collection of fingerprints for charter
                applications.
                 The OCC also is proposing a number of technical changes to Sec.
                5.20. First, in the definition of ``organizing group'' the OCC proposes
                to change the term ``persons'' to ``individuals'' to more accurately
                reflect who may make up an organizing group. Second, in Sec.
                5.20(g)(4)(ii), the OCC proposes to change the phrase ``withdrawal of
                preliminary approval'' to ``nullification or rescission of preliminary
                approval'' to align with the terminology in proposed Sec. Sec. 5.13(h)
                and (i). Third, in Sec. 5.20(i), Decision notification, the OCC
                proposes to change the term ``spokesperson'' to ``contact person'' in
                redesignated paragraph (i)(5) to conform to the use of this term in
                other paragraphs of this section. Fourth, also in Sec. 5.20(i),
                redesignated paragraph (i)(5), the OCC proposes to change the term
                ``interested parties'' to ``relevant parties,'' which more accurately
                describes who the OCC should notify of its decision on an application.
                Lastly, the OCC proposes to remove the reference to 12 CFR part 197 in
                Sec. 5.20(i), redesignated paragraph (i)(6)(iii), because the OCC has
                removed this regulation. The remaining citation, 12 CFR part 16, now
                applies to both national banks and Federal savings associations.
                Federal Mutual Savings Association Charter and Bylaws (Sec. 5.21)
                 Section 5.21 governs the procedures and requirements for charters
                and bylaws of Federal mutual savings associations. Pursuant to
                paragraph (f)(2), charter amendments are generally subject to prior
                approval by the OCC, although under paragraph (g), most applications
                for charter amendments are subject to expedited review and deemed
                approved as of the 30th day after filing unless the OCC notifies the
                filer that it has denied the amendment, or the amendment is not
                eligible for expedited review. An application is not eligible for
                expedited review if the charter amendment would render more difficult
                or discourage a merger, proxy contest, the assumption of control by a
                mutual account holder of the association, or the removal of incumbent
                management or involves a significant issue of law or policy. Paragraph
                (g) further provides that a notice is required within 30 days after
                adoption if the filer adopts the optional charter amendments contained
                in paragraph (g) without change.
                 The OCC is proposing to reorganize these provisions to clarify the
                procedures Federal mutual savings associations must follow in adopting
                charter amendments, to align the terminology in Sec. 5.21 with general
                usage in part 5, and to make other clarifying changes. The OCC does not
                intend these changes to be substantive. Specifically, the OCC proposes
                including all of this section's procedural requirements for adopting
                charter amendments in paragraph (f)(2). These amendments would clarify
                that charter amendments are subject to a three-part regime: Application
                with expedited review, standard application, or notice. Paragraph (g)
                would only contain provisions relating to optional charter amendments.
                Additionally, the OCC proposes to add a new paragraph (f)(3) specifying
                that a charter amendment is effective once it is: (1) Approved by the
                OCC, if approval is required under paragraph (f)(2); and (2) adopted by
                the association provided the association follows the requirements of
                its charter in adopting the amendment.
                 Paragraph (j) governs the bylaws for Federal mutual savings
                associations. Paragraph (j)(2)(viii) requires the bylaws to specify
                that the Federal mutual association's board of directors consist of no
                fewer than five nor more than fifteen members unless the OCC has
                authorized a higher or lower number. However, unlike the corresponding
                provision for Federal stock savings associations, 12 CFR 5.22(l)(2),
                paragraph (j)(2)(viii) does not explicitly address numbers of directors
                authorized by the former OTS. Accordingly, the OCC proposes to revise
                this paragraph to explicitly acknowledge that authorizations by the
                former OTS remain effective.
                 Paragraph (j)(3) contains the filing requirements for changes to
                Federal mutual savings association bylaws. Currently, all bylaw
                amendments require some sort of filing with the OCC. As with the
                charter amendments discussed above, the OCC is proposing to reorganize
                these provisions to clarify the procedures Federal mutual savings
                associations must follow in adopting bylaw amendments and to align the
                terminology with that used in part 5. The OCC also proposes to
                eliminate the filing requirement for savings associations that adopt
                without change the OCC's model or optional bylaws, thereby reducing
                burden for these Federal mutual savings associations. As a result,
                these amendments would specify that bylaw amendments are subject to a
                four-part regime: Application with expedited review, standard
                application, notice, and no filing required. As with the charter
                amendments, the OCC also proposes that a bylaw amendment is effective
                after approval by the OCC, if required, and adoption by the
                association, provided that the association follows the requirements of
                its charter and bylaws in adopting the amendment.
                 As discussed later in this Supplementary Information, the OCC is
                proposing technical changes throughout part 5, including replacing the
                word ``shall'' with another appropriate word or words. These changes,
                as well as other minor proposed wording changes, are included in the
                model charter and bylaw provisions provided in Sec. 5.21. The OCC does
                not intend these proposed changes to require any changes on the part of
                Federal mutual savings associations that use the current model
                language. Further, the OCC does not intend that the changes would have
                any effect on the provisions or effectiveness of a Federal mutual
                savings association's current charter or bylaws.
                Federal Stock Savings Association Charter and Bylaws (Sec. 5.22)
                 Section 5.22 governs the procedures and requirements for Federal
                stock savings association charters and bylaws. Section 5.22 generally
                parallels Sec. 5.21, which applies to Federal mutual savings
                association charters and bylaws. The OCC proposes equivalent changes to
                Sec. 5.22 as proposed for Sec. 5.21. The OCC also proposes two
                additional technical amendments to Sec. 5.22. Section 5.22 contains
                sample charter and bylaw provisions, and paragraph (g)(7) provides an
                optional ``Section 8'' for Federal stock savings association charters
                following mutual to stock conversions. This optional section contains a
                definition of ``acting in concert.'' The OCC proposes minor wording
                changes to this definition for consistency with the definition of this
                [[Page 18733]]
                term in Sec. 5.50(d)(2), changes in bank control. The OCC also
                proposes correcting a cross-reference to 12 CFR part 192 in paragraph
                (e).
                Conversion To Become a Federal Savings Association (Sec. 5.23) and
                Conversion To Become a National Bank (Sec. 5.24)
                 Sections 5.23 and 5.24 are largely parallel rules that provide the
                procedures and standards for OCC review and approval of an application
                by an institution to convert to a Federal savings association or
                national bank, respectively. Sections 5.23(d)(2)(ii)(A) and
                5.24(e)(2)(i) each require the president or other duly authorized
                officer to sign the conversion application. These sections are the only
                provisions in part 5 that have specific signature requirements for the
                filing. As discussed above, the OCC is proposing a new provision in
                Sec. 5.4 requiring that a filing include evidence of authorization for
                the filing, such as a board resolution. Accordingly, the OCC proposes
                to remove Sec. Sec. 5.23(d)(2)(ii)(A) and 5.24(e)(2)(i) as
                unnecessary.
                 The ``Conversions to Federal Charter'' booklet of the Comptroller's
                Licensing Manual indicates that filers should include a list of
                directors and senior executive officers of the converting institution
                as well as a list of individuals, directors, and shareholders who
                directly or indirectly, or acting in concert with one or more persons
                or companies, or together with members of their immediate family, do or
                will own, control, or hold 10 percent or more of the converting
                institution's stock. The OCC proposes to codify these requirements in
                Sec. Sec. 5.23(d)(2)(ii) and 5.24(e)(2). It is necessary to have a
                complete list of these individuals because the OCC generally conducts
                routine background investigations as part of the application process.
                Furthermore, the OCC proposes to add a new paragraph to each of these
                rules, Sec. Sec. 5.23(d)(2)(iv) and 5.24(e)(4), providing that the OCC
                may require directors and senior executive officers of the converting
                institution to submit the Interagency Biographical and Financial Report
                and legible fingerprints. This amendment would codify the background
                investigation process set forth in the ``Conversions to Federal
                Charter'' booklet of the Comptroller's Licensing Manual and
                specifically authorize the collection of fingerprints for conversion
                applications, consistent with the background investigation changes
                proposed to other sections in this rulemaking.
                 Additionally, Sec. Sec. 5.23(d)(4) and 5.24(h) provide for
                expedited review for conversion from an eligible national bank to a
                Federal savings association, and vice versa. Currently, this conversion
                application is deemed approved as of the 60th day after the filing is
                received by the OCC. The OCC believes that it can review and decide
                these conversion applications in a shorter period because it already
                supervises an entity eligible to use the expedited review process.
                Accordingly, the OCC proposes decreasing the time period for the
                expedited review to 45 days. The OCC also proposes a technical change
                to Sec. 5.23(d)(4) to remove the modifier ``national'' before bank as
                the defined term in Sec. 5.3 is ``eligible bank.'' This deletion would
                not change the scope of institutions eligible for expedited review as
                only a national bank, and not a State bank, may be an eligible bank
                under the definition in Sec. 5.3.
                Fiduciary Powers of National Banks and Federal Savings Associations
                (Sec. 5.26)
                 Section 5.26 contains the application requirements and processes
                for a national bank or Federal savings association to engage in the
                exercise of fiduciary powers. Paragraph (e)(2)(i)(C) requires a
                national bank or Federal savings association to submit sufficient
                biographical information on proposed trust management personnel as part
                of an application for fiduciary powers. The scope of the term ``trust
                management personnel'' is unclear, and therefore the OCC is proposing
                to clarify that the biographical information is required for proposed
                senior trust management personnel, as identified by the OCC. The OCC
                also is proposing that the application include, if requested by the
                OCC, the Interagency Biographical and Financial Report and legible
                fingerprints for these individuals, consistent with the background
                investigation changes proposed to other sections in this rulemaking.
                 Section 5.26(e)(6) requires a national bank or Federal savings
                association to submit a written notice to the OCC no later than 10 days
                after it begins previously approved fiduciary activities in additional
                States. The OCC proposes to reorganize this paragraph with no
                additional substantive changes. As proposed, paragraph (e)(6)(i) would
                generally require a written notice after the national bank or Federal
                savings association begins any of the activities specified in 12 CFR
                9.7(d) in a new State. Paragraph (e)(6)(ii) would require the notice to
                include the new States, the fiduciary activities to be conducted, and
                the extent to which the activities differ materially from the fiduciary
                activities currently conducted. Finally, paragraph (e)(6)(iii) would
                not require any notice if the information required by paragraph
                (e)(6)(ii) is provided by other means, such as in a merger application.
                Establishment, Acquisition, and Relocation of a Branch of a National
                Bank (Sec. 5.30)
                 Section 5.30 describes application procedures to establish and
                relocate a national bank branch. Paragraph (d) provides definitions
                applicable to Sec. 5.30. Paragraph (d)(1)(i) lists certain types of
                facilities that are considered branches. The OCC proposes to reorder
                this list so that the reference to 12 U.S.C. 36(c) applies only to
                seasonal agencies and not to the other types of facilities.
                Additionally, paragraph (d)(1)(iii) specifies that remote service units
                (RSUs) and certain types of offices are not within the definition of
                ``branch.'' The OCC proposes to clarify this provision by adding both a
                cross reference to the description of RSUs contained in 12 CFR 7.4003
                and a reference to automated teller machines (ATMs), including
                interactive ATMs, codifying OCC Interpretive Letter No. 1165 (August
                2019).\6\ As discussed in OCC Interpretive Letter No. 1165, a national
                bank establishment of an interactive ATM does not constitute
                establishing a branch if the machine meets the definition of an ATM
                used for purposes of 12 U.S.C. 36 consistent with OCC interpretations,
                and the nature of the interactions between the customer and remote bank
                personnel are delimited as would be the case with an RSU.
                ---------------------------------------------------------------------------
                 \6\ OCC Interpretive Letter No. 1165, Legal Requirements for the
                Establishment of Interactive Automated Teller Machines (August
                2019), available at https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2019/int1165.pdf.
                ---------------------------------------------------------------------------
                 The OCC is considering one additional change to the definition of
                ``branch'' in paragraph (d). Paragraph (d)(1)(ii)(B) specifies that a
                drive-in or pedestrian facility located within 500 feet of a public
                entrance to a main office or branch is not considered a separate
                branch, provided the functions performed at the drive-in or pedestrian
                facility are limited to functions that are ordinarily performed at a
                teller window. The OCC is considering expanding this distance to 1,500
                feet to address issues in crowded urban areas. The OCC specifically
                requests comment on whether this increase in distance, or some other
                distance, would be appropriate and whether it would be helpful in
                reducing regulatory burden.
                 Finally, the OCC proposes a technical change to paragraph (f),
                which provides the procedures for establishing a
                [[Page 18734]]
                national bank branch. Paragraph (f)(1) requires each national bank that
                proposes to establish a branch to submit an application to the OCC,
                except in the case of messenger services as specified in paragraph
                (f)(2). However, paragraph (f)(3) provides that if a national bank
                proposes to establish a branch jointly with one or more national banks
                or other depository institutions, only one of the national banks must
                submit a branch application and this bank may act as agent for the
                other institutions. Even if a single application is submitted for a
                joint branch, the OCC still considers the relevant factors for each
                national bank. The OCC proposes including paragraph (f)(3) as an
                additional exception to the application requirement in paragraph
                (f)(1), thereby conforming these two paragraphs.
                Establishment, Acquisition, and Relocation of a Branch and
                Establishment of an Agency Office of a Federal Savings Association
                (Sec. 5.31)
                 Section 5.31 describes application and notice procedures for the
                establishment, acquisition, or relocation of a Federal savings
                association branch. Under paragraph (f)(2)(i), a Federal savings
                association is not required to submit an application for OCC approval
                to establish a drive-in or pedestrian office located within 500 feet of
                a public entrance of its home office or a branch. As with national
                banks, the OCC is considering expanding this distance to 1,500 feet to
                address issues in crowded urban areas. The OCC specifically requests
                comment on whether this increase in distance, or some other distance,
                would be appropriate and whether it would be helpful in reducing
                regulatory burden.
                 Paragraph (j), implementing section 5(m) of the Home Owners' Loan
                Act (HOLA) (12 U.S.C. 1464(m)), requires a Federal or State savings
                association to obtain prior OCC approval to establish or move a branch
                or move its principal office in the District of Columbia. The OCC
                proposes to add a new paragraph (j)(3) to clarify that a branch in the
                District of Columbia includes any location at which accounts are
                opened, payments are received, or withdrawals made, including ATMs that
                perform one or more of these functions. This amendment would implement
                court opinions finding that ATMs that accept deposits or disburse funds
                against a customer's account constitute a branch.\7\ Although Congress
                amended 12 U.S.C. 36(j) to remove ATMs and RSUs from the definition of
                a national bank ``branch,'' Congress has not similarly amended section
                5(m) of the HOLA. Therefore, the OCC and OTS have long taken the
                position that an ATM established by a savings association in the
                District of Columbia constitutes a branch requiring approval. Because
                proposed paragraph (j)(3) codifies the OCC's existing legal
                interpretation, the OCC does not view this proposed amendment as adding
                burden to savings associations.
                ---------------------------------------------------------------------------
                 \7\ See Independent Bankers Ass'n of New York State, Inc. v.
                Marine Midland Bank, N.A., 757 F.2d 453, 458 (2d Cir. 1985)
                (collecting cases).
                ---------------------------------------------------------------------------
                Business Combinations Involving a National Bank or Federal Savings
                Association (Sec. 5.33)
                 Section 5.33 provides the application requirements and procedures
                for business combinations involving national banks and Federal savings
                associations, such as mergers, consolidations, and certain purchase and
                assumption transactions. Paragraph (e) of Sec. 5.33 sets forth
                policies the OCC considers when evaluating business combinations.
                Paragraph (e)(1)(ii)(F) provides that the OCC will not approve a
                transaction that would violate the deposit concentration limit in 12
                U.S.C. 1828(c)(13). Only interstate merger transactions, as defined 12
                U.S.C. 1828(c)(13)(C)(i) are subject to this deposit concentration
                limit. The OCC proposes adding a reference to 12 U.S.C.
                1828(c)(13)(C)(i) in paragraph (e)(1)(ii)(F) for clarity.
                 Paragraph (e)(1)(iii) provides the OCC's policy for evaluating
                business combinations under the CRA (12 U.S.C. 2901 et seq.). Under 12
                U.S.C. 2903(a)(2), the OCC must evaluate an insured national bank's or
                Federal savings association's CRA record when evaluating its
                application for a business combination. The OCC proposes three changes
                to paragraph (e)(1)(iii). First, the OCC proposes a new paragraph
                (e)(1)(iii)(A) to better describe the OCC's review and to more closely
                track the statutory requirement that the OCC assess only the CRA record
                of the filer. Further, the proposal would specify that the OCC's
                conclusion of whether the CRA performance is or is not consistent with
                approval of an application is considered in conjunction with the other
                factors in Sec. 5.33. This amendment codifies the OCC's practice of
                evaluating all policy factors in light of the whole application, as set
                forth in the OCC's Policies and Procedures Manual (PPM-6300-2). The OCC
                practice in this regard is to consider and evaluate a filer's record of
                performance under the CRA and, more broadly, the filer's plans and
                ability to enable the combined organization to serve the convenience
                and needs of its communities. Second, the OCC proposes a new paragraph
                (e)(1)(iii)(B) to recognize the expanded community reinvestment
                compliance review required by 12 U.S.C. 1831u(b)(3) when the filing
                national bank would have a branch or bank affiliate immediately
                following the transaction in any State in which the filer had no branch
                or bank affiliate immediately before the transaction. Third, the OCC
                proposes a new paragraph (e)(1)(iii)(C) requiring the filer to disclose
                whether it has entered into and disclosed a covered agreement, as
                defined in 12 CFR 35.2, in accordance with 12 CFR 35.6 and 35.7. These
                regulations implement the CRA sunshine requirements of section 48 of
                the FDI Act, 12 U.S.C. 1831y. Requiring disclosure of any covered
                agreements will better permit the OCC to review the filer's CRA record
                and any CRA-related comments on the filing. Additionally, the OCC is
                considering whether to require a filer to memorialize and publish any
                discussion between the filer and any third party with respect to
                development of any community reinvestment plan, community benefit plan,
                or similar plan in connection with a business combination. The OCC
                requests comment on whether to include this requirement in the final
                rule.
                 The OCC also proposes a new paragraph (e)(1)(iv) to state that the
                OCC considers the standards and requirements contained in 12 U.S.C.
                1831u for interstate merger transactions between insured banks, when
                applicable. Current paragraph (h) describes the application of 12
                U.S.C. 1831u to combination between insured banks with different home
                states. As part of the reorganization of paragraphs (g) and (h),
                discussed below, the OCC proposes instead to include its review of the
                12 U.S.C. 1831u factors in paragraph (e)(1) for clarity.
                 Paragraph (e)(8)(ii) requires a national bank or Federal savings
                association with one or more classes of securities subject to
                registration under sections 12(b) or (g) of the Securities Exchange Act
                of 1934 to file preliminary proxy material or information statements
                with the Director, Securities and Corporate Practices Division (SCP) of
                the OCC. As a result of an internal reorganization, the OCC proposes
                replacing the reference to SCP in paragraph (e)(8)(ii) with the OCC
                Chief Counsel's Office.
                 Paragraph (g) provides procedures for different types of
                consolidations and mergers. Paragraph (o) provides general procedures
                for Federal savings association approval of business combinations.
                These paragraphs provide detailed procedures for national banks
                [[Page 18735]]
                and Federal savings associations engaging in several different types of
                business combinations. Some of these requirements are imposed by
                statute. Specifically, 12 U.S.C. 215 and 215a provide procedures for
                consolidations and mergers, respectively, between national banks and
                State or national banks located in the same State resulting in a
                national bank. Similarly, 12 U.S.C. 214 through 214d provide procedures
                for consolidations and mergers between national banks and State banks
                located in the same State resulting in a State bank. Other
                consolidation and merger transactions described in Sec. 5.33 do not
                have any statutory procedures, including interstate consolidations and
                mergers involving a national bank under 12 U.S.C. 215a-1;
                consolidations and mergers of national banks and Federal savings
                associations under 12 U.S.C. 215c and 1467a(s); consolidations and
                mergers of Federal savings associations and State banks, State savings
                associations, State trust companies, or credit unions under 12 U.S.C.
                1464(d)(3)(A) and 1467a(s); and mergers of national banks with their
                non-bank affiliates under 12 U.S.C. 215a-3.
                 The OCC formerly opined in licensing decisions that 12 U.S.C. 215a-
                1 incorporates the provisions of 12 U.S.C. 215 for consolidations and
                12 U.S.C. 215a for mergers.\8\ Twelve U.S.C. 215a-1 is the codification
                of section 4 of the National Bank Consolidation and Merger Act (NBCMA),
                which was enacted by section 102(b)(4)(D) of the Riegle-Neal Interstate
                Banking and Branching Efficiency Act of 1994.\9\ Twelve U.S.C. 215 and
                215a are codifications of sections 2 and 3 of the NBCMA, respectively.
                Section 4 of the NBCMA states that ``a national bank may engage in a
                consolidation or merger under this Act with an out-of-State bank if the
                consolidation or merger is approved'' (emphasis added) \10\ under 12
                U.S.C. 1831u, which governs interstate mergers of insured banks. In
                prior licensing decisions, the OCC interpreted ``under this Act'' to
                mean that a consolidation or merger under section 4 of the NBCMA is
                also a consolidation or merger under section 2 or 3 of the NBCMA,
                respectively, and thus subject to the provisions of those sections.
                However, after further analysis, the OCC believes that the proper
                reading of section 4 of the NBCMA is that it is self-referential and
                does not directly incorporate any provisions of sections 2 or 3 of the
                NBCMA. A consolidation or merger with an out-of-State bank generally
                may not be approved under sections of 2 and 3 of the NBCMA, which
                specifically apply to consolidations or mergers, respectively, between
                banks located in the same State. Accordingly, ``under this Act,'' as
                used in section 4 of the NBCMA should not be read as referring to
                sections 2 or 3 of the NBCMA. As there are no other sections of the
                NBCMA under which an interstate merger between banks could be
                conducted, ``under this Act'' can only be read to refer to section 4
                itself. As section 4 of the NBCMA, 12 U.S.C. 215a-1, does not contain
                any statutory procedures, there are no statutory procedures for
                interstate bank mergers resulting in a national bank. Therefore, the
                OCC is proposing several procedures that a national bank or Federal
                savings association may elect for business combinations for which there
                are no statutory procedural requirements.
                ---------------------------------------------------------------------------
                 \8\ See, e.g., OCC CRA Decision #94 (June 1999).
                 \9\ Public Law 103-328, 108 Stat. 2338, 2351.
                 \10\ 12 U.S.C. 215a-1(a).
                ---------------------------------------------------------------------------
                 First, the national bank or Federal savings association may follow
                the procedures currently provided in paragraph (g) for the specific
                transaction if there are no statutory procedures.
                 Second, the national bank or Federal savings association may elect
                to follow the procedures applicable to a State bank or State savings
                association, respectively, chartered by the State in which the national
                bank's main office or the Federal savings association's home office is
                located. In connection with this election, the OCC proposes rules of
                construction so that the State procedures function logically for
                national banks and Federal savings associations. Specifically, any
                references to a State agency in the applicable State procedures would
                be read as referring to the OCC. Additionally, unless otherwise
                specified in Federal law, all filings required by the applicable State
                procedures would be made to the OCC. Requiring filings prescribed by
                State law to be made with the OCC, rather than a State agency, is
                consistent with past OCC practice for certain transactions under State
                corporate governance procedures adopted pursuant to 12 CFR 7.2000.\11\
                ---------------------------------------------------------------------------
                 \11\ See, e.g., OCC Conditional Approval #859 (July 2008).
                ---------------------------------------------------------------------------
                 Third, the national bank or Federal savings association that is the
                acquiring institution in a transaction may follow a de minimis
                procedure not requiring a shareholder vote pursuant to proposed Sec.
                5.33(p) if certain criteria are met. Proposed Sec. 5.33(p) is similar
                to the de minimis exception to general shareholder voting requirements
                for Federal stock savings associations in current Sec. 5.33(o)(3)(ii),
                which applies if the transaction does not involve an interim savings
                association; the Federal savings association charter does not change;
                each share of stock outstanding will be identical to an outstanding
                share or treasury share after the effective date of the transaction;
                and either no stock or securities convertible into stock will be issued
                or delivered under the plan of combination, or the authorized unissued
                shares or treasury shares of the resulting Federal savings association
                to be issued or delivered, plus those initially issuable upon
                conversion of any securities to be issued or delivered, do not exceed
                15 percent of the total shares of voting stock outstanding immediately
                prior to the effective date of the consolidation or merger. The OCC
                proposes making this de minimis exception available to a national bank
                engaging in transactions not subject to statutory procedural
                requirements as well as a Federal stock savings association in new
                paragraph (p) with two revisions. First, the OCC proposes permitting
                certain combinations involving an interim bank or savings association.
                Specifically, a national bank or Federal stock savings association
                engaging in a transaction involving an interim bank or saving
                association would potentially be able to use the procedures in
                paragraph (p) if the existing shareholders of the national bank or
                Federal stock savings association would directly hold the shares of the
                resulting national bank or Federal stock savings association. In
                promulgating an amendment to the predecessor to current Sec.
                5.33(o)(3)(ii), the Federal Home Loan Bank Board, the predecessor to
                OTS, stated that ``[a]lthough the ownership interests of shareholders
                of a reorganizing association generally do not undergo substantive
                change upon a reorganization into holding company form, the Board
                believes that shareholders should, nevertheless, be given an
                opportunity to approve or disapprove a plan of reorganization.'' \12\
                The OCC believes that in a transaction involving reorganization into a
                holding company structure, shareholders of the national bank or Federal
                stock savings association should have the opportunity to vote. However,
                the OCC believes that a national bank or Federal stock savings
                association may engage in transactions involving interim banks or
                savings association that do not involve holding company reorganizations
                where shareholder votes are not necessary, if the rest of the
                requirements of proposed paragraph (p) are met. Second, to
                [[Page 18736]]
                provide additional flexibility, the OCC also proposes increasing the
                maximum issuance of shares eligible under this procedure for both
                national banks and Federal savings associations from 15 percent of
                total outstanding shares to 20 percent. This proposal mirrors the 20
                percent threshold in similar procedures under Delaware law.\13\
                ---------------------------------------------------------------------------
                 \12\ 47 FR 17797 at 17799 (Apr. 26, 1982).
                 \13\ See Del. Code Ann. tit. 8, Sec. 251(f).
                ---------------------------------------------------------------------------
                 In addition to new paragraph (p), the OCC proposes implementing the
                changes discussed above through revisions to paragraphs (g), (h), and
                (o). The proposal redesignates a number of paragraphs in paragraph (g)
                to keep similar transactions consecutive and to accommodate additional
                paragraphs. Specifically, the OCC proposes redesignating current
                paragraphs (g)(2), (g)(3), (g)(6), and (g)(7) as paragraphs (g)(3),
                (g)(6), (g)(7), and (g)(9), respectively. The proposal includes new
                paragraph (g)(2) providing procedures for interstate consolidations and
                mergers under 12 U.S.C. 215a-1 resulting in a national bank and
                paragraph (g)(8) providing procedures for interstate mergers between an
                insured national bank and an insured State bank resulting in a State
                bank. Procedures for these transactions are currently contained in
                paragraph (h). New paragraphs (g)(2) and (g)(8) generally follow the
                procedures for intrastate mergers resulting in a national bank or State
                bank in paragraphs (g)(1) and redesignated paragraph (g)(7),
                respectively. The proposal includes a new corporate succession
                provision in new paragraph (g)(2)(iv) for interstate mergers resulting
                in a national bank to ensure that the resulting bank succeeds to the
                rights, franchises, and interests, including the fiduciary
                appointments, of the consolidating or merging banks. The proposal also
                includes in new and redesignated paragraphs (g)(2), (g)(3), (g)(4),
                (g)(5), (g)(6), and (g)(8) a reference to a national bank making an
                election under paragraph (h). Revised paragraph (h) would permit a
                national bank to elect to follow the procedures of the laws of the
                State which the national bank association has elected to follow
                pursuant to 12 CFR 7.2000(b) or to use the de minimis procedure in new
                paragraph (p) if applicable. The proposal also includes coordinating
                revisions to cross references to paragraph (g).
                 For Federal savings associations, the OCC proposes reorganizing
                paragraph (o) to contain the election procedures. Revised paragraph
                (o)(1)(i) permits a Federal savings association to follow the
                procedures applicable to a State savings association chartered by the
                State where the Federal savings association's home office is located or
                to follow the standard procedures in revised paragraph (o)(2). As
                discussed above for national banks, revised paragraph (o)(1)(ii) would
                direct Federal savings associations to read references to State
                agencies as the OCC and to make filings generally with the OCC.
                 Revised paragraph (o)(2) would contain the procedures in current
                paragraphs (o)(1) and (o)(3) governing board and shareholder votes,
                respectively. The proposal would change the de minimis exception to the
                shareholder voting requirement in current paragraph (o)(3)(ii),
                redesignated by this proposal as paragraph (o)(2)(ii)(B), to a cross-
                reference to new paragraph (p). Current paragraph (o)(2) regarding the
                Federal savings association's change in name or home office would be
                redesignated as paragraph (o)(3). Finally, the OCC proposes a technical
                amendment to revised paragraph (o)(2)(ii)(A), replacing the citation to
                12 CFR 152.4 with the current citation, 12 CFR 5.22.
                 Paragraph (k) requires a national bank or Federal savings
                association engaging in a consolidation or merger in which it is not
                the filer and the resulting institution to file a notice with the OCC
                advising of its intention. This requirement currently applies even when
                the surviving institution is another national bank or Federal savings
                association. Because the OCC already supervises the surviving
                institution and has acted on the application for consolidation or
                merger, the OCC proposes removing this requirement for the disappearing
                national bank or Federal savings association in this type of
                transaction. In such a case, the OCC already has the information that
                it needs to process termination and ensure that the disappearing
                national bank or Federal savings association has met all applicable
                requirements. The proposal also includes conforming revisions to
                paragraph (g).
                 Paragraph (n) provides authority for, and limits on, certain
                business combinations for Federal savings associations. In addition to
                consolidations, mergers, and other specified forms of business
                combinations, this paragraph addresses ``other combinations,'' the
                definition of which in section 5.33(d)(10) includes the transfer of any
                deposit liabilities to another insured depository institution, credit
                union, or other institution. Paragraph (n)(2)(iii) provides special
                requirements for mutual savings associations. Specifically, if any
                combining savings association is a mutual savings association, the
                resulting institution must be a mutually held depository institution
                insured by the FDIC, unless the transaction is approved under 12 CFR
                part 192 governing mutual to stock conversions or the transaction
                involves a mutual holding company organization under 12 U.S.C. 1467a(o)
                or a similar transaction under State law. Under the definition of
                ``other combination,'' Sec. 5.33(n)(2)(iii) applies to any transfer of
                deposit liabilities, such as the sale of a branch, even if the mutual
                savings association still exists as an ongoing institution after the
                transaction. Accordingly, a branch sale would not be permissible unless
                the sale is to an insured mutual institution or either the mutual to
                stock or mutual holding company reorganization exception applied.
                 The OCC did not intend paragraph (n)(2)(iii) to apply to this type
                of transfer of deposit liabilities when it last amended this provision
                in 2015 (2015 Final Rule).\14\ In fact, Sec. 5.33(n)(4), which
                requires mutual savings associations to provide notice to
                accountholders of a proposed account transfer and to give them the
                option of retaining the account in the transferring Federal savings
                association if the account liabilities are transferred to an uninsured
                institution, contemplates just such an account transfer.
                ---------------------------------------------------------------------------
                 \14\ 80 FR 28346 (May 18, 2015).
                ---------------------------------------------------------------------------
                 In addition, the anomalous reading of Sec. 5.33(n)(2)(iii) was not
                present in the pre-integration version of the Federal savings
                association combination rules.\15\ Former 12 CFR 146.2(a)(4) contained
                a similar restriction on the resulting institution being a mutually
                held savings association with similar exceptions. However, Sec.
                146.2(a) applied to combinations, which was defined in 12 CFR
                152.13(b)(1) as a merger or consolidation with another depository
                institution, or an acquisition of all or substantially all of the
                assets or assumption of all or substantially all of the liabilities of
                a depository institution by another depository institution.
                Accordingly, a branch purchase or other transfer of less than
                substantially all deposits was not a combination and thus not subject
                to the restrictions in Sec. 146.2(a)(4). Furthermore, in the preamble
                to the 2015 Final Rule, the OCC did not describe paragraph (n)(2)(iii)
                as applying to transfers of less than substantially all deposits.\16\
                ---------------------------------------------------------------------------
                 \15\ The 2015 Final Rule integrated many licensing rules that
                apply to national banks and Federal savings associations.
                 \16\ The OCC stated, ``in a merger or consolidation with a
                mutual Federal savings association, a mutual savings association
                must be the resulting institution.'' 80 FR 28346 at 28374 (May 18,
                2015).
                ---------------------------------------------------------------------------
                [[Page 18737]]
                 Accordingly, the OCC proposes revising paragraph (n)(2)(iii) to
                state that a consolidation or merger involving a mutual savings
                association or the transfer of all or substantially all of the deposits
                of a mutual savings association must result in a mutually held
                depository institution insured by the FDIC unless one of the exceptions
                applies.
                 The OCC also proposes adding an additional exception to paragraph
                (n)(2)(iii). The OCC and OTS have permitted transactions where a mutual
                savings association transferred all of its deposits to a non-mutual
                savings association institution followed by the voluntarily dissolution
                of the mutual savings association. These transactions are subject to
                approvals or non-objections by the OCC. However, the literal reading of
                5.33(n)(2)(iii) may not permit such transactions. Accordingly, the OCC
                proposes adding a new paragraph (n)(2)(iii)(C) that provides an
                exception to the requirement that the resulting institution be an
                insured mutual institution when the transaction is part of a voluntary
                liquidation for which the OCC has provided non-objection under Sec.
                5.48.
                 Finally, the OCC proposes technical amendments to paragraph (l) to
                correct a typographical error and to revise paragraph (o)(2)(ii)(A) to
                replace the citation to 12 CFR 152.4 with the current citation, 12 CFR
                5.22.
                Operating Subsidiaries of a National Bank (Sec. 5.34)
                 Section 5.34 provides the licensing requirements for a national
                bank's acquisition or establishment of an operating subsidiary or
                commencement of a new activity in an existing operating subsidiary.
                Paragraph (e)(2)(i) specifies what entities may qualify as an operating
                subsidiary. Paragraph (e)(2)(i)(A) requires that the national bank must
                have the ability to control the management and operations of the
                subsidiary and no other person or entity exercises effective operating
                control over the subsidiary or has the ability to influence the
                subsidiary's operations to an extent equal to or greater than that of
                the bank. The OCC is proposing to clarify this provision by requiring
                that no other person or entity has the ability to exercise effective
                control or influence over the management or operations of the
                subsidiary to an extent equal to or greater than that of the bank or an
                operating subsidiary thereof. The OCC also is proposing conforming
                amendments to current Sec. 5.34(e)(5)(ii)(A)(3)(i), redesignated by
                this proposed rule as Sec. 5.34(f)(2)(i)(C)(1), which contains a
                parallel requirement for operating subsidiary filings and provides
                additional requirements for how the national bank must effectively
                control the operating subsidiary to be eligible to submit a notice to
                the OCC instead of an application to establish or acquire or engage in
                an activity in an operating subsidiary.
                 Section 5.34(e)(2)(ii) identifies certain subsidiaries that are not
                operating subsidiaries for purposes of Sec. 5.34. The OCC is proposing
                to replace the word ``subsidiaries'' with ``entities'' to further
                clarify the exclusion. The OCC also is proposing a new paragraph
                (e)(2)(ii)(C) to specify that a trust formed for purposes of
                securitizing assets held by the bank as part of its banking business
                would not be considered an operating subsidiary. This proposal would
                codify the OCC's position that securitization trusts generally do not
                qualify as operating subsidiaries because of the bank's limited control
                over the trust and because beneficial interests in trusts lack many of
                the indicia of traditional equity. The OCC invites comment on the scope
                of this proposed provision.
                 Paragraph (e)(5) provides the procedures for operating subsidiary
                filings. The OCC is proposing to redesignate the majority of paragraph
                (e)(5) as paragraph (f) and current paragraph (e)(6), addressing
                grandfathered operating subsidiaries, as paragraph (g). The OCC also is
                proposing conforming revisions to cross-references.
                 Redesignated Sec. 5.34(f)(2) contains the requirements for a
                national bank to qualify for the notice process for operating
                subsidiary filings. In addition to meeting additional control
                requirements and being well capitalized and well managed, paragraph
                (f)(2)(i)(A) permits a national bank to file a notice instead of an
                application if the activity is listed in redesignated paragraph (f)(5).
                The OCC is proposing to expand the scope of this requirement to include
                any activity that is substantively the same as a previously approved
                activity and that will be conducted in accordance with the same terms
                and conditions applicable to the previously approved activity. As
                discussed above, the proposal defines ``previously approved activity''
                in Sec. 5.3 to mean, for national banks, an activity approved in
                published OCC precedent for a national bank, an operating subsidiary of
                a national bank, or a non-controlling investment of a national bank.
                The OCC notes that the expansion of the notice requirement to
                activities that are substantively the same as previously approved
                activities does not relieve the national bank from the requirement to
                ensure that the operating subsidiary is only conducting permissible
                activities and would not affect the OCC's ability to take action if the
                OCC finds that the activities are not permissible or are conducted in
                an unsafe or unsound manner.
                 Proposed Sec. 5.34(f)(2)(ii) would exempt from this expanded scope
                of permissible activities eligible for a notice the holding of an
                entity that is or will be chartered or licensed by a State as a bank,
                trust company, or savings association as an operating subsidiary. The
                proposed rule instead would require a national bank to file an
                application to hold these entities as an operating subsidiary.
                 The OCC also is considering as an alternative amendment removing
                all filing requirements for permissible activities, even for those not
                previously approved by the OCC. Under this alternative amendment,
                national banks would be able to acquire or establish an operating
                subsidiary or commence a new activity in an existing operating
                subsidiary without filing a notice or application if the activity to be
                engaged in by the operating subsidiary is a permissible national bank
                activity, provided that the operating subsidiary meets the ownership
                and structural aspects currently required for notice and the national
                bank is well capitalized and well managed. National banks are generally
                not required to notify or seek approval from the OCC before they engage
                in new permissible bank activities. Accordingly, removing the
                application and notice requirement would apply this logic to operating
                subsidiaries, which may only engage in activities permissible for
                national banks. Because the use of the operating subsidiary structure
                requires additional controls on the part of the national bank to ensure
                that the bank is not subject to unlimited liability and that the
                appropriate formalities for the subsidiary are met, this alternative
                amendment would maintain the additional control and well managed and
                well managed requirement. The OCC requests comment on the proposed
                amendment to the notice provision, the alternative amendment described
                above, and any intermediate options, such as removing the filing
                requirement for activities that are substantively the same as
                previously approved activities.
                 Redesignated Sec. 5.34(f)(2)(i)(B) requires that an operating
                subsidiary eligible to file a notice must be a corporation, limited
                liability company, or limited partnership. Redesignated paragraphs
                (f)(2)(i)(C)(1) and (2) contain specific requirements for the
                management, control, and ownership of these entities to be eligible for
                the notice process. If
                [[Page 18738]]
                a national bank does not meet these requirements, the OCC requires the
                filer to submit an application so that it may conduct a case-by-case
                review to ensure that the national bank has effective control over the
                operating subsidiary and that the bank is not exposed to undue
                risks.\17\ As trusts are currently not entities eligible for notice
                under redesignated paragraph (f)(2)(i)(B), a national bank must file an
                application for a trust to be an operating subsidiary. In recent years,
                the OCC has processed a number of applications for operating
                subsidiaries organized as trusts. From this experience, the OCC
                believes that a national bank in certain circumstances possesses
                sufficient control over trust structures that the notice process is
                appropriate. Accordingly, the OCC is proposing to add trusts to the
                list of entities eligible for notice in redesignated paragraph
                (f)(2)(i)(B). To qualify for the notice process, the national bank or
                an operating subsidiary must have the ability to replace the trustee at
                will and be the sole beneficial owner of the trust. The OCC believes
                that these requirements are appropriate in light of the flexible
                ownership and control permitted by trust structures. Requiring a
                national bank or its operating subsidiary to be able to replace the
                trustee at will and to be the sole beneficial owner of the trust would
                ensure that the bank has sufficient control over the trust making it
                unnecessary for the OCC to conduct a case-by-case review through an
                application process. Additionally, the OCC is proposing to reorganize
                redesignated paragraphs (f)(2)(i)(C)(1) and (2) to reflect the addition
                of trust structures and to explicitly recognize that the national bank
                may meet the required control provisions indirectly through another
                operating subsidiary. The OCC intends no substantive change to the
                provisions that address corporations, limited liability partnerships,
                or limited liability companies.
                ---------------------------------------------------------------------------
                 \17\ See 61 FR 60350 (Nov. 27, 1996).
                ---------------------------------------------------------------------------
                 Current 5.34(e)(7) requires national banks to file an annual report
                with the OCC describing operating subsidiaries that do business
                directly with consumers. The OCC publishes this information on its
                website. The OCC is proposing to remove this requirement to reduce
                burden and because it generally duplicates information contained
                elsewhere, such as the FFIEC's National Information Center (NIC).\18\
                In addition, the majority of the operating subsidiaries reported are
                subject to the jurisdiction of the Consumer Financial Protection
                Bureau, and not the OCC, for most consumer law issues.
                ---------------------------------------------------------------------------
                 \18\ The NIC may be found at https://www.ffiec.gov/NPW.
                ---------------------------------------------------------------------------
                 Finally, the OCC is proposing a technical change that would remove
                the definitions of ``well capitalized'' and ``well managed'' from Sec.
                5.34(d). As described above, the OCC is proposing to define these terms
                in Sec. 5.3.
                Bank Service Company Investments by a National Bank or Federal Savings
                Association (Sec. 5.35)
                 Section 5.35 addresses national bank and Federal savings
                association investments in bank service companies as authorized by the
                Bank Service Company Act (BSCA) (12 U.S.C. 1861-1867). Pursuant to
                section 2 of the BSCA (12 U.S.C. 1862), paragraph (i) of Sec. 5.35
                provides that a national bank or Federal savings association may not
                invest more than 10 percent of its capital and surplus in a bank
                service company. In addition, paragraph (i) also provides that the
                national bank's or Federal savings association's total investments in
                all bank service companies may not exceed five percent of the national
                bank's or Federal savings association's total assets. However, section
                2 of the BSCA also specifies that the investment limitations in section
                5(c)(4)(B) of the HOLA apply to Federal savings associations with
                regard to bank service company investments. This limitation is not
                currently included in paragraph (i). Accordingly, the OCC proposes to
                revise paragraph (i) to directly reference the limitations in section 2
                of the BSCA.
                 The OCC also is proposing a technical correction to the title of
                this section that would remove the extraneous word ``investment.''
                Other Equity Investments by a National Bank (Sec. 5.36)
                 Section 5.36 provides the procedures for national banks to make
                certain types of equity investments. Paragraphs (e) and (f) provide the
                procedures and requirements for a national bank to make a non-
                controlling investment that is not prescribed by other OCC rules. The
                OCC is proposing to clarify the types of national bank equity
                investments that are subject to Sec. 5.36 by adding a new definition
                to paragraph (c) that would define ``non-controlling investment'' to
                mean an equity investment made pursuant to 12 U.S.C. 24(Seventh) that
                is not governed by procedures prescribed by another OCC rule.
                Additionally, the OCC is proposing to specify in the definition that
                ``non-controlling investment'' does not include a national bank holding
                interests in a trust formed for the purposes of securitizing assets
                held by the bank as part of its banking business or for the purposes of
                holding multiple legal titles of motor vehicles or equipment in
                conjunction with lease financing transactions. This would codify OCC
                interpretation that these interests do not have sufficient indicia of
                ownership and control to qualify as an equity investment for purposes
                of Sec. 5.36. The OCC also is proposing a conforming change to
                paragraphs (e) and (f).
                 For a national bank to make a noncontrolling investment, current
                Sec. 5.36 requires a filing with the OCC that: (1) Describes the
                structure of the investment and the activity or activities conducted by
                the enterprise in which the bank is investing; (2) describes how the
                bank has the ability to prevent the enterprise from engaging in
                impermissible activities or has the ability to withdraw its investment;
                (3) describes how the investment is convenient and useful to the bank
                in carrying out its business and not a mere passive investment; (4)
                certifies that the bank's loss exposure is limited; and (5) certifies
                that the enterprise agrees to be subject to OCC supervision and
                examination, subject to the limitations and requirements of section 45
                of the FDI Act (12 U.S.C. 1831v) and section 115 of the Gramm-Leach-
                Bliley Act (12 U.S.C. 1820a).
                 A national bank must file an application with the OCC to make a
                non-controlling investment unless it qualifies for the notice procedure
                in Sec. 5.36(e). A national bank may file a notice if: (1) The
                investment meets the above requirements; (2) the enterprise engages in
                activities that are listed in Sec. 5.34(e)(5)(v) (permissible
                operating subsidiary activities) or an activity that is substantively
                the same as that contained in published OCC precedent approving a non-
                controlling investment by a national bank or its operating subsidiary;
                and (3) the bank is well managed and well capitalized. As discussed
                above for operating subsidiary notices, the OCC is proposing to expand
                the activities eligible for notice for non-controlling investments to
                all previously approved activities, as defined in proposed Sec. 5.3.
                This definition includes activities approved for national banks and
                their operating subsidiaries, in addition to previously approved non-
                controlling investments. The proposal also reorganizes paragraph (e)
                and makes conforming changes to paragraphs (e)(2) and (e)(4).
                Additionally, the OCC is considering removing the filing requirement
                for non-controlling investments in enterprises engaging in bank
                permissible activities, as discussed above for national bank
                [[Page 18739]]
                operating subsidiaries. The OCC requests comment on the proposed
                amendment to the notice provision, the alternative amendment described
                above, and any intermediate options, such as removing the filing
                requirement for activities that are substantively the same as
                previously approved activities.
                 As noted, whether a national bank is filing a notice under
                paragraph (e) or an application under paragraph (f), the current rule
                requires the enterprise in which the bank will make a non-controlling
                investment to agree to OCC supervision and examination. The OCC is
                proposing to amend paragraph (f), redesignated as paragraph (f)(1), to
                permit national banks to file an application for prior approval to
                invest in an enterprise that has not agreed to be subject to OCC
                supervision and examination. The OCC believes that this will give
                national banks greater flexibility to make permissible non-controlling
                investments, while giving the OCC an opportunity for an in-depth review
                of the proposed investment to ensure there is no inappropriate risk to
                the national bank's safety and soundness.
                 Additionally, the OCC is proposing a new paragraph (f)(2) to
                provide for expedited review of certain applications for investments in
                enterprises that do not agree to OCC supervision and examination that
                pose minimal risk to the national bank's safety and soundness. An
                application under proposed paragraph (f)(2) would be deemed approved by
                the OCC within 10 days after the application is received if five
                additional requirements are met. First, the enterprise must engage in
                permissible bank activities as described in proposed paragraph (e) of
                this section. Second, the national bank must be well managed and well
                capitalized. These two requirements parallel the requirements for
                filing a notice. Third, the book value of the national bank's non-
                controlling investment for which the application is submitted must not
                be more than 1% of the bank's capital and surplus. Fourth, no more than
                50% of the enterprise may be owned or controlled by banks or savings
                associations subject to examination by an appropriate Federal banking
                agency or credit unions insured by the National Credit Union
                Association. Many enterprises in which national banks make non-
                controlling investments are owned by a consortium of banks and savings
                associations and provide services to their owners and others. Given the
                potentially complex interactions between these enterprises and their
                owners and the additional risks posed to the owners, the OCC believes
                that OCC supervision and examination of these enterprises is necessary
                for the safety and soundness of the investing national banks and
                Federal savings associations. Accordingly, the proposed rule does not
                permit investments in these entities without their commitment to OCC
                supervision and examination, and therefore expedited review of these
                investments would not be available. Finally, the OCC must not have
                notified the national bank that the application has been removed from
                expedited review, or that the expedited review process has been
                extended, pursuant to the standards contained in Sec. 5.13(a)(2).
                 In addition, the proposed rule would permit a national bank to make
                a non-controlling investment without a filing to the OCC in certain
                circumstances. Under proposed paragraph (g), a national bank would be
                permitted to make a non-controlling investment without an application
                or notice if the activities of the enterprise are limited to those
                activities previously reported by the bank in connection with making or
                acquiring a non-controlling investment; the activities in the
                enterprise continue to be legally permissible for a national bank; the
                bank's non-controlling investment will be made in accordance with any
                conditions imposed by the OCC in approving any prior non-controlling
                investment in an enterprise conducting these same activities; and the
                bank is able to make the representations and certifications specified
                in Sec. Sec. 5.36(e)(3) through (e)(7), as proposed to be amended. As
                the national bank would already have a non-controlling investment in an
                entity conducting particular activities, the OCC believes that there
                would be little risk in the bank making an additional non-controlling
                investment in an entity conducting the same activities. Furthermore,
                the OCC believes that non-controlling investments pose similar risks to
                national banks as operating subsidiaries, and proposed paragraph (g)
                would parallel current Sec. 5.34(e)(5)(vi), redesignated in this
                proposal as Sec. 5.34(f)(6), which permits national banks to make
                investments in operating subsidiaries without a filing. Therefore, the
                OCC believes that proposed paragraph (g) would reduce burden without
                jeopardizing the national bank's safety and soundness. As a conforming
                amendment, the OCC is proposing to redesignate current paragraphs (g)
                through (i) as paragraphs (h) through (j), respectively.
                 Redesignated paragraph (j) provides exceptions to the rules of
                general applicability. The OCC is proposing to remove the exception to
                Sec. 5.9, public availability, because some of these investments may
                be of public interest. Further, the proposal would permit the OCC to
                determine that some or all provisions in Sec. Sec. 5.8, 5.10, and 5.11
                apply if it concludes that an application presents significant or novel
                policy, supervisory, or legal issues. This proposed paragraph (j) would
                parallel the equivalent provision for operating subsidiary filings in
                current Sec. 5.34(e)(5)(iii).
                Investment in National Bank or Federal Savings Association Premises
                (Sec. 5.37)
                 Section 5.37 describes the procedures for national bank and Federal
                savings association investment in bank premises. Paragraph (d)(1)(i)
                provides that the procedures of Sec. 5.37 are applicable to
                investments in the stocks, bonds, debentures, or other obligations of
                any corporation holding the premises of the national bank or Federal
                savings association in addition to direct investments in the bank
                premises. Twelve CFR 7.1000 provides the authority for national bank
                and Federal savings association investments in bank premises. In
                addition to the investments listed in Sec. 5.37(d)(1)(i), Sec.
                7.1000(a)(3) provides that national banks and Federal savings
                associations may hold bank premises through a subsidiary organized as a
                corporation, partnership, or similar entity (e.g., a limited liability
                company). The OCC proposes to revise Sec. 5.37(d)(1)(i) to recognize
                the permissibility of holding bank premises through partnerships and
                similar entities, such as limited liability companies, so that it is
                consistent with Sec. 7.1000(a)(3).
                 In addition, the OCC proposes to remove the definition of ``capital
                and surplus'' in Sec. 5.37. Because Sec. 5.3 defines this term, it is
                not necessary to include it in Sec. 5.37. Finally, the OCC proposes to
                correct a technical error in paragraph (a), replacing ``12 U.S.C.
                317d'' with ``12 U.S.C. 371d.''
                Operating Subsidiaries of a Federal Savings Association (Sec. 5.38)
                 Section 5.38 provides the application requirements for a Federal
                savings association's acquisition or establishment of an operating
                subsidiary or commencement of a new activity in an existing operating
                subsidiary when required by section 18(m) of the FDI Act (12 U.S.C.
                1828(m)). Section 5.38 is largely parallel to Sec. 5.34 for national
                bank operating subsidiaries, except that where a national bank would
                file a notice, a Federal savings association would file an application
                eligible for expedited review. Accordingly, the OCC is proposing
                coordinating revisions to
                [[Page 18740]]
                Sec. 5.38 including: (1) Revising the standard for qualifying
                subsidiaries in paragraph (e)(2)(i)(A); (2) excluding securitization
                trusts from the scope of the section in new paragraph (e)(2)(iii)(C);
                (3) redesignating paragraphs (e)(5), (e)(6), and (e)(7) as paragraphs
                (f), (g), and (h), respectively; (4) expanding the activities eligible
                for expedited review to include activities substantially the same as a
                previously approved activity (as proposed to be defined in Sec. 5.3)
                and conducted in accordance with the same terms and conditions
                applicable to the previously approved activity, in redesignated
                paragraph (f)(2)(ii)(B); (5) expanding the entities eligible for
                expedited review to include certain trusts where the Federal savings
                association or its operating subsidiary is the sole beneficiary and has
                the ability to replace the trustee at will, in redesignated paragraphs
                (f)(2)(ii)(C) and (D); and (6) explicitly recognizing that the control
                required by redesignated paragraphs (f)(2)(ii)(D) may be met through an
                operating subsidiary of the Federal savings association. In addition,
                the OCC is proposing technical changes that would remove the
                definitions of ``well capitalized'' and ``well managed'' from Sec.
                5.38, as in proposed Sec. 5.34, and replace the word ``subsidiary''
                with the more appropriate word ``entity'' in the introductory text of
                paragraph (e)(2)(iii).
                 In addition, the OCC is proposing to correct an inadvertent
                omission in the 2015 Final Rule by amending redesignated Sec.
                5.38(f)(2)(ii)(D)(1), which contains requirements for how a Federal
                savings association must effectively control an operating subsidiary to
                be eligible for expedited review of an application. Although the OCC
                made changes in the 2015 Final Rule to current Sec. Sec.
                5.34(e)(2)(i)(A), 5.34(e)(5)(ii)(A)(3)(i), and 5.38(e)(2)(i)(A) to
                address commenter's concerns regarding the application of the rule to
                joint ventures,\19\ the OCC did not make corresponding conforming
                changes to current Sec. 5.38(e)(5)(ii)(B)(4)(i), redesignated in this
                proposal as Sec. 5.38(f)(2)(ii)(D)(1). However, all of these
                provisions should contain parallel language. Accordingly, the OCC is
                proposing to revise redesignated Sec. 5.38(f)(2)(ii)(D)(1) so that it
                parallels current Sec. 5.34(e)(5)(ii)(A)(3)(i), redesignated in this
                proposal as Sec. 5.34(f)(2)(i)(C)(1).
                ---------------------------------------------------------------------------
                 \19\ See 80 FR 28346, at 28375 (May 18, 2015).
                ---------------------------------------------------------------------------
                Financial Subsidiaries of a National Bank (Sec. 5.39)
                 Section 5.39 describes the procedures for national bank acquisition
                of, and conduct of activities in, a financial subsidiary pursuant to
                section 5136A of the Revised Statutes (12 U.S.C. 24a). Paragraph
                (h)(5)(ii) of Sec. 5.39 specifies that the restrictions contained in
                section 23A(a)(1)(A) of the Federal Reserve Act (12 U.S.C.
                371c(a)(1)(A)), do not apply to a covered transaction between a bank
                and its financial subsidiary. However, section 609 of the Dodd-Frank
                Wall Street Reform and Consumer Protection Act removed this section 23A
                exclusion. Accordingly, the OCC proposes to remove paragraph
                (h)(5)(ii).
                 The OCC also proposes to clarify the approval process for financial
                subsidiary activities. First, consistent with other changes in part 5,
                the OCC proposes to change the terminology for filings under Sec. 5.39
                from notice to application. However, the OCC does not intend any
                substantive change in standards or procedures.
                 Second, as the OCC recognized in the initial proposal for Sec.
                5.39, section 24a states that OCC approval shall be based solely upon
                specific statutory factors.\20\ Accordingly, the OCC proposed the
                current procedures for Sec. 5.39 upon the understanding that the
                approval may occur upon a bank's submission of information
                demonstrating satisfaction of the statutory criteria.\21\ The OCC
                proposes to add a new paragraph (i)(3) specifying that an application
                is deemed approved upon filing of the information required by the
                procedures of paragraphs (i)(1) or (i)(2) within the time frames
                provided.
                ---------------------------------------------------------------------------
                 \20\ 65 FR 3159 (Jan. 20, 2000).
                 \21\ Id.
                ---------------------------------------------------------------------------
                 In addition, the OCC is proposing technical changes to paragraph
                (d) that would remove the definitions of ``appropriate Federal banking
                agency,'' ``well capitalized,'' and ``well managed.'' As discussed
                above, the proposal would amend Sec. 5.3 to add these definitions
                without any substantive changes.
                 Finally, consistent with other proposed changes in part 5, the OCC
                proposes changing the terminology for ``notice'' to ``application''
                thereby conforming the terminology to the licensing action provided in
                Sec. 5.39. No substantive change is intended from this change in
                nomenclature.
                National Bank Director Residency and Citizenship Waivers (New Sec.
                5.43)
                 The OCC proposes a new Sec. 5.43 to provide procedures for waivers
                of the national bank director residency and citizenship requirements.
                Section 5146 of the Revised Statues (12 U.S.C. 72) requires every
                director of a national bank to be a citizen of the United States and
                that a majority of the directors reside in the State, Territory, or
                District where the national bank is located, or within one hundred
                miles of the location of the office of the bank. These requirements
                reflect the principle of local ownership and control of national banks.
                Twelve U.S.C. 72 provides the Comptroller the discretion to waive the
                residency requirement and to waive the citizenship requirement for not
                more than a minority of the total number of directors.
                 The OCC has processed requests for waivers of the residency and
                citizenship requirements for many years. The ``National Bank Director
                Waivers'' booklet of the Comptroller's Licensing Manual currently
                describes the procedures for requesting and granting waivers. The OCC
                proposes codifying these procedures in a new 12 CFR 5.43 to better
                clarify and structure the waiver process.
                 Proposed paragraph (a) would set forth the authority for the
                regulation, 12 U.S.C. 72 and 93a, the latter of which grants the OCC
                general rulemaking authority. Proposed paragraph (b) would set forth
                the scope of the section as describing the procedures for the OCC to
                waive the residency and citizenship requirements.
                 Proposed paragraph (c) would set forth the application procedures.
                Under paragraph (c)(1), a national bank would file a written
                application with the OCC to request a waiver of the residency
                requirement. Proposed paragraph (c)(1) also provides that the OCC may
                grant this waiver for individual directors or for any number of
                director positions. The OCC typically grants residency waivers for a
                certain number of directors on the board rather than to specific
                individuals. However, the OCC proposes to increase flexibility by
                permitting either procedure.
                 Under proposed paragraph (c)(2), a national bank could request a
                waiver of the citizenship requirements for individuals who comprise up
                to a minority of the total number of directors by filing a written
                application with the OCC. Proposed paragraph (c)(2) also provides that
                the OCC may grant a waiver on an individual basis. Given the more
                prescriptive nature of the citizenship requirement and the greater
                background investigation that the OCC undertakes on proposed non-
                citizen directors, OCC practice is to grant waivers to individuals and
                not to a designated number of directors. Accordingly, the OCC also
                proposes specifying in paragraph (c)(2) that a citizenship waiver is
                valid until the individual leaves the board or the OCC revokes the
                waiver in accordance with
                [[Page 18741]]
                proposed paragraph (d), discussed below.
                 Proposed paragraph (c)(3)(i) requires the subject of a citizenship
                waiver application to submit the information prescribed in the
                Interagency Biographical and Financial Report. Proposed paragraph
                (c)(3)(ii) provides that the OCC may require additional information
                about the subject of a citizenship waiver application, including
                legible fingerprints, if appropriate. This proposed paragraph also
                permits the OCC to waive any of the information requirements if the OCC
                determines that doing so is in the public interest.
                 Proposed paragraph (c)(4) provides for exceptions to the rules of
                general applicability. The OCC proposes that Sec. Sec. 5.8 (public
                notice), 5.9 (public availability), 5.10 (comments), and 5.11 (hearings
                and other meetings) not apply to applications for citizenship waivers.
                The OCC believes that the applications will largely consist of
                information specific to a bank's internal practices as well as
                significant private information about the individuals subject to the
                waiver applications. Accordingly, the OCC does not believe that these
                applications should be publicly available or subject to public notice,
                comment, or hearings.
                 The OCC also would add a new paragraph (d) that would provide
                procedures for the OCC's revocation of a residency or citizenship
                waiver. Under these procedures, the OCC would provide written notice
                before a revocation to the national bank and affected director(s) of
                its intention to revoke the waiver and the basis for its intention. The
                bank and the affected director(s) may respond in writing to the OCC
                within 10 calendar days, unless the OCC determines that a shorter
                period is appropriate in light of relevant circumstances. The OCC will
                consider the written responses of the bank and affected director(s), if
                any, prior to deciding whether or not to revoke a residency or
                citizenship waiver. The OCC will notify the national bank and the
                director of the OCC's decision to revoke a residency or citizenship
                waiver in writing. The OCC's decision to revoke a residency or
                citizenship waiver would be effective, if the director appeals pursuant
                to proposed paragraph (e), upon the director's receipt of the decision
                of the Comptroller, an authorized delegate, or the appellate official,
                to uphold the initial decision to revoke the residency or citizenship
                waiver. If the director does not appeal, the revocation would be
                effective the expiration of the period to appeal.
                 Although 12 U.S.C. 72 does not contain any explicit provisions for
                revoking a waiver, the OCC believes that the decision to revoke a
                waiver is consistent with the Comptroller's authority to grant a
                waiver. Absent this authority, many residency waivers effectively would
                be perpetual as the OCC generally grants residency waivers for a
                designated number of director positions. Further, changing geo-
                political circumstances may in some circumstances warrant the
                revocation of citizenship waivers, particularly if foreign governments
                are unduly influencing directors' activities with regard to a national
                bank.
                 The OCC recognizes that discretion in revoking residency and
                citizenship waivers is premised upon the guarantee of due process.
                Accordingly, the proposed rule provides affected national banks and
                directors the opportunity to respond to the OCC's intention to revoke a
                waiver. The OCC will specifically consider written responses prior to
                deciding on the revocation.
                 Proposed paragraph (e) would provide an appeals process for a
                director whose residency or citizenship waiver the OCC has decided to
                revoke. This proposed appeals process is parallel to that provided for
                disapprovals of directors and senior executive officers in 12 CFR 5.51,
                and provides review by the Comptroller, an authorized delegate, or a
                designated appellate official. A director may appeal on the grounds
                that the reasons for the initial decision to revoke were contrary to
                fact or arbitrary and capricious. The Comptroller, an authorized
                delegate, or the appellate official will independently determine
                whether the reasons given for the initial decision to revoke are
                contrary to fact or arbitrary and capricious. If they determine either
                to be the case, the Comptroller, an authorized delegate, or the
                appellate official may reverse the initial decision to revoke the
                waiver.
                 Proposed paragraph (f) provides that waivers outstanding on the
                effective date of a final rule would remain in effect notwithstanding
                proposed paragraph (c)(2), unless revoked pursuant to proposed
                paragraph (d).
                Increases in Permanent Capital of a Federal Stock Savings Association
                (Sec. 5.45)
                 Section 5.45 sets out the OCC's rules addressing increases in
                permanent capital by a Federal savings association organized in stock
                form. The OCC is proposing two technical amendments to this section.
                First, the proposed rule would change the term ``Federal savings
                association'' or ``savings association'' to ``Federal stock savings
                association'' each time it appears, except as used in the defined term
                ``eligible savings association,'' to more accurately reflect the scope
                of this section. Second, the proposed rule would replace the reference
                to 12 CFR part 197 in paragraph (h) with 12 CFR part 16, which now
                applies to Federal savings associations.
                 The OCC is considering one other change to Sec. 5.45. Under the
                current rule, Federal savings associations that meet the criteria for
                an eligible savings association described in Sec. 5.3 may have their
                applications for capital increases, when required, reviewed under an
                expedited process. In the OCC's experience, the most relevant factors
                in considering such applications are the financial and managerial
                conditions of the requesting Federal savings association, given the
                more direct relationship between capital, on the one hand, and the
                financial and managerial conditions, on the other hand. Accordingly,
                the OCC requests comment on whether the agency should amend its
                regulations to focus the eligibility criteria such that only well
                capitalized and well managed Federal savings associations are eligible
                to request expedited review of their applications for capital
                increases. If the OCC makes this change to Sec. 5.45 in the final
                rule, it also would amend its other capital filing-related rules in
                part 5 based on this same rationale, Sec. Sec. 5.46 (Changes in
                permanent capital of a national bank), 5.47 (Subordinated debt issued
                by a national bank), 5.55 (Capital distributions by Federal savings
                associations), and 5.56 (Inclusion of subordinated debt securities and
                mandatorily redeemable preferred stock as Federal savings association
                supplementary (tier 2) capital).
                Changes in Permanent Capital of a National Bank (Sec. 5.46)
                 Section 5.46 sets out the OCC's rules addressing changes in
                permanent capital for a national bank. Paragraph (g)(1)(ii) provides
                that prior OCC approval is required for an increase in permanent
                capital in certain cases. In addition, pursuant to 12 U.S.C. 57,
                paragraph (i)(3) of Sec. 5.46 requires a bank to submit a notice to
                the appropriate licensing office after it completes an increase in
                capital, regardless of whether prior approval is required. The OCC
                proposes to clarify these procedures for increases in capital requiring
                prior approval by referencing paragraph (i)(3) in the introductory text
                of paragraph (g)(1)(ii) and removing it from paragraph (g)(1)(ii)(C).
                The OCC also proposes to clarify the introductory text of paragraph
                (g)(1)(ii) to specifically
                [[Page 18742]]
                indicate that an application to increase a national bank's permanent
                capital may be eligible for expedited review under paragraph (i)(2).
                 Paragraph (h) provides that a national bank must apply and obtain
                the OCC's prior approval for any reduction in its permanent capital.
                Paragraph (i)(2) provides expedited review procedures and currently
                provides that an eligible bank may request approval for decreasing its
                capital for up to four consecutive quarters. The OCC proposes a number
                of amendments to paragraphs (h) and (i) to add flexibility for national
                banks and to clarify procedures. First, the proposal would amend
                paragraph (h) to permit a national bank to request approval in a
                standard application for a reduction in capital for multiple quarters.
                The request need only specify a total dollar amount for the requested
                period and need not specify amounts for each quarter. As a result, a
                national bank may request approval for a reduction in permanent capital
                over more than four consecutive quarters. However, this request would
                not be eligible for expedited review so that the OCC may have the time
                to carefully review the request. Second, the proposed rule would add
                flexibility to the expedited process in paragraph (i)(2) by specifying
                that an eligible national bank need only state the total dollar amount
                rather than per-quarter reductions in requests for four-quarter
                decreases. As a conforming change, the OCC proposes to amend paragraph
                (i)(5) to clarify that the OCC's approval of a capital change does not
                expire within one year of the date of the approval if the OCC specifies
                a longer period.
                Subordinated Debt Issued By a National Bank (Sec. 5.47)
                 Section 5.47 describes the requirements applicable to a national
                bank's issuance of subordinated debt, including subordinated debt
                intended for inclusion in tier 2 capital. The OCC is proposing to add a
                new definition of ``subordinated debt document'' to Sec. 5.47(c) to
                mean any document pertaining to an issuance of subordinated debt, and
                any renewal, extension, amendment, modification, or replacement
                thereof, including the subordinated debt note, and any global note,
                pricing supplement, note agreement, trust indenture, paying agent
                agreement, or underwriting agreement. The OCC intends this list of
                documents to be illustrative and not exclusive.
                 This change would clarify that a national bank should submit with
                their applications all material documents needed for the OCC to review
                the application for compliance with its regulatory requirements. The
                OCC reviews ancillary securities documents to ensure that they do not
                contain language that conflicts with required disclosures or statements
                made in the subordinated debt note. The OCC invites comment on
                revisions to the proposed definition and the scope of relevant
                documents typically employed in subordinated debt issuances. The OCC
                also is proposing conforming revisions throughout Sec. 5.47 to better
                reflect this terminology.
                 Paragraph (d)(3)(ii) contains a list of statements and descriptions
                that a national bank must clearly and accurately disclose in the
                subordinated debt note. The OCC proposes adding language to paragraph
                (d)(3)(ii)(C) to clarify that a national bank is only required to
                disclose the OCC's authority under 12 CFR 3.11 to limit certain
                distributions if the disclosure requirement is applicable to the
                subordinated debt issuance. Specifically, a national bank only will be
                required to incorporate this disclosure language into a subordinated
                debt note if the issuing bank, or any successor institution to the
                issuing bank, would have discretion under the terms of the subordinated
                debt to permanently or temporarily suspend payments without triggering
                an event of default. This amendment would provide flexibility and
                reduce burden by permitting national banks to omit the provisions when
                warranted.
                 The OCC also proposes to add a new paragraph (d)(3)(ii)(D) that
                would require a national bank to disclose in a subordinated debt note
                that the subordinated debt obligation may be fully subordinated to
                interests held by the U.S. government in the event that the national
                bank enters into a receivership, insolvency, liquidation, or similar
                proceeding. This proposed requirement mirrors the language in 12 CFR
                3.20(d)(1)(xi), which requires advanced approaches banks to disclose
                this information in the governing agreement, offering circular, or
                prospectus of an instrument to be included in tier 2 capital. The OCC
                believes that disclosing this information to potential investors in
                subordinated debt is beneficial for all national banks, even those that
                are not advanced approaches banks or that do not intend to include the
                debt in tier 2 capital. The proposal would make a conforming change to
                paragraph (e) introductory text to remove the reference to advanced
                approaches national banks.
                 Paragraphs (f)(1)(ii) and (h) govern the procedure for a national
                bank to include subordinated debt in tier 2 capital. Currently, these
                provisions provide that a national bank may not include subordinated
                debt as tier 2 capital unless it has filed a notice with the OCC and
                received notification from the OCC that the subordinated debt qualifies
                as tier 2 capital. The OCC proposes to make these paragraphs consistent
                with the rest of part 5 by changing the terminology from notice to
                application. This change is not intended to be substantive. The OCC
                also is proposing clarifying changes to this paragraph.
                 Additionally, the OCC proposes to provide explicit regulatory
                authority for a national bank to seek approval to include subordinated
                debt as tier 2 capital before issuance of the subordinated debt in
                paragraphs (f)(1)(ii) and (h)(1). National banks routinely seek
                confirmation from the OCC that subordinated debt will qualify as tier 2
                capital prior to issuance to mitigate the risk of issuing nonqualifying
                subordinated debt. This amendment would codify this practice. Under the
                proposal, and as with current practice, the OCC would not provide final
                approval that the subordinated debt qualifies as tier 2 capital until
                after the debt is issued and final pricing is available. Relatedly, the
                OCC proposes a conforming revision to paragraph (h)(2)(ii), which
                requires the application to include the amount and date of receipt of
                funds, to permit submission of the projected amount and date of
                receipt.
                 The OCC also proposes to add a new paragraph (h)(2)(iii) requiring
                the application to include the interest rate or expected calculation
                method for the interest rate for the subordinated debt. This would
                assist the OCC in reviewing applications for inclusion of the
                subordinated debt in tier 2 capital.
                 Paragraphs (f)(2)(ii) and (g)(1)(ii) require OCC approval for a
                national bank to prepay subordinated debt. The approval requirements
                for prepayment of subordinated debt include specific additional
                requirements for prepayment that is in the form of a call option.
                Specifically, a national bank seeking to prepay subordinated debt in
                the form of a call option is required to provide: (1) A statement
                explaining why the national bank believes that following the proposed
                prepayment the national bank would continue to hold an amount of
                capital commensurate with its risk; or (2) a description of the
                replacement capital instrument that meets the criteria for tier 1 or
                tier 2 capital under 12 CFR 3.20, including the amount of such
                instrument, and the time frame for issuance. The OCC has found that in
                the distinction between prepayment and prepayment in the form of a call
                option is immaterial to OCC review, that the
                [[Page 18743]]
                additional requirements are generally satisfied in most prepayment
                applications, and that the additional information is helpful for the
                OCC to determine the impact of the prepayment on the national bank's
                capital levels and safety and soundness. Accordingly, the OCC proposes
                having a single procedure for the prepayment of subordinated debt that
                would incorporate the requirements for prepayment in the form of a call
                option. The proposal contains a coordinating revision to paragraph
                (g)(2)(ii) regarding OCC approval.
                 Currently, Sec. 5.47 does not explicitly require a national bank
                to make a filing with the OCC if the national bank makes a material
                change to its outstanding subordinated debt note or any related
                subordinated debt documents. The OCC proposes to add new paragraphs
                (f)(3) and (g)(1)(iii) to ensure that subordinated debt issuances
                remain compliant with OCC regulatory requirements, including the
                requirements for inclusion in tier 2 capital. This revision would
                require OCC approval for a material change to an existing subordinated
                debt document if the bank would have been required to receive OCC
                approval to issue the security under paragraph (f)(1) or to include it
                in tier 2 capital under paragraph (h). An application to make a
                material change would include: (1) A description of the proposed
                changes; (2) a statement of whether the national bank is subject to or
                required to file a capital plan with the OCC, and if so, how the
                proposed change conforms to the capital plan; (3) a copy of the revised
                subordinated debt documents reflecting all proposed changes; and (4) a
                statement that the proposed changes to the subordinated debt documents
                comply with all applicable laws and regulations.
                 The OCC also is proposing to make certain stylistic changes to the
                rule text of Sec. 5.47 that are not intended to impact the substantive
                requirements applicable to national banks.
                Change in Control of a National Bank or Federal Savings Association;
                Reporting of Stock Loans (Sec. 5.50)
                 Section 5.50 sets forth the procedures and standards for changes in
                control of national banks and Federal savings associations. Paragraph
                (d)(8) contains a definition of insured depository institution.
                However, that term is not used within Sec. 5.50. Accordingly, the OCC
                proposes to replace that definition with the definition of ``depository
                institution,'' to mean a depository institution as defined in section
                3(c)(1) of the FDI Act (12 U.S.C. 1813(c)(1)).
                 Paragraph (f)(3)(iv) states that an applicant may request a hearing
                by the OCC within 10 days of receipt of a notice disapproving a change
                in control and that following final agency action under 12 CFR part 19,
                further review by the courts is available. Paragraph (f)(6) provides
                that the OCC will notify the proposed acquiror in writing of a
                disapproval within three days and will indicate the basis of its
                disapproval. For clarity, the OCC proposes combining these provisions
                in a revised paragraph (f)(6). The OCC also proposes to add language
                stating that this disapproval notice will inform the filer of the
                availability of a hearing. Additionally, the OCC proposes a new
                paragraph (f)(6)(iii) specifying that if a filer fails to request a
                hearing with a timely request, the notice of disapproval constitutes a
                final and unappealable order. This language is currently included in 12
                CFR 19.161 and the OCC believes it also should be included in Sec.
                5.50 to put filers on notice of the implications of failure to request
                a hearing in a timely manner.
                 Finally, paragraph (g)(2)(i) provides procedures for the OCC's
                release of information related to a change in control notice, including
                publication of information in the OCC's Weekly Bulletin. The OCC
                proposes revising this provision to reflect the information that the
                OCC publishes in the Weekly Bulletin in practice, namely the date of
                filing, the disposition of the notice and date thereof, and the
                consummation date of the transaction, if applicable.
                Changes in Directors and Senior Executive Officers of a National Bank
                or Federal Savings Association (Sec. 5.51)
                 Section 5.51 implements section 914 of the Financial Institutions
                Reform, Recovery, and Enforcement of 1989 (12 U.S.C. 1831i). Section
                914 requires a national bank or Federal savings association to provide
                prior notice to the OCC of the proposed addition of any individual to
                the board of directors or the employment of any individual as a senior
                executive officer of a bank if, among other things, the bank is in
                troubled condition. Paragraph (c)(4) defines ``senior executive
                officer'' to mean the president, chief executive officer, chief
                operating officer, chief financial officer, chief lending officer,
                chief investment officer, and any other individual the OCC identifies
                in writing to the national bank or Federal savings association who
                exercises significant influence over, or participates in, major policy
                making decisions of the bank or savings association without regard to
                title, salary, or compensation. The term also includes employees of
                entities retained by a national bank or Federal savings association to
                perform functions in lieu of directly hiring the individuals, and the
                individual functioning as the chief managing official of the Federal
                branch of a foreign bank. The OCC proposes to add chief risk officer to
                the definition of senior executive officer given the increase in that
                role at many national banks and Federal savings associations. The OCC
                invites comment on whether it should add others to the definition or
                remove any currently included in the definition.
                 Paragraph (c)(7) provides the definition of ``troubled condition,''
                which is one of the circumstances in which a national bank or Federal
                savings association is required to file a notice under Sec. 5.51.
                Pursuant to paragraph (c)(7)(ii), this definition includes a national
                bank or Federal savings association that is subject to a cease and
                desist order, a consent order, or a formal written agreement, unless
                otherwise informed in writing by the OCC. The OCC is proposing to amend
                paragraph (c)(7)(ii) to specify that the cease and desist order,
                consent order, or formal written agreement must require the bank or
                savings association to improve its financial condition for the
                institution to be considered in ``troubled condition'' solely as a
                result of the enforcement action. The OCC expects to inform a bank in
                writing when an enforcement action does not require action to improve
                the financial condition of the bank. The OCC's general policy is not to
                apply troubled condition status to national banks or Federal savings
                associations solely as a result of cease and desist orders, consent
                orders, or formal written agreements that do not require improvement in
                the financial condition of the bank or savings association, such as
                enforcement actions that address certain compliance-related
                deficiencies that do not affect the financial condition of the bank or
                savings association. Typically, the OCC has specifically noted in these
                actions that the bank or savings association is not in troubled
                condition as a result of the action. This proposal would update the
                definition of troubled condition in Sec. 5.51 to align with the OCC's
                current supervisory practice. The OCC notes that this practice is
                consistent with that of the Federal Reserve Board (Board) and the FDIC,
                and the proposed revision would align the OCC's regulations with the
                Board's and FDIC's regulations implementing section 914.\22\
                ---------------------------------------------------------------------------
                 \22\ See 12 CFR 225.71(d) (Board); 12 CFR 303.101(c) (FDIC).
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                [[Page 18744]]
                Capital Distributions by Federal Savings Associations (Sec. 5.55)
                 Section 5.55 provides standards and procedures for capital
                distributions made by Federal savings associations. Paragraph (d)(2)
                defines ``capital'' as total capital, computed under 12 CFR part 3. The
                OCC proposes to delete this definition as unnecessary because all
                references to ``capital'' are either in relation to the defined term
                ``capital distribution'' or contain an explicit reference to
                calculations under 12 CFR part 3. Additionally, the OCC proposes a new
                definition of ``control,'' to have the same meaning as in section
                10(a)(2) of the HOLA (12 U.S.C. 1467a(a)(2)), and to use this term to
                describe control relationships, rather than the current use of the term
                ``subsidiary'' in Sec. 5.55.
                 Current paragraph (e)(1) requires a Federal savings association to
                file an application if it is not an eligible savings association.
                Current paragraphs (e)(2) and (g)(2) require eligible savings
                associations to file a notice if certain requirements are met.
                Consistent with other proposed changes in part 5, the OCC proposes to
                change the terminology for notice to application and to make
                corresponding changes throughout Sec. 5.55. As a result, filings that
                are currently notices would be applications subject to expedited
                review. In addition, the OCC proposes to reorganize paragraphs (e) and
                (g) to clarify the procedures; however no substantive change is
                intended. The OCC also would make additional stylistic revisions to
                current paragraph (e)(4) to clarify that the notice mentioned in this
                paragraph is that of the notice filed with the Board of Governors of
                the Federal Reserve System.
                 Further, the OCC proposes one substantive change to the application
                procedures. Current paragraph (e)(1)(ii) requires a Federal savings
                association to file an application if the total amount of all its
                capital distributions (including the proposed capital distribution) for
                the applicable calendar year exceeds its net income for that year to
                date plus retained net income for the preceding two years. Under 12 CFR
                5.64(c)(2), a national bank may calculate its dividends in excess of a
                single year's current net income by offsetting certain excess dividends
                against retained net income from each of the prior two years, with the
                potential to incorporate net income from up to four years prior to the
                current year when determining the maximum dividend payout possible
                without prior OCC approval. To provide additional flexibility, the OCC
                would permit a Federal savings association to conduct this calculation
                when determining whether this application requirement applies.
                Specifically, if the capital distribution is from retained earnings, a
                Federal savings association would be able to calculate the aggregate
                limitation for a capital distribution in accordance with 12 CFR
                5.64(c)(2), substituting ``capital distributions'' for ``dividends'' in
                that section.
                 Paragraph (f)(2) provides that the capital distribution application
                may include a schedule proposing capital distributions over a specified
                period, not to exceed 12 months. The OCC proposes to remove this 12-
                month limitation to allow a Federal savings association more
                flexibility for its distributions and to align this provision with the
                analogous national bank provision, 12 CFR 5.46(i)(1)(ii).
                 Additionally, the OCC is proposing a new paragraph (g)(3) to
                clarify the appropriate OCC filing office for capital distribution
                applications and notices. In general, a Federal savings association
                would file with the appropriate OCC licensing office. However, the
                Federal savings association must submit the application to the
                appropriate OCC supervisory office if the application involves solely a
                cash dividend from retained earnings or involves a cash dividend from
                retained earnings and a concurrent cash distribution from permanent
                capital.
                 Finally, the OCC is proposing to reorganize paragraph (h), which
                addresses OCC review of an application, by providing separate
                paragraphs for OCC denials and approvals. As a result, proposed
                paragraph (h)(1) would address OCC denials and include the majority of
                current paragraph (h) and proposed paragraph (h)(2) would address OCC
                approvals. In doing so, the proposal would clarify that the OCC may
                approve an application in whole or in part and that the OCC may waive
                any waivable prohibition or condition to permit a distribution. The
                proposal also would change the cross-reference in the current
                introductory text to the more appropriate paragraph (e)(1).
                Inclusion of Subordinated Debt Securities and Mandatorily Redeemable
                Preferred Stock as Federal Savings Association Supplementary (tier 2)
                Capital (Sec. 5.56)
                 Section 5.56 provides the requirements and procedures for a Federal
                savings association to include subordinated debt and mandatorily
                redeemable preferred stock (collectively, ``covered securities'') in
                tier 2 capital. Paragraph (b) provides the filing procedures, including
                the application and notice procedures. Under Sec. 5.56, the OCC must
                approve an application or notice before a Federal savings association
                may include covered securities as tier 2 capital. As proposed in Sec.
                5.47, the OCC proposes to make this process consistent with the rest of
                part 5 by changing the terminology from notice to application where
                appropriate throughout Sec. 5.56. The proposal also would clarify that
                a savings association may not include covered securities in tier 2
                capital until the OCC approves the application and the securities are
                issued. This change is not intended to be substantive.
                 Paragraph (b)(2) requires an application and prior approval from
                the OCC for a Federal savings association to prepay covered securities
                included in tier 2 capital. Similar to the national bank requirement in
                Sec. 5.47, Sec. Sec. 5.56(b)(2)(ii) and (h) contain additional
                application requirements for and OCC review of prepayments in the form
                of a call option. As provided above in the discussion for Sec. 5.47,
                and for the same reasons, the OCC is proposing to incorporate the
                application requirements currently applicable to prepayment in the form
                of a call option to all prepayment applications. The OCC is proposing
                one additional technical change in Sec. 5.56(b)(2) to replace a
                reference to ``a tier 1 or tier 2 instrument'' to refer to ``tier 1 or
                tier 2 capital.''
                 Paragraph (d)(1) contains disclosure requirements for covered
                securities. The OCC proposes to add a new paragraph (d)(1)(i)(H) to
                require the covered security to state that it may be fully subordinated
                to interests held by the U.S. government in the event that the savings
                association enters into a receivership, insolvency, liquidation, or
                similar proceeding. As discussed above regarding Sec. 5.47, a Federal
                savings association that is an advanced approaches institution must
                make this disclosure under 12 CFR 3.20(d)(1)(xi). The OCC believes that
                disclosing this information to potential investors in the covered
                security is beneficial for all Federal savings associations, even those
                that are not advanced approaches Federal savings associations or that
                do not intend to include the debt in tier 2 capital.
                 In addition, the proposed rule would replace the reference to 12
                CFR part 197 in paragraphs (b)(1)(iii) and (d)(2)(i) with 12 CFR part
                16, which now applies to Federal savings associations. The OCC also is
                proposing to make certain purely stylistic changes to the rule text of
                Sec. 5.56 that are not intended to impact the substantive requirements
                applicable to Federal savings associations.
                [[Page 18745]]
                Pass-Through Investments by a Federal Savings Association (Sec. 5.58)
                 Section 5.58 provides the licensing procedures for Federal savings
                associations making pass-through investments. Although based on
                different authority, Sec. 5.58 is largely analogous to the provisions
                in Sec. 5.36 governing national bank non-controlling investments.
                Accordingly, the OCC is proposing amendments to Sec. 5.58 similar to
                those proposed for Sec. 5.36, and for the same reasons.
                 First, the OCC is proposing to amend paragraph (d), Definitions, by
                defining ``pass-through investment'' as an investment authorized under
                12 CFR 160.32(a). As discussed above for the proposed definition of
                ``non-controlling investment'' in Sec. 5.36, the proposed definition
                for ``pass-through investment'' would exclude a Federal savings
                association holding interests in a trust formed for the purposes of
                securitizing assets held by the bank as part of its business or for the
                purposes of holding multiple legal titles of motor vehicles or
                equipment in conjunction with lease financing transactions. The OCC
                also is proposing to amend paragraph (d) by removing the definitions of
                ``well capitalized'' and ``well managed.'' As described above, the OCC
                is proposing to define these terms in Sec. 5.3.
                 Second, the proposal would expand the activities eligible for
                notice to include activities that are substantially the same as
                previously approved activities, as proposed to be defined in Sec. 5.3.
                In making this change, the proposal reorganizes paragraph (e) and makes
                conforming changes to paragraphs (e)(2) and (e)(4). Additionally, the
                OCC is considering removing the filing requirement for pass-through
                investments in enterprises engaging in activities permissible for a
                Federal savings association, as discussed above for national bank
                operating subsidiaries and non-controlling investments. The OCC would
                not remove the filing requirement if the enterprise would be a
                subsidiary of the Federal savings association for purposes of section
                18(m) of the FDIA Act (12 U.S.C. 1828(m)), which generally requires a
                Federal savings association to provide 30-days prior notice to the OCC
                before establishing or acquiring a subsidiary defined in section
                3(w)(4) of the FDI Act (12 U.S.C. 1813(w)(4)). The OCC requests comment
                on the proposed amendment to the notice provision, the alternative
                amendment described above, and any intermediate options, such as
                removing the filing requirement for activities that are substantively
                the same as previously approved activities.
                 Third, the proposal would revise paragraph (f)(1) to permit a
                Federal savings association to file an application to make a pass-
                through investment in an entity that does not agree to OCC supervision
                and examination. The proposal also would redesignate paragraph (f)(2)
                as paragraph (f)(3) and add a new paragraph (f)(2) providing for
                expedited review for certain applications. The qualifications for
                expedited review are equivalent to those in proposed Sec. 5.36(f).
                 Fourth, the OCC is proposing to add a new paragraph (g) that would
                permit a Federal savings association to make a pass-through investment
                without a notice or application to the OCC. The standards would be
                equivalent to those in proposed Sec. 5.36(g) except that the
                enterprise must not be a subsidiary of the Federal savings association
                for purposes of section 18(m) of the FDI Act. In such a case, an
                application would be required under Sec. 5.58(f)(2).
                 Finally, the OCC is proposing to amend redesignated paragraph (j)
                to provide exceptions to the rules of general applicability in the same
                manner as proposed Sec. 5.36(j).
                Earnings Limitation Under 12 U.S.C. 60 (Sec. 5.64)
                 Section 5.64 describes the calculations for earnings available for
                dividends under 12 U.S.C. 60. Paragraph (d) provides special rules for
                what the OCC referred to as ``surplus surplus,'' which is an amount in
                capital surplus in excess of capital stock that the national bank can
                demonstrate came from earnings in prior periods. A national bank had
                been required to retain a certain percentage of net income as capital
                surplus whenever it paid dividends. In addition, a variety of statutes
                and regulations established limits for banks based on permanent
                capital, including capital surplus, and ignored any amounts in retained
                earnings, which provided an incentive for banks to shift earnings into
                permanent capital. After Congress revised the statutes to provide more
                flexibility to include retained earnings as capital for purposes of the
                statutory limits, the OCC permitted banks to distribute these surplus
                surplus funds as dividends rather than as reductions in permanent
                capital given the surplus surplus funds' origin as earnings rather than
                paid in capital. As these statutory and regulatory changes occurred
                decades ago, national banks have not needed to create new surplus
                surplus for many years but may still incur recordkeeping burden
                associated with identifying regulatory surplus surplus within capital
                surplus. Accordingly, the OCC proposes to remove the concept of surplus
                surplus and associated procedures described in paragraph (d). However,
                removal of paragraph (d) would not prevent a bank from distributing
                amounts contained in the capital surplus accounts. A national bank may
                make an appropriate filing under 12 CFR 5.46 for a reduction in capital
                to distribute these funds.
                Dividends Payable in Property Other Than Cash (Sec. 5.66)
                 Section 5.66 provides procedures for payment of dividends in non-
                cash property by national banks. This section currently provides that
                these dividends are equivalent to a cash dividend in an amount equal to
                the actual current value of the property, even if the bank previously
                has charged down or written off the property. Before the dividend is
                declared, the bank should show the excess of the actual value over book
                value on its books as a recovery and should declare the dividend in the
                amount of the full book value (equivalent to the actual current value)
                of the property being distributed. The OCC proposes to revise this
                section to clarify that the dividend is equivalent to a cash dividend
                in an amount equal to the actual current value of the property,
                regardless of whether the book value is higher or lower under GAAP. The
                OCC also proposes to apply this valuation methodology to all non-cash
                dividends, not just those for property that has been charged down or
                written off. Further, the amendment would provide that the bank should
                show the difference between the actual value and book value on its
                books as gain or loss, as applicable, prior to recording the non-cash
                dividend reflecting the actual value of the property. The OCC believes
                this approach better reflects the value of the property being
                distributed from the bank, particularly in cases where the non-cash
                property was recorded at historical cost under GAAP.
                Fractional Shares (Sec. 5.67)
                 Section 5.67 provides a number of potential arrangements that a
                national bank may adopt to avoid the issuance of fractional shares. The
                OCC proposes to simplify this section for a national bank by retaining
                only one of these options, the remittance of the cash equivalent of the
                fraction not being issued to those to whom fractional shares would
                otherwise be issued. The OCC believes this procedure is the simplest
                and is the predominant method of disposing of fractional shares today.
                Other options in the current rule include issuing
                [[Page 18746]]
                warrants for fractional shares or permitting shareholders to purchase
                additional fractions up to one whole share. While the OCC permitted
                these methods historically, these methods can create significant
                recordkeeping costs today when bank stock may be traded in ``round
                lots'' of 100 shares or more. Because a transaction that would result
                in the issuance of fractional shares will generally require an
                application with the OCC, proposed Sec. 5.67 maintains flexibility for
                banks by permitting the bank to propose an alternate method in the
                application for the stock issuance, which could include one of the
                options proposed to be removed from the rule.
                Federal Branches and Agencies (Sec. 5.70)
                 Section 5.70 provides the filing procedures for corporate
                activities and transactions involving Federal branches and agencies of
                foreign banks. Consistent with the background investigation changes
                proposed to other sections, the OCC proposes adding a new paragraph
                (d)(3) to explicitly permit the OCC to require any senior executive
                officer of a Federal branch or agency submitting a filing to submit an
                Interagency Biographical and Financial Report and legible fingerprints.
                General Technical Changes
                 The OCC proposes numerous technical changes throughout 12 CFR part
                5. Specifically, the proposed rule would:
                 Replace the word ``shall'' with ``must,'' ``will,'' or
                other appropriate language, which is the more current rule writing
                convention for imposing an obligation and is the recommended drafting
                style of the Federal Register;
                 Replace the term ``notice'' with the term ``application''
                where prior OCC approval is required, thereby conforming the
                terminology to the licensing action provided in the provision (notices
                would continue to include informational filings to the OCC as well as
                certain transactions that the OCC has the power to disapprove, such as
                changes in control);
                 Amend the expedited review provisions throughout part 5 to
                refer to the OCC removing a filing from expedited review rather than
                making a determination that the filing is not eligible for expedited
                review to accord with the language and procedure in Sec. 5.13(a)(2).
                 Revise citations to the U.S. Code and the Code of Federal
                Regulations by adjusting cross-references and making citations more
                specific;
                 Update and standardize references to the OCC website;
                 Simplify gender references by replacing ``his or her''
                with the neutral ``their;''
                 Uniformly capitalize the word ``State,'' in conformance
                with Federal Register drafting style; and
                 Replace the term ``bank'' and ``savings association'' with
                ``national bank'' or ``Federal savings association,'' respectively,
                where appropriate.
                III. Regulatory Analyses
                A. Paperwork Reduction Act
                Paperwork Reduction Act
                 Certain provisions of the proposed rulemaking contain ``collection
                of information'' requirements within the meaning of the Paperwork
                Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with
                the requirements of the PRA, the OCC may not conduct or sponsor, and a
                respondent is not required to respond to, an information collection
                unless it displays a currently valid Office of Management and Budget
                (OMB) control number.
                 The OCC reviewed the proposed rulemaking and determined that it
                revises certain information collection requirements previously cleared
                by OMB under OMB Control No. 1557-0014. The OCC has submitted the
                revised information collection to OMB for review under section 3507(d)
                of the PRA (44 U.S.C. 3507(d)) and section 1320.11 of the OMB's
                implementing regulations (5 CFR 1320).
                Current Actions
                 The proposed rulemaking would:
                 Add new definitions to add clarity and consistency across
                Part 5. This includes proposing a single definition of well managed
                applicable throughout Part 5. 12 CFR 5.3.
                 Require each proposed organizer, director, executive
                officer, or principal shareholder to submit information prescribed in
                the Interagency Biographical and Financial Report and legible
                fingerprints. This amendment merely codifies current application
                requirements and will not result in a change in burden. 12 CFR 5.20.
                 Eliminate the bylaw amendment notice requirement for
                Federal savings associations that adopt without change the OCC's model
                or optional bylaws set forth in the rule. 12 CFR 5.21, 5.22.
                 Require that applications to convert to a Federal savings
                association or national bank include: A list of directors and senior
                executive officers of the converting institution; and a list of
                individuals, directors, and shareholders who directly or indirectly, or
                acting in concert with one or more persons or companies, or together
                with members of their immediate family, do or will own, control, or
                hold 10 percent or more of the converting institution's stock. This
                amendment merely codifies current application requirements and will not
                result in a change in burden. 12 CFR 5.23(d)(2)(ii), 5.24(e)(2).
                 Permit the OCC to require directors and senior executive
                officers of a converting institution to submit the Interagency
                Biographical and Financial Report and legible fingerprints. This
                amendment merely codifies current application requirements and will not
                result in a change in burden. 12 CFR 5.23, 5.24.
                 Require that applications for national banks or Federal
                savings associations that wish to engage in the exercise of fiduciary
                powers include, if requested by the OCC, the Interagency Biographical
                and Financial Report and legible fingerprints. 12 CFR 5.26.
                 Require a filer of a business combination application
                under CRA to disclose whether it has entered into and disclosed a
                covered agreement, as defined in 12 CFR 35.2. 12 CFR
                5.33(e)(1)(iii)(B).
                 Remove the requirement that a disappearing national bank
                or Federal savings association consolidating or merging with another
                OCC-supervised institution provide a notice to the OCC. Sec. 5.33(g),
                (k).
                 For national bank operating subsidiaries, expand the after
                the fact notice for national banks to activities that are substantially
                the same as previously approved activities that will be conducted in
                accordance with the same terms and conditions applicable to the
                previously approved activity. Expand the list of eligible entities to
                include trusts provided that the bank or operating subsidiary has the
                ability to replace the trustee at will and be the sole beneficial owner
                of the trust. 12 CFR 5.34.
                 Remove the requirement for a national bank to file an
                annual report identifying its operating subsidiaries that do business
                directly with consumers and are not functionally regulated. 12 CFR
                5.34.
                 For national bank non-controlling investments and Federal
                savings association pass-through investments, expand the activities
                eligible for notice to activities that are substantially the same as
                previously approved activities., 12 CFR 5.36, 5.58.
                 Allow national banks and Federal savings associations to
                file an application to make a non-controlling investment or a pass-
                through investment, respectively, in an enterprise that has not agreed
                to be
                [[Page 18747]]
                subject to OCC supervision and examination. 12 CFR 5.36(f), 5.58(f).
                 Allow national banks and Federal savings associations to
                make non-controlling investments or a pass-through investments,
                respectively, without a filing if the activities of the enterprise are
                limited to those previously reported to the OCC in connection with a
                prior investment. 12 CFR 5.36, 5.58.
                 For Federal savings association operating subsidiaries,
                expand the expedited approval process for Federal savings associations
                to include activities that are substantially the same as previously
                approved activities that will be conducted in accordance with the same
                terms and conditions applicable to the previously approved activity.
                Expanded the list of eligible entities to include trusts provided that
                the Federal savings association or operating subsidiary has the ability
                to replace the trustee at will and be the sole beneficial owner of the
                trust. 12 CFR 5.38.
                 Permit national banks to request approval for a reduction
                in permanent capital for multiple quarters. 12 CFR 5.46.
                 Regarding subordinated debt notes, allow national banks to
                omit inapplicable provisions when warranted, and require national banks
                to disclose in subordinated debt notes that the subordinated debt
                obligation may be fully subordinated to interests held by the U.S.
                government in the event that the national bank enters into a
                receivership, insolvency, liquidation, or similar proceeding. 12 CFR
                5.47.
                 Revise the standard for when prior approval is required
                for a national bank's issuance of subordinated debt and for prepayment
                of any subordinated debt that is not included in tier 2 capital 12 CFR
                5.47(f).
                 Require OCC approval for a material change to an existing
                subordinated debt document if the national bank would have been
                required to receive OCC approval to issue the security under Sec.
                5.47(f)(1) or to include it in tier 2 capital under Sec. 5.47(h). 12
                CFR 5.47.
                 Add the position of chief risk officer to the definition
                of senior executive officer. This change would require prior OCC
                approval for the employment of an individual as a chief risk officer by
                a national bank or Federal savings association in troubled condition.
                12 CFR 5.51.
                 Require a covered security (inclusion of subordinated debt
                and mandatorily redeemable preferred stock) issued by a Federal savings
                association to state that it may be fully subordinated to interests
                held by the U.S. government in the event that the savings association
                enters into a receivership, insolvency, liquidation, or similar
                proceeding. 12 CFR 5.56.
                 Permit the OCC to require any senior executive officer of
                a Federal branch or agency submitting a filing to submit an Interagency
                Biographical and Financial Report and legible fingerprints. This
                amendment merely codifies current application requirements and will not
                result in a change in burden. 12 CFR 5.70.
                 Title of Information Collection: Licensing Manual.
                 Frequency: Event generated.
                 Affected Public: Businesses or other for-profit.
                 Estimated number of respondents: 1,196.
                 Total estimated annual burden: 12,481 hours.
                 Comments are invited on:
                 a. Whether the collections of information are necessary for the
                proper performance of the agencies' functions, including whether the
                information has practical utility;
                 b. The accuracy or the estimate of the burden of the information
                collections, including the validity of the methodology and assumptions
                used;
                 c. Ways to enhance the quality, utility, and clarity of the
                information to be collected;
                 d. Ways to minimize the burden of the information collections on
                respondents, including through the use of automated collection
                techniques or other forms of information technology; and
                 e. Estimates of capital or startup costs and costs of operation,
                maintenance, and purchase of services to provide information.
                 All comments will become a matter of public record. Comments on
                aspects of this notice that may affect reporting, recordkeeping, or
                disclosure requirements and burden estimates should be sent to the
                addresses listed in the ADDRESSES section of this document. A copy of
                the comments may also be submitted to the OMB desk officer by mail to
                U.S. Office of Management and Budget, 725 17th Street NW, #10235,
                Washington, DC 20503; facsimile to (202) 395-6974; or email to
                [email protected], Attention, Federal Banking Agency Desk
                Officer.
                B. Regulatory Flexibility Act Analysis
                 In general, the Regulatory Flexibility Act (5 U.S.C. 601 et seq.)
                requires an agency, in connection with a proposed rule, to prepare an
                Initial Regulatory Flexibility Analysis describing the impact of the
                rule on small entities (defined by the SBA for purposes of the RFA to
                include commercial banks and savings institutions with total assets of
                $600 million or less and trust companies with total revenue of $41.5
                million or less). However, under section 605(b) of the RFA, this
                analysis is not required if an agency certifies that the rule would not
                have a significant economic impact on a substantial number of small
                entities and publishes its certification and a short explanatory
                statement in the Federal Register along with its rule.
                 The OCC currently supervises approximately 1,196 institutions
                (commercial banks, trust companies, FSAs, and branches or agencies of
                foreign banks, collectively banks), of which 782 are small
                entities.\23\ Because the rule applies to all OCC-supervised depository
                institutions, the proposed rule would affect all small OCC-supervised
                entities, and thus a substantial number of them.
                ---------------------------------------------------------------------------
                 \23\ Consistent with the General Principles of Affiliation 13
                CFR 121.103(a), the OCC counts the assets of affiliated financial
                institutions when determining if it should classify an institution
                as a small entity. The OCC used December 31, 2018, to determine size
                because a ``financial institution's assets are determined by
                averaging the assets reported on its four quarterly financial
                statements for the preceding year.'' See footnote 8 of the U.S.
                Small Business Administration's Table of Standards.
                ---------------------------------------------------------------------------
                 The OCC classifies the economic impact of total costs on an OCC-
                regulated entity as significant if the total costs for the entity in a
                single year are greater than 5 percent of total salaries and benefits,
                or greater than 2.5 percent of total non-interest expense. The OCC
                estimates that the monetized direct cost of this rulemaking would range
                from a low of approximately $4,560 per bank (40 hours x $114 per hour)
                \24\ to a high of approximately $18,240 per bank (160 hours x $114 per
                hour). Using the upper bound average direct cost per bank, the OCC
                finds the compliance costs would have a significant economic impact on
                no more than 20 small banks, which is not a substantial number.\25\
                Therefore, the OCC certifies that this regulation, if adopted, would
                not have a significant economic impact on a substantial number of small
                entities supervised by the OCC. Accordingly, an Initial Regulatory
                Flexibility Analysis is not required.
                ---------------------------------------------------------------------------
                 \24\ This per hour dollar amount is based on the U.S. Bureau of
                Labor Statistics data for wages (by industry and occupation).
                 \25\ The OCC's threshold for a substantial number of small
                entities is five percent of OCC-supervised small entities, or 39 as
                of December 31, 2018.
                ---------------------------------------------------------------------------
                C. Unfunded Mandates Reform Act of 1995
                 The OCC has analyzed the proposed rule under the factors in the
                Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.).
                Under this
                [[Page 18748]]
                analysis, the OCC considered whether the proposed rule includes a
                Federal mandate that may result in the expenditure by State, local, and
                tribal governments, in the aggregate, or by the private sector, of $100
                million or more in any one year (adjusted annually for inflation). The
                UMRA does not apply to regulations that incorporate requirements
                specifically set forth in law.
                 Based on the OCC estimate that the monetized direct cost of this
                rulemaking would range from a low of approximately $4,560 per bank to a
                high of approximately $18,240 per bank, the OCC's overall estimate of
                the total effect of the proposed rule ranges from approximately $5.5
                million to approximately $21.8 million for the approximately 1,196
                institutions supervised by the OCC. Therefore, the OCC finds that the
                proposed rule does not trigger the UMRA cost threshold. Accordingly,
                the OCC has not prepared the written statement described in section 202
                of the UMRA.
                D. Riegle Community Development and Regulatory Improvement Act of 1994
                 Pursuant to section 302(a) of the Riegle Community Development and
                Regulatory Improvement Act of 1994 (12 U.S.C. 4802(a)), in determining
                the effective date and administrative compliance requirements for new
                regulations that impose additional reporting, disclosure, or other
                requirements on insured depository institutions, the OCC will consider,
                consistent with the principles of safety and soundness and the public
                interest: (1) Any administrative burdens that the proposed rule would
                place on depository institutions, including small depository
                institutions and customers of depository institutions; and (2) the
                benefits of the proposed rule. The OCC requests comment on any
                administrative burdens that the proposed rule would place on depository
                institutions, including small depository institutions, and their
                customers, and the benefits of the proposed rule that the OCC should
                consider in determining the effective date and administrative
                compliance requirements for a final rule.
                List of Subjects
                12 CFR Part 5
                 Administrative practice and procedure, Federal savings
                associations, National banks, Reporting and recordkeeping requirements,
                Securities.
                 For the reasons set out in the preamble, the OCC proposes to amend
                12 CFR chapter I as follows:
                PART 5--RULES, POLICIES, AND PROCEDURES FOR CORPORATE ACTIVITIES
                0
                1. The authority citation for part 5 is revised to read as follows:
                 Authority: 12 U.S.C. 1 et seq., 24a, 35, 93a, 214a, 215, 215a,
                215a-1, 215a-2, 215a-3, 215c, 371d, 481, 1462a, 1463, 1464, 1817(j),
                1831i, 1831u, 2901 et seq., 3101 et seq., 3907, and 5412(b)(2)(B).
                Sec. 5.2 [Amended]
                0
                2. Amend Sec. 5.2 by:
                0
                a. In paragraph (b), removing the word ``filings,'' and adding in its
                place the phrase ``filings as it deems necessary, for example,'' and
                removing the word ``applicant'' and adding in its place the word
                ``filer''; and
                0
                b. In paragraph (c), removing the phrase ``on the OCC's internet web
                page''.
                0
                3. Revise Sec. 5.3 to read as follows.
                Sec. 5.3 Definitions.
                 As used in this part:
                 Application means a submission requesting OCC approval to engage in
                various corporate activities and transactions.
                 Appropriate Federal banking agency has the meaning set forth in
                section 3(q) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(q).
                 Appropriate OCC licensing office means the OCC office that is
                responsible for processing applications or notices to engage in various
                corporate activities or transactions, as described at www.occ.gov.
                 Appropriate OCC supervisory office means the OCC office that is
                responsible for the supervision of a national bank or Federal savings
                association, as described in subpart A of 12 CFR part 4.
                 Capital and surplus means:
                 (1) For qualifying community banking organizations that have
                elected to use the community bank leverage ratio framework, as set
                forth under the OCC's Capital Adequacy Standards at part 3 of this
                chapter:
                 (i) A qualifying community banking organization's tier 1 capital,
                as used under Sec. 3.12 of this chapter; plus
                 (ii) A qualifying community banking organization's allowance for
                loan and lease losses or adjusted allowances for credit losses, as
                applicable, as reported in the national bank's or Federal savings
                association's Consolidated Report of Condition and Income (Call
                Report); or
                 (2) For all other national banks and Federal savings associations:
                 (i) A national bank's or Federal savings association's tier 1 and
                tier 2 capital calculated under the OCC's risk-based capital standards
                set forth in part 3 of this chapter, as applicable, as reported in the
                bank's or savings association's Call Report, respectively; plus
                 (ii) The balance of the national bank's or Federal savings
                association's allowance for loan and lease losses or adjusted
                allowances for credit losses, as applicable, not included in the
                institution's tier 2 capital, as reported in the Call Report.
                 Depository institution means any bank or savings association.
                 Eligible bank or eligible savings association means a national bank
                or Federal savings association that:
                 (1) Is well capitalized as defined in Sec. 5.3;
                 (2) Has a composite rating of 1 or 2 under the Uniform Financial
                Institutions Rating System (CAMELS);
                 (3) Has a Community Reinvestment Act (CRA), 12 U.S.C. 2901 et seq.,
                rating of ``Outstanding'' or ``Satisfactory,'' if applicable;
                 (4) Has a consumer compliance rating of 1 or 2 under the Uniform
                Interagency Consumer Compliance Rating System; and
                 (5) Is not subject to a cease and desist order, consent order,
                formal written agreement, or Prompt Corrective Action directive (see 12
                CFR part 6, subpart B) or, if subject to any such order, agreement, or
                directive, is informed in writing by the OCC that the bank or savings
                association may be treated as an ``eligible bank or eligible savings
                association'' for purposes of this part.
                 Eligible depository institution means:
                 (1) With respect to a national bank, a State bank or a Federal or
                State savings association that meets the criteria for an ``eligible
                bank or eligible savings association'' under Sec. 5.3 and is FDIC-
                insured; and
                 (2) With respect to a Federal savings association, a State or
                national bank or a State savings association that meets the criteria
                for an ``eligible bank or eligible savings association'' under Sec.
                5.3 and is FDIC-insured.
                 FDIC means the Federal Deposit Insurance Corporation.
                 Filer means a person or entity that submits a notice or application
                to the OCC under this part.
                 Filing means an application or notice submitted to the OCC under
                this part.
                 GAAP means generally accepted accounting principles as used in the
                United States.
                 MSA means metropolitan statistical area as defined by the Director
                of the Office of Management and Budget.
                 Nonconforming assets and nonconforming activities mean assets or
                activities, respectively, that are
                [[Page 18749]]
                impermissible for national banks or Federal savings associations to
                hold or conduct, as applicable, or, if permissible, are held or
                conducted in a manner that exceeds limits applicable to national banks
                or Federal savings associations, as applicable. Assets include
                investments in subsidiaries or other entities.
                 Notice, in general, means a submission notifying the OCC that a
                national bank or Federal savings association intends to engage in or
                has commenced certain corporate activities or transactions. The
                specific meaning of notice depends on the context of the rule in which
                it is used and may provide the OCC with authority to disapprove the
                notice or may be informational requiring no official OCC action.
                 OTS means the former Office of Thrift Supervision.
                 Previously approved activity means:
                 (1) In the case of a national bank, an activity approved in
                published OCC precedent for a national bank, an operating subsidiary of
                a national bank, or a non-controlling investment of a national bank;
                and
                 (2) In the case of a Federal savings association, an activity
                approved in published OCC or OTS precedent for a Federal savings
                association, an operating subsidiary of a Federal savings association,
                or a pass-through investment of a Federal savings association.
                 Principal city means an area designated as a ``principal city'' by
                the Office of Management and Budget.
                 Short-distance relocation means moving the premises of a branch or
                main office of a national bank or a branch or home office of a Federal
                savings association within a:
                 (1) One thousand foot-radius of the site if the branch, main
                office, or home office is located within a principal city of an MSA;
                 (2) One-mile radius of the site if the branch, main office, or home
                office is not located within a principal city, but is located within an
                MSA; or
                 (3) Two-mile radius of the site if the branch, main office, or home
                office is not located within an MSA.
                 Well capitalized means:
                 (1) In the case of a national bank or Federal savings association,
                the capital level described in 12 CFR 6.4;
                 (2) In the case of a Federal branch or agency, the capital level
                described in 12 CFR 4.7(b)(1)(iii); or
                 (3) In the case of another depository institution, the capital
                level designated as ``well capitalized'' by the institution's
                appropriate Federal banking agency pursuant to section 38 of the
                Federal Deposit Insurance Act (12 U.S.C. 1831o).
                 Well managed means:
                 (1) In the case of a national bank or Federal savings association:
                 (i) Unless otherwise determined in writing by the OCC, the national
                bank or Federal savings association has received a composite rating of
                1 or 2 under the Uniform Financial Institutions Rating System in
                connection with its most recent examination, and at least a rating of 2
                for management, if such a rating is given; or
                 (ii) In the case of a national bank or Federal savings association
                that has not been examined by the OCC, the existence and use of
                managerial resources that the OCC determines are satisfactory.
                 (2) In the case of a Federal branch or agency of a foreign bank:
                 (i) Unless determined otherwise in writing by the OCC, the Federal
                branch or agency has received a composite ROCA supervisory rating
                (which rates risk management, operational controls, compliance, and
                asset quality) of 1 or 2 at its most recent examination, and at least a
                rating of 2 for risk management, if such a rating is given; or
                 (ii) In the case of a Federal branch or agency that has not been
                examined by the OCC, the existence and use of managerial resources that
                the OCC determines are satisfactory.
                 (3) In the case of another depository institution:
                 (i) Unless otherwise determined in writing by the appropriate
                Federal banking agency, the institution has received a composite rating
                of 1 or 2 under the Uniform Financial Institutions Rating System (or an
                equivalent rating under an equivalent rating system) in connection with
                the most recent examination or subsequent review of the depository
                institution and, at least a rating of 2 for management, if such a
                rating is given; or
                 (ii) In the case of another depository institution that has not
                been examined by its appropriate Federal banking agency, the existence
                and use of managerial resources that the appropriate Federal banking
                agency determines are satisfactory.
                0
                4. Amend Sec. 5.4 by:
                0
                a. In paragraph (a), removing the word ``shall'' and adding in its
                place the word ``must'';
                0
                 b. In paragraph (b), removing the phrase ``on the OCC's internet web
                page'';
                0
                c. In paragraph (c), removing the word ``applicant'' each time that it
                appears and adding in its place the word ``filer'';
                0
                d. In paragraphs (d) and (e), removing the phrase ``an applicant'' each
                time that it appears and adding in its place the phrase ``a filer'';
                0
                e. In paragraph (d), removing the phrase ``the OCC's internet web page
                at'';
                0
                f. Revising paragraph (f); and
                0
                g. Adding paragraph (g).
                 The addition and revision read as follows:
                Sec. 5.4 Filing required.
                * * * * *
                 (f) Prefiling meeting. Before submitting a filing to the OCC, a
                potential filer is encouraged to contact the appropriate OCC licensing
                office to determine the need for a prefiling meeting. The OCC decides
                whether to require a prefiling meeting on a case-by-case basis.
                Submission of a draft business plan or other relevant information
                before any prefiling meeting may expedite the filing review process. A
                potential filer considering a novel, complex, or unique proposal is
                encouraged to contact the appropriate OCC licensing office to schedule
                a prefiling meeting early in the development of its proposal for the
                early identification and consideration of policy issues. Information on
                model business plans can be found in the Comptroller's Licensing
                Manual.
                 (g) Certification. A filer must certify that any filing or
                supporting material submitted to the OCC contains no material
                misrepresentations or omissions. The OCC may review and verify any
                information filed in connection with a notice or an application. Any
                person responsible for any material misrepresentation or omission in a
                filing or supporting materials may be subject to enforcement action and
                other penalties, including criminal penalties provided in 18 U.S.C.
                1001.
                0
                5. Amend Sec. 5.5 by revising paragraph (a) to read as follows:
                Sec. 5.5 Filing fees.
                 (a) Procedure. A filer must submit the appropriate filing fee, if
                any, in connection with its filing. Filing fees must be paid by check
                payable to the OCC or by other means acceptable to the OCC. Additional
                information on filing fees, including where to file, can be found in
                the Comptroller's Licensing Manual. The OCC generally does not refund
                the filing fees.
                * * * * *
                0
                6. Amend Sec. 5.7 by redesignating paragraph (b) as paragraph (c) and
                adding a new paragraph (b) to read as follows:
                [[Page 18750]]
                Sec. 5.7 Investigations.
                * * * * *
                 (b) Fingerprints. For certain filings, the OCC collects
                fingerprints for submission to the Federal Bureau of Investigation for
                a national criminal history background check.
                * * * * *
                Sec. 5.8 [Amended]
                0
                7. Amend Sec. 5.8 by:
                0
                a. In paragraph (a), removing the phrase ``An applicant shall publish''
                and adding in its place the phrase ``A filer must publish'' and
                removing the phrase ``the applicant proposes'' and adding in its place
                the phrase ``the filer proposes'';
                0
                b. In paragraphs (a) and (b), removing the word ``shall'' and adding in
                its place the word ``must'';
                0
                c. In paragraphs (b) and (g)(1), removing the word ``applicant'' and
                adding in its place the word ``filer'';
                0
                d. In paragraphs (c) and (d), removing the phrase ``applicant shall''
                and adding in its place the phrase ``filer must''; and
                0
                e. In paragraph (e) and paragraph (g) introductory text, removing the
                phrase ``an applicant'' and adding in its place the phrase ``a filer''.
                Sec. 5.9 [Amended]
                0
                8. Amend Sec. 5.9 by:
                0
                a. In paragraph (b), in the second sentence, removing the word
                ``Applicants'' and adding in its place the word ``Filers''; and
                0
                b. In paragraph (c), removing the word ``applicant'' and adding in its
                place the word ``filer''.
                Sec. 5.10 [Amended]
                0
                9. Amend Sec. 5.10 by:
                0
                a. In paragraphs (b)(2)(i) and (b)(3), removing the word ``applicant''
                and adding in its place the word ``filer'';
                0
                b. In paragraph (b)(2)(ii), removing the word ``application'' and
                adding in its place the word ``filing''; and
                0
                c. In paragraph (b)(3), revising the paragraph heading by removing the
                word ``Applicant'' and adding in its place the word ``Filer''.
                Sec. 5.11 [Amended]
                0
                10. Amend Sec. 5.11 by:
                0
                a. In paragraphs (a), (e), and (g)(2), removing the word ``shall'' each
                time it appears and adding in its place the word ``must'';
                0
                b. In paragraphs (a), (d)(1), (e), (g)(1), and (g)(2), removing the
                word ``applicant'' each time it appears and adding in its place the
                word ``filer'';
                0
                c. In paragraph (c), removing the word ``shall'' and adding in its
                place the word ``will'';
                0
                d. In paragraphs (e) and (f), removing the phrase ``his or her'' and
                adding in its place the word ``their'';
                0
                e. In paragraph (h), removing the word ``applicant's'' and adding in
                its place the word ``filer's''; and
                0
                f. In paragraph (i)(1) removing the phrase ``an application'' and
                adding in its place the phrase ``a filing'' and removing the phrase
                ``the application'' and adding in its place the phrase ``the filing'';
                and
                0
                g. In paragraph (i)(2), removing the phrase ``an applicant'' and adding
                in its place the phrase ``a filer''.
                Sec. 5.12 [Amended]
                0
                11. Amend Sec. 5.12 by removing the phrase ``an application'' and
                adding in its place the phrase ``a filing''.
                0
                12. Amend Sec. 5.13 by:
                0
                a. In paragraph (a) introductory text and paragraphs (b)(1), (b)(3),
                (d), and (g), removing the phrase ``the applicant'' each time that it
                appears and adding in its place the phrase ``the filer'';
                0
                b. Revising paragraph (a)(2) introductory text and paragraphs (a)(2)(i)
                and (ii);
                0
                c. In paragraphs (c) and (f), removing the phrase ``an applicant'' and
                adding in its place the phrase ``a filer'';
                0
                d. In paragraph (g), removing the word ``applicant's'' and adding in
                its place the word filer's'';
                0
                e. Revising paragraph (h); and
                0
                f. Adding paragraph (i).
                 The revisions and addition read as follows:
                Sec. 5.13 Decisions.
                 (a) * * *
                 (2) Expedited review. The OCC grants qualifying national banks and
                Federal savings associations expedited review within a specified time
                after filing or commencement of the public comment period for certain
                filings.
                 (i) The OCC may extend the expedited review period or remove a
                filing from expedited review procedures if it concludes that the
                filing, or an adverse comment regarding the filing, presents a
                significant supervisory, CRA (if applicable), or compliance concern or
                raises a significant legal or policy issue requiring additional OCC
                review. The OCC will provide the filer with a written explanation if it
                decides not to process an application from a qualifying national bank
                or Federal savings association under expedited review pursuant to this
                paragraph.
                 (ii) Adverse comments that the OCC determines do not raise a
                significant supervisory, CRA (if applicable), or compliance concern or
                a significant legal or policy issue; are frivolous, non-substantive, or
                filed primarily as a means of delaying action on the filing; or raise a
                CRA concern that has been satisfactorily resolved do not affect the
                OCC's decision under paragraph (a)(2)(i) of this section. The OCC
                considers a comment to be non-substantive if it is (1) a generalized
                opinion that a filing should or should not be approved or (2) a
                conclusory statement, lacking factual or analytical support. The OCC
                considers a CRA concern to have been satisfactorily resolved if the OCC
                previously reviewed (e.g., in an examination, other supervisory
                activity, or a prior filing) a concern presenting substantially the
                same issue in substantially the same assessment area during
                substantially the same time, and the OCC determines that the concern
                would not warrant denial or imposition of a condition on approval of
                the application.
                * * * * *
                 (h) Nullifying a decision. The OCC may nullify any decision on a
                filing either prior to or after consummation of the transaction if:
                 (1) The OCC discovers a material misrepresentation or omission in
                any information provided to the OCC in the filing or supporting
                materials;
                 (2) The decision is contrary to law, regulation, or OCC policy
                thereunder; or
                 (3) The decision was granted due to clerical or administrative
                error, or a material mistake of law or fact.
                 (i) Modifying, Suspending, or Rescinding a Decision. The OCC may
                modify, suspend, or rescind a decision on a filing if a material change
                in the information or circumstance on which the OCC relied occurs prior
                to the date of the consummation of the transaction to which the
                decision pertains.
                0
                13. Amend Sec. 5.20 by:
                0
                a. In paragraph (b), paragraph (e)(1)(iii) introductory text, and
                paragraphs (h)(1)(i), (h)(2), (h)(3), (h)(5)(i), (h)(5)(ii),
                (h)(5)(iii), (h)(7), (i)(2), (i)(3), (i)(5)(ii)(A), (i)(5)(ii)(B),
                (i)(5)(iii), (i)(5)(iv), (k)(1), (l)(1), and (l)(2), removing the word
                ``shall'' each time that it appears and adding in its place the word
                ``must'';
                0
                b. In paragraph (d)(2), removing the phrase ``section 2'' and adding in
                its place ``section 2(a)(2)'' and removing the phrase ``section 10''
                and adding in its place ``section 10(a)(2)'';
                0
                c. Redesignating paragraphs (d)(7) and (8) as paragraphs (d)(8) and
                (9), respectively, and adding new paragraphs (d)(7) and (d)(10);
                0
                d. In newly redesignated paragraph (d)(8), removing the word
                ``persons'' and adding in its place the word ``individuals''; and
                0
                e. In newly redesignated paragraph (d)(9), removing the phrase ``an
                [[Page 18751]]
                applicant'' and adding in its place the phrase ``a filer'';
                0
                f. In paragraph (e)(1)(ii)(A), removing the word ``applicants'' and
                adding in its place the word ``filers''; and
                0
                g. In paragraph (e)(3), removing the phrase ``Federal Deposit Insurance
                Corporation (FDIC)'' and adding in its place the word ``FDIC'';
                0
                h. In paragraph (g)(4) removing the word ``shall'' and adding in its
                place the word ``may'' and removing the phrase ``withdrawal of
                preliminary approval'' and adding in its place the phrase
                ``nullification or rescission of a preliminary approval'' in paragraph
                (g)(4)(ii);
                0
                i. In paragraphs (i)(1), (j)(1), and (j)(2), removing the word
                ``applicant'' and adding in its place the word ``filer'';
                0
                j. Redesignating paragraphs (i)(3) through (5) as paragraphs (i)(4)
                through (i)(6) and adding a new paragraph (i)(3);
                0
                k. In newly redesignated paragraph (i)(5), removing the phrase
                ``spokesperson and other interested persons'' and adding in its place
                the phrase ``contact person and other relevant parties''; and
                0
                l. In newly redesignated paragraph (i)(6)(iii), removing the phrase
                ``or part 197'';
                0
                m. Revising paragraph (j)(1); and
                 n. In paragraphs (k)(2) and (l)(1), removing the phrase ``An
                applicant'' each time that it appears and adding in its place the
                phrase ``A filer''.
                 The additions and revision read as follows:
                Sec. 5.20 Organizing a national bank or Federal savings association.
                * * * * *
                 (d) * * *
                 (7) Organizer means a member of the organizing group.
                * * * * *
                 (10) Principal shareholder means a person who directly or
                indirectly or acting in concert with one or more persons or companies,
                or together with members of their immediate family, will own, control,
                or hold 10 percent or more of the voting stock of the proposed national
                bank or Federal savings association.
                * * * * *
                 (i) * * *
                 (3) Biographical and financial reports--(i) Each proposed
                organizer, director, executive officer, or principal shareholder must
                submit to the appropriate OCC licensing office:
                 (A) The information prescribed in the Interagency Biographical and
                Financial Report, available at www.occ.gov; and
                 (B) Legible fingerprints.
                 (ii) The OCC may require additional information about any proposed
                organizer, director, executive officer, or principal shareholder, if
                appropriate. The OCC may waive any of the information requirements of
                this paragraph if the OCC determines that it is in the public interest.
                * * * * *
                 (j) * * *
                 (1) Notifies the filer prior to that date that the filing has been
                removed from expedited review, or the expedited review process is
                extended, under Sec. 5.13(a)(2); or
                * * * * *
                0
                14. Amend Sec. 5.21 by:
                0
                a. In paragraph (d), removing the word ``shall'' and adding in its
                place the word ``do'';
                0
                b. In paragraph (e) introductory text, removing the word ``shall'' and
                adding in its place the word ``must'' in the first and second sentence;
                and removing the word ``shall'' and adding in its place the word
                ``will'' in the last sentence;
                0
                c. In the form ``Federal Mutual Charter'' following paragraph (e):
                0
                i. Removing the phrase ``shall be'' and adding in its place the word
                ``is'' each time it appears in Section 2 and Section 7;
                0
                ii. In Section 6:
                 A. Removing the phrase ``shall be permitted'' and adding in its
                place the phrase ``is permitted'';
                 B. Removing the phrase ``shall cast'' and adding in its place the
                phrase ``may cast''; and
                 C. Removing the phrase ``accounts shall be'' and adding in its
                place the phrase ``accounts are'';
                0
                iii. Removing the phrase ``shall not'' and adding in its place the
                phrase ``may not'' in Section 7; and
                0
                iv. Removing the word ``shall'' and adding in its place the word
                ``will'' each time it appears in Section 8 and Section 9;
                0
                d. Revising paragraph (f)(2) and adding paragraph (f)(3);
                0
                e. Revising paragraph (g) introductory text;
                0
                f. In paragraph (g)(1):
                0
                i. Removing the phrase ``shall have the'' and adding in its place the
                phrase ``has the'';
                0
                ii. Removing the phrase ``shall require'' and adding in its place the
                word ``requires'';
                0
                iii. Removing the phrase ``raise capital, which shall be unlimited,''
                and adding in its place the phrase ``raise unlimited capital'';
                0
                iv. Removing the phrase ``accounts as shall'' and adding in its place
                the phrase ``accounts as will'';
                0
                v. Removing the phrase ``shall have such'' and adding in its place the
                phrase ``will have such''; and
                0
                vi. Removing the phrase ``shall have power'' and adding in its place
                the phrase ``has the power'';
                0
                g. Revising paragraph (i); and
                0
                h. Revising paragraph (j):
                 The revisions and addition read as follows.
                Sec. 5.21 Federal mutual savings association charter and bylaws.
                * * * * *
                 (f) * * *
                 (2) Form of filing--(i) Application requirement. Except as provided
                in paragraph (f)(2)(ii) of this section, a Federal mutual savings
                association must file the proposed charter amendment with, and obtain
                the prior approval of, the OCC.
                 (A) Expedited review. Except as provided in paragraph (f)(2)(i)(B)
                of this section, the charter amendment will be deemed approved as of
                the 30th day after filing, unless the OCC notifies the filer that the
                amendment is denied or that the amendment contains procedures of the
                type described in paragraph (f)(2)(i)(B) of this section and is not
                eligible for expedited review, provided the association follows the
                requirements of its charter in adopting the amendment.
                 (B) Amendments exempted from expedited review. Expedited review is
                not available for a charter amendment that would render more difficult
                or discourage a merger, proxy contest, the assumption of control by a
                mutual account holder of the association, or the removal of incumbent
                management; or involve a significant issue of law or policy.
                 (ii) Notice requirement. No application under paragraph (f)(2)(i)
                of this section is required if the text of the amendment is contained
                within paragraphs (e) or (g) of this section. In such case, the Federal
                mutual savings association must submit a notice with the charter
                amendment to the OCC within 30 days after adoption.
                 (3) Effectiveness. A charter amendment is effective after approval
                by the OCC, if required pursuant to paragraph (f)(2) of this section,
                and adoption by the association, provided the association follows the
                requirements of its charter in adopting the amendment.
                 (g) Optional charter amendments. The following charter amendments
                are subject to the notice requirement in paragraph (f)(2)(ii) of this
                section if adopted without change:
                * * * * *
                 (i) Availability of chartering documents. A Federal mutual savings
                association must make available a true copy of its charter and bylaws
                and all
                [[Page 18752]]
                amendments thereto to accountholders at all times in each office of the
                savings association, and must upon request deliver to any
                accountholders a copy of such charter and bylaws or amendments thereto.
                 (j) Bylaws for Federal mutual savings associations--(1) In general.
                A Federal mutual savings association must operate under bylaws that
                contain provisions that comply with all requirements specified by the
                OCC in this paragraph and that are not otherwise inconsistent with the
                provisions of this paragraph; the association's charter; and all other
                applicable laws, rules, and regulations provided that, a bylaw
                provision inconsistent with the provisions of this paragraph may be
                adopted with the approval of the OCC. Bylaws may be adopted, amended or
                repealed by a majority of the votes cast by the members at a legal
                meeting or a majority of the association's board of directors. The
                bylaws for a Federal mutual savings bank must substitute the term
                ``savings bank'' for ``association''. The term ``trustee'' may be
                substituted for the term ``director''.
                 (2) Requirements. The following requirements are applicable to
                Federal mutual savings associations:
                 (i) Annual meetings of members. (A) An association must provide for
                and conduct an annual meeting of its members for the election of
                directors and at which any other business of the association may be
                conducted. Such meeting must be held at any convenient place the board
                of directors may designate, and at a date and time within 150 days
                after the end of the association's fiscal year.
                 (B) At each annual meeting, the officers must make a full report of
                the financial condition of the association and of its progress for the
                preceding year and must outline a program for the succeeding year.
                 (ii) Special meetings of members. Procedures for calling any
                special meeting of the members and for conducting such a meeting must
                be set forth in the bylaws. The board of directors of the association
                or the holders of 10 percent or more of the voting capital must be
                entitled to call a special meeting. For purposes of this paragraph,
                ``voting capital'' means FDIC-insured deposits as of the voting record
                date.
                 (iii) Notice of meeting of members. Notice specifying the date,
                time, and place of the annual or any special meeting and adequately
                describing any business to be conducted must be published for two
                successive weeks immediately prior to the week in which such meeting
                will convene in a newspaper of general circulation in the city or
                county in which the principal place of business of the association is
                located, or mailed postage prepaid at least 15 days and not more than
                45 days prior to the date on which such meeting will convene to each of
                its members of record. A similar notice must be posted in a conspicuous
                place in each of the offices of the association during the 14 days
                immediately preceding the date on which such meeting will convene. The
                bylaws may permit a member to waive in writing any right to receive
                personal delivery of the notice. When any meeting is adjourned for 30
                days or more, notice of the adjournment and reconvening of the meeting
                must be given as in the case of the original meeting.
                 (iv) Fixing of record date. The bylaws must provide for the fixing
                of a record date and a method for determining from the books of the
                association the members entitled to vote. Such date may not more than
                60 days nor fewer than 10 days prior to the date on which the action,
                requiring such determination of members, is to be taken. The same
                determination must apply to any adjourned meeting.
                 (v) Member quorum. Any number of members present and voting,
                represented in person or by proxy, at a regular or special meeting of
                the members constitutes a quorum. A majority of all votes cast at any
                meeting of the members determines any question, unless otherwise
                required by regulation. At any adjourned meeting, any business may be
                transacted that might have been transacted at the meeting as originally
                called. Members present at a duly constituted meeting may continue to
                transact business until adjournment.
                 (vi) Voting by proxy. Procedures must be established for voting at
                any annual or special meeting of the members by proxy pursuant to the
                rules and regulations of the OCC. Proxies may be given telephonically
                or electronically as long as the holder uses a procedure for verifying
                the identity of the member. All proxies with a term greater than eleven
                months or solicited at the expense of the association must run to the
                board of directors as a whole, or to a committee appointed by a
                majority of such board.
                 (vii) Communications between members. Provisions relating to
                communications between members must be consistent with Sec. 144.8 of
                this chapter. No member, however, may have the right to inspect or copy
                any portion of any books or records of a Federal mutual savings
                association containing:
                 (A) A list of depositors in or borrowers from such association;
                 (B) Their addresses;
                 (C) Individual deposit or loan balances or records; or
                 (D) Any data from which such information could be reasonably
                constructed.
                 (viii) Number of directors, membership. The bylaws must set forth a
                specific number of directors, not a range. The number of directors may
                not be fewer than five nor more than fifteen, unless a higher or lower
                number has been authorized by the OTS prior to July 21, 2011 or by the
                OCC. Each director of the association must be a member of the
                association. Directors may be elected for periods of one to three years
                and until their successors are elected and qualified, but if a
                staggered board is chosen, provision must be made for the election of
                approximately one-third or one-half of the board each year, as
                appropriate. State-chartered savings banks converting to Federal
                savings banks may include alternative provisions for the election and
                term of office of directors so long as such provisions are authorized
                by the OCC, and provide for compliance with the standard provisions of
                this paragraph no later than six years after the conversion to a
                Federal savings association.
                 (ix) Meetings of the board. The board of directors determines the
                place, frequency, time, procedure for notice, which must be at least 24
                hours unless waived by the directors, and waiver of notice for all
                regular and special meetings. The board also may permit telephonic or
                electronic participation at meetings. The bylaws may provide for action
                to be taken without a meeting if unanimous written consent is obtained
                for such action. A majority of the authorized directors constitutes a
                quorum for the transaction of business. The act of a majority of the
                directors present at any meeting at which there is a quorum will be the
                act of the board.
                 (x) Officers, employees and agents. (A) The bylaws must contain
                provisions regarding the officers of the association, their functions,
                duties, and powers. The officers of the association must consist of a
                president, one or more vice presidents, a secretary, and a treasurer or
                comptroller, each of whom must be elected annually by the board of
                directors. Such other officers and assistant officers and agents as may
                be deemed necessary may be elected or appointed by the board of
                directors or chosen in such other manner as may be prescribed in the
                bylaws. Any two or more offices may be held by the same person, except
                the offices of president and secretary.
                [[Page 18753]]
                 (B) Any officer may be removed by the board of directors with or
                without cause, but such removal, other than for cause, must be without
                prejudice to the contractual rights, if any, of the person so removed.
                Termination for cause, for purposes of this section and Sec. 5.22,
                includes termination because of the person's personal dishonesty;
                incompetence; willful misconduct; breach of fiduciary duty involving
                personal profit; intentional failure to perform stated duties; willful
                violation of any law, rule, or regulation (other than traffic
                violations or similar offenses) or final cease and desist order; or
                material breach of any provision of an employment contract.
                 (xi) Vacancies, resignation or removal of directors. In the event
                of a vacancy on the board, the board of directors may, by their
                affirmative vote, fill such vacancy, even if the remaining directors
                constitute less than a quorum. A director elected to fill a vacancy may
                serve only until the next election of directors by the members. The
                bylaws must set out the procedure for the resignation of a director.
                Directors may be removed only for cause, as defined in paragraph
                (j)(2)(x)(B) of this section, by a vote of the holders of a majority of
                the shares then entitled to vote at an election of directors.
                 (xii) Powers of the board. The board of directors has the power to
                exercise any and all of the powers of the association not expressly
                reserved by the charter to the members.
                 (xiii) Nominations for directors. The bylaws must provide that
                nominations for directors may be made at the annual meeting by any
                member and must be voted upon, except, however, the bylaws may require
                that nominations by a member must be submitted to the secretary and
                then prominently posted in the principal place of business at least 10
                days prior to the date of the annual meeting. However, if such
                provision is made for prior submission of nominations by a member, then
                the bylaws must provide for a nominating committee, which, except in
                the case of a nominee substituted as a result of death or other
                incapacity, must submit nominations to the secretary and have such
                nominations similarly posted at least 15 days prior to the date of the
                annual meeting.
                 (xiv) New business. The bylaws must provide procedures for the
                introduction of new business at the annual meeting.
                 (xv) Amendment. Bylaws may include any provision for their
                amendment that would be consistent with applicable law, rules, and
                regulations and adequately addresses its subject and purpose.
                 (A) Amendments will be effective:
                 (1) After approval by a majority vote of the authorized board, or
                by a majority of the vote cast by the members of the association at a
                legal meeting; and
                 (2) After receipt of any applicable regulatory approval.
                 (B) When an association fails to meet its quorum requirement,
                solely due to vacancies on the board, the bylaws may be amended by an
                affirmative vote of a majority of the sitting board.
                 (xvi) Miscellaneous. The bylaws also may address any other subjects
                necessary or appropriate for effective operation of the association.
                 (3) Form of filing--(i) Application requirement. Except as provided
                in paragraphs (j)(3)(ii) or (j)(3)(iii) of this section, a Federal
                mutual savings association must file the proposed bylaw amendment with,
                and obtain the prior approval of, the OCC.
                 (A) Expedited review. Except as provided in paragraph (j)(3)(i)(B)
                of this section, the bylaw amendment will be deemed approved as of the
                30th day after filing, unless the OCC notifies the filer that the bylaw
                amendment is denied or that the amendment contains procedures of the
                type described in paragraph (f)(3)(i)(B) of this section and is not
                eligible for expedited review, provided the association follows the
                requirements of its charter and bylaws in adopting the amendment.
                 (B) Amendments not subject to expedited review. A bylaw amendment
                is not subject to expedited review if it would render more difficult or
                discourage a merger, proxy contest, the assumption of control by a
                mutual account holder of the association, or the removal of incumbent
                management; involve a significant issue of law or policy, including
                indemnification, conflicts of interest, and limitations on director or
                officer liability; or be inconsistent with the requirements of this
                paragraph or with applicable laws, rules, regulations, or the
                association's charter.
                 (ii) Notice Requirement. A Federal mutual association may elect to
                follow the corporate governance procedures of the laws of the State
                where the home office of the institution is located, provided that such
                procedures are not inconsistent with applicable Federal statutes,
                regulations, and safety and soundness, and such procedures are not of
                the type described in paragraph (j)(3)(i)(B) of this section. If this
                election is selected, a Federal mutual association must designate in
                its bylaws the provision or provisions from the body of law selected
                for its corporate governance procedures, and must submit a notice
                containing a copy of such bylaws, within 30 days after adoption. The
                notice must indicate, where not obvious, why the bylaw provisions meet
                the requirements stated in paragraph (j)(3)(i)(B) of this section.
                 (iii) No filing required. No filing is required for purposes of
                paragraph (j)(3) of this section if a bylaw amendment adopts the
                language of the OCC's model or optional bylaws without change.
                 (4) Effectiveness. A bylaw amendment is effective after approval by
                the OCC, if required, and adoption by the association, provided that
                the association follows the requirements of its charter and bylaws in
                adopting the amendment.
                 (5) Effect of subsequent charter or bylaw change. Notwithstanding
                any subsequent change to its charter or bylaws, the authority of a
                Federal mutual savings association to engage in any transaction is
                determined only by the association's charter or bylaws then in effect.
                0
                15. Amend Sec. 5.22 by:
                0
                 a. In paragraph (d), removing the word ``shall'' and adding in its
                place the word ``do'';
                0
                b. In paragraph (e) introductory text removing the word ``shall'' each
                time it appears and adding in its place the word ``must'' and removing
                ``Sec. 192.3(c)(13)'' and adding in its place ``Sec. 192.485'';
                0
                c. In the form ``Federal Stock Charter'' following paragraph (e):
                0
                i. In Section 2, removing the phrase ``shall be'' and adding in its
                place the word ``is'';
                0
                ii. Revising Section 5;
                0
                iii. In Section 6, removing the phrase ``shall not be entitled'' and
                adding in its place the phrase ``are not entitled'';
                0
                iv. In Section 7, removing the phrase ``shall be'' and adding in its
                place the phrase ``will be'' and removing the phrase ``shall not be''
                and adding in its place the phrase ``may not be''; and
                0
                v. In Section 8, removing the phrase ``shall be'' and adding in its
                place ``may be'';
                0
                d. Revising paragraph (f)(2) and adding paragraph (f)(3);
                0
                e. Revising paragraph (g) introductory text and paragraph (g)(4);
                0
                f. Removing the word ``shall'' each time it appears and adding in its
                place the word ``will'' in paragraph (g)(6); and
                0
                g. Revising paragraph (g)(7);
                0
                h. In paragraph (h):
                0
                i. Removing the phrase ``shall file'' and adding in its place the word
                ``files'';
                0
                ii. Removing the phrase ``for approval'' and adding in its place the
                phrase ``pursuant to paragraph (f)(2)(i) of this section'';
                0
                iii. Removing the word ``state'' and adding in its place the word
                ``State''; and
                [[Page 18754]]
                0
                iv. Removing the phrase ``shall not'' and adding in its place the
                phrase ``may not'';
                0
                i. In paragraph (i), removing the phrase ``under (c) of this part'' and
                adding in its place ``in the form ``Federal Stock Charter'' in
                paragraph (c) of this section'';
                0
                j. Revising paragraphs (j)(2) and (3);
                0
                k. In paragraph (j)(4), removing the phrase ``shall be'' and adding in
                its place the word ``is'':
                0
                l. Revising paragraphs (k)(1) through (7);
                0
                m. Revising paragraphs (l)(1) through (10);
                0
                n. In paragraph (m)(1) removing the phrase ``shall be a president'' and
                adding in its place the phrase ``must consist of a president'';
                removing the phrase ``shall be elected'' and adding in its place the
                phrase ``must be elected''; and removing the word ``chairman'' and
                adding in its place the word ``chair''; and
                0
                o. In paragraph (m)(2) removing the phrase ``shall be'' and adding in
                its place the phrase ``will be'' and removing the phrase ``shall
                conform'' and adding in its place the phrase ``must conform''; and
                0
                p. Revising paragraph (n).
                 The addition and revisions read as follows.
                Sec. 5.22 Federal stock savings association charter and bylaws.
                * * * * *
                 (e) * * *
                Federal Stock Charter
                * * * * *
                 Section 5. Capital stock. The total number of shares of all classes
                of the capital stock that the association has the authority to issue is
                __, all of which is common stock of par [or if no par is specified then
                shares have a stated] value of __ per share. The shares may be issued
                from time to time as authorized by the board of directors without the
                approval of its shareholders, except as otherwise provided in this
                Section 5 or to the extent that such approval is required by governing
                law, rule, or regulation. The consideration for the issuance of the
                shares must be paid in full before their issuance and may not be less
                than the par [or stated] value. Neither promissory notes nor future
                services may constitute payment or part payment for the issuance of
                shares of the association. The consideration for the shares must be
                cash, tangible or intangible property (to the extent direct investment
                in such property would be permitted to the association), labor, or
                services actually performed for the association, or any combination of
                the foregoing. In the absence of actual fraud in the transaction, the
                value of such property, labor, or services, as determined by the board
                of directors of the association, is conclusive. Upon payment of such
                consideration, such shares are deemed to be fully paid and
                nonassessable. In the case of a stock dividend, that part of the
                retained earnings of the association that is transferred to common
                stock or paid-in capital accounts upon the issuance of shares as a
                stock dividend is deemed to be the consideration for their issuance.
                 Except for shares issued in the initial organization of the
                association or in connection with the conversion of the association
                from the mutual to stock form of capitalization, no shares of capital
                stock (including shares issuable upon conversion, exchange, or exercise
                of other securities) may be issued, directly or indirectly, to
                officers, directors, or controlling persons of the association other
                than as part of a general public offering or as qualifying shares to a
                director, unless the issuance or the plan under which they would be
                issued has been approved by a majority of the total votes eligible to
                be cast at a legal meeting. The holders of the common stock exclusively
                possess all voting power. Each holder of shares of common stock is
                entitled to one vote for each share held by such holder, except as to
                the cumulation of votes for the election of directors, unless the
                charter provides that there will be no such cumulative voting. Subject
                to any provision for a liquidation account, in the event of any
                liquidation, dissolution, or winding up of the association, the holders
                of the common stock will be entitled, after payment or provision for
                payment of all debts and liabilities of the association, to receive the
                remaining assets of the association available for distribution, in cash
                or in kind. Each share of common stock must have the same relative
                rights as and be identical in all respects with all the other shares of
                common stock.
                 (f) * * *
                 (2) Form of filing--(i) Application requirement. Except as provided
                in paragraph (f)(2)(ii) of this section, a Federal stock savings
                association must file the proposed charter amendment with, and obtain
                the prior approval of the OCC.
                 (A) Expedited review. Except as provided in paragraph (f)(2)(i)(B)
                of this section, the charter amendment will be deemed approved as of
                the 30th day after filing, unless the OCC notifies the filer that the
                amendment is denied or that the amendment contains procedures of the
                type described in paragraph (f)(2)(ii)(B) of this section and is not
                subject to expedited review, provide the association follows the
                requirements of its charter in adopting the amendment.
                 (B) Amendments exempted from expedited review. Expedited review is
                not available for a charter amendment that would render more difficult
                or discourage a merger, tender offer, or proxy contest, the assumption
                of control by a holder of a block of the association's stock, the
                removal of incumbent management, or involve a significant issue of law
                or policy.
                 (ii) Notice requirement. No application under paragraph (f)(2)(i)
                of this section is required if the amendment is contained within
                paragraphs (e) or (g) of this section. In such case, the Federal stock
                savings association must submit a notice with the charter amendment to
                the OCC within 30 days after adoption.
                 (3) Effectiveness. A charter amendment is effective after approval
                by the OCC, if required, and adoption by the association, provided the
                association follows the requirements of its charter in adopting the
                amendments.
                 (g) Optional charter amendments. The following charter amendments
                are subject to the notice requirement in paragraph (f)(2)(ii) of this
                section if adopted without change:
                * * * * *
                 (4) Capital stock. A Federal stock association may amend its
                charter by revising Section 5 to read as follows:
                 Section 5. Capital stock. The total number of shares of all classes
                of capital stock that the association has the authority to issue is __,
                of which __ is common stock of par [or if no par value is specified the
                stated] value of __ per share and of which [list the number of each
                class of preferred and the par or if no par value is specified the
                stated value per share of each such class]. The shares may be issued
                from time to time as authorized by the board of directors without
                further approval of shareholders, except as otherwise provided in this
                Section 5 or to the extent that such approval is required by governing
                law, rule, or regulation. The consideration for the issuance of the
                shares must be paid in full before their issuance and may not be less
                than the par [or stated] value. Neither promissory notes nor future
                services may constitute payment or part payment for the issuance of
                shares of the association. The consideration for the shares must be
                cash, tangible or intangible property (to the extent direct investment
                in such property would be permitted), labor, or services actually
                performed for the
                [[Page 18755]]
                association, or any combination of the foregoing. In the absence of
                actual fraud in the transaction, the value of such property, labor, or
                services, as determined by the board of directors of the association,
                will be conclusive. Upon payment of such consideration, such shares
                will be deemed to be fully paid and nonassessable. In the case of a
                stock dividend, that part of the retained earnings of the association
                that is transferred to common stock or paid-in capital accounts upon
                the issuance of shares as a stock dividend will be deemed to be the
                consideration for their issuance.
                 Except for shares issued in the initial organization of the
                association or in connection with the conversion of the association
                from the mutual to the stock form of capitalization, no shares of
                capital stock (including shares issuable upon conversion, exchange, or
                exercise of other securities) may be issued, directly or indirectly, to
                officers, directors, or controlling persons of the association other
                than as part of a general public offering or as qualifying shares to a
                director, unless their issuance or the plan under which they would be
                issued has been approved by a majority of the total votes eligible to
                be cast at a legal meeting.
                 Nothing contained in this Section 5 (or in any supplementary
                sections hereto) entitles the holders of any class of a series of
                capital stock to vote as a separate class or series or to more than one
                vote per share, except as to the cumulation of votes for the election
                of directors, unless the charter otherwise provides that there will be
                no such cumulative voting: Provided, That this restriction on voting
                separately by class or series does not apply:
                 i. To any provision which would authorize the holders of preferred
                stock, voting as a class or series, to elect some members of the board
                of directors, less than a majority thereof, in the event of default in
                the payment of dividends on any class or series of preferred stock;
                 ii. To any provision that would require the holders of preferred
                stock, voting as a class or series, to approve the merger or
                consolidation of the association with another corporation or the sale,
                lease, or conveyance (other than by mortgage or pledge) of properties
                or business in exchange for securities of a corporation other than the
                association if the preferred stock is exchanged for securities of such
                other corporation: Provided, That no provision may require such
                approval for transactions undertaken with the assistance or pursuant to
                the direction of the OCC or the Federal Deposit Insurance Corporation;
                 iii. To any amendment which would adversely change the specific
                terms of any class or series of capital stock as set forth in this
                Section 5 (or in any supplementary sections hereto), including any
                amendment which would create or enlarge any class or series ranking
                prior thereto in rights and preferences. An amendment which increases
                the number of authorized shares of any class or series of capital
                stock, or substitutes the surviving association in a merger or
                consolidation for the association, is not considered to be such an
                adverse change.
                 A description of the different classes and series (if any) of the
                association's capital stock and a statement of the designations, and
                the relative rights, preferences, and limitations of the shares of each
                class of and series (if any) of capital stock are as follows:
                 A. Common stock. Except as provided in this Section 5 (or in any
                supplementary sections thereto) the holders of the common stock
                exclusively possess all voting power. Each holder of shares of the
                common stock is entitled to one vote for each share held by each
                holder, except as to the cumulation of votes for the election of
                directors, unless the charter otherwise provides that there will be no
                such cumulative voting.
                 Whenever there has been paid, or declared and set aside for
                payment, to the holders of the outstanding shares of any class of stock
                having preference over the common stock as to the payment of dividends,
                the full amount of dividends and of sinking fund, retirement fund, or
                other retirement payments, if any, to which such holders are
                respectively entitled in preference to the common stock, then dividends
                may be paid on the common stock and on any class or series of stock
                entitled to participate therewith as to dividends out of any assets
                legally available for the payment of dividends.
                 In the event of any liquidation, dissolution, or winding up of the
                association, the holders of the common stock (and the holders of any
                class or series of stock entitled to participate with the common stock
                in the distribution of assets) will be entitled to receive, in cash or
                in kind, the assets of the association available for distribution
                remaining after: (i) Payment or provision for payment of the
                association's debts and liabilities; (ii) distributions or provision
                for distributions in settlement of its liquidation account; and (iii)
                distributions or provision for distributions to holders of any class or
                series of stock having preference over the common stock in the
                liquidation, dissolution, or winding up of the association. Each share
                of common stock will have the same relative rights as and be identical
                in all respects with all the other shares of common stock.
                 B. Preferred stock. The association may provide in supplementary
                sections to its charter for one or more classes of preferred stock,
                which must be separately identified. The shares of any class may be
                divided into and issued in series, with each series separately
                designated so as to distinguish the shares thereof from the shares of
                all other series and classes. The terms of each series must be set
                forth in a supplementary section to the charter. All shares of the same
                class must be identical except as to the following relative rights and
                preferences, as to which there may be variations between different
                series:
                 a. The distinctive serial designation and the number of shares
                constituting such series;
                 b. The dividend rate or the amount of dividends to be paid on the
                shares of such series, whether dividends are cumulative and, if so,
                from which date(s), the payment date(s) for dividends, and the
                participating or other special rights, if any, with respect to
                dividends;
                 c. The voting powers, full or limited, if any, of shares of such
                series;
                 d. Whether the shares of such series are redeemable and, if so, the
                price(s) at which, and the terms and conditions on which, such shares
                may be redeemed;
                 e. The amount(s) payable upon the shares of such series in the
                event of voluntary or involuntary liquidation, dissolution, or winding
                up of the association;
                 f. Whether the shares of such series are entitled to the benefit of
                a sinking or retirement fund to be applied to the purchase or
                redemption of such shares, and if so entitled, the amount of such fund
                and the manner of its application, including the price(s) at which such
                shares may be redeemed or purchased through the application of such
                fund;
                 g. Whether the shares of such series are convertible into, or
                exchangeable for, shares of any other class or classes of stock of the
                association and, if so, the conversion price(s) or the rate(s) of
                exchange, and the adjustments thereof, if any, at which such conversion
                or exchange may be made, and any other terms and conditions of such
                conversion or exchange.
                 h. The price or other consideration for which the shares of such
                series are issued; and
                 i. Whether the shares of such series which are redeemed or
                converted have the status of authorized but unissued
                [[Page 18756]]
                shares of serial preferred stock and whether such shares may be
                reissued as shares of the same or any other series of serial preferred
                stock.
                 Each share of each series of serial preferred stock must have the
                same relative rights as and be identical in all respects with all the
                other shares of the same series.
                 The board of directors has authority to divide, by the adoption of
                supplementary charter sections, any authorized class of preferred stock
                into series, and, within the limitations set forth in this section and
                the remainder of this charter, fix and determine the relative rights
                and preferences of the shares of any series so established.
                 Prior to the issuance of any preferred shares of a series
                established by a supplementary charter section adopted by the board of
                directors, the association must file with the OCC a dated copy of that
                supplementary section of this charter established and designating the
                series and fixing and determining the relative rights and preferences
                thereof.
                * * * * *
                 (7) Anti-takeover provisions following mutual to stock conversion.
                Notwithstanding the law of the State in which the association is
                located, a Federal stock association may amend its charter by
                renumbering existing sections as appropriate and adding a new section 8
                as follows:
                 Section 8. Certain Provisions Applicable for Five Years.
                Notwithstanding anything contained in the Association's charter or
                bylaws to the contrary, for a period of [specify number of years up to
                five] years from the date of completion of the conversion of the
                Association from mutual to stock form, the following provisions will
                apply:
                 A. Beneficial Ownership Limitation. No person may directly or
                indirectly offer to acquire or acquire the beneficial ownership of more
                than 10 percent of any class of an equity security of the association.
                This limitation does not apply to a transaction in which the
                association forms a holding company without change in the respective
                beneficial ownership interests of its stockholders other than pursuant
                to the exercise of any dissenter and appraisal rights, the purchase of
                shares by underwriters in connection with a public offering, or the
                purchase of less than 25 percent of a class of stock by a tax-qualified
                employee stock benefit plan as defined in 12 CFR 192.25.
                 In the event shares are acquired in violation of this section 8,
                all shares beneficially owned by any person in excess of 10 percent
                will be considered ``excess shares'' and will not be counted as shares
                entitled to vote and may not be voted by any person or counted as
                voting shares in connection with any matters submitted to the
                stockholders for a vote.
                 For purposes of this section 8, the following definitions apply:
                 1. The term ``person'' includes an individual, a group acting in
                concert, a corporation, a partnership, an association, a joint stock
                company, a trust, an unincorporated organization or similar company, a
                syndicate or any other group formed for the purpose of acquiring,
                holding or disposing of the equity securities of the association.
                 2. The term ``offer'' includes every offer to buy or otherwise
                acquire, solicitation of an offer to sell, tender offer for, or request
                or invitation for tenders of, a security or interest in a security for
                value.
                 3. The term ``acquire'' includes every type of acquisition, whether
                effected by purchase, exchange, operation of law or otherwise.
                 4. The term ``acting in concert'' means (a) knowing participation
                in a joint activity or parallel action towards a common goal of
                acquiring control whether or not pursuant to an express agreement, or
                (b) a combination or pooling of voting or other interests in the
                securities of an issuer for a common purpose pursuant to any contract,
                understanding, relationship, agreement or other arrangement, whether
                written or otherwise.
                 B. Cumulative Voting Limitation. Stockholders may not cumulate
                their votes for election of directors.
                 C. Call for Special Meetings. Special meetings of stockholders
                relating to changes in control of the association or amendments to its
                charter may be called only upon direction of the board of directors.
                * * * * *
                 (j) * * *
                 (2) Form of filing--(i) Application requirement. Except as provided
                in paragraphs (j)(2)(ii) or (j)(2)(iii) of this section, a Federal
                stock savings association must file the proposed bylaw amendment with,
                and obtain the prior approval of, the OCC.
                 (A) Expedited review. Except as provided in paragraph (j)(2)(i)(B)
                of this section, the bylaw amendment will be deemed approved as of the
                30th day after filing, unless the OCC notifies the filer that the
                application is denied or that the amendment contains procedures of the
                type described in paragraph (j)(2)(i)(B) of this section and is not
                eligible for expedited review, provided the association follows the
                requirements of its charter and bylaws in adopting the amendment.
                 (B) Amendments exempted from expedited review. Expedited review is
                not available for a bylaw amendment that would:
                 (1) Render more difficult or discourage a merger, tender offer, or
                proxy contest, the assumption of control by a holder of a large block
                of the association's stock, or the removal of incumbent management; or
                 (2) Be inconsistent with paragraphs (k) through (n) of this
                section, with applicable laws, rules, regulations or the association's
                charter or involve a significant issue of law or policy, including
                indemnification, conflicts of interest, and limitations on director or
                officer liability.
                 (ii) Notice Requirement. A Federal stock association may elect to
                follow the corporate governance procedures of: The laws of the State
                where the home office of the association is located; the laws of the
                State where the association's holding company, if any, is incorporated
                or chartered; Delaware General Corporation law; or The Model Business
                Corporation Act, provided that such procedures may be elected to the
                extent not inconsistent with applicable Federal statutes and
                regulations and safety and soundness, and such procedures are not of
                the type described in paragraph (j)(2)(i)(B) of this section. If this
                election is selected, a Federal stock association must designate in its
                bylaws the provision or provisions from the body or bodies of law
                selected for its corporate governance procedures, and must file a
                notice containing a copy of such bylaws, within 30 days after adoption.
                The notice must indicate, where not obvious, why the bylaw provisions
                meet the requirements stated in paragraph (j)(2)(i)(B) of this section.
                 (iii) No filing required. No filing is required for purposes of
                paragraph (j)(2) of this section if a bylaw amendment adopts the
                language of the OCC's model or optional bylaws without change.
                 (3) Effectiveness. A bylaw amendment is effective after approval by
                the OCC, if required, and adoption by the association, provided that
                the association follows the requirements of its charter and bylaws in
                adopting the amendment.
                * * * * *
                 (k) Shareholders of Federal stock savings associations--(1)
                Shareholder meetings. A meeting of the shareholders of the association
                for the election of directors and for the transaction of any other
                business of the association must be held annually within 150 days after
                the end of the association's fiscal year.
                [[Page 18757]]
                Unless otherwise provided in the association's charter, special
                meetings of the shareholders may be called by the board of directors or
                on the request of the holders of 10 percent or more of the shares
                entitled to vote at the meeting, or by such other persons as may be
                specified in the bylaws of the association. All annual and special
                meetings of shareholders may be held at any convenient place the board
                of directors may designate.
                 (2) Notice of shareholder meetings. Written notice stating the
                place, day, and hour of the meeting and the purpose or purposes for
                which the meeting is called must be delivered not fewer than 20 nor
                more than 50 days before the date of the meeting, either personally or
                by mail, by or at the direction of the chair of the board, the
                president, the secretary, or the directors, or other persons calling
                the meeting, to each shareholder of record entitled to vote at such
                meeting. If mailed, such notice will be deemed to be delivered when
                deposited in the mail, addressed to the shareholder at the address
                appearing on the stock transfer books or records of the association as
                of the record date prescribed in paragraph (i)(3) of this section, with
                postage thereon prepaid. When any shareholders' meeting, either annual
                or special, is adjourned for 30 days or more, notice of the adjourned
                meeting must be given as in the case of an original meeting.
                Notwithstanding anything in this section, however, a Federal stock
                association that is wholly owned is not subject to the shareholder
                notice requirement.
                 (3) Fixing of record date. For the purpose of determining
                shareholders entitled to notice of or to vote at any meeting of
                shareholders or any adjournment thereof, or shareholders entitled to
                receive payment of any dividend, or in order to make a determination of
                shareholders for any other proper purpose, the board of directors must
                fix in advance a date as the record date for any such determination of
                shareholders. Such date in any case may not more than 60 days and, in
                case of a meeting of shareholders, not less than 10 days prior to the
                date on which the particular action, requiring such determination of
                shareholders, is to be taken. When a determination of shareholders
                entitled to vote at any meeting of shareholders has been made as
                provided in this section, such determination will apply to any
                adjournment thereof.
                 (4) Voting lists. (i) At least 20 days before each meeting of the
                shareholders, the officer or agent having charge of the stock transfer
                books for the shares of the association must make a complete list of
                the stockholders of record entitled to vote at such meeting, or any
                adjournments thereof, arranged in alphabetical order, with the address
                and the number of shares held by each. This list of shareholders must
                be kept on file at the home office of the association and is subject to
                inspection by any shareholder of record or the stockholder's agent
                during the entire time of the meeting. The original stock transfer book
                will constitute prima facie evidence of the stockholders entitled to
                examine such list or transfer books or to vote at any meeting of
                stockholders. Notwithstanding anything in this section, however, a
                Federal stock association that is wholly owned is not subject to the
                voting list requirements.
                 (ii) In lieu of making the shareholders list available for
                inspection by any shareholders as provided in paragraph (j)(4)(i) of
                this section, the board of directors may perform such acts as required
                by paragraphs (a) and (b) of Rule 14a-7 of the General Rules and
                Regulations under the Securities and Exchange Act of 1934 (17 CFR
                240.14a-7) as may be duly requested in writing, with respect to any
                matter which may be properly considered at a meeting of shareholders,
                by any shareholder who is entitled to vote on such matter and who must
                defray the reasonable expenses to be incurred by the association in
                performance of the act or acts required.
                 (5) Shareholder quorum. A majority of the outstanding shares of the
                association entitled to vote, represented in person or by proxy,
                constitutes a quorum at a meeting of shareholders. The shareholders
                present at a duly organized meeting may continue to transact business
                until adjournment, notwithstanding the withdrawal of enough
                shareholders to leave less than a quorum. If a quorum is present, the
                affirmative vote of the majority of the shares represented at the
                meeting and entitled to vote on the subject matter will be the act of
                the stockholders, unless the vote of a greater number of stockholders
                voting together or voting by classes is required by law or the charter.
                Directors, however, are elected by a plurality of the votes cast at an
                election of directors.
                 (6) Shareholder voting--(i) Proxies. Unless otherwise provided in
                the association's charter, at all meetings of shareholders, a
                shareholder may vote in person or by proxy executed in writing by the
                shareholder or by a duly authorized attorney in fact. Proxies may be
                given telephonically or electronically as long as the holder uses a
                procedure for verifying the identity of the shareholder. Proxies
                solicited on behalf of the management must be voted as directed by the
                shareholder or, in the absence of such direction, as determined by a
                majority of the board of directors. No proxy may be valid more than
                eleven months from the date of its execution except for a proxy coupled
                with an interest.
                 (ii) Shares controlled by association. Neither treasury shares of
                its own stock held by the association nor shares held by another
                corporation, if a majority of the shares entitled to vote for the
                election of directors of such other corporation are held by the
                association, may be voted at any meeting or counted in determining the
                total number of outstanding shares at any given time for purposes of
                any meeting.
                 (7) Nominations and new business submitted by shareholders.
                Nominations for directors and new business submitted by shareholders
                must be voted upon at the annual meeting if such nominations or new
                business are submitted in writing and delivered to the secretary of the
                association at least five days prior to the date of the annual meeting.
                Ballots bearing the names of all the persons nominated must be provided
                for use at the annual meeting.
                * * * * *
                 (l) Board of directors--(1) General powers and duties. The business
                and affairs of the association must be under the direction of its board
                of directors. Directors need not be stockholders unless the bylaws so
                require.
                 (2) Number and term. The bylaws must set forth a specific number of
                directors, not a range. The number of directors may not be fewer than
                five nor more than fifteen, unless a higher or lower number has been
                authorized by the OTS prior to July 21, 2011 or the OCC. Directors must
                be elected for a term of one to three years and until their successors
                are elected and qualified. If a staggered board is chosen, the
                directors must be divided into two or three classes as nearly equal in
                number as possible and one class must be elected by ballot annually.
                 (3) Regular meetings. The board of directors determines the place,
                frequency, time and procedure for notice of regular meetings.
                 (4) Quorum. A majority of the number of directors constitutes a
                quorum for the transaction of business at any meeting of the board of
                directors. The act of the majority of the directors present at a
                meeting at which a quorum is present will be the act of the board of
                directors, unless a greater number is prescribed by regulation of the
                OCC.
                 (5) Vacancies. Any vacancy occurring in the board of directors may
                be filled
                [[Page 18758]]
                by the affirmative vote of a majority of the remaining directors
                although less than a quorum of the board of directors. A director
                elected to fill a vacancy may serve only until the next election of
                directors by the shareholders. Any directorship to be filled by reason
                of an increase in the number of directors may be filled by election by
                the board of directors for a term of office continuing only until the
                next election of directors by the shareholders.
                 (6) Removal or resignation of directors. (i) At a meeting of
                shareholders called expressly for that purpose, any director may be
                removed only for cause, as termination for cause is defined in Sec.
                5.21(j)(2)(x)(B), by a vote of the holders of a majority of the shares
                then entitled to vote at an election of directors. Associations may
                provide for procedures regarding resignations in the bylaws.
                 (ii) If less than the entire board is to be removed, no one of the
                directors may be removed if the votes cast against the removal would be
                sufficient to elect a director if then cumulatively voted at an
                election of the class of directors of which such director is a part.
                 (iii) Whenever the holders of the shares of any class are entitled
                to elect one or more directors by the provisions of the charter or
                supplemental sections thereto, the provisions of this section apply, in
                respect to the removal of a director or directors so elected, to the
                vote of the holders of the outstanding shares of that class and not to
                the vote of the outstanding shares as a whole.
                 (7) Executive and other committees. The board of directors, by
                resolution adopted by a majority of the full board, may designate from
                among its members an executive committee and one or more other
                committees. No committee may have the authority of the board of
                directors with reference to: The declaration of dividends; the
                amendment of the charter or bylaws of the association; recommending to
                the stockholders a plan of merger, consolidation, or conversion; the
                sale, lease, or other disposition of all, or substantially all, of the
                property and assets of the association otherwise than in the usual and
                regular course of its business; a voluntary dissolution of the
                association; a revocation of any of the foregoing; or the approval of a
                transaction in which any member of the executive committee, directly or
                indirectly, has any material beneficial interest. The designation of
                any committee and the delegation of authority thereto does not operate
                to relieve the board of directors, or any director, of any
                responsibility imposed by law or regulation.
                 (8) Notice of special meetings. Written notice of at least 24 hours
                regarding any special meeting of the board of directors or of any
                committee designated thereby must be given to each director in
                accordance with the bylaws, although such notice may be waived by the
                director. The attendance of a director at a meeting constitutes a
                waiver of notice of such meeting, except where a director attends a
                meeting for the express purpose of objecting to the transaction of any
                business because the meeting is not lawfully called or convened.
                Neither the business to be transacted at, nor the purpose of, any
                meeting need be specified in the notice or waiver of notice of such
                meeting. The bylaws may provide for electronic participation at a
                meeting.
                 (9) Action without a meeting. Any action required or permitted to
                be taken by the board of directors at a meeting may be taken without a
                meeting if a consent in writing, setting forth the actions so taken, is
                signed by all of the directors.
                 (10) Presumption of assent. A director of the association who is
                present at a meeting of the board of directors at which action on any
                association matter is taken is presumed to have assented to the action
                taken unless their dissent or abstention is entered in the minutes of
                the meeting or unless a written dissent to such action is filed with
                the person acting as the secretary of the meeting before the
                adjournment thereof or is forwarded by registered mail to the secretary
                of the association within five days after the date on which a copy of
                the minutes of the meeting is received. Such right to dissent does not
                apply to a director who voted in favor of such action.
                * * * * *
                 (n) Certificates for shares and their transfer--(1) Certificates
                for shares. Certificates representing shares of capital stock of the
                association must be in such form as determined by the board of
                directors and approved by the OCC. The name and address of the person
                to whom the shares are issued, with the number of shares and date of
                issue, must be entered on the stock transfer books of the association.
                All certificates surrendered to the association for transfer must be
                cancelled and no new certificate may be issued until the former
                certificate for a like number of shares has been surrendered and
                cancelled, except that in the case of a lost or destroyed certificate a
                new certificate may be issued upon such terms and indemnity to the
                association as the board of directors may prescribe.
                 (2) Transfer of shares. Transfer of shares of capital stock of the
                association may be made only on its stock transfer books. Authority for
                such transfer may be given only by the holder of record or by a legal
                representative, who must furnish proper evidence of such authority, or
                by an attorney authorized by a duly executed power of attorney and
                filed with the association. The transfer may be made only on surrender
                for cancellation of the certificate for the shares. The person in whose
                name shares of capital stock stand on the books of the association is
                deemed by the association to be the owner for all purposes.
                0
                16. Amend Sec. 5.23 by:
                0
                a. In paragraph (b)(2), removing the phrase ``an industrial bank or a
                credit union, chartered in'' and adding in its place the phrase ``an
                industrial bank, or a credit union chartered in'';
                0
                b. In paragraphs (c), (d)(2)(ii), (e), and (f)(1), removing the word
                ``shall'' each time that it appears and adding in its place the word
                ``must'';
                0
                c. In paragraphs (c), (d)(1), (d)(2)(i), (d)(2)(v), and (d)(4),
                removing the word ``applicant'' each time that it appears and adding in
                its place the word ``filer'';
                0
                d. In paragraph (c), removing the phrase ``Federal Deposit Insurance
                Corporation (FDIC)'' and adding in its place the word ``FDIC'';
                0
                e. Removing paragraph (d)(2)(ii)(A), redesignating paragraphs
                (d)(2)(ii)(B) through (J) as paragraphs (d)(2)(ii)(A) through (I),
                respectively and adding new paragraphs (d)(2)(ii)(K) and (d)(2)(ii)(L);
                0
                f. In newly redesignated paragraphs (d)(2)(ii)(D) and (d)(2)(ii)(I),
                removing the word ``state'' and adding in its place the word ``State'';
                0
                g. In newly redesignated paragraph (d)(2)(ii)(G), removing the comma
                after the phrase ``engages in'';
                0
                h. In newly redesignated paragraph (d)(2)(ii)(I), removing the word
                ``and'' after the phrase ``after conversion;'';
                0
                i. In newly redesignated paragraph (d)(2)(ii)(J), removing the period
                after the phrase ``from the OCC'' and adding in its place a semicolon;
                0
                j. In paragraph (d)(2)(iii), removing the word ``HOLA'' and adding in
                its place ``Home Owners' Loan Act (12 U.S.C. 1464(c))'';
                0
                k. Redesignating paragraphs (d)(2)(iv) through (v) as paragraphs
                (d)(2)(v) through (vi) and adding a new paragraph (d)(2)(iv);
                0
                l. Revising paragraph (d)(4); and
                0
                m. In paragraph (e), removing the phrase ``an applicant'' and adding in
                its place the phrase ``a filer'';
                0
                n. In paragraph (f)(1), removing the word ``state'' and adding in its
                place the word ``State''; and
                [[Page 18759]]
                0
                o. In paragraph (g) removing the phrase ``shall continue'' and adding
                in its place the word ``continues'' and removing the phrase ``shall
                be'' and adding in its place the word ``is''.
                 The additions and revision read as follows.
                Sec. 5.23 Conversion to become a Federal savings association.
                * * * * *
                 (d) * * *
                 (2) * * *
                 (ii) * * *
                 (K) Include a list of directors and senior executive officers, as
                defined in Sec. 5.51, of the converting institution; and
                 (L) Include a list of individuals, directors, and shareholders who
                directly or indirectly, or acting in concert with one or more persons
                or companies, or together with members of their immediate family, do or
                will own, control, or hold 10 percent or more of the institution's
                voting stock.
                * * * * *
                 (iv) The OCC may require directors and senior executive officers of
                the converting institution to submit the Interagency Biographical and
                Financial Report, available at www.occ.gov, and legible fingerprints.
                * * * * *
                 (4) Expedited review. An application by an eligible bank to convert
                to a Federal savings association charter is deemed approved by the OCC
                as of the 45th day after the filing is received by the OCC, unless the
                OCC notifies the filer prior to that date that the filing has been
                removed from expedited review, or the expedited review process is
                extended, under Sec. 5.13(a)(2).
                * * * * *
                0
                17. Amend Sec. 5.24 by:
                0
                 a. In paragraphs (b), (c)(1), (c)(2), (d), (e)(2) introductory text,
                and (e)(3), removing the word ``state'' each time that it appears and
                adding in its place the word ``State'';
                0
                b. In paragraphs (b), (e)(2) introductory text, and (f), removing the
                word ``shall'' each time that it appears and adding in its place the
                word ``must'';
                0
                c. In paragraph (c)(2), removing the word ``state'' and adding in its
                place the word ``State'';
                0
                 d. In paragraphs (d), (e)(1), and (h), removing the word ``applicant''
                each time that it appears and adding in its place the word ``filer'';
                0
                e. Removing paragraph (e)(2)(i) and redesignating paragraphs (e)(2)(ii)
                through (x) as paragraphs (e)(2)(i) through (ix), respectively, and
                adding paragraphs (e)(2)(x) through (xi);
                0
                f. In newly redesignated paragraphs (e)(2)(iv) and (e)(2)(ix), removing
                the word ``state'' each time that it appears and adding in its place
                the word ``State'';
                0
                g. At the end of newly redesignated paragraph (e)(2)(viii), removing
                the word ``and'';
                0
                h. At the end of newly redesignated paragraph (e)(2)(ix), removing the
                period and adding in its place a semicolon;
                0
                i. Redesignating paragraphs (e)(4) through (5) as paragraphs (e)(5)
                through (6), respectively, and adding a new paragraph (e)(4);
                0
                 j. In newly redesignated paragraph (e)(6), removing the word
                ``applicant'' and adding the word ``filer'' in its place;
                0
                 k. Revising paragraph (h); and
                0
                l. In paragraph (i):
                0
                i. In the first sentence, removing the phrase ``shall continue'' and
                adding in its place the word ``continues''; and
                0
                ii. In the second sentence, removing the phrase ``shall be'' and adding
                in its place the word ``is''.
                 The additions and revisions read as follows.
                Sec. 5.24 Conversion to become a national bank.
                * * * * *
                 (e) * * *
                 (2) * * *
                 (x) Include a list of directors and senior executive officers, as
                defined in Sec. 5.51, of the converting institution; and
                 (xi) Include a list of individuals, directors, and shareholders who
                directly or indirectly, or acting in concert with one or more persons
                or companies, or together with members of their immediate family, do or
                will own, control, or hold 10 percent or more of the institution's
                voting stock.
                * * * * *
                 (4) The OCC may require directors and senior executive officers of
                the converting institution to submit the Interagency Biographical and
                Financial Report, available at www.occ.gov, and legible fingerprints.
                * * * * *
                 (h) Expedited review. An application by an eligible savings
                association to convert to a national bank charter is deemed approved by
                the OCC as of the 45th day after the filing is received by the OCC,
                unless the OCC notifies the filer prior to that date that the filing
                has been removed from expedited review, or the expedited review process
                is extended, under Sec. 5.13(a)(2).
                * * * * *
                Sec. 5.25 [Amended]
                0
                18. Amend Sec. 5.25 by:
                0
                a. In the section heading and in paragraphs (b), (c), (d)(1), (d)(2),
                (d)(3)(i), and (d)(4), removing the word ``state'' each time that it
                appears and adding in its place the word ``State'';
                0
                b. In paragraphs (b), (d)(3)(i), and (d)(3)(ii), removing the word
                ``shall'' each time it appears and adding in its place the word
                ``must''; and
                0
                c. In paragraphs (d)(1) and (d)(3)(i), removing the phrase ``defined in
                214(a)'' each time in appears and adding in its place the phrase
                ``defined in 12 U.S.C. 214(a)''.
                0
                19. Amend Sec. 5.26 by:
                0
                a. In paragraph (a), removing the phrase ``12 U.S.C. 92a and'' and
                adding in its place the phrase ``12 U.S.C. 92a,'';
                0
                b. In paragraphs (b)(2) and (b)(4), removing the phrase ``Office of
                Thrift Supervision'' each time in appears and adding in its place the
                word ``OTS'';
                0
                c. In paragraphs (b)(3), (b)(4), (e)(1)(ii), (e)(1)(iii), (e)(2)(i)(B),
                (e)(2)(i)(E), and (e)(2)(iii)(B), removing the word ``state'' each time
                it appears and adding in its place the word ``State''; and
                0
                d. In paragraph (e)(2)(i) introductory text, removing the word
                ``shall'' and adding in its place the word ``must'';
                0
                e. Revising paragraph (e)(2)(i)(C);
                0
                f. In paragraph (e)(2)(ii), removing the word ``applicant'' and adding
                in its place the word ``filer''; and
                0
                g. Revising paragraphs (e)(3) and (6).
                 The revisions read as follows.
                Sec. 5.26 Fiduciary powers of national banks and Federal savings
                associations.
                * * * * *
                 (e) * * *
                 (2) * * *
                 (i) * * *
                 (C) Sufficient biographical information on proposed senior trust
                management personnel, as identified by the OCC, to enable the OCC to
                assess their qualifications, including, if requested by the OCC,
                legible fingerprints and the Interagency Biographical and Financial
                Report, available at www.occ.gov;
                * * * * *
                 (3) Expedited review. An application by an eligible bank or
                eligible savings association to exercise fiduciary powers is deemed
                approved by the OCC as of the 30th day after the application is
                received by the OCC, unless the OCC notifies the bank or savings
                association prior to that date that the filing has been removed from
                expedited review, or the expedited review process is extended, under
                Sec. 5.13(a)(2).
                * * * * *
                 (6) Notice of fiduciary activities in additional States. (i) Except
                as provided in paragraphs (e)(6)(iii)-(iv) of this section, a national
                bank or Federal savings association with existing OCC approval to
                exercise fiduciary powers must provide written notice to the OCC
                [[Page 18760]]
                no later than 10 days after it begins to engage in any of the
                activities specified in Sec. 9.7(d) of this chapter in a State in
                addition to the State or States described in the application for
                fiduciary powers that the OCC has approved.
                 (ii) A notice submitted pursuant to paragraph (e)(6)(i) of this
                section must identify the new State or States involved, identify the
                fiduciary activities to be conducted, and describe the extent to which
                the activities differ materially from the fiduciary activities the
                national bank or Federal savings association previously conducted.
                 (iii) No notice under paragraph (e)(6)(i) of this section is
                required if the national bank or Federal savings association provides
                the information required by paragraph (e)(6)(ii) of this section
                through other means, such as a merger application.
                 (iv) No notice is required if the national bank or Federal savings
                association is conducting only activities ancillary to its fiduciary
                business through a trust representative office or otherwise.
                * * * * *
                0
                20. Amend Sec. 5.30 by:
                0
                a. Removing the word ``shall'' each time it appears and adding in its
                place the word ``must'' in paragraphs (b), (f)(1), (f)(4), (g), (h)(1),
                and (j);
                0
                b. Revising paragraphs (d)(1)(i) and (iii)
                0
                c. In paragraph (d)(2), removing the word ``state'' and adding in its
                place the word ``State'';
                0
                d. In paragraphs (d)(2), (d)(3), (g), and (h)(4), removing the word
                ``state'' each time it appears and adding in its place the word
                ``State'';
                0
                e. In paragraph (f)(1), removing the phrase ``paragraph (f)(2)'' and
                adding in its place the phrase ``paragraphs (f)(2) or (f)(3)''; and
                0
                f. In paragraph (f)(6), removing the phrase ``is not eligible for
                expedited review, or the expedited review process is extended, under
                Sec. 5.13(a)(2)'' and adding in its place the phrase ``has been
                removed from expedited review, or the expedited review process is
                extended, under Sec. 5.13(a)(2)''.
                 The revisions read as follows.
                Sec. 5.30 Establishment, acquisition, and relocation of a branch of a
                national bank.
                * * * * *
                 (d) * * *
                 (1) * * *
                 (i) A branch established by a national bank includes a seasonal
                agency described in 12 U.S.C. 36(c), a mobile facility, a temporary
                facility, an intermittent facility, or a drop box.
                * * * * *
                 (iii) A branch does not include a remote service unit (RSU) as
                described in 12 CFR 7.4003. This encompasses RSUs that are automated
                teller machines (ATMs), including interactive ATMs. A branch also does
                not include a loan production office, a deposit production office, a
                trust office, an administrative office, a data processing office, or
                any other office that does not engage in at least one of the activities
                in paragraph (d)(1) of this section.
                * * * * *
                0
                21. Amend Sec. 5.31 by:
                0
                a. In paragraph (a) removing the period after ``1464'' and adding in
                its place a comma; and adding a comma after ``2907'';
                0
                b. In paragraphs (b), (f)(1)(i), (f)(3), (i), (k)(2)(ii), and (j)(2),
                removing the word ``shall'' and adding in its place the word ``must''
                each time it appears;
                0
                c. In paragraphs (c)(3) and (j)(1), removing the word ``HOLA'' and
                adding in its place the phrase ``Home Owners' Loan Act'';
                0
                d. In paragraph (d)(1), removing the word ``office'';
                0
                e. In paragraph (d)(2), removing the word ``state'' and adding in its
                place the word ``State'';
                0
                f. In paragraphs (d)(2), (g)(2), and (j)(2), removing the word
                ``state'' and adding in its place the word ``State'' each time in
                appears;
                0
                g. In paragraph (f)(1)(iii), removing the word ``Federal'' and removing
                the phrase ``is not eligible for expedited review, or the expedited
                review process is extended, under Sec. 5.13(a)(2)'' and adding in its
                place the phrase ``has been removed from expedited review, or the
                expedited review process is extended, under Sec. 5.13(a)(2)'';
                0
                h. In paragraph (f)(2)(ii), removing the word ``Sec. 5.3(l)'' and
                adding its place the word ``Sec. 5.3'';
                0
                i. In paragraph (f)(2)(iii) introductory text, removing the word
                ``Sec. 5.3(g)'' and adding its place ``Sec. 5.3'';
                0
                j. In paragraph (j) introductory text, removing the word ``HOLA'' and
                adding in its place ``Home Owners' Loan Act''; and
                0
                k. Adding paragraph (j)(3).
                 The addition reads as follows.
                Sec. 5.31 Establishment, acquisition, and relocation of a branch and
                establishment of an agency office of a Federal savings association.
                * * * * *
                 (j) * * *
                 (3) For purposes of 12 U.S.C. 1464(m)(1), a branch in the District
                of Columbia includes any location at which accounts are opened,
                payments are received, or withdrawals are made. This includes an
                Automated Teller Machine that performs one or more of these functions.
                * * * * *
                Sec. 5.32 [Amended]
                0
                22. Amend Sec. 5.32 by:
                0
                a. In paragraphs (c), (f), (h)(1), and (h)(2), removing the word
                ``shall'' and adding in its place the word ``must'' each time it
                appears;
                0
                b. In paragraph (d)(1), removing the phrase ``shall be'' and adding in
                its place the word ``is'';
                0
                c. In paragraph (d)(2)(i), removing the word ``shall'' and adding in
                its place the word ``will'';
                0
                d. In paragraph (e), removing the phrase ``his or her'' and adding in
                its place the word ``their'';
                0
                e. In paragraph (f), removing the word ``Applicant'' and adding in its
                place the word ``Filers''; and
                0
                f. In paragraph (h)(1), removing the phrase ``An applicant'' and adding
                in its place the phrase ``A filer''; and
                0
                g. In paragraph (h)(2), removing the word ``applicant'' and adding in
                its place the word ``filer''.
                0
                23. Revise Sec. 5.33 to read as follows:
                 Sec. 5.33 Business combinations involving a national bank or Federal
                savings association.
                 (a) Authority. 12 U.S.C. 24(Seventh), 93a, 181, 214a, 214b, 215,
                215a, 215a-1, 215a-3, 215b, 215c, 1462a, 1463, 1464, 1467a, 1828(c),
                1831u, 2903, and 5412(b)(2)(B).
                 (b) Scope. This section sets forth the provisions governing
                business combinations and the standards for:
                 (1) OCC review and approval of an application by a national bank or
                a Federal savings association for a business combination resulting in a
                national bank or Federal savings association; and
                 (2) Requirements of notices and other procedures for national banks
                and Federal savings associations involved in other combinations in
                which a national bank or Federal savings association is not the
                resulting institution.
                 (c) Licensing requirements. As prescribed by this section, a
                national bank or Federal savings association must submit an application
                and obtain prior OCC approval for a business combination when the
                resulting institution is a national bank or Federal savings
                association. As prescribed by this section, a national bank or Federal
                savings association must give notice to the OCC prior to engaging in
                any other combination where the resulting institution will not be a
                national bank or Federal savings association.\26\ A
                [[Page 18761]]
                national bank must submit an application and obtain prior OCC approval
                for any merger between the national bank and one or more of its nonbank
                affiliates.
                ---------------------------------------------------------------------------
                 \26\ Other combinations, as defined in paragraph (d)(10) of this
                section, do not require an application under this section. However,
                some may require an application under 12 CFR 5.53.
                ---------------------------------------------------------------------------
                 (d) Definitions. For purposes of this section:
                 (1) Bank means any national bank or any State bank.
                 (2) Business combination means:
                 (i) Any merger or consolidation between a national bank or a
                Federal savings association and one or more depository institutions or
                State trust companies, in which the resulting institution is a national
                bank or Federal savings association;
                 (ii) In the case of a Federal savings association, any merger or
                consolidation with a credit union in which the resulting institution is
                a Federal savings association;
                 (iii) In the case of a national bank, any merger between a national
                bank and one or more of its nonbank affiliates;
                 (iv) The acquisition by a national bank or a Federal savings
                association of all, or substantially all, of the assets of another
                depository institution; or
                 (v) The assumption by a national bank or a Federal savings
                association of any deposit liabilities of another insured depository
                institution or any deposit accounts or other liabilities of a credit
                union or any other institution that will become deposits at the
                national bank or Federal savings association.
                 (3) Business reorganization means either:
                 (i) A business combination between eligible banks and eligible
                savings associations, or between an eligible bank or an eligible
                savings association and an eligible depository institution, that are
                controlled by the same holding company or that will be controlled by
                the same holding company prior to the combination; or
                 (ii) A business combination between an eligible bank or an eligible
                savings association and an interim national bank or interim Federal
                savings association chartered in a transaction in which a person or
                group of persons exchanges its shares of the eligible bank or eligible
                savings association for shares of a newly formed holding company and
                receives after the transaction substantially the same proportional
                share interest in the holding company as it held in the eligible bank
                or eligible savings association (except for changes in interests
                resulting from the exercise of dissenters' rights), and the
                reorganization involves no other transactions involving the bank or
                savings association.
                 (4) Company means a corporation, limited liability company,
                partnership, business trust, association, or similar organization.
                 (5) For business combinations under paragraphs (g)(4) and (5) of
                this section, a company or shareholder is deemed to control another
                company if:
                 (i) Such company or shareholder, directly or indirectly, or acting
                through one or more other persons owns, controls, or has power to vote
                25 percent or more of any class of voting securities of the other
                company; or
                 (ii) Such company or shareholder controls in any manner the
                election of a majority of the directors or trustees of the other
                company. No company is deemed to own or control another company by
                virtue of its ownership or control of shares in a fiduciary capacity.
                 (6) Credit union means a financial institution subject to
                examination by the National Credit Union Administration Board.
                 (7) Home State means, with respect to a national bank, the State in
                which the main office of the national bank is located and, with respect
                to a State bank, the State by which the bank is chartered.
                 (8) Interim national bank or interim Federal savings association
                means a national bank or Federal savings association that does not
                operate independently but exists solely as a vehicle to accomplish a
                business combination.
                 (9) Nonbank affiliate of a national bank means any company (other
                than a bank or Federal savings association) that controls, is
                controlled by, or is under common control with the national bank.
                 (10) Other combination means:
                 (i) Any merger or consolidation between a national bank or a
                Federal savings association and one or more depository institutions or
                State trust companies, in which the resulting institution is not a
                national bank or Federal savings association;
                 (ii) In the case of a Federal stock savings association, any merger
                or consolidation with a credit union in which the resulting institution
                is a credit union;
                 (iii) The transfer by a national bank or a Federal savings
                association of any deposit liabilities to another insured depository
                institution, a credit union or any other institution; or
                 (iv) The acquisition by a national bank or a Federal savings
                association of all, or substantially all, of the assets, or the
                assumption of all or substantially all of the liabilities, of any
                company other than a depository institution.
                 (11) Savings association and State savings association have the
                meaning set forth in section 3(b) of the Federal Deposit Insurance Act,
                12 U.S.C. 1813(b).
                 (12) State trust company means a trust company organized under
                State law that is not engaged in the business of receiving deposits,
                other than trust funds.
                 (e) Policy--(1) Factors--(i) In general. When the OCC evaluates any
                application for a business combination, the OCC considers the following
                factors:
                 (A) The capital level of any resulting national bank or Federal
                savings association
                 (B) The conformity of the transaction to applicable law,
                regulation, and supervisory policies;
                 (C) The purpose of the transaction;
                 (D) The impact of the transaction on safety and soundness of the
                national bank or Federal savings association; and
                 (E) The effect of the transaction on the national bank's or Federal
                savings association's shareholders (or members in the case of a mutual
                savings association), depositors, other creditors, and customers.
                 (ii) Bank Merger Act. When the OCC evaluates an application for a
                business combination under the Bank Merger Act, the OCC also considers
                the following factors:
                 (A) Competition. (1) The OCC considers the effect of a proposed
                business combination on competition. The filer must provide a
                competitive analysis of the transaction, including a definition of the
                relevant geographic market or markets. A filer may refer to the
                Comptroller's Licensing Manual for procedures to expedite its
                competitive analysis.
                 (2) The OCC will deny an application for a business combination if
                the combination would result in a monopoly or would be in furtherance
                of any combination or conspiracy to monopolize or attempt to monopolize
                the business of banking in any part of the United States. The OCC also
                will deny any proposed business combination whose effect in any section
                of the United States may be substantially to lessen competition, or
                tend to create a monopoly, or which in any other manner would be in
                restraint of trade, unless the probable effects of the transaction in
                meeting the convenience and needs of the community clearly outweigh the
                anticompetitive effects of the transaction. For purposes of weighing
                against anticompetitive effects, a business combination may have
                favorable effects in meeting the convenience and needs of the community
                if the depository institution being acquired has limited long-term
                [[Page 18762]]
                prospects, or if the resulting national bank or Federal savings
                association will provide significantly improved, additional, or less
                costly services to the community.
                 (B) Financial and managerial resources and future prospects. The
                OCC considers the financial and managerial resources and future
                prospects of the existing or proposed institutions.
                 (C) Convenience and needs of community. The OCC considers the
                probable effects of the business combination on the convenience and
                needs of the community served. The filer must describe these effects in
                its application, including any planned office closings or reductions in
                services following the business combination and the likely impact on
                the community. The OCC also considers additional relevant factors,
                including the resulting national bank's or Federal savings
                association's ability and plans to provide expanded or less costly
                services to the community.
                 (D) Money laundering. The OCC considers the effectiveness of any
                insured depository institution involved in the business combination in
                combating money laundering activities, including in overseas branches.
                 (E) Financial stability. The OCC considers the risk to the
                stability of the United States banking and financial system.
                 (F) Deposit concentration limit. The OCC will not approve a
                transaction that would violate the deposit concentration limit in 12
                U.S.C. 1828(c)(13) for interstate merger transactions, as defined in 12
                U.S.C. 1828(c)(13)(C)(i).
                 (iii) Community Reinvestment Act--(A) In General. The OCC takes
                into account the filer's Community Reinvestment Act (CRA) record of
                performance in considering an application for a business combination.
                The OCC's conclusion of whether the CRA performance is or is not
                consistent with approval of an application is considered in conjunction
                with the other factors of this section.
                 (B) Interstate mergers under 12 U.S.C. 1831u. The OCC considers the
                CRA record of performance of the filer and its resulting bank
                affiliates and the filer's record of compliance with applicable State
                community reinvestment laws when required by 12 U.S.C. 1831u(b)(3).
                 (C) CRA Sunshine. A filer must disclose whether it has entered into
                and disclosed a covered agreement, as defined in 12 CFR 35.2, in
                accordance with 12 CFR 35.6 and 35.
                 (iv) Interstate mergers under 12 U.S.C. 1831u. The OCC considers
                the standards and requirements contained in 12 U.S.C. 1831u for
                interstate merger transactions between insured banks, when applicable.
                 (2) Acquisition and retention of branches. A filer must disclose
                the location of any branch it will acquire and retain in a business
                combination, including approved but unopened branches. The OCC
                considers the acquisition and retention of a branch under the standards
                set out in Sec. 5.30 or Sec. 5.31, as applicable, but it does not
                require a separate application.
                 (3) Subsidiaries. (i) A filer must identify any subsidiary,
                financial subsidiary investment, bank service company investment,
                service corporation investment, or other equity investment to be
                acquired in a business combination and state the activities of each
                subsidiary or other company in which the filer would be acquiring an
                investment. The OCC does not require a separate application or notice
                under Sec. Sec. 5.34, 5.35, 5.36, 5.38, 5.39, 5.58, and 5.59.
                 (ii) An national bank filer proposing to acquire, through a
                business combination, a subsidiary, financial subsidiary investment,
                bank service company investment, service corporation investment, or
                other equity investment of any entity other than a national bank must
                provide the same information and analysis of the subsidiary's
                activities, or of the investment, that would be required if the filer
                were establishing the subsidiary, or making such investment, pursuant
                to Sec. Sec. 5.34, 5.35, 5.36, or 5.39.
                 (iii) A Federal savings association filer proposing to acquire,
                through a business combination, a subsidiary, bank service company
                investment, service corporation investment, or other equity investment
                of any entity other than a Federal savings association must provide the
                same information and analysis of the subsidiary's activities, or of the
                investment, that would be required if the filer were establishing the
                subsidiary, or making such investment, pursuant to Sec. Sec. 5.35,
                5.38, 5.58, or 5.59.
                 (4) Interim national bank or interim Federal savings association--
                (i) Application. A filer for a business combination that plans to use
                an interim national bank or interim Federal savings association to
                accomplish the transaction must file an application to organize an
                interim national bank or interim Federal savings association as part of
                the application for the related business combination.
                 (ii) Conditional approval. The OCC grants conditional preliminary
                approval to form an interim national bank or interim Federal savings
                association when it acknowledges receipt of the application for the
                related business combination.
                 (iii) Corporate status. An interim national bank or interim Federal
                savings association becomes a legal entity and may enter into legally
                valid agreements when it has filed, and the OCC has accepted, the
                interim national bank's duly executed articles of association and
                organization certificate or the Federal savings association's charter
                and bylaws. OCC acceptance occurs:
                 (A) On the date the OCC advises the interim national bank that its
                articles of association and organization certificate are acceptable or
                advises the interim Federal savings association that its charter and
                bylaws are acceptable; or
                 (B) On the date the interim national bank files articles of
                association and an organization certificate that conform to the form
                for those documents provided by the OCC in the Comptroller's Licensing
                Manual or the date the interim Federal savings association files a
                charter and bylaws that conform to the requirements set out in this
                part 5.
                 (iv) Other corporate procedures. A filer should consult the
                Comptroller's Licensing Manual to determine what other information is
                necessary to complete the chartering of the interim national bank as a
                national bank or the interim Federal savings association as a Federal
                savings association.
                 (5) Nonconforming assets. (i) A filer must identify any
                nonconforming activities and assets, including nonconforming
                subsidiaries, of other institutions involved in the business
                combination that will not be disposed of or discontinued prior to
                consummation of the transaction. The OCC generally requires a national
                bank or Federal savings association to divest or conform nonconforming
                assets, or discontinue nonconforming activities, within a reasonable
                time following the business combination.
                 (ii) Any resulting Federal savings association must conform to the
                requirements of sections 5(c) and 10(m) of the Home Owners' Loan Act
                (12 U.S.C. 1464(c) and 1467a(m)) within the time period prescribed by
                the OCC.
                 (6) Fiduciary powers. (i) A filer must state whether the resulting
                national bank or Federal savings association intends to exercise
                fiduciary powers pursuant to Sec. 5.26(b).
                 (ii) If a filer intends to exercise fiduciary powers after the
                combination and requires OCC approval for such powers, the filer must
                include the information required under Sec. 5.26(e)(2).
                 (7) Expiration of approval. Approval of a business combination, and
                conditional approval to form an interim
                [[Page 18763]]
                national bank or interim Federal savings association, if applicable,
                expires if the business combination is not consummated within six
                months after the date of OCC approval, unless the OCC grants an
                extension of time.
                 (8) Adequacy of disclosure. (i) A filer must inform shareholders of
                all material aspects of a business combination and must comply with any
                applicable requirements of the Federal securities laws and securities
                regulations of the OCC. Accordingly, a filer must ensure that all proxy
                and information statements prepared in connection with a business
                combination do not contain any untrue or misleading statement of a
                material fact, or omit to state a material fact necessary in order to
                make the statements made, in the light of the circumstances under which
                they were made, not misleading.
                 (ii) A national bank or Federal savings association filer with one
                or more classes of securities subject to the registration provisions of
                section 12(b) or (g) of the Securities Exchange Act of 1934, 15 U.S.C.
                78 l(b) or 78 l(g), must file preliminary proxy material or information
                statements for review with the Director, Bank Advisory, OCC,
                Washington, DC 20219. Any other filer must submit the proxy materials
                or information statements it uses in connection with the combination to
                the appropriate OCC licensing office no later than when the materials
                are sent to the shareholders.
                 (f) Exceptions to rules of general applicability--(1) National bank
                or Federal savings association filer--(i) In general. Sections 5.8,
                5.10, and 5.11 do not apply to this section. However, if the OCC
                concludes that an application presents significant or novel policy,
                supervisory, or legal issues, the OCC may determine that some or all
                provisions in Sec. Sec. 5.8, 5.10 and 5.11 apply.
                 (ii) Statutory notice. If an application is subject to the Bank
                Merger Act or to another statute that requires notice to the public, a
                national bank or Federal savings association filer must follow the
                public notice requirements contained in 12 U.S.C. 1828(c)(3) or the
                other statute and Sec. Sec. 5.8(b) through 5.8(e), 5.10, and 5.11.
                 (2) Interim national bank or interim Federal savings association.
                Sections 5.8, 5.10, and 5.11 do not apply to an application to organize
                an interim national bank or interim Federal savings association.
                However, if the OCC concludes that an application presents significant
                or novel policy, supervisory, or legal issues, the OCC may determine
                that any or all parts of Sec. Sec. 5.8, 5.10, and 5.11 apply. The OCC
                treats an application to organize an interim national bank or interim
                Federal savings association as part of the related application to
                engage in a business combination and does not require a separate public
                notice and public comment process.
                 (3) State bank, or State savings association, State trust company,
                or credit union as resulting institution. Sections 5.7 through 5.13 do
                not apply to transactions covered by paragraphs (g)(6) or (g)(7) of
                this section.
                 (g) Provisions governing consolidations and mergers with different
                types of entities--(1) Consolidations and mergers under 12 U.S.C. 215
                or 215a of a national bank with other national banks and State banks as
                defined in 12 U.S.C. 215b(1) resulting in a national bank. A national
                bank entering into a consolidation or merger authorized pursuant to 12
                U.S.C. 215 or 215a, respectively, is subject to the approval procedures
                and requirements with respect to treatment of dissenting shareholders
                set forth in those provisions.
                 (2) Interstate consolidations and mergers under 12 U.S.C. 215a-1
                resulting in a national bank--(i) With the approval of the OCC, an
                insured national bank may consolidate or merge with an insured out-of-
                State bank, as defined in 12 U.S.C. 1831u(g)(8), with the national bank
                as the resulting institution.
                 (ii) Unless it has elected to follow the procedures set out in
                paragraph (h) of this section, the resulting national bank entering
                into the consolidation or merger must comply with the procedures of 12
                U.S.C. 215 or 215a, as applicable.
                 (iii) Unless it has elected to follow the procedures applicable to
                State bank under paragraph (h)(1)(i), any national bank that will not
                be the resulting bank in a consolidation or merger pursuant to 12
                U.S.C. 215a-1 must comply with the procedures of 12 U.S.C. 215 or 215a,
                as applicable.
                 (iv) Corporate existence. The corporate existence of each bank
                participating in a consolidation or merger continues in the resulting
                national bank, and all the rights, franchises, property, appointments,
                liabilities, and other interests of the participating bank are
                transferred to the resulting national bank, as set forth in 12 U.S.C.
                215(b), (e) and (f) or 12 U.S.C. 215a(a), (e), and (f), as applicable.
                 (3) Consolidations and mergers of a national bank with Federal
                savings associations under 12 U.S.C. 215c resulting in a national bank.
                (i) With the approval of the OCC, any national bank and any Federal
                savings association may consolidate or merge with a national bank as
                the resulting institution by complying with the following procedures:
                 (A) Unless it has elected to follow the procedures set out in
                paragraph (h) of this section, a national bank entering into the
                consolidation or merger must follow the procedures of 12 U.S.C. 215 or
                215a, respectively, as if the Federal savings association were a
                national bank.
                 (B)(1) A Federal savings association entering into the
                consolidation or merger must comply with the requirements of paragraph
                (n) of this section and follow the procedures set out in paragraph (o)
                of this section.
                 (2) For purposes of this paragraph (g)(3), a combination in which a
                national bank acquires all or substantially all of the assets, or
                assumes all or substantially all of the liabilities, of a Federal
                savings association will be treated as a consolidation for the Federal
                savings association.
                 (ii)(A) Unless the national bank has elected to follow the
                procedures set out in paragraph (h) of this section, national bank
                shareholders who dissent from a plan to consolidate may receive in cash
                the value of their national bank shares if they comply with the
                requirements of 12 U.S.C. 215 as if the Federal savings association
                were a national bank.
                 (B) Unless the Federal savings association has elected to follow
                the procedures applicable to State savings associations pursuant to
                paragraph (o)(1)(i)(A) of this section, Federal savings association
                shareholders who dissent from a plan to consolidate or merge may
                receive in cash the value of their Federal savings association shares
                if they comply with the requirements of 12 U.S.C. 215 or 215a as if the
                Federal savings association were a national bank.
                 (C) Unless the national bank or Federal savings association has
                elected to follow the procedures applicable to State banks or State
                savings associations, respectively, pursuant to paragraph (h)(1)(i) or
                (o)(1)(i)(A) of this section, respectively, the OCC will conduct an
                appraisal or reappraisal of the value of a national bank or Federal
                savings association held by dissenting shareholders in accordance with
                the provisions of 12 U.S.C. 215 or 215a, as applicable, except that the
                costs and expenses of any appraisal or reappraisal may be apportioned
                and assessed by the Comptroller as he or she may deem equitable against
                all or some of the parties. In making this determination the
                Comptroller will consider whether any party has acted arbitrarily or
                not in
                [[Page 18764]]
                good faith in respect to the rights provided by this paragraph.
                 (iii) The consolidation or merger agreement must address the effect
                upon, and the terms of the assumption of, any liquidation account of
                any participating institution by the resulting institution.
                 (4) Mergers of a national bank with its nonbank affiliates under 12
                U.S.C. 215a-3 resulting in a national bank. (i) With the approval of
                the OCC, a national bank may merge with one or more of its nonbank
                affiliates, with the national bank as the resulting institution, in
                accordance with the provisions of this paragraph, provided that the law
                of the State or other jurisdiction under which the nonbank affiliate is
                organized allows the nonbank affiliate to engage in such mergers. If
                the national bank is an insured bank, the transaction is also subject
                to approval by the FDIC under the Bank Merger Act, 12 U.S.C. 1828(c).
                 (ii) Unless it has elected to follow the procedures set out in
                paragraph (h) of this section, a national bank entering into the merger
                must follow the procedures of 12 U.S.C. 215a as if the nonbank
                affiliate were a State bank, except as otherwise provided herein.
                 (iii) A nonbank affiliate entering into the merger must follow the
                procedures for such mergers set out in the law of the State or other
                jurisdiction under which the nonbank affiliate is organized.
                 (iv) The rights of dissenting shareholders and appraisal of
                dissenters' shares of stock in the nonbank affiliate entering into the
                merger must be determined in the manner prescribed by the law of the
                State or other jurisdiction under which the nonbank affiliate is
                organized.
                 (v) The corporate existence of each institution participating in
                the merger continues in the resulting national bank, and all the
                rights, franchises, property, appointments, liabilities, and other
                interests of the participating institutions are transferred to the
                resulting national bank, as set forth in 12 U.S.C. 215a(a), (e), and
                (f) in the same manner and to the same extent as in a merger between a
                national bank and a State bank under 12 U.S.C. 215a(a), as if the
                nonbank affiliate were a State bank.
                 (5) Mergers of an uninsured national bank with its nonbank
                affiliates under 12 U.S.C. 215a-3 resulting in a nonbank affiliate. (i)
                With the approval of the OCC, a national bank that is not an insured
                bank as defined in 12 U.S.C. 1813(h) may merge with one or more of its
                nonbank affiliates, with the nonbank affiliate as the resulting entity,
                in accordance with the provisions of this paragraph, provided that the
                law of the State or other jurisdiction under which the nonbank
                affiliate is organized allows the nonbank affiliate to engage in such
                mergers.
                 (ii) Unless it has elected to follow the procedures applicable to
                State banks under paragraph (h)(1)(i) of this section, a national bank
                entering into the merger must follow the procedures of 12 U.S.C. 214a,
                as if the nonbank affiliate were a State bank, except as otherwise
                provided in this section.
                 (iii) A nonbank affiliate entering into the merger must follow the
                procedures for such mergers set out in the law of the State or other
                jurisdiction under which the nonbank affiliate is organized.
                 (iv)(A) National bank shareholders who dissent from an approved
                plan to merge may receive in cash the value of their national bank
                shares if they comply with the requirements of 12 U.S.C. 214a as if the
                nonbank affiliate were a State bank. The OCC may conduct an appraisal
                or reappraisal of dissenters' shares of stock in a national bank
                involved in the merger if all parties agree that the determination is
                final and binding on each party and agree on how the total expenses of
                the OCC in making the appraisal will be divided among the parties and
                paid to the OCC.
                 (B) The rights of dissenting shareholders and appraisal of
                dissenters' shares of stock in the nonbank affiliate involved in the
                merger must be determined in the manner prescribed by the law of the
                State or other jurisdiction under which the nonbank affiliate is
                organized.
                 (v) The corporate existence of each entity participating in the
                merger continues in the resulting nonbank affiliate, and all the
                rights, franchises, property, appointments, liabilities, and other
                interests of the participating national bank are transferred to the
                resulting nonbank affiliate as set forth in 12 U.S.C. 214b, in the same
                manner and to the same extent as in a merger between a national bank
                and a State bank under 12 U.S.C. 214a, as if the nonbank affiliate were
                a State bank.
                 (6) Consolidation or merger of a Federal savings association with
                another Federal savings association, a national bank, a State bank, a
                State savings bank, a State savings association, a State trust company,
                or a credit union resulting in a Federal savings association. (i) With
                the approval of the OCC, a Federal savings association may consolidate
                or merge with another Federal savings association, a national bank, a
                State bank, a State savings association, a State trust company, or a
                credit union with the Federal savings association as the resulting
                institution by complying with the following procedures:
                 (A)(1) The filer Federal savings association must comply with the
                requirements of paragraph (n) of this section and follow the procedures
                set out in paragraph (o) of this section.
                 (2) For purposes of this paragraph (g)(3), a combination in which a
                Federal savings association acquires all or substantially all of the
                assets, or assumes all or substantially all of the liabilities, of
                another other participating institution will be treated as a
                consolidation for the acquiring Federal savings association and as a
                consolidation by a Federal savings association whose assets are
                acquired, if any.
                 (B)(1) Unless it has elected to follow the procedures applicable to
                State banks under paragraph (h)(1)(i) of this section, a national bank
                entering into a merger or consolidation with a Federal savings
                association when the resulting institution will be a Federal savings
                association must comply with the requirements of 12 U.S.C. 214a and 12
                U.S.C. 214c as if the Federal savings association were a State bank.
                However, for these purposes the references in 12 U.S.C. 214c to ``law
                of the State in which such national banking association is located''
                and ``any State authority'' mean ``laws and regulations governing
                Federal savings associations'' and ``Office of the Comptroller of the
                Currency'' respectively.
                 (2) Unless the national bank has elected to follow the procedures
                applicable to State banks under paragraph (h)(1)(i) of this section,
                national bank shareholders who dissent from a plan to merge or
                consolidate may receive in cash the value of their national bank shares
                if they comply with the requirements of 12 U.S.C. 214a as if the
                Federal savings association were a State bank. The OCC will conduct an
                appraisal or reappraisal of the value of the national bank shares held
                by dissenting shareholders in accordance with the provisions of 12
                U.S.C. 214a, except that the costs and expenses of any appraisal or
                reappraisal may be apportioned and assessed by the Comptroller as he or
                she may deem equitable against all or some of the parties. In making
                this determination the Comptroller will consider whether any party has
                acted arbitrarily or not in good faith in respect to the rights
                provided by this paragraph.
                 (C)(1) A Federal savings association entering into a merger or
                consolidation with another Federal savings association when the
                resulting institution will be the other Federal savings association
                [[Page 18765]]
                must comply with the requirements of paragraph (n) of this section and
                the procedures of paragraph (o) of this section.
                 (2) Unless the Federal savings association has elected to follow
                the procedures applicable to State savings associations under paragraph
                (o)(1)(i)(A), Federal savings association shareholders who dissent from
                a plan to merge or consolidate may receive in cash the value of their
                Federal savings association shares if they comply with the requirements
                of 12 U.S.C. 214a as if the other Federal savings association were a
                State bank. The OCC will conduct an appraisal or reappraisal of the
                value of the Federal savings association shares held by dissenting
                shareholders in accordance with the provisions of 12 U.S.C. 214a,
                except that the costs and expenses of any appraisal or reappraisal may
                be apportioned and assessed by the Comptroller as he or she may deem
                equitable against all or some of the parties. In making this
                determination the Comptroller will consider whether any party has acted
                arbitrarily or not in good faith in respect to the rights provided by
                this paragraph.
                 (3) Unless the Federal savings association has elected to follow
                the procedures applicable to State savings associations under paragraph
                (o)(1)(i)(A), the plan of merger or consolidation must provide the
                manner of disposing of the shares of the resulting Federal savings
                association not taken by the dissenting shareholders of the Federal
                savings association.
                 (D)(1) A State bank, State savings association, State trust
                company, or credit union entering into a consolidation or merger with a
                Federal savings association when the resulting institution will be a
                Federal savings association must follow the procedures for such
                consolidations or mergers set out in the law of the State or other
                jurisdiction under which the State bank, State savings association,
                State trust company, or credit union is organized.
                 (2) The rights of dissenting shareholders and appraisal of
                dissenters' shares of stock in the State bank, State savings
                association, or State trust company, entering into the consolidation or
                merger will be determined in the manner prescribed by the law of the
                State or other jurisdiction under which the State bank, State savings
                association, or State trust company is organized.
                 (ii) The consolidation or merger agreement must address the effect
                upon, and the terms of the assumption of, any liquidation account of
                any participating institution by the resulting institution.
                 (7) Consolidation or merger under 12 U.S.C. 214a of a national bank
                with a State bank resulting in a State bank as defined in 12 U.S.C.
                214(a)--(i) In general. Prior OCC approval is not required for the
                merger or consolidation of a national bank with a State bank as defined
                in 12 U.S.C. 214(a). Termination of a national bank's existence and
                status as a national banking association is automatic, and its charter
                cancelled, upon completion of the statutory and regulatory requirements
                for engaging in the consolidation or merger and consummation of the
                consolidation or merger.
                 (ii) Procedures. A national bank desiring to merge or consolidate
                with a State bank as defined in 12 U.S.C. 214(a) when the resulting
                institution will be a State bank must comply with the requirements and
                follow the procedures of 12 U.S.C. 214a and 214c and must provide
                notice to the OCC under paragraph (k) of this section.
                 (iii) Dissenters' rights and appraisal procedures. National bank
                shareholders who dissent from a plan to merge or consolidate may
                receive in cash the value of their national bank shares if they comply
                with the requirements of 12 U.S.C. 214a. The OCC conducts an appraisal
                or reappraisal of the value of the national bank shares held by
                dissenting shareholders as provided for in 12 U.S.C. 214a.
                 (iv) Liquidation account. The consolidation or merger agreement
                must address the effect upon, and the terms of the assumption of, any
                liquidation account of any participating institution by the resulting
                institution.
                 (8) Interstate consolidations and mergers between an insured
                national bank and an insured State bank resulting in a State bank.--(i)
                In general. Prior OCC approval is not required for the merger or
                consolidation of an insured national bank with an insured out-of-state
                State bank, as defined in 12 U.S.C. 1831u(g)(8), with the State bank as
                the resulting institution, that has been approved by the appropriate
                Federal banking agency for the State bank. Termination of a national
                bank's existence and status as a national banking association is
                automatic, and its charter cancelled, upon completion of the statutory
                and regulatory requirements for engaging in the consolidation or merger
                and consummation of the consolidation or merger.
                 (ii) Procedures. Unless it has elected to follow the procedures
                applicable to State banks under paragraph (h)(1)(i) of this section,
                the national bank entering into the consolidation or merger must comply
                with the procedures of 12 U.S.C. 214a, as applicable.
                 (iii) Notice. The national bank must provide a notice to the OCC
                under paragraph (k) of this section.
                 (9) Consolidation or merger of a Federal savings association with a
                State bank, State savings bank, State savings association, State trust
                company, or credit union resulting in a State bank, State savings bank,
                State savings association, State trust company, or credit union--(i)
                Policy. Prior OCC approval is not required for the merger or
                consolidation of a Federal savings association with a State bank, State
                savings bank, State savings association, State trust company, or credit
                union when the resulting institution will be a State institution or
                credit union. Termination of a national bank's or Federal savings
                association's existence and status as a national banking association or
                Federal savings association is automatic, and its charter cancelled,
                upon completion of the statutory and regulatory requirements for
                engaging in the consolidation or merger and consummation of the
                consolidation or merger.
                 (ii) Procedures. (A) A Federal savings association desiring to
                merge or consolidate with a State bank, State savings bank, State
                savings association, State trust company, or credit union when the
                resulting institution will be a State institution or credit union must
                comply with the requirements of paragraph (n) of this section and the
                procedures of paragraph (o) of this section and must provide notice to
                the OCC under paragraph (k) of this section.
                 (B) For purposes of this paragraph (g)(9), a combination in which a
                State bank, State savings bank, State savings association, State trust
                company, or credit union acquires all or substantially all of the
                assets, or assumes all or substantially all of the liabilities, of a
                Federal savings association must be treated as a consolidation by the
                Federal savings association.
                 (iii) Dissenters' rights and appraisal procedures. (A) Unless the
                Federal savings association has elected to follow the procedures
                applicable to State savings associations under paragraph (o)(1)(i)(A),
                Federal savings association shareholders who dissent from a plan to
                merge or consolidate may receive in cash the value of their Federal
                savings association shares if they comply with the requirements of 12
                U.S.C. 214a as if the Federal savings association were a national bank.
                The OCC conducts an appraisal or reappraisal of the value of the
                Federal savings association shares held by dissenting shareholders only
                if all parties agree that the determination
                [[Page 18766]]
                will be final and binding. The parties also must agree on how the total
                expenses of the OCC in making the appraisal will be divided among the
                parties and paid to the OCC.
                 (B) Unless the Federal savings association has elected to follow
                the procedures applicable to State savings associations under paragraph
                (o)(1)(i)(A), the plan of merger or consolidation must provide the
                manner of disposing of the shares of the resulting State institution
                not taken by the dissenting shareholders of the Federal savings
                association.
                 (iv) Liquidation account. The consolidation or merger agreement
                must address the effect upon, and the terms of the assumption of, any
                liquidation account of any participating institution by the resulting
                institution.
                 (h) Procedural requirements for national bank combinations--(1)
                Permissible elections. A national bank participating in a combination
                pursuant to paragraph (g)(2), (g)(3), (g)(4), (g)(5), (g)(6), or (g)(8)
                of this section may elect to follow with respect to the combination:
                 (i) The procedures applicable to a State bank chartered by the
                State where the national bank's main office is located; or
                 (ii) Paragraph (p) of this section, if applicable.
                 (2) Rules of Construction. For purposes of paragraph (h)(1) of this
                section:
                 (i) Any references to a State agency in the applicable State
                procedures should be read as referring to the OCC; and
                 (ii) Unless otherwise specified in Federal law, all filings
                required by the applicable State procedures must be made to the OCC.
                 (i) Expedited review for business reorganizations and streamlined
                applications. A filing that qualifies as a business reorganization as
                defined in paragraph (d)(3) of this section, or a filing that qualifies
                as a streamlined application as described in paragraph (j) of this
                section, is deemed approved by the OCC as of the 15th day after the
                close of the comment period, unless the OCC notifies the filer that the
                filing is not eligible for expedited review, or the expedited review
                process is extended, under Sec. 5.13(a)(2). An application under this
                paragraph must contain all necessary information for the OCC to
                determine if it qualifies as a business reorganization or streamlined
                application.
                 (j) Streamlined applications. (1) A filer may qualify for a
                streamlined business combination application in the following
                situations:
                 (i) At least one party to the transaction is an eligible bank or
                eligible savings association, and all other parties to the transaction
                are eligible banks, eligible savings associations, or eligible
                depository institutions, the resulting national bank or resulting
                Federal savings association will be well capitalized immediately
                following consummation of the transaction, and the total assets of the
                target institution are no more than 50 percent of the total assets of
                the acquiring bank or Federal savings association, as reported in each
                institution's Consolidated Report of Condition and Income filed for the
                quarter immediately preceding the filing of the application;
                 (ii) The acquiring bank or Federal savings association is an
                eligible bank or eligible savings association, the target bank or
                savings association is not an eligible bank, eligible savings
                association, or an eligible depository institution, the resulting
                national bank or resulting Federal savings association will be well
                capitalized immediately following consummation of the transaction, and
                the filers in a prefiling communication request and obtain approval
                from the appropriate OCC licensing office to use the streamlined
                application;
                 (iii) The acquiring bank or Federal savings association is an
                eligible bank or eligible savings association, the target bank or
                savings association is not an eligible bank, eligible savings
                association, or an eligible depository institution, the resulting bank
                or resulting Federal savings association will be well capitalized
                immediately following consummation of the transaction, and the total
                assets acquired do not exceed 10 percent of the total assets of the
                acquiring national bank or acquiring Federal savings association, as
                reported in each institution's Consolidated Report of Condition and
                Income filed for the quarter immediately preceding the filing of the
                application; or
                 (iv) In the case of a transaction under paragraph (g)(4) of this
                section, the acquiring bank is an eligible bank, the resulting national
                bank will be well capitalized immediately following consummation of the
                transaction, the filers in a prefiling communication request and obtain
                approval from the appropriate OCC licensing office to use the
                streamlined application, and the total assets acquired do not exceed 10
                percent of the total assets of the acquiring national bank, as reported
                in the bank's Consolidated Report of Condition and Income filed for the
                quarter immediately preceding the filing of the application.
                 (2) Notwithstanding paragraph (j)(1) of this section, a filer does
                not qualify for a streamlined business combination application if the
                transaction is part of a conversion under part 192 of this chapter.
                 (3) When a business combination qualifies for a streamlined
                application, the filer should consult the Comptroller's Licensing
                Manual to determine the abbreviated application information required by
                the OCC. The OCC encourages prefiling communications between the filers
                and the appropriate OCC licensing office before filing under paragraph
                (j) of this section.
                 (k) Exit notice to OCC--(1) Notice required. As provided in
                paragraphs (g)(7)(ii), (g)(8)(iii), and (g)(9)(ii) of this section, a
                national bank or Federal savings association engaging in a
                consolidation or merger in which it is not the filer and the resulting
                institution must file a notice rather than an application to the
                appropriate OCC licensing office advising of its intention.
                 (2) Timing of notice. The national bank or Federal savings
                association must submit the notice at the time the application to merge
                or consolidate is filed with the responsible agency under the Bank
                Merger Act, 12 U.S.C. 1828(c), or if there is no such filing then no
                later than 30 days prior to the effective date of the merger or
                consolidation.
                 (3) Content of notice. The notice must include the following:
                (i)(A) A short description of the material features of the transaction,
                the identity of the acquiring institution, the identity of the State or
                Federal regulator to whom the application was made, and the date of the
                application; or
                 (B) A copy of a filing made with another Federal or State
                regulatory agency seeking approval from that agency for the transaction
                under the Bank Merger Act or other applicable statute;
                 (ii) The planned consummation date for the transaction;
                 (iii) Information to demonstrate compliance by the national bank or
                Federal savings association with applicable requirements to engage in
                the transactions (e.g., board approval or shareholder or accountholder
                requirements); and
                 (iv) If the national bank or Federal savings association submitting
                the notice maintains a liquidation account established pursuant to part
                192 of this chapter, the notice must state that the resulting
                institution will assume such liquidation account.
                 (4) Termination of status. The national bank or Federal savings
                association must advise the OCC when
                [[Page 18767]]
                the transaction is about to be consummated. Termination of a national
                bank's or Federal savings association's existence and status as a
                national banking association or Federal savings association is
                automatic, and its charter cancelled, upon completion of the statutory
                and regulatory requirements and consummation of the consolidation or
                merger. When the national bank or Federal savings association files the
                notice under paragraph (k)(2) of this section, the OCC provides
                instructions to the national bank or Federal savings association for
                terminating its status as a national bank or Federal savings, including
                surrendering its charter to the OCC immediately after consummation of
                the transaction.
                 (5) Expiration. If the action contemplated by the notice is not
                completed within six months after the OCC's receipt of the notice, a
                new notice must be submitted to the OCC, unless the OCC grants an
                extension of time.
                 (l) Mergers and consolidations; transfer of assets and liabilities
                to the resulting institution. (1) In any consolidation or merger in
                which the resulting institution is a national bank or Federal savings
                association, on the effective date of the merger or consolidation, all
                assets and property (real, personal and mixed, tangible and intangible,
                choses in action, rights, and credits) then owned by each participating
                institution or which would inure to any of them, immediately by
                operation of law and without any conveyance, transfer, or further
                action, become the property of the resulting national bank or Federal
                savings association. The resulting national bank or Federal savings
                association is deemed to be a continuation of the entity of each
                participating institution, and will succeed to such rights and
                obligations of each participating institution and the duties and
                liabilities connected therewith.
                 (2) The authority in paragraph (l)(1) of this section is in
                addition to any authority granted by applicable statutes for specific
                transactions and is subject to the National Bank Act, the Home Owners'
                Loan Act, and other applicable statutes.
                 (m) Certification of combination; effective date. (1) When a
                national bank or Federal savings association is the filer and will be
                the resulting entity in a consolidation or merger, after receiving
                approval from the OCC, it must complete any remaining steps needed to
                complete the transaction, provide the OCC with a certification that all
                other required regulatory or shareholder approvals have been obtained,
                and inform the OCC of the planned consummation date.
                 (2) When the transaction is consummated, the filer must notify the
                OCC of the consummation date. The OCC will issue a letter certifying
                that the combination was effective on the date specified in the filer's
                notice.
                 (n) Authority for and certain limits on business combinations and
                other transactions by Federal savings associations. (1) Federal savings
                associations may enter into business combinations only in accordance
                with this section, the Bank Merger Act, and sections 5(d)(3)(A) and
                10(s) of the Home Owners' Loan Act.
                 (2) A Federal savings association may consolidate or merge with
                another depository institution, a State trust company or a credit
                union, may engage in another business combination listed in paragraphs
                (d)(2)(iv) and (v) of this section, or may engage in any other
                combination listed in paragraph (d)(10), provided that:
                 (i) The combination is in compliance with, and receives all
                approvals required under, any applicable statutes and regulations;
                 (ii) Any resulting Federal savings association meets the
                requirements for insurance of accounts; and
                 (iii) A consolidation or merger involving a mutual savings
                association or the transfer of all or substantially all of the deposits
                of a mutual savings association must result in a mutually held
                depository institution that is insured by the FDIC, unless:
                 (A) The transaction is approved under part 192 governing mutual to
                stock conversions;
                 (B) The transaction involves a mutual holding company
                reorganization under 12 U.S.C. 1467a(o) or a similar transaction under
                State law; or
                 (C) The transaction is part of a voluntary liquidation for which
                the OCC has provided non-objection under Sec. 5.48.
                 (3) Where the resulting institution is a Federal mutual savings
                association, the OCC may approve a temporary increase in the number of
                directors of the resulting institution provided that the association
                submits a plan for bringing the board of directors into compliance with
                the requirements of Sec. 5.21(e) within a reasonable period of time.
                 (4)(i) The Federal savings associations described in paragraph
                (n)(4)(ii) of this section below must provide affected accountholders
                with a notice of a proposed account transfer and an option of retaining
                the account in the transferring Federal savings association. The notice
                must allow affected accountholders at least 30 days to consider whether
                to retain their accounts in the transferring Federal savings
                association.
                 (ii) The following savings associations must provide the notices:
                 (A) A Federal mutual savings association transferring account
                liabilities to an institution the accounts of which are not insured by
                the Deposit Insurance Fund or the National Credit Union Share Insurance
                Fund; and
                 (B) Any Federal mutual savings association transferring account
                liabilities to a stock form depository institution.
                 (o) Procedural requirements for Federal savings association
                approval of combinations--(1) In general--(i) Permissible elections. A
                Federal savings association participating in a combination may elect to
                follow the applicable procedures with respect to the combination:
                 (A) The procedures applicable to a State savings association
                chartered by the State where the Federal savings association's home
                office is located: or
                 (B) The standard procedures provided in paragraph (o)(2) of this
                section.
                 (ii) Rules of Construction. For purposes of paragraph (o)(1)(i) of
                this section:
                 (A) Any references to a State agency in the applicable State
                procedures should be read as referring to the OCC; and
                 (B) Unless otherwise specified in Federal law, all filings required
                by the applicable State procedures must be made to the OCC.
                 (2) Standard procedures--(i) Board approval. Before a Federal
                savings association files a notice or application for any consolidation
                or merger, the combination and combination agreement must be approved
                by majority vote of the entire board of each constituent Federal
                savings association in the case of Federal stock savings associations
                or a two-thirds vote of the entire board of each constituent Federal
                savings association in the case of Federal mutual savings associations.
                 (ii) Shareholder vote--(A) General rule. Except as otherwise
                provided in this paragraph (o)(2)(ii), an affirmative vote of two-
                thirds of the outstanding voting stock of any constituent Federal stock
                savings association is required for approval of a consolidation or
                merger. If any class of shares is entitled to vote as a class pursuant
                to Sec. 5.22, an affirmative vote of a majority of the shares of each
                voting class and two-thirds of the total voting shares is required. The
                required vote must be taken at a meeting of the savings association.
                [[Page 18768]]
                 (B) General exception. Stockholders of the resulting Federal stock
                savings association need not authorize a consolidation or merger if the
                transaction meets the requirements of paragraph (p) of this section.
                 (C) Exceptions for certain combinations involving an interim
                association. Stockholders of a Federal stock savings association need
                not authorize by a two-thirds affirmative vote consolidations or
                mergers involving an interim Federal savings association or interim
                State savings association when the resulting Federal stock savings
                association is acquired pursuant to the regulations of the Board of
                Governors of the Federal Reserve System at 12 CFR 238.15(e) (relating
                to the creation of a savings and loan holding company by a savings
                association). In those cases, an affirmative vote of 50 percent of the
                shares of the outstanding voting stock of the Federal stock savings
                association plus one affirmative vote is required. If any class of
                shares is entitled to vote as a class pursuant to Sec. 5.22(g), an
                affirmative vote of 50 percent of the shares of each voting class plus
                one affirmative vote is required. The required votes must be taken at a
                meeting of the association.
                 (3) Change of name or home office. If the name of the resulting
                Federal savings association or the location of the home office of the
                resulting Federal savings association will change as a result of the
                business combination, the resulting Federal savings association must
                amend its charter accordingly.
                 (4) Mutual member vote. Notwithstanding any other provision of this
                section, the OCC may require that a consolidation, merger or other
                business combination be submitted to the voting members of any mutual
                savings association participating in the proposed transaction at duly
                called meetings and that the transaction, to be effective, must be
                approved by such voting members.
                 (p) Exception to voting requirements. Shareholders of a resulting
                national bank or Federal stock savings association need not authorize a
                consolidation or merger if:
                 (1) Either:
                 (i) The transaction does not involve an interim bank or an interim
                savings association; or
                 (ii) The transaction involves an interim bank or an interim savings
                association and the existing shareholders of the national bank or
                Federal stock savings association will directly hold the shares of the
                resulting national bank or Federal stock savings association;
                 (2) The national bank's articles of association or the Federal
                stock savings association's charter, as applicable, is not changed;
                 (3) Each share of stock outstanding immediately prior to the
                effective date of the consolidation or merger is to be an identical
                outstanding share or a treasury share of the resulting national bank or
                Federal stock savings association after such effective date; and
                 (4) Either:
                 (i) No shares of voting stock of the resulting national bank or
                Federal stock savings association and no securities convertible into
                such stock are to be issued or delivered under the plan of combination;
                or
                 (ii) The authorized unissued shares or the treasury shares of
                voting stock of the resulting national bank or Federal stock savings
                association to be issued or delivered under the plan of merger or
                consolidation, plus those initially issuable upon conversion of any
                securities to be issued or delivered under such plan, do not exceed 20
                percent of the total shares of voting stock of such national bank or
                Federal stock savings association outstanding immediately prior to the
                effective date of the consolidation or merger.
                0
                24. Amend Sec. 5.34 by:
                0
                a. In paragraph (a), removing ``3101 et seq.'' and adding in its place
                ``3102(b)'';
                0
                b. In paragraph (c), removing the phrase ``(e)(5)(i)(B) of this section
                shall apply'' and adding in its place the phrase ``(f)(1)(ii) of this
                section applies'';
                0
                c. Revising paragraph (d);
                0
                d. In paragraphs (e)(1)(i)(B), (e)(3), and (e)(4)(ii), removing the
                word ``state'' and adding in its place the word ``State'' each time it;
                0
                e. Revising paragraph (e)(2)(i)(A);
                0
                f. In paragraph (e)(2)(i)(C), removing the phrase ``generally accepted
                accounting principles (GAAP)'' and adding in its place the word
                ``GAAP'';
                0
                g. In paragraph (e)(2)(ii) introductory text, removing the word
                ``subsidiaries'' and adding in its place the word ``entities'';
                0
                h. Removing the word ``and'' in paragraph (e)(2)(ii)(A);
                0
                 i. Removing the period and adding in its place ``; and'' in paragraph
                (e)(2)(ii)(B);
                0
                 j. Adding paragraph (e)(2)(ii)(C);
                0
                k. In paragraph (e)(2)(iii)(B), removing the word ``shall'' and adding
                in its place the word ``may'';
                0
                 l. In paragraphs (e)(4)(i) and (e)(4)(ii), removing the word ``shall''
                and adding in its place the word ``will'';
                0
                m. Removing paragraph (e)(7);
                0
                n. Redesignating paragraphs (e)(5) and (e)(6) as paragraphs (f) and
                (g), respectively ; and
                0
                o. Revising newly redesignated paragraph (f).
                 The addition and revisions read as follows.
                Sec. 5.34 Operating subsidiaries of a national bank.
                * * * * *
                 (d) Definition. For purposes of this section, authorized product
                means a product that would be defined as insurance under section 302(c)
                of the Gramm-Leach-Bliley Act (15 U.S.C. 6712) that, as of January 1,
                1999, the OCC had determined in writing that national banks may provide
                as principal or national banks were in fact lawfully providing the
                product as principal, and as of that date no court of relevant
                jurisdiction had, by final judgment, overturned a determination by the
                OCC that national banks may provide the product as principal. An
                authorized product does not include title insurance, or an annuity
                contract the income of which is subject to treatment under section 72
                of the Internal Revenue Code of 1986 (26 U.S.C. 72).
                 (e) * * *
                 (2) * * *
                 (i) * * *
                 (A) The bank has the ability to control the management and
                operations of the subsidiary, and no other person or entity has the
                ability to exercise effective control or influence over the management
                or operations of the subsidiary to an extent equal to or greater than
                that of the bank or an operating subsidiary thereof;
                * * * * *
                 (ii) * * *
                 (C) A trust formed for purposes of securitizing assets held by the
                bank as part of its banking business.
                * * * * *
                 (f) Procedures--(1) Application required. (i) Except for an
                operating subsidiary that qualifies for the notice procedures in
                paragraph (f)(2) of this section or is exempt from application or
                notice requirements under paragraph (f)(6) of this section, a national
                bank must first submit an application to, and receive prior approval
                from, the OCC to establish or acquire an operating subsidiary or to
                perform a new activity in an existing operating subsidiary.
                 (ii) The application must explain, as appropriate, how the bank
                ``controls'' the enterprise, describing in full detail structural
                arrangements where control is based on factors other than bank
                ownership of more than 50 percent of the voting interest of the
                subsidiary and the ability to control the management and operations of
                the subsidiary by holding voting interests sufficient to select the
                number of directors needed to
                [[Page 18769]]
                control the subsidiary's board and to select and terminate senior
                management. In the case of a limited partnership or limited liability
                company that does not qualify for the notice procedures set forth in
                paragraph (f)(2) of this section, the bank must provide a statement
                explaining why it is not eligible. The application also must include a
                complete description of the bank's investment in the subsidiary, the
                proposed activities of the subsidiary, the organizational structure and
                management of the subsidiary, the relations between the bank and the
                subsidiary, and other information necessary to adequately describe the
                proposal. To the extent that the application relates to the initial
                affiliation of the bank with a company engaged in insurance activities,
                the bank must describe the type of insurance activity in which the
                company is engaged and has present plans to conduct. The bank must also
                list for each State the lines of business for which the company holds,
                or will hold, an insurance license, indicating the State where the
                company holds a resident license or charter, as applicable. The
                application must state whether the operating subsidiary will conduct
                any activity at a location other than the main office or a previously
                approved branch of the bank. The OCC may require a filer to submit a
                legal analysis if the proposal is novel, unusually complex, or raises
                substantial unresolved legal issues. In these cases, the OCC encourages
                filers to have a prefiling meeting with the OCC. Any bank receiving
                approval under this paragraph is deemed to have agreed that the
                subsidiary will conduct the activity in a manner consistent with
                published OCC guidance.
                 (2) Notice process only for certain qualifying filings. (i) Except
                for an operating subsidiary that is exempt from application or notice
                procedures under paragraph (f)(6) of this section, a national bank that
                is well capitalized and well managed, as defined in Sec. 5.3, may
                establish or acquire an operating subsidiary, or perform a new activity
                in an existing operating subsidiary, by providing the appropriate OCC
                licensing office written notice prior to, or within 10 days after,
                acquiring or establishing the subsidiary, or commencing the new
                activity, if:
                 (A) The activity is listed in paragraph (f)(5) of this section or,
                except as provided in paragraph (f)(2)(ii) of this section, the
                activity is substantively the same as a previously approved activity,
                as defined in Sec. 5.3, and the activity will be conducted in
                accordance with the same terms and conditions applicable to the
                previously approved activity;
                 (B) The entity is a corporation, limited liability company, limited
                partnership, or trust; and
                 (C) The bank or an operating subsidiary thereof:
                 (1) Has the ability to control the management and operations of the
                subsidiary and no other person or entity has the ability to exercise
                effective control or influence over the management or operations of the
                subsidiary to an extent equal to or greater than that of the bank or an
                operating subsidiary thereof. The ability to control the management and
                operations means:
                 (i) In the case of a subsidiary that is a corporation, the bank or
                an operating subsidiary thereof holds voting interests sufficient to
                select the number of directors needed to control the subsidiary's board
                and to select and terminate senior management;
                 (ii) In the case of a subsidiary that is a limited partnership, the
                bank or an operating subsidiary thereof has the ability to control the
                management and operations of the subsidiary by controlling the
                selection and termination of senior management;
                 (iii) In the case of a subsidiary that is a limited liability
                company, the bank or an operating subsidiary thereof has the ability to
                control the management and operations of the subsidiary by controlling
                the selection and termination of senior management; or
                 (iv) In the case of a subsidiary that is a trust, the bank or an
                operating subsidiary thereof has the ability to replace the trustee at
                will;
                 (2) Holds more than 50 percent of the voting, or equivalent,
                interests in the subsidiary and:
                 (i) In the case of a subsidiary that is a limited partnership, the
                bank or an operating subsidiary thereof is the sole general partner of
                the limited partnership, provided that under the partnership agreement,
                limited partners have no authority to bind the partnership by virtue
                solely of their status as limited partners;
                 (ii) In the case of a subsidiary that is a limited liability
                company, the bank or an operating subsidiary thereof is the sole
                managing member of the limited liability company, provided that under
                the limited liability company agreement, other limited liability
                company members have no authority to bind the limited liability company
                by virtue solely of their status as members; or
                 (iii) In the case of a subsidiary that is a trust, the bank or an
                operating subsidiary thereof is the sole beneficial owner of the trust;
                and
                 (3) Is required to consolidate its financial statements with those
                of the subsidiary under GAAP.
                 (ii) A national bank must file an application under paragraph
                (f)(1) of this section if a State has or will charter or license the
                proposed operating subsidiary as a bank, trust company, or savings
                association.
                 (iii) The written notice must include a complete description of the
                bank's investment in the subsidiary and of the activity conducted and a
                representation and undertaking that the activity will be conducted in
                accordance with OCC policies contained in guidance issued by the OCC
                regarding the activity. To the extent that the notice relates to the
                initial affiliation of the bank with a company engaged in insurance
                activities, the bank must describe the type of insurance activity in
                which the company is engaged and has present plans to conduct. The bank
                also must list for each State the lines of business for which the
                company holds, or will hold, an insurance license, indicating the State
                where the company holds a resident license or charter, as applicable.
                Any bank receiving approval under this paragraph is deemed to have
                agreed that the subsidiary will conduct the activity in a manner
                consistent with published OCC guidance.
                 (3) Exceptions to rules of general applicability. Sections 5.8,
                5.10, and 5.11 do not apply to this section. However, if the OCC
                concludes that an application presents significant or novel policy,
                supervisory, or legal issues, the OCC may determine that some or all
                provisions in Sec. Sec. 5.8, 5.10, and 5.11 apply.
                 (4) OCC review and approval. The OCC reviews a national bank's
                application to determine whether the proposed activities are legally
                permissible under Federal banking laws and to ensure that the proposal
                is consistent with safe and sound banking practices and OCC policy and
                does not endanger the safety or soundness of the parent national bank.
                As part of this process, the OCC may request additional information and
                analysis from the filer.
                 (5) Activities eligible for notice. The following activities
                qualify for the notice procedures in paragraph (f)(2) of this section,
                provided the activity is conducted pursuant to the same terms and
                conditions as would be applicable if the activity were conducted
                directly by a national bank:
                 (i) Holding and managing assets acquired by the parent bank or its
                operating subsidiaries, including investment assets and property
                acquired
                [[Page 18770]]
                by the bank through foreclosure or otherwise in good faith to
                compromise a doubtful claim, or in the ordinary course of collecting a
                debt previously contracted;
                 (ii) Providing services to or for the bank or its affiliates,
                including accounting, auditing, appraising, advertising and public
                relations, and financial advice and consulting;
                 (iii) Making loans or other extensions of credit, and selling money
                orders, savings bonds, and travelers checks;
                 (iv) Purchasing, selling, servicing, or warehousing loans or other
                extensions of credit, or interests therein;
                 (v) Providing courier services between financial institutions;
                 (vi) Providing management consulting, operational advice, and
                services for other financial institutions;
                 (vii) Providing check guaranty, verification and payment services;
                 (viii) Providing data processing, data warehousing and data
                transmission products, services, and related activities and facilities,
                including associated equipment and technology, for the bank or its
                affiliates;
                 (ix) Acting as investment adviser (including an adviser with
                investment discretion) or financial adviser or counselor to
                governmental entities or instrumentalities, businesses, or individuals,
                including advising registered investment companies and mortgage or real
                estate investment trusts, furnishing economic forecasts or other
                economic information, providing investment advice related to futures
                and options on futures, and providing consumer financial counseling;
                 (x) Providing tax planning and preparation services;
                 (xi) Providing financial and transactional advice and assistance,
                including advice and assistance for customers in structuring,
                arranging, and executing mergers and acquisitions, divestitures, joint
                ventures, leveraged buyouts, swaps, foreign exchange, derivative
                transactions, coin and bullion, and capital restructurings;
                 (xii) Underwriting and reinsuring credit related insurance to the
                extent permitted under section 302 of the Gramm-Leach-Bliley Act (15
                U.S.C. 6712);
                 (xiii) Leasing of personal property and acting as an agent or
                adviser in leases for others;
                 (xiv) Providing securities brokerage or acting as a futures
                commission merchant, and providing related credit and other related
                services;
                 (xv) Underwriting and dealing, including making a market, in bank
                permissible securities and purchasing and selling as principal, asset
                backed obligations;
                 (xvi) Acting as an insurance agent or broker, including title
                insurance to the extent permitted under section 303 of the Gramm-Leach-
                Bliley Act (15 U.S.C. 6713);
                 (xvii) Reinsuring mortgage insurance on loans originated,
                purchased, or serviced by the bank, its subsidiaries, or its
                affiliates, provided that if the subsidiary enters into a quota share
                agreement, the subsidiary assumes less than 50 percent of the aggregate
                insured risk covered by the quota share agreement. A ``quota share
                agreement'' is an agreement under which the reinsurer is liable to the
                primary insurance underwriter for an agreed upon percentage of every
                claim arising out of the covered book of business ceded by the primary
                insurance underwriter to the reinsurer;
                 (xviii) Acting as a finder pursuant to 12 CFR 7.1002 to the extent
                permitted by published OCC precedent for national banks; \2\
                ---------------------------------------------------------------------------
                 \2\ See, e.g., the OCC's monthly publication ``Interpretations
                and Actions.'' Beginning with the May 1996 issue, electronic
                versions of ``Interpretations and Actions'' are available at
                www.occ.gov.
                ---------------------------------------------------------------------------
                 (xix) Offering correspondent services to the extent permitted by
                published OCC precedent for national banks;
                 (xx) Acting as agent or broker in the sale of fixed or variable
                annuities;
                 (xxi) Offering debt cancellation or debt suspension agreements;
                 (xxii) Providing real estate settlement, closing, escrow, and
                related services; and real estate appraisal services for the
                subsidiary, parent bank, or other financial institutions;
                 (xxiii) Acting as a transfer or fiscal agent;
                 (xxiv) Acting as a digital certification authority to the extent
                permitted by published OCC precedent for national banks, subject to the
                terms and conditions contained in that precedent;
                 (xxv) Providing or selling public transportation tickets, event and
                attraction tickets, gift certificates, prepaid phone cards, promotional
                and advertising material, postage stamps, and Electronic Benefits
                Transfer (EBT) script, and similar media, to the extent permitted by
                published OCC precedent for national banks, subject to the terms and
                conditions contained in that precedent;
                 (xvi) Providing data processing, and data transmission services,
                facilities (including equipment, technology, and personnel), databases,
                advice and access to such services, facilities, databases and advice,
                for the parent bank and for others, pursuant to 12 CFR 7.5006 to the
                extent permitted by published OCC precedent for national banks;
                 (xxvii) Providing bill presentment, billing, collection, and
                claims-processing services;
                 (xxviii) Providing safekeeping for personal information or valuable
                confidential trade or business information, such as encryption keys, to
                the extent permitted by published OCC precedent for national banks;
                 (xxix) Providing payroll processing;
                 (xxx) Providing branch management services;
                 (xxxi) Providing merchant processing services except when the
                activity involves the use of third parties to solicit or underwrite
                merchants; and
                 (xxxii) Performing administrative tasks involved in benefits
                administration.
                 (6) No application or notice required. A national bank may acquire
                or establish an operating subsidiary, or perform a new activity in an
                existing operating subsidiary, without filing an application or
                providing notice to the OCC, if the bank is well managed and well
                capitalized and the:
                 (i) Activities of the new subsidiary are limited to those
                activities previously reported by the bank in connection with the
                establishment or acquisition of a prior operating subsidiary;
                 (ii) Activities in which the new subsidiary will engage continue to
                be legally permissible for the subsidiary;
                 (iii) Activities of the new subsidiary will be conducted in
                accordance with any conditions imposed by the OCC in approving the
                conduct of these activities for any prior operating subsidiary of the
                bank; and
                 (iv) The standards set forth in paragraphs (f)(2)(i)(B) and (C) of
                this section are satisfied.
                 (7) Fiduciary powers. (i) If an operating subsidiary proposes to
                accept fiduciary appointments for which fiduciary powers are required,
                such as acting as trustee or executor, then the national bank must have
                fiduciary powers under 12 U.S.C. 92a and the subsidiary also must have
                its own fiduciary powers under the law applicable to the subsidiary.
                 (ii) Unless the subsidiary is a registered investment adviser, if
                an operating subsidiary proposes to exercise investment discretion on
                behalf of customers or provide investment advice for a fee, the
                national bank must have prior OCC approval to exercise fiduciary powers
                pursuant to Sec. 5.26 and 12 CFR part 9.
                 (8) Expiration of approval. Approval expires if the national bank
                has not established or acquired the operating subsidiary or commenced
                the new
                [[Page 18771]]
                activity in an existing operating subsidiary within 12 months after the
                date of the approval, unless the OCC shortens or extends the time
                period.
                * * * * *
                0
                25. Amend Sec. 5.35 by:
                0
                a. Revising the section heading;
                0
                b. In paragraphs (b) and (d)(6), removing the word ``shall'' and adding
                in its place the word ``must'' each time it appears;
                0
                c. In paragraphs (d)(2), (d)(3), (g)(2), and (g)(4), removing the word
                ``state'' and adding in its place the word ``State'' each time in
                appears;
                0
                d. In paragraph (d)(2) removing the phrase ``section 3 of the Federal
                Deposit Insurance Act'' and adding in its place the phrase ``section
                3(a)(3) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(a)(3)'' ;
                0
                e. In paragraph (d)(3):
                0
                i. After the words ``an insured bank'', removing the phrase ``(section
                3 of the Federal Deposit Insurance Act)'' and adding in its place the
                phrase ``(section 3(c) of the Federal Deposit Insurance Act, 12 U.S.C.
                1813(c))'' ;
                0
                ii. After the words ``a savings association'', removing the phrase
                ``(section 3 of the Federal Deposit Insurance Act)'' and adding in its
                place the phrase ``(section 3(b)(1) of the Federal Deposit Insurance
                Act, 12 U.S.C. 1813(b)(1))'';
                0
                iiii. Removing the phrase ``Federal Deposit Insurance Corporation'' and
                adding in its place the word ``FDIC'';
                0
                f. In paragraph (d)(4), removing the phrase ``section 3 of the Federal
                Deposit Insurance Act'' and adding in its place the phrase ``section
                3(c)(2) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(c)(2)'';
                0
                g. Revising paragraph (f)(2)(ii)(A);
                0
                h. In paragraph (f)(2)(ii)(B), removing the phrase ``Sec.
                5.34(e)(5)(v) or Sec. 5.38(e)(5)(v)'' and adding in its place the
                phrase ``Sec. 5.34(f)(5) or Sec. 5.38(f)(5)''; and
                0
                i. Revising paragraph (i).
                 The revision and addition read as follows.
                Sec. 5.35 Bank service company investments by a national bank or
                Federal savings association.
                * * * * *
                 (f) * * *
                 (2) * * *
                 (ii) * * *
                 (A) The national bank or Federal savings association is well
                capitalized and well managed as defined in Sec. 5.3; and
                * * * * *
                 (i) Investment limitations. A national bank or Federal savings
                association must comply with the investment limitations specified in 12
                U.S.C. 1862.
                * * * * *
                0
                26. Amend Sec. 5.36 by:
                0
                a. In paragraph (a), removing the phrase ``and 93a'' and adding in its
                place the phrase ``93a, and 3101 et seq.'';
                0
                b. In paragraph (b), removing the phrase ``and 5.37'' and adding in its
                place the phrase ``5.37, and 5.39'';
                0
                c. Revising paragraph (c);
                0
                d. Revising paragraph (e) introductory text;
                0
                e. In paragraph (e)(1), removing the word ``state'' and adding in its
                place the word ``State'' each time it appears;
                0
                f. Revising paragraphs (e)(2) through (4)
                0
                g. Revising paragraph (f);
                0
                h. Redesignating paragraphs (g) through (i) as paragraph (h) through
                (j);
                0
                i. Adding new paragraph (g);
                0
                 j. In newly redesignated paragraph (h)(1), adding the phrase ``, as
                defined in Sec. 5.3'' after the phrase ``well managed'';
                0
                k. Revising newly redesignated paragraphs (i) and (j).
                 The addition and revisions read as follows.
                Sec. 5.36 Other equity investments by a national bank.
                * * * * *
                 (c) Definitions. For purposes of this section:
                 (1) Enterprise means any corporation, limited liability company,
                partnership, trust, or similar business entity.
                 (2) Non-controlling investment means an equity investment made
                pursuant to 12 U.S.C. 24(Seventh) that is not governed by procedures
                prescribed by another OCC rule. A non-controlling investment does not
                include a national bank holding interests in a trust formed for the
                purposes of securitizing assets held by the bank as part of its banking
                business or for the purposes of holding multiple legal titles of motor
                vehicles or equipment in conjunction with lease financing transactions.
                * * * * *
                 (e) Non-controlling investments; notice procedure. Except as
                provided in paragraphs (f), (g), and (h) of this section, a national
                bank may make a non-controlling investment, directly or through its
                operating subsidiary, in an enterprise that engages in an activity
                described in Sec. 5.34(f)(5) or in an activity that is substantively
                the same as a previously approved activity, as defined in Sec. 5.3, by
                filing a written notice. The bank must file this written notice with
                the appropriate OCC licensing office no later than 10 days after making
                the investment. The written notice must:
                * * * * *
                 (2) State:
                 (i) Which paragraphs of Sec. 5.34(f)(5) describe the activity; or
                 (ii) If the activity is substantively the same as a previously
                approved activity, as defined in Sec. 5.3:
                 (A) How the activity is substantively the same as a previously
                approved activity;
                 (B) The citation to the applicable precedent; and
                 (C) That the activity will be conducted in accordance with the same
                terms and conditions applicable to the previously approved activity;
                 (3) Certify that the bank is well capitalized and well managed, as
                defined in Sec. 5.3, at the time of the investment;
                 (4) Describe how the bank has the ability to prevent the enterprise
                from engaging in activities that are not set forth in Sec. 5.34(f)(5)
                or not contained in published OCC precedent for previously approved
                activities, as defined in Sec. 5.3, or how the bank otherwise has the
                ability to withdraw its investment;
                * * * * *
                 (f) Non-controlling investment; application procedure--(1) In
                general. A national bank must file an application and obtain prior
                approval before making or acquiring, either directly or through an
                operating subsidiary, a non-controlling investment in an enterprise if
                the non-controlling investment does not qualify for the notice
                procedure set forth in paragraph (e) of this section because the bank
                is unable to make the representation required by paragraph (e)(2) or
                the certifications required by paragraphs (e)(3) or (e)(7) of this
                section. The application must include the information required in
                paragraphs (e)(1) and (e)(4) through (e)(6) of this section and the
                information required by paragraphs (e)(2), (e)(3), and (e)(7) of this
                section, if possible. If the bank is unable to make the representation
                set forth in paragraph (e)(2) of this section, the bank's application
                must explain why the activity in which the enterprise engages is a
                permissible activity for a national bank and why the filer should be
                permitted to hold a non-controlling investment in an enterprise engaged
                in that activity. A bank may not make a non-controlling investment if
                it is unable to make the representations and certifications specified
                in paragraphs (e)(1) and (e)(4) through (e)(6) of this section.
                 (2) Expedited review. An application submitted by a national bank
                is deemed approved by the OCC as of the 10th day
                [[Page 18772]]
                after the application is received by the OCC if:
                 (i) The national bank makes the representation required by
                paragraph (e)(2) and the certification required by paragraph (e)(3) of
                this section;
                 (ii) The book value of the national bank's non-controlling
                investment for which the application is being submitted is no more than
                1% of the bank's capital and surplus;
                 (iii) No more than 50% of the enterprise is owned or controlled by
                banks or savings associations subject to examination by an appropriate
                Federal banking agency or credit unions insured by the National Credit
                Union Association; and
                 (iv) The OCC has not notified the national bank that the
                application has been removed from expedited review, or the expedited
                review process is extended, under Sec. 5.13(a)(2).
                 (g) Non-controlling investment; no application or notice required.
                A national bank may make or acquire, either directly or through an
                operating subsidiary, a non-controlling investment in an enterprise
                without an application or notice to the OCC, if the:
                 (1) Activities of the enterprise are limited to those activities
                previously reported by the bank in connection with the making or
                acquiring of a non-controlling investment;
                 (2) Activities of the enterprise continue to be legally permissible
                for a national bank;
                 (3) The bank's non-controlling investment will be made in
                accordance with any conditions imposed by the OCC in approving any
                prior non-controlling investment in an enterprise conducting these same
                activities; and
                 (4) The bank is able to make the representations and certifications
                specified in paragraphs (e)(3) through (e)(7) of this section.
                * * * * *
                 (i) Non-controlling investments by Federal branches. A Federal
                branch that is well capitalized and well managed, as defined in Sec.
                5.3, may make a non-controlling investment in accordance with paragraph
                (e) of this section in the same manner and subject to the same
                conditions and requirements as a national bank, and subject to any
                additional requirements that may apply under 12 CFR 28.10(c).
                 (j) Exceptions to rules of general applicability. Sections 5.8,
                5.10, and 5.11 do not apply to this section. However, if the OCC
                concludes that an application presents significant or novel policy,
                supervisory, or legal issues, the OCC may determine that some or all
                provisions in Sec. Sec. 5.8, 5.10, and 5.11 apply.
                Sec. 5.37 [Amended]
                 27. Amend Sec. 5.37 by:
                0
                a. In paragraph (a), removing ``317d'' and adding in its place
                ``371d'';
                0
                b. Removing paragraph (c)(3);
                0
                c. In paragraph (d)(1)(i) and (d)(3)(i), removing the word ``shall''
                and adding in its place the word ``must'' each time it appears;
                0
                d. In paragraph (d)(1)(i), removing the phrase ``any corporation'' and
                adding in its place the phrase ``any corporation, partnership, or
                similar entity (e.g., a limited liability company)'';
                0
                e. In paragraph (d)(3)(i), removing the phrase ``as defined in 12 CFR
                part 6'' and adding in its place the phrase ``as defined in Sec.
                5.3''; and
                0
                f. In paragraph (d)(5), adding '' 5.9,'' after ``5.8,'' each time it
                appears.
                0
                28. Amend Sec. 5.38 by:
                0
                a. In paragraph (a), adding the word ``and'' before ``5412(b)(2)(B)'';
                0
                b. In paragraph (b), adding ``(12 U.S.C. 1828(m))'' after the word
                ``Act'';
                0
                c. Removing and reserving paragraph (d);
                0
                d. Revising paragraph (e)(2)(i)(A);
                0
                e. In paragraph (e)(2)(i)(C), removing the phrase ``generally accepted
                accounting principles (GAAP)'' and adding in its place the word
                ``GAAP'';
                0
                f. In paragraph (e)(2)(iii) introductory text, removing the word
                ``subsidiaries'' and adding in its place the word ``entities'';
                0
                g. Removing the word ``and'' at the end of paragraph (e)(2)(iii)(A);
                0
                h. In paragraph (e)(2)(iii)(B), removing the period and adding in its
                place ``; and'';
                0
                i. Adding new paragraph (e)(2)(iii)(C);
                0
                j. In paragraph (e)(2)(iv)(B), removing the word ``shall'' and adding
                in its place the word ``may'';
                0
                k. In paragraph (e)(3), removing the word ``state'' and adding in its
                place the word ``State'';
                0
                l. In paragraph (e)(4), removing the word ``shall'' and adding in its
                place the word ``must'';
                0
                m. Redesignating paragraphs (e)(5) through (7) as paragraphs (f)
                through (h);
                0
                n. Revising newly redesignated paragraph (f); and
                0
                o. In newly redesignated paragraph (h), removing the word ``shall''
                each time it appears and adding in its place the word ``may''.
                 The addition and revisions read as follows.
                Sec. 5.38 Operating subsidiaries of a Federal savings association.
                * * * * *
                 (e) * * *
                 (2) * * *
                 (i) * * *
                 (A) The savings association has the ability to control the
                management and operations of the subsidiary, and no other person or
                entity has the ability to exercise effective control or influence over
                the management or operations of the subsidiary to an extent equal to or
                greater than that of the savings association or an operating subsidiary
                thereof;
                * * * * *
                 (iii) * * *
                 (C) A trust formed for purpose of securitizing assets held by the
                savings association as part of its business.
                * * * * *
                 (f) Procedures--(1) Application required. (i) A Federal savings
                association must first submit an application to, and receive prior
                approval from, the OCC to establish or acquire an operating subsidiary,
                or to perform a new activity in an existing operating subsidiary.
                 (ii) The application must explain, as appropriate, how the savings
                association ``controls'' the enterprise, describing in full detail
                structural arrangements where control is based on factors other than
                savings association ownership of more than 50 percent of the voting
                interest of the subsidiary and the ability to control the management
                and operations of the subsidiary by holding voting interests sufficient
                to select the number of directors needed to control the subsidiary's
                board and to select and terminate senior management. In the case of a
                limited partnership or limited liability company that does not qualify
                for the expedited review procedure set forth in paragraph (f)(2) of
                this section, the savings association must provide a statement
                explaining why it is not eligible. The application also must include a
                complete description of the savings association's investment in the
                subsidiary, the proposed activities of the subsidiary, the
                organizational structure and management of the subsidiary, the
                relations between the savings association and the subsidiary, and other
                information necessary to adequately describe the proposal. To the
                extent that the application relates to the initial affiliation of the
                savings association with a company engaged in insurance activities, the
                savings association must describe the type of insurance activity in
                which the company is engaged and has present plans to conduct. The
                savings association must also list for each State the lines of business
                for which the company holds, or will hold, an insurance license,
                indicating the State where the company holds a resident license or
                charter, as applicable. The application must state whether the
                operating subsidiary will conduct any
                [[Page 18773]]
                activity at a location other than the home office or a previously
                approved branch of the savings association. The OCC may require a filer
                to submit a legal analysis if the proposal is novel, unusually complex,
                or raises substantial unresolved legal issues. In these cases, the OCC
                encourages filers to have a prefiling meeting with the OCC. Any savings
                association receiving approval under this paragraph is deemed to have
                agreed that the subsidiary will conduct the activity in a manner
                consistent with published OCC guidance.
                 (2) Expedited review. (i) An application to establish or acquire an
                operating subsidiary, or to perform a new activity in an existing
                operating subsidiary, that meets the requirements of this paragraph is
                deemed approved by the OCC as of the 30th day after the filing is
                received by the OCC, unless the OCC notifies the filer prior to that
                date that the filing has been removed from expedited review, or the
                expedited review process is extended under Sec. 5.13(a)(2). Any
                savings association receiving approval under this paragraph is deemed
                to have agreed that the subsidiary will conduct the activity in a
                manner consistent with published OCC guidance.
                 (ii) An application is eligible for expedited review if all of the
                following requirements are met:
                 (A) The savings association is well capitalized and well managed,
                as defined in Sec. 5.3;
                 (B) The activity is listed in paragraph (f)(5) this section or is
                substantively the same as a previously approved activity, as defined in
                Sec. 5.3, and the activity will be conducted in accordance with the
                same terms and conditions applicable to the previously approved
                activity;
                 (C) The entity is a corporation, limited liability company, limited
                partnership or trust; and
                 (D) The savings association or an operating subsidiary thereof:
                 (1) Has the ability to control the management and operations of the
                subsidiary and no other person or entity has the ability to exercise
                effective control or influence over the management or operations of the
                subsidiary to an extent equal to or greater than that of the savings
                association or an operating subsidiary thereof. The ability to control
                the management and operations means:
                 (i) In the case of a subsidiary that is a corporation, the savings
                association or an operating subsidiary thereof holds voting interests
                sufficient to select the number of directors needed to control the
                subsidiary's board and to select and terminate senior management;
                 (ii) In the case of a subsidiary that is a limited partnership, the
                savings association or an operating subsidiary thereof has the ability
                to control the management and operations of the subsidiary by
                controlling the selection and termination of senior management;
                 (iii) In the case of a subsidiary that is a limited liability
                company, the savings association or an operating subsidiary thereof has
                the ability to control the management and operations of the subsidiary
                by controlling the selection and termination of senior management; or
                 (iv) In the case of a subsidiary that is a trust, the savings
                association or an operating subsidiary thereof has the ability to
                replace the trustee at will;
                 (2) Holds more than 50 percent of the voting, or equivalent,
                interests in the subsidiary, and:
                 (i) In the case of a subsidiary that is a limited partnership, the
                savings association or an operating subsidiary thereof is the sole
                general partner of the limited partnership, provided that under the
                partnership agreement, limited partners have no authority to bind the
                partnership by virtue solely of their status as limited partners;
                 (ii) In the case of a subsidiary that is a limited liability
                company, the savings association or an operating subsidiary thereof is
                the sole managing member of the limited liability company, provided
                that under the limited liability company agreement, other limited
                liability company members have no authority to bind the limited
                liability company by virtue solely of their status as members; or
                 (iii) In the case of a subsidiary that is a trust, the savings
                association or an operating subsidiary thereof is the sole beneficial
                owner of the trust; and
                 (3) Is required to consolidate its financial statements with those
                of the subsidiary under GAAP. A filer proposing to qualify for
                expedited review must include in the application all necessary
                information showing the application meets the requirements.
                 (3) Exceptions to rules of general applicability. Sections 5.8,
                5.10, and 5.11 do not apply to this section. However, if the OCC
                concludes that an application presents significant or novel policy,
                supervisory, or legal issues, the OCC may determine that some or all
                provisions in Sec. Sec. 5.8, 5.10, and 5.11 apply.
                 (4) OCC review and approval. The OCC reviews a Federal savings
                association's application to determine whether the proposed activities
                are legally permissible under Federal savings association law and to
                ensure that the proposal is consistent with safe and sound banking
                practices and OCC policy and does not endanger the safety or soundness
                of the parent Federal savings association. As part of this process, the
                OCC may request additional information and analysis from the filer.
                 (5) Activities eligible for expedited review. The following
                activities qualify for the expedited review procedures in paragraph
                (f)(2) of this section, provided the activity is conducted pursuant to
                the same terms and conditions as would be applicable if the activity
                were conducted directly by a Federal savings association:
                 (i) Holding and managing assets acquired by the parent savings
                association or its operating subsidiaries, including investment assets
                and property acquired by the savings association through foreclosure or
                otherwise in good faith to compromise a doubtful claim, or in the
                ordinary course of collecting a debt previously contracted;
                 (ii) Providing services to or for the savings association or its
                affiliates, including accounting, auditing, appraising, advertising and
                public relations, and financial advice and consulting;
                 (iii) Making loans or other extensions of credit, and selling money
                orders and travelers checks;
                 (iv) Purchasing, selling, servicing, or warehousing loans or other
                extensions of credit, or interests therein;
                 (v) Providing management consulting, operational advice, and
                services for other financial institutions;
                 (vi) Providing check payment services;
                 (vii) Acting as investment adviser (including an adviser with
                investment discretion) or financial adviser or counselor to
                governmental entities or instrumentalities, businesses, or individuals,
                including advising registered investment companies and mortgage or real
                estate investment trusts;
                 (viii) Providing financial and transactional advice and assistance,
                including advice and assistance for customers in structuring,
                arranging, and executing mergers and acquisitions, divestitures, joint
                ventures, leveraged buyouts, swaps, foreign exchange, derivative
                transactions, coin and bullion, and capital restructurings;
                 (ix) Underwriting and reinsuring credit life and disability
                insurance;
                 (x) Leasing of personal property;
                 (xi) Providing securities brokerage;
                 (xii) Underwriting and dealing, including making a market, in
                savings association permissible securities and purchasing and selling
                as principal, asset backed obligations;
                [[Page 18774]]
                 (xiii) Acting as an insurance agent or broker for credit life,
                disability, and unemployment insurance; single property interest
                insurance; and title insurance;
                 (xiv) Offering correspondent services to the extent permitted by
                published OCC precedent for Federal savings associations;
                 (xv) Acting as agent or broker in the sale of fixed annuities;
                 (xvi) Offering debt cancellation or debt suspension agreements;
                 (xvii) Providing escrow services;
                 (xviii) Acting as a transfer agent; and
                 (xix) Providing or selling postage stamps.
                 (6) Redesignation. A Federal savings association that proposes to
                redesignate a service corporation as an operating subsidiary must
                submit a notification to the OCC at least 30 days prior to the
                redesignation date. The notification must include a description of how
                the redesignated service corporation meets all of the requirements of
                this section to be an operating subsidiary, a resolution of the savings
                association's board of directors approving the redesignation, and the
                proposed effective date of the redesignation. The savings association
                may effect the redesignation on the proposed date unless the OCC
                notifies the savings association otherwise prior to that date. The OCC
                may require an application if the redesignation presents policy,
                supervisory, or legal issues.
                 (7) Fiduciary powers. (i) If an operating subsidiary proposes to
                accept fiduciary appointments for which fiduciary powers are required,
                such as acting as trustee or executor, then the Federal savings
                association must have fiduciary powers under section 5(n) of the Home
                Owners' Loan Act, 12 U.S.C. 1464(n), and the subsidiary also must have
                its own fiduciary powers under the law applicable to the subsidiary.
                 (ii) Unless the subsidiary is a registered investment adviser, if
                an operating subsidiary proposes to exercise investment discretion on
                behalf of customers or provide investment advice for a fee, the Federal
                savings association must have prior OCC approval to exercise fiduciary
                powers pursuant to Sec. 5.26 (or a predecessor provision) and 12 CFR
                part 150.
                 (8) Expiration of approval. Approval expires if the Federal savings
                association has not established or acquired the operating subsidiary,
                or commenced the new activity in an existing operating subsidiary
                within 12 months after the date of the approval, unless the OCC
                shortens or extends the time period.
                0
                29. Amend Sec. 5.39 by:
                0
                a. Revising paragraph (a);
                0
                b. In paragraph (b), removing the phrase ``a notice'' and adding in its
                place the phrase ``an application'', and removing ``Sec. 5.34(e)(5)''
                and adding in its place ``Sec. 5.34(f)'';
                0
                c. In paragraphs (b), (h)(2), and (j)(1)(ii), removing the word
                ``shall'' and adding in its place the word ``must'' each time it
                appears;
                0
                d. In paragraph (d)(1), removing the phrase ``shall have'' and adding
                in its place the word ``has'';
                0
                e. Removing paragraphs (d)(2), (d)(11) and (d)(12) and redesignating
                paragraphs (d)(3) through (d)(10) as paragraphs (d)(2) through (d)(9);
                0
                f. In paragraphs (e)(1)(ii) and (j)(2), removing the word ``state'' and
                adding in its place the word ``State'' each time it appears;
                0
                g. In paragraph (f)(1), removing the phrase ``Gramm-Leach-Bliley Act
                (GLBA)), 113 Stat. 1407-1409, (15 U.S.C. 6712 or 15 U.S.C. 6713)'' and
                adding in its place the phrase ``Gramm-Leach-Bliley Act, (15 U.S.C.
                6712 or 15 U.S.C. 6713))'';
                0
                h. In paragraph (f)(3), removing the phrase ``GLBA, 113 Stat. 1381''
                and adding in its place the phrase ``Gramm-Leach-Bliley Act (12 U.S.C.
                1843 note)'';
                0
                i. In paragraph (g)(1), adding the phrase ``, as defined in Sec. 5.3''
                after ``well managed'';
                0
                j. In paragraph (h)(2), removing the phrase ``generally accepted
                accounting principles'' and adding in its place the word ``GAAP'';
                0
                k. Revising paragraph (h)(5)(i);
                0
                l. Removing and reserving paragraph (h)(5)(ii);
                0
                m. In paragraphs (h)(5)(vi), removing the word ``GLBA'' and adding in
                its place the phrase ``Gramm-Leach-Bliley Act'';
                0
                n. Removing the phrase ``shall be'' and adding in its place the word
                ``is'' in paragraph (h)(6);
                0
                o. Revising paragraph (i);
                0
                p. In paragraph (j)(1)(i), removing the phrase ``OCC shall'' and adding
                in its place the phrase ``OCC will'' and removing the phrase ``shall
                be'' and adding in its place the word ``is''; and
                0
                q. In paragraph (k), removing the word ``GLBA'' and adding in its place
                the phrase ``Gramm-Leach-Bliley Act''.
                 The revisions read as follows.
                Sec. 5.39 Financial subsidiaries of a national bank.
                 (a) Authority. 12 U.S.C. 24a and 93a.
                * * * * *
                 (h) * * *
                 (5) * * *
                 (i) A financial subsidiary is deemed to be an affiliate of the bank
                and is not deemed to be a subsidiary of the bank;
                * * * * *
                 (i) Procedures to engage in activities through a financial
                subsidiary. A national bank that intends, directly or indirectly, to
                acquire control of, or hold an interest in, a financial subsidiary, or
                to commence a new activity in an existing financial subsidiary, must
                obtain OCC approval through the procedures set forth in paragraph
                (i)(1) or (i)(2) of this section.
                 (1) Certification with subsequent application. (i) At any time, a
                national bank may file a ``Financial Subsidiary Certification'' with
                the appropriate OCC licensing office listing the bank's depository
                institution affiliates and certifying that the bank and each of those
                affiliates is well capitalized and well managed.
                 (ii) Thereafter, at such time as the bank seeks OCC approval to
                acquire control of, or hold an interest in, a new financial subsidiary,
                or commence a new activity authorized under section 5136A(a)(2)(A)(i)
                of the Revised Statutes (12 U.S.C. 24a) in an existing subsidiary, the
                bank may file an application with the appropriate OCC licensing office
                at the time of acquiring control of, or holding an interest in, a
                financial subsidiary, or commencing such activity in an existing
                subsidiary. The application must be labeled ``Financial Subsidiary
                Application'' and must:
                 (A) State that the bank's Certification remains valid;
                 (B) Describe the activity or activities conducted by the financial
                subsidiary. To the extent the application relates to the initial
                affiliation of the bank with a company engaged in insurance activities,
                the bank should describe the type of insurance activity that the
                company is engaged in and has present plans to conduct. The bank must
                also list for each State the lines of business for which the company
                holds, or will hold, an insurance license, indicating the State where
                the company holds a resident license or charter, as applicable;
                 (C) Cite the specific authority permitting the activity to be
                conducted by the financial subsidiary. (Where the authority relied on
                is an agency order or interpretation under section 4(c)(8) or 4(c)(13),
                respectively, of the Bank Holding Company Act of 1956 (12 U.S.C.
                1843(c)(8) or (c)(13)), a copy of the order or interpretation should be
                attached);
                 (D) Certify that the bank will be well capitalized after making
                adjustments required by paragraph (h)(1) of this section;
                 (E) Demonstrate the aggregate consolidated total assets of all
                financial subsidiaries of the national bank do not exceed the lesser of
                45 percent of the
                [[Page 18775]]
                bank's consolidated total assets or $50 billion (or the increased level
                established by the indexing mechanism); and
                 (F) If applicable, certify that the bank meets the eligible debt
                requirement in paragraph (g)(3) of this section.
                 (2) Combined certification and application. A national bank may
                file a combined certification and application with the appropriate OCC
                licensing office at least five business days prior to acquiring control
                of, or holding an interest in, a financial subsidiary, or commencing a
                new activity authorized pursuant to section 5136A(a)(2)(A)(i) of the
                Revised Statutes (12 U.S.C. 24a(a)(2)(A)(i)) in an existing subsidiary.
                The written application must be labeled ``Financial Subsidiary
                Certification and Application'' and must:
                 (i) List the bank's depository institution affiliates and certify
                that the bank and each depository institution affiliate of the bank is
                well capitalized and well managed;
                 (ii) Describe the activity or activities to be conducted in the
                financial subsidiary. To the extent the application relates to the
                initial affiliation of the bank with a company engaged in insurance
                activities, the bank should describe the type of insurance activity
                that the company is engaged in and has present plans to conduct. The
                bank must also list for each State the lines of business for which the
                company holds, or will hold, an insurance license, indicating the State
                where the company holds a resident license or charter, as applicable;
                 (iii) Cite the specific authority permitting the activity to be
                conducted by the financial subsidiary. (Where the authority relied on
                is an agency order or interpretation under section 4(c)(8) or 4(c)(13),
                respectively, of the Bank Holding Company Act of 1956 (12 U.S.C.
                1843(c)(8) or (c)(13)), a copy of the order or interpretation should be
                attached);
                 (iv) Certify that the bank will remain well capitalized after
                making the adjustments required by paragraph (h)(1) of this section;
                 (v) Demonstrate the aggregate consolidated total assets of all
                financial subsidiaries of the national bank do not exceed the lesser of
                45% of the bank's consolidated total assets or $50 billion (or the
                increased level established by the indexing mechanism); and
                 (vi) If applicable, certify that the bank meets the eligible debt
                requirement in paragraph (g)(3) of this section.
                 (3) Approval. An application is deemed approved upon filing the
                information required by paragraphs (i)(1) or (i)(2) of this section
                within the time frames provided therein.
                 (4) Exceptions to rules of general applicability. Sections 5.8,
                5.10, 5.11, and 5.13 do not apply to activities authorized under this
                section.
                 (5) Community Reinvestment Act (CRA). A national bank may not apply
                under this paragraph (i) to commence a new activity authorized under
                section 5136A(a)(2)(A)(i) of the Revised Statutes (12 U.S.C. 24a), or
                directly or indirectly acquire control of a company engaged in any such
                activity, if the bank or any of its insured depository institution
                affiliates received a CRA rating of less than ``satisfactory record of
                meeting community credit needs'' on its most recent CRA examination
                prior to when the bank would file an application under this section.
                * * * * *
                Sec. 5.40 [Amended]
                0
                30. Amend Sec. 5.40 by:
                0
                a. Removing the word ``shall'' and adding in its place the word
                ``must'' each time it appears in paragraphs (b), (c)(1), (c)(2)(i),
                (c)(2)(ii), and (c)(3); and
                0
                b. In paragraph (c)(4), removing the phrase ``national bank'' and
                adding in its place the word ``bank'', removing the phrase ``Federal
                savings association'' and adding in its place the phrase ``savings
                association'', and removing the phrase ``is not eligible for'' and
                adding in its place the phrase ``has been removed from''.
                0
                31. Section 5.42 is amended by:
                0
                a. In paragraphs (d)(1) and (d)(2), removing the word ``shall'' and
                adding in its place the word ``must'' each time it appears;
                0
                b. Revising paragraph (d)(3);
                0
                c. In paragraph (d)(4), removing ``5.13(a)'' and adding in its place
                ``5.13'' each time it appears and removing the word ``application'' and
                adding in its place the word ``notice''.
                 The revision reads as follows.
                Sec. 5.42 Corporate title of a national bank or Federal savings
                association.
                * * * * *
                 (d) * * *
                 (3) Amendment to charter. A Federal savings association must amend
                its charter in accordance with 12 CFR 5.21 or 5.22, as applicable, to
                change its title.
                * * * * *
                0
                32. Section 5.43 is added to read as follows:
                Sec. 5.43 National bank director residency and citizenship waivers.
                 (a) Authority. 12 U.S.C. 72 and 93a.
                 (b) Scope. This section describes the procedures for the OCC to
                waive the residency and citizenship requirements for national bank
                directors set forth at 12 U.S.C. 72.
                 (c) Application Procedures--(1) Residency. A national bank may
                request a waiver of the residency requirement for any number of
                directors by filing a written application with the OCC. The OCC may
                grant a waiver on an individual basis or for any number of director
                positions.
                 (2) Citizenship. A national bank may request a waiver of the
                citizenship requirements for individuals who comprise up to a minority
                of the total number of directors by filing a written application with
                the OCC. The OCC may grant a waiver on an individual basis. A
                citizenship waiver is valid until the individual no longer serves on
                the board or the OCC revokes the waiver in accordance with paragraph
                (d) of this section.
                 (3) Biographical and Financial Reports. (i) Each subject of a
                citizenship waiver application must submit to the appropriate OCC
                licensing office the information prescribed in the Interagency
                Biographical and Financial Report, available at www.occ.gov.
                 (ii) The OCC may require additional information about any subject
                of a citizenship waiver application, including legible fingerprints, if
                appropriate. The OCC may waive any of the information requirements of
                this paragraph if the OCC determines that doing so is in the public
                interest.
                 (4) Exceptions to rules of general applicability. Sections 5.8,
                5.9, 5.10, and 5.11 do not apply to this section.
                 (d) Revocation of waiver--(1) Procedure. The OCC may revoke a
                residency or citizenship waiver. Before revocation, the OCC will
                provide written notice to the national bank and affected director(s) of
                its intention to revoke a residency or citizenship waiver and the basis
                for its intention. The bank and affected director(s) may respond in
                writing to the OCC within 10 calendar days, unless the OCC determines
                that a shorter period is appropriate in light of relevant
                circumstances. The OCC will consider the written responses of the bank
                and affected director(s), if any, prior to deciding whether or not to
                revoke a residency or citizenship waiver. The OCC will notify the
                national bank and the director of the OCC's decision to revoke a
                residency or citizenship waiver in writing.
                 (2) Effective date. The OCC's decision to revoke a residency or
                citizenship waiver is effective:
                 (i) If the director appeals pursuant to paragraph (e) of this
                section, upon the director's receipt of the decision of the
                Comptroller, an authorized delegate, or the appellate official, to
                uphold the
                [[Page 18776]]
                initial decision to revoke the residency or citizenship waiver; or
                 (ii) If the director does not appeal pursuant to paragraph (e) of
                this section, upon the expiration of the period to appeal.
                 (e) Appeal. (1) A director may seek review by appealing the OCC's
                decision to revoke a residency or citizenship waiver to the
                Comptroller, or an authorized delegate, within 15 days of the receipt
                of the OCC's written decision to revoke. The director may appeal on the
                grounds that the reasons for revocation are contrary to fact or
                arbitrary and capricious. The appellant must submit all documents and
                written arguments that the appellant wishes to be considered in support
                of the appeal.
                 (2) The Comptroller, or an authorized delegate, may designate an
                appellate official who was not previously involved in the decision
                leading to the appeal at issue. The Comptroller, an authorized
                delegate, or the appellate official considers all information submitted
                with the original application for the residency or citizenship waiver,
                the material before the OCC official who made the initial decision, and
                any information submitted by the appellant at the time of appeal.
                 (3) The Comptroller, an authorized delegate, or the appellate
                official will independently determine whether the reasons given for the
                initial decision to revoke are contrary to fact or arbitrary and
                capricious. If they determine either to be the case, the Comptroller,
                an authorized delegate, or the appellate official may reverse the
                initial decision to revoke the waiver.
                 (4) Upon completion of the review, the Comptroller, an authorized
                delegate, or the appellate official will notify the appellant in
                writing of the decision. If the initial decision is upheld, the
                decision to revoke the waiver is effective pursuant to paragraph
                (d)(2)(ii) of this section.
                 (f) Prior waivers. Notwithstanding paragraph (c)(2) of this
                section, any waiver granted by the OCC before [EFFECTIVE DATE OF THE
                FINAL RULE] remains in effect unless revoked pursuant to paragraph (d)
                of this section.
                Sec. 5.45 [Amended]
                0
                33. Amend Sec. 5.45 by:
                0
                a. In paragraphs (b), (e)(1), and (g)(5), removing the phrase ``Federal
                savings association'' and adding in its place ``Federal stock savings
                association'' each time it appears;
                0
                b. In paragraph (f)(3), removing the phrase ``savings association's''
                and adding in its place ``Federal stock savings association's'';
                0
                c. In paragraphs (g)(1) introductory text and (g)(4)(i) introductory
                text and in paragraphs (g)(2)(iii), (g)(4)(i)(C), (h), and (i),
                removing the phrase ``savings association'' and adding in its place
                ``Federal stock savings association'' each time it appears;
                0
                d. In paragraph (g)(4)(i) introductory text and paragraphs (h) and (i),
                removing the word ``shall'' and adding in its place the word ``must'';
                and
                0
                e. In paragraph (h), removing the number ``197'' and adding in its
                place ``16''.
                0
                34. Amend Sec. 5.46 by:
                0
                a. In paragraph (b), removing the word ``shall'' and adding in its
                place the word ``must'' in the first sentence and removing the word
                ``shall'' and adding in its place the word ``may'' in the second
                sentence;
                0
                b. Revising paragraph (g)(1)(ii);
                0
                c. In paragraphs (g)(2), (i)(1) introductory text, (i)(3)(i)
                introductory text, (i)(4), (j), and (k), removing the word ``shall''
                and adding in its place the word ``must'' each time it appears;
                0
                d. In paragraph (g)(2), removing the word ``applicant'' and adding in
                its place the word ``filer'';
                0
                e. Revising paragraphs (h) and (i)(2);
                0
                f. In paragraph (i)(5), adding the phrase ``, unless the OCC specifies
                a longer period'' after the word ``approval'';
                0
                g. In paragraph (i)(6)(i), removing the phrase ``U.S. generally
                accepted accounting principles'' and adding in its place the word
                ``GAAP''; and
                0
                h. In paragraph (i)(6)(ii), removing the word ``U.S.''.
                 The additions and revisions read as follows.
                Sec. 5.46 Changes in permanent capital of a national bank.
                * * * * *
                 (g) * * *
                 (1) * * *
                 (ii) Prior approval required. In addition to a notice of capital
                increase under paragraph (i)(3) of this section, a national bank must
                submit an application under paragraph (i)(1) or (i)(2) of this section
                and obtain prior OCC approval to increase its permanent capital if the
                bank is:
                 (A) Required to receive OCC approval pursuant to letter, order,
                directive, written agreement, or otherwise;
                 (B) Selling common or preferred stock for consideration other than
                cash; or
                 (C) Receiving a material noncash contribution to capital surplus.
                * * * * *
                 (h) Decreases in permanent capital. A national bank must submit an
                application and obtain prior approval under paragraph (i)(1) or (i)(2)
                of this section for any reduction of its permanent capital. A national
                bank may request approval for a reduction in capital for multiple
                quarters. The request need only specify a total dollar amount for the
                requested period and need not specify amounts for each quarter.
                 (i) * * *
                 (2) Expedited review. An eligible bank's application is deemed
                approved by the OCC 15 days after the date the OCC receives the
                application described in paragraph (i)(1) of this section, unless the
                OCC notifies the bank prior to that date that the application has been
                removed from expedited review, or the expedited review process is
                extended, under Sec. 5.13(a)(2). An eligible bank seeking to decrease
                its capital may request OCC approval for up to four consecutive
                quarters. The request need only specify a total dollar amount for the
                four-quarter period and need not specify amounts for each quarter. An
                eligible bank may decrease its capital pursuant to such a plan only if
                the bank maintains its eligible bank status before and after each
                decrease in its capital.
                * * * * *
                0
                35. Amend Sec. 5.47 by:
                0
                a. In paragraph (b), removing the phrase ``debt notes'' and adding in
                its place the word ``debt'';
                0
                b. Revising paragraph (c);
                0
                c. In paragraph (d)(1)(ii), removing the phrase ``Federal Deposit
                Insurance Corporation (FDIC)'' and adding in its place the word
                ``FDIC'';
                0
                d. In paragraph (d)(1)(iv)(B), removing the word ``state'' and adding
                in its place the word ``State'';
                0
                e. In paragraph (d)(1)(vi), removing the word ``shall'' and adding in
                its place the word ``must'' the first time it appears;
                0
                f. In paragraphs (d)(1)(vi) and (vii), removing the word ``shall'' and
                adding in its place the word ``may'' the second time it appears;
                0
                g. In paragraph (d)(2) introductory text, removing the word ``note''
                and adding in its place the word ``document'';
                0
                h. In paragraph (d)(3)(ii)(C), adding the phrase ``, if applicable to
                the subordinated debt issuance'' after the word ``default'';
                0
                i. Adding paragraph (d)(3)(ii)(D);
                0
                j. In paragraph (e), removing the phrase ``, including, for an advanced
                approaches national bank, the disclosure requirement in 12 CFR
                3.20(d)(1)(xi)''; and
                0
                k. Revising paragraphs (f), (g) and (h).
                 The addition and revisions read as follows.
                [[Page 18777]]
                Sec. 5.47 Subordinated debt issued by a national bank.
                * * * * *
                 (c) Definitions. The following definitions apply to this section:
                 (1) Capital plan means a plan describing the means and schedule by
                which a national bank will attain specified capital levels or ratios,
                including a capital restoration plan filed with the OCC under 12 U.S.C.
                1831o and 12 CFR 6.5.
                 (2) Original maturity means the stated maturity of the subordinated
                debt note. If the subordinated debt note does not have a stated
                maturity, then original maturity means the earliest possible date the
                subordinated debt note may be redeemed, repurchased, prepaid,
                terminated, or otherwise retired by the national bank pursuant to the
                terms of the subordinated debt note.
                 (3) Payment on subordinated debt means principal and interest, and
                premium, if any.
                 (4) Subordinated debt document means any document pertaining to an
                issuance of subordinated debt, and any renewal, extension, amendment,
                modification, or replacement thereof, including the subordinated debt
                note, and any global note, pricing supplement, note agreement, trust
                indenture, paying agent agreement, or underwriting agreement.
                 (5) Tier 2 capital has the same meaning as set forth in 12 CFR
                3.20(d).
                * * * * *
                 (d) * * *
                 (3) * * *
                 (ii) * * *
                 (D) A statement that the obligation may be fully subordinated to
                interests held by the U.S. government in the event that the national
                bank enters into a receivership, insolvency, liquidation, or similar
                proceeding.* * * * *
                 (f) Process and procedures--(1) Issuance of subordinated debt--(i)
                Approval--(A) Eligible bank. An eligible bank is required to receive
                prior approval from the OCC to issue any subordinated debt, in
                accordance with paragraph (g)(1)(i) of this section, if:
                 (1) The national bank will not continue to be an eligible bank
                after the transaction;
                 (2) The OCC has previously notified the national bank that prior
                approval is required; or
                 (3) Prior approval is required by law.
                 (B) National bank not an eligible bank. A national bank that is not
                an eligible bank must receive prior OCC approval to issue any
                subordinated debt, in accordance with paragraph (g)(1)(i) of this
                section.
                 (ii) Application to include subordinated debt in tier 2 capital. A
                national bank that intends to include subordinated debt in tier 2
                capital must submit an application to the OCC for approval, in
                accordance with paragraph (h) of this section, before or within ten
                days after issuing the subordinated debt. Where a national bank's
                application to issue subordinated debt has been deemed to be approved,
                in accordance with paragraph (g)(2)(i) of this section, and the
                national bank does not contemporaneously receive approval from the OCC
                to include the subordinated debt as tier 2 capital, the national bank
                must submit an application for approval to include subordinated debt in
                tier 2 capital, pursuant to paragraph (h) of this section, after
                issuance of the subordinated debt. A national bank may not include
                subordinated debt in tier 2 capital unless the national bank has filed
                the application with the OCC and received approval from the OCC that
                the subordinated debt issued by the national bank qualifies as tier 2
                capital.
                 (2) Prepayment of subordinated debt--(i) Subordinated debt not
                included in tier 2 capital--(A) Eligible bank. An eligible bank is
                required to receive prior approval from the OCC to prepay any
                subordinated debt that is not included in tier 2 capital (including
                acceleration, repurchase, redemption prior to maturity, and exercising
                a call option), in accordance with paragraph (g)(1)(ii) of this
                section, only if:
                 (1) The national bank will not be an eligible bank after the
                transaction;
                 (2) The OCC has previously notified the national bank that prior
                approval is required;
                 (3) Prior approval is required by law; or
                 (4) The amount of the proposed prepayment is equal to or greater
                than one percent of the national bank's total capital, as defined in 12
                CFR 3.2.
                 (B) National bank not an eligible bank. A national bank that is not
                an eligible bank must receive prior OCC approval to prepay any
                subordinated debt that is not included in tier 2 capital (including
                acceleration, repurchase, redemption prior to maturity, and exercising
                a call option), in accordance with paragraph (g)(1)(ii) of this
                section.
                 (ii) Subordinated debt included in tier 2 capital. All national
                banks must receive prior OCC approval to prepay subordinated debt
                included in tier 2 capital, in accordance with paragraph (g)(1)(ii) of
                this section.
                 (3) Material changes to existing subordinated debt documents. A
                national bank must receive prior approval from the OCC in accordance
                with paragraph (g)(1)(iii) of this section prior to making a material
                change to an existing subordinated debt document if the bank would have
                been required to receive OCC approval to issue the security under
                paragraph (f)(1)(i) of this section or to include it in tier 2 capital
                under paragraph (h) of this section.
                 (g) Prior approval procedure--(1) Application--(i) Issuance of
                subordinated debt. A national bank required to obtain OCC approval
                before issuing subordinated debt must submit an application to the
                appropriate OCC licensing office. The application must include:
                 (A) A description of the terms and amount of the proposed issuance;
                 (B) A statement of whether the national bank is subject to a
                capital plan or required to file a capital plan with the OCC and, if
                so, how the proposed change conforms to the capital plan;
                 (C) A copy of the proposed subordinated note and any other
                subordinated debt documents; and
                 (D) A statement that the subordinated debt issue complies with all
                applicable laws and regulations.
                 (ii) Prepayment of subordinated debt. A national bank required to
                obtain OCC approval before prepaying subordinated debt, pursuant to
                paragraph (f)(2) of this section, must submit an application to the
                appropriate OCC licensing office. The application must include:
                 (A) A description of the terms and amount of the proposed
                prepayment;
                 (B) A statement of whether the national bank is subject to a
                capital plan or required to file a capital plan with the OCC and, if
                so, how the proposed change conforms to the capital plan;
                 (C) A copy of the subordinated debt note the national bank is
                proposing to prepay and any other subordinated debt documents; and
                 (D) Either:
                 (1) A statement explaining why the national bank believes that
                following the proposed prepayment the national bank would continue to
                hold an amount of capital commensurate with its risk; or
                 (2) A description of the replacement capital instrument that meets
                the criteria for tier 1 or tier 2 capital under 12 CFR 3.20, including
                the amount of such instrument, and the time frame for issuance.
                 (iii) Material changes to existing subordinated debt. A national
                bank required to obtain OCC approval before making a material change to
                an existing subordinated debt document, pursuant to paragraph (f)(3) of
                this section, must submit an application to the appropriate OCC
                licensing office. The application must include:
                 (A) A description of all proposed changes;
                [[Page 18778]]
                 (B) A statement of whether the national bank is subject to a
                capital plan or required to file a capital plan with the OCC and, if
                so, how the proposed change conforms to the capital plan;
                 (C) A copy of the revised subordinated debt documents reflecting
                all proposed changes; and
                 (D) A statement that the proposed changes to the subordinated debt
                documents complies with all applicable laws and regulations.
                 (iv) Additional information. The OCC reserves the right to request
                additional relevant information, as appropriate.
                 (2) Approval--(i) General. The application is deemed approved by
                the OCC as of the 30th day after the filing is received by the OCC,
                unless the OCC notifies the national bank prior to that date that the
                filing presents a significant supervisory, or compliance concern, or
                raises a significant legal or policy issue.
                 (ii) Prepayment. Notwithstanding this paragraph (g)(2)(i) of this
                section, if the application for prior approval is for prepayment, the
                national bank must receive affirmative approval from the OCC. If the
                OCC requires the national bank to replace the subordinated debt, the
                national bank must receive affirmative approval that the replacement
                capital instrument meets the criteria for tier 1 or tier 2 capital
                under 12 CFR 3.20 and must issue the replacement instrument prior to
                prepaying the subordinated debt, or immediately thereafter.\4\
                ---------------------------------------------------------------------------
                 \4\ A national bank may replace tier 2 capital instruments
                concurrent with the redemption of existing tier 2 capital
                instruments.
                ---------------------------------------------------------------------------
                 (iii) Tier 2 capital. Following notification to the OCC pursuant to
                paragraph (f)(1)(ii) of this section that the national bank has issued
                the subordinated debt, the OCC will notify the national bank whether
                the subordinated debt qualifies as tier 2 capital.
                 (iv) Expiration of approval. Approval expires if a national bank
                does not complete the sale of the subordinated debt within one year of
                approval.
                 (h) Application procedure for inclusion in tier 2 capital. (1) A
                national bank must submit an application to the appropriate OCC
                licensing office in writing before or within ten days after issuing
                subordinated debt that it intends to include in tier 2 capital. A
                national bank may not include such subordinated debt in tier 2 capital
                unless the national bank has received approval from the OCC that the
                subordinated debt qualifies as tier 2 capital.
                 (2) The application must include:
                 (i) The terms of the issuance;
                 (ii) The amount or projected amount and date or projected date of
                receipt of funds;
                 (iii) The interest rate or expected calculation method for the
                interest rate;
                 (iv) Copies of the final subordinated debt documents; and
                 (v) A statement that the issuance complies with all applicable laws
                and regulations.
                * * * * *
                Sec. 5.48 [Amended]
                0
                36. Amend Sec. 5.48 in paragraphs (b), (e)(1), (e)(2)(i), (e)(3)(i)
                introductory text, (e)(3)(ii), (e)(3)(iii), (e)(4), (e)(5), (e)(6), and
                (f)(2)(ii) by removing the word ``shall'' and adding in its place the
                word ``must'' each time it appears.
                0
                 37. Section 5.50 is amended by:
                0
                a. In paragraphs (b), (c)(3)(v)(B), (f)(2)(i), (f)(2)(vii),
                (f)(3)(ii)(B), (f)(3)(ii)(C), (g)(1) introductory text, (h), (i)(1)(i),
                (i)(1)(ii), (i)(4)(ii), and (i)(5), removing the word ``shall'' and
                adding in its place the word ``must'' each time it appears;
                0
                b. In paragraph (c)(2)(iii), removing the word ``(HOLA)'';
                0
                c. In paragraph (d)(1)(ii), removing the phrase ``shall be'' and adding
                in its place the word ``is'';
                0
                d. In paragraph (d)(5), removing the word ``their'' and adding in its
                place the phrase ``his or her'';
                0
                e. Removing paragraph (d)(8);
                0
                f. Redesignating paragraphs (d)(6) through (7) as paragraphs (d)(7)
                through (8);
                0
                g. Adding new paragraph (d)(6);
                0
                h. In newly redesignated paragraph (d)(7), removing the word ``HOLA''
                and adding in its place the phrase ``Home Owners' Loan Act, 12 U.S.C.
                1464'';
                0
                i. In paragraph (f)(2)(ii), removing the phrase ``shall be'' and adding
                in its place the word ``are'';
                0
                 j. In paragraph (f)(2)(ii)(E), removing the phrase ``defined in Sec.
                192.25 of this chapter shall'' and adding in its place the phrase
                ``defined in 12 CFR 192.25 is'';
                0
                k. In paragraph (f)(2)(viii), removing the word ``shall'' and adding in
                its place the word ``will'';
                0
                l. In paragraph (f)(3)(i)(A), removing the phrase ``on the OCC's
                internet web page,'' and adding in its place the word ``at'';
                0
                m. In paragraphs (f)(3)(ii)(A), (f)(3)(ii)(B), and (f)(3)(iii)
                introductory text, removing the word ``applicant'' and adding in its
                place the word ``filer'';
                0
                n. In paragraph (f)(3)(ii)(C), removing the phrase ``An applicant'' and
                adding in its place the phrase ``A filer'';
                0
                o. Removing paragraph (f)(3)(iv);
                0
                p. Removing the phrase ``of notice'' in the heading of paragraph
                (f)(5);
                0
                q. Revising paragraph (f)(6);
                0
                 r. In paragraph (g)(1) introductory text, removing the word
                ``applicant'' and adding in its place the word ``filer''; and
                0
                 s. Revising paragraph (g)(2)(i).
                 The addition and revisions read as follows.
                Sec. 5.50 Change in control of a national bank or Federal savings
                association; reporting of stock loans.
                * * * * *
                 (d) * * *
                 (6) Depository institution means a depository institution as
                defined in section 3(c)(1) of the Federal Deposit Insurance Act, 12
                U.S.C. 1813(c)(1).
                * * * * *
                 (f) * * *
                 (6) Notification of disapproval. (i) Written notice by OCC. If the
                OCC disapproves a notice, it will notify the filer in writing within
                three days after the decision. The OCC's written disapproval will
                contain a statement of the basis for disapproval and indicate that the
                filer may request a hearing.
                 (ii) Hearing Request. The filer may request a hearing by the OCC
                within 10 days of receipt of disapproval, pursuant to the procedures in
                12 CFR part 19, subpart H. Following final agency action under 12 CFR
                part 19, further review by the courts is available. (See 12 U.S.C.
                1817(j)(5)).
                 (iii) Failure to request a hearing. If a filer fails to request a
                hearing with a timely request, the notice of disapproval constitutes a
                final and unappealable order.
                * * * * *
                 (g) * * *
                 (2) * * *
                 (i) Upon the request of any person, the OCC releases the
                information provided in the public portion of the notice and makes it
                available for public inspection and copying as soon as possible after a
                notice has been filed. In certain circumstances the OCC may determine
                that the release of the information would not be in the public
                interest. In addition, the OCC makes the date that the notice is filed,
                the disposition of the notice and the date thereof, and the
                consummation date of the transaction, if applicable, publicly available
                in the OCC's ``Weekly Bulletin.''
                * * * * *
                0
                38. Amend Sec. 5.51 by:
                0
                a. Revising paragraph (a);
                0
                b. In paragraph (c)(4), adding the phrase ``chief risk officer,'' after
                the phrase ``chief investment officer,''
                0
                c. In paragraph (c)(7)(ii), adding the phrase ``that requires action to
                improve the financial condition of the national
                [[Page 18779]]
                bank or Federal savings association'' after the word ``agreement'';
                0
                d. In paragraph (d) introductory text, and paragraphs (e)(1),
                (e)(6)(i)(C), (e)(6)(1)(D)(2), (e)(6)(i)(E), and (f)(1), removing the
                word ``shall'' and adding in its place the word ``must'' each time it
                appears;
                0
                e. In paragraph (e)(6)(i)(E), removing the phrase ``his or her'' and
                adding in its place the word ``their'';
                0
                f. In paragraph (e)(8), adding ``, 5.9,'' after ``5.8''; and
                0
                g. In paragraphs (e)(8), (f)(3), and (f)(4), removing the word
                ``shall'' and adding in its place the word ``will''.
                 The revision reads as follows.
                Sec. 5.51 Changes in directors and senior executive officers of a
                national bank or Federal savings association.
                 (a) Authority. 12 U.S.C. 1831i, 3102(b), and 5412(b)(2)(B).
                * * * * *
                Sec. 5.52 [Amended]
                0
                39. Amend Sec. 5.52 in paragraph (c)(1) by removing the word ``shall''
                and adding in its place the word ``must''.
                0
                40. Amend Sec. 5.55 by:
                0
                a. In paragraph (b), removing the phrase ``or notice'';
                0
                b. Removing paragraph (d)(2) and redesignating paragraph (d)(3) as
                paragraph (d)(2);
                0
                c. Adding a new paragraph (d)(3); and
                0
                d. In paragraph (d)(4), removing the phrase ``generally accepted
                accounting principles (GAAP)'' and adding in its place the word
                ``GAAP'';
                0
                e. Revising paragraphs (e), (f), (g), and paragraph (h) introductory
                text;
                0
                f. Redesignating paragraphs (h)(1) through (h)(3) as paragraphs
                (h)(1)(i) through (h)(1)(iii);
                0
                g. Removing the last sentence of redesignated paragraph (h)(1)(iii);
                and
                0
                h. Adding new paragraph (h)(1) introductory text and paragraph (h)(2).
                 The additions and revisions read as follows:
                Sec. 5.55 Capital distributions by Federal savings associations.
                * * * * *
                 (d) * * *
                 (3) Control has the same meaning as in section 10(a)(2) of the Home
                Owners' Loan Act (12 U.S.C. 1467a(a)(2)).
                * * * * *
                 (e) Filing requirements--(1) Application required. A Federal
                savings association must file an application with the OCC before making
                a capital distribution if:
                 (i) The savings association would not be at least well capitalized,
                as set forth in 12 CFR 6.4, or would not otherwise remain an eligible
                savings association following the distribution;
                 (ii) The total amount of all of the savings association's capital
                distributions (including the proposed capital distribution) for the
                applicable calendar year exceeds its net income for that year to date
                plus retained net income for the preceding two years. If the capital
                distribution is from retained earnings, the aggregate limitation in
                this paragraph may be calculated in accordance with 12 CFR 5.64(c)(2),
                substituting ``capital distributions'' for ``dividends'' in that
                section;
                 (iii) The savings association's proposed capital distribution would
                reduce the amount of or retire any part of its common or preferred
                stock or retire any part of debt instruments such as notes or
                debentures included in capital under 12 CFR part 3 (other than regular
                payments required under a debt instrument approved under Sec. 5.56);
                 (iv) The savings association's proposed capital distribution is
                payable in property other than cash;
                 (v) The savings association is a directly or indirectly controlled
                by a mutual savings and loan holding company or by a company that is
                not a savings and loan holding company; or
                 (vi) The savings association's proposed capital distribution would
                violate a prohibition contained in any applicable statute, regulation,
                or agreement between the savings association and the OCC or the OTS, or
                violate a condition imposed on the savings association in an
                application or notice approved by the OCC or the OTS.
                 (2) No application required. A Federal savings association may make
                a capital distribution without filing an application with the OCC if it
                does not meet the filing requirements in paragraph (e)(1) of this
                section.
                 (3) Informational copy of Federal Reserve System notice required.
                If the Federal savings association is a subsidiary of a savings and
                loan holding company that is filing a notice with the Board of
                Governors of the Federal Reserve System (Board) for a dividend solely
                under 12 U.S.C. 1467a(f) and not also under 12 U.S.C. 1467a(o)(11), and
                no application under paragraph (e)(1) of this section is required, then
                the savings association must provide an informational copy to the OCC
                of the notice filed with the Board, at the same time the notice is
                filed with the Board.
                 (f) Application format--(1) Contents. The application must:
                 (i) Be in narrative form;
                 (ii) Include all relevant information concerning the proposed
                capital distribution, including the amount, timing, and type of
                distribution; and
                 (iii) Demonstrate compliance with paragraph (h) of this section.
                 (2) Schedules. The application may include a schedule proposing
                capital distributions over a specified period.
                 (3) Combined filings. A Federal savings association may combine the
                application required under paragraph (e)(1) of this section with any
                other notice or application, if the capital distribution is a part of,
                or is proposed in connection with, another transaction requiring a
                notice or application under this chapter. If submitting a combined
                filing, the Federal savings association must state that the related
                notice or application is intended to serve as an application under this
                section.
                 (g) Filing procedures--(1) Application. When a Federal savings
                association is required to file an application under paragraph (e)(1)
                of this section, it must file the application at least 30 days before
                the proposed declaration of dividend or approval of the proposed
                capital distribution by its board of directors. Except as provided in
                paragraph (g)(2) of this section, the OCC is deemed to have approved an
                application from an eligible savings association upon the expiration of
                30 days after the filing date of the application unless, before the
                expiration of that time period, the OCC notifies the Federal savings
                association that:
                 (i) Additional information is required to supplement the
                application;
                 (ii) The application has been removed from expedited review, or the
                expedited review process is extended, under 5.13(a)(2); or
                 (iii) The application is denied.
                 (2) Applications not subject to expedited review. An application is
                not subject to expedited review if:
                 (i) The Federal savings association is not an eligible savings
                association;
                 (ii) The total amount of all of the Federal savings association's
                capital distributions (including the proposed capital distribution) for
                the applicable calendar year exceeds its net income for that year to
                date plus retained net income for the preceding two years;
                 (iii) The Federal savings association would not be at least
                adequately capitalized, as set forth in 12 CFR 6.4, following the
                distribution; or
                 (iv) The Federal savings association's proposed capital
                distribution would violate a prohibition contained in any applicable
                statute, regulation, or agreement between the savings association and
                the OCC or the OTS, or violate a condition imposed on the savings
                association in an application or notice approved by the OCC or the OTS.
                 (3) OCC filing office--(i) Appropriate licensing office. Except as
                provided in paragraph (g)(3)(ii) of this section, a Federal savings
                association that is
                [[Page 18780]]
                required to file an application under paragraph (e)(1) of this section
                or an informational copy of a notice under paragraph (e)(3) of this
                section must submit the application or notice to the appropriate OCC
                licensing office.
                 (ii) Appropriate supervisory office. A Federal savings association
                that is required to file an application under paragraph (e)(1) of this
                section for capital distributions involving solely a cash dividend from
                retained earnings or involving a cash dividend from retained earnings
                and a concurrent cash distribution from permanent capital must submit
                the application to the appropriate OCC supervisory office.
                 (h) OCC review of capital distributions. After review of an
                application submitted pursuant to paragraph (e)(1) of this section:
                 (1) The OCC may deny the application in whole or in part, if it
                makes any of the following determinations:
                * * * * *
                 (2) The OCC may approve the application in whole or in part.
                Notwithstanding paragraph (h)(1)(iii) of this section, the OCC may
                waive any waivable prohibition or condition to permit a distribution.
                * * * * *
                0
                41. Amend Sec. 5.56 by:
                0
                a. Revising paragraph (b);
                0
                b. In paragraph (d)(1)(i)(F), removing the word ``and'';
                0
                c. In paragraph (d)(1)(i)(G), removing the period and adding in its
                place ``; and'';
                0
                d. Adding new paragraph (d)(1)(i)(H);
                0
                e. In paragraph (d)(2)(i), removing ``12 CFR 197.4'' and adding in its
                place ``12 CFR 16.7'' and removing the word ``shall'' and adding in its
                place the word ``may'';
                0
                f. In paragraph (e)(1) introductory text, removing the phrase ``notices
                and'';
                0
                g. In paragraphs (e)(2) and (i), removing the phrase ``or notice'' each
                time it appears; and
                0
                h. Revising paragraph (h).
                 The addition and revisions read as follows.
                Sec. 5.56 Inclusion of subordinated debt securities and mandatorily
                redeemable preferred stock as Federal savings association supplementary
                (tier 2) capital.
                * * * * *
                 (b) Application procedures--(1) Application to include covered
                securities in tier 2 capital--(i) Application required. A Federal
                savings association must file an application seeking the OCC's approval
                of the inclusion of covered securities in tier 2 capital. The savings
                association may file its application before or after it issues covered
                securities, but may not include covered securities in tier 2 capital
                until the OCC approves the application and the securities are issued.
                 (ii) Expedited review. The OCC is deemed to have approved an
                application from an eligible savings association to include covered
                securities in tier 2 capital upon the expiration of 30 days after the
                filing date of the application unless, before the expiration of that
                time period, the OCC notifies the Federal savings association that:
                 (A) Additional information is required to supplement the
                application;
                 (B) The application has been removed from expedited review, or the
                expedited review process is extended under Sec. 5.13(a)(2); or
                 (C) The OCC denies the application.
                 (iii) Securities offering rules. A Federal savings association also
                must comply with the securities offering rules at 12 CFR part 16 by
                filing an offering circular for a proposed issuance of covered
                securities, unless the offering qualifies for an exemption under that
                part.
                 (2) Application required to prepay covered securities included in
                tier 2 capital--(i) In general. A Federal savings association must file
                an application to, and receive prior approval from, the OCC before
                prepaying covered securities included in tier 2 capital.
                 The application must include:
                 (A) A statement explaining why the Federal savings association
                believes that following the proposed prepayment the savings association
                would continue to hold an amount of capital commensurate with its risk;
                or
                 (B) A description of the replacement capital instrument that meets
                the criteria for tier 1 or tier 2 capital under 12 CFR 3.20, including
                the amount of such instrument, and the time frame for issuance.
                 (ii) Replacement covered security. If the OCC conditions approval
                of prepayment on a requirement that a Federal savings association must
                replace the covered security with a covered security of an equivalent
                amount that satisfies the requirements for tier 1 or tier 2 capital,
                the savings association must file an application to issue the
                replacement covered security and must receive prior OCC approval.
                * * * * *
                 (d) * * *
                 (1) * * *
                 (i) * * *
                 (H) State that the security may be fully subordinated to interests
                held by the U.S. government in the event that the savings association
                enters into a receivership, insolvency, liquidation, or similar
                proceeding;
                * * * * *
                 (h) Issuance of a replacement regulatory capital instrument in
                connection with prepaying a covered security. The OCC may require a
                Federal savings association seeking prior approval to prepay a covered
                security included in tier 2 capital to issue a replacement covered
                security of an equivalent amount that qualifies as tier 1 or tier 2
                capital under 12 CFR 3.20. If the OCC imposes such a requirement, the
                savings association must complete the sale of such covered security
                prior to, or immediately after, the prepayment.\5\
                ---------------------------------------------------------------------------
                 \5\ A Federal savings association may replace tier 2 capital
                instruments concurrent with the redemption of existing tier 2
                capital instruments.
                ---------------------------------------------------------------------------
                * * * * *
                0
                42. Amend Sec. 5.58 by:
                0
                 a. Revising paragraph (d);
                0
                 b. Revising paragraph (e) introductory text;
                0
                c. In paragraph (e)(1), removing the word ``state'' each time it
                appears and adding in its place the word ``State'';
                0
                d. Revising paragraphs (e)(2), (e)(3), and (e)(4);
                0
                e. Revising paragraph (f)(1);
                0
                f. Redesignating paragraph (f)(2) as paragraph (f)(3);
                0
                g. Adding a new paragraph (f)(2);
                0
                h. In newly redesignated paragraph (f)(3), removing the word
                ``applicant'' and adding in its place the word ``filer'';
                0
                i. Redesignating paragraphs (g) through (i) as paragraphs (h) through
                (j), respectively and adding new paragraph (g);
                0
                j. In the heading of newly redesignated paragraph (h), removing the
                word ``entities'' and adding in its place the word ``enterprises'';
                0
                k. In paragraph (h) introductory text, removing the word ``entity'' and
                adding in its place the word ``enterprises'';
                0
                l. In newly redesignated paragraph (i)(3), removing the word ``non-
                controlling'' and adding in its place the word ``pass-through''; and
                0
                m. Revising newly redesignated paragraph (j).
                 The additions and revisions read as follows.
                Sec. 5.58 Pass-through investments by a Federal savings association.
                * * * * *
                 (d) Definitions. For purposes of this section:
                 (1) Enterprise means any corporation, limited liability company,
                partnership, trust, or similar business entity.
                 (2) Pass-through investment means an investment authorized under 12
                CFR
                [[Page 18781]]
                160.32(a). A pass-through investment does not include a Federal savings
                association holding interests in a trust formed for the purposes of
                securitizing assets held by the savings association as part of its
                business or for the purposes of holding multiple legal titles of motor
                vehicles or equipment in conjunction with lease financing transactions.
                 (e) Pass-through investments; notice procedure. Except as provided
                in paragraphs (f) through (i) of this section, a Federal savings
                association may make a pass-through investment, directly or through its
                operating subsidiary, in an enterprise that engages in an activity
                described in Sec. 5.38(f)(5) or in an activity that is substantively
                the same as a previously approved activity, as defined in Sec. 5.3, by
                filing a written notice. The Federal savings association must file this
                written notice with the appropriate OCC licensing office no later than
                10 days after making the investment. The written notice must:
                * * * * *
                 (2) State:
                 (i) Which paragraphs of Sec. 5.38(f)(5) describe the activity; or
                 (ii) If the activity is substantively the same as a previously
                approved activity, as defined in Sec. 5.3:
                 (A) How, the activity is substantively the same as a previously
                approved activity;
                 (B) The citation to the applicable precedent; and
                 (C) That the activity will be conducted in accordance with the same
                terms and conditions applicable to the previously approved activity;
                 (3) Certify that the Federal savings association is well
                capitalized and well managed, as defined in Sec. 5.3, at the time of
                the investment;
                 (4) Describe how the Federal savings association has the ability to
                prevent the enterprise from engaging in an activity that is not set
                forth in Sec. 5.38(f)(5) or not contained in published OCC (including
                published former OTS) precedent for previously approved activities, as
                defined in Sec. 5.3; or how the savings association otherwise has the
                ability to withdraw its investment;
                * * * * *
                 (f) * * * (1) In general. A Federal savings association must file
                an application and obtain prior approval before making or acquiring,
                either directly or through an operating subsidiary, a pass-through
                investment in an enterprise if the pass-through investment does not
                qualify for the notice procedure set forth in paragraph (e) of this
                section because the savings association is unable to make the
                representation required by paragraph (e)(2) or the certification
                required by paragraphs (e)(3) or (e)(7) of this section. The
                application must include the information required in paragraphs (e)(1)
                and (e)(4) through (e)(6) of this section and paragraphs (e)(2),
                (e)(3), and (e)(7) of this section, if possible. If the Federal savings
                association is unable to make the representation set forth in paragraph
                (e)(2) of this section, the savings association's application must
                explain why the activity in which the enterprise engages is a
                permissible activity for a Federal savings association and why the
                filer should be permitted to hold a pass-through investment in an
                enterprise engaged in that activity. A Federal savings association may
                not make a pass-through investment if it is unable to make the
                representations and certifications specified in paragraphs (e)(1) and
                (e)(4) through (e)(6) of this section.
                 (2) Expedited review. An application submitted by a Federal savings
                association is deemed approved by the OCC as of the 10th day after the
                application is received by the OCC if:
                 (A) The Federal savings association makes the representation
                required by paragraph (e)(2) and the certification required by
                paragraph (e)(3) of this section;
                 (B) The book value of the Federal savings association's pass-
                through investment for which the application is being submitted is no
                more than 1% of the savings association's capital and surplus;
                 (C) No more than 50% of the enterprise is owned or controlled by
                banks or savings associations subject to examination by an appropriate
                Federal banking agency or credit unions insured by the National Credit
                Union Association; and
                 (D) The OCC has not notified the Federal savings association that
                the application has been removed from expedited review, or the
                expedited review process is extended, under Sec. 5.13(a)(2).
                * * * * *
                 (g) Pass-through investments; no application or notice required. A
                Federal savings association may make or acquire, either directly or
                through an operating subsidiary, a pass-through investment in an
                enterprise, without an application or notice to the OCC, if:
                 (i) The activities of the enterprise are limited to those to
                activities previously reported by the savings association in connection
                with the making or acquiring of a pass-through investment;
                 (ii) The activities in the enterprise continue to be legally
                permissible for a Federal savings association;
                 (iii) The savings association's pass-through investment will be
                made in accordance with any conditions imposed by the OCC or OTS in
                approving any prior pass-through investment conducting these
                activities;
                 (iv) The savings association is able to make the representations
                and certifications specified in paragraphs (e)(3) through (e)(7) of
                this section; and
                 (v) The enterprise will not be a subsidiary for purposes of 12
                U.S.C. 1828(m).
                * * * * *
                 (j) Exceptions to rules of general applicability. Sections 5.8,
                5.10, and 5.11 do not apply to this section. However, if the OCC
                concludes that an application presents significant or novel policy,
                supervisory, or legal issues, the OCC may determine that some or all
                provision in Sec. Sec. 5.8, 5.10, and 5.11 apply.
                * * * * *
                0
                43. Amend Sec. 5.59 by:
                0
                a. In paragraph (a), removing ``1464'' and adding in its place
                ``1464(c)(4)(B)'';
                0
                b. In paragraph (b) introductory text, adding ``(12 U.S.C. 1828(m))''
                after the phrase ``Insurance Act'';
                0
                c. In paragraph (d)(2), removing the phrase ``generally accepted
                accounting principles (GAAP)'' and adding in its place the word
                ``GAAP'';
                0
                 d. In paragraphs (e)(1), (e)(2), (f)(6)(i), and (h)(1)(ii), removing
                the word ``state'' and adding the word ``State'' each time it appears;
                0
                e. In paragraph (e)(4), removing the word ``HOLA'' and adding in its
                place the phrase ``Home Owners' Loan Act, 12 U.S.C. 1464(c)'';
                0
                f. In paragraph (e)(9), removing the word ``shall'' and adding in its
                place the word ``must'' each time it appears;
                0
                g. In paragraph (g)(1), removing the word ``HOLA'' and adding in its
                place the phrase ``Home Owners' Loan Act (12 U.S.C. 1464(c)(4)(B))'';
                0
                h. In paragraph (g)(1), removing ``Sec. 24.6'' and adding in its place
                ``12 CFR part 24'';
                0
                i. In paragraph (g)(2), removing the phrase ``HOLA and parts 5 and 160
                of this chapter'' and adding in its place the phrase ``Home Owners'
                Loan Act (12 U.S.C. 1464(c)), this part 5, and 12 CFR part 160''; and
                0
                j. In paragraph (h)(1)(i) introductory text, adding the phrase ``(12
                U.S.C. 1828(m))'' after the word ``Act'';
                0
                k. In paragraph (h)(1)(ii), removing the phrase ``an applicant'' and
                adding in its place the phrase ``a filer'', and removing the word
                ``applicants'' and adding in its place the word ``filers'';
                0
                l. In paragraphs (h)(2)(i) and (h)(3), removing the word ``applicant''
                and
                [[Page 18782]]
                adding in its place the word ``filer'' each time it appears;
                0
                m. In paragraph (h)(2), removing the phrase ``is not eligible for
                expedited review under Sec. 5.13(a)(2)'' and adding in its place the
                phrase ``has been removed from expedited review, or the expedited
                review period is extended, under Sec. 5.13(a)(2)''; and
                0
                n. Revising paragraph (h)(2)(ii)(A).
                 The revision reads as follows:
                Sec. 5.59 Service corporations of Federal savings associations.
                * * * * *
                 (h) * * *
                 (2) * * *
                 (ii) * * *
                 (A) The savings association is well capitalized and well managed,
                as defined in Sec. 5.3; and
                * * * * *
                Sec. 5.62 [Amended]
                0
                44. Section 5.62 is amended by removing the word ``shall'' and adding
                in its place the word ``must''.
                Sec. 5.64 [Amended]
                0
                45. Section 5.64 is amended by:
                0
                a. In paragraph (c)(2)(i), removing the word ``shall'' and adding in
                its place the word ``does'';
                0
                b. In paragraph (c)(2)(iii), removing the phrase ``shall apply'' and
                adding in its place the word ``applies'';
                0
                c. In paragraph (c)(3), removing the word ``shall'' and adding in its
                place the word ``must''; and
                0
                d. Removing paragraph (d).
                0
                46. Revise Sec. 5.66 to read as follows.
                Sec. 5.66 Dividends payable in property other than cash.
                 In addition to cash dividends, directors of a national bank may
                declare dividends payable in property, with the approval of the OCC. A
                national bank must submit a request for prior approval of a noncash
                dividend to the appropriate OCC licensing office. The dividend is
                equivalent to a cash dividend in an amount equal to the actual current
                value of the property, regardless of whether the book value is higher
                or lower under GAAP. Before the dividend is declared, the bank should
                show the difference between actual value and book value on the books of
                the national bank as a gain or loss, as applicable, and the dividend
                should then be declared in the amount of the actual current value of
                the property being distributed.
                0
                47. Revise Sec. 5.67 to read as follows.
                Sec. 5.67 Fractional shares.
                 A national bank issuing additional stock may adopt arrangements to
                preclude the issuance of fractional shares. The bank may remit the cash
                equivalent of the fraction not being issued to those to whom fractional
                shares would otherwise be issued. The cash equivalent is based on the
                market value of the stock, if there is an established and active market
                in the national bank's stock. In the absence of such a market, the cash
                equivalent is based on a reliable and disinterested determination as to
                the fair market value of the stock if such stock is available. The bank
                may propose an alternate method in the application for the stock
                issuance filed with the OCC.
                0
                48. Amend Sec. 5.70 by:
                0
                a. In paragraphs (c)(1)(iv) and (c)(1)(v), removing the word ``state''
                and adding in its place the word ``State'' each time it appears;
                0
                b. In paragraph (d)(1) and paragraph (d)(2) introductory text, removing
                the word ``shall'' and adding in its place the word ``must'' each time
                it appears; and
                0
                c. Adding new paragraph (d)(3).
                 The addition reads as follows.
                Sec. 5.70 Federal branches and agencies.
                * * * * *
                 (d) * * *
                 (3) Biographical and Financial Reports. The OCC may require any
                senior executive officer of a Federal branch or agency submitting a
                filing to submit an Interagency Biographical and Financial Report,
                available at www.occ.gov, and legible fingerprints.
                * * * * *
                 Dated: March 5, 2020.
                Joseph M. Otting,
                Comptroller of the Currency.
                [FR Doc. 2020-04938 Filed 4-1-20; 8:45 am]
                 BILLING CODE 4810-33-P
                

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