[Title 12 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2002 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

                    12


          Parts 500 to 599

                         Revised as of January 1, 2002

Banks and Banking





          Containing a codification of documents of general 
          applicability and future effect
          As of January 1, 2002
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

A Special Edition of the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2002



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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 12:
          Chapter V--Office of Thrift Supervision, Department 
          of the Treasury                                            3
  Finding Aids:
      Table of CFR Titles and Chapters........................     467
      Alphabetical List of Agencies Appearing in the CFR......     485
      Redesignation Table.....................................     495
      List of CFR Sections Affected...........................     519



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

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  12 CFR 500.1 refers 
                       to title 12, part 500, 
                       section 1.

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

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
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    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2002), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
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instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

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Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
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also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

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volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
[email protected].

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ELECTRONIC SERVICES

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free). E-mail, [email protected].

[[Page vii]]

    The Office of the Federal Register also offers a free service on the 
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                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 2002.



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                               THIS TITLE

    Title 12--Banks and Banking is composed of six volumes. The parts in 
these volumes are arranged in the following order: parts 1-199, 200-219, 
220-299, 300-499, 500-599, and part 600-end. The first volume containing 
parts 1-199 is comprised of chapter I--Comptroller of the Currency, 
Department of the Treasury. The second and third volumes containing 
parts 200-299 are comprised of chapter II--Federal Reserve System. The 
fourth volume containing parts 300-499 is comprised of chapter III--
Federal Deposit Insurance Corporation and chapter IV--Export-Import Bank 
of the United States. The fifth volume containing parts 500-599 is 
comprised of chapter V--Office of Thrift Supervision, Department of the 
Treasury. The sixth volume containing part 600-end is comprised of 
chapter VI--Farm Credit Administration, chapter VII--National Credit 
Union Administration, chapter VIII--Federal Financing Bank, chapter IX--
Federal Housing Finance Board, chapter XI--Federal Financial 
Institutions Examination Council, chapter XIV--Farm Credit System 
Insurance Corporation, chapter XV--Department of the Treasury, chapter 
XVII--Office of Federal Housing Enterprise Oversight, Department of 
Housing and Urban Development and chapter XVIII--Community Development 
Financial Institutions Fund, Department of the Treasury. The contents of 
these volumes represent all of the current regulations codified under 
this title of the CFR as of January 1, 2002.

    Redesignation tables appear in the volumes containing parts 1-199, 
parts 300-499, parts 500-599, and part 600-end.

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

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                       TITLE 12--BANKS AND BANKING




                  (This book contains parts 500 to 599)

  --------------------------------------------------------------------
                                                                    Part

chapter v--Office of Thrift Supervision, Department of the 
  Treasury..................................................         500

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   CHAPTER V--OFFICE OF THRIFT SUPERVISION, DEPARTMENT OF THE TREASURY




  --------------------------------------------------------------------
Part                                                                Page
500             Agency organization and functions...........           5
502             Assessments and fees........................           6
503             Privacy Act.................................          10
505             Freedom of Information Act..................          12
506             Information collection requirements under 
                    the Paperwork Reduction Act.............          13
508             Removals, suspensions, and prohibitions 
                    where a crime is charged or proven......          14
509             Rules of practice and procedure in 
                    adjudicatory proceedings................          17
510             Miscellaneous organizational regulations....          40
512             Rules for investigative proceedings and 
                    formal examination proceedings..........          45
513             Practice before the Office..................          47
516             Application processing procedures...........          51
517             Contracting outreach programs...............          62
528             Nondiscrimination requirements..............          64
533             Disclosure and reporting of CRA-related 
                    agreements..............................          69
535             Prohibited consumer credit practices........          81
536             Consumer protection in sales of insurance...          83
541             Definitions for regulations affecting 
                    federal savings associations............          87
543             Federal mutual savings associations--
                    Incorporation, organization, and 
                    conversion..............................          89
544             Federal mutual savings associations--Charter 
                    and bylaws..............................          96
545             Federal savings associations--Operations....         104
546             Federal mutual savings associations--Merger, 
                    dissolution, reorganization, and 
                    conversion..............................         111
550             Fiduciary powers of savings associations....         113
552             Federal stock associations--Incorporation, 
                    organization, and conversion............         122
555             Electronic operations.......................         140
557             Deposits....................................         141

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558             Possession by conservators and receivers for 
                    Federal and State savings associations..         143
559             Subordinate organizations...................         144
560             Lending and investment......................         154
561             Definitions for regulations affectiing all 
                    savings associations....................         177
562             Regulatory reporting standards..............         184
563             Savings associations--Operations............         185
563b            Conversions from mutual to stock form.......         223
563c            Accounting requirements.....................         275
563d            Securities of savings associations..........         284
563e            Community reinvestment......................         286
563f            Management official interlocks..............         306
563g            Securities offerings........................         310
564             Appraisals..................................         320
565             Prompt corrective action....................         325
567             Capital.....................................         335
568             Security procedures under the Bank 
                    Protection Act..........................         369
569             Proxies.....................................         371
570             Safety and soundness guidelines and 
                    compliance procedures...................         372
572             Loans in areas having special flood hazards.         379
573             Privacy of consumer financial information...         383
574             Acquisition of control of savings 
                    associations............................         401
575             Mutual holding companies....................         423
583             Definitions for regulations affecting 
                    savings and loan holding companies......         445
584             Regulated activities........................         447
590             Preemption of State usury laws..............         454
591             Preemption of State due-on-sale laws........         459
592--599        [Reserved]


  Editorial Note: Nomenclature changes to Chapter V appear at 59 FR 
18475, Apr. 19, 1994, and at 60 FR 66715, Dec. 26, 1995.

[[Page 5]]



PART 500--AGENCY ORGANIZATION AND FUNCTIONS--Table of Contents




Subpart A--Functions and Responsibilities of the Director of the Office 
                          of Thrift Supervision

Sec.
500.1  General statement and statutory authority.
500.2-500.5  [Reserved]
500.6  General statement concerning gender-related terminology.

                     Subpart B--General Organization

500.10  The OTS or The Office.

                          Subpart C--Procedures

500.30  General statement concerning procedures and forms.

    Authority: 12 U.S.C. 1462a, 1463, 1464.

    Source: 54 FR 49440, Nov. 30, 1989, unless otherwise noted.



Subpart A--Functions and Responsibilities of the Director of the Office 
                          of Thrift Supervision



Sec. 500.1  General statement and statutory authority.

    (a) The Director of the Office of Thrift Supervision (referred to in 
this chapter as ``Director'' or ``Office'') is responsible for the 
administration and enforcement of the Home Owners' Loan Act of 1933, 
(``HOLA''), and applicable portions of the Federal Deposit Insurance Act 
and with respect to savings associations subject to provisions of the 
foregoing acts and title, the Bank Protection Act of 1968, the Truth in 
Lending Act, and the Fair Credit Reporting Act.
    (b) The Office is authorized under such rules and regulations as it 
may prescribe to provide for the organization, incorporation, 
examination, operation, and regulation of Federal savings associations. 
Under this authority, the Office's functions include, but are not 
limited to, regulation of the corporate structure of such associations, 
regulation of the distribution of their earnings, regulation of their 
lending and other investment powers, acting upon their applications for 
facility offices (including branch offices, limited facilities, mobile 
facilities and satellite offices), the regulation of mergers, 
conversions, and dissolutions involving such associations, the 
appointment of conservators and receivers for such associations, and the 
enforcement of laws, regulations, or conditions against such 
associations or the officers or directors thereof by proceedings under 
section 5 of the Home Owners' Loan Act of 1933, as amended.
    (c) The Office regulates and examines savings associations within 
the authority conferred by the HOLA and the FDIA and is authorized to 
enforce applicable laws, regulations, or conditions against savings 
associations or the officers or directors thereof by proceedings under 
section 5 of the HOLA and section 8 of the FDIA as amended. The Office 
also regulates and supervises savings and loan holding companies 
pursuant to the provisions of section 10 of the HOLA, as amended, and 
section 8 of the FDIA.
    (d) The Office exercises supervisory and regulatory authority over 
all building and loan or savings and loan associations and similar 
institutions of or doing business in or maintaining offices in the 
District of Columbia.

[54 FR 49440, Nov. 30, 1989, as amended at 60 FR 66868, Dec. 27, 1995]



Sec. 500.2-500.5  [Reserved]



Sec. 500.6  General statement concerning gender-related terminology.

    The statutes administered by the Office and the rules, regulations, 
policies, practices, publications, directives, and guidelines 
promulgated pursuant to such statutes that prescribe the course and 
methods to be followed by the Office that inadvertently use or contain 
gender-related terminology are to be interpreted as equally applicable 
to either sex.



                     Subpart B--General Organization



Sec. 500.10  The OTS or The Office.

    The Office of Thrift Supervision (referred to as ``OTS'' or 
``Office'') is an office of the Department of the Treasury. Its 
functions are to charter, supervise, regulate and examine Federal 
savings associations and to supervise, regulate and examine all savings 
associations. It is directed by a Director, who

[[Page 6]]

is appointed by the President and confirmed by the Senate to a five-year 
term. The Director directs and carries out the mission of the OTS with 
the assistance of offices reporting directly to him. One of these 
offices oversees the direct examination and supervision of savings 
associations by regulatory staff to ensure the safety and soundness of 
the industry.

[57 FR 14335, Apr. 20, 1992, as amended at 60 FR 66869, Dec. 27, 1995]



                          Subpart C--Procedures



Sec. 500.30  General statement concerning procedures and forms.

    (a) Rules and procedures of the Office are published in chapter V of 
title 12 of the Code of Federal Regulations and in supplementary 
material published in the Federal Register. The statutes administered by 
the Office and the rules and regulations promulgated pursuant to such 
statutes prescribe the course and method of the formal procedures to be 
followed in proceedings of the Office. These are supplemented where 
practicable by informal procedures designed to aid the public and 
facilitate the execution of the Office's functions. The informal 
procedures of the Office consist principally in the rendering of advice 
and assistance to members of the public dealing with the Office. 
Opinions expressed by members of the staff do not constitute an official 
expression of the views of the Office, but do represent views of persons 
working with the provisions of the statute or regulation involved. The 
Director may, for good cause and to the extent permitted by statute, 
waive the applicability of any provision of this chapter.
    (b) Information with respect to procedures, forms, and instructions 
of the Office is available to the public at the headquarters of the 
Office. Forms of concern to the public consist principally of periodic 
financial reports and of applications to the Office. The Office may from 
time to time require the completion by individuals or savings 
associations of miscellaneous forms, questionnaires, reports, or other 
papers. In each instance, the individual or savings association is given 
actual and timely notice of the scope and contents of the papers in 
question.

[54 FR 49440, Nov. 30, 1989, as amended at 59 FR 53570, Oct. 25, 1994]



PART 502--ASSESSMENTS AND FEES--Table of Contents




Sec.
502.5  Who must pay assessments and fees?

                         Subpart A--Assessments

502.10  How does OTS calculate my assessment?
502.15  How does OTS determine my size component?
502.20  How does OTS determine my condition component?
502.25  How does OTS determine my complexity component?
502.30  When must I pay my assessment?
502.35  How must I pay my assessment?
502.40  Can I get a refund or proration of my assessment?
502.45  What if I do not pay my assessment on time?

                             Subpart B--Fees

502.50  What fees does OTS charge?
502.55  Where can I find OTS's fee schedule?
502.60  When will OTS adjust, add, waive, or eliminate a fee?
502.65  When is an application fee due?
502.70  How must I pay an application fee?
502.75  What if I do not pay my fees on time?

    Authority: 12 U.S.C. 1462a, 1463, 1467, 1467a.

    Source: 63 FR 65670, Nov. 30, 1998, unless otherwise noted.



Sec. 502.5  Who must pay assessments and fees?

    (a) Authority. Section 9 of the HOLA, 12 U.S.C. 1467, authorizes the 
Director to charge assessments to recover the costs of examining savings 
associations and their affiliates, to charge fees to recover the costs 
of processing applications and other filings, and to charge fees to 
cover OTS ``s direct and indirect expenses in regulating savings 
associations and their affiliates.
    (b) Assessments. If you are a savings association that OTS regulates 
on the last day of January or on the last day of July of each year, you 
must pay a semi-annual assessment due on that day. Subpart A of this 
part describes OTS's assessment procedures and requirements.
    (c) Fees. Whether or not you are a savings association, if you make 
any

[[Page 7]]

filings with OTS or use OTS services, the Director may require you to 
pay a fee to cover the costs of processing your submission or providing 
those services. The filings for which the Director may charge a fee 
include notices, applications, and securities filings. Among the 
services for which the Director may charge a fee are publications, 
seminars, certifications for official copies of agency documents, and 
records or services requested by other agencies. The Director also 
assesses fees for examining and investigating savings associations that 
administer trust assets of $1 billion or less, and affiliates of savings 
associations. If you are a savings association and you or any of your 
affiliates cause OTS to incur extraordinary expenses related to your 
examination, investigation, regulation, or supervision, the Director may 
charge you a fee to fund those expenses. Subpart B of this part 
describes OTS's fee procedures and requirements.



                         Subpart A--Assessments



Sec. 502.10  How does OTS calculate my assessment?

    OTS determines your semi-annual assessment by totaling three 
components: your size, your condition, and the complexity of your 
business. For the size and complexity components, OTS uses the September 
30 Thrift Financial Report to determine amounts due at the January 31 
assessment; and the March 31 Thrift Financial Report to determine 
amounts due at the July 31 assessment. For purposes of this subpart, 
total assets are your total assets as reported on Thrift Financial 
Reports filed with OTS. For the condition component, OTS uses the most 
recent composite rating, as defined in 12 CFR part 516, of which you 
have been notified in writing before an assessment's due date.



Sec. 502.15  How does OTS determine my size component?

    (a) General. (1) Unless you are a qualifying savings association 
under paragraph (b) of this section, OTS uses the following chart to 
calculate your size component:

----------------------------------------------------------------------------------------------------------------
          If your total assets are:                                   Your size component is:
----------------------------------------------------------------------------------------------------------------
                                                      This amount--
          Over--                  But not over--     Base assessment    Plus--  Marginal      Of assets over--
                                                         amount               rate              Class floor
----------------------------------------------------------------------------------------------------------------
Column A                        Column B.........                   Column C            ColColumn E
0.............................  $67 million......                   C1                D1   0.
$67 million...................  215 million......                   C2                D2   $67 million.
215 million...................  1 billion........                   C3                D3   215 million.
1 billion.....................  6.03 billion.....                   C4                D4   1 billion.
6.03 billion..................  18 billion.......                   C5                D5   6.03 billion.
18 billion....................  35 billion.......                   C6                D6   18 billion.
35 billion....................  .................                   C7                D7   35 billion.

    (2) To calculate your size component, find the row in Columns A and 
B that describes your total assets. Reading across in that same row, 
find your base assessment amount in Column C, your marginal rate in 
Column D, and your class floor in Column E. Calculate how much your 
total assets exceed your Column E class floor. Multiply this number by 
your Column D marginal rate. Add this number to your Column C base 
assessment amount. The total is your size component. OTS will establish 
the base assessment amounts and the marginal rates in columns C and D in 
a Thrift Bulletin.
    (b) Special size component calculation for qualifying savings 
associations. If you meet all of the criteria set forth in paragraph 
(b)(1) of this section, you are a qualifying savings association and OTS 
will calculate your size component in accordance with paragraph (b)(2) 
of this section.
    (1) Criteria for qualifying savings association status. (i) You were 
a savings association as of January 1, 1999.

[[Page 8]]

    (ii) Your total assets have never exceeded $100 million at the end 
of any quarter.
    (2) Size component for qualifying savings associations. If you are a 
qualifying savings association, your size component is the lesser of:
    (i) Your size component calculated under paragraph (a) of this 
section; or
    (ii) Your assessment calculated using the general assessment table 
at 12 CFR 502.1(c) as contained in the 12 CFR, parts 500 to 599, edition 
revised as of January 1, 1998, as implemented in Thrift Bulletin 48-9, 
dated December 21, 1992.



Sec. 502.20  How does OTS determine my condition component?

    OTS uses the following chart to determine your condition component.

------------------------------------------------------------------------
                                                 Then your condition
       If your component  rating is:                component is:
------------------------------------------------------------------------
1 or 2....................................  Zero.
3.........................................  50 percent of your size
                                             component.
4 or 5....................................  100 percent of your size
                                             component.
------------------------------------------------------------------------


[66 FR 33159, June 21, 2001]



Sec. 502.25  How does OTS determine my complexity component?

    If your portfolio exceeds any of the thresholds in paragraph (a) of 
this section, OTS will calculate your complexity component according to 
paragraph (c) of this section. If your portfolio does not exceed any of 
the thresholds in paragraph (a) of this section, your complexity 
component is zero.
    (a) Thresholds for complexity component. OTS uses three separate 
thresholds in calculating your complexity component. You exceed a 
threshold if you have more than $1 billion in any of the following:
    (1) Trust assets you administer.
    (2) The outstanding principal balance of assets covered, fully or 
partially, by your recourse obligations or direct credit substitutes.
    (3) The principal amount of loans that you service for others.
    (b) Assessment rates. OTS will establish one or more assessment 
rates for each of the types of activities listed in paragraph (a) of 
this section. OTS will publish those assessment rates in a Thrift 
Bulletin.
    (c) Calculation of complexity component. OTS separately considers 
each of the thresholds in paragraph (a) of this section in calculating 
your complexity component. OTS first calculates the amount by which you 
exceed any of those thresholds. OTS multiplies the amount by which you 
exceed any threshold in paragraph (a) of this section by the applicable 
assessment rate(s) under paragraph (b) of this section. OTS then totals 
the results. This total is your complexity component.



Sec. 502.30  When must I pay my assessment?

    OTS will bill you semiannually for your assessments. Assessments are 
due January 31 and July 31 of each year. At least seven days before your 
assessment is due, the Director will mail you a notice that indicates 
the amount of your assessment, explains how OTS calculated the amount, 
and specifies when payment is due.



Sec. 502.35  How must I pay my assessment?

    (a) Debit at Federal Home Loan Banks. If you are a member of a 
Federal Home Loan Bank, you must maintain a demand deposit account at 
your Federal Home Loan Bank with sufficient funds to pay your assessment 
when due. OTS will notify your Federal Home Loan Bank of the amount of 
your assessment. OTS will debit your account for your assessments.
    (b) Direct billing. If you are not a member of a Federal Home Loan 
Bank, OTS will directly debit an account you must maintain at your 
association.



Sec. 502.40  Can I get a refund or proration of my assessment?

    OTS will not refund or prorate your assessment, even if you cease to 
be a savings association. If you are a savings association for whom a 
conservator or receiver has been appointed, you must continue to pay 
assessments in accordance with this part. OTS will not increase or 
decrease your assessment based on events that occur after the date of 
the Thrift Financial Report upon which your assessment is based.

[[Page 9]]



Sec. 502.45  What if I do not pay my assessment on time?

    The Director will charge interest on delinquent assessments. 
Interest will accrue at a rate (that OTS will determine quarterly) equal 
to 150 percent of the average of the bond-equivalent rates of 13-week 
Treasury bills auctioned during the preceding calendar quarter. 
Assessments under this subpart A are delinquent if you do not pay them 
when required by Sec. 502.30.



                             Subpart B--Fees



Sec. 502.50  What fees does OTS charge?

    (a) The Director assesses fees for examining or investigating 
savings associations that administer trust assets of $1 billion or less, 
and savings association affiliates. ``Affiliate'' has the meaning in 12 
U.S.C. 1462(9), except that, for this part only, ``affiliate'' does not 
include any entity that is consolidated with a savings association on 
the Consolidated Statement of the Thrift Financial Report.
    (b) The Director assesses fees for processing notices, applications, 
securities filings, and requests, and for providing other services.



Sec. 502.55  Where can I find OTS's fee schedule?

    OTS will periodically publish a schedule of its fees in a Thrift 
Bulletin. OTS will publish these fees at least 30 days before they are 
effective.



Sec. 502.60  When will OTS adjust, add, waive, or eliminate a fee?

    Under unusual circumstances, the Director may deem it necessary or 
appropriate to adjust, add, waive, or eliminate a fee. For example, the 
Director may:
    (a) Reduce any fee to adjust for any inequities, efficiencies, or 
changed procedures that OTS projects will reduce its applications 
processing costs but that OTS did not consider in determining its fees;
    (b) Reduce or waive any fee if OTS determines that the fee would 
unduly or unjustifiably discourage particular types of applications or 
applications for particular categories of transactions;
    (c) Add a fee for a new type of application;
    (d) Increase a fee for an application that presents unusual or 
particularly complex issues of law or policy or otherwise causes the 
agency to incur unusually high processing costs; or
    (e) Charge a fee to recover extraordinary expenses related to 
examination, investigation, regulation, or supervision of savings 
associations or their affiliates.



Sec. 502.65  When is an application fee due?

    (a) You must pay the application fee when you file an application. 
OTS will not process your application if you do not include the required 
fee.
    (b) If OTS cannot complete its review of your application because 
the application is materially deficient and it refuses to accept your 
application for processing, you must pay a new application fee upon 
filing a revised application.
    (c) If a transaction involves multiple applications, you must pay 
the appropriate fee for each application, unless OTS specifies otherwise 
by Thrift Bulletin.



Sec. 502.70  How must I pay an application fee?

    You must pay an application fee to the Office of Thrift Supervision. 
You must include a statement of the fee and how you calculated the fee.



Sec. 502.75  What if I do not pay my fees on time?

    (a) Interest. An examination or investigation fee is delinquent if 
OTS does not receive the fee within 30 days of the date specified in a 
bill. The Director will charge interest on a delinquent examination or 
investigation fee. Interest will accrue at a rate (that OTS will 
determine quarterly) equal to 150 percent of the average of the bond-
equivalent rates of 13-week Treasury bills auctioned during the 
preceding calendar quarter.
    (b) Failure to pay. If your holding company, affiliate, or 
subsidiary fails to pay any examination or investigation fee within 60 
days of the date specified in a bill, the Director may assess that fee, 
with interest, against you and

[[Page 10]]

collect it from you. If any such entity is a holding company, affiliate, 
or subsidiary of more than one savings association, the Director may 
assess the fee against and collect it from each savings association as 
the Director may prescribe.



PART 503--PRIVACY ACT--Table of Contents




Sec.
503.1  Scope and procedures.
503.2  Exemptions of records containing investigatory material compiled 
          for law enforcement purposes.

    Authority: 5 U.S.C. 552a; 12 U.S.C. 1462a, 1463, 1464.

    Cross Reference: See 31 CFR part 1, subpart C.



Sec. 503.1  Scope and procedures.

    (a) In general. The Privacy Act regulations of the Department of the 
Treasury, 31 CFR part 1, subpart C, apply to the Office as a component 
part of the Department of the Treasury. This part 503 sets forth, for 
the Office, specific notification and access procedures with respect to 
particular systems of records, and identifies the officials designated 
to make the initial determinations with respect to notification and 
access to records and accountings of disclosures of records. This part 
503 also sets forth the specific procedures for requesting amendment of 
records and identifies the officials designated to make the initial and 
appellate determinations with respect to requests for amendment of 
records. It identifies the officials designated to grant extensions of 
time on appeal, the officials with whom ``Statements of Disagreement'' 
may be filed, the official designated to receive service of process and 
the addresses for delivery of requests, appeals, and service of process. 
In addition, it references the notice of systems of records and notices 
of the routine uses of the information in the system required by 5 
U.S.C. 552a(e) (4) and (11) and published annually by the Office of the 
Federal Register in ``Privacy Act Issuances.''
    (b) Requests for notification and access to records and accountings 
of disclosures. Initial determinations under 31 CFR 1.26, whether to 
grant requests for notification and access to records and accountings of 
disclosures for the Office, will be made by the head of the 
organizational unit having immediate custody of the records requested or 
an official designated by this official. This is indicated in the 
appropriate system notice in ``Privacy Act Issuances'' published 
annually by the Office of the Federal Register. Requests for information 
and specific guidance on where to send requests for records may be 
mailed or delivered personally to: Privacy Act Request, Manager, 
Dissemination Branch, Information Management & Services Division, Office 
of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552.
    (c) Requests for amendment of records. Initial determinations under 
31 CFR 1.27(a) through (d), whether to grant requests to amend records 
will be made by the head of the organizational unit having immediate 
custody of the records or the delegate of such official. Requests for 
amendment should be addressed to: Privacy Act Amendment Request, 
Manager, Dissemination Branch, Information Management & Services 
Division, Office of Thrift Supervision, 1700 G Street, NW., Washington, 
DC 20552.
    (d) Administrative appeal of initial determinations refusing 
amendment of records. Appellate determinations refusing amendment of 
records under 31 CFR 1.27(e) including extensions of time on appeal, 
with respect to records of the Office will be made by the Director of 
the Office of Thrift Supervision (``Director'') or Chief Counsel or the 
delegate of the Director or Chief Counsel. Appeals made by mail should 
be addressed to, or delivered personally to: Privacy Act Amendment 
Appeal, Deputy Chief Counsel for General Law, Office of Thrift 
Supervision, 1700 G Street, NW., Washington, DC 20552.
    (e) Statements of disagreement. ``Statements of Disagreement'' under 
31 CFR 1.27(e)(4)(i) shall be filed with the Deputy Director for 
Washington Operations at the address indicated in the letter of 
notification within 35 days of the date of such notification and should 
be limited to one page.

[[Page 11]]

    (f) Service of process. Service of process will be received by the 
Chief Counsel's Office or the delegate of such official and shall be 
delivered to the following location: Chief Counsel's Office, Office of 
Thrift Supervision, 1700 G Street, NW., Washington, DC 20552.
    (g) Annual notice of systems of records. The annual notice of 
systems of records is published by the Office of the Federal Register, 
as specified in 5 U.S.C. 552a(f). The publication is entitled ``Privacy 
Act Issuance.'' Any specific requirements for access, including 
identification requirements, in addition to the requirements set forth 
in 31 CFR 1.26 and 1.27 are indicated in the notice for the pertinent 
system.

[54 FR 49443, Nov. 30, 1989, as amended at 59 FR 18475, Apr. 19, 1994; 
64 FR 69184, Dec. 10, 1999]



Sec. 503.2  Exemptions of records containing investigatory material compiled for law enforcement purposes.

    (a) Scope. The Office has established a system of records, entitled 
the ``Confidential Individual Information System.'' The purpose of this 
system is to assist the Office in the accomplishment of its statutory 
and regulatory responsibilities in connection with supervision of 
savings associations. This system will be exempt from certain provisions 
of the Privacy Act of 1974 for the reasons set forth in paragraph (c) of 
this section.
    (b) Exemptions Under 5 U.S.C. 552a(k)(2). (1) Pursuant to 5 U.S.C. 
552a(k)(2), the head of an agency may issue rules to exempt any system 
of records within the agency from certain provisions of the Privacy Act 
of 1974 if the system contains investigatory material compiled for law 
enforcement purposes.
    (2) Provisions of the Privacy Act of 1974 from which exemptions will 
be made under 5 U.S.C. 552a(k)(2) are as follows:
    (i) 5 U.S.C. 552a(c)(3);
    (ii) 5 U.S.C. 552a(d)(1), (d)(2), (d)(3), and (d)(4);
    (iii) 5 U.S.C. 552a(e)(1);
    (iv) 5 U.S.C. 552a(e)(4)(G), (e)(4)(H), and (e)(4)(I); and
    (v) 5 U.S.C. 552a(f).
    (c) Reasons for exemptions under 5 U.S.C. 552a(k)(2). (1) 5 U.S.C. 
552a(c)(3) requires that an agency make accountings of disclosures of 
records available to individuals named in the records at their request. 
These accountings must state the date, nature, and purpose of each 
disclosure of a record and the name and address of the recipient. The 
application of this provision would make known to subjects of an 
investigation that an investigation is taking place and that they are 
the subjects of it. Release of such information could result in the 
alteration or destruction of documentary evidence, improper influencing 
of witnesses, and reluctance of witnesses to offer information, and 
could otherwise impede or compromise an investigation.
    (2) 5 U.S.C. 552a(d)(1), (d)(2), (d)(3), and (d)(4), (e)(4)(G) and 
(e)(4)(H), and (f), relate to an individual's right to be notified of 
the existence of, and the right to examine, records pertaining to such 
individual. Notifying an individual at the individual's request of the 
existence of records and allowing the individual to examine an 
investigative file pertaining to such individual, or granting access to 
an investigative file, could:
    (i) Interfere with investigations and enforcement proceedings;
    (ii) Constitute an unwarranted invasion of the personal privacy of 
others;
    (iii) Disclose the identity of confidential sources and reveal 
confidential information supplied by those sources; or
    (iv) Disclose investigative techniques and procedures.
    (3) 5 U.S.C. 552a(e)(4)(I) requires the publication of the 
categories of sources of records in each system. Application of this 
provision could disclose investigative techniques and procedures and 
cause sources to refrain from giving such information because of fear of 
reprisal, or fear of breach of promises of anonymity and 
confidentiality, thus compromising the agency's ability to conduct 
investigations and to identify, detect, and apprehend violators.
    (4) 5 U.S.C. 552a(e)(1) requires each agency to maintain in its 
records only information about an individual that is relevant and 
necessary to accomplish a purpose of the agency required by statute or 
Executive Order. Limiting the system as described would impede 
enforcement activities because:

[[Page 12]]

    (i) It is not always possible to determine the relevance or 
necessity of specific information in the early stages of an 
investigation; and
    (ii) In any investigation the Office may obtain information 
concerning violations of laws other than those within the scope of its 
jurisdiction. In the interest of effective law enforcement, the Office 
should retain this information to aid in establishing patterns of 
criminal activity, and to provide leads for those law enforcement 
agencies charged with enforcing criminal or civil laws.
    (d) Documents exempted. Exemptions will be applied only when 
appropriate under 5 U.S.C. 552a(k).

[55 FR 31371, Aug. 2, 1990]



PART 505--FREEDOM OF INFORMATION ACT--Table of Contents




Sec.
505.1  Basis and scope.
505.2  Public Reading Room.
505.3  Requests for records.
505.4  Administrative appeal of initial determination to deny records.
505.5  Delivery of process.

    Authority: 5 U.S.C. 552; 12 U.S.C. 1462a, 1463, 1464.

    Cross Reference: See 31 CFR part 1, subpart A.



Sec. 505.1  Basis and scope.

    (a) This part is issued by the Office of Thrift Supervision 
(``OTS'') as a supplement to the Freedom of Information Act regulations 
of the Department of the Treasury, 31 CFR part 1, subpart A, which apply 
to the OTS as a component part of the Department of the Treasury.
    (b) This part is issued by the OTS pursuant to the requirement of 
section 552 of title 5 of the United States Code, which requires every 
federal agency to publish in the Federal Register the established places 
at which, the employees from whom, and the methods whereby, the public 
may obtain information, make submittals on requests, or obtain 
decisions, and the forms available or the places at which forms and 
instructions as to the scope and contents of all papers, reports, or 
examinations may be found. Information about the Public Reading Room is 
set forth in Sec. 505.2 of this part. Procedures for requests for 
records are set forth in Sec. 505.3 of this part. Information about 
administrative appeals is set forth in Sec. 505.4 of this part. 
Provisions relating to delivery of process upon the OTS are set forth in 
Sec. 505.5 of this part.

[54 FR 49444, Nov. 30, 1989, as amended at 60 FR 66716, Dec. 26, 1995; 
66 FR 65819, Dec. 21, 2001]



Sec. 505.2  Public Reading Room.

    OTS will make materials available for review on an ad hoc basis when 
necessary. Contact the Dissemination Branch, General Law Division, 
Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552, 
or you may visit the Public Reading Room at 1700 G Street, NW., by 
appointment only. To make an appointment for access, call (202) 906-
5922, send an E-mail to [email protected], or send a facsimile 
transmission to (202) 906-7755. (Please identify the materials you would 
like to inspect, to assist us in serving you.) We schedule appointments 
on business days between 10 a.m. and 4 p.m. In most cases, appointments 
will be available the next business day following the date we receive 
your request.

[66 FR 65819, Dec. 21, 2001]



Sec. 505.3  Requests for records.

    The Manager, Dissemination Branch or a designated official will make 
the initial determination under 31 CFR 1.5(g) whether to grant a request 
for OTS records. Requests may be mailed to: Freedom of Information Act 
Request, Dissemination Branch, General Law Division, Office of Thrift 
Supervision, 1700 G Street, NW., Washington, DC 20552, or marked 
``FOIA'' and delivered in person to the Public Reading Room, 
Dissemination Branch, General Law Division, 1700 G Street, NW., 
Washington, DC 20552. Requests may also be sent by e-mail or facsimile.

[60 FR 66716, Dec. 26, 1995, as amended at 64 FR 69184, Dec. 10, 1999; 
66 FR 65819, Dec. 21, 2001]



Sec. 505.4  Administrative appeal of initial determination to deny records.

    The Deputy Chief Counsel for General Law or a designated official 
will

[[Page 13]]

make appellate determinations under 31 CFR 1.5(h) with respect to OTS 
records. Appeals by mail should be addressed to: Deputy Chief Counsel 
for General Law, 1700 G Street, NW., Washington, DC 20552. Appeals may 
be delivered personally to the Dissemination Branch, General Law 
Division, Office of Thrift Supervision, 1700 G Street, NW., Washington, 
DC 20552. Appeals may also be sent by e-mail or facsimile.

[60 FR 66716, Dec. 26, 1995, as amended at 64 FR 69184, Dec. 10, 1999; 
66 FR 65819, Dec. 21, 2001]



Sec. 505.5  Delivery of process.

    Service of process will be received as set forth in Sec. 510.4 of 
this chapter.

[54 FR 49444, Nov. 30, 1989]



PART 506--INFORMATION COLLECTION REQUIREMENTS UNDER THE PAPERWORK REDUCTION ACT--Table of Contents




    Authority: 44 U.S.C. 3501 et seq.



Sec. 506.1  OMB control numbers assigned pursuant to the Paperwork Reduction Act.

    (a) Purpose. This part collects and displays the control numbers 
assigned to information collection requirements contained in regulations 
of the Office of Thrift Supervision by the Office of Management and 
Budget (OMB) pursuant to the Paperwork Reduction Act of 1995, Pub. L. 
104-13, 109 Stat. 163, and is adopted in compliance with the 
requirements of 5 CFR 1320.8. Information collection requirements that 
are not mandated by statute must be assigned control numbers by OMB in 
order to be enforceable. Respondents/recordkeepers are not required to 
comply with any collection of information unless it displays a currently 
valid OMB control number.
    (b) Display.

------------------------------------------------------------------------
  12 CFR part or section where identified
               and described                   Current OMB control No.
------------------------------------------------------------------------
502.70....................................  1550-0053.
510.......................................  1550-0081.
Part 516..................................  1550-0056.
Part 528..................................  1550-0021.
533.4.....................................  1550-0105.
533.6.....................................  1550-0105.
533.7.....................................  1550-0105.
536.40....................................  1550-0106.
543.2.....................................  1550-0005.
543.3.....................................  1550-0005
543.9.....................................  1550-0007.
544.2.....................................  1550-0017.
544.5.....................................  1550-0018.
544.8.....................................  1550-0011.
545.74....................................  1550-0013.
545.92....................................  1550-0004 and 1550-0006.
545.95....................................  1550-0006.
545.96(c).................................  1550-0011.
546.2.....................................  1550-0016.
546.4.....................................  1550-0066.
Part 550..................................  1550-0037.
552.2-1...................................  1550-0005.
552.2-6...................................  1550-0007.
552.4.....................................  1550-0017.
552.5.....................................  1550-0018.
552.6.....................................  1550-0025.
552.7.....................................  1550-0025.
552.11....................................  1550-0011.
552.13....................................  1550-0016, 1550-0025.
555.300...................................  1550-0095.
555.310...................................  1550-0095.
557.20....................................  1550-0092.
559.3.....................................  1550-0077.
559.11....................................  1550-0067.
559.12....................................  1550-0013.
559.13....................................  1550-0065.
560.1.....................................  1550-0078.
560.2.....................................  1550-0078.
560.32....................................  1550-0078.
560.35....................................  1550-0078.
560.93(f).................................  1550-0078.
560.101...................................  1550-0078.
560.170(c)................................  1550-0078.
560.172...................................  1550-0078.
560.210...................................  1550-0078.
562.1.....................................  1550-0011.
562.1(b)..................................  1550-0078.
562.4.....................................  1550-0011.
563.1.....................................  1550-0027.
563.1(b)..................................  1550-0011.
563.22....................................  1550-0016.
563.41(e).................................  1550-0078.
563.42(e).................................  1550-0078.
563.43....................................  1550-0075.
563.47(e).................................  1550-0011.
563.74....................................  1550-0050.
563.76(c).................................  1550-0011.
563.80....................................  1550-0030.
563.81....................................  1550-0061.
563.143 through 563.146...................  1550-0059.
563.170...................................  1550-0078.
563.177...................................  1550-0041.
563.180...................................  1550-0084.
563.180(d)................................  1550-0003.
563.180(e)................................  1550-0079.
563.181...................................  1550-0032.
563.183...................................  1550-0032.
Part 563b.................................  1550-0014.
563b.4....................................  1550-0032.
563b.20 through 563b.32...................  1550-0074.
Part 563d.................................  1550-0019.
Part 563e.................................  1550-0012.
Part 563f.................................  1550-0051.
Part 563g.................................  1550-0035.
Part 564..................................  1550-0078.
Part 568..................................  1550-0062.
572.6.....................................  1550-0088.
572.7.....................................  1550-0088.
572.9.....................................  1550-0088.
572.10....................................  1550-0088.
Part 573..................................  1550-0103.
574.3(b)..................................  1550-0032.

[[Page 14]]

 
574.4.....................................  1550-0032.
574.5.....................................  1550-0032.
574.6.....................................  1550-0015.
Part 575..................................  1550-0072.
584.1(f)..................................  1550-0011.
584.2-1...................................  1550-0063.
584.2-2...................................  1550-0063.
584.9.....................................  1550-0063.
590.4(h)..................................  1550-0078.
------------------------------------------------------------------------

[60 FR 66716, Dec. 26, 1995, as amended by 61 FR 65178, Dec. 11, 1996; 
62 FR 54764, Oct. 22, 1997; 62 FR 66261, Dec. 18, 1997; 63 FR 71211, 
Dec. 24, 1998; 65 FR 78901, Dec. 18, 2000; 66 FR 15017, Mar. 15, 2001;66 
FR 65819, Dec. 21, 2001]



PART 508--REMOVALS, SUSPENSIONS, AND PROHIBITIONS WHERE A CRIME IS CHARGED OR PROVEN--Table of Contents




Sec.
508.1  Scope.
508.2  Definitions.
508.3  Issuance of Notice or Order.
508.4  Contents and service of the Notice or Order.
508.5  Petition for hearing.
508.6  Initiation of hearing.
508.7  Conduct of hearings.
508.8  Default.
508.9  Rules of evidence.
508.10  Burden of persuasion.
508.11  Relevant considerations.
508.12  Proposed findings and conclusions and recommended decision.
508.13  Decision of the Office.
508.14  Miscellaneous.

    Authority: 12 U.S.C. 1464, 1818.

    Source: 54 FR 49444, Nov. 30, 1989, unless otherwise noted.



Sec. 508.1  Scope.

    The rules in this part apply to hearings, which are exempt from the 
adjudicative provisions of the Administrative Procedure Act, afforded to 
any officer, director, or other person participating in the conduct of 
the affairs of a savings association, affiliate service corporation, 
savings and loan holding company, or subsidiary of such a holding 
company, where such person has been suspended or removed from office or 
prohibited from further participation in the conduct of the affairs of 
one of the aforementioned entities by a Notice or Order served by the 
Office upon the grounds set forth in section 8(g) of the Federal Deposit 
Insurance Act, (12 U.S.C. 1818(g)).



Sec. 508.2  Definitions.

    As used in this part--
    (a) The term Office means the Office of Thrift Supervision.
    (b) The term Secretary means the Secretary to the Office and any 
Assistant or Acting Secretary to the Office.
    (c) The term Notice means a Notice of Suspension or Notice of 
Prohibition issued by the Office pursuant to section 8(g) of the Federal 
Deposit Insurance Act.
    (d) The term Order means an Order of Removal or Order of Prohibition 
issued by the Office pursuant to section 8(g) of the Federal Deposit 
Insurance Act.
    (e) The term association means a savings association within the 
meaning of section 2(4) of the Home Owners' Loan Act of 1933, as 
amended, 12 U.S.C. 1462(4) (``HOLA''), an affiliate service corporation 
within the meaning of section 8(b)(8) of the Federal Deposit Insurance 
Act, as amended, 12 U.S.C. 1818(b)(8) (``FDIA''), a savings and loan 
holding company within the meaning of section 10(a)(1)(D) of the HOLA, 
12 U.S.C. 1467a(a)(1)(D) and a subsidiary of a savings and loan holding 
company (other than a savings association) within the meaning of section 
10(a)(1)(G) of the Home Owners' Loan Act of 1933.
    (f) The term subject individual means a person served with a Notice 
or Order.
    (g) The term petitioner means a subject individual who has filed a 
petition for informal hearing under this part.



Sec. 508.3  Issuance of Notice or Order.

    (a) The Office may issue and serve a Notice upon an officer, 
director, or other person participating in the conduct of the affairs of 
an association, where the individual is charged in any information, 
indictment, or complaint

[[Page 15]]

with the commission of or participation in a crime involving dishonesty 
or breach of trust that is punishable by imprisonment for a term 
exceeding one year under State or Federal law, if the Office, upon due 
deliberation, determines that continued service or participation by the 
individual may pose a threat to the interests of the association's 
depositors or may threaten to impair public confidence in the 
association. The Notice shall remain in effect until the information, 
indictment, or complaint is finally disposed of or until terminated by 
the Office.
    (b) The Office may issue and serve an Order upon a subject 
individual against whom a judgment of conviction, or an agreement to 
enter a pretrial diversion or other similar program has been rendered, 
where such judgment is not subject to further appellate review, and the 
Office, upon the deliberation, has determined that continued service or 
participation by the subject individual may pose a threat to the 
interests of the association's depositors or may threaten to impair 
public confidence in the association.



Sec. 508.4  Contents and service of the Notice or Order.

    (a) The Notice or Order shall set forth the basis and facts in 
support of the Office's issuance of such Notice or Order, and shall 
inform the subject individual of his right to a hearing, in accordance 
with this part, for the purpose of determining whether the Notice or 
Order should be continued, terminated, or otherwise modified.
    (b) The Secretary shall serve a copy of the Notice or Order upon the 
subject individual and the related association in the manner set forth 
in Sec. 509.11 of this chapter.
    (c) Upon receipt of the Notice or Order, the subject individual 
shall immediately comply with the requirements thereof.

[54 FR 49444, Nov. 30, 1989, as amended at 56 FR 38306, Aug. 12, 1991]



Sec. 508.5  Petition for hearing.

    (a) To obtain a hearing, the subject individual must file two copies 
of a petition with the Secretary within 30 days of being served with the 
Notice or Order.
    (b) The petition filed under this section shall admit or deny 
specifically each allegation in the Notice or Order, unless the 
petitioner is without knowledge or information, in which case the 
petition shall so state and the statement shall have the effect of a 
denial. Any allegation not denied shall be deemed to be admitted. When a 
petitioner intends in good faith to deny only a part of or to qualify an 
allegation, he shall specify so much of it as is true and shall deny 
only the remainder.
    (c) The petition shall state whether the petitioner is requesting 
termination or modification of the Notice or Order, and shall state with 
particularity how the petitioner intends to show that his continued 
service to or participation in the conduct of the affairs of the 
association would not, or is not likely to, pose a threat to the 
interests of the association's depositors or to impair public confidence 
in the association.



Sec. 508.6  Initiation of hearing.

    (a) Within 10 days of the filing of a petition for hearing, the 
Office shall notify the petitioner of the time and place fixed for 
hearing, and it shall designate one or more Office employees to serve as 
presiding officer.
    (b) The hearing shall be scheduled to be held no later than 30 days 
from the date the petition was filed, unless the time is extended at the 
request of the petitioner.
    (c) A petitioner may appear personally or through counsel, but if 
represented by counsel, said counsel is required to comply with 
Sec. 509.6 of this chapter.
    (d) A representative(s) of the Office's Office of Enforcement also 
may attend the hearing and participate therein as a party.

[54 FR 49444, Nov. 30, 1989, as amended at 56 FR 38306, Aug. 12, 1991]



Sec. 508.7  Conduct of hearings.

    (a) Hearings provided by this section are not subject to the 
adjudicative provisions of the Administrative Procedure Act (5 U.S.C. 
554-557). The presiding officer is, however, authorized to exercise all 
of the powers enumerated in Sec. 509.5 of this chapter.

[[Page 16]]

    (b) Witnesses may be presented, within time limits specified by the 
presiding officer, provided that at least 10 days prior to the hearing 
date, the party presenting the witnesses furnishes the presiding officer 
and the opposing party with a list of such witnesses and a summary of 
the proposed testimony. However, the requirement for furnishing such a 
witness list and summary of testimony shall not apply to the 
presentation of rebuttal witnesses. The presiding officer may ask 
questions of any witness, and each party shall have an opportunity to 
cross-examine any witness presented by an opposing party.
    (c) Upon the request of either the petitioner or a representative of 
the Office of Enforcement, the record shall remain open for a period of 
5 business days following the hearing, during which time the parties may 
make any additional submissions for the record. Thereafter, the record 
shall be closed.
    (d) Following the introduction of all evidence, the petitioner and 
the representative of the Office of Enforcement shall have an 
opportunity for oral argument; however, the parties may jointly waive 
the right to oral argument, and, in lieu thereof, elect to submit 
written argument.
    (e) All oral testimony and oral argument shall be recorded, and 
transcripts made available to the petitioner upon payment of the cost 
thereof. A copy of the transcript shall be sent directly to the 
presiding officer, who shall have authority to correct the record sua 
sponte or upon the motion of any party.
    (f) The parties may, in writing, jointly waive an oral hearing and 
instead elect a hearing upon a written record in which all evidence and 
argument would be submitted to the presiding officer in documentary form 
and statements of individuals would be made by affidavit.

[54 FR 49444, Nov. 30, 1989, as amended at 56 FR 38306, Aug. 12, 1991]



Sec. 508.8  Default.

    If the subject individual fails to file a petition for a hearing, or 
fails to appear at a hearing, either in person or by attorney, or fails 
to submit a written argument where oral argument has been waived 
pursuant to Sec. 508.7(d) or (f) of this part, the Notice shall remain 
in effect until the information, indictment, or complaint is finally 
disposed of and the Order shall remain in effect until terminated by the 
Office.



Sec. 508.9  Rules of evidence.

    (a) Formal rules of evidence shall not apply to a hearing, but the 
presiding officer may limit the introduction of irrelevant, immaterial, 
or unduly repetitious evidence.
    (b) All matters officially noticed by the presiding officer shall 
appear on the record.



Sec. 508.10  Burden of persuasion.

    The petitioner has the burden of showing, by a preponderance of the 
evidence, that his or her continued service to or participation in the 
conduct of the affairs of the association does not, or is not likely to, 
pose a threat to the interests of the association's depositors or 
threaten to impair public confidence in the association.



Sec. 508.11  Relevant considerations.

    (a) In determining whether the petitioner has shown that his or her 
continued service to or participation in the conduct of the affairs of 
the association would not, or is not likely to, pose a threat to the 
interests of the association's depositors or threaten to impair public 
confidence in the association, in order to decide whether the Notice or 
Order should be continued, terminated, or otherwise modified, the Office 
will consider:
    (1) The nature and extent of the petitioner's participation in the 
affairs of the association;
    (2) The nature of the offense with which the petitioner has been 
charged;
    (3) The extent of the publicity accorded the indictment and trial; 
and
    (4) Such other relevant factors as may be entered on the record.
    (b) When considering a request for the termination or modification 
of a Notice, the Office will not consider the ultimate guilt or 
innocence of the petitioner with respect to the criminal charge that is 
outstanding.
    (c) When considering a request for the termination or modification 
of an Order which has been issued following

[[Page 17]]

a final judgment of conviction against a subject individual, the Office 
will not collaterally review such final judgment of conviction.



Sec. 508.12  Proposed findings and conclusions and recommended decision.

    (a) Within 30 days after completion of oral argument or the 
submission of written argument where oral argument has been waived, the 
presiding officer shall file with the Secretary and certify to the 
Office for decision the entire record of the hearing, which shall 
include a recommended decision, the Notice or Order, and all other 
documents filed in connection with the hearing.
    (b) The recommended decision shall contain:
    (1) A statement of the issue(s) presented,
    (2) A statement of findings and conclusions, and the reasons or 
basis therefor, on all material issues of fact, law, or discretion 
presented on the record, and
    (3) An appropriate recommendation as to whether the suspension, 
removal, or prohibition should be continued, modified, or terminated.



Sec. 508.13  Decision of the Office.

    (a) Within 30 days after the recommended decision has been certified 
to the Office, the Office shall issue a final decision.
    (b) The Office's final decision shall contain a statement of the 
basis therefor. The Office may satisfy this requirement where it adopts 
the recommended decision of the presiding officer upon finding that the 
recommended decision satisfies the requirements of Sec. 509.38 of this 
chapter.
    (c) The Secretary shall serve upon the petitioner and the 
representative of the Office of Enforcement a copy of the Office's final 
decision and the related recommended decision.

[54 FR 49444, Nov. 30, 1989, as amended at 56 FR 38306, Aug. 12, 1991; 
59 FR 53570, Oct. 25, 1994]



Sec. 508.14  Miscellaneous.

    The provisions of Secs. 509.10, 509.11, and 509.12 of this chapter 
shall apply to proceedings under this part.

[54 FR 49444, Nov. 30, 1989, as amended at 56 FR 38306, Aug. 12, 1991]



PART 509--RULES OF PRACTICE AND PROCEDURE IN ADJUDICATORY PROCEEDINGS--Table of Contents




           Subpart A--Uniform Rules of Practice and Procedure

Sec.
509.1  Scope.
509.2  Rules of construction.
509.3  Definitions.
509.4  Authority of Director.
509.5  Authority of the administrative law judge.
509.6  Appearance and practice in adjudicatory proceedings.
509.7  Good faith certification.
509.8  Conflicts of interest.
509.9  Ex parte communications.
509.10  Filing of papers.
509.11  Service of papers.
509.12  Construction of time limits.
509.13  Change of time limits.
509.14  Witness fees and expenses.
509.15  Opportunity for informal settlement.
509.16  Office's right to conduct examination.
509.17  Collateral attacks on adjudicatory proceeding.
509.18  Commencement of proceeding and contents of notice.
509.19  Answer.
509.20  Amended pleadings.
509.21  Failure to appear.
509.22  Consolidation and severance of actions.
509.23  Motions.
509.24  Scope of document discovery.
509.25  Request for document discovery from parties.
509.26  Document subpoenas to nonparties.
509.27  Deposition of witness unavailable for hearing.
509.28  Interlocutory review.
509.29  Summary disposition.
509.30  Partial summary disposition.
509.31  Scheduling and prehearing conferences.
509.32  Prehearing submissions.
509.33  Public hearings.
509.34  Hearing subpoenas.
509.35  Conduct of hearings.
509.36  Evidence.

[[Page 18]]

509.37  Post-hearing filings.
509.38  Recommended decision and filing of record.
509.39  Exceptions to recommended decision.
509.40  Review by the Director.
509.41  Stays pending judicial review.

                         Subpart B--Local Rules

509.100  Scope.
509.101  Appointment of Office of Financial Institution Adjudication.
509.102  Discovery.
509.103  Civil money penalties.
509.104  Additional procedures.

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 1464, 1467, 1467a, 1468, 
1817(j), 1818, 3349, 4717; 15 U.S.C. 78(l), 78o-5, 78u-2; 28 U.S.C. 2461 
note; 31 U.S.C. 5321; 42 U.S.C. 4012a.

    Source: 56 FR 38306, Aug. 12, 1991, unless otherwise noted.



           Subpart A--Uniform Rules of Practice and Procedure



Sec. 509.1  Scope.

    This subpart prescribes Uniform Rules of practice and procedure 
applicable to adjudicatory proceedings as to which hearings on the 
record are provided for by the following statutory provisions:
    (a) Cease-and-desist proceedings under section 8(b) of the Federal 
Deposit Insurance Act (FDIA) (12 U.S.C. 1818(b));
    (b) Removal and prohibition proceedings under section 8(e) of the 
FDIA (12 U.S.C. 1818(e));
    (c) Change-in-control proceedings under section 7(j)(4) of the FDIA 
(12 U.S.C. 1817(j)(4)) to determine whether the Office should issue an 
order to approve or disapprove a person's proposed acquisition of an 
institution and/or institution holding company;
    (d) Proceedings under section 15C(c)(2) of the Securities Exchange 
Act of 1934 (Exchange Act) (15 U.S.C. 78o-5), to impose sanctions upon 
any government securities broker or dealer or upon any person associated 
or seeking to become associated with a government securities broker or 
dealer for which the Office is the appropriate Office;
    (e) Assessment of civil money penalties by the Office against 
institutions, institution-affiliated parties, and certain other persons 
for which it is the appropriate Office for any violation of:
    (1) Section 5 of the Home Owners' Loan Act (HOLA) or any regulation 
or order issued thereunder, pursuant to 12 U.S.C. 1464 (d), (s) and (v);
    (2) Section 9 of the HOLA or any regulation or order issued 
thereunder, pursuant to 12 U.S.C. 1467(d);
    (3) Section 10 of the HOLA, pursuant to 12 U.S.C. 1467a (i) and (r);
    (4) Any provisions of the Change in Bank Control Act, any regulation 
or order issued thereunder or certain unsafe or unsound practices or 
breaches of fiduciary duty, pursuant to 12 U.S.C. 1817(j)(16);
    (5) Sections 22(h) and 23 of the Federal Reserve Act, or any 
regulation issued thereunder or certain unsafe or unsound practices or 
breaches of fiduciary duty, pursuant to 12 U.S.C. 1468;
    (6) Certain provisions of the Exchange Act, pursuant to section 21B 
of the Exchange Act (15 U.S.C. 78u-2);
    (7) Section 1120 of Financial Institutions Reform, Recovery and 
Enforcement Act of 1989 (12 U.S.C. 3349), or any order or regulation 
issued thereunder;
    (8) The terms of any final or temporary order issued or enforceable 
pursuant to section 8 of the FDIA or of any written agreement executed 
by the Office, the terms of any conditions imposed in writing by the 
Office in connection with the grant of an application or request, 
certain unsafe or unsound practices or breaches of fiduciary duty, or 
any law or regulation not otherwise provided herein pursuant to 12 
U.S.C. 1818(i)(2);
    (9) Any provision of law referenced in section 102 of the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)) or any order or 
regulation issued thereunder; and
    (10) Any provision of law referenced in 31 U.S.C. 5321 or any order 
or regulation issued thereunder;
    (f) Remedial action under section 102 of the Flood Disaster 
Protection Act of 1973 (42 U.S.C. 4012a(g)); and
    (g) This subpart also applies to all other adjudications required by 
statute to be determined on the record after

[[Page 19]]

opportunity for an agency hearing, unless otherwise specifically 
provided for in the Local Rules.

[56 FR 38306, Aug. 12, 1991, as amended at 56 FR 59866, Nov. 26, 1991; 
61 FR 20353, May 6, 1996]



Sec. 509.2  Rules of construction.

    For purposes of this subpart:
    (a) Any term in the singular includes the plural, and the plural 
includes the singular, if such use would be appropriate;
    (b) Any use of a masculine, feminine, or neuter gender encompasses 
all three, if such use would be appropriate;
    (c) The term counsel includes a non-attorney representative; and
    (d) Unless the context requires otherwise, a party's counsel of 
record, if any, may, on behalf of that party, take any action required 
to be taken by the party.



Sec. 509.3  Definitions.

    For purposes of this subpart, unless explicitly stated to the 
contrary:
    (a) Administrative law judge means one who presides at an 
administrative hearing under authority set forth at 5 U.S.C. 556.
    (b) Adjudicatory proceeding means a proceeding conducted pursuant to 
these rules and leading to the formulation of a final order other than a 
regulation.
    (c) Decisional employee means any member of the Office's or 
administrative law judge's staff who has not engaged in an investigative 
or prosecutorial role in a proceeding and who may assist the Office or 
the administrative law judge, respectively, in preparing orders, 
recommended decisions, decisions, and other documents under the Uniform 
Rules.
    (d) Director means the Director of the Office of Thrift Supervision 
or his or her designee.
    (e) Enforcement Counsel means any individual who files a notice of 
appearance as counsel on behalf of the Office in an adjudicatory 
proceeding.
    (f) Final order means an order issued by the Office with or without 
the consent of the affected institution or the institution-affiliated 
party, that has become final, without regard to the pendency of any 
petition for reconsideration or review.
    (g) Institution includes any savings association as that term is 
defined in section 3(b) of the FDIA (12 U.S.C. 1813(b)), any savings and 
loan holding company or any subsidiary thereof whether wholly or partly 
owned (other than a bank) as those terms are defined in section 10(a) of 
the HOLA (12 U.S.C. 1467(a)).
    (h) Institution-affiliated party means any institution-affiliated 
party as that term is defined in section 3(u) of the FDIA (12 U.S.C. 
1813(u)).
    (i) Local Rules means those rules found in subpart B of this part.
    (j) Office means the Office of Thrift Supervision in the case of any 
savings association or any savings and loan holding company, and 
subsidiary (other than a bank or subsidiary of that bank) of a savings 
and loan holding company, any service corporation of a savings 
association, and any subsidiary of such service corporation, whether 
wholly or partly owned.
    (k) Office of Financial Institution Adjudication (OFIA) means the 
executive body charged with overseeing the administration of 
administrative enforcement proceedings for the Office of the Comptroller 
of the Currency, the Board of Governors of the Federal Reserve Board, 
the Federal Deposit Insurance Corporation, the National Credit Union 
Administration and the Office.
    (l) Party means the Office and any person named as a party in any 
notice.
    (m) Person means an individual, sole proprietor, partnership, 
corporation, unincorporated association, trust, joint venture, pool, 
syndicate, agency or other entity or organization, including an 
institution as defined in paragraph (g) of this section.
    (n) Respondent means any party other than the Office.
    (o) Uniform Rules means those rules in subpart A of this part.
    (p) Violation includes any action (alone or with another or others) 
for or toward causing, bringing about, participating in, counseling, or 
aiding or abetting a violation.

[[Page 20]]



Sec. 509.4  Authority of Director.

    The Director may, at any time during the pendency of a proceeding 
perform, direct the performance of, or waive performance of, any act 
which could be done or ordered by the administrative law judge.



Sec. 509.5  Authority of the administrative law judge.

    (a) General rule. All proceedings governed by this part shall be 
conducted in accordance with the provisions of chapter 5 of title 5 of 
the United States Code. The administrative law judge shall have all 
powers necessary to conduct a proceeding in a fair and impartial manner 
and to avoid unnecessary delay.
    (b) Powers. The administrative law judge shall have all powers 
necessary to conduct the proceeding in accordance with paragraph (a) of 
this section, including the following powers:
    (1) To administer oaths and affirmations;
    (2) To issue subpoenas, subpoenas duces tecum, and protective 
orders, as authorized by this part, and to quash or modify any such 
subpoenas and orders;
    (3) To receive relevant evidence and to rule upon the admission of 
evidence and offers of proof;
    (4) To take or cause depositions to be taken as authorized by this 
subpart;
    (5) To regulate the course of the hearing and the conduct of the 
parties and their counsel;
    (6) To hold scheduling and/or pre-hearing conferences as set forth 
in Sec. 509.31 of this subpart;
    (7) To consider and rule upon all procedural and other motions 
appropriate in an adjudicatory proceeding, provided that only the 
Director shall have the power to grant any motion to dismiss the 
proceeding or to decide any other motion that results in a final 
determination of the merits of the proceeding;
    (8) To prepare and present to the Director a recommended decision as 
provided herein;
    (9) To recuse himself or herself by motion made by a party or on his 
or her own motion;
    (10) To establish time, place and manner limitations on the 
attendance of the public and the media for any public hearing; and
    (11) To do all other things necessary and appropriate to discharge 
the duties of a presiding officer.



Sec. 509.6  Appearance and practice in adjudicatory proceedings.

    (a) Appearance before an Office or an administrative law judge--(1) 
By attorneys. Any member in good standing of the bar of the highest 
court of any state, commonwealth, possession, territory of the United 
States, or the District of Columbia may represent others before the 
Office if such attorney is not currently suspended or debarred from 
practice before the Office.
    (2) By non-attorneys. An individual may appear on his or her own 
behalf; a member of a partnership may represent the partnership; a duly 
authorized officer, director, or employee of any government unit, 
agency, institution, corporation or authority may represent that unit, 
agency, institution, corporation or authority if such officer, director, 
or employee is not currently suspended or debarred from practice before 
the Office.
    (3) Notice of appearance. Any individual acting as counsel on behalf 
of a party, including the Director, shall file a notice of appearance 
with OFIA at or before the time that individual submits papers or 
otherwise appears on behalf of a party in the adjudicatory proceeding. 
The notice of appearance must include a written declaration that the 
individual is currently qualified as provided in paragraph (a)(1) or 
(a)(2) of this section and is authorized to represent the particular 
party. By filing a notice of appearance on behalf of a party in an 
adjudicatory proceeding, the counsel agrees and represents that he or 
she is authorized to accept service on behalf of the represented party 
and that, in the event of withdrawal from representation, he or she 
will, if required by the administrative law judge, continue to accept 
service until new counsel has filed a notice of appearance or until the 
represented party indicates that he or she will proceed on a pro se 
basis.
    (b) Sanctions. Dilatory, obstructionist, egregious, contemptuous or 
contumacious conduct at any phase of

[[Page 21]]

any adjudicatory proceeding may be grounds for exclusion or suspension 
of counsel from the proceeding.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20354, May 6, 1996]



Sec. 509.7  Good faith certification.

    (a) General requirement. Every filing or submission of record 
following the issuance of a notice shall be signed by at least one 
counsel of record in his or her individual name and shall state that 
counsel's address and telephone number. A party who acts as his or her 
own counsel shall sign his or her individual name and state his or her 
address and telephone number on every filing or submission of record.
    (b) Effect of signature. (1) The signature of counsel or a party 
shall constitute a certification that: the counsel or party has read the 
filing or submission of record; to the best of his or her knowledge, 
information, and belief formed after reasonable inquiry, the filing or 
submission of record is well-grounded in fact and is warranted by 
existing law or a good faith argument for the extension, modification, 
or reversal of existing law; and the filing or submission of record is 
not made for any improper purpose, such as to harass or to cause 
unnecessary delay or needless increase in the cost of litigation.
    (2) If a filing or submission of record is not signed, the 
administrative law judge shall strike the filing or submission of 
record, unless it is signed promptly after the omission is called to the 
attention of the pleader or movant.
    (c) Effect of making oral motion or argument. The act of making any 
oral motion or oral argument by any counsel or party constitutes a 
certification that to the best of his or her knowledge, information, and 
belief formed after reasonable inquiry, his or her statements are well-
grounded in fact and are warranted by existing law or a good faith 
argument for the extension, modification, or reversal of existing law, 
and are not made for any improper purpose, such as to harass or to cause 
unnecessary delay or needless increase in the cost of litigation.



Sec. 509.8  Conflicts of interest.

    (a) Conflict of interest in representation. No person shall appear 
as counsel for another person in an adjudicatory proceeding if it 
reasonably appears that such representation may be materially limited by 
that counsel's responsibilities to a third person or by the counsel's 
own interests. The administrative law judge may take corrective measures 
at any stage of a proceeding to cure a conflict of interest in 
representation, including the issuance of an order limiting the scope of 
representation or disqualifying an individual from appearing in a 
representative capacity for the duration of the proceeding.
    (b) Certification and waiver. If any person appearing as counsel 
represents two or more parties to an adjudicatory proceeding or also 
represents a non-party on a matter relevant to an issue in the 
proceeding, counsel must certify in writing at the time of filing the 
notice of appearance required by Sec. 509.6(a):
    (1) That the counsel has personally and fully discussed the 
possibility of conflicts of interest with each such party and non-party; 
and
    (2) That each such party and non-party waives any right it might 
otherwise have had to assert any known conflicts of interest or to 
assert any non-material conflicts of interest during the course of the 
proceeding.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20354, May 6, 1996]



Sec. 509.9  Ex parte communications.

    (a) Definition--(1) Ex parte communication means any material oral 
or written communication relevant to the merits of an adjudicatory 
proceeding that was neither on the record nor on reasonable prior notice 
to all parties that takes place between:
    (i) An interested person outside the Office (including such person's 
counsel); and
    (ii) The administrative law judge handling that proceeding, the 
Director, or a decisional employee.
    (2) Exception. A request for status of the proceeding does not 
constitute an ex parte communication.
    (b) Prohibition of ex parte communications. From the time the notice 
is

[[Page 22]]

issued by the Director until the date that the Director issues the final 
decision pursuant to Sec. 509.40(c) of this subpart:
    (1) No interested person outside the Office shall make or knowingly 
cause to be made an ex parte communication to the Director, the 
administrative law judge, or a decisional employee; and
    (2) The Director, administrative law judge, or decisional employee 
shall not make or knowingly cause to be made to any interested person 
outside the Office any ex parte communication.
    (c) Procedure upon occurrence of ex parte communication. If an ex 
parte communication is received by the administrative law judge, the 
Director or other person identified in paragraph (a) of this section, 
that person shall cause all such written communications (or, if the 
communication is oral, a memorandum stating the substance of the 
communication) to be placed on the record of the proceeding and served 
on all parties. All other parties to the proceeding shall have an 
opportunity, within ten days of receipt of service of the ex parte 
communication to file responses thereto and to recommend any sanctions, 
in accordance with paragraph (d) of this section, that they believe to 
be appropriate under the circumstances.
    (d) Sanctions. Any party or his or her counsel who makes a 
prohibited ex parte communication, or who encourages or solicits another 
to make any such communication, may be subject to any appropriate 
sanction or sanctions imposed by the Director or the administrative law 
judge including, but not limited to, exclusion from the proceedings and 
an adverse ruling on the issue which is the subject of the prohibited 
communication.
    (e) Separation-of-functions. Except to the extent required for the 
disposition of ex parte matters as authorized by law, the administrative 
law judge may not consult a person or party on any matter relevant to 
the merits of the adjudication, unless on notice and opportunity for all 
parties to participate. An employee or agent engaged in the performance 
of investigative or prosecuting functions for the Office in a case may 
not, in that or a factually related case, participate or advise in the 
decision, recommended decision, or agency review of the recommended 
decision under Sec. 509.40 of this subpart, except as witness or counsel 
in public proceedings.

[56 FR 38306, Aug. 12, 1991, as amended at 60 FR 28035, May 30, 1995]



Sec. 509.10  Filing of papers.

    (a) Filing. Any papers required to be filed, excluding documents 
produced in response to a discovery request pursuant to Secs. 509.25 and 
509.26 of this subpart, shall be filed with the OFIA, except as 
otherwise provided.
    (b) Manner of filing. Unless otherwise specified by the Director or 
the administrative law judge, filing may be accomplished by:
    (1) Personal service;
    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery;
    (3) Mailing the papers by first class, registered, or certified 
mail; or
    (4) Transmission by electronic media, only if expressly authorized, 
and upon any conditions specified, by the Director or the administrative 
law judge. All papers filed by electronic media shall also concurrently 
be filed in accordance with paragraph (c) of this section as to form.
    (c) Formal requirements as to papers filed--(1) Form. All papers 
filed must set forth the name, address, and telephone number of the 
counsel or party making the filing and must be accompanied by a 
certification setting forth when and how service has been made on all 
other parties. All papers filed must be double-spaced and printed or 
typewritten on 8\1/2\ x 11 inch paper, and must be clear and legible.
    (2) Signature. All papers must be dated and signed as provided in 
Sec. 509.7 of this subpart.
    (3) Caption. All papers filed must include at the head thereof, or 
on a title page, the name of the Office and of the filing party, the 
title and docket number of the proceeding, and the subject of the 
particular paper.
    (4) Number of copies. Unless otherwise specified by the Director, or 
the administrative law judge, an original and one copy of all documents 
and papers shall be filed, except that only one copy of

[[Page 23]]

transcripts of testimony and exhibits shall be filed.



Sec. 509.11  Service of papers.

    (a) By the parties. Except as otherwise provided, a party filing 
papers shall serve a copy upon the counsel of record for all other 
parties to the proceeding so represented, and upon any party not so 
represented.
    (b) Method of service. Except as provided in paragraphs (c)(2) and 
(d) of this section, a serving party shall use one or more of the 
following methods of service:
    (1) Personal service;
    (2) Delivering the papers to a reliable commercial courier service, 
overnight delivery service, or to the U.S. Post Office for Express Mail 
delivery;
    (3) Mailing the papers by first class, registered, or certified 
mail; or
    (4) Transmission by electronic media, only if the parties mutually 
agree. Any papers served by electronic media shall also concurrently be 
served in accordance with the requirements of Sec. 509.10(c) of this 
subpart as to form.
    (c) By the Director or the administrative law judge. (1) All papers 
required to be served by the Director or the administrative law judge 
upon a party who has appeared in the proceeding through a counsel of 
record, shall be served by any means specified in paragraph (b) of this 
section.
    (2) If a party has not appeared in the proceeding in accordance with 
Sec. 509.6 of this subpart, the Director or the administrative law judge 
shall make service by any of the following methods:
    (i) By personal service;
    (ii) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (iii) If the person to be served is a corporation or other 
association, by delivery to an officer, managing or general agent, or to 
any other agent authorized by appointment or by law to receive service 
and, if the agent is one authorized by statute to receive service and 
the statute so requires, by also mailing a copy to the party;
    (iv) By registered or certified mail addressed to the person's last 
known address; or
    (v) By any other method reasonably calculated to give actual notice.
    (d) Subpoenas. Service of a subpoena may be made:
    (1) By personal service;
    (2) If the person to be served is an individual, by delivery to a 
person of suitable age and discretion at the physical location where the 
individual resides or works;
    (3) By delivery to an agent, which in the case of a corporation or 
other association, is delivery to an officer, managing or general agent, 
or to any other agent authorized by appointment or by law to receive 
service and, if the agent is one authorized by statute to receive 
service and the statute so requires, by also mailing a copy to the 
party;
    (4) By registered or certified mail addressed to the person's last 
known address; or
    (5) By any other method reasonably calculated to give actual notice.
    (e) Area of service. Service in any state, territory, possession of 
the United States, or the District of Columbia, on any person or company 
doing business in any state, territory, possession of the United States, 
or the District of Columbia, or on any person as otherwise provided by 
law, is effective without regard to the place where the hearing is held, 
provided that if service is made on a foreign bank in connection with an 
action or proceeding involving one or more of its branches or agencies 
located in any state, territory, possession of the United States, or the 
District of Columbia, service shall be made on at least one branch or 
agency so involved.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20354, May 6, 1996]



Sec. 509.12  Construction of time limits.

    (a) General rule. In computing any period of time prescribed by this 
subpart, the date of the act or event that commences the designated 
period of time is not included. The last day so computed is included 
unless it is a Saturday, Sunday, or Federal holiday. When the last day 
is a Saturday, Sunday, or Federal holiday, the period runs until the

[[Page 24]]

end of the next day that is not a Saturday, Sunday, or Federal holiday. 
Intermediate Saturdays, Sundays, and Federal holidays are included in 
the computation of time. However, when the time period within which an 
act is to be performed is ten days or less, not including any additional 
time allowed for in paragraph (c) of this section, intermediate 
Saturdays, Sundays, and Federal holidays are not included.
    (b) When papers are deemed to be filed or served. (1) Filing and 
service are deemed to be effective:
    (i) In the case of personal service or same day commercial courier 
delivery, upon actual service;
    (ii) In the case of overnight commercial delivery service, U.S. 
Express mail delivery, or first class, registered, or certified mail, 
upon deposit in or delivery to an appropriate point of collection; or
    (iii) In the case of transmission by electronic media, as specified 
by the authority receiving the filing, in the case of filing, and as 
agreed among the parties, in the case of service.
    (2) The effective filing and service dates specified in paragraph 
(b)(1) of this section may be modified by the Director or administrative 
law judge in the case of filing or by agreement of the parties in the 
case of service.
    (c) Calculation of time for service and filing of responsive papers. 
Whenever a time limit is measured by a prescribed period from the 
service of any notice or paper, the applicable time limits are 
calculated as follows:
    (1) If service is made by first class, registered, or certified 
mail, add three calendar days to the prescribed period;
    (2) If service is made by express mail or overnight delivery 
service, add one calendar day to the prescribed period; or
    (3) If service is made by electronic media transmission, add one 
calendar day to the prescribed period, unless otherwise determined by 
the Director or the administrative law judge in the case of filing, or 
by agreement among the parties in the case of service.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20354, May 6, 1996]



Sec. 509.13  Change of time limits.

    Except as otherwise provided by law, the administrative law judge 
may, for good cause shown, extend the time limits prescribed by the 
Uniform Rules or any notice or order issued in the proceedings. After 
the referral of the case to the Director pursuant to Sec. 509.38 of this 
subpart, the Director may grant extensions of the time limits for good 
cause shown. Extensions may be granted at the motion of a party or on 
the Director's or the administrative law judge's own motion after notice 
and opportunity to respond is afforded all non-moving parties.



Sec. 509.14  Witness fees and expenses.

    Witnesses subpoenaed for testimony or deposition shall be paid the 
same fees for attendance and mileage as are paid in the United States 
district courts in proceedings in which the United States is a party, 
provided that, in the case of a discovery subpoena addressed to a party, 
no witness fees or mileage need be paid. Fees for witnesses shall be 
tendered in advance by the party requesting the subpoena, except that 
fees and mileage need not be tendered in advance where the Office is the 
party requesting the subpoena. The Office shall not be required to pay 
any fees to, or expenses of, any witness not subpoenaed by the Office.



Sec. 509.15  Opportunity for informal settlement.

    Any respondent may, at any time in the proceeding, unilaterally 
submit to Enforcement Counsel written offers or proposals for settlement 
of a proceeding, without prejudice to the rights of any of the parties. 
No such offer or proposal shall be made to any Office representative 
other than Enforcement Counsel. Submission of a written settlement offer 
does not provide a basis for adjourning or otherwise delaying all or any 
portion of a proceeding under this part. No settlement offer or 
proposal, or any subsequent negotiation or resolution, is admissible as 
evidence in any proceeding.



Sec. 509.16  Office's right to conduct examination.

    Nothing contained in this subpart limits in any manner the right of 
the

[[Page 25]]

Office to conduct any examination, inspection, or visitation of any 
institution or institution-affiliated party, or the right of the Office 
to conduct or continue any form of investigation authorized by law.



Sec. 509.17  Collateral attacks on adjudicatory proceeding.

    If an interlocutory appeal or collateral attack is brought in any 
court concerning all or any part of an adjudicatory proceeding, the 
challenged adjudicatory proceeding shall continue without regard to the 
pendency of that court proceeding. No default or other failure to act as 
directed in the adjudicatory proceeding within the times prescribed in 
this subpart shall be excused based on the pendency before any court of 
any interlocutory appeal or collateral attack.



Sec. 509.18  Commencement of proceeding and contents of notice.

    (a) Commencement of proceeding. (1)(i) Except for change-in-control 
proceedings under section 7(j)(4) of the FDIA (12 U.S.C. 1817(j)(4)), a 
proceeding governed by this subpart is commenced by issuance of a notice 
by the Director.
    (ii) The notice must be served by the Director upon the respondent 
and given to any other appropriate financial institution supervisory 
authority where required by law.
    (iii) The notice must be filed with the OFIA.
    (2) Change-in control proceedings under section 7(j)(4) of the FDIA 
(12 U.S.C. 1817(j)(4)) commence with the issuance of an order by the 
Director.
    (b) Contents of notice. The notice must set forth:
    (1) The legal authority for the proceeding and for the Office's 
jurisdiction over the proceeding;
    (2) A statement of the matters of fact or law showing that the 
Office is entitled to relief;
    (3) A proposed order or prayer for an order granting the requested 
relief;
    (4) The time, place, and nature of the hearing as required by law or 
regulation;
    (5) The time within which to file an answer as required by law or 
regulation;
    (6) The time within which to request a hearing as required by law or 
regulation; and
    (7) The answer and/or request for a hearing shall be filed with 
OFIA.



Sec. 509.19  Answer.

    (a) When. Within 20 days of service of the notice, respondent shall 
file an answer as designated in the notice. In a civil money penalty 
proceeding, respondent shall also file a request for a hearing within 20 
days of service of the notice.
    (b) Content of answer. An answer must specifically respond to each 
paragraph or allegation of fact contained in the notice and must admit, 
deny, or state that the party lacks sufficient information to admit or 
deny each allegation of fact. A statement of lack of information has the 
effect of a denial. Denials must fairly meet the substance of each 
allegation of fact denied; general denials are not permitted. When a 
respondent denies part of an allegation, that part must be denied and 
the remainder specifically admitted. Any allegation of fact in the 
notice which is not denied in the answer must be deemed admitted for 
purposes of the proceeding. A respondent is not required to respond to 
the portion of a notice that constitutes the prayer for relief or 
proposed order. The answer must set forth affirmative defenses, if any, 
asserted by the respondent.
    (c) Default--(1) Effect of failure to answer. Failure of a 
respondent to file an answer required by this section within the time 
provided constitutes a waiver of his or her right to appear and contest 
the allegations in the notice. If no timely answer is filed, Enforcement 
Counsel may file a motion for entry of an order of default. Upon a 
finding that no good cause has been shown for the failure to file a 
timely answer, the administrative law judge shall file with the Director 
a recommended decision containing the findings and the relief sought in 
the notice. Any final order issued by the Director based upon a 
respondent's failure to answer is deemed to be an order issued upon 
consent.
    (2) Effect of failure to request a hearing in civil money penalty 
proceedings. If respondent fails to request a hearing as

[[Page 26]]

required by law within the time provided, the notice of assessment 
constitutes a final and unappealable order.

[56 FR 38306, Aug. 12, 1991, as amended at 65 FR 78901, Dec. 18, 2000]



Sec. 509.20  Amended pleadings.

    (a) Amendments. The notice or answer may be amended or supplemented 
at any stage of the proceeding. The respondent must answer an amended 
notice within the time remaining for the respondent's answer to the 
original notice, or within ten days after service of the amended notice, 
whichever period is longer, unless the Director or administrative law 
judge orders otherwise for good cause.
    (b) Amendments to conform to the evidence. When issues not raised in 
the notice or answer are tried at the hearing by express or implied 
consent of the parties, they will be treated in all respects as if they 
had been raised in the notice or answer, and no formal amendments are 
required. If evidence is objected to at the hearing on the ground that 
it is not within the issues raised by the notice or answer, the 
administrative law judge may admit the evidence when admission is likely 
to assist in adjudicating the merits of the action and the objecting 
party fails to satisfy the administrative law judge that the admission 
of such evidence would unfairly prejudice that party's action or defense 
upon the merits. The administrative law judge may grant a continuance to 
enable the objecting party to meet such evidence.

[61 FR 20354, May 6, 1996]



Sec. 509.21  Failure to appear.

    Failure of a respondent to appear in person at the hearing or by a 
duly authorized counsel constitutes a waiver of respondent's right to a 
hearing and is deemed an admission of the facts as alleged and consent 
to the relief sought in the notice. Without further proceedings or 
notice to the respondent, the administrative law judge shall file with 
the Director a recommended decision containing the findings and the 
relief sought in the notice.



Sec. 509.22  Consolidation and severance of actions.

    (a) Consolidation. (1) On the motion of any party, or on the 
administrative law judge's own motion, the administrative law judge may 
consolidate, for some or all purposes, any two or more proceedings, if 
each such proceeding involves or arises out of the same transaction, 
occurrence or series of transactions or occurrences, or involves at 
least one common respondent or a material common question of law or 
fact, unless such consolidation would cause unreasonable delay or 
injustice.
    (2) In the event of consolidation under paragraph (a)(1) of this 
section, appropriate adjustment to the prehearing schedule must be made 
to avoid unnecessary expense, inconvenience, or delay.
    (b) Severance. The administrative law judge may, upon the motion of 
any party, sever the proceeding for separate resolution of the matter as 
to any respondent only if the administrative law judge finds that:
    (1) Undue prejudice or injustice to the moving party would result 
from not severing the proceeding; and
    (2) Such undue prejudice or injustice would outweigh the interests 
of judicial economy and expedition in the complete and final resolution 
of the proceeding.



Sec. 509.23  Motions.

    (a) In writing. (1) Except as otherwise provided herein, an 
application or request for an order or ruling must be made by written 
motion.
    (2) All written motions must state with particularity the relief 
sought and must be accompanied by a proposed order.
    (3) No oral argument may be held on written motions except as 
otherwise directed by the administrative law judge. Written memoranda, 
briefs, affidavits or other relevant material or documents may be filed 
in support of or in opposition to a motion.
    (b) Oral motions. A motion may be made orally on the record unless 
the administrative law judge directs that such motion be reduced to 
writing.
    (c) Filing of motions. Motions must be filed with the administrative 
law

[[Page 27]]

judge, but upon the filing of the recommended decision, motions must be 
filed with the Director.
    (d) Responses. (1) Except as otherwise provided herein, within ten 
days after service of any written motion, or within such other period of 
time as may be established by the administrative law judge or the 
Director, any party may file a written response to a motion. The 
administrative law judge shall not rule on any oral or written motion 
before each party has had an opportunity to file a response.
    (2) The failure of a party to oppose a written motion or an oral 
motion made on the record is deemed a consent by that party to the entry 
of an order substantially in the form of the order accompanying the 
motion.
    (e) Dilatory motions. Frivolous, dilatory or repetitive motions are 
prohibited. The filing of such motions may form the basis for sanctions.
    (f) Dispositive motions. Dispositive motions are governed by 
Secs. 509.29 and 509.30 of this subpart.



Sec. 509.24  Scope of document discovery.

    (a) Limits on discovery. (1) Subject to the limitations set out in 
paragraphs (b), (c), and (d) of this section, a party to a proceeding 
under this subpart may obtain document discovery by serving a written 
request to produce documents. For purposes of a request to produce 
documents, the term ``documents'' may be defined to include drawings, 
graphs, charts, photographs, recordings, data stored in electronic form, 
and other data compilations from which information can be obtained, or 
translated, if necessary, by the parties through detection devices into 
reasonably usable form, as well as written material of all kinds.
    (2) Discovery by use of deposition is governed by Sec. 509.102 of 
this part.
    (3) Discovery by use of interrogatories is not permitted.
    (b) Relevance. A party may obtain document discovery regarding any 
matter, not privileged, that has material relevance to the merits of the 
pending action. Any request to produce documents that calls for 
irrelevant material, that is unreasonable, oppressive, excessive in 
scope, unduly burdensome, or repetitive of previous requests, or that 
seeks to obtain privileged documents will be denied or modified. A 
request is unreasonable, oppressive, excessive in scope or unduly 
burdensome if, among other things, it fails to include justifiable 
limitations on the time period covered and the geographic locations to 
be searched, the time provided to respond in the request is inadequate, 
or the request calls for copies of documents to be delivered to the 
requesting party and fails to include the requestor's written agreement 
to pay in advance for the copying, in accordance with Sec. 509.25 of 
this subpart.
    (c) Privileged matter. Privileged documents are not discoverable. 
Privileges include the attorney-client privilege, work-product 
privilege, any government's or government agency's deliberative-process 
privilege, and any other privileges the Constitution, any applicable act 
of Congress, or the principles of common law provide.
    (d) Time limits. All discovery, including all responses to discovery 
requests, shall be completed at least 20 days prior to the date 
scheduled for the commencement of the hearing, except as provided in the 
Local Rules. No exceptions to this time limit shall be permitted, unless 
the administrative law judge finds on the record that good cause exists 
for waiving the requirements of this paragraph.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20354, May 6, 1996]



Sec. 509.25  Request for document discovery from parties.

    (a) General rule. Any party may serve on any other party a request 
to produce for inspection any discoverable documents that are in the 
possession, custody, or control of the party upon whom the request is 
served. The request must identify the documents to be produced either by 
individual item or by category, and must describe each item and category 
with reasonable particularity. Documents must be produced as they are 
kept in the usual course of business or must be organized to correspond 
with the categories in the request.
    (b) Production or copying. The request must specify a reasonable 
time, place,

[[Page 28]]

and manner for production and performing any related acts. In lieu of 
inspecting the documents, the requesting party may specify that all or 
some of the responsive documents be copied and the copies delivered to 
the requesting party. If copying of fewer than 250 pages is requested, 
the party to whom the request is addressed shall bear the cost of 
copying and shipping charges. If a party requests 250 pages or more of 
copying, the requesting party shall pay for the copying and shipping 
charges. Copying charges are the current per-page copying rate imposed 
under 12 CFR 502.7 for requests under the Freedom of Information Act (5 
U.S.C. 552). The party to whom the request is addressed may require 
payment in advance before producing the documents.
    (c) Obligation to update responses. A party who has responded to a 
discovery request with a response that was complete when made is not 
required to supplement the response to include documents thereafter 
acquired, unless the responding party learns that:
    (1) The response was materially incorrect when made; or
    (2) The response, though correct when made, is no longer true and a 
failure to amend the response is, in substance, a knowing concealment.
    (d) Motions to limit discovery. (1) Any party that objects to a 
discovery request may, within ten days of being served with such 
request, file a motion in accordance with the provisions of Sec. 509.23 
of this subpart to revoke or otherwise limit the request. If an 
objection is made to only a portion of an item or category in a request, 
the portion objected to shall be specified. Any objections not made in 
accordance with this paragraph and Sec. 509.23 of this subpart are 
waived.
    (2) The party who served the request that is the subject of a motion 
to revoke or limit may file a written response within five days of 
service of the motion. No other party may file a response.
    (e) Privilege. At the time other documents are produced, the 
producing party must reasonably identify all documents withheld on the 
grounds of privilege and must produce a statement of the basis for the 
assertion of privilege. When similar documents that are protected by 
deliberative process, attorney-work-product, or attorney-client 
privilege are voluminous, these documents may be identified by category 
instead of by individual document. The administrative law judge retains 
discretion to determine when the identification by category is 
insufficient.
    (f) Motions to compel production. (1) If a party withholds any 
documents as privileged or fails to comply fully with a discovery 
request, the requesting party may, within ten days of the assertion of 
privilege or of the time the failure to comply becomes known to the 
requesting party, file a motion in accordance with the provisions of 
Sec. 509.23 of this subpart for the issuance of a subpoena compelling 
production.
    (2) The party who asserted the privilege or failed to comply with 
the request may file a written response to a motion to compel within 
five days of service of the motion. No other party may file a response.
    (g) Ruling on motions. After the time for filing responses pursuant 
to this section has expired, the administrative law judge shall rule 
promptly on all motions filed pursuant to this section. If the 
administrative law judge determines that a discovery request, or any of 
its terms, calls for irrelevant material, is unreasonable, oppressive, 
excessive in scope, unduly burdensome, or repetitive of previous 
requests, or seeks to obtain privileged documents, he or she may deny or 
modify the request, and may issue appropriate protective orders, upon 
such conditions as justice may require. The pendency of a motion to 
strike or limit discovery or to compel production is not a basis for 
staying or continuing the proceeding, unless otherwise ordered by the 
administrative law judge. Notwithstanding any other provision in this 
part, the administrative law judge may not release, or order a party to 
produce, documents withheld on grounds of privilege if the party has 
stated to the administrative law judge its intention to file a timely 
motion for interlocutory review of the administrative law judge's order 
to produce the documents, and until the motion for interlocutory review 
has been decided.

[[Page 29]]

    (h) Enforcing discovery subpoenas. If the administrative law judge 
issues a subpoena compelling production of documents by a party, the 
subpoenaing party may, in the event of noncompliance and to the extent 
authorized by applicable law, apply to any appropriate United States 
district court for an order requiring compliance with the subpoena. A 
party's right to seek court enforcement of a subpoena shall not in any 
manner limit the sanctions that may be imposed by the administrative law 
judge against a party who fails to produce subpoenaed documents.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20355, May 6, 1996]



Sec. 509.26  Document subpoenas to nonparties.

    (a) General rules. (1) Any party may apply to the administrative law 
judge for the issuance of a document discovery subpoena addressed to any 
person who is not a party to the proceeding. The application must 
contain a proposed document subpoena and a brief statement showing the 
general relevance and reasonableness of the scope of documents sought. 
The subpoenaing party shall specify a reasonable time, place, and manner 
for making production in response to the document subpoena.
    (2) A party shall only apply for a document subpoena under this 
section within the time period during which such party could serve a 
discovery request under Sec. 509.24(d) of this subpart. The party 
obtaining the document subpoena is responsible for serving it on the 
subpoenaed person and for serving copies on all parties. Document 
subpoenas may be served in any state, territory, or possession of the 
United States, the District of Columbia, or as otherwise provided by 
law.
    (3) The administrative law judge shall promptly issue any document 
subpoena requested pursuant to this section. If the administrative law 
judge determines that the application does not set forth a valid basis 
for the issuance of the subpoena, or that any of its terms are 
unreasonable, oppressive, excessive in scope, or unduly burdensome, he 
or she may refuse to issue the subpoena or may issue it in a modified 
form upon such conditions as may be consistent with the Uniform Rules.
    (b) Motion to quash or modify. (1) Any person to whom a document 
subpoena is directed may file a motion to quash or modify such subpoena, 
accompanied by a statement of the basis for quashing or modifying the 
subpoena. The movant shall serve the motion on all parties, and any 
party may respond to such motion within ten days of service of the 
motion.
    (2) Any motion to quash or modify a document subpoena must be filed 
on the same basis, including the assertion of privilege, upon which a 
party could object to a discovery request under Sec. 509.25(d) of this 
subpart, and during the same time limits during which such an objection 
could be filed.
    (c) Enforcing document subpoenas. If a subpoenaed person fails to 
comply with any subpoena issued pursuant to this section or any order of 
the administrative law judge which directs compliance with all or any 
portion of a document subpoena, the subpoenaing party or any other 
aggrieved party may, to the extent authorized by applicable law, apply 
to an appropriate United States district court for an order requiring 
compliance with so much of the document subpoena as the administrative 
law judge has not quashed or modified. A party's right to seek court 
enforcement of a document subpoena shall in no way limit the sanctions 
that may be imposed by the administrative law judge on a party who 
induces a failure to comply with subpoenas issued under this section.



Sec. 509.27  Deposition of witness unavailable for hearing.

    (a) General rules. (1) If a witness will not be available for the 
hearing, a party may apply in accordance with the procedures set forth 
in paragraph (a)(2) of this section, to the administrative law judge for 
the issuance of a subpoena, including a subpoena duces tecum, requiring 
the attendance of the witness at a deposition. The administrative law 
judge may issue a deposition subpoena under this section upon showing 
that:

[[Page 30]]

    (i) The witness will be unable to attend or may be prevented from 
attending the hearing because of age, sickness or infirmity, or will 
otherwise be unavailable;
    (ii) The witness' unavailability was not procured or caused by the 
subpoenaing party;
    (iii) The testimony is reasonably expected to be material; and
    (iv) Taking the deposition will not result in any undue burden to 
any other party and will not cause undue delay of the proceeding.
    (2) The application must contain a proposed deposition subpoena and 
a brief statement of the reasons for the issuance of the subpoena. The 
subpoena must name the witness whose deposition is to be taken and 
specify the time and place for taking the deposition. A deposition 
subpoena may require the witness to be deposed at any place within the 
country in which that witness resides or has a regular place of 
employment or such other convenient place as the administrative law 
judge shall fix.
    (3) Any requested subpoena that sets forth a valid basis for its 
issuance must be promptly issued, unless the administrative law judge on 
his or her own motion, requires a written response or requires 
attendance at a conference concerning whether the requested subpoena 
should be issued.
    (4) The party obtaining a deposition subpoena is responsible for 
serving it on the witness and for serving copies on all parties. Unless 
the administrative law judge orders otherwise, no deposition under this 
section shall be taken on fewer than ten days' notice to the witness and 
all parties. Deposition subpoenas may be served in any state, territory, 
possession of the United States, or the District of Columbia, on any 
person or company doing business in any state, territory, possession of 
the United States, or the District of Columbia, or as otherwise 
permitted by law.
    (b) Objections to deposition subpoenas. (1) The witness and any 
party who has not had an opportunity to oppose a deposition subpoena 
issued under this section may file a motion with the administrative law 
judge to quash or modify the subpoena prior to the time for compliance 
specified in the subpoena, but not more than ten days after service of 
the subpoena.
    (2) A statement of the basis for the motion to quash or modify a 
subpoena issued under this section must accompany the motion. The motion 
must be served on all parties.
    (c) Procedure upon deposition. (1) Each witness testifying pursuant 
to a deposition subpoena must be duly sworn, and each party shall have 
the right to examine the witness. Objections to questions or documents 
must be in short form, stating the grounds for the objection. Failure to 
object to questions or documents is not deemed a waiver except where the 
ground for the objection might have been avoided if the objection had 
been timely presented. All questions, answers, and objections must be 
recorded.
    (2) Any party may move before the administrative law judge for an 
order compelling the witness to answer any questions the witness has 
refused to answer or submit any evidence the witness has refused to 
submit during the deposition.
    (3) The deposition must be subscribed by the witness, unless the 
parties and the witness, by stipulation, have waived the signing, or the 
witness is ill, cannot be found, or has refused to sign. If the 
deposition is not subscribed by the witness, the court reporter taking 
the deposition shall certify that the transcript is a true and complete 
transcript of the deposition.
    (d) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any order of the administrative law judge which directs compliance with 
all or any portion of a deposition subpoena under paragraph (b) or 
(c)(2) of this section, the subpoenaing party or other aggrieved party 
may, to the extent authorized by applicable law, apply to an appropriate 
United States district court for an order requiring compliance with the 
portions of the subpoena that the administrative law judge has ordered 
enforced. A party's right to seek court enforcement of a deposition 
subpoena in no way limits the sanctions that may be imposed by the 
administrative law judge on a party who fails to comply with or procures 
a failure to

[[Page 31]]

comply with, a subpoena issued under this section.



Sec. 509.28  Interlocutory review.

    (a) General rule. The Director may review a ruling of the 
administrative law judge prior to the certification of the record to the 
Director only in accordance with the procedures set forth in this 
section and Sec. 509.23 of this subpart.
    (b) Scope of review. The Director may exercise interlocutory review 
of a ruling of the administrative law judge if the Director finds that:
    (1) The ruling involves a controlling question of law or policy as 
to which substantial grounds exist for a difference of opinion;
    (2) Immediate review of the ruling may materially advance the 
ultimate termination of the proceeding;
    (3) Subsequent modification of the ruling at the conclusion of the 
proceeding would be an inadequate remedy; or
    (4) Subsequent modification of the ruling would cause unusual delay 
or expense.
    (c) Procedure. Any request for interlocutory review shall be filed 
by a party with the administrative law judge within ten days of his or 
her ruling and shall otherwise comply with Sec. 509.23 of this subpart. 
Any party may file a response to a request for interlocutory review in 
accordance with Sec. 509.23(d) of this subpart. Upon the expiration of 
the time for filing all responses, the administrative law judge shall 
refer the matter to the Director for final disposition.
    (d) Suspension of proceeding. Neither a request for interlocutory 
review nor any disposition of such a request by the Director under this 
section suspends or stays the proceeding unless otherwise ordered by the 
administrative law judge or the Director.



Sec. 509.29  Summary disposition.

    (a) In general. The administrative law judge shall recommend that 
the Director issue a final order granting a motion for summary 
disposition if the undisputed pleaded facts, admissions, affidavits, 
stipulations, documentary evidence, matters as to which official notice 
may be taken, and any other evidentiary materials properly submitted in 
connection with a motion for summary disposition show that:
    (1) There is no genuine issue as to any material fact; and
    (2) The moving party is entitled to a decision in its favor as a 
matter of law.
    (b) Biling of motions and responses. (1) Any party who believes that 
there is no genuine issue of material fact to be determined and that he 
or she is entitled to a decision as a matter of law may move at any time 
for summary disposition in its favor of all or any part of the 
proceeding. Any party, within 20 days after service of such a motion, or 
within such time period as allowed by the administrative law judge, may 
file a response to such motion.
    (2) A motion for summary disposition must be accompanied by a 
statement of the material facts as to which the moving party contends 
there is no genuine issue. Such motion must be supported by documentary 
evidence, which may take the form of admissions in pleadings, 
stipulations, depositions, investigatory depositions, transcripts, 
affidavits and any other evidentiary materials that the moving party 
contends support his or her position. The motion must also be 
accompanied by a brief containing the points and authorities in support 
of the contention of the moving party. Any party opposing a motion for 
summary disposition must file a statement setting forth those material 
facts as to which he or she contends a genuine dispute exists. Such 
opposition must be supported by evidence of the same type as that 
submitted with the motion for summary disposition and a brief containing 
the points and authorities in support of the contention that summary 
disposition would be inappropriate.
    (c) Hearing on motion. At the request of any party or on his or her 
own motion, the administrative law judge may hear oral argument on the 
motion for summary disposition.
    (d) Decision on motion. Following receipt of a motion for summary 
disposition and all responses thereto, the administrative law judge 
shall determine whether the moving party is entitled to summary 
disposition. If the administrative law judge determines that summary 
disposition is warranted, the administrative law judge shall submit

[[Page 32]]

a recommended decision to that effect to the Director. If the 
administrative law judge finds that no party is entitled to summary 
disposition, he or she shall make a ruling denying the motion.



Sec. 509.30  Partial summary disposition.

    If the administrative law judge determines that a party is entitled 
to summary disposition as to certain claims only, he or she shall defer 
submitting a recommended decision as to those claims. A hearing on the 
remaining issues must be ordered. Those claims for which the 
administrative law judge has determined that summary disposition is 
warranted will be addressed in the recommended decision filed at the 
conclusion of the hearing.



Sec. 509.31  Scheduling and prehearing conferences.

    (a) Scheduling conference. Within 30 days of service of the notice 
or order commencing a proceeding or such other time as parties may 
agree, the administrative law judge shall direct counsel for all parties 
to meet with him or her in person at a specified time and place prior to 
the hearing or to confer by telephone for the purpose of scheduling the 
course and conduct of the proceeding. This meeting or telephone 
conference is called a ``scheduling conference.'' The identification of 
potential witnesses, the time for and manner of discovery, and the 
exchange of any prehearing materials including witness lists, statements 
of issues, stipulations, exhibits and any other materials may also be 
determined at the scheduling conference.
    (b) Prehearing conferences. The administrative law judge may, in 
addition to the scheduling conference, on his or her own motion or at 
the request of any party, direct counsel for the parties to meet with 
him or her (in person or by telephone) at a prehearing conference to 
address any or all of the following:
    (1) Simplification and clarification of the issues;
    (2) Stipulations, admissions of fact, and the contents, authenticity 
and admissibility into evidence of documents;
    (3) Matters of which official notice may be taken;
    (4) Limitation of the number of witnesses;
    (5) Summary disposition of any or all issues;
    (6) Resolution of discovery issues or disputes;
    (7) Amendments to pleadings; and
    (8) Such other matters as may aid in the orderly disposition of the 
proceeding.
    (c) Transcript. The administrative law judge, in his or her 
discretion, may require that a scheduling or prehearing conference be 
recorded by a court reporter. A transcript of the conference and any 
materials filed, including orders, becomes part of the record of the 
proceeding. A party may obtain a copy of the transcript at its expense.
    (d) Scheduling or prehearing orders. At or within a reasonable time 
following the conclusion of the scheduling conference or any prehearing 
conference, the administrative law judge shall serve on each party an 
order setting forth any agreements reached and any procedural 
determinations made.

[56 FR 38306, Aug. 12, 1991, as amended at 65 FR 78901, Dec. 18, 2000]



Sec. 509.32  Prehearing submissions.

    (a) Within the time set by the administrative law judge, but in no 
case later than 14 days before the start of the hearing, each party 
shall serve on every other party, his or her:
    (1) Prehearing statement;
    (2) Final list of witnesses to be called to testify at the hearing, 
including name and address of each witness and a short summary of the 
expected testimony of each witness;
    (3) List of the exhibits to be introduced at the hearing along with 
a copy of each exhibit; and
    (4) Stipulations of fact, if any.
    (b) Effect of failure to comply. No witness may testify and no 
exhibits may be introduced at the hearing if such witness or exhibit is 
not listed in the prehearing submissions pursuant to paragraph (a) of 
this section, except for good cause shown.



Sec. 509.33  Public hearings.

    (a) General rule. All hearings shall be open to the public, unless 
the Director, in the Director's discretion, determines that holding an 
open hearing would be

[[Page 33]]

contrary to the public interest. Within 20 days of service of the notice 
or, in the case of change-in-control proceedings under section 7(j)(4) 
of the FDIA (12 U.S.C. 1817(j)(4)), within 20 days from service of the 
hearing order, any respondent may file with the Director a request for a 
private hearing, and any party may file a reply to such a request. A 
party must serve on the administrative law judge a copy of any request 
or reply the party files with the Director. The form of, and procedure 
for, these requests and replies are governed by Sec. 509.23 of this 
subpart. A party's failure to file a request or a reply constitutes a 
waiver of any objections regarding whether the hearing will be public or 
private.
    (b) Filing document under seal. Enforcement Counsel, in his or her 
discretion, may file any document or part of a document under seal if 
disclosure of the document would be contrary to the public interest. The 
administrative law judge shall take all appropriate steps to preserve 
the confidentiality of such documents or parts thereof, including 
closing portions of the hearing to the public.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20355, May 6, 1996]



Sec. 509.34  Hearing subpoenas.

    (a) Issuance. (1) Upon application of a party showing general 
relevance and reasonableness of scope of the testimony or other evidence 
sought, the administrative law judge may issue a subpoena or a subpoena 
duces tecum requiring the attendance of a witness at the hearing or the 
production of documentary or physical evidence at the hearing. The 
application for a hearing subpoena must also contain a proposed subpoena 
specifying the attendance of a witness or the production of evidence 
from any state, territory, or possession of the United States, the 
District of Columbia, or as otherwise provided by law at any designated 
place where the hearing is being conducted. The party making the 
application shall serve a copy of the application and the proposed 
subpoena on every other party.
    (2) A party may apply for a hearing subpoena at any time before the 
commencement of a hearing. During a hearing, a party may make an 
application for a subpoena orally on the record before the 
administrative law judge.
    (3) The administrative law judge shall promptly issue any hearing 
subpoena requested pursuant to this section. If the administrative law 
judge determines that the application does not set forth a valid basis 
for the issuance of the subpoena, or that any of its terms are 
unreasonable, oppressive, excessive in scope, or unduly burdensome, he 
or she may refuse to issue the subpoena or may issue it in a modified 
form upon any conditions consistent with this subpart. Upon issuance by 
the administrative law judge, the party making the application shall 
serve the subpoena on the person named in the subpoena and on each 
party.
    (b) Motion to quash or modify. (1) Any person to whom a hearing 
subpoena is directed or any party may file a motion to quash or modify 
the subpoena, accompanied by a statement of the basis for quashing or 
modifying the subpoena. The movant must serve the motion on each party 
and on the person named in the subpoena. Any party may respond to the 
motion within ten days of service of the motion.
    (2) Any motion to quash or modify a hearing subpoena must be filed 
prior to the time specified in the subpoena for compliance, but not more 
than ten days after the date of service of the subpoena upon the movant.
    (c) Enforcing subpoenas. If a subpoenaed person fails to comply with 
any subpoena issued pursuant to this section or any order of the 
administrative law judge which directs compliance with all or any 
portion of a document subpoena, the subpoenaing party or any other 
aggrieved party may seek enforcement of the subpoena pursuant to section 
Sec. 509.26(c) of this subpart.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20355, May 6, 1996]



Sec. 509.35  Conduct of hearings.

    (a) General rules. (1) Hearings shall be conducted so as to provide 
a fair and expeditious presentation of the relevant disputed issues. 
Each party has the right to present its case or defense by oral and 
documentary evidence and to conduct such cross examination as

[[Page 34]]

may be required for full disclosure of the facts.
    (2) Order of hearing. Enforcement Counsel shall present its case-in-
chief first, unless otherwise ordered by the administrative law judge, 
or unless otherwise expressly specified by law or regulation. 
Enforcement Counsel shall be the first party to present an opening 
statement and a closing statement, and may make a rebuttal statement 
after the respondent's closing statement. If there are multiple 
respondents, respondents may agree among themselves as to their order of 
presentation of their cases, but if they do not agree the administrative 
law judge shall fix the order.
    (3) Examination of witnesses. Only one counsel for each party may 
conduct an examination of a witness, except that in the case of 
extensive direct examination, the administrative law judge may permit 
more than one counsel for the party presenting the witness to conduct 
the examination. A party may have one counsel conduct the direct 
examination and another counsel conduct re-direct examination of a 
witness, or may have one counsel conduct the cross examination of a 
witness and another counsel conduct the re-cross examination of a 
witness.
    (4) Stipulations. Unless the administrative law judge directs 
otherwise, all stipulations of fact and law previously agreed upon by 
the parties, and all documents, the admissibility of which have been 
previously stipulated, will be admitted into evidence upon commencement 
of the hearing.
    (b) Transcript. The hearing must be recorded and transcribed. The 
reporter will make the transcript available to any party upon payment by 
that party to the reporter of the cost of the transcript. The 
administrative law judge may order the record corrected, either upon 
motion to correct, upon stipulation of the parties, or following notice 
to the parties upon the administrative law judge's own motion.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20356, May 6, 1996]



Sec. 509.36  Evidence.

    (a) Admissibility. (1) Except as is otherwise set forth in this 
section, relevant, material, and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the APA and 
other applicable law.
    (2) Evidence that would be admissible under the Federal Rules of 
Evidence is admissible in a proceeding conducted pursuant to this 
subpart.
    (3) Evidence that would be inadmissible under the Federal Rules of 
Evidence may not deemed or ruled to be inadmissible in a proceeding 
conducted pursuant to this subpart if such evidence is relevant, 
material, reliable and not unduly repetitive.
    (b) Official notice. (1) Official notice may be taken of any 
material fact which may be judicially noticed by a United States 
district court and any material information in the official public 
records of any Federal or state government agency.
    (2) All matters officially noticed by the administrative law judge 
or Director shall appear on the record.
    (3) If official notice is requested or taken of any material fact, 
the parties, upon timely request, shall be afforded an opportunity to 
object.
    (c) Documents. (1) A duplicate copy of a document is admissible to 
the same extent as the original, unless a genuine issue is raised as to 
whether the copy is in some material respect not a true and legible copy 
of the original.
    (2) Subject to the requirements of paragraph (a) of this section, 
any document, including a report of examination, supervisory activity, 
inspection or visitation, prepared by the appropriate Office or state 
regulatory agency, is admissible either with or without a sponsoring 
witness.
    (3) Witnesses may use existing or newly created charts, exhibits, 
calendars, calculations, outlines or other graphic material to 
summarize, illustrate, or simplify the presentation of testimony. Such 
materials may, subject to the administrative law judge's discretion, be 
used with or without being admitted into evidence.
    (d) Objections. (1) Objections to the admissibility of evidence must 
be timely made and rulings on all objections must appear on the record.
    (2) When an objection to a question or line of questioning 
propounded to a witness is sustained, the examining counsel may make a 
specific proffer on

[[Page 35]]

the record of what he or she expected to prove by the expected testimony 
of the witness, either by representation of counsel or by direct 
interrogation of the witness.
    (3) The administrative law judge shall retain rejected exhibits, 
adequately marked for identification, for the record, and transmit such 
exhibits to the Director.
    (4) Failure to object to admission of evidence or to any ruling 
constitutes a waiver of the objection.
    (e) Stipulations. The parties may stipulate as to any relevant 
matters of fact or the authentication of any relevant documents. Such 
stipulations must be received in evidence at a hearing, and are binding 
on the parties with respect to the matters therein stipulated.
    (f) Depositions of unavailable witnesses. (1) If a witness is 
unavailable to testify at a hearing, and that witness has testified in a 
deposition to which all parties in a proceeding had notice and an 
opportunity to participate, a party may offer as evidence all or any 
part of the transcript of the deposition, including deposition exhibits, 
if any.
    (2) Such deposition transcript is admissible to the same extent that 
testimony would have been admissible had that person testified at the 
hearing, provided that if a witness refused to answer proper questions 
during the depositions, the administrative law judge may, on that basis, 
limit the admissibility of the deposition in any manner that justice 
requires.
    (3) Only those portions of a deposition received in evidence at the 
hearing constitute a part of the record.



Sec. 509.37  Post-hearing filings.

    (a) Proposed findings and conclusions and supporting briefs. (1) 
Using the same method of service for each party, the administrative law 
judge shall serve notice upon each party, that the certified transcript, 
together with all hearing exhibits and exhibits introduced but not 
admitted into evidence at the hearing, has been filed. Any party may 
file with the administrative law judge proposed findings of fact, 
proposed conclusions of law, and a proposed order within 30 days 
following service of this notice by the administrative law judge or 
within such longer period as may be ordered by the administrative law 
judge.
    (2) Proposed findings and conclusions must be supported by citation 
to any relevant authorities and by page references to any relevant 
portions of the record. A post-hearing brief may be filed in support of 
proposed findings and conclusions, either as part of the same document 
or in a separate document. Any party who fails to file timely with the 
administrative law judge any proposed finding or conclusion is deemed to 
have waived the right to raise in any subsequent filing or submission 
any issue not addressed in such party's proposed finding or conclusion.
    (b) Reply briefs. Reply briefs may be filed within 15 days after the 
date on which the parties' proposed findings, conclusions, and order are 
due. Reply briefs must be strictly limited to responding to new matters, 
issues, or arguments raised in another party's papers. A party who has 
not filed proposed findings of fact and conclusions of law or a post-
hearing brief may not file a reply brief.
    (c) Simultaneous filing required. The administrative law judge shall 
not order the filing by any party of any brief or reply brief in advance 
of the other party's filing of its brief.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20356, May 6, 1996]



Sec. 509.38  Recommended decision and filing of record.

    (a) Filing of recommended decision and record. Within 45 days after 
expiration of the time allowed for filing reply briefs under 
Sec. 509.37(b) of this subpart, the administrative law judge shall file 
with and certify to the Director, for decision, the record of the 
proceeding. The record must include the administrative law judge's 
recommended decision, recommended findings of fact, recommended 
conclusions of law, and proposed order; all prehearing and hearing 
transcripts, exhibits, and rulings; and the motions, briefs, memoranda, 
and other supporting papers filed in connection with the hearing. The 
administrative law judge shall serve upon each party the recommended 
decision, findings, conclusions, and proposed order.

[[Page 36]]

    (b) Filing of index. At the same time the administrative law judge 
files with and certifies to the Director for final determination the 
record of the proceeding, the administrative law judge shall furnish to 
the Director a certified index of the entire record of the proceeding. 
The certified index shall include, at a minimum, an entry for each 
paper, document or motion filed with the administrative law judge in the 
proceeding, the date of the filing, and the identity of the filer. The 
certified index shall also include an exhibit index containing, at a 
minimum, an entry consisting of exhibit number and title or description 
for: Each exhibit introduced and admitted into evidence at the hearing; 
each exhibit introduced but not admitted into evidence at the hearing; 
each exhibit introduced and admitted into evidence after the completion 
of the hearing; and each exhibit introduced but not admitted into 
evidence after the completion of the hearing.

[61 FR 20356, May 6, 1996]



Sec. 509.39  Exceptions to recommended decision.

    (a) Filing exceptions. Within 30 days after service of the 
recommended decision, findings, conclusions, and proposed order under 
Sec. 509.38 of this subpart, a party may file with the Director written 
exceptions to the administrative law judge's recommended decision, 
findings, conclusions or proposed order, to the admission or exclusion 
of evidence, or to the failure of the administrative law judge to make a 
ruling proposed by a party. A supporting brief may be filed at the time 
the exceptions are filed, either as part of the same document or in a 
separate document.
    (b) Effect of failure to file or raise exceptions. (1) Failure of a 
party to file exceptions to those matters specified in paragraph (a) of 
this section within the time prescribed is deemed a waiver of objection 
thereto.
    (2) No exception need be considered by the Director if the party 
taking exception had an opportunity to raise the same objection, issue, 
or argument before the administrative law judge and failed to do so.
    (c) Contents. (1) All exceptions and briefs in support of such 
exceptions must be confined to the particular matters in, or omissions 
from, the administrative law judge's recommendations to which that party 
takes exception.
    (2) All exceptions and briefs in support of exceptions must set 
forth page or paragraph references to the specific parts of the 
administrative law judge's recommendations to which exception is taken, 
the page or paragraph references to those portions of the record relied 
upon to support each exception, and the legal authority relied upon to 
support each exception.



Sec. 509.40  Review by the Director.

    (a) Notice of submission to the Director. When the Director 
determines that the record in the proceeding is complete, the Director 
shall serve notice upon the parties that the proceeding has been 
submitted to the Director for final decision.
    (b) Oral argument before the Director. Upon the initiative of the 
Director or on the written request of any party filed with the Director 
within the time for filing exceptions, the Director may order and hear 
oral argument on the recommended findings, conclusions, decision, and 
order of the administrative law judge. A written request by a party must 
show good cause for oral argument and state reasons why arguments cannot 
be presented adequately in writing. A denial of a request for oral 
argument may be set forth in the Director's final decision. Oral 
argument before the Director must be on the record.
    (c) Director's final decision. (1) Decisional employees may advise 
and assist the Director in the consideration and disposition of the 
case. The final decision of the Director will be based upon review of 
the entire record of the proceeding, except that the director may limit 
the issues to be reviewed to those findings and conclusions to which 
opposing arguments or exceptions have been filed by the parties.
    (2) The Director shall render a final decision within 90 days after 
notification of the parties that the case has been submitted for final 
decision, or 90 days after oral argument, whichever is

[[Page 37]]

later, unless the Director orders that the action or any aspect thereof 
be remanded to the administrative law judge for further proceedings. 
Copies of the final decision and order of the Director shall be served 
upon each party to the proceeding, upon other persons required by 
statute, and, if directed by the Director or required by statute, upon 
any appropriate state or Federal supervisory authority.



Sec. 509.41  Stays pending judicial review.

    The commencement of proceedings for judicial review of a final 
decision and order of the Office may not, unless specifically ordered by 
the Director or a reviewing court, operate as a stay of any order issued 
by the Director. The Director may, in its discretion, and on such terms 
as it finds just, stay the effectiveness of all or any part of its order 
pending a final decision on a petition for review of the order.



                         Subpart B--Local Rules



Sec. 509.100  Scope.

    The rules and procedures in this subpart B shall apply to those 
proceedings covered by subpart A of this part. In addition, subpart A of 
this part and this subpart shall apply to adjudicatory proceedings for 
which hearings on the record are provided for by the following statutory 
provisions:
    (a) Proceedings under section 10(a)(2)(D) of the HOLA (12 U.S.C. 
1467a(a)(2)(D)) to determine whether any person directly or indirectly 
exercises a controlling influence over the management or policies of a 
savings association or any other company;
    (b) Proceedings under section 10(g)(5)(A) of the HOLA (12 U.S.C. 
1467a(g)(5)(A)) to determine whether to terminate certain activities by 
savings and loan holding companies or to terminate ownership or control 
of a non-insured savings and loan holding company subsidiary; and
    (c) Proceedings under section 15(c)(4) of the Securities and 
Exchange Act of 1934 (15 U.S.C. 78o(c)(4)) (Exchange Act) to determine 
whether any association or person subject to the jurisdiction of the 
Office pursuant to section 12(i) of the Exchange Act (15 U.S.C. 78l(i)) 
has failed to comply with the provisions of sections 12, 13, 14(a), 
14(c), 14(d) or 14(f) of the Exchange Act.



Sec. 509.101  Appointment of Office of Financial Institution Adjudication.

    Unless otherwise directed by the Office, all hearings under subpart 
A of this part and this subpart shall be conducted by administrative law 
judges under the direction of the Office of Financial Institution 
Adjudication, 1700 G Street NW., Washington, DC 20552.



Sec. 509.102  Discovery.

    (a) In general. A party may take the deposition of an expert, or of 
a person, including another party, who has direct knowledge of matters 
that are non-privileged, relevant and material to the proceeding and 
where there is a need for the deposition. The deposition of experts 
shall be limited to those experts who are expected to testify at the 
hearing.
    (b) Notice. A party desiring to take a deposition shall give 
reasonable notice in writing to the deponent and to every other party to 
the proceeding. The notice must state the time and place for taking the 
deposition and the name and address of the person to be deposed.
    (c) Time limits. A party may take depositions at any time after the 
commencement of the proceeding, but no later than ten days before the 
scheduled hearing date, except with permission of the administrative law 
judge for good cause shown.
    (d) Conduct of the deposition. The witness must be duly sworn, and 
each party shall have the right to examine the witness with respect to 
all non-privileged, relevant and material matters of which the witness 
has factual, direct and personal knowledge. Objections to questions or 
exhibits shall be in short form, stating the grounds for objection. 
Failure to object to questions or exhibits is not a waiver except where 
the grounds for the objection might have been avoided if the objection 
had been timely presented. The court reporter shall transcribe or 
otherwise record the witness's testimony, as agreed among the parties.
    (e) Protective orders. At any time after notice of a deposition has 
been given, a party may file a motion for the

[[Page 38]]

issuance of a protective order. Such protective order may prohibit, 
terminate, or limit the scope or manner of the taking of a deposition. 
The administrative law judge shall grant such protective order upon a 
showing of sufficient grounds, including that the deposition:
    (1) Is unreasonable, oppressive, excessive in scope, or unduly 
burdensome;
    (2) Involves privileged, investigative, trial preparation, 
irrelevant or immaterial matters; or
    (3) Is being conducted in bad faith or in such manner as to 
unreasonably annoy, embarrass, or oppress the deponent.
    (f) Fees. Deposition witnesses, including expert witnesses, shall be 
paid the same expenses in the same manner as are paid witnesses in the 
district courts of the United States in proceedings in which the United 
States Government is a party. Expenses in accordance with this paragraph 
shall be paid by the party seeking to take the deposition.
    (g) Deposition subpoenas--(1) Issuance. At the request of a party, 
the administrative law judge shall issue a subpoena requiring the 
attendance of a witness at a deposition. The attendance of a witness may 
be required from any place in any state or territory that is subject to 
the jurisdiction of the United States or as otherwise permitted by law.
    (2) Service. The party requesting the subpoena must serve it on the 
person named therein or upon that person's counsel, by any of the 
methods identified in Sec. 509.11(d) of this part. The party serving the 
subpoena must file proof of service with the administrative law judge.
    (3) Motion to quash. A person named in the subpoena or a party may 
file a motion to quash or modify the subpoena. A statement of the 
reasons for the motion must accompany it and a copy of the motion must 
be served on the party that requested the subpoena. The motion must be 
made prior to the time for compliance specified in the subpoena and not 
more than ten days after the date of service of the subpoena, or if the 
subpoena is served within 15 days of the hearing, within five days after 
the date of service.
    (4) Enforcement of deposition subpoena. Enforcement of a deposition 
subpoena shall be in accordance with the procedures of Sec. 509.27(d) of 
this part.

[56 FR 38306, Aug. 12, 1991, as amended at 61 FR 20356, May 6, 1996]



Sec. 509.103  Civil money penalties.

    (a) Assessment. In the event of consent, or if upon the record 
developed at the hearing the Office finds that any of the grounds 
specified in the notice issued pursuant to Sec. 509.18 of this part have 
been established, the Office may serve an order of assessment of civil 
money penalty upon the party concerned. The assessment order shall be 
effective immediately upon service or upon such other date as may be 
specified therein and shall remain effective and enforceable until it is 
stayed, modified, terminated, or set aside by the Office or by a 
reviewing court.
    (b) Payment. (1) Civil penalties assessed pursuant to subpart A of 
this part and this subpart B are payable and to be collected within 60 
days after the issuance of the notice of assessment, unless the Office 
fixes a different time for payment where it determines that the purpose 
of the civil money penalty would be better served thereby; however, if a 
party has made a timely request for a hearing to challenge the 
assessment of the penalty, the party may not be required to pay such 
penalty until the Office has issued a final order of assessment 
following the hearing. In such instances, the penalty shall be paid 
within 60 days of service of such order unless the Office fixes a 
different time for payment. Notwithstanding the foregoing, the Office 
may seek to attach the party's assets or to have a receiver appointed to 
secure payment of the potential civil money penalty or other obligation 
in advance of the hearing in accordance with section 8(i)(4) of the FDIA 
(12 U.S.C. 1818(i)(4)).
    (2) Checks in payment of civil penalties shall be made payable to 
the Treasurer of the United States and sent to the Controller's Division 
of the Office. Upon receipt, the Office shall forward the check to the 
Treasury of the United States.
    (c) Inflation adjustment. Under the Federal Civil Monetary Penalties 
Inflation Adjustment Act of 1990 (28 U.S.C.

[[Page 39]]

2461 note), OTS must adjust for inflation the civil monetary penalties 
in statutes that it administers. The following chart displays the 
adjusted civil money penalties. The amounts in this chart apply to 
violations that occur after October 17, 2000:

------------------------------------------------------------------------
                                                           New maximum
         U.S. Code citation            CMP description        amount
------------------------------------------------------------------------
12 U.S.C. 1464(v)(4)...............  Reports of                   $2,200
                                      Condition--1st
                                      Tier.
12 U.S.C. 1464(v)(5)...............  Reports of                   22,000
                                      Condition--2nd
                                      Tier.
12 U.S.C. 1464(v)(6)...............  Reports of                1,175,000
                                      Condition--3rd
                                      Tier.
12 U.S.C. 1467(d)..................  Refusal to                    5,500
                                      Cooperate in Exam.
12 U.S.C. 1467a(i)(2)..............  Holding Company              27,500
                                      Act Violation.
12 U.S.C. 1467a(i)(3)..............  Holding Company              27,500
                                      Act Violation.
12 U.S.C. 1467a(r)(1)..............  Late/Inaccurate               2,200
                                      Reports--1st Tier.
12 U.S.C. 1467a(r)(2)..............  Late/Inaccurate              22,000
                                      Reports--2nd Tier.
12 U.S.C. 1467a(r)(3)..............  Late/Inaccurate           1,175,000
                                      Reports--3rd Tier.
12 U.S.C. 1817(j)(16)(A)...........  Change in Control--           5,500
                                      1st Tier.
12 U.S.C. 1817(j)(16)(B)...........  Change in Control--          27,500
                                      2nd Tier.
12 U.S.C. 1817(j)(16)(C)...........  Change in Control--       1,175,000
                                      3rd Tier.
12 U.S.C. 1818(i)(2)(A)............  Violation of Law              5,500
                                      or Unsafe or
                                      Unsound Practice--
                                      1st Tier.
12 U.S.C. 1818(i)(2)(B)............  Violation of Law             27,500
                                      or Unsafe or
                                      Unsound Practice--
                                      2nd Tier.
12 U.S.C. 1818(i)(2)(C)............  Violation of Law          1,175,000
                                      or Unsafe or
                                      Unsound Practice--
                                      3rd Tier.
12 U.S.C. 1884.....................  Violation of                    110
                                      Security Rules.
12 U.S.C. 3349(b)..................  Appraisals                    5,500
                                      Violation--1st
                                      Tier.
12 U.S.C. 3349(b)..................  Appraisals                   27,500
                                      Violation--2nd
                                      Tier.
12 U.S.C. 3349(b)..................  Appraisals                1,175,000
                                      Violation--3rd
                                      Tier.
42 U.S.C. 4012a(f).................  Flood Insurance...      350/115,000
------------------------------------------------------------------------


[56 FR 38306, Aug. 12, 1991, as amended at 65 FR 61262, Oct. 17, 2000]



Sec. 509.104  Additional procedures.

    (a) Replies to exceptions. Replies to written exceptions to the 
administrative law judge's recommended decision, findings, conclusions 
or proposed order pursuant to Sec. 509.39 of this part shall be filed 
within 10 days of the date such written exceptions were required to be 
filed.
    (b) Motions. All motions shall be filed with the administrative law 
judge and an additional copy shall be filed with the Secretary to the 
Office, who receives adjudicatory filings, (``Secretary''); provided, 
however, that once the administrative law judge has certified the record 
to the Director pursuant to Sec. 509.38 of this part, all motions must 
be filed with the Director, to the attention of the Secretary, within 
the 10 day period following the filing of exceptions allowed for the 
filing of replies to exceptions. Responses to such motions filed in a 
timely manner with the Director, other than motions for oral argument 
before the Director, shall be allowed pursuant to the procedures at 
Sec. 509.23(d) of this part. No response is required for the Director to 
make a determination on a motion for oral argument.
    (c) Authority of administrative law judge. In addition to the powers 
listed in Sec. 509.5 of this part, the administrative law judge shall 
have the authority to deny any dispositive motion and shall follow the 
procedures set forth for motions for summary disposition at Sec. 509.29 
of this part and partial summary disposition at Sec. 509.30 of this part 
in making determinations on such motions.
    (d) Notification of submission of proceeding to the Director. Upon 
the expiration of the time for filing any exceptions, any replies to 
such exceptions or any motions and any ruling thereon, and after receipt 
of certified record, the Office shall notify the parties within ten days 
of the submission of the proceeding to the Director for final 
determination.
    (e) Extensions of time for final determination. The Director may, 
sua sponte, extend the time for final determination by signing an order 
of extension of time within the 90 day time period and notifying the 
parties of such extension thereafter.
    (f) Service upon the Office. Service of any document upon the Office 
shall be made by filing with the Secretary, in addition to the 
individuals and/or offices designated by the Office in its Notice issued 
pursuant to Sec. 509.18 of this

[[Page 40]]

part, or such other means reasonably suited to provide notice of the 
person and/or office designated to receive filings.
    (g) Filings with the Director. An additional copy of all materials 
required or permitted to be filed with or referred to the administrative 
law judge pursuant to subpart A and B of this part shall be filed with 
the Secretary. This rule shall not apply to the transcript of testimony 
and exhibits adduced at the hearing or to proposed exhibits submitted in 
advance of the hearing pursuant to an order of the administrative law 
judge under Sec. 509.32 of this part. Materials required or permitted to 
be filed with or referred to the Director pursuant to subparts A and B 
of this part shall be filed with the Director, to the attention of the 
Secretary.
    (h) Presence of cameras and other recording devices. The use of 
cameras and other recording devices, other than those used by the court 
reporter, shall be prohibited and excluded from the proceedings.

[56 FR 38306, Aug. 12, 1991, as amended at 58 FR 4311, Jan. 14, 1993; 61 
FR 20356, May 6, 1996]



PART 510--MISCELLANEOUS ORGANIZATIONAL REGULATIONS--Table of Contents




Sec.
510.2  Provisions related to regulations of the Office.
510.4  Service of process.
510.5  Release of unpublished OTS information.

    Authority: 12 U.S.C. 1462a, 1463, 1464; Pub. L. 101-410, 104 Stat. 
890; Pub. L. 104-134, 110 Stat. 1321-358.

    Source: 54 FR 49456, Nov. 30, 1989, unless otherwise noted.



Sec. 510.2  Provisions related to regulations of the Office.

    (a) Amendments. The Office expressly reserves the right to amend 
(including the right to alter or repeal) the regulations set forth in 
this chapter.
    (b) Waiver or relaxation of regulatory provisions with respect to 
disaster or emergency areas. Whenever the President of the United States 
determines that a major disaster or emergency exists, or declares an 
area a major disaster or emergency area, the Office may, to the extent 
not inconsistent with law, by resolution waive or relax any limitations 
pertaining to the operations of Federal savings associations and savings 
associations in any area or areas affected by such disaster or emergency 
so declared.
    (c) Bar on participation in notice and comment rulemaking by 
suspended or disbarred persons. No person who has been suspended or 
debarred from practice before the Office in accordance with the 
provisions of part 513 of this chapter may submit to the Office, either 
directly or on behalf of an interested party, any written documents or 
petitions otherwise permitted by the Administrative Procedures Act.

[54 FR 49456, Nov. 30, 1989, as amended at 60 FR 66716, Dec. 26, 1995]



Sec. 510.4  Service of process.

    (a) Service of Process. Service of process may be made upon the 
Office by delivering a copy of the summons and complaint to the U.S. 
Attorney for the district in which the action is brought or to an 
assistant U.S. Attorney or clerical employee designated by the U.S. 
Attorney in a writing filed with the clerk of the court, and by sending 
copies of the summons and of the complaint by registered or certified 
mail to the Attorney General of the United States,Washington, DC, and to 
the Secretary of the Office.
    (b) Subpoenas. Any subpoena to obtain information maintained by 
Office shall be duly issued and served upon the Secretary of the Office 
of Thrift Supervision, 1700 G Street, NW., Washington, DC, 20552.



Sec. 510.5  Release of unpublished OTS information.

    (a) Scope. (1) This section applies to requests by the public for 
unpublished OTS information, such as requests for records or testimony 
from parties to lawsuits in which the OTS is not a party.
    (2) Unpublished OTS information includes records created or obtained 
in connection with the OTS's performance of its responsibilities, such 
as records concerning supervision, regulation, and examination of 
savings associations, their holding companies, and affiliates, and 
records compiled in connection

[[Page 41]]

with the OTS's enforcement responsibilities. Unpublished OTS information 
also includes information that current and former employees, officers, 
and agents obtained in their official capacities. Examples of 
unpublished information include:
    (i) Information in the memory of a current or former employee, 
officer, or agent of the OTS (or the Federal Home Loan Bank Board, the 
predecessor agency of the OTS), by testimony or informal interview, that 
was acquired in the course of performing official duties or because of 
the employee's, officer's or agent's official status;
    (ii) Reports of examination, supervisory correspondence, internal 
agency memoranda and investigatory files compiled in connection with an 
investigation, whether such records are in the possession of the OTS or 
some other individual or entity; and
    (iii) Unpublished OTS records obtained by or in the possession of 
third parties, including other government agencies.
    (3) This section does not apply to:
    (i) Requests for records or testimony in proceedings in which the 
OTS is a party;
    (ii) Requests for information by other government agencies, except 
when specifically provided; and
    (iii) Requests for records that are required to be disclosed under 
the Freedom of Information Act, see 5 U.S.C. 552, and 31 CFR 1.1-1.6.
    (b) Purpose. The purposes of this section are:
    (1) To afford an orderly mechanism for the OTS to expeditiously 
process requests for unpublished OTS information and, where appropriate, 
for the OTS to assert evidentiary privileges in litigation;
    (2) To balance the need for confidentiality of unpublished OTS 
information with the private party's interest in obtaining disclosure of 
that information;
    (3) To ensure that the time of OTS employees is utilized in the most 
efficient manner consistent with the OTS's statutory mission;
    (4) To prevent undue burdens on the OTS;
    (5) To limit the expenditure of the OTS's funds for private 
purposes; and
    (6) To maintain the impartiality of the OTS among private litigants.
    (c) Procedure--(1) Requests for records and testimony in general. A 
request for unpublished OTS information must be in writing, furnish the 
caption of the lawsuit if the request arises in the course of 
litigation, and support the requester's claim that the information 
sought is highly relevant to the purpose for which it is sought. In 
demonstrating that the information is highly relevant, the requester 
must explain in detail how the requested OTS information relates to the 
issues in the case or the matter.
    (i) For requests arising in lawsuits, the submission also must 
include:
    (A) A copy of the complaint or equivalent document in the case and 
any other pleadings necessary to show relevance;
    (B) A description of any prior decisions or pending motions in the 
case that may bear on the asserted relevance of the information being 
sought from the OTS; and
    (C) The names, addresses and phone numbers of counsel to all other 
parties in the case.
    (ii) In all instances, in addition to demonstrating that the 
information sought is highly relevant to the purpose for which it is 
sought, the requester must:
    (A) Demonstrate that the information sought is not available from 
any other source; and
    (B) Demonstrate that the need for the information clearly outweighs 
the need to maintain the confidentiality of the OTS information and the 
burden on the OTS to produce the information.
    (iii) If a request seeks a response in fewer than 30 days, it must 
include an explanation of why the requester was unable to submit the 
request earlier and why expediting the request is required.
    (2) Additional provisions relating to requests for records. In 
addition to the requirements of paragraph (c)(1) of this section, the 
provisions in paragraphs (c)(2)(i) and (c)(2)(ii) of this section apply 
to requests for disclosure of records.

[[Page 42]]

    (i) A request for records must list the categories of records sought 
and describe the specific information sought, including the relevant 
time period.
    (ii) When the OTS believes that another person has a claim of 
privilege regarding the information in the records and the records are 
in the possession or control of that person, such as reports prepared by 
a savings association's attorneys that are shared with the OTS, the OTS 
may respond to the request by authorizing that person to release the 
records pursuant to an appropriate confidentiality order rather than by 
the OTS releasing the records directly to the requesting party. This 
will enable the person possessing or controlling the records to argue 
any issues of privilege to the appropriate court.
    (3) Additional provisions relating to requests for testimony from 
OTS employees. In addition to the requirements of paragraph (c)(1) of 
this section, the provisions in paragraphs (c)(3)(i) through (c)(3)(iv) 
of this section apply to requests that current or former OTS employees 
be authorized to give testimony.
    (i) The request must specifically describe the substance of the 
testimony sought and show a compelling need for the testimony. A showing 
of compelling need should include a demonstration that the requested 
information is not available from any other source, such as the books 
and records of other persons or entities, OTS records that have been or 
might be released, or the testimony of other non-OTS persons, including 
retained experts.
    (ii) OTS employees will not be authorized to provide expert or 
opinion testimony for private parties.
    (iii) The OTS expects litigants to anticipate their need for OTS 
testimony in sufficient time to request and obtain that testimony in 
deposition form. A request for testimony at a trial or hearing may not 
be granted unless the requester shows that properly developed deposition 
testimony could not be used or would not be adequate at the trial or 
hearing.
    (iv) The OTS shall specify the scope of any authorized testimony and 
may take steps to ensure that the scope of testimony taken adheres to 
the scope authorized. Parties to the case who did not join in the 
request and who wish to question the witness beyond the authorized scope 
should request expanded authorization pursuant to this regulation. The 
OTS will attempt to render decisions on such requests in an expedited 
manner.
    (4) Information available to savings associations, holding 
companies, state and Federal agencies and requesters. (i) The regular 
report of examination of a savings association, savings and loan holding 
company, or other affiliate of a savings association is made available 
by the appropriate Regional Office to the entity examined.
    (ii) A subsidiary savings association of a savings and loan holding 
company may reproduce and furnish a copy of its report of examination 
and related supervisory correspondence of the savings association to its 
parent holding company(ies) without prior approval of the OTS. A savings 
and loan holding company may reproduce and furnish a copy of its report 
of examination and related supervisory correspondence to another 
affiliated savings and loan holding company that controls the same 
savings association or its subsidiary savings association(s) without 
prior approval of the OTS. This paragraph does not require such 
disclosure by a parent savings and loan holding company or subsidiary 
savings association.
    (iii) Reports of examination and other information relating to 
state-chartered savings associations and affiliates are made available, 
upon request, by the OTS to the state governmental authority having 
general supervision of such state-chartered savings associations.
    (iv) Reports of examination and other information may be made 
available by the OTS to other agencies of the United States, a state 
agency, or to the Federal Home Loan Banks, for use where necessary in 
the performance of their official duties.
    (v) All reports or other information made available to savings 
associations, holding companies, affiliates, other governmental agencies 
or requesters shall remain the property of the OTS and, except as 
permitted by this section or otherwise by the Director or his

[[Page 43]]

delegate, no person, company, agency, or authority to whom the 
information is made available, or any officer, director, employee or 
agent thereof, shall disclose any such information except published 
statistical material that would not disclose the identity of any 
individual or corporation.
    (5) Where to submit requests. In all matters covered by this 
section, notification of the issuance of subpoenas or compulsory process 
and requests for records or testimony covered by this section must be 
sent to the OTS at 1700 G Street NW., Washington, DC 20552, to the 
attention of the Corporate Secretary, and should be labelled ``Request 
for Release of Unpublished Information Under Section 510.5.'' Requesters 
may furnish copies of the request or subpoenas simultaneously to the 
appropriate OTS Regional Office, but the furnishing of such copies does 
not constitute service on the OTS.
    (d) Consideration of requests--(1) In general. The OTS will 
generally process requests in the order in which they are received. The 
OTS will endeavor to respond to requests within 30 days, but this may 
vary depending on the scope and precision of the request. The OTS will 
weigh requests for processing in less than 30 days against the burden to 
the OTS of expedited processing and the unfairness to other parties 
whose pending requests may be delayed.
    (2) Consultation with requester. The OTS may consult with the 
requester to:
    (i) Refine and limit the scope of the request so as to reduce the 
burden and expense on the OTS; or
    (ii) Obtain additional information necessary for the OTS to make an 
informed determination on the request. To the extent necessary to reach 
an informed determination on the request, the OTS may inquire into the 
circumstances of the underlying matter and rely on sources of 
information beyond the requester, including other interested parties.
    (3) Final determinations. Final determinations on requests will be 
made by the Director or his delegate. All such determinations are the 
sole discretion of the Director or his delegate. Requesters will be 
notified in writing of the disposition of the request.
    (4) Denial of requests. (i) The OTS may deny requests for records or 
testimony that seek information that the OTS deems to be:
    (A) Not highly relevant;
    (B) Privileged;
    (C) Available from other sources; or
    (D) Information that should not be disclosed for reasons that 
warrant restriction of discovery under the Federal Rules of Civil 
Procedure (28 U.S.C. appendix).
    (ii) The OTS may also deny a records or testimony request when it 
considers production of the information to be overly burdensome or 
contrary to the public interest, or where OTS determines that the need 
for the information does not clearly outweigh the need to maintain the 
confidentiality of the information, or where the requester seeks 
testimony and has not shown a compelling need for the testimony.
    (5) Confidentiality Orders and Agreements. As is set forth in 
paragraph (f) of this section, the OTS may condition release of 
information on the entry by the relevant tribunal of an order 
satisfactory to the OTS or, in a non-litigated matter, the execution of 
a confidentiality agreement that limits access of third parties to the 
unpublished OTS information. It shall be the duty of the requesting 
party to obtain such an order or to execute a confidentiality agreement.
    (e) Parties with access to OTS information; restriction on 
dissemination--(1) Current and former employees. Except as authorized by 
this section or as otherwise authorized by the Director or his delegate, 
no current or former employee, officer or agent of the OTS or a 
predecessor agency shall disclose or permit the disclosure of any 
unpublished information of the OTS to anyone (other than an employee, 
officer or agent of the OTS properly entitled to such information for 
the performance of their official duties), whether by giving out or 
furnishing such information or a copy thereof or by allowing any person 
to inspect, examine, or copy such information or copy thereof, or 
otherwise.
    (2) Duty of person served. If any person, whether or not a current 
or former employee, officer or agent of the OTS, has information of the 
OTS that may

[[Page 44]]

not be disclosed under the regulations of the OTS or other applicable 
law, and in connection therewith is served with a subpoena, order, or 
other process requiring personal attendance as a witness or production 
of records or information in any proceeding, that person shall promptly 
advise the OTS of such service or request for information. Upon such 
notice the OTS will take appropriate action to advise the court or 
tribunal that issued the process and the attorney for the party at whose 
instance the process was issued, if known, of the substance of this 
section. Such notice to the OTS shall be made by contacting the 
Litigation Division, Office of Chief Counsel, Office of Thrift 
Supervision, 1700 G Street NW., Washington, DC 20552. As provided in 
paragraph (e)(3) of this section, a person so served with process may 
not disclose OTS information without OTS authorization. To obtain OTS 
authorization, a request must be sent to the OTS in Washington, DC, in 
accordance with paragraph (c) of this section.
    (3) Appearance by person served. Except as the OTS has authorized 
disclosure of the relevant information, or except as authorized by law, 
any person who has information of the OTS that may not be disclosed 
under this section and is required to respond to a subpoena or other 
legal process shall attend at the time and place therein mentioned and 
respectfully decline to produce such records or give any testimony with 
respect thereto, basing such refusal on this part. If, notwithstanding, 
the court or other body orders the disclosure of such records or the 
giving of such testimony, the person having such information of the OTS 
shall continue respectfully to decline to produce such information and 
shall promptly advise the Litigation Division of the Chief Counsel's 
Office, Office of Thrift Supervision. Upon such notice the OTS will take 
appropriate action to advise the court or tribunal which issued the 
order, of the substance of this section.
    (4) Non-waiver of privilege. The possession by any entity or 
individual described in paragraph (c)(4) of this section of OTS records 
covered by this section shall not waive any privilege of the OTS or the 
OTS's right to supervise the further dissemination of these records.
    (f) Orders and agreements protecting the confidentiality of 
unpublished OTS information--(1) Records. Unless otherwise permitted by 
the OTS, release of records authorized pursuant to this section will be 
conditioned by the OTS upon entry of an acceptable protective order by 
the court or administrative tribunal presiding in the particular case, 
or, in non-litigated matters, upon execution of an acceptable 
confidentiality agreement. In cases where protective orders have already 
been entered, the OTS reserves the right to condition approval for 
release of information upon the inclusion of additional or amended 
provisions.
    (2) Testimony. The OTS may condition its authorization of deposition 
testimony on an agreement of the parties that the transcript of the 
testimony will be kept under seal, or will be made available only to the 
parties, the court and the jury, except to the extent that the OTS may 
allow use of the transcript in related litigation. The party who 
requested the testimony shall, at its expense, furnish to the OTS a copy 
of the transcript of testimony of the OTS employee or former employee.
    (g) Limitation of burden on the OTS in connection with released 
records--(1) Authentication for use as evidence. The OTS will 
authenticate released records to facilitate their use as evidence. 
Requesters who require authenticated records should request certified 
copies at least 30 days prior to the date they will be needed. The 
request should be sent to the OTS Public Disclosure Branch and shall 
identify the records, giving the office or record depository where they 
are located (if known) and include copies of the records and payment of 
the certification fee.
    (2) Responsibility of litigants to share released records. The party 
who has sought and obtained OTS records has the responsibility of:
    (i) Notifying other parties to the case of the release and, after 
entry of a protective order, providing copies of the records to the 
other parties who are subject to the protective order; and
    (ii) Retrieving any records from the court's file as soon as the 
records are

[[Page 45]]

no longer required by the court and returning them to the OTS. Where a 
party may be involved in related litigation, the OTS may, upon a request 
made to it pursuant to this section, authorize such party to transfer 
the records for use in that related case.
    (h) Fees--(1) Fees for records searches, copying and certifications. 
Requesters shall be charged fees in accordance with Treasury Department 
regulations, 31 CFR 1.7. With certain exceptions, the regulations in 31 
CFR 1.7 provide for recovery of the full direct costs of searching, 
reviewing, certifying and duplicating the records sought. An estimate of 
the statement of charges will be sent to requesters, and fees shall be 
remitted by check payable to the OTS prior to release of the requested 
records. Where it deems appropriate, the OTS may contract with 
commercial copying concerns to copy the records, with the cost billed to 
the requester.
    (2) Witness fees and allowances. (i) Litigants whose requests for 
testimony of current OTS employees are approved shall, upon completion 
of the testimonial appearance, promptly tender a check payable to the 
OTS for witness fees and allowances in accordance with 28 U.S.C. 1821.
    (ii) All litigants whose requests for testimony of former OTS 
employees are approved, shall also promptly tender witness fees and 
allowances to the witness in accordance with 28 U.S.C. 1821.

[54 FR 49456, Nov. 30, 1989, as amended at 60 FR 28031, May 30, 1995]



PART 512--RULES FOR INVESTIGATIVE PROCEEDINGS AND FORMAL EXAMINATION PROCEEDINGS--Table of Contents




Sec.
512.1  Scope of part.
512.2  Definitions.
512.3  Confidentiality of proceedings.
512.4  Transcripts.
512.5  Rights of witnesses.
512.6  Obstruction of the proceedings.
512.7  Subpoenas.

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467, 1467a, 1813; 15 U.S.C. 
78 l.

    Source: 54 FR 49457, Nov. 30, 1989, unless otherwise noted.



Sec. 512.1  Scope of part.

    This part prescribes rules of practice and procedure applicable to 
the conduct of investigative proceedings under section 10(g)(2) of the 
Home Owners' Loan Act, as amended, 12 U.S.C. 1467a(g)(2) (``HOLA'') and 
to the conduct of formal examination proceedings with respect to savings 
associations and their affiliates under section 5(d)(1)(B) of the HOLA, 
as amended, 12 U.S.C. 1464(d)(1)(B) or section 7(j)(15) of the Federal 
Deposit Insurance Act, as amended, 12 U.S.C. 1817(j)(15) (``FDIA''), 
section 8(n) of the FDIA, 12 U.S.C. 1818(n), or section 10(c) of the 
FDIA, 12 U.S.C. 1820(c). This part does not apply to adjudicatory 
proceedings as to which hearings are required by statute, the rules for 
which are contained in part 509 of this chapter.



Sec. 512.2  Definitions.

    As used in this part:
    (a) Office means the Office of Thrift Supervision;
    (b) Investigative proceeding means an investigation conducted under 
section 10(g)(2) of the HOLA;
    (c) Formal examination proceeding means the administration of oaths 
and affirmations, taking and preserving of testimony, requiring the 
production of books, papers, correspondence, memoranda, and all other 
records, the issuance of subpoenas, and all related activities in 
connection with examination of savings associations and their affiliates 
conducted pursuant to section 5(d)(1)(B) of the HOLA, section 7(j)(15) 
of the FDIA, section 8(n) of the FDIA or section 10(c) of the FDIA; and
    (d) Designated representative means the person or persons empowered 
by the Office to conduct an investigative proceeding or a formal 
examination proceeding.



Sec. 512.3  Confidentiality of proceedings.

    All formal examination proceedings shall be private and, unless 
otherwise ordered by the Office, all investigative proceedings shall 
also be private. Unless otherwise ordered or permitted by the Office, or 
required by law, and except as provided in Secs. 512.4 and 512.5, the

[[Page 46]]

entire record of any investigative proceeding or formal examination 
proceeding, including the resolution of the Office or its delegate(s) 
authorizing the proceeding, the transcript of such proceeding, and all 
documents and information obtained by the designated representative(s) 
during the course of said proceedings shall be confidential.



Sec. 512.4  Transcripts.

    Transcripts or other recordings, if any, of investigative 
proceedings or formal examination proceedings shall be prepared solely 
by an official reporter or by any other person or means authorized by 
the designated representative. A person who has submitted documentary 
evidence or given testimony in an investigative proceeding or formal 
examination proceeding may procure a copy of his own documentary 
evidence or transcript of his own testimony upon payment of the cost 
thereof; provided, that a person seeking a transcript of his own 
testimony must file a written request with the Deputy Chief Counsel for 
Enforcement or the appropriate Regional Counsel for Enforcement stating 
the reason he desires to procure such transcript, and said persons may 
for good cause deny such request. In any event, any witness (or his 
counsel) shall have the right to inspect the transcript of the witness' 
own testimony.

[54 FR 49457, Nov. 30, 1989, as amended at 60 FR 66717, Dec. 26, 1995]



Sec. 512.5  Rights of witnesses.

    (a) Any person who is compelled or requested to furnish documentary 
evidence or give testimony at an investigative proceeding or formal 
examination proceeding shall have the right to examine, upon request, 
the Office resolution authorizing such proceeding. Copies of such 
resolution shall be furnished, for their retention, to such persons only 
with the written approval of the Deputy Chief Counsel for Enforcement or 
the appropriate Regional Counsel for Enforcement.
    (b) Any witness at an investigative proceeding or formal examination 
proceeding may be accompanied and advised by an attorney personally 
representing that witness.
    (1) Such attorney shall be a member in good standing of the bar of 
the highest court of any state, Commonwealth, possession, territory, or 
the District of Columbia, who has not been suspended or debarred from 
practice by the bar of any such political entity or before the Office in 
accordance with the provisions of part 513 of this chapter and has not 
been excluded from the particular investigative proceeding or formal 
examination proceeding in accordance with paragraph (b)(3) of this 
section.
    (2) Such attorney may advise the witness before, during, and after 
the taking of his testimony and may briefly question the witness, on the 
record, at the conclusion of his testimony, for the sole purpose of 
clarifying any of the answers the witness has given. During the taking 
of the testimony of a witness, such attorney may make summary notes 
solely for his use in representing his client. All witnesses shall be 
sequestered, and, unless permitted in the discretion of the designated 
representative, no witness or accompanying attorney may be permitted to 
be present during the taking of testimony of any other witness called in 
such proceeding. Neither attorney(s) for the association(s) that are the 
subjects of the investigative proceedings or formal examination 
proceedings, nor attorneys for any other interested persons, shall have 
any right to be present during the testimony of any witness not 
personally being represented by such attorney.
    (3) The Office, for good cause, may exclude a particular attorney 
from further participation in any investigation in which the Office has 
found the attorney to have engaged in dilatory, obstructionist, 
egregious, contemptuous or contumacious conduct. The person conducting 
an investigation may report to the Office instances of apparently 
dilatory, obstructionist, egregious, contemptuous or contumacious 
conduct on the part of an attorney. After due notice to the attorney, 
the Office may take such action as the circumstances warrant based upon 
a written record evidencing the conduct of the attorney in that 
investigation or such other or additional written or oral

[[Page 47]]

presentation as the Office may permit or direct.

[54 FR 49457, Nov. 30, 1989, as amended at 60 FR 66717, Dec. 26, 1995]



Sec. 512.6  Obstruction of the proceedings.

    The designated representative shall report to the Office any 
instances where any witness or counsel has engaged in dilatory, 
obstructionist, or contumacious conduct or has otherwise violated any 
provision of this part during the course of an investigative proceeding 
or formal examination proceeding; and the Office may take such action as 
the circumstances warrant, including the exclusion of counsel from 
further participation in such proceeding.



Sec. 512.7  Subpoenas.

    (a) Service. Service of a subpoena in connection with any 
investigative proceeding or formal examination proceeding shall be 
effected in the following manner:
    (1) Service upon a natural person. Service of a subpoena upon a 
natural person may be effected by handing it to such person; by leaving 
it at his office with the person in charge thereof, or, if there is no 
one in charge, by leaving it in a conspicuous place therein; by leaving 
it at his dwelling place or usual place of abode with some person of 
suitable age and discretion then residing therein; by mailing it to him 
by registered or certified mail or by an express delivery service at his 
last known address; or by any method whereby actual notice is given to 
him.
    (2) Service upon other persons. When the person to be served is not 
a natural person, service of the subpoena may be effected by handing the 
subpoena to a registered agent for service, or to any officer, director, 
or agent in charge of any office of such person; by mailing it to any 
such representative by registered or certified mail or by an express 
delivery service at his last known address; or by any method whereby 
actual notice is given to such person.
    (b) Motions to quash. Any person to whom a subpoena is directed may, 
prior to the time specified therein for compliance, but in no event more 
than 10 days after the date of service of such subpoena, apply to the 
Chief Counsel or his designee to quash or modify such subpoena, 
accompanying such application with a statement of the reasons therefor. 
The Chief Counsel or his designee, as appropriate, may:
    (1) Deny the application;
    (2) Quash or revoke the subpoena;
    (3) Modify the subpoena; or
    (4) Condition the granting of the application on such terms as the 
Chief Counsel or his designee determines to be just, reasonable, and 
proper.
    (c) Attendance of witnesses. Subpoenas issued in connection with an 
investigative proceeding or formal examination proceeding may require 
the attendance and/or testimony of witnesses from any State or territory 
of the United States and the production by such witnesses of documentary 
or other tangible evidence at any designated place where the proceeding 
is being (or is to be) conducted. Foreign nationals are subject to such 
subpoenas if such service is made upon a duly authorized agent located 
in the United States.
    (d) Witness fees and mileage. Witnesses summoned in any proceeding 
under this part shall be paid the same fees and mileage that are paid 
witnesses in the district courts of the United States. Such fees and 
mileage need not be tendered when the subpoena is issued on behalf of 
the Office by any of its designated representatives.

[54 FR 49457, Nov. 30, 1989, as amended at 56 FR 38317, Aug. 12, 1991]



PART 513--PRACTICE BEFORE THE OFFICE--Table of Contents




Sec.
513.1  Scope of part.
513.2  Definitions.
513.3  Who may practice.
513.4  Suspension and debarment.
513.5  Reinstatement.
513.6  Duty to file information concerning adverse judicial or 
          administrative action.
513.7  Proceeding under this part.

    Authority: Sec. 3, as added by sec. 301, 103 Stat. 278 (12 U.S.C. 
1462a); sec. 4, as added by sec. 301, 103 Stat. 280 (12 U.S.C. 1463); 
sec. 5, 48 Stat. 132, as amended (12 U.S.C. 1464); sec. 12, sec. 3, 64 
Stat. 873, as amended by sec. 204, 103 Stat. 190 (12 U.S.C. 1813); 48 
Stat. 892, as amended (15 U.S.C. 78 1).

    Source: 54 FR 49459, Nov. 30, 1989, unless otherwise noted.

[[Page 48]]



Sec. 513.1  Scope of part.

    This part prescribes rules with regard to general practice before 
the Office on one's own behalf or in a representative capacity and 
prescribes rules describing the circumstances under which attorneys, 
accountants, appraisers, or other persons may be suspended or debarred, 
either temporarily or permanently, from practicing before the Office. In 
connection with any particular matter, reference also should be made to 
any special requirements of procedure and practice that may be contained 
in the particular statute involved or the rules and forms adopted by the 
Office thereunder, which special requirements are controlling. In 
addition to any suspension hereunder, a person may be excluded from 
further participation under this chapter from a rulemaking hearing in 
accordance with Sec. 510.2, from an adjudicatory proceeding in 
accordance with Sec. 509.6(a)(1), from a removal hearing in accordance 
with Sec. 508.3, or from an investigatory proceeding in accordance with 
Sec. 512.5(b)(2) of this chapter.

[54 FR 49459, Nov. 30, 1989, as amended at 56 FR 38317, Aug. 12, 1991]



Sec. 513.2  Definitions.

    As used in this part:
    (a) Office means the Office;
    (b) The term Secretary means the Secretary and any Assistant or 
Acting Secretary to the Office;
    (c) The term presiding officer includes the Office, his delegatee or 
an administrative law judge appointed under section 3105 or detailed 
pursuant to section 3344 of title 5 of the U.S. Code and, as used in 
this part, the term shall be construed to refer to whichever of the 
above-identified individuals presides at a hearing or other proceeding, 
except as otherwise specified in the text;
    (d) The term attorney means any person who is a member in good 
standing of the bar of the highest court of any State, possession, 
territory, Commonwealth or the District of Columbia; and
    (e) The term practice means transacting any business with the 
Office, including:
    (1) The representation of another person at any adjudicatory, 
investigatory, removal or rulemaking proceeding conducted before the 
Office, a presiding officer or the Office's staff, including those 
proceedings covered in parts 508, 509, 510, and 512 of this chapter;
    (2) The preparation of any statement, opinion, financial statement, 
appraisal report, audit report, or other document or report by any 
attorney, accountant, appraiser or other licensed expert which is filed 
with or submitted to the Office, with such expert's consent or knowledge 
in connection with any application or other filing with the Office;
    (3) A presentation to the Office, a presiding officer or the 
Office's staff at a conference or meeting relating to an association's 
or other person's rights, privileges or liabilities under the laws 
administered by the Office and rules and regulations promulgated 
thereunder;
    (4) Any business correspondence or communication with the Office, a 
presiding officer or the Office's staff; and
    (5) The transaction of any other formal business with the Office on 
behalf of another, in the capacity of an attorney, accountant, appraiser 
or other licensed expert.



Sec. 513.3  Who may practice.

    (a) By non-attorneys--(1) An individual may appear on his own behalf 
(pro se); a member of a partnership may represent the partnership; a 
bona fide and duly authorized officer of a corporation, trust or 
association may represent the corporation, trust or association; and an 
officer or employee of a commission, department or political subdivision 
may represent that commission, department or political subdivision 
before the Office.
    (2) Any accountant, appraiser or other licensed expert may practice 
before the Office in a professional capacity.
    (b) By attorneys. Any association or other person may be represented 
in any proceeding or other matter before the Office by an attorney.
    (c) Any licensed expert or professional transacting business with 
the Office in a representative capacity may be required to show his 
authority to act in such capacity.

[[Page 49]]



Sec. 513.4  Suspension and debarment.

    (a) The Office may censure any person practicing before it or may 
deny, temporarily or permanently, the privilege of any person to 
practice before it if such person is found by the Office, after notice 
of and opportunity for hearing in the matter,
    (1) Not to possess the requisite qualifications to represent others,
    (2) To be lacking in character or professional integrity,
    (3) To have engaged in any dilatory, obstructionist, egregious, 
contemptuous, contumacious or other unethical or improper professional 
conduct before the Office, or
    (4) To have willfully violated, or willfully aided and abetted the 
violation of, any provision of the laws administered by the Office or 
the rules and regulations promulgated thereunder.
    (b) Automatic suspension. (1) Any person who, after being licensed 
as a professional or expert by any competent authority, has been 
convicted of a felony, or of a misdemeanor involving moral turpitude, 
personal dishonesty or breach of trust, shall be suspended forthwith 
from practicing before the Office.
    (2) Any accountant, appraiser or other licensed expert whose license 
to practice has been revoked in any State, possession, territory, 
Commonwealth or the District of Co1umbia, shall be suspended forthwith 
from practice before the Office.
    (3) Any attorney who has been suspended or disbarred by a court of 
the United States or in any State, possession, territory, Commonwealth 
or the District of Columbia, shall be suspended forthwith from 
practicing before the Office.
    (4) A conviction (including a judgment or order on a plea of nolo 
contendere), revocation, suspension or disbarment under paragraphs 
(b)(1), (b)(2) and (b)(3) of this section shall be deemed to have 
occurred when the convicting, revoking, suspending or disbarring agency 
or tribunal enters its judgment or order, regardless of whether an 
appeal is pending or could be taken.
    (5) For purposes of this section, it shall be irrelevant that any 
attorney, accountant, appraiser or other licensed expert who has been 
suspended, disbarred or otherwise disqualified from practice before a 
court or in a jurisdiction continues in professional good standing 
before other courts or in other jurisdictions.
    (c) Temporary suspension. (1) The Office, with due regard to the 
public interest and without preliminary hearing, by order, may 
temporarily suspend any person from appearing or practicing before it 
who, on or after June 20, 1984, by name, has been:
    (i) Permanently enjoined (whether by consent, default or summary 
judgment or after trial) by any court of competent jurisdiction or by 
the Office itself in a final administrative order, by reason of his 
misconduct in any action brought by the Office based upon violations of, 
or aiding and abetting the violation of, the Home Owners, Loan Act of 
1933, as amended, 12 U.S.C. 1461 et seq., the Federal Deposit Insurance 
Act, as amended, 12 U.S.C. 1811 et seq. or any provision of the 
Securities Exchange Act of 1934, as amended, 15 U.S.C. 78a, et seq., 
which is administered by the Office, or of any rule or regulation 
promulgated thereunder; or
    (ii) Found by any court of competent jurisdiction (whether by 
consent, default, or summary judgment, or after trial) in any action 
brought by the Office to which he is a party or found by the Office 
(whether by consent, default, upon summary judgment or after hearing) in 
any administrative proceeding in which the Office is a complainant and 
he is a party, to have willfully committed, caused or aided or abetted a 
violation of any provision of the Home Owners' Loan Act of 1933, as 
amended, 12 U.S.C. 1461 et seq., the Federal Deposit Insurance Act, as 
amended, 12 U.S.C. 1811 et seq. or any provision of the Securities 
Exchange Act of 1934, as amended, 15 U.S.C. 78a, et seq., which is 
administered by the Office, or of any rule or regulation promulgated 
thereunder.
    (2) An order of temporary suspension shall become effective when 
served by certified or registered mail directed to the last known 
business or residential address of the person involved. No order of 
temporary suspension shall be entered by the Office pursuant to 
paragraph (c)(1) of this section more than three months after the final 
judgment

[[Page 50]]

or order entered in a judicial or administrative proceeding described in 
paragraphs (c)(1)(i) or (c)(1)(ii) of this section has become effective 
and all review or appeal procedures have been completed or are no longer 
available.
    (3) Any person temporarily suspended from appearing and practicing 
before the Office in accordance with paragraph (c)(1) of this section 
may, within 30 days after service upon him of the order of temporary 
suspension, petition the Office to lift such suspension. If no petition 
is received by the Office within those 30 days, the suspension shall 
become permanent.
    (4) Within 30 days after the filing of a petition in accordance with 
paragraph (c)(3) of this section, the Office shall either lift the 
temporary suspension or set the matter down for hearing at a time and 
place to be designated by the Office, or both. After opportunity for 
hearing, the Office may censure the petitioner or may suspend the 
petitioner from appearing or practicing before the Office temporarily or 
permanently. In every case in which the temporary suspension has not 
been lifted, the hearing and any other action taken pursuant to this 
paragraph (c)(4) shall be expedited by the Office in order to ensure the 
petitioner's right to address the allegations against him.
    (5) In any hearing held on a petition filed in accordance with 
paragraph (c)(3) of this section, a showing that the petitioner has been 
enjoined or has been found to have committed, caused or aided or abetted 
violations as described in paragraph (c)(1) of this section, without 
more, may be a basis for suspension or debarment; that showing having 
been made, the burden shall then be on the petitioner to show why he 
should not be censured or be temporarily or permanently suspended or 
debarred. A petitioner will not be permitted to contest any findings 
against him or any admissions made by him in the judicial or 
administrative proceedings upon which the proposed censure, suspension 
or debarment is based. A petitioner who has consented to the entry of a 
permanent injunction or order as described in paragraph (c)(1)(i) of 
this section, without admitting the facts set forth in the complaint, 
shall nevertheless be presumed for all purposes under this section to 
have been enjoined or ordered by reason of the misconduct alleged in the 
complaint.



Sec. 513.5  Reinstatement.

    (a) Any person who is suspended from practicing before the Office 
under paragraph (a) or (c) of Sec. 513.4 of this part may file an 
application for reinstatement at any time. Denial of the privilege of 
practicing before the Office shall continue unless and until the 
applicant has been reinstated by order of the Office for good cause 
shown.
    (b) Any person suspended under paragraph (b) of Sec. 513.4 shall be 
reinstated by the Office, upon appropriate application, if all of the 
grounds for application of the provisions of paragraph (b) of Sec. 513.4 
subsequently are removed by a reversal of the conviction or termination 
of the suspension, disbarment or revocation. An application for 
reinstatement on any other grounds by any person suspended under 
paragraph (b) of Sec. 513.4 may be filed at any time. Such application 
shall state with particularity the relief desired and the grounds 
therefor and shall include supporting evidence, when available. The 
applicant shall be accorded an opportunity for an informal hearing in 
the matter, unless the applicant has waived a hearing in the application 
and, instead, has elected to have the matter determined on the basis of 
written submissions. Such hearing shall utilize the procedures 
established in Sec. 508.3 and paragraph (a) of Sec. 508.7 of this 
chapter. However, such suspension shall continue unless and until the 
applicant has been reinstated by order of the Office for good cause 
shown.

[54 FR 49459, Nov. 30, 1989, as amended at 56 FR 38318, Aug. 12, 1991]



Sec. 513.6  Duty to file information concerning adverse judicial or administrative action.

    Any person appearing or practicing before the Office who has been or 
is the subject of a conviction, suspension, debarment, license 
revocation, injunction or other finding of the kind described in 
Sec. 513.4 (b) or (c) of this part in an action not instituted by the 
Office shall promptly file a copy of the relevant order, judgment or 
decree with the Secretary to the Office together with any

[[Page 51]]

related opinion or statement of the agency or tribunal involved. Any 
person who fails to so file a copy of the order, judgment or decree 
within 30 days after the later of June 15, 1984, the entry of the order, 
judgment or decree, or the date such person initiates practice before 
the Office, for that reason alone may be disqualified from practicing 
before the Office until such time as the appropriate filing shall be 
made, but neither the filing of these documents nor the failure of a 
person to file them shall in any way impair the operation of any other 
provision of this part.



Sec. 513.7  Proceeding under this part.

    (a) All hearings required or permitted to be held under paragraphs 
(a) and (c) of Sec. 513.4 of this part shall be held before a presiding 
officer utilizing the procedures established in the rules of practice 
and procedure in adjudicatory proceedings under part 509 of this 
chapter.
    (b) All hearings held under this part shall be closed to the public 
unless the Office on its own motion or upon the request of a party 
otherwise directs.
    (c) Any proceeding brought under any section of this part 513 shall 
not preclude a proceeding under any other section of this part or any 
other part of the Office's regulations.



PART 516--APPLICATION PROCESSING PROCEDURES--Table of Contents




Sec.
516.1  What does this part do?
516.5  Do the same procedures apply to all applications under this part?
516.10  How does OTS compute time periods under this part?

               Subpart A--Pre-Filing and Filing Procedures

                          Pre-Filing Procedures

516.15  Must I meet with OTS before I file my application?
516.20  What information must I include in my draft business plan?

                            Filing Procedures

516.25  What type of application must I file?
516.30  What information must I provide with my application?
516.35  May I keep portions of my application confidential?
516.40  Where do I file my application?
516.45  What is the filing date of my application?
516.47  How do I amend or supplement my application?

                   Subpart B--Publication Requirements

516.50  Who must publish a public notice of an application?
516.55  What information must I include in my public notice?
516.60  When must I publish the public notice?
516.70  Where must I publish the public notice?
516.80  What language must I use in my publication?

                      Subpart C--Comment Procedures

516.100  What does this subpart do?
516.110  Who may submit a written comment?
516.120  What information should a comment include?
516.130  Where are comments filed?
516.140  How long is the comment period?
516.150  Will there be additional opportunities to discuss the 
          application?

                      Subpart D--Meeting Procedures

516.160  What does this subpart do?
516.170  What procedures govern informal meetings on applications?
516.180  What procedures govern formal meetings on applications?
516.185  Will OTS approve or disapprove an application at a meeting?
516.190  Will a meeting affect application processing time frames?

                          Subpart E--OTS Review

                           Expedited Treatment

516.200  If I file a notice under expedited treatment, when may I engage 
          in the proposed activities?

                           Standard Treatment

516.210  What will OTS do after I file my application?
516.220  If OTS requests additional information to complete my 
          application, how will it process my application?
516.230  Will OTS conduct an eligibility examination?
516.240  What may OTS require me to do after my application is deemed 
          complete?
516.250  Will OTS require me to publish a new public notice?
516.260  May OTS suspend processing of my application?
516.270  How long is the OTS review period?

[[Page 52]]

516.280  How will I know if my application has been approved?
516.290  What will happen if OTS does not approve or disapprove my 
          application within two calendar years after the filing date?

    Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1462a, 1463, 1464, 2901 et 
seq.

    Source: 57 FR 14336, Apr. 20, 1992, unless otherwise noted.



Sec. 516.1  What does this part do?

    (a) This part explains OTS procedures for processing applications, 
notices, or filings (applications). Except as provided in paragraph (b) 
of this section, subparts A and E of this part apply whenever an OTS 
regulation requires any person (you) to file an application with OTS. 
Subparts B, C, and D, however, only apply when an OTS regulation 
incorporates the procedures in the subpart or where otherwise required 
by OTS.
    (b) This part does not apply to any of the following:
    (1) An application related to a transaction under section 13(c) or 
(k) of the Federal Deposit Insurance Act, 12 U.S.C. 1823(c) or (k).
    (2) A request for reconsideration, modification, or appeal of a 
final OTS action.
    (3) A request related to litigation, an enforcement proceeding, a 
supervisory directive or supervisory agreement. Such requests include a 
request seeking approval under, modification of, or termination of an 
order issued under part 508 or 509 of this chapter, a supervisory 
agreement, a supervisory directive, a consent merger agreement or a 
document negotiated in settlement of an enforcement matter or other 
litigation, unless an applicable OTS regulation specifically requires an 
application under this part.
    (4) An application filed under an OTS regulation that prescribes 
other application processing procedures and time frames for the approval 
of applications.
    (c) If an OTS regulation for a specific type of application 
prescribes some application processing procedures, or time frames, OTS 
will apply this part to the extent necessary to process the application. 
For example, if an OTS regulation for a specific type of application 
does not identify time periods for the processing of an application, the 
time periods in this part apply.

[66 FR 13000, Mar. 2, 2001]



Sec. 516.5  Do the same procedures apply to all applications under this part?

    OTS processes applications under this part using two procedures, 
expedited treatment and standard treatment. To determine which treatment 
applies, you may use the following chart:

----------------------------------------------------------------------------------------------------------------
                        If * * *                           Then OTS will process your  application under * * *
----------------------------------------------------------------------------------------------------------------
(a) The applicable regulation does not specifically      Standard treatment.
 state that expedited treatment is available.
(b) You are not a savings association..................  Standard treatment.
(c) Your composite rating is 3, 4, or 5. The composite   Standard treatment.
 rating is the composite numeric rating that OTS or the
 other federal banking regulator assigned to you under
 the Uniform Financial Institutions Rating System \1\
 or under a comparable rating system. The composite
 rating refers to the rating assigned and provided to
 you, in writing, as a result of the most recent
 examination.
(d) Your Community Reinvestment Act (CRA) rating is      Standard treatment.
 Needs to Improve or Substantial Noncompliance. The CRA
 rating is the Community Reinvestment Act performance
 rating that OTS or the other federal banking regulator
 assigned and provided to you, in writing, as a result
 of the most recent compliance examination. See, for
 example, Sec.  563e.28 of this chapter.
(e) Your compliance rating is 3, 4, or 5. The            Standard treatment.
 compliance rating is the numeric rating that OTS or
 the other federal banking regulator assigned to you
 under OTS compliance rating system, or a comparable
 rating system used by the other federal banking
 regulator. The compliance rating refers to the rating
 assigned and provided to you, in writing, as a result
 of the most recent compliance examination.
(f) You fail any one of your capital requirements under  Standard treatment.
 part 567 of this chapter.
(g) OTS has notified you that you are an association in  Standard treatment.
 troubled condition.
(h) Neither OTS nor any other federal banking regulator  Standard treatment.
 has assigned you a composite rating, a CRA rating or a
 compliance rating.

[[Page 53]]

 
(i) You do not meet any of the criteria listed in        Expedited treatment.
 paragraphs (a) through (h) of this section.
----------------------------------------------------------------------------------------------------------------
\1\ A savings association may obtain a copy of its composite rating from the appropriate Regional Office.


[66 FR 13000, Mar. 2, 2001]



Sec. 516.10  How does OTS compute time periods under this part?

    In computing time periods under this part, OTS does not include the 
day of the act or event that commences the time period. When the last 
day of a time period is a Saturday, Sunday, or Federal holiday, the time 
period runs until the end of the next day that is not a Saturday, 
Sunday, or Federal holiday.

[66 FR 13000, Mar. 2, 2001]



               Subpart A--Pre-Filing and Filing Procedures

    Source: 66 FR 13000, Mar. 2, 2001, unless otherwise noted.

                          Pre-Filing Procedures



Sec. 516.15  Must I meet with OTS before I file my application?

    (a) Chart. To determine whether you must attend a pre-filing meeting 
before you file an application, please consult the following chart:

------------------------------------------------------------------------
           If you file * * *                        Then * * *
------------------------------------------------------------------------
(1) An application for permission to     You must meet with OTS before
 organize a de novo federal savings       filing your application. You
 association.                             must submit a draft business
                                          plan before this meeting.
(2) An application to convert an         You must meet with OTS before
 existing insured depository              filing your application. OTS
 institution (other than a state-         may require you to submit a
 chartered savings association or a       draft business plan or other
 state-chartered savings bank) or a       relevant information before
 credit union to a federal savings        this meeting.
 association.
(3) An application to acquire control    OTS may require you to meet
 of a savings association.                with OTS before filing your
                                          application and may require
                                          you to submit a draft business
                                          plan or other relevant
                                          information before this
                                          meeting.
------------------------------------------------------------------------

    (b) Contacting the Regional Office. (1) You must contact the 
appropriate Regional Office a reasonable time before you file an 
application described in paragraph (a) of this section. Unless paragraph 
(a) already requires a pre-filing meeting or a draft business plan, the 
Regional Office will determine whether it will require a pre-filing 
meeting, and whether you must submit a business plan or other relevant 
information before the meeting. The Regional Office will also establish 
a schedule for any meeting and the submission of any information.
    (2) All other applicants are encouraged to contact the appropriate 
Regional Office to determine whether a pre-filing meeting or the 
submission of a draft business plan or other relevant information would 
expedite the application review process.



Sec. 516.20  What information must I include in my draft business plan?

    If you must submit a draft business plan under Sec. 516.15, your 
plan must:
    (a) Clearly and completely describe the savings association's 
projected operations and activities;
    (b) Describe the risks associated with the transaction and the 
impact of this transaction on any existing activities and operations of 
the savings association, including financial projections for a minimum 
of three years;
    (c) Identify the majority of the proposed board of directors and the 
key senior executive officers (as defined in Sec. 563.555 of this 
chapter) of the savings association and demonstrate that these 
individuals have the expertise to prudently manage the activities and 
operations described in the savings association's draft business plan; 
and
    (d) Demonstrate how applicable requirements regarding serving the 
credit and lending needs in the market

[[Page 54]]

areas served by the savings association will be met.

                            Filing Procedures



Sec. 516.25  What type of application must I file?

    (a) Expedited treatment. If you are eligible for expedited treatment 
under Sec. 516.5, you may file your application in the form of a notice 
that includes all information required by the applicable substantive 
regulation. If OTS has designated a form for your notice, you must file 
that form. Your notice is an application for the purposes of all 
statutory and regulatory references to ``applications.''
    (b) Standard treatment. If you are subject to standard treatment 
under Sec. 516.5, you must file your application following all 
applicable substantive regulations and guidelines governing the filing 
of applications. If OTS has a designated form for your application, you 
must file that form.
    (c) Waiver requests.Z If you want OTS to waive a requirement that 
you provide certain information with the notice or application, you must 
include a written waiver request:
    (1) Describing the requirement to be waived and
    (2) Explaining why the information is not needed to enable OTS to 
evaluate your notice or application under applicable standards.



Sec. 516.30  What information must I provide with my application?

    (a) Required information. You may obtain information about required 
certifications, other regulations and guidelines affecting particular 
notices and applications, appropriate forms, and instructions from any 
OTS Regional Office. You may also obtain forms and instructions on OTS's 
web page at www.ots.treas.gov.
    (b) Captions and exhibits. You must caption the original application 
and required copies with the type of filing, and must include all 
exhibits and other pertinent documents with the original application and 
all required copies. You are not required to include original signatures 
on copies if you include a copy of the signed signature page or the copy 
otherwise indicates that the original was signed.



Sec. 516.35  May I keep portions of my application confidential?

    (a) Confidentiality. OTS makes submissions under this part available 
to the public, but may keep portions of your application confidential 
based on the rules in this section.
    (b) Confidentiality request. (1) You may request OTS to keep 
portions of your application confidential. You must submit your request 
in writing with your application and must explain in detail how your 
request is consistent with the standards under the Freedom of 
Information Act (5 U.S.C. 552) and part 505 of this chapter. For 
example, you should explain how you will be substantially harmed by 
pubic disclosure of the information. You must separately bind and mark 
the portions of the application you consider confidential and the 
portions you consider non-confidential.
    (2) OTS will not treat as confidential the portion of your 
application describing how you plan to meet your Community Reinvestment 
Act (CRA) objectives. OTS will make information in your CRA plan, 
including any information incorporated by reference from other parts of 
your application, available to the public upon request.
    (c) OTS determination on confidentiality. OTS will determine whether 
information that you designate as confidential may be withheld from the 
public under the Freedom of Information Act (5 U.S.C. 552) and part 505 
of this chapter. OTS will advise you before it makes information you 
designate as confidential available to the public.



Sec. 516.40  Where do I file my application?

    (a) Regional Office. (1) You must file the original application and 
the number of copies indicated on the applicable form with the 
applications filing division of the appropriate OTS Regional Office. You 
should address the filings to ``Attn: Applications Filing Room'' at the 
Regional address listed in paragraph (a)(2) of this section. If the form 
does not indicate the number of copies

[[Page 55]]

you must file or if OTS has not prescribed a form for your application, 
you must file the original application and two copies.
    (2) The addresses of each Regional Office and the states covered by 
each office are:

------------------------------------------------------------------------
          Region                Office address         States served
------------------------------------------------------------------------
Northeast.................  Office of Thrift       Connecticut,
                             Supervision, 10        Delaware, Maine,
                             Exchange Place, 18th   Massachusetts, New
                             Floor, Jersey City,    Hampshire, New
                             New Jersey, 07302.     Jersey, New York,
                                                    Pennsylvania, Rhode
                                                    Island, Vermont,
                                                    West Virginia.
Southeast.................  Office of Thrift       Alabama, District of
                             Supervision, 1475      Columbia, Florida,
                             Peachtree Street,      Georgia, Maryland,
                             NE., Atlanta,          North Carolina,
                             Georgia 30309. Mail    Puerto Rico, South
                             to: PO Box 105217,     Carolina, Virginia,
                             Atlanta, Georgia       the Virgin Islands
                             30348-5217.
Central...................  Office of Thrift       Illinois, Indiana,
                             Supervision, One       Kentucky, Michigan,
                             South Wacker Drive,    Ohio, Tennessee,
                             Suite 2000, Chicago,   Wisconsin
                             Illinois 60606.
Midwest...................  Office of Thrift       Arkansas, Colorado,
                             Supervision, 225 E.    Iowa, Kansas,
                             John Carpenter         Louisiana,
                             Freeway, Suite 500,    Minnesota,
                             Irving, Texas 75062-   Mississippi,
                             2326. Mail to: PO      Missouri, Nebraska,
                             Box 619027, Dallas/    New Mexico, North
                             Ft. Worth, Texas       Dakota, Oklahoma,
                             75261-9027.            South Dakota, Texas
West......................  Office of Thrift       Alaska, Arizona,
                             Supervision, Pacific   California, Guam,
                             Plaza, 2001 Junipero   Hawaii, Idaho,
                             Serra Boulevard,       Montana, Nevada,
                             Suite 650, Daly        Northern Mariana
                             City, California,      Islands, Oregon,
                             94014-1976. Mail to:   Utah, Washington,
                             PO Box 7165, San       Wyoming
                             Francisco,
                             California 94120-
                             7165.
------------------------------------------------------------------------

    (b) Additional filings with OTS Headquarters. (1) In addition to 
filing in the Regional Office, if your application involves a 
significant issue of law or policy or if an applicable regulation or 
form directs you to file with OTS Headquarters, you must also file 
copies of your application with the Applications Filing Room at OTS 
headquarters, 1700 G Street, NW., Washington, DC 20552. You must file 
the number of copies indicated on the applicable form. If the form does 
not indicate the number of copies you must file or if OTS has not 
prescribed a form for your application, you must file three copies.
    (2)(i) You may obtain a list of applications involving significant 
issues of law or policy at the OTS website at www.ots.treas.gov or by 
contacting a Regional Office.
    (ii) OTS reserves the right to identify significant issues of law or 
policy in a particular application. OTS will advise you, in writing, if 
it makes this determination.

[66 FR 13000, Mar. 2, 2001, as amended at 66 FR 65820, Dec. 21, 2001]



Sec. 516.45  What is the filing date of my application?

    (a) Your application's filing date is the date that you complete all 
of the following requirements.
    (1) You attend a pre-filing meeting and submit a draft business plan 
or relevant information, if OTS requires you to do so under Sec. 516.15.
    (2) You file your application and all required copies with OTS, as 
described under Sec. 516.40.
    (i) If you are required to file with a Regional Office and with OTS 
Headquarters, you have not filed with OTS until you file with both 
offices.
    (ii) You have not filed with a Regional Office or OTS Headquarters 
until you file the application and the required number of copies with 
that office.
    (iii) If you file after the close of business established by a 
Regional Office or OTS Headquarters, you have filed with that office on 
the next business day.
    (3) You pay the applicable fee. You have not paid the fee until you 
submit the fee to the appropriate Regional Office, or OTS waives the 
fee. You may pay by check, money order, cashier's check or wire transfer 
payable to OTS.
    (b) OTS may notify you that it has adjusted your application filing 
date if you fail to meet any applicable publication requirements.
    (c) If, after you properly file your application with the Regional 
Office, OTS determines that a significant issue of law or policy exists 
under Sec. 516.40(b)(2)(ii), the filing date of your application is the 
day you filed with the Regional Office. The 30-day review period under 
Secs. 516.200 or 516.210 of this

[[Page 56]]

part will restart in its entirety when the Regional Office forwards the 
appropriate number of copies of your application to OTS Headquarters.



Sec. 516.47  How do I amend or supplement my application?

    To amend or supplement your application, you must file the amendment 
or supplemental information at the appropriate OTS office(s) along with 
the number of copies required under Sec. 516.40. Your amendment or 
supplemental information also must meet the caption and exhibit 
requirements at Sec. 516.30(b).



                   Subpart B--Publication Requirements

    Source: 62 FR 64143, Dec. 4, 1997, unless otherwise noted.



Sec. 516.50  Who must publish a public notice of an application?

    This subpart applies whenever an OTS regulation requires an 
applicant (``you'') to follow the public notice procedures in this 
subpart.



Sec. 516.55  What information must I include in my public notice?

    Your public notice must include the following:
    (a) Your name and address.
    (b) The type of application.
    (c) The name of the depository institution(s) that is the subject 
matter of the application.
    (d) A statement indicating that the public may submit comments to 
the appropriate OTS office(s).
    (e) The address of the appropriate OTS offices where the public may 
submit comments.
    (f) The date that the comment period closes.
    (g) A statement indicating that the nonconfidential portions of the 
application are on file in the Regional Office, and are available for 
public inspection during regular business hours.
    (h) Any other information that OTS requires you to publish. You may 
find the format for various publication notices in the appendix to OTS 
application processing handbook.

[66 FR 13002, Mar. 2, 2001]



Sec. 516.60  When must I publish the public notice?

    You must publish a public notice of the application no earlier than 
seven days before and no later than the date of filing of the 
application.



Sec. 516.70  Where must I publish the public notice?

    You must publish the notice in a newspaper having a general 
circulation in the following communities:
    (a) The community in which your home office(s) are located, or if 
you are filing an application for permission to organize, the community 
in which your home office will be located; and
    (b) If you are filing a branch application, the community to be 
served by the branch office.



Sec. 516.80  What language must I use in my publication?

    (a) English. You must publish the notice in a newspaper printed in 
the English language.
    (b) Other than English. If the OTS determines that the primary 
language of a significant number of adult residents of the community is 
a language other than English, the OTS may require that you 
simultaneously publish additional notice(s) in the community in the 
appropriate language(s).



                      Subpart C--Comment Procedures

    Source: 62 FR 64144, Dec. 4, 1997, unless otherwise noted.



Sec. 516.100  What does this subpart do?

    This subpart contains the procedures governing the submission of 
public comments on certain types of applications or notices 
(``applications'') pending before the OTS. It applies whenever a 
regulation incorporates the procedures in this subpart, or where 
otherwise required by the OTS.



Sec. 516.110  Who may submit a written comment?

    Any person may submit a written comment supporting or opposing an 
application.

[62 FR 64144, Dec. 4, 1997, as amended at 66 FR 13003, Mar. 2, 2001]

[[Page 57]]



Sec. 516.120  What information should a comment include?

    (a) A comment should recite relevant facts, including any 
demographic, economic, or financial data, supporting the commenter's 
position. A comment opposing an application should also:
    (1) Address at least one of the reasons why OTS may deny the 
application under the relevant statute or regulation;
    (2) Recite any relevant facts and supporting data addressing these 
reasons; and;
    (3) Address how the approval of the application could harm the 
commenter or any community.
    (b) If a commenter wishes to request an informal meeting under 
Sec. 516.170, the commenter must file a request with the comment. The 
commenter should describe the nature of the issues or facts to be 
discussed and the reasons why written submissions are insufficient to 
adequately address these facts or issues.

[66 FR 13003, Mar. 2, 2001]



Sec. 516.130  Where are comments filed?

    A commenter must file with the appropriate OTS Regional Office (See 
table at Sec. 516.40(a)(2)). The commenter must simultaneously send a 
copy of the comment to the applicant.

[66 FR 13003, Mar. 2, 2001]



Sec. 516.140  How long is the comment period?

    (a) General. Except as provided in paragraph (b) of this section, a 
commenter must file a written comment with OTS within 25 calendar days 
after the application is filed with OTS.
    (b) Late-filed comments. OTS will consider a late-filed comment if:
    (1) Within the comment period, the commenter demonstrates to OTS 
good cause why the commenter could not submit a timely comment; or
    (2) OTS concludes that the comment addresses a significant 
regulatory concern and will assist in the disposition of the 
application.

[66 FR 13003, Mar. 2, 2001]



Sec. 516.150  Will there be additional opportunities to discuss the application?

    OTS may provide the commenter with additional opportunities to 
discuss the application in informal or formal meetings under subpart D 
of this part.

[66 FR 13003, Mar. 2, 2001]



                      Subpart D--Meeting Procedures

    Source: 62 FR 64144, Dec. 4, 1997, unless otherwise noted.



Sec. 516.160  What does this subpart do?

    This subpart contains informal and formal meeting procedures. It 
applies whenever a regulation incorporates the procedures in this 
subpart, or when otherwise required by the OTS.



Sec. 516.170  What procedures govern informal meetings on applications?

    (a) When will the OTS arrange an informal meeting? The OTS may 
arrange an informal meeting with the applicant, commenters, or any other 
interested persons to clarify and narrow the issues and to facilitate 
the resolution of the issues. If a commenter has filed a written request 
for an informal meeting containing the information described at 
Sec. 516.120(b), the OTS will arrange an informal meeting. The OTS also 
may arrange an informal meeting on its own initiative.
    (b) What action will the OTS take on an informal meeting request? 
The OTS will inform the applicant and commenters requesting an informal 
meeting of the OTS decision on a request for an informal meeting, or of 
its decision to hold an informal meeting on its own initiative.
    (c) How will the OTS inform the informal meeting participants of the 
date, time, location and format for the informal meeting? The OTS will 
invite the applicant and the commenter filing the request for the 
informal meeting. The OTS may also invite any other interested persons 
to attend. The OTS will inform the participants of the date, time, 
location, and format for the informal meeting a reasonable time in 
advance of the informal meeting.

[[Page 58]]

    (d) What procedures will govern the conduct of the informal meeting? 
The OTS may hold informal meetings in any format, including a telephone 
conference or face-to-face meeting.
    (e) Will there be an additional opportunity to discuss the 
application? Within three days after the informal meeting, any 
participant in the informal meeting may request the OTS to hold a formal 
meeting under Sec. 516.180. The participant should describe the nature 
of the issues or facts to be presented and the reasons why a formal 
meeting is necessary to make an adequate presentation of the facts or 
issues. The participant must file the request with the OTS and send 
copies of the request to other participants in the informal meeting.



Sec. 516.180  What procedures govern formal meetings on applications?

    (a) When will the OTS hold a formal meeting? The OTS will not grant 
a request for a formal meeting unless an informal meeting has been 
conducted under Sec. 516.170. The OTS will grant all requests for a 
formal meeting filed under Sec. 516.170(e). The OTS may also hold a 
formal meeting on its own initiative, if it determines that written 
submissions and informal meetings are insufficient to adequately present 
issues or facts to the OTS, or that a formal meeting would otherwise 
benefit the decisionmaking process. The OTS may limit the issues 
considered at the formal meeting to issues that the OTS deems relevant 
or material.
    (b) How will the OTS announce the formal meeting? The OTS will issue 
a Notice of Formal Meeting that will state the subject and date of the 
filing, the time and place of the formal meeting and the issues to be 
addressed. The OTS will send the Notice to the applicant and any person 
requesting a formal meeting under Sec. 516.170(e). The OTS may also 
invite other interested persons to participate in the formal meeting by 
sending the Notice to such persons.
    (c) Who may participate in the formal meeting? A person receiving a 
Notice must notify the OTS of its intent to participate within ten days 
after the OTS issues the Notice. At least five days before the formal 
meeting, all participants in the formal meeting must provide the names 
of their witnesses and copies of proposed exhibits to the OTS, the 
applicant, and any other person designated by the OTS.
    (d) Will the formal meeting be transcribed? The OTS will arrange for 
a transcript. Each participant must bear the cost of any copies of the 
transcript it requests for its use.
    (e) What procedures govern the conduct of the formal meeting? (1) 
The OTS will appoint a presiding officer to conduct the formal meeting. 
The presiding officer is responsible for all procedural questions not 
governed by this section. Subject to the rulings of the presiding 
officer, a participant may make opening statements and present 
witnesses, material and data. If a participant presents documentary 
material, it must furnish copies of the material to the OTS and to each 
other participant. The OTS may keep the formal meeting record open for 
additional information for up to 14 days following the receipt of the 
transcript.
    (2) The Administrative Procedure Act (5 U.S.C. 551 et seq.), the 
Federal Rules of Evidence (28 U.S.C. Appendix), the Federal Rules of 
Civil Procedure (28 U.S.C. Rule 1 et seq.) and the OTS Rules of Practice 
and Procedure in Adjudicatory Proceedings (12 CFR part 509) do not apply 
to formal meetings under this section.



Sec. 516.185  Will OTS approve or disapprove an application at a meeting?

    OTS will not approve or deny an application at a formal or informal 
meeting under this subpart.

[66 FR 13003, Mar. 2, 2001]



Sec. 516.190  Will a meeting affect application processing time frames?

    If OTS has arranged a meeting, it will suspend applicable 
application processing time frames, including the time frames for 
deeming an application complete and the applicable approval time frames 
specified in subpart E of this part. The time period will resume when 
OTS determines that a record has

[[Page 59]]

been developed that sufficiently supports a determination on the issues 
raised in the comments.

[66 FR 13003, Mar. 2, 2001]



                          Subpart E--OTS Review

    Source: 66 FR 13003, Mar. 2, 2001, unless otherwise noted.

                           Expedited Treatment



Sec. 516.200  If I file a notice under expedited treatment, when may I engage in the proposed activities?

    If you are eligible for expedited treatment and you have 
appropriately filed your notice with OTS, you may engage in the proposed 
activities upon the expiration of 30 days after the filing date of your 
notice, unless OTS takes one of the following actions before the 
expiration of that time period:
    (a) OTS notifies you in writing that you must file additional 
information supplementing your notice. If you are required to file 
additional information, you may engage in the proposed activities upon 
the expiration of 30 calendar days after the date you file the 
additional information, unless OTS takes one of the actions described in 
paragraphs (b) through (d) of this section before the expiration of that 
time period;
    (b) OTS notifies you in writing that your notice is subject to 
standard treatment under this subpart. OTS will subject your notice to 
standard treatment if it raises a supervisory concern, raises a 
significant issue of law or policy, or requires significant additional 
information;
    (c) OTS notifies you in writing that it is suspending the applicable 
time frames under Sec. 516.190; or
    (d) OTS notifies you that it disapproves your notice.

                           Standard Treatment



Sec. 516.210  What will OTS do after I file my application?

    (a) OTS action. Within 30 calendar days after the filing date of 
your application, OTS will take one of the following actions:

------------------------------------------------------------------------
              If OTS * * *                          Then * * *
------------------------------------------------------------------------
(1) Notifies you, in writing, that your  The applicable review period
 application is complete * * *.           will begin on the date that
                                          OTS deems your application
                                          complete.
(2) Notifies you, in writing, that you   You must submit the required
 must submit addition information to      additional information under
 complete your application * * *.         Sec.  516.220.
(3) Notifies you, in writing, that your  OTS will not process your
 application is materially deficient *    application.
 * *.
(4) Takes no action * * *..............  Your application is deemed
                                          complete. The applicable
                                          review period will begin on
                                          the day the 30-day time period
                                          expires.
------------------------------------------------------------------------

    (b) Waiver requests. If your application includes a request for 
waiver of an information requirement under Sec. 516.25(b), and OTS has 
not notified you that you must submit additional information under 
paragraph (a)(2) of this section, your request for waiver is granted.



Sec. 516.220  If OTS requests additional information to complete my application, how will it process my application?

    (a) You may use the following chart to determine the procedure that 
applies to your submission of additional information under 
Sec. 516.210(a)(1):

------------------------------------------------------------------------
   If, within 30 calendar days
 after the date of OTS's request   Then, OTS may * *      And * * *.
for additional information * * *          *.
------------------------------------------------------------------------
(1) You file a response to all    (i) Notify you in   The applicable
 information requests * * *.       writing within 15   review period
                                   days after the      will begin on the
                                   filing date of      date tha t OTS
                                   your response       deems your
                                   that your           application
                                   applicaiton is      complete.
                                   complete * * *
                                   applicable to all
                                   response that
                                   your application
                                   is complete * * *.

[[Page 60]]

 
                                  (ii) Notify you in  You must respond
                                   writing within 15   to the additional
                                   calendar days       information
                                   after the filing    request within
                                   date of your        the time period
                                   response that you   required by OTS.
                                   must submit         OTS will review
                                   additional          your response
                                   information         under the
                                   regarding matters   procedures
                                   derived from or     described in this
                                   prompted by         section.
                                   information
                                   already furnished
                                   or any additional
                                   information
                                   information
                                   necessary to
                                   resolve the
                                   issues presented
                                   in your
                                   application * * *.
                                  (iii) Notify you    OTS will not
                                   in writing within   process your
                                   15 calendar days    application.
                                   after the filing
                                   date of your
                                   response that
                                   your application
                                   is materially
                                   deficient * * *.
                                  (iv) Take no        Your application
                                   action within 15    is deemed
                                   calendar days       complete. The
                                   after the filing    applicable review
                                   date of your        period will begin
                                   response * * *.     on the day that
                                                       the 15-day time
                                                       period expires.
(2) You request an extension of   (i) Grant an        You must fully
 time to file additional           extension, in       respond within
 information * * *.                writing,            the extended time
                                   specifying the      period specified
                                   number of days      by OTS. OTS will
                                   for the extension   review your
                                   * * *.              response under
                                                       the procedures
                                                       described under
                                                       this section.
                                  (ii) Notify you in  OTS will not
                                   writing that your   process your
                                   extension request   application
                                   is disapproved *    further. You may
                                   * *.                resubmit the
                                                       application for
                                                       processing as a
                                                       new filing under
                                                       the applicable
                                                       regulation.
(3) You fail to respond           (i) Notify you in   OTS will not
 completely * * *.                 writing that your   process your to
                                   application is      respond
                                   deemed withdrawn    application
                                   * * *.              further. You may
                                                       resubmit the
                                                       application for
                                                       processing as a
                                                       new filing under
                                                       the applicable
                                                       regulation.
                                  (ii) Notify you,    You must fully
                                   in writing, that    respond within
                                   your response is    the extended time
                                   incomplete and      period specified
                                   extend the          by OTS. OTS will
                                   response period,    review your
                                   specifying the      response under
                                   number of days      the procedures
                                   for the respond     described under
                                   extension * * *.    this section.
------------------------------------------------------------------------

    (b) OTS may extend the 15-day period referenced in paragraph (a)(1) 
of this section by up to 15 calendar days, if OTS requires the 
additional time to review your response. OTS will notify you that it has 
extended the period before the end of the initial 15-day period and will 
briefly explain why the extension is necessary.
    (c) If your response filed under paragraph (a)(1) of this section 
includes a request for a waiver of an informational requirement, your 
request for a waiver is granted if OTS fails to act on it within 15 
calendar days after the filing of your response, unless OTS extends the 
review period under paragraph (b). If OTS extends the review period 
under paragraph (b), your request is granted if OTS fails to act on it 
by the end of the extended review period.



Sec. 516.230  Will OTS conduct an eligibility examination?

    (a) Eligibility examination. OTS may notify you at any time before 
it deems your application complete that it will conduct an eligibility 
examination. If OTS decides to conduct an eligibility examination, it 
will not deem your application complete until it concludes the 
examination.
    (b) Additional information. OTS may, as a result of the eligibility 
examination, notify you that you must submit additional information to 
complete your application. If so, you must respond to the additional 
information request within the time period required by OTS. OTS will 
review your response under the procedures described in Sec. 516.220.

[[Page 61]]



Sec. 516.240  What may OTS require me to do after my application is deemed complete?

    After your application is deemed complete, but before the end of the 
applicable review period,
    (a) OTS may require you to provide additional information if the 
information is necessary to resolve or clarify the issues presented by 
your application.
    (b) OTS may determine that a major issue of law or a change in 
circumstances arose after you filed your application, and that the issue 
or changed circumstances will substantially effect your application. If 
OTS identifies such an issue or changed circumstances, it may:
    (1) Notify you, in writing, that your application is now incomplete 
and require you to submit additional information to complete the 
application under the procedures described at Sec. 516.220; and
    (2) Require you to publish a new public notice of your application 
under Sec. 516.250.



Sec. 516.250  Will OTS require me to publish a new public notice?

    (a) If your application was subject to a publication requirement, 
OTS may require you to publish a new public notice of your application 
if:
    (1) You submitted a revision to the application, you submitted new 
or additional information, or a major issue of law or a change in 
circumstances arose after the filing of your application; and
    (2) OTS determines that additional comment on these matters is 
appropriate because of the significance of the new information or 
circumstances.
    (b) OTS will notify you in writing if you must publish a new public 
notice of your revised application.
    (c) If you are required to publish a new public notice of your 
revised application, you must notify OTS after you publish the new 
public notice.



Sec. 516.260  May OTS suspend processing of my application?

    (a) Suspension. OTS may, at any time, indefinitely suspend 
processing of your application if:
    (1) OTS, another governmental entity, or a self-regulatory trade or 
professional organization initiates an investigation, examination, or 
administrative proceeding that is relevant to OTS's evaluation of your 
application;
    (2) You request the suspension or there are other extraordinary 
circumstances that have a significant impact on the processing of your 
application.
    (b) Notice. OTS will promptly notify you, in writing, if it suspends 
your application.



Sec. 516.270  How long is the OTS review period?

    (a) General. The applicable OTS review period is 60 calendar days 
after the date that your application is deemed complete, unless an 
applicable OTS regulation specifies a different review period.
    (b) Multiple applications. If you submit more than one application 
in connection with a proposed action or if two or more applicants submit 
related applications, the applicable review period for all applications 
is the review period for the application with the longest review period, 
subject to statutory review periods.
    (c) Extensions. (1) OTS may extend the review period for up to 30 
calendar days beyond the period described in paragraph (a) or (b) of 
this section. OTS must notify you in writing of the extension and the 
duration of the extension. OTS must issue the written extension before 
the end of the review period.
    (2) OTS may also extend the review period as needed until it acts on 
the application, if the application presents a significant issue of law 
or policy that requires additional time to resolve. OTS must notify you 
in writing of the extension and the general reasons for the extension. 
OTS must issue the written extension before the end of the review 
period, including any extension of that period under paragraph (c)(1) of 
this section. This section applies to applications and notices filed 
under Sec. 575.3(b) and part 574 of this chapter.

[[Page 62]]



Sec. 516.280  How will I know if my application has been approved?

    (a) OTS approval or denial. (1) OTS will approve or deny your 
application before the expiration of the applicable review period, 
including any extensions of the review period.
    (2) OTS will promptly notify you in writing of its decision to 
approve or deny your application.
    (b) No OTS action. If OTS fails to act under paragraph (a)(1) of 
this section, your application is approved.



Sec. 516.290  What will happen if OTS does not approve or disapprove my application within two calendar years after the filing date?

    (a) Withdrawal. If OTS has not approved or denied your pending 
application within two calendar years after the filing date under 
Sec. 516.45, OTS will notify you, in writing, that your application is 
deemed withdrawn unless OTS determines that you are actively pursuing a 
final OTS determination on your application. You are not actively 
pursuing a final OTS determination if you have failed to timely take an 
action required under this part, including filing required additional 
information, or OTS has suspended processing of your application under 
Sec. 516.260 based on circumstances that are, in whole or in part, 
within your control and you have failed to take reasonable steps to 
resolve these circumstances.
    (b) Effective date. This section is effective July 1, 2001.



PART 517--CONTRACTING OUTREACH PROGRAMS--Table of Contents




Sec.
517.1  Purpose and scope.
517.2  Definitions.
517.3  Policy.
517.4  Oversight and monitoring.
517.5  Outreach.
517.6  Certification.
517.7  Contract award guidelines.

    Authority: 12 U.S.C. 1833(e); 42 U.S.C. 12101 et seq.

    Source: 58 FR 33324, June 17, 1993, unless otherwise noted.



Sec. 517.1  Purpose and scope.

    The purpose of the OTS Minority-, Women- and Individuals with 
Disabilities-Owned Businesses Outreach Program (Outreach Program) is to 
ensure that firms owned and operated by minorities, women and 
individuals with disabilities are given the opportunity to participate 
to the maximum extent possible in all contracts entered into by the OTS. 
Sections 517.5 through 517.7 of this part apply to all contracting 
activities, with the exception of contracting for legal services, 
engaged in by OTS in any of its capacities, for all OTS functions 
authorized by law. These contracts will typically pertain to services in 
support of OTS's business operations, such as consulting, programming, 
auditing, expert witnesses, customized training, relocation services, 
information systems technology (computer systems, database management, 
software and office automation), or micrographic services; or in support 
of its day-to-day operations, such as facilities management, mail and 
printing services, or procurement of office supplies, furniture and 
office equipment.



Sec. 517.2  Definitions.

    The definitions included in this part are derived from common usage 
of these terms. A term in this part includes all those who are commonly 
understood to be included within that term.
    (a) Minority- and/or women-owned (small and large) businesses and 
entities owned by minorities and women means firms at least fifty-one 
(51) percent owned by individuals who are members of the minority group 
or women and who are citizens of the United States. In the case of 
publicly-owned companies, at least fifty-one (51) percent of each class 
of voting stock must be owned by one or more members of the minority 
group or by one or more women, who are citizens of the United States. In 
the case of partnerships, at least fifty-one (51) percent of the 
partnership interest must be owned by one or more members of the 
minority group or by one or more women, who are citizens of the United 
States. Additionally, the management and daily business operations of 
the firm must be controlled by one or more such individuals.

[[Page 63]]

    (b) Minority means any Black/African-American; Native American 
(American Indians, Eskimos, Aleuts and Native Hawaiians); Hispanic 
American; Asian-Pacific American; or Subcontinent-Asian American.
    (c) Small and large businesses and entities owned by individuals 
with disabilities means firms at least fifty-one (51) percent owned by 
individuals with disabilities who are citizens of the United States. In 
the case of publicly-owned companies, at least fifty-one (51) percent of 
each class of voting stock must be owned by individuals with 
disabilities who are citizens of the United States. In the case of 
partnerships, at least fifty-one (51) percent of the partnership 
interest must be owned by individuals with disabilities who are citizens 
of the United States. Additionally, the management and daily business 
operations must be controlled by one or more such individuals.
    (d) Disability, as used in this part, has the same meaning as the 
term used in section 3 of the Americans With Disabilities Act of 1990, 
Public Law 101-336, 104 Stat. 327 (42 U.S.C. 12101 et seq).



Sec. 517.3  Policy.

    It is the policy of the OTS that minorities, women and individuals 
with disabilities and entities owned by minorities, women and 
individuals with disabilities are given the opportunity to participate 
to the maximum extent possible in all contracts entered into by the OTS.



Sec. 517.4  Oversight and monitoring.

    The Director of OTS shall appoint an Outreach Program Advocate, who 
shall have primary responsibility for furthering the purposes of the 
Outreach Program.



Sec. 517.5  Outreach.

    (a) The outreach program advocate shall perform outreach activities 
and act as liaison between the OTS and the public on outreach program 
issues.
    (b) Outreach activities include the identification and registration 
of minority-, women-owned (small and large) businesses and entities 
owned by individuals with disabilities who can provide goods and 
services utilized by the OTS. This includes distributing information 
concerning the Outreach Program and providing appropriate registration 
materials for use by vendors and contractors. Identification will 
primarily be accomplished by:
    (1) Obtaining various lists and directories maintained by other 
federal, state and local governmental agencies of Outreach Program 
businesses;
    (2) Participating in conventions, seminars and professional meetings 
oriented towards Outreach Programs;
    (3) Conducting seminars, meetings, workshops and various other 
functions; and
    (4) Monitoring proposed purchases and contracts to assure that OTS 
contracting staff understand and actively promote the Outreach Program.



Sec. 517.6  Certification.

    In order to qualify as an Outreach Program participant, each 
business or contractor must either:
    (a) Self-certify ownership status by filing with the OTS Outreach 
Program Advocate a completed and signed Solicitation Mailing List 
Application, Standard Form 129 (SF-129), as prescribed by the Federal 
Acquisition Regulation (48 CFR part 53);
    (b) Self-certify ownership status by filing with the OTS Outreach 
Program Advocate a completed and signed ABELS Registration/Certification 
Form, as prescribed by the U.S. Department of Commerce's Minority 
Business Development Agency and available from the Outreach Program 
Advocate at the headquarters address of the OTS listed in Sec. 516.40(b) 
of this chapter.
    (c) Submit a valid Outreach Program certification received from a 
Federal agency, or a designated state or authorized local agency.

[58 FR 33324, June 17, 1993, as amended at 66 FR 13005, Mar. 2, 2001]



Sec. 517.7  Contract award guidelines.

    Contracts for goods or services shall be awarded in accordance with 
OTS procurement rules and policies (48 CFR chapter 1 and FIRMR, 41 CFR 
chapter 201). The OTS Outreach Program Advocate shall work to facilitate 
the maximum participation of minority-,

[[Page 64]]

women-owned (small and large) businesses and entities owned by 
individuals with disabilities in the OTS procurement of goods or 
services.



PART 528--NONDISCRIMINATION REQUIREMENTS--Table of Contents




Sec.
528.1  Definitions.
528.1a  Supplementary guidelines.
528.2  Nondiscrimination in lending and other services.
528.2a  Nondiscriminatory appraisal and underwriting.
528.3  Nondiscrimination in applications.
528.4  Nondiscriminatory advertising.
528.5  Equal Housing Lender Poster.
528.6  Loan application register.
528.7  Nondiscrimination in employment.
528.8  Complaints.
528.9  Guidelines relating to nondiscrimination in lending.

    Authority: 12 U.S.C. 1464, 2810 et seq., 2901 et seq.; 15 U.S.C. 
1691; 42 U.S.C. 1981, 1982, 3601-3619.

    Source: 55 FR 1388, Jan. 16, 1990, unless otherwise noted.



Sec. 528.1  Definitions.

    As used in this part 528--
    (a) Application. For purposes of this part, an application for a 
loan or other service is as defined in Regulation C, 12 CFR 203.2(b).
    (b) Savings association. The term ``savings association'' means any 
savings association as defined in Sec. 561.43 of this chapter other than 
a State-chartered savings bank whose deposits are insured by the Bank 
Insurance Fund.
    (c) Dwelling. The term ``dwelling'' means a residential structure 
(whether or not it is attached to real property) located in a state of 
the United States of America, the District of Colombia, or the 
Commonwealth of Puerto Rico. The term includes an individual condominium 
unit, cooperative unit, or mobile or manufactured home.

[55 FR 1388, Jan. 16, 1990, as amended at 58 FR 4312, Jan. 14, 1993; 63 
FR 71212, Dec. 24, 1998]



Sec. 528.1a  Supplementary guidelines.

    The Office's policy statement found at 12 CFR 528.9 supplements this 
part and should be read together with this part. Refer also to the HUD 
Fair Housing regulations at 24 CFR parts 100 et seq., Federal Reserve 
Regulation B at 12 CFR part 202, and Federal Reserve Regulation C at 12 
CFR part 203.

[63 FR 71212, Dec. 24, 1998]



Sec. 528.2  Nondiscrimination in lending and other services.

    (a) No savings association may deny a loan or other service, or 
discriminate in the purchase of loans or securities or discriminate in 
fixing the amount, interest rate, duration, application procedures, 
collection or enforcement procedures, or other terms or conditions of 
such loan or other service on the basis of the age or location of the 
dwelling, or on the basis of the race, color, religion, sex, handicap, 
familial status (having one or more children under the age of 18), 
marital status, age (provided the person has the capacity to contract) 
or national origin of:
    (1) An applicant or joint applicant;
    (2) Any person associated with an applicant or joint applicant 
regarding such loan or other service, or with the purposes of such loan 
or other service;
    (3) The present or prospective owners, lessees, tenants, or 
occupants of the dwelling(s) for which such loan or other service is to 
be made or given;
    (4) The present or prospective owners, lessees, tenants, or 
occupants of other dwellings in the vicinity of the dwelling(s) for 
which such loan or other service is to be made or given.
    (b) A savings association shall consider without prejudice the 
combined income of joint applicants for a loan or other service.
    (c) No savings association may discriminate against an applicant for 
a loan or other service on any prohibited basis (as defined in 12 CFR 
202.2(z) and 24 CFR part 100).

    Note: See also, Sec. 528.9 (b) and (c).

[55 FR 1388, Jan. 16, 1990, as amended at 63 FR 71212, Dec. 24, 1998]



Sec. 528.2a  Nondiscriminatory appraisal and underwriting.

    (a) Appraisal. No savings association may use or rely upon an 
appraisal of a dwelling which the savings association knows, or 
reasonably should know, is discriminatory on the basis of the age or 
location of the dwelling, or is discriminatory per se or in effect under

[[Page 65]]

the Fair Housing Act of 1968 or the Equal Credit Opportunity Act.
    (b) Underwriting. Each savings association shall have clearly 
written, non-discriminatory loan underwriting standards, available to 
the public upon request, at each of its offices. Each association shall, 
at least annually, review its standards, and business practices 
implementing them, to ensure equal opportunity in lending

    Note: See also, Sec. 528.9(b), (c)(6), and (c)(7).

[55 FR 1388, Jan. 16, 1990, as amended at 63 FR 71212, Dec. 24, 1998]



Sec. 528.3  Nondiscrimination in applications.

    (a) No savings association may discourage, or refuse to allow, 
receive, or consider, any application, request, or inquiry regarding a 
loan or other service, or discriminate in imposing conditions upon, or 
in processing, any such application, request, or inquiry on the basis of 
the age or location of the dwelling, or on the basis of the race, color, 
religion, sex, handicap, familial status (having one or more children 
under the age of 18), marital status, age (provided the person has the 
capacity to contract), national origin, or other characteristics 
prohibited from consideration in Sec. 528.2(c) of this part, of the 
prospective borrower or other person, who:
    (1) Makes application for any such loan or other service;
    (2) Requests forms or papers to be used to make application for any 
such loan or other service; or
    (3) Inquires about the availability of such loan or other service.
    (b) A savings association shall inform each inquirer of his or her 
right to file a written loan application, and to receive a copy of the 
association's underwriting standards.

    Note: See also, Sec. 528.9(a) through (d).

[55 FR 1388, Jan. 16, 1990, as amended at 63 FR 71212, Dec. 24, 1998]



Sec. 528.4  Nondiscriminatory advertising.

    No savings association may directly or indirectly engage in any form 
of advertising which implies or suggests a policy of discrimination or 
exclusion in violation of title VIII of the Civil Rights Acts of 1968, 
the Equal Credit Opportunity Act, or this part 528. Advertisements, 
other than for savings, shall include a facsimile of the following 
logotype and legend:
[GRAPHIC] [TIFF OMITTED] TC07SE91.000



Sec. 528.5  Equal Housing Lender Poster.

    (a) Each savings association shall post and maintain one or more 
Equal Housing Lender Posters, the text of which is prescribed in 
paragraph (b) of this section, in the lobby of each of its offices in a 
prominent place or places readily apparent to all persons seeking loans. 
The poster shall be at least 11 by 14 inches in size, and the text shall 
be easily legible. It is recommended that savings associations post a 
Spanish language version of the poster in offices serving areas with a 
substantial Spanish-speaking population.
    (b) The text of the Equal Housing Lender Poster shall be as follows:
    [GRAPHIC] [TIFF OMITTED] TC07SE91.001
    
    We Do Business In Accordance With Federal Fair Lending Laws.
    UNDER THE FEDERAL FAIR HOUSING ACT, IT IS ILLEGAL, ON THE BASIS OF 
RACE, COLOR, NATIONAL ORIGIN, RELIGION, SEX, HANDICAP, OR FAMILIAL 
STATUS (HAVING CHILDREN UNDER THE AGE OF 18) TO:
    [ ]Deny a loan for the purpose of purchasing, constructing, 
improving, repairing

[[Page 66]]

or maintaining a dwelling or to deny any loan secured by a dwelling; or
    [ ]Discriminate in fixing the amount, interest rate, duration, 
application procedures, or other terms or conditions of such a loan or 
in appraising property.
    IF YOU BELIEVE YOU HAVE BEEN DISCRIMINATED AGAINST, YOU SHOULD:
    SEND A COMPLAINT TO:
    Assistant Secretary for Fair Housing and Equal Opportunity, 
Department of Housing and Urban Development, Washington, DC 20410.
    For processing under the Federal Fair Housing Act
    AND TO:
    Director, Consumer Affairs, Office of Thrift Supervision, 
Washington, DC 20552.
    For processing under Office of Thrift Supervision Regulations.

    UNDER THE EQUAL CREDIT OPPORTUNITY ACT, IT IS ILLEGAL TO 
DISCRIMINATE IN ANY CREDIT TRANSACTION:
    [ ]On the basis of race, color, national origin, religion, sex, 
marital status, or age;
    [ ]Because income is from public assistance; or
    [ ]Because a right has been exercised under the Consumer Credit 
Protection Act.
    IF YOU BELIEVE YOU HAVE BEEN DISCRIMINATED AGAINST, YOU SHOULD SEND 
A COMPLAINT TO:
    Director, Consumer Affairs, Office of Thrift Supervision, 
Washington, DC 20552.



Sec. 528.6  Loan application register.

    Savings associations and other lenders required to file Home 
Mortgage Disclosure Act Loan Application Registers with the Office of 
Thrift Supervision in accordance with 12 CFR part 203 must enter the 
reason for denial, using the codes provided in 12 CFR part 203, with 
respect to all loan denials.

[58 FR 4312, Jan. 14, 1993]



Sec. 528.7  Nondiscrimination in employment.

    (a) No savings association shall, because of an individual's race, 
color, religion, sex, or national origin:
    (1) Fail or refuse to hire such individual;
    (2) Discharge such individual;
    (3) Otherwise discriminate against such individual with respect to 
such individual's compensation, promotion, or the terms, conditions, or 
privileges of such individual's employment; or
    (4) Discriminate in admission to, or employment in, any program of 
apprenticeship, training, or retraining, including on-the-job training.
    (b) No savings association shall limit, segregate, or classify its 
employees in any way which would deprive or tend to deprive any 
individual of employment opportunities or otherwise adversely affect 
such individual's status as an employee because of such individual's 
race, color, religion, sex, or national origin.
    (c) No savings association shall discriminate against any employee 
or applicant for employment because such employee or applicant has 
opposed any employment practice made unlawful by Federal, State, or 
local law or regulation or because he has in good faith made a charge of 
such practice or testified, assisted, or participated in any manner in 
an investigation, proceeding, or hearing of such practice by any 
lawfully constituted authority.
    (d) No savings association shall print or publish or cause to be 
printed or published any notice or advertisement relating to employment 
by such savings association indicating any preference, limitation, 
specification, or discrimination based on race, color, religion, sex, or 
national origin.
    (e) This regulation shall not apply in any case in which the Federal 
Equal Employment Opportunities law is made inapplicable by the 
provisions of section 2000e-1 or sections 2000e-2 (e) through (j) of 
title 42, United States Code.
    (f) Any violation of the following laws or regulations by a savings 
association shall be deemed to be a violation of this part 528:
    (1) The Equal Employment Opportunity Act, as amended, 42 U.S.C. 
2000e-2000h-2, and Equal Employment Opportunity Commission (EEOC) 
regulations at 29 CFR part 1600;
    (2) The Age Discrimination in Employment Act, 29 U.S.C. 621-633, and 
EEOC and Department of Labor regulations;
    (3) Department of the Treasury regulations at 31 CFR part 12 and 
Office of Federal Contract Compliance Programs (OFCCP) regulations at 41 
CFR part 60;

[[Page 67]]

    (4) The Veterans Employment and Readjustment Act of 1972, 38 U.S.C. 
2011-2012, and the Vietnam Era Veterans Readjustment Adjustment 
Assistance Act of 1974, 38 U.S.C. 2021-2026;
    (5) The Rehabilitation Act of 1973, 29 U.S.C. 701 et al.; and
    (6) The Immigration and Nationality Act, 8 U.S.C. 1324b, and INS 
regulations at 8 CFR part 274a.



Sec. 528.8  Complaints.

    Complaints regarding discrimination in lending by a savings 
association shall be referred to the Assistant Secretary for Fair 
Housing and Equal Opportunity, U.S. Department of Housing and Urban 
Development, Washington, DC 20410 for processing under the Fair Housing 
Act, and to the Director, Consumer Affairs, Office of Thrift 
Supervision, Washington, DC 20552 for processing under Office 
regulations. Complaints regarding discrimination in employment by a 
savings association should be referred to the Equal Employment 
Opportunity Commission, Washington, DC 20506 and a copy, for information 
only, sent to the Director, Consumer Affairs, Office of Thrift 
Supervision, Washington, DC 20552.



Sec. 528.9  Guidelines relating to nondiscrimination in lending.

    (a) General. Fair housing and equal opportunity in home financing is 
a policy of the United States established by Federal statutes and 
Presidential orders and proclamations. In furtherance of the Federal 
civil rights laws and the economical home financing purposes of the 
statutes administered by the Office, the Office has adopted, in part 528 
of this chapter, nondiscrimination regulations that, among other things, 
prohibit arbitrary refusals to consider loan applications on the basis 
of the age or location of a dwelling, and prohibit discrimination based 
on race, color, religion, sex, handicap, familial status (having one or 
more children under the age of 18), marital status, age (provided the 
person has the capacity to contract), or national origin in fixing the 
amount, interest rate, duration, application procedures, collection or 
enforcement procedures, or other terms or conditions of housing related 
loans. Such discrimination is also prohibited in the purchase of loans 
and securities. This section provides supplementary guidelines to aid 
savings associations in developing and implementing nondiscriminatory 
lending policies. Each savings association should reexamine its 
underwriting standards at least annually in order to ensure equal 
opportunity.
    (b) Loan underwriting standards. The basic purpose of the Office's 
nondiscrimination regulations is to require that every applicant be 
given an equal opportunity to obtain a loan. Each loan applicant's 
creditworthiness should be evaluated on an individual basis without 
reference to presumed characteristics of a group. The use of lending 
standards which have no economic basis and which are discriminatory in 
effect is a violation of law even in the absence of an actual intent to 
discriminate. However, a standard which has a discriminatory effect is 
not necessarily improper if its use achieves a genuine business need 
which cannot be achieved by means which are not discriminatory in effect 
or less discriminatory in effect.
    (c) Discriminatory practices--(1) Discrimination on the basis of sex 
or marital status. The Civil Rights Act of 1968 and the National Housing 
Act prohibit discrimination in lending on the basis of sex. The Equal 
Credit Opportunity Act, in addition to this prohibition, forbids 
discrimination on the basis of marital status. Refusing to lend to, 
requiring higher standards of creditworthiness of, or imposing different 
requirements on, members of one sex or individuals of one marital 
status, is discrimination based on sex or marital status. Loan 
underwriting decisions must be based on an applicant's credit history 
and present and reasonably foreseeable economic prospects, rather than 
on the basis of assumptions regarding comparative differences in 
creditworthiness between married and unmarried individuals, or between 
men and women.
    (2) Discrimination on the basis of language. Requiring fluency in 
the English language as a prerequisite for obtaining a loan may be a 
discriminatory practice based on national origin.

[[Page 68]]

    (3) Income of husbands and wives. A practice of discounting all or 
part of either spouse's income where spouses apply jointly is a 
violation of section 527 of the National Housing Act. As with other 
income, when spouses apply jointly for a loan, the determination as to 
whether a spouse's income qualifies for credit purposes should depend 
upon a reasonable evaluation of his or her past, present, and reasonably 
foreseeable economic circumstances. Information relating to child-
bearing intentions of a couple or an individual may not be requested.
    (4) Supplementary income. Lending standards which consider as 
effective only the non-overtime income of the primary wage-earner may 
result in discrimination because they do not take account of variations 
in employment patterns among individuals and families. The Office favors 
loan underwriting which reasonably evaluates the credit worthiness of 
each applicant based on a realistic appraisal of his or her own past, 
present, and foreseeable economic circumstances. The determination as to 
whether primary income or additional income qualifies as effective for 
credit purposes should depend upon whether such income may reasonably be 
expected to continue through the early period of the mortgage risk. 
Automatically discounting other income from bonuses, overtime, or part-
time employment, will cause some applicants to be denied financing 
without a realistic analysis of their credit worthiness. Since 
statistics show that minority group members and low- and moderate-income 
families rely more often on such supplemental income, the practice may 
be racially discriminatory in effect, as well as artificially 
restrictive of opportunities for home financing.
    (5) Applicant's prior history. Loan decisions should be based upon a 
realistic evaluation of all pertinent factors respecting an individual's 
creditworthiness, without giving undue weight to any one factor. The 
savings association should, among other things, take into consideration 
that:
    (i) In some instances, past credit difficulties may have resulted 
from discriminatory practices;
    (ii) A policy favoring applicants who previously owned homes may 
perpetuate prior discrimination;
    (iii) A current, stable earnings record may be the most reliable 
indicator of credit-worthiness, and entitled to more weight than factors 
such as educational level attained;
    (iv) Job or residential changes may indicate upward mobility; and
    (v) Preferring applicants who have done business with the lender can 
perpetuate previous discriminatory policies.
    (6) Income level or racial composition of area. Refusing to lend or 
lending on less favorable terms in particular areas because of their 
racial composition is unlawful. Refusing to lend, or offering less 
favorable terms (such as interest rate, downpayment, or maturity) to 
applicants because of the income level in an area can discriminate 
against minority group persons.
    (7) Age and location factors. Sections 528.2, 528.2a, and 528.3 of 
this chapter prohibit loan denials based upon the age or location of a 
dwelling. These restrictions are intended to prohibit use of unfounded 
or unsubstantiated assumptions regarding the effect upon loan risk of 
the age of a dwelling or the physical or economic characteristics of an 
area. Loan decisions should be based on the present market value of the 
property offered as security (including consideration of specific 
improvements to be made by the borrower) and the likelihood that the 
property will retain an adequate value over the term of the loan. 
Specific factors which may negatively affect its short-range future 
value (up to 3-5 years) should be clearly documented. Factors which in 
some cases may cause the market value of a property to decline are 
recent zoning changes or a significant number of abandoned homes in the 
immediate vicinity of the property. However, not all zoning changes will 
cause a decline in property values, and proximity to abandoned buildings 
may not affect the market value of a property because of rehabilitation 
programs or affirmative lending programs, or because the cause of 
abandonment is unrelated to high risk. Proper underwriting 
considerations include the condition and utility

[[Page 69]]

of the improvements, and various physical factors such as street 
conditions, amenities such as parks and recreation areas, availability 
of public utilities and municipal services, and exposure to flooding and 
land faults. However, arbitrary decisions based on age or location are 
prohibited, since many older, soundly constructed homes provide housing 
opportunities which may be precluded by an arbitrary lending policy.
    (8) Fair Housing Act (title VIII, Civil Rights Act of 1968, as 
amended). Savings associations, must comply with all regulations 
promulgated by the Department of Housing and Urban Development to 
implement the Fair Housing Act, found at 24 CFR part 100 et seq., except 
that they shall use the Equal Housing Lender logo and poster prescribed 
by Office regulations at 12 CFR 528.4 and 528.5 rather than the Equal 
Housing Opportunity logo and poster required by 24 CFR parts 109 and 
110.
    (d) Marketing practices. Savings associations should review their 
advertising and marketing practices to ensure that their services are 
available without discrimination to the community they serve. 
Discrimination in lending is not limited to loan decisions and 
underwriting standards; a savings association does not meet its 
obligations to the community or implement its equal lending 
responsibility if its marketing practices and business relationships 
with developers and real estate brokers improperly restrict its 
clientele to segments of the community. A review of marketing practices 
could begin with an examination of an association's loan portfolio and 
applications to ascertain whether, in view of the demographic 
characteristics and credit demands of the community in which the 
institution is located, it is adequately serving the community on a 
nondiscriminatory basis. The Office will systematically review marketing 
practices where evidence of discrimination in lending is discovered.

[54 FR 49666, Nov. 30, 1989, as amended at 60 FR 66870, Dec. 27, 1995. 
Redesignated at 63 FR 71212, Dec. 24, 1998]



PART 533--DISCLOSURE AND REPORTING OF CRA-RELATED AGREEMENTS--Table of Contents




Sec.
533.1  Purpose and scope of this part.
533.2  Definition of covered agreement.
533.3  CRA communications.
533.4  Fulfillment of the CRA.
533.5  Related agreements considered a single agreement.
533.6  Disclosure of covered agreements.
533.7  Annual reports.
533.8  Release of information under FOIA.
533.9  Compliance provisions.
533.10  Transition provisions.
533.11  Other definitions and rules of construction used in this part.

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, and 1831y.

    Source: 66 FR 2106, Jan. 10, 2001, unless otherwise noted.



Sec. 533.1  Purpose and scope of this part.

    (a) General. This part implements section 711 of the Gramm-Leach-
Bliley Act (12 U.S.C. 1831y). That section requires any nongovernmental 
entity or person (NGEP), insured depository institution, or affiliate of 
an insured depository institution that enters into a covered agreement 
to--
    (1) Make the covered agreement available to the public and the 
appropriate Federal banking agency; and
    (2) File an annual report with the appropriate Federal banking 
agency concerning the covered agreement.
    (b) Scope of this part. The provisions of this part apply to--
    (1) Savings associations and their subsidiaries;
    (2) Savings and loan holding companies;
    (3) Affiliates of savings associations and savings and loan holding 
companies, other than bank holding companies, banks, and subsidiaries of 
bank holding companies and banks; and
    (4) NGEPs that enter into covered agreements with any company listed 
in paragraphs (b)(1) through (b)(3) of this section.
    (c) Relation to Community Reinvestment Act. This part does not 
affect in any way the Community Reinvestment Act of 1977 (CRA) (12 
U.S.C. 2901 et seq.), OTS's Community Reinvestment rule

[[Page 70]]

(12 CFR Part 563e), or OTS's interpretations or administration of the 
CRA or Community Reinvestment rule.
    (d) Examples. (1) The examples in this part are not exclusive. 
Compliance with an example, to the extent applicable, constitutes 
compliance with this part.
    (2) Examples in a paragraph illustrate only the issue described in 
the paragraph and do not illustrate any other issues that may arise in 
this part.



Sec. 533.2  Definition of covered agreement.

    (a) General definition of covered agreement. A covered agreement is 
any contract, arrangement, or understanding that meets all of the 
following criteria--
    (1) The agreement is in writing.
    (2) The parties to the agreement include--
    (i) One or more insured depository institutions or affiliates of an 
insured depository institution; and
    (ii) One or more NGEPs.
    (3) The agreement provides for the insured depository institution or 
any affiliate to--
    (i) Provide to one or more individuals or entities (whether or not 
parties to the agreement) cash payments, grants, or other consideration 
(except loans) that have an aggregate value of more than $10,000 in any 
calendar year; or
    (ii) Make to one or more individuals or entities (whether or not 
parties to the agreement) loans that have an aggregate principal amount 
of more than $50,000 in any calendar year.
    (4) The agreement is made pursuant to, or in connection with, the 
fulfillment of the CRA, as defined in Sec. 533.4 of this part.
    (5) The agreement is with a NGEP that has had a CRA communication as 
described in Sec. 533.3 of this part prior to entering into the 
agreement.
    (b) Examples concerning written arrangements or understandings--(1) 
Example 1. A NGEP meets with an insured depository institution and 
states that the institution needs to make more community development 
investments in the NGEP's community. The NGEP and insured depository 
institution do not reach an agreement concerning the community 
development investments the institution should make in the community, 
and the parties do not reach any mutual arrangement or understanding. 
Two weeks later, the institution unilaterally issues a press release 
announcing that it has established a general goal of making $100 million 
of community development grants in low- and moderate-income 
neighborhoods served by the insured depository institution over the next 
5 years. The NGEP is not identified in the press release. The press 
release is not a written arrangement or understanding.
    (2) Example 2. A NGEP meets with an insured depository institution 
and states that the institution needs to offer new loan programs in the 
NGEP's community. The NGEP and the insured depository institution reach 
a mutual arrangement or understanding that the institution will provide 
additional loans in the NGEP's community. The institution tells the NGEP 
that it will issue a press release announcing the program. Later, the 
insured depository institution issues a press release announcing the 
loan program. The press release incorporates the key terms of the 
understanding reached between the NGEP and the insured depository 
institution. The written press release reflects the mutual arrangement 
or understanding of the NGEP and the insured depository institution and 
is, therefore, a written arrangement or understanding.
    (3) Example 3. An NGEP sends a letter to an insured depository 
institution requesting that the institution provide a $15,000 grant to 
the NGEP. The insured depository institution responds in writing and 
agrees to provide the grant in connection with its annual grant program. 
The exchange of letters constitutes a written arrangement or 
understanding.
    (c) Loan agreements that are not covered agreements. A covered 
agreement does not include--
    (1) Any individual loan that is secured by real estate; or
    (2) Any specific contract or commitment for a loan or extension of 
credit to an individual, business, farm, or other entity, or group of 
such individuals or entities, if--

[[Page 71]]

    (i) The funds are loaned at rates that are not substantially below 
market rates; and
    (ii) The loan application or other loan documentation does not 
indicate that the borrower intends or is authorized to use the borrowed 
funds to make a loan or extension of credit to one or more third 
parties.
    (d) Examples concerning loan agreements--(1) Example 1. An insured 
depository institution provides an organization with a $1 million loan 
that is documented in writing and is secured by real estate owned or to-
be-acquired by the organization. The agreement is an individual mortgage 
loan and is exempt from coverage under paragraph (c)(1) of this section, 
regardless of the interest rate on the loan or whether the organization 
intends or is authorized to re-loan the funds to a third party.
    (2) Example 2. An insured depository institution commits to provide 
a $500,000 line of credit to a small business that is documented by a 
written agreement. The loan is made at rates that are within the range 
of rates offered by the institution to similarly situated small 
businesses in the market and the loan documentation does not indicate 
that the small business intends or is authorized to re-lend the borrowed 
funds. The agreement is exempt from coverage under paragraph (c)(2) of 
this section.
    (3) Example 3. An insured depository institution offers small 
business loans that are guaranteed by the Small Business Administration 
(SBA). A small business obtains a $75,000 loan, documented in writing, 
from the institution under the institution's SBA loan program. The loan 
documentation does not indicate that the borrower intends or is 
authorized to re-lend the funds. Although the rate charged on the loan 
is well below that charged by the institution on commercial loans, the 
rate is within the range of rates that the institution would charge a 
similarly situated small business for a similar loan under the SBA loan 
program. Accordingly, the loan is not made at substantially below market 
rates and is exempt from coverage under paragraph (c)(2) of this 
section.
    (4) Example 4. A bank holding company enters into a written 
agreement with a community development organization that provides that 
insured depository institutions owned by the bank holding company will 
make $250 million in small business loans in the community over the next 
5 years. The written agreement is not a specific contract or commitment 
for a loan or an extension of credit and, thus, is not exempt from 
coverage under paragraph (c)(2) of this section. Each small business 
loan made by the insured depository institution pursuant to this general 
commitment would, however, be exempt from coverage if the loan is made 
at rates that are not substantially below market rates and the loan 
documentation does not indicate that the borrower intended or was 
authorized to re-lend the funds.
    (e) Agreements that include exempt loan agreements. If an agreement 
includes a loan, extension of credit or loan commitment that, if 
documented separately, would be exempt under paragraph (c) of this 
section, the exempt loan, extension of credit or loan commitment may be 
excluded for purposes of determining whether the agreement is a covered 
agreement.
    (f) Determining annual value of agreements that lack schedule of 
disbursements. For purposes of paragraph (a)(3) of this section, a 
multi-year agreement that does not include a schedule for the 
disbursement of payments, grants, loans or other consideration by the 
insured depository institution or affiliate, is considered to have a 
value in the first year of the agreement equal to all payments, grants, 
loans and other consideration to be provided at any time under the 
agreement.



Sec. 533.3  CRA communications.

    (a) Definition of CRA communication. A CRA communication is any of 
the following--
    (1) Any written or oral comment or testimony provided to a Federal 
banking agency concerning the adequacy of the performance under the CRA 
of the insured depository institution, any affiliated insured depository 
institution, or any CRA affiliate.
    (2) Any written comment submitted to the insured depository 
institution

[[Page 72]]

that discusses the adequacy of the performance under the CRA of the 
institution and must be included in the institution's CRA public file.
    (3) Any discussion or other contact with the insured depository 
institution or any affiliate about--
    (i) Providing (or refraining from providing) written or oral 
comments or testimony to any Federal banking agency concerning the 
adequacy of the performance under the CRA of the insured depository 
institution, any affiliated insured depository institution, or any CRA 
affiliate;
    (ii) Providing (or refraining from providing) written comments to 
the insured depository institution that concern the adequacy of the 
institution's performance under the CRA and must be included in the 
institution's CRA public file; or
    (iii) The adequacy of the performance under the CRA of the insured 
depository institution, any affiliated insured depository institution, 
or any CRA affiliate.
    (b) Discussions or contacts that are not CRA communications--(1) 
Timing of contacts with a Federal banking agency. An oral or written 
communication with a Federal banking agency is not a CRA communication 
if it occurred more than 3 years before the parties entered into the 
agreement.
    (2) Timing of contacts with insured depository institutions and 
affiliates. A communication with an insured depository institution or 
affiliate is not a CRA communication if the communication occurred--
    (i) More than 3 years before the parties entered into the agreement, 
in the case of any written communication;
    (ii) More than 3 years before the parties entered into the 
agreement, in the case of any oral communication in which the NGEP 
discusses providing (or refraining from providing) comments or testimony 
to a Federal banking agency or written comments that must be included in 
the institution's CRA public file in connection with a request to, or 
agreement by, the institution or affiliate to take (or refrain from 
taking) any action that is in fulfillment of the CRA; or
    (iii) More than 1 year before the parties entered into the 
agreement, in the case of any other oral communication not described in 
paragraph (b)(2)(ii).
    (3) Knowledge of communication by insured depository institution or 
affiliate. (i) A communication is only a CRA communication under 
paragraph (a) of this section if the insured depository institution or 
its affiliate has knowledge of the communication under paragraph 
(b)(3)(ii) or (b)(3)(iii) of this section.
    (ii) Communication with insured depository institution or affiliate. 
An insured depository institution or affiliate has knowledge of a 
communication by the NGEP to the institution or its affiliate under this 
paragraph only if one of the following representatives of the insured 
depository institution or any affiliate has knowledge of the 
communication--
    (A) An employee who approves, directs, authorizes, or negotiates the 
agreement with the NGEP; or
    (B) An employee designated with responsibility for compliance with 
the CRA or executive officer if the employee or executive officer knows 
that the institution or affiliate is negotiating, intends to negotiate, 
or has been informed by the NGEP that it expects to request that the 
institution or affiliate negotiate an agreement with the NGEP.
    (iii) Other communications. An insured depository institution or 
affiliate is deemed to have knowledge of--
    (A) Any testimony provided to a Federal banking agency at a public 
meeting or hearing;
    (B) Any comment submitted to a Federal banking agency that is 
conveyed in writing by the agency to the insured depository institution 
or affiliate; and
    (C) Any written comment submitted to the insured depository 
institution that must be and is included in the institution's CRA public 
file.
    (4) Communication where NGEP has knowledge. A NGEP has a CRA 
communication with an insured depository institution or affiliate only 
if any of the following individuals has knowledge of the communication--
    (i) A director, employee, or member of the NGEP who approves, 
directs, authorizes, or negotiates the agreement

[[Page 73]]

with the insured depository institution or affiliate;
    (ii) A person who functions as an executive officer of the NGEP and 
who knows that the NGEP is negotiating or intends to negotiate an 
agreement with the insured depository institution or affiliate; or
    (iii) Where the NGEP is an individual, the NGEP.
    (c) Examples of CRA communications--(1) Examples of actions that are 
CRA communications. The following are examples of CRA communications. 
These examples are not exclusive and assume that the communication 
occurs within the relevant time period as described in paragraph (b)(1) 
or (b)(2) of this section and the appropriate representatives have 
knowledge of the communication as specified in paragraphs (b)(3) and 
(b)(4) of this section.
    (i) Example 1. A NGEP files a written comment with a Federal banking 
agency that states than an insured depository institution successfully 
addresses the credit needs of its community. The written comment is in 
response to a general request from the agency for comments on an 
application of the insured depository institution to open a new branch 
and a copy of the comment is provided to the institution.
    (ii) Example 2. A NGEP meets with an executive officer of an insured 
depository institution and states that the institution must improve its 
CRA performance.
    (iii) Example 3. A NGEP meets with an executive officer of an 
insured depository institution and states that the institution needs to 
make more mortgage loans in low- and moderate-income neighborhoods in 
its community.
    (iv) Example 4. A bank holding company files an application with a 
Federal banking agency to acquire an insured depository institution. Two 
weeks later, the NGEP meets with an executive officer of the bank 
holding company to discuss the adequacy of the performance under the CRA 
of the target insured depository institution. The insured depository 
institution was an affiliate of the bank holding company at the time the 
NGEP met with the target institution. (See Sec. 533.11(a) of this part.) 
Accordingly, the NGEP had a CRA communication with an affiliate of the 
bank holding company.
    (2) Examples of actions that are not CRA communications. The 
following are examples of actions that are not by themselves CRA 
communications. These examples are not exclusive.
    (i) Example 1. A NGEP provides to a Federal banking agency comments 
or testimony concerning an insured depository institution or affiliate 
in response to a direct request by the agency for comments or testimony 
from that NGEP. Direct requests for comments or testimony do not include 
a general invitation by a Federal banking agency for comments or 
testimony from the public in connection with a CRA performance 
evaluation of, or application for a deposit facility (as defined in 
section 803 of the CRA (12 U.S.C. 2902(3)) by, an insured depository 
institution or an application by a company to acquire an insured 
depository institution.
    (ii) Example 2. A NGEP makes a statement concerning an insured 
depository institution or affiliate at a widely attended conference or 
seminar regarding a general topic. A public or private meeting, public 
hearing, or other meeting regarding one or more specific institutions, 
affiliates or transactions involving an application for a deposit 
facility is not considered a widely attended conference or seminar.
    (iii) Example 3. A NGEP, such as a civil rights group, community 
group providing housing and other services in low- and moderate-income 
neighborhoods, veterans organization, community theater group, or youth 
organization, sends a fundraising letter to insured depository 
institutions and to other businesses in its community. The letter 
encourages all businesses in the community to meet their obligation to 
assist in making the local community a better place to live and work by 
supporting the fundraising efforts of the NGEP.
    (iv) Example 4. A NGEP discusses with an insured depository 
institution or affiliate whether particular loans, services, 
investments, community development activities, or other activities are 
generally eligible for consideration by a Federal banking agency

[[Page 74]]

under the CRA. The NGEP and insured depository institution or affiliate 
do not discuss the adequacy of the CRA performance of the insured 
depository institution or affiliate.
    (v) Example 5. A NGEP engaged in the sale or purchase of loans in 
the secondary market sends a general offering circular to financial 
institutions offering to sell or purchase a portfolio of loans. An 
insured depository institution that receives the offering circular 
discusses with the NGEP the types of loans included in the loan pool, 
whether such loans are generally eligible for consideration under the 
CRA, and which loans are made to borrowers in the institution's local 
community. The NGEP and insured depository institution do not discuss 
the adequacy of the institution's CRA performance.
    (d) Multiparty covered agreements. (1) A NGEP that is a party to a 
covered agreement that involves multiple NGEPs is not required to comply 
with the requirements of this part if--
    (i) The NGEP has not had a CRA communication; and
    (ii) No representative of the NGEP identified in paragraph (b)(4) of 
this section has knowledge at the time of the agreement that another 
NGEP that is a party to the agreement has had a CRA communication.
    (2) An insured depository institution or affiliate that is a party 
to a covered agreement that involves multiple insured depository 
institutions or affiliates is not required to comply with the 
requirements in Secs. 533.6 and 533.7 if--
    (i) No NGEP that is a party to the agreement has had a CRA 
communication concerning the insured depository institution or any 
affiliate; and
    (ii) No representative of the insured depository institution or any 
affiliate identified in paragraph (b)(3) of this section has knowledge 
at the time of the agreement that an NGEP that is a party to the 
agreement has had a CRA communication concerning any other insured 
depository institution or affiliate that is a party to the agreement.



Sec. 533.4  Fulfillment of the CRA

    (a) List of factors that are in fulfillment of the CRA. Fulfillment 
of the CRA, for purposes of this part, means the following list of 
factors--
    (1) Comments to a Federal banking agency or included in CRA public 
file. Providing or refraining from providing written or oral comments or 
testimony to any Federal banking agency concerning the performance under 
the CRA of an insured depository institution or CRA affiliate that is a 
party to the agreement or an affiliate of a party to the agreement or 
written comments that are required to be included in the CRA public file 
of any such insured depository institution; or
    (2) Activities given favorable CRA consideration. Performing any of 
the following activities if the activity is of the type that is likely 
to receive favorable consideration by a Federal banking agency in 
evaluating the performance under the CRA of the insured depository 
institution that is a party to the agreement or an affiliate of a party 
to the agreement--
    (i) Home-purchase, home-improvement, small business, small farm, 
community development, and consumer lending, as described in 
Sec. 563e.22 of this chapter, including loan purchases, loan 
commitments, and letters of credit;
    (ii) Making investments, deposits, or grants, or acquiring 
membership shares, that have as their primary purpose community 
development, as described in Sec. 563e.23 of this chapter;
    (iii) Delivering retail banking services, as described in 
Sec. 563.24(d) of this chapter;
    (iv) Providing community development services, as described in 
Sec. 563e.24(e) of this chapter;
    (v) In the case of a wholesale or limited-purpose insured depository 
institution, community development lending, including originating and 
purchasing loans and making loan commitments and letters of credit, 
making qualified investments, or providing community development 
services, as described in Sec. 563e.25(c) of this chapter;
    (vi) In the case of a small insured depository institution, any 
lending or other activity described in Sec. 563e.26(a) of this chapter; 
or
    (vii) In the case of an insured depository institution that is 
evaluated on the basis of a strategic plan, any element of the strategic 
plan, as described in Sec. 563e.27(f) of this chapter.

[[Page 75]]

    (b) Agreements relating to activities of CRA affiliates. An insured 
depository institution or affiliate that is a party to a covered 
agreement that concerns any activity described in paragraph (a) of this 
section of a CRA affiliate must, prior to the time the agreement is 
entered into, notify each NGEP that is a party to the agreement that the 
agreement concerns a CRA affiliate.



Sec. 533.5  Related agreements considered a single agreement.

    The following rules must be applied in determining whether an 
agreement is a covered agreement under Sec. 533.2 of this part.
    (a) Agreements entered into by same parties. All written agreements 
to which an insured depository institution or an affiliate of the 
insured depository institution is a party shall be considered to be a 
single agreement if the agreements--
    (1) Are entered into with the same NGEP;
    (2) Were entered into within the same 12-month period; and
    (3) Are each in fulfillment of the CRA.
    (b) Substantively related contracts. All written contracts to which 
an insured depository institution or an affiliate of the insured 
depository institution is a party shall be considered to be a single 
agreement, without regard to whether the other parties to the contracts 
are the same or whether each such contract is in fulfillment of the CRA, 
if the contracts were negotiated in a coordinated fashion and a NGEP is 
a party to each contract.



Sec. 533.6  Disclosure of covered agreements.

    (a) Applicability date. This section applies only to covered 
agreements entered into after November 12, 1999.
    (b) Disclosure of covered agreements to the public--(1) Disclosure 
required. Each NGEP and each insured depository institution or affiliate 
that enters into a covered agreement must make a copy of the covered 
agreement available to any individual or entity upon request.
    (2) Nondisclosure of confidential and proprietary information 
permitted. In responding to a request for a covered agreement from any 
individual or entity under paragraph (b)(1) of this section, a NGEP, 
insured depository institution, or affiliate may withhold from public 
disclosure confidential or proprietary information that the party 
believes the relevant supervisory agency could withhold from disclosure 
under the Freedom of Information Act (5 U.S.C. 552 et seq.) (FOIA).
    (3) Information that must be disclosed. Notwithstanding paragraph 
(b)(2) of this section, a party must disclose any of the following 
information that is contained in a covered agreement--
    (i) The names and addresses of the parties to the agreement;
    (ii) The amount of any payments, fees, loans, or other consideration 
to be made or provided by any party to the agreement;
    (iii) Any description of how the funds or other resources provided 
under the agreement are to be used;
    (iv) The term of the agreement (if the agreement establishes a 
term); and
    (v) Any other information that the relevant supervisory agency 
determines is not properly exempt from public disclosure.
    (4) Request for review of withheld information. Any individual or 
entity may request that the relevant supervisory agency review whether 
any information in a covered agreement withheld by a party must be 
disclosed. Any requests for agency review of withheld information must 
be filed, and will be processed in accordance with, the relevant 
supervisory agency's rules concerning the availability of information 
(see part 505 of this chapter and the Department of Treasury's rules (31 
CFR part 1)).
    (5) Duration of obligation. The obligation to disclose a covered 
agreement to the public terminates 12 months after the end of the term 
of the agreement.
    (6) Reasonable copy and mailing fees. Each NGEP and each insured 
depository institution or affiliate may charge an individual or entity 
that requests a copy of a covered agreement a reasonable fee not to 
exceed the cost of copying and mailing the agreement.
    (7) Use of CRA public file by insured depository institution or 
affiliate. An insured depository institution and any affiliate of an 
insured depository institution may fulfill its obligation under

[[Page 76]]

this paragraph (b) by placing a copy of the covered agreement in the 
insured depository institution's CRA public file if the institution 
makes the agreement available in accordance with the procedures set 
forth in Sec. 563e.43 of this chapter.
    (c) Disclosure by NGEPs of covered agreements to the relevant 
supervisory agency. (1) Each NGEP that is a party to a covered agreement 
must provide the following within 30 days of receiving a request from 
the relevant supervisory agency--
    (i) A complete copy of the agreement; and
    (ii) In the event the NGEP proposes the withholding of any 
information contained in the agreement in accordance with paragraph 
(b)(2) of this section, a public version of the agreement that excludes 
such information and an explanation justifying the exclusions. Any 
public version must include the information described in paragraph 
(b)(3) of this section.
    (2) The obligation to provide a covered agreement to the relevant 
supervisory agency terminates 12 months after the end of the term of the 
covered agreement.
    (d) Disclosure by insured depository institution or affiliate of 
covered agreements to the relevant supervisory agency--(1) In general. 
Within 60 days of the end of each calendar quarter, each insured 
depository institution and affiliate must provide each relevant 
supervisory agency with--
    (i)(A) A complete copy of each covered agreement entered into by the 
insured depository institution or affiliate during the calendar quarter; 
and
    (B) In the event the institution or affiliate proposes the 
withholding of any information contained in the agreement in accordance 
with paragraph (b)(2) of this section, a public version of the agreement 
that excludes such information (other than any information described in 
paragraph (b)(3) of this section) and an explanation justifying the 
exclusions; or
    (ii) A list of all covered agreements entered into by the insured 
depository institution or affiliate during the calendar quarter that 
contains--
    (A) The name and address of each insured depository institution or 
affiliate that is a party to the agreement;
    (B) The name and address of each NGEP that is a party to the 
agreement;
    (C) The date the agreement was entered into;
    (D) The estimated total value of all payments, fees, loans and other 
consideration to be provided by the institution or any affiliate of the 
institution under the agreement; and
    (E) The date the agreement terminates.
    (2) Prompt filing of covered agreements contained in list required. 
(i) If an insured depository institution or affiliate files a list of 
the covered agreements entered into by the institution or affiliate 
pursuant to paragraph (d)(1)(ii) of this section, the institution or 
affiliate must provide any relevant supervisory agency a complete copy 
and public version of any covered agreement referenced in the list 
within 7 calendar days of receiving a request from the agency for a copy 
of the agreement.
    (ii) The obligation of an insured depository institution or 
affiliate to provide a covered agreement to the relevant supervisory 
agency under this paragraph (d)(2) terminates 36 months after the end of 
the term of the covered agreement.
    (3) Joint filings. In the event that 2 or more insured depository 
institutions or affiliates are parties to a covered agreement, the 
insured depository institution(s) and affiliate(s) may jointly file the 
documents required by this paragraph (d) of this section. Any joint 
filing must identify the insured depository institution(s) and 
affiliate(s) for whom the filings are being made.



Sec. 533.7  Annual reports.

    (a) Applicability date. This section applies only to covered 
agreements entered into on or after May 12, 2000.
    (b) Annual report required. Each NGEP and each insured depository 
institution or affiliate that is a party to a covered agreement must 
file an annual report with each relevant supervisory agency concerning 
the disbursement, receipt, and uses of funds or other resources under 
the covered agreement.

[[Page 77]]

    (c) Duration of reporting requirement--(1) NGEPs. A NGEP must file 
an annual report for a covered agreement for any fiscal year in which 
the NGEP receives or uses funds or other resources under the agreement.
    (2) Insured depository institutions and affiliates. An insured 
depository institution or affiliate must file an annual report for a 
covered agreement for any fiscal year in which the institution or 
affiliate--
    (i) Provides or receives any payments, fees, or loans under the 
covered agreement that must be reported under paragraphs (e)(1)(iii) and 
(e)(1)(iv) of this section; or
    (ii) Has data to report on loans, investments, and services provided 
by a party to the covered agreement under the covered agreement under 
paragraph (e)(1)(vi) of this section.
    (d) Annual reports filed by NGEP--(1) Contents of report. The annual 
report filed by a NGEP under this section must include the following--
    (i) The name and mailing address of the NGEP filing the report;
    (ii) Information sufficient to identify the covered agreement for 
which the annual report is being filed, such as by providing the names 
of the parties to the agreement and the date the agreement was entered 
into or by providing a copy of the agreement;
    (iii) The amount of funds or resources received under the covered 
agreement during the fiscal year; and
    (iv) A detailed, itemized list of how the funds or resources 
received by the NGEP under the covered agreement were used during the 
fiscal year, including the total amount used for--
    (A) Compensation of officers, directors, and employees;
    (B) Administrative expenses;
    (C) Travel expenses;
    (D) Entertainment expenses;
    (E) Payment of consulting and professional fees; and
    (F) Other expenses and uses (specify expense or use).
    (2) More detailed reporting of uses of funds or resources 
permitted--(i) In general. If a NGEP allocated and used funds received 
under a covered agreement for a specific purpose, the NGEP may fulfill 
the requirements of paragraph (d)(1)(iv) of this section with respect to 
such funds by providing--
    (A) A brief description of each specific purpose for which the funds 
or other resources were used; and
    (B) The amount of funds or resources used during the fiscal year for 
each specific purpose.
    (ii) Specific purpose defined. A NGEP allocates and uses funds for a 
specific purpose if the NGEP receives and uses the funds for a purpose 
that is more specific and limited than the categories listed in 
paragraph (d)(1)(iv) of this section.
    (3) Use of other reports. The annual report filed by a NGEP may 
consist of or incorporate a report prepared for any other purpose, such 
as the Internal Revenue Service Return of Organization Exempt From 
Income Tax on Form 990, or any other Internal Revenue Service form, 
state tax form, report to members or shareholders, audited or unaudited 
financial statements, audit report, or other report, so long as the 
annual report filed by the NGEP contains all of the information required 
by this paragraph (d).
    (4) Consolidated reports permitted. A NGEP that is a party to 2 or 
more covered agreements may file with each relevant supervisory agency a 
single consolidated annual report covering all the covered agreements. 
Any consolidated report must contain all the information required by 
this paragraph (d). The information reported under paragraphs (d)(1)(iv) 
and (d)(2) of this section may be reported on an aggregate basis for all 
covered agreements.
    (5) Examples of annual report requirements for NGEPs

    (i) Example 1. A NGEP receives an unrestricted grant of $15,000 
under a covered agreement, includes the funds in its general operating 
budget and uses the funds during its fiscal year. The NGEP's annual 
report for the fiscal year must provide the name and mailing address of 
the NGEP, information sufficient to identify the covered agreement, and 
state that the NGEP received $15,000 during the fiscal year. The report 
must also indicate the total expenditures made by the NGEP during the 
fiscal year for compensation, administrative expenses, travel expenses, 
entertainment expenses, consulting and professional fees, and other 
expenses and uses. The NGEP's annual report may provide this information 
by submitting an Internal Revenue Service Form 990 that includes the

[[Page 78]]

required information. If the Internal Revenue Service Form does not 
include information for all of the required categories listed in this 
part, the NGEP must report the total expenditures in the remaining 
categories either by providing that information directly or by providing 
another form or report that includes the required information.
    (ii) Example 2. An organization receives $15,000 from an insured 
depository institution under a covered agreement and allocates and uses 
the $15,000 during the fiscal year to purchase computer equipment to 
support its functions. The organization's annual report must include the 
name and address of the organization, information sufficient to identify 
the agreement, and a statement that the organization received $15,000 
during the year. In addition, since the organization allocated and used 
the funds for a specific purpose that is more narrow and limited than 
the categories of expenses included in the detailed, itemized list of 
expenses, the organization would have the option of providing either the 
total amount it used during the year for each category of expenses 
included in paragraph (d)(1)(iv) of this section, or a statement that it 
used the $15,000 to purchase computer equipment and a brief description 
of the equipment purchased.
    (iii) Example 3. A community group receives $50,000 from an insured 
depository institution under a covered agreement. During its fiscal 
year, the community group specifically allocates and uses $5,000 of the 
funds to pay for a particular business trip and uses the remaining 
$45,000 for general operating expenses. The group's annual report for 
the fiscal year must include the name and address of the group, 
information sufficient to identify the agreement, and a statement that 
the group received $50,000. Because the group did not allocate and use 
all of the funds for a specific purpose, the group's annual report must 
provide the total amount of funds it used during the year for each 
category of expenses included in paragraph (d)(1)(iv) of this section. 
The group's annual report also could state that it used $5,000 for a 
particular business trip and include a brief description of the trip.
    (iv) Example 4. A community development organization is a party to 
two separate covered agreements with two unaffiliated insured depository 
institutions. Under each agreement, the organization receives $15,000 
during its fiscal year and uses the funds to support its activities 
during that year. If the organization elects to file a consolidated 
annual report, the consolidated report must identify the organization 
and the two covered agreements, state that the organization received 
$15,000 during the fiscal year under each agreement, and provide the 
total amount that the organization used during the year for each 
category of expenses included in paragraph (d)(1)(iv) of this section.
    (e) Annual report filed by insured depository institution or 
affiliate--(1) General. The annual report filed by an insured depository 
institution or affiliate must include the following--
    (i) The name and principal place of business of the insured 
depository institution or affiliate filing the report;
    (ii) Information sufficient to identify the covered agreement for 
which the annual report is being filed, such as by providing the names 
of the parties to the agreement and the date the agreement was entered 
into or by providing a copy of the agreement;
    (iii) The aggregate amount of payments, aggregate amount of fees, 
and aggregate amount of loans provided by the insured depository 
institution or affiliate under the covered agreement to any other party 
to the agreement during the fiscal year;
    (iv) The aggregate amount of payments, aggregate amount of fees, and 
aggregate amount of loans received by the insured depository institution 
or affiliate under the covered agreement from any other party to the 
agreement during the fiscal year;
    (v) A general description of the terms and conditions of any 
payments, fees, or loans reported under paragraphs (e)(1)(iii) and 
(e)(1)(iv) of this section, or, in the event such terms and conditions 
are set forth--
    (A) In the covered agreement, a statement identifying the covered 
agreement and the date the agreement (or a list identifying the 
agreement) was filed with the relevant supervisory agency; or
    (B) In a previous annual report filed by the insured depository 
institution or affiliate, a statement identifying the date the report 
was filed with the relevant supervisory agency; and
    (vi) The aggregate amount and number of loans, aggregate amount and 
number of investments, and aggregate amount of services provided under 
the covered agreement to any individual or entity not a party to the 
agreement--
    (A) By the insured depository institution or affiliate during its 
fiscal year; and
    (B) By any other party to the agreement, unless such information is 
not

[[Page 79]]

known to the insured depository institution or affiliate filing the 
report or such information is or will be contained in the annual report 
filed by another party under this section.
    (2) Consolidated reports permitted--(i) Party to multiple 
agreements. An insured depository institution or affiliate that is a 
party to 2 or more covered agreements may file a single consolidated 
annual report with each relevant supervisory agency concerning all the 
covered agreements.
    (ii) Affiliated entities party to the same agreement. An insured 
depository institution and its affiliates that are parties to the same 
covered agreement may file a single consolidated annual report relating 
to the agreement with each relevant supervisory agency for the covered 
agreement.
    (iii) Content of report. Any consolidated annual report must contain 
all the information required by this paragraph (e). The amounts and data 
required to be reported under paragraphs (e)(1)(iv) and (e)(1)(vi) of 
this section may be reported on an aggregate basis for all covered 
agreements.
    (f) Time and place of filing--(1) General. Each party must file its 
annual report with each relevant supervisory agency for the covered 
agreement no later than six months following the end of the fiscal year 
covered by the report.
    (2) Alternative method of fulfilling annual reporting requirement 
for a NGEP. (i) A NGEP may fulfill the filing requirements of this 
section by providing the following materials to an insured depository 
institution or affiliate that is a party to the agreement no later than 
six months following the end of the NGEP's fiscal year--
    (A) A copy of the NGEP's annual report required under paragraph (d) 
of this section for the fiscal year; and
    (B) Written instructions that the insured depository institution or 
affiliate promptly forward the annual report to the relevant supervisory 
agency or agencies on behalf of the NGEP.
    (ii) An insured depository institution or affiliate that receives an 
annual report from a NGEP pursuant to paragraph (f)(2)(i) of this 
section must file the report with the relevant supervisory agency or 
agencies on behalf of the NGEP within 30 days.



Sec. 533.8  Release of information under FOIA.

    OTS will make covered agreements and annual reports available to the 
public in accordance with the Freedom of Information Act (5 U.S.C. 552 
et seq.), OTS's rules (part 505 of this chapter), and the Department of 
Treasury's rules (31 CFR part 1). A party to a covered agreement may 
request confidential treatment of proprietary and confidential 
information in a covered agreement or an annual report under those 
procedures.



Sec. 533.9  Compliance provisions.

    (a) Willful failure to comply with disclosure and reporting 
obligations. (1) If OTS determines that a NGEP has willfully failed to 
comply in a material way with Secs. 533.6 or 533.7 of this part, OTS 
will notify the NGEP in writing of that determination and provide the 
NGEP a period of 90 days (or such longer period as OTS finds to be 
reasonable under the circumstances) to comply.
    (2) If the NGEP does not comply within the time period established 
by OTS, the agreement shall thereafter be unenforceable by that NGEP by 
operation of section 48 of the Federal Deposit Insurance Act (12 U.S.C. 
1831y).
    (3) OTS may assist any insured depository institution or affiliate 
that is a party to a covered agreement that is unenforceable by a NGEP 
by operation of section 48 of the Federal Deposit Insurance Act (12 
U.S.C. 1831y) in identifying a successor to assume the NGEP's 
responsibilities under the agreement.
    (b) Diversion of funds. If a court or other body of competent 
jurisdiction determines that funds or resources received under a covered 
agreement have been diverted contrary to the purposes of the covered 
agreement for an individual's personal financial gain, OTS may take 
either or both of the following actions--
    (1) Order the individual to disgorge the diverted funds or resources 
received under the agreement;
    (2) Prohibit the individual from being a party to any covered 
agreement for a period not to exceed 10 years.
    (c) Notice and opportunity to respond. Before making a determination 
under

[[Page 80]]

paragraph (a)(1) of this section, or taking any action under paragraph 
(b) of this section, OTS will provide written notice and an opportunity 
to present information to OTS concerning any relevant facts or 
circumstances relating to the matter.
    (d) Inadvertent or de minimis errors. Inadvertent or de minimis 
errors in annual reports or other documents filed with OTS under 
Secs. 533.6 or 533.7 of this part will not subject the reporting party 
to any penalty.
    (e) Enforcement of provisions in covered agreements. No provision of 
this part shall be construed as authorizing OTS to enforce the 
provisions of any covered agreement.



Sec. 533.10  Transition provisions.

    (a) Disclosure of covered agreements entered into before the 
effective date of this part. The following disclosure requirements apply 
to covered agreements that were entered into after November 12, 1999, 
and that terminated before April 1, 2001.
    (1) Disclosure to the public. Each NGEP and each insured depository 
institution or affiliate that was a party to the agreement must make the 
agreement available to the public under Sec. 533.6 of this part until at 
least April 1, 2002.
    (2) Disclosure to the relevant supervisory agency. (i) Each NGEP 
that was a party to the agreement must make the agreement available to 
the relevant supervisory agency under Sec. 533.6 of this part until at 
least April 1, 2002.
    (ii) Each insured depository institution or affiliate that was a 
party to the agreement must, by June 30, 2001, provide each relevant 
supervisory agency either--
    (A) A copy of the agreement under Sec. 533.6(d)(1)(i) of this part; 
or
    (B) The information described in Sec. 533.6(d)(1)(ii) of this part 
for each agreement.
    (b) Filing of annual reports that relate to fiscal years ending on 
or before December 31, 2000. In the event that a NGEP, insured 
depository institution or affiliate has any information to report under 
Sec. 533.7 of this part for a fiscal that ends on or before December 31, 
2000, and that concerns a covered agreement entered into between May 12, 
2000, and December 31, 2000, the annual report for that fiscal year must 
be provided, no later than June 30, 2001, to--
    (1) Each relevant supervisory agency; or
    (2) In the case of a NGEP, to an insured depository institution or 
affiliate that is a party to the agreement in accordance with 
Sec. 533.7(f)(2) of this part.



Sec. 533.11  Other definitions and rules of construction used in this part.

    (a) Affiliate. Affiliate means--
    (1) Any company that controls, is controlled by, or is under common 
control with another company; and
    (2) For the purpose of determining whether an agreement is a covered 
agreement under Sec. 533.2, an affiliate includes any company that would 
be under common control or merged with another company on consummation 
of any transaction pending before a Federal banking agency at the time--
    (i) The parties enter into the agreement; and
    (ii) The NGEP that is a party to the agreement makes a CRA 
communication, as described in Sec. 533.3 of this part.
    (b) Control. Control is defined in section 2(a) of the Bank Holding 
Company Act (12 U.S.C. 1841(a)).
    (c) CRA affiliate. A CRA affiliate of an insured depository 
institution is any company that is an affiliate of an insured depository 
institution to the extent, and only to the extent, that the activities 
of the affiliate were considered by the appropriate Federal banking 
agency when evaluating the CRA performance of the institution at its 
most recent CRA examination prior to the agreement. An insured 
depository institution or affiliate also may designate any company as a 
CRA affiliate at any time prior to the time a covered agreement is 
entered into by informing the NGEP that is a party to the agreement of 
such designation.
    (d) CRA public file. CRA public file means the public file 
maintained by an insured depository institution and described in 
Sec. 563.43 of this chapter.
    (e) Executive officer. The term executive officer has the same 
meaning as in Sec. 215.2(e)(1) of the Board of Governors of the Federal 
Reserve's Regulation O (12

[[Page 81]]

CFR 215.2(e)(1)). In applying this definition under this part, the term 
savings association shall be used in place of the term bank.
    (f) Federal banking agency; appropriate Federal banking agency. The 
terms Federal banking agency and appropriate Federal banking agency have 
the same meanings as in section 3 of the Federal Deposit Insurance Act 
(12 U.S.C. 1813).
    (g) Fiscal year. (1) The fiscal year for a NGEP that does not have a 
fiscal year shall be the calendar year.
    (2) Any NGEP, insured depository institution, or affiliate that has 
a fiscal year may elect to have the calendar year be its fiscal year for 
purposes of this part.
    (h) Insured depository institution. Insured depository institution 
has the same meaning as in section 3 of the Federal Deposit Insurance 
Act (12 U.S.C. 1813).
    (i) Nongovernmental entity or person or NGEP--(1) General. A 
nongovernmental entity or person or NGEP is any partnership, 
association, trust, joint venture, joint stock company, corporation, 
limited liability corporation, company, firm, society, other 
organization, or individual.
    (2) Exclusions. A nongovernmental entity or person does not 
include--
    (i) The United States government, a state government, a unit of 
local government (including a county, city, town, township, parish, 
village, or other general-purpose subdivision of a state) or an Indian 
tribe or tribal organization established under Federal, state or Indian 
tribal law (including the Department of Hawaiian Home Lands), or a 
department, agency, or instrumentality of any such entity;
    (ii) A federally-chartered public corporation that receives Federal 
funds appropriated specifically for that corporation;
    (iii) An insured depository institution or affiliate of an insured 
depository institution; or
    (iv) An officer, director, employee, or representative (acting in 
his or her capacity as an officer, director, employee, or 
representative) of an entity listed in paragraphs (i)(2)(i), (i)(2)(ii), 
or (i)(2)(iii) of this section.
    (j) Party. The term party with respect to a covered agreement means 
each NGEP and each insured depository institution or affiliate that 
entered into the agreement.
    (k) Relevant supervisory agency. The relevant supervisory agency for 
a covered agreement means the appropriate Federal banking agency for--
    (1) Each insured depository institution (or subsidiary thereof) that 
is a party to the covered agreement;
    (2) Each insured depository institution (or subsidiary thereof) or 
CRA affiliate that makes payments or loans or provides services that are 
subject to the covered agreement; and
    (3) Any company (other than an insured depository institution or 
subsidiary thereof) that is a party to the covered agreement.
    (l) Term of agreement. An agreement that does not have a fixed 
termination date is considered to terminate on the last date on which 
any party to the agreement makes any payment or provides any loan or 
other resources under the agreement, unless the relevant supervisory 
agency for the agreement otherwise notifies each party in writing.



PART 535--PROHIBITED CONSUMER CREDIT PRACTICES--Table of Contents




Sec.
535.1  Definitions.
535.2  Unfair credit practices.
535.3  Unfair or deceptive cosigner practices.
535.4  Late charges.
535.5  State exemptions.

    Authority: Sec. 18, as added by sec. 202, 88 Stat. 2193, as amended 
(15 U.S.C. 57a).

    Source: 54 FR 49479, Nov. 30, 1989, unless otherwise noted.



Sec. 535.1  Definitions.

    (a) Act. For the purposes of this part, ``Act'' means the Federal 
Trade Commission Act, 15 U.S.C. 41 et seq.
    (b) Consumer. The term ``consumer'' means a natural person who seeks 
or acquires goods, services, or money for personal, family, or household 
purposes, and who applies for or is extended ``consumer credit'' as 
defined in Sec. 561.12 of this chapter.
    (c) Cosigner. The term ``cosigner'' means a natural person who 
assumes

[[Page 82]]

liability for the obligation of a consumer without receiving goods, 
services, or money in return for the obligation, or in the case of an 
open-end credit obligation, without receiving the contractual right to 
obtain extensions of credit under the account. The term shall include 
any person whose signature is requested as a condition to granting 
credit to a consumer, or as a condition for forbearance on collection of 
a consumer's obligation that is in default. The term shall not include a 
spouse or other person whose signature is required on a credit 
obligation to perfect a security interest pursuant to state law. A 
person is a cosigner within the meaning of this definition whether or 
not he or she is designated as such on a credit obligation.
    (d) Creditor. The term ``creditor'' means a savings association.
    (e) Debt. The term ``debt'' means money that is due or alleged to be 
due from one to another.
    (f) Earnings. The term ``earnings'' means compensation paid or 
payable to an individual or for his or her account for personal services 
rendered or to be rendered by him or her, whether denominated as wages, 
salary, commission, bonus, or otherwise, including periodic payments 
pursuant to a pension, retirement, or disability program.
    (g) Household goods. The term ``household goods'' means clothing, 
furniture, appliances, linens, china, crockery, kitchenware, and 
personal effects of the consumer and his or her dependents, provided 
that the following are not included within the scope of the term 
``household goods'':
    (1) Works of art;
    (2) Electronic entertainment equipment (except one television and 
one radio);
    (3) Antiques, i.e., any item over one hundred years of age, 
including such items that have been repaired or renovated without 
changing their original form or character, and
    (4) Jewelry (other than wedding rings).
    (h) Savings association. For purposes of this part, the term 
``savings association'' includes any savings association, and any 
service corporation that is wholly owned by one or more savings 
association, that engages in the business of providing credit to 
consumers.
    (i) Obligation. The term ``obligation'' means an agreement between a 
consumer and a creditor.
    (j) Person. The term ``person'' means an individual, corporation, or 
other business organization.



Sec. 535.2  Unfair credit practices.

    (a) In connection with the extension of credit to consumers after 
January 1, 1986, it is an unfair act or practice within the meaning of 
section 5 of the Act for a savings association directly or indirectly to 
enter into a consumer credit obligation that constitutes or contains, or 
to enforce in a consumer credit obligation purchased by a savings 
association, any of the following provisions:
    (1) A cognovit or confession of judgment (for purposes other than 
executory process in the State of Louisiana), warrant of attorney, or 
other waiver of the right to notice and the opportunity to be heard in 
the event of suit or process thereon;
    (2) An executory waiver or a limitation of exemption from 
attachment, execution, or other process on real or personal property 
held, owned by, or due to the consumer, unless the waiver applies solely 
to property subject to a security interest executed in connection with 
the obligation;
    (3) An assignment of wages or other earnings, unless:
    (i) The assignment by its terms is revocable at the will of the 
debtor,
    (ii) The assignment is a payroll deduction plan or preauthorized 
payment plan, commencing at the time of the transaction, in which the 
consumer authorizes a series of wage deductions as a method of making 
each payment, or
    (iii) The assignment applies only to wages or other earnings already 
earned at the time of the assignment.
    (4) A nonpossessory security interest in household goods other than 
a purchase-money security interest.



Sec. 535.3  Unfair or deceptive cosigner practices.

    (a) General. In connection with the extension of credit to consumers 
after January 1, 1986, it is:

[[Page 83]]

    (1) A deceptive act or practice within the meaning of section 5 of 
the Act for a savings association, directly or indirectly, to 
misrepresent the nature or extent of cosigner liability to any person.
    (2) An unfair act or practice within the meaning of section 5 of the 
Act for a savings association, directly or indirectly, to obligate a 
cosigner unless the cosigner is informed, prior to becoming obligated, 
of the nature of his or her liability as cosigner.
    (b) Disclosure requirement. (1) A clear and conspicuous document 
that shall contain the following statement or one which is substantially 
equivalent, shall be given to the consigner prior to becoming obligated 
(which, in the case of open-end credit, shall mean prior to the time 
that the cosigner becomes obligated for any fees or transaction on the 
account):

                           Notice of Cosigner

    You are being asked to guarantee this debt. Think carefully before 
you do. If the borrower doesn't pay the debt, you will have to. Be sure 
you can afford to pay if you have to, and that you want to accept this 
responsibility.
    You may have to pay up to the full amount of the debt if the 
borrower does not pay. You may also have to pay late fees or collection 
costs, which increase this amount.
    The creditor can collect this debt from you without first trying to 
collect from the borrower. The creditor can use the same collection 
methods against you that can be used against the borrower, such as suing 
you, garnishing your wages, etc. If this debt is ever in default, that 
fact may become a part of your credit record.

    (2) Compliance with the disclosure requirement under paragraph 
(b)(1) of this section shall constitute compliance with the consumer 
information requirement of paragraph (a)(2) of this section.
    (3) If the notice is a separate document, nothing other than the 
following times may appear with the notice:
    (i) The name and address of the savings association;
    (ii) An identification of the debt to be cosigned (e.g., a loan 
identification number);
    (iii) The date; and
    (iv) The statement, ``This notice is not the contract that makes you 
liable for the debt.''



Sec. 535.4  Late charges.

    (a) In connection with collecting a debt arising out of an extension 
of credit to a consumer after January 1, 1986, it is an unfair act or 
practice within the meaning of section 5 of the Act for a savings 
association, directly or indirectly, to levy or collect any delinquency 
charge on a payment, which payment is otherwise a full payment for the 
applicable period and is paid on its due date or within an applicable 
grace period, when the only delinquency is attributable to late fee(s) 
or delinquency charge(s) assessed on earlier installment(s).
    (b) For the purposes of this part, ``collecting a debt'' means any 
activity, other than the use of judicial process, that is intended to 
bring about or does bring about repayment of all or part of a consumer 
debt.



Sec. 535.5  State exemptions.

    (a) Upon application to the Office by an appropriate state agency, 
the Office shall determine if:
    (1) There is a state requirement or prohibition in effect that 
applies to any transaction to which a provision of this rule applies; 
and
    (2) The state requirement or prohibition affords a level of 
protection to consumers that is substantially equivalent to, or greater 
than, the protection afforded by this rule.
    (b) If the Office makes a determination as specified under paragraph 
(a) of this section, then that provision of this section will not be in 
effect in that state to the extent specified by the Office in its 
determination, for as long as the state administers and enforces the 
state requirement or prohibition effectively, as determined by the 
Office.
    (c) The Director of Consumer Affairs in consultation with the Chief 
Counsel shall have delegated authority to make such determinations as 
are required under this part 535.



PART 536--CONSUMER PROTECTION IN SALES OF INSURANCE--Table of Contents




Sec.
536.10  Purpose and scope.
536.20  Definitions.
536.30  Prohibited practices.
536.40  What you must disclose.

[[Page 84]]

536.50  Where insurance activities may take place.
536.60  Qualification and licensing requirements for insurance sales 
          personnel.

Appendix A to Part 536--Consumer Grievance Process.

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, and 1831x.

    Source: 65 FR 75845, Dec. 4, 2000, unless otherwise noted.



Sec. 536.10  Purpose and scope.

    (a) General rule. This part establishes consumer protections in 
connection with retail sales practices, solicitations, advertising, or 
offers of any insurance product or annuity to a consumer by:
    (1) Any savings association; or
    (2) Any other person that is engaged in such activities at an office 
of a savings association or on behalf of a savings association.
    (b) Application to operating subsidiaries. For purposes of 
Sec. 559.3(h) of this chapter, an operating subsidiary is subject to 
this part only to the extent that it sells, solicits, advertises, or 
offers insurance products or annuities at an office of a savings 
association or on behalf of a savings association.



Sec. 536.20  Definitions.

    As used in this part:
    Affiliate means a company that controls, is controlled by, or is 
under common control with another company.
    Company means any corporation, partnership, business trust, 
association or similar organization, or any other trust (unless by its 
terms the trust must terminate within twenty-five years or not later 
than twenty-one years and ten months after the death of individuals 
living on the effective date of the trust). It does not include any 
corporation the majority of the shares of which are owned by the United 
States or by any State, or a qualified family partnership, as defined in 
section 2(o)(10) of the Bank Holding Company Act of 1956, as amended (12 
U.S.C. 1841(o)(10)).
    Consumer means an individual who purchases, applies to purchase, or 
is solicited to purchase from a covered person insurance products or 
annuities primarily for personal, family, or household purposes.
    Control of a company has the same meaning as in section 3(w)(5) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(5)).
    Domestic violence means the occurrence of one or more of the 
following acts by a current or former family member, household member, 
intimate partner, or caretaker:
    (1) Attempting to cause or causing or threatening another person 
physical harm, severe emotional distress, psychological trauma, rape, or 
sexual assault;
    (2) Engaging in a course of conduct or repeatedly committing acts 
toward another person, including following the person without proper 
authority, under circumstances that place the person in reasonable fear 
of bodily injury or physical harm;
    (3) Subjecting another person to false imprisonment; or
    (4) Attempting to cause or causing damage to property so as to 
intimidate or attempt to control the behavior of another person.
    Electronic media includes any means for transmitting messages 
electronically between a covered person and a consumer in a format that 
allows visual text to be displayed on equipment, for example, a personal 
computer monitor.
    Office means the premises of a savings association where retail 
deposits are accepted from the public.
    Subsidiary has the same meaning as in section 3(w)(4) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(w)(4)).
    You means:
    (1) A savings association, as defined in Sec. 561.43 of this 
chapter; or
    (2) Any other person only when the person sells, solicits, 
advertises, or offers an insurance product or annuity to a consumer at 
an office of a savings association, or on behalf of a savings 
association. For purposes of this definition, activities on behalf of a 
savings association include activities where a person, whether at an 
office of the savings association or at another location, sells, 
solicits, advertises, or offers an insurance product or annuity and at 
least one of the following applies:

[[Page 85]]

    (i) The person represents to a consumer that the sale, solicitation, 
advertisement, or offer of any insurance product or annuity is by or on 
behalf of the savings association;
    (ii) The savings association refers a consumer to a seller of 
insurance products and annuities and the savings association has a 
contractual arrangement to receive commissions or fees derived from a 
sale of an insurance product or annuity resulting from that referral; or
    (iii) Documents evidencing the sale, solicitation, advertising, or 
offer of an insurance product or annuity identify or refer to the 
savings association.



Sec. 536.30  Prohibited practices.

    (a) Anticoercion and antitying rules. You may not engage in any 
practice that would lead a consumer to believe that an extension of 
credit, in violation of section 5(q) of the Home Owners' Loan Act (12 
U.S.C. 1464(q)), is conditional upon either:
    (1) The purchase of an insurance product or annuity from a savings 
association or any of its affiliates; or
    (2) An agreement by the consumer not to obtain, or a prohibition on 
the consumer from obtaining, an insurance product or annuity from an 
unaffiliated entity.
    (b) Prohibition on misrepresentations generally. You may not engage 
in any practice or use any advertisement at any office of, or on behalf 
of, a savings association or a subsidiary of a savings association that 
could mislead any person or otherwise cause a reasonable person to reach 
an erroneous belief with respect to:
    (1) The fact that an insurance product or annuity you or any 
subsidiary of a savings association sell or offer for sale is not backed 
by the Federal government or a savings association, or the fact that the 
insurance product or annuity is not insured by the Federal Deposit 
Insurance Corporation;
    (2) In the case of an insurance product or annuity that involves 
investment risk, the fact that there is an investment risk, including 
the potential that principal may be lost and that the product may 
decline in value; or
    (3) In the case of a savings association or subsidiary of a savings 
association at which insurance products or annuities are sold or offered 
for sale, the fact that:
    (i) The approval of an extension of credit to a consumer by the 
savings association or subsidiary may not be conditioned on the purchase 
of an insurance product or annuity by the consumer from the savings 
association or a subsidiary of a savings association; and
    (ii) The consumer is free to purchase the insurance product or 
annuity from another source.
    (c) Prohibition on domestic violence discrimination. You may not 
sell or offer for sale, as principal, agent, or broker, any life or 
health insurance product if the status of the applicant or insured as a 
victim of domestic violence or as a provider of services to victims of 
domestic violence is considered as a criterion in any decision with 
regard to insurance underwriting, pricing, renewal, or scope of coverage 
of such product, or with regard to the payment of insurance claims on 
such product, except as required or expressly permitted under State law.



Sec. 536.40  What you must disclose.

    (a) Insurance disclosures. In connection with the initial purchase 
of an insurance product or annuity by a consumer from you, you must 
disclose to the consumer, except to the extent the disclosure would not 
be accurate, that:
    (1) The insurance product or annuity is not a deposit or other 
obligation of, or guaranteed by, a savings association or an affiliate 
of a savings association;
    (2) The insurance product or annuity is not insured by the Federal 
Deposit Insurance Corporation (FDIC) or any other agency of the United 
States, a savings association, or (if applicable) an affiliate of a 
savings association; and
    (3) In the case of an insurance product or annuity that involves an 
investment risk, there is investment risk associated with the product, 
including the possible loss of value.
    (b) Credit disclosures. In the case of an application for credit in 
connection with which an insurance product or annuity is solicited, 
offered, or sold, you

[[Page 86]]

must disclose that a savings association may not condition an extension 
of credit on either:
    (1) The consumer's purchase of an insurance product or annuity from 
the savings association or any of its affiliates; or
    (2) The consumer's agreement not to obtain, or a prohibition on the 
consumer from obtaining, an insurance product or annuity from an 
unaffiliated entity.
    (c) Timing and method of disclosures--(1) In general. The 
disclosures required by paragraph (a) of this section must be provided 
orally and in writing before the completion of the initial sale of an 
insurance product or annuity to a consumer. The disclosure required by 
paragraph (b) of this section must be made orally and in writing at the 
time the consumer applies for an extension of credit in connection with 
which an insurance product or annuity is solicited, offered, or sold.
    (2) Exception for transactions by mail. If you conduct an insurance 
product or annuity sale by mail, you are not required to make the oral 
disclosures required by paragraph (a) of this section. If you take an 
application for credit by mail, you are not required to make the oral 
disclosure required by paragraph (b) of this section.
    (3) Exception for transactions by telephone. If a sale of an 
insurance product or annuity is conducted by telephone, you may provide 
the written disclosures required by paragraph (a) of this section by 
mail within 3 business days beginning on the first business day after 
the sale, solicitation, or offer, excluding Sundays and the legal public 
holidays specified in 5 U.S.C. 6103(a). If you take an application for 
credit by telephone, you may provide the written disclosure required by 
paragraph (b) of this section by mail, provided you mail it to the 
consumer within three days beginning the first business day after the 
application is taken, excluding Sundays and the legal public holidays 
specified in 5 U.S.C. 6103(a).
    (4) Electronic form of disclosures. (i) Subject to the requirements 
of section 101(c) of the Electronic Signatures in Global and National 
Commerce Act (12 U.S.C. 7001(c)), you may provide the written 
disclosures required by paragraph (a) and (b) of this section through 
electronic media instead of on paper, if the consumer affirmatively 
consents to receiving the disclosures electronically and if the 
disclosures are provided in a format that the consumer may retain or 
obtain later, for example, by printing or storing electronically (such 
as by downloading).
    (ii) You are not required to provide orally any disclosures required 
by paragraphs (a) or (b) of this section that you provide by electronic 
media.
    (5) Disclosures must be readily understandable. The disclosures 
provided shall be conspicuous, simple, direct, readily understandable, 
and designed to call attention to the nature and significance of the 
information provided. For instance, you may use the following 
disclosures in visual media, such as television broadcasting, ATM 
screens, billboards, signs, posters and written advertisements and 
promotional materials, as appropriate and consistent with paragraphs (a) 
and (b) of this section:

 NOT A DEPOSIT
 NOT FDIC-INSURED
 NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
 NOT GUARANTEED BY THE SAVINGS ASSOCIATION
 MAY GO DOWN IN VALUE

    (6) Disclosures must be meaningful. (i) You must provide the 
disclosures required by paragraphs (a) and (b) of this section in a 
meaningful form. Examples of the types of methods that could call 
attention to the nature and significance of the information provided 
include:
    (A) A plain-language heading to call attention to the disclosures;
    (B) A typeface and type size that are easy to read;
    (C) Wide margins and ample line spacing;
    (D) Boldface or italics for key words; and
    (E) Distinctive type size, style, and graphic devices, such as 
shading or sidebars, when the disclosures are combined with other 
information.
    (ii) You have not provided the disclosures in a meaningful form if 
you merely state to the consumer that the required disclosures are 
available in printed material, but do not provide

[[Page 87]]

the printed material when required and do not orally disclose the 
information to the consumer when required.
    (iii) With respect to those disclosures made through electronic 
media for which paper or oral disclosures are not required, the 
disclosures are not meaningfully provided if the consumer may bypass the 
visual text of the disclosures before purchasing an insurance product or 
annuity.
    (7) Consumer acknowledgment. You must obtain from the consumer, at 
the time a consumer receives the disclosures required under paragraphs 
(a) or (b) of this section, or at the time of the initial purchase by 
the consumer of an insurance product or annuity, a written 
acknowledgment by the consumer that the consumer received the 
disclosures. You may permit a consumer to acknowledge receipt of the 
disclosures electronically or in paper form. If the disclosures required 
under paragraphs (a) or (b) of this section are provided in connection 
with a transaction that is conducted by telephone, you must:
    (i) Obtain an oral acknowledgment of receipt of the disclosures and 
maintain sufficient documentation to show that the acknowledgment was 
given; and
    (ii) Make reasonable efforts to obtain a written acknowledgment from 
the consumer.
    (d) Advertisements and other promotional material for insurance 
products or annuities. The disclosures described in paragraph (a) of 
this section are required in advertisements and promotional material for 
insurance products or annuities unless the advertisements and 
promotional material are of a general nature describing or listing the 
services or products offered by a savings association.



Sec. 536.50  Where insurance activities may take place.

    (a) General rule. A savings association must, to the extent 
practicable:
    (1) Keep the area where the savings association conducts 
transactions involving insurance products or annuities physically 
segregated from areas where retail deposits are routinely accepted from 
the general public;
    (2) Identify the areas where insurance product or annuity sales 
activities occur; and
    (3) Clearly delineate and distinguish those areas from the areas 
where the savings association's retail deposit-taking activities occur.
    (b) Referrals. Any person who accepts deposits from the public in an 
area where such transactions are routinely conducted in a savings 
association may refer a consumer who seeks to purchase an insurance 
product or annuity to a qualified person who sells that product only if 
the person making the referral receives no more than a one-time, nominal 
fee of a fixed dollar amount for each referral that does not depend on 
whether the referral results in a transaction.



Sec. 536.60  Qualification and licensing requirements for insurance sales personnel.

    A savings association may not permit any person to sell or offer for 
sale any insurance product or annuity in any part of the savings 
association's office or on its behalf, unless the person is at all times 
appropriately qualified and licensed under applicable State insurance 
licensing standards with regard to the specific products being sold or 
recommended.

           Appendix A to Part 536--Consumer Grievance Process

    Any consumer who believes that any savings association or any other 
person selling, soliciting, advertising, or offering insurance products 
or annuities to the consumer at an office of the savings association or 
on behalf of the savings association has violated the requirements of 
this part should contact the Director, Consumer Programs, Office of 
Thrift Supervision, at the following address: 1700 G Street, NW., 
Washington, DC 20552, or telephone 202-906-6237 or 800-842-6929, or e-
mail [email protected].



PART 541--DEFINITIONS FOR REGULATIONS AFFECTING FEDERAL SAVINGS ASSOCIATIONS--Table of Contents




Sec.
541.1  General.
541.2  Act.
541.5  Commercial paper.
541.7  Corporate debt security.
541.8  Debit card.
541.10  Dwelling unit.
541.11  Federal savings association.
541.14  Home.
541.15  Improved nonresidential real estate.

[[Page 88]]

541.16  Improved residential real estate.
541.18  Interim Federal savings association.
541.19  Interim state savings association.
541.20  Loans.
541.21  Nonresidential real estate.
541.22  [Reserved]
541.23  Residential real estate.
541.25  Single-family dwelling.
541.26  Surplus.
541.27  Unimproved real estate.
541.28  Withdrawal value of a savings account.

    Authority: 12 U.S.C. 1462a, 1463, 1464.

    Source: 54 FR 49480, Nov. 30, 1989, unless otherwise noted.



Sec. 541.1  General.

    Unless another definition is provided in this chapter, definitions 
in part 561 of this chapter apply.



Sec. 541.2  Act.

    The term Act means the Home Owners' Loan Act of 1933, as amended.



Sec. 541.5  Commercial paper.

    The term commercial paper means any note, draft, or bill of exchange 
which arises out of a current transaction or the proceeds of which have 
been or are to be used for current transactions, and which has a 
maturity at the time of issuance of not exceeding nine months, exclusive 
of days of grace, or any renewal thereof the maturity of which is 
likewise limited.



Sec. 541.7  Corporate debt security.

    The term corporate debt security means a marketable obligation, 
evidencing the indebtedness of any corporation in the form of a bond, 
note and/or debenture which is commonly regarded as a debt security and 
is not predominantly speculative in nature. A security is marketable if 
it may be sold with reasonable promptness at a price which corresponds 
reasonably to its fair value.



Sec. 541.8  Debit card.

    The term debit card means a card that enables an accountholder to 
obtain access to a savings account for the purpose of making withdrawals 
or of transferring funds to a third party by non-transferable order or 
authorization.



Sec. 541.10  Dwelling unit.

    The term dwelling unit means the unified combination of rooms 
designed for residential use by one family, other than a single-family 
dwelling.



Sec. 541.11  Federal savings association.

    The term Federal savings association means a Federal savings 
association or Federal savings bank chartered under section 5(o) of the 
Act.



Sec. 541.14  Home.

    The term home means real estate comprising a single-family 
dwelling(s) or a dwelling unit(s) for four or fewer families in the 
aggregate.



Sec. 541.15  Improved nonresidential real estate.

    The term improved nonresidential real estate means nonresidential 
real estate:
    (a) Containing a permanent structure(s) constituting at least 25 
percent of its value; or
    (b) Containing improvements which make it usable by a business or 
industrial enterprise; or
    (c) Used, or to be used within a reasonable time, for commercial 
farming, excluding hobby and vacation property.



Sec. 541.16  Improved residential real estate.

    The term improved residential real estate means residential real 
estate containing offsite or other improvements sufficient to make the 
property ready for primarily residential construction, and real estate 
in the process of being improved by a building or buildings to be 
constructed or in the process of construction for primarily residential 
use.



Sec. 541.18  Interim Federal savings association.

    The term interim Federal savings association means a Federal savings 
association chartered by the Office under section 5 of the Act to 
facilitate the acquisition of 100 percent of the voting shares of an 
existing Federal stock savings association or other insured stock 
savings association by a newly formed company or an existing savings and 
loan holding company or to facilitate any other transaction the Office 
may approve.

[[Page 89]]



Sec. 541.19  Interim state savings association.

    The term interim state savings association means a savings 
association, other than a Federal savings association, the accounts of 
which are insured by the FDIC to facilitate the acquisition of 100 
percent of the voting shares of an existing Federal stock savings 
association or other insured stock savings association by a newly formed 
company or an existing savings and loan holding company or to facilitate 
any other transaction the Office may approve.



Sec. 541.20  Loans.

    The term loans means obligations and extensions or advances of 
credit; and any reference to a loan or investment includes an interest 
in such a loan or investment.



Sec. 541.21  Nonresidential real estate.

    The terms nonresidential real estate or nonresidential real property 
mean real estate that is not residential real estate, as that term is 
defined in Sec. 541.23 of this part.



Sec. 541.22  [Reserved]



Sec. 541.23  Residential real estate.

    The terms residential real estate or residential real property mean:
    (a) Homes (including a dwelling unit in a multi-family residential 
property such as a condominium or a cooperative);
    (b) Combinations of homes and business property (i.e., a home used 
in part for business);
    (c) Other real estate used for primarily residential purposes other 
than a home (but which may include homes);
    (d) Combinations of such real estate and business property involving 
only minor business use (i.e., where no more than 20 percent of the 
total appraised value of the real estate is attributable to the business 
use);
    (e) Farm residences and combinations of farm residences and 
commercial farm real estate;
    (f) Property to be improved by the construction of such structures; 
or
    (g) Leasehold interests in the above real estate.

[64 FR 46564, Aug. 26, 1999]



Sec. 541.25  Single-family dwelling.

    A structure designed for residential use by one family, or a unit so 
designed, whose owner owns, directly or through a non-profit cooperative 
housing organization, an undivided interest in the underling real 
estate, including property owned in common with others which contributes 
to the use and enjoyment of the structure or unit.



Sec. 541.26  Surplus.

    The term surplus means undistributed earnings held as unallocated 
reserves for general corporate use.



Sec. 541.27  Unimproved real estate.

    The term unimproved real estate means real estate that will be 
improved, as defined in Sec. 541.15 or Sec. 541.16 of this part.



Sec. 541.28  Withdrawal value of a savings account.

    The term withdrawal value of a savings account means the amount 
invested in a savings account plus earnings credited thereto, less 
lawful deductions therefrom.



PART 543--FEDERAL MUTUAL SAVINGS ASSOCIATIONS--INCORPORATION, ORGANIZATION, AND CONVERSION--Table of Contents




Sec.
543.1  Corporate title.

                              Organization

543.2  Application for permission to organize.
543.3  ``De novo'' applications for a Federal savings association 
          charter.
543.5  Issuance of charter.
543.6  Completion of organization.
543.7  Limitations on transaction of business.
543.7-1  Federal savings association created in connection with an 
          association in default or in danger of default.

                               Conversion

543.8  Conversion of depository institutions to Federal mutual charter.
543.9  Application for conversion to Federal mutual charter.
543.10  Organization after conversion.
543.11  Organization plan for governance during first years after 
          issuance of Federal mutual savings bank charter.

[[Page 90]]

543.11-1  Grandfathered authority.
543.14  Continuity of existence.

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901 et seq.

    Source: 54 FR 49482, Nov. 30, 1989, unless otherwise noted.



Sec. 543.1  Corporate title.

    (a) General. A Federal savings association shall not adopt a title 
that misrepresents the nature of the institution or the services it 
offers.
    (b) Title change. Prior to changing its corporate title, an 
association must file with the OTS a written notice indicating the 
intended change. The OTS, shall provide to the association a timely 
written acknowledgment stating when the notice was received. If, within 
30 days of receipt of notice, the OTS does not notify the association of 
its objection on the grounds set forth in paragraph (a) of this section, 
the association may change its title by amending its charter in 
accordance with Sec. 544.2(b) or Sec. 552.4 and the amendment provisions 
of its charter, except that an association chartered as a Federal 
Savings and Loan Association may change its title to indicate that it is 
a Federal Savings Bank, and an association chartered as a Federal 
Savings Bank may change its title to indicate that it is a Federal 
Savings and Loan Association.

[54 FR 49482, Nov. 30, 1989, as amended at 57 FR 14338, Apr. 20, 1992; 
58 FR 4312, Jan. 14, 1993; 61 FR 64015, Dec. 3, 1996]

                              Organization



Sec. 543.2  Application for permission to organize.

    (a) General. Recommendations by employees of the OTS regarding 
applications for permission to organize a Federal savings association 
are privileged, confidential, and subject to Sec. 510.5 (b) and (c) of 
this chapter.
    (b)-(c) [Reserved]
    (d) Public notice and inspection. (1) The applicant must publish a 
public notice of the application to organize in accordance with the 
procedures specified in subpart B of part 516 of this chapter.
    (2) Promptly after publication, the applicant(s) shall transmit 
copies of each notice and publisher's affidavit of publication in the 
same manner as the original filing.
    (3) The OTS shall give notice of the application to the State 
official who supervises savings associations in the State in which the 
new association is to be located.
    (4) Any person may inspect the application and all related 
communications at the Regional Office during regular business hours, 
unless such information is exempt from public disclosure.
    (e) Submission of comments. Commenters may submit comments on the 
application in accordance with the procedures specified in subpart C of 
part 516 of this chapter.
    (f) Meetings. The OTS may arrange informal or formal meetings in 
accordance with the procedures specified in subpart D of part 516 of 
this chapter.
    (g) Approval. (1) Factors that will be considered are:
    (i) Whether the applicants are persons of good character and 
responsibility;
    (ii) Whether a necessity exists for such association in the 
community to be served;
    (iii) Whether there is a reasonable probability of the association's 
usefulness and success;
    (iv) Whether the association can be established without undue injury 
to properly conducted existing local thrift and home financing 
institutions;
    (v) Whether the association will perform a role of providing credit 
for housing consistent with safe and sound operation of a Federal 
savings association; and
    (vi) Whether the factors set forth in Sec. 543.3 are met, in the 
case of an application that would result in the formation of a de novo 
association, as defined in Sec. 543.3(a).
    (2) Approvals of applications will be conditioned on the following:
    (i) Receipt by the Office of written confirmation from the Federal 
Deposit Insurance Corporation that the accounts of the Federal savings 
association will be insured by the Federal Deposit Insurance 
Corporation;
    (ii) A minimum amount of capital to be paid into the association's 
accounts prior to commencing business;
    (iii) The submission of a statement that--

[[Page 91]]

    (A) The applicants have complied in all respects with the Act and 
these rules and regulations regarding organization of a Federal savings 
association;
    (B) The applicants have incurred no expense in forming the 
association which is chargeable to it, and no such expense will be 
incurred;
    (C) No funds have been collected on account of the association 
before the Office's approval;
    (D) An organization committee has been created (naming the committee 
and its officers);
    (E) The committee will organize the association and serve as 
temporary officers of the association until officers are elected by the 
association's board of directors under Sec. 543.6 of this part; and
    (F) No funds will be accepted for deposit by the association until 
organization has been completed; and
    (iv) The satisfaction of any other requirement the Director, or his 
or her designee, may impose.
    (h) Alternative procedures for interim Federal savings associations. 
(1) Applications for permission to organize an interim Federal savings 
association are not subject to paragraphs (d), (e), (f) or (g)(2) of 
this section.
    (2) Approval of an application for permission to organize an interim 
Federal savings association shall be conditioned on approval by the 
Office of an application to merge the interim Federal savings 
association and an existing insured stock association or on approval by 
the Office of such other transaction which the interim was chartered to 
facilitate. In evaluating the application, the Director or his or her 
designee will consider the purpose for which the association will be 
organized, the form of any proposed transactions involving the 
organizing association, the effect of the transactions on existing 
associations involved in the transactions, and the factors specified in 
section Sec. 543.2(g)(1) to the extent relevant.

[54 FR 49482, Nov. 30, 1989, as amended at 55 FR 13510, Apr. 11, 1990; 
57 FR 14338, Apr. 20, 1992; 62 FR 27180, May 19, 1997; 62 FR 64145, Dec. 
4, 1997]



Sec. 543.3  ``De novo'' applications for a Federal savings association charter.

    (a) Definitions. For purposes of this section, the term ``de novo 
association'' means any Federal savings association chartered by the 
Office, the business of which has not been conducted previously under 
any charter or conducted in the previous three years in substantially 
the same form as is proposed by the de novo association. A ``de novo 
applicant'' means any person or persons who apply to establish a de novo 
association.
    (b) Minimum initial capitalization. (1) A de novo association must 
have at least two million dollars in initial capital stock (stock 
institutions) or initial pledged savings or cash (mutual institutions), 
except as provided in paragraph (b)(2) of this section. The minimum 
initial capitalization is the amount of proceeds net of all incurred and 
anticipated securities issuance expenses, organization expenses, pre-
opening expenses, or any expenses paid (or funds advanced) by organizers 
that are to be reimbursed from the proceeds of a securities offering. In 
securities offerings for a de novo association, all securities of a 
particular class in the initial offering shall be sold at the same 
price.
    (2) On a case by case basis, the Director may, for good cause, 
approve a de novo association that has less than two million dollars in 
initial capital or may require a de novo association to have more than 
two million dollars in initial capital.
    (c) Business and investment plans of de novo associations. (1) To 
assist the Office in making the determinations required under section 
5(e) of the Home Owners' Loan Act, a de novo applicant shall submit a 
business plan describing, for the first three years of operation of the 
de novo association, the major areas of operation, including:
    (i) Lending, leasing and investment activity, including plans for 
meeting Qualified Thrift Lender requirements;
    (ii) Deposit, savings and borrowing activity;
    (iii) Interest-rate risk management;
    (iv) Internal controls and procedures;
    (v) Plans for meeting the credit needs of the proposed de novo 
association's

[[Page 92]]

community (including low- and moderate-income neighborhoods);
    (vi) Projected statements of condition;
    (vii) Projected statements of operations; and
    (viii) Any other information requested by the Office.
    (2) The business plan shall:
    (i) Provide for the continuation or succession of competent 
management subject to the approval of the Regional Director;
    (ii) Provide that any material change in, or deviation from, the 
business plan must receive the prior approval of the Regional Director;
    (iii) Demonstrate the de novo association's ability to maintain 
required minimum regulatory capital under 12 CFR parts 565 and 567 for 
the duration of the plan.
    (d) Composition of the board of directors. (1) A majority of a de 
novo association's board of directors must be representative of the 
state in which the savings association is located. The Office generally 
will consider a director to be representative of the state if the 
director resides, works or maintains a place of business in the state in 
which the savings association is located. If the association is located 
in a Metropolitan Statistical Area (MSA), Primary Metropolitan 
Statistical Area (PMSA) or Consolidated Metropolitan Statistical Area 
(CMSA) that incorporates portions of more than one state, a director 
will be considered representative of the association's state if he or 
she resides, works or maintains a place of business in the MSA, PMSA or 
CMSA in which the association is located.
    (2) The de novo association's board of directors must be diversified 
and composed of individuals with varied business and professional 
experience. In addition, except in the case of a de novo association 
that is wholly-owned by a holding company, no more than one-third of a 
board of directors may be in closely related businesses. The background 
of each director must reflect a history of responsibility and personal 
integrity, and must show a level of competence and experience sufficient 
to demonstrate that such individual has the ability to direct the 
policies of the association in a safe and sound manner. Where a de novo 
association is owned by a holding company that does not have substantial 
independent economic substance, the foregoing standards will be applied 
to the board of directors of the holding company.
    (e) Management Officials. Proposed stockholders of ten percent or 
more of the stock of a de novo association will be considered management 
officials of the association for the purpose of the Office's evaluation 
of the character and qualifications of the management of the 
association. In connection with the Office's consideration of an 
application for permission to organize and subsequent to issuance of a 
Federal savings association charter to the association by the Office, 
any individual or group of individuals acting in concert under 12 CFR 
part 574, who owns or proposes to acquire, directly or indirectly, ten 
percent or more of the stock of an association subject to this section, 
shall submit a Biographical and Financial Report, on forms prescribed by 
the Office, to the Regional Director.
    (f) Supervisory transactions. This section does not apply to any 
application for a Federal savings association charter submitted in 
connection with a transfer or an acquisition of the business or accounts 
of a savings association if the Office determines that such transfer or 
acquisition is instituted for supervisory purposes, or in connection 
with applications for Federal charters for interim de novo associations 
chartered for the purpose of facilitating mergers, holding company 
reorganizations, or similar transactions.

[62 FR 27180, May 19, 1997; 62 FR 28983, May 29, 1997]



Sec. 543.5  Issuance of charter.

    Approval by the Office of the organization of a Federal savings 
association or the conversion of an insured association to Federal 
savings association form shall constitute issuance of a charter and 
shall be final, provided that the association complies with the 
procedures set out at Sec. 544.2(a) of this chapter. The charter shall 
conform with the requirements of Sec. 544.1 of this chapter, the 
permissible provisions of Sec. 544.2, or other provisions specifically 
approved by the Office.

[[Page 93]]



Sec. 543.6  Completion of organization.

    (a)(1) Temporary officers. When the Office approves an application 
for permission to organize a Federal savings association, the applicants 
shall constitute the organization committee and elect a chairperson, 
vice-chairperson, and a secretary, who shall act as the temporary 
officers of the association until their successors are duly elected and 
qualified. The temporary officers may effect compliance with any 
conditions prescribed by the Office.
    (2) Organization meeting. Promptly upon receipt of a charter, the 
temporary officers shall call a meeting of the association's capital 
subscribers; notice of such meeting shall be mailed to each subscriber 
at least 5 days before the meeting day. Subscribers who have subscribed 
for a majority of the association's capital, present in person or by 
proxy, shall constitute a quorum. At such meeting, directors of the 
association shall be elected according to the association's charter and 
bylaws, and any other action permitted by such charter and bylaws may be 
taken; any such action shall be considered an acceptance by the 
association of such charter and of such bylaws, which shall be in the 
form provided in parts 544 and 552 of this chapter.
    (b) First meeting of directors. Upon election, the association's 
board of directors shall hold a meeting to elect officers of the 
association as provided by its charter and bylaws and to take any other 
action necessary to permit operation of the association in accordance 
with law, the association's charter and bylaws, and these rules and 
regulations. When such officers have been bonded under Sec. 563.190 of 
this chapter, they shall immediately collect the sums due on 
subscriptions to the association's capital.
    (c) Membership in Federal Home Loan Bank and insurance of accounts. 
When a Federal savings association's charter is issued it must promptly 
qualify as a member of a Federal Home Loan Bank and meet all 
requirements necessary to obtain insurance of its accounts by the 
Federal Deposit Insurance Corporation.
    (d) Failure to complete. Organization of a Federal savings 
association is completed when the organization meeting and the first 
meeting of its directors have been held, permanent officers have been 
bonded, the association holds the cash required to be paid on 
subscriptions to its capital, if required, Federal Home Loan Bank 
membership has been obtained and Federal Deposit Insurance Corporation 
insurance of accounts has been confirmed and any conditions imposed by 
the Office in connection with approval of the application have been met. 
If organization is not so completed within six months after issuance of 
a charter, or within such additional period as the Director or his or 
her designee may for good cause grant, and in the case of an interim 
Federal savings association, if a merger, or other transaction 
facilitated by the existence of an interim association, has not been 
approved, the charter shall become void and all cash collected on 
subscriptions shall thereupon be returned.



Sec. 543.7  Limitations on transaction of business.

    No person may organize a Federal savings association, collect money 
from others for such purpose, or represent himself or herself as 
authorized to do so, and no Federal savings association shall transact 
any business prior to completion of its organization, except as provided 
in this part.



Sec. 543.7-1  Federal savings association created in connection with an association in default or in danger of default.

    The preceding sections of this part do not apply to a Federal 
savings association which is proposed by the Federal Deposit Insurance 
Corporation or the Resolution Trust Corporation under section 11(c) of 
the Federal Deposit Insurance Act (12 U.S.C. 1821(c)) or section 21A of 
the Federal Home Loan Bank Act (12 U.S.C. 1441A), or is otherwise 
chartered by the Office in connection with an association in default or 
in danger of default. Incorporation and organization of such 
associations are complete when the Director or his or her designee so 
determines.

[[Page 94]]

                               Conversion



Sec. 543.8  Conversion of depository institutions to Federal mutual charter.

    (a) With the approval of the OTS, any depository institution, as 
defined in Sec. 552.13 of this chapter, that is in mutual form, may 
convert into a Federal mutual savings association, provided that:
    (1) The depository institution, upon conversion, will have its 
deposits insured by the Federal Deposit Insurance Corporation;
    (2) The depository institution, in accomplishing the conversion, 
complies with all applicable state and federal statutes and regulations, 
and OTS policies, and obtains all necessary regulatory and member 
approvals; and
    (3) The resulting Federal mutual association conforms, within the 
time prescribed by the OTS, to the requirements of section 5(c) of the 
Home Owners' Loan Act.
    (b) Recommendations regarding applications for issuance of Federal 
charters are privileged, confidential and subject to Sec. 510.5 (b) and 
(c) of this chapter.

[54 FR 49482, Nov. 30, 1989, as amended at 57 FR 14339, Apr. 20, 1992; 
60 FR 66717, Dec. 26, 1995; 62 FR 45309, Aug. 27, 1997]



Sec. 543.9  Application for conversion to Federal mutual charter.

    (a)(1) Filing. Any depository institution that proposes to convert 
to a Federal mutual association as provided in Sec. 543.8 must, after 
approval by its board of directors, file an application on forms 
obtained from OTS. The applicant must submit any financial statements or 
other information OTS may require.
    (2) Procedures. An application for conversion filed under this 
section is subject to the procedures for organization of a federal 
mutual association at Sec. 543.2(d) through (f) of this chapter.
    (b) Plan of conversion. The applicant shall submit with its 
application a plan of conversion specifying the location of the home 
office and any branch offices to be maintained by the Federal savings 
association, and providing for:
    (1) Appropriate reserves and surplus for the Federal savings 
association;
    (2) Satisfaction in full or assumption by the Federal savings 
association of all creditor obligations of the applicant;
    (3) Issuance by the Federal savings association of savings accounts 
to current holders of withdrawable accounts in an amount equalling the 
value of such accounts; and
    (4) If applicable, issuance of additional savings accounts to 
current holders of nonwithdrawable capital stock of the applicant in an 
amount equalling the value of their nonwithdrawable capital stock, 
including the present value of any preference to which such holders are 
entitled.
    (c) Action on application. The OTS will consider such application 
and any information submitted with the application, and may approve the 
application in accordance with section 5(e) of the Home Owners' Loan Act 
and Sec. 543.2(g)(1). Converting depository institutions that have been 
in existence less than three years will be subject to all approval 
criteria and other requirements applicable to de novo Federal 
associations. Approval of an application and issuance by the OTS of a 
charter will be subject to:
    (1) Compliance by the applicant with all conditions prescribed in 
the approval;
    (2) Receipt by the applicant of approval of the plan of conversion 
by such vote as may be required by the laws of the applicant's 
jurisdiction to consider such action;
    (3) In the case of a converting association the accounts of which 
are not insured by the Federal Deposit Insurance Corporation, receipt by 
the OTS of written confirmation from the Federal Deposit Insurance 
Corporation that the accounts of the converting association will be 
insured by the Federal Deposit Insurance Corporation; and
    (4) Receipt by the OTS of written confirmation from the appropriate 
Federal Home Loan Bank of approval of the converting institution's 
application for Federal Home Loan Bank membership, if the institution is 
not a member.

[54 FR 49482, Nov. 30, 1989, as amended at 55 FR 13510, Apr. 11, 1990; 
57 FR 14339, Apr. 20, 1992; 62 FR 45309, Aug. 27, 1997; 66 FR 13005, 
Mar. 2, 2001]

[[Page 95]]



Sec. 543.10  Organization after conversion.

    Except as provided in Sec. 543.11, after a Federal charter is issued 
under Sec. 543.9 the association's members shall, after due notice, or 
upon a valid adjournment of a previous legal meeting, hold a meeting to 
elect directors and take all other action necessary fully to effect the 
conversion and operate the association in accordance with law and these 
rules and regulations. Immediately thereafter the board of directors 
shall meet, elect officers, and transact any other appropriate business.



Sec. 543.11  Organization plan for governance during first years after issuance of Federal mutual savings bank charter.

    (a) Organizational meeting. Except as provided in paragraph (c)(1) 
of this section, promptly upon receipt of a charter, the officers of a 
Federal mutual savings bank which, immediately prior to conversion, was 
a state chartered mutual savings bank, shall call a meeting of the 
members. Notice for, and conduct of, such meeting shall be in accordance 
with the bank's Federal charter and bylaws. Business to be conducted at 
the organizational meeting shall include the election of trustees (who 
may also be known as a board of directors) and any other matters 
permitted by the charter and bylaws. Any action taken at such meeting 
shall be deemed an acceptance of the charter and bylaws approved by the 
Office pursuant to Sec. 544.1 of this chapter.
    (b) First meeting of trustees. Upon election or appointment, the 
board of trustees shall hold a meeting to elect the officers of the bank 
in accordance with its Federal charter and bylaws, and to take other 
action necessary to permit the operation of the bank in accordance with 
the Home Owners' Loan Act of 1933, as amended, the bank's charter and 
bylaws, these rules and regulations, and orders of the Office.
    (c) Plan for governance of association during first six years after 
issuance of Federal charter. (1)(i) An applicant for a Federal mutual 
savings bank charter may submit a plan which provides that each member 
of its governing board, i.e., board of trustees, managers, or directors, 
may continue to serve, provided that within two years of the issuance of 
a Federal charter at least one-fifth of the members of such board shall 
have been elected by vote, either in person or by proxy, of the bank's 
membership as provided in its Federal charter, that within three years 
of the issuance of its Federal charter at least two-fifths of the 
members of such board shall have been elected by such a membership vote, 
that within four years of the issuance of its Federal charter at least 
three-fifths of the members of such board shall have been elected by 
such a membership vote, that within five years of the issuance of its 
Federal charter at least four-fifths of the members of such board shall 
have been elected by such a membership vote, and that within six years 
of the issuance of its Federal charter all of the members of such board 
shall have been elected by such a membership vote.
    (ii) The plan:
    (A) Shall set forth the names of those persons who are being 
proposed for service on the applicant's governing board after conversion 
to a Federal charter,
    (B) Shall show how trustees not elected by the converted bank's 
membership will be appointed or otherwise selected, and
    (C) Shall provide that no trustees may be appointed or elected to 
terms of more than three years.
    (iii) The plan may provide that
    (A) After receipt of its Federal charter the bank will be organized 
by its existing governing board,
    (B) Within the first two years following receipt of its Federal 
charter, the bank's charter may be amended without a membership vote, 
provided any such amendment is first approved by a two-thirds vote of 
its board of trustees and is thereafter approved by the Office, and
    (C) The bank's first annua1 membership meeting need not take place 
until two years after receipt of its Federal charter.
    (2) Except to the extent that the Office approves a plan under this 
paragraph (c) which is inconsistent with other provisions of this 
section, a Federal mutual savings bank shall in all

[[Page 96]]

respects comply with those other provisions.

[54 FR 49482, Nov. 30, 1989, as amended at 60 FR 66717, Dec. 26, 1995]



Sec. 543.11-1  Grandfathered authority.

    (a) A Federal savings bank formerly chartered or designated as a 
mutual savings bank under state law may exercise any authority it was 
authorized to exercise as a mutual savings bank under state law at the 
time of its conversion from a state mutual savings bank to a Federal or 
other state charter. Except to the extent such authority may be 
exercised by Federal savings associations not enjoying grandfathered 
rights hereunder, such authority may be exercised only to the degree 
authorized under state law at the time of such conversion. Unless 
otherwise determined by the Director, an association, in the exercise of 
grandfathered authority, may continue to follow applicable state laws 
and regulations in effect at the time of such conversion.
    (b) A Federal savings association that acquires, or has acquired, a 
Federal savings bank by merger or consolidation may itself exercise any 
grandfathered rights enjoyed by the disappearing institution, whether 
such rights were obtained directly through conversion or through merger 
or consolidation. The extent of the grandfathered rights of a Federal 
savings association that disappeared prior to the effective date of this 
section shall be determined exclusively pursuant to this section.
    (c) This section shall not be construed to prevent the exercise by a 
Federal savings association enjoying grandfathered rights hereunder of 
authority that is available under the applicable state law only upon the 
occurrence of specific preconditions, such as the attainment of a 
particular future date or specified level of regulatory capital, which 
have not occurred at the time of conversion from a state mutual savings 
bank, provided they occur thereafter.
    (d) This section shall not be construed to permit the exercise of 
any particular authority on a more liberal basis than is allowable under 
the most liberal construction of either state or Federal law or 
regulation.



Sec. 543.14  Continuity of existence.

    The corporate existence of an association converting under this part 
shall continue in its successor. Each savings or demand accountholder 
shall receive a savings account or accounts in the converted association 
equal in amount to the value of accounts held in the former association.

[54 FR 49482, Nov. 30, 1989, as amended at 61 FR 64015, Dec. 3, 1996]



PART 544--FEDERAL MUTUAL SAVINGS ASSOCIATIONS--CHARTER AND BYLAWS--Table of Contents




                                 Charter

Sec.
544.1  Federal mutual charter.
544.2  Charter amendments.
544.4  Issuance of charter.

                                 Bylaws

544.5  Federal mutual savings association bylaws.
544.6  Effect of subsequent charter or bylaw change.

                              Availability

544.7  In association offices.
544.8  Communication between members of a Federal mutual savings 
          association.

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901 et seq.

    Source: 54 FR 49486, Nov. 30, 1989, unless otherwise noted.

                                 Charter



Sec. 544.1  Federal mutual charter.

    A Federal mutual savings association shall have a charter in the 
following form, which may include any of the additional provisions set 
forth in Sec. 544.2 of this Part, if such provisions are specifically 
requested. A charter for a Federal mutual savings bank shall substitute 
the term ``savings bank'' for ``association.'' The term ``trustee'' may 
be substituted for the term ``director.'' Associations adopting this 
charter with existing borrower members must grandfather those borrower 
members who were members as of the date of issuance of the new charter 
by the Office. Such borrowers shall have one vote for the period of time 
such borrowings are in existence.

[[Page 97]]

                         Federal Mutual Charter

    Section 1. Corporate title. The full corporate title of the Federal 
savings association is ______.
    Section 2. Office. The home office shall be located in ______ [city, 
state].
    Section 3. Duration. The duration of the association is perpetual.
    Section 4. Purpose and powers. The purpose of the association is to 
pursue any or all of the lawful objectives of a Federal mutual savings 
association chartered under section 5 of the Home Owners' Loan Act and 
to exercise all the express, implied, and incidental powers conferred 
thereby and by all acts amendatory thereof and supplemental thereto, 
subject to the Constitution and laws of the United States as they are 
now in effect, or as they may hereafter be amended, and subject to all 
lawful and applicable rules, regulations, and orders of the Office of 
Thrift Supervision (``Office'').
    Section 5. Capital. The association may raise capital by accepting 
payments on savings and demand accounts and by any other means 
authorized by the Office.
    Section 6. Members. All holders of the association's savings, 
demand, or other authorized accounts are members of the association. In 
the consideration of all questions requiring action by the members of 
the association, each holder of an account shall be permitted to cast 
one vote for each $100, or fraction thereof, of the withdrawal value of 
the member's account. No member, however, shall cast more than 1000 
votes. All accounts shall be nonassessable.
    Section 7. Directors. The association shall be under the direction 
of a board of directors. The authorized number of directors shall not be 
fewer than five nor more than fifteen persons, as fixed in the 
association's bylaws, except that the number of directors may be 
decreased to a number less than five or increased to a number greater 
than fifteen with the prior approval of the Director of the Office or 
his or her delegate.
    Section 8. Capital, surplus, and distribution of earnings. The 
association shall maintain for the purpose of meeting losses the amount 
of capital required by section 5 of the Home Owners' Loan Act and by 
regulations of the Office. The association shall distribute net earnings 
on its accounts on such basis and in accordance with such terms and 
conditions as may from time to time be authorized by the Director of the 
Office: Provided, That the association may establish minimum-balance 
requirements for accounts to be eligible for distribution of earnings.
    All holders of accounts of the association shall be entitled to 
equal distribution of assets, pro rata to the value of their accounts, 
in the event of voluntary or involuntary liquidation, dissolution, or 
winding up of the association. Moreover, in any such event, or in any 
other situation in which the priority of such accounts is in 
controversy, all such accounts shall, to the extent of their withdrawal 
value, be debts of the association having the same priority as the 
claims of general creditors of the association not having priority 
(other than any priority arising or resulting from consensual 
subordination) over other general creditors of the association.
    Section 9. Amendment of charter. Adoption of any preapproved charter 
amendment shall be effective after such preapproved amendment has been 
approved by the members at a legal meeting. Any other amendment, 
addition, change, or repeal of this charter must be approved by the 
Office prior to approval by the members at a legal meeting, and shall be 
effective upon filing with the Office in accordance with regulatory 
procedures.

Attest:_________________________________________________________________
      Secretary of the Association

By:_____________________________________________________________________
      President or Chief Executive Officer of the Association

Attest:_________________________________________________________________
      Secretary of the Office of Thrift Supervision

By:_____________________________________________________________________
      Director of the Office of Thrift Supervision

Effective Date:_________________________________________________________

[54 FR 49486, Nov. 30, 1989, as amended at 61 FR 64015, Dec. 3, 1996]



Sec. 544.2  Charter amendments.

    (a) General. In order to adopt a charter amendment, a Federal mutual 
savings association must comply with the following requirements:
    (1) Board of directors approval. The board of directors of the 
association must adopt a resolution proposing the charter amendment that 
states the text of such amendment;
    (2) Form of filing--(i) Application requirement. If the proposed 
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 involve a 
significant issue of law or policy; then, the association shall file the 
proposed amendment and obtain the prior approval of the OTS.
    (ii) Notice requirement. If the proposed charter amendment does not 
involve a provision that would be covered by paragraph (a)(2)(i) of this 
section and is permissible under all applicable laws,

[[Page 98]]

rules and regulations, then the association shall submit the proposed 
amendment to the OTS, at least 30 days prior to the effective date of 
the proposed charter amendment.
    (b) Approval. Any charter amendment filed pursuant to paragraph 
(a)(2)(ii) of this section shall automatically be approved 30 days from 
the date of filing of such amendment, provided that the association 
follows the requirements of its charter in adopting such amendment. This 
automatic approval does not apply if, prior to the expiration of such 
30-day period, the OTS notifies the association that such amendment is 
rejected or that such amendment is deemed to be filed under the 
provisions of paragraph (a)(2)(i) of this section. In addition, 
notwithstanding anything in paragraph (a) of this section to the 
contrary, the following charter amendments, including the adoption of 
the Federal mutual charter as set forth in Sec. 544.1 of this part, 
shall be effective and deemed approved at the time of adoption, if 
adopted without change and filed with OTS, within 30 days after 
adoption, provided the association follows the requirements of its 
charter in adopting such amendments:
    (1) Purpose and powers. Add a second paragraph to section 4, as 
follows:

    Section 4. Purpose and powers. * * * The association shall have the 
express power: (i) To act as fiscal agent of the United States when 
designated for that purpose by the Secretary of the Treasury, under such 
regulations as the Secretary may prescribe, to perform all such 
reasonable duties as fiscal agent of the United States as may be 
required, and to act as agent for any other instrumentality of the 
United States when designated for that purpose by any such 
instrumentality; (ii) To sue and be sued, complain and defend in any 
court of law or equity; (iii) To have a corporate seal, affixed by 
imprint, facsimile or otherwise; (iv) To appoint officers and agents as 
its business shall require and allow them suitable compensation; (v) To 
adopt bylaws not inconsistent with the Constitution or laws of the 
United States and rules and regulations adopted thereunder and under 
this Charter; (vi) To raise capital, which shall be unlimited, by 
accepting payments on savings, demand, or other accounts, as are 
authorized by rules and regulations made by the Office, and the holders 
of all such accounts or other accounts as shall, to such extent as may 
be provided by such rules and regulations, be members of the association 
and shall have such voting rights and such other rights as are thereby 
provided; (vii) To issue notes, bonds, debentures, or other obligations, 
or securities, provided by or under any provision of Federal statute as 
from time to time is in effect; (viii) To provide for redemption of 
insured accounts; (ix) To borrow money without limitation and pledge and 
otherwise encumber any of its assets to secure its debts; (x) To lend 
and otherwise invest its funds as authorized by statute and the rules 
and regulations of the Office; (xi) To wind up and dissolve, merge, 
consolidate, convert, or reorganize; (xii) To purchase, hold, and convey 
real estate and personalty consistent with its objects, purposes, and 
powers; (xiii) To mortgage or lease any real estate and personalty and 
take such property by gift, devise, or bequest; and (xiv) To exercise 
all powers conferred by law. In addition to the foregoing powers 
expressly enumerated, this association shall have power to do all things 
reasonably incident to the accomplishment of its express objects and the 
performance of its express powers.

    (2) Title change. A Federal mutual savings association that has 
complied with Sec. 543.1(b) of this chapter may amend its charter by 
substituting a new corporate title in section 1.
    (3) Home office. A Federal mutual savings association that has 
complied with Sec. 545.95 of this chapter may amend its charter by 
substituting a new home office in section 2.
    (4) Maximum number of votes. A Federal mutual savings association 
may amend its charter by substituting ______ votes per member in section 
6. [Fill in a number from 1 to 1000.]
    (c) Reissuance of charter. A Federal mutual savings association that 
has amended its charter may apply to have its charter, including the 
amendments, reissued by the Office. Such request for reissuance should 
be filed with the Corporate Secretary at the Washington Headquarters 
Office at the address listed at Sec. 516.40(b) of this chapter and 
contain signatures required under Sec. 544.1 of this part, together with 
such supporting documents as may be needed to demonstrate that the 
amendments were properly adopted.

[54 FR 49486, Nov. 30, 1989, as amended at 55 FR 13510, Apr. 11, 1990; 
57 FR 14339, Apr. 20, 1992; 61 FR 64016, Dec. 3, 1996; 63 FR 46160, Aug. 
31, 1998; 66 FR 13005, Mar. 2, 2001]



Sec. 544.4  Issuance of charter.

    Issuance by the Office of a charter to a Federal mutual savings 
association

[[Page 99]]

within the meaning of Sec. 543.5 of this chapter constitutes the 
incorporation of that association by the Office.

                                 Bylaws



Sec. 544.5  Federal mutual savings association bylaws.

    (a) General. A Federal mutual savings association shall operate 
under bylaws that contain provisions that comply with all requirements 
specified by the OTS in this section and that are not otherwise 
inconsistent with the provisions of this section, the association's 
charter, and all other applicable laws, rules, and regulations provided 
that, a bylaw provision inconsistent with the provisions of this section 
may be adopted with the approval of the OTS. 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 shall substitute the term 
``savings bank'' for ``association''. The term ``trustee'' may be 
substituted for the term ``director''.
    (b) The following requirements are applicable to Federal mutual 
savings associations:
    (1) Annual meetings of members. An association shall 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 shall be held, as designated by its board of directors, at 
a location within the state that constitutes the principal place of 
business of the association, or at any other 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. At each annual meeting, the 
officers shall make a full report of the financial condition of the 
association and of its progress for the preceding year and shall outline 
a program for the succeeding year.
    (2) Special meetings of members. Procedures for calling any special 
meeting of the members and for conducting such a meeting shall be set 
forth in the bylaws. The subject matter of such special meeting must be 
established in the notice for such meeting. The board of directors of 
the association or the holders of 10 percent or more of the voting 
capital shall be entitled to call a special meeting. For purposes of 
this section, ``voting capital'' means FDIC-insured deposits as of the 
voting record date.
    (3) 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 shall be published for two successive weeks 
immediately prior to the week in which such meeting shall 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 shall convene to each of its members of 
record at the last address appearing on the books of the association. A 
similar notice shall 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 shall 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 shall be given as in the case 
of the original meeting.
    (4) Fixing of record date. For the purpose of determining members 
entitled to notice of or to vote at any meeting of members or any 
adjournment thereof, or in order to make a determination of members for 
any other proper purpose, the bylaws shall 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 shall be 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 shall apply to any adjourned meeting.
    (5) Member quorum. Any number of members present and voting, 
represented in person or by proxy, at a regular or special meeting of 
the members shall constitute a quorum. A majority of all votes cast at 
any meeting of the members shall determine any

[[Page 100]]

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.
    (6) Voting by proxy. Procedures shall be established for voting at 
any annual or special meeting of the members by proxy pursuant to the 
rules and regulations of the Office, including the placing of such 
proxies on file with the secretary of the association, for verification, 
prior to the convening of such meeting. 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.
    (7) Communications between members. Provisions relating to 
communications between members shall be consistent with Sec. 544.8 of 
this part. No member, however, shall have the right to inspect or copy 
any portion of any books or records of a Federal mutual savings 
association containing:
    (i) A list of depositors in or borrowers from such association;
    (ii) Their addresses;
    (iii) Individual deposit or loan balances or records; or
    (iv) Any data from which such information could be reasonably 
constructed.
    (8) Number of directors, membership. The bylaws shall set forth a 
specific number of directors, not a range. The number of directors shall 
be not fewer than five nor more than fifteen, unless a higher or lower 
number has been authorized by the Director of the Office or his or her 
designee. Each director of the association shall 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 shall 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 
Office, and provide for compliance with the standard provisions of this 
section no later than six years after the conversion to a Federal 
savings association.
    (9) Meetings of the board. The board of directors shall determine 
the place, frequency, time, procedure for notice, which shall be at 
least 24 hours unless waived by the directors, and waiver of notice for 
all regular and special meetings. The meetings shall be under the 
direction of a chairman, appointed annually by the board; or in the 
absence of the chairman, the meetings shall be under the direction of 
the president. The board also may permit telephonic 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 shall constitute 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 shall be the act of the board.
    (10) Officers, employees. and agents. (i) The bylaws shall contain 
provisions regarding the officers of the association, their functions, 
duties, and powers. The officers of the association shall consist of a 
president, one or more vice presidents, a secretary, and a treasurer or 
comptroller, each of whom shall 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.
    (ii) All officers and agents of the association, as between 
themselves and the association, shall have such authority and perform 
such duties in the management of the association as may be provided in 
the bylaws, or as may be determined by resolution of the board of 
directors not inconsistent with the bylaws. In the absence of any such 
provision, officers shall have such powers

[[Page 101]]

and duties as generally pertain to their respective offices. Any officer 
may be removed by the board of directors with or without cause, but such 
removal, other than for cause, shall be without prejudice to the 
contractual rights, if any, of the person so removed.
    (iii) Any indemnification provision must provide that any 
indemnification is subject to applicable Federal law, rules, and 
regulations.
    (11) Vacancies, resignation or removal of directors. Members of the 
association shall elect directors by ballot: Provided, that 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 
shall be elected to serve only until the next election of directors by 
the members. The bylaws shall set out the procedure for the resignation 
of a director, which shall be by written notice or by any other 
procedure established in the bylaws. Directors may be removed only for 
cause as defined in Sec. 563.39 of this chapter, by a vote of the 
holders of a majority of the shares then entitled to vote at an election 
of directors.
    (12) Powers of the board. The board of directors shall have the 
power:
    (i) By resolution, to appoint from among its members and remove an 
executive committee and one or more other committees, which committee[s] 
shall have and may exercise all the powers of the board between the 
meetings or the board; but no such committee shall have the authority of 
the board to amend the charter or bylaws, adopt a plan of merger, 
consolidation, dissolution, or provide for the disposition of all or 
substantially all the property and assets of the association. Such 
committee shall not operate to relieve the board, or any member thereof, 
of any responsibility imposed by law;
    (ii) To fix the compensation of directors, officers, and employees; 
and to remove any officer or employee at any time with or without cause;
    (iii) To exercise any and all of the powers of the association not 
expressly reserved by the charter to the members.
    (13) Nominations for directors. The bylaws shall provide that 
nominations for directors may be made at the annual meeting by any 
member and shall 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.
    (14) New business. The bylaws shall provide procedures for the 
introduction of new business at the annual meeting. Those provisions may 
require that such new business be stated in writing and filed with the 
secretary prior to the annual meeting at least 30 days prior to the date 
of the annual meeting.
    (15) 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.
    (i) Amendments shall be effective:
    (A) 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
    (B) After receipt of any applicable regulatory approval.
    (ii) 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.
    (16) Miscellaneous. The bylaws may also address the subject of age 
limitations for directors or officers as long as they are consistent 
with applicable Federal law, rules or regulations, and any other 
subjects necessary or appropriate for effective operation of the 
association.
    (c) Form of filing--(1) Application requirement. (i) Any bylaw 
amendment shall be submitted to the OTS if it would:

[[Page 102]]

    (A) 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;
    (B) Involve a significant issue of law or policy, including 
indemnification, conflicts of interest, and limitations on director or 
officer liability; or
    (C) Be inconsistent with the requirements of this section or with 
applicable laws, rules, regulations, or the association's charter.
    (ii) Applications submitted under paragraph (c)(1)(i) of this 
section are subject to standard treatment processing procedures at part 
516, subparts A and E of this chapter.
    (iii) For purposes of this paragraph (c), bylaw provisions that 
adopt the language of the model or optional bylaws in OTS's Application 
Processing Handbook, if adopted without change, and filed with OTS 
within 30 days after adoption, are effective upon adoption.
    (2) Filing requirement. If the proposed bylaw amendment does not 
involve a provision that would be covered by paragraph (c)(1) or (c)(3) 
of this section, then the association shall submit the amendment to the 
OTS at least 30 days prior to the date the bylaw amendment is to be 
adopted by the association.
    (3) Corporate governance procedures. A Federal mutual association 
may elect to follow the corporate governance procedures of the laws of 
the state where the main office of the institution is located, provided 
that such procedures may be elected only to the extent not inconsistent 
with applicable Federal statutes, regulations, and safety and soundness, 
and such procedures are not of the type described in paragraph (c)(1) of 
this section. If this election is selected, a Federal mutual association 
shall designate in its bylaws the provision or provisions from the body 
of law selected for its corporate governance procedures, and shall file 
a copy of such bylaws, which are effective upon adoption, within 30 days 
after adoption. The submission shall indicate, where not obvious, why 
the bylaw provisions meet the requirements stated in paragraph (c)(1) of 
this section.
    (d) Effectiveness. Any bylaw amendment filed pursuant to paragraph 
(c)(2) of this section shall automatically be effective 30 days from the 
date of filing of such amendment, provided that the association follows 
the requirements of its charter and bylaws in adopting such amendment. 
This automatic effective date does not apply if, prior to the expiration 
of such 30-day period, the OTS notifies the association that such 
amendment is rejected or that such amendment requires an application to 
be filed pursuant to paragraph (c)(1) of this section.

[54 FR 49486, Nov. 30, 1989, as amended at 55 FR 13511, Apr. 11, 1990; 
57 FR 14339, Apr. 20, 1992; 61 FR 64016, Dec. 3, 1996; 62 FR 66262, Dec. 
18, 1997; 66 FR 13006, Mar. 2, 2001; 66 FR 15020, Mar. 15, 2001]



Sec. 544.6  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 shall be determined only by the association's charter or 
bylaws then in effect.

                              Availability



Sec. 544.7  In association offices.

    A Federal mutual savings association shall make available to its 
members at all times in its offices a true copy of its charter and 
bylaws, including any amendments, and shall deliver such a copy to any 
member on request.



Sec. 544.8  Communication between members of a Federal mutual savings association.

    (a) Right of communication with other members. A member of a Federal 
mutual savings association has the right to communicate, as prescribed 
in paragraph (b) of this section, with other members of the Federal 
savings association regarding any matter related to the Federal savings 
association's affairs, except for ``improper'' communications, as 
defined in paragraph (c) of this section. The association may not defeat 
that right by redeeming a savings member's savings account in the 
Federal mutual savings association.

[[Page 103]]

    (b) Member communication procedures. If a member of a Federal mutual 
savings association desires to communicate with other members, the 
following procedures shall be followed:
    (1) The member shall give the Federal mutual savings association a 
written request to communicate;
    (2) If the proposed communication is in connection with a meeting of 
the Federal savings association's members, the request shall be given at 
least thirty days before the annual meeting or 10 days before a special 
meeting;
    (3) The request shall contain--
    (i) The member's full name and address;
    (ii) The nature and extent of the member's interest in the Federal 
savings association at the time the information is given;
    (iii) A copy of the proposed communication; and
    (iv) If the communication is in connection with a meeting of the 
members, the date of the meeting;
    (4) The Federal savings association shall reply to the request 
within either--
    (i) Fourteen days;
    (ii) Ten days, if the communication is in connection with the annual 
meeting; or
    (iii) Three days, if the communication is in connection with a 
special meeting;
    (5) The reply shall provide either--
    (i) The number of the Federal savings association's members and the 
estimated reasonable cost to the Federal savings association of mailing 
to them the proposed communication; or
    (ii) Notification that the Federal savings association has 
determined not to mail the communication because it is ``improper'', as 
defined in paragraph (c) of this section;
    (6) After receiving the amount of the estimated costs of mailing and 
sufficient copies of the communication, the Federal savings association 
shall mail the communication to all members, by a class of mail 
specified by the requesting member, either--
    (i) Within fourteen days;
    (ii) Within seven days, if the communication is in connection with 
the annual meeting;
    (iii) As soon as practicable before the meeting, if the 
communication is in connection with a special meeting; or
    (iv) On a later date specified by the member;
    (7) If the Federal savings association refuses to mail the proposed 
communication, it shall return the requesting member's materials 
together with a written statement of the specific reasons for refusal, 
and shall simultaneously send to the Regional Director two copies each 
of the requesting member's materials, the Federal savings association's 
written statement, and any other relevant material. The materials shall 
be sent within:
    (i) Fourteen days,
    (ii) Ten days if the communication is in connection with the annual 
meeting, or
    (iii) Three days, if the communication is in connection with a 
special meeting,

after the Federal savings association receives the request for 
communication.
    (c) Improper communication. A communication is an ``improper 
communication'' if it contains material which:
    (1) At the time and in the light of the circumstances under which it 
is made:
    (i) Is false or misleading with respect to any material fact; or
    (ii) Omits a material fact necessary to make the statements therein 
not false or misleading, or necessary to correct a statement in an 
earlier communication on the same subject which has become false or 
misleading;
    (2) Relates to a personal claim or a personal grievance, or is 
solicitous of personal gain or business advantage by or on behalf of any 
party;
    (3) Relates to any matter, including a general economic, political, 
racial, religious, social, or similar cause, that is not significantly 
related to the business of the Federal savings association or is not 
within the control of the Federal savings association; or
    (4) Directly or indirectly and without expressed factual foundation:
    (i) Impugns character, integrity, or personal reputation,
    (ii) Makes charges concerning improper, illegal, or immoral conduct, 
or

[[Page 104]]

    (iii) Makes statements impugning the stability and soundness of the 
Federal savings association.

[54 FR 49492, Nov. 30, 1989, as amended at 60 FR 66717, Dec. 26, 1995. 
Redesignated at 61 FR 64018, Dec. 3, 1996.]



PART 545--FEDERAL SAVINGS ASSOCIATIONS--OPERATIONS--Table of Contents




Sec.
545.1  General authority.
545.2  Federal preemption.
545.16  Public deposits, depositaries, and fiscal agents.
545.17  Funds transfer services.
545.74  Securities brokerage.
545.91  Home office.
545.92  Branch offices.
545.93  Branching by Federal savings associations.
545.95  Change of office location and redesignation of offices.
545.96  Agency.
545.101  Fiscal agency.
545.121  Indemnification of directors, officers and employees.

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.

    Source: 54 FR 49492, Nov. 30, 1989, unless otherwise noted.



Sec. 545.1  General authority.

    A Federal savings association may exercise all authority granted it 
by the Home Owners' Loan Act of 1933 (``Act''), 12 U.S.C. 1464, as 
amended, and its charter and bylaws, whether or not implemented 
specifically by Office regulations, subject to the limitations and 
interpretations contained in this part.



Sec. 545.2  Federal preemption.

    The regulations in this part 545 are promulgated pursuant to the 
plenary and exclusive authority of the Office to regulate all aspects of 
the operations of Federal savings associations, as set forth in section 
5(a) of the Act. This exercise of the Office's authority is preemptive 
of any state law purporting to address the subject of the operations of 
a Federal savings association.



Sec. 545.16  Public deposits, depositaries, and fiscal agents.

    (a) Definitions. As used in this section--
    (1) Moneys includes monies and has the meaning it has in applicable 
state law;
    (2) State law includes actions by a governmental body which has a 
charter adopted under the constitution of the state with provisions 
respecting deposits of public money of that body;
    (3) Surety means surety under real and/or personal suretyship, and 
includes guarantor; and
    (4) Terms in paragraph (b) of this section have the meanings they 
have under applicable state law.
    (b) Authority to act as surety for public deposits. (1) A Federal 
savings association that is a deposit association may give bond or 
security for deposit in it of public moneys or investment in it by a 
governmental unit if required to do so by state law, either as an 
alternative condition or otherwise, regardless of the amount required. 
Any bond or security may be given and any substitution or increase 
thereof may be made under this section at any time.
    (2) If state law requires as a condition of such deposit or 
investment that the Federal savings association or its bond or security, 
or any combination thereof, be surety for or with respect to other 
deposits or instruments, whether of that depositor or investor or of any 
other(s), and whether in the Federal savings association or in any other 
institution(s) having, when the investments or deposits were made, 
insurance by the Federal Deposit Insurance Corporation, the same shall 
become, or if the state law is self-executing shall be, such surety.
    (c) Depositaries and fiscal agents. Subject to regulation of the 
United States Treasury Department, a Federal savings association may 
serve as a depositary for Federal taxes, as a Treasury tax and loan 
depositary, or as a depositary of public money and fiscal agent of the 
Government or any other instrumentality thereof when designated for that 
purpose by such instrumentality and approved by the Office, and may 
satisfy any requirement in connection therewith, including maintaining 
accounts described in Secs. 561.33, 561.52, 561.53, and 561.54 of this 
chapter; pledging collateral; and performing the services outlined in 31 
CFR 202.3(b) or any section that supersedes or amends Sec. 202.3(b).

[[Page 105]]



Sec. 545.17  Funds transfer services.

    A Federal savings association is authorized to transfer, with or 
without fee, its customers' funds from any account (including a line of 
credit) of the customer at the Federal savings association or at another 
financial intermediary to third parties or other accounts of the 
customer on the customer's order or authorization by any mechanism or 
device, including cashier's checks, conforming with applicable laws and 
established commercial practices.



Sec. 545.74  Securities brokerage.

    (a) A service corporation may execute securities transactions on an 
agency or riskless principal basis solely upon the order of and for the 
account of customers, and may provide standardized and individualized 
investment advice to individuals or entities, provided that the service 
corporation:
    (1) Conducts securities brokerage and investment advisory activities 
in an area that is clearly identified and distinguished from the areas 
where the association's depository functions are performed;
    (2) Distinguishes advertising by the service corporation from that 
of the association, such that advertising does not confuse securities 
transactions executed, securities purchased, or investment advice 
provided by the service corporation with federally-insured deposits; 
that the advertising indicates that the service corporation and broker-
dealer, and not the association, is providing the securities brokerage 
or investment advisory services, identifies the broker-dealer in 
advertising, and does not use the logo of the parent association in the 
text of any advertisement prepared or distributed by the service 
corporation or the broker-dealer or in the text of any advertisement for 
specific securities products;
    (3) Where the service corporation contracts with a third-party 
broker-dealer, has a written contract with the broker-dealer that 
provides that the broker-dealer agrees to indemnify fully the service 
corporation and the association for any liability arising from the 
negligence, recklessness, or intentional conduct of the broker-dealer or 
its employees, and that sets forth operating, marketing, compensation, 
and other relevant terms;
    (4) Provides to the OTS an initial opinion of counsel or an opinion 
from the senior securities principal responsible for overseeing the 
subject brokerage program that the program has been established pursuant 
to operational procedures that are intended to ensure that the program 
is conducted in conformity with applicable securities laws and 
regulations and that such procedures include internal controls and 
supervisory systems that have been established and are to be applied to 
detect and prevent violations of federal securities statutes, the rules 
adopted thereunder, and the rules of self-regulatory organizations 
applicable to broker-dealers, including but not limited to those 
provisions designed to prevent churning, unsuitable recommendations, 
charging excessive prices, and the making of fraudulent representations 
in connection with the offer, sale, or purchase of securities (``the 
regulations''); and on an annual basis thereunder provides a 
certification by the senior securities principal responsible for 
supervising and overseeing the subject brokerage program that he or she 
has discharged the obligations incumbent upon him or her by reason of 
such procedures and systems previously described and has no reasonable 
belief or cause to believe that such procedures and systems have not 
been and are not being complied with or that a violation of the 
regulations has occurred;
    (5) Does not condition the provision of securities services to a 
customer on the customer's utilizing services of any affiliate of the 
association, the service corporation, or a broker-dealer.
    (b) Service corporation activities authorized under this paragraph 
(b) may not include the following activities:
    (1) Execution of securities transactions on a principal basis, 
including market-making and underwriting, except on a riskless principal 
basis, and except as permitted under Sec. 559.4 of this chapter;
    (2) Payment to any employee of the association of a referral fee, 
bonus, or any incentive compensation, in cash or in kind, for referring 
any customer to the service corporation except as may

[[Page 106]]

be consistent with a ``no-action'' letter received by the association 
from the U.S. Securities and Exchange Commission (``SEC''), stating that 
the SEC will not recommend enforcement section if association employees 
receive the planned referral fee but do not register with a broker-
dealer and the association does not register as a broker-dealer;
    (3) Solicitation of a person to execute a transaction in a specific 
security by any registered representative;
    (4) Indemnification by the service corporation to a degree greater 
than the indemnification provided to it by the third-party broker-
dealer; and the association is prohibited from indemnifying a third 
party broker-dealer;
    (5) Extension of margin credit by the association to customers of 
the service corporation or broker-dealer;
    (6) Non-registered representatives who are dual or sole employees of 
the association performing tasks other than clerical for ministerial 
tasks; prohibited activities include accepting or delivering money or 
securities and taking orders to execute securities transactions.
    (c) Any association that intends to acquire or establish a service 
corporation to engage in preapproved securities brokerage activities 
shall furnish to the OTS at least 30 days prior to the commencement of 
operations, written notice containing a full description of the 
brokerage services to be provided and a certification from the board of 
directors of such association that such services will be in compliance 
with all of the requirements of this section. In addition, the 
association shall retain complete records of all executed contractual 
agreements and memoranda between the service corporation and broker-
dealers, investment advisors, the parent savings association, and their 
affiliates, pro forma income statements for a three year period, any 
required professional opinions, and a reasoned legal opinion from 
counsel that the securities brokerage services qualify as preapproved 
under this section.
    (d) The Regional Director may request additional information at any 
time regarding the operations of the service corporation if there are 
supervisory concerns about the activity, has evidence that the activity 
may not be in the best interest of the association or service 
corporation, or has questions as to whether the activities are being 
conducted in a manner that is preapproved.

[54 FR 49492, Nov. 30, 1989, as amended at 55 FR 13511, Apr. 11, 1990; 
57 FR 14340, Apr. 20, 1992; 57 FR 33437, July 29, 1992; 57 FR 48949, 
Oct. 29, 1992; 57 FR 62474, Dec. 31, 1992; 59 FR 53570, Oct. 25, 1994; 
60 FR 66717, Dec. 26, 1995; 61 FR 66570, Dec. 18, 1996]



Sec. 545.91  Home office.

    All operations of a Federal savings association shall be subject to 
direction from the home office.



Sec. 545.92  Branch offices.

    (a) General. A branch office of a Federal savings association is any 
office other than its home office, agency office, administrative office, 
data processing office, or an electronic means or facility under part 
555 of this chapter.
    (b) Eligibility. Federal savings associations eligible for expedited 
treatment under Sec. 516.5 of this chapter may establish a branch office 
subject to the procedures in paragraph (f) of this section. A Federal 
savings association subject to standard treatment under Sec. 516.5 of 
this chapter must not establish a branch office without prior approval 
subject to the procedures in paragraph (e) of this section.
    (c) Application form; filing; completion; supervisory objection. 
Applicants shall obtain application and notice forms and related 
instructions from the OTS.
    (d) Processing of applications/notices. Processing of applications 
and notices shall be subject to the following procedures:
    (1) Publication. (i) A federal savings association must publish a 
public notice of the branch application or notice in accordance with the 
procedures specified in subpart B of part 516 of this chapter.
    (ii) Promptly after publication of the public notice, the savings 
association shall transmit copies of the public notice and publisher's 
affidavit of publication to the OTS.
    (iii) The application or notice and all related communications may 
be inspected by any person at the Regional

[[Page 107]]

Office during regular business hours, unless such information is exempt 
from public disclosure.
    (2) Submission of application or notice. A Federal savings 
association must comply with Sec. 545.93 of this part and must file its 
application or notice within the time frame in Sec. 516.60 of this 
chapter.
    (3) Submission of comments. Commenters may submit comments on the 
application or notice in accordance with the procedures specified in 
subpart C of part 516 of this chapter.
    (4) Meetings. The OTS may arrange informal or formal meetings in 
accordance with the procedures specified in subpart D of part 516 of 
this chapter.
    (e) Approval of branch application. (1) The OTS shall approve an 
application only if the overall policies, condition, and operation of 
the applicant afford no basis for supervisory objection and the proposed 
branch will open within twelve months of approval unless otherwise 
allowed by the OTS. In considering whether to approve an application, 
the OTS will assess and take into account an association's record of 
helping to meet the credit needs of its entire community, including low- 
and moderate-income neighborhoods, pursuant to part 563e of this 
chapter; assessment of an association's record of performance may be the 
basis for denying an application.
    (2) An application shall be deemed to be approved 30 days after 
notification that the application is complete, unless the OTS suspends 
the applicable processing time frames under Sec. 516.190 of this 
chapter, or the OTS objects to the application on the grounds set forth 
under paragraph (e)(1) of this section.
    (f) Approval of branch notice. A notice filed by a Federal savings 
association that qualifies for expedited treatment must be deemed to be 
approved 30 days after its filing with OTS, unless OTS takes one of the 
actions described at Sec. 516.200 of this chapter. OTS will apply the 
review standards set forth in paragraph (e)(1) of this section; or OTS 
determines to process the filing as an application under Sec. 516.200(b) 
of this chapter. If the OTS suspends the applicable processing time 
frames, the savings association may not open a branch until the OTS 
provides a notification of its approval.
    (g) Offices not requiring prior written approval. A Federal savings 
association may establish without prior approval a drive-in and/or 
pedestrian office opened in conjunction with an approved branch or home 
office of the association, located within 500 feet of a public entrance 
of that office and closer to that entrance than to a public entrance of 
any other SAIF-insured association, and the functions of which are 
limited to the ordinary functions performed at a teller-window.
    (h) Maintenance of branch office after conversion, consolidation, 
purchase of bulk assets, merger or purchase from receiver. (1) An 
existing association which converts to a Federal savings association may 
maintain an existing office, and a Federal savings association that 
acquires offices through consolidation, purchase of bulk assets, merger 
or purchase from the receiver of an association may maintain any 
acquired office, except to the extent the approval by the OTS of the 
conversion, consolidation, merger, or purchase specifies otherwise.
    (2) A Federal savings association may not file a branch application 
after having filed an application to merge or otherwise surrender its 
Federal charter, unless the merger or conversion application has been 
pending for at least six months.

[54 FR 49492, Nov. 30, 1989, as amended at 55 FR 13512, Apr. 11, 1990; 
57 FR 14341, Apr. 20, 1992; 57 FR 37084, Aug. 18, 1992; 62 FR 64145, 
Dec. 4, 1997; 63 FR 65682, Nov. 30, 1998; 66 FR 13006, Mar. 2, 2001; 66 
FR 65820, Dec. 21, 2001]



Sec. 545.93  Branching by Federal savings associations.

    (a) General. A Federal association may branch in any state or states 
of the United States and its territories, except as provided in 
paragraph (b) of this section, subject to the requirements of paragraph 
(c) of this section.
    (b) Limitations. No branching will be permitted under paragraph (a) 
of this section that will result in the following:
    (1) Establishment or operation of a branch outside the state in 
which the

[[Page 108]]

association has its home office in violation of section 5(r) of the Home 
Owners' Loan Act;
    (2) Formation by any company of a multiple savings and loan holding 
company controlling savings associations in more than one state in 
violation of section 10(e)(3) of the Home Owners' Loan Act; or
    (3) Acquisition of a savings association and the establishment and 
operation of new branches by such savings association in violation of 
section 13(k)(4) of the Federal Deposit Insurance Act.
    (c) Branching applications. (1) General. Prior to opening a branch, 
an association must obtain approval of a branching application pursuant 
to Sec. 545.92 of this chapter. The Office may approve or deny an 
application based on information available from any source and 
supervisory objection may be interposed at any point during the 
processing of the application. In granting supervisory clearance to an 
applicant, the Office will consider whether the policies, condition, and 
operation of the applicant are satisfactory and afford no basis for 
supervisory objection.
    (2) Regulatory capital. For supervisory clearance, an association's 
regulatory capital should meet or exceed the minimum requirements 
established by law and applicable regulations of the Office upon 
acquisition or establishment of the proposed branch or branches, except 
as otherwise permitted under section 38(e)(4) of the Federal Deposit 
Insurance Act.
    (3) Community reinvestment. Pursuant to the Community Reinvestment 
Act of 1977 (12 U.S.C. 2901), the Office encourages savings associations 
to help meet in an affirmative and continuing manner the credit needs of 
all communities in which they do business, including low- and moderate-
income neighborhoods, consistent with safe and sound operation. The 
Office will evaluate an applicant's record under part 563e of this 
chapter, may deny an application based on the assessment of the 
association's CRA record, and may approve a branch application on the 
condition that the association improve specific aspects of its community 
investment-related practices and performance to the satisfaction of the 
Office. However, in most cases, commitments by an applicant to improve 
its record of compliance with the CRA shall not be regarded as 
sufficient to overcome a seriously deficient CRA record at the time of 
application.
    (4) Comment procedures. Comments on applications for branches must 
be submitted in writing and factually documented. Comment procedures are 
set forth in subpart C of part 516 of this chapter, Sec. 563e.29 (c) and 
(d) of this chapter, the OTS Application Processing Handbook, and other 
supervisory guidance issued by the OTS.
    (5) Expiration of approvals. If an association does not open a 
branch within the time specified in the approval, and the Director or 
his or her designee finds that the association is not making a good-
faith effort to open the branch promptly, the approval will be deemed to 
have expired and the association will be required to reapply if it wants 
to branch in that location.
    (d) Federal preemption. This exercise of the OTS's authority is 
preemptive of any state law purporting to address the subject of 
branching by a Federal savings association.

[57 FR 12207, Apr. 9, 1992, as amended at 60 FR 66718, Dec. 26, 1995; 62 
FR 64146, Dec. 4, 1997. Redesignated at 66 FR 65820, Dec. 21, 2001]



Sec. 545.95  Change of office location and redesignation of offices.

    (a) Eligibility. A Federal savings association may change the 
permanent location of its home office or any approved branch office, or 
redesignate a home or branch office subject to the appropriate expedited 
or standard treatment procedures for establishing a branch office set 
forth in Sec. 545.92 of this part.
    (b) Processing of application. (1) Processing of an application for 
a change of office location or redesignation of a home or branch office 
shall follow the procedures set forth in Sec. 545.92 of this part, 
except that:
    (i) The applicant shall publish the required newspaper notice of 
application in the applicant's home office community, the community to 
be served by the new office, and the community where the office is to be 
closed or the

[[Page 109]]

home office is to be redesignated as a branch; and
    (ii) The applicant shall post notice of the application for 25 days 
from the date of first publication in a prominent location in the office 
to be closed or redesignated.
    (2) The OTS may approve an amendment to an association's charter in 
connection with approval of a home office relocation or redesignation 
under this section.
    (c) Short-distance relocations. (1) Notwithstanding paragraph (a) of 
this section, an association may change the permanent location of a home 
or branch office, without applying for approval by the OTS, to a site 
within the market area and short-distance relocation area of the office 
site that has been approved in accordance with Sec. 545.92 of this part 
or paragraph (a) of this section. The short-distance relocation area of 
an office site is:
    (i) The area within a 1,000-foot radius of the site if it is located 
within a central city of a Metropolitan Statistical Area (``MSA'') 
designated by the U.S. Department of Commerce;
    (ii) The area within a one-mile radius of the site if it is located 
within an MSA designated by the U.S. Department of Commerce but not 
within a central city; or
    (iii) The area within a two-mile radius of the site if it is not 
located within a MSA.
    (2) An association shall notify the OTS in writing at least 30 days 
before such an office relocation and may proceed with the relocation 
unless, within 30 days of receipt of the notice, the OTS notifies the 
association that the relocation does not satisfy the criteria set forth 
in the first sentence of paragraph (c)(1) of this section, in which case 
the association must file an application and obtain approval by the OTS 
in accordance with paragraph (b) of this section.

[57 FR 14341, Apr. 20, 1992, as amended at 62 FR 64146, Dec. 4, 1997]



Sec. 545.96  Agency.

    (a) General. A Federal savings association may, without approval of 
the Office, to the extent authorized by its board of directors, 
establish or maintain agencies that only service and originate (but do 
not approve) loans and contracts or manage or sell real estate owned by 
the Federal savings association.
    (b) Additional services. Except for payment on savings accounts, 
offering of any services not listed in paragraph (a) of this section may 
be approved by the OTS.
    (c) Records. An agency shall maintain records of all business it 
transacts and transmit copies to a branch or home office of the Federal 
savings association.

[54 FR 49492, Nov. 30, 1989, as amended at 54 FR 50614, Dec. 8, 1989; 55 
FR 13512, Apr. 11, 1990; 57 FR 14342, Apr. 20, 1992]



Sec. 545.101  Fiscal agency.

    A Federal savings association designated fiscal agent by the 
Secretary of the Treasury or with Office approval by another 
instrumentality of the United States, shall, as such, perform such 
reasonable duties and exercise only such powers and privileges as the 
Secretary of the Treasury or such instrumentality may prescribe.



Sec. 545.121  Indemnification of directors, officers and employees.

    A Federal savings association shall indemnify its directors, 
officers, and employees in accordance with the following requirements:
    (a) Definitions and rules of construction. (1) Definitions for 
purposes of this section.
    (i) Action. The term ``action'' means any judicial or administrative 
proceeding, or threatened proceeding, whether civil, criminal, or 
otherwise, including any appeal or other proceeding for review;
    (ii) Court. The term ``court'' includes, without limitation, any 
court to which or in which any appeal or any proceeding for review is 
brought.
    (iii) Final judgment. The term ``final judgment'' means a judgment, 
decree, or order which is not appealable or as to which the period for 
appeal has expired with no appeal taken.
    (iv) Settlement. The term ``settlement'' includes entry of a 
judgment by consent or confession or a plea of guilty or nolo 
contendere.
    (2) References in this section to any individual or other person, 
including any association, shall include legal

[[Page 110]]

representatives, successors, and assigns thereof.
    (b) General. Subject to paragraphs (c) and (g) of this section, a 
savings association shall indemnify any person against whom an action is 
brought or threatened because that person is or was a director, officer, 
or employee of the association, for:
    (1) Any amount for which that person becomes liable under a judgment 
if such action; and
    (2) Reasonable costs and expenses, including reasonable attorney's 
fees, actually paid or incurred by that person in defending or settling 
such action, or in enforcing his or her rights under this section if he 
or she attains a favorable judgment in such enforcement action.
    (c) Requirements. Indemnification shall be made to such period under 
paragraph (b) of this section only if:
    (1) Final judgment on the merits is in his or her favor; or
    (2) In case of:
    (i) Settlement,
    (ii) Final judgment against him or her, or
    (iii) Final judgment in his or her favor, other than on the merits, 
if a majority of the disinterested directors of the savings association 
determine that he or she was acting in good faith within the scope of 
his or her employment or authority as he or she could reasonably have 
perceived it under the circumstances and for a purpose he or she could 
reasonably have believed under the circumstances was in the best 
interests of the savings association or its members.

However, no indemnification shall be made unless the association gives 
the Office at least 60 days' notice of its intention to make such 
indemnification. Such notice shall state the facts on which the action 
arose, the terms of any settlement, and any disposition of the action by 
a court. Such notice, a copy thereof, and a certified copy of the 
resolution containing the required determination by the board of 
directors shall be sent to the Regional Director, who shall promptly 
acknowledge receipt thereof. The notice period shall run from the date 
of such receipt. No such indemnification shall be made if the OTS 
advises the association in writing, within such notice period, of his or 
her objection thereto.
    (d) Insurance. A savings association may obtain insurance to protect 
it and its directors, officers, and employees from potential losses 
arising from claims against any of them for alleged wrongful acts, or 
wrongful acts, committed in their capacity as directors, officers, or 
employees. However, no savings association may obtain insurance which 
provides for payment of losses of any person incurred as a consequence 
of his or her willful or criminal misconduct.
    (e) Payment of expenses. If a majority of the directors of a savings 
association concludes that, in connection with an action, any person 
ultimately may become entitled to indemnification under this section, 
the directors may authorize payment of reasonable costs and expenses, 
including reasonable attorneys' fees, arising from the defense or 
settlement of such action. Nothing in this paragraph (e) shall prevent 
the directors of a savings association from imposing such conditions on 
a payment of expenses as they deem warranted and in the interests of the 
savings association. Before making advance payment of expenses under 
this paragraph (e), the savings association shall obtain an agreement 
that the savings association will be repaid if the person on whose 
behalf payment is made is later determined not to be entitled to such 
indemnification.
    (f) Exclusiveness of provisions. No savings association shall 
indemnify any person referred to in paragraph (b) of this section or 
obtain insurance referred to in paragraph (d) of the section other than 
in accordance with this section. However, an association which has a 
bylaw in effect relating to indemnification of its personnel shall be 
governed solely by that bylaw, except that its authority to obtain 
insurance shall be governed by paragraph (d) of this section.
    (g) The indemnification provided for in paragraph (b) of this 
section is subject to and qualified by 12 U.S.C. 1821(k).

[54 FR 49492, Nov. 30, 1989, as amended at 56 FR 59866, Nov. 26, 1991; 
60 FR 66717, Dec. 26, 1995]

[[Page 111]]



PART 546--FEDERAL MUTUAL SAVINGS ASSOCIATIONS--MERGER, DISSOLUTION, REORGANIZATION, AND CONVERSION--Table of Contents




Sec.
546.1  Definitions.
546.2  Procedure; effective date.
546.3  Transfer of assets upon merger or consolidation.
546.4  Voluntary dissolution.

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901 et seq.

    Source: 54 FR 49517, Nov. 30, 1989, unless otherwise noted.



Sec. 546.1  Definitions.

    The terms used in Secs. 546.2 and 546.3 shall have the same meaning 
as set forth in Secs. 552.13(b) and 563.22(g) of this chapter.

[59 FR 44622, Aug. 30, 1994]



Sec. 546.2  Procedure; effective date.

    (a) A Federal mutual savings association may combine with any 
depository institution, provided that:
    (1) The combination is in compliance with, and receives all 
approvals required under, any applicable statutes and regulations;
    (2) Any resulting Federal savings association meets the requirements 
for Federal Home Loan Bank membership and insurance of accounts;
    (3) In the case of a combination with a bank that is a member of the 
Bank Insurance Fund, any resulting Federal savings association conforms 
to the requirements of sections 5(c) and 10(m) of the Home Owners' Loan 
Act under the standards set forth in section 5(c)(5) of the Home Owners' 
Loan Act, and in the case of a combination with any other depository 
institution, any resulting Federal savings association conforms within 
the time prescribed by the OTS, to the requirements of section 5(c) of 
the Home Owners' Loan Act; and
    (4) The resulting institution shall be a mutually held savings 
association, unless:
    (i) The transaction involves a supervisory merger;
    (ii) The transaction is approved under part 563b of this chapter; or
    (iii) The transaction involves a transfer in the context of a mutual 
holding company reorganization under section 10(o) of the Home Owners' 
Loan Act.
    (b) Each Federal mutual savings association, by a two-thirds vote of 
its board of directors, shall approve a plan of combination evidenced by 
a combination agreement. The agreement shall state:
    (1) That the combination shall not be effective unless and until the 
combination receives any necessary approval from the Office pursuant to 
Sec. 563.22 (a) or (c), or in the case of a transaction requiring a 
notice pursuant to Sec. 563.22(c), the notice has been filed, and the 
appropriate period of time has passed or the OTS has advised the parties 
that it will not disapprove the transaction;
    (2) Which constituent institution is to be the resulting 
institution;
    (3) The name of the resulting institution;
    (4) The location of the home office and any other offices of the 
resulting institution;
    (5) The terms and conditions of the combination and the method of 
effectuation;
    (6) Any charter amendments, or the new charter in the combination;
    (7) The basis upon which the resulting institution's savings 
accounts will be issued;
    (8) If the Federal mutual savings association is the resulting 
institution, the number, names, residence addresses, and terms of 
directors;
    (9) The effect upon and assumption of any liquidation account of a 
disappearing institution by the resulting institution; and
    (10) Such other provisions, agreements, or understandings as relate 
to the combination.
    (c) Prior written notification to, notice to, or prior written 
approval of, the Office pursuant to Sec. 563.22 of this chapter is 
required for every combination. In the case of applications and notices 
pursuant to 563.22 (a) or (c), the Office shall apply the criteria set 
out in Sec. 563.22 of this chapter and shall impose any conditions it 
deems necessary or appropriate to ensure compliance with those criteria 
and the requirements of this chapter.
    (d) Where the resulting institution is a Federal mutual savings 
association,

[[Page 112]]

the Office 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. 544.1 of this chapter within a reasonable period of 
time.
    (e) Notwithstanding any other provision of this part, the Office may 
require that a plan of combination be submitted to the voting members of 
any of the mutual savings associations that are constituent institutions 
at a duly called meeting(s), and that the plan, to be effective, be 
approved by such voting members.
    (f) A conservator or receiver for a Federal mutual savings 
association may combine the association with another insured depository 
institution without submitting the plan to the association's board of 
directors or members for their approval.
    (g) If a plan of combination provides for a resulting Federal mutual 
savings association's name or location to be changed, its charter shall 
be amended accordingly. If the resulting institution is a Federal mutual 
savings association, the effective date of the combination shall be the 
date specified in the approval; if the resulting institution is not a 
Federal savings association, the effective date shall be that prescribed 
under applicable law. Approval of a merger automatically cancels the 
Federal charter of a Federal association that is a disappearing 
institution as of the effective date of merger, and the association 
shall, on that date, surrender its charter to the Office.

[59 FR 44622, Aug. 30, 1994]



Sec. 546.3  Transfer of assets upon merger or consolidation.

    On the effective date of a merger or consolidation in which the 
resulting institution is a Federal association, all assets and property 
of the disappearing institutions shall immediately, without any further 
act, become the property of the resulting institution to the same extent 
as they were the property of the disappearing institutions, and the 
resulting institution shall be a continuation of the entity which 
absorbed the disappearing institutions. All rights and obligations of 
the disappearing institutions shall remain unimpaired, and the resulting 
institution shall, on the effective date of the merger or consolidation, 
succeed to all those rights and obligations, subject to the Home Owners' 
Loan Act and other applicable statutes.

[59 FR 44623, Aug. 30, 1994]



Sec. 546.4  Voluntary dissolution.

    A Federal savings association's board of directors may propose a 
plan for dissolution of the association. The plan may provide for 
either:
    (a) Appointment of the Federal Deposit Insurance Corporation or the 
Resolution Trust Corporation (under section 5 of the Act and section 11 
of the Federal Deposit Insurance Act, as amended or section 21A of the 
Federal Home Loan Bank Act, as amended) as receiver for the purpose of 
liquidation;
    (b) Transfer of all the association's assets to another association 
and home-financing institution under Federal or State charter either for 
cash sufficient to pay all obligations of the association and retire all 
outstanding accounts or in exchange for that association's payment of 
all the association's outstanding obligations and issuance of share 
accounts or other evidence of interest to the association's members on a 
pro rata basis; or
    (c) Dissolution in a manner proposed by the directors which they 
consider best for all concerned.

The plan, and a statement of reasons for proposing dissolution and for 
proposing the plan, shall be submitted to the OTS for approval. The OTS 
will approve the plan if the OTS believes dissolution is advisable and 
the plan best for all concerned, but if the OTS considers the plan 
inadvisable, the OTS may either make recommendations to the association 
concerning the plan or disapprove it. When the plan is approved by the 
association's board of directors and by the OTS, it shall be submitted 
to the association's members at a duly called meeting and, when approved 
by a majority of votes cast at that meeting, shall become effective. 
After dissolution in accordance with the plan, a certificate evidencing 
dissolution, supported by such evidence as

[[Page 113]]

the OTS may require, shall immediately be filed with the OTS. When the 
OTS receives such evidence satisfactory to the OTS, it will terminate 
the corporate existence of the dissolved association and the 
association's charter shall thereby be canceled. A Federal savings 
association is not required to obtain approval under this section where 
the Federal savings association transfers all of its assets and 
liabilities to a bank in a transaction that is subject to Sec. 563.22(b) 
of this chapter.

[54 FR 49517, Nov. 30, 1989, as amended at 55 FR 13512, Apr. 11, 1990; 
57 FR 14342, Apr. 20, 1992; 59 FR 44623, Aug. 30, 1994]



PART 550--FIDUCIARY POWERS OF SAVINGS ASSOCIATIONS--Table of Contents




Sec.
550.10  What regulations govern the fiduciary operations of savings 
          associations?
550.20  What are fiduciary powers?
550.30  What fiduciary capacities does this part cover?
550.40  When do I have investment discretion?
550.50  What is a fiduciary account?
550.60  What other definitions apply to this part?

                  Subpart A--Obtaining Fiduciary Powers

550.70  Must I obtain OTS approval before exercising fiduciary powers?
550.80  How do I obtain OTS approval?
550.90  What information must I include in my application?
550.100  What factors may the OTS consider in its review of my 
          application?
550.110  Who will act on my application?
550.120  What action will the OTS take on my application?

                 Subpart B--Exercising Fiduciary Powers

550.130  What fiduciary powers may I exercise?
550.140  Must I adopt and follow written policies and procedures in 
          exercising fiduciary powers?

                   Fiduciary Personnel and Facilities

550.150  Who is responsible for the exercise of fiduciary powers?
550.160  What personnel and facilities may I use to perform fiduciary 
          services?
550.170  May my other departments or affiliates use fiduciary personnel 
          and facilities to perform other services?
550.180  May I perform fiduciary services for, or purchase fiduciary 
          services from, another association or entity?
550.190  Must fiduciary officers and employees be bonded?

                      Review of a Fiduciary Account

550.200  Must I review a prospective account before I accept it?
550.210  Must I conduct another review of an account after I accept it?
550.220  Are any other account reviews required?

                      Custody and Control of Assets

550.230  Who must maintain custody or control of assets in a fiduciary 
          account?
550.240  May I hold investments of a fiduciary account off-premises?
550.250  Must I keep fiduciary assets separate from other assets?

                 Investing Funds of a Fiduciary Account

550.260  How may I invest funds of a fiduciary account?

                Funds Awaiting Investment or Distribution

550.290  What must I do with fiduciary funds awaiting investment or 
          distribution?
550.300  Where may I deposit fiduciary funds awaiting investment or 
          distribution?
550.310  What if the FDIC does not insure the deposits?
550.320  What is acceptable collateral for uninsured deposits?

                      Restrictions on Self Dealing

550.330  Are there investments in which I may not invest funds of a 
          fiduciary account?
550.340  May I exercise rights to purchase additional stock or 
          fractional shares of my stock or obligations or the stock or 
          obligations of my affiliates?
550.350  May I lend, sell, or transfer assets of a fiduciary account if 
          I have an interest in the transaction?
550.360  May I make a loan to a fiduciary account that is secured by an 
          interest in the assets in the account?
550.370  May I sell assets or lend money between fiduciary accounts?

                    Compensation, Gifts, and Bequests

550.380  May I earn compensation for acting in a fiduciary capacity?
550.390  May my officer or employee retain compensation for acting as a 
          co-fiduciary?
550.400  May my fiduciary officer or employee accept a gift or bequest?

                       Recordkeeping Requirements

550.410  What records must I keep?
550.420  How long must I keep these records?
550.430  Must I keep fiduciary records separate and distinct from other 
          records?

[[Page 114]]

                           Audit Requirements

550.440  When do I have to audit my fiduciary activities?
550.450  What standards govern the conduct of the audit?
550.460  Who may conduct an audit?
550.470  Who directs the conduct of the audit?
550.480  How do I report the results of the audit?

         Subpart C--Depositing Securities With State Authorities

550.490  When must I deposit securities with State authorities?
550.500  How much must I deposit if I administer fiduciary assets in 
          more than one State?
550.510  What must I do if State authorities refuse my deposit?

               Subpart D--Terminating Fiduciary Activities

                       Receivership or Liquidation

550.520  What happens if I am placed in receivership or voluntary 
          liquidation?

                      Surrender of Fiduciary Powers

550.530  How do I surrender fiduciary powers?
550.540  When will the OTS terminate my fiduciary powers?
550.550  May I recover my deposit from State authorities?

                     Revocation of Fiduciary Powers

550.560  When may the OTS revoke my fiduciary powers?
550.570  What procedures govern the revocation?

               Subpart E--Activities Exempt From This Part

550.580  When may I act in a fiduciary capacity without obtaining OTS 
          approval?
550.590  What standards must I observe when acting in exempt fiduciary 
          capacities?
550.600  How may I invest funds when acting in exempt fiduciary 
          capacities?
550.610  What disclosures must I make when acting in exempt fiduciary 
          capacities?
550.620  May I receive compensation for acting in exempt fiduciary 
          capacities?

    Authority: 12 U.S.C. 1462a, 1463, 1464.

    Source: 62 FR 67703, Dec. 30, 1997, unless otherwise noted.



Sec. 550.10  What regulations govern the fiduciary operations of savings associations?

    (a) Federal savings associations. A Federal savings association 
(``you'') must conduct its fiduciary operations in accordance with 12 
U.S.C. 1464(n) and this part.
    (b) State-chartered savings associations. (1) A State-chartered 
savings association must conduct its fiduciary operations in accordance 
with applicable State law, and must exercise its fiduciary powers in a 
safe and sound manner. To ensure safe and sound operations, State-
chartered savings associations and their subsidiaries should follow the 
standards for the exercise of fiduciary powers in this part.
    (2) The OTS will monitor the fiduciary operations of State-chartered 
savings associations and their subsidiaries to ensure that those 
operations are conducted in a safe and sound manner. The OTS may object 
to practices that deviate materially from the practices described in 
this part, and may restrict or prohibit activities that threaten the 
safety and soundness of a State-chartered savings association.



Sec. 550.20  What are fiduciary powers?

    Fiduciary powers are the authority that the OTS permits you to 
exercise under 12 U.S.C. 1464(n). The scope of permissible fiduciary 
powers depends on the powers that the State in which you are located 
grants to competing fiduciaries in that State.



Sec. 550.30  What fiduciary capacities does this part cover?

    You are subject to this part if you act in a fiduciary capacity, 
except as described in subpart E of this part. You act in a fiduciary 
capacity when you act in any of the following capacities:
    (a) Trustee.
    (b) Executor.
    (c) Administrator.
    (d) Registrar of stocks and bonds.
    (e) Transfer agent.
    (f) Assignee.
    (g) Receiver.
    (h) Guardian or conservator of the estate of a minor, an incompetent 
person, an absent person, or a person over whose estate a court has 
taken jurisdiction, other than under bankruptcy or insolvency laws.
    (i) A fiduciary in a relationship established under a State law that 
is substantially similar to the Uniform Gifts to Minors Act or the 
Uniform Transfers

[[Page 115]]

to Minors Act as published by the American Law Institute.
    (j) Investment adviser, if you receive a fee for your investment 
advice.
    (k) Any capacity in which you have investment discretion on behalf 
of another.
    (l) Any other similar capacity that the OTS may authorize under 12 
U.S.C. 1464(n).



Sec. 550.40  When do I have investment discretion?

    (a) General. You have investment discretion when you have, with 
respect to a fiduciary account, the sole or shared authority to 
determine what securities or other assets to purchase or sell on behalf 
of that account. It does not matter whether you have exercised this 
authority.
    (b) Delegations. You retain investment discretion if you delegate 
investment discretion to another. You also have investment discretion if 
you receive delegated authority to exercise investment discretion from 
another.



Sec. 550.50  What is a fiduciary account?

    A fiduciary account is an account that you administer acting in a 
fiduciary capacity.



Sec. 550.60  What other definitions apply to this part?

    Affiliate has the same meaning as in 12 U.S.C. 221a(b). For purposes 
of this part, substitute the term ``Federal savings association'' for 
the term ``member bank'' whenever it appears in 12 U.S.C. 221a(b).
    Applicable law means the law of a State or other jurisdiction 
governing your fiduciary relationships, any Federal law governing those 
relationships, the terms of the instrument governing a fiduciary 
relationship, and any court order pertaining to the relationship.
    Fiduciary officers and employees means the officers and employees of 
a Federal savings association to whom the board of directors or its 
designee has assigned functions involving the exercise of the 
association's fiduciary powers.



                  Subpart A--Obtaining Fiduciary Powers



Sec. 550.70  Must I obtain OTS approval before exercising fiduciary powers?

    Unless you are covered by subpart E of this part, you must obtain 
prior approval from the OTS before exercising fiduciary powers.



Sec. 550.80  How do I obtain OTS approval?

    You must file an application under part 516, subparts A and E of 
this chapter.

[66 FR 13006, Mar. 2, 2001]



Sec. 550.90  What information must I include in my application?

    You must describe the fiduciary powers that you or your affiliate 
will exercise. You must also include information necessary to enable the 
OTS to make the determinations described in Sec. 550.100.



Sec. 550.100  What factors may the OTS consider in its review of my application?

    The OTS may consider the following factors when reviewing your 
application:
    (a) Your financial condition.
    (b) Your capital and whether that capital is sufficient under the 
circumstances.
    (c) Your overall performance.
    (d) The fiduciary powers you propose to exercise.
    (e) Your proposed supervision of those powers.
    (f) The availability of legal counsel.
    (g) The needs of the community to be served.
    (h) Any other facts or circumstances that the OTS considers proper.



Sec. 550.110  Who will act on my application?

    The Director of OTS may act on any application. The Regional 
Director may act on an application if it does not raise any significant 
issues of law or policy on which the OTS has not taken a formal 
position.

[[Page 116]]



Sec. 550.120  What action will the OTS take on my application?

    The OTS may approve or deny your application. If your application is 
approved, the OTS may impose conditions to ensure that the requirements 
of this part are met.



                 Subpart B--Exercising Fiduciary Powers



Sec. 550.130  What fiduciary powers may I exercise?

    You may exercise only those fiduciary powers specified in the OTS 
approval under Sec. 550.120. Unless otherwise provided in the approval, 
you may exercise fiduciary powers only from those offices listed in the 
application.



Sec. 550.140  Must I adopt and follow written policies and procedures in exercising fiduciary powers?

    You must adopt and follow written policies and procedures adequate 
to maintain your fiduciary activities in compliance with applicable law. 
Among other relevant matters, the policies and procedures should 
address, where appropriate, the following areas:
    (a) Your brokerage placement practices.
    (b) Your methods for ensuring that your fiduciary officers and 
employees do not use material inside information in connection with any 
decision or recommendation to purchase or sell any security.
    (c) Your methods for preventing self-dealing and conflicts of 
interest.
    (d) Your selection and retention of legal counsel who is ready and 
available to advise you and your fiduciary officers and employees on 
fiduciary matters.
    (e) Your investment of funds held as fiduciary, including short-term 
investments and the treatment of fiduciary funds awaiting investment or 
distribution.

                   Fiduciary Personnel and Facilities



Sec. 550.150  Who is responsible for the exercise of fiduciary powers?

    The exercise of your fiduciary powers must be managed by or under 
the direction of your board of directors. In discharging its 
responsibilities, the board may assign any function related to the 
exercise of fiduciary powers to any director, officer, employee, or 
committee of directors, officers, or employees.



Sec. 550.160  What personnel and facilities may I use to perform fiduciary services?

    You may use your qualified personnel and facilities or an 
affiliate's qualified personnel and facilities to perform services 
related to the exercise of fiduciary powers.



Sec. 550.170  May my other departments or affiliates use fiduciary personnel and facilities to perform other services?

    Your other departments or affiliates may use fiduciary officers, 
employees, and facilities to perform services unrelated to the exercise 
of fiduciary powers, to the extent not prohibited by applicable law.



Sec. 550.180  May I perform fiduciary services for, or purchase fiduciary services from, another association or entity?

    You may perform services related to the exercise of fiduciary powers 
for another association or other entity under a written agreement. You 
may also purchase services related to the exercise of fiduciary powers 
from another association or other entity under a written agreement.



Sec. 550.190  Must fiduciary officers and employees be bonded?

    You must obtain an adequate bond for all fiduciary officers and 
employees.

                      Review of a Fiduciary Account



Sec. 550.200  Must I review a prospective account before I accept it?

    Before accepting a prospective fiduciary account, you must review it 
to determine whether you can properly administer the account.



Sec. 550.210  Must I conduct another review of an account after I accept it?

    After you accept a fiduciary account for which you have investment 
discretion, you must conduct a prompt review of all assets of the 
account to

[[Page 117]]

evaluate whether they are appropriate, individually and collectively, 
for the account.



Sec. 550.220  Are any other account reviews required?

    At least once every calendar year, you must conduct a review of all 
assets of each fiduciary account for which you have investment 
discretion. In this review, you must evaluate whether the assets are 
appropriate, individually and collectively, for the account.

                      Custody and Control of Assets



Sec. 550.230  Who must maintain custody or control of assets in a fiduciary account?

    You must place assets of fiduciary accounts in the joint custody or 
control of not fewer than two fiduciary officers or employees designated 
for that purpose by the board of directors.



Sec. 550.240  May I hold investments of a fiduciary account off-premises?

    You may hold the investments of a fiduciary account off-premises, if 
this practice is consistent with applicable law, and you maintain 
adequate safeguards and controls.



Sec. 550.250  Must I keep fiduciary assets separate from other assets?

    You must keep the assets of fiduciary accounts separate from your 
other assets. You must also keep the assets of each fiduciary account 
separate from all other accounts, or you must identify the investments 
as the property of a particular account, except as provided in 
Secs. 550.260.

                 Investing Funds of a Fiduciary Account



Sec. 550.260  How may I invest funds of a fiduciary account?

    (a) General. You must invest funds of a fiduciary account in a 
manner consistent with applicable law.
    (b) Collective investment funds. (1) You may invest funds of a 
fiduciary account in a collective investment fund, including a 
collective investment fund that you have established. In establishing 
and administering such funds, you must comply with 12 CFR 9.18.
    (2) If you must file a document with the Comptroller of the Currency 
under 12 CFR 9.18, you must also file that document with the appropriate 
Regional Office at Sec. 516.40(a) of this chapter. The OTS may review 
such documents for compliance with this part and other laws and 
regulations.
    (3) ``Bank'' and ``national bank'' as used in 12 CFR 9.18 shall be 
deemed to include a Federal savings association.

[62 FR 67703, Dec. 30, 1997, as amended at 66 FR 13006, Mar. 2, 2001]

                Funds Awaiting Investment or Distribution



Sec. 550.290  What must I do with fiduciary funds awaiting investment or distribution?

    If you have investment discretion or discretion over distributions 
for a fiduciary account which contains funds awaiting investment or 
distribution, you must ensure that those funds do not remain uninvested 
and undistributed any longer than is reasonable for the proper 
management of the account and consistent with applicable law. You also 
must obtain a rate of return for those funds that is consistent with 
applicable law.



Sec. 550.300  Where may I deposit fiduciary funds awaiting investment or distribution?

    (a) Self deposits. You may deposit funds of a fiduciary account that 
are awaiting investment or distribution in your other departments, 
unless prohibited by applicable law.
    (b) Affiliate deposits. You may also deposit funds of a fiduciary 
account that are awaiting investment or distribution with an affiliated 
insured depository institution, unless prohibited by applicable law.



Sec. 550.310  What if the FDIC does not insure the deposits?

    If the FDIC does not insure the entire amount of a self deposit or 
an affiliate deposit, you must set aside collateral as security. The 
market value of the collateral must at all times equal or exceed the 
amount of the uninsured fiduciary funds. You must place the collateral 
under the control of appropriate fiduciary officers and employees.

[[Page 118]]



Sec. 550.320  What is acceptable collateral for uninsured deposits?

    Any of the following is acceptable collateral for self deposits or 
affiliate deposits under Sec. 550.310:
    (a) Direct obligations of the United States, or other obligations 
fully guaranteed by the United States as to principal and interest.
    (b) Readily marketable securities of the classes in which State-
chartered corporate fiduciaries are permitted to invest fiduciary funds 
under applicable State law.
    (c) Other readily marketable securities as the OTS may determine.
    (d) Surety bonds, to the extent they provide adequate security, 
unless prohibited by applicable law.
    (e) Any other assets that qualify under applicable State law as 
appropriate security for deposits of fiduciary funds.

                      Restrictions on Self Dealing



Sec. 550.330  Are there investments in which I may not invest funds of a fiduciary account?

    You may not invest funds of a fiduciary account for which you have 
investment discretion in the following assets, unless authorized by 
applicable law:
    (a) The stock or obligations of, or assets acquired from, you or any 
of your directors, officers, or employees.
    (b) The stock or obligations of, or assets acquired from, your 
affiliates or any of their directors, officers, or employees.
    (c) The stock or obligations of, or assets acquired from, other 
individuals or organizations if you have an interest in the individual 
or organization that might affect the exercise of your best judgment.



Sec. 550.340  May I exercise rights to purchase additional stock or fractional shares of my stock or obligations or the stock or obligations of my affiliates?

    If the retention of investments in your stock or obligations or the 
stock or obligations of an affiliate in fiduciary accounts is consistent 
with applicable law, you may do either of the following:
    (a) Exercise rights to purchase additional stock (or securities 
convertible into additional stock) when these rights are offered pro 
rata to stockholders.
    (b) Purchase fractional shares to complement fractional shares 
acquired through the exercise of rights or through the receipt of a 
stock dividend resulting in fractional share holdings.



Sec. 550.350  May I lend, sell, or transfer assets of a fiduciary account if I have an interest in the transaction?

    (a) General restriction. Except as provided in paragraph (b) of this 
section, you may not lend, sell, or otherwise transfer assets of a 
fiduciary account for which you have investment discretion to yourself 
or any of your directors, officers, or employees; to your affiliates or 
any of their directors, officers, or employees; or to other individuals 
or organizations with whom you have an interest that might affect the 
exercise of your best judgment.
    (b) Exceptions--(1) Funds for which you have investment discretion. 
You may lend, sell or otherwise transfer assets of a fiduciary account 
for which you have investment discretion to yourself or any of your 
directors, officers, or employees; to your affiliates or any of their 
directors, officers, or employees; or to other individuals or 
organizations with whom you have an interest that might affect the 
exercise of your best judgment, if you meet one of the following 
conditions:
    (i) The transaction is authorized by applicable law.
    (ii) Legal counsel advises you in writing that you have incurred, in 
your fiduciary capacity, a contingent or potential liability. Upon the 
sale or transfer of assets, you must reimburse the fiduciary account in 
cash in an amount equal to the greater of book or market value of the 
assets.
    (iii) The transaction is permitted under 12 CFR 9.18(b)(8)(iii) for 
defaulted fixed-income investments.
    (iv) The OTS requires you to do so.
    (2) Funds held as trustee. You may make loans of funds held in trust 
to any of your directors, officers, or employees if the funds are held 
in an employee benefit plan and the loan is

[[Page 119]]

made in accordance with the exemptions found at section 408 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1108).



Sec. 550.360  May I make a loan to a fiduciary account that is secured by an interest in the assets of the account?

    You may make a loan to a fiduciary account that is secured by an 
interest in the assets of the account, if the transaction is fair to the 
account and is not prohibited by applicable law.



Sec. 550.370  May I sell assets or lend money between fiduciary accounts?

    You may sell assets or lend money between fiduciary accounts, if the 
transaction is fair to both accounts and is not prohibited by applicable 
law.

                    Compensation, Gifts, and Bequests



Sec. 550.380  May I earn compensation for acting in a fiduciary capacity?

    If the amount of your compensation for acting in a fiduciary 
capacity is not set or governed by applicable law, you may charge a 
reasonable fee for your services.



Sec. 550.390  May my officer or employee retain compensation for acting as a co-fiduciary?

    You may not permit your officers or employees to retain any 
compensation for acting as a co-fiduciary with you in the administration 
of a fiduciary account, except with the specific approval of your board 
of directors.



Sec. 550.400  May my fiduciary officer or employee accept a gift or bequest?

    You may not permit any fiduciary officer or employee to accept a 
bequest or gift of fiduciary assets, unless the bequest or gift is 
directed or made by a relative of the officer or employee or is 
specifically approved by your board of directors.

                       Recordkeeping Requirements



Sec. 550.410  What records must I keep?

    You must keep adequate records for all fiduciary accounts. For 
example, you must keep documents on the establishment and termination of 
each fiduciary account.



Sec. 550.420  How long must I keep these records?

    You must keep fiduciary records for three years after the 
termination of the account or the termination of any litigation relating 
to the account, whichever is later.



Sec. 550.430  Must I keep fiduciary records separate and distinct from other records?

    You must keep fiduciary records separate and distinct from your 
other records.

                           Audit Requirements



Sec. 550.440  When do I have to audit my fiduciary activities?

    (a) Annual Audit. If you do not use a continuous audit system 
described in paragraph (b) of this section, then you must arrange for a 
suitable audit of all significant fiduciary activities at least once 
during each calendar year.
    (b) Continuous audit. Instead of an annual audit, you may adopt a 
continuous audit system. Under a continuous audit system, you must 
arrange for a discrete audit of each significant fiduciary activity 
(i.e., on an activity-by-activity basis) at an interval commensurate 
with the nature and risk of that activity. Some fiduciary activities may 
receive audits at intervals greater or less than one year, as 
appropriate.



Sec. 550.450  What standards govern the conduct of the audit?

    Auditors must follow generally accepted standards for attestation 
engagements and other standards established by the OTS. An audit must 
ascertain whether your internal control policies and procedures provide 
reasonable assurance of three things:
    (a) You are administering fiduciary activities in accordance with 
applicable law.
    (b) You are properly safeguarding fiduciary assets.
    (c) You are accurately recording transactions in appropriate 
accounts in a timely manner.

[[Page 120]]



Sec. 550.460  Who may conduct an audit?

    Internal auditors, external auditors, or other qualified persons who 
are responsible only to the board of directors, may conduct an audit.



Sec. 550.470  Who directs the conduct of the audit?

    Your fiduciary audit committee directs the conduct of the audit. 
Your fiduciary audit committee may consist of a committee of your 
directors or an audit committee of an affiliate. There are two 
restrictions on who may serve on the committee:
    (a) Your officers and officers of an affiliate who participate 
significantly in administering your fiduciary activities may not serve 
on the audit committee.
    (b) A majority of the members of the audit committee may not serve 
on any committee to which the board of directors has delegated power to 
manage and control your fiduciary activities.



Sec. 550.480  How do I report the results of the audit?

    (a) Annual audit. If you conduct an annual audit, you must note the 
results of the audit (including significant actions taken as a result of 
the audit) in the minutes of the board of directors.
    (b) Continuous audit. If you adopt a continuous audit system, you 
must note the results of all discrete audits conducted since the last 
audit report (including significant actions taken as a result of the 
audits) in the minutes of the board of directors at least once during 
each calendar year.



         Subpart C--Depositing Securities With State Authorities



Sec. 550.490  When must I deposit securities with State authorities?

    You must deposit securities with a State's authorities or, if 
applicable, a Federal Home Loan Bank under Sec. 550.510, if you meet all 
of the following:
    (a) You are located in the State.
    (b) You act as a private or court-appointed trustee.
    (c) The law of the State requires corporations acting in a fiduciary 
capacity to deposit securities with State authorities for the protection 
of private or court trusts.



Sec. 550.500  How much must I deposit if I administer fiduciary assets in more than one State?

    If you administer fiduciary assets in more than one State, you must 
compute the amount of deposit required for each State on the basis of 
fiduciary assets that you administer primarily from offices located in 
that State.



Sec. 550.510  What must I do if State authorities refuse my deposit?

    If State authorities refuse to accept your deposit under 
Sec. 550.490, you must deposit the securities with the Federal Home Loan 
Bank of which you are a member. The Federal Home Loan Bank will hold the 
securities for the protection of private or court trusts to the same 
extent as if the securities had been deposited with State authorities.



               Subpart D--Terminating Fiduciary Activities

                       Receivership or Liquidation



Sec. 550.520  What happens if I am placed in receivership or voluntary liquidation?

    If the OTS appoints a conservator or receiver for you under part 558 
of this chapter, or if you place yourself in voluntary liquidation, the 
receiver, conservator, or liquidating agent must promptly close or 
transfer all fiduciary accounts to a substitute fiduciary, in accordance 
with OTS instructions and the orders of the court having jurisdiction.

                      Surrender of Fiduciary Powers



Sec. 550.530  How do I surrender fiduciary powers?

    If you want to surrender your fiduciary powers, you must file a 
certified copy of a resolution of your board of directors evidencing 
that intent. You must file the resolution with the appropriate Regional 
Office at the address listed in Sec. 516.40(a) of this chapter.

[62 FR 66703, Dec. 30, 1997, as amended at 66 FR 13006, Mar. 2, 2001]

[[Page 121]]



Sec. 550.540  When will the OTS terminate my fiduciary powers?

    If, after appropriate investigation, the Regional Director is 
satisfied that you have been discharged from all fiduciary duties, the 
Regional Director will issue a written notice indicating that you are no 
longer authorized to exercise fiduciary powers.



Sec. 550.550  May I recover my deposit from State authorities?

    Upon issuance of the OTS written notice under Sec. 550.540, you may 
recover any securities deposited with State authorities, or a Federal 
Home Loan Bank, under subpart C of this part.

                     Revocation of Fiduciary Powers



Sec. 550.560  When may the OTS revoke my fiduciary powers?

    The OTS may revoke your fiduciary powers if it determines that you 
have done any of the following:
    (a) Exercised those fiduciary powers unlawfully or unsoundly.
    (b) Failed to exercise those fiduciary powers for five consecutive 
years.
    (c) Otherwise failed to follow the requirements of this part.



Sec. 550.570  What procedures govern the revocation?

    The procedures for revocation of fiduciary powers are set forth in 
12 U.S.C. 1464(n)(10). The OTS will conduct the hearing required under 
12 U.S.C. 1464(n)(10)(B) under part 509 of this chapter.



               Subpart E--Activities Exempt From This Part



Sec. 550.580  When may I act in a fiduciary capacity without obtaining OTS approval?

    You do not need OTS approval under subpart B if you act in one of 
the following fiduciary capacities:
    (a) Trustee of a trust created or organized in the United States and 
forming part of a stock bonus, pension, or profit-sharing plan 
qualifying for specific tax treatment under section 401(d) of the 
Internal Revenue Code of 1954 (26 U.S.C. 401(d)).
    (b) Trustee or custodian of a Individual Retirement Account within 
the meaning of section 408(a) of the Internal Revenue Code of 1954 (26 
U.S.C. 408(a)).
    (c) Trustee of a fiduciary account that involves no active fiduciary 
duties provided that the applicable law authorizes the savings 
association to act in this capacity.



Sec. 550.590  What standards must I observe when acting in exempt fiduciary capacities?

    You must observe principles of sound fiduciary administration, 
including those related to recordkeeping and segregation of assets.



Sec. 550.600  How may I invest funds when acting in exempt fiduciary capacities?

    If you act in an exempt fiduciary capacity under Sec. 550.580, you 
may invest the funds of the fiduciary account in only the following:
    (a) Your accounts, deposits, obligations, or securities.
    (b) Other assets as the customer may direct, provided you do not 
exercise any investment discretion and do not directly or indirectly 
provide any investment advice for the fiduciary account.



Sec. 550.610  What disclosures must I make when acting in exempt fiduciary capacities?

    If you act in an exempt fiduciary capacity under Sec. 550.580 and 
fiduciary investments are not limited to accounts or deposits insured by 
the FDIC, you must include the following language in bold type on the 
first page of any contract documents:

    Funds invested pursuant to this agreement are not insured by the 
Federal Deposit Insurance Corporation (``FDIC'') merely because the 
trustee or custodian is a Federal savings association the accounts of 
which are covered by such insurance. Only investments in the accounts of 
a Federal savings association are insured by the FDIC, subject to its 
rules and regulations.



Sec. 550.620  May I receive compensation for acting in exempt fiduciary capacities?

    You may receive reasonable compensation.

[[Page 122]]



PART 552--FEDERAL STOCK ASSOCIATIONS--INCORPORATION, ORGANIZATION, AND CONVERSION--Table of Contents




Sec.
552.2-1  Procedure for organization of Federal stock association.
552.2-2  Procedures for organization of interim Federal stock 
          association.
552.2-3  Federal stock association created in connection with an 
          association in default or in danger of default.
552.2-6  Conversion from stock form depository institution to Federal 
          stock association.
552.2-7  Conversion to National banking association or State bank.
552.3  Charters for Federal stock associations.
552.4  Charter amendments.
552.5  Bylaws.
552.6  Shareholders.
552.6-1  Board of directors.
552.6-2  Officers.
552.6-3  Certificates for shares and their transfer.
552.6-4  [Reserved]
552.9  [Reserved]
552.10  Annual reports to stockholders.
552.11  Books and records.
552.12  [Reserved]
552.13  Combinations involving Federal stock associations.
552.14  Dissenter and appraisal rights.
552.15  Supervisory combinations.
552.16  Effect of subsequent charter or bylaw change.

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.

    Source: 54 FR 49523, Nov. 30, 1989, unless otherwise noted.



Sec. 552.2-1  Procedure for organization of Federal stock association.

    (a) Application for permission to organize. Applications for 
permission to organize a Federal stock association are subject to this 
section and to Sec. 543.3 of this chapter. Recommendations by employees 
of the OTS regarding applications for permission to organize are 
privileged, confidential, and subject to Sec. 510.5 (b) and (c) of this 
chapter. The processing of an application under this section shall be 
subject to the following procedures:
    (1) Publication. (i) The applicant shall publish a public notice of 
the application to organize in accordance with the procedures specified 
in subpart B of part 516 of this chapter.
    (ii) Promptly after publication of the public notice, the applicant 
shall transmit copies of the public notice and publisher's affidavit of 
publication to the OTS in the same manner as the original filing.
    (iii) Any person may inspect the application and all related 
communications at the Regional Office during regular business hours, 
unless such information is exempt from public disclosure.
    (2) Notification to interested parties. The OTS shall give notice of 
the application to the State official who supervises savings 
associations in the State in which the new association is to be located.
    (3) Submission of comments. Commenters may submit comments on the 
application in accordance with the procedures specified in subpart C of 
part 516 of this chapter.
    (4) Meetings. The OTS may arrange informal or formal meetings in 
accordance with the procedures specified in subpart D of part 516 of 
this chapter.
    (b) Conditions of approval. The OTS will decide all applications for 
permission to organize a Federal stock association.
    (1) Factors that will be considered on all applications for 
permission to organize a Federal stock association are:
    (i) Whether the applicants are persons of good character and 
responsibility;
    (ii) Whether a necessity exists for such association in the 
community to be served;
    (iii) Whether there is a reasonable probability of the association's 
usefulness and success;
    (iv) Whether the association can be established without undue injury 
to properly conducted existing local thrift and home financing 
institutions; and
    (v) Whether the association will perform a role of providing credit 
for housing consistent with safe and sound operation of a Federal 
savings association.
    (2) [Reserved]
    (3) Approvals of applications will be conditioned on the following:
    (i) Receipt by the Office of written confirmation from the Federal 
Deposit

[[Page 123]]

Insurance Corporation that the accounts of the association will be 
insured by the Federal Deposit Insurance Corporation;
    (ii) The sale of a minimum amount of fully-paid capital stock of the 
association prior to commencing business;
    (iii) The submission of a statement that:
    (A) The applicants have incurred no expense in organization which is 
chargeable to the association, and that no such expense will be 
incurred, and
    (B) No funds will be accepted for deposit by the association until 
organization has been completed;
    (iv) Compliance with all applicable laws, rules, and regulations; 
and
    (v) The satisfaction of any other requirement or condition the 
Director or his or her designee may impose.
    (c) Issuance of charter. Upon approval of an application, the Office 
shall issue to the association a charter for a Federal stock savings 
association or for a Federal stock savings bank, as requested by the 
applicants, which shall be in the form provided in this part. Issuance 
of the charter shall be subject to the condition subsequent that the 
organization of the association is completed pursuant to this section.
    (d) Interim board of directors and officers. Upon approval of the 
application and the issuance of the charter, the applicants shall 
constitute the interim board of directors of the association until the 
board of directors of the association are elected by its stockholders at 
the organizational meeting required by paragraph (g) of this section, 
and the interim officers of the association shall be those persons set 
forth in the application for permission to organize.
    (e) Sale of capital stock. Upon the issuance of the charter, the 
association shall proceed to offer and sell its capital stock pursuant 
to the requirements of part 563g of this chapter.
    (f) Bank membership and insurance of accounts. Promptly upon the 
issuance of the charter, a Federal stock association must qualify as a 
member of the appropriate Federal Home Loan Bank and meet all 
requirements necessary to obtain insurance of accounts by the Federal 
Deposit Insurance Corporation.
    (g) Organizational meeting. Promptly upon the completion of the sale 
of its capital stock, the association shall provide notice, pursuant to 
Sec. 552.6(b), of a meeting of its stockholders to elect a board of 
directors. Immediately following such election, the directors shall meet 
to elect the officers of the association and to undertake any other 
action necessary under the charter or bylaws to complete corporate 
organization.
    (h) Completion of organization. Organization of a Federal stock 
association shall be deemed complete for the purposes of this part when:
    (1) The association has obtained Federal Home Loan Bank membership 
and insurance of its accounts from the Federal Deposit Insurance 
Corporation;
    (2) It has completed the sale of and received full payment for its 
capital stock;
    (3) It has complied with all requirements of part 563g of this 
chapter;
    (4) It has held its organizational meeting for the election of 
directors and all directors have been elected;
    (5) Its officers have been elected and bonded; and
    (6) It has met the requirements and conditions imposed by the Office 
in connection with approval of the application.
    (i) Failure of completion. If organization of a Federal stock 
association is not completed within six months after the OTS approves 
the application, or within such additional period as the OTS for good 
cause may grant, the charter shall become null and void and all 
subscriptions to capital stock shall be returned.

[54 FR 49523, Nov. 30, 1989, as amended at 57 FR 14342, Apr. 20, 1992; 
62 FR 27181, May 19, 1997; 62 FR 64146, Dec. 4, 1997]



Sec. 552.2-2  Procedures for organization of interim Federal stock association.

    (a) Applications for permission to organize an interim Federal 
savings association are not subject to subparts B, C and D of part 516 
of this chapter or Sec. 552.2-1(b)(3) of this part.
    (b) Approval of an application for permission to organize an interim 
Federal stock association shall be conditioned upon approval by the 
Office of an application to merge the interim

[[Page 124]]

Federal stock association, or upon approval by the Office of other 
transaction which the interim was chartered to facilitate. Applications 
for permission to organize an interim Federal stock association shall be 
submitted in the same manner as the related filing(s). In evaluating the 
application, the Office will consider the purpose for which the 
association will be organized, the form of any proposed transactions 
involving the association, the effect of the transactions on existing 
associations involved in the transactions, and the factors specified in 
Sec. 552.1(b)(1) to the extent relevant.
    (c) If a merger or other transaction facilitated by the existence of 
the interim Federal stock association has not been approved within six 
months of the approval of the application for permission to organize, 
unless extended by OTS for good cause shown, the charter shall be void 
and all subscriptions for capital stock shall be returned.

[54 FR 49523, Nov. 30, 1989, as amended at 55 FR 13513, Apr. 11, 1990; 
57 FR 14342, Apr. 20, 1992; 62 FR 64146, Dec. 4, 1997]



Sec. 552.2-3  Federal stock association created in connection with an association in default or in danger of default.

    Sections 552.2-1 and 552.2-2 of this part do not apply to a Federal 
stock association which is proposed by the Federal Deposit Insurance 
Corporation, or the Resolution Trust Corporation under section 5(p) of 
the Home Owner's Loan Act of 1933, section 11(c) of the Federal Deposit 
Insurance Act, or section 21A of the Federal Home Loan Bank Act, or is 
otherwise chartered by the Office in connection with an association in 
default or in danger of default. Incorporation and organization of such 
associations are complete when and under such conditions as the Director 
or his or her designee so determines.



Sec. 552.2-6  Conversion from stock form depository institution to Federal stock association.

    (a) With the approval of the Office, any stock depository 
institution that is, or is eligible to become, a member of a Federal 
Home Loan Bank, may convert to a Federal stock association, provided 
that the depository institution, at the time of the conversion, has 
deposits insured by the Federal Deposit Insurance Corporation, and 
provided further, that the depository institution, in accomplishing the 
conversion, complies with all applicable statutes and regulations, 
including, without limitation, section 5(d) of the Federal Deposit 
Insurance Act. The resulting Federal stock association must conform 
within the time prescribed by the OTS to the requirements of section 
5(c) of the Home Owners' Loan Act. For purposes of this section, the 
term ``depository institution'' shall have the meaning set forth at 12 
CFR 552.13(b). An application for conversion filed under this section is 
subject to the procedures for organization of a federal stock 
organization at Sec. 552.2-1.
    (b) Any and all of the assets and other property (whether real, 
personal, mixed, tangible or intangible, including choses in action, 
rights, and credits) of the former stock form depository institution 
become assets and property of the Federal stock association when the 
conversion occurs. Similarly, any and all of the obligations and debts 
of or claims against the former stock form depository institution become 
obligations and debts of and claims against the Federal stock 
association when the conversion occurs. In effect, the Federal stock 
association is the same as the former stock form depository institution 
with respect to any and all assets, property, claims and debts of or 
claims against the former stock form depository institution.

[59 FR 44623, Aug. 30, 1994, as amended at 66 FR 13006, Mar. 2, 2001; 66 
FR 23154, May 8, 2001]



Sec. 552.2-7  Conversion to National banking association or State bank.

    A Federal stock association may convert to a National banking 
association or a State bank after filing a notification or application, 
as appropriate, with the Office in accordance with the applicable 
provisions of Sec. 563.22(b) of this chapter.

[59 FR 44623, Aug. 30, 1994]

[[Page 125]]



Sec. 552.3  Charters for Federal stock associations.

    The charter of a Federal stock association shall be in the following 
form, except that an association that has converted from the mutual form 
pursuant to part 563b of this chapter shall include in its charter a 
section establishing a liquidation account as required by 
Sec. 563b.3(c)(13) of this chapter. A charter for a Federal stock 
savings bank shall substitute the term ``savings bank'' for 
``association.'' Charters may also include any preapproved optional 
provision contained in Sec. 552.4 of this part.

                          Federal Stock Charter

    Section 1. Corporate title. The full corporate title of the 
association is ______.
    Section 2. Office. The home office shall be located in ______ [city, 
state].
    Section 3. Duration. The duration of the association is perpetual.
    Section 4. Purpose and powers. The purpose of the association is to 
pursue any or all of the lawful objectives of a Federal savings 
association chartered under section 5 of the Home Owners' Loan Act and 
to exercise all of the express, implied, and incidental powers conferred 
thereby and by all acts amendatory thereof and supplemental thereto, 
subject to the Constitution and laws of the United States as they are 
now in effect, or as they may hereafter be amended, and subject to all 
lawful and applicable rules, regulations, and orders of the Office of 
Thrift Supervision (``Office'').
    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 shall be common stock of par [or if no par is 
specified then shares shall 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 shall be paid in full before their issuance 
and shall not be less than the par [or stated] value. Neither promissory 
notes nor future services shall constitute payment or part payment for 
the issuance of shares of the association. The consideration for the 
shares shall 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, shall be 
conclusive. Upon payment of such consideration, such shares shall 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 shall 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 stock form of capitalization, no shares of capital stock 
(including shares issuable upon conversion, exchange, or exercise of 
other securities) shall 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 shall exclusively possess all voting 
power. Each holder of shares of common stock shall be 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 shall 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 shall 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 shall have the same relative rights as and be identical 
in all respects with all the other shares of common stock.
    Section 6. Preemptive rights. Holders of the capital stock of the 
association shall not be entitled to preemptive rights with respect to 
any shares of the association which may be issued.
    Section 7. Directors. The association shall be under the direction 
of a board of directors. The authorized number of directors, as stated 
in the association's bylaws, shall not be fewer than five nor more than 
fifteen except when a greater or lesser number is approved by the 
Director of the Office, or his or her delegate.
    Section 8. Amendment of charter. Except as provided in Section 5, no 
amendment, addition, alteration, change or repeal of this charter shall 
be made, unless such is proposed by the board of directors of the 
association, approved by the shareholders by a majority of the votes 
eligible to be cast at a

[[Page 126]]

legal meeting, unless a higher vote is otherwise required, and approved 
or preapproved by the Office.
Attest:_________________________________________________________________
      Secretary of the Association

By:_____________________________________________________________________
      President or Chief Executive Officer of the Association

Attest:_________________________________________________________________
      Secretary of the Office of Thrift Supervision

By:_____________________________________________________________________
      Director of the Office of Thrift Supervision

Effective Date:_________________________________________________________

[54 FR 49523, Nov. 30, 1989, as amended at 59 FR 53571, Oct. 25, 1994; 
61 FR 64018, Dec. 3, 1996]



Sec. 552.4  Charter amendments.

    (a) General. In order to adopt a charter amendment, a Federal stock 
association must comply with the following requirements:
    (1) Board of directors approval. The board of directors of the 
association must adopt a resolution proposing the charter amendment that 
states the text of such amendment.
    (2) Form of filing--(i) Application requirement. If the proposed 
charter amendment 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, the association shall 
file the proposed amendment and shall obtain the prior approval of the 
OTS; and
    (ii) Notice requirement. If the proposed charter amendment does not 
involve a provision that would be covered by paragraph (a)(2)(i) of this 
section and such amendment is permissible under all applicable laws, 
rules or regulations, then the association shall submit the proposed 
amendments to the OTS, at least 30 days prior to the date the proposed 
charter amendment is to be mailed for consideration by the association's 
shareholders.
    (b) Approval. Any charter amendment filed pursuant to paragraph 
(a)(2)(ii) of this section shall automatically be approved 30 days from 
the date of filing of such amendment, provided that the association 
follows the requirements of its charter in adopting such amendment, 
unless prior to the expiration of such 30-day period the OTS notifies 
the association that such amendment is rejected or that such amendment 
is deemed to be filed under the provisions of paragraph (a)(2)(i) of 
this section. In addition, the following charter amendments, including 
the adoption of the Federal stock charter as set forth in Sec. 552.3 of 
this part, shall be approved at the time of adoption, if adopted without 
change and filed with OTS within 30 days after adoption, provided the 
association follows the requirements of its charter in adopting such 
amendments:
    (1) Title change. A Federal stock association that has complied with 
Sec. 543.1(b) of this chapter may amend its charter by substituting a 
new corporate title in section 1.
    (2) Home office. A Federal stock association that has complied with 
Sec. 545.95 of this chapter may amend its charter by substituting a new 
home office in section 2.
    (3) Number of shares of stock and par value. A Federal stock 
association may amend Section 5 of its charter to change the number of 
authorized shares of stock, the number of shares within each class of 
stock, and the par or stated value of such shares.
    (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 ______ shall be 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 shall be paid in full before their issuance and shall not 
be less than the par [or stated] value. Neither promissory notes nor 
future services shall constitute payment or part payment for the 
issuance of shares of the association. The consideration for the shares 
shall be cash, tangible or intangible property (to the extent direct 
investment in such

[[Page 127]]

property would be permitted), 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, 
shall be conclusive. Upon payment of such consideration, such shares 
shall 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 shall 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) shall 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) shall entitle 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 shall be no 
such cumulative voting: Provided, That this restriction on voting 
separately by class or series shall 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 Office 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, shall not be 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 shall 
exclusively possess all voting power. Each holder of shares of the 
common stock shall be 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 shall be no 
such cumulative voting.
    Whenever there shall have 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) shall 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 shall 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 shall be separately identified. The shares of any class may be 
divided into and issued in series, with each series separately

[[Page 128]]

designated so as to distinguish the shares thereof from the shares of 
all other series and classes. The terms of each series shall be set 
forth in a supplementary section to the charter. All shares of the same 
class shall 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 shall be 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 shall be 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 shall be 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 shall be 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 shall be issued; and
    (i) Whether the shares of such series which are redeemed or 
converted shall have the status of authorized but unissued 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 shall 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 shall have 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 shall file with the Secretary to the Office 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.

    (5) Limitations on subsequent issuances. A Federal stock association 
may amend its charter to require shareholder approval of the issuance or 
reservation of common stock or securities convertible into common stock 
under circumstances which would require shareholder approval under the 
rules of the New York or American Stock Exchange if the shares were then 
listed on the New York or American Stock Exchange.
    (6) Cumulative voting. A Federal stock association may amend its 
charter by substituting the following sentence for the second sentence 
in the third paragraph of Section 5: ``Each holder of shares of common 
stock shall be entitled to one vote for each share held by such holder 
and there shall be no right to cumulate votes in an election of 
directors.''
    (7) [Reserved]
    (8) 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 shall 
apply:
    A. Beneficial Ownership Limitation. No person shall 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 shall 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 shares by a tax-qualified employee stock benefit

[[Page 129]]

plan which is exempt from the approval requirements under 
Sec. 574.3(c)(1)(vi) of the Office's regulations.
    In the event shares are acquired in violation of this section 8, all 
shares beneficially owned by any person in excess of 10% shall be 
considered ``excess shares'' and shall not be counted as shares entitled 
to vote and shall 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 conscious parallel action towards a common goal 
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 arrangements, whether written or otherwise.
    B. Cumulative Voting Limitation. Stockholders shall not be permitted 
to 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 shall be called only upon direction of the board of directors.

    (c) Anti-takeover provisions. The Office may grant approval to a 
charter amendment not listed in paragraph (b) of this section regarding 
the acquisition by any person or persons of its equity securities 
provided that the association shall file as part of its application for 
approval an opinion, acceptable to the OTS, of counsel independent from 
the association that the proposed charter provision would be permitted 
to be adopted by a corporation chartered by the state in which the 
principal office of the association is located. Any such provision must 
be consistent with applicable statutes, regulations, and OTS policies. 
Further, any such provision that would have the effect of rendering more 
difficult a change in control of the association and would require for 
any corporate action (other than the removal of directors) the 
affirmative vote of a larger percentage of shareholders than is required 
by this Part, shall not be effective unless adopted by a percentage of 
shareholder vote at least equal to the highest percentage that would be 
required to take any action under such provision.
    (d) Reissuance of charter. A Federal stock association that has 
amended its charter may apply to have its charter, including the 
amendments, reissued by the Office. Such requests for reissuance should 
be filed with the Corporate Secretary at Washington Headquarters Office 
at the address listed in Sec. 516.40(b) of this chapter, and contain 
signatures required under Sec. 552.3 of this part, together with such 
supporting documents as needed to demonstrate that the amendments were 
properly adopted.

[54 FR 49523, Nov. 30, 1989, as amended at 55 FR 13513, Apr. 11, 1990; 
57 FR 14343, Apr. 20, 1992; 59 FR 18476, Apr. 19, 1994; 61 FR 64018, 
Dec. 3, 1996; 62 FR 66262, Dec. 18, 1997; 66 FR 13006, Mar. 2, 2001]



Sec. 552.5  Bylaws.

    (a) General. At its first organizational meeting, the board of 
directors of a Federal stock association shall adopt a set of bylaws for 
the administration and regulation of its affairs. Bylaws may be adopted, 
amended or repealed by either a majority of the votes cast by the 
shareholders at a legal meeting or a majority of the board of directors. 
The bylaws shall contain sufficient provisions to govern the association 
in accordance with the requirements of Secs. 552.6, 552.6-1, 552.6-2, 
and 552.6-3 of this part and shall not contain any provision that is 
inconsistent with those sections or with applicable laws, rules, 
regulations or the association's charter, except that a bylaw provision 
inconsistent with Secs. 552.6, 552.6-1, 552.6-3, and 552.6-4 of this 
part may be adopted with the approval of the OTS.
    (b) Form of Filing--(1) Application requirement. (i) Any bylaw 
amendment shall be submitted to the OTS for approval if it would:

[[Page 130]]

    (A) 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
    (B) Be inconsistent with Secs. 552.6, 552.6-1, 552.6-2, and 552.6-3 
of this part, 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) Applications submitted under paragraph (b)(1)(i) of this 
section are subject to standard treatment processing procedures at part 
516, subparts A and E of this chapter.
    (iii) Bylaw provisions that adopt the language of the model or 
optional bylaws in OTS's Application Processing Handbook, if adopted 
without change, and filed with OTS within 30 days after adoption, are 
effective upon adoption.
    (2) Filing requirement. If the proposed bylaw amendment does not 
involve a provision that would be covered by paragraph (b)(1) or (b)(3) 
of this section and is permissible under all applicable laws, rules, or 
regulations, then the association shall submit the amendment to the OTS 
at least 30 days prior to the date the bylaw amendment is to be adopted 
by the association.
    (3) Corporate governance procedures. A Federal stock association may 
elect to follow the corporate governance procedures of: The laws of the 
state where the main 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 (b)(1) of this section. If this election 
is selected, a Federal stock association shall designate in its bylaws 
the provision or provisions from the body or bodies of law selected for 
its corporate governance procedures, and shall file a copy of such 
bylaws, which are effective upon adoption, within 30 days after 
adoption. The submission shall indicate, where not obvious, why the 
bylaw provisions meet the requirements stated in paragraph (b)(1) of 
this section.
    (c) Effectiveness. Any bylaw amendment filed pursuant to paragraph 
(b)(2) of this section shall automatically be effective 30 days from the 
date of filing of such amendment, provided that the association follows 
the requirements of its charter and bylaws in adopting such amendment, 
unless prior to the expiration of such 30-day period the OTS notifies 
the association that such amendment is rejected or that such amendment 
requires an application to be filed pursuant to paragraph (b)(1) of this 
section.
    (d) Effect of subsequent charter or bylaw change. Notwithstanding 
any subsequent change to its charter or bylaws, the authority of a 
Federal stock association to engage in any transaction shall be 
determined only by the association's charter or bylaws then in effect, 
unless otherwise provided by Federal law or regulation.

[57 FR 14343, Apr. 20, 1992, as amended at 60 FR 66718, Dec. 26, 1995; 
61 FR 64019, Dec. 3, 1996; 66 FR 13006, Mar. 2, 2001; 66 FR 15020, Mar. 
15, 2001]



Sec. 552.6  Shareholders.

    (a) Shareholder meetings. An annual meeting of the shareholders of 
the association for the election of directors and for the transaction of 
any other business of the association shall be held annually within 150 
days after the end of the association's fiscal year. 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 
shall be held at such place as the board of directors may determine in 
the state in which the association has its principal place of business, 
or at any other convenient place the board of directors may designate.
    (b) Notice of shareholder meetings. Written notice stating the 
place, day, and hour of the meeting and the purpose or purposes for 
which the meeting

[[Page 131]]

is called shall 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 chairman 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 shall 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 (c) 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 shall be 
given as in the case of an original meeting. Notwithstanding anything in 
this section, however, a Federal stock association that is wholly owned 
shall not be subject to the shareholder notice requirement.
    (c) 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 shall 
fix in advance a date as the record date for any such determination of 
shareholders. Such date in any case shall be 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 shall apply to any 
adjournment thereof.
    (d) Voting lists. (1) 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 shall 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 shall 
be kept on file at the home office of the association and shall be 
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 shall 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 shall not be subject to 
the voting list requirements.
    (2) In lieu of making the shareholders list available for inspection 
by any shareholders as provided in paragraph (d)(1) 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 shall defray the reasonable 
expenses to be incurred by the association in performance of the act or 
acts required.
    (e) Shareholder quorum. A majority of the outstanding shares of the 
association entitled to vote, represented in person or by proxy, shall 
constitute 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 shall 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.
    (f) Shareholder voting--(1) 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

[[Page 132]]

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. A proxy may designate as holder a corporation, partnership 
or company as defined in Part 574 of this chapter, or other person. 
Proxies solicited on behalf of the management shall 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 shall be valid more 
than eleven months from the date of its execution except for a proxy 
coupled with an interest.
    (2) 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, shall be voted at any meeting or counted in determining the 
total number of outstanding shares at any given time for purposes of any 
meeting.
    (g) Nominations and new business submitted by shareholders. 
Nominations for directors and new business submitted by shareholders 
shall 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 shall be provided 
for use at the annual meeting.
    (h) Informal action by stockholders. If the bylaws of the 
association so provide, any action required to be taken at a meeting of 
the stockholders, or any other action that may be taken at a meeting of 
the stockholders, may be taken without a meeting if consent in writing 
has been given by all the stockholders entitled to vote with respect to 
the subject matter.

[54 FR 49523, Nov. 30, 1989, as amended at 59 FR 18476, Apr. 19, 1994; 
61 FR 64019, Dec. 3, 1996]



Sec. 552.6-1  Board of directors.

    (a) General powers and duties. The business and affairs of the 
association shall be under the direction of its board of directors. The 
board of directors shall annually elect a chairman of the board from 
among its members and shall designate the chairman of the board, when 
present, to preside at its meeting. Directors need not be stockholders 
unless the bylaws so require.
    (b) Number and term. The bylaws shall set forth a specific number of 
directors, not a range. The number of directors shall be not fewer than 
five nor more than fifteen, unless a higher or lower number has been 
authorized by the Director of the Office or his or her delegate. 
Directors shall 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 shall be divided into two or three classes as 
nearly equal in number as possible and one class shall be elected by 
ballot annually. In the case of a converting or newly chartered 
association where all directors shall be elected at the first election 
of directors, if a staggered board is chosen, the terms shall be 
staggered in length from one to three years.
    (c) Regular meetings. A regular meeting of the board of directors 
shall be held immediately after, and at the same place as, the annual 
meeting of shareholders. The board of directors shall determine the 
place, frequency, time and procedure for notice of regular meetings.
    (d) Quorum. A majority of the number of directors shall constitute 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 shall be the act of the board of directors, 
unless a greater number is prescribed by regulation of the Office.
    (e) Vacancies. Any vacancy occurring in the board of directors may 
be filled 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 shall be elected to 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.

[[Page 133]]

    (f) Removal or resignation of directors. (1) At a meeting of 
shareholders called expressly for that purpose, any director may be 
removed only for cause, as defined in Sec. 563.39 of this chapter, by a 
vote of the holders of a majority of the shares then entitled to vote at 
an election of directors. Associations may provide for procedures 
regarding resignations in the bylaws.
    (2) 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.
    (3) 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 shall 
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.
    (g) 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 each of which, to the extent provided in the resolution or 
bylaws of the association, shall have and may exercise all of the 
authority of the board of directors, except no committee shall 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 shall not operate to relieve the board of directors, 
or any director, of any responsibility imposed by law or regulation.
    (h) 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 shall 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 shall constitute 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 telephonic participation at a meeting.
    (i) 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, 
shall be signed by all of the directors.
    (j) 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 shall be presumed to have assented to the 
action taken unless his or her dissent or abstention shall be entered in 
the minutes of the meeting or unless a written dissent to such action 
shall be filed with the person acting as the secretary of the meeting 
before the adjournment thereof or shall be 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 shall not apply to a director who voted in favor of such action.
    (k) Age limitation on directors. A Federal association may provide a 
bylaw on age limitation for directors. Bylaws on age limitations must 
comply with all Federal laws, rules and regulations.

[54 FR 49523, Nov. 30, 1989, as amended at 58 FR 4312, Jan. 14, 1993; 61 
FR 64020, Dec. 3, 1996; 62 FR 66262, Dec. 18, 1997]

[[Page 134]]



Sec. 552.6-2  Officers.

    (a) Positions. The officers of the association shall be a president, 
one or more vice presidents, a secretary, and a treasurer or 
comptroller, each of whom shall be elected by the board of directors. 
The board of directors may also designate the chairman of the board as 
an officer. The offices of the secretary and treasurer or comptroller 
may be held by the same person and the vice president may also be either 
the secretary or the treasurer or comptroller. The board of directors 
may designate one or more vice presidents as executive vice president or 
senior vice president. The board of directors may also elect or 
authorize the appointment of such other officers as the business of the 
association may require. The officers shall have such authority and 
perform such duties as the board of directors may from time to time 
authorize or determine. In the absence of action by the board of 
directors, the officers shall have such powers and duties as generally 
pertain to their respective offices.
    (b) Removal. Any officer may be removed by the board of directors 
whenever in its judgment the best interests of the association will be 
served thereby; but such removal, other than for cause, shall be without 
prejudice to the contractual rights, if any, of the person so removed. 
Employment contracts shall conform with Sec. 563.39 of this chapter.
    (c) Age limitation on officers. A Federal association may provide a 
bylaw on age limitation for officers. Bylaws on age limitations must 
comply with all Federal laws, rules, and regulations.

[54 FR 49523, Nov. 30, 1989, as amended at 56 FR 59866, Nov. 26, 1991; 
60 FR 66869, Dec. 27, 1995; 61 FR 64020, Dec. 3, 1996]



Sec. 552.6-3  Certificates for shares and their transfer.

    (a) Certificates for shares. Certificates representing shares of 
capital stock of the association shall be in such form as shall be 
determined by the board of directors and approved by the OTS. The 
certificates shall be signed by the chief executive officer or by any 
other officer of the association authorized by the board of directors, 
attested by the secretary or an assistant secretary, and sealed with the 
corporate seal or a facsimile thereof. The signatures of such officers 
upon a certificate may be facsimiles if the certificate is manually 
signed on behalf of a transfer agent or a registrar other than the 
association itself or one of its employees. Each certificate for shares 
of capital stock shall be consecutively numbered or otherwise 
identified. The name and address of the person to whom the shares are 
issued, with the number of shares and date of issue, shall be entered on 
the stock transfer books of the association. All certificates 
surrendered to the association for transfer shall be cancelled and no 
new certificate shall be issued until the former certificate for a like 
number of shares shall have 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.
    (b) Transfer of shares. Transfer of shares of capital stock of the 
association shall be made only on its stock transfer books. Authority 
for such transfer shall be given only by the holder of record or by a 
legal representative, who shall 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 shall 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 shall be deemed by the association to be the owner for all 
purposes.

[54 FR 49523, Nov. 30, 1989, as amended at 55 FR 13514, Apr. 11, 1990; 
57 FR 14343, Apr. 20, 1992]



Sec. 552.6-4  [Reserved]



Sec. 552.9  [Reserved]



Sec. 552.10  Annual reports to stockholders.

    A Federal stock association not wholly-owned by a holding company 
shall, within 130 days after the end of its fiscal year, mail to each of 
its

[[Page 135]]

stockholders entitled to vote at its annual meeting an annual report 
containing financial statements that satisfy the requirements of rule 
14a-3 under the Securities Exchange Act of 1934. (17 CFR 240.14a-3). 
Concurrently with such mailing a certification of such mailing signed by 
the chairman of the board, the president or a vice president of the 
association, together with copies of the report, shall be transmitted by 
the association to the OTS.

[57 FR 14343, Apr. 20, 1992, as amended at 62 FR 66262, Dec. 18, 1997]



Sec. 552.11  Books and records.

    (a) Each Federal stock association shall keep correct and complete 
books and records of account; shall keep minutes of the proceedings of 
its stockholders, board of directors, and committees of directors; and 
shall keep at its home office or at the office of its transfer agent or 
registrar, a record of its stockholders, giving the names and addresses 
of all stockholders, and the number, class and series, if any, of the 
shares held by each.
    (b) Any stockholder or group of stockholders of a Federal stock 
association, holding of record the number of voting shares of such 
association specified below, upon making written demand stating a proper 
purpose, shall have the right to examine, in person or by agent or 
attorney, at any reasonable time or times, nonconfidential portions of 
its books and records of account, minutes and record of stockholders and 
to make extracts therefrom. Such right of examination is limited to a 
stockholder or group of stockholders holding of record:
    (1) Voting shares having a cost of not less than $100,000 or 
constituting not less than one percent of the total outstanding voting 
shares, provided in either case such stockholder or group of 
stockholders have held of record such voting shares for a period of at 
least six months before making such written demand, or
    (2) Not less than five percent of the total outstanding voting 
shares.

No stockholder or group of stockholders of a Federal stock association 
shall have any other right under this section or common law to examine 
its books and records of account, minutes and record of stockholders, 
except as provided in its bylaws with respect to inspection of a list of 
stockholders.
    (c) The right to examination authorized by paragraph (b) of this 
section and the right to inspect the list of stockholders provided by a 
Federal stock association's bylaws may be denied to any stockholder or 
group of stockholders upon the refusal of any such stockholder or group 
of stockholders to furnish such association, its transfer agent or 
registrar an affidavit that such examination or inspection is not 
desired for any purpose which is in the interest of a business or object 
other than the business of the association, that such stockholder has 
not within the five years preceding the date of the affidavit sold or 
offered for sale, and does not now intend to sell or offer for sale, any 
list of stockholders of the association or of any other corporation, and 
that such stockholder has not within said five-year period aided or 
abetted any other person in procuring any list of stockholders for 
purposes of selling or offering for sale such list.
    (d) Notwithstanding any provision of this section or common law, no 
stockholder or group of stockholders shall have the right to obtain, 
inspect or copy any portion of any books or records of a Federal stock 
association containing:
    (1) A list of depositors in or borrowers from such association;
    (2) Their addresses;
    (3) Individual deposit or loan balances or records; or
    (4) Any data from which such information could be reasonably 
constructed.

[54 FR 49523, Nov. 30, 1989, as amended at 61 FR 64020, Dec. 3, 1996]



Sec. 552.12  [Reserved]



Sec. 552.13  Combinations involving Federal stock associations.

    (a) Scope and authority. Federal stock associations may enter into 
combinations only in accordance with the provisions of this section, 
sections 5(d) and 18(c) of the Federal Deposit Insurance Act, sections 
5(d)(3)(A) and 10(s) of the Home Owners' Loan Act, and Sec. 563.22 of 
this chapter.

[[Page 136]]

    (b) Definitions. The following definitions apply to Secs. 552.13 and 
552.14 of this part:
    (1) Combination. 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. Combine means 
to be a constituent institution in a combination.
    (2) Consolidation. Fusion of two or more depository institutions 
into a newly-created depository institution.
    (3) Constituent institution. Resulting, disappearing, acquiring, or 
transferring depository institution in a combination.
    (4) Depository institution means any commercial bank (including a 
private bank), a savings bank, a trust company, a savings and loan 
association, a building and loan association, a homestead association, a 
cooperative bank, an industrial bank or a credit union, chartered in the 
United States and having its principal office located in the United 
States.
    (5) Disappearing institution. A depository institution whose 
corporate existence does not continue after a combination.
    (6) Merger. Uniting two or more depository institutions by the 
transfer of all property rights and franchises to the resulting 
depository institution, which retains its corporate identity.
    (7) Mutual savings association. Any savings association organized in 
a form not requiring non-withdrawable stock under Federal or State law.
    (8) Resulting institution. The depository institution whose 
corporate existence continues after a combination.
    (9) Savings association has the same meaning as defined in 
Sec. 561.43 of this chapter.
    (10) State. Includes the District of Columbia, Commonwealth of 
Puerto Rico, and States, territories, and possessions of the United 
States.
    (11) Stock association. Any savings association organized in a form 
requiring non-withdrawable stock.
    (c) Forms of combination. A Federal stock association may combine 
with any depository institution, provided that:
    (1) The combination is in compliance with, and receives all 
approvals required under, any applicable statutes and regulations;
    (2) Any resulting Federal savings association meets the requirements 
for Federal Home Loan Bank membership and insurance of accounts;
    (3) In the case of a combination with a bank that is a member of the 
Bank Insurance Fund, any resulting Federal savings association conforms 
to the requirements of sections 5(c) and 10(m) of the Home Owners' Loan 
Act under the standards set forth in section 5(c)(5) of the Home Owners' 
Loan Act, and in the case of a combination with any other depository 
institution, any resulting Federal savings association conforms within 
the time prescribed by the OTS to the requirements of section 5(c) of 
the Home Owners' Loan Act; and
    (4) If any constituent savings association is a mutual savings 
association, the resulting institution shall be mutually held, unless:
    (i) The transaction involves a supervisory merger;
    (ii) The transaction is approved under part 563b of this chapter;
    (iii) The transaction involves an interim Federal stock association 
or an interim State stock savings association; or
    (iv) The transaction involves a transfer in the context of a mutual 
holding company reorganization under section 10(o) of the Home Owners' 
Loan Act.
    (d) Combinations. Prior written notification to, notice to, or prior 
written approval of, the Office pursuant to Sec. 563.22 of this chapter 
is required for every combination. In the case of applications and 
notices pursuant to Sec. 563.22 (a) or (c), the Office shall apply the 
criteria set out in Sec. 563.22 of this chapter and shall impose any 
conditions it deems necessary or appropriate to ensure compliance with 
those criteria and the requirements of this chapter.
    (e) Approval of the board of directors. Before filing a notice or 
application for any combination involving a Federal stock association, 
the combination shall be approved:
    (1) By a two-thirds vote of the entire board of each constituent 
Federal savings association; and

[[Page 137]]

    (2) As required by other applicable Federal or state law, for other 
constituent institutions.
    (f) Combination agreement. All terms, conditions, agreements or 
understandings, or other provisions with respect to a combination 
involving a Federal savings association shall be set forth fully in a 
written combination agreement. The combination agreement shall state:
    (1) That the combination shall not be effective unless and until:
    (i) The combination receives any necessary approval from the Office 
pursuant to Sec. 563.22 (a) or (c);
    (ii) In the case of a transaction requiring a notification pursuant 
to Sec. 563.22(b), notification has been provided to the OTS; or
    (iii) In the case of a transaction requiring a notice pursuant to 
Sec. 563.22(c), the notice has been filed, and the appropriate period of 
time has passed or the OTS has advised the parties that it will not 
disapprove the transaction;
    (2) Which constituent institution is to be the resulting 
institution;
    (3) The name of the resulting institution;
    (4) The location of the home office and any other offices of the 
resulting institution;
    (5) The terms and conditions of the combination and the method of 
effectuation;
    (6) Any charter amendments, or the new charter in the combination;
    (7) The basis upon which the savings accounts of the resulting 
institution shall be issued;
    (8) If a Federal association is the resulting institution, the 
number, names, residence addresses, and terms of directors;
    (9) The effect upon and assumption of any liquidation account of a 
disappearing institution by the resulting institution; and
    (10) Such other provisions, agreements, or understandings as relate 
to the combination.
    (g) [Reserved]
    (h) Approval by stockholders--(1) General rule. Except as otherwise 
provided in this section, an affirmative vote of two-thirds of the 
outstanding voting stock of any constituent Federal savings association 
shall be required for approval of the combination agreement. If any 
class of shares is entitled to vote as a class pursuant to Sec. 552.4 of 
this part, an affirmative vote of a majority of the shares of each 
voting class and two-thirds of the total voting shares shall be 
required. The required vote shall be taken at a meeting of the savings 
association.
    (2) General exception. Stockholders of the resulting Federal stock 
association need not authorize a combination agreement if:
    (i) It does not involve an interim Federal savings association or an 
interim state savings association;
    (ii) The association's charter is not changed;
    (iii) Each share of stock outstanding immediately prior to the 
effective date of the combination is to be an identical outstanding 
share or a treasury share of the resulting Federal stock association 
after such effective date; and
    (iv) Either:
    (A) No shares of voting stock of the resulting Federal stock 
association and no securities convertible into such stock are to be 
issued or delivered under the plan of combination, or
    (B) The authorized unissued shares or the treasury shares of voting 
stock of the resulting Federal stock association to be issued or 
delivered under the plan of combination, plus those initially issuable 
upon conversion of any securities to be issued or delivered under such 
plan, do not exceed 15% of the total shares of voting stock of such 
association outstanding immediately prior to the effective date of the 
combination.
    (3) Exceptions for certain combinations involving an interim 
association. Stockholders of a Federal stock association need not 
authorize by a two-thirds affirmative vote combinations involving an 
interim Federal savings association or interim state savings association 
when the resulting Federal stock association is acquired pursuant to 
Sec. 574.7(a)(2) of this chapter. In those cases, an affirmative vote of 
50 percent of the shares of the outstanding voting stock of the Federal 
stock association plus one affirmative vote shall be required. If any 
class of shares is entitled to vote as a class pursuant to Sec. 552.4 of

[[Page 138]]

this part, an affirmative vote of 50 percent of the shares of each 
voting class plus one affirmative vote shall be required. The required 
votes shall be taken at a meeting of the association.
    (i) Disclosure. The OTS may require, in connection with a 
combination under this section, such disclosure of information as the 
OTS deems necessary or desirable for the protection of investors in any 
of the constituent associations.
    (j) Articles of combination. (1) Following stockholder approval of 
any combination in which a Federal savings association is the resulting 
institution, articles of combination shall be executed in duplicate by 
each constituent institution, by its chief executive officer or 
executive vice president and by its secretary or an assistant secretary, 
and verified by one of the officers of each institution signing such 
articles, and shall set forth:
    (i) The plan of combination;
    (ii) The number of shares outstanding in each depository 
institution; and
    (iii) The number of shares in each depository institution voted for 
and against such plan.
    (2) Both sets of articles of combination shall be filed with the 
Office. If the Office determines that such articles conform to the 
requirements of this section, the Office shall endorse the articles and 
return one set to the resulting institution.
    (k) Effective date. No combination under this section shall be 
effective until receipt of any approvals required by the Office. The 
effective date of a combination in which the resulting institution is a 
Federal stock association shall be the date of consummation of the 
transaction or such other later date specified on the endorsement of the 
articles of combination by the Office. If a disappearing institution 
combining under this section is a Federal stock association, its charter 
shall be deemed to be cancelled as of the effective date of the 
combination and such charter must be surrendered to the Office as soon 
as practicable after the effective date.
    (l) Mergers and consolidations: transfer of assets and liabilities 
to the resulting institution. Upon the effective date of a merger or 
consolidation under this section, if the resulting institution is a 
Federal savings association, all assets and property (real, personal and 
mixed, tangible and intangible, choses in action, rights, and credits) 
then owned by each constituent institution or which would inure to any 
of them, shall, immediately by operation of law and without any 
conveyance, transfer, or further action, become the property of the 
resulting Federal savings association. The resulting Federal savings 
association shall be deemed to be a continuation of the entity of each 
constituent institution, the rights and obligations of which shall 
succeed to such rights and obligations and the duties and liabilities 
connected therewith, subject to the Home Owners' Loan Act and other 
applicable statutes.

[54 FR 49523, Nov. 30, 1989, as amended at 57 FR 14343, Apr. 20, 1992; 
59 FR 44623, Aug. 30, 1994]



Sec. 552.14  Dissenter and appraisal rights.

    (a) Right to demand payment of fair or appraised value. Except as 
provided in paragraph (b) of this section, any stockholder of a Federal 
stock association combining in accordance with Sec. 552.13 of this part 
shall have the right to demand payment of the fair or appraised value of 
his stock: Provided, That such stockholder has not voted in favor of the 
combination and complies with the provisions of paragraph (c) of this 
section.
    (b) Exceptions. No stockholder required to accept only qualified 
consideration for his or her stock shall have the right under this 
section to demand payment of the stock's fair or appraised value, if 
such stock was listed on a national securities exchange or quoted on the 
National Association of Securities Dealers' Automated Quotation System 
(``NASDAQ'') on the date of the meeting at which the combination was 
acted upon or stockholder action is not required for a combination made 
pursuant to Sec. 552.13(h)(2) of this part. ``Qualified consideration'' 
means cash, shares of stock of any association or corporation which at 
the effective date of the combination will be listed on a national 
securities exchange or quoted on NASDAQ, or any

[[Page 139]]

combination of such shares of stock and cash.
    (c) Procedure--(1) Notice. Each constituent Federal stock 
association shall notify all stockholders entitled to rights under this 
section, not less than twenty days prior to the meeting at which the 
combination agreement is to be submitted for stockholder approval, of 
the right to demand payment of appraised value of shares, and shall 
include in such notice a copy of this section. Such written notice shall 
be mailed to stockholders of record and may be part of management's 
proxy solicitation for such meeting.
    (2) Demand for appraisal and payment. Each stockholder electing to 
make a demand under this section shall deliver to the Federal stock 
association, before voting on the combination, a writing identifying 
himself or herself and stating his or her intention thereby to demand 
appraisal of and payment for his or her shares. Such demand must be in 
addition to and separate from any proxy or vote against the combination 
by the stockholder.
    (3) Notification of effective date and written offer. Within ten 
days after the effective date of the combination, the resulting 
association shall:
    (i) Give written notice by mail to stockholders of constituent 
Federal stock associations who have complied with the provisions of 
paragraph (c)(2) of this section and have not voted in favor of the 
combination, of the effective date of the combination;
    (ii) Make a written offer to each stockholder to pay for dissenting 
shares at a specified price deemed by the resulting association to be 
the fair value thereof; and
    (iii) Inform them that, within sixty days of such date, the 
respective requirements of paragraphs (c)(5) and (c)(6) of this section 
(set out in the notice) must be satisfied.

The notice and offer shall be accompanied by a balance sheet and 
statement of income of the association the shares of which the 
dissenting stockholder holds, for a fiscal year ending not more than 
sixteen months before the date of notice and offer, together with the 
latest available interim financial statements.
    (4) Acceptance of offer. If within sixty days of the effective date 
of the combination the fair value is agreed upon between the resulting 
association and any stockholder who has complied with the provisions of 
paragraph (c)(2) of this section, payment therefor shall be made within 
ninety days of the effective date of the combination.
    (5) Petition to be filed if offer not accepted. If within sixty days 
of the effective date of the combination the resulting association and 
any stockholder who has complied with the provisions of paragraph (c)(2) 
of this section do not agree as to the fair value, then any such 
stockholder may file a petition with the Office, with a copy by 
registered or certified mail to the resulting association, demanding a 
determination of the fair market value of the stock of all such 
stockholders. A stockholder entitled to file a petition under this 
section who fails to file such petition within sixty days of the 
effective date of the combination shall be deemed to have accepted the 
terms offered under the combination.
    (6) Stock certificates to be noted. Within sixty days of the 
effective date of the combination, each stockholder demanding appraisal 
and payment under this section shall submit to the transfer agent his 
certificates of stock for notation thereon that an appraisal and payment 
have been demanded with respect to such stock and that appraisal 
proceedings are pending. Any stockholder who fails to submit his or her 
stock certificates for such notation shall no longer be entitled to 
appraisal rights under this section and shall be deemed to have accepted 
the terms offered under the combination.
    (7) Withdrawal of demand. Notwithstanding the foregoing, at any time 
within sixty days after the effective date of the combination, any 
stockholder shall have the right to withdraw his or her demand for 
appraisal and to accept the terms offered upon the combination.
    (8) Valuation and payment. The Director shall, as he or she may 
elect, either appoint one or more independent persons or direct 
appropriate staff of the Office to appraise the shares to determine 
their fair market value, as of the

[[Page 140]]

effective date of the combination, exclusive of any element of value 
arising from the accomplishment or expectation of the combination. 
Appropriate staff of the Office shall review and provide an opinion on 
appraisals prepared by independent persons as to the suitability of the 
appraisal methodology and the adequacy of the analysis and supportive 
data. The Director after consideration of the appraisal report and the 
advice of the appropriate staff shall, if he or she concurs in the 
valuation of the shares, direct payment by the resulting association of 
the appraised fair market value of the shares, upon surrender of the 
certificates representing such stock. Payment shall be made, together 
with interest from the effective date of the combination, at a rate 
deemed equitable by the Director.
    (9) Costs and expenses. The costs and expenses of any proceeding 
under this section may be apportioned and assessed by the Director as he 
or she may deem equitable against all or some of the parties. In making 
this determination the Director shall consider whether any party has 
acted arbitrarily, vexatiously, or not in good faith in respect to the 
rights provided by this section.
    (10) Voting and distribution. Any stockholder who has demanded 
appraisal rights as provided in paragraph (c)(2) of this section shall 
thereafter neither be entitled to vote such stock for any purpose nor be 
entitled to the payment of dividends or other distributions on the stock 
(except dividends or other distribution payable to, or a vote to be 
taken by stockholders of record at a date which is on or prior to, the 
effective date of the combination): Provided, That if any stockholder 
becomes unentitled to appraisal and payment of appraised value with 
respect to such stock and accepts or is deemed to have accepted the 
terms offered upon the combination, such stockholder shall thereupon be 
entitled to vote and receive the distributions described above.
    (11) Status. Shares of the resulting association into which shares 
of the stockholders demanding appraisal rights would have been converted 
or exchanged, had they assented to the combination, shall have the 
status of authorized and unissued shares of the resulting association.



Sec. 552.15  Supervisory combinations.

    Notwithstanding the foregoing provisions of this part, the Director 
of the Office may waive or deem inapplicable any provision of 
Sec. 552.13 or Sec. 552.14 of this part if he or she determines that 
grounds exist, or may imminently exist, for appointment of a conservator 
or receiver for an association under subsection 5(d) of the Home Owners' 
Loan Act.



Sec. 552.16  Effect of subsequent charter or bylaw change.

    Notwithstanding any subsequent change to its charter or bylaws, the 
authority of a Federal stock association to engage in any transaction 
shall be determined only by the association's charter or bylaws then in 
effect.



PART 555--ELECTRONIC OPERATIONS--Table of Contents




Sec.
555.100  What does this part do?

    Subpart A--Authority of Federal Savings Associations to Conduct 
                          Electronic Operations

555.200  How may I use or participate with others to use electronic 
          means and facilities?
555.210  What precautions must I take?

     Subpart B--Requirements Applicable to All Savings Associations

555.300  Must I inform OTS before I use electronic means or facilities?
555.310  How do I notify OTS?

    Authority: 12 U.S.C. 1462a, 1463, 1464.

    Source: 63 FR 65682, Nov. 30, 1998, unless otherwise noted.



Sec. 555.100  What does this part do?

    Subpart A of this part describes how a Federal savings association 
may provide products and services through electronic means and 
facilities. Subpart B of this part contains requirements applicable to 
all savings associations.

[[Page 141]]



    Subpart A--Authority of Federal Savings Associations to Conduct 
                          Electronic Operations



Sec. 555.200  How may I use or participate with others to use electronic means and facilities?

    (a) General. A Federal savings association (``you'') may use, or 
participate with others to use, electronic means or facilities to 
perform any function, or provide any product or service, as part of an 
authorized activity. Electronic means or facilities include, but are not 
limited to, automated teller machines, automated loan machines, personal 
computers, the Internet, the World Wide Web, telephones, and other 
similar electronic devices.
    (b) Other. To optimize the use of your resources, you may market and 
sell, or participate with others to market and sell, electronic 
capacities and by-products to third-parties, if you acquired or 
developed these capacities and by-products in good faith as part of 
providing financial services.



Sec. 555.210  What precautions must I take?

    If you use electronic means and facilities under this subpart, your 
management must:
    (a) Identify, assess, and mitigate potential risks and establish 
prudent internal controls; and
    (b) Implement security measures designed to ensure secure 
operations. Such measures must be adequate to:
    (1) Prevent unauthorized access to your records and your customers' 
records;
    (2) Prevent financial fraud through the use of electronic means or 
facilities; and
    (3) Comply with applicable security devices requirements of part 568 
of this chapter.



     Subpart B--Requirements Applicable to All Savings Associations



Sec. 555.300  Must I inform OTS before I use electronic means or facilities?

    (a) General. A savings association (``you'') are not required to 
inform OTS before you use electronic means or facilities, except as 
provided in paragraphs (b) and (c) of this section. However, OTS 
encourages you to consult with your Regional Office before you engage in 
any activities using electronic means or facilities.
    (b) Activities requiring advance notice. You must file a written 
notice as described in Sec. 555.310 before you establish a transactional 
web site. A transactional web site is an Internet site that enables 
users to conduct financial transactions such as accessing an account, 
obtaining an account balance, transferring funds, processing bill 
payments, opening an account, applying for or obtaining a loan, or 
purchasing other authorized products or services.
    (c) Other procedures. If the OTS Regional Office informs you of any 
supervisory or compliance concerns that may affect your use of 
electronic means or facilities, you must follow any procedures it 
imposes in writing.



Sec. 555.310  How do I notify OTS?

    (a) Notice requirement. You must file a written notice with the 
appropriate Regional Office listed at Sec. 516.40(a) of this chapter at 
least 30 days before you establish a transactional website. The notice 
must do three things:
    (1) Describe the transactional web site.
    (2) Indicate the date the transactional web site will become 
operational.
    (3) List a contact familiar with the deployment, operation, and 
security of the transactional web site.
    (b) Transition provision. If you established a transactional web 
site after the date of your last regular onsite OTS safety and soundness 
examination but before January 1, 1999, you must file a notice 
describing your activity by February 1, 1999.

[63 FR 65682, Nov. 30, 1998, as amended at 66 FR 13006, Mar. 2, 2001]



PART 557--DEPOSITS--Table of Contents




                           Subpart A--General

Sec.
557.1  What does this part do?

[[Page 142]]

      Subpart B--Deposit Activities of Federal Savings Associations

557.10  What authorities govern the issuance of deposit accounts by a 
          federal savings association?
557.11  To what extent does Federal law preempt deposit-related State 
          laws?
557.12  What are some examples of preempted state laws affecting 
          deposits?
557.13  What State laws affecting deposits are not preempted?
557.14  What interest rate may I pay on savings accounts?
557.15  Who owns a deposit account?

        Subpart C--Deposit Activities of All Savings Associations

557.20  What records should I maintain on deposit activities?

    Authority: 12 U.S.C. 1462a, 1463, 1464.

    Source: 62 FR 54764, Oct. 22, 1997, unless otherwise noted.



                           Subpart A--General



Sec. 557.1  What does this part do?

    This part applies to the deposit activities of savings associations. 
If you are a federal savings association, subpart B of this part applies 
to your deposit activities. Subpart C of this part applies to the 
deposit activities of all federal and state-chartered savings 
associations.



      Subpart B--Deposit Activities of Federal Savings Associations



Sec. 557.10  What authorities govern the issuance of deposit accounts by a federal savings association?

    A federal savings association (``you'') may raise funds through 
accounts and may issue evidence of accounts under section 5(b)(1) of the 
HOLA (12 U.S.C. 1464(b)(1)), your charter, and this part. Additionally, 
12 CFR parts 204 and 230 apply to your deposit activities.



Sec. 557.11  To what extent does Federal law preempt deposit-related State laws?

    (a) Under sections 4(a), 5(a), and 5(b) of the HOLA, 12 U.S.C. 
1463(a), 1464(a), and 1464(b), OTS is authorized to promulgate 
regulations that preempt state laws affecting the operations of federal 
savings associations when appropriate to:
    (1) Facilitate the safe and sound operations of federal savings 
associations;
    (2) Enable federal savings associations to operate according to the 
best thrift institutions practices in the United States; or
    (3) Further other purposes of HOLA.
    (b) To further these purposes without undue regulatory duplication 
and burden, OTS hereby occupies the entire field of federal savings 
associations' deposit-related regulations. OTS intends to give federal 
savings associations maximum flexibility to exercise deposit-related 
powers according to a uniform federal scheme of regulation. Federal 
savings associations may exercise deposit-related powers as authorized 
under federal law, including this part, without regard to state laws 
purporting to regulate or otherwise effect deposit activities, except to 
the extent provided in Sec. 557.13. State law includes any statute, 
regulation, ruling, order, or judicial decision.

[62 FR 54764, Oct. 22, 1997, as amended at 63 FR 71212, Dec. 24, 1998; 
64 FR 69184, Dec. 10, 1999]



Sec. 557.12  What are some examples of preempted state laws affecting deposits?

    The OTS preempts state laws that purport to impose requirements 
governing the following:
    (a) Abandoned and dormant accounts;
    (b) Checking accounts;
    (c) Disclosure requirements;
    (d) Funds availability;
    (e) Savings account orders of withdrawal;
    (f) Service charges and fees;
    (g) State licensing or registration requirements; and
    (h) Special purpose savings services.



Sec. 557.13  What State laws affecting deposits are not preempted?

    (a) The OTS has not preempted the following types of state law, to 
the extent that the law only incidentally affects your deposit-related 
activities or is otherwise consistent with the purposes of Sec. 557.11:
    (1) Contract and commercial law;
    (2) Tort law; and
    (3) Criminal law.

[[Page 143]]

    (b) The OTS will not preempt any other state law if the OTS, upon 
review, finds that the law:
    (1) Furthers a vital state interest; and
    (2) Either only incidentally affects your deposit-related activities 
or is not otherwise contrary to the purposes expressed in Sec. 557.11.



Sec. 557.14  What interest rate may I pay on savings accounts?

    (a) You may pay interest at any rate or anticipated rate of return 
on savings accounts, either in deposit or in share form, as provided in 
your charter and the account's terms.
    (b) You may pay fixed or variable rates. If you pay a variable rate, 
you must base it on a schedule, index, or formula that you specify in 
the account's terms.



Sec. 557.15  Who owns a deposit account?

    You may treat the holder of record as the account owner, even if you 
receive contrary notice, until you transfer the account on your records.



        Subpart C--Deposit Activities of All Savings Associations



Sec. 557.20  What records should I maintain on deposit activities?

    All federal and state chartered savings associations (``you'') 
should establish and maintain deposit documentation practices and 
records that demonstrate that you appropriately administer and monitor 
deposit-related activities. Your records should adequately evidence 
ownership, balances, and all transactions involving each account. You 
may maintain records on deposit activities in any format that is 
consistent with standard business practices.



PART 558--POSSESSION BY CONSERVATORS AND RECEIVERS FOR FEDERAL AND STATE SAVINGS ASSOCIATIONS--Table of Contents




Sec.
558.1  Procedure upon taking possession.
558.2  Notice of appointment.

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.



Sec. 558.1  Procedure upon taking possession.

    (a) The conservator or receiver for a Federal or state savings 
association shall take possession of the savings association by taking 
possession of the principal office of the Federal or state savings 
association in accordance with the terms of the Director's appointment.
    (b) Upon taking possession, the conservator or receiver shall 
immediately:
    (1) Give notice of the appointment to any officer or employee in the 
principal office who appears to be in charge of that office.
    (2) Serve a copy of the order of appointment upon the savings 
association or upon its conservator or receiver by:
    (i) Leaving a certified copy of the order of appointment at the 
principal office of the savings association; or
    (ii) Handing a certified copy of the order of appointment to the 
previous conservator, receiver or other legal custodian of the savings 
association, or to the officer or employee of the savings association or 
of the previous conservator, receiver or other legal custodian in the 
principal office of the savings association who appears to be in charge.
    (3) Take possession of the savings association's books, records and 
assets.
    (4) Notify in writing, served personally or by registered mail or 
telegraph, all persons and entities that the conservator or receiver 
knows to be holding or in possession of assets of the savings 
association, that the conservator or receiver has succeeded to all 
rights, titles, powers and privileges of the savings associations.
    (5) File with the Corporate Secretary a statement that possession 
was taken, including the time of the taking, which statement shall be 
conclusive evidence thereof.
    (6) Post a notice on the door of the principal and other offices of 
the savings association in the form prescribed by the Director of the 
OTS.
    (7) By operation of law and without any conveyance or other 
instrument, act or deed, succeed to the rights, titles, powers and 
privileges of the savings association, and to the rights,

[[Page 144]]

powers, and privileges of its stockholders, members, accountholders, 
depositors, officers, and directors. No stockholder, member, 
accountholder, depositor, officer or director shall thereafter have or 
exercise any right, power, or privilege, or act in connection with any 
of the savings association's assets or property.

[58 FR 4312, Jan. 14, 1993, as amended at 59 FR 53571, Oct. 25, 1994]



Sec. 558.2  Notice of appointment.

    If the Director of the OTS appoints a conservator or receiver under 
this part, notice of the appointment shall be filed immediately for 
publication in the Federal Register.

[59 FR 53571, Oct. 25, 1994]



PART 559--SUBORDINATE ORGANIZATIONS--Table of Contents




Sec.
559.1  What does this part cover?
559.2  Definitions.

    Subpart A--Regulations Applicable to Federal Savings Associations

559.3  What are the characteristics of, and what requirements apply to, 
          subordinate organizations of Federal savings associations?
559.4  What activities are preapproved for service corporations?
559.5  How much may a savings association invest in service corporations 
          or lower-tier entities?

      Subpart B--Regulations Applicable to All Savings Associations

559.10  How must separate corporate identities be maintained?
559.11  What notices are required to establish or acquire a new 
          subsidiary or engage in new activities through an existing 
          subsidiary?
559.12  How may a subsidiary of a savings association issue securities?
559.13  How may a savings association exercise its salvage power in 
          connection with its service corporation or lower-tier 
          entities?

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1828.

    Source: 61 FR 66571, Dec. 18, 1996, unless otherwise noted.



Sec. 559.1  What does this part cover?

    (a) OTS is issuing this part 559 pursuant to its general rulemaking 
and supervisory authority under the Home Owners' Loan Act, 12 U.S.C. 
1462 et seq., and its specific authority under section 18(m) of the 
Federal Deposit Insurance Act, 12 U.S.C. 1828(m). Subpart A of this part 
559 applies to subordinate organizations of federal savings 
associations. Subpart B of this part applies to subordinate 
organizations of all savings associations. OTS may, at any time, limit a 
savings association's investment in any of these entities, or may limit 
or refuse to permit any activities of any of these entities for 
supervisory, legal, or safety and soundness reasons.
    (b) Notices under this part are applications for purposes of 
statutory and regulatory references to ``applications.'' Any conditions 
that OTS imposes in approving any application are enforceable as a 
condition imposed in writing by the OTS in connection with the granting 
of a request by a savings association within the meaning of 12 U.S.C. 
1818(b) or 1818(i).



Sec. 559.2  Definitions.

    For purposes of this part:
    Control has the same meaning as in part 574 of this chapter.
    GAAP-consolidated subsidiary means an entity in which a savings 
association has a direct or indirect ownership interest and whose assets 
are consolidated with those of the savings association for purposes of 
reporting under Generally Accepted Accounting Principles (GAAP). 
Generally, these are entities in which a savings association has a 
majority ownership interest.
    Lower-tier entity includes any company in which an operating 
subsidiary or a service corporation has a direct or indirect ownership 
interest.
    Operating subsidiary means any entity that satisfies all of the 
requirements for an operating subsidiary set forth in Sec. 559.3 of this 
part and that is designated by the parent savings association as an 
operating subsidiary pursuant to Sec. 559.3 of this part. More than 50% 
of the voting shares of an operating subsidiary must be owned, directly 
or indirectly, by a federal savings association and no other person or

[[Page 145]]

entity may exercise effective operating control. An operating subsidiary 
may only engage in activities permissible for a federal savings 
association.
    Ownership interest means any equity interest in a business 
organization, including stock, limited or general partnership interests, 
or shares in a limited liability company.
    Service corporation means any entity that satisfies all of the 
requirements for service corporations in 12 U.S.C. 1464(c)(4)(B) and 
Sec. 559.3 of this part and that is designated by the investing savings 
association as a service corporation pursuant to Sec. 559.3 of this 
part. A service corporation must be organized under the laws of the 
state where the federal savings association's home office is located, 
may only be owned by savings associations with home offices in that 
state, and may engage in the activities identified in Secs. 559.3(e)(2) 
and 559.4 of this part.
    Subordinate organization means any corporation, partnership, 
business trust, association, joint venture, pool, syndicate, or other 
similar business organization in which a savings association has a 
direct or indirect ownership interest, unless that ownership interest 
qualifies as a pass-through investment pursuant to Sec. 560.32 of this 
chapter and is so designated by the investing savings association.
    Subsidiary means any subordinate organization directly or indirectly 
controlled by a savings association.



    Subpart A--Regulations Applicable to Federal Savings Associations



Sec. 559.3  What are the characteristics of, and what requirements apply to, subordinate organizations of Federal savings associations?

    A federal savings association (``you'') that meets the requirements 
of this section, as detailed in the following chart, may establish, or 
obtain an interest in an operating subsidiary or a service corporation. 
For ease of reference, this section cross-references other regulations 
in this chapter affecting operating subsidiaries and service 
corporations. You should refer to those regulations for the details of 
how they apply. The chart also discusses the regulations that may apply 
to lower-tier entities in which you have an indirect ownership interest 
through your operating subsidiary or service corporation. The chart 
follows:

----------------------------------------------------------------------------------------------------------------
                                              Operating subsidiary                   Service corporation
----------------------------------------------------------------------------------------------------------------
(a) How may a federal savings         (1) You must file a notice            (2) You must file a notice
 association (``you'') establish an    satisfying Sec.  559.11. Any          satisfying Sec.  559.11. Depending
 operating subsidiary or a service     finance subsidiary that existed on    upon your condition and the
 corporation?                          January 1, 1997 is deemed an          activities in which the service
                                       operating subsidiary without          corporation will engage, Sec.
                                       further action on your part.          559.3(e)(2) may require you to file
                                                                             an application.
 
----------------------------------------------------------------------------------------------------------------
(b) Who may be an owner?              (1) Anyone may have an ownership      (2) Only savings associations with
                                       interest in an operating              home offices in the state where you
                                       subsidiary.                           have your home office may have an
                                                                             ownership interest in any service
                                                                             corporation in which you invest.
 
----------------------------------------------------------------------------------------------------------------

[[Page 146]]

 
(c) What ownership requirements       (1) You must own, directly or         (2) You are not required to have any
 apply?                                indirectly, more than 50% of the      particular percentage ownership
                                       voting shares of the operating        interest and need not have control
                                       subsidiary. No one else may           of the service corporation.
                                       exercise effective operating
                                       control.
 
----------------------------------------------------------------------------------------------------------------
(d) What geographic restrictions      (1) An operating subsidiary may be    (2) A service corporation must be
 apply?                                organized in any geographic           organized in the state where your
                                       location.                             home office is located.
 
----------------------------------------------------------------------------------------------------------------
(e) What activities are permissible?  (1) After you have notified OTS in    (2)(i) If you are eligible for
                                       accordance with Sec.  559.11, an      expedited treatment under Sec.
                                       operating subsidiary may engage in    516.5 of this chapter, and notify
                                       any activity that you may conduct     OTS as required by Sec.  559.11,
                                       directly. You may hold another        your service corporation may engage
                                       insured depository institution as     in the preapproved activities
                                       an operating subsidiary.              listed in Sec.  559.4. You may
                                                                             request OTS approval for your
                                                                             service corporation to engage in
                                                                             any other activity reasonably
                                                                             related to the activities of
                                                                             financial institutions by filing an
                                                                             application in accordance with
                                                                             standard treatment processing
                                                                             procedures at part 516, subparts A
                                                                             and E of this chapter.
                                                                            (ii) If you are subject to standard
                                                                             treatment under Sec.  516.5 of this
                                                                             chapter, and notify OTS as required
                                                                             by Sec.  559.11, your service
                                                                             corporation may engage in any
                                                                             activity that you may conduct
                                                                             directly except taking deposits.
                                                                             You may request OTS approval for
                                                                             your service corporation to engage
                                                                             in any other activity reasonably
                                                                             related to the activities of
                                                                             financial institutions, including
                                                                             the activities set forth in Sec.
                                                                             559.4(b)-(i), by filing an
                                                                             application in accordance with
                                                                             standard treatment processing
                                                                             procedures at part 516, subparts A
                                                                             and E of this chapter.
 
----------------------------------------------------------------------------------------------------------------

[[Page 147]]

 
(f) May the operating subsidiary or   (1)(i) An operating subsidiary may    (2) A service corporation may invest
 service corporation invest in lower-  itself hold an operating              in all types of lower-tier entities
 tier entities?                        subsidiary. Part 559 applies          as long as the lower-tier entity is
                                       equally to a lower-tier operating     engaged solely in activities that
                                       subsidiary. In applying the           are permissible for a service
                                       regulations in this part, the         corporation. All of the
                                       investing operating subsidiary        requirements of this part apply to
                                       should substitute ``investing         such entities except for paragraphs
                                       operating subsidiary'' wherever the   (b)(2) and (d)(2) of this section.
                                       part uses ``you'' or ``savings
                                       association.''
 
                                      (ii) An operating subsidiary may
                                       also invest in other types of lower-
                                       tier entities. These entities must
                                       comply with all of the requirements
                                       of this part 559 that apply to
                                       service corporations except for
                                       paragraphs (b)(2) and (d)(2) of
                                       this section.
 
----------------------------------------------------------------------------------------------------------------
(g) How much may a federal savings    (1) There are no limits on the        (2) Section 559.5 limits your
 association invest?                   amount you may invest in your         aggregate investments in service
                                       operating subsidiaries, either        corporations and indicates when
                                       separately or in the aggregate.       your investments (both debt and
                                                                             equity) in lower-tier entities must
                                                                             be aggregated with your investments
                                                                             in service corporations.
 
----------------------------------------------------------------------------------------------------------------
(h) Do federal statutes and           (1) Unless otherwise specifically     (2) (i) If the federal statute or
 regulations that apply to the         provided by statute, regulation, or   regulation specifically refers to
 savings association apply?            OTS policy, all federal statutes      ``service corporation,'' it applies
                                       and regulations apply to operating    to all service corporations, even
                                       subsidiaries in the same manner as    if you do not control the service
                                       they apply to you. You and your       corporation or it is not a GAAP-
                                       operating subsidiary are generally    consolidated subsidiary.
                                       consolidated and treated as a unit   (ii) If the federal statute or
                                       for statutory and regulatory          regulation refers to
                                       purposes.                             ``subsidiary,'' it applies only to
                                                                             service corporations that you
                                                                             directly or indirectly control.
----------------------------------------------------------------------------------------------------------------

[[Page 148]]

 
(i) Do the investment limits that     (1) Your assets and those of your     (2) Your service corporation's
 apply to federal savings              operating subsidiary are aggregated   assets are not subject to the same
 associations (HOLA section 5(c) and   when calculating investment           investment limitations that apply
 part 560 of this chapter) apply?      limitations.                          to you. The investment activities
                                                                             of your service corporation are
                                                                             governed by paragraph (e)(2) of
                                                                             this section and Sec.  559.4.
 
----------------------------------------------------------------------------------------------------------------
(j) How does the capital regulation   (1) Your assets and those of your     (2) The capital treatment of a
 (part 567 of this chapter) apply?     operating subsidiary are              service corporation depends upon
                                       consolidated for all capital          whether it is an includable
                                       purposes.                             subsidiary. That determination is
                                                                             based upon factors set forth in
                                                                             part 567 of this chapter, including
                                                                             your percentage ownership of the
                                                                             service corporation and the
                                                                             activities in which the service
                                                                             corporation engages. Both debt and
                                                                             equity investments in service
                                                                             corporations that are GAAP-
                                                                             consolidated subsidiaries are
                                                                             considered investments in
                                                                             subsidiaries for purposes of the
                                                                             capital regulation, regardless of
                                                                             the authority under which they are
                                                                             made.
 
----------------------------------------------------------------------------------------------------------------
(k) How does the loans-to-one-        (1) The LTOB regulation does not      (2) The LTOB regulation does not
 borrower (LTOB) regulation (Sec.      apply to loans from you to your       apply to loans from you to your
 560.93 of this chapter) apply?        operating subsidiary or loans from    service corporation or from your
                                       your operating subsidiary to you.     service corporation to you.
                                       Other loans made by your operating    However, Sec.  559.5 imposes
                                       subsidiary are aggregated with your   restrictions on the amount of loans
                                       loans for LTOB purposes.              you may make to certain service
                                                                             corporations. Loans made by a
                                                                             service corporation that you
                                                                             control to entities other than you
                                                                             or your subordinate organizations
                                                                             are aggregated with your loans for
                                                                             LTOB purposes.
 
----------------------------------------------------------------------------------------------------------------

[[Page 149]]

 
(l) How do the transactions with      (1) Section 563.41 of this chapter    (2) Section 563.41 of this chapter
 affiliates (TWA) regulations (Secs.   explains how TWA applies.             explains how TWA applies.
 563.41 and 563.42 of this chapter)    Generally, an operating subsidiary    Generally, a service corporation
 apply?                                of a savings association is not       that is controlled by a savings
                                       deemed to be an affiliate unless it   association is not deemed to be an
                                       is a depository institution or the    affiliate of that savings
                                       parent holding company or another     association unless it is a
                                       affiliate has control of the          depository institution or the
                                       subsidiary outside of the ownership   parent holding company or another
                                       chain that runs through the thrift.   affiliate has control of the
                                       Transactions that an operating        service corporation outside of the
                                       subsidiary engages in with an         ownership chain that runs through
                                       affiliate of the thrift are           the thrift. Transactions that a
                                       aggregated with those of the          service corporation that is
                                       thrift.                               directly or indirectly controlled
                                                                             by the savings association engages
                                                                             in with an affiliate of the savings
                                                                             association are aggregated with
                                                                             those of the savings association.
 
----------------------------------------------------------------------------------------------------------------
(m) How does the Qualified Thrift     (1) Under 12 U.S.C. 1467a(m)(5), you  (2) Under 12 U.S.C. 1467a(m)(5), you
 Lender (QTL) (12 U.S.C. 1467a(m))     may determine whether to              may determine whether to
 test apply?                           consolidate the assets of a           consolidate the assets of a
                                       particular operating subsidiary for   particular service corporation for
                                       purposes of calculating your          purposes of calculating your
                                       qualified thrift investments. If      qualified thrift investments. If a
                                       the operating subsidiary's assets     service corporation's assets are
                                       are not consolidated with yours for   not consolidated with yours for
                                       that purpose, your investment in      that purpose, your investment in
                                       the operating subsidiary will be      the service corporation will be
                                       considered in calculating your        considered in calculating your
                                       qualified thrift investments.         qualified thrift investments.
 
----------------------------------------------------------------------------------------------------------------
(n) Does state law apply?             (1) State law applies to operating    (2) State law applies to service
                                       subsidiaries only to the extent it    corporations regardless of whether
                                       applies to you.                       it applies to you, except where
                                                                             there is a conflict with federal
                                                                             law.
 
----------------------------------------------------------------------------------------------------------------
(o) May OTS conduct examinations?     (1) An operating subsidiary is        (2) A service corporation is subject
                                       subject to examination by OTS.        to examination by OTS.
 
----------------------------------------------------------------------------------------------------------------

[[Page 150]]

 
(p) What must be done to redesignate  (1) Before redesignating an           (2) Before redesignating a service
 an operating subsidiary as a          operating subsidiary as a service     corporation as an operating
 service corporation or a service      corporation, you should consult       subsidiary, you should consult with
 corporation as an operating           with the OTS Regional Director for    the OTS Regional Director for the
 subsidiary?                           the Region in which your home         Region in which your home office is
                                       office is located. You must           located. You must maintain adequate
                                       maintain adequate internal records,   internal records, available for
                                       available for examination by OTS,     examination by OTS, demonstrating
                                       demonstrating that the redesignated   that the redesignated operating
                                       service corporation meets all of      subsidiary meets all of the
                                       the applicable requirements of this   applicable requirements of this
                                       part and that your board of           part and that your board of
                                       directors has approved the            directors has approved the
                                       redesignation.                        redesignation.
 
----------------------------------------------------------------------------------------------------------------
(q) What are the consequences of      (1) If an operating subsidiary, or    (2) If a service corporation, or any
 failing to comply with the            any lower-tier entity in which the    lower-tier entity in which the
 requirements of this part?            operating subsidiary invests          service corporation invests
                                       pursuant to paragraph (f)(1) of       pursuant to paragraph (f)(2) of
                                       this section fails to meet any of     this section, fails to meet any of
                                       the requirements of this section,     the requirements of this section,
                                       you must notify OTS. Unless           you must notify OTS. Unless
                                       otherwise advised by OTS, if the      otherwise advised by OTS, if the
                                       company cannot comply within 90       company cannot comply within 90
                                       days with all of the requirements     days with all of the requirements
                                       for either an operating subsidiary    for either an operating subsidiary
                                       or a service corporation under this   or a service corporation under this
                                       section, or any other investment      section, or any other investment
                                       authorized by 12 U.S.C. 1464(c) or    authorized by 12 U.S.C. 1464(c) or
                                       part 560 of this chapter, you must    part 560 of this chapter, you must
                                       promptly dispose of your              promptly dispose of your
                                       investment.                           investment.
----------------------------------------------------------------------------------------------------------------

[61 FR 66571, Dec. 18, 1996, as amended at 62 FR 66262, Dec. 18, 1997; 
63 FR 65683, Nov. 30, 1998; 66 FR 13006, Mar. 2, 2001]



Sec. 559.4  What activities are preapproved for service corporations?

    This section sets forth the activities that have been preapproved 
for service corporations. Section 559.3(e)(2) of this part sets forth 
the procedures for engaging in a broader scope of activities on a case-
by-case basis. You should read these two sections together to determine 
whether you must file a notice with OTS under Sec. 559.11 of this part, 
or whether you must file an application under part 516 of this chapter 
and receive prior written OTS approval for your service corporation to 
engage in a particular activity. To the extent permitted by 
Sec. 559.3(e)(2) of this part, a service corporation may engage in the 
following activities:
    (a) Any activity that all federal savings associations may conduct 
directly, except taking deposits.
    (b) Business and professional services. The following services are 
preapproved for service corporations

[[Page 151]]

only when they are limited to financial documents or financial clients 
or are generally finance-related:
    (1) Accounting or internal audit;
    (2) Advertising, marketing research and other marketing;
    (3) Clerical;
    (4) Consulting;
    (5) Courier;
    (6) Data processing;
    (7) Data storage facilities operation and related services;
    (8) Office supplies, furniture, and equipment purchasing and 
distribution;
    (9) Personnel benefit program development or administration;
    (10) Printing and selling forms that require Magnetic Ink Character 
Recognition (MICR) encoding;
    (11) Relocation of personnel;
    (12) Research studies and surveys;
    (13) Software development and systems integration; and
    (14) Remote service unit operation, leasing, ownership or 
establishment.
    (c) Credit-related activities.
    (1) Abstracting;
    (2) Acquiring and leasing personal property;
    (3) Appraising;
    (4) Collection agency;
    (5) Credit analysis;
    (6) Check or credit card guaranty and verification;
    (7) Escrow agent or trustee (under deeds of trust, including 
executing and deliverance of conveyances, reconveyances and transfers of 
title); and
    (8) Loan inspection.
    (d) Consumer services.
    (1) Financial advice or consulting;
    (2) Foreign currency exchange;
    (3) Home ownership counseling;
    (4) Income tax return preparation;
    (5) Postal services;
    (6) Stored value instrument sales;
    (7) Welfare benefit distribution;
    (8) Check printing and related services; and
    (9) Remote service unit operation, leasing, ownership, or 
establishment.
    (e) Real estate related services.
    (1) Acquiring real estate for prompt development or subdivision, for 
construction of improvements, for resale or leasing to others for such 
construction, or for use as manufactured home sites, in accordance with 
a prudent program of property development;
    (2) Acquiring improved real estate or manufactured homes to be held 
for rental or resale, for remodeling, renovating, or demolishing and 
rebuilding for sale or rental, or to be used for offices and related 
facilities of a stockholder of the service corporation;
    (3) Maintaining and managing real estate; and
    (4) Real estate brokerage for property owned by a savings 
association that owns capital stock of the service corporation, the 
service corporation, or a lower-tier entity in which the service 
corporation invests.
    (f) Securities brokerage, insurance and related services.
    (1) Execution of transactions in securities or other nondeposit 
investment products on an agency or riskless principal basis solely upon 
the order of and for the account of customers, provided that the service 
corporation complies with the provisions of Sec. 545.74 of this chapter;
    (2) Investment advice, provided that the service corporation 
complies with the provisions of Sec. 545.74 of this chapter;
    (3) Insurance brokerage or agency for liability, casualty, 
automobile, life, health, accident or title insurance;
    (4) Liquidity management;
    (5) Issuing notes, bonds, debentures or other obligations or 
securities; and
    (6) Purchase or sale of coins issued by the U.S. Treasury.
    (g) Investments.
    (1) Tax-exempt bonds used to finance residential real property for 
family units;
    (2) Tax-exempt obligations of public housing agencies used to 
finance housing projects with rental assistance subsidies;
    (3) Small business investment companies and new markets venture 
capital companies licensed by the U.S. Small Business Administration; 
and
    (4) Investing in savings accounts of an investing thrift.
    (h) Community development and charitable activities:
    (1) Investments in governmentally insured, guaranteed, subsidized or 
otherwise sponsored programs for housing, small farms, or businesses 
that are local in character;

[[Page 152]]

    (2) Investments designed primarily to promote the public welfare, 
including the welfare of low- and moderate-income communities or 
families (such as providing housing, services, or jobs);
    (3) Investments in low-income housing tax credit and new markets tax 
credit projects and entities authorized by statute (e.g., community 
development financial institutions) to promote community, inner city, 
and community development purposes; and
    (4) Establishing a corporation that is recognized by the Internal 
Revenue Service as organized for charitable purposes under 26 U.S.C. 
501(c)(3) of the Internal Revenue Code and making a reasonable 
contribution to capitalize it, provided that the corporation engages 
exclusively in activities designed to promote the well-being of 
communities in which the owners of the service corporation operate.
    (i) Activities conducted on behalf of a customer on an other than 
``as principal'' basis.
    (j) Activities reasonably incident to those listed in paragraphs (a) 
through (i) of this section if the service corporation engages in those 
activities.

[61 FR 66571, Dec. 18, 1996, as amended by 66 FR 13007, Mar. 2, 2001; 66 
FR 65824, Dec. 21, 2001]



Sec. 559.5  How much may a savings association invest in service corporations or lower-tier entities?

    The amount that a federal savings association (``you'') may invest 
in a service corporation or any lower-tier entity depends upon several 
factors. These include your total assets, your capital, the purpose of 
the investment, and your ownership interest in the service corporation 
or entity.
    (a) Under section 5(c)(4)(B) of the HOLA, you may invest up to 3% of 
your assets in the capital stock, obligations, and other securities of 
service corporations. Any investment you make under this paragraph that 
would cause your investment, in the aggregate, to exceed 2% of your 
assets must serve primarily community, inner city, or community 
development purposes. You must designate the investments serving those 
purposes, which include:
    (1) Investments in governmentally insured, guaranteed, subsidized or 
otherwise sponsored programs for housing, small farms, or businesses 
that are local in character;
    (2) Investments for the preservation or revitalization of either 
urban or rural communities;
    (3) Investments designed to meet the community development needs of, 
and primarily benefit, low- and moderate-income communities; or
    (4) Other community, inner city, or community development-related 
investments approved by OTS.
    (b) In addition to the amounts you may invest under paragraph (a) of 
this section, and to the extent that you have authority under other 
provisions of section 5(c) of the HOLA and part 560 of this chapter, and 
available capacity within any applicable investment limits, you may make 
loans to any service corporation and any lower-tier entity, subject to 
the following conditions:
    (1) You and your GAAP-consolidated subsidiaries may, in the 
aggregate, make loans of up to 15% of your capital as defined in 
Sec. 567.5(c) of this chapter to each subordinate organization that does 
not qualify as a GAAP-consolidated subsidiary. All loans made under this 
paragraph (b)(1) may not, in the aggregate, exceed 50% of your total 
capital, as defined in Sec. 567.5(c) of this chapter.
    (2) The Regional Director may limit the amount of loans to a GAAP-
consolidated subsidiary, or may adjust the limits set forth in paragraph 
(b)(1) of this section where safety and soundness considerations warrant 
such action.
    (c) For purposes of this section, the terms ``loans'' and 
``obligations'' include all loans and other debt instruments (except 
accounts payable incurred in the ordinary course of business and paid 
within 60 days) and all guarantees or take-out commitments of such loans 
or debt instruments.



      Subpart B--Regulations Applicable to All Savings Associations



Sec. 559.10  How must separate corporate identities be maintained?

    (a) Each savings association and subordinate organization thereof 
must be

[[Page 153]]

operated in a manner that demonstrates to the public that each maintains 
a separate corporate existence. Each must operate so that:
    (1) Their respective business transactions, accounts, and records 
are not intermingled;
    (2) Each observes the formalities of their separate corporate 
procedures;
    (3) Each is adequately financed as a separate unit in light of 
normal obligations reasonably foreseeable in a business of its size and 
character;
    (4) Each is held out to the public as a separate enterprise; and
    (5) Unless the parent savings association has guaranteed a loan to 
the subordinate organization, all borrowings by the subordinate 
organization indicate that the parent is not liable.
    (b) OTS regulations that apply both to savings associations and 
subordinate organizations shall not be construed as requiring a savings 
association and its subordinate organizations to operate as a single 
entity.



Sec. 559.11  What notices are required to establish or acquire a new subsidiary or engage in new activities through an existing subsidiary?

    When required by section 18(m) of the Federal Deposit Insurance Act, 
a savings association (``you'') must file a notice (``Notice'') under 
part 516, subpart A of this chapter at least 30 days before establishing 
or acquiring a subsidiary or engaging in new activities in a subsidiary. 
The Notice must contain all of the information the Federal Deposit 
Insurance Corporation (FDIC) requires under 12 CFR 362.15. Providing OTS 
with a copy of the notice you file with the FDIC will satisfy this 
requirement. If OTS notifies you within 30 days that the Notice presents 
supervisory concerns, or raises significant issues of law or policy, you 
must apply for and receive OTS's prior written approval under the 
standard treatment processing procedures at part 516, subpart A and E of 
this chapter before establishing or acquiring the subsidiary or engaging 
in new activities in the subsidiary.

[61 FR 66571, Dec. 18, 1996, as amended at 64 FR 69185, Dec. 10, 1999; 
66 FR 13007, Mar. 2, 2001]



Sec. 559.12  How may a subsidiary of a savings association issue securities?

    (a) A subsidiary may issue, either directly or through a third party 
intermediary, any securities that its parent savings association 
(``you'') may issue. The subsidiary must not state or imply that the 
securities it issues are covered by federal deposit insurance. A 
subsidiary may not issue any security the payment, maturity, or 
redemption of which may be accelerated upon the condition that you are 
insolvent or have been placed into receivership.
    (b) You must file a notice with OTS in accordance with Sec. 559.11 
of this part at least 30 days before your first issuance of any 
securities through an existing subsidiary or in conjunction with 
establishing or acquiring a new subsidiary. If OTS notifies you within 
30 days that the notice presents supervisory concerns or raises 
significant issues of law or policy, you must receive OTS's prior 
written approval before issuing securities through your subsidiary.
    (c) For as long as any securities are outstanding, you must maintain 
all records generated through each securities issuance in the ordinary 
course of business, including a copy of any prospectus, offering 
circular, or similar document concerning such issuance, and make such 
records available for examination by OTS. Such records must include, but 
are not limited to:
    (1) The amount of your assets or liabilities (including any 
guarantees you make with respect to the securities issuance) that have 
been transferred or made available to the subsidiary; the percentage 
that such amount represents of the current book value of your assets on 
an unconsolidated basis; and the current book value of all such assets 
of the subsidiary;
    (2) The terms of any guarantee(s) issued by you or any third party;
    (3) A description of the securities the subsidiary issued;
    (4) The net proceeds from the issuance of securities (or the pro 
rata portion of the net proceeds from securities issued through a 
jointly owned subsidiary); the gross proceeds of the securities 
issuance; and the market

[[Page 154]]

value of assets collateralizing the securities issuance (any assets of 
the subsidiary, including any guarantees of its securities issuance you 
have made);
    (5) The interest or dividend rates and yields, or the range thereof, 
and the frequency of payments on the subsidiary's securities;
    (6) The minimum denomination of the subsidiary's securities; and
    (7) Where the subsidiary marketed or intends to market the 
securities.
    (d) Sales of the subsidiary's securities to retail customers must 
comply with Sec. 545.74 of this chapter.



Sec. 559.13  How may a savings association exercise its salvage power in connection with a service corporation or lower-tier entities?

    (a) In accordance with this section, a savings association (``you'') 
may exercise your salvage power to make a contribution or a loan 
(including a guarantee of a loan made by any other person) to your 
service corporation or lower-tier entity (``salvage investment'') that 
exceeds the maximum amount otherwise permitted under law or regulation. 
You must notify OTS at least 30 days before making such a salvage 
investment. This notice must demonstrate that:
    (1) The salvage investment protects your interest in the service 
corporation or lower-tier entity;
    (2) The salvage investment is consistent with safety and soundness; 
and
    (3) You considered alternatives to the salvage investment and 
determined that such alternatives would not adequately satisfy 
paragraphs (a)(1) and (a)(2) of this section.
    (b) If OTS notifies you within 30 days that the Notice presents 
supervisory concerns, or raises significant issues of law or policy, you 
must apply for and receive OTS's prior written approval under the 
standard treatment processing procedures at part 516, subparts A and E 
of this chapter before making a salvage investment.
    (c) If your service corporation or lower-tier entity is a GAAP-
consolidated subsidiary, your salvage investment under this section will 
be considered an investment in a subsidiary for purposes of part 567 of 
this chapter.

[61 FR 66571, Dec. 18, 1996, as amended at 66 FR 13007, Mar. 2, 2001]



PART 560--LENDING AND INVESTMENT--Table of Contents




Sec.
560.1  General.
560.2  Applicability of law.
560.3  Definitions.

      Subpart A--Lending and Investment Powers for Federal Savings 
                              Associations

560.30  General lending and investment powers of Federal savings 
          associations.
560.31  Election regarding categorization of loans or investments and 
          related calculations.
560.32  Pass-through investments.
560.33  Late charges.
560.34  Prepayments.
560.35  Adjustments to home loans.
560.36  De minimis investments.
560.37  Real estate for office and related facilities.
560.40  Commercial paper and corporate debt securities.
560.41  Leasing.
560.42  State and local government obligations.
560.43  Foreign assistance investments.
560.50  Letters of credit and other independent undertakings--authority.
560.60  Suretyship and guaranty.

 Subpart B--Lending and Investment Provisions Applicable to all Savings 
                              Associations

560.93  Lending limitations.
560.100  Real estate lending standards; purpose and scope.
560.101  Real estate lending standards.
560.110  Most favored lender usury preemption.
560.120  Letters of credit and other independent undertakings to pay 
          against documents.
560.121  Investment in State housing corporations.
560.130  Prohibition on loan procurement fees.
560.160  Asset classification.
560.170  Records for lending transactions.
560.172  Re-evaluation of real estate owned.

              Subpart C--Alternative Mortgage Transactions

560.210  Disclosures for variable rate transactions.
560.220  Alternative Mortgage Parity Act.


[[Page 155]]


    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1701j-3, 1828, 
3803, 3806; 42 U.S.C. 4106.

    Source: 61 FR 50971, Sept. 30, 1996, unless otherwise noted.



Sec. 560.1  General.

    (a) Authority and scope. This part is being issued by OTS under its 
general rulemaking and supervisory authority under the Home Owners' Loan 
Act (HOLA), 12 U.S.C. 1462 et seq. Subpart A of this part sets forth the 
lending and investment powers of Federal savings associations. Subpart B 
of this part contains safety-and-soundness based lending and investment 
provisions applicable to all savings associations. Subpart C of this 
part addresses alternative mortgages and applies to all savings 
associations.
    (b) General lending standards. Each savings association is expected 
to conduct its lending and investment activities prudently. Each 
association should use lending and investment standards that are 
consistent with safety and soundness, ensure adequate portfolio 
diversification and are appropriate for the size and condition of the 
institution, the nature and scope of its operations, and conditions in 
its lending market. Each association should adequately monitor the 
condition of its portfolio and the adequacy of any collateral securing 
its loans.



Sec. 560.2  Applicability of law.

    (a) Occupation of field. Pursuant to sections 4(a) and 5(a) of the 
HOLA, 12 U.S.C. 1463(a), 1464(a), OTS is authorized to promulgate 
regulations that preempt state laws affecting the operations of federal 
savings associations when deemed appropriate to facilitate the safe and 
sound operation of federal savings associations, to enable federal 
savings associations to conduct their operations in accordance with the 
best practices of thrift institutions in the United States, or to 
further other purposes of the HOLA. To enhance safety and soundness and 
to enable federal savings associations to conduct their operations in 
accordance with best practices (by efficiently delivering low-cost 
credit to the public free from undue regulatory duplication and burden), 
OTS hereby occupies the entire field of lending regulation for federal 
savings associations. OTS intends to give federal savings associations 
maximum flexibility to exercise their lending powers in accordance with 
a uniform federal scheme of regulation. Accordingly, federal savings 
associations may extend credit as authorized under federal law, 
including this part, without regard to state laws purporting to regulate 
or otherwise affect their credit activities, except to the extent 
provided in paragraph (c) of this section or Sec. 560.110 of this part. 
For purposes of this section, ``state law'' includes any state statute, 
regulation, ruling, order or judicial decision.
    (b) Illustrative examples. Except as provided in Sec. 560.110 of 
this part, the types of state laws preempted by paragraph (a) of this 
section include, without limitation, state laws purporting to impose 
requirements regarding:
    (1) Licensing, registration, filings, or reports by creditors;
    (2) The ability of a creditor to require or obtain private mortgage 
insurance, insurance for other collateral, or other credit enhancements;
    (3) Loan-to-value ratios;
    (4) The terms of credit, including amortization of loans and the 
deferral and capitalization of interest and adjustments to the interest 
rate, balance, payments due, or term to maturity of the loan, including 
the circumstances under which a loan may be called due and payable upon 
the passage of time or a specified event external to the loan;
    (5) Loan-related fees, including without limitation, initial 
charges, late charges, prepayment penalties, servicing fees, and 
overlimit fees;
    (6) Escrow accounts, impound accounts, and similar accounts;
    (7) Security property, including leaseholds;
    (8) Access to and use of credit reports;
    (9) Disclosure and advertising, including laws requiring specific 
statements, information, or other content to be included in credit 
application forms, credit solicitations, billing statements, credit 
contracts, or other credit-related documents and laws requiring 
creditors to supply copies of credit reports to borrowers or applicants;

[[Page 156]]

    (10) Processing, origination, servicing, sale or purchase of, or 
investment or participation in, mortgages;
    (11) Disbursements and repayments;
    (12) Usury and interest rate ceilings to the extent provided in 12 
U.S.C. 1735f-7a and part 590 of this chapter and 12 U.S.C. 1463(g) and 
Sec. 560.110 of this part; and
    (13) Due-on-sale clauses to the extent provided in 12 U.S.C. 1701j-3 
and part 591 of this chapter.
    (c) State laws that are not preempted. State laws of the following 
types are not preempted to the extent that they only incidentally affect 
the lending operations of Federal savings associations or are otherwise 
consistent with the purposes of paragraph (a) of this section:
    (1) Contract and commercial law;
    (2) Real property law;
    (3) Homestead laws specified in 12 U.S.C. 1462a(f);
    (4) Tort law;
    (5) Criminal law; and
    (6) Any other law that OTS, upon review, finds:
    (i) Furthers a vital state interest; and
    (ii) Either has only an incidental effect on lending operations or 
is not otherwise contrary to the purposes expressed in paragraph (a) of 
this section.



Sec. 560.3  Definitions.

    For purposes of this part and any determination under 12 U.S.C. 
1467a(m):
    Consumer loans include loans for personal, family, or household 
purposes and loans reasonably incident thereto, and may be made as 
either open-end or closed-end consumer credit (as defined at 12 CFR 
226.2(a) (10) and (20)). Consumer loans do not include credit extended 
in connection with credit card loans, bona fide overdraft loans, and 
other loans that the savings association has designated as made under 
investment or lending authority other than section 5(c)(2)(D) of the 
HOLA.
    Credit card is any card, plate, coupon book, or other single credit 
device that may be used from time to time to obtain credit.
    Credit card account is a credit account established in conjunction 
with the issuance of, or the extension of credit through, a credit card. 
This term includes loans made to consolidate credit card debt, including 
credit card debt held by other lenders, and participation certificates, 
securities and similar instruments secured by credit card receivables.
    Home loans include any loans made on the security of a home 
(including a dwelling unit in a multi-family residential property such 
as a condominium or a cooperative), combinations of homes and business 
property (i.e., a home used in part for business), farm residences, and 
combinations of farm residences and commercial farm real estate.
    Loan commitment includes a loan in process, a letter of credit, or 
any other commitment to extend credit.
    Real estate loan, for purposes of this part, is a loan for which the 
savings association substantially relies upon a security interest in 
real estate given by the borrower as a condition of making the loan. A 
loan is made on the security of real estate if:
    (1) The security property is real estate pursuant to the law of the 
state in which the property is located;
    (2) The security interest of the Federal savings association may be 
enforced as a real estate mortgage or its equivalent pursuant to the law 
of the state in which the property is located;
    (3) The security property is capable of separate appraisal; and
    (4) With regard to a security property that is a leasehold or other 
interest for a period of years, the term of the interest extends, or is 
subject to extension or renewal at the option of the Federal savings 
association for a term of at least five years following the maturity of 
the loan.
    Small business includes a small business concern or entity as 
defined by section 3(a) of the Small Business Act, 15 U.S.C. 632(a), and 
implemented by the regulations of the Small Business Administration at 
13 CFR Part 121.
    Small business loans and loans to small businesses include any loan 
to a small business as defined in this section; or a loan that does not 
exceed $2 million

[[Page 157]]

(including a group of loans to one borrower) and is for commercial, 
corporate, business, or agricultural purposes.

[61 FR 50971, Sept. 30, 1996, as amended at 61 FR 60184, Nov. 27, 1996; 
62 FR 15825, Apr. 3, 1997; 64 FR 46565, Aug. 26, 1999; 66 FR 65825, Dec. 
21, 2001]



      Subpart A--Lending and Investment Powers for Federal Savings 
                              Associations



Sec. 560.30  General lending and investment powers of Federal savings associations.

    Pursuant to section 5(c) of the Home Owners' Loan Act (``HOLA''), 12 
U.S.C. 1464(c), a Federal savings association may make, invest in, 
purchase, sell, participate in, or otherwise deal in (including 
brokerage or warehousing) all loans and investments allowed under 
section 5(c) of the HOLA including, without limitation, the following 
loans, extensions of credit, and investments, subject to the limitations 
indicated and any such terms, conditions, or limitations as may be 
prescribed from time to time by OTS by policy directive, order, or 
regulation:

                   Lending and Investment Powers Chart
------------------------------------------------------------------------
                                                    Statutory investment
                                                   limitations (Endnotes
           Category                 Statutory       contain  applicable
                                authorization \1\        regulatory
                                                        limitations)
------------------------------------------------------------------------
Bankers' bank stock..........  5(c)(4)(E)........  Same terms as
                                                    applicable to
                                                    national banks.
Business development credit    5(c)(4)(A)........  The lesser of .5% of
 corporations.                                      total outstanding
                                                    loans or $250,000.
Commercial loans.............  5(c)(2)(A)........  20% of total assets,
                                                    provided that
                                                    amounts in excess of
                                                    10% of total assets
                                                    may be used only for
                                                    small business
                                                    loans.
Commercial paper and           5(c)(2)(D)........  Up to 35% of total
 corporate debt securities.                         assets.2 3
Community development loans    5(c)(3)(A)........  5% of total assets,
 and equity equity                                  provided equity
 investments.                                       investments do not
                                                    exceed 2% of total
                                                    assets.\4\
Construction loans without     5(c)(3)(C)........  In the aggregate, the
 security.                                          greater of total
                                                    capital or 5% of
                                                    total assets.
Consumer loans...............  5(c)(2)(D)........  Up to 35% of total
                                                    assets.2 5
Credit card loans or loans     5(c)(1)(T)........  None.\6\
 made through credit card
 accounts.
Deposits in insured            5(c)(1)(G)........  None.\6\
 depository institutions.
Education loans..............  5(c)(1)(U)........  None.\6\
Federal government and         5(c)(1)(C),         None.\6\
 government-sponsored           5(c)(1)(D),
 enterprise securities and      5(c)(1)(E),
 instruments.                   5(c)(1)(F).
Finance leasing..............  5(c)(1)(B),         Based on purpose and
                                5(c)(2)(A),         property
                                5(c)(2)(B),         financed.\7\
                                5(c)(2)(D).
Foreign assistance             5(c)(4)(C)........  1% of total
 investments.                                       assets.\8\
General leasing..............  5(c)(2)(C)........  10% of assets.\7\
Home improvement loans.......  5(c)(1)(J)........  None.\6\
Home (residential) loans \9\.  5(c)(1)(B)........  None.6 10
HUD-insured or guaranteed      5(c)(1)(O)........  None.\6\
 investments.
Insured loans................  5(c)(1)(I),         None\6\
                                5(c)(1)(K).
Liquidity investments........  5(c)(1)(M)........  None.\6\
Loans secured by deposit       5(c)(1)(A)........  None.6 11
 accounts.
Loans to financial             5(c)(1)(L)........  None.6 12
 institutions, brokers, and
 dealers.
Manufactured home loans......  5(c)(1)(J)........  None.6 13
Mortgage-backed securities...  5(c)(1)(R)........  None.\6\
National Housing Partnership   5(c)(1)(N)........  None.\6\
 Corporation and related
 partnerships and joint
 ventures.
New markets venture capital    5(c)(4)(F)........  5% of total capital.
 companies.
Nonconforming loans..........  5(c)(3)(B)........  5% of total assets.
Nonresidential real property   5(c)(2)(B)........  400% of total
 loans.                                             capital.\14\
Open-end management            5(c)(1)(Q)........  None.\6\
 investment companies \15\.
Service corporations.........  5(c)(4)(B)........  3% of total assets,
                                                    as long as any
                                                    amounts in excess of
                                                    2% of total assets
                                                    further community,
                                                    inner city, or
                                                    community
                                                    development
                                                    purposes.\16\
Small business investment      15 U.S.C.           5% of total capital.
 companies.                     682(b)(2).
Small-business-related         5(c)(1)(S)........  None.\6\
 securities.
State and local government     5(c)(1)(H)........  None for general
 obligations.                                       obligations. Per
                                                    issuer limitation of
                                                    10% of capital for
                                                    other
                                                    obligations.\6\ \17\

[[Page 158]]

 
State housing corporations...  5(c)(1)(P)........  None.\6\ \18\
Transaction account loans,     5(c)(1)(A)........  None.\6\ \19\
 including overdrafts.
------------------------------------------------------------------------

                                Endnotes

    1. All references are to section 5 of the Home Owners' Loan Act (12 
U.S.C. 1464) unless otherwise indicated.
    2. For purposes of determining a Federal savings association's 
percentage of assets limitation, investment in commercial paper and 
corporate debt securities must be aggregated with the Federal savings 
association's investment in consumer loans.
    3. A Federal savings association may invest in commercial paper and 
corporate debt securities, which includes corporate debt securities 
convertible into stock, subject to the provisions of Sec. 560.40 of this 
part. Amounts in excess of 30% of assets, in the aggregate, may be 
invested only in obligations purchased by the association directly from 
the original obligor and for which no finder's or referral fees have 
been paid.
    4. The 2% of assets limitation is a sublimit for investments within 
the overall 5% of assets limitation on community development loans and 
investments. The qualitative standards for such loans and investments 
are set forth in HOLA section 5(c)(3)(A) (formerly 5(c)(3)(B), as 
explained in an opinion of the OTS Chief Counsel dated May 10, 1995 
(available at www.ots.treas.gov)).
    5. Amounts in excess of 30% of assets, in the aggregate, may be 
invested only in loans made by the association directly to the original 
obligor and for which no finder's or referral fees have been paid. A 
Federal savings association may include loans to dealers in consumer 
goods to finance inventory and floor planning in the total investment 
made under this section.
    6. While there is no statutory limit on certain categories of loans 
and investments, including credit card loans, home improvement loans, 
education loans, and deposit account loans, OTS may establish an 
individual limit on such loans or investments if the association's 
concentration in such loans or investments presents a safety and 
soundness concern.
    7. A Federal savings association may engage in leasing activities 
subject to the provisions of Sec. 560.41 of this part.
    8. This 1% of assets limitation applies to the aggregate outstanding 
investments made under the Foreign Assistance Act and in the capital of 
the Inter-American Savings and Loan Bank. Such investments may be made 
subject to the provisions of Sec. 560.43 of this part.
    9. A home (or residential) loan includes loans secured by one-to-
four family dwellings, multi-family residential property, and loans 
secured by a unit or units of a condominium or housing cooperative.
    10. A Federal savings association may make home loans subject to the 
provisions of Secs. 560.33, 560.34, and 560.35 of this part.
    11. Loans secured by savings accounts and other time deposits may be 
made without limitation, provided the Federal savings association 
obtains a lien on, or a pledge of, such accounts. Such loans may not 
exceed the withdrawable amount of the account.
    12. A Federal savings association may only invest in these loans if 
they are secured by obligations of, or by obligations fully guaranteed 
as to principal and interest by, the United States or any of its 
agencies or instrumentalities, the borrower is a financial institution 
insured by the Federal Deposit Insurance Corporation or is a broker or 
dealer registered with the Securities and Exchange Commission, and the 
market value of the securities for each loan at least equals the amount 
of the loan at the time it is made.
    13. If the wheels and axles of the manufactured home have been 
removed and it is permanently affixed to a foundation, a loan secured by 
a combination of a manufactured home and developed residential lot on 
which it sits may be treated as a home loan.
    14. Without regard to any limitations of this part, a Federal 
savings association may make or invest in the fully insured or 
guaranteed portion of nonresidential real estate loans insured or 
guaranteed by the Economic Development Administration, the Farmers Home 
Administration, or the Small Business Administration. Unguaranteed 
portions of guaranteed loans must be aggregated with uninsured loans 
when determining an association's compliance with the 400% of capital 
limitation for other real estate loans.
    15. This authority is limited to investments in open-end management 
investment companies that are registered with the Securities and 
Exchange Commission under the Investment Company Act of 1940. The 
portfolio of the investment company must be restricted by the company's 
investment policy (changeable only if authorized by shareholder vote) 
solely to investments that a Federal savings association may, without 
limitation as to percentage of assets, invest in, sell, redeem, hold, or 
otherwise deal in.

[[Page 159]]

Separate and apart from this authority, a Federal savings association 
may make pass-through investments to the extent authorized by 
Sec. 560.32 of this part.
    16. A Federal savings association may invest in service corporations 
subject to the provisions of part 559 of this chapter.
    17. This category includes obligations issued by any state, 
territory, or possession of the United States or political subdivision 
thereof (including any agency, corporation, or instrumentality of a 
state or political subdivision), subject to Sec. 560.42 of this part.
    18. A Federal savings association may invest in state housing 
corporations subject to the provisions of Sec. 560.121 of this part.
    19. Payments on accounts in excess of the account balance 
(overdrafts) on commercial deposit or transaction accounts shall be 
considered commercial loans for purposes of determining the 
association's percentage of assets limitation.

[66 FR 65825, Dec. 21, 2001]



Sec. 560.31  Election regarding categorization of loans or investments and related calculations.

    (a) If a loan or other investment is authorized under more than one 
section of the HOLA, as amended, or this part, a Federal savings 
association may designate under which section the loan or investment has 
been made. Such a loan or investment may be apportioned among 
appropriate categories, and may be moved, in whole or part, from one 
category to another. A loan commitment shall be counted as an investment 
and included in total assets of a Federal savings association for 
purposes of calculating compliance with HOLA section 5(c)'s investment 
limitations only to the extent that funds have been advanced and not 
repaid pursuant to the commitment.
    (b) Loans or portions of loans sold to a third party shall be 
included in the calculation of a percentage-of-assets or percentage-of-
capital investment limitation only to the extent they are sold with 
recourse.
    (c) A Federal savings association may make a loan secured by an 
assignment of loans to the extent that it could, under applicable law 
and regulations, make or purchase the underlying assigned loans.



Sec. 560.32  Pass-through investments.

    (a) A federal savings association (``you'') may make pass-through 
investments. A pass-through investment occurs when you invest in an 
entity (``company'') that engages only in activities that you may 
conduct directly and the investment meets the requirements of this 
section. If an investment is authorized under both this section and some 
other provision of law, you may designate under which authority or 
authorities the investment is made. When making a pass-through 
investment, you must comply with all the statutes and regulations that 
would apply if you were engaging in the activity directly. For example, 
your proportionate share of the company's assets will be aggregated with 
the assets you hold directly in calculating investment limits (e.g., no 
more than 400% of total capital may be invested in nonresidential real 
property loans).
    (b) You may make a pass-through investment without prior notice to 
OTS if all of the following conditions are met:
    (1) You do not invest more than 15% of your total capital in one 
company;
    (2) The book value of your aggregate pass-through investments does 
not exceed 50% of your total capital after making the investment;
    (3) Your investment would not give you direct or indirect control of 
the company;
    (4) Your liability is limited to the amount of your investment; and
    (5) The company falls into one of the following categories:
    (i) A limited partnership;
    (ii) An open-end mutual fund;
    (iii) A closed-end investment trust;
    (iv) A limited liability company; or
    (v) An entity in which you are investing primarily to use the 
company's services (e.g., data processing).
    (c) If you want to make other pass-through investments, you must 
provide OTS with 30 days' advance notice. If within that 30-day period 
OTS notifies you that an investment presents supervisory, legal, or 
safety and soundness concerns, you must apply for and receive OTS prior 
written approval under the standard treatment processing procedures at 
part 516, subparts A and E of this chapter before making the investment. 
Notices under this section are deemed to be applications for purposes of 
statutory and regulatory references

[[Page 160]]

to ``applications.'' Any conditions that OTS imposes on any pass-through 
investment shall be enforceable as a condition imposed in writing by the 
OTS in connection with the granting of a request by a savings 
association within the meaning of 12 U.S.C. 1818(b) or 1818(i).

[61 FR 66578, Dec. 18, 1996, as amended at 66 FR 13007, Mar. 2, 2001]



Sec. 560.33  Late charges.

    A Federal savings association may include in a home loan contract a 
provision authorizing the imposition of a late charge with respect to 
the payment of any delinquent periodic payment. With respect to any loan 
made after July 31, 1976, on the security of a home occupied or to be 
occupied by the borrower, no late charge, regardless of form, shall be 
assessed or collected by a Federal savings association, unless any 
billing, coupon, or notice the Federal savings association may provide 
regarding installment payments due on the loan discloses the date after 
which the charge may be assessed. A Federal savings association may not 
impose a late charge more than one time for late payment of the same 
installment, and any installment payment made by the borrower shall be 
applied to the longest outstanding installment due. A Federal savings 
association shall not assess a late charge as to any payment received by 
it within fifteen days after the due date of such payment. No form of 
such late charge permitted by this paragraph shall be considered as 
interest to the Federal savings association and the Federal savings 
association shall not deduct late charges from the regular periodic 
installment payments on the loan, but must collect them as such from the 
borrower.



Sec. 560.34  Prepayments.

    Any prepayment on a real estate loan must be applied directly to 
reduce the principal balance on the loan unless the loan contract or the 
borrower specifies otherwise. Subject to the terms of the loan contract, 
a Federal savings association may impose a fee for any prepayment of a 
loan.



Sec. 560.35  Adjustments to home loans.

    (a) For any home loan secured by borrower-occupied property, or 
property to be occupied by the borrower, adjustments to the interest 
rate, payment, balance, or term to maturity must comply with the 
limitations of this section and the disclosure and notice requirements 
of Sec. 560.210 of this part.
    (b) Adjustments to the interest rate shall correspond directly to 
the movement of an index satisfying the requirements of paragraph (d) of 
this section. A Federal savings association also may increase the 
interest rate pursuant to a formula or schedule that specifies the 
amount of the increase, the time at which it may be made, and which is 
set forth in the loan contract. A Federal savings association may 
decrease the interest rate at any time.
    (c) Adjustments to the payment and the loan balance that do not 
reflect an interest-rate adjustment may be made if:
    (1) The adjustments reflect a change in an index that may be used 
pursuant to paragraph (d) of this section;
    (2) In the case of a payment adjustment, the adjustment reflects a 
change in the loan balance or is made pursuant to a formula, or to a 
schedule specifying the percentage or dollar change in the payment as 
set forth in the loan contract; or
    (3) In the case of an open-end line-of-credit loan, the adjustment 
reflects an advance taken by the borrower under the line-of-credit and 
is permitted by the loan contract.
    (d)(1) Any index used must be readily available and independently 
verifiable. If set forth in the loan contract, an association may use 
any combination of indices, a moving average of index values, or more 
than one index during the term of a loan.
    (2) Except as provided in paragraph (d)(3) of this section, any 
index used must be a national or regional index.
    (3) A Federal savings association may use an index not satisfying 
the requirements of paragraph (d)(2) of this section 30 days after 
filing a notice unless, within that 30-day period, OTS has notified the 
association that the notice presents supervisory concerns or raises 
significant issues of law or policy. If

[[Page 161]]

OTS notifies the association of such concerns or issues, the Federal 
savings association may not use such an index unless it applies for and 
receives OTS's prior written approval under the standard treatment 
processing procedures at part 516, subparts A and E of this chapter.

[61 FR 50971, Sept. 30, 1996, as amended at 66 FR 13007, Mar. 2, 2001]



Sec. 560.36  De minimis investments.

    A Federal savings association may invest in the aggregate up to the 
greater of 1% of its total capital or $250,000 in community development 
investments of the type permitted for a national bank under 12 CFR part 
24.

[66 FR 65826, Dec. 21, 2001]



Sec. 560.37  Real estate for office and related facilities.

    A federal savings association may invest in real estate (improved or 
unimproved) to be used for office and related facilities of the 
association, or for such office and related facilities and for rental or 
sale, if such investment is made and maintained under a prudent program 
of property acquisition to meet the federal savings association's 
present needs or its reasonable future needs for office and related 
facilities. A federal savings association may not make an investment 
that would cause the outstanding book value of all such investments 
(including investments under Sec. 559.4(e)(2) of this chapter) to exceed 
its total capital.

[61 FR 66579, Dec. 18, 1996]



Sec. 560.40  Commercial paper and corporate debt securities.

    Pursuant to HOLA section 5(c)(2)(D), a Federal savings association 
may invest in, sell, or hold commercial paper and corporate debt 
securities subject to the provisions of this section.
    (a) Limitations. (1) Commercial paper must be:
    (i) As of the date of purchase, rated in either one of the two 
highest categories by at least two nationally recognized investment 
ratings services as shown by the most recently published rating made of 
such investments; or
    (ii) If unrated, guaranteed by a company having outstanding paper 
that is rated as provided in paragraph (a)(1)(i) of this section.
    (2) Corporate debt securities must be:
    (i) Securities that may be sold with reasonable promptness at a 
price that corresponds reasonably to their fair value; and
    (ii) Rated in one of the four highest categories as to the portion 
of the security in which the association is investing by a nationally 
recognized investment ratings service at its most recently published 
rating before the date of purchase of the security.
    (3) A Federal savings association's total investment in the 
commercial paper and corporate debt securities of any one issuer, or 
issued by any one person or entity affiliated with such issuer, together 
with other loans, shall not exceed the general lending limitations 
contained in Sec. 560.93(c) of this part.
    (4) Investments in corporate debt securities convertible into stock 
are subject to the following additional limitations:
    (i) The purchase of securities convertible into stock at the option 
of the issuer is prohibited;
    (ii) At the time of purchase, the cost of such securities must be 
written down to an amount that represents the investment value of the 
securities considered independently of the conversion feature; and
    (iii) Federal savings associations are prohibited from exercising 
the conversion feature.
    (5) A Federal savings association shall maintain information in its 
files adequate to demonstrate that it has exercised prudent judgment in 
making investments under this section.
    (b) Notwithstanding the limitations contained in this section, the 
Office may permit investment in corporate debt securities of another 
savings association in connection with the purchase or sale of a branch 
office or in connection with a supervisory merger or acquisition.
    (c) Underwriting. Before committing to acquire any investment 
security, a Federal savings association must determine whether the 
investment is safe and sound and suitable for the association. The 
Federal savings association

[[Page 162]]

must consider, as appropriate, the interest rate, credit, liquidity, 
price, transaction, and other risks associated with the investment 
activity. The Federal savings association must also determine that the 
issuer has adequate resources and the willingness to provide for all 
required payments on its obligations in a timely manner.

[61 FR 50971, Sept. 30, 1996, as amended at 66 FR 65826, Dec. 21, 2001]



Sec. 560.41  Leasing.

    (a) Permissible activities. Subject to the limitations of this 
section, a Federal savings association may engage in leasing activities. 
These activities include becoming the legal or beneficial owner of 
tangible personal property or real property for the purpose of leasing 
such property, obtaining an assignment of a lessor's interest in a lease 
of such property, and incurring obligations incidental to its position 
as the legal or beneficial owner and lessor of the leased property.
    (b) Definitions. For the purposes of this section:
    (1) The term net lease means a lease under which the Federal savings 
association will not, directly or indirectly, provide or be obligated to 
provide for:
    (i) The servicing, repair or maintenance of the leased property 
during the lease term;
    (ii) The purchasing of parts and accessories for the leased 
property, except that improvements and additions to the leased property 
may be leased to the lessee upon its request in accordance with the 
full-payout requirements of paragraph (c)(2)(i) of this section;
    (iii) The loan of replacement or substitute property while the 
leased property is being serviced;
    (iv) The purchasing of insurance for the lessee, except where the 
lessee has failed to discharge a contractual obligation to purchase or 
maintain insurance; or
    (v) The renewal of any license, registration, or filing for the 
property unless such action by the Federal savings association is 
necessary to protect its interest as an owner or financier of the 
property.
    (2) The term full-payout lease means a lease transaction in which 
any unguaranteed portion of the estimated residual value relied on by 
the association to yield the return of its full investment in the leased 
property, plus the estimated cost of financing the property over the 
term of the lease, does not exceed 25% of the original cost of the 
property to the lessor. In general, a lease will qualify as a full-
payout lease if the scheduled payments provide at least 75% of the 
principal and interest payments that a lessor would receive if the 
finance lease were structured as a market-rate loan.
    (3) The term realization of investment means that a Federal savings 
association that enters into a lease financing transaction must 
reasonably expect to realize the return of its full investment in the 
leased property, plus the estimated cost of financing the property over 
the term of the lease from:
    (i) Rentals;
    (ii) Estimated tax benefits, if any; and
    (iii) The estimated residual value of the property at the expiration 
of the term of the lease.
    (c) Finance leasing--(1) Investment limits. A Federal savings 
association may exercise its authority under HOLA sections 5(c)(1)(B) 
(residential real estate loans), 5(c)(2)(A) (commercial, business, 
corporate or agricultural loans), 5(c)(2)(B) (nonresidential real estate 
loans), and 5(c)(2)(D) (consumer loans) by conducting leasing activities 
that are the functional equivalent of loans made under those HOLA 
sections. These activities are commonly referred to as financing leases. 
Such financing leases are subject to the same investment limits that 
apply to loans made under those sections. For example, a financing lease 
of tangible personal property made to a natural person for personal, 
family or household purposes is subject to all limitations applicable to 
the amount of a Federal savings association's investment in consumer 
loans. A financing lease made for commercial, corporate, business, or 
agricultural purposes is subject to all limitations applicable to the 
amount of a Federal savings association's investment in commercial 
loans. A financing lease of residential or nonresidential real property 
is subject to all limitations applicable to the amount of a

[[Page 163]]

Federal savings association's investment in these types of real estate 
loans.
    (2) Functional equivalent of lending. To qualify as the functional 
equivalent of a loan:
    (i) The lease must be a net, full-payout lease representing a non-
cancelable obligation of the lessee, notwithstanding the possible early 
termination of the lease;
    (ii) The portion of the estimated residual value of the property 
relied upon by the lessor to satisfy the requirements of a full-payout 
lease must be reasonable in light of the nature of the leased property 
and all relevant circumstances so that realization of the lessor's full 
investment plus the cost of financing the property depends primarily on 
the creditworthiness of the lessee, and not on the residual market value 
of the leased property; and
    (iii) At the termination of a financing lease, either by expiration 
or default, property acquired must be liquidated or released on a net 
basis as soon as practicable. Any property held in anticipation of re-
leasing must be reevaluated and recorded at the lower of fair market 
value or book value.
    (d) General leasing. Pursuant to section 5(c)(2)(C) of the HOLA, a 
Federal savings association may invest in tangible personal property, 
including vehicles, manufactured homes, machinery, equipment, or 
furniture, for the purpose of leasing that property. In contrast to 
financing leases, lease investments made under this authority need not 
be the functional equivalent of loans.
    (e) Leasing salvage powers. If, in good faith, a Federal savings 
association believes that there has been an unanticipated change in 
conditions that threatens its financial position by significantly 
increasing its exposure to loss, it may:
    (1) As the owner and lessor, take reasonable and appropriate action 
to salvage or protect the value of the property or its interest arising 
under the lease;
    (2) As the assignee of a lessor's interest in a lease, become the 
owner and lessor of the leased property pursuant to its contractual 
right, or take any reasonable and appropriate action to salvage or 
protect the value of the property or its interest arising under the 
lease; or
    (3) Include any provisions in a lease, or make any additional 
agreements, to protect its financial position or investment in the 
circumstances set forth in paragraphs (e)(1) and (e)(2) of this section.



Sec. 560.42  State and local government obligations.

    (a) What limitations apply? Pursuant to HOLA section 5(c)(1)(H), a 
Federal savings association (``you'') may invest in obligations issued 
by any state, territory, possession, or political subdivision thereof 
(``governmental entity''), subject to appropriate underwriting and the 
following conditions:

------------------------------------------------------------------------
                                       Aggregate          Per-issuer
                                      limitation          limitation
------------------------------------------------------------------------
(1) General obligations.........  None..............  None.
(2) Other obligations of a        None..............  10% of total
 governmental entity (e.g.,                            capital.
 revenue bonds) that hold one of
 the four highest investment
 grade ratings by a nationally
 recognized rating agency or
 that are nonrated but of
 investment quality.
(3) Obligations of a              As approved by      10% of total
 governmental entity that do not   your Regional       capital.
 qualify under any other           Director
 paragraph but are approved by
 your Regional Director.
------------------------------------------------------------------------

    (b) What is a political subdivision? Political subdivision means a 
county, city, town, or other municipal corporation, a public authority, 
or a publicly-owned entity that is an instrumentality of a state or a 
municipal corporation.
    (c) What is a general obligation of a state or political 
subdivision? A general obligation is an obligation that is guaranteed by 
the full faith and credit of a state or political subdivision that has 
the power to tax. Indirect payments, such as through a special fund, may 
qualify as general obligations if a state

[[Page 164]]

or political subdivision with taxing authority has unconditionally 
agreed to provide funds to cover payments.
    (d) What is appropriate underwriting for this type of investment? In 
the case of a security rated in one of the four highest investment 
grades by a nationally recognized rating agency, your assessment of the 
obligor's credit quality may be based, in part, on reliable rating 
agency estimates of the obligor's performance. For all other securities, 
you must perform your own detailed analysis of credit quality. In doing 
so, you must consider, as appropriate, the interest rate, credit, 
liquidity, price, transaction, and other risks associated with the 
investment activity and determine that such investment is appropriate 
for your institution. You must also determine that the obligor has 
adequate resources and willingness to provide for all required payments 
on its obligations in a timely manner.

[66 FR 65826, Dec. 21, 2001]



Sec. 560.43  Foreign assistance investments.

    Pursuant to HOLA section 5(c)(4)(C), a Federal savings association 
may make foreign assistance investments in an aggregate amount not to 
exceed one percent of its assets, subject to the following conditions:
    (a) For any investment made under the Foreign Assistance Act, the 
loan agreement shall specify what constitutes an event of default, and 
provide that upon default in payment of principal or interest under such 
agreement, the entire amount of outstanding indebtedness thereunder 
shall become immediately due and payable, at the lender's option. 
Additionally, the contract of guarantee shall cover 100% of any loss of 
investment thereunder, except for any portion of the loan arising out of 
fraud or misrepresentation for which the party seeking payment is 
responsible, and provide that the guarantor shall pay for any such loss 
in U.S. dollars within a specified reasonable time after the date of 
application for payment.
    (b) To make any investments in the share capital and capital reserve 
of the Inter-American Savings and Loan Bank, a Federal savings 
association must be adequately capitalized and have adequate allowances 
for loan and lease losses. The Federal savings association's aggregate 
investment in such capital or capital reserve, including the amount of 
any obligations undertaken to provide said Bank with reserve capital in 
the future (call-able capital), must not, as a result of such 
investment, exceed the lesser of one-quarter of 1% of its assets or 
$100,000.



Sec. 560.50  Letters of credit and other independent undertakings--authority.

    A Federal savings association may issue letters of credit and may 
issue such other independent undertakings as are approved by OTS, 
subject to the restrictions in Sec. 560.120.

[64 FR 46565, Aug. 26, 1999]



Sec. 560.60  Suretyship and guaranty.

    Pursuant to section 5(b)(2) of the HOLA, a Federal savings 
association may enter into a repayable suretyship or guaranty agreement, 
subject to the conditions in this section.
    (a) What is a suretyship or guaranty agreement? Under a suretyship, 
a Federal savings association is bound with its principal to pay or 
perform an obligation to a third person. Under a guaranty agreement, a 
Federal savings association agrees to satisfy the obligation of the 
principal only if the principal fails to pay or perform.
    (b) What requirements apply to suretyship and guaranty agreements 
under this section? A Federal savings association may enter into a 
suretyship or guaranty agreement under this section, subject to each of 
the following requirements:
    (1) The Federal savings association must limit its obligations under 
the agreement to a fixed dollar amount and a specified duration.
    (2) The Federal savings association's performance under the 
agreement must create an authorized loan or other investment.
    (3) The Federal savings association must treat its obligation under 
the agreement as a loan to the principal for purposes of Secs. 560.93 
and 563.43 of this chapter.
    (4) The Federal savings association must take and maintain a 
perfected security interest in collateral sufficient

[[Page 165]]

to cover its total obligation under the agreement.
    (c) What collateral is sufficient? (1) The Federal savings 
association must take and maintain a perfected security interest in real 
estate or marketable securities equal to at least 110 percent of its 
obligation under the agreement, except as provided in paragraph (c)(2) 
of this section.
    (i) If the collateral is real estate, the Federal savings 
association must establish the value by a signed appraisal or evaluation 
in accordance with part 564 of this chapter. In determining the value of 
the collateral, the Federal savings association must factor in the value 
of any existing senior mortgages, liens or other encumbrances on the 
property, except those held by the principal to the suretyship or 
guaranty agreement.
    (ii) If the collateral is marketable securities, the Federal savings 
association must be authorized to invest in that security taken as 
collateral. The Federal savings association must ensure that the value 
of the security is 110 percent of the obligation at all times during the 
term of agreement.
    (2) The Federal savings association may take and maintain a 
perfected security interest in collateral which is at all times equal to 
at least 100 percent of its obligation, if the collateral is:
    (i) Cash;
    (ii) Obligations of the United States or its agencies;
    (iii) Obligations fully guarantied by the United States or its 
agencies as to principal and interest; or
    (iv) Notes, drafts, or bills of exchange or bankers' acceptances 
that are eligible for rediscount or purchase by a Federal Reserve Bank.

[64 FR 46565, Aug. 26, 1999]



 Subpart B--Lending and Investment Provisions Applicable to all Savings 
                              Associations



Sec. 560.93  Lending limitations.

    (a) Scope. This section applies to all loans and extensions of 
credit to third parties made by a savings association and its 
subsidiaries. This section does not apply to loans made by a savings 
association or a GAAP-consolidated subsidiary to subordinate 
organizations or affiliates of the savings association. The terms 
subsidiary, GAAP-consolidated subsidiary, and subordinate organization 
have the same meanings as specified in Sec. 559.2 of this chapter. The 
term affiliate has the same meaning as specified in Sec. 563.41 of this 
chapter.
    (b) Definitions. In applying these lending limitations, savings 
associations shall apply the definitions and interpretations promulgated 
by the Office of the Comptroller of the Currency consistent with 12 
U.S.C. 84. See 12 CFR part 32. In applying these definitions, pursuant 
to 12 U.S.C. 1464, savings associations shall use the terms savings 
association, savings associations, and savings association's in place of 
the terms national bank and bank, banks, and bank's, respectively. For 
purposes of this section:
    (1) The term one borrower has the same meaning as the term person 
set forth at 12 CFR part 32. It also includes, in addition to the 
definition cited therein, a financial institution as defined at 
Sec. 561.19 of this chapter.
    (2) The term company means a corporation, partnership, business 
trust, association, or similar organization and, unless specifically 
excluded, the term company includes a savings association and a bank.
    (3) Contractual commitment to advance funds has the meaning set 
forth in 12 CFR part 32.
    (4) Loans and extensions of credit has the meaning set forth in 12 
CFR part 32, and includes investments in commercial paper and corporate 
debt securities. The Office expressly reserves its authority to deem 
other arrangements that are, in substance, loans and extensions of 
credit to be encompassed by this term.
    (5) The term loans as used in the phrase Loans to one borrower to 
finance the sale of real property acquired in satisfaction of debts 
previously contracted for in good faith does not include an 
association's taking of a purchase money mortgage note from the 
purchaser provided that:
    (i) No new funds are advanced by the association to the borrower; 
and
    (ii) The association is not placed in a more detrimental position as 
a result of the sale.

[[Page 166]]

    (6) [Reserved]
    (7) Readily marketable collateral has the meaning set forth in 12 
CFR part 32.
    (8) Residential housing units has the same meaning as the term 
residential real estate set forth in Sec. 541.23 of this chapter. The 
term to develop includes the various phases necessary to produce housing 
units as an end product, to include: acquisition, development and 
construction; development and construction; construction; 
rehabilitation; or conversion. The term domestic includes units within 
the fifty states, the District of Columbia, Puerto Rico, the Virgin 
Islands, Guam, and the Pacific Islands.
    (9) Single family dwelling unit has the meaning set forth in 
Sec. 541.20 of this chapter.
    (10) A standby letter of credit has the meaning set forth in 12 CFR 
part 32.
    (11) Unimpaired capital and unimpaired surplus means--
    (i) A savings association's core capital and supplementary capital 
included in its total capital under part 567 of this chapter; plus
    (ii) The balance of a savings association's allowance for loan and 
lease losses not included in supplementary capital under part 567 of 
this chapter; plus
    (iii) The amount of a savings association's loans to, investments 
in, and advances to subsidiaries not included in calculating core 
capital under part 567 of this chapter.
    (c) General limitation. Section 5200 of the Revised Statutes (12 
U.S.C. 84) shall apply to savings associations in the same manner and to 
the same extent as it applies to national banks. This statutory 
provision and lending limit regulations and interpretations promulgated 
by the Office of the Comptroller of the Currency pursuant to a 
rulemaking conducted in accordance with the provisions of the 
Administrative Procedure Act, 5 U.S.C. 553 et seq. (including the 
regulations appearing at 12 CFR part 32) shall apply to savings 
associations in the same manner and to the same extent as these 
provisions apply to national banks:
    (1) The total loans and extensions of credit by a savings 
association to one borrower outstanding at one time and not fully 
secured, as determined in the same manner as determined under 12 U.S.C. 
84(a)(2), by collateral having a market value at least equal to the 
amount of the loan or extension of credit shall not exceed 15 percent of 
the unimpaired capital and unimpaired surplus of the association.
    (2) The total loans and extensions of credit by a savings 
association to one borrower outstanding at one time and fully secured by 
readily marketable collateral having a market value, as determined by 
reliable and continuously available price quotations, at least equal to 
the amount of the funds outstanding shall not exceed 10 per centum of 
the unimpaired capital and unimpaired surplus of the association. This 
limitation shall be separate from and in addition to the limitation 
contained in paragraph (c)(1) of this section.
    (d) Exceptions to the general limitation--(1) $500,000 exception. If 
a savings association's aggregate lending limitation calculated under 
paragraphs (c)(1) and (c)(2) of this section is less than $500,000, 
notwithstanding this aggregate limitation in paragraphs (c)(1) and 
(c)(2) of this section, such savings association may have total loans 
and extensions of credit, for any purpose, to one borrower outstanding 
at one time not to exceed $500,000.
    (2) Statutory exceptions. The exceptions to the lending limits set 
forth in 12 U.S.C. 84 and 12 CFR part 32 are applicable to savings 
associations in the same manner and to the extent as they apply to 
national banks.
    (3) Loans to develop domestic residential housing units. Subject to 
paragraph (d)(4) of this section, a savings association may make loans 
to one borrower to develop domestic residential housing units, not to 
exceed the lesser of $30,000,000 or 30 percent of the savings 
association's unimpaired capital and unimpaired surplus, including all 
amounts loaned under the authority of the General Limitation set forth 
under paragraphs (c)(1) and (c)(2) of this section, provided that:
    (i) The final purchase price of each single family dwelling unit the 
development of which is financed under this paragraph (d)(3) does not 
exceed $500,000;

[[Page 167]]

    (ii) The savings association is, and continues to be, in compliance 
with its capital requirements under part 567 of this chapter.
    (iii) OTS permits, subject to conditions it may impose, the savings 
association to use the higher limit set forth under this paragraph 
(d)(3). A savings association that meets the requirements of paragraphs 
(d)(3)(i), (ii), (iv) and (v) of this section and that meets the 
requirements for ``expedited treatment'' under Sec. 516.5 of this 
chapter may use the higher limit set forth under this paragraph (d)(3) 
if the savings association has filed a notice with OTS that it intends 
to use the higher limit at least 30 days prior to the proposed use. A 
savings association that meets the requirements of paragraphs (d)(3)(i), 
(ii), (iv), and (v) of this section and that meets the requirements for 
``standard treatment'' under Sec. 516.5 of this chapter may use the 
higher limit set forth under this paragraph (d)(3) if the savings 
association has filed an application with OTS and OTS has approved the 
use the higher limit;
    (iv) Loans made under this paragraph (d)(3) to all borrowers do not, 
in aggregate, exceed 150 percent of the savings association's unimpaired 
capital and unimpaired surplus; and
    (v) Such loans comply with the applicable loan-to-value requirements 
that apply to Federal savings associations.
    (4) The authority of a savings association to make a loan or 
extension of credit under the exception in paragraph (d)(3) of this 
section ceases immediately upon the association's failure to comply with 
any one of the requirements set forth in paragraph (d)(3) of this 
section or any condition(s) set forth in a Director's order under 
paragraph (d)(3)(iii) of this section.
    (5) Notwithstanding the limit set forth in paragraphs (c)(1) and 
(c)(2) of this section, a savings association may invest up to 10 
percent of unimpaired capital and unimpaired surplus in the obligations 
of one issuer evidenced by:
    (i) Commercial paper rated, as of the date of purchase, as shown by 
the most recently published rating by at least two nationally recognized 
investment rating services in the highest category; or
    (ii) Corporate debt securities that may be sold with reasonable 
promptness at a price that corresponds reasonably to their fair value, 
and that are rated in one of the two highest categories by a nationally 
recognized investment rating service in its most recently published 
ratings before the date of purchase of the security.
    (e) Loans to finance the sale of REO. A savings association's loans 
to one borrower to finance the sale of real property acquired in 
satisfaction of debts previously contracted for in good faith shall not, 
when aggregated with all other loans to such borrower, exceed the 
General Limitation in paragraph (c)(1) of this section.
    (f) Calculating compliance and recordkeeping. (1) The amount of an 
association's unimpaired capital and unimpaired surplus pursuant to 
paragraph (b)(11) of this section shall be calculated as of the 
association's most recent periodic report required to be filed with OTS 
prior to the date of granting or purchasing the loan or otherwise 
creating the obligation to repay funds, unless the association knows, or 
has reason to know, based on transactions or events actually completed, 
that such level has changed significantly, upward or downward, 
subsequent to filing of such report.
    (2) If a savings association or subsidiary thereof makes a loan or 
extension of credit to any one borrower, as defined in paragraph (b)(1) 
of this section, in an amount that, when added to the total balances of 
all outstanding loans owed to such association and its subsidiary by 
such borrower, exceeds the greater of $500,000 or 5 percent of 
unimpaired capital and unimpaired surplus, the records of such 
association or its subsidiary with respect to such loan shall include 
documentation showing that such loan was made within the limitations of 
paragraphs (c) and (d) of this section; for the purpose of such 
documentation such association or subsidiary may require, and may accept 
in good faith, a certification by the borrower identifying the persons, 
entities, and interests described in the definition of one borrower in 
paragraph (b)(1) of this section.
    (g) [Reserved]

[[Page 168]]

    (h) More stringent restrictions. The Director may impose more 
stringent restrictions on a savings association's loans to one borrower 
if the Director determines that such restrictions are necessary to 
protect the safety and soundness of the savings association.

                Appendix to Sec. 560.93--Interpretations

 Section 560.93-100  Interrelation of General Limitation With Exception 
         for Loans To Develop Domestic Residential Housing Units

    1. The Sec. 560.93(d)(3) exception for loans to one person to 
develop domestic residential housing units is characterized in the 
regulation as an ``alternative'' limit. This exceptional $30,000,000 or 
30 percent limitation does not operate in addition to the 15 percent 
General Limitation or the 10 percent additional amount an association 
may loan to one borrower secured by readily marketable collateral, but 
serves as the uppermost limitation on a savings association's lending to 
any one person once an association employs this exception. An example 
will illustrate the Office's interpretation of the application of this 
rule:
    Example: Savings Associations A's lending limitation as calculated 
under the 15 percent General Limitation is $800,000. If Association A 
lends Y $800,000 for commercial purposes, Association A cannot lend Y an 
additional $1,600,000, or 30 percent of capital and surplus, to develop 
residential housing units under the paragraph (d)(3) exception. The 
(d)(3) exception operates as the uppermost limitation on all lending to 
one borrower (for associations that may employ this exception) and 
includes any amounts loaned to the same borrower under the General 
Limitation. Association A, therefore, may lend only an additional 
$800,000 to Y, provided the paragraph (d)(3) prerequisites have been 
met. The amount loaned under the authority of the General Limitation 
($800,000), when added to the amount loaned under the exception 
($800,000), yields a sum that does not exceed the 30 percent uppermost 
limitation ($1,600,000).
    2. This result does not change even if the facts are altered to 
assume that some or all of the $800,000 amount of lending permissible 
under the General Limitation's 15 percent basket is not used, or is 
devoted to the development of domestic residential housing units.
    In other words, using the above example, if Association A lends Y 
$400,000 for commercial purposes and $300,000 for residential purposes--
both of which would be permitted under the Association's $800,000 
General Limitation--Association A's remaining permissible lending to Y 
would be: first, an additional $100,000 under the General Limitation, 
and then another $800,000 to develop domestic residential housing units 
if the Association meets the paragraph (d)(3) prerequisites. (The latter 
is $800,000 because in no event may the total lending to Y exceed 30 
percent of unimpaired capital and unimpaired surplus). If Association A 
did not lend Y the remaining $100,000 permissible under the General 
Limitation, its permissible loans to develop domestic residential 
housing units under paragraph (d)(3) would be $900,000 instead of 
$800,000 (the total loans to Y would still equal $1,600,000).
    3. In short, under the paragraph (d)(3) exception, the 30 percent or 
$30,000,000 limit will always operate as the uppermost limitation, 
unless of course the association does not avail itself of the exception 
and merely relies upon its General Limitation.

Section 560.93-101  Interrelationship Between the General Limitation and 
  the 150 Percent Aggregate Limit on Loans to all Borrowers To Develop 
                   Domestic Residential Housing Units

    1. The Office has already received numerous questions regarding the 
allocation of loans between the different lending limit ``baskets,'' 
i.e., the 15 percent General Limitation basket and the 30 percent 
Residential Development basket. In general, the inquiries concern the 
manner in which an association may ``move'' a loan from the General 
Limitation basket to the Residential Development basket. The following 
example is intended to provide guidance:
    Example: Association A's General Limitation under section 5(u)(1) is 
$15 million. In January, Association A makes a $10 million loan to 
Borrower to develop domestic residential housing units. At the time the 
loan was made, Association A had not received approval under a Director 
order to avail itself of the residential development exception to 
lending limits. Therefore, the $10 million loan is made under 
Association A's General Limitation.
    2. In June, Association A receives authorization to lend under the 
Residential Development exception. In July, Association A lends $3 
million to Borrower to develop domestic residential housing units. In 
August, Borrower seeks an additional $12 million commercial loan from 
Association A. Association A cannot make the loan to Borrower, however, 
because it already has an outstanding $10 million loan to Borrower that 
counts against Association A's General Limitation of $15 million. Thus, 
Association A may lend only up to an additional $5 million to Borrower 
under the General Limitation.
    3. However, Association A may be able to reallocate the $10 million 
loan it made to Borrower in January to its Residential Development 
basket provided that: (1) Association A has obtained authority under a 
Director's order to avail itself of the additional

[[Page 169]]

lending authority for residential development and maintains compliance 
with all prerequisites to such lending authority; (2) the original $10 
million loan made in January constitutes a loan to develop domestic 
residential housing units as defined; and (3) the housing unit(s) 
constructed with the funds from the January loan remain in a stage of 
``development'' at the time Association A reallocates the loan to the 
domestic residential housing basket. The project must be in a stage of 
acquisition, development, construction, rehabilitation, or conversion in 
order for the loan to be reallocated.
    4. If Association A is able to reallocate the $10 million loan made 
to Borrower in January to its Residential Development basket, it may 
make the $12 million commercial loan requested by Borrower in August. 
Once the January loan is reallocated to the Residential Development 
basket, however, the $10 million loan counts towards Association's 150 
percent aggregate limitation on loans to all borrowers under the 
residential development basket (section 5(u)(2)(A)(ii)(IV)).
    5. If Association A reallocates the January loan to its domestic 
residential housing basket and makes an additional $12 million 
commercial loan to Borrower, Association A's totals under the respective 
limitations would be: $12 million under the General Limitation; and $13 
million under the Residential Development limitation. The full $13 
million residential development loan counts toward Association A's 
aggregate 150 percent limitation.

[61 FR 50976, Sept. 30, 1996, as amended at 61 FR 66579, Dec. 18, 1996; 
62 FR 66262, Dec. 18, 1997; 66 FR 13007, Mar. 2, 2001]



Sec. 560.100  Real estate lending standards; purpose and scope.

    This section, and Sec. 560.101 of this subpart, issued pursuant to 
section 304 of the Federal Deposit Insurance Corporation Improvement Act 
of 1991, 12 U.S.C. 1828(o), prescribe standards for real estate lending 
to be used by savings associations and all their includable 
subsidiaries, as defined in 12 CFR 567.1, over which the savings 
associations exercise control, in adopting internal real estate lending 
policies.

[61 FR 50971, Sept. 30, 1996, as amended at 62 FR 66262, Dec. 18, 1997]



Sec. 560.101  Real estate lending standards.

    (a) Each savings association shall adopt and maintain written 
policies that establish appropriate limits and standards for extensions 
of credit that are secured by liens on or interests in real estate, or 
that are made for the purpose of financing permanent improvements to 
real estate.
    (b)(1) Real estate lending policies adopted pursuant to this section 
must:
    (i) Be consistent with safe and sound banking practices;
    (ii) Be appropriate to the size of the institution and the nature 
and scope of its operations; and
    (iii) Be reviewed and approved by the savings association's board of 
directors at least annually.
    (2) The lending policies must establish:
    (i) Loan portfolio diversification standards;
    (ii) Prudent underwriting standards, including loan-to-value limits, 
that are clear and measurable;
    (iii) Loan administration procedures for the savings association's 
real estate portfolio; and
    (iv) Documentation, approval, and reporting requirements to monitor 
compliance with the savings association's real estate lending policies.
    (c) Each savings association must monitor conditions in the real 
estate market in its lending area to ensure that its real estate lending 
policies continue to be appropriate for current market conditions.
    (d) The real estate lending policies adopted pursuant to this 
section should reflect consideration of the Interagency Guidelines for 
Real Estate Lending Policies established by the Federal bank and thrift 
supervisory agencies.

Appendix to Sec. 560.101--Interagency Guidelines for Real Estate Lending 
                                Policies

    The agencies' regulations require that each insured depository 
institution adopt and maintain a written policy that establishes 
appropriate limits and standards for all extensions of credit that are 
secured by liens on or interests in real estate or made for the purpose 
of financing the construction of a building or other improvements.\1\ 
These guidelines are intended to assist institutions in the formulation 
and maintenance of a real

[[Page 170]]

estate lending policy that is appropriate to the size of the institution 
and the nature and scope of its individual operations, as well as 
satisfies the requirements of the regulation.
---------------------------------------------------------------------------

    \1\ The agencies have adopted a uniform rule on real estate lending. 
See 12 CFR Part 365 (FDIC); 12 CFR Part 208, Subpart C (FRB); 12 CFR 
Part 34, Subpart D (OCC); and 12 CFR 560.100-560.101 (OTS).
---------------------------------------------------------------------------

    Each institution's policies must be comprehensive, and consistent 
with safe and sound lending practices, and must ensure that the 
institution operates within limits and according to standards that are 
reviewed and approved at least annually by the board of directors. Real 
estate lending is an integral part of many institutions' business plans 
and, when undertaken in a prudent manner, will not be subject to 
examiner criticism.

                Loan Portfolio Management Considerations

    The lending policy should contain a general outline of the scope and 
distribution of the institution's credit facilities and the manner in 
which real estate loans are made, serviced, and collected. In 
particular, the institution's policies on real estate lending should:
     Identify the geographic areas in which the institution will 
consider lending.
     Establish a loan portfolio diversification policy and set 
limits for real estate loans by type and geographic market (e.g., limits 
on higher risk loans).
     Identify appropriate terms and conditions by type of real 
estate loan.
     Establish loan origination and approval procedures, both 
generally and by size and type of loan.
     Establish prudent underwriting standards that are clear and 
measurable, including loan-to-value limits, that are consistent with 
these supervisory guidelines.
     Establish review and approval procedures for exception 
loans, including loans with loan-to-value percentages in excess of 
supervisory limits.
     Establish loan administration procedures, including 
documentation, disbursement, collateral inspection, collection, and loan 
review.
     Establish real estate appraisal and evaluation programs.
     Require that management monitor the loan portfolio and 
provide timely and adequate reports to the board of directors.
    The institution should consider both internal and external factors 
in the formulation of its loan policies and strategic plan. Factors that 
should be considered include:
     The size and financial condition of the institution.
     The expertise and size of the lending staff.
     The need to avoid undue concentrations of risk.
     Compliance with all real estate related laws and 
regulations, including the Community Reinvestment Act, anti-
discrimination laws, and for savings associations, the Qualified Thrift 
Lender test.
     Market conditions.
    The institution should monitor conditions in the real estate markets 
in its lending area so that it can react quickly to changes in market 
conditions that are relevant to its lending decisions. Market supply and 
demand factors that should be considered include:
     Demographic indicators, including population and employment 
trends.
     Zoning requirements.
     Current and projected vacancy, construction, and absorption 
rates.
     Current and projected lease terms, rental rates, and sales 
prices, including concessions.
     Current and projected operating expenses for different 
types of projects.
     Economic indicators, including trends and diversification 
of the lending area.
     Valuation trends, including discount and direct 
capitalization rates.

                         Underwriting Standards

    Prudently underwritten real estate loans should reflect all relevant 
credit factors, including:
     The capacity of the borrower, or income from the underlying 
property, to adequately service the debt.
     The value of the mortgaged property.
     The overall creditworthiness of the borrower.
     The level of equity invested in the property.
     Any secondary sources of repayment.
     Any additional collateral or credit enhancements (such as 
guarantees, mortgage insurance or takeout commitments).
    The lending policies should reflect the level of risk that is 
acceptable to the board of directors and provide clear and measurable 
underwriting standards that enable the institution's lending staff to 
evaluate these credit factors. The underwriting standards should 
address:
     The maximum loan amount by type of property.
     Maximum loan maturities by type of property.
     Amortization schedules.
     Pricing structure for different types of real estate loans.
     Loan-to-value limits by type of property.
    For development and construction projects, and completed commercial 
properties, the policy should also establish, commensurate with the size 
and type of the project or property:
     Requirements for feasibility studies and sensitivity and 
risk analyses (e.g., sensitivity of income projections to changes in 
economic variables such as interest rates, vacancy rates, or operating 
expenses).

[[Page 171]]

     Minimum requirements for initial investment and maintenance 
of hard equity by the borrower (e.g., cash or unencumbered investment in 
the underlying property).
     Minimum standards for net worth, cash flow, and debt 
service coverage of the borrower or underlying property.
     Standards for the acceptability of and limits on non-
amortizing loans.
     Standards for the acceptability of and limits on the use of 
interest reserves.
     Pre-leasing and pre-sale requirements for income-producing 
property.
     Pre-sale and minimum unit release requirements for non-
income-producing property loans.
     Limits on partial recourse or nonrecourse loans and 
requirements for guarantor support.
     Requirements for takeout commitments.
     Minimum covenants for loan agreements.

                           Loan Administration

    The institution should also establish loan administration procedures 
for its real estate portfolio that address:
     Documentation, including:
    Type and frequency of financial statements, including requirements 
for verification of information provided by the borrower;
    Type and frequency of collateral evaluations (appraisals and other 
estimates of value).
     Loan closing and disbursement.
     Payment processing.
     Escrow administration.
     Collateral administration.
     Loan payoffs.
     Collections and foreclosure, including:
    Delinquency follow-up procedures;
    Foreclosure timing;
    Extensions and other forms of forbearance;
    Acceptance of deeds in lieu of foreclosure.
     Claims processing (e.g., seeking recovery on a defaulted 
loan covered by a government guaranty or insurance program).
     Servicing and participation agreements.

                    Supervisory Loan-to-Value Limits

    Institutions should establish their own internal loan-to-value 
limits for real estate loans. These internal limits should not exceed 
the following supervisory limits:

------------------------------------------------------------------------
                                                               Loan-to-
                       Loan category                         value limit
                                                               (percent)
------------------------------------------------------------------------
Raw land...................................................           65
Land development...........................................           75
Construction:
    Commercial, multifamily,\1\ and other nonresidential...           80
    1- to 4-family residential.............................           85
Improved property..........................................           85
Owner-occupied 1- to 4-family and home equity..............       (\2\)
------------------------------------------------------------------------
\1\ Multifamily construction includes condominiums and cooperatives.
\2\ A loan-to-value limit has not been established for permanent
  mortgage or home equity loans on owner-occupied, 1- to 4-family
  residential property. However, for any such loan with a loan-to-value
  ratio that equals or exceeds 90 percent at origination, an institution
  should require appropriate credit enhancement in the form of either
  mortgage insurance or readily marketable collateral.

    The supervisory loan-to-value limits should be applied to the 
underlying property that collateralizes the loan. For loans that fund 
multiple phases of the same real estate project (e.g., a loan for both 
land development and construction of an office building), the 
appropriate loan-to-value limit is the limit applicable to the final 
phase of the project funded by the loan; however, loan disbursements 
should not exceed actual development or construction outlays. In 
situations where a loan is fully cross-collateralized by two or more 
properties or is secured by a collateral pool of two or more properties, 
the appropriate maximum loan amount under supervisory loan-to-value 
limits is the sum of the value of each property, less senior liens, 
multiplied by the appropriate loan-to-value limit for each property. To 
ensure that collateral margins remain within the supervisory limits, 
lenders should redetermine conformity whenever collateral substitutions 
are made to the collateral pool.
    In establishing internal loan-to-value limits, each lender is 
expected to carefully consider the institution-specific and market 
factors listed under ``Loan Portfolio Management Considerations,'' as 
well as any other relevant factors, such as the particular subcategory 
or type of loan. For any subcategory of loans that exhibits greater 
credit risk than the overall category, a lender should consider the 
establishment of an internal loan-to-value limit for that subcategory 
that is lower than the limit for the overall category.
    The loan-to-value ratio is only one of several pertinent credit 
factors to be considered when underwriting a real estate loan. Other 
credit factors to be taken into account are highlighted in the 
``Underwriting Standards'' section above. Because of these other 
factors, the establishment of these supervisory limits should not be 
interpreted to mean that loans at these levels will automatically be 
considered sound.

         Loans in Excess of the Supervisory Loan-to-Value Limits

    The agencies recognize that appropriate loan-to-value limits vary 
not only among categories of real estate loans but also

[[Page 172]]

among individual loans. Therefore, it may be appropriate in individual 
cases to originate or purchase loans with loan-to-value ratios in excess 
of the supervisory loan-to-value limits, based on the support provided 
by other credit factors. Such loans should be identified in the 
institutions' records, and their aggregate amount reported at least 
quarterly to the institution's board of directors. (See additional 
reporting requirements described under ``Exceptions to the General 
Policy.'') The aggregate amount of all loans in excess of the 
supervisory loan-to-value limits should not exceed 100 percent of total 
capital.\2\ Moreover, within the aggregate limit, total loans for all 
commercial, agricultural, multifamily or other non-1-to- 4 family 
residential properties should not exceed 30 percent of total capital. An 
institution will come under increased supervisory scrutiny as the total 
of such loans approaches these levels.
---------------------------------------------------------------------------

    \2\ For the state member banks, the term ``total capital'' means 
``total risk-based capital'' as defined in Appendix A to 12 CFR Part 
208. For insured state non-member banks, ``total capital'' refers to 
that term described in table I of Appendix A to 12 CFR Part 325. For 
national banks, the term ``total capital'' is defined at 12 CFR 3.2(e). 
For savings associations, the term ``total capital'' is defined at 12 
CFR 567.5(c).
---------------------------------------------------------------------------

    In determining the aggregate amount of such loans, institutions 
should: (a) Include all loans secured by the same property if any one of 
those loans exceeds the supervisory loan-to-value limits; and (b) 
include the recourse obligation of any such loan sold with recourse. 
Conversely, a loan should no longer be reported to the directors as part 
of aggregate totals when reduction in principal or senior liens, or 
additional contribution of collateral or equity (e.g., improvements to 
the real property securing the loan), bring the loan-to-value ratio into 
compliance with supervisory limits.

                          Excluded Transactions

    The agencies also recognize that there are a number of lending 
situations in which other factors significantly outweigh the need to 
apply the supervisory loan-to-value limits.
    These include:
     Loans guaranteed or insured by the U.S. government or its 
agencies, provided that the amount of the guaranty or insurance is at 
least equal to the portion of the loan that exceeds the supervisory 
loan-to-value limit.
     Loans backed by the full faith and credit of a state 
government, provided that the amount of the assurance is at least equal 
to the portion of the loan that exceeds the supervisory loan-to-value 
limit.
     Loans guaranteed or insured by a state, municipal or local 
government, or an agency thereof, provided that the amount of the 
guaranty or insurance is at least equal to the portion of the loan that 
exceeds the supervisory loan-to-value limit, and provided that the 
lender has determined that the guarantor or insurer has the financial 
capacity and willingness to perform under the terms of the guaranty or 
insurance agreement.
     Loans that are to be sold promptly after origination, 
without recourse, to a financially responsible third party.
     Loans that are renewed, refinanced, or restructured without 
the advancement of new funds or an increase in the line of credit 
(except for reasonable closing costs), or loans that are renewed, 
refinanced, or restructured in connection with a workout situation, 
either with or without the advancement of new funds, where consistent 
with safe and sound banking practices and part of a clearly defined and 
well-documented program to achieve orderly liquidation of the debt, 
reduce risk of loss, or maximize recovery on the loan.
     Loans that facilitate the sale of real estate acquired by 
the lender in the ordinary course of collecting a debt previously 
contracted in good faith.
     Loans for which a lien on or interest in real property is 
taken as additional collateral through an abundance of caution by the 
lender (e.g., the institution takes a blanket lien on all or 
substantially all of the assets of the borrower, and the value of the 
real property is low relative to the aggregate value of all other 
collateral).
     Loans, such as working capital loans, where the lender does 
not rely principally on real estate as security and the extension of 
credit is not used to acquire, develop, or construct permanent 
improvements on real property.
     Loans for the purpose of financing permanent improvements 
to real property, but not secured by the property, if such security 
interest is not required by prudent underwriting practice.

                Exceptions to the General Lending Policy

    Some provision should be made for the consideration of loan requests 
from creditworthy borrowers whose credit needs do not fit within the 
institution's general lending policy. An institution may provide for 
prudently underwritten exceptions to its lending policies, including 
loan-to-value limits, on a loan-by-loan basis. However, any exceptions 
from the supervisory loan-to-value limits should conform to the 
aggregate limits on such loans discussed above.
    The board of directors is responsible for establishing standards for 
the review and approval of exception loans. Each institution should 
establish an appropriate internal

[[Page 173]]

process for the review and approval of loans that do not conform to its 
own internal policy standards. The approval of any such loan should be 
supported by a written justification that clearly sets forth all of the 
relevant credit factors that support the underwriting decision. The 
justification and approval documents for such loans should be maintained 
as a part of the permanent loan file. Each institution should monitor 
compliance with its real estate lending policy and individually report 
exception loans of a significant size to its board of directors.

    Supervisory Review of Real Estate Lending Policies and Practices

    The real estate lending policies of institutions will be evaluated 
by examiners during the course of their examinations to determine if the 
policies are consistent with safe and sound lending practices, these 
guidelines, and the requirements of the regulation. In evaluating the 
adequacy of the institution's real estate lending policies and 
practices, examiners will take into consideration the following factors:
     The nature and scope of the institution's real estate 
lending activities.
     The size and financial condition of the institution.
     The quality of the institution's management and internal 
controls.
     The expertise and size of the lending and loan 
administration staff.
     Market conditions.
    Lending policy exception reports will also be reviewed by examiners 
during the course of their examinations to determine whether the 
institutions' exceptions are adequately documented and appropriate in 
light of all of the relevant credit considerations. An excessive volume 
of exceptions to an institution's real estate lending policy may signal 
a weakening of its underwriting practices, or may suggest a need to 
revise the loan policy.

                               Definitions

    For the purposes of these Guidelines:
    Construction loan means an extension of credit for the purpose of 
erecting or rehabilitating buildings or other structures, including any 
infrastructure necessary for development.
    Extension of credit or loan means:
    (1) The total amount of any loan, line of credit, or other legally 
binding lending commitment with respect to real property; and
    (2) The total amount, based on the amount of consideration paid, of 
any loan, line of credit, or other legally binding lending commitment 
acquired by a lender by purchase, assignment, or otherwise.
    Improved property loan means an extension of credit secured by one 
of the following types of real property:
    (1) Farmland, ranchland or timberland committed to ongoing 
management and agricultural production;
    (2) 1- to 4-family residential property that is not owner-occupied;
    (3) Residential property containing five or more individual dwelling 
units;
    (4) Completed commercial property; or
    (5) Other income-producing property that has been completed and is 
available for occupancy and use, except income-producing owner-occupied 
1- to 4-family residential property.
    Land development loan means an extension of credit for the purpose 
of improving unimproved real property prior to the erection of 
structures. The improvement of unimproved real property may include the 
laying or placement of sewers, water pipes, utility cables, streets, and 
other infrastructure necessary for future development.
    Loan origination means the time of inception of the obligation to 
extend credit (i.e., when the last event or prerequisite, controllable 
by the lender, occurs causing the lender to become legally bound to fund 
an extension of credit).
    Loan-to-value or loan-to-value ratio means the percentage or ratio 
that is derived at the time of loan origination by dividing an extension 
of credit by the total value of the property(ies) securing or being 
improved by the extension of credit plus the amount of any readily 
marketable collateral and other acceptable collateral that secures the 
extension of credit. The total amount of all senior liens on or 
interests in such property(ies) should be included in determining the 
loan-to-value ratio. When mortgage insurance or collateral is used in 
the calculation of the loan-to-value ratio, and such credit enhancement 
is later released or replaced, the loan-to-value ratio should be 
recalculated.
    Other acceptable collateral means any collateral in which the lender 
has a perfected security interest, that has a quantifiable value, and is 
accepted by the lender in accordance with safe and sound lending 
practices. Other acceptable collateral should be appropriately 
discounted by the lender consistent with the lender's usual practices 
for making loans secured by such collateral. Other acceptable collateral 
includes, among other items, unconditional irrevocable standby letters 
of credit for the benefit of the lender.
    Owner-occupied, when used in conjunction with the term 1- to 4-
family residential property means that the owner of the underlying real 
property occupies at least one unit of the real property as a principal 
residence of the owner.
    Readily marketable collateral means insured deposits, financial 
instruments, and bullion in which the lender has a perfected interest. 
Financial instruments and bullion must be salable under ordinary 
circumstances with

[[Page 174]]

reasonable promptness at a fair market value determined by quotations 
based on actual transactions, on an auction or similarly available daily 
bid and ask price market. Readily marketable collateral should be 
appropriately discounted by the lender consistent with the lender's 
usual practices for making loans secured by such collateral.
    Value means an opinion or estimate, set forth in an appraisal or 
evaluation, whichever may be appropriate, of the market value of real 
property, prepared in accordance with the agency's appraisal regulations 
and guidance. For loans to purchase an existing property, the term 
``value'' means the lesser of the actual acquisition cost or the 
estimate of value.
    1- to 4-family residential property means property containing fewer 
than five individual dwelling units, including manufactured homes 
permanently affixed to the underlying property (when deemed to be real 
property under state law).

[61 FR 50971, Sept. 30, 1996, as amended at 66 FR 65821, Dec. 21, 2001]



Sec. 560.110  Most favored lender usury preemption.

    (a) Definition. The term ``interest'' as used in 12 U.S.C. 1463(g) 
includes any payment compensating a creditor or prospective creditor for 
an extension of credit, making available of a line of credit, or any 
default or breach by a borrower of a condition upon which credit was 
extended. It includes, among other things, the following fees connected 
with credit extension or availability: numerical periodic rates, late 
fees, not sufficient funds (NSF) fees, overlimit fees, annual fees, cash 
advance fees, and membership fees. It does not ordinarily include 
appraisal fees, premiums and commissions attributable to insurance 
guaranteeing repayment of any extension of credit, finders' fees, fees 
for document preparation or notarization, or fees incurred to obtain 
credit reports.
    (b) Authority. A savings association located in a state may charge 
interest at the maximum rate permitted to any state-chartered or 
licensed lending institution by the law of that state. If state law 
permits different interest charges on specified classes of loans, a 
federal savings association making such loans is subject only to the 
provisions of state law relating to that class of loans that are 
material to the determination of the permitted interest. For example, a 
federal savings association may lawfully charge the highest rate 
permitted to be charged by a state-licensed small loan company, without 
being so licensed, but subject to state law limitations on the size of 
loans made by small loan companies. Except as provided in this 
paragraph, the applicability of state law to Federal savings 
associations shall be determined in accordance with Sec. 560.2 of this 
part. State supervisors determine the degree to which state-chartered 
savings associations must comply with state laws other than those 
imposing restrictions on interest, as defined in paragraph (a) of this 
section.
    (c) Effect on state definitions of interest. The Federal definition 
of the term ``interest'' in paragraph (a) of this section does not 
change how interest is defined by the individual states (nor how the 
state definition of interest is used) solely for purposes of state law. 
For example, if late fees are not ``interest'' under state law where a 
savings association is located but state law permits its most favored 
lender to charge late fees, then a savings association located in that 
state may charge late fees to its intrastate customers. The savings 
association may also charge late fees to its interstate customers 
because the fees are interest under the Federal definition of interest 
and an allowable charge under state law where the savings association is 
located. However, the late fees would not be treated as interest for 
purposes of evaluating compliance with state usury limitations because 
state law excludes late fees when calculating the maximum interest that 
lending institutions may charge under those limitations.



Sec. 560.120  Letters of credit and other independent undertakings to pay against documents.

    (a) General authority. A savings association may issue and commit to 
issue letters of credit within the scope of applicable laws or rules of 
practice recognized by law. It may also issue other independent 
undertakings within the scope of such laws or rules of practice

[[Page 175]]

recognized by law, that have been approved by OTS (approved 
undertaking).\1\ Under such letters of credit and approved undertakings, 
the savings association's obligation to honor depends upon the 
presentation of specified documents and not upon nondocumentary 
conditions or resolution of questions of fact or law at issue between 
the account party and the beneficiary. A savings association may also 
confirm or otherwise undertake to honor or purchase specified documents 
upon their presentation under another person's independent undertaking 
within the scope of such laws or rules.
---------------------------------------------------------------------------

    \1\ Samples of laws or rules of practice applicable to letters of 
credit and other independent undertakings include, but are not limited 
to: the applicable version of Article 5 of the Uniform Commercial Code 
(UCC) (1962, as amended 1990) or revised Article 5 of the UCC (as 
amended 1995) (available from West Publishing Co., 1/800/328-4880); the 
Uniform Customs and Practice for Documentary Credits (International 
Chamber of Commerce (ICC) Publication No. 500) (available from ICC 
Publishing, Inc., 212/206-1150; the United Nations Convention on 
Independent Guarantees and Standby Letters of Credit (adopted by the 
U.N. General Assembly in 1995 and signed by the U.S. in 1997) (available 
from the U.N. Commission on International Trade Law, 212/963-5353); and 
the Uniform Rules for Bank-to-Bank Reimbursements Under Documentary 
Credits (ICC Publication No. 525) (available from ICC Publishing, Inc., 
212/206-1150).
---------------------------------------------------------------------------

    (b) Safety and soundness considerations--(1) Terms. As a matter of 
safe and sound banking practice, savings associations that issue letters 
of credit or approved undertakings should not be exposed to undue risk. 
At a minimum, savings associations should consider the following:
    (i) The independent character of the letter of credit or approved 
undertaking should be apparent from its terms (such as terms that 
subject it to laws or rules providing for its independent character);
    (ii) The letter of credit or approved undertaking should be limited 
in amount;
    (iii) The letter of credit or approved undertaking should:
    (A) Be limited in duration; or
    (B) Permit the savings association to terminate the letter of credit 
or approved undertaking, either on a periodic basis (consistent with the 
savings association's ability to make any necessary credit assessments) 
or at will upon either notice or payment to the beneficiary; or
    (C) Entitle the savings association to cash collateral from the 
account party on demand (with a right to accelerate the customer's 
obligations, as appropriate); and
    (iv) The savings association either should be fully collateralized 
or have a post-honor right of reimbursement from its customer or from 
another issuer of a letter of credit or an independent undertaking. 
Alternatively, if the savings association's undertaking is to purchase 
documents of title, securities, or other valuable documents, it should 
obtain a first priority right to realize on the documents if the savings 
association is not otherwise to be reimbursed.
    (2) Additional considerations in special circumstances. Certain 
letters of credit and approved undertakings require particular 
protections against credit, operational, and market risk:
    (i) In the event that the undertaking is to honor by delivery of an 
item of value other than money, the savings association should ensure 
that market fluctuations that affect the value of the item will not 
cause the savings association to assume undue market risk;
    (ii) In the event that the undertaking provides for automatic 
renewal, the terms for renewal should allow the savings association to 
make any necessary credit assessment prior to renewal;
    (iii) In the event that a savings association issues an undertaking 
for its own account, the underlying transaction for which it is issued 
must be within the savings association's authority and comply with any 
safety and soundness requirements applicable to that transaction.
    (3) Operational expertise. The savings association should possess 
operational expertise that is commensurate with the sophistication of 
its letter of credit or independent undertaking activities.
    (4) Documentation. The savings association must accurately reflect 
its letters of credit or approved undertakings

[[Page 176]]

in its records, including any acceptance or deferred payment or other 
absolute obligation arising out of its contingent undertaking.

[61 FR 50971, Sept. 30, 1996, as amended at 64 FR 46565, Aug. 26, 1999]



Sec. 560.121  Investment in State housing corporations.

    (a) Any savings association to the extent it has legal authority to 
do so, may make investments in, commitments to invest in, loans to, or 
commitments to lend to any state housing corporation; provided, that 
such obligations or loans are secured directly, or indirectly through a 
fiduciary, by a first lien on improved real estate which is insured 
under the National Housing Act, as amended, and that in the event of 
default, the holder of such obligations or loans has the right directly, 
or indirectly through a fiduciary, to subject to the satisfaction of 
such obligations or loans the real estate described in the first lien, 
or the insurance proceeds.
    (b) Any savings association that is adequately capitalized may, to 
the extent it has legal authority to do so, invest in obligations 
(including loans) of, or issued by, any state housing corporation 
incorporated in the state in which such savings association has its home 
or a branch office; provided (except with respect to loans), that:
    (1) The obligations are rated in one of the four highest grades as 
shown by the most recently published rating made of such obligations by 
a nationally recognized rating service; or
    (2) The obligations, if not rated, are approved by the Office. The 
aggregate outstanding direct investment in obligations under paragraph 
(b) of this section shall not exceed the amount of the savings 
association's total capital.
    (c) Each state housing corporation in which a savings association 
invests under the authority of paragraph (b) of this section shall 
agree, before accepting any such investment (including any loan or loan 
commitment), to make available at any time to the Office such 
information as the Office may consider to be necessary to ensure that 
investments are properly made under this section.



Sec. 560.130  Prohibition on loan procurement fees.

    If you are a director, officer, or other natural person having the 
power to direct the management or policies of a savings association, you 
must not receive, directly or indirectly, any commission, fee, or other 
compensation in connection with the procurement of any loan made by the 
savings association or a subsidiary of the savings association.

[61 FR 60178, Nov. 27, 1996]



Sec. 560.160  Asset classification.

    (a)(1) Each savings association must evaluate and classify its 
assets on a regular basis in a manner consistent with, or reconcilable 
to, the asset classification system used by OTS in its Thrift Activities 
Handbook (Available at the address of Washington Headquarters Office at 
Sec. 516.40(b) of this chapter).
    (2) In connection with the examination of a savings association or 
its affiliates, OTS examiners may identify problem assets and classify 
them, if appropriate. The association must recognize such examiner 
classifications in its subsequent reports to OTS.
    (b) Based on the evaluation and classification of its assets, each 
savings association shall establish adequate valuation allowances or 
charge-offs, as appropriate, consistent with generally accepted 
accounting principles and the practices of the federal banking agencies.

[61 FR 50971, Sept. 30, 1996, as amended at 66 FR 13007, Mar. 2, 2001]



Sec. 560.170  Records for lending transactions.

    In establishing and maintaining its records pursuant to Sec. 563.170 
of this chapter, each savings association and service corporation should 
establish and maintain loan documentation practices that:
    (a) Ensure that the institution can make an informed lending 
decision and can assess risk on an ongoing basis;
    (b) Identify the purpose and all sources of repayment for each loan, 
and assess the ability of the borrower(s) and any guarantor(s) to repay 
the indebtedness in a timely manner;

[[Page 177]]

    (c) Ensure that any claims against a borrower, guarantor, security 
holders, and collateral are legally enforceable;
    (d) Demonstrate appropriate administration and monitoring of its 
loans; and
    (e) Take into account the size and complexity of its loans.



Sec. 560.172  Re-evaluation of real estate owned.

    A savings association shall appraise each parcel of real estate 
owned at the earlier of in-substance foreclosure or at the time of the 
savings association's acquisition of such property, and at such times 
thereafter as dictated by prudent management policy; such appraisals 
shall be consistent with the requirements of part 564 of this chapter. 
The Regional Director or his or her designee may require subsequent 
appraisals if, in his or her discretion, such subsequent appraisal is 
necessary under the particular circumstances. The foregoing requirement 
shall not apply to any parcel of real estate that is sold and reacquired 
less than 12 months subsequent to the most recent appraisal made 
pursuant to this part. A dated, signed copy of each report of appraisal 
made pursuant to any provisions of this part shall be retained in the 
savings association's records.



              Subpart C--Alternative Mortgage Transactions



Sec. 560.210  Disclosures for variable rate transactions.

    A savings association must provide the initial disclosures described 
at 12 CFR 226.19(b) and the adjustment notices described at 12 CFR 
226.20(c) for variable rate transactions, as described in those 
regulations. The OTS administers and enforces those provisions for 
savings associations.

[63 FR 38463, July 17, 1998]



Sec. 560.220  Alternative Mortgage Parity Act.

    Pursuant to 12 U.S.C. 3803, housing creditors that are not 
commercial banks, credit unions, or Federal savings associations may 
make alternative mortgage transactions as defined by that section and 
further defined and described by applicable regulations identified in 
this section, notwithstanding any state constitution, law, or 
regulation. In accordance with section 807(b) of Public Law 97-320, 12 
U.S.C. 3801 note, Secs. 560.33, 560.34, 560.35, and 560.210 of this part 
are identified as appropriate and applicable to the exercise of this 
authority and all regulations not so identified are deemed inappropriate 
and inapplicable. Housing creditors engaged in credit sales should read 
the term ``loan'' as ``credit sale'' wherever applicable.



PART 561--DEFINITIONS FOR REGULATIONS AFFECTING ALL SAVINGS ASSOCIATIONS--Table of Contents




Sec.
561.1  General.
561.2  Account.
561.3  Accountholder.
561.4  Affiliate.
561.5  Affiliated person.
561.6  Audit period.
561.7  BIF.
561.8  [Reserved]
561.9  Certificate account.
561.12  Consumer credit.
561.14  Controlling person.
561.15  Corporation.
561.16  Demand accounts.
561.18  Director.
561.19  Financial institution.
561.24  Immediate family.
561.26  Land loan.
561.27  Low-rent housing.
561.28  Money Market Deposit Accounts.
561.29  Negotiable Order of Withdrawal Accounts.
561.30  Nonresidential construction loan.
561.31  Nonwithdrawable account.
561.33  Note account.
561.34  Office.
561.35  Officer.
561.37  Parent company; subsidiary.
561.38  Political subdivision.
561.39  Principal office.
561.40  Public unit.
561.41  SAIF.
561.42  Savings account.
561.43  Savings association.
561.44  Security.
561.45  Service corporation.
561.49  [Reserved]
561.50  State.
561.51  Subordinated debt security.
561.52  Tax and loan account.
561.53  United States Treasury General Account.
561.54  United States Treasury Time Deposit Open Account.
561.55  With recourse.


[[Page 178]]


    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.

    Source: 54 FR 49545, Nov. 30, 1989, unless otherwise noted.



Sec. 561.1  General.

    Unless another definition is provided in this chapter, definitions 
in part 541 of this chapter apply.



Sec. 561.2  Account.

    The term account means any savings account, demand account, 
certificate account, tax and loan account, note account, United States 
Treasury general account or United States Treasury time deposit-open 
account, whether in the form of a deposit or a share, held by an 
accountholder in a savings association.



Sec. 561.3  Accountholder.

    The term accountholder means the holder of an account or accounts in 
a savings association insured by the SAIF. The term does not include the 
holder of any subordinated debt security or any mortgage-backed bond 
issued by the savings association.



Sec. 561.4  Affiliate.

    The term affiliate of a savings association, unless otherwise 
defined, means any corporation, business trust, association, or other 
similar organization:
    (a) Of which a savings association, directly or indirectly, owns or 
controls either a majority of the voting shares or more than 50 
percentum of the number of shares voted for the election of its 
directors, trustees, or other persons exercising similar functions at 
the preceding election, or controls in any manner the election of a 
majority of its directors, trustees, or other persons exercising similar 
functions; or
    (b) Of which control is held, directly or indirectly through stock 
ownership or in any other manner, by the shareholders of a savings 
association who own or control either a majority of the shares of such 
savings association or more than 50 per centum of the number of shares 
voted for the election of directors of such savings association at the 
preceding election, or by trustees for the benefit of the shareholders 
of any such savings association; or
    (c) Of which a majority of its directors, trustees, or other persons 
exercising similar functions are directors of any one savings 
association.



Sec. 561.5  Affiliated person.

    The term affiliated person of a savings association means the 
following:
    (a) A director, officer, or controlling person of such association;
    (b) A spouse of a director, officer, or controlling person of such 
association;
    (c) A member of the immediate family of a director, officer, or 
controlling person of such association, who has the same home as such 
person or who is a director or officer of any subsidiary of such 
association or of any holding company affiliate of such association;
    (d) Any corporation or organization (other than the savings 
association or a corporation or organization through which the savings 
association operates) of which a director, officer or the controlling 
person of such association:
    (1) Is chief executive officer, chief financial officer, or a person 
performing similar functions;
    (2) Is a general partner;
    (3) Is a limited partner who, directly or indirectly either alone or 
with his or her spouse and the members of his or her immediate family 
who are also affiliated persons of the association, owns an interest of 
10 percent or more in the partnership (based on the value of his or her 
contribution) or who, directly or indirectly with other directors, 
officers, and controlling persons of such association and their spouses 
and their immediate family members who are also affiliated persons of 
the association, owns an interest of 25 percent or more in the 
partnership; or
    (4) Directly or indirectly either alone or with his or her spouse 
and the members of his or her immediate family who are also affiliated 
persons of the association, owns or controls 10 percent or more of any 
class of equity securities or owns or controls, with other directors, 
officers, and controlling persons of such association and their spouses 
and their immediate family members who are also affiliated persons of 
the association, 25 percent or more of any class of equity securities; 
and

[[Page 179]]

    (5) Any trust or other estate in which a director, officer, or 
controlling person of such association or the spouse of such person has 
a substantial beneficial interest or as to which such person or his or 
her spouse serves as trustee or in a similar fiduciary capacity.

[59 FR 18476, Apr. 19, 1994]



Sec. 561.6  Audit period.

    The audit period of a savings association means the twelve month 
period (or other period in the case of a change in audit period) covered 
by the annual audit conducted to satisfy Sec. 563.170.



Sec. 561.7  BIF.

    The term BIF means the Bank Insurance Fund established by the 
Federal Deposit Insurance Act. (12 U.S.C. 1821 et seq.)



Sec. 561.8  [Reserved]



Sec. 561.9  Certificate account.

    The term certificate account means a savings account evidenced by a 
certificate that must be held for a fixed or minimum term.



Sec. 561.12  Consumer credit.

    The term consumer credit means credit extended to a natural person 
for personal, family, or household purposes, including loans secured by 
liens on real estate and chattel liens secured by mobile homes and 
leases of personal property to consumers that may be considered the 
functional equivalent of loans on personal security: Provided, the 
savings association relies substantially upon other factors, such as the 
general credit standing of the borrower, guaranties, or security other 
than the real estate or mobile home, as the primary security for the 
loan. Appropriate evidence to demonstrate justification for such 
reliance should be retained in a savings association's files. Among the 
types of credit included within this term are consumer loans; 
educational loans; unsecured loans for real property alteration, repair 
or improvement, or for the equipping of real property; loans in the 
nature of overdraft protection; and credit extended in connection with 
credit cards.



Sec. 561.14  Controlling person.

    The term controlling person of a savings association means any 
person or entity which, either directly or indirectly, or acting in 
concert with one or more other persons or entities, owns, controls, or 
holds with power to vote, or holds proxies representing, ten percent or 
more of the voting shares or rights of such savings association; or 
controls in any manner the election or appointment of a majority of the 
directors of such savings association. However, a director of a savings 
association will not be deemed to be a controlling person of such 
savings association based upon his or her voting, or acting in concert 
with other directors in voting, proxies:
    (a) Obtained in connection with an annual solicitation of proxies, 
or
    (b) Obtained from savings account holders and borrowers if such 
proxies are voted as directed by a majority vote of the entire board of 
directors of such association, or of a committee of such directors if 
such committee's composition and authority are controlled by a majority 
vote of the entire board and if its authority is revocable by such a 
majority.



Sec. 561.15  Corporation.

    The terms Corporation and FDIC mean the Federal Deposit Insurance 
Corporation.



Sec. 561.16  Demand accounts.

    (a) The term demand accounts means non-interest-bearing demand 
deposits which are subject to check or to withdrawal or transfer on 
negotiable or transferable order to the savings association and which 
are permitted to be issued by statute, regulation, or otherwise and are 
payable on demand.
    (b) A fee paid by a savings association to a person who introduces a 
depositor to the savings association shall not be deemed a payment of 
interest to the depositor if the fee:
    (1) Consists of bonuses in cash or merchandise to the savings 
association's employees for participation in an account drive, contest 
or other incentive plan: Provided, That such bonuses are tied to the 
total amount of deposits solicited; or
    (2) Is paid to a bona fide broker if:

[[Page 180]]

    (i) The broker is principally engaged in the business of acting as a 
broker or dealer in regard to deposits, securities, or money market 
instruments;
    (ii) The relationship between the broker and savings association is 
memorialized in a written agreement, a copy of which is retained by the 
savings association and made available to examiners; and
    (iii) An officer of the broker certifies that no portion of the fee 
paid to the broker is directly or indirectly passed on to the depositor, 
and a copy of the certification is given to the savings association to 
be retained on file with the agreement.

[54 FR 49545, Nov. 30, 1989, as amended at 58 FR 4313, Jan. 14, 1993; 62 
FR 54765, Oct. 22, 1997]



Sec. 561.18  Director.

    (a) The term director means any director, trustee, or other person 
performing similar functions with respect to any organization whether 
incorporated or unincorporated. Such term does not include an advisory 
director, honorary director, director emeritus, or similar person, 
unless the person is otherwise performing functions similar to those of 
a director.
    (b) The term Director means the Director of the Office of Thrift 
Supervision as established in section 3 of the Act.



Sec. 561.19  Financial institution.

    The term financial institution has the same meaning as the term 
depository institution set forth in 12 U.S.C. 1813(c)(1).



Sec. 561.24  Immediate family.

    The term immediate family of any natural person means the following 
(whether by the full or half blood or by adoption):
    (a) Such person's spouse, father, mother, children, brothers, 
sisters, and grandchildren;
    (b) The father, mother, brothers, and sisters of such person's 
spouse; and
    (c) The spouse of a child, brother, or sister of such person.



Sec. 561.26  Land loan.

    The term land loan means a loan:
    (a) Secured by real estate upon which all facilities and 
improvements have been completely installed, as required by local 
regulations and practices, so that it is entirely prepared for the 
erection of structures;
    (b) To finance the purchase of land and the accomplishment of all 
improvements required to convert it to developed building lots; or
    (c) Secured by land upon which there is no structure.



Sec. 561.27  Low-rent housing.

    The term low-rent housing means real estate which is, or which is 
being constructed, remodeled, rehabilitated, modernized, or renovated to 
be, the subject of an annual contributions contract for low-rent housing 
under the provisions of the United States Housing Act of 1937, as 
amended.



Sec. 561.28  Money Market Deposit Accounts.

    (a) Money Market Deposit Accounts (MMDAs) offered by Federal savings 
associations in accordance with 12 U.S.C. 1464(b)(1) and by state-
chartered savings associations in accordance with applicable state law 
are savings accounts on which interest may be paid if issued subject to 
the following limitations:
    (1) The savings association shall reserve the right to require at 
least seven days' notice prior to withdrawal or transfer of any funds in 
the account; and
    (2)(i) The depositor is authorized by the savings association to 
make no more than six transfers per calendar month or statement cycle 
(or similar period) of at least four weeks by means of preauthorized, 
automatic, telephonic, or data transmission agreement, order, or 
instruction to another account of the depositor at the same savings 
association to the savings association itself, or to a third party: 
Provided, That no more than three of the six transfers provided for in 
this paragraph (a)(2)(i) may be by check, draft, debit card, or similar 
order made by the depositor and payable to third parties.
    (ii) Savings associations may permit holders of MMDAs to make 
unlimited transfers for the purpose of repaying

[[Page 181]]

loans (except overdraft loans on the depositor's demand account) and 
associated expenses at the same savings association (as originator or 
servicer), to make unlimited transfers of funds from this account to 
another account of the same depositor at the same savings association or 
to make unlimited payments directly to the depositor from the account 
when such transfers or payments are made by mail, messenger, automated 
teller machine, or in person, or when such payments are made by 
telephone (via check mailed to the depositor).
    (3) In order to ensure that no more than the number of transfers 
specified in paragraph (a)(2)(i) of this section are made, a savings 
association must either:
    (i) Prevent transfers of funds in excess of the limitations; or
    (ii) Adopt procedures to monitor those transfers on an after-the-
fact basis and contact customers who exceed the limits on more than an 
occasional basis. For customers who continue to violate those limits 
after being contacted by the depository savings association the 
depository savings association must either place funds in another 
account that the depositor is eligible to maintain or take away the 
account's transfer and draft capacities.
    (iii) Insured savings association at their option, may use on a 
consistent basis either the date on a check or the date it is paid in 
determining whether the transfer limitations within the specified 
interval are exceeded.
    (b) Federal savings associations may offer MMDAs to any depositor, 
and state-chartered savings associations may offer MMDAs to any 
depositor not inconsistent with applicable state law.



Sec. 561.29  Negotiable Order of Withdrawal Accounts.

    (a) Negotiable Order of Withdrawal (NOW) accounts are savings 
accounts authorized by 12 U.S.C. 1832 on which the savings association 
reserves the right to require at least seven days' notice prior to 
withdrawal or transfer of any funds in the account.
    (b) For purposes of 12 U.S.C. 1832:
    (1) An organization shall be deemed ``operated primarily for 
religious, philanthropic, charitable, educational, or other similar 
purposes and * * * not * * * for profit'' if it is described in sections 
501(c)(3) through (13), 501(c)(19), or 528 of the Internal Revenue Code; 
and
    (2) The funds of a sole proprietorship or unincorporated business 
owned by a husband and wife shall be deemed beneficially owned by ``one 
or more individuals.''



Sec. 561.30  Nonresidential construction loan.

    The term nonresidential construction loan means a loan for 
construction of other than one or more dwelling units.



Sec. 561.31  Nonwithdrawable account.

    The term nonwithdrawable account means an account which by the terms 
of the contract of the accountholder with the savings association or by 
provisions of state law cannot be paid to the accountholder until all 
liabilities, including other classes of share liability of the savings 
association have been fully liquidated and paid upon the winding up of 
the savings association is referred to as a nonwithdrawable account.



Sec. 561.33  Note account.

    The term note account means a note, subject to the right of 
immediate call, evidencing funds held by depositories electing the note 
option under applicable United States Treasury Department regulations. 
Note accounts are not savings accounts or savings deposits.



Sec. 561.34  Office.

    The term Office means the Office as established in section 3 of the 
Act or any official duly authorized to act on its behalf. Where 
appropriate in context, it also refers to the Federal Home Loan Bank 
Board and the Federal Savings and Loan Insurance Corporation as 
predecessor agencies to the Office.



Sec. 561.35  Officer.

    The term Officer means the president, any vice-president (but not an 
assistant vice-president, second vice-president, or other vice president 
having authority similar to an assistant or second vice-president), the 
secretary, the treasurer, the comptroller, and any

[[Page 182]]

other person performing similar functions with respect to any 
organization whether incorporated or unincorporated. The term officer 
also includes the chairman of the board of directors if the chairman is 
authorized by the charter or by-laws of the organization to participate 
in its operating management or if the chairman in fact participates in 
such management.



Sec. 561.37  Parent company; subsidiary.

    The terms parent company and subsidiary have the meanings given to 
them by Secs. 583.15 and 583.23 of this chapter, respectively.



Sec. 561.38  Political subdivision.

    The term political subdivision includes any subdivision of a public 
unit, any principal department of such public unit:
    (a) The creation of which subdivision or department has been 
expressly authorized by state statute,
    (b) To which some functions of government have been delegated by 
state statute, and
    (c) To which funds have been allocated by statute or ordinance for 
its exclusive use and control. It also includes drainage, irrigation, 
navigation, improvement, levee, sanitary, school or power districts and 
bridge or port authorities and other special districts created by state 
statute or compacts between the states. Excluded from the term are 
subordinate or nonautonomous divisions, agencies or boards within 
principal departments.



Sec. 561.39  Principal office.

    The term principal office means the home office of a savings 
association established as such in conformity with the laws under which 
the savings association is organized.



Sec. 561.40  Public unit.

    The term public unit means the United States, any state of the 
United States, the District of Columbia, any territory of the United 
States, Puerto Rico, the Virgin Islands, any county, any municipality or 
any political subdivision thereof.



Sec. 561.41  SAIF.

    The term SAIF means the Savings Association Insurance Fund, 
established by the Federal Deposit Insurance Act. (12 U.S.C. 1811 et 
seq.).



Sec. 561.42  Savings account.

    The term savings account means any withdrawable account, except a 
demand account as defined in Sec. 561.16 of this chapter, a tax and loan 
account, a note account, a United States Treasury general account, or a 
United States Treasury time deposit-open account.

[54 FR 49545, Nov. 30, 1989, as amended at 62 FR 54765, Oct. 22, 1997]



Sec. 561.43  Savings association.

    The term savings association means a savings association as defined 
in section 3 of the Federal Deposit Insurance Act, the deposits of which 
are insured by the Corporation. It includes a Federal savings 
association or Federal savings bank, chartered under section 5 of the 
Act, or a building and loan, savings and loan, or homestead association, 
or a cooperative bank (other than a cooperative bank which is a State 
bank as defined in section 3(a)(2) of the Federal Deposit Insurance Act) 
organized and operating according to the laws of the State in which it 
is chartered or organized, or a corporation (other than a bank as 
defined in section 3(a)(1) of the Federal Deposit Insurance Act) that 
the Board of Directors of the Federal Deposit Insurance Corporation and 
the Director of the Office of Thrift Supervision jointly determine to be 
operating substantially in the same manner as a savings association.



Sec. 561.44  Security.

    The term security means any non-withdrawable account, note, stock, 
treasury stock, bond, debenture, evidence of indebtedness, certificate 
of interest or participation in any profit-sharing agreement, 
collateral-trust certificate, preorganization certificate or 
subscription, transferable share, investment contract, voting-trust 
certificate, or, in general, any interest or instrument commonly known 
as a security, or any certificate of interest or participation in, 
temporary or interim certificate for, receipt for, guarantee

[[Page 183]]

of, or warrant or right to subscribe to or purchase, any of the 
foregoing, except that a security shall not include an account or 
deposit insured by the Federal Deposit Insurance Corporation.



Sec. 561.45  Service corporation.

    The term service corporation means any corporation, the majority of 
the capital stock of which is owned by one or more savings associations 
and which engages, directly or indirectly, in any activities similar to 
activities which may be engaged in by a service corporation in which a 
Federal savings association may invest under part 559 of this chapter.

[54 FR 49545, Nov. 30, 1989, as amended at 62 FR 66262, Dec. 18, 1997]



Sec. 561.50  State.

    The term State means a State, the District of Columbia, Guam, Puerto 
Rico, and the Virgin Islands of the United States.



Sec. 561.51  Subordinated debt security.

    The term subordinated debt security means any unsecured note, 
debenture, or other debt security issued by a savings association and 
subordinated on liquidation to all claims having the same priority as 
account holders or any higher priority.



Sec. 561.52  Tax and loan account.

    The term tax and loan account means an account, the balance of which 
is subject to the right of immediate withdrawal, established for receipt 
of payments of Federal taxes and certain United States obligations. Such 
accounts are not savings accounts or savings deposits.



Sec. 561.53  United States Treasury General Account.

    The term United States Treasury General Account means an account 
maintained in the name of the United States Treasury the balance of 
which is subject to the right of immediate withdrawal, except in the 
case of the closure of the member, and in which a zero balance may be 
maintained. Such accounts are not savings accounts or savings deposits.



Sec. 561.54  United States Treasury Time Deposit Open Account.

    The term United States Treasury Time Deposit Open Account means a 
non-interest-bearing account maintained in the name of the United States 
Treasury which may not be withdrawn prior to the expiration of 30 days' 
written notice from the United States Treasury, or such other period of 
notice as the Treasury may require. Such accounts are not savings 
accounts or savings deposits.



Sec. 561.55  With recourse.

    (a) The term with recourse means, in connection with the sale of a 
loan or a participation interest in a loan, an agreement or arrangement 
under which the purchaser is to be entitled to receive from the seller a 
sum of money or thing of value, whether tangible or intangible 
(including any substitution), upon default in payment of any loan 
involved or any part thereof or to withhold or to have withheld from the 
seller a sum of money or anything of value by way of security against 
default. The recourse liability resulting from a sale with recourse 
shall be the total book value of any loan sold with recourse less:
    (1) The amount of any insurance or guarantee against loss in the 
event of default provided by a third party,
    (2) The amount of any loss to be borne by the purchaser in the event 
of default, and
    (3) The amount of any loss resulting from a recourse obligation 
entered on the books and records of the savings association.
    (b) The term with recourse does not include loans or interests 
therein where the agreement of sale provides for the savings association 
directly or indirectly
    (1) To hold or retain a subordinate interest in a specified 
percentage of the loans or interests; or
    (2) To guarantee against loss up to a specified percentage of the 
loans or interests, which specified percentage shall not exceed ten 
percent of the outstanding balance of the loans or interests at the time 
of sale: Provided, That the savings association designates adequate 
reserves for the subordinate interest or guarantee.

[[Page 184]]

    (c) This definition does not apply for purposes of determining the 
capital adequacy requirements under part 567 of this chapter.

[54 FR 49545, Nov. 30, 1989, as amended at 57 FR 33437, July 29, 1992]



PART 562--REGULATORY REPORTING STANDARDS--Table of Contents




Sec.
562.1  Regulatory reporting requirements.
562.2  Regulatory reports.
562.4  Audit of savings associations and savings association holding 
          companies.

    Authority: 12 U.S.C. 1463.

    Source: 57 FR 40090, Sept. 2, 1992, unless otherwise noted.



Sec. 562.1  Regulatory reporting requirements.

    (a) Authority and scope. This part is issued by the Office of Thrift 
Supervision (OTS) pursuant to section 4(b) and 4(c) of the Home Owners' 
Loan Act (HOLA). It applies to all savings associations regulated by the 
OTS.
    (b) Records and reports--general--(1) Records. Each savings 
association and its affiliates shall maintain accurate and complete 
records of all business transactions. Such records shall support and be 
readily reconcilable to any regulatory reports submitted to the OTS and 
financial reports prepared in accordance with GAAP. The records shall be 
maintained in the United States and be readily accessible for 
examination and other supervisory purposes within 5 business days upon 
request by the OTS, at a location acceptable to the OTS.
    (2) Reports. For purposes of examination by and regulatory reports 
to the OTS and compliance with this chapter, all savings associations 
shall use such forms and follow such regulatory reporting requirements 
as the OTS may require by regulation or otherwise.



Sec. 562.2  Regulatory reports.

    (a) Definition and scope. This section applies to all regulatory 
reports, as defined herein. A regulatory report is any report that the 
OTS prepares, or is submitted to, or is used by the OTS, to determine 
compliance with its rules and regulations, and to evaluate the safe and 
sound condition and operation of savings associations. The Report of 
Examination and the Thrift Financial Report (TFR) are examples of 
regulatory reports. Regulatory reports are regulatory documents, not 
accounting documents.
    (b) Regulatory reporting requirements--(1) General. The instructions 
to regulatory reports are referred to as ``regulatory reporting 
requirements.'' Regulatory reporting requirements include, but are not 
limited to, the accounting instructions provided in the TFR, guidance 
contained in OTS regulations, bulletins, and examination handbooks, and 
safe and sound practices. Regulatory reporting requirements are not 
limited to the minimum requirements under generally accepted accounting 
principles (GAAP) because of the special supervisory, regulatory, and 
economic policy needs served by such reports. Regulatory reporting by 
savings associations that purports to comply with GAAP shall incorporate 
the GAAP that best reflects the underlying economic substance of the 
transaction at issue. Regulatory reporting requirements shall, at a 
minimum:
    (i) Incorporate GAAP whenever GAAP is the referenced accounting 
instruction for regulatory reports to the Federal banking agencies;
    (ii) Incorporate safe and sound practices contained in OTS 
regulations, bulletins, examination handbooks and instructions to 
regulatory reports. Such safety and soundness requirements shall be no 
less stringent than those applied by the Comptroller of the Currency for 
national banks; and
    (iii) Incorporate additional safety and soundness requirements more 
stringent than GAAP, as the Director may prescribe.
    (2) Exceptions. Regulatory reporting requirements that are not 
consistent with GAAP, if any, are not required to be reflected in 
audited financial statements, including financial statements contained 
in securities filings submitted to the OTS pursuant to the Securities 
and Exchange Act of 1934 or parts 563b, 563d, or 563g of this chapter.

[[Page 185]]

    (3) Compliance. When the OTS determines that a savings association's 
regulatory reports did not conform to regulatory reporting requirements 
in previous reporting periods, the association shall correct its 
regulatory reports in accordance with the directions of the OTS.



Sec. 562.4  Audit of savings associations and savings association holding companies.

    (a) General. The OTS may require, at any time, an independent audit 
of the financial statements of, or the application of procedures agreed 
upon by the OTS to a savings association, savings and loan holding 
company, or affiliate (as defined by 12 CFR 563.41(b)(1)) by qualified 
independent public accountants when needed for any safety and soundness 
reason identified by the Director.
    (b) Audits required for safety and soundness purposes. The OTS 
requires an independent audit for safety and soundness purposes:
    (1) If a savings association has received a composite rating of 3, 4 
or 5, as defined at Sec. 516.5(c) of this chapter; or
    (2) If, as of the beginning of its fiscal year, a savings and loan 
holding company controls savings association subsidiary(ies) with 
aggregate consolidated assets of $500 million or more.
    (c) Procedures. (1) When the OTS requires an independent audit 
because such an audit is needed for safety and soundness purposes, the 
Director shall determine whether the audit was conducted and filed in a 
manner satisfactory to the OTS.
    (2) The Director may waive the independent audit requirement 
described at paragraph (b)(1) of this section, if the Director 
determines that an audit would not provide further information on safety 
and soundness issues relevant to the examination rating.
    (3) When the OTS requires the application of procedures agreed upon 
by the OTS for safety and soundness purposes, the Director shall 
identify the procedures to be performed. The Director shall also 
determine whether the agreed upon procedures were conducted and filed in 
a manner satisfactory to the OTS.
    (d) Qualifications for independent public accountants. The audit 
shall be conducted by an independent public accountant who:
    (1) Is registered or licensed to practice as a public accountant, 
and is in good standing, under the laws of the state or other political 
subdivision of the United States in which the savings association's or 
holding company's principal office is located;
    (2) Agrees in the engagement letter to provide the OTS with access 
to and copies of any work papers, policies, and procedures relating to 
the services performed;
    (3) Is in compliance with the American Institute of Certified Public 
Accountants' (AICPA) Code of Professional Conduct and meets the 
independence requirements and interpretations of the Securities and 
Exchange Commission and its staff; and
    (4) Has received, or is enrolled in, a peer review program that 
meets guidelines acceptable to the OTS.
    (e) Voluntary audits. When a savings association, savings and loan 
holding company, or affiliate (as defined by 12 CFR 563.41(b)(1)) 
obtains an independent audit voluntarily, it shall be performed only by 
an independent public accountant who satisfies the requirements of 
paragraphs (d)(1), (d)(2), and (d)(3) of this section.

[59 FR 60304, Nov. 23, 1994, as amended at 62 FR 3780, Jan. 27, 1997; 66 
FR 13007, Mar. 2, 2001]



PART 563--SAVINGS ASSOCIATIONS--OPERATIONS--Table of Contents




                           Subpart A--Accounts

Sec.
563.1  Chartering documents.
563.4  [Reserved]
563.5  Securities: Statement of non-insurance.

                   Subpart B--Operation and Structure

563.22  Merger, consolidation, purchase or sale of assets, or assumption 
          of liabilities.
563.27  Advertising.
563.33  Directors, officers, and employees.
563.36  Tying restriction exception.
563.39  Employment contracts.
563.41  Loans and other transactions with affiliates and subsidiaries.

[[Page 186]]

563.42  Additional standards applicable to transactions with affiliates 
          and subsidiaries.
563.43  Loans by savings associations to their executive officers, 
          directors and principal shareholders.
563.47  Pension plans.

                  Subpart C--Securities and Borrowings

563.74  Mutual capital certificates.
563.76  Offers and sales of securities at an office of a savings 
          association.
563.80  Borrowing limitations.
563.81  Issuance of subordinated debt securities and mandatorily 
          redeemable preferred stock.

Subpart D [Reserved]

                    Subpart E--Capital Distributions

563.140  What does this subpart cover?
563.141  What is a capital distribution?
563.142  What other definitions apply to this subpart?
563.143  Must I file with OTS?
563.144  How do I file with the OTS?
563.145  May I combine my notice or application with other notices or 
          applications?
563.146  Will the OTS permit my capital distribution?

                Subpart F--Financial Management Policies

563.161  Management and financial policies.
563.170  Examinations and audits; appraisals; establishment and 
          maintenance of records.
563.171  Frequency of safety and soundness examination.
563.172  Financial derivatives.
563.176  Interest-rate-risk-management procedures.
563.177  Procedures for monitoring Bank Secrecy Act compliance.

                    Subpart G--Reporting and Bonding

563.180  Suspicious Activity Reports and other reports and statements.
563.181  Reports of change in control of mutual savings associations.
563.183  Reports of change in chief executive officer or director; other 
          reports; form and filing of such reports.
563.190  Bonds for directors, officers, employees, and agents; form of 
          and amount of bonds.
563.191  Bonds for agents.
563.200  Conflicts of interest.
563.201  Corporate opportunity.

   Subpart H--Notice of Change of Director or Senior Executive Officer

563.550  What does this subpart do?
563.555  What definitions apply to this subpart?
563.560  Who must give prior notice?
563.565  What procedures govern the filing of my notice?
563.570  What information must I include in my notice?
563.575  What procedures govern OTS review of my notice for 
          completeness?
563.580  What standards and procedures will govern OTS review of the 
          substance of my notice?
563.585  When may a proposed director or senior executive officer begin 
          service?
563.590  When will the OTS waive the prior notice requirement?

    Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 
1817, 1820, 1828, 1831o, 3806; 42 U.S.C. 4106.

    Source: 54 FR 49552, Nov. 30, 1989, unless otherwise noted.



                           Subpart A--Accounts



Sec. 563.1  Chartering documents.

    (a) Submission for approval. Any de novo savings association prior 
to commencing operations shall file its charter and bylaws with the OTS 
for approval, together with a certification that such charter and bylaws 
are permissible under all applicable laws, rules and regulations.
    (b) Availability of chartering documents. Each savings association 
shall cause a true copy of its charter and bylaws and all amendments 
thereto to be available to accountholders at all times in each office of 
the savings association, and shall upon request deliver to any 
accountholders a copy of such charter and bylaws or amendments thereto.

[57 FR 14344, Apr. 20, 1992]



Sec. 563.4  [Reserved]



Sec. 563.5  Securities: Statement of non-insurance.

    Every security issued by a savings association must include in its 
provisions a clear statement that the security is not insured by the 
Federal Deposit Insurance Corporation.

[[Page 187]]



                   Subpart B--Operation and Structure



Sec. 563.22  Merger, consolidation, purchase or sale of assets, or assumption of liabilities.

    (a) No savings association may, without application to and approval 
by the Office:
    (1) Combine with any insured depository institution, if the 
acquiring or resulting institution is to be a savings association; or
    (2) Assume liability to pay any deposit made in, any insured 
depository institution.
    (b)(1) No savings association may, without notifying the Office, as 
provided in paragraph (h)(1) of this section:
    (i) Combine with another insured depository institution where a 
savings association is not the resulting institution; or
    (ii) In the case of a savings association that meets the conditions 
for expedited treatment under Sec. 516.5 of this chapter, convert, 
directly or indirectly, to a national or state bank.
    (2) A savings association that does not meet the conditions for 
expedited treatment under Sec. 516.5 of this chapter may not, directly 
or indirectly, convert to a national or state bank without prior 
application to and approval of OTS, as provided in paragraph (h)(2)(ii) 
of this section.
    (c) No savings association may make any transfer (excluding 
transfers subject to paragraphs (a) or (b) of this section) without 
notice or application to the Office, as provided in paragraph (h)(2) of 
this section. For purposes of this paragraph, the term ``transfer'' 
means purchases or sales of assets or liabilities in bulk not made in 
the ordinary course of business including, but not limited to, transfers 
of assets or savings account liabilities, purchases of assets, and 
assumptions of deposit accounts or other liabilities, and combinations 
with a depository institution other than an insured depository 
institution.
    (d)(1) In determining whether to confer approval for a transaction 
under paragraphs (a), (b)(2), or (c) of this section, the Office shall 
take into account the following:
    (i) The capital level of any resulting savings association;
    (ii) The financial and managerial resources of the constituent 
institutions;
    (iii) The future prospects of the constituent institutions;
    (iv) The convenience and needs of the communities to be served;
    (v) The conformity of the transaction to applicable law, regulation, 
and supervisory policies;
    (vi) Factors relating to the fairness of and disclosure concerning 
the transaction, including, but not limited to:
    (A) Equitable treatment. The transaction should be equitable to all 
concerned--savings account holders, borrowers, creditors and 
stockholders (if any) of each savings association--giving proper 
recognition of and protection to their respective legal rights and 
interests. The transaction will be closely reviewed for fairness where 
the transaction does not appear to be the result of arms' length 
bargaining or, in the case of a stock savings association, where 
controlling stockholders are receiving different consideration from 
other stockholders. No finder's or similar fee should be paid to any 
officer, director, or controlling person of a savings association which 
is a party to the transaction.
    (B) Full disclosure. The filing should make full disclosure of all 
written or oral agreements or understandings by which any person or 
company will receive, directly or indirectly, any money, property, 
service, release of pledges made, or other thing of value, whether 
tangible or intangible, in connection with the transaction.
    (C) Compensation to officers. Compensation, including deferred 
compensation, to officers, directors and controlling persons of the 
disappearing savings association by the resulting institution or an 
affiliate thereof should not be in excess of a reasonable amount, and 
should be commensurate with their duties and responsibilities. The 
filing should fully justify the compensation to be paid to such persons. 
The transaction will be particularly scrutinized where any of such 
persons is to receive a material increase in compensation above that 
paid by the disappearing savings association prior to the commencement 
of negotiations

[[Page 188]]

regarding the proposed transaction. An increase in compensation in 
excess of the greater of 15% or $10,000 gives rise to presumptions of 
unreasonableness and sale of control. In the case of such an increase, 
evidence sufficient to rebut such presumptions should be submitted.
    (D) Advisory boards. Advisory board members should be elected for a 
term not exceeding one year. No advisory board fees should be paid to 
salaried officers or employees of the resulting savings association. The 
filing should describe and justify the duties and responsibilities and 
any compensation paid to any advisory board of the resulting savings 
association that consists of officers, directors or controlling persons 
of the disappearing institution, particularly if the disappearing 
institution experienced significant supervisory problems prior to the 
transaction. No advisory board fees should exceed the director fees paid 
by the resulting savings association. Advisory board fees that are in 
excess of 115 percent of the director fees paid by the disappearing 
savings association prior to commencement of negotiations regarding the 
transaction give rise to presumptions of unreasonableness and sale of 
control unless sufficient evidence to rebut such presumptions is 
submitted. Rebuttal evidence is not required if:
    (1) The advisory board fees do not exceed the fee that advisory 
board members of the resulting institution receive for each monthly 
meeting attended or $150, whichever is greater; or
    (2) The advisory board fees do not exceed $100 per meeting attended 
for disappearing savings associations with assets greater than 
$10,000,000 or $50 per meeting attended for disappearing savings 
associations with assets of $10,000,000 or less, based on a schedule of 
12 meetings per year.
    (E) The accounting and tax treatment of the transaction; and
    (F) Fees paid and professional services rendered in connection with 
the transaction.
    (2) In conferring approval of a transaction under paragraph (a) of 
this section, the Office also will consider the competitive impact of 
the transaction, including whether:
    (i) The transaction would result in a monopoly, or would be in 
furtherance of any monopoly or conspiracy to monopolize or to attempt to 
monopolize the savings association business in any part of the United 
States; or
    (ii) The effect of the transaction on any section of the country may 
be substantially to lessen competition, or tend to create a monopoly, or 
in any other manner would be in restraint of trade, unless the Office 
finds that the anticompetitive effects of the proposed transaction are 
clearly outweighed in the public interest by the probable effect of the 
transaction in meeting the convenience and needs of the communities to 
be served.
    (3) Applications and notices filed under this section shall be upon 
forms prescribed by the Office.
    (4) Applications filed under section 5(d)(3) of the Federal Deposit 
Insurance Act (12 U.S.C. 1815(d)(3)) and paragraph (a) of this section 
must be processed in accordance with the time frames set forth in 
Secs. 516.220 through 516.290 of this chapter, provided that the period 
for review may be extended only if the Office determines that the 
applicant has failed to furnish all requested information or that the 
information submitted is substantially inaccurate, in which case the 
review period may be extended for up to 30 days.
    (e)(1) Unless the OTS finds that it must act immediately in order to 
prevent the probable default of one of the savings associations 
involved, the applicant must publish a public notice of the application 
in accordance with the procedures specified in subpart B of part 516 of 
this chapter. In addition to initial publication, the applicant must 
publish on a weekly basis during the period allowed for furnishing 
reports under paragraph (e)(2) of this section.
    (2) Unless the Office determines that action must be taken 
immediately in order to prevent the probable default of one of the 
savings associations involved, the Office shall request reports from the 
Attorney General, the Comptroller of the Currency, the Board of 
Governors of the Federal Reserve System and the Federal Deposit 
Insurance Corporation on the competitive factors involved in the 
transaction. The reports shall be furnished within thirty

[[Page 189]]

calendar days of the date on which they are requested, or within ten 
calendar days of such date if the Office advised the Attorney General 
and the other three banking agencies that an emergency exists requiring 
expeditious action. The Office shall immediately notify the Attorney 
General of any approval of a transaction pursuant to this section.
    (3) If the Office has found that it must act immediately to prevent 
the probable default of one of the savings associations involved and the 
reports on the competitive factors have been dispensed with, the 
transaction may be consummated immediately upon approval by the Office 
and any applicable state regulatory authorities. If the Office has 
advised the Attorney General and the other three banking agencies of the 
existence of an emergency requiring expeditious action and has requested 
reports on the competitive factors within ten days, the transaction may 
not be consummated before the fifth calendar day after the date of 
approval by the Office. In all other cases, the transaction may not be 
consummated before the thirtieth calendar day after the date of approval 
by the Office.
    (4) Commenters may submit comments on the application in accordance 
with the procedures set forth in subpart C of part 516 of this chapter, 
except that comments may be submitted at any time during the period 
described in paragraph (e)(2) of this section. The OTS may arrange 
informal or formal meetings in accordance with the procedures set forth 
in subpart D of part 516 of this chapter.
    (5) Notice of a proposed account transfer and the option of 
retaining the account in the transferring savings association shall be 
furnished to an affected accountholder:
    (i) By a savings association transferring account liabilities to an 
institution the accounts of which are not insured by the Savings 
Association Insurance Fund, the Bank Insurance Fund, or the National 
Credit Union Share Insurance Fund; and
    (ii) By any mutual savings association transferring account 
liabilities to a stock form depository institution. The required notice 
shall allow affected accountholders at least 30 days to consider whether 
to retain their accounts in the transferring savings association.
    (f) Automatic approvals by the Office. Applications filed pursuant 
to paragraph (a) of this section shall be deemed to be approved 
automatically by the Office 30 calendar days after the Office sends 
written notice to the applicant that the application is complete, 
unless:
    (1) The acquiring savings association does not meet the criteria for 
expedited treatment under Sec. 516.5 of this chapter;
    (2) The OTS recommends the imposition of non-standard conditions 
prior to approving the application;
    (3) The OTS suspends the applicable processing time frames under 
Sec. 516.190 of this chapter;
    (4) The OTS raises objections to the transaction;
    (5) The resulting savings association would be one of the 3 largest 
depository institutions competing in the relevant geographic area where 
before the transaction there were 5 or fewer depository institutions, 
the resulting savings association would have 25 percent or more of the 
total deposits held by depository institutions in the relevant 
geographic area, and the share of total deposits would have increased by 
5 percent or more;
    (6) The resulting savings association would be one of the 2 largest 
depository institutions competing in the relevant geographic area where 
before the transaction there were 6 to 11 depository institutions the 
resulting savings association would have 30 percent or more of the total 
deposits held by depositing institutions in the relevant geographic 
area, and the share of total deposits would have increased by 10 percent 
or more;
    (7) The resulting savings association would be one of the 2 largest 
depository institutions competing in the relevant geographic area where 
before the transaction there were 12 or more depository institutions, 
the resulting savings association would have 35 percent or more of the 
total deposits held by the depository institutions in the relevant 
geographic area, and the share of total

[[Page 190]]

deposits would have increased by 15 percent or more;
    (8) The Herfindahl-Hirschman Index (HHI) in the relevant geographic 
area was more than 1800 before the transaction, and the increase in the 
HHI used by the transaction would be 50 or more;
    (9) In a transaction involving potential competition, the OTS 
determines that the acquiring savings association is one of three or 
fewer potential entrants into the relevant geographic area;
    (10) The acquiring savings association has assets of $1 billion or 
more and proposes to acquire assets of $1 billion or more;
    (11) The savings association that will be the resulting savings 
association in the transaction has a composite Community Reinvestment 
Act rating of less than satisfactory, or is otherwise seriously 
deficient with respect to the Office's nondiscrimination regulations and 
the deficiencies have not been resolved to the satisfaction of the OTS;
    (12) The transaction involves any supervisory or assistance 
agreement with the Office, the Resolution Trust Corporation, or the 
Federal Deposit Insurance Corporation;
    (13) The transaction is part of a conversion under part 563b of this 
chapter;
    (14) The transaction raises a significant issue of law or policy; or
    (15) The transaction is opposed by any constituent institution or 
contested by a competing acquiror.
    (g) Definitions. (1) The terms used in this section shall have the 
same meaning as set forth in Sec. 552.13(b) of this chapter.
    (2) Insured depository institution. Insured depository institution 
has the same meaning as defined in section 3(c)(2) of the Federal 
Deposit Insurance Act.
    (3) With regard to paragraph (f) of this section, the term relevant 
geographic area is used as a substitute for relevant geographic market, 
which means the area within which the competitive effects of a merger or 
other combination may be evaluated. The relevant geographic area shall 
be delineated as a county or similar political subdivision, an area 
smaller than a county, or an aggregation of counties within which the 
merging or combining insured depository institutions compete. In 
addition, the Office may consider commuting patterns, newspaper and 
other advertising activities, or other factors as the Office deems 
relevant.
    (h) Special requirements and procedures for transactions under 
paragraphs (b) and (c) of this section--(1) Certain transactions with no 
surviving savings association. The Office must be notified of any 
transaction under paragraph (b)(1) of this section. Such notification 
must be submitted to the OTS at least 30 days prior to the effective 
date of the transaction, but not later than the date on which an 
application relating to the proposed transaction is filed with the 
primary regulator of the resulting institution; the Office may, upon 
request or on its own initiative, shorten the 30-day prior notification 
requirement. Notifications under this paragraph must demonstrate 
compliance with applicable stockholder or accountholder approval 
requirements. Where the savings association submitting the notification 
maintains a liquidation account established pursuant to part 563b of 
this chapter, the notification must state that the resulting institution 
will assume such liquidation account.
    The notification may be in the form of either a letter describing 
the material features of the transaction or 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. If the action contemplated by the notification is not completed 
within one year after the Office's receipt of the notification, a new 
notification must be submitted to the Office.
    (2) Other transfer transactions--(i) Expedited treatment. A notice 
in conformity with Sec. 516.25(a) of this chapter may be submitted to 
OTS under Sec. 516.40 of this chapter for any transaction under 
paragraph (c) of this section, provided all constituent savings 
associations meet the conditions for expedited treatment under 
Sec. 516.5 of this chapter. Notices submitted under this paragraph must 
be deemed approved automatically by OTS 30 days after receipt, unless 
OTS advises the applicant in writing prior to the expiration of

[[Page 191]]

such period that the proposed transaction may not be consummated without 
OTS's approval of an application under paragraphs (h)(2)(ii) or 
(h)(2)(iii) of this section.
    (ii) Standard treatment. An application in conformity with 
Sec. 516.25(b) of this chapter and paragraph (d) of this section must be 
submitted to OTS under Sec. 516.40 by each savings association 
participating in a transaction under paragraph (b)(2) or (c) of this 
section, where any constituent savings association does not meet the 
conditions for expedited treatment under Sec. 516.5 of this chapter, 
except as provided in paragraph (h)(2)(iii) of this section. 
Applications under this paragraph must be processed in accordance with 
the procedures in part 516, subparts A and E of this chapter.
    (iii) Standard treatment for transactions under section 5(d)(3) of 
the Federal Deposit Insurance Act. An application in conformity with 
Sec. 516.25(b) of this chapter and paragraph (d) of this section must be 
submitted to OTS under Sec. 516.40 by each savings association which 
will survive any transaction under both section 5(d)(3) of the Federal 
Deposit Insurance Act (12 U.S.C. 1815(d)(3)) and paragraph (c) of this 
section, where any constituent savings association does not meet the 
conditions for expedited treatment under Sec. 516.5 of this chapter. 
Applications under this paragraph must be processed in accordance with 
the procedures in part 516, subparts A and E of this chapter, provided 
that the period for review may be extended only if OTS determines that 
the applicant has failed to furnish all requested information or that 
the information submitted is substantially inaccurate, in which case the 
review period may be extended for up to 30 days.

[54 FR 49552, Nov. 30, 1989, as amended at 55 FR 13514, Apr. 11, 1990; 
57 FR 14344, Apr. 20, 1992; 59 FR 44624, Aug. 30, 1994; 59 FR 66159, 
Dec. 23, 1994; 62 FR 64146, Dec. 4, 1997; 66 FR 13007, Mar. 2, 2001]



Sec. 563.27  Advertising.

    No savings association shall use advertising (which includes print 
or broadcast media, displays or signs, stationery, and all other 
promotional materials), or make any representation which is inaccurate 
in any particular or which in any way misrepresents its services, 
contracts, investments, or financial condition.

[54 FR 49552, Nov. 30, 1989, as amended at 58 FR 4313, Jan. 14, 1993]



Sec. 563.33  Directors, officers, and employees.

    (a) Directors--(1) Requirements. The composition of the board of 
directors of a savings association must be in accordance with the 
following requirements:
    (i) A majority of the directors must not be salaried officers or 
employees of the savings association or of any subsidiary or (except in 
the case of a savings association having 80% or more of any class of 
voting shares owned by a holding company) any holding company affiliate 
thereof.
    (ii) Not more than two of the directors may be members of the same 
immediate family.
    (iii) Not more than one director may be an attorney with a 
particular law firm.
    (2) Prospective application. In the case of an association whose 
board of directors does not conform with any requirement set forth in 
paragraph (a)(1) of this section as of October 5, 1983, this paragraph 
(a) shall not prohibit the uninterrupted service, including re-election 
and re-appointment, of any person serving on the board of directors at 
that date.
    (b) [Reserved]

[54 FR 49552, Nov. 30, 1989, as amended at 58 FR 4313, Jan. 14, 1993]



Sec. 563.36  Tying restriction exception.

    (a) Safe harbor for combined-balance discounts. A savings and loan 
holding company or any savings association or any affiliate of either 
may vary the consideration for any product or package of products based 
on a customer's maintaining a combined minimum balance in certain 
products specified by the company varying the consideration (eligible 
products), if:
    (1) That company (if it is a savings association) or a savings 
association affiliate of that company (if it is not a savings 
association) offers deposits,

[[Page 192]]

and all such deposits are eligible products; and
    (2) Balances in deposits count at least as much as non-deposit 
products toward the minimum balance.
    (b) Limitations on exception. This exception shall terminate upon a 
finding by the OTS that the arrangement is resulting in anti-competitive 
practices. The eligibility of a savings and loan holding company or 
savings association or affiliate of either to operate under this 
exception shall terminate upon a finding by the OTS that its exercise of 
this authority is resulting in anti-competitive practices.

[61 FR 60184, Nov. 27, 1996]



Sec. 563.39  Employment contracts.

    (a) General. A savings association may enter into an employment 
contract with its officers and other employees only in accordance with 
the requirements of this section. All employment contracts shall be in 
writing and shall be approved specifically by an association's board of 
directors. An association shall not enter into an employment contract 
with any of its officers or other employees if such contract would 
constitute an unsafe or unsound practice. The making of such an 
employment contract would be an unsafe or unsound practice if such 
contract could lead to material financial loss or damage to the 
association or could interfere materially with the exercise by the 
members of its board of directors of their duty or discretion provided 
by law, charter, bylaw or regulation as to the employment or termination 
of employment of an officer or employee of the association. This may 
occur, depending upon the circumstances of the case, where an employment 
contract provides for an excessive term.
    (b) Required provisions. Each employment contract shall provide 
that:
    (1) The association's board of directors may terminate the officer 
or employee's employment at any time, but any termination by the 
association's board of directors other than termination for cause, shall 
not prejudice the officer or employee's right to compensation or other 
benefits under the contract. The officer or employee shall have no right 
to receive compensation or other benefits for any period after 
termination for cause. Termination for cause shall include termination 
because of the officer or employee'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 the contract.
    (2) If the officer or employee is suspended and/or temporarily 
prohibited from participating in the conduct of the association's 
affairs by a notice served under section 8 (e)(3) or (g)(1) of Federal 
Deposit Insurance Act (12 U.S.C. 1818 (e)(3) and (g)(1)) the 
association's obligations under the contract shall be suspended as of 
the date of service unless stayed by appropriate proceedings. If the 
charges in the notice are dismissed, the association may in its 
discretion (i) pay the officer or employee all or part of the 
compensation withheld while its contract obligations were suspended, and 
(ii) reinstate (in whole or in part) any of its obligations which were 
suspended.
    (3) If the officer or employee is removed and/or permanently 
prohibited from participating in the conduct of the association's 
affairs by an order issued under section 8 (e)(4) or (g)(1) of the 
Federal Deposit Insurance Act (12 U.S.C. 1818 (e)(4) or (g)(1)), all 
obligations of the association under the contract shall terminate as of 
the effective date of the order, but vested rights of the contracting 
parties shall not be affected.
    (4) If the savings association is in default (as defined in section 
3(x)(1) of the Federal Deposit Insurance Act), all obligations under the 
contract shall terminate as of the date of default, but this paragraph 
(b)(4) shall not affect any vested rights of the contracting parties: 
Provided, that this paragraph (b)(4) need not be included in an 
employment contract if prior written approval is secured from the 
Director or his or her designee.
    (5) All obligations under the contract shall be terminated, except 
to the extent determined that continuation of

[[Page 193]]

the contract is necessary of the continued operation of the association
    (i) By the Director or his or her designee, at the time the Federal 
Deposit Insurance Corporation or Resolution Trust Corporation enters 
into an agreement to provide assistance to or on behalf of the 
association under the authority contained in 13(c) of the Federal 
Deposit Insurance Act; or
    (ii) By the Director or his or her designee, at the time the 
Director or his or her designee approves a supervisory merger to resolve 
problems related to operation of the association or when the association 
is determined by the Director to be in an unsafe or unsound condition.

Any rights of the parties that have already vested, however, shall not 
be affected by such action.



Sec. 563.41  Loans and other transactions with affiliates and subsidiaries.

    (a) Restrictions on transactions with affiliates and subsidiaries. A 
savings association and its subsidiaries may engage in a covered 
transaction with an affiliate only if the transaction is permissible 
under section 23A of the Federal Reserve Act, 12 U.S.C. 371c, and the 
additional restrictions set forth in this section, as follows:
    (1) A savings association and its subsidiaries may engage in a 
covered transaction with an affiliate only if:
    (i) In the case of any affiliate, the aggregate amount of covered 
transactions of the savings association and its subsidiaries shall not 
exceed 10 per centum of the capital stock and surplus of the savings 
association; and
    (ii) In the case of all affiliates, the aggregate amount of covered 
transactions of the savings association and its subsidiaries shall not 
exceed 20 per centum of the capital stock and surplus of the savings 
association;
    (2) For purposes of paragraph (a)(1) of this section, any 
transaction by a savings association or its subsidiaries with any person 
shall be deemed to be a transaction with an affiliate to the extent that 
proceeds of the transaction are used for the benefit of, or transferred 
to, that affiliate;
    (3) A savings association (or its subsidiary) may not make a loan or 
other extension of credit to an affiliate, unless the affiliate is 
engaged solely in activities described in 12 U.S.C. 1467a(c)(2)(F)(i), 
as defined in Sec. 584.2-2 of this chapter. For the purposes of this 
paragraph (a)(3), a loan or other extension of credit includes a 
purchase of assets from an affiliate that is subject to the affiliate's 
agreement to repurchase the assets. Such a purchase of assets, however, 
will not be considered a loan or other extension of credit if the 
savings association (or its subsidiary) has entered into a transaction 
or series of transactions that meets all of the following requirements:
    (i) The savings association (or its subsidiary) purchases United 
States Treasury securities from the affiliate, the affiliate agrees to 
repurchase the securities at the end of a stated term, the remaining 
term of the securities purchased by the savings association (or its 
subsidiary) exceeds the term of the affiliate's repurchase agreement, 
and the savings association (or its subsidiary) has possession or 
control of the securities and the right to dispose of the securities at 
any time during the term of the agreement and upon default.
    (ii) The affiliate purchases United States Treasury securities from 
the savings association (or its subsidiary) and the savings association 
(or its subsidiary) agrees to repurchase the securities at the end of a 
stated term.
    (iii) The aggregate amount of the affiliate's outstanding 
obligations to repurchase securities from the savings association (or 
its subsidiary) under the repurchase obligation described at paragraph 
(a)(3)(i) of this section, at all times, is less than the aggregate 
amount of the savings association's (or its subsidiary's) outstanding 
obligations to repurchase securities from the affiliate under paragraph 
(a)(3)(ii) of this section;
    (4) A savings association and its subsidiaries may not purchase or 
invest in the securities of any affiliate other than with respect to 
shares of a subsidiary which, for purposes of this paragraph (a)(4), 
shall include a bank and a savings association;
    (5) A savings association and its subsidiaries may not purchase a 
low-quality asset from an affiliate unless the

[[Page 194]]

association or such subsidiary, pursuant to an independent credit 
evaluation, committed itself to purchase the asset prior to the time the 
asset was acquired by the affiliate; and
    (6) Any covered transactions and any transactions exempt under 
paragraph (d) of this section and section 23A(d) of the Federal Reserve 
Act, 12 U.S.C. 371c(d), between a savings association or its 
subsidiaries and an affiliate shall be on terms and conditions that are 
consistent with safe and sound banking practices.
    (b) Definitions. For the purpose of this section:
    (1) The term affiliate with respect to a savings association means:
    (i) Any company that controls the savings association and any other 
company that is controlled by the company that controls the savings 
association;
    (ii) A bank or savings association subsidiary of the savings 
association;
    (iii) Any company:
    (A) That is controlled directly or indirectly, by a trust or 
otherwise, by or for the benefit of shareholders who beneficially or 
otherwise control, directly or indirectly, by trust or otherwise, the 
savings association or any company that controls the savings 
association; or
    (B) In which a majority of its directors, partners or trustees 
constitute a majority of the persons holding any such office with the 
savings association or any company that controls the savings 
association;
    (iv)(A) Any company, including a real estate investment trust, that 
is sponsored and advised on a contractual basis by the savings 
association or any subsidiary or affiliate of the savings association; 
or
    (B) Any investment company with respect to which a savings 
association or any affiliate thereof is an investment adviser as defined 
in section 2(a)(20) of the Investment Company Act of 1940, 15 U.S.C. 
80a-2(a)(2); and
    (v) Any company: (A) That the Office or the Board of Governors of 
the Federal Reserve System determines by regulation or order to have a 
relationship with the savings association or any subsidiary or affiliate 
of the savings association such that covered transactions by the savings 
association or its subsidiary with that company may be affected by the 
relationship to the detriment of the savings association or its 
subsidiary; or
    (B) That the Office determines presents a risk to the safety or 
soundness of the savings association, based on the nature of the 
activities conducted by the company, amount of transactions with the 
savings associations or its subsidiaries, financial condition of the 
company or its parent savings association, or other supervisory factors;
    (2) The following shall not be considered to be an affiliate:
    (i) Any company, other than a bank or savings association, that is a 
subsidiary of a savings association, unless a determination is made by 
the Board of Governors of the Federal Reserve System under section 
23A(b)(1)(E) of the Federal Reserve Act, 12 U.S.C. 371c(b)(1)(E), or by 
the Office under Sec. 563.41(b)(1)(v), not to exclude the subsidiary 
company from the definition of affiliate and, provided that any company 
that would be an affiliate under paragraph (b)(1) of this section but 
for the fact that it is a subsidiary of a savings association, shall 
nonetheless be deemed to be an affiliate unless the Office determines to 
exclude such company from the definition of affiliate;
    (ii) Any company engaged solely in holding the premises of the 
savings association;
    (iii) Any company engaged solely in conducting a safe deposit 
business;
    (iv) Any company engaged solely in holding obligations of the United 
States or its agencies or obligations fully guaranteed by the United 
States or its agencies as to principal and interest; and
    (v) Any company where control results from the exercise of rights 
arising out of a bona fide debt previously contracted, but only for the 
period of time specifically authorized under applicable State or Federal 
law or regulation or, in the absence of a law or regulation, for a 
period of two years from the date of the exercise of those rights, 
subject, upon application, to authorization by the Office for good cause 
shown of extensions of time for not more than one year at a time, but 
extensions in the aggregate shall not exceed three years;

[[Page 195]]

    (3)(i) A company or shareholder shall be deemed to have control over 
another company if:
    (A) The company or shareholder, directly or indirectly, or acting 
through one or more other persons owns, controls, or has power to vote 
25 per centum or more of any class of voting securities of the other 
company;
    (B) The company or shareholder would be deemed to control the 
company under Sec. 574.4(a) of this chapter, or presumed to control the 
company under Sec. 574.4(b) of this chapter, and in the latter case, 
control has not been rebutted; and
    (ii) Notwithstanding any other provision of this section, no company 
shall be deemed to own or control another company by virtue of its 
ownership or control of shares in a fiduciary capacity, except as 
provided in paragraph (b)(1)(iii) of this section;
    (4) The term subsidiary, when used in connection with a savings 
association means a company that is controlled by that savings 
association within the meaning of part 574 of this chapter;
    (5) The term savings association has the same meaning as that term 
is defined at Sec. 583.21 of this chapter; and the term bank includes a 
state bank, national bank, banking association, or trust company;
    (6) The term company means a corporation, partnership, business 
trust, association, or similar organization and, unless specifically 
excluded, the term ``company'' includes a ``savings association'' and a 
``bank'';
    (7) The term covered transaction means with respect to an affiliate 
of a savings association:
    (i) A loan or extension of credit to the affiliate;
    (ii) A purchase of assets, including assets subject to an agreement 
to repurchase, from the affiliate, except purchases of real and personal 
property that may be specifically exempted by the Board of Governors of 
the Federal Reserve System by order or regulation;
    (iii) The acceptance of securities issued by the affiliate as 
collateral security for a loan or extension of credit to any person or 
company; or
    (iv) The issuance of a guarantee, acceptance, or letter of credit, 
including an endorsement or standby letter of credit, on behalf of an 
affiliate;
    (8) The term aggregate amount of covered transactions means the 
amount of the covered transactions about to be engaged in added to the 
current amount of all outstanding covered transactions. For this 
purpose, the outstanding balance of any credits extended to an affiliate 
shall be added to the value of any asset acquired from the affiliate (or 
all affiliates), as reflected on the financial records of the savings 
association or its subsidiaries, subject to the following conditions:
    (i) With respect to a loan or extension of credit made by the 
savings association or its subsidiaries, any principal amount that has 
been amortized may be deducted from the aggregate amount of covered 
transactions;
    (ii) With respect to a purchase of assets by the savings association 
or its subsidiaries:
    (A) Any amounts of depreciation that have been deducted from the 
cost of an asset for federal income tax purposes by the purchaser may be 
deducted from the aggregate amount of covered transactions; and
    (B) Upon the sale of an asset that was previously purchased in a 
covered transaction, the aggregate amount of covered transactions shall 
be reduced by an amount equal to the purchase price of the asset at the 
time of the covered transaction less depreciation subsequently taken and 
previously deducted from the aggregate amount of covered transactions;
    (9) The term securities means stocks, bonds, debentures, notes, and 
other similar obligations;
    (10) The term low-quality asset means an asset that falls in any one 
or more of the following categories:
    (i) An asset classified as substandard, doubtful, or loss or treated 
as other loans especially mentioned in the most recent report of 
examination or inspection of an affiliate prepared by either a Federal 
or State supervisory agency;
    (ii) An asset in a nonaccrual status;
    (iii) An asset on which principal or interest payments are more than 
thirty days past due; or
    (iv) An asset whose terms have been renegotiated or compromised due 
to

[[Page 196]]

the deteriorating financial condition of the obligor;
    (11) The term capital stock and surplus of the savings association 
means ``unimpaired capital and unimpaired surplus'' as defined at 
Sec. 560.93(b)(11) of this chapter.
    (c) Collateral for certain transactions with affiliates. (1) Each 
loan or extension of credit to, or guarantee, acceptance, or letter of 
credit issued on behalf of, an affiliate by a savings association or its 
subsidiary shall be secured at the time of the transaction by collateral 
having a market value equal to:
    (i) 100 per centum of the amount of the loan or extension or credit, 
guarantee, acceptance, or letter of credit, if the collateral is 
composed of:
    (A) Obligations of the United States or its agencies;
    (B) Obligations fully guaranteed by the United States or its 
agencies as to principal and interest;
    (C) Notes, drafts, bills of exchange or bankers' acceptances that 
are eligible for rediscount or purchase by a Federal Home Loan Bank or 
Federal Reserve Bank; or
    (D) A segregated, earmarked deposit account with the savings 
associations;
    (ii) 110 per centum of the amount of the loan or extension of 
credit, guarantee, acceptance, or letter of credit if the collateral is 
composed of obligations of any State or political subdivision of any 
State;
    (iii) 120 per centum of the amount of the loan or extension of 
credit, guarantee, acceptance, or letter of credit if the collateral is 
composed of other debt instruments, including receivables; or
    (iv) 130 per centum of the amount of the loan or extension of 
credit, guarantee, acceptance, or letter of credit if the collateral is 
composed of stock, leases, or other real or personal property.
    (2) Any such collateral that is subsequently retired or amortized 
shall be replaced by additional eligible collateral where needed to keep 
the percentage of the collateral value relative to the amount of the 
outstanding loan or extension of credit, guarantee, acceptance, or 
letter of credit equal to the minimum percentage required at the 
inception of the transaction.
    (3) A low-quality asset shall not be acceptable as collateral for a 
loan or extension of credit to, or guarantee, acceptance, or letter of 
credit issued on behalf of, an affiliate.
    (4) The securities issued by an affiliate of the savings association 
shall not be acceptable as collateral for a loan or extension of credit 
to, or guarantee, acceptance, or letter of credit issued on behalf of, 
that affiliate or any other affiliate of the savings association.
    (5) The collateral requirements of this paragraph shall not be 
applicable to an acceptance that is already fully secured either by 
attached documents or by other property having an ascertainable market 
value that is involved in the transaction.
    (d) Exemptions. The provisions of this section, except paragraph 
(a)(6) of this section, shall not be applicable to the following 
transactions by a savings association:
    (1) Any transaction, subject to the prohibition contained in 
paragraph (a)(5) of this section with a savings association or a bank:
    (i) That controls 80 per centum or more of the voting shares of the 
savings association;
    (ii) In which the savings association controls 80 per centum or more 
of the voting shares; or
    (iii) In which 80 per centum or more of the voting shares are 
controlled by the company that controls 80 per centum or more of the 
voting shares of the savings association;
    (2) Making deposits in an affiliated bank, affiliated savings 
association or affiliated foreign bank in the ordinary course of 
correspondent business, subject to any restrictions that the Office or 
the Board of Governors of the Federal Reserve System may prescribe by 
regulation or order;
    (3) Giving immediate credit to an affiliate for uncollected items 
received in the ordinary course of business;
    (4) Subject to paragraph (a)(3) of this section, making a loan or 
extension of credit to, or issuing a guarantee, acceptance, or letter of 
credit on behalf of, an affiliate, if such loan, extension

[[Page 197]]

of credit, guarantee, acceptance, or letter of credit is fully secured 
by:
    (i) Obligations of the United States or its agencies;
    (ii) Obligations fully guaranteed by the United States or its 
agencies as to principal and interest; or
    (iii) A segregated, earmarked deposit account with the savings 
association;
    (5) Purchasing assets having a readily identifiable and publicly 
available market quotation and purchased at that market quotation or, 
subject to the prohibition contained in paragraph (a)(5) of this 
section, purchasing loans on a nonrecourse basis from affiliated banks 
or savings associations; and
    (6) Purchasing from an affiliate a loan or extension of credit that 
was originated by the savings association and sold to the affiliate 
subject to a repurchase agreement or with recourse.
    (e) Recordkeeping and notice requirements. (1) With respect to all 
transactions between a savings association and its subsidiaries and the 
association's affiliates or between a savings association and an 
unaffiliated party to the extent that the proceeds of the transaction 
are used for the benefit of, or transferred to, an affiliate, the 
association shall make and retain records that reflect those 
transactions in reasonable detail. The association's records shall, at a 
minimum:
    (i) Identify the affiliate;
    (ii) Indicate the dollar amount of the transaction and reflect that 
the amount is within the applicable quantitative limitations specified 
in this section or that the transaction is not subject to those 
limitations;
    (iii) Indicate whether the transaction involves a low-quality asset 
as that term is defined in paragraph (b)(10) of this section;
    (iv) Indicate the type and amount of any collateral involved in the 
transaction and that such collateral complies in all respects with the 
requirements of this section or that the transaction is not subject to 
those limitations;
    (v) With respect to any transaction subject to Sec. 563.42 of this 
part, demonstrate that the terms and circumstances of the transaction 
comply with the standards set forth therein;
    (vi) Reflect that loans and extensions of credit made to affiliates 
comply with paragraph (a)(3) of this section; and
    (vii) Be readily accessible for examination and other supervisory 
purposes.
    (2) Notwithstanding paragraphs (a) through (d) of this section, and 
except with respect to transactions of the type described in 12 CFR 
250.250, the Office may require prior notification by a savings 
association and its subsidiaries of any and all transactions with any or 
all of the association's affiliates or subsidiaries under the following 
circumstances:
    (i) A de novo savings association that commenced operations or an 
association or holding company thereof that has been the subject of an 
application or notice under part 574 of this chapter that was approved 
during the preceding two year period; or
    (ii) A savings association that:
    (A) Has a composite rating of 4 or 5, as defined in Sec. 516.5(c) of 
this chapter;
    (B) Is not meeting all of its regulatory capital requirements;
    (C) Has entered into a consent to merge, a supervisory agreement or 
cease and desist order during the preceding two year period, or is 
subject to a formal enforcement proceeding; or
    (D) The OTS determines is a problem association or in troubled 
condition.
    (3) Upon receipt of written notice from the Office identifying one 
or more of the circumstances described in paragraph (e)(2) of this 
section and stating that the Office has determined that prior 
notification by a savings association will be required pursuant to this 
paragraph, the association shall provide, no later than 30 days prior to 
entering into any transaction for which prior notification has been 
required, written notice containing a full description of the proposed 
transaction. If no objections are raised by the Office during such 30 
day period, the association or its subsidiaries may proceed with the 
proposed transaction.

[56 FR 34011, July 25, 1991, as amended at 57 FR 14344, Apr. 20, 1992; 
60 FR 66869, Dec. 27, 1995; 61 FR 65179, Dec. 11, 1996; 61 FR 66579, 
Dec. 18, 1996; 62 FR 3781, Jan. 27, 1997; 62 FR 66262, Dec. 18, 1997; 63 
FR 43293, Aug. 13, 1998; 64 FR 69185, Dec. 10, 1999; 66 FR 13008, Mar. 
2, 2001]

[[Page 198]]



Sec. 563.42  Additional standards applicable to transactions with affiliates and subsidiaries.

    (a) General. A savings association and its subsidiaries may engage 
in a transaction with an affiliate only if the transaction is 
permissible under section 23B of the Federal Reserve Act, 12 U.S.C. 
371c-1, and the additional restrictions set forth in this section, as 
follows:
    (1) Standards. A savings association and its subsidiaries may engage 
in any of the transactions described in paragraph (a)(2) of this section 
only:
    (i) On terms and under circumstances, including credit standards, 
that are substantially the same, or at least as favorable to the 
association or its subsidiary, as those prevailing at the time for 
comparable transactions with or involving nonaffiliated companies; or
    (ii) In the absence of comparable transactions, on terms and under 
circumstances, including credit standards, that in good faith would be 
offered to, or would apply to, nonaffiliated companies;
    (2) Transactions covered. Paragraph (a)(1) of this section applies 
to the following:
    (i) Any covered transaction with an affiliate;
    (ii) The sale of securities or other assets to an affiliate, 
including assets subject to an agreement to repurchase;
    (iii) The payment of money or the furnishing of services to an 
affiliate under contract, lease, or otherwise;
    (iv) Any transaction in which an affiliate acts as an agent or 
broker or receives a fee for its services to the savings association or 
to any other person;
    (v) Any transaction or series of transactions with a third party:
    (A) If an affiliate has a financial interest in the third party; or
    (B) If an affiliate is a participant in the transaction or series of 
transactions;
    (3) Transactions that benefit an affiliate. For the purpose of this 
section, any transaction by a savings association or its subsidiaries 
with any person shall be deemed to be a transaction with an affiliate if 
any of the proceeds of the transaction are used for the benefit of, or 
transferred to, that affiliate.
    (b) Prohibited transactions--(1) General. A savings association and 
its subsidiaries:
    (i) Shall not purchase as fiduciary any securities or other assets 
from any affiliate unless the purchase is permitted:
    (A) Under the instrument creating the fiduciary relationship;
    (B) By court order; or
    (C) By law of the jurisdiction governing the fiduciary relationship; 
and
    (ii) Whether acting as principal or fiduciary, shall not knowingly 
purchase or otherwise acquire, during the existence of any underwriting 
or selling syndicate, any security if a principal underwriter of that 
security is an affiliate of the association.
    (2) Exception. Paragraph (b)(1)(ii) of this section shall not apply 
if the purchase or acquisition of securities has been approved, before 
the securities are initially offered for sale to the public, by a 
majority of the directors of the savings association who are not 
officers or employees of the association or any affiliate thereof.
    (c) Advertising restriction. A savings association and its 
subsidiaries and any affiliate of a savings association shall not 
publish any advertisement or enter into any agreement stating or 
suggesting that the association shall in any way be responsible for the 
obligations of its affiliates.
    (d) Definitions. For the purpose of this section:
    (1) The terms affiliate, bank, covered transaction, savings 
association and subsidiary have the meaning given to each term in 
Sec. 563.41 of this part, (but the term affiliate does not include any 
company described in paragraph (b)(2) of Sec. 563.41 of this part, any 
bank, or any savings association).
    (2) The term security has the meaning given to that term in section 
3(a)(10) of the Securities Exchange Act of 1934, 15 U.S.C. 78c(a)(10); 
and
    (3) The term principal underwriter means any underwriter who, in 
connection with a primary distribution of securities:
    (i) Is in privity of contract with the issuer or an affiliated 
person of the issuer;
    (ii) Acting alone or in concert with one or more other persons, 
initiates or

[[Page 199]]

directs the formation of an underwriting syndicate; or
    (iii) Is allowed a rate of gross commission, spread, or other profit 
greater than the rate allowed another underwriter participating in the 
distribution.
    (e) Recordkeeping requirements. With respect to all transactions 
subject to this section between a savings association and its 
subsidiaries and the association's affiliates or between a savings 
association and an unaffiliated party to the extent that the proceeds of 
the transaction are used for the benefit of, or transferred to, an 
affiliate, the association shall make and retain records, that reflect 
those transactions in reasonable detail. The association's records 
shall, at a minimum, include the information required by 
Sec. 563.41(e)(1)(v) of this part.

[56 FR 34013, July 25, 1991, as amended at 60 FR 66869, Dec. 27, 1995]



Sec. 563.43  Loans by savings associations to their executive officers, directors and principal shareholders.

    Pursuant to 12 U.S.C. 1463(a) and 1468, a savings association, its 
subsidiaries and its insiders (as defined) shall be subject to the 
restrictions contained in 12 CFR Part 215, subparts A and B of the 
Federal Reserve Board's Regulation O, with the exception of 12 CFR 
215.13, in the same manner and to the same extent as if the association 
were a bank and a member bank of the Federal Reserve System, except 
that:
    (a) Such provisions shall be administered and enforced by the OTS;
    (b) References to the term ``bank holding company'' shall be deemed 
to refer to ``savings and loan holding company'';
    (c) References to ``report of condition filed under 12 U.S.C. 
1817(a)(3)'' shall be deemed to refer to ``Thrift Financial Report'';
    (d) The term subsidiary shall include a savings association that is 
``controlled,'' within the meaning of Sec. 563.41(a)(3) of this part, by 
a company (including for this purpose an insured depository institution) 
that is a savings and loan holding company. When used to refer to a 
subsidiary of a savings association, the term subsidiary shall mean a 
``subsidiary'' as that term is defined at Sec. 563.41(b)(4) of this 
part; and
    (e) References to the Reserve Bank or the Comptroller shall be 
deemed to include the Director of the Office of Thrift Supervision.
    (f) References to the term ``unimpaired capital and unimpaired 
surplus'' shall be deemed to refer to ``unimpaired capital and 
unimpaired surplus'' as defined at Sec. 563.93(b)(11) of this part.

[57 FR 45980, Oct. 6, 1992, as amended at 59 FR 53571, Oct. 25, 1994; 60 
FR 66869, Dec. 27, 1995]



Sec. 563.47  Pension plans.

    (a) General. No savings association or service corporation thereof 
shall sponsor an employee pension plan which, because of unreasonable 
costs or any other reason, could lead to material financial loss or 
damage to the sponsor. For purposes of this section, an employee pension 
plan is defined in section 3(2) of the Employee Retirement Income 
Security Act of 1974, as amended. The prospective obligation or 
liability of a plan sponsor to each plan participant shall be stated in 
or determinable from the plan, and, for a defined benefit plan, shall 
also be based upon an actuarial estimate of future experience under the 
plan.
    (b) Funding. Actuarial cost methods permitted under the Employee 
Retirement Income Security Act of 1974 and the Internal Revenue Code of 
1954, as amended, shall be used to determine plan funding.
    (c) Plan amendment. A plan may be amended to provide reasonable 
annual cost-of-living increases to retired participants: Provided, That
    (1) Any such increase shall be for a period and amount determined by 
the sponsor's board of directors, but in no event shall it exceed the 
annual increase in the Consumer Price Index published by the Bureau of 
Labor Statistics; and
    (2) No increase shall be granted unless (i) anticipated charges to 
net income for future periods have first been found by such board of 
directors to be reasonable and are documented by appropriate resolution 
and supporting analysis; and (ii) the increase will not reduce the 
association's regulatory

[[Page 200]]

capital below its regulatory capital requirement.
    (d) Termination. The plan shall permit the sponsor's board of 
directors and its successors to terminate such plan. Notice of intent to 
terminate shall be filed with the OTS at least 60 days prior to the 
proposed termination date.
    (e) Records. Each savings association or service corporation 
maintaining a plan not subject to recordkeeping and reporting 
requirements of the Employee Retirement Income Security Act of 1974, and 
the Internal Revenue Code of 1954, as amended, shall establish and 
maintain records containing the following:
    (1) Plan description;
    (2) Schedule of participants and beneficiaries;
    (3) Schedule of participants and beneficiaries' rights and 
obligations;
    (4) Plan's financial statements; and
    (5) Except for defined contribution plans, an opinion signed by an 
enrolled actuary (as defined by the Employee Retirement Income Security 
Act of 1974) affirming that actuarial assumptions in the aggregate are 
reasonable, take into account the plan's experience and expectations, 
and represent the actuary's best estimate of the plan's projected 
experiences.

[59 FR 66159, Dec. 23, 1994]



                  Subpart C--Securities and Borrowings



Sec. 563.74  Mutual capital certificates.

    (a) General. No savings association that is in the mutual form shall 
issue mutual capital certificates pursuant to this section or amend the 
terms of such certificates unless it has obtained written approval of 
the Office. No approval shall be granted unless the proposed issuance of 
the mutual capital certificates and the form and manner of filing of the 
application are in accordance with the provisions of this section.
    (b) Eligibility Requirements. The Office will consider and process 
an application for approval of the issuance of mutual capital 
certificates pursuant to this section only if the issuance is authorized 
by applicable law and regulation and is not inconsistent with any 
provision of the applicant's charter, constitution or bylaws.
    (c) Application form; supporting information. An application for 
approval of the issuance of mutual capital certificates pursuant to this 
section shall be in the form prescribed by the Office. Such application 
and instructions may be obtained from the OTS. Information and exhibits 
shall be furnished in support of the application in accordance with such 
instructions, setting forth all of the terms and provisions relating to 
the proposed issue and showing that all of the requirements of this 
section have been or will be met.
    (d) Charter amendment. No application for approval of the issuance 
of mutual capital certificates pursuant to this section may be filed 
unless the amendment to the mutual association's charter, constitution 
or bylaws or other actions conferring such authority shall have been 
approved pursuant to the procedures and requirements set forth in the 
mutual association's charter, constitution or bylaws, or as may 
otherwise be required by applicable law.
    (e) Filing requirements. The application for issuance of mutual 
capital certificates shall be publicly filed with the OTS.
    (f) Supervisory objection. No application or approval of the 
issuance of mutual capital certificates pursuant to this section shall 
be approved if, in the opinion of the Office, the policies, condition, 
or operation of the applicant afford a basis for supervisory objection 
to the application.
    (g) Limitation on offering period. Following the date of the 
approval of the application by the Office, the association shall have an 
offering period of not more than one year in which to complete the sale 
of the mutual capital certificates issued pursuant to this section. The 
Office may in its discretion extend such offering period if a written 
request showing good cause for such extension is filed with it not later 
than 30 days before the expiration of such offering period or any 
extension thereof.
    (h) Reports. Within 30 days after completion of the sale of mutual 
capital certificates issued pursuant to this section, the association 
shall transmit to the OTS a written report stating the total dollar 
amount of securities sold,

[[Page 201]]

and the amount of net proceeds received by the association, and within 
90 days it shall transmit a written report stating the number of 
purchasers.
    (i) Requirements as to mutual capital certificates--(1) Form of 
certificate. Each mutual capital certificate and any governing agreement 
evidencing a mutual capital certificate issued by an association 
pursuant to this section:
    (i) Shall bear on its face, in bold-face type, the following legend: 
``This security is not a savings account or a deposit and it is not 
insured by the United States or any agency or fund of the United 
States''; and
    (ii) Shall clearly state that the certificate is subject to the 
requirements of Sec. 563.74(i)(2).
    (2) Legal requirements. Mutual capital certificates issued pursuant 
to this section shall:
    (i) Be subordinate to all claims against the association having the 
same priority as savings accounts, savings certificates, debt 
obligations or any higher priority;
    (ii) Not be eligible for use as collateral for any loan made by the 
issuing association;
    (iii) Constitute a claim in liquidation not exceeding the face value 
plus accrued dividends of the certificates, on the general reserves, 
surplus and undivided profits of the association remaining after the 
payment in full of all savings accounts, savings certificates and debt 
obligations;
    (iv) Be entitled to the payment of dividends, which may be fixed, 
variable, participating, or cumulative, or any combination thereof, only 
if, when and as declared by the association's board of directors out of 
funds legally available for that purpose, provided that no dividend may 
be declared or paid without the approval of the Office if such payment 
would cause the association to fail to meet its regulatory capital 
requirement under Sec. 567.2 of this chapter, and provided further that 
no dividend may be paid if such payment would constitute a violation of 
12 U.S.C. 1828(b);
    (v) Not be redeemable, except: (A) Where the dollar weighted average 
term of each issue of mutual capital certificates to be redeemed is 
seven years or more and redemption is to be made pursuant to a 
redemption schedule; (B) in the event of a merger, consolidation or 
reorganization approved by the Office; or (C) where the funds for 
redemption are raised by the issuance of mutual capital certificates 
approved pursuant to this section, or in conjunction with the issuance 
of capital stock pursuant to part 563b of this chapter: Provided, that 
mandatory redemption shall not be required; that mutual capital 
certificates shall not be redeemable on the demand or at the option of 
the holder; and that mutual capital certificates shall not receive, 
benefit from, be credited with or otherwise be entitled to or due 
payments in or for redemption if such payments would cause the 
association to fail to meet its regulatory capital requirement under 
Sec. 567.2 of this chapter; And Provided further, for the purposes of 
this paragraph (i)(2)(v), the ``dollar weighted average term'' of an 
issue of mutual capital certificates shall be the sum of the products 
calculated for each year that the mutual capital certificates in the 
issue have been redeemed or are scheduled to be redeemed. Each product 
shall be calculated by multiplying the number of years of each mutual 
capital certificate of a given term by a fraction, the numerator of 
which shall be the total dollar amount of each mutual capital 
certificate in the issue with the same term and the denominator of which 
shall be the total dollar amount of mutual capital certificates in the 
entire issue;
    (vi) Not have preemptive rights;
    (vii) Not have voting rights, except that an association may provide 
for voting rights if:
    (A) The savings association fails to pay dividends for a minimum of 
three consecutive dividend periods, and then the holders of the class or 
classes of mutual capital certificates granted such voting rights, and 
voting as a single class, with one vote for each outstanding 
certificate, may elect by a majority vote a maximum of one-third of the 
association's board of directors, the directors so elected to serve 
until the next annual meeting of the association succeeding the payment 
of all current and past dividends;
    (B) Any merger, consolidation, or reorganization (except in a 
supervisory

[[Page 202]]

case) is sought to be authorized, where the issuing association is not 
the survivor, provided that the regulatory capital of the resulting 
association available for payment of any class of mutual capital 
certificate on liquidation is less than the regulatory capital available 
for such class prior to the merger, consolidation, or reorganization;
    (C) Action is sought to be authorized which would create any class 
of mutual capital certificates having a preference or priority over an 
outstanding class or classes of mutual capital certificates;
    (D) Any action is sought to be authorized which would adversely 
change the specific terms of any class of mutual capital certificates;
    (E) Action is sought to be authorized which would increase the 
number of a class of mutual capital certificates, or the number of a 
class of mutual capital certificates ranking prior to or on parity with 
another class of mutual capital certificates; or
    (F) Action is sought which would authorize the issuance of an 
additional class or classes of mutual capital certificates without the 
association having met specific financial standards;
    (viii) Not constitute an obligation of the association and shall 
confer no rights which would give rise to any claim of or action for 
default;
    (ix) Not be convertible into any account, security, or interest, 
except that mutual capital certificates may be surrendered in exchange 
for preferred stock issued in connection with the conversion of the 
issuing savings association to the stock form pursuant to part 563b of 
this chapter, provided that the preferred stock shall have substantially 
the same voting rights, designations, preferences and relative, 
participating optional, or other special rights, and qualifications, 
limitations, and restrictions, as the mutual capital certificates 
exchanged for the preferred stock.
    (x) Provide for charging of losses after the exhaustion of all other 
items in the regulatory capital account.

[54 FR 49552, Nov. 30, 1989, as amended at 55 FR 13515, Apr. 11, 1990; 
57 FR 14345, Apr. 20, 1992; 59 FR 66159, Dec. 23, 1994]



Sec. 563.76  Offers and sales of securities at an office of a savings association.

    (a) A saving association may not offer or sell debt or equity 
securities issued by the association or an affiliate of the association 
at an office of the association; except that equity securities issued by 
the association or an affiliate in connection with the association's 
conversion from the mutual to stock form of organization in a conversion 
approved pursuant to part 563b of this chapter may be offered and sold 
at the association's offices: Provided, That:
    (1) The Regional Director does not object on supervisory grounds 
that the offer and sale of the securities at the offices of the 
association;
    (2) No commissions, bonuses, or comparable payments are paid to any 
employee of the savings association or its affiliates or to any other 
person in connection with the sale of securities at an office of a 
savings association; except that compensation and commissions consistent 
with industry norms may be paid to securities personnel of registered 
broker-dealers;
    (3) No offers or sales are made by tellers or at the teller counter, 
or by comparable persons at comparable locations;
    (4) Sales activity is conducted in a segregated or separately 
identifiable area of the savings association's offices apart from the 
area accessible to the general public for the purposes of making or 
withdrawing deposits;
    (5) Offers and sales are made only by regular, full-time employees 
of the savings association or by securities personnel who are subject to 
supervision by a registered broker-dealer;
    (6) An acknowledgment, in the form set forth in paragraph (c) of 
this section, is signed by any customer to whom the security is sold in 
the savings association's offices prior to the sale of any such 
securities;
    (7) A legend that the security is not a deposit or account and is 
not federally insured or guaranteed appears conspicuously on the 
security and in all offering documents and advertisements for the 
securities; the legend must state in bold or other prominent type at 
least as large as other textual type in the document that ``This 
security is

[[Page 203]]

not a deposit or account and is not federally insured or guaranteed''; 
and
    (8) The savings association will be in compliance with its current 
capital requirements upon completion of the conversion stock offering.
    (b) Securities sales practices, advertisements, and other sales 
literature used in connection with offers and sales of securities by 
savings associations shall be subject to Sec. 563g.10 of this chapter.
    (c) Offers and sales of securities of a savings association or its 
affiliates in any office of the savings association must use a one-page, 
unambiguous, certification in substantially the following form:

                          FORM OF CERTIFICATION

    I ACKNOWLEDGE THAT THIS SECURITY IS NOT A DEPOSIT OR ACCOUNT AND IS 
NOT FEDERALLY INSURED, AND IS NOT GUARANTEED BY [insert name of savings 
association] OR BY THE FEDERAL GOVERNMENT.
    If anyone asserts that this security is federally insured or 
guaranteed, or is as safe as an insured deposit, I should call the 
Office of Thrift Supervision Regional Director [insert Regional 
Director's name and telephone number with area code].
    I further certify that, before purchasing the [description of 
security being offered] of [name of issuer, name of savings association 
and affiliation to issuer (if different)], I received an offering 
circular.
    The offering circular that I received contains disclosure concerning 
the nature of the security being offered and describes the risks 
involved in the investment, including:
    [List briefly the principal risks involved and cross reference 
certain specified pages of the offering circular where a more complete 
description of the risks is made.]

Signature:______________________________________________________________
Date:___________________________________________________________________

    (d) For purposes of this section, an ``office'' of an association 
means any premises used by the association that are identified to the 
public through advertising or signage using the association's name, 
trade name, or logo.

[57 FR 46088, Oct. 7, 1992]



Sec. 563.80  Borrowing limitations.

    (a) General. Except as the Office otherwise may permit by advice in 
writing, a savings association may borrow only in accordance with the 
provisions of this section.
    (b) Amount of borrowing. A savings association may borrow up to the 
amount authorized by the laws under which the savings association 
operates.
    (c) Security. An association may give security for borrowings 
subject to any requirements imposed by the Office or the FDIC regarding 
notice of default on borrowings and any FDIC right of first refusal to 
purchase collateral.
    (d) Required statement for all securities evidencing outside 
borrowings. Each security shall bear on its face, in a prominent place, 
the following legend:

    This security is not a savings account or a deposit and it is not 
insured by the United States or any agency or fund of the United States.

    (e) Filing requirements for outside borrowings with maturities in 
excess of one year. (1) Unless the savings association meets its capital 
requirement under part 567 of this chapter, it shall, at least ten 
business days prior to issuance, file with the Regional Director or his 
or her designee a notice of intent to issue securities evidencing such 
borrowings. Such notice shall contain a summary of the items of the 
security, including:
    (i) Principal amount of the securities;
    (ii) Anticipated interest rate range and price range at which the 
securities are to be sold;
    (iii) Minimum denomination;
    (iv) Stated and average effective maturity;
    (v) Mandatory and optional prepayment provisions;
    (vi) Description, amount, and maintenance of collateral if any;
    (vii) Trustee provisions if any;
    (viii) Events of default and remedies of default;
    (ix) Any provisions which restrict, conditionally or otherwise, the 
operations of the association.
    (2) The OTS shall have 10 business days after receipt of such filing 
to object to the issuance of such securities. The OTS shall object if 
the terms or covenants of the proposed issue place unreasonable burdens 
on, or control over, the operations of the association. If no objection 
is taken, the savings association shall have 120 calendar days within 
which to issue such securities.

[[Page 204]]

    (f) Note accounts. For purposes of this section, note accounts are 
not borrowings.

[54 FR 49552, Nov. 30, 1989, as amended at 55 FR 7300, Mar. 1, 1990; 55 
FR 13515, Apr. 11, 1990; 57 FR 14345, Apr. 20, 1992; 57 FR 33438, July 
29, 1992]



Sec. 563.81  Issuance of subordinated debt securities and mandatorily redeemable preferred stock.

    (a) General--(1) Savings associations receiving standard treatment. 
No savings association subject to standard treatment of its applications 
under Sec. 516.5 of this chapter may issue subordinated debt securities 
or mandatorily redeemable preferred stock includable in regulatory 
capital pursuant to this section or amend the terms of such securities 
unless it has obtained the written approval of OTS. Approval of the 
issuance under this section, in order to meet the requirements of 
Sec. 567.5 of this chapter, may be obtained either before or after the 
securities are issued. No approval shall be granted unless issuance of 
the securities and the form and manner of filing of the application are 
in accordance with the provisions of this section.
    (2) Savings associations receiving expedited treatment. No savings 
association eligible for expedited treatment under Sec. 516.5 of this 
chapter may issue subordinated debt securities or mandatorily redeemable 
preferred stock pursuant to this section for inclusion in regulatory 
capital or amend the terms of such securities unless it provides notice 
to OTS, and such notice contains a statement of the association's intent 
to include such securities in regulatory capital. Notice should be made 
30 days in advance of an issuance of subordinated debt securities or 
mandatorily redeemable preferred stock under this section, if the 
association intends to qualify such securities or stock as supplementary 
capital under Sec. 567.5(b)(2) of this chapter. Notice may be made 
either before or after such securities are issued, but will only be 
includable in regulatory capital (to the extent permitted by 
Sec. 567.5(b) of this chapter) if the issuance of the securities and the 
filing of the notice are in accordance with the provisions of this 
section and the savings association certifies, in writing, to the Office 
that all regulatory requirements have been met. The Office reserves the 
right to determine after the 30-day notice period has expired that the 
issuance does not comply with the requirements of this section or those 
of Part 567 for inclusion in capital.
    (b) Eligibility requirements. In determining whether an issuance of 
subordinated debt securities or mandatorily redeemable preferred stock 
is includable in the regulatory capital of a savings association 
pursuant to this section, the OTS will consider the following factors:
    (1) Whether the issuance of such securities by the savings 
association is authorized by applicable law and regulation and is not 
inconsistent with any provision of the savings association's charter or 
bylaws. Proof of such provision shall be submitted with the notice or 
application;
    (2)(i) Whether, in the opinion of the OTS the overall policies, 
condition and operation of the savings association do not afford a basis 
for supervisory objection to the application or notice. The OTS shall 
establish guidelines that shall identify supervisory bases that may be 
used to object to the inclusion of specific subordinated debt and 
preferred stock issuances as regulatory capital. Such guidelines shall 
constitute illustrative but not exclusive bases for supervisory 
objection to subordinated debt and mandatorily redeemable preferred 
stock applications and notices. Such bases for supervisory objection may 
include, but are not limited to instances where:
    (A) Regulatory capital, without regard to the amount of any 
subordinated debt and mandatorily redeemable preferred stock to be 
included in regulatory capital, does not meet the requirements of 
Sec. 567.2 of this chapter;
    (B) Actual and expected losses have not been offset by specific and 
general valuation allowances to the extent required pursuant to 
Sec. 563.160 and Sec. 563.172 of this part; and
    (C) Actual and anticipated income from operations, after 
distribution of earnings to the holders of savings accounts, payment of 
dividends on outstanding equity securities and payment

[[Page 205]]

of interest on borrowings but before income taxes, is not demonstrably 
sufficient for payment of dividends and redemption price, discount and 
related expenses of the proposed issuance.
    (ii) The OTS may modify the guidelines in paragraph (b)(2)(i) of 
this section from time to time, as appropriate, and any such changes 
shall be effective for those applications and notices filed after the 
date of the changes to the guidelines and for those applications and 
notices submitted to the OTS but not yet deemed ``complete.''
    (3) Whether the issuance of such securities by the savings 
association in the transaction and any related transactions will result 
in a transfer of risk from the Savings Association Insurance Fund or the 
Bank Insurance Fund, as the case may be, to parties other than savings 
associations. In this connection, the issuance of subordinated debt 
securities shall not be deemed to result in a sufficient transfer of 
risk if such securities or any indenture or related agreement pursuant 
to which they are issued provides for events of default or includes 
other provisions that could result in a mandatory prepayment of 
principle by declaration or otherwise, other than events of default 
arising out of the obligor's failure to make timely payment of interest 
and principal, its failure to comply with reasonable financial, 
operating and maintenance covenants of a type that are customarily 
included in indentures relating to publicly offered issues of debt 
securities, and events of default relating to certain events of 
bankruptcy or insolvency, receivership and similar events.
    (c) Form of application or notice; supporting information. 
Applications subject to standard treatment or notices eligible for 
expedited treatment under Sec. 516.5 of this chapter must be in the form 
prescribed by OTS. The form of application and instructions for a 
savings association subject to standard treatment, and instructions for 
a notice by a savings association subject to expedited treatment, may be 
obtained from the OTS. Information and exhibits shall be furnished in 
support of an application or notice in accordance with the applicable 
instructions, setting forth all of the terms and provisions relating to 
the proposed issuance and showing that all of the requirements of this 
section have been or will be met.
    (d) Requirements as to securities. Subordinated debt securities and 
mandatorily redeemable preferred stock issued pursuant to this section 
shall meet all of the following requirements unless one or more of such 
requirements, not including paragraphs (d)(1)(i)(A) and (d)(1)(ii) of 
this section which are not eligible for waiver, are waived by the OTS:
    (1) Form of certificate. Each certificate evidencing subordinated 
debt or mandatorily redeemable preferred stock issued by a savings 
association pursuant to this section shall:
    (i) Bear on its face, in bold-face type, the following legends:
    (A) ``This security is not a savings account or deposit and it is 
not insured by the United States or any agency or fund of the United 
States''; and
    (B) ``Absent prior written approval by the Office, this security is 
not eligible for purchase by any savings association or a corporate 
affiliate thereof, except that this security may be purchased by a 
corporate affiliate of the issuer or by any diversified savings and loan 
holding company and any non-savings association subsidiary thereof.''
    (ii) Clearly state that the security--
    (A) Is subordinated on liquidation, as to principal, interest, and 
premium, if any, to all claims (including post-default interest) against 
the savings association having the same priority as savings account 
holders or any higher priority;
    (B) Is unsecured by the assets of the issuing association, or any of 
its affiliates; and
    (C) Is not eligible as collateral for any loan by the issuing 
association.
    (iii) In connection only with a certificate evidencing subordinated 
debt, state or refer to a document stating the terms under which the 
issuing savings association may prepay the obligation, which shall 
include at least the right to prepay without premium or other penalty 
during the fifteen months immediately prior to the maturity date;

[[Page 206]]

    (iv) State or refer to a document stating that, in connection with a 
certificate evidencing subordinated debt, no voluntary prepayment of 
principal shall be made and that no payment of principal shall be 
accelerated and, in connection with a certificate evidencing mandatorily 
redeemable preferred stock, no voluntary redemption, other than 
scheduled redemptions, shall be made without the approval of the OTS if 
the savings association is failing to meet its regulatory capital 
requirements under part 567 of this chapter or, if after giving effect 
to such payment, the association would fail to meet such regulatory 
capital requirements;
    (v) State the limitations upon payment of interest or dividends, as 
appropriate imposed by 12 U.S.C. 1828(b); and
    (vi) In connection only with a certificate evidencing subordinated 
debt, set forth, in the certificate and the purchase agreement or 
indenture, precisely the following statement:

    Notwithstanding anything to the contrary in this certificate (or in 
any related document); (A) if the FDIC shall be appointed receiver for 
the issuer of this certificate (the ``issuer'') and in its capacity as 
such shall cause the issuer to merge with or into another financial 
institution, or in such capacity shall sell or otherwise convey part or 
all of the assets of the issuer to another financial institution or 
shall arrange for the assumption of less than all of the liabilities of 
the issuer by one or more other financial institutions, the FDIC shall 
have no obligation, either in its capacity as receiver or in its 
corporate capacity, to contract for or to otherwise arrange for the 
assumption of the obligation represented by this certificate in whole or 
in part by any financial institution or institutions which results from 
any such merger or which has purchased or otherwise acquired from the 
FDIC as receiver for the issuer, any of the assets of the issuer, or 
which, pursuant to any arrangement with the FDIC, has assumed less than 
all of the liabilities of the issuer. To the extent that obligations 
represented by this certificate have not been assumed in full by a 
financial institution with or into which the issuer may have been 
merged, as described in this paragraph (A), and/or by one or more 
financial institutions which have succeeded to all or a portion of the 
assets of the issuer, or which have assumed a portion but not all of the 
liabilities of the issuer as a result of one or more transactions 
entered into by the FDIC as receiver for the issuer, then the holder of 
this certificate shall be entitled to payments on this obligation in 
accordance with the procedures and priorities set forth in any 
applicable receivership regulations or in orders of the FDIC relating to 
such receivership.
    (B) In the event that the obligation represented by this certificate 
is assumed in full by another financial institution, which shall succeed 
by merger or otherwise to substantially all of the assets and the 
business of the issuer, or which shall by arrangement with the FDIC 
assume all or a portion of the liabilities of the issuer, and payment or 
provision for payment shall have been made in respect of all matured 
installments of interests upon the certificates together with all 
matured installments of principal on such certificates which shall have 
become due otherwise than by acceleration, then any default caused by 
the appointment of a receiver for the issuer shall be deemed to have 
been cured, and any declaration consequent upon such default declaring 
the principal and interest on the certificate to be immediately due and 
payable shall be deemed to have been rescinded.
    (C) This security is not eligible to be purchased or held by any 
savings association or corporate affiliate thereof except that this 
security may be purchased or held by a corporate affiliate of the issuer 
or by a diversified savings and loan holding company and its non-savings 
association subsidiaries. The issuer of this security may not recognize 
on its transfer books any transfer made to a savings association or any 
corporate affiliate thereof (except as provided in the preceding 
sentence) and will not be obligated to make any payments of principal or 
interest on this security if the owner of this security is a savings 
association or any corporate affiliate thereof (except as provided in 
the preceding sentence).

    (2) Limitation as to term. No subordinated debt security or 
mandatorily redeemable preferred stock issued by a savings association 
pursuant to this section shall have an original period to maturity or 
required redemption of less than seven years. During the first six years 
that such a security is outstanding, the total of all required sinking 
fund payments, other required prepayments, required purchase-fund 
payments, required reserve allocations and required redemptions with 
respect to the portion of such six years as have elapsed shall at no 
time exceed the original principal amount or original redemption price, 
thereof multiplied by a fraction, the numerator of which is the number 
of years that have elapsed since the issuance of the security and

[[Page 207]]

the denominator of which is the number of years covered by the original 
period to maturity or required redemption.
    (3) Limitations on sale to certain associations. (i) No savings 
association may sell any subordinated debt securities issued pursuant to 
this section to a Federal Home Loan Bank or, except with prior written 
approval of the Office in a supervisory case, to the FDIC; and
    (ii) Without the prior written approval of the Office, no savings 
association may sell, either directly or indirectly through an 
underwriter or otherwise, any subordinated debt securities issued 
pursuant to this section to a savings association or any corporate 
affiliate thereof, except that a savings association may sell such 
securities to its corporate affiliates or to a diversified savings and 
loan holding company and its non-savings association subsidiaries.
    (4) Indenture. An issuer must use an indenture, as described herein, 
for subordinated debt securities offered pursuant to this section. Such 
an indenture must provide for the appointment of a trustee other than 
the obligor or an affiliate of the obligor (as defined in 12 CFR 583.2) 
and provide for the collective enforcement of the rights and remedies of 
the security holders, if the aggregate amount of debt securities 
``publicly offered'' (sales in a private non-public offering as defined 
in 12 CFR 563g.4 are excluded) and sold by a single obligor in any 
consecutive twelve month period exceeds $2,000,000 and/or $5,000,000 in 
any consecutive thirty-six month period.
    (e) [Reserved]
    (f) Additional requirements. The Office may impose on the savings 
association such requirements or conditions with regard to the 
securities or the offering or issuance thereof as it may deem necessary 
or desirable for the protection of purchasers, the savings association, 
the Office, or the Savings Association Insurance Fund or the Bank 
Insurance Fund, as the case may be.
    (g) Limitation on offering period. Following the date of approval of 
an application by a savings association subject to standard treatment by 
the OTS, or the earlier of the date of non-objection by the OTS of a 
notice by a savings association eligible for expedited treatment or 30 
days after submission of a notice by such a savings association, unless 
the OTS has rejected such notice or issued a request for additional 
information on such notice, the association shall have an offering 
period of not more than one year in which to complete the sale of the 
subordinated debt securities or mandatorily redeemable preferred stock 
issued pursuant to this section. The Office may in its discretion extend 
such offering period if a written request showing good cause for such 
extension is filed with it not later than 30 days before the expiration 
of such offering period or any previous extension thereof.
    (h) Reports. Within 30 days after completion of the sale of the 
subordinated debt securities or mandatorily redeemable preferred stock 
issued pursuant to this section, the savings association shall transmit 
a written report to the OTS stating the number of purchases, the total 
dollar amount of securities sold, and the amount of net proceeds 
received by the savings association. The association's report shall 
clearly state the amount of subordinated debt or mandatorily redeemable 
preferred stock, net of all expenses, that the association intends to be 
counted as regulatory capital.
    (i)--(j) [Reserved]
    (k) Conditions of approval and acceptance for subordinated debt and 
mandatorily redeemable preferred stock applications and notices. 
Issuance of subordinated debt and mandatorily redeemable preferred stock 
applications and notices shall be subject to the following conditions:
    (1) Where securities are to be sold pursuant to an offering circular 
required to be filed with the OTS pursuant to 12 CFR 563g.2, and where 
such offering circular has not yet been declared effective prior to the 
date of approval of or nonobjection to the subordinated debt or 
preferred stock application or notice, the offering circular in the form 
declared effective shall not disclose any material adverse information 
concerning the savings association's business, operations, prospects, or 
financial condition not disclosed in the latest form of offering 
circular

[[Page 208]]

filed as an exhibit to the application or notice;
    (2) The savings association shall submit to the OTS no later than 30 
days from the completion of the sale of the securities, certification of 
compliance with all applicable laws and regulations in connection with 
the offering, issuance, and sale of the securities;
    (3) The savings association shall submit to the OTS no later than 30 
days from the completion of the sale of the securities, the report(s) 
required by paragraph (h) of this section and the following additional 
items:
    (i) Three copies of an executed form of the securities issued 
pursuant to the subject application or notice and a copy of any related 
agreement or indenture governing the issuance of securities; and
    (ii) A certificate from the principal executive officer of the 
savings association that states that to the best of his or her 
knowledge, none of the securities issued pursuant to the subject 
application or notice were sold to any association whose accounts are 
insured by the Savings Association Insurance Fund, or a corporate 
affiliate thereof, except as permitted by 12 CFR 563.81;
    (4) That as of the date of approval or nonobjection, there have been 
no material changes with respect to the information disclosed in the 
application or notice as submitted to the OTS;
    (5) The savings association receives prior written approval or 
nonobjection from the OTS for any post-approval amendment to the 
securities or any related indenture if:
    (i) The proposed amendment modifies or is inconsistent with any 
provision of the securities, or the indenture that is required to be 
included therein by the OTS's regulations as may then be in effect or 
would result in a transfer of risk to the savings association or the 
Savings Association Insurance Fund or the Bank Insurance Fund, as 
appropriate; and
    (ii) All or a portion of the proceeds from the issuance and sale of 
the securities would continue to be included in the regulatory capital 
of the savings association following adoption of the amendment;
    (6) The savings association shall submit to the OTS promptly after 
execution, one copy of each amendment to the securities or the related 
indenture, made after approval or nonobjection, and if prior approval of 
or nonobjection to such amendment was not obtained, shall also state the 
reason(s) such prior approval or nonobjection was not required; and
    (7) Before any offers or sales of the securities are made on the 
premises of the association or its affiliates, the savings association 
shall submit to the OTS a set of policies and procedures for such sale 
of the securities satisfactory to the OTS.

[54 FR 49552, Nov. 30, 1989, as amended at 55 FR 13515, Apr. 11, 1990; 
57 FR 14345, Apr. 20, 1992; 62 FR 66262, Dec. 18, 1997; 66 FR 13008, 
Mar. 2, 2001]

Subpart D [Reserved]



                    Subpart E--Capital Distributions

    Source: 64 FR 2809, Jan. 19, 1999, unless otherwise noted.



Sec. 563.140  What does this subpart cover?

    This subpart applies to all capital distributions by a savings 
association (``you'').



Sec. 563.141  What is a capital distribution?

    A capital distribution is:
    (a) A distribution of cash or other property to your owners made on 
account of their ownership, but excludes:
    (1) Any dividend consisting only of your shares or rights to 
purchase your shares; or
    (2) If you are a mutual savings association, any payment that you 
are required to make under the terms of a deposit instrument and any 
other amount paid on deposits that the OTS determines is not a 
distribution for the purposes of this section;
    (b) Your payment to repurchase, redeem, retire or otherwise acquire 
any of your shares or other ownership interests, any payment to 
repurchase, redeem, retire, or otherwise acquire debt instruments 
included in your total capital under Sec. 567.5 of this chapter, and any 
extension of credit to finance an affiliate's acquisition of your shares 
or interests;

[[Page 209]]

    (c) Any direct or indirect payment of cash or other property to 
owners or affiliates made in connection with a corporate restructuring. 
This includes your payment of cash or property to shareholders of 
another association or to shareholders of its holding company to acquire 
ownership in that association, other than by a distribution of shares;
    (d) Any other distribution charged against your capital accounts if 
you would not be well capitalized, as set forth in Sec. 565.4(b)(1) of 
this chapter, following the distribution; and
    (e) Any transaction that the OTS or the Corporation determines, by 
order or regulation, to be in substance a distribution of capital.



Sec. 563.142  What other definitions apply to this subpart?

    The following definitions apply to this subpart:
    Affiliate means an affiliate, as defined under Sec. 563.41(b) of 
this part.
    Capital means total capital, as defined under Sec. 567.5(c) of this 
chapter.
    Net income means your net income computed in accordance with 
generally accepted accounting principles.
    Retained net income means your net income for a specified period 
less total capital distributions declared in that period.
    Shares means common and preferred stock, and any options, warrants, 
or other rights for the acquisition of such stock. The term ``share'' 
also includes convertible securities upon their conversion into common 
or preferred stock. The term does not include convertible debt 
securities prior to their conversion into common or preferred stock or 
other securities that are not equity securities at the time of a capital 
distribution.



Sec. 563.143  Must I file with OTS?

    Whether and what you must file with the OTS depends on whether you 
and your proposed capital distribution fall within certain criteria.
    (a) Application required.

----------------------------------------------------------------------------------------------------------------
                  If:                                                   Then you:
----------------------------------------------------------------------------------------------------------------
(1) You are not eligible for expedited  Must file an application with the OTS.
 treatment under Sec.  516.5 of this
 chapter.
----------------------------------------------------------------------------------------------------------------
(2) The total amount of all of your     Must file an application with the OTS.
 capital distributions (including the
 proposed capital distribution) for
 the applicable calendar year exceeds
 your net income for that year to date
 plus your retained net income for the
 preceding two years.
----------------------------------------------------------------------------------------------------------------
(3) You would not be at least           Must file an application with the OTS.
 adequately capitalized, as set forth
 in Sec.  565.4(b)(2) of this chapter,
 following the distribution.
----------------------------------------------------------------------------------------------------------------
(4) Your proposed capital distribution  Must file an application with the OTS.
 would violate a prohibition contained
 in any applicable statute,
 regulation, or agreement between you
 and the OTS (or the Corporation), or
 violate a condition imposed on you in
 an OTS-approved application or notice.
----------------------------------------------------------------------------------------------------------------

    (b) Notice required.

----------------------------------------------------------------------------------------------------------------
  If you are not required to file an
  application under paragraph (a) of                                    Then you:
          this section, but:
----------------------------------------------------------------------------------------------------------------
(1) You would not be well capitalized,  Must file a notice with the OTS.
 as set forth under Sec.  565.4(b)(1),
 following the distribution.
----------------------------------------------------------------------------------------------------------------

[[Page 210]]

 
(2) Your proposed capital distribution  Must file a notice with the OTS.
 would reduce the amount of or retire
 any part of your common or preferred
 stock or retire any part of debt
 instruments such as notes or
 debentures included in capital under
 part 567 of this chapter (other than
 regular payments required under a
 debt instrument approved under Sec.
 563.81).
----------------------------------------------------------------------------------------------------------------
(3) You are a subsidiary of a savings   Must file a notice with the OTS.
 and loan holding company.
----------------------------------------------------------------------------------------------------------------

    (c) No prior notice required.

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
If neither you nor your proposed        Then you do not need to file a notice or an application with the OTS
 capital distribution meet any of the    before making a capital distribution.
 criteria listed in paragraphs (a) and
 (b) of this section.
----------------------------------------------------------------------------------------------------------------


[64 FR 2809, Jan. 19, 1999, as amended at 66 FR 13008, Mar. 2, 2001]



Sec. 563.144  How do I file with the OTS?

    (a) Contents. Your notice or application must:
    (1) Be in narrative form.
    (2) Include all relevant information concerning the proposed capital 
distribution, including the amount, timing, and type of distribution.
    (3) Demonstrate compliance with Sec. 563.146.
    (b) Schedules. Your notice or application may include a schedule 
proposing capital distributions over a specified period, not to exceed 
12 months.
    (c) Timing. You must file your notice or application at least 30 
days before the proposed declaration of dividend or approval of the 
proposed capital distribution by your board of directors.



Sec. 563.145  May I combine my notice or application with other notices or applications?

    You may combine the notice or application required under 
Sec. 563.143 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 you 
submit a combined filing, you must:
    (a) State that the related notice or application is intended to 
serve as a notice or application under this subpart; and
    (b) Submit the notice or application in a timely manner.



Sec. 563.146  Will the OTS permit my capital distribution?

    The OTS will review your notice or application under the review 
procedures in 12 CFR part 516, subpart A. The OTS may disapprove your 
notice or deny your application filed under Sec. 563.143, in whole or in 
part, if the OTS makes any of the following determinations.
    (a) You will be undercapitalized, significantly undercapitalized, or 
critically undercapitalized as set forth in Sec. 565.4(b) of this 
chapter, following the capital distribution. If so, the OTS will 
determine if your capital distribution is permitted under 12 U.S.C. 
1831o(d)(1)(B).
    (b) Your proposed capital distribution raises safety or soundness 
concerns.
    (c) Your proposed capital distribution violates a prohibition 
contained in any statute, regulation, agreement between you and the OTS 
(or the Corporation), or a condition imposed on you in an OTS-approved 
application or notice. If so, the OTS will determine whether it may 
permit your capital distribution notwithstanding the prohibition or 
condition.

[[Page 211]]



                Subpart F--Financial Management Policies



Sec. 563.161  Management and financial policies.

    (a)(1) For the protection of depositors and other savings 
associations, each savings association and each service corporation must 
be well managed and operate safely and soundly. Each also must pursue 
financial policies that are safe and consistent with economical home 
financing and the purposes of savings associations. In implementing this 
section, OTS will consider that service corporations may be authorized 
to engage in activities that involve a higher degree of risk than 
activities permitted to savings associations.
    (2) As part of meeting its requirements under paragraph (a)(1) of 
this section, each savings association and service corporation must 
maintain sufficient liquidity to ensure its safe and sound operation.
    (b) Compensation to officers, directors, and employees of each 
savings association and its service corporations shall not be in excess 
of that which is reasonable and commensurate with their duties and 
responsibilities. Former officers, directors, and employees of savings 
association or its service corporation who regularly perform services 
therefor under consulting contracts are employees thereof for purposes 
of this paragraph (b).

[54 FR 49552, Nov. 30, 1989, as amended at 66 FR 15017, Mar. 15, 2001]



Sec. 563.170  Examinations and audits; appraisals; establishment and maintenance of records.

    (a) Examinations and audits. Each savings association and affiliate 
thereof shall be examined periodically, and may be examined at any time, 
by the Office, with appraisals when deemed advisable, in accordance with 
general policies from time to time established by the Office. The costs, 
as computed by the Office, of any examinations made by it, including 
office analysis, overhead, per diem, travel expense, other supervision 
by the Office, and other indirect costs, shall be paid by the savings 
associations examined, except that in the case of service corporations 
of Federal savings associations the cost of examinations, as determined 
by the Office, shall be paid by the service corporations. Payments shall 
be made in accordance with a schedule of annual assessments based upon 
each savings association's total assets and of rates for examiner time 
in amounts determined by the Office.
    (b) Appraisals. (1) Unless otherwise ordered by the Office, 
appraisal of real estate by the Office in connection with any 
examination or audit of a savings association, affiliate, or service 
corporation shall be made by an appraiser, or by appraisers, selected by 
the Office's Regional Director of the Region in which such savings 
association is located. The cost of such appraisal shall promptly be 
paid by such savings association, affiliate, or service corporation 
direct to such appraiser or appraisers upon receipt by the savings 
association, affiliate, or service corporation of a statement of such 
cost as approved by such Regional Director. A copy of the report of each 
appraisal made by the Office pursuant to any of the foregoing provisions 
of this section shall be furnished to the savings association, 
affiliate, or service corporation, as appropriate within a reasonable 
time, not to exceed 90 days, following the completion of such appraisals 
and the filing of a report thereof by the appraiser, or appraisers, with 
such Regional Director.
    (2) The Office may obtain at any time, at its expense, such 
appraisals of any of the assets, including the security therefor, of a 
savings association, affiliate, or service corporation as the Office 
deems appropriate.
    (c) Establishment and maintenance of records. To enable the Office 
to examine savings associations and affiliates and audit savings 
associations, affiliates, and service corporations pursuant to the 
provisions of paragraph (a) of this section, each savings association, 
affiliate, and service corporation shall establish and maintain such 
accounting and other records as will provide an accurate and complete 
record of all business it transacts. This includes, without limitation, 
establishing and maintaining such other records as are required by 
statute or any other regulation to which the savings association, 
affiliate, or service corporation is

[[Page 212]]

subject. The documents, files, and other material or property comprising 
said records shall at all times be available for such examination and 
audit wherever any of said records, documents, files, material, or 
property may be.
    (d) Change in location of records. A savings association shall not 
transfer the location of any of its general accounting or control 
records, or the maintenance thereof, from its home office to a branch or 
service office, or from a branch or service office to its home office or 
to another branch or service office unless prior to the date of transfer 
its board of directors has:
    (1) By resolution authorized the transfer or maintenance and;
    (2) Sent a certified copy of the resolution to the Regional Director 
of the OTS Region in which the principal office of the savings 
association is located.
    (e) Use of data processing services for maintenance of records. A 
savings association which determines to maintain any of its records by 
means of data processing services shall so notify the Regional Director 
of the Region in which the principal office of such savings association 
is located, in writing, at least 90 days prior to the date on which such 
maintenance of records will begin. Such notification shall include 
identification of the records to be maintained by data processing 
services and a statement as to the location at which such records will 
be maintained. Any contract, agreement, or arrangement made by a savings 
association pursuant to which data processing services are to be 
performed for such savings association shall be in writing and shall 
expressly provide that the records to be maintained by such services 
shall at all times be available for examination and audit.

[54 FR 49552, Nov. 30, 1989, as amended at 55 FR 34547, Aug. 23, 1990; 
57 FR 14335, Apr. 20, 1992; 57 FR 40092, Sept. 2, 1992; 58 FR 28348, May 
13, 1993; 59 FR 29502, June 7, 1994; 59 FR 53571, Oct. 25, 1994; 59 FR 
60304, Nov. 23, 1994; 60 FR 66718, Dec. 26, 1995; 61 FR 50984, Sept. 30, 
1996]



Sec. 563.171  Frequency of safety and soundness examination.

    (a) General. The OTS examines savings associations pursuant to 
authority conferred by 12 U.S.C. 1463 and the requirements of 12 U.S.C. 
1820(d). The OTS is required to conduct a full-scope, on-site 
examination of every savings association at least once during each 12-
month period.
    (b) 18-month rule for certain small institutions. The OTS may 
conduct a full-scope, on-site examination of a savings association at 
least once during each 18-month period, rather than each 12-month period 
as provided in paragraph (a) of this section, if the following 
conditions are satisfied:
    (1) The savings association has total assets of $250 million or 
less;
    (2) The savings association is well capitalized as defined in 
Sec. 565.4 of this chapter;
    (3) At its most recent examination, the OTS found the savings 
association to be well managed;
    (4) At its most recent examination, OTS determined that the savings 
association was in outstanding or good condition, that is, it received a 
composite rating of 1 or 2, as composite rating defined in Sec. 516.5(c) 
of this chapter;
    (5) The savings association currently is not subject to a formal 
enforcement proceeding or order; and
    (6) No person acquired control of the savings association during the 
preceding 12-month period in which a full-scope, on-site examination 
would have been required but for this section.
    (c) Authority to conduct more frequent examinations. This section 
does not limit the authority of the OTS to examine any savings 
association as frequently as the agency deems necessary.

[63 FR 16381, Apr. 2, 1998, as amended at 64 FR 69185, Dec. 10, 1999; 66 
FR 13008, Mar. 2, 2001]



Sec. 563.172  Financial derivatives.

    (a) What is a financial derivative? A financial derivative is a 
financial contract whose value depends on the value of one or more 
underlying assets, indices, or reference rates. The most common types of 
financial derivatives are

[[Page 213]]

futures, forward commitments, options, and swaps. A mortgage derivative 
security, such as a collateralized mortgage obligation or a real estate 
mortgage investment conduit, is not a financial derivative under this 
section.
    (b) May I engage in transactions involving financial derivatives? 
(1) If you are a Federal savings association, you may engage in a 
transaction involving a financial derivative if you are authorized to 
invest in the assets underlying the financial derivative, the 
transaction is safe and sound, and you otherwise meet the requirements 
in this section.
    (2) If you are a state-chartered savings association, you may engage 
in a transaction involving a financial derivative if your charter or 
applicable State law authorizes you to engage in such transactions, the 
transaction is safe and sound, and you otherwise meet the requirements 
in this section.
    (3) In general, if you engage in a transaction involving a financial 
derivative, you should do so to reduce your risk exposure.
    (c) What are my board of directors' responsibilities with respect to 
financial derivatives? (1) Your board of directors is responsible for 
effective oversight of financial derivatives activities.
    (2) Before you may engage in any transaction involving a financial 
derivative, your board of directors must establish written policies and 
procedures governing authorized financial derivatives. Your board of 
directors should review Thrift Bulletin 13a, ``Management of Interest 
Rate Risk, Investment Securities, and Derivatives Activities,'' and 
other applicable agency guidance on establishing a sound risk management 
program.
    (3) Your board of directors must periodically review:
    (i) Compliance with the policies and procedures established under 
paragraph (c)(2) of this section; and
    (ii) The adequacy of these policies and procedures to ensure that 
they continue to be appropriate to the nature and scope of your 
operations and existing market conditions.
    (4) Your board of directors must ensure that management establishes 
an adequate system of internal controls for transactions involving 
financial derivatives.
    (d) What are management's responsibilities with respect to financial 
derivatives? (1) Management is responsible for daily oversight and 
management of financial derivatives activities. Management must 
implement the policies and procedures established by the board of 
directors and must establish a system of internal controls. This system 
of internal controls should, at a minimum, provide for periodic 
reporting to the board of directors and management, segregation of 
duties, and internal review procedures.
    (2) Management must ensure that financial derivatives activities are 
conducted in a safe and sound manner and should review Thrift Bulletin 
13a, ``Management of Interest Rate Risk, Investment Securities, and 
Derivatives Activities'' (available at the address listed at Sec. 516.1 
of this chapter), and other applicable agency guidance on implementing a 
sound risk management program.
    (e) What records must I keep on financial derivative transactions? 
You must maintain records adequate to demonstrate compliance with this 
section and with your board of directors' policies and procedures on 
financial derivatives.

[63 FR 66349, Dec. 1, 1998]



Sec. 563.176  Interest-rate-risk-management procedures.

    Savings associations shall take the following actions:
    (a) The board of directors or a committee thereof shall review the 
savings association's interest-rate-risk exposure and devise a policy 
for the savings association's management of that risk.
    (b) The board of directors shall formerly adopt a policy for the 
management of interest-rate risk. The management of the savings 
association shall establish guidelines and procedures to ensure that the 
board's policy is successfully implemented.
    (c) The management of the savings association shall periodically 
report to the board of directors regarding implementation of the savings 
association's policy for interest-rate-risk management and shall make 
that information available upon request to the Office.

[[Page 214]]

    (d) The savings association's board of directors shall review the 
results of operations at least quarterly and shall make such adjustments 
as it considers necessary and appropriate to the policy for interest-
rate-risk management, including adjustments to the authorized acceptable 
level of interest-rate risk.

[54 FR 49552, Nov. 30, 1989, as amended at 58 FR 45813, Aug. 31, 1993; 
59 FR 53571, Oct. 25, 1994]



Sec. 563.177  Procedures for monitoring Bank Secrecy Act compliance.

    (a) Purpose. The purpose of this regulation is to require savings 
associations (as defined by Sec. 561.43 of this chapter) to establish 
and maintain procedures reasonably designed to assure and monitor 
compliance with the requirements of subchapter II of chapter 53 of title 
31, United States Code, and the implementing regulations promulgated 
thereunder by the U.S. Department of Treasury, 31 CFR part 103.
    (b) Compliance procedure. On or before April 27, 1987, each savings 
association shall develop and provide for the continued administration 
of a program reasonably designed to assure and monitor compliance with 
the recordkeeping and reporting requirements set forth in subchapter II 
of chapter 53 of title 31, United States Code, and the implementing 
regulations promulgated thereunder by the Department of Treasury, 31 CFR 
part 103. The compliance program shall be reduced to writing, approved 
by the savings association's board of directors, and reflected in the 
minutes of the savings association.
    (c) Contents of compliance program. The compliance program shall, at 
a minimum:
    (1) Provide for a system of internal controls to assure ongoing 
compliance;
    (2) Provide for independent testing for compliance to be conducted 
by a savings association's in-house personnel or by an outside party;
    (3) Designate individual(s) responsible for coordinating and 
monitoring day-to-day compliance; and
    (4) Provide training for appropriate personnel.

(Approved by the Office of Management and Budget under control number 
3068-0530)



                    Subpart G--Reporting and Bonding



Sec. 563.180  Suspicious Activity Reports and other reports and statements.

    (a) Periodic reports. Each savings association and service 
corporation thereof shall make such periodic or other reports of its 
affairs in such manner and on such forms as the Office may prescribe. 
The Office may provide that reports filed by savings associations or 
service corporations to meet the requirements of other regulations also 
satisfy requirements imposed under this section.
    (b) False or misleading statements or omissions. No savings 
association or director, officer, agent, employee, affiliated person, or 
other person participating in the conduct of the affairs of such 
association nor any person filing or seeking approval of any application 
shall knowingly:
    (1) Make any written or oral statement to the Office or to an agent, 
representative or employee of the Office that is false or misleading 
with respect to any material fact or omits to state a material fact 
concerning any matter within the jurisdiction of the Office; or
    (2) Make any such statement or omission to a person or organization 
auditing a savings association or otherwise preparing or reviewing its 
financial statements concerning the accounts, assets, management 
condition, ownership, safety, or soundness, or other affairs of the 
association.
    (c) Notifications of loss and reports of increase in deductible 
amount of bond. A savings association maintaining bond coverage as 
required by Sec. 563.190 of this part shall promptly notify its bond 
company and file a proof of loss under the procedures provided by its 
bond, concerning any covered losses greater than twice the deductible 
amount. Whenever a deductible amount specified in a bond is increased 
above the permissible deductible amount specified in the table in 
Sec. 563.190(b) of this part, the affected savings association or 
service corporation shall report promptly the facts concerning such 
increase in writing to the OTS.
    (d) Suspicious Activity Reports--(1) Purpose and scope. This 
paragraph (d) ensures that savings associations and

[[Page 215]]

service corporations file a Suspicious Activity Report when they detect 
a known or suspected violation of Federal law or a suspicious 
transaction related to a money laundering activity or a violation of the 
Bank Secrecy Act.
    (2) Definitions. For the purposes of this paragraph (d):
    (i) FinCEN means the Financial Crimes Enforcement Network of the 
Department of the Treasury.
    (ii) Institution-affiliated party means any institution-affiliated 
party as that term is defined in sections 3(u) and 8(b)(9) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(u) and 1818(b)(9)).
    (iii) SAR means a Suspicious Activity Report on the form prescribed 
by the OTS.
    (3) SARs required. A savings association or service corporation 
shall file a SAR with the appropriate Federal law enforcement agencies 
and the Department of the Treasury in accordance with the form's 
instructions, by sending a completed SAR to FinCEN in the following 
circumstances:
    (i) Insider abuse involving any amount. Whenever the savings 
association or service corporation detects any known or suspected 
Federal criminal violation, or pattern of criminal violations, committed 
or attempted against the savings association or service corporation or 
involving a transaction or transactions conducted through the savings 
association or service corporation, where the savings association or 
service corporation believes that it was either an actual or potential 
victim of a criminal violation, or series of criminal violations, or 
that it was used to facilitate a criminal transaction, and it has a 
substantial basis for identifying one of its directors, officers, 
employees, agents or other institution-affiliated parties as having 
committed or aided in the commission of a criminal act, regardless of 
the amount involved in the violation.
    (ii) Violations aggregating $5,000 or more where a suspect can be 
identified. Whenever the savings association or service corporation 
detects any known or suspected Federal criminal violation, or pattern of 
criminal violations, committed or attempted against the savings 
association or service corporation or involving a transaction or 
transactions conducted through the savings association or service 
corporation and involving or aggregating $5,000 or more in funds or 
other assets, where the savings association or service corporation 
believes that it was either an actual or potential victim of a criminal 
violation or series of criminal violations, or that it was used to 
facilitate a criminal transaction, and it has a substantial basis for 
identifying a possible suspect or group of suspects. If it is determined 
prior to filing this report that the identified suspect or group of 
suspects has used an alias, then information regarding the true identity 
of the suspect or group of suspects, as well as alias identifiers, such 
as drivers' license or social security numbers, addresses and telephone 
numbers, must be reported.
    (iii) Violations aggregating $25,000 or more regardless of potential 
suspects. Whenever the savings association or service corporation 
detects any known or suspected Federal criminal violation, or pattern of 
criminal violations, committed or attempted against the savings 
association or service corporation or involving a transaction or 
transactions conducted through the savings association or service 
corporation and involving or aggregating $25,000 or more in funds or 
other assets, where the savings association or service corporation 
believes that it was either an actual or potential victim of a criminal 
violation or series of criminal violations, or that it was used to 
facilitate a criminal transaction, even though there is no substantial 
basis for identifying a possible suspect or group of suspects.
    (iv) Transactions aggregating $5,000 or more that involve potential 
money laundering or violations of the Bank Secrecy Act. Any transaction 
(which for purposes of this paragraph (d)(3)(iv) means a deposit, 
withdrawal, transfer between accounts, exchange of currency, loan, 
extension of credit, purchase or sale of any stock, bond, certificate of 
deposit, or other monetary instrument or investment security, or any 
other payment, transfer, or delivery by, through, or to a financial 
institution, by whatever means effected) conducted or attempted by, at 
or through the savings association or service corporation and

[[Page 216]]

involving or aggregating $5,000 or more in funds or other assets, if the 
savings association or service corporation knows, suspects, or has 
reason to suspect that:
    (A) The transaction involves funds derived from illegal activities 
or is intended or conducted in order to hide or disguise funds or assets 
derived from illegal activities (including, without limitation, the 
ownership, nature, source, location, or control of such funds or assets) 
as part of a plan to violate or evade any law or regulation or to avoid 
any transaction reporting requirement under Federal law;
    (B) The transaction is designed to evade any regulations promulgated 
under the Bank Secrecy Act; or
    (C) The transaction has no business or apparent lawful purpose or is 
not the sort in which the particular customer would normally be expected 
to engage, and the institution knows of no reasonable explanation for 
the transaction after examining the available facts, including the 
background and possible purpose of the transaction.
    (4) Service corporations. When a service corporation is required to 
file a SAR under paragraph (d)(3) of this section, either the service 
corporation or a savings association that wholly or partially owns the 
service corporation may file the SAR.
    (5) Time for reporting. A savings association or service corporation 
is required to file a SAR no later than 30 calendar days after the date 
of initial detection of facts that may constitute a basis for filing a 
SAR. If no suspect was identified on the date of detection of the 
incident requiring the filing, a savings association or service 
corporation may delay filing a SAR for an additional 30 calendar days to 
identify a suspect. In no case shall reporting be delayed more than 60 
calendar days after the date of initial detection of a reportable 
transaction. In situations involving violations requiring immediate 
attention, such as when a reportable violation is ongoing, the savings 
association or service corporation shall immediately notify, by 
telephone, an appropriate law enforcement authority and the OTS in 
addition to filing a timely SAR.
    (6) Reports to state and local authorities. A savings association or 
service corporation is encouraged to file a copy of the SAR with state 
and local law enforcement agencies where appropriate.
    (7) Exception. A savings association or service corporation need not 
file a SAR for a robbery or burglary committed or attempted that is 
reported to appropriate law enforcement authorities.
    (8) Retention of records. A savings association or service 
corporation shall maintain a copy of any SAR filed and the original or 
business record equivalent of any supporting documentation for a period 
of five years from the date of the filing of the SAR. Supporting 
documentation shall be identified and maintained by the savings 
association or service corporation as such, and shall be deemed to have 
been filed with the SAR. A savings association or service corporation 
shall make all supporting documentation available to appropriate law 
enforcement agencies upon request.
    (9) Notification to board of directors--(i) Generally. Whenever a 
savings association (or a service corporation in which the savings 
association has an ownership interest) files a SAR pursuant to this 
paragraph (d), the management of the savings association or service 
corporation shall promptly notify its board of directors, or a committee 
of directors or executive officers designated by the board of directors 
to receive notice.
    (ii) Suspect is a director or executive officer. If the savings 
association or service corporation files a SAR pursuant to this 
paragraph (d) and the suspect is a director or executive officer, the 
savings association or service corporation may not notify the suspect, 
pursuant to 31 U.S.C. 5318(g)(2), but shall notify all directors who are 
not suspects.
    (10) Compliance. Failure to file a SAR in accordance with this 
section and the instructions may subject the savings association or 
service corporation, its directors, officers, employees, agents, or 
other institution-affiliated parties to supervisory action.
    (11) Obtaining SARs. A savings association or service corporation 
may obtain SARs and the instructions from the appropriate OTS Regional 
Office listed in Sec. 516.40(a) of this chapter.

[[Page 217]]

    (12) Confidentiality of SARs. SARs are confidential. Any institution 
or person subpoenaed or otherwise requested to disclose a SAR or the 
information contained in a SAR shall decline to produce the SAR or to 
provide any information that would disclose that a SAR has been prepared 
or filed, citing this paragraph (d), applicable law (e.g., 31 U.S.C. 
5318(g)), or both, and shall notify the OTS.
    (13) Safe harbor. The safe harbor provision of 31 U.S.C. 5318(g), 
which exempts any financial institution that makes a disclosure of any 
possible violation of law or regulation from liability under any law or 
regulation of the United States, or any constitution, law or regulation 
of any state or political subdivision, covers all reports of suspected 
or known criminal violations and suspicious activities to law 
enforcement and financial institution supervisory authorities, including 
supporting documentation, regardless of whether such reports are filed 
pursuant to this paragraph (d), or are filed on a voluntary basis.
    (e) Adjustable-rate mortgage indices--(1) Reporting obligation. Upon 
the request of a Federal Home Loan Bank, all savings associations within 
the jurisdiction of that Federal Home Loan Bank shall report the data 
items set forth in paragraph (e)(2) of this section for the Federal Home 
Loan Bank to use in calculating and publishing an adjustable-rate 
mortgage index.
    (2) Data to be reported. For purposes of paragraph (e)(1) of this 
section, the term ``data items'' means the data items previously 
collected from the monthly Thrift Financial Report and such data items 
as may be altered, amended, or substituted by the requesting Federal 
Home Loan Bank.
    (3) Applicable indices. For the purpose of this reporting 
requirement, the term ``adjustable-rate mortgage index'' means any of 
the adjustable-rate mortgage indices calculated and published by a 
Federal Home Loan Bank or the Federal Home Loan Bank Board on or before 
August 9, 1989.

[54 FR 49552, Nov. 30, 1989, as amended at 56 FR 29566, June 28, 1991; 
56 FR 32474, July 16, 1991; 57 FR 61251, Dec. 24, 1992; 59 FR 66159, 
Dec. 23, 1994; 61 FR 6105, Feb. 16, 1996; 66 FR 13008, Mar. 2, 2001]



Sec. 563.181  Reports of change in control of mutual savings associations.

    (a) Reports of change in control--(1) When reports are required. 
Reports are required under this paragraph (a) whenever any change occurs 
in the control of savings association and no report is required under 
any other paragraph of this section. As used in this section, the term 
``control'' means power, directly or indirectly, to direct or cause the 
direction of the management or policies of the savings association, and 
the term ``savings association'' means a mutual savings association. 
Reports shall be made to the Office by the president or other chief 
executive officer of the savings association involved within 15 days 
after he or she obtains knowledge of such change. If there is any doubt 
as to whether a change in control has occurred, such doubt shall be 
resolved in favor of reporting to the Office.
    (2) Contents of reports. Reports of change in the control of a 
savings association, as required under this paragraph (a), shall contain 
the following information to the extent that such information is known 
by the person making the report:
    (i) The name or names of the person or persons who acquired such 
control;
    (ii) The basis of such control; and
    (iii) The date and a description of the transaction or transactions 
by which such control was acquired.
    (b) Reports of changes in voting stock or voting rights--(1) When 
reports are required. (i) Reports are required under this paragraph (b) 
whenever a change occurs in the outstanding voting stock or voting 
rights of a savings association resulting in control or a change in the 
control of such savings association. Reports shall be made to the Office 
by the president or other chief executive officer of the savings 
association involved within 15 days after he or she obtains knowledge of 
such change. If there is any doubt as to whether such a change has 
resulted in control or a change in control, such doubt shall be resolved 
in favor of reporting to the Office.
    (ii) Without any limitation on the foregoing, a report is required 
under this paragraph (b) whenever any person, partnership, corporation, 
trust or

[[Page 218]]

group of associated persons acquires, receives, or becomes the holder 
of:
    (A) Ten percent or more of the outstanding shares of any class of 
the voting stock of the savings association or of the voting rights 
thereto;
    (B) Ten percent or more of the outstanding voting rights of the 
savings association; or
    (C) Any appointment, designation or right of substitution with 
respect to 10 percent or more of the outstanding voting rights of the 
savings association.
    (2) Contents of reports--(i) General. The reports required under 
this paragraph (b) shall contain the items of information set forth 
below to the extent that such information is known by the person making 
the report. In addition, such reports shall contain such other 
information as may be available to inform the Office of the effect of 
the transaction upon control of the savings association.
    (ii) Reports of changes in voting stock or voting rights with 
respect to such stock. Reports of changes in ownership of voting stock 
or holdings of voting rights with respect to such stock, resulting in 
control or a change in the control of a savings association, shall 
contain the following information:
    (A) The number of shares of each class of voting stock and the 
number of voting rights with respect thereto involved in the 
transaction;
    (B) The names of the purchasers (or transferees) of such stock or 
such voting rights;
    (C) The names of the sellers (or transferors) of such stock or 
voting rights;
    (D) The amount of consideration received by the sellers (or 
transferors) in connection with the transaction;
    (E) The names of the beneficial owners if the shares or voting 
rights are of record in another name or other names;
    (F) The total number of shares of each class of voting stock owned 
by the sellers (or transferors), the purchasers (or transferees), and 
the beneficial owners both immediately before and after the transaction;
    (G) The total number of shares of each class of voting stock 
outstanding both immediately before and after the transaction;
    (H) The total number of voting rights (with respect to voting stock) 
held by the sellers (or transferors), the purchasers (or transferees), 
and the beneficial owners both immediately before and after the 
transaction;
    (I) The total number of such voting rights outstanding both 
immediately before and after the transaction; and
    (J) In the case of any appointment, designation, or substitution of 
a holder or holders of such voting rights, the name or names of the 
holder or holders both immediately before and after the transaction.
    (iii) Reports of changes in voting rights with respect to 
withdrawable accounts. Reports of changes in holding of voting rights 
with respect to withdrawable accounts, resulting in control or a change 
in the control of a savings association, shall contain the following 
information:
    (A) In the case of a transfer or transfers of such voting rights 
from one holder or group of holders to another holder or group of 
holders;
    (1) The date of each such transfer; and
    (2) The name or names of the acquiring holder or holders and of the 
transferor or transferors (unless such transferors are the original 
owners of the accounts to which such voting rights attach);
    (B) In the case of any appointment, designation, or substitution of 
a holder or holders of voting rights, with respect to a holder or group 
of holders already having control:
    (1) The date of such appointment, designation or substitution; and
    (2) The names of each of the holders both immediately before and 
after such change; and
    (C) In the case of any other acquisition of or change in control 
(without regard to the number of voting rights involved):
    (1) The name or names of the person or persons acquiring such 
control;
    (2) The basis of such control; and
    (3) The date and a description of such acquisition or change.
    (c) Reports of solicitation of voting rights--(1) When reports are 
required. Reports are required under this paragraph (c) whenever any 
person, partnership,

[[Page 219]]

corporation, trust, or group of associated persons:
    (i) Solicits voting rights with respect to 10 percent or more of the 
outstanding shares of any class of voting stock of a savings 
association.
    (ii) Solicits 10 percent or more of the outstanding voting rights in 
a savings association; or
    (iii) Solicits any voting rights in a savings association when such 
solicitor already holds either:
    (A) Voting rights with respect to 10 percent or more of the 
outstanding shares of any class of the voting stock of such savings 
association; or
    (B) Ten percent or more of the outstanding voting rights in such 
savings association.
    (2) Content of reports--(i) General. The reports required under this 
paragraph (c) shall contain the items of information set forth below to 
the extent that such information is known by the person making the 
report. In addition, such reports shall contain such other information 
as may be available to inform the Office of the possible impact of the 
solicitation upon control of the savings association.
    (ii) Voting rights with respect to stock. Reports of solicitation of 
voting rights with respect to any class of voting stock of a savings 
association shall contain the following information:
    (A) The name or names of the person or persons making the 
solicitation;
    (B) The extent of such solicitation (including relevant dates) and 
the class or classes of such voting stock with respect to which the 
solicitation of voting rights is made;
    (C) The number of shares of such class or classes of voting stock 
which the solicitor already owns and the total number of voting rights 
with respect thereto which he or she holds at the time of such 
solicitation; and
    (D) The total number of shares of such class or classes of voting 
stock outstanding at the time of such solicitation.
    (iii) Voting rights with respect to withdrawable accounts. Reports 
of solicitation of voting rights with respect to withdrawable accounts 
of a savings association shall contain the following information:
    (A) The name or names of the person or persons making the 
solicitation;
    (B) The extent of such solicitation (including relevant dates); and
    (C) The approximate percentage of the outstanding voting rights 
which the solicitor already holds at the time of such solicitation.
    (d) Definitions. As used in this section--
    (1) The term stock means rights, interest, or powers with respect to 
a mutual savings association.
    (2) The term voting rights means stock which carries voting rights.
    (3) The term voting rights means proxies, consents, or 
authorizations which give the holder or holders the right to vote with 
respect to shares of voting stock, or with respect to withdrawable 
accounts, in a savings association.



Sec. 563.183  Reports of change in chief executive officer or director; other reports; form and filing of such reports.

    (a) Definitions used in this section--(1) Control. The term 
``control'' means power, directly or indirectly, to direct the 
management or policies of a savings association or to vote 25 percent or 
more of any class of the voting stock or voting rights in a savings 
association.
    (2) Savings association. The term ``savings association'' means a 
savings association, whether in mutual or stock form, and any savings 
and loan holding company as defined in section 10 of the Home Owners' 
Loan Act.
    (3) Stock. The term ``stock'' means any permanent or guaranty stock 
or other nonwithdrawable account, share, or equity security in a savings 
association.
    (4) Voting stock. The term ``voting stock'' means any stock which 
carries voting rights.
    (5) Voting rights. The term ``voting rights'' means any proxies, 
consents, or authorizations which give the holder(s) the right to vote 
with respect to shares of voting stock or withdrawable accounts in a 
savings association.
    (b) Reports of change in chief executive officer or director. 
Whenever a change resulting in control or a change in control of a 
savings association has occurred concurrently with or within 60 days 
after or 12 months before a change

[[Page 220]]

or replacement of the chief executive officer or any director of the 
savings association, a report shall be filed containing the following:
    (1) The name of the new chief executive officer or director;
    (2) The effective date of the person's appointment or election; and
    (3) A statement of the person's past and current business and 
professional affiliations.
    (c) Form and filing of reports. (1) Unless otherwise specified by 
OTS, a report required by Sec. 563.181 of this part or this Sec. 563.183 
must comply with Sec. 516.30 and must be submitted to the appropriate 
Regional Office listed in Sec. 516.40(a) of this chapter.
    (2) Such a report shall be made by the president or other chief 
executive officer of the savings association.
    (3) Such a report shall be filed within 15 days after the person 
making it learns of the change in control or the activity which 
necessitates filing the report, except that a report required under 
paragraph (b) of this section shall be filed within 15 days after the 
effective date of the change or replacement of the chief executive 
officer or director, or within 15 days after the officer making the 
report obtains knowledge of the change or replacement, whichever occurs 
later.
    (d) Other reports. The Office may also require savings associations 
and individuals or other persons who have or have had any connection 
with the management of any savings association, including any present or 
former director, officer, controlling person, or agent of a savings 
association, to provide such periodic or other reports as it may 
determine to be necessary or appropriate for protection of investors or 
the Office.

[54 FR 49552, Nov. 30, 1989, as amended at 60 FR 66718, Dec. 26, 1995; 
66 FR 13008, Mar. 2, 2001]



Sec. 563.190  Bonds for directors, officers, employees, and agents; form of and amount of bonds.

    (a) Each savings association shall maintain fidelity bond coverage. 
The bond shall cover each director, officer, employee, and agent who has 
control over or access to cash, securities, or other property of the 
savings association.
    (b) The amount of coverage to be required for each savings 
association shall be determined by the association's management, based 
on its assessment of the level that would be safe and sound in view of 
the association's potential exposure to risk; provided, such 
determination shall be subject to approval by the association's board of 
directors.
    (c) Each savings association may maintain bond coverage in addition 
to that provided by the insurance underwriter industry's standard forms, 
through the use of endorsements, riders, or other forms of supplemental 
coverage, if, in the judgment of the association's board of directors, 
additional coverage is warranted.
    (d) The board of directors of each savings association shall 
formally approve the association's bond coverage. In deciding whether to 
approve the bond coverage, the board shall review the adequacy of the 
standard coverage and the need for supplemental coverage. Documentation 
of the board's approval shall be included as a part of the minutes of 
the meeting at which the board approves coverage. Additionally, the 
board of directors shall review the association's bond coverage at least 
annually to assess the continuing adequacy of coverage.

[57 FR 12698, Apr. 13, 1992]



Sec. 563.191  Bonds for agents.

    In lieu of the bond provided in Sec. 563.190 of this part in the 
case of agents appointed by a savings association, a fidelity bond may 
be provided in an amount at least twice the average monthly collections 
of such agents, provided such agents shall be required to make 
settlement with the savings association at least monthly, and provided 
such bond is approved by the board of directors of the savings 
association. No bond need be obtained for any agent that is a financial 
institution insured by the Federal Deposit Insurance Corporation.



Sec. 563.200  Conflicts of interest.

    If you are a director, officer, or employee of a savings 
association, or have the power to direct its management or

[[Page 221]]

policies, or otherwise owe a fiduciary duty to a savings association:
    (a) You must not advance your own personal or business interests, or 
those of others with whom you have a personal or business relationship, 
at the expense of the savings association; and
    (b) You must, if you have an interest in a matter or transaction 
before the board of directors:
    (1) Disclose to the board all material nonprivileged information 
relevant to the board's decision on the matter or transaction, 
including:
    (i) The existence, nature and extent of your interests; and
    (ii) The facts known to you as to the matter or transaction under 
consideration;
    (2) Refrain from participating in the board's discussion of the 
matter or transaction; and
    (3) Recuse yourself from voting on the matter or transaction (if you 
are a director).

[61 FR 60178, Nov. 27, 1996]



Sec. 563.201  Corporate opportunity.

    (a) If you are a director or officer of a savings association, or 
have the power to direct its management or policies, or otherwise owe a 
fiduciary duty to a savings association, you must not take advantage of 
corporate opportunities belonging to the savings association.
    (b) A corporate opportunity belongs to a savings association if:
    (1) The opportunity is within the corporate powers of the savings 
association or a subsidiary of the savings association; and
    (2) The opportunity is of present or potential practical advantage 
to the savings association, either directly or through its subsidiary.
    (c) OTS will not deem you to have taken advantage of a corporate 
opportunity belonging to the savings association if a disinterested and 
independent majority of the savings association's board of directors, 
after receiving a full and fair presentation of the matter, rejected the 
opportunity as a matter of sound business judgment.

[61 FR 60179, Nov. 27, 1996]



   Subpart H--Notice of Change of Director or Senior Executive Officer

    Source: 63 FR 51274, Sept. 25, 1998, unless otherwise noted.



Sec. 563.550  What does this subpart do?

    This subpart implements 12 U.S.C. 1831i, which requires certain 
savings associations and savings and loan holding companies to notify 
the OTS before appointing or employing directors and senior executive 
officers.



Sec. 563.555  What definitions apply to this subpart?

    The following definitions apply to this subpart:
    Director means an individual who serves on the board of directors of 
a savings association or savings and loan holding company. This term 
does not include an advisory director who:
    (1) Is not elected by the shareholders;
    (2) Is not authorized to vote on any matters before the board of 
directors or any committee of the board of directors;
    (3) Provides only general policy advice to the board of directors or 
any committee of the board of directors; and
    (4) Has not been identified by the OTS in writing as an individual 
who performs the functions of a director, or who exercises significant 
influence over, or participates in, major policymaking decisions of the 
board of directors.
    Senior executive officer means an individual who holds the title or 
performs the function of one or more of the following positions (without 
regard to title, salary, or compensation): president, chief executive 
officer, chief operating officer, chief financial officer, chief lending 
officer, or chief investment officer. Senior executive officer also 
includes any other person identified by the OTS in writing as an 
individual who exercises significant influence over, or participates in, 
major policymaking decisions, whether or not hired as an employee.
    Troubled condition means:
    (1) A savings association that has a composite rating of 4 or 5, as 
composite

[[Page 222]]

rating is defined in Sec. 516.5(c) of this chapter.
    (2) A savings and loan holding company that has an unsatisfactory 
rating under the OTS's holding company rating system, or that is 
informed in writing by the OTS that it has an adverse effect on its 
subsidiary savings association;
    (3) A savings association or savings and loan holding company that 
is subject to a capital directive, a cease-and-desist order, a consent 
order, a formal written agreement, or a prompt corrective action 
directive relating to the safety and soundness or financial viability of 
the savings association, unless otherwise informed in writing by the 
OTS; or
    (4) A savings association or savings and loan holding company that 
is informed in writing by the OTS that it is in troubled condition based 
on information available to the OTS.

[63 FR 51274, Sept. 25, 1998, as amended by 66 FR 13008, Mar. 2, 2001]



Sec. 563.560  Who must give prior notice?

    (a) Savings association or savings and loan holding company. Except 
as provided under Sec. 563.590, you must notify the OTS at least 30 days 
before adding or replacing any member of your board of directors, 
employing any person as a senior executive officer, or changing the 
responsibilities of any senior executive officer so that the person 
would assume a different senior executive position if:
    (1) You are a savings association and at least one of the following 
circumstances apply:
    (i) You do not comply with all minimum capital requirements under 
part 567 of this chapter;
    (ii) You are in troubled condition; or
    (iii) The OTS has notified you, in connection with its review of a 
capital restoration plan required under section 38 of the Federal 
Deposit Insurance Act or part 565 of this chapter or otherwise, that a 
notice is required under this subpart; or
    (2) You are a savings and loan holding company and you are in 
troubled condition.
    (b) Notice by individual. If you are an individual seeking election 
to the board of directors of a savings association or savings and loan 
holding company described in paragraph (a) of this section, and have not 
been nominated by management, you must either provide the prior notice 
required under paragraph (a) of this section or follow the process under 
Sec. 563.590(b).



Sec. 563.565  What procedures govern the filing of my notice?

    The procedures found in part 516, subpart A of this chapter govern 
the filing of your notice under Sec. 563.560.

[66 FR 13009, Mar. 2, 2001]



Sec. 563.570  What information must I include in my notice?

    (a) Content requirements. Your notice must include:
    (1) The information required under 12 U.S.C. 1817(j)(6)(A), and the 
information prescribed in the Interagency Notice of Change in Director 
or Senior Executive Officer and the Interagency Biographical and 
Financial Report which are available from OTS headquarters at the 
address in part 516 of this chapter; or from any OTS regional office;
    (2) Legible fingerprints of the proposed director or senior 
executive officer. You are not required to file fingerprints if, within 
three years prior to the date of submission of the notice, the proposed 
director or senior executive officer provided legible fingerprints as 
part of a notice filed with the OTS under 12 U.S.C. 1831i; and
    (3) Such other information required by the OTS.
    (b) Modification of content requirements. The OTS may require or 
accept other information in place of the content requirements in 
paragraph (a) of this section.



Sec. 563.575  What procedures govern OTS review of my notice for completeness?

    The OTS will first review your notice to determine whether it is 
complete.
    (a) If your notice is complete, the OTS will notify you in writing 
of the date that the OTS received the complete notice.
    (b) If your notice is not complete, the OTS will notify you in 
writing what additional information you need to submit, why we need the 
information,

[[Page 223]]

and when you must submit it. You must, within the specified time period, 
provide additional information or request that the OTS suspend 
processing of the notice. If you fail to act within the specified time 
period, the OTS may treat the notice as withdrawn or may review the 
application based on the information provided.



Sec. 563.580  What standards and procedures will govern OTS review of the substance of my notice?

    The OTS will disapprove a notice if, pursuant to the standard set 
forth in 12 U.S.C. 1831i(e), the OTS finds that the competence, 
experience, character, or integrity of the proposed director or senior 
executive officer indicates that it would not be in the best interests 
of the depositors of the savings association or of the public to permit 
the individual to be employed by, or associated with, the savings 
association or savings and loan holding company. If the OTS disapproves 
a notice, it will issue a written notice that explains why the OTS 
disapproved the notice. The OTS will send the notice to the savings 
association or savings and loan holding company and the individual.



Sec. 563.585  When may a proposed director or senior executive officer begin service?

    (a) A proposed director or senior executive officer may begin 
service 30 days after the date the OTS receives all required 
information, unless:
    (1) The OTS notifies you that it has disapproved the notice; or
    (2) The OTS extends the 30-day period for an additional period not 
to exceed 60 days. If the OTS extends the 30-day period, it will notify 
you in writing that the period has been extended, and will state the 
reason for the extension. The proposed director or senior executive 
officer may begin service upon expiration of the extended period, unless 
the OTS notifies you that it has disapproved the notice during the 
extended period.
    (b) Notwithstanding paragraph (a) of this section, a proposed 
director or senior executive officer may begin service after the OTS 
notifies you, in writing, of its intention not to disapprove the notice.



Sec. 563.590  When will the OTS waive the prior notice requirement?

    (a) Waiver request. (1) An individual may serve as a director or 
senior executive officer before filing a notice under this subpart if 
the OTS issues a written finding that:
    (i) Delay would threaten the safety or soundness of the savings 
association;
    (ii) Delay would not be in the public interest; or
    (iii) Other extraordinary circumstances exist that justify waiver of 
prior notice.
    (2) If the OTS grants a waiver, you must file a notice under this 
subpart within the time period specified by the OTS.
    (b) Automatic waiver. An individual may serve as a director before 
filing a notice under this subpart, if the individual was not nominated 
by management and the individual submits a notice under this subpart 
within seven days after election as a director.
    (c) Subsequent OTS action. The OTS may disapprove a notice within 30 
days after the OTS issues a waiver under paragraph (a) of this section 
or within 30 days after the election of an individual who has filed a 
notice and is serving pursuant to an automatic waiver under paragraph 
(b) of this section.



PART 563b--CONVERSIONS FROM MUTUAL TO STOCK FORM--Table of Contents




Sec.
563b.1  Scope of part.
563b.2  Definitions.

                     Subpart A--Standard Conversions

563b.3  General principles for conversions.
563b.4  Notice of filing; public statements; confidentiality.
563b.5  Solicitation of proxies; proxy statement.
563b.6  Vote by members.
563b.7  Pricing and sale of securities.
563b.8  Procedural requirements.
563b.9  Conversion of a savings association in connection with the 
          formation of a holding company.
563b.10  Conversion of a savings association through merger with an 
          existing holding company or stock savings association.
563b.11  Convenience and needs considerations.

[[Page 224]]

Subpart B [Reserved]

           Subpart C--Voluntary Supervisory Stock Conversions

563b.20  Scope of subpart.
563b.21  Voluntary supervisory conversions.
563b.22  Purpose of subpart.
563b.23  Authorization of supervisory conversions.
563b.24  Qualification for supervisory conversion of SAIF-insured 
          associations.
563b.25  Qualification for supervisory conversion of BIF-insured savings 
          associations.
563b.26  Viability of converted savings association.
563b.27  Application for voluntary supervisory stock conversion.
563b.28  Liquidation account.
563b.29  Procedural requirements.
563b.30  Conditions of approval.
563b.31  Sale of conversion stock.
563b.32  Expenses.
563b.33  Employment contracts.

Subpart D [Reserved]

                            Subpart E--Forms

563b.100  Form AC--Application for Conversion.
563b.101  Form PS--Proxy Statements.
563b.102  Form OC--Offering Circulars.

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901; 15 U.S.C. 
78c, 78l, 78m, 78n, 78w.

    Source: 54 FR 49596, Nov. 30, 1989, unless otherwise noted.



Sec. 563b.1  Scope of part.

    (a) General. Except as the Office may otherwise determine, the 
provisions of this part shall exclusively govern the conversion of 
mutual savings associations to capital stock associations, and no mutual 
savings association shall convert to the capital stock form without the 
prior written consent of the Office. The Office may grant a waiver in 
writing from any requirement of this part for good cause shown.
    (b) Provisions of prescribed forms. Any provision in a form 
prescribed under this part and covering the same subject matter as any 
provision of this part shall have the same force and effect as if it 
were a provision of this part except as it relates to information not 
deemed material.
    (c) Conflicts with State law. (1) In the event an applicant finds 
that compliance with any provision of this part would be in conflict 
with applicable State law, the applicant may file a written request for 
waiver of compliance with such provision by the Office. Such request may 
be incorporated in the application for conversion; otherwise, the 
applicant shall file four copies of such request.
    (2) In making any such request, the applicant shall:
    (i) Specify the provision or provisions of this part with respect to 
which the applicant desires waiver;
    (ii) Furnish an opinion of counsel demonstrating that applicable 
State law is in conflict with the specified provision or provisions of 
this part; and
    (iii) Demonstrate that the requested waiver would not result in any 
effects that would be inequitable or detrimental to the applicant, its 
account holders or other savings associations or be contrary to the 
public interest.



Sec. 563b.2  Definitions.

    (a) As used in this part and in the forms under this part, the 
following definitions apply, unless the context otherwise requires:
    (1) Acting in concert. The term ``acting in concert'' shall be 
defined as provided in Sec. 574.2(c).
    (2) Affiliate. An ``affiliate'' of, or a person ``affiliated'' with, 
a specified person, is a person that directly, or indirectly through one 
or more intermediaries, controls, or is controlled by, or is under 
common control with, the person specified.
    (3) Amount. The term ``amount'', when used in regard to securities, 
means the principal amount if relating to evidences of indebtedness, the 
number of shares if relating to shares, and the number of units if 
relating to any other kind of security.
    (4) Applicant. An ``applicant'' is a savings association which has 
applied to convert pursuant to this part.
    (5) Associate. The term ``associate'', when used to indicate a 
relationship with any person, means:
    (i) Any corporation or organization (other than the applicant or a 
majority-owned subsidiary of the applicant) of which such person is an 
officer or partner or is, directly or indirectly, the beneficial owner 
of 10 percent or more of any class of equity securities,
    (ii) Any trust or other estate in which such person has a 
substantial

[[Page 225]]

beneficial interest or as to which such person serves as trustee or in a 
similar fiduciary capacity, except that, for the purposes of Sec. 563b.3 
(c)(6), (c)(7), (c)(9), and (d)(4), it does not include any tax-
qualified employee stock benefit plan or non-tax-qualified employee 
stock benefit plan in which a person has a substantial beneficial 
interest or serves as a trustee or in a similar fiduciary capacity, and 
that, for the purposes of Sec. 563b.3(c)(8), it does not include any 
tax-qualified employee stock benefit plan, and
    (iii) Any relative or spouse of such person, or any relative of such 
spouse, who has the same home as such person or who is a director or 
officer of the applicant or any of its parents or subsidiaries.
    (6) Association members. The term ``association members'' refers to 
persons who, pursuant to the charter or bylaws of the applicant, are 
eligible to vote at the applicant's meeting at which conversion will be 
voted upon.
    (7) BIF. The term ``BIF'' means the Bank Insurance Fund, as 
established by the Federal Deposit Insurance Act, 12 U.S.C. 1811 et seq.
    (8) Broker. The term ``broker'' means any person engaged in the 
business of effecting transactions in securities for the account of 
others.
    (9) Capital stock. The term ``capital stock'' includes permanent 
stock, guaranty stock, permanent reserve stock, or any similar 
certificate evidencing nonwithdrawable capital.
    (10) Charter. The term ``charter'' includes articles of 
incorporation, articles of association, or any similar instrument, as 
amended, effecting (either with or without filing with any governmental 
agency) the organization or creation of an incorporated or 
unincorporated person.
    (11) Control. The term ``control'' (including the terms 
``controlling'', ``controlled by'', and ``under common control with'') 
means the possession, directly or indirectly, of the power to direct or 
cause the direction of the management and policies of a person, whether 
through the ownership of voting securities, by contract, or otherwise.
    (12) Dealer. The term ``dealer'' means any person who engages either 
for all or part of his or her time, directly or indirectly, as agent, 
broker, or principal, in the business of offering, buying, selling, or 
otherwise dealing or trading in securities issued by another person.
    (13) Director. The term ``director'' means any director of a 
corporation or any person performing similar functions with respect to 
any organization whether incorporated or unincorporated.
    (14) Eligibility record date. The term ``eligibility record date'' 
means the record date for determining eligible account holders of a 
converting association.
    (15) Eligible account holder. The term eligible account holder means 
any person holding a qualifying deposit as determined in accordance with 
Sec. 563b.3(e) of this part, but shall include only those account 
holders with savings accounts in place for a minimum of one year prior 
to board of director adoption of the plan of conversion.
    (16) Employee. The term employee does not include a director or 
officer.
    (17) Equity security. The term ``equity security'' means any stock 
or similar security; or any security convertible, with or without 
consideration, into such a security, or carrying any warrant or right to 
subscribe to or purchase such security; or any such warrant or right.
    (18) FDIC. The term ``FDIC'' means the Federal Deposit Insurance 
Corporation, as established by the Federal Deposit Insurance Act, 12 
U.S.C. 1811 et seq.
    (19) Local community. The term local community includes all counties 
in which the converting association has its home office or a branch 
office, all zip code areas corresponding to the converting association's 
delineated Community Reinvestment Act service area, each county's 
metropolitan statistical area and/or such other area or category as 
delineated by the savings association and provided for in the plan of 
conversion, as approved by the OTS.
    (20) Market Maker. The term ``market maker'' means a dealer who, 
with respect to a particular security:
    (i) Regularly publishes bona fide, competitive bid and offer 
quotations in

[[Page 226]]

a recognized inter-dealer quotation system; or
    (ii) Furnishes bona fide competitive bid and offer quotations on 
request; and
    (iii) Is ready, willing and able to effect transactions in 
reasonable quantities at his or her quoted prices with other brokers or 
dealers.
    (21) Material. The term ``material'', when used to qualify a 
requirement for the furnishing of information as to any subject, limits 
the information required to those matters as to which an average prudent 
investor ought reasonably to be informed before purchasing an equity 
security of the applicant, or matters as to which an average prudent 
association member ought reasonably to be informed in voting upon the 
plan of conversion of the applicant.
    (22) Member. The term ``member'' means any person qualifying as a 
member of a savings association pursuant to its charter or bylaws.
    (23) Offer. The term ``offer'', ``offer to sell'', or ``offer of 
sale'' shall include every attempt or offer to dispose of, or 
solicitation of an offer to buy, a security or interest in a security, 
for value. These terms shall not include preliminary negotiations or 
agreements between an applicant and any underwriter or among 
underwriters who are or are to be in privity of contract with an 
applicant.
    (24) Office. The term ``Office'' means the Office of Thrift 
Supervision.
    (25) Officer. The term ``officer'' means the chairman of the board, 
president, vice-president, secretary, treasurer or principal financial 
officer, comptroller or principal accounting officer, and any other 
person performing similar functions with respect to any organization 
whether incorporated or unincorporated.
    (26) Person. The term ``person'' means an individual, a corporation, 
a partnership, an association, a joint-stock company, a trust, any 
unincorporated organization, or a government or political subdivision 
thereof.
    (27) Proxy. The term ``proxy'' includes every form of authorization 
by which a person is, or may be deemed to be, designated to act for an 
association member in the exercise of his or her voting rights in the 
affairs of a savings association. Such an authorization may take the 
form of failure to dissent or object.
    (28) Purchase. The terms ``purchase'' and ``buy'' include every 
contract to purchase, buy, or otherwise acquire a security or interest 
in a security for value.
    (29) Regional Director. The term regional director means the senior 
representative of the Director of the Office of Thrift Supervision for 
all matters dealing with examination and supervision of savings 
associations in the region in which the converting savings association 
has its principal office.
    (30) SAIF. The term ``SAIF'' means the Savings Association Insurance 
Fund, as established by the Federal Deposit Insurance Act, 12 U.S.C. 
1811 et seq.
    (31) Sale. The terms ``sale'' and ``sell'' include every contract to 
sell or otherwise dispose of a security or interest in a security for 
value; but such terms do not include an exchange of securities in 
connection with a merger or acquisition approved by the Office.
    (32) Savings account. The term ``savings account'' has the same 
meaning as in part 561 of this chapter and includes certificates of 
deposit.
    (33) Savings association. The term ``savings association'' has the 
same meaning as in part 561 of this chapter.
    (34) Security. The term ``security'' includes any note, stock, 
treasury stock, bond, debenture, transferable share, investment 
contract, voting trust certificate, or in general, any instrument 
commonly known as a ``security''; or any certificate of interest or 
participation in, temporary or interim certificate for, receipt for, or 
warrant or right to subscribe to or purchase, any of the foregoing.
    (35) Solicitation; solicit. The terms ``solicitation'' and 
``solicit'' refer to:
    (i) Any request for a proxy whether or not accompanied by or 
included in a form of proxy;
    (ii) Any request to execute, not execute, or revoke a proxy; or
    (iii) The furnishing of a form of proxy or other communication to 
association members under circumstances reasonably calculated to result 
in the procurement, withholding, or revocation of a proxy.

[[Page 227]]


The terms do not apply, however, to the furnishing of a form of proxy to 
an association member upon the unsolicited request of such association 
member, the performance of acts required by Sec. 563b.5(f), or to the 
performance by any person of ministerial acts on behalf of a person 
soliciting a proxy.
    (36) Subscription offering. The term ``subscription offering'' 
refers to the offering of shares of capital stock, through 
nontransferable subscription rights issued to:
    (i) Eligible account holders as required by Sec. 563b.3(c)(2);
    (ii) Supplemental eligible account holders as required by 
Sec. 563b.3(c)(4);
    (iii) Members entitled to vote at the meeting called to consider the 
conversion as required by Sec. 563b.3(c)(5);
    (iv) Directors, officers and employees, as permitted by 
Sec. 563b.3(d)(2); and
    (v) Eligible account holders, supplemental eligible account holders, 
and voting members as permitted by Sec. 563b.3(d)(3).
    (37) Subsidiary. A ``subsidiary'' of a specified person is an 
affiliate controlled by such person, directly or indirectly through one 
or more intermediaries.
    (38) Supplemental eligibility record date. The term ``supplemental 
eligibility record date'' means the supplemental record date for 
determining supplemental eligible account holders of a converting 
association required by Sec. 563b.3(c)(4). The date shall be the last 
day of the calendar quarter preceding the Office's approval of the 
application for conversion.
    (39) Supplemental eligible account holder. The term ``supplemental 
eligible account holder'' means any person holding a qualifying deposit, 
except officers, directors and their associates, as of the supplemental 
eligibility record date.
    (40) Tax-qualified employee stock benefit plan. A ``tax-qualified 
employee stock benefit plan'' is any defined benefit plan or defined 
contribution plan, such as an employee stock ownership plan, stock bonus 
plan, profit-sharing plan or other plan, which, with its related trust, 
meets the requirements to be ``qualified'' under section 401 of the 
Internal Revenue Code. A ``non-tax-qualified employee stock benefit 
plan'' is any defined benefit plan or defined contribution plan which is 
not so qualified.
    (41) Underwriter. The term ``underwriter'' means any person who has 
purchased from an applicant with a view to, or offers or sells for an 
applicant in connection with, the distribution of any security, or 
participates or has a direct or indirect participation in the direct or 
indirect underwriting of any such undertaking; but such term shall not 
include a person whose interest is limited to a commission from an 
underwriter or dealer not in excess of the usual and customary 
distributors' or sellers commission. The term ``principal underwriter'' 
means an underwriter in privity of contract with the applicant or other 
issuer of securities as to which he or she is the underwriter.
    (b) Terms defined in other parts of this chapter, when used in this 
part, shall have the meanings given in such definitions, to the extent 
such definitions are not inconsistent with the definitions contained in 
this part, unless the context otherwise requires.

[54 FR 49596, Nov. 30, 1989, as amended at 59 FR 22732, May 3, 1994; 59 
FR 61261, Nov. 30, 1994; 60 FR 66718, Dec. 26, 1995]



                     Subpart A--Standard Conversions



Sec. 563b.3  General principles for conversions.

    (a) Applicability of subpart. The provisions of this subpart shall 
govern conversions undertaken pursuant to any other subpart of this part 
unless clearly inapplicable.
    (b) General requirements. No application for conversion shall be 
approved by the Office if:
    (1) The plan of conversion adopted by the applicant's board of 
directors is not in accordance with the provisions of this part;
    (2) The conversion would cause the applicant to fail to meet any 
regulatory capital requirement of Sec. 567.2 of this chapter;
    (3) The conversion may result in a taxable reorganization of the 
applicant under the Internal Revenue Code of 1986, as amended; or

[[Page 228]]

    (4) The converted association would not have its accounts insured by 
the FDIC.
    (c) Required provisions in plan of conversion. The plan of 
conversion shall:
    (1) Provide that the converting savings association shall issue and 
sell its capital stock at a total price equal to the estimated pro forma 
market value of such stock in the converted savings association, based 
on an independent valuation, as provided in Sec. 563b.7.
    (2) Provide that each eligible account holder shall receive, without 
payment, nontransferable subscription rights to purchase capital stock 
in an amount equal to the greater of the maximum purchase limitation 
established for the public offering or the direct community offering 
pursuant to paragraph (c)(6) or (d)(4) of this section, one-tenth of one 
percent of the total offering of shares, or 15 times the product 
(rounded down to the next whole number) obtained by multiplying the 
total number of shares of capital stock to be issued by a fraction of 
which the numerator is the amount of the qualifying deposit of the 
eligible account holder and the denominator is the total amount of 
qualifying deposits of all eligible account holders in the converting 
savings association.
    (i) In the event of an oversubscription to capital stock pursuant to 
this paragraph (c)(2), shares shall be allocated among subscribing 
eligible account holders so as to permit each such account holder, to 
the extent possible, to purchase a number of shares sufficient to make 
his or her total allocation equal to 100 shares.
    (ii) Any shares not allocated in accordance with paragraph (c)(2)(i) 
of this section shall be allocated among the subscribing eligible 
account holders on such equitable basis, related to the amounts of their 
respective qualifying deposits, as may be provided in the plan of 
conversion.
    (3) Nontransferable subscription rights to purchase capital stock 
received by officers and directors and their associates of the 
converting savings association based on their increased deposits in the 
converting association in the one year period preceding the eligibility 
record date shall be subordinated to all other subscriptions involving 
the exercise of nontransferable subscription rights to purchase shares 
pursuant to paragraph (c)(2) of this section.
    (4) Provide that, in plans involving an eligibility record date that 
is more than 15 months prior to the date of the latest amendment to the 
application for conversion filed prior to the Office's approval, a 
supplemental eligibility record date be determined whereby each 
supplemental eligible account holder of the converting association shall 
receive, without payment, nontransferable subscription rights to 
purchase capital stock in an amount equal to the greater of the maximum 
purchase limitation established for the public offering or the direct 
community offering pursuant to paragraph (c)(6) or (d)(4) of this 
section, one-tenth of one percent of the total offering of shares, or 15 
times the product (rounded down to the next whole number) obtained by 
multiplying the total number of shares of capital stock to be issued by 
a fraction of which the numerator is the amount of the qualifying 
deposit of the supplemental eligible account holder and the denominator 
is the total amount of the qualifying deposits of all supplemental 
eligible account holders in the converting savings association on the 
supplemental eligibility record date.
    (i) Subscription rights received pursuant to this paragraph (c)(4) 
shall be subordinated to all rights received by eligible account holders 
to purchase shares pursuant to paragraphs (c)(2) and (c)(3) of this 
section.
    (ii) Any nontransferable subscription rights to purchase shares 
received by an eligible account holder in accordance with paragraph 
(c)(2) of this section shall be applied in partial satisfaction of the 
subscription rights to be distributed pursuant to this paragraph (c)(4) 
of this section.
    (iii) In the event of an oversubscription to capital stock pursuant 
to this paragraph (c)(4), shares shall be allocated among the 
subscribing supplemental eligible account holders so as to permit each 
such supplemental account holder, to the extent possible, to purchase a 
number of shares sufficient to make his or her total allocation 
(including the number of shares, if any,

[[Page 229]]

allocated in accordance with paragraph (c)(2) of this section) equal to 
100 shares.
    (iv) Any shares not allocated in accordance with paragraph 
(c)(4)(iii) of this section shall be allocated among the subscribing 
supplemental eligible account holders on such equitable basis, related 
to the amounts of their respective qualifying deposits, as may be 
provided in the plan of conversion.
    (5) Provide that association voting members who are not either 
eligible account holders or supplemental eligible account holders shall 
receive, without payment, nontransferable subscription rights to 
purchase capital stock in an amount equal to the greater of the maximum 
purchase limitation established for the public offering or the direct 
community offering pursuant to paragraph (c)(6) or (d)(4) of this 
section, or one-tenth of one percent of the total offering of shares.
    (i) Subscription rights received pursuant to this paragraph (c)(5) 
shall be subordinated to all rights received by eligible account holders 
and supplemental account holders to purchase shares pursuant to 
paragraphs (c)(2), (c)(3), and (c)(4) of this section.
    (ii) In the event of an oversubscription to capital stock pursuant 
to this paragraph (c)(5), shares shall be allocated among the 
subscribing voting members on such equitable basis as may be provided in 
the plan of conversion.
    (6) Provide that any shares of the converting savings association 
not sold to persons with subscription rights shall be sold either in a 
public offering through an underwriter or directly by the converting 
savings association in a direct community offering, subject to the 
applicant demonstrating to the Office the feasibility of the method of 
sale and to such conditions as may be provided in the plan of 
conversion. Such conditions shall include, but not be limited to:
    (i) Subject to the adoption in the plan of conversion of the 
optional provision of paragraph (d)(4) of this section, a condition 
limiting purchases in the public offering or the direct community 
offering by any person together with any associate or group of persons 
acting in concert to not more than five percent (5%) of the total 
offering of shares, except that any one or more tax-qualified employee 
benefit plans may purchase in the aggregate not more than ten percent 
(10%) of the total offering of shares. Shares held by one or more tax-
qualified employee stock benefit plans and attributed to a person shall 
not be aggregated with other shares purchased directly by or otherwise 
attributable to that person.
    (ii) A condition requiring that orders for stock in any public 
offering or direct community offering shall first be filled up to a 
maximum of two percent of the conversion stock and thereafter remaining 
shares shall be allocated on an equal number of shares per order basis 
until all orders have been filled.
    (iii) A condition requiring the stock to be offered and sold in the 
public offering or the direct community offering to be offered and sold 
in a manner that will achieve the widest distribution of the stock.
    (iv) A condition that any direct community offering by the 
converting savings association shall give a preference to natural 
persons residing in the association's local community.
    (7) Subject to the adoption in the plan of conversion of the 
optional provision of paragraph (d)(4) of this section, provide that the 
total shares that any person and any associate or group of persons 
acting in concert may subscribe for or purchase in the conversion shall 
not exceed five percent (5%) of the total offering of shares, except 
that any one or more tax-qualified employee benefit plans may purchase 
in the aggregate not more than ten percent (10%) of the total offering 
of shares. Shares held by one or more tax-qualified employee stock 
benefit plans and attributed to a person shall not be aggregated with 
shares purchased directly by or otherwise attributable to that person.
    (8) Provide that the officers and directors of the converting 
association and their associates may purchase in the conversion, up to 
thirty-five percent (35%) of the total offering of shares of the 
converting association provided that the converting association has less 
than $50 million in total assets, and up to twenty-five percent (25%) in 
the total offering of shares if

[[Page 230]]

the converting association has more than $500 million in total assets. 
If the converting association has between $50 million and $500 million, 
in total assets, the maximum percentage shall be equal to thirty-five 
percent (35%) minus one percent (1%) multiplied by the quotient of the 
total assets less $50 million divided by $45 million. For example, for a 
converting association with $275 million in total assets, the percentage 
will be thirty percent (30%), calculated as thirty-five percent (35%) 
minus one percent (1%) multiplied by the quotient of $275 million less 
$50 million, or $225 million, divided by $45 million, which equals five, 
or five percent (5%), which when subtracted leaves a difference of 
thirty percent (30%). In calculating the number of shares which may be 
purchased, any shares attributable to the officers and directors and 
their associates but held by one or more tax-qualified employee stock 
benefit plans shall not be included. In the case of merger conversions 
undertaken pursuant to Sec. 563b.10, any shares owned prior to the 
merger conversion by officers, directors, and their associates shall not 
be included in calculating the aggregate amount which may be purchased 
by such persons.
    (9) Provide that an officer or director, or his or her associates, 
shall not purchase, without the prior written approval of the Office, 
the capital stock of the converted savings association except from a 
broker or dealer registered with the Securities and Exchange Commission, 
for a period of three years following the date of the conversion; except 
that, this paragraph (c)(9) shall not apply to:
    (i) Negotiated transactions involving more than one percent (1%) of 
the outstanding capital stock of the converted savings association; or
    (ii) Purchases of stock made by and held by any one or more tax-
qualified or non-tax-qualified employee stock benefit plan which may be 
attributable to individual officers or directors.
    (10) Provide that the sales price of the shares of capital stock to 
be sold in the conversion shall be a uniform price determined in 
accordance with Sec. 563b.7 of this part; and specify the underwriting 
and/or other marketing arrangements to be made to ensure the sale of all 
shares not sold to persons with subscription rights.
    (11) Establish a time period within which the conversion must be 
completed prior to termination. The time period shall be not more than 
24 months from the date the association members approve the plan of 
conversion and shall not be extended by the converting savings 
association or the Office.
    (12) Provide that each savings account holder of the converting 
savings association shall receive, without payment, a withdrawable 
savings account or accounts in the converted savings association equal 
in withdrawable amount to the withdrawal value of such account holder's 
savings account or accounts in the converting savings association.
    (13) Provide for the establishment and maintenance of a liquidation 
account for the benefit of eligible account holders and supplemental 
eligible account holders in the event of a subsequent complete 
liquidation of the converted savings association, in accordance with the 
provisions of paragraph (f) of this section. An association converting 
to a federally chartered stock savings and loan association or savings 
bank shall include in its charter the following section:

    Liquidation account. Pursuant to the requirements of the Office's 
regulations (12 CFR Part 563b) the association shall establish and 
maintain a liquidation account for the benefit of its savings account 
holders as of ____________(``eligible savers''). In the event of a 
complete liquidation of the association, it shall comply with such 
regulations with respect to the amount and the priorities on liquidation 
of each of the association's eligible savers' inchoate interest in the 
liquidation account, to the extent it is still in existence: Provided, 
That an eligible saver's inchoate interest in the liquidation account 
shall not entitle such eligible saver to any voting rights at meetings 
of the association's stockholders.

    (14) Provide for an eligibility record date, which shall be not less 
than one year prior to the date of adoption of the plan of conversion by 
the converting savings association's board of directors.
    (15) Provide that the holders of the capital stock of the converted 
savings

[[Page 231]]

association shall have exclusive voting rights, unless in the case of a 
State-chartered converted savings association State law requires savings 
account holders and/or borrowers of the converted savings association to 
have voting rights, in which case the charter of the converted savings 
association shall:
    (i) Limit such voting rights to the minimum required by State law, 
and
    (ii) Provide for the management of the converted savings association 
to solicit proxies from such savings account holders and/or borrowers in 
the same manner as it solicits proxies from its shareholders.
    (16) Provide that the plan of conversion adopted by the applicant's 
board of directors may be substantively amended by such board of 
directors as a result of comments from regulatory authorities or 
otherwise prior to the solicitation of proxies from members to vote on 
the plan and at any time thereafter with the concurrence of the Office; 
and that the conversion may be terminated by such board of directors at 
any time prior to the meeting of members called to consider the plan of 
conversion and at any time thereafter with the concurrence of the 
Office.
    (17) Provide that all shares of capital stock purchased by directors 
and officers on original issue in the conversion either directly from 
the savings association (by subscription or otherwise) or from an 
underwriter shall be subject to the restriction that the shares shall 
not be sold for a period of not less than one year following the date of 
purchase, except in the event of death of the director or officer.
    (18) Provide that, in connection with shares of capital stock 
subject to restriction on sale for a period of time:
    (i) Each certificate for such stock shall bear a legend giving 
appropriate notice of such restriction;
    (ii) Appropriate instructions shall be issued to the transfer agent 
for the converted savings association's capital stock with respect to 
applicable restrictions on transfer of any such restricted stock; and
    (iii) Any shares issued as a stock dividend, stock split or 
otherwise with respect to any such restricted stock shall be subject to 
the same restrictions as may apply to such restricted stock.
    (19) Provide that the converting savings association shall:
    (i) Promptly following the conversion register the securities issued 
in connection therewith pursuant to the Securities Exchange Act of 1934 
and undertake not to deregister such securities for a period of three 
years thereafter;
    (ii) Use its best efforts to encourage and assist a market maker to 
establish and maintain a market for the securities issued in connection 
with the conversion; and
    (iii) Use its best efforts to list those shares issued in connection 
with the conversion on a national or regional securities exchange or on 
the NASDAQ quotation system.
    (20) Provide that the expenses incurred in the conversion shall be 
reasonable.
    (21) Contain no provision which the Office shall determine to be 
inequitable or detrimental to the applicant, its savings account holders 
or other savings associations or to be contrary to the public interest.
    (22) Provide that the converting savings association shall not loan 
funds or otherwise extend credit to any person to purchase the capital 
stock of the association.
    (23) Provide that eligible account holders with subscription rights 
have first priority to purchase conversion stock, tax-qualified employee 
stock benefit plans have second priority, supplemental eligible account 
holders have third priority, and other voting members who have 
subscription rights have fourth priority. If the final conversion stock 
valuation range exceeds the maximum conversion stock offering range, up 
to ten percent of the total offering of shares may be sold to the tax-
qualified employee stock benefit plans. Furthermore, if the ESOP is not 
able to purchase conversion stock, the ESOP or any other tax-qualified 
plan may purchase shares in the open market or utilize authorized but 
unissued shares only with prior OTS approval; and disclosure must be 
made in the conversion stock offering materials of the potential open 
market purchases or use of authorized but unissued shares to fund the 
ESOP and

[[Page 232]]

its effects on the association and its shareholders.
    (24) Provide that the association may make scheduled discretionary 
contributions to a tax-qualified employee stock benefit plan provided 
such contributions do not cause the association to fail to meet its 
regulatory capital requirement.
    (d) Optional provisions in plan of conversion. The plan of 
conversion may provide any or all of the following:
    (1) That the converting savings association may commence the direct 
community offering or the public offering, or both, concurrently with or 
at any time during the subscription offering. The subscription offering 
may be commenced concurrently with or at any time after the mailing to 
association members pursuant to Sec. 563b.6(c) of this part of the proxy 
statement authorized for use by the Office. The subscription offering 
may be closed before the meeting of the association members held to vote 
on the plan of conversion, provided that the offer and sale of the 
capital stock shall be conditioned upon the approval of the plan of 
conversion by the association members as provided in Sec. 563b.6.
    (2) That directors, officers and employees of the converting savings 
association shall receive without payment nontransferable subscription 
rights to purchase shares of capital stock that are available after 
satisfying the subscriptions of eligible account holders, supplemental 
eligible account holders, voting members, and tax-qualified employee 
stock benefit plans provided for under paragraphs (c)(2), (c)(4), 
(c)(5), and (c)(23) of this section, subject to the following 
conditions:
    (i) The total number of shares which may be purchased under this 
paragraph (d)(2) shall not exceed 25 percent of the total number of 
shares to be issued in the case of a converting savings association with 
total assets of less than $50 million or 15 percent in the case of a 
converting savings association with total assets of $500 million or 
more; in the case of a converting savings association with total assets 
of $50 million or more but less than $500 million, the percentage shall 
be no more than a correspondingly appropriate number of shares based on 
total asset size (for example, 20 percent in the case of a converting 
savings association with total assets of approximately $275 million); 
and
    (ii) The shares shall be allocated among directors, officers, and 
employees on an equitable basis such as by giving weight to period of 
service, compensation and position, subject to a reasonable limitation 
on the amount of shares which may be purchased by any person associate 
thereof, or group of affiliated persons or group of persons otherwise 
acting in concert.
    (3) That any account holder receiving rights to purchase stock in 
the subscription offering, shall also receive, without payment, non-
transferable subscription rights to purchase up to one percent of the 
total offering of shares of capital stock, to the extent that such 
shares are available after satisfying the subscriptions provided for 
under paragraphs (c)(2), (c)(4), (c)(5), and (c)(23) of this section, 
subject to such conditions as may be provided in the plan of conversion. 
In the event of an oversubscription for such additional shares, the 
shares available shall be allocated among the subscribing eligible 
account holders, supplemental eligible account holders and voting 
members on such equitable basis, related to the amounts of their 
respective subscriptions, as may be provided in the plan of conversion. 
Where possible such subscriptions shall be allocated in such a manner 
that total purchases by eligible account holders, supplemental eligible 
account holders, and voting members shall be rounded to the nearest 100 
shares.
    (4) That purchases in the public offering or in the direct community 
offering by any person together with any associate or group of persons 
acting in concert shall be limited to less than ten percent (10%) of the 
total offering of shares. The percentage amount by which any order for 
conversion stock exceeds 5% of the total offering of shares shall be 
aggregated with the percentage amounts by which all other orders for 
conversion stock exceed 5% of the total offering of shares. The 
aggregate amount shall not exceed 10% of the total offering of shares, 
except that this limitation shall not apply to the

[[Page 233]]

purchases of the tax-qualified employee stock benefit plans.
    (5) That the converting savings association may require association 
members to return by a reasonable date certain a postage-paid written 
communication provided by the converting savings association requesting 
receipt of a subscription offering circular, or a preliminary or final 
offering circular in an offering pursuant to paragraph (d)(11) of this 
section, in order to be entitled to receive an offering circular from 
the converting savings association: Provided, That the subscription 
offering or the offering pursuant to paragraph (d)(11) of this section 
shall not be closed until the expiration of thirty days after the 
mailing by the converting savings association to association members of 
the postage-paid written communication. If the subscription offering or 
the offering pursuant to paragraph (d)(11) of this section is not 
commenced within 45 days after the meeting of association members, the 
converting savings association that has adopted this optional provision 
shall transmit no more than 30 days prior to the commencement of the 
subscription offering or the offering pursuant to paragraph (d)(11) of 
this section to each association member who had been furnished with 
proxy soliciting materials, written notice of the commencement of the 
offering, which notice shall state that the converting savings 
association is not required to furnish an offering circular to an 
association member unless the association member returns by a reasonable 
date certain the postage-paid written communication provided by the 
converting savings association requesting receipt of an offering 
circular.
    (6) That the converting savings association may require eligible 
account holders and supplemental eligible account holders who are not 
voting members pursuant to Sec. 563b.6(d) of this part to return by a 
reasonable date certain a postage-paid written communication provided by 
the converting savings association requesting the receipt of a 
subscription offering circular, or a preliminary or final offering 
circular in an offering pursuant to paragraph (d)(11) of this section, 
in order to be entitled to receive an offering circular from the 
converting savings association: Provided, That the subscription offering 
or the offering pursuant to paragraph (d)(11) of this section shall not 
be closed until the expiration of thirty days after the mailing by the 
converting savings association to the non-voting eligible account 
holders and supplemental eligible account holders of the postage-paid 
written communication. If the subscription offering or the offering 
pursuant to paragraph (d)(11) of this section is not commenced within 45 
days after the meeting of association members, the converting savings 
association that has adopted this optional provision shall transmit no 
more than 30 days prior to the commencement of the subscription offering 
or the offering pursuant to paragraph (d)(11) of this section to each 
eligible account holder and supplemental account holder who had been 
furnished with a notice pursuant to paragraph (d)(11) of this section 
written notice of the commencement of the offering, which notice shall 
state that the converting savings association is not required to furnish 
an offering circular to a non-voting eligible account holder or 
supplemental eligible account holder unless the eligible account holder 
or supplemental eligible account holder returns by a reasonable date 
certain the postage-paid written communication provided by the 
converting savings association requesting receipt of an offering 
circular.
    (7) That any insignificant residue of shares of the converting 
savings association not sold in the subscription offering or in a public 
offering referred to in paragraph (c)(6) of this section may be sold in 
such other manner as provided in the plan with the Office's approval.
    (8) That the number of shares which any person, or group of persons 
affiliated with each other or otherwise acting in concert, may subscribe 
for in the subscription offering may be made subject to a limit of not 
less than one percent of the total offering of shares.
    (9) That any person exercising subscription rights to purchase 
capital stock shall be required to purchase a minimum of up to 25 shares 
to the extent such shares are available (but the

[[Page 234]]

aggregate price for any minimum share purchase shall not exceed $500).
    (10) That the converted savings association shall issue and sell, in 
lieu of shares of its capital stock, units of securities consisting of 
capital stock and long-term warrants or other equity securities, in 
which event any reference in the provisions of this part to capital 
stock shall apply to such units of equity securities unless the context 
otherwise requires.
    (11) That, instead of a separate subscription offering, all 
subscription rights issued in connection with the conversion shall be 
exercisable by delivery of properly completed and executed order forms 
to the underwriters or selling group for the public offering or pursuant 
to any other procedure, subject to the applicant demonstrating to the 
Office the feasibility of the method of exercising such rights and to 
such conditions as shall be provided in the plan of conversion. Such 
conditions shall include, but not be limited to, a condition requiring 
that orders for stock in the public offering or direct community 
offering shall first be filled, in the order of priority set forth in 
this section, by orders of persons exercising subscription rights.
    (12) That the offering of stock to be sold in the subscription 
offering may give a preference to eligible account holders, supplemental 
eligible account holders, and other voting members residing in the 
association's local community.
    (13) That the Office may approve such other equitable provisions as 
are necessary to avert imminent injury to the converting savings 
association.
    (e) Determination of amount of qualifying deposit; predecessor and 
successor accounts. (1) Unless otherwise provided in the plan of 
conversion, for the purposes of this section, the amount of the 
qualifying deposit of an eligible account holder or supplemental 
eligible account holder shall be the total of the deposit balances in 
the eligible account holder's or supplemental eligible account holder's 
savings accounts in the converting savings association as of the close 
of business on the eligibility record date or supplemental eligibility 
record date. However, the plan of conversion may provide that any 
savings accounts with total deposit balances of less than $50 (or any 
lesser amount) shall not constitute a qualifying deposit.
    (2) As used in this section, the term ``savings account'' includes a 
predecessor or successor account of a given savings account which is 
held only in the same right and capacity and on the same terms and 
conditions as the given savings account. However, the plan of conversion 
may provide for lesser requirements for consideration as a predecessor 
or successor account.
    (f) Liquidation account. (1) Each converted savings association 
shall, at the time of conversion, establish a liquidation account in an 
amount equal to the amount of net worth of the converting savings 
association as of the latest practicable date prior to conversion. For 
the purposes of this paragraph, the savings association shall use the 
net worth figure no later than that set forth in its latest statement of 
financial condition contained in the final offering circular. The 
function of the liquidation account is to establish a priority on 
liquidation and, except as provided in paragraph (g)(2) of this section, 
the existence of the liquidation account shall not operate to restrict 
the use or application of any of the net worth accounts of the converted 
savings association.
    (2) The liquidation account shall be maintained by the converted 
savings association for the benefit of eligible account holders and 
supplemental eligible account holders who maintain their savings 
accounts in such association. Each such eligible account holder and 
supplemental eligible account holder shall, with respect to each savings 
account held, have a related inchoate interest in a portion of the 
liquidation account balance (``subaccount'').
    (3) In the event of a complete liquidation of the converted savings 
association (and only in such event), each eligible account holder and 
supplemental eligible account holder shall be entitled to receive a 
liquidation distribution from the liquidation account, in the amount of 
the then current adjusted subaccount balances for savings accounts held, 
before any liquidation distribution may be made with respect

[[Page 235]]

to capital at the time of the conversion in exchange for the surrender 
of mutual capital certificates issued by the association prior to 
conversion. A merger, consolidation, sale of bulk assets, or similar 
combination or transaction with another SAIF-insured savings association 
is not considered a complete liquidation for these purposes, and in such 
a transaction the liquidation account would be assumed by the surviving 
association. Preferred stock issued in exchange for mutual capital 
certificates may receive distributions in liquidation prior to 
distribution from the liquidation account to the holders of the mutual 
capital certificates that would have been entitled to priority over the 
residual rights of depositors had the association not been converted as 
of the date of liquidation.
    (4) The initial subaccount balance for a savings account held by an 
eligible account holder and/or supplemental eligible account holder 
shall be determined by multiplying the opening balance in the 
liquidation account by a fraction of which the numerator is the amount 
of qualifying deposits in such savings account on the eligibility record 
date and/or the supplemental eligibility record date and the denominator 
is the total amount of qualifying deposits of all eligible account 
holders and supplemental eligible account holders in the converting 
savings association on such dates. For savings accounts in existence at 
both dates, separate subaccounts shall be determined on the basis of the 
qualifying deposits in such saving accounts on such record dates. Such 
initial subaccount balances shall not be increased, and it shall be 
subject to downward adjustment as provided in paragraph (f)(5) of this 
section.
    (5) If the deposit balance in any savings account of an eligible 
account holder or supplemental eligible account holder at the close of 
business on any annual closing date subsequent to the respective record 
dates is less than the lesser of:
    (i) The deposit balance in such savings account at the close of 
business on any other annual closing date subsequent to the eligibility 
record date or supplemental eligibility record date; or
    (ii) The amount of qualifying deposit as of the eligibility record 
date or the supplemental eligibility record date, the subaccount balance 
for such savings account shall be adjusted by reducing such subaccount 
balance in an amount proportionate to the reduction in such deposit 
balance.

In the event of such a downward adjustment, the subaccount balance shall 
not be subsequently increased, notwithstanding any increase in the 
deposit balance of the related savings account. The converted 
association shall not be required to recompute the liquidation account 
and subaccount balances provided the converted association maintains 
records sufficient to make necessary computations in the event of a 
complete liquidation or such other events as may require a computation 
of the balance of the liquidation account. The liquidation subaccount of 
an account holder shall be maintained for as long as the account holder 
maintains an account with the same Social Security number.
    (g) Restrictions on repurchase of stock; payment of dividends; and 
use of stock option and management or employee stock benefit plans. Each 
savings association that converts pursuant to this part shall be subject 
to the following conditions:
    (1) No converted savings association may, for a period of one year 
from the date of the completion of the conversion, repurchase any of its 
capital stock from any person, except that this restriction shall not 
apply to:
    (i) A repurchase, on a pro rata basis, pursuant to an offer approved 
by OTS and made to all shareholders of such association;
    (ii) A repurchase of qualifying shares of a director; or
    (iii) A repurchase approved by OTS under paragraph (g)(3) of this 
section.
    (2) No converted association shall declare or pay a dividend on, or 
repurchase any of, its capital stock if the effect thereof would cause 
the regulatory capital of the converted association to be reduced below 
the amount required for its liquidation account. Any dividend declared 
or paid on, or repurchase of, a converted association's capital stock 
also shall be in compliance with Secs. 563.140-563.146 of this chapter.

[[Page 236]]

    (3) A savings association that is subject to paragraph (g)(1) of 
this section may not repurchase its capital stock within one year 
following its conversion to stock form, except that open market stock 
repurchases of up to five percent of its outstanding capital stock may 
occur during the first year after the conversion where extraordinary 
circumstances exist. The savings association must establish compelling 
and valid business purposes for the repurchases, to the satisfaction of 
the OTS. The savings association must file a notice with the Regional 
Director, with a copy to the Office of Examination and Supervision, at 
least ten days before commencement of the proposed repurchase. The 
notice must describe the proposed repurchase program and the effects of 
the proposed repurchases on the savings association's regulatory 
capital. OTS will not object to the proposed repurchase program if:
    (i) The repurchase does not adversely affect the savings 
association's financial condition;
    (ii) The savings association submits sufficient information to 
evaluate the repurchase program;
    (iii) The savings association demonstrates extraordinary 
circumstances and a compelling and valid business purpose for the 
repurchase program consistent with the savings association's business 
plan; or
    (iv) The repurchase program would not be contrary to other 
applicable regulations.
    (4) Use of Stock Option and Management or Employee Stock Benefit 
Plans. No converted savings association shall, for a one year period 
from the date of the conversion, implement a stock option plan or 
management or employee stock benefit plan, other than a tax-qualified 
plan complying with (c)(6) of this section, unless each of the following 
requirements are met:
    (i) Each of the plans was fully disclosed in the proxy soliciting 
and conversion stock offering materials;
    (ii) For stock option plans, the total number of shares of common 
stock for which options may be granted does not exceed ten percent of 
the amount of shares issued in the conversion;
    (iii) For management or employee stock benefit plans, the aggregate 
amount of such plans shall not exceed three percent of the amount of 
shares issued in the conversion;
    (iv) The aggregate amount of all shares obtained by a tax-qualified 
employee stock benefit plan(s) in the conversion, pursuant to (c)(6) of 
this section, or within one year following the conversion, and all the 
shares in a management or employee stock benefit plan, pursuant to 
paragraph (g)(4)(iii) of this section, shall not exceed ten percent of 
the total amount of shares issued in the conversion;
    (v) Associations that have in excess of ten percent tangible capital 
following the conversion, may be granted, on a case by case basis, 
approval to establish a management or employee stock benefit plan 
pursuant to paragraph (g)(4)(iii) of this section in an amount up to 
four percent of the amount of the shares issued in the conversion, and 
an aggregate total of up to twelve percent for all plans established 
pursuant to paragraph (g)(4)(iv) of this section;
    (vi) No individual shall receive more than twenty-five percent of 
the shares of any plan and directors who are not employees of the 
association shall not receive more than five percent of the stock 
individually, or thirty percent in the aggregate, of any plan;
    (vii) All such plans, prior to establishment and implementation, are 
approved by the holders of a majority of the total votes eligible to be 
cast at any duly called meeting of shareholders of the association or 
its holding company, either annual or special, to be held not earlier 
than six months after completion of the conversion;
    (viii) In the case of a savings association subsidiary of a mutual 
holding company, all such plans, prior to establishment and 
implementation, are approved by the holders (other than its parent 
mutual holding company) of a majority of the total votes eligible to be 
cast, at any duly called meeting of shareholders, either annual or 
special, to be held no earlier than six months after completion of the 
conversion;
    (ix) For stock option plans, stock options are granted at no less 
than the market price at which the stock is trading at the time of 
grant;

[[Page 237]]

    (x) For management or employee stock benefit plans, no conversion 
stock is used to fund the plans;
    (xi) The plans subject to this section must comply with the terms 
and amounts specified in paragraph (g)(4) of this section;
    (xii) The plans subject to this section shall begin vesting no 
earlier than one year from the date the plans are approved by 
shareholders, shall not vest at a rate in excess of 20% a year, and 
shall not provide for accelerated vesting except in the case of 
disability or death;
    (xiii) Disclosure in all proxy and related material distributed to 
shareholders in connection with the meeting at which the stock option 
plans and management stock benefit plans will be voted shall state that 
the plans comply with OTS regulations, that the OTS in no way endorses 
or approves the plans; and no written or oral representation to the 
contrary shall be made; and
    (xiv) No later than five calendar days from the date of shareholder 
approval of any stock option or management benefit plans, the 
institution shall file with the OTS a copy of the approved plans and 
written certification that the plans approved by the shareholders are 
the same plans filed with and disclosed in the proxy materials.
    (h) Manipulative and deceptive devices. In the offer, sale or 
purchase of securities issued incident to its conversion, no savings 
association, or any director, officer, attorney agent or employee 
thereof, shall:
    (1) Employ any device, scheme, or artifice to defraud;
    (2) Obtain money or property by means of any untrue statement of a 
material fact or any omission 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; or
    (3) Engage in any act, transaction, practice, or course of business 
which operates or would operate as a fraud or deceit upon a purchaser or 
seller.
    (i) Acquisition of the securities of converting and converted 
savings associations--(1) Prohibited transfers. Prior to the completion 
of a conversion, no person shall transfer, or enter into any agreement 
or understanding to transfer, the legal or beneficial ownership of 
conversion subscription rights, or the underlying securities to the 
account of another.
    (2) Prohibition of offers and certain acquisitions. Prior to the 
completion of a conversion, no person shall make any offer, or any 
announcement of an offer, for any security of the converting savings 
association issued in connection with the conversion nor shall any 
person knowingly acquire securities of the converted savings association 
issued in connection with the conversion in excess of the maximum 
purchase limitations established in the association's approved plan of 
conversion pursuant to paragraph (c)(7) or (d)(4) of this section.
    (3) Prohibition on offers to acquire and acquisitions of stock for 
three years following conversion. (i) For a period of three years 
following the date of the completion of the conversion, no person shall, 
directly or indirectly, offer to acquire or acquire the beneficial 
ownership of more than ten percent of any class of an equity security of 
a savings association converted in accordance with the provisions of 
this part 563b, without the prior written approval of the Office. Where 
any person, directly or indirectly, acquires beneficial ownership of 
more than ten percent of any class of any equity security of a savings 
association converted in accordance with part 563b, without the prior 
wirtten approval of the Office as required by this section, the 
securities beneficially owned by such person in excess of ten percent 
shall not be counted as shares entitled to vote and shall not be voted 
by any person or counted as voting shares in connection with any matter 
submitted to the stockholders for a vote. For the purposes of this 
section, a person shall be deemed to have acquired beneficial ownership 
of more than ten percent (10%) of a class of equity security of a 
savings association where the person holds any combination of stock or 
revocable or irrevocable proxies of the association under circumstances 
that give rise to a conclusive control determination or rebuttable 
control determination under Secs. 574.4(a) and 574.4(b) of this chapter. 
In obtaining the prior

[[Page 238]]

written approval of the OTS under this paragraph (i), the criteria for 
approval under paragraph (i)(5) of this section should be addressed, if 
applicable, in the application, notice, or rebuttal required by part 574 
of this chapter for the acquisition of stock of a savings association, 
as set forth in Sec. 574.6(j) of this chapter.
    (ii) A conversion shall be deemed completed on the date all of the 
converting association's conversion stock was sold.
    (iii) An acquisition of shares shall be presumed to have been made 
if the acquiror entered into a binding written agreement for the 
transfer of shares. An offer shall be deemed made when communicated.
    (4) Exceptions. (i) Paragraphs (i)(1) and (i)(2) of this section 
shall not apply to a transfer, agreement, or understanding to transfer, 
offer, or announcement of an offer or intent to make an offer which:
    (A) Pertains only to securities to be purchased pursuant to 
paragraph (c)(6), (d)(7), or (d)(12); and
    (B) Has the prior written approval of the Office.
    (ii) Paragraphs (i)(2) and (i)(3) of this section shall not apply to 
any offer with a view toward public resale made exclusively to the 
association or to the underwriters or a selling group acting on its 
behalf.
    (iii) Unless made applicable by the Office by prior advice in 
writing, the restriction contained in paragraph (i)(3) of this section 
shall not apply to any offer or announcement of an offer which if 
consummated would result in the acquisition by a person, together with 
all other acquisitions by the person of the same class of securities 
during the preceding 12-month period, of not more than one percent of 
the class of securities.
    (iv) The restriction contained in paragraph (i)(3) of this section 
shall not apply to any offer to acquire or acquisition of beneficial 
ownership of more than ten percent of the common stock of a savings 
association by a corporation whose ownership is or will be substantially 
the same as the ownership of the savings association, provided that the 
offer or acquisition is made more than one year following the date of 
completion of the conversion.
    (v) Paragraphs (i)(1), (i)(2) and (i)(3) of this section shall not 
apply to the acquisition of securities of an association or holding 
company thereof by any one or more tax-qualified employee stock benefit 
plans of such association or holding company, provided that, the plan or 
plans do not have beneficial ownership in the aggregate of more than 
twenty-five percent (25%) of any class of equity security of the 
converted association or holding company.
    (vi) No application under paragraph (i)(3)(i) of this section 
generally shall be required for any proposed acquisition that requires 
prior approval of, or clearance by, the OTS under 12 CFR part 574 
provided that the application required to be filed pursuant to part 574 
of this chapter addresses in specific detail how the proposed 
transaction will comply with the criteria for approval under paragraph 
(i)(5) of this section, and the proposed acquisition is not opposed by 
the recently converted association subject to paragraph (i)(3)(i) of 
this section. Where, pursuant to this paragraph (i)(4)(vi), no separate 
application under paragraph (i)(3)(i) of this section is required, the 
prohibition on offers to acquire equity securities contained in 
paragraph (i)(3)(i) of this section shall not apply.
    (5) Criteria for approval. The Office may deny an application 
involving an offer or acquisition of any security or proxies to vote 
securities of a converted association submitted under paragraph (i)(3) 
of this section if it finds that the proposed acquisition:
    (i) Would frustrate the purposes of the provisions of this part 
563b;
    (ii) Would be manipulative or deceptive;
    (iii) Would subvert the fairness of the conversion;
    (iv) Would be likely to result in injury to the association;
    (v) Would not be consistent with economical home financing;
    (vi) Would otherwise be violative of law or regulation; or
    (vii) Would not contribute to the prudent deployment of the 
association's conversion proceeds.
    (6) Optional charter provisions. The plan of conversion may provide 
for the

[[Page 239]]

charter of the converted savings association to include, for a specified 
period of not more than five years following the date of the completion 
of the conversion, any or all of the provisions of Sec. 552.4(b)(8) of 
this chapter: Provided, that if the savings association is converting to 
a state-chartered stock association, it shall include in its application 
an opinion of counsel independent of the association that such charter 
provisions are permissible under the law of the applicable state. At any 
annual or special meeting of its shareholders, a converted state-
chartered savings association may adopt any charter provision regarding 
the acquisition by any person or persons of its equity securities that 
would be permitted to be adopted by a savings association chartered by 
the state in which the converted savings association is chartered, and a 
converted federally-chartered savings association may adopt any such 
charter provision permitted under Sec. 552.4 of this chapter.
    (7) Definitions. (i) 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 securities of a savings association.
    (ii) The term offer includes every offer to buy or 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: Provided, That for the purpose of this Sec. 563b.3(i), the term 
``offer'' shall not include:
    (A) Inquiries directed solely to the management of a savings 
association and not intended to be communicated to stockholders, 
designed to elicit an indication of management's receptivity to the 
basic structure of a potential acquisition with respect to the amount of 
securities, manner of acquisition and formula for determining price, or
    (B) Nonbinding expressions of understanding or letters of intent 
with the management of a savings association regarding the basic 
structure of a potential acquisition with respect to the amount of 
securities, manner of acquisition, and formula for determining price.
    (iii) The term acquire includes every type of acquisition, whether 
effected by purchase, exchange, operation of law or otherwise.
    (iv) The term security includes non-transferable subscription rights 
issued pursuant to a plan of conversion as well as a security as defined 
in 15 U.S.C. 78c(2)(10).
    (j) Priority of regulations. The provisions of this part shall 
supersede all inconsistent charter and bylaw provisions of federally-
chartered savings associations converting to the stock form.

[54 FR 49596, Nov. 30, 1989, as amended at 55 FR 13516, Apr. 11, 1990; 
55 FR 27197 , July 2, 1990; 56 FR 59867, Nov. 26, 1991; 57 FR 14347, 
Apr. 20, 1992; 58 FR 4314, Jan. 14, 1993; 59 FR 22733, May 3, 1994; 59 
FR 61261, Nov. 30, 1994; 60 FR 66718, Dec. 26, 1995; 64 FR 2810, Jan. 
19, 1999; 65 FR 43090, July 12, 2000]



Sec. 563b.4  Notice of filing; public statements; confidentiality.

    (a) Information prior to approval of plan of conversion. (1) A 
savings association which is considering converting pursuant to this 
part and its directors, officers and employees shall keep such 
consideration in the strictest confidence and shall only discuss the 
potential conversion as would be consistent with the need to prepare 
information for filing an application for conversion. Should this 
confidence be breached the Office may require remedial measures 
including:
    (i) A public statement by the association that its board of 
directors is currently considering converting pursuant to this part;
    (ii) Providing for an eligibility record date which shall be as of 
such a date prior to the adoption of the plan by the converting savings 
association's board of directors as to assure the equitability of the 
conversion;
    (iii) Limitation of the subscription rights of any person violating 
or aiding the violation of this section to an amount deemed appropriate 
by the Office; and
    (iv) Any other actions the Office may deem appropriate and necessary 
to assure the fairness and equitability of the conversion.

[[Page 240]]

    (2) If it should become essential as a result of rumors prior to the 
adoption of a plan of conversion by the applicant's board of directors, 
a public statement limited to that purpose may be made by the applicant.
    (3) Promptly after the adoption of a plan of conversion by not less 
than two-thirds of its board of directors, the savings association 
shall:
    (i) Notify its members of such action by publishing a statement in a 
newspaper having general circulation in each community in which an 
office of the savings association is located and/or by mailing a letter 
to each of its members; and
    (ii) Have copies of the adopted plan of conversion available for 
inspection by its members at each office of the savings association. The 
savings association may also issue a press release with respect to such 
action. Copies of the proposed statement, letter and press release are 
not required to be filed with the Office, but may be submitted for 
comment to the Chief Counsel's Office, Corporate and Securities 
Division. Copies of the definitive statement, letter and press release 
shall be filed with the Office as part of the application for 
conversion.
    (4) The statement, letter and press release, unless otherwise 
authorized by the Office shall contain only (but need not contain all 
of) the following:
    (i) A statement that the board of directors has adopted a proposed 
plan to convert the savings association from a Federal (or State, as the 
case may be) mutual association to a Federal (or State, as the case may 
be) capital stock savings association;
    (ii) A statement that the proposed plan of conversion must be 
approved by at least a majority of the votes eligible to be cast either 
in person or by proxy by association members at a meeting at which the 
plan will be submitted for their approval;
    (iii) A statement that existing proxies held with respect to voting 
rights in the savings association will not be voted regarding the 
conversion, and that new proxies will be solicited for voting on the 
proposed plan of conversion;
    (iv) A statement that a proxy statement setting forth more detailed 
information with respect to the proposed plan of conversion will be sent 
to association members prior to the meeting of members;
    (v) A statement that the proposed plan of conversion is subject to 
approval by the Office and by the appropriate State regulatory authority 
or authorities (naming such an authority or authorities) before such 
plan can become effective and that members of the applicant will have an 
opportunity to file written comments including objections and materials 
supporting such objections to the Office;
    (vi) A statement that the proposed plan of conversion is contingent 
upon obtaining favorable tax rulings from the Internal Revenue Service 
or an appropriate tax opinion;
    (vii) A statement that there is no assurance that the approval of 
the Office or the approval of any appropriate State authority or 
authorities will be obtained, and also no assurance that the favorable 
tax rulings or tax opinion will be received;
    (viii) The proposed record date for determining the eligible account 
holders entitled to receive nontransferable subscription rights to 
purchase capital stock of the applicant;
    (ix) A brief statement describing the circumstances that would 
require supplemental eligible account holders to receive nontransferable 
subscription rights to purchase capital stock of the applicant;
    (x) A brief statement as to the extent to which voting members will 
participate in the conversion;
    (xi) A brief description of the proposed plan of conversion;
    (xii) The par value (if any) and approximate number of shares of 
capital stock to be issued and sold under the proposed plan of 
conversion;
    (xiii) A brief statement as to the extent to which directors, 
officers and employees will participate in the conversion;
    (xiv) A statement that savings account holders will continue to hold 
accounts in the converted savings association identical as to dollar 
amount, rate of return and general terms, and that their accounts will 
continue to be insured by the FDIC;

[[Page 241]]

    (xv) A statement that the savings association will continue to be a 
member of the Federal Home Loan Bank System;
    (xvi) A statement that borrowers' loans will be unaffected by 
conversion, and that the amount, rate, maturity, security and other 
conditions will remain contractually fixed as they existed prior to 
conversion;
    (xvii) A statement that the normal business of the savings 
association in accepting savings and making loans will continue without 
interruption; that the converted savings association will continue after 
conversion to conduct its present services to savings account holders 
and borrowers under current policies to be carried on in existing 
offices and by the present management and staff;
    (xviii) A statement that the proposed plan of conversion may be 
substantively amended by the board of directors as a result of comments 
from the regulatory authorities or otherwise prior to the meeting, and 
that the proposed plan may also be terminated by the board of directors; 
and
    (xix) A statement that questions of members will be answered in the 
proxy material to be sent after the regulatory approvals of the proposed 
plan of conversion have been obtained and that any questions at this 
time may be answered by telephoning or writing to the savings 
association.
    (5) Such statement, letter and press release shall not in any manner 
solicit proxies, include financial statements or describe the benefits 
of conversion or the value of the capital stock of the savings 
association upon conversion. In replying to inquiries, the savings 
association should limit its answers to the matters listed in paragraph 
(a)(3) of this section.
    (b) Notice of filing. (1)(i) Immediately upon filing an application 
for conversion with the Office, the applicant shall publish a notice of 
the filing. If an application for conversion is not properly executed or 
is materially deficient or substantially incomplete, the Office may 
require a new application to be filed, publication of a new notice and 
an additional 20-day comment period. The applicant shall prominently 
post the notice in each of its offices and publish the notice in at 
least one newspaper printed in the English language and having a 
substantial general circulation in each community in which an office of 
the applicant is located, as follows:

Notice of Filing of an Application for Conversion To Convert to a Stock 
          Savings and Loan Association or a Stock Savings Bank

    Notice is hereby given that, pursuant to part 563b of the Rules and 
Regulations Applicable to All Savings Associations, ________________ 
(fill in name of applicant) has filed an application with the Office of 
Thrift Supervision (``Office'') for approval to convert to 
the________________ (State-chartered or Federally-chartered) stock form 
of organization. Copies of the application have been delivered to the 
Chief Counsel, Corporate and Securities Division, Office of Thrift 
Supervision, l700 G Street, NW., Washington, DC 20552, and to the 
Regional Director at ________________ (Address, including zip code, of 
Regional Director).

    (ii) Written comments, including objections to the plan of 
conversion and materials supporting the objections, from any member of 
the applicant or aggrieved person will be considered by the Office if 
filed within twenty calendar days after the date of this notice. The OTS 
may, in its discretion, and upon written request, extend the twenty day 
comment period for an additional twenty calendar days. Failure to 
provide the written comments in twenty calendar days may preclude the 
pursuit of any administrative or judicial remedies. Two copies of the 
comments should be sent to the Chief Counsel, Business Transactions 
Division, one copy to the Corporate Activities Division and one copy to 
the Regional Director. The proposed plan of conversion and any comments 
will be available for inspection by any member of the applicant at the 
Chief Counsel's Office and at the Regional Director's Office. A copy of 
the plan of conversion may also be inspected at the home office and each 
branch office of the applicant.
    (2) If a significant number of the applicant's members speak a 
language other than English and a newspaper in that language is 
published in the area served by the applicant, an appropriate 
translation of the notice shall also be published in that newspaper.

[[Page 242]]

    (3) Promptly after publication of the notice or notices prescribed 
in paragraphs (b)(1) and (b)(2), the applicant shall file four copies of 
each notice with the Office accompanied by an affidavit of publication 
from each publisher.
    (c) Should the applicant desire to submit any information it deems 
to be of a confidential nature regarding the answer to any item or any 
part of any exhibit included in any application under this part, such 
information pertaining to such item or exhibit shall be separately bound 
and labeled ``confidential,'' and a statement shall be submitted 
therewith briefly setting forth the grounds on which such information 
should be treated as confidential. Only general reference thereto need 
be made in that portion of the application which the applicant deems not 
to be confidential. Applications under this part shall be made available 
for inspection by the public, except for portions which are bound and 
labeled ``confidential'' and which the Office determines to withhold 
from public availability under 5 U.S.C. 552 and part 505 of this 
chapter. Preliminary soliciting materials will be made available upon 
filing, unless such materials are not otherwise available to the public 
and are bound and labeled ``confidential.'' The applicant will be 
advised of any decision by the Office to make public information 
designated ``confidential'' by the applicant. Even though sections of 
the application are considered ``confidential,'' as far as public 
inspection thereof is concerned, to the extent it deems necessary, the 
Office may comment on such confidential submissions in any public 
statement in connection with its decision on the application without 
prior notice to the applicant.

[54 FR 49596, Nov. 30, 1989, as amended at 59 FR 22734, May 3, 1994; 59 
FR 61262, Nov. 30, 1994; 60 FR 66718, Dec. 26, 1995]



Sec. 563b.5  Solicitation of proxies; proxy statement.

    (a) Solicitations to which rules apply. This section applies to 
every solicitation of a proxy from an association member of a savings 
association for the meeting at which a conversion plan will be voted 
upon, except the following:
    (1) Any solicitation made otherwise than on behalf of the management 
of the savings association where the total number of persons solicited 
is not more than 50;
    (2) Any solicitation through the medium of a newspaper advertisement 
which informs association members, following approval of the plan of 
conversion, of a source from which they may obtain copies of a proxy 
statement, form of proxy, or any other soliciting material and does no 
more than:
    (i) Name the savings association;
    (ii) State the reason for the advertisement;
    (iii) Identify the proposal or proposals to be acted upon by 
association members; and
    (iv) Urge the member to vote at the meeting.
    (b) Use of proxy soliciting material to be authorized. No proxy 
soliciting material required to be filed with the Office prior to use 
shall be furnished to association members or otherwise released for 
distribution until the use of such material has been authorized in 
writing by the Office. Proxy material authorized for use by the Office 
shall be mailed to the association members within ten days of such 
authorization unless extended by the Office in writing.
    (c) Information to be furnished association members. No solicitation 
subject to this section shall be made unless each person solicited is 
concurrently furnished, or has previously been furnished, a written 
proxy statement the use of which has been authorized by the Office.
    (d) Requirements as to proxy. (1) The form of proxy:
    (i) Shall indicate in bold face type whether the proxy is solicited 
on behalf of the management;
    (ii) Shall provide specifically designated blank spaces for dating 
and signing the proxy;
    (iii) Shall identify clearly and impartially each matter or group of 
related matters intended to be acted upon;
    (iv) Shall be clearly labeled ``Revocable Proxy'' in bold face type 
(at least as large as 18 point);

[[Page 243]]

    (v) Shall describe any charter or State law requirement restricting 
or conditioning voting by proxy;
    (vi) Shall contain an acknowledgement by the person giving the proxy 
that he has received a proxy statement prior to signing the form of 
proxy;
    (vii) Shall contain the date, time and place of meeting, if 
practicable;
    (viii) Shall provide by a box or otherwise, a means whereby the 
person solicited is afforded an opportunity to specify by ballot a 
choice between approval or disapproval of each matter referred to 
therein as intended to be acted upon; and
    (ix) Shall indicate in bold face type how the proxy shall be voted 
on each such matter to which no choice is so specified.
    (2) No proxy subject to this section shall confer authority to vote 
at any meeting other than the meeting (or any adjournment thereof) to 
vote on conversion. A proxy may be deemed to confer authority to vote 
with respect to matters incident to the conduct of such meeting. If the 
plan of conversion is considered at an annual meeting, existing proxies 
may be voted with respect to matters not related to the plan of 
conversion.
    (3) The proxy statement or form of proxy shall provide that the 
votes represented by the proxy will be voted; that, where the person 
solicited specifies by means of a ballot provided pursuant to paragraph 
(d)(1)(viii) of this section a choice with respect to any matter to be 
acted upon, the votes will be voted in accordance with the 
specifications so made; and that if no choice is so specified, the votes 
will be cast as indicated in bold face type on the form of proxy.
    (4) Each voting member must be furnished a form of proxy conforming 
with paragraph (d) of this section. No applicant shall use previously-
executed proxies.
    (e) Material required to be filed. (1) Applicants shall file ten 
preliminary copies of such proxy materials as are required by the form 
for applying for approval to convert under this part.
    (2) Ten preliminary copies of any additional soliciting material 
subject to this section including soliciting material in the form of 
press releases, and radio or television scripts, to be used or furnished 
to association members subsequent to furnishing the proxy statement, 
shall be filed with the Office at least five business days prior to the 
date on which the Office is requested to authorize the use of such 
material. Speeches may, but need not be, filed with the Office prior to 
use.
    (3) Twenty-five copies of the proxy statement and ten copies of the 
form of proxy and all other soliciting material, in the form in which 
such material is furnished to association members, shall be filed with 
or mailed for filing to the Office not later than the date such material 
is first sent or given to association members. All materials filed 
pursuant to this paragraph (e)(3) shall be accompanied by a statement of 
the date on which copies of such materials are to be released to 
association members.
    (4) If the solicitation is to be made in whole or in part by 
personal solicitation, ten preliminary copies of all written 
instructions or other material which discusses or reviews, or comments 
upon the merits of, any matter to be acted upon and which is to be 
furnished to the individuals making the actual solicitation for their 
use directly or indirectly in connection with the solicitation shall be 
filed with the Office at least five business days prior to the date on 
which the Office is requested to authorize the use of such material.
    (5) All preliminary copies of material filed pursuant to paragraphs 
(e)(1), (e)(2) and (e)(4) of this section shall be clearly marked on the 
cover page ``Preliminary Copy''. Such preliminary copies shall be public 
unless otherwise deemed confidential pursuant to Sec. 563b.4(c) of this 
part.
    (6) Unless requested by the Office, copies of replies to inquiries 
from members of the savings association and copies of communications 
which do no more than request that forms of proxy theretofore solicited 
be signed and returned need not be filed pursuant to paragraph (e) of 
this section.
    (7) Where any proxy statement, form of proxy or other material filed 
pursuant to paragraph (e) of this section is

[[Page 244]]

amended or revised, four of the required copies of such amended or 
revised material filed with the Office shall be marked to indicate 
clearly and precisely the changes effected therein subsequent to the 
last prior filing.
    (f) Mailing communications for associations members. If the 
management of the applicant has adopted a plan of conversion, the 
applicant shall perform such of the following acts as may be duly 
requested in writing with respect to a matter to be considered at the 
meeting to vote on the plan of conversion by any association member who 
will defray the reasonable expenses to be incurred by the applicant in 
the performance of the act or acts requested.
    (1) The applicant shall mail or otherwise furnish to such 
association member the following information as promptly as practicable 
after the receipt of such request:
    (i) A statement of the approximate number of association members who 
have been or are to be solicited on behalf of the management, or any 
group of such holders which the association member shall designate; and
    (ii) An estimate of the cost of mailing a specified proxy statement, 
form of proxy or other communication to such association member.
    (2) Copies of any proxy statement, form of proxy or other 
communication furnished by the association member and as approved by the 
Office shall be mailed by the applicant to such of the association 
members specified in paragraph (f)(1)(i) of this section as the 
association member shall designate.
    (3) Any such material which is furnished by the association member 
shall be mailed with reasonable promptness by the applicant after 
receipt of the material to be mailed, envelopes or other containers 
therefor and postage or payment for postage.
    (4) Neither the management nor the applicant shall be responsible 
for such proxy statement, form of proxy or other communication.
    (g) False or misleading statements. (1) No solicitation of a proxy 
by the applicant, its management, or any other person for the meeting to 
vote on conversion shall be made by means of any proxy statement, form 
of proxy, notice of meeting or other communication, written or oral, 
containing any statement which, at the time and in the light of the 
circumstances under which it is made, is false or misleading with 
respect to any material fact, or which omits to state any material fact 
necessary in order to make the statements therein not false or 
misleading or necessary to correct any statement in any earlier 
communication with respect to the solicitation of a proxy for such 
meeting which has become false or misleading.
    (2) The fact that a proxy statement, form of proxy or other 
soliciting material has been filed with or examined by the Office and 
authorized for use shall not be deemed a finding by the Office that such 
material is accurate or complete or not false or misleading, or that the 
Office has passed upon the merits of or approved any proposal contained 
therein. No representation contrary to the foregoing shall be made by 
any person.
    (3) If a solicitation by management violates any provision of this 
section, the Office may require remedial measures including:
    (i) Correction of any such violation by means of a retraction and 
new solicitation;
    (ii) Rescheduling of the meeting for a vote on the conversion; and
    (iii) Any other actions the Office may deem appropriate in the 
circumstances in order to ensure a fair vote.
    (h) Prohibition of certain solicitations. No person soliciting a 
proxy from an association member for the meeting to vote on conversion 
shall solicit:
    (1) Any undated or post-dated proxy;
    (2) Any proxy which provides that it shall be deemed to be dated as 
of any date subsequent to the date on which it is signed by the 
association members;
    (3) Any proxy which is not revocable at will by the association 
member giving it; or
    (4) Any proxy which is part of any other document or instrument 
(such as an account card).

[54 FR 49596, Nov. 30, 1989, as amended at 59 FR 22734, May 3, 1994]



Sec. 563b.6  Vote by members.

    (a) Vote at special meeting. Following approval by the Office of an 
application for conversion, the plan of conversion

[[Page 245]]

shall be submitted to a special meeting of members, unless in the case 
of a State-chartered converting savings association State law requires 
that the plan be considered at an annual meeting of members.
    (b) Determining members eligible to vote. The record date for 
determining those members eligible to vote at the meeting called to 
consider a plan of conversion shall not be more than 60 nor less than 10 
days prior to the date of such meeting, without prior approval of the 
Office, unless State law requires a different voting record date.
    (c)(1) Notice to members. Notice of the meeting to consider a plan 
of conversion shall be given by means of the proxy statement authorized 
for use by the Office. The notice shall be given not more than 45 nor 
fewer than 20 days prior to the date of the meeting to each association 
member, unless State law requires a different notice period. Such notice 
shall also be sent to each beneficial holder of an account held in a 
fiduciary capacity:
    (i) In the case of a Federal association, where the account is an 
Individual Retirement Account and the name of the beneficial holder is 
disclosed on the association's records; and
    (ii) In the case of a State-chartered association, where the 
beneficial holder possesses voting rights.
    (2) Summary proxy statement. The proxy statement required by 
paragraph (c)(1) of this section may be in summary form, Provided:
    (i) A statement is made in bold-face type on the notice to members 
required under paragraph (c)(1) of this section that a more detailed 
description of the proposed transaction may be obtained by returning an 
attached postage-paid postcard or other written communication requesting 
a supplemental information statement which, together with the summary 
proxy statement, complies with the requirements of Form PS;
    (ii) The last date on which the summary proxy statement is mailed to 
members will be deemed the date on which notice is given for purposes of 
paragraph (c)(1) of this section. Without prior approval by the Office, 
the special meeting of members shall not be held fewer than 20 days 
after the last date on which the supplemental information statement is 
mailed to requesting members;
    (iii) The supplemental information statement required to be 
furnished to members pursuant to paragraph (c)(2)(i) of this section may 
be combined with Form OC, if the subscription offering is commenced 
concurrently with or during the proxy solicitation period pursuant to 
Sec. 563b.3(d)(1) of this subpart A; and
    (iv) The summary proxy statement shall be prepared in accordance 
with the following requirements:
    (A) All of the requirements of Form PS shall be met, with the 
exception of the following:
    (1) Item 6. Management Remuneration.
    (2) Item 7. Business of the Applicant. Paragraphs (c) through (m), 
and (o).
    (3) Item 14. Financial Statements.
    (4) Item 15. Consents of Experts and Reports. Paragraph (b).
    (B) The disclosure requirements of items 8(j), 9 and 13 of Form PS 
may be prepared in summary form.
    (C) The disclosure requirements of item 5 may be met through 
disclosure of the names, ages, and present occupations of all directors 
and executive officers.
    (D) The plan of conversion shall not be required to be attached to 
the summary proxy statement under item 16.
    (E) The statement contained in Sec. 563b.8(u) of this part shall be 
included.
    (d) Notice to eligible account holders and supplemental account 
holders who are not voting members. The converting savings association 
may give notice of the proposed conversion and the meeting of the 
association members by letter or other written communication authorized 
for use by the Office to eligible account holders and supplemental 
account holders who are not voting members. The contents of the notice 
shall be subject to Secs. 563b.4(a)(4) and (a)(5), and 563b.5(g) of this 
part; the use of the notice shall be subject to Sec. 563b.5(b) of this 
part; and filing of the notice with the Office shall be subject to 
Sec. 563b.5(e)(1), (e)(3), (e)(5), and (e)(7) of this part.
    (e) Required vote. The plan shall be approved by a vote of at least 
a majority of the total outstanding votes of

[[Page 246]]

the association members, unless State law requires a higher percentage 
for a State-chartered converting savings association, in which case the 
higher percentage shall be used. Voting may be in person or by proxy.



Sec. 563b.7  Pricing and sale of securities.

    (a) General. (1) No offer to sell securities of an applicant 
pursuant to a plan of conversion may be made prior to approval by the 
Office of the application for conversion and until the proxy statement 
has been authorized for use by the Office.
    (2) No offering circular may be transmitted to any person in 
connection with an offer or sale of a security that is the subject of a 
plan of conversion which has been filed with the Office unless the 
offering circular meets the requirements of this part or part 563g.
    (3) No sale of securities may be made except by means of a final 
offering circular which has been declared effective by the Office.
    (4) The provisions of Sec. 563b.7(a) shall not apply to preliminary 
negotiations or agreements between an applicant and any underwriter or 
among underwriters who are to be in priority of contract with the 
applicant.
    (b) Distribution of offering materials. Any preliminary offering 
circular which has been filed with the Office may be distributed in 
connection with the offering at the same time as or after the proxy 
statement is mailed to association members pursuant to Sec. 563b.6(c) of 
this part. No final offering circular shall be distributed until it has 
been declared effective by the Office. The declaration of effectiveness 
of the final offering circular by the Office shall not extend beyond the 
maximum time period specified for the completion of the sale of all the 
capital stock in paragraph (i) of this section, or beyond such period of 
time as the Office shall establish upon a subsequent declaration of 
effectiveness in the event of the granting of an extension of time under 
paragraph (k) of this section.
    (c) Estimated price information. If the offering is to commence 
prior to the meeting of the association members held to vote on the plan 
of conversion, the proxy statement authorized for use by the Office 
shall set forth the estimated price range. Any preliminary offering 
circular shall set forth the estimated price range. The maximum of such 
price range should normally be no more than 15 percent above the average 
of the minimum and maximum of such price range and the minimum should 
normally be no more than 15 percent below such average. The maximum 
price used in the price range should normally be no more than $50 per 
share and the minimum no less than $5 per share.
    (d) Prohibited representations. The Office will review the price 
information required under this section in determining whether to give 
approval to applications for conversion when the offering is to commence 
prior to the meeting of association members, and will review the 
information in determining whether to declare a final offering circular 
effective. No representations may be made in any manner that such price 
information has been approved by the Office or that the shares of 
capital stock sold pursuant to the plan of conversion have been approved 
or disapproved by the Office or that the Office has passed upon the 
accuracy or adequacy of any offering circular covering such shares.
    (e) Underwriting expenses. Underwriting commissions shall not exceed 
an amount or percentage per share accepted as reasonable by the Office 
or its delegate. No underwriting commission shall be allowed or paid 
with respect to shares of capital stock sold in the subscription 
offering unless the plan of conversion contains the optional provision 
permitted by Sec. 563b.3(d)(11) of this part; however, an underwriter 
may be reimbursed for accountable expenses in connection with the 
subscription offering where the public offering is limited such that 
reasonable underwriting commissions thereon would not be sufficient to 
cover total accountable expenses and, in the case in which no public 
offering occurs, an underwriter may be paid a consulting fee reasonable 
under the circumstances as the Office shall accept. The term 
``underwriting commissions'' includes underwriting discounts.
    (f) Pricing materials. (1) In considering the pricing information 
required under

[[Page 247]]

paragraph (c) of this section, the Office will apply the following 
guidelines:
    (i) The materials shall be prepared by persons independent of the 
applicant, experienced and expert in the area of corporate appraisal, 
and acceptable to the Office;
    (ii) The materials shall contain a full appraisal, including a 
complete and detailed description of the elements that make up an 
appraisal report, justification for the methodology employed and 
sufficient support for the conclusions reached therein;
    (iii) To the extent that the appraisal is based on a capitalization 
of the pro forma income of the converted savings association, the 
materials must indicate the basis for determination of the income to be 
derived from the proceeds of the sale of stock and demonstrate the 
appropriateness of the earnings-multiple used, including assumptions 
made as to future earnings growth. To the extent that the appraisal is 
based on comparison of the capital stock of the applicant with 
outstanding capital stock of existing stock associations, such existing 
stock associations must be reasonably comparable to the converting 
savings association in terms of such factors as size, market area, 
competitive conditions, profit history, and expected future earnings;
    (iv) In those instances where the initial appraisal report is deemed 
to be materially deficient and/or substantially incomplete, the OTS may 
deem the entire conversion application materially deficient and/or 
substantially incomplete, and in accordance with the OTS applications 
processing rules, 12 CFR part 516, decline to further process the 
application.
    (2) In addition to the information required in paragraph (f)(1) of 
this section, the applicant shall submit information demonstrating to 
the satisfaction of the Office the independence and expertise of any 
person preparing materials under this paragraph. No appraiser shall 
serve as an underwriter or selling agent under the same plan of 
conversion. No affiliate of an appraiser may act as an underwriter or 
selling agent unless procedures are followed and representations made to 
ensure that an appraiser is separate from the underwriter or selling 
agent affiliate and the underwriter or selling agent affiliate does not 
make recommendations or in any way impact the appraisal. No appraiser 
shall receive any other fee except for the fee for services rendered in 
connection with such appraisal.
    (3) In addition to the information required in paragraphs (f)(1) and 
(f)(2) of this section, the applicant shall file with the Office such 
additional information with respect to the pricing of the capital stock 
of the association as the Office may request.
    (g) Order forms for purchase of capital stock. (1) Promptly after 
the Office has declared effective the offering circular for the 
subscription offering, the applicant shall distribute order forms for 
the purchase of shares of capital stock in the offering to all eligible 
account holders, supplemental eligible account holders, voting members 
and other persons who may subscribe for shares of capital stock under 
the plan of conversion. If the converting savings association shall have 
adopted in its plan of conversion the optional provisions set forth in 
Sec. 563b.3 (d)(5), (d)(6), or (d)(11) of this part, the applicant shall 
deliver order forms to the eligible account holders, supplemental 
eligible account holders, and voting members who requested receipt of 
the offering circular.
    (2) Each order form shall be accompanied or preceded by the final 
offering circular for the subscription offering or the public offering, 
as the case may be, and a set of detailed instructions explaining how to 
properly complete such order forms.
    (3) The maximum subscription price stated on each order form shall 
be the amount to be paid when the order form is returned. The maximum 
subscription price and the actual subscription price shall be within the 
subscription price range stated in the Office's approval and the 
offering circular. If either the maximum subscription price or the 
actual subscription price is not within the subscription price range, 
the applicant must obtain an amendment to the Office's approval. If 
appropriate, the Office will condition its approval by requiring a 
resolicitation of proxies and/or order forms. If the actual public 
offering price is less than the maximum subscription price stated on the 
order form, the actual subscription price

[[Page 248]]

shall be correspondingly reduced and the difference shall be refunded to 
those who have paid the maximum subscription price, unless the 
subscribers affirmatively elect to have the difference applied to the 
purchase of additional shares of capital stock.
    (4) Each order form shall be prepared so as to indicate to the 
person receiving it, in as simple, clear and intelligible a manner as 
possible, the actions which are required or available to him or her with 
respect to the form and the capital stock offered for purchase thereby. 
Specifically, each order form shall:
    (i) Indicate the maximum number of shares that may be purchased 
pursuant to the subscription rights;
    (ii) Indicate the period of time within which the subscription 
rights must be exercised, which period of time shall be no less than 20 
days and no more than 45 days following the date of the mailing of the 
subscription offering order form;
    (iii) State the maximum subscription price per share of capital 
stock;
    (iv) Indicate any requirements as to the minimum number of shares of 
capital stock which may be purchased;
    (v) Provide a specifically designated blank space or spaces for 
indicating the number of shares of capital stock which the eligible 
account holder or other person wishes to purchase;
    (vi) Indicate the manner of required payment and, if such payment 
may be made by withdrawal from a certificate of deposit, indicate that 
such withdrawal may be made without penalty. If payment is to be made by 
withdrawal from a savings account or certificate of deposit, a box to 
check should be provided;
    (vii) Provide specifically designated blank spaces for dating and 
signing the order form;
    (viii) Contain an acknowledgment by the account holder or other 
person signing the order form that he or she has received a final 
offering circular prior to so signing; and
    (ix) Indicate the consequences of failing to properly complete and 
return the order form, including a statement that the subscription 
rights are nontransferable and will become void at the end of the 
subscription period. The order form may, and the set of instructions 
shall, indicate the place or places to which the order forms are to be 
returned and when the order forms shall be deemed to be received, such 
as by date and time of actual receipt at the address indicated or by 
date and time of postmark.
    (5) The order form may provide that it may not be modified without 
the applicant's consent after its receipt as set forth in the order 
form. If payment is to be made by withdrawal from a savings account or 
certificate of deposit, the applicant may, but need not, cause such 
withdrawal to be made upon receipt of the order form. If such withdrawal 
is made at any time prior to the closing date of the public offering, 
the applicant shall pay interest to the account holder on the account 
withdrawn as if such amount had remained in the account from which it 
was withdrawn until such closing date.
    (h) Withdrawal from certificate accounts. Notwithstanding any 
regulatory provision regarding penalties for early withdrawal from 
certificate accounts, the applicant may allow payment for capital stock 
pursuant to the exercise of subscription rights by withdrawal from a 
certificate account without the assessment of such penalties. In the 
case of early withdrawal of only a portion of such account, the 
certificate evidencing such account shall be cancelled if the applicable 
minimum balance requirement ceases to be met. The remaining balance will 
earn interest at the passbook rate.
    (i) Period for completion of sale. The sale of all shares of capital 
stock of the converting savings association to be made under the plan of 
conversion, including any sale in a public offering or direct community 
marketing, shall be completed as promptly as possible and within 45 
calendar days after the last day of the subscription period, unless 
extended by the Office.
    (j) Interest on subscriptions and direct community offering purchase 
orders. The converting savings association shall pay interest at not 
less than the passbook rate on all amounts paid in cash or by check or 
money order to the association to purchase shares of capital stock in 
the subscription offering or direct community offering from the date

[[Page 249]]

payment is received by the association until the conversion is completed 
or terminated.
    (k) Extensions of time to complete public offering or direct 
community offering; post-effective amendments to subscription offering 
circular. (1) The Office may grant one or more extensions of the time 
required to complete the sale of all shares of capital stock under 
paragraph (i) of this section, provided that no single extension of time 
shall exceed 90 days.
    (2) Immediately upon the granting of an extension of time pursuant 
to paragraph (k)(1) of this section, the converting savings association 
shall distribute to each subscriber in the offering and, if applicable, 
each person who has ordered capital stock in the direct community 
offering, a post-effective amendment to the offering circular filed 
under an amendment to the application for conversion and declared 
effective by the Office pursuant to paragraph (k)(4) of this section 
which shall notify each subscriber and each ordering person of the 
granting of the extension of time, and of the right of each subscriber 
and each ordering person to increase, decrease or rescind this 
subscription:
    (i) At any time prior to 20 days before the end of the extension 
period; or (ii) at any time prior to the date of the commencement of the 
public offering or the direct community offering: Provided, That if the 
public offering or the direct community offering is not completed within 
20 days after its commencement, all instructions from subscribers and 
ordering persons to increase, decrease, or rescind their subscriptions 
or orders received during the 20-day offering period shall be honored by 
the converting savings association.
    (3) For the purpose of paragraph (k) of this section, the public 
offering shall be deemed to commence upon the filing with the Office of 
the preliminary offering circular for the public offering, and the 
direct community offering shall be deemed to commence upon the 
declaration of effectiveness by the Office of the final offering 
circular.
    (4) After the expiration of subscription rights, the converting 
savings association shall file with and have declared effective by the 
Office a post-effective amendment to the offering circular delivered to 
subscribers upon the occurrence of any event, circumstance, or change of 
circumstance which would be material to the investment decision of a 
subscriber or, if applicable, a person who has ordered capital stock in 
the direct community offering.
    (5) Any post-effective amendment to an offering circular distributed 
to subscribers in the offering shall be distributed by the converting 
savings association immediately after the declaration of effectiveness 
to each subscriber, and, if applicable, each person who has ordered 
stock in the direct community offering, and the converting savings 
association shall grant to each subscriber and ordering person the right 
to increase, decrease, or rescind his or her subscription or order for a 
period which shall be no less than the greater of ten days from the date 
of the mailing of the post-effective amendment or the period remaining 
in an extension of time granted by the Office pursuant and subject to 
the provisions of paragraph (k)(2) of this section.

[54 FR 49596, Nov. 30, 1989, as amended at 59 FR 22734, May 3, 1994; 59 
FR 61262, Nov. 30, 1994]



Sec. 563b.8  Procedural requirements.

    (a) Filing an application for conversion. An applicant that desires 
to convert in accordance with this part shall file ten copies of an 
application for approval in the form prescribed by the Office.
    (b) Return of improperly executed or materially incomplete filings. 
(1) Any application for approval that is improperly executed shall not 
be accepted for filing and shall be returned to the applicant.
    (2) Subject to the provisions of paragraph (b)(3) of this section, 
any application for approval that does not contain copies of:
    (i) A plan of conversion;
    (ii) A preliminary proxy statement with signed financial statements; 
and
    (iii) A preliminary form of proxy, shall not be accepted for filing 
and shall be returned to the applicant.

Any application for approval containing a materially incomplete plan of 
conversion, proxy statement, or form

[[Page 250]]

of proxy may be returned by the Office to the applicant.
    (3) Any application for approval which contains, at a minimum, a 
materially complete plan of conversion shall be accepted for filing if 
the application for approval is accompanied by the written request of 
the applicant that the application not be reviewed by the Office until 
the applicant requests and the Office consents to the filing of the 
additional materials set forth in paragraph (b)(2) of this section.
    (c) Additional filing requirements. An applicant whose plan of 
conversion has been approved by the Office shall fulfill the following 
requirements.
    (1) The applicant shall file with the Office promptly after the 
meeting of association members called to consider the plan of conversion 
a certified copy of each resolution adopted at such meeting relating to 
the plan of conversion, together with the following information:
    (i) The total number of votes eligible to be cast;
    (ii) The total number of votes represented in person or by proxy at 
the meeting;
    (iii) The total number of votes cast in favor of and against each 
such matter; and
    (iv) The percentage of votes necessary to approve each such matter.

The compilation of the votes cast at the meeting may be prepared for the 
savings association by an independent public accountant or by an 
independent transfer agent.
    (2) The applicant shall file with the Office promptly after the 
meeting of association members called to consider the plan of conversion 
an opinion of counsel to the effect that:
    (i) The meeting of members was duly held in accordance with all 
requirements of applicable State and Federal law and regulation;
    (ii) All requirements of State law applicable to the conversion have 
been complied with; and
    (iii) If the association has used proxies executed prior to the 
proxy solicitation required by Sec. 563b.6(c)(1), the authority 
conferred by such proxies includes authority to vote on the plan of 
conversion.
    (3) Each offering circular for the offering shall be prepared in 
compliance with this part and Form OC. The applicant shall file with the 
Office ten copies of each preliminary offering circular and twenty-five 
copies of each final offering circular.
    (d) Termination or amendment of charter. (1) Upon approval of a plan 
of conversion by the members of a State-chartered savings association or 
a Federal savings association which is converting to a State-chartered 
stock savings association, the charter of such savings association shall 
terminate effective upon the issuance to it of a stock charter under the 
laws of the State in which the home office of the applicant is located. 
If such converting savings association is a Federal savings association, 
its Federal charter shall promptly be surrendered to the Office for 
cancellation. A savings association converting to a State-chartered 
stock savings association shall promptly file with the Office a copy of 
the stock charter issued to it.
    (2) A mutual association converting to a Federal stock association 
shall apply to amend its charter and bylaws to read in a form consistent 
with part 552 of this chapter. The effective date of such amendment 
shall be stated in the Office's order approving the conversion.
    (3) The corporate existence of a mutual association converting to a 
federally-chartered stock association shall not terminate, but the 
converted association shall be deemed to be a continuation of the 
association so converted. In the case of a Federal or a State-chartered 
mutual savings association converting to a State-chartered stock savings 
association, unless State law otherwise prescribes, the corporate 
existence of the converting savings association shall similarly not 
terminate and the converted savings association shall be deemed to be a 
continuation of the savings association so converted.
    (e) Number of copies; place of filing; binding; signatures. (1) 
Whenever a requirement is made under this part for the filing of four 
copies of any document with the Office, one copy shall be filed with the 
Regional Director or his or her designee and the remaining copies with 
the Chief Counsel, Business

[[Page 251]]

Transactions Division, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC 20552. Whenever a requirement is made under this part for 
the filing of ten or more copies of any document with the Office, three 
copies shall be filed with the Regional Director or his or her designee 
and the remaining copies with the Chief Counsel, Business Transactions 
Division. Whenever a requirement is made under this part that a document 
to be filed be manually signed, one manually signed copy shall be filed 
with the Regional Director or his or her designee and another with the 
Chief Counsel, Business Transactions Division. Other copies shall be 
conformed. Each of the copies filed under this part shall be bound, in 
one or more parts, without stiff covers. The binding shall be made on 
the side or stitching margin in such manner as to leave the reading 
matter legible.
    (2) At least two copies of every application and every amendment 
thereto filed shall be manually signed by:
    (i) A duly authorized representative of the applicant on its behalf;
    (ii) Its principal executive officer;
    (iii) Its principal financial officer;
    (iv) Its principal accounting officer; and
    (v) At least two-thirds of its directors.
    (3) If any name is signed to an application or any amendment thereto 
pursuant to a power of attorney, four copies of such power of attorney, 
including two manually signed, shall be filed with the application.
    (4)(i) Except as provided in paragraph (e)(4)(ii) of this section, 
the filing of any application or amendment thereto under this part shall 
constitute a representation of the applicant by its duly authorized 
representative, the applicant's principal executive officer, the 
applicant's principal financial officer, and the applicant's principal 
accounting officer, and each member of the applicant's board of 
directors (whether or not such director has signed the application or 
any amendment thereto) severally that:
    (A) He or she has read such application or amendment;
    (B) In the opinion of each such person, he or she has made such 
examination and investigation as is necessary to enable him or her to 
express an informed opinion that such application or amendment complies 
to the best of his or her knowledge and belief with the applicable 
requirements of this part and forms prescribed hereunder; and
    (C) Each such person holds such informed opinion.
    (ii) The representations specified in paragraph (e)(4)(i) of this 
section shall not be deemed to have been made by any director of the 
applicant who did not sign the application or any amendment thereto, if, 
and only to the extent that, such director files with the Office within 
10 business days after the filing of such application or amendment a 
statement describing those portions of such filing as to which he or she 
does not so represent.
    (f) Requirements as to paper and printing. (1) Applications shall be 
filed on good quality, unglazed, white paper approximately 8\1/2\ by 13 
or 8\1/2\ by 11 inches in size, insofar as practicable. However, tables, 
charts, maps and financial statements may be on larger paper if folded 
to such sizes, and the plan of conversion, proxy statement and offering 
circular may be on smaller paper if the applicant so desires.
    (2) Applications and, insofar as practicable, all papers and 
documents filed as a part thereof, shall be printed, lithographed, 
mimeographed or type-written. However, applications for any portion 
thereof may be prepared by any similar process which, in the opinion of 
the Office, produces copies suitable for a permanent record. 
Irrespective of the process used, all copies of any such material shall 
be clear, easily readable and suitable for repeated photocopying. Debits 
in credit categories and credits in debit categories shall be designated 
so as to be clearly distinguishable as such on photocopies.
    (g) Method of preparation. Every application shall furnish 
information in item-and-answer form in response to the items of the 
appropriate form, and shall include the captions of the form, but omit 
the text of all items and instructions. Every proxy statement and 
offering circular shall present information as provided in paragraph (n) 
of this section in response to the items of

[[Page 252]]

the appropriate form in lieu of furnishing the information in item-and-
answer form, and shall omit the captions and text of all items and 
instruction. Every application shall include a cross reference sheet 
showing the location in the proxy statement and offering circular of the 
response to the items of the appropriate form. If any such item is 
inapplicable, or the answer thereto is in the negative and is omitted, a 
statement to that effect shall be made in the cross reference sheet.
    (h) Interpretation of requirements. (1) Unless the context indicates 
otherwise, the forms require information only as to the applicant.
    (2) Whenever words relate to the future, they have reference solely 
to present intention.
    (3) Any words indicating the holder of a position or office include 
persons, by whatever titles designated, whose duties are those 
ordinarily performed by holders of such positions or offices.
    (i) Additional information. In addition to the information expressly 
required to be included in any application under this part, there shall 
be added such further material information, if any, as may be necessary 
to make the required statements, in the light of the circumstances under 
which they made, not misleading.
    (j) Information unknown or not reasonably available. Information 
required need be given only insofar as it is known or reasonably 
available to the applicant. If any required information is unknown and 
not reasonably available to the applicant, either because the obtaining 
thereof would involve unreasonable effort or expense, or because it 
rests peculiarly within the knowledge of another person not affiliated 
with the applicant, the information may be omitted, subject to the 
following conditions:
    (1) The applicant shall give such information on the subject as it 
possesses or can acquire without unreasonable effort or expense, 
together with the sources thereof.
    (2) The applicant shall include a statement either showing that 
unreasonable effort or expense would be involved or indicating the 
absence of any affiliation with the person within whose knowledge the 
information rests and stating the result of a request made to such 
person for the information.
    (k) Incorporation of certain information by reference. (1) Where an 
item in an application calls for information not required to be included 
in the proxy statement or offering circular, matter contained in any 
part of the application, including exhibits, may be incorporated by 
reference in answer, or partial answer, to such item. No information may 
be incorporated by reference in a proxy statement or offering circular, 
unless the document containing such information is attached thereto or 
is summarized or outlined as provided in paragraph (l) of this section. 
However, an offering circular may incorporate by reference the 
information contained in a proxy statement previously delivered, without 
need of summary or outline.
    (2) Material incorporated by reference shall be clearly identified 
in the reference. An express statement that the specified matter is 
incorporated by reference shall be made at the particular place in the 
application where the information is required. Matter shall not be 
incorporated by reference in any case where such incorporation would 
render the statement incomplete, unclear or confusing.
    (l) Summaries or outlines of documents. Where a summary or outline 
of the provisions of any document is required, only a brief statement 
shall be made, in succinct and condensed form, as to the most important 
provisions of the document. In addition to such statement, the summary 
or outline may incorporate by reference particular items, sections or 
paragraphs of any exhibit and may be qualified in its entirety by such 
reference.
    (m) Legibility of materials. The body of all printed plans of 
conversion, proxy statements, and offering circulars, including all 
notes to financial statements and other tabular data included therein, 
shall be in roman type at least as large and as legible as 10-point 
modern type. However, to the extent necessary for convenient 
presentation, financial statements and other tabular data, including 
tabular data in notes, may be in roman type at least as large

[[Page 253]]

and as legible as 8-point modern type. All such type shall be leaded at 
least 2 points.
    (n) Presentation of information. (1) The information required in a 
proxy statement or offering circular need not follow the order of the 
items or other requirements in the appropriate form. Such information 
shall not, however, be set forth in such fashion as to obscure any of 
the required information or any information necessary to keep the 
required information from being incomplete or misleading. Where an item 
requires information to be given in tabular form it shall be given in 
substantially the tabular form specified in the item.
    (2) All information contained in a plan of conversion, proxy 
statement or offering circular shall be set forth under appropriate 
captions or headings reasonably indicative of the principal subject 
matter set forth thereunder. Except as to financial statements and other 
tabular data, all information set forth in any form under this part 
shall be divided into reasonably short paragraphs or sections.
    (3) Every proxy statement and offering circular shall include in the 
forepart thereof a reasonably detailed table of contents showing the 
subject matter of its various sections or subdivisions and the page 
number on which each such section or subdivision begins.
    (4) All information required to be included in a proxy statement or 
offering circular shall be clearly understandable without the necessity 
of referring to the particular form or to the regulations under this 
part. Except as to financial statements and information required in 
tabular form, the information set forth in a proxy statement or offering 
circular may be expressed in condensed or summarized form.
    (5) Financial statements are to be set forth in comparative form, 
and shall include the notes thereto and the accountants' certificate or 
certificates. Section 563c.1 of this chapter governs the certification, 
form and content of such financial statements, including the basis of 
consolidation.
    (o) Application of amendments to regulations and forms. (1) The form 
and contents of any filing made under the provisions of this part need 
conform only to the applicable regulations and forms then in effect, and 
contain the information, including financial statements specified 
therein, required at the time the filing is made, notwithstanding 
subsequent amendments to such regulations, except as otherwise provided 
in any such amendment or in paragraph (o)(2) of this section.
    (2) Whenever the Office prohibits by order or otherwise the use of 
any filing under this part, the form and contents of any filing used 
thereafter shall conform to the requirements of such order and the 
applicable regulations and forms in effect at the time such prohibition 
ceases to be effective.
    (p) Consents of experts. (1) If any accountant, attorney, investment 
banker, appraiser, or other persons whose professions give authority to 
a statement made in any application under this part are named as having 
prepared, reviewed, passed upon, or certified any part thereof, or any 
report or valuation for use in connection therewith, the written consent 
of such person shall be filed with the application. If any portion of a 
report of an expert is quoted or summarized as such in any filing under 
this part, the written consent of the expert shall expressly state that 
the expert consents to such quotation or summarization.
    (2) All written consents filed pursuant to paragraph (p) of this 
section shall be dated and signed manually. A list of such consents 
shall be filed with the application. Where the consent of the expert is 
contained in his or her report, a reference shall be made in the list to 
the report containing such consent.
    (q) Consents of persons about to become directors. If any person who 
has not signed an application is named in the proxy statement or 
offering circular as about to become a director, the written consent of 
such person shall be filed with the appropriate form.
    (r) Date of filing. The date on which any documents are actually 
received by the Office in the manner prescribed in this part shall be 
the date of filing thereof.
    (s) Amendments. All amendments to any application under this part 
shall be

[[Page 254]]

filed under cover of an appropriate facing sheet, shall be numbered 
consecutively in the order in which filed, and shall conform to all 
pertinent regulations applicable to the type of application which they 
amend.
    (t) Pre-filing conferences with applicants. (1) The staff of the 
Office, including the Regional Director or his or her designee, will be 
available for conferences with prospective applicants or their 
representatives in advance of filing an application to convert. These 
conferences may be held for the purpose of discussing generally the 
problems confronting an applicant in effecting conversion or to resolve 
specific problems of an unusual nature.
    (2) Pre-filing review of an application may be refused by the staff 
of the Office if such review would delay the examination and processing 
of material which has already been filed or would favor certain 
applicants at the expense of others. In any conference under paragraph 
(t) of this section, the staff of the Office will not undertake to 
prepare material for filing but will limit themselves to indicating the 
kind of information required, leaving the actual drafting to the 
applicant and its representatives.
    (u) Review of the Office's action. Any person aggrieved by a final 
action of the Office which approves, with or without conditions, or 
disapproves a plan of conversion pursuant to this part may obtain review 
of such action by filing in the court of appeals of the United States 
for the circuit in which the principal office or residence of such 
person is located, or in the U.S. Court of Appeals for the District of 
Columbia Circuit, a written petition praying that the final action of 
the Office be modified, terminated or set aside. Such petition must be 
filed within 30 days after publication of notice of such final action in 
the Federal Register, or 30 days after the mailing by the applicant of 
the notice to members as provided for in Sec. 563b.6(c) of this part, 
whichever is later. The further procedure for review is as follows: A 
copy of the petition is forthwith transmitted to the Office by the clerk 
of the court and thereupon the Office files in the court the record in 
the proceeding, as provided in section 2112 of title 28 of the U.S. 
Code. Upon the filing of the petition, the court has jurisdiction, which 
upon the filing of the record is exclusive, to affirm, modify, 
terminate, or set aside in whole or in part, the final action of the 
Office. Review of such proceedings is had as provided in chapter 7 of 
title 5 of the U.S. Code. The judgment and decree of the court is final, 
except that they are subject to review by the Supreme Court upon 
certiorari as provided in section 1254 of title 28 of the U.S. Code.
    (v) Post-conversion reports. The applicant shall file such post-
conversion reports concerning its conversion as the Office may require.

[54 FR 49596, Nov. 30, 1989, as amended at 57 FR 14348, Apr. 20, 1992; 
59 FR 22735, May 3, 1994; 60 FR 66718, Dec. 26, 1995]



Sec. 563b.9  Conversion of a savings association in connection with the formation of a holding company.

    A savings association may convert to the stock form pursuant to this 
subpart A as part of a transaction in which a holding company is 
organized to acquire upon issuance all the capital stock of the 
converted savings association. In such a transaction eligible account 
holders, supplemental eligible account holders, and voting members of 
the converting savings association shall receive, without payment, 
nontransferable rights under Sec. 563b.3(c)(2), (c)(4), and (c)(5) of 
this part to purchase capital stock of the newly-formed holding company 
in lieu of capital stock of the converting association. Unless clearly 
inapplicable, all of the requirements of this subpart A shall apply to a 
conversion under this section.



Sec. 563b.10  Conversion of a savings association through merger with an existing holding company or stock savings association.

    A savings association that qualifies for a voluntary supervisory 
conversion under subpart C of this part may convert to stock form by 
merging with an existing holding company or interim Federal or state 
chartered stock association in a transaction in which stock of the 
existing holding company or resulting association is issued.

[59 FR 22735, May 3, 1994]

[[Page 255]]



Sec. 563b.11  Convenience and needs considerations.

    In reviewing an application under this subpart, the Office will 
examine the extent to which the conversion will affect the convenience 
and needs of the communities to be served by the converted savings 
association. The Office will review the applicant's record under part 
563e of this chapter. In addition, the Office will scrutinize the 
business plan of the applicant. Each applicant must demonstrate that the 
proposed deployment of proceeds contained in its business plan will help 
meet the credit and lending needs of the communities served by the 
applicant. Also, the Office will consider other relevant factors 
relating to the association's performance in meeting the convenience and 
needs of the community. Based on an assessment of the applicant's record 
under part 563e of this chapter, the applicant's business plan and other 
relevant factors, the Office may approve the application, deny the 
application, or approve the application on the condition that the 
applicant improve certain aspects of its CRA performance record or 
address particular credit or lending needs of the communities that it 
serves.

[59 FR 61262, Nov. 30, 1994]

Subpart B [Reserved]



           Subpart C--Voluntary Supervisory Stock Conversions



Sec. 563b.20  Scope of subpart.

    (a) Except as the Office may otherwise determine, the provisions of 
this subpart shall govern the voluntary supervisory conversion from the 
mutual to stock form of savings associations as authorized, ordered or 
concurred in by the Office or the FDIC pursuant to sections 5(i) (1) and 
(2), 5(o)(2)(C), and 5(p) of the Home Owners' Loan Act, 12 U.S.C. 
1464(i) (1), (2), (o)(2)(C), and (p).
    (b) All of the provisions of Subpart A of this part shall apply to a 
supervisory conversion undertaken pursuant to this subpart unless 
clearly inapplicable.



Sec. 563b.21  Voluntary supervisory conversions.

    (a) A voluntary supervisory conversion of a savings association 
pursuant to this subpart may involve the sale of a converting 
association's shares directly to an acquiror(s), which may be a person, 
company, depository institution, or depository institution holding 
company. The conversion may result in the converting association being 
merged into or consolidated with an existing or newly created depository 
institution, but only as authorized by and in accordance with any 
limitations or restrictions imposed by applicable laws and regulations.
    (b) A majority of the directors of the converting association must 
adopt a plan of voluntary supervisory conversion that complies with the 
provisions of this subpart. The members of the association have no 
rights of approval or participation in the voluntary supervisory 
conversion, or to the continuance of any legal or beneficial ownership 
interests in the converted association, unless otherwise provided by the 
OTS. The members shall have interests in a liquidation account, if one 
is established, pursuant to Sec. 563b.28 of this subpart.

[57 FR 49380, Nov. 2, 1992]



Sec. 563b.22  Purpose of subpart.

    The purpose of this subpart is to give guidance to savings 
associations and potential acquirors of the stock of converting savings 
associations regarding the qualification of savings associations for a 
supervisory conversion under this subpart, and guidance as to the extent 
to which the Office will permit, by means of a supervisory conversion, 
deviations from the substantive and procedural requirements adopted by 
the Office for standard conversions under subpart A of this part.



Sec. 563b.23  Authorization of supervisory conversions.

    (a) The OTS may authorize or order a voluntary supervisory 
conversion if a savings association files an application containing the 
information and documents specified in Sec. 563b.27 of this subpart, in 
accordance with the procedures specified in Sec. 563b.29 of this 
subpart,

[[Page 256]]

and meets the qualification standards specified in Sec. 563b.24 of this 
subpart. If the OTS authorizes or orders a supervisory stock conversion, 
the conditions specified in Sec. 563b.30 of this subpart must be 
fulfilled and the resulting institution and the purchaser(s) of its 
conversion stock must comply with the requirements of Sec. 563b.31 of 
this subpart.
    (b) In connection with approval of an association's conversion, the 
OTS may impose conditions and restrictions on the converting or 
resulting institution, the acquiror, and controlling parties, directors 
and officers of either, to prevent unsafe or unsound practices, to 
protect the deposit insurance funds and the public interest, and to 
prevent potential injury or detriment to the converting or resulting 
association. The OTS generally will exercise this authority consistent 
with applicable supervisory policies.
    (c) The OTS may deny an association's conversion if the Office 
determines that the converting or resulting association, the acquiror, 
or controlling parties or directors and officers of either, have engaged 
in unsafe or unsound practices in connection with the transaction, or 
that the transaction is detrimental to or would cause potential injury 
to the converting or resulting association, the Federal deposit 
insurance funds or is contrary to the public interest.
    (d) For three years following the date of completion of a voluntary 
supervisory conversion, neither any controlling shareholder nor the 
resulting institution may acquire shares from minority shareholders 
without the prior approval of the OTS.

[57 FR 49381, Nov. 2, 1992]



Sec. 563b.24  Qualification for supervisory conversion of SAIF-insured associations.

    (a) The OTS in its discretion may authorize the supervisory 
conversion of a SAIF-insured savings association upon finding that the 
association:
    (1) Is significantly undercapitalized; and
    (2) Would be a viable entity as determined under Sec. 563b.26 of 
this subpart, following the conversion.
    (b) The OTS in its discretion also may authorize the supervisory 
conversion of a SAIF-insured savings association upon finding that the 
association:
    (1) Is undercapitalized;
    (2) Demonstrates by clear evidence that a standard conversion that 
would raise sufficient capital to enable the association to be 
adequately capitalized is not feasible; and
    (3) Would be a viable entity as determined under Sec. 563b.26 of 
this subpart, following the conversion.
    (c) Notwithstanding any other provision of law, the OTS also may 
authorize, (or in the case of a Federal savings association require), 
the conversion of a savings association into a Federal savings 
association pursuant to section 5(p) of the Home Owners' Loan Act, 12 
U.S.C. 1464(p).

[57 FR 49381, Nov. 2, 1992]



Sec. 563b.25  Qualification for supervisory conversion of BIF-insured savings associations.

    (a) The Office may, in its discretion, concur with the determination 
of the FDIC that a BIF-insured mutual savings bank qualifies for a 
voluntary supervisory conversion if the FDIC certifies to the Office in 
accordance with section 5(o)(2)(C) of the Home Owners' Loan Act, 12 
U.S.C. 1464(o)(2)(C), that severe financial conditions exist that 
threaten the stability of the savings bank and that the voluntary 
supervisory conversion is likely to improve the financial condition of 
the savings bank; or
    (b) The Office may, in its discretion, authorize a BIF-insured 
savings association to undergo a voluntary supervisory conversion to 
Federal stock form if the following conditions have been met:
    (1) The association's liabilities exceed its assets, as calculated 
under generally accepted accounting principles, assuming the association 
is a going concern; and
    (2)(i) A sufficient amount of permanent capital stock is issued in 
connection with the voluntary supervisory conversion to allow the 
association to meet its capital requirement as established by the FDIC 
immediately upon completion of the conversion; or

[[Page 257]]

    (ii) The FDIC has indicated that, based upon the association's 
proposed post-conversion operating plan, the association would achieve a 
capital level acceptable to the FDIC within a period satisfactory to the 
FDIC.



Sec. 563b.26  Viability of converted savings association.

    (a) An application of a SAIF-insured savings association to convert 
pursuant to this subpart may be approved by the Office in its discretion 
if it finds that the SAIF-insured savings association will be a ``viable 
entity'' following the conversion.
    (b) A converting SAIF-insured association is a ``viable entity'' if:
    (1) As part of the plan of conversion:
    (i) The capital being infused into the association through its 
conversion is sufficient to cause the converted or resulting association 
to be adequately capitalized; provided that the OTS, in its discretion, 
may require higher capitalization as it deems appropriate for safety and 
soundness reasons; and
    (ii) The converting association, its proposed conversion, and any 
acquiror(s) comply with applicable supervisory policies; and
    (2) The transaction taken as a whole is in the best interest of, and 
does not present potential for injury or detriment to, the converting 
association, the federal deposit insurance funds, or the public 
interest.

[54 FR 49596, Nov. 30, 1989, as amended at 57 FR 49381, Nov. 2, 1992]



Sec. 563b.27  Application for voluntary supervisory stock conversion.

    A savings association may apply for OTS approval of a voluntary 
supervisory conversion pursuant to this subpart by filing the following 
information and documents in accordance with the procedures specified in 
Sec. 563b.29 of this subpart:
    (a) A plan of conversion adopted by a majority of the directors of 
the association, which shall contain at a minimum the name and address 
of the savings association; the names, addresses, dates and places of 
birth, and social security numbers of the proposed purchasers of 
conversion stock and their relationship to the savings association; the 
title, per-unit par value, number, and per-unit and aggregate offering 
price of shares of conversion stock to be authorized and issued; the 
number and percentage of shares of conversion stock to be purchased by 
each investor, the aggregate number and percentage of shares of 
conversion stock to be purchased by directors, officers and their 
affiliates and associates (as defined in Sec. 563b.2(a) of this part); a 
description of the liquidation account, if required under Sec. 563b.28 
of this subpart or if otherwise established; and certified copies of all 
resolutions of the board of directors relating to the Plan.
    (b) A copy of any agreements between the savings association and the 
proposed conversion stock purchasers.
    (c) An opinion of qualified, independent counsel or an independent, 
certified public accountant regarding the tax consequences to the 
savings association arising from the conversion, or an Internal Revenue 
Service ruling that the transaction qualifies as a tax-free 
reorganization.
    (d) A business plan, which shall contain a description of the 
proposed operating policies of the savings association or the resulting 
savings association following the conversion, including a statement as 
to how the conversion proceeds will be used, and a projection of the 
savings association's results of operations for the three-year period 
following completion of the conversion. The projections should show the 
continuing ability of the converted association to meet applicable 
capital requirements. The savings association shall specify the 
assumptions on which its projections are based.
    (e) A Holding Company Act application, Control Act notice, or 
rebuttal submission for each proposed conversion stock acquiror as may 
be required under part 574 of this chapter, if applicable, and any 
required prior-conduct certification pursuant to RB 20 \1\ for each such 
acquiror.
---------------------------------------------------------------------------

    \1\ Regulatory Bulletins are available at the address listed in 
Sec. 516.40(b) of this chapter.
---------------------------------------------------------------------------

    (f) The proposed charter and bylaws of the converted savings 
association.
    (g) The proposed stock certificate form.

[[Page 258]]

    (h) A description of all existing and proposed employment contracts, 
if applicable.
    (i) All filings required under the securities offering rules of 12 
CFR parts 563b and 563g.
    (j) A subordinated debt application, if applicable.
    (k) Applications for permission to organize a stock association and 
for approval of a merger, if applicable, and a copy of the applications 
for Federal Home Loan Bank membership, and FDIC insurance of accounts, 
if applicable.
    (l) Information to support the value of any non-cash assets to be 
contributed to the savings association in connection with the voluntary 
supervisory conversion, if applicable. Appraisals submitted in this 
connection must be acceptable to the OTS.
    (m) A description of the estimated expenses of the voluntary 
supervisory conversion to the savings association.
    (n) The association's most recent audited financial statements and 
Thrift Financial Report with an appropriate explanation to support the 
determination that the association's current capital levels qualify it 
to undertake a supervisory conversion.
    (o) Pro forma financial statements prepared in accordance with the 
regulations and policies of the OTS to reflect the effects of the 
transaction. These pro forma financial statements should be supplemented 
to identify the converting or resulting association's tangible, core, 
and risk-based capital levels and show the appropriate adjustments 
necessary to compute such capital levels.
    (p) An opinion of independent counsel that the voluntary supervisory 
conversion of a state-chartered savings association to state stock form 
is authorized under applicable state law, if applicable.
    (q) A specific description of any of the features of the savings 
association's application that do not conform to the requirements of 
this subpart.
    (r) A specific description of and detailed justification for any 
waivers or supervisory forbearances that are requested as part of the 
voluntary supervisory conversion.
    (s) A statement of all other applications required pursuant to 
federal or state banking laws for all transactions related to the 
association's conversion, copies of all decisions, orders, opinions, and 
other similar dispositive documents issued by such regulatory 
authorities relating to such applications, and, if requested by the OTS, 
copies of such applications and related documents.

[54 FR 49596, Nov. 30, 1989, as amended at 57 FR 49381, Nov. 2, 1992; 66 
FR 13009, Mar. 2, 2001]



Sec. 563b.28  Liquidation account.

    A liquidation account must be established in accordance with the 
requirements set forth at Sec. 563b.3(f) of this part; provided, 
however, that the OTS may waive this requirement if the converting 
association's tangible capital is less than zero, or for other good 
cause.

[57 FR 49382, Nov. 2, 1992]



Sec. 563b.29  Procedural requirements.

    (a) Filing of voluntary supervisory conversion application. A 
savings association seeking to convert pursuant to this subpart shall 
file with the OTS the information and documents specified in 
Sec. 563b.27 of this subpart.
    (b) Incomplete application. An application for supervisory stock 
conversion that does not contain all of the applicable information and 
documents specified in Sec. 563b.27 of this part shall constitute an 
incomplete application, and the Regional Director shall continue to seek 
other appropriate supervisory resolutions of the association's financial 
condition pending the filing of a complete application.
    (c) [Reserved]
    (d) Termination or amendment of charter. (1) Upon approval by the 
Office of a plan of supervisory stock conversion of a state-chartered 
savings association or a federally-chartered savings association which 
is converting to a state-chartered stock savings association, the mutual 
charter of such savings association shall terminate upon the issuance to 
it of a stock charter under the laws of the state in which its home 
office is located. If such converting savings association is a 
federally-chartered savings association, its federal

[[Page 259]]

charter shall be surrendered promptly to the Office for cancellation. A 
savings association converting to a state-chartered stock savings 
association shall promptly file with the Office a copy of the stock 
charter issued to it.
    (2) A mutual savings association converting to a federally-chartered 
stock savings association shall apply to amend its charter and bylaws to 
read in a form consistent with part 552 of this chapter. The effective 
date of such amendment shall be stated in the Office's order approving 
the conversion.
    (3) The corporate existence of a mutual savings association 
converting to a federally-chartered stock savings association shall not 
terminate, but the converted association shall be deemed to be a 
continuation of the association so converted. In the case of a federal 
or state-chartered mutual savings association converting to a state-
chartered stock savings association, unless state law otherwise 
prescribes, the corporate existence of the converting mutual savings 
association shall similarly not terminate and the converted savings 
association shall be deemed to be a continuation of the savings 
association so converted.

[54 FR 49596, Nov. 30, 1989, as amended at 55 FR 13516, Apr. 11, 1990; 
57 FR 14348, Apr. 20, 1992. Redesignated at 57 FR 49382, Nov. 2, 1992; 
60 FR 66718, Dec. 26, 1995]



Sec. 563b.30  Conditions of approval.

    The Office's approval of a supervisory conversion application will 
be conditioned upon the following:
    (a) Completion of the sale of conversion stock within a maximum of 
three months after the Office approves the application, or within such 
additional period as the OTS may for good cause grant;
    (b) Compliance with all filing requirements of 12 CFR parts 563b and 
563g;
    (c) Submission of an opinion of independent legal counsel that all 
applicable state securities law requirements have been met in connection 
with the sale of the association's conversion stock;
    (d) Compliance with all applicable laws, rules, and regulations; and
    (e) Satisfaction of any other requirement or conditions the Office 
may impose.

[54 FR 49596, Nov. 30, 1989, as amended at 57 FR 14348, Apr. 20, 1992. 
Redesignated at 57 FR 49382, Nov. 2, 1992]



Sec. 563b.31  Sale of conversion stock.

    Each savings association that converts pursuant to this subpart 
shall offer and sell its conversion stock pursuant to the requirements 
of 12 CFR part 563g.

[54 FR 49596, Nov. 30, 1989. Redesignated at 57 FR 49382, Nov. 2, 1992]



Sec. 563b.32  Expenses.

    Expenses incurred by a savings association in connection with its 
voluntary supervisory conversion application shall be reasonable and, 
with respect to a SAIF-insured savings association, shall not be in an 
amount such that the payment of such expenses would render the proceeds 
to the association from the sale of its conversion stock insufficient to 
satisfy the viability requirement of Sec. 563b.26 of this subpart.

[54 FR 49596, Nov. 30, 1989. Redesignated at 57 FR 49382, Nov. 2, 1992]



Sec. 563b.33  Employment contracts.

    An applicant for voluntary supervisory conversion must justify any 
employment contract incidental to the conversion, and otherwise 
demonstrate that the making of such an employment contract by a savings 
association would not be an unsafe or unsound practice or represent a 
sale of control. The Office shall determine the permissibility of such 
contract based upon, at a minimum, the applicant's justification for the 
contract, the term, salary, and severance provisions of the contract, 
the identity and background of the officer or employee who is subject to 
the employment contract, and the amount of the conversion stock to be 
purchased by such officer or employee or his or her affiliates or 
associates. Any employment contract incident to a voluntary supervisory 
conversion with a term in excess of one year granted to existing 
management of a

[[Page 260]]

savings association generally will be disfavored.

[54 FR 49596, Nov. 30, 1989. Redesignated at 57 FR 49382, Nov. 2, 1992]

Subpart D [Reserved]



                            Subpart E--Forms



Sec. 563b.100  Form AC--Application for Conversion.

                                 Form AC

                             [Facing Sheet]

                      OFFICE OF THRIFT SUPERVISION

1700 G Street, NW., Washington, DC 20552

                       Application for Conversion

_______________________________________________________________________
(Exact name of Applicant as specified in charter)

_______________________________________________________________________
(Street address of applicant)

_______________________________________________________________________
(City, State and Zip Code)

Date of Application_____________________________________________________
_______________________________________________________________________

                          General Instructions

                      A. Rules as to Use of Form AC

    Form AC shall be used by any savings association seeking approval by 
the Office of conversion from the mutual to the stock form of 
organization pursuant to part 563b of the Rules and Regulations 
Applicable to All Savings Associations.

                 B. Application of Rules and Regulations

    Attention is directed to Sec. 563b.8. That section contains general 
requirements regarding preparation and filing of this Form. The 
definitions in Sec. 563b.2 also should be noted.

                       Item 1. Form of Application

    Set forth an application for approval of the plan of conversion in 
the following form with the names and titles of the officers and 
directors signing the application indicated below their signatures:
    The undersigned hereby makes application for approval to convert 
into a stock association, and submits herewith a statement of its 
proposed plan of conversion and other information and exhibits as 
required by part 563b of the Rules and Regulations Applicable to All 
Savings Associations.
    In submitting this application the applicant understands and agrees 
that, if further examinations or appraisals, or both, are required by 
the Office, they will be conducted by, or as approved by, the Office at 
the expense of the applicant; and applicant will pay the costs thereof 
as computed by the Office.
    This application has been approved by at least two-thirds of the 
board of directors of the applicant. In accordance with 
Sec. 563b.8(e)(4) of the Rules and Regulations Applicable to All Savings 
Associations, by the filing of this application, the applicant by its 
duly authorized representative, the undersigned officers and each member 
of the applicant's board of directors severally represent, except to the 
extent otherwise provided in said section: (1) That each such person has 
read this application; (2) that in the opinion of each such person, he 
or she has made such examination and investigation as is necessary to 
enable him or her to express an informed opinion that this application 
complies to the best of his or her knowledge and belief with the 
applicable requirements of part 563b of the Rules and Regulations 
Applicable to All Savings Associations and forms thereunder; and (3) 
that each such person holds such informed opinion.
Attest:

Applicant_______________________________________________________________
By______________________________________________________________________
_______________________________________________________________________
(Duly Authorized Representative)

_______________________________________________________________________
(Principal Executive Officer)

_______________________________________________________________________
(Principal Financial Officer)

_______________________________________________________________________
(Principal Accounting Officer)

_______________________________________________________________________
(Director)

_______________________________________________________________________
(Director)

_______________________________________________________________________
(Director)

_______________________________________________________________________
(Director)

_______________________________________________________________________
(Director)

(Signatures of at least two-thirds of the Board of Directors)

                       Item 2. Plan of Conversion

    Furnish the complete formal written plan adopted by the board of 
directors for conversion of the applicant to the stock form of 
organization. The terms of the plan submitted pursuant to this item will 
be a basis for the Office's approval and the plan as approved will be 
distributed as an attachment to the proxy statement and the offering 
circular.

              Item 3. Proxy Statement and Offering Circular

    Furnish preliminary copies of the proxy statement and offering 
circular. The proxy statement and offering circular should be

[[Page 261]]

prepared in accordance with Forms PS and OC, respectively.

                          Item 4. Form of Proxy

    Furnish preliminary copies of the form of proxy to be distributed to 
association members by the management.

                 Item 5. Sequence and Timing of the Plan

    Set forth the expected chronological order of the events connected 
with the plan of conversion beginning with the filing of this 
application through completion of the sale of all the capital stock 
under the plan. Indicate the expected timing of any requisite approvals 
by State or other regulatory authorities (other than the Office). 
Indicate the proposed timing of all aspects of the subscription 
offering. If there will be an underwritten public or direct community 
marketing of the applicant's securities as part of the plan of 
conversion, indicate the proposed timing of all aspects of such 
offering.

                          Item 6. Record Dates

    If the applicant's plan of conversion contains an eligibility record 
date substantially earlier than one year prior to the date of adoption 
of the plan of conversion by the board of directors, state the reason 
for the selection of such earlier date.
    Indicate the circumstances that will require the use of a 
supplemental eligibility record date.

               Item 7. Expenses Incident to the Conversion

    Provide in substantially the tabular form indicated below the 
estimated expense of the conversion to the applicant.

 
 
------------------------------------------------------------------------
Legal........................................................  .........
Postage and Mailing..........................................  .........
Printing.....................................................  .........
Escrow or Agent Fees.........................................  .........
Underwriting Fees............................................  .........
Appraisal Fees...............................................  .........
Transfer Agent Fees..........................................  .........
Auditing and Accounting......................................  .........
Proxy Solicitation Fees......................................  .........
Advertising..................................................  .........
Other Expenses...............................................  .........
                                                              ----------
    Total....................................................  .........
------------------------------------------------------------------------

    Instructions. 1. The applicant may exclude costs represented by 
salaries and wages of regular employees and officers; if a statement to 
that effect is made.
    The cost of solicitation by specially engaged employees or paid 
solicitors under paragraph (b) of item 3 of Form PS shall be stated 
under ``Proxy Solicitation Fees'' in this item.
    2. If the applicant has any category of expense exceeding $10,000 
which is not specified in this item, such expense shall be itemized 
rather than including it under the category ``Other Expenses''.
    3. If the solicitation is conducted other than by management of the 
applicant, the information required in this item shall be provided with 
respect to the cost of such solicitation.

                         Item 8. Indemnification

    State the general effect of any charter provisions, bylaw, contract, 
arrangement, statute, or regulation to be in effect during or after the 
conversion under which any underwriter, appraiser, lawyer, accountant or 
expert, or director or officer of the applicant will be insured or 
indemnified in any manner against any liability which he or she may 
incur in his or her capacity as such.

         Item 9. Federally Chartered Stock Savings Associations

    State whether the converting savings association is applying to 
amend its charter and bylaws to read in a form consistent with part 552 
of the Rules and Regulations Applicable to Federal Savings Associations.

                                Exhibits

    The following exhibits shall be attached to this Form.

               Exhibit 1. Resolution of Board of Directors

    Set forth a certified copy or copies of a resolution or resolutions 
of the board of directors: (1) Adopting the plan of conversion filed 
with this application; (2) authorizing the filing of this application; 
and (3) applying for continued insurance of accounts by the Federal 
Deposit Insurance Corporation and continued membership in the 
appropriate Federal Home Loan Bank. The action adopting the plan of 
conversion and authorizing the filing of this application must be 
approved by two-thirds of the board of directors.

        Exhibit 2. Copies of Documents, Contracts and Agreements

    Furnish the following documents, contracts and agreements:
    (a) Proposed certificates for capital stock and any other securities 
to be issued;
    (b) Proposed order forms with respect to the subscription rights;
    (c) Proposed charter and bylaws of the applicant to take effect upon 
conversion including, if applicable, the optional charter provision 
provided for in Sec. 563b.3(i)(7);
    (d) Any proposed stock option plan and form of stock option 
agreement;
    (e) Any proposed management employment contracts;
    (f) Any contract described in response to item 6 of Form PS;
    (g) Contracts or agreements with paid solicitors described in 
response to item 3(b) of Form PS;

[[Page 262]]

    (h) Any material loan agreements relating to borrowing by the 
applicant other than from a Federal Home Loan Bank and other than 
subordinated debt securities approved by the Office;
    (i) Any appraisal agreement or proposed agreement, underwriting 
contracts or agreements among underwriters;
    (j) Any charter amendment filed for the purpose of converting a 
Federal mutual association to a Federal stock association;
    (k) Any proposed contracts or agreements among members of a group 
regarding the purchase of unsubscribed shares pursuant to 
Sec. 563b.3(d)(2);
    (l) Any required undertaking or affidavits by officers or directors 
purchasing shares in the conversion that they are acting independently;
    (m) Any documents referred to in the answer to item 8 of Form AC;
    (n) Any trustee agreements or indentures;
    (o) Any agreements for the making of markets or the listing on 
exchanges of the stock of the converted savings association.

Documents, contracts and agreements which are furnished in proposed form 
under this exhibit shall be furnished in final form immediately after 
the meeting of association members to consider the plan of conversion, 
except for documents which by their nature cannot be practically 
expected until a later time required by subdivisions (i) and (k) in 
which case they shall be furnished in substantially final form.

                      Exhibit 3. Opinion of Counsel

    Furnish an opinion of counsel for the applicant regarding each of 
the following matters:
    (a) The legal sufficiency of the applicant's proposed certificates 
and order forms for capital stock and any other securities;
    (b) State law requirements applicable to the plan of conversion 
including citations to applicable State law and whether such 
requirements will be fulfilled by the plan;
    (c) The legal sufficiency of the applicant's bylaws;
    (d) The continuation of insurance of the applicant's accounts by the 
Federal Deposit Insurance Corporation after conversion;
    (e) The type and extent of each class of voting rights in the 
applicant after conversion, including any requirement of State law that 
savings account holders or borrowers have voting rights in the converted 
savings association;
    (f) A certification that the proposed charter and bylaws conform to 
part 552 of this chapter or if not a statement to that effect.
    Matters listed in subdivisions (b), (c) and (e) of this Exhibit only 
apply to an applicant which is converting to a State-chartered stock 
association.

           Exhibit 4. Federal and State Tax Opinions or Ruling

    (a) Furnish an opinion of the applicant's tax advisor or an Internal 
Revenue ruling as to the Federal income tax consequences of the plan of 
conversion to the applicant and to the various account holders who 
receive nontransferable subscription rights to purchase capital stock.
    Instruction. The Office recommends that each applicant obtain a 
ruling from the Internal Revenue Service regarding the Federal income 
tax consequences of the plan of conversion. The Office may require that 
such a ruling be obtained if the applicant's plan of conversion is not 
substantially similar to plans of conversion which have received 
favorable rulings. The Office may also require that such a ruling be 
obtained if the applicant's plan of conversion contains novel provisions 
or there is otherwise a question as to the Federal income tax 
consequences of the plan.
    (b) Furnish an opinion of the applicant's tax advisor or, if 
applicable, a ruling from the appropriate state taxing authority to any 
tax consequences of the plan of conversion under the laws of the State 
in which the applicant will be located upon conversion. Such opinion 
should relate to the applicant and to eligible account holders.

                     Exhibit 5. Valuation Materials

    Furnish any materials required to be filed by Sec. 563b.7 regarding 
the valuation to the applicant's capital stock. An applicant is not 
required to file such materials if the offering of capital stock will 
not commence before the meeting of association members to vote on the 
plan of conversion.

                      Exhibit 6. Notice to Members

    Furnish the notices to the applicant's members required by 
Sec. 563b.4(a) and (b).

                       Exhibit 7. Other Materials

    (a) If information required by an appropriate form is not given for 
the reasons specified in Sec. 563b.8(j), furnish the statement required 
for each such omission by Sec. 563b.8(j)(2).
    (b) Furnish all consents required to be filed by Sec. 563b.8(p) and 
(q).
    (c) If applicable, furnish the statement required by item 5 of Form 
PS regarding events which occurred within the last ten years to 
directors of the applicant.
    (d) Furnish any powers of attorney employed pursuant to 
Sec. 563b.8(e)(3).
    (e) Furnish the cross reference sheet referred to in Sec. 563b.8(g).
    (f) If the applicant wishes to request a waiver of compliance in 
accordance with Sec. 563b.1(c), furnish the materials required by 
Sec. 563b.1(c)(2).

[[Page 263]]

                        Exhibit 8. Business Plans

    (a) Furnish a consolidated business plan. The converting association 
shall provide, as part of the business plan, a detailed discussion of 
how the capital acquired in the conversion will be utilized, including, 
among other things, any proposed stock repurchases.
    (b) Applicant should follow Sec. 563b.4(c) if the business plan is 
to be deemed confidential.

[54 FR 49596, Nov. 30, 1989, as amended at 59 FR 22735, May 3, 1994]



Sec. 563b.101  Form PS--Proxy Statements.

                                 Form PS

                             [Facing Sheet]

                      OFFICE OF THRIFT SUPERVISION

1700 G Street, NW., Washington, DC 20552

                             Proxy Statement

_______________________________________________________________________
(Exact name of Applicant as specified in charter)
_______________________________________________________________________
(Street address of applicant)
_______________________________________________________________________
(City, State and Zip Code)

                          Proxy Statement Form

                             Index to Items

Item 1.  Notice of Meeting
Item 2.  Revocability of Proxy
Item 3.  Persons Making Solicitation
Item 4.  Voting Rights and Vote Required for Approval
Item 5.  Directors and Executive Officers
Item 6.  Management Remuneration
Item 7.  Business of the Applicant
Item 8.  Description of the Applicant's Plan of Conversion
Item 9.  Description of Capital Stock
Item 10.  Capitalization
Item 11.  Use of New Capital
Item 12.  New Charter, Bylaws or Other Documents
Item 13.  Other Matters
Item 14.  Financial Statements
Item 15.  Consents of Experts and Reports
Item 16.  Attachments

           Information Required in Conversion Proxy Statement

                                  Notes

    1. Except as otherwise specifically provided, where any item calls 
for information for a specified period in regard to directors, officers 
or other persons holding specified positions or relationships, the 
information shall be given in regard to any person who held any of the 
specified positions or relationships at any time during the period. 
However, information need not be included for any portion of the period 
during which such person did not hold any such position or relationship 
provided a statement to that effect is made.
    2. The proxy statement shall include such information which the 
Chief Counsel or the Deputy Chief Counsel for Securities and Corporate 
Structure by interpretative release or otherwise has deemed necessary to 
comply with items of this Form PS.

                        Item 1. Notice of Meeting

    The cover page of the proxy statement shall give notice of the 
meeting of the association members called by the board of directors to 
act upon the conversion. The cover page shall include the date, time and 
place of the meeting, a brief description of each matter to be acted 
upon at the meeting, the date of record for association members entitled 
to vote at the meeting, the date of the statement and the full address, 
ZIP code and telephone number of the applicant.
    In accordance with Sec. 563b.5(d)(4) of this part, the applicant 
shall not use previously-executed proxies to vote on the plan of 
conversion.

                      Item 2. Revocability of Proxy

    State that the person giving the proxy has the power to revoke it 
before the proxy is exercised at the meeting. If the right of revocation 
is subject to compliance with any formal procedure, briefly describe 
such procedure. Briefly describe any charter, bylaw or applicable 
Federal or State law requirements otherwise restricting voting by proxy. 
State that the proxy is solicited for that meeting, and any adjournment 
thereof, and will not be used for any other meeting. (See also 
Sec. 563b.5(d)(3)).

                 Item 3. Persons Making the Solicitation

    (a) State whether the solicitation is made by the management of the 
applicant. Give the name of any director of the applicant who has 
informed the management in writing that he or she intends to oppose any 
action intended to be taken by the management and indicate the action 
which he or she intends to oppose.
    (b) If the solicitation is to be made otherwise than by the use of 
the mails, describe the methods to be employed. If the solicitation is 
to be made by specially engaged employees or paid solicitors, state the 
material features of any contract or arrangement for such solicitation 
and identify the parties.
    (c) If the solicitation is made otherwise than by the management of 
the applicant, so state and give the names of the persons by whom and on 
whose behalf it is made. Any such solicitation normally need not respond 
to items 5 through 16, but must include such

[[Page 264]]

information as to make such solicitations comply with Sec. 563b.5(g)(1).

          Item 4. Voting Rights and Vote Required for Approval

    (a) Describe briefly the voting rights of each class of association 
members, state the approximate total number of votes entitled to be cast 
at the meeting, and the approximate number of votes to which each class 
is entitled. Discuss the voting rights of beneficiaries of accounts held 
in a fiduciary capacity such as IRA accounts.
    (b) As part of the description give the date of record for 
association members entitled to vote at the meeting.
    (c) As to each matter which will be submitted to a vote of 
association members, state the vote required for its approval.
    (d) The applicant shall not use previously-executed proxies to vote 
on the plan of conversion.

                Item 5. Directors and Executive Officers

    (a) Furnish the information regarding directors and executive 
officers and certain relationships and related transactions required to 
be disclosed in a registration or proxy statement filed with the Office 
under the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq. In 
particular, see items 401 and 404 of Regulation S-K, 17 CFR 229.401 and 
404, and item 6 of Regulation 14A, 17 CFR 240.14a-101. Unless the 
context otherwise requires, the words ``registrant'' and ``issuer'' in 
those regulations shall refer to the applicant and the word 
``Commission'' shall refer to the Office.
    (b) State whether control of the applicant has been exercised 
through the use of proxies and the nature of such control.

                     Item 6. Management Remuneration

    Furnish the information regarding management remuneration required 
to be disclosed in a registration or proxy statement filed with the 
Office under the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq. 
In particular, see item 402 of Regulation S-K, 17 CFR 229.402, and item 
7 of Regulation 14A, 17 CFR 240.14a-101. Unless the context otherwise 
requires, the words ``registrant'' and ``Commission'' in those 
regulations shall refer to the applicant and to the Office, 
respectively.

                    Item 7. Business of the Applicant

    (a) Narrative description of business. (1) Discuss briefly the 
organizational history of the applicant, including the year of 
organization, the identity of the chartering authority, and any material 
charter conversions.
    (2) Describe the business conducted and intended to be conducted by 
the applicant and its subsidiaries. This should include a description of 
the general development of the business of the applicant and any 
predecessor(s) during the past five years, or such shorter period as the 
applicant may have been engaged in business. Information shall be 
disclosed for earlier periods if material to an understanding of the 
general development of the business. Any material changes in the mode of 
conducting the business should be discussed.
    (3) Consideration should be given to inclusion of a description of 
the applicant's historical practices, including the average remaining 
term to maturity of its portfolio of mortgage loans, and present 
intention regarding the making of loans, whether real estate or other, 
the nature of security received, the terms of loans, whether carrying 
fixed or variable interest rates, and the retention of loans or their 
resale in secondary mortgage markets. Historical description might 
require a general identification of the magnitude of various activities.
    (4) Also explain any significant impact to the association as a 
result of any material acquisitions.
    (b) Selected financial data. Furnish in comparative columnar form a 
summary of selected financial data for the applicant for:
    (1) Each of the last five fiscal years of the applicant (or for the 
life of the applicant and its predecessors, if less); and
    (2) Any additional fiscal years necessary to keep the summary from 
being misleading.
    Instructions. 1. The purpose of the summary of selected financial 
data shall be to supply in convenient and readable format selected data 
which highlight significant trends in the applicant's financial 
condition and results of operations.
    2. Subject to appropriate variation to conform to the nature of the 
applicant's business, the following items, as a minimum, shall be 
included in the summary: Total interest income; total interest expense; 
income (loss) from continuing operations; net income; total loans; total 
investments; total assets; total savings; total borrowings; total 
regulatory capital; and total number of customer service facilities 
indicating the number which provide full service. Applicants may include 
additional items which they believe would enhance understanding and 
highlight trends in their financial condition and results of operations. 
Briefly describe, or cross reference to a discussion of, factors such as 
accounting changes, business combinations, or dispositions of business 
operations that materially affect the comparability of the information 
reflected in selected financial data. Discussion of, or reference to, 
any material uncertainties should also be included where those matters 
might cause the data reflected not to be indicative of the applicant's 
future financial condition or results of operations.

[[Page 265]]

    3. Those applicants which elect to provide five-year summary 
information in accordance with the Financial Accounting Standards 
Board's Statement of Financial Accounting Standards No. 89 (``SFAS 89'') 
``Financial Reporting and Changing Prices,'' may combine such 
information with the selected financial data appearing pursuant to this 
item.
    4. All references to the applicant in the summary and in these 
instructions shall mean the applicant and its consolidated subsidiaries.
    5. If interim-period financial statements are included, or are 
required to be included by item 14, applicants should update the 
selected financial data for the interim period to reflect any material 
change in the trends indicated; where such updating information is 
necessary, applicants shall provide the information on a comparative 
basis unless not necessary to an understanding of the updating 
information.
    (c) Management's discussion and analysis of financial condition and 
results of operations. (1) Discuss applicant's financial condition, 
changes in financial condition, and results of operations. The 
discussion shall provide information as specified in paragraphs (i), 
(ii), and (iii) of this paragraph with respect to liquidity, capital 
resources, and results of operations and also should provide all other 
information which the applicant believes to be necessary to an 
understanding of its financial condition, changes in financial 
condition, and results of operations. Significant business combinations 
should be discussed. Discussion of liquidity and capital resources may 
be combined whenever the two topics are interrelated. Where in the 
applicant's judgment a discussion of subdivisions of the applicant's 
business would be appropriate to an understanding of the business, the 
discussion should focus on each relevant, reportable segment or other 
subdivision of the business and on the applicant as a whole.
    (i) Liquidity. Identify any known trends or any known demands, 
commitments, events, or uncertainties which will result in or which are 
reasonably likely to result in the applicant's liquidity increasing or 
decreasing in any material way. If a material deficiency is identified, 
indicate the course of action which the applicant has taken or proposes 
to take to remedy the deficiency. Identify and separately describe 
internal and external sources of liquidity, and briefly discuss any 
material unused sources of liquid assets. Comment on maturity imbalances 
between assets and liabilities and planned activities in the secondary 
mortgage market.
    (ii) Committed resources. (A) Describe the applicant's material 
commitments for loan fundings or other expenditures as of the end of the 
latest fiscal period and indicate the general purpose of the commitments 
and the anticipated source of funds needed to fulfill the commitments.
    (B) Describe any known material trends, favorable or unfavorable, in 
the applicant's committed resources. Indicate any expected material 
changes in the mix and the relative cost of the resources. This 
discussion should consider changes between savings, equity, debt, and 
any off-balance-sheet financing arrangements.
    (iii) Results of operations. (A) Describe any unusual or infrequent 
events or transactions or any significant economic changes that 
materially affected the amount or reported income from continuing 
operations and, in each case, indicate the extent to which income was 
affected. In addition, describe any other significant components of 
revenues or expenses which, in the applicant's judgment, should be 
described in order to understand the applicant's results of operations.
    (B) Describe any known trends or uncertainties which have had, or 
which the applicant reasonably expects will have, a materially favorable 
or unfavorable impact on net sales or revenues or income from continuing 
operations. If the applicant knows of events which will cause a material 
change in the relationship between costs and revenues (such as known 
future increases in costs of money or interest rates) the change in the 
relationship should be disclosed.
    (C) To the extent that the financial statements disclose material 
increases in interest expense, provide a narrative discussion of the 
extent to which the increases are attributable to increases in rates or 
to increases in volume.
    (D) For the three most recent fiscal years of the applicant, or for 
those fiscal years in which the applicant has been engaged in business, 
whichever period is shorter, discuss the impact of inflation and 
changing prices on the applicant's revenues and on income from 
continuing operations.
    (E) For the most recent financial statement presented, discuss any 
unusual risk characteristics in the assets of the applicant. This would 
include real estate development, significant amounts of commercial real 
estate as loan collateral, and any other significant risk factors 
inherent in the applicant's lending or investment portfolios, including 
significant increases in amounts of nonaccrual, past due, restructured, 
and potential problem loans (see Securities and Exchange Commission's 
Securities Act Industry Guide 3, section III C).
    Instructions. 1. The applicant's discussion and analysis shall be of 
the financial statements and of other statistical data which the 
applicant believes will enhance a reader's understanding of its 
financial condition, changes in financial condition, and results of 
operations. Generally, the discussion should cover the three-year period 
covered by the financial statements and should utilize year-

[[Page 266]]

to-year comparisons or other formats which in the applicant's judgment 
enhance a reader's understanding. However, where trend information is 
relevant, reference to the five-year selected financial data appearing 
in item 7(b) above may be necessary.
    2. The purpose of the discussion and analysis should be to provide 
to investors and other users information relevant to an assessment of 
the financial condition and results of operations of the applicant as 
determined by evaluating the amounts and certainty of cash flows from 
operations and from outside sources. The information provided in this 
item 7(c) need only include that which is available to the applicant 
without undue effort or expense and which does not clearly appear in the 
applicant's financial statements.
    3. The discussion and analysis should specifically focus on material 
events and uncertainties known to management which would cause reported 
financial information not to be necessarily indicative of future 
operating results or of future financial condition. This would include 
description and amounts of (a) matters which would have an impact on 
future operations and have not had an impact in the past, and (b) 
matters which have had an impact on reported operations and are not 
expected to have an impact upon future operations.
    4. Where the consolidated financial statements reveal material 
changes from year to year in one or more line items, the causes for the 
changes should be described to the extent necessary to an understanding 
of the applicant's business as a whole; provided, however, if the causes 
for a change in one line item also relate to other line items, no 
repetition is required and a line-by-line analysis of the financial 
statements as a whole is not required or generally appropriate. 
Applicants need not recite the amounts of changes from year to year 
which are readily computable from the financial statements. The 
discussion should not merely repeat numerical data contained in the 
consolidated financial statements.
    5. The term ``liquidity'' as used in paragraph (c)(1)(i) of this 
item 7 refers to the ability of an enterprise to generate adequate 
amounts of cash to meet the enterprise's needs for cash. Except where it 
is otherwise clear from the discussion, the applicant should indicate 
those balance sheet conditions or income or cash flow items which the 
applicant believes may be indicators of its liquidity condition. 
Liquidity generally should be discussed on both a long-term and short-
term basis. The issue of liquidity should be discussed in the context of 
the applicant's own business or businesses. Liquidity does not 
necessarily mean ``liquid assets'' as defined in the liquidity 
regulations of the Office.
    6. Applicants are encouraged, but not required, to supply forward-
looking information. This is to be distinguished from presently known 
data which will have an impact upon future operating results, such as 
known future increases in rates or other costs. This latter data is 
required to be disclosed. Any forward-looking information supplied is 
hereby expressly covered by the safe-harbor rule for projections, 
Sec. 563d.3b-6, under the circumstances specified in that rule.
    7. Applicants which elect to provide narrative explanations of 
supplementary information disclosed in accordance with SFAS 89 may 
combine the explanations with their discussion and analysis required 
pursuant to this provision or they may supply the information 
separately. If the information is combined, it shall be located in 
reasonable proximity to the discussion and analysis. If the information 
is not combined, the discussion of the impact of inflation otherwise 
required by this item may be omitted if there is an appropriate cross 
reference to the explanations provided pursuant to SFAS 89.
    8. Applicants which elect not to provide explanations of 
supplementary information disclosed in accordance with SFAS 89 may 
discuss the effects of inflation and changes in prices in whatever 
manner appears appropriate under the circumstances. Although voluntary 
compliance with SFAS 89 is encouraged, all that is required is a brief 
textual presentation of management's views. No specific numerical 
financial data need be presented.
    9. All references to the applicant in the discussion and in these 
instructions shall mean the applicant and its consolidated subsidiaries.
    (2) If interim-period financial statements are included or are 
required to be included by item 14, a management's discussion and 
analysis of the financial condition and results of operations shall be 
provided to enable the reader to assess material changes in financial 
condition and results of operations between the periods specified in 
subdivisions (i) and (ii) of this paragraph (2). The discussion and 
analysis shall include a discussion of material changes in those items 
specifically listed in paragraph (c)(1) of this item 7, except that the 
impact of inflation and changing prices on operations for interim 
periods need not be addressed.
    (i) Material changes in financial condition. Discuss any material 
changes in financial condition from the end of the preceding fiscal year 
to the date of the most recent interim balance sheet provided. If the 
interim financial statements include an interim balance sheet as of the 
corresponding interim date of the preceding fiscal year, any material 
change in financial condition from that date to the date of the most 
recent interim balance sheet provided shall also be discussed. If 
discussions of changes from both

[[Page 267]]

the end and the corresponding interim date of the preceding fiscal year 
are required, the discussions may be combined at the discretion of the 
applicant.
    (ii) Material changes in results of operations. Discuss any material 
changes in the applicant's results of operations with respect to the 
most recent fiscal year-to-date period for which an income statement is 
provided and the corresponding year-to-date period of the preceding 
fiscal year. If the applicant is required to or has elected to provide 
an income statement for the most recent fiscal year quarter, the 
discussion also shall cover material changes with respect to that fiscal 
quarter and the corresponding fiscal quarter in the preceding fiscal 
year. In addition, if the applicant has elected to provide an income 
statement for the 12-month period ended as of the date of the most 
recent interim balance sheet provided, the discussion shall also cover 
material changes with respect to that 12-month period and the 12-month 
period ended as of the corresponding interim balance sheet date of the 
preceding fiscal year.
    Instructions. 1. If interim financial statements are presented 
together with financial statements for full fiscal years, the discussion 
of the interim financial information shall be prepared pursuant to 
paragraph (c)(2) and the discussion of the full fiscal year information 
shall be prepared pursuant to paragraph (c)(1) of this item 7. Such 
discussions may be combined.
    2. The discussion and analysis required by this paragraph (c)(2) is 
required to focus only on material changes. Where the interim financial 
statements reveal material change from period to period in one or more 
significant line items, the causes for the changes should be described 
if they have not already been disclosed; however, if the causes for a 
change in one line item also relate to other line items, no repetition 
is required. Applicants need not recite the amounts of changes from 
period to period which are readily computable from the financial 
statements. This discussion should not merely repeat numerical data 
contained in the financial statements. The information provided should 
include that which is available to the applicant without undue effort or 
expense and which does not clearly appear in the applicant's interim 
financial statements.
    3. The applicant's discussion of material changes in results of 
operations should identify any significant elements of the applicant's 
income or loss from continuing operations which do not arise from or are 
not necessarily representative of the applicant's ongoing business.
    4. Applicants are encouraged but are not required to discuss 
forward-looking information. Any forward-looking information supplied is 
expressly covered by the safe-harbor rule for projections, Sec. 563d.3b-
6, under the circumstances specified in that rule.
    (d) Lending activities. (1) Briefly describe the applicable Federal 
and State restrictions on the lending activities of the applicant, 
including applicable laws affecting mortgage loan interest rates. Also 
briefly describe the applicant's general policy concerning loan-to-value 
ratios; customary methods of obtaining loan originations, such as the 
use of loan consultants; approval of properties as security for loans; 
the use of a loan committee, if any; and policies as to requiring title, 
fire, and casualty insurance on security properties. Indicate the 
applicant's general future intentions with respect to activities in 
secondary mortgage markets, including transactions with the Federal Home 
Loan Mortgage Corporation or mortgage bankers. If significant, indicate 
loan service fee income as a percentage of net interest income for the 
years required by item 14(b).
    (2) As to the lending area of the applicant, describe briefly (i) 
the lending area restrictions, if any, applicable to the applicant, (ii) 
the areas in which the applicant normally lends, and (iii) any material 
loan concentration areas of the applicant. The descriptions may include 
maps illustrating one or more of these areas. Furnish an estimate of the 
housing vacancy rates in areas where the applicant's loan concentrations 
are located, if practicable.
    (3) Describe briefly the general long-term nature of investment in 
mortgage loans and the consequent effect upon the earnings spread of 
savings associations. State the normal maturity of loans made by the 
applicant on the security of single-family dwellings and furnish an 
estimate as to the average length of time the loans are outstanding.
    (4) For each of the periods required by item 14(b), set forth in 
tabular form, excluding fees which are not considered adjustments of 
yield, the following:
    (i) Average yield during the period on: (A) Loan portfolio, (B) 
investment portfolio, (C) other interest-earning assets, and (D) all 
interest earning assets. Average yield should be computed on no greater 
than a monthly basis.
    (ii) Average rate paid during the period on: (A) Deposits, (B) 
borrowings and Federal Home Loan Bank advances, (C) other interest-
bearing liabilities, (D) all interest-bearing liabilities ((A), (B), and 
(C)). Average rate paid should be computed on no greater than a monthly 
basis.
    (iii) Weighted-average yield at end of the latest required period, 
for the items in items (i) and (ii) of paragraph (4).
    (iv) The net yield on average interest-earning assets (net interest 
earnings divided by average interest-earning assets, with net interest 
earnings equaling the difference between the dollar amount of interest 
earned and paid). Average interest-earning assets

[[Page 268]]

should be determined on an interval no more frequent than monthly.
    (v) For each of the periods required by item 14(b), set forth in 
tabular form: (A) The dollar amount of change in interest income and (B) 
the dollar amount of change in interest expense. The changes should be 
segregated for each major category of interest-earning asset and 
interest-bearing liability (as stated in items (i) and (ii) of paragraph 
(4)) into amounts attributable to (1) changes in volume (change in 
volume multiplied by old rate), (2) changes in rates (change in rate 
multiplied by old volume), and (3) changes in rate-volume (change in 
rate multiplied by the change in volume). The rate/volume variances 
should be allocated on a consistent basis between rate and volume 
variance and the basis of allocation disclosed in a note to the table.
    (5) For each of the periods required by item 14(b), present the 
following:
    (i) Return on assets (net income divided by average total assets).
    (ii) Return on equity (net income divided by average equity).
    (iii) Equity-to-assets ratio (average equity divided by average 
total assets).
    Instructions. Applicants should supply any additional ratios which 
they deem necessary to explain their operations.
    (6) As of the end of the latest fiscal year reported on, present 
separately the amounts of loans in each category required by balance 
sheet item 7(b), Sec. 563c.102, which are due: (i) In each of the three 
years following the balance sheet, (ii) after three through five years, 
(iii) after five through ten years, (iv) after ten through fifteen 
years, and (v) after fifteen years.
    In addition, present separately the total amount of all such loans 
due after one year which have predetermined interest rates and floating 
or adjustable interest rates.
    Instructions. 1. Scheduled principal repayments should be reported 
in the maturity category in which the payment is due.
    2. Demand loans, loans having no stated schedule of repayments and 
no stated maturity, and overdrafts should be reported as due in one year 
or less.
    3. Determinations of maturities should be based upon contract terms. 
However, such terms may vary due to the applicant's ``rollover policy,'' 
in which case the maturity should be revised as appropriate and the 
rollover policy should be briefly discussed.
    (7) Describe briefly the risk elements within the loan and 
investment portfolios including the applicant's customary procedures 
regarding delinquent loans. As of the end of each of the periods covered 
by the statements of operation required by item 14(b)(1) and as of the 
date of the latest statement of financial condition required by item 
14(a), set forth in tabular form the amounts and categories of 
nonaccrual, past due, restructured, and potential problem loans (see 
Securities and Exchange Commission's Securities Act Industry Guide 3, 
section III C) and the ratio of such loans to total assets. Where the 
amount of real estate that has been in substance foreclosed, acquired by 
foreclosure, or by deed in lieu thereof is significant, include a brief 
description of the major properties and a statement as to the 
applicant's probable losses, if any, upon disposition of such 
properties.
    (e) Savings activities. (1) State whether the maximum rate of 
interest which the applicant may pay is established by regulatory 
authorities. State that, in the event of liquidation of the applicant 
after conversion, savings account holders will be entitled to full 
payment of their accounts prior to payment to shareholders. Also 
indicate the percentage of total savings accounts which are from out-of-
state sources, if such total is significant.
    (2) Set forth in tabular form the amounts of time deposit accounts 
by categories of interest rates as of the dates of each balance sheet 
filed. Each interest-rate category should not be more than 200 basis 
points. As of the date of the latest balance sheet, set forth, in 
tabular form for each interest-rate category, the amounts of savings 
maturing during each of the three years following the balance sheet date 
and the total maturing thereafter.
    (3) Disclose the weighted-average rate and general terms (as well as 
formal provisions for the extension of the maturity) of each category of 
short-term borrowings required by Balance Sheet Caption 14, 
Sec. 563c.102, along with the maximum amount of borrowings in each 
category outstanding at any month-end during each period for which an 
end-of-period balance sheet is required. In addition, disclose the 
approximate average short-term borrowings outstanding during the period 
and the approximate weighted-average interest rate (and a brief 
description of the means used to compute such average) for such 
aggregate short-term borrowings. The disclosure required by this 
paragraph (3) need not be furnished as regards borrowings in each 
particular category when the aggregate amount of such borrowings at the 
balance sheet date does not exceed one percent of assets at that date. 
Notwithstanding this reporting threshold, if the weighted average of 
such borrowings outstanding during the year exceeds one percent of 
assets at year-end and significantly exceeds the amount of such 
borrowings at year-end, the disclosure called for by this paragraph (3) 
should be furnished. This information is not required to be given for 
any category of short-term borrowings for which the average balance 
outstanding during the period was less than 30 percent of stockholders 
equity at the end of the period.
    (f) Federal regulation. Describe briefly, to the extent not 
otherwise covered by other

[[Page 269]]

items, Federal regulation of the applicant and the conduct of its 
operations. In particular, describe briefly the insurance of accounts 
and the general regulatory authority of the Federal Deposit Insurance 
Corporation, the general regulatory authority of the Office, and Federal 
regulatory capital requirements, the results of failure to meet those 
requirements, and the applicant's regulatory capital position in 
relation to those requirements. Also describe the assessment authority 
and requirements of the Federal Deposit Insurance Corporation, the 
Office, the Financing Corporation, and the Resolution Funding 
Corporation. In addition, describe briefly applicable liquidity 
requirements under section 4A of the Home Owners' Loan Act, as amended, 
the regulations thereunder, and State law. State the applicant's 
position with respect to those requirements.
    (g) Federal Home Loan Bank System. Describe briefly the Federal Home 
Loan Bank System and state that the applicant is a member. Such 
description shall include
    (1) Limitations on borrowings,
    (2) Recent loan policies of the applicant's Federal Home Loan Bank 
and current interest rates, and
    (3) Federal Home Loan Bank stock purchase requirements and the 
applicant's position with respect to those requirements.
    (h) State savings association law. If the applicant is converting to 
a State-chartered stock association, describe briefly applicable 
provisions of State law which have a material effect on the business of 
the applicant.
    (i) Federal and State taxation. Describe briefly the Federal income 
tax laws applicable to the applicant including:
    (1) Permissible bad debt reserves;
    (2) The applicant's position with respect to the maximum bad debt 
reserve limitations as of the date of the latest statement of financial 
condition required under item 14(a);
    (3) Future increases in the effective income tax rate;
    (4) The date through which the applicant's Federal income tax 
returns have been audited by the Internal Revenue Service; and
    (5) The tax effect to the applicant of the payment of cash dividends 
on capital stock of the applicant after conversion.
Also describe briefly the State taxation of the applicant.
    (j) Competition. Describe the material sources of competition for 
savings associations generally and indicate to the extent practicable 
the applicant's position in its principal lending and savings markets.
    Instruction. In answering item 7(j) give to the extent known the 
association's savings and mortgage product market shares by county in 
its geographic market. Also indicate its rank and any material changes 
or trends in its competitive standing.
    (k) Office and other material properties. (1) Furnish the location 
of the applicant's home office and each existing and approved branch 
office and other office facilities (such as mobile or satellite 
offices). State the total net book value of all such offices as of the 
date of the latest statement of financial condition required by item 
14(a). If any such office is leased, state the expiration dates of such 
leases.
    (2) Describe briefly undeveloped land owned by the applicant, 
including location, net book value, and prospective use and holding 
period. If the applicant or a subsidiary owns or leases electronic data 
processing equipment principally for its own use, describe briefly such 
equipment indicating net book value if owned or the principal lease 
terms if leased.
    (l) Employees. State the number of persons employed full time by the 
applicant including executive officers listed under item 5. State 
whether employees are represented by a collective bargaining group and 
whether the applicant's relations with its employees is satisfactory. 
Summarize briefly any loans, profit sharing, retirement, medical, 
hospitalization or other remuneration plans provided for employees not 
already included pursuant to item 6.
    (m) Service corporations. Describe briefly the applicant's 
investment in any subsidiary and the major lines of business (including 
any joint ventures) of the subsidiary which are material to its 
operations.
    (n) Legal proceedings. Furnish the information regarding legal 
proceedings required to be disclosed in a registration statement filed 
with the Office under the Securities Exchange Act of 1934, 15 U.S.C. 78a 
et seq. In particular, see item 103 of Regulation S-K, 17 CFR 229.103. 
Unless the context otherwise requires, the word ``registrant'' in that 
regulation shall refer to the applicant.
    (o) Additional information. The Office may upon the request of 
applicant, and where consistent with the protection of account holders 
and others, permit the omission of any of the information required by 
this item or the furnishing in substitution therefor of appropriate 
information of comparable character. The Office may also require the 
furnishing of other information in addition to, or in substitution for, 
the information required by this item in any case where such information 
is necessary or appropriate for an adequate description of the 
applicant's business done or intended to be done.

              Item 8. Description of the Plan of Conversion

    (a) A statement to the following effect shall be inserted in the 
proxy statement immediately preceding the information required by this 
item: The Office of Thrift Supervision has given approval to the plan of 
conversion, subject to its approval by association members and the 
satisfaction of certain other conditions. However, such approval by the 
Office does not constitute a

[[Page 270]]

recommendation or endorsement of the plan by the Office.
    (b) The proxy statement shall contain a description of the plan of 
conversion. Such description shall contain the information required by 
paragraphs (c) through (j) of this item and such additional information 
as may be necessary to accurately describe the material provisions of 
the plan.
    (c) Briefly describe the effects of conversion from a mutual 
association to a stock association including the following information:
    (1) State that savings accounts of the applicant will not be 
affected by the conversion with respect to such matters as balances in 
the accounts and the extent of insurance of savings accounts by the 
Savings Association Insurance Fund or the Bank Insurance Fund, as the 
case may be;
    (2) State whether savings and borrowing members of the applicant 
will continue to have voting rights in the applicant after conversion, 
and describe any voting rights they will have;
    (3) State the present liquidation rights of account holders and 
describe the liquidation account to be established and maintained by the 
applicant, including the conditions under which such account will be 
paid, the interest of eligible account holders and supplemental eligible 
account holders in such account and the formula by which such account 
will be adjusted;
    (4) State that the rights and obligations of borrowers from the 
applicant will not be changed in any manner;
    (5) State that capital stock to be sold by the applicant will not be 
insured by the Savings Association Insurance Fund or the Bank Insurance 
Fund, as the case may be;
    (6) State than none of the assets of the applicant will be 
distributed in order to effect the conversion other than to pay expenses 
incident thereto; and
    (7) State briefly the reasons why management is recommending the 
conversion, including any advantages to the community served by the 
applicant.
    (d) With respect to the subscription rights of members, furnish the 
following information:
    (1) The formula to be used for determining the subscription rights 
of account holders to purchase shares pursuant to Sec. 563b.3(c) (2), 
(4), and (5);
    (2) Any optional provisions included in the plan of conversion 
pursuant to Sec. 563b.3(d) for the purchase of shares of capital stock, 
including the purchase priorities, limitation on total purchases, the 
total number of shares which may be purchased, and the formula for the 
allocation;
    (3) The allocation formulas to be used in the event that there is an 
oversubscription of shares at any time during the sale of stock under 
the plan of conversion; and
    (4) The use and time of the order forms with respect to the exercise 
of subscription rights.
    (e)(1) Set forth on a per-share basis the estimated public offering 
price range of the shares of capital stock to be sold pursuant to the 
plan of conversion, except that an estimated price range is not required 
to be stated if the offering of stock is not to commence until after the 
meeting of association members to vote on the plan of conversion;
    (2) State that the offering price will be the pro forma market value 
of such shares as determined by the association's management and the 
underwriter, as the case may be; and
    (3) State that all of the shares are required to be sold.
    (f) Unless the offering of stock is not to commence until after the 
meeting of association members to vote on the plan of conversion, 
discuss: (1) The earnings per share of the capital stock to be sold on a 
pro forma basis as of the most recent year-end and interim period 
required by item 14(b); and (2) the book value per share on a pro forma 
basis as of the most recent year-end and interim period required by item 
14(a).
    Instructions: 1. Earnings and book value per share shall be 
furnished without giving effect to the estimated net proceeds from the 
sale of the capital stock and then after giving effect to such proceeds, 
with all assumptions used clearly stated.
    2. In computing pro forma earnings, the applicant shall use the 
arithmetic average of the (i) average yield on all interest-earning 
assets (item 7(d)(4)(i)(D)) and (ii) average rate paid on deposits (item 
7(d)(4)(ii)(A)).
    3. If significant changes in interest rates occur during the periods 
presented, the Office will consider permitting alternative computations 
proposed by an applicant that are properly supported.
    4. An appropriate statement should be included which explains that 
the pro forma data should not be relied upon as indicative of the actual 
financial position or results of continuing operations that will be 
experienced by the applicant after its conversion.
    (g) State the proposed commencement and expiration dates of the 
subscription period and describe any provisions in the plan of 
conversion related to the timing or extension of the subscription 
period. Also, state:
    (1) That a maximum subscription price will be set forth in the 
offering circular used for offering of subscription rights;
    (2) That the actual subscription price will be the public offering 
price;
    (3) That the actual subscription price will not exceed the maximum 
subscription price shown on the order form; and
    (4) That any difference between the maximum and actual subscription 
prices will be refunded unless the subscribers affirmatively elect to 
have the difference applied to the

[[Page 271]]

purchase of additional shares of capital stock.
    (h) Furnish the following information:
    (1) Describe to the extent practicable the applicant's present 
intentions with respect to listing the capital stock on an exchange or 
otherwise providing a market for the purchase and sale of the capital 
stock in the future;
    (2) Describe briefly the tax effect of the conversion both to the 
applicant and to the various classes of account holders receiving 
nontransferable subscription rights to purchase capital stock in the 
conversion;
    (3) State that the plan of conversion is attached as an exhibit to 
the proxy statement (or will be made available on request if the summary 
proxy statement provided for by Sec. 563b.6(c)(2) is being used) and 
should be consulted for further information.
    (i)(1) State whether the plan of conversion provides for 
unsubscribed capital stock to be offered to the public through 
underwriters or directly by the converting association. If such is the 
case, provide the information to the extent known required by item 6 of 
Form OC and indicate the estimated timing of the proposed offering.
    (2) State whether the plan of conversion provides for the purchase 
by any person or group of any insignificant residue of shares remaining 
at the conclusion of the offering.
    (j) Furnish the following information in tabular form regarding 
proposed purchases of capital stock involving directors and officers of 
the applicant:
    (1) State the total number of shares proposed to be purchased by all 
officers, directors and their associates as a group without naming them.
    (2) As to each officer and director named in item 5(a), name him or 
her, state his or her position, and the number of shares proposed to be 
purchased by him or her.
    (3) As to any officer, director or associate thereof who proposes to 
purchase 1 percent or more of the total number of shares of capital 
stock of the applicant to be outstanding, name him or her, state his or 
her position, and the number of shares proposed to be purchased by him 
or her.
    (4) With respect to the information required by items (1), (2) and 
(3) of paragraph (j), indicate separately the number of shares proposed 
to be purchased in each offering category.
    Instructions. With respect to the information requested as to 
associates of officers and directors, such information is required only 
to the extent known. In a case where such confirmation is not 
obtainable, only the number of shares which the associate is given 
subscription rights to purchase need be disclosed.

                  Item 9. Description of Capital Stock

    (a) Furnish the information regarding capital stock of the applicant 
required to be disclosed in a registration statement filed with the 
Office under the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq. 
In particular, see item 202 of Regulation S-K, 17 CFR 229.202. Unless 
the context otherwise requires, the term ``registrant'' in that 
regulation shall refer to the applicant.
    (b) An undertaking should be included in the proxy statement that 
the applicant where practical will use its best efforts to encourage and 
assist a professional market maker in establishing and maintaining a 
market for the capital stock of the applicant.
    (c) Outline briefly the trading market that is expected to exist for 
the capital stock following the conversion including the estimated 
number of market makers and stockholders, and the anticipated success of 
the applicant in listing the stock.
    Instructions. Any discussion of the listing of the applicant's stock 
should include the basic requirements that must be met for such listing.
    (d) If the rights evidenced by the capital stock will be materially 
limited or qualified by the rights of savings account holders or 
borrowers, include the information regarding the limitations or 
qualifications necessary to enable investors to understand the rights 
evidenced by the capital stock.

                         Item 10. Capitalization

    Set forth in substantially the tabular form indicated below the 
dollar amounts of the capitalization of the applicant. Captions below 
may be modified as appropriate.

----------------------------------------------------------------------------------------------------------------
                                                                                              (C) Pro forma
                                         (A) Capitalization as       (B) Pro forma        capitalization, after
                                         of most recent balance     adjustments as a      giving effect to the
                                               sheet date         result of conversion         conversion
----------------------------------------------------------------------------------------------------------------
Deposits
  FHL bank advances.
  Other
Borrowings
  Capital stock
  Preferred stock
  Paid-in capital
Retained earnings:
  Restricted
  Unrestricted
----------------------------------------------------------------------------------------------------------------
    Total.............................
----------------------------------------------------------------------------------------------------------------

    Instructions. 1. With respect to capital stock, indicate in the 
table or in a footnote the total number of shares to be authorized,

[[Page 272]]

the par or stated value of such shares, and the number of shares to be 
sold as part of the conversion.
    2. With respect to the funds to be received by the applicant from 
the sale of its capital stock, indicate in the table the estimated total 
amount of funds to be obtained and in a footnote state the price per 
share used in making the estimate. The total amount and price per share 
shall be clearly identified as being estimates.
    3. With respect to Column A, the applicant should use the most 
recent balance sheet date required by item 14.

                       Item 11. Use of New Capital

    State the principal purposes for which the net proceeds to the 
applicant from the capital stock to be sold are intended to be invested 
or otherwise used and the approximate amount intended for each such 
purpose.
    Instruction. Details of proposed investments are not to be given. 
There need be furnished, for example, only a brief statement of any 
investment or other activity of the applicant which will be affected 
materially by availability of the proceeds. Examples of such activities 
may include expanded secondary market activities, larger scale lending 
projects, loan portfolio diversification, increased liquidity 
investments, repayment of debt, additional branch offices and other 
facilities, service corporation investments, and acquisitions.

            Item 12. New Charter, Bylaws, or Other Documents

    Describe briefly any material differences between the provisions of 
the existing charter, bylaws, and any similar documents of the applicant 
and those which will take effect after conversion.
    Instruction. This item requires only a brief summary of the 
provisions which are pertinent from both an investment stand-point and a 
voting standpoint. A complete legal description of the provisions 
referred to is not required and should not be given. Do not set forth 
the provisions verbatim; only a succinct resume is required.

                         Item 13. Other Matters

    State that the applicant will register its capital stock under 
section 12(g) of the Securities Exchange Act of 1934, as amended, and 
that it will not deregister such stock for a period of three years. It 
should be noted that upon such registration the proxy rules, insider 
trading reporting and restrictions, annual and periodic reporting and 
other requirements of that Act will be applicable.

                      Item 14. Financial Statements

    Notes: 1. The following instructions specify the consolidated 
balance sheets, the consolidated statements of income, the consolidated 
statements of cash flows, and stockholders' equity required to be 
included in the proxy statement. Subpart A of part 563c governs the 
certification, form, and content of such financial statements, including 
the basis of consolidation.
    2. If the applicant has previously used an audit period in 
connection with its certified financial statements which does not 
coincide with its fiscal year, such audit period may be used in place of 
any fiscal year requirement provided it covers a full twelve months' 
operations and is used consistently.
    (a) Consolidated balance sheets. (1) There shall be furnished for 
the applicant and its subsidiaries consolidated, audited balance sheets 
as of the end of each of the two most recent fiscal years.
    (2) If the latest balance sheets furnished under (1) of this 
paragraph are in excess of 135 days prior to the date of the Office's 
approval of the conversion, there shall be furnished an interim balance 
sheet as of a date within 135 days of such approval. This interim 
balance sheet need not be audited.
    (b) Consolidated statements of income and cash flows. (1) There 
shall be furnished for the applicant and its subsidiaries and 
predecessors consolidated, audited statements of income and cash flows 
for each of the three fiscal years preceding the date of the most recent 
balance sheet furnished, except that for periods prior to July 15, 1988, 
statements of changes in financial position may be provided in lieu of 
statements of cash flows.
    (2) In addition, for any interim period between the latest audited 
balance sheet and the date of the most recent interim balance sheet 
being filed, and for the corresponding period of the preceding fiscal 
year, statements of income and cash flows shall be furnished. The 
interim financial statements may be unaudited.
    (c) Changes in stockholders' equity. An analysis of the changes in 
each caption of stockholders' equity presented in the balance sheets 
shall be given in a note or separate statement. This analysis shall be 
presented in the form of a reconciliation of the beginning balance to 
the ending balance for each period for which an income statement is 
required to be furnished with all significant reconciling items 
described by appropriate captions.
    (d) Financial statements of business acquired or to be acquired. 
There shall be furnished the information required by 17 CFR 210.3-05 and 
210.11-01 to -03 regarding business acquired or to be acquired.
    (e) Separate financial statements of subsidiaries not consolidated 
and 50-percent- or less-owned persons. There shall be furnished the 
information required by 17 CFR 210.3-09 regarding separate financial 
statements of subsidiaries not consolidated and 50-percent- or less-
owned persons.

[[Page 273]]

    (f) Filing of other statements in certain cases. The Office may, 
upon the request of the applicant, and where consistent with the 
protection of account holders and others, permit the omission of one or 
more of the statements herein required or the filing in substitution 
therefor of appropriate statements of comparable character. The Office 
may also require the inclusion of other statements in addition to, or in 
substitution for, the statements herein required in any case where such 
statements are necessary or appropriate for an adequate presentation of 
the financial condition of any person whose financial statements are 
required, or whose statements are otherwise necessary for the protection 
of account holders and others.

                Item 15. Consents of Experts and Reports

    (a) The proxy statement shall briefly describe all consents of 
experts filed pursuant to Sec. 563b.8(p).
    (b) The statement shall contain a report of the independent public 
accountants who have certified the financial statements and other 
matters in the statement.
    Instruction. The instruction on item 12 shall apply to paragraph (a) 
of this item.

                          Item 16. Attachments

    There shall be attached to the proxy statement distributed to 
association members and others a copy of the applicant's plan of 
conversion as approved by the Office unless the following procedure is 
observed. The association may in the alternative set forth in the proxy 
statement that the plan of conversion will not be provided unless the 
recipient so requests within a specified period by means of a postage-
paid postcard or other written communication.

[54 FR 49596, Nov. 30, 1989, as amended at 59 FR 22735, May 3, 1994]



Sec. 563b.102  Form OC--Offering Circulars.

                                 Form OC

                             [Facing Sheet]

                      OFFICE OF THRIFT SUPERVISION

                1700 G Street, NW., Washington, DC 20552

                            Offering Circular

_______________________________________________________________________
(Exact name of applicant as specified in charter)
_______________________________________________________________________
(Street address of applicant)
_______________________________________________________________________
(City, State and Zip Code)

                         Offering Circular Form

           Item 1. Information Required by and Use of Form OC

    The offering circular shall be dated as of the date of its issuance. 
The offering circular shall contain substantially the same information 
required to be included in the proxy statement of the applicant 
distributed to association members to vote upon the plan of conversion. 
Information of the type required to be included in the proxy statement 
may be omitted from the offering circular only to the extent that it is 
clearly inapplicable. The offering circular may be in ``wrap around'' 
form with the proxy statement attached.
    Instructions. 1. The term ``offering circular'' refers to both the 
offering circular for the subscription offering and the offering 
circular for the public offering through an underwriter or the direct 
community marketing by the converting savings association of the 
unsubscribed shares, unless otherwise indicated.
    2. The offering circular shall include such information which the 
Chief Counsel or Deputy Chief Counsel for Securities and Corporate 
Structure, by interpretive release or otherwise, has deemed necessary to 
comply with this Form OC.
    3. An offering circular for the subscription offering in ``wrap 
around'' form distributed to association members and other persons who 
have previously been furnished a copy of the proxy statement need not 
contain the proxy statement as an attachment provided such offering 
circular states that a copy of the proxy statement has previously been 
furnished to such persons and that an additional copy thereof will be 
furnished promptly upon request to the applicant (with the telephone 
number and mailing address of the applicant stated).

             Item 2. Additional Current Information Required

    Each offering circular shall, as of its respective dates of 
issuance, include, to the extent available, the following additional 
current information to the extent that such information is not already 
included in the proxy statement:
    (a) Information with respect to the vote of association members upon 
the plan of conversion and any other proposals considered at the meeting 
of members.
    (b) Information with respect to any recent material developments in 
the business or affairs of the applicant.
    (c) Information with respect to the trading market that is expected 
to exist for the capital stock following the conversion.
    (d) Information, on the outside front cover page, summarizing the 
results of any separate subscription offering including the number of 
shares sold to eligible account holders,

[[Page 274]]

voting members and others, the price at which the shares were sold, and 
the number of unsubscribed shares.
    (e) The information required by items 8(e)(1) and 8(f) of Form PS.
    (f) Any other information necessary to make such offering circular 
current, including full financial statements of the applicant within six 
months prior to the date of issuance of such offering circular. In 
addition, a subscription offering circular shall contain any more recent 
financial statements which, at the time of commencement of the 
subscription offering, it can be determined will be required to be 
included in an offering circular to be used in the direct community 
offering or public offering pursuant to this paragraph (f).

            Item 3. Statement Required in Offering Circulars

    There shall be set forth on the outside cover page of every offering 
circular the following statement in capital letters printed in bold-face 
Roman type at least as large as ten-point modern type and at least two 
points leaded:

  THESE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE OFFICE OF 
   THRIFT SUPERVISION NOR HAS SUCH OFFICE PASSED UPON THE ACCURACY OR 
 ADEQUACY OF THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE CONTRARY 
                              IS UNLAWFUL.

                  Item 4. Preliminary Offering Circular

    The outside front cover page of any preliminary offering circular 
shall bear, in red ink, the caption ``Preliminary Offering Circular,'' 
the date of its issuance, and the following statement printed in type as 
large as that used generally in the body of such offering circular.
    ``This offering circular has been filed with the Office of Thrift 
Supervision, but has not been authorized for use in final form. 
Information contained herein is subject to completion or amendment. The 
shares covered hereby may not be sold nor may offers to buy be accepted 
prior to the time the offering circular is declared effective by the 
Office of Thrift Supervision. The offering circular shall not constitute 
an offer to sell or the solicitation of an offer to buy nor shall there 
be any sale of these shares in any State in which such offer, 
solicitation or sale would be unlawful prior to registration or 
qualification under the securities laws of any such State.''

   Item 5. Information with Respect to Exercise of Subscription Rights

    Any offering circular which is required to be delivered to 
subscribers shall describe all material terms of the offering relating 
to the exercise of subscription rights to the extent that such 
description is not already in the proxy statement. Such terms include 
the expiration date, any subscription agent, method of exercising 
subscription rights, payment for shares, delivery of stock certificates 
for shares purchased, maximum subscription price, possible reduction of 
subscription price, relationship of subscription price to public 
offering price, requirement that all unsubscribed shares be sold, and 
any other material conditions relating to the exercise of subscription 
rights.

Item 6. Information with Respect to Public Offering or Direct Community 
                                Offering

    Each offering circular shall describe the material terms of the plan 
or plans of distribution for all unsubscribed shares of capital stock to 
the extent such description is not already in the proxy statement, 
including the following:
    (a) If the shares are to be offered through underwriters, the 
outside front cover page of both offering circulars shall give the 
information called for by this paragraph. In the case of the offering 
circular for any public offering, such information shall be given in 
substantially the tabular form set forth below. In any other case, the 
information may be given in narrative form. If the information is not 
known at the time of the subscription offering, so state and estimate.

----------------------------------------------------------------------------------------------------------------
                                                                 Underwriting discounts
                                            Price to public         and commissions       Proceeds to applicant
----------------------------------------------------------------------------------------------------------------
Per share............................  $______................  $______................  $______
  Total..............................  $______................  $______................  $______
----------------------------------------------------------------------------------------------------------------

    (b) An offering circular for a public offering or direct community 
marketing, where the plan of conversion does not contain the optional 
provision permitted by Sec. 563b.3(d)(11), may omit the description 
relating to the exercise of subscription rights required by item 5.
    (c) If any shares are to be offered through underwriters, the 
offering circular for the public offering shall state the names of the 
principal underwriters and the respective amounts underwritten by each. 
The names of the principal underwriters other than the managing 
underwriters and the respective amounts to be underwritten may be 
omitted from the offering circular for the subscription offering, unless 
the plan of conversion contains the optional provision permitted by 
Sec. 563b.3(d)(11). Each offering circular shall identify each principal 
underwriter having a material relationship to the applicant and state 
the nature of the relationship. Each offering circular shall state 
briefly the nature of the underwriter's obligation to take the 
unsubscribed shares.

[[Page 275]]

    (d) The offering circular for the public offering shall state 
briefly the discounts and commissions to be allowed or paid to dealers 
in connection with the sale of the unsubscribed shares. Such information 
may be omitted from the offering circular for any subscription offering, 
unless the plan of conversion contains the optional provision permitted 
by Sec. 563b.3(d)(11).
    (e) If any shares are to be offered through underwriters, the 
offering circular for the public offering shall identify any principal 
underwriter that intends to confirm sales to any accounts over which it 
exercises discretionary authority and include an estimate of the number 
of shares so intended to be confirmed. Such information may be omitted 
from the offering circular for any subscription offering.
    Instructions. 1. Commissions include all cash, securities, 
contracts, or anything else of value, paid, to be set aside, disposed 
of, or understandings made with or for the benefit of any persons in 
which any underwriter or dealer is interested, in connection with the 
sale of the shares.
    2. Only commissions paid by the applicant in cash are to be included 
in the table. Any other consideration to the underwriters shall be set 
forth following the table with a reference thereto in the second column 
of the table. Any finder's fees or similar payments shall be 
appropriately disclosed.
    3. All that is required as to the nature of the underwriters' 
obligation is whether the underwriters are or will be committed to take 
and to pay for all of the shares if any are taken, or whether it is 
merely an agency or ``best efforts'' arrangement under which the 
underwriters are required to take and pay for only such shares as they 
may sell to the public. Conditions precedent to the underwriters' taking 
the shares, including customary ``market outs,'' need not be described. 
If a ``best efforts'' arrangement is used, describe any standby 
commitments for shares not sold.
    (f) If any shares are to be sold by the converting savings 
association through a direct community marketing, indicate the timing of 
the offering, the geographical area where the offering will be made, the 
method to be employed to market the shares, including the frequency and 
nature of communications or contracts with potential purchasers, any 
preferences that will be given any such geographical area or class of 
potential purchasers, and the limitations on purchases by potential 
purchasers.



PART 563c--ACCOUNTING REQUIREMENTS--Table of Contents




           Subpart A--Form and Content of Financial Statements

Sec.
563c.1  Form and content of financial statements.
563c.2  Definitions.
563c.3  Qualification of public accountant.
563c.4  Condensed financial information [Parent only].

Subpart B [Reserved]

               Subpart C--Financial Statement Presentation

563c.101  Application of this subpart.
563c.102  Financial statement presentation.

    Authority: 12 U.S.C. 1462a, 1463, 1464; 15 U.S.C. 78c(b), 78m, 78n, 
78w.

    Source: 54 FR 49627, Nov. 30, 1989, unless otherwise noted.



           Subpart A--Form and Content of Financial Statements



Sec. 563c.1  Form and content of financial statements.

    (a) This subpart A states the requirements as to form and content of 
financial statements included by a savings association in the following 
documents. However, the Office's regulations governing the applicable 
documents specify the actual financial statements that are to be 
included in that document.
    (1) Any proxy statement or offering circular required to be used in 
connection with a conversion under part 563b of this chapter.
    (2) Any offering circular or nonpublic offering materials required 
to be used in connection with an offer or sale of securities under part 
563g of this chapter.
    (3) Any filing under the Securities Exchange Act of 1934, 15 U.S.C. 
78a et seq., made pursuant to the requirements of part 563d of this 
chapter.
    (b) Except as otherwise provided by the Office by rule, regulation, 
or order

[[Page 276]]

made specifically applicable to financial statements governed by this 
section, financial statements shall:
    (1) Be prepared and presented in accordance with generally accepted 
accounting principles;
    (2) Comply with subpart C of this part;
    (3) Consistent with the provisions of this subpart, comply with 
articles 1, 2, 3, 4, 10, and 11 of Regulation S-X adopted by the 
Securities and Exchange Commission (17 CFR 210.l-210.4, 210.10, and 
210.11).
    (4) Be audited, when required, by an independent auditor in 
accordance with the standards imposed by the American Institute of 
Certified Public Accountants.
    (c) The term ``financial statements'' includes all notes to the 
statements and related schedules.



Sec. 563c.2  Definitions.

    (See also 17 CFR 210.1-02.)
    (a) Registrant. The term ``registrant'' means an applicant, a 
savings association, or any other person required to prepare financial 
statements in accordance with this subpart.
    (b) Significant subsidiary. The term ``significant subsidiary'' 
means a subsidiary, including its subsidiaries, which meets any of the 
following conditions:
    (1) The association's and its other subsidiaries' investments in and 
advances to the subsidiary exceed 10 percent of the total assets of the 
association and its subsidiaries consolidated as of the end of the most 
recently completed fiscal year (for purposes of determining whether 
financial statements of a business acquired or to be acquired in a 
business combination accounted for as a pooling of interests are 
required pursuant to 17 CFR 210.3-05, this condition is also met when 
the number of common shares exchanged by the association exceeds 10 
percent of its total common shares outstanding at the date the 
combination is initiated); or
    (2) The association's and its other subsidiaries' proportionate 
share of the total assets (after intercompany eliminations) of the 
subsidiary exceeds 10 percent of the total assets of the association and 
its subsidiaries consolidated as of the end of the most recently 
completed fiscal year; or
    (3) The association's and its other subsidiaries' equity in the 
income from continuing operations before income taxes, extraordinary 
items, and cumulative effect of a change in accounting principle of the 
subsidiary exceeds 10 percent of such income of the association and its 
subsidiaries consolidated for the most recently completed fiscal year.

    Computational note: For purposes of making the prescribed income 
test the following guidance should be applied:
    1. When a loss has been incurred by either the parent or its 
consolidated subsidiaries or the tested subsidiary, but not both, the 
equity in the income or loss of the tested subsidiary should be excluded 
from the income of the association and its subsidiaries consolidated for 
purposes of the computation.
    2. If income of the association and its subsidiaries consolidated 
for the most recent fiscal year is at least 10 percent lower than the 
average of the income for the last five fiscal years, such average 
income should be substituted for purposes of the computation. Any loss 
years should be omitted for purposes of computing average income.



Sec. 563c.3  Qualification of public accountant.

    (See also 17 CFR 210.2-01.)
    The term ``qualified public accountant'' means a certified public 
accountant or licensed public accountant certified or licensed by a 
regulatory authority of a State or other political subdivision of the 
United States who is in good standing as such under the laws of the 
jurisdiction where the home office of the registrant to be audited is 
located. Any person or firm who is suspended from practice before the 
Securities and Exchange Commission or other governmental agency is not a 
``qualified public accountant'' for purposes of this section.

[54 FR 49627, Nov. 30, 1989, as amended at 60 FR 66718, Dec. 26, 1995]



Sec. 563c.4  Condensed financial information [Parent only].

    (a) The information prescribed by Schedule III required by section 
IV of Sec. 563c.102 of this part shall be presented in a note to the 
financial statements when the restricted net assets (17 CFR

[[Page 277]]

210.4-08(e)(3)) of consolidated subsidiaries exceed 25 percent of 
consolidated net assets as of the end of the most recently completed 
fiscal year. The investment in and indebtedness of and to association 
subsidiaries shall be stated separately in the condensed balance sheet 
from amounts for other subsidiaries; and the amount of cash dividends 
paid to the parent association for each of the last three years by 
association subsidiaries shall be stated separately in the condensed 
income statement from amounts for other subsidiaries.
    (b) For purposes of the above test, restricted net assets of 
consolidated subsidiaries shall mean that amount of the association's 
proportionate share of net assets of consolidated subsidiaries (after 
intercompany eliminations) which as of the end of the most recent year 
may not be transferred to the parent company by subsidiaries in the form 
of loans, advances, or cash dividends without the consent of a third 
party (i.e., lender, regulatory agency, foreign government, etc.).
    (c) Where restrictions on the amount of funds which may be loaned or 
advanced differ from the amount restricted as to transfer in the form of 
cash dividends, the amount least restrictive to the subsidiary shall be 
used. Redeemable preferred stocks (See item I (22) in Sec. 563c.102) and 
minority interest (See item I (21) in Sec. 563c.102) shall be deducted 
in computing net assets for purposes of this test.

Subpart B [Reserved]



               Subpart C--Financial Statement Presentation



Sec. 563c.101  Application of this subpart.

    This subpart contains rules pertaining to the form and content of 
financial statements included as part of:
    (a) A conversion application under part 563b, including financial 
statements in proxy statements and offering circulars,
    (b) A filing under the Securities Exchange Act of 1934, 15 U.S.C. 
78a et seq., and
    (c) Any offering circular required to be used in connection with the 
issuance of mutual capital certificates under Sec. 563.74 and debt 
securities under Sec. 563.80 and Sec. 563.81 of this chapter.

[54 FR 49627, Nov. 30, 1989, as amended at 65 FR 16305, Mar. 28, 2000]



Sec. 563c.102  Financial statement presentation.

    This section specifies the various line items which should appear on 
the face of the financial statements governed by this subpart C and 
additional disclosures which should be included with the financial 
statements in related notes.

                            I. Balance Sheet

    Balance sheets shall comply with the following provisions:

                                 Assets

    1. Cash and amounts due from depository institutions. (a) The 
amounts in this caption should include noninterest-bearing deposits with 
depository institutions.
    (b) State in a note the amount and terms of any deposits in 
depository institutions held as compensating balances against long- or 
short-term borrowing arrangements. This disclosure should include the 
provisions of any restrictions as to withdrawal or usage. Restrictions 
may include legally restricted deposits held as compensating balances 
against short-term borrowing arrangements, contracts entered into with 
others, or company statements of intention with regard to particular 
deposits; however, time deposits and short-term certificates of deposits 
are not generally included in legally restricted deposits. In cases 
where compensating balance arrangements exist but are not agreements 
which legally restrict the use of cash amounts shown on the balance 
sheet, describe in the notes to the financial statements these 
arrangements and the amount involved, if determinable, for the most 
recent audited balance sheet required and for any subsequent unaudited 
balance sheet required. Compensating balances that are maintained under 
an agreement to ensure future credit availability shall be disclosed in 
the notes to the financial statements along with the amount and terms of 
the agreement.
    (c) Checks outstanding in excess of an applicant's book balance in a 
demand deposit account shall be shown as a liability.
    2. Interest-bearing deposits in other banks.
    3. Federal funds sold and securities purchased under resale 
agreements or similar arrangements. These amounts should be presented, 
i.e., gross and not netted against Federal funds purchased and 
securities sold under agreement to repurchase, as reported in caption 
15.

[[Page 278]]

    4. Trading account assets. Include securities considered to be held 
for trading purposes.
    5. Other short-term investments.
    6. Investment securities. (a) Include securities considered to be 
held for investment purposes. Disclose the aggregate book value of 
investment securities as the line item on the balance sheet; and also 
show on the face of the balance sheet the aggregate market value at the 
balance sheet date. The aggregate amounts should include securities 
pledged, loaned, or sold under repurchase agreements and similar 
arrangements. Borrowed securities and securities purchased under resale 
agreements or similar arrangements should be excluded.
    (b) Disclose in a note the carrying value and market value of 
securities of (i) the U.S. Treasury and other U.S. Government agencies 
and corporations; (ii) states of the U.S. and political subdivisions 
thereof; and (iii) other securities.
    7. Assets held for sale. Investments in assets considered to be held 
for sale purposes should be reported separately in the statement of 
financial condition.
    8. Loans. (a) Disclose separately: (i) Total loans (including 
financing type leases), (ii) allowance for loan losses, (iii) unearned 
income on installment loans, (iv) discount on loans purchased, and (v) 
loans in process.
    (b) State on the balance sheet or in a note the amount of loans in 
each of the following categories: (i) Real estate mortgage; (ii) real 
estate construction; (iii) installment; and (iv) commercial, financial, 
and agricultural.
    (c)(i) Include under the real estate mortgage category loans payable 
in monthly, quarterly, or other periodic installments and secured by 
developed income property and/or personal residences.
    (ii) Include under the real estate construction category loans 
secured by real estate which are made for the purpose of financing 
construction of real estate and land development projects.
    (iii) Include under the installment category loans to individuals 
generally repayable in monthly installments. This category shall 
include, but not be limited to, credit card and related activities, 
individual automobile loans, other installment loans, mobile home loans, 
and residential repair and modernization loans.
    (iv) Include under the commercial, financial, and agricultural 
category all loans not included in another category. This category shall 
include, but not be limited to, loans to real estate investment trusts, 
mortgage companies, banks, and other financial institutions; loans for 
carrying securities; and loans for agricultural purposes. Do not include 
loans secured primarily by developed real estate.
    (d) State separately any other loan category regardless of relative 
size if necessary to reflect any unusual risk concentration.
    (e) Unearned income on installment loans shall be shown and deducted 
separately from total loans.
    (f) Unamortized discounts on purchased loans shall be deducted 
separately from total loans.
    (g) Loans in process shall be deducted separately from total loans.
    (h) A series of categories other than those specified in item (b) of 
paragraph 8. may be used to present details of loans if considered a 
more appropriate presentation. The categories specified in item (b) of 
paragraph 8. should be considered the minimum categories that may be 
presented.
    (i) For each period for which an income statement is presented, 
disclose in a note the total dollar amount of loans being serviced by 
the association for the benefit of others.
    (j)(i)(A) As of each balance sheet date, disclose in a note the 
aggregate dollar amount of loans (exclusive of loans to any such persons 
which in the aggregate do not exceed $60,000 during the last year) made 
by the association or any of its subsidiaries to directors, executive 
officers, or principal holders of equity securities (17 CFR 210.1-02) of 
the association or any of its significant subsidiaries (17 CFR 210.1-02) 
or to any associate of such persons. For the latest fiscal year, an 
analysis of activity with respect to such aggregate loans to related 
parties should be provided. The analysis should include at the beginning 
of the period new loans, repayments, and other changes. (Other changes, 
if significant, should be explained.)
    (B) This disclosure need not be furnished when the aggregate amount 
of such loans at the balance sheet date (or with respect to the latest 
fiscal year, the maximum amount outstanding during the period) does not 
exceed 5 percent of stockholders' equity at the balance sheet date.
    (ii) If a significant portion of the aggregate amount of loans 
outstanding at the end of the fiscal year disclosed pursuant to item 
(i)(A) of this paragraph (j) relates to nonaccrual, past due, 
restructured, and potential problem loans (see Securities and Exchange 
Commission's Securities Act Industry Guide 3, section III.C.), so state 
and disclose the aggregate amount of such loans along with such other 
information necessary to an understanding of the effects of the 
transactions on the financial statements.
    (iii) Notwithstanding the aggregate disclosure called for by 
paragraph (j)(i) of this balance sheet caption 8, if any loans were not 
made in the ordinary course of business during any period for which an 
income statement is required to be filed, provide an appropriate 
description of each such loan (see 17 CFR 210.9-03.7(e)(3)).
    (iv) For purposes only of Balance Sheet item 8(j), the following 
definitions shall apply:

[[Page 279]]

    (A) Associate used to indicate a relationship with any person means 
(1) any corporation, venture, or organization of which such person is a 
general partner or is, directly or indirectly, the beneficial owner of 
10 percent or more of any class of equity securities; (2) any trust or 
other estate in which such person has a substantial beneficial interest 
or for which such person serves as trustee or in a similar capacity; and 
(3) any member of the immediate family of any of the foregoing persons.
    (B) Executive officer means the president, any vice president in 
charge of a principal business unit, division, or function (such as 
loans, investments, operations, administration, or finance), and any 
other officer or person who performs similar policy-making functions.
    (C) Immediate family with regard to a person means such person's 
spouse, parents, children, siblings, mother- and father-in-law, sons- 
and daughters-in-law, and brothers- and sisters-in-law.
    (D) Ordinary course of business with regard to loans means those 
loans which were made on substantially the same terms, including 
interest rate and collateral, as those prevailing at the same time for 
comparable transactions with unrelated persons and did not involve more 
than the normal risk of collectibility or present other unfavorable 
features.
    (k) For each period for which an income statement is presented, 
furnish in a note a statement of changes in the allowance for loan 
losses, showing balances at beginning and end of the period, provision 
charged to income, recoveries of amounts previously charged off, and 
losses charged to the allowance.
    9. Premises and equipment.
    10. Real estate owned. State, parenthetically or otherwise:
    (a) The amount of real estate owned by class as described in item 
(b) of paragraph 10. and the basis for determining that amount; and
    (b) A description of each class of real estate owned (i) acquired by 
foreclosure or by deed in lieu of foreclosure, (ii) in judgment and 
subject to redemption, or (iii) acquired for development or resale. Show 
separately any accumulated depreciation or valuation allowances. 
Disclose the policies regarding, and amounts of, capitalized costs, 
including interest.
    11. Investment in joint ventures. In a note, present summarized 
aggregate financial statements for investments in real estate or other 
joint ventures which individually (a) are 20 percent or more owned by 
the association or any of its subsidiaries, or (b) have liabilities 
(including contingent liabilities) to the parent exceeding 10 percent of 
the parent's regulatory capital. If an allowance for real estate losses 
subsequent to acquisition is maintained, the amount shall be disclosed, 
deducted from the other real estate owned, and a statement of changes in 
the allowance showing balances at beginning and end of period should be 
included. Provision charged to income and losses charged to the 
allowance account shall be furnished for each period for which an income 
statement is filed.
    12. Other assets. (a) Disclose separately on the balance sheet or in 
a note thereto any of the following assets or any other asset the amount 
of which exceeds 30 percent of stockholders' equity. The remaining 
assets may be shown as one amount.
    (i) Accrued interest receivable. State separately those amounts 
relating to loans and those amounts relating to investments.
    (ii) Excess of cost over assets acquired (net of amortization).
    (b) State in a note (i) amounts representing investments in 
affiliates and investments in other persons which are accounted for by 
the equity method, and (ii) indebtedness of affiliates and other 
persons, the investments in which are accounted for by the equity 
method. State the basis of determining the amounts reported under 
paragraph (b)(i).
    13. Total assets.

                  Liabilities, and Stockholders' Equity

    14. Deposits. (a) Disclose separately on the balance sheet or in a 
note the amounts in the following categories of interest-bearing and 
noninterest-bearing deposits: (i) NOW account and MMDA deposits, (ii) 
savings deposits, and (iii) time deposits.
    (b) Include under the savings-deposits category interest-bearing 
deposits without specified maturity or contractual provisions requiring 
advance notice of intention to withdraw funds. Include deposits for 
which an association may require at its option written notice of 
intended withdrawal not less than 14 days in advance.
    (c) Include under the time-deposits category deposits subject to 
provisions specifying maturity or other withdrawal conditions such as 
time certificates of deposits, open account time deposits, and deposits 
accumulated for the payment of personal loans.
    (d) Include accrued interest or dividends, if appropriate.
    15. Short-term borrowings. (a) State separately, here or in a note, 
the amounts payable for (i) Federal funds purchased and securities sold 
under agreements to repurchase, (ii) commercial paper, and (iii) other 
short-term borrowings.
    (b) Federal funds purchased and sales of securities under repurchase 
agreements shall be reported gross and not netted against sales of 
Federal funds and purchase of securities under resale agreements.
    (c) Include as securities sold under agreements to repurchase all 
transactions of this

[[Page 280]]

type regardless of (i) whether they are called simultaneous purchases 
and sales, buy-backs, turnarounds, overnight transactions, delayed 
deliveries, or other terms signifying the same substantive transaction, 
and (ii) whether the transactions are with the same or different 
institutions, if the purpose of the transactions is to repurchase 
identical or similar securities.
    (d) The amount and terms (including commitment fees and the 
conditions under which lines may be withdrawn) of unused lines of credit 
for short-term financing shall be disclosed, if significant, in the 
notes to the financial statements. The amount of these lines of credit 
which support a commercial paper borrowing arrangement or similar 
arrangements shall be separately identified.
    16. Advance payments by borrowers for taxes and insurance.
    17. Other liabilities. Disclose separately on the balance sheet or 
in a note any of the following liabilities or any other items which are 
individually in excess of 30 percent of stockholders' equity (except 
that amounts in excess of 5 percent of stockholders' equity should be 
disclosed with respect to item (d)). The remaining items may be shown as 
one amount.
    (a) Income taxes payable.
    (b) Deferred income taxes.
    (c) Indebtedness to affiliate and other persons the investment in 
which is accounted for by the equity method.
    (d) Indebtedness to directors, executive officers, and principal 
holders of equity securities of the registrant or any of its significant 
subsidiaries. (The guidance in balance sheet caption ``8(j)'' shall be 
used to identify related parties for purposes of this disclosure.)
    18. Bonds, mortgages, and similar debt. (a) Include bonds, Federal 
Home Loan Bank advances, capital notes, debentures, mortgages, and 
similar debt.
    (b) For each issue or type of obligation state in a note:
    (i) The general character of each type of debt, including: (A) The 
rate of interest, (B) the date of maturity, or, if maturing serially, a 
brief indication of the serial maturities, such as ``maturing serially 
from 1980 to 1990,'' (C) if the payment of principal or interest is 
contingent, an appropriate indication of such contingency, (D) a brief 
indication of priority, and (E) if convertible, the basis. For amounts 
owed to related parties see 17 CFR 210.4-08(k).
    (ii) The amount and terms (including commitment fees and the 
conditions under which commitments may be withdrawn) of unused 
commitments for long-term financing arrangements that, if used, would be 
disclosed under this caption shall be disclosed in the notes to the 
financial statements, if significant.
    (c) State in the notes with appropriate explanations (i) the title 
and amount of each issue of debt of a subsidiary included in item (a) of 
paragraph 18 which has not been assumed or guaranteed by the 
association, and (ii) any liens on premises of a subsidiary or its 
consolidated subsidiaries which have not been assumed by the subsidiary 
or its consolidated subsidiaries.
    19. Deferred credits. State separately those items which exceed 30 
percent of stockholders' equity.
    20. Commitments and contingent liabilities. Total commitments to 
fund loans should be disclosed. The dollar amounts and terms of other 
than floating market-rate commitments should also be disclosed.
    21. Minority interest in consolidated subsidiaries.
    22. Preferred stock subject to mandatory redemption requirements or 
the redemption of which is outside the control of the issuer. (a) 
Include under this caption amounts applicable to any class of stock 
which has any of the following characteristics: (i) it is redeemable at 
a fixed or determinable price on a fixed or determinable date or dates, 
whether by operation of a sinking fund or otherwise; (ii) it is 
redeemable at the option of the holder; or (iii) it has conditions for 
redemption which are not solely within the control of the issuer, such 
as stock which must be redeemed out of future earnings. Amounts 
attributable to preferred stock which is not redeemable or is redeemable 
solely at the option of the issuer shall be included under caption 23 
unless it meets one or more of the above criteria.
    (b) State on the face of the balance sheet the title, carrying 
amount, and redemption amount of each issue. (If there is more than one 
issue, these amounts may be aggregated on the face of the balance sheet 
and details concerning each issue may be presented in the note required 
by item (c) of paragraph 22.) Show also the dollar amount of any shares 
subscribed for but unissued, and show the deduction of subscriptions 
receivable therefrom. If the carrying value is different from the 
redemption amount, describe the accounting treatment for such difference 
in the note required by item (c) of paragraph 22. Also state in this 
note or on the face of the balance sheet, for each issue, the number of 
shares authorized and the number of shares issued or outstanding, as 
appropriate. (See 17 CFR 210.4-07.)
    (c) State in a separate note captioned ``Redeemable Preferred 
Stock'' (i) a general description of each issue, including its 
redemption features (e.g., sinking fund, at option of holders, out of 
future earnings) and the rights, if any, of holders in the event of 
default, including the effect, if any, on junior securities in the event 
a required dividend, sinking fund, or other redemption payment(s) is not 
made, (ii) the combined aggregate amount of redemption requirements for

[[Page 281]]

all issues each year for the five years following the date of the latest 
balance sheet, and (iii) the changes in each issue for each period for 
which an income statement is required to be presented. (See also 17 CFR 
210.4-08(d).
    (d) Securities reported under this caption are not to be included 
under a general heading ``stockholders' equity'' or combined in a total 
with items described in captions 23, 24 or 25, which follow.
    23. Preferred stock which is not redeemable or is redeemed solely at 
the option of the issuer. State on the face of the balance sheet, or, if 
more than one issue is outstanding, state in a note, the title of each 
issue and the dollar amount thereof. Show also the dollar amount of any 
shares subscribed for but unissued, and show the deduction of 
subscriptions receivable. State on the face of the balance sheet or in a 
note, for each issue, the number of shares authorized and the number of 
shares issued or outstanding, as appropriate. (See 17 CFR 210.4-07.) 
Show in a note or separate statement the changes in each class of 
preferred shares reported under this caption for each period for which 
an income statement is required to be presented. (See also 17 CFR 210.4-
08(d)).
    24. Common stock. For each class of common shares state, on the face 
of the balance sheet, the number of shares issued or outstanding, as 
appropriate (see 17 CFR 210.4-07), and the dollar amount thereof. If 
convertible, this fact should be indicated on the face of the balance 
sheet. For each class of common stock state, on the face of the balance 
sheet or in a note, the title of the issue, the number of shares 
authorized, and, if convertible, the basis for conversion (see also 17 
CFR 210.4-08(d).) Show also the dollar amount of any common stock 
subscribed for but unissued, and show the deduction of subscriptions 
receivable. Show in a note or statement the changes in each class of 
common stock for each period for which an income statement is required 
to be presented.
    25. Other stockholders' equity. (a) Separate captions shall be shown 
on the face of the balance sheet for (i) additional paid-in capital, 
(ii) other additional capital, and (iii) retained earnings, both (A) 
restricted and (B) unrestricted. (See 17 CFR 210.4-08(e).) Additional 
paid-in capital and other additional capital may be combined with the 
stock caption to which it applies, if appropriate. State whether or not 
the association is in compliance with the Federal regulatory capital 
requirements (and state requirements where applicable). Also include the 
dollar amount of those regulatory capital requirements and the amount by 
which the association exceeds or fails to meet those requirements.
    (b) For a period of at least 10 years subsequent to the effective 
date of a quasi-reorganization, any description of retained earnings 
shall indicate the point in time from which the new retained earnings 
dates, and for a period of at least three years shall indicate, on the 
face of the balance sheet, the total amount of the deficit eliminated.
    (c) Changes in stockholders' equity shall be disclosed in accordance 
with the requirements of 17 CFR 210.3-04.
    26. Total liabilities and stockholders' equity.

                          II. Income Statement

    Income statements shall comply with the following provisions:
    1. Interest and fees on loans. (a) Include interest, service 
charges, and fees which are related to or are an adjustment of the loan 
interest yield.
    (b) Current amortization of premiums on mortgages or other loans 
shall be deducted from interest on loans, and current accretion of 
discount on such items shall be added to interest on loans.
    (c) Discounts and other deferred amounts which are related to or are 
an adjustment of the loan interest yield shall be amortized into income 
using the interest (level yield) method.
    2. Interest and dividends on investment securities. Include 
accretion of discount on securities and deduct amortization of premiums 
on securities.
    3. Trading account interest. Include interest from securities 
carried in a dealer trading account or accounts that are held 
principally for resale to customers.
    4. Other interest income. Include interest on short-term investments 
(Federal funds sold and securities purchased under agreements to resell) 
and interest on bank deposits.
    5. Total interest income.
    6. Interest on deposits. Include interest on all deposits. On the 
income statement or in a note, state separately, in the same categories 
as those specified for deposits at balance sheet caption 14(a), the 
interest on those deposits. Early withdrawal penalties should be netted 
against interest on deposits and, if material, disclosed on the income 
statement.
    7. Interest on short-term borrowings. Include interest on borrowed 
funds, including Federal funds purchased, securities sold under 
agreements to repurchase, commercial paper, and other short-term 
borrowings.
    8. Interest on long-term borrowings. Include interest on bonds, 
capital notes, debentures, mortgages on association premises, 
capitalized leases, and similar debt.
    9. Total interest expense.
    10. Net interest income.
    11. Provision for loan losses.
    12. Net interest income after provision for loan losses.
    13. Other income. Disclose separately any of the following amounts, 
or any other item of other income, which exceeds 1 percent of the 
aggregate of total interest income and other income. The remaining 
amount may be

[[Page 282]]

shown as one amount, except for investment securities gains or losses 
which shall be shown separately regardless of size.
    (a) Commissions and fees from fiduciary activities.
    (b) Fees for other services to customers.
    (c) Commissions, fees, and markups on securities underwriting and 
other securities activities.
    (d) Profit or loss on transactions in investment securities.
    (e) Equity in earnings of unconsolidated subsidiaries and 50-
percent- or less-owned persons.
    (f) Gains or losses on disposition of investments in securities of 
subsidiaries and 50-percent- or less-owned persons.
    (g) Profit or loss from real estate operations.
    (h) Other fees related to loan originations or commitments not 
included in income statement caption 1.
    The remaining other income may be shown in one amount.
    (i) Investment securities gains or losses. The method followed in 
determining the cost of investments sold (e.g., ``average cost,'' 
``first-in, first-out,'' or ``identified certificate'') and related 
income taxes shall be disclosed.
    14. Other expenses. Disclose separately any of the following 
amounts, or any other item of other expense, which exceeds 1 percent of 
the aggregate of total interest income and other income. The remaining 
amounts may be shown as one amount.
    (a) Salaries and employee benefits.
    (b) Net occupancy expense of premises.
    (c) Net cost of operations of other real estate (including 
provisions for real estate losses, rental income, and gains and losses 
on sales of real estate).
    (d) Minority interest in income of consolidated subsidiaries.
    (e) Goodwill amortization.
    15. Other income and expenses. State separately material events or 
transactions that are unusual in nature or occur infrequently, but not 
both, and therefore do not meet both criteria for classification as an 
extraordinary item. Examples of items which would be reported separately 
are gain or loss from the sale of premises and equipment, provision for 
loss on real estate owned, or provision for gain or loss on the sale of 
loans.
    16. Income or losses before income tax expense.
    17. Income tax expense. The information required by 17 CFR 210.4-
08(h) should be disclosed.
    18. Income or loss before extraordinary items effects of changes in 
accounting principles.
    19. Extraordinary items, less applicable tax.
    20. Cumulative effects of changes in accounting principles.
    21. Net income or loss.
    22. Earnings-per-share data.
    23. Conversion footnote. If the association is an applicant for 
conversion from a mutual to a stock association or has converted within 
the last three years, describe in a note the general terms of the 
conversion and restrictions on the operations of the association imposed 
by the conversion. Also, state the amount of net proceeds received from 
the conversion and costs associated with the conversion.
    24. Mergers and acquisitions. For the period in which a business 
combination occurs and is accounted for by the purchase method of 
accounting, in addition to those disclosures required by Accounting 
Principles Board Opinion No. 16, the association shall make those 
disclosures as noted below for all combinations involving significant 
acquisitions. (A significant acquisition is defined for this purpose to 
be one in which the assets of the acquired association, or group of 
associations, exceed 10 percent of the assets of the consolidated 
association at the end of the most recent period being reported upon.)
    (a) Amounts and descriptions of discounts and premiums related to 
recording the aggregate interest-bearing assets and liabilities at their 
fair market value. The disclosure should also include the methods of 
amortization or accretion and the estimated remaining lives.
    (b) The net effect on net income before taxes of the amortization 
and accretion of discounts, premiums, and intangible assets related to 
the purchase accounting transaction(s). For subsequent periods, the 
association shall disclose the remaining total unamortized or unaccreted 
amounts of discounts, premiums, and intangible assets as of the date of 
the most recent balance sheet presented. In addition, the association 
shall disclose the net effect on net income before taxes of the 
amortization and accretion of discounts, premiums, and intangible assets 
related to prior business combinations accounted for by the purchase 
method of accounting. Such disclosures need not be made if the total 
amounts of discounts, premiums, or intangible assets do not exceed 30 
percent of stockholders' equity as of the date of the most recent 
balance sheet presented.

                      III. Statement of Cash Flows

    The amounts shown in this statement should be those items which 
materially enhance the reader's understanding of the association's 
business. For example, gains from sales of loans should be segregated 
from sales of mortgage-backed securities and other securities, if 
material, proceeds from principal repayments and maturities from loans 
and mortgage-backed securities should be segregated from proceeds from 
sales of loans and mortgage-backed securities, purchases of loans, 
mortgage-backed securities and other securities should be segregated, if 
material. Additional guidance may be found

[[Page 283]]

in the FASB's Statement of Financial Accounting Standards No. 95 
Statement of Cash Flows.

                   IV. Schedules Required to be Filed

    The following schedules, which should be examined by an independent 
accountant, shall be filed unless the required information is not 
applicable or is presented in the related financial statements:
    (1) Schedule I--Indebtedness of and to related parties--Not Current. 
For each period for which an income statement is required, the following 
schedule should be filed in support of the amounts required to be 
reported by balance sheet items 8(j) and 17(c) unless such aggregate 
amount does not exceed 5 percent of stockholders' equity at either the 
beginning or the end of the period:

           Indebtedness of and to Related Parties--Not Current
------------------------------------------------------------------------
                            Indebtedness of--
-------------------------------------------------------------------------
   Name of     Balance at                                     Balance at
 person \1\    beginning    Additions \2\    Deductions \3\       end
------------------------------------------------------------------------
A             B            C                D                 E
------------------------------------------------------------------------


           Indebtedness of and to Related Parties--Not Current
------------------------------------------------------------------------
                      Indebtedness to--
------------------------------------------------------------- Balance at
   Name of     Balance at                                         end
 person \1\    beginning    Additions \2\    Deductions \3\
------------------------------------------------------------------------
A             F            G                H                 I
------------------------------------------------------------------------
\1\ The persons named shall be grouped as in the related schedule
  required for investments in related parties. The information called
  for shall be shown separately for any persons whose investments were
  shown separately in such related schedule.
\2\ For each person named in column A, explain in a note the nature and
  purpose of any increase during the period that is in excess of 10
  percent of the related balance at either the beginning or end of the
  period.
\3\ If deduction was other than a receipt or disbursement of cash,
  explain.

    (2) Schedule II--Guarantees of securities of other issuers. The 
following schedule should be filed as of the date of the most recently 
audited balance sheet with respect to any guarantees of securities of 
other issuers by the person for which the statements are being filed:

                                  Guarantees of Securities of Other Issuers \1\
----------------------------------------------------------------------------------------------------------------
                                                                                         Col. D. Amount owned by
 Col. A. Name of issuer of securities   Col. B. Title of issue    Col. C. Total amount    person or persons for
    guaranteed by person for which         of each class of          guaranteed and         which statement is
          statement is filed            securities guaranteed       outstanding \2\               filed
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------


                                  Guarantees of Securities of Other Issuers \1\
----------------------------------------------------------------------------------------------------------------
                                                                                          Col. G. Nature of any
                                                                                           default by issue of
                                                                                          securities guaranteed
 Col. A. Name of issuer of securities     Col. E. Amount in        Col. F. Nature of     in principal, interest,
    guaranteed by person for which      treasury of issuer of        guarantee \3\           sinking fund or
          statement is filed            securities guaranteed                             redemption provisions,
                                                                                         or payment of dividends
                                                                                                   \4\
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
\1\ Indicate in a note to the most recent schedule being filed for a particular person or group any significant
  changes since the date of the related balance sheet. If this schedule is filed in support of consolidated or
  combined statements, there shall be set forth guarantees by any person included in the consolidation or
  combination, except that such guarantees of securities which are included in the consolidated or combined
  balance sheet need not be set forth.
\2\ Indicate any amounts included in column C which are included also in column D or E.
\3\ There need be made only a brief statement of the nature of the guarantee, such as ``Guarantee of principal
  and interest,'' or ``Guarantee of dividends.'' If the guarantee is of interest or dividends, state the annual
  aggregate amount of interest or dividends so guaranteed.
\4\ Only a brief statement as to any such defaults need be made.

    (3) Schedule III--Condensed financial information. The following 
schedule shall be filed as of the dates and for the periods specified in 
the schedule.
    Condensed Financial Information
    [Parent only]
    [Association may determine disclosure based on information provided 
in footnotes below]
    (a) Provide condensed financial information as to financial 
position, changes in financial position, and results of operations of 
the association as of the same dates and for the same periods for which 
audited consolidated financial statements are required. The financial 
information required need not be presented in greater detail than is 
required for condensed statement by 17 CFR 210.10-01(a) (2), (3), (4). 
Detailed footnote disclosure which would normally be included with 
complete financial statements may be omitted with the exception of 
disclosure regarding material contingencies, long-term obligations, and 
guarantees. Description of significant provisions of the association's 
long-term obligations, mandatory dividend, or redemption requirements of 
redeemable stocks, and guarantees of the association shall be provided 
along with a 5-year schedule of maturities of debt. If the material 
contingencies, long-term obligations, redeemable stock requirements, and 
guarantees of the association have been separately disclosed in the 
consolidated statements, they need not be repeated in this schedule.
    (b) Disclose separately the amount of cash dividends paid to the 
association for each of the last three fiscal years by consolidated 
subsidiaries, unconsolidated subsidiaries,

[[Page 284]]

and 50-percent- or less-owned persons accounted for by the equity 
method, respectively.

[54 FR 49627, Nov. 30, 1989, as amended at 57 FR 26990, June 17, 1992]



PART 563d--SECURITIES OF SAVINGS ASSOCIATIONS--Table of Contents




                         Subpart A--Regulations

Sec.
563d.1  Requirements under certain sections of the Securities Exchange 
          Act of 1934.
563d.2  Mailing requirements for securities filings.
563d.3b-6  Liability for certain statements by savings associations.
563d.210  Form and content of financial statements.

                       Subpart B--Interpretations

563d.801  Application of this subpart.
563d.802  Description of business.

    Authority: 12 U.S.C. 1462a, 1463, 1464; 15 U.S.C. 78c(b), 78l, 78m, 
78w, 78d-1.

    Source: 54 FR 49634, Nov. 30, 1989, unless otherwise noted.



                         Subpart A--Regulations



Sec. 563d.1  Requirements under certain sections of the Securities Exchange Act of 1934.

    In respect to any securities issued by savings associations, the 
powers, functions, and duties vested in the Securities and Exchange 
Commission (the ``Commission'') to administer and enforce sections 12, 
13, 14(a), 14(c), 14(d), 14(f), and 16 of the Securities Exchange Act of 
1934 (the ``Act'') are vested in the Office. The rules, regulations and 
forms prescribed by the Commission pursuant to those sections or 
applicable in connection with obligations imposed by those sections, 
shall apply to securities issued by savings associations, except as 
otherwise provided in this part. The term ``Commission'' as used in 
those rules and regulations shall with respect to securities issued by 
savings associations be deemed to refer to the Office unless the context 
otherwise requires. All filings with respect to securities issued by 
savings associations required by those rules and regulations to be made 
with the Commission shall be made with the Business Transactions 
Division, Chief Counsel's Office, Office of Thrift Supervision, 1700 G 
Street, NW., Washington, DC 20552, by submitting such filings to the 
Securities Filing Desk at the above address, except as noted in 
Sec. 563d.2 of this part. Except to the extent otherwise specifically 
provided by the Office in the application fee schedule published in the 
Thrift Bulletin pursuant to 12 CFR part 502, all filing fees specified 
by the Commission's rules shall be paid to the Office. If, after the 
Office reviews a Form 10-K, Form 10-Q, Schedule 13D or Schedule 13G and 
determines that the filing is materially deficient such that the Office 
requires that an amendment be filed to correct the deficiency, then, 
upon the filing of the amendment to the Form 10-K, Form 10-Q, Schedule 
13D or Schedule 13G, as the case may be, the filer shall pay an 
additional filing fee to the Office, in the amount specified by the 
Office in the application fee schedule published in the Thrift Bulletin 
pursuant to 12 CFR part 502.

[54 FR 49634 Nov. 30, 1989, as amended at 55 FR 34531, Aug. 23, 1990; 60 
FR 66718, Dec. 26, 1995; 61 FR 65179, Dec. 11, 1996; 66 FR 65821, Dec. 
21, 2001]



Sec. 563d.2  Mailing requirements for securities filings.

    Any savings association or other party required to file reports with 
the Business Transactions Division, as set forth in Sec. 563d.1 of this 
part, shall file one of the required number of copies with the Regional 
Office of the Region in which the association is located or in the case 
of an association located in more than one Region, the Region where the 
association's home office is located. Such copies shall be marked to the 
attention of the Regional Director. The originally-signed copy and all 
remaining copies of each filing shall be sent to the Business 
Transactions Division by submitting such filings to the Securities 
Filing Desk at the address specified in Sec. 563d.1 of this part. Copies 
sent to the Regional Offices shall be mailed on the same day as the 
original and remaining copies are forwarded to the Business Transactions 
Division.

[55 FR 3041, Jan. 30, 1990, as amended at 60 FR 66718, Dec. 26, 1995; 66 
FR 65821, Dec. 21, 2001]

[[Page 285]]



Sec. 563d.3b-6  Liability for certain statements by savings associations.

    This section replaces adherence to 17 CFR 240.3b-6 and applies as 
follows:
    (a) A statement within the coverage of paragraph (b) of this section 
which is made by or on behalf of an issuer or by an outside reviewer 
retained by the issuer shall be deemed not to be a fraudulent statement 
(as defined in paragraph (d) of this section), unless it is shown that 
such statement was made or reaffirmed without a reasonable basis or was 
disclosed other than in good faith.
    (b) This section applies to the following statements:
    (1) A forward-looking statement (as defined in paragraph (c) of this 
section) made in a proxy statement or offering circular filed with the 
Office under part 563b of this chapter; in a registration statement 
filed with the Office under the Act on Form 10 (17 CFR 249.210); in part 
I of a quarterly report filed with the Office on Form 10-Q (17 CFR 
241.308a); in an annual report to shareholders meeting the requirements 
of Sec. 563d.1 of this part, particularly 17 CFR 240.14a-3 (b) and (c) 
or 17 CFR 240.14c-3 (a) and (b) under the Act; in a statement 
reaffirming such forward-looking statement subsequent to the date the 
document was filed or the annual report was made publicly available; or 
a forward-looking statement made prior to the date the document was 
filed or the date the annual report was made publicly available if such 
statement is reaffirmed in a filed document or annual report made 
publicly available within a reasonable time after the making of such 
forward-looking statement: Provided, That
    (i) At the time such statements are made or reaffirmed, either:
    (A) The issuer is subject to the reporting requirements of section 
13(a) or 15(d) of the Act and has complied with the requirements of 17 
CFR 240.13a-1 or 240.15d-1 thereunder, if applicable, to file its most 
recent annual report on Form 10-K; or
    (B) If the issuer is not subject to the reporting requirements of 
section 13(a) or 15(d) of the Act, the statements are made either in a 
registration statement filed under the Securities Act of 1933 or 
pursuant to section 12 (b) or (g) of the Act, or in a proxy statement or 
offering circular filed with the Office under part 563b of this chapter 
if such statements are reaffirmed in a registration statement under the 
Act on Form 10, filed with the Office within 180 days of the savings 
association's conversion, and
    (ii) The statements are not made by or on behalf of an issuer that 
is an investment company registered under the Investment Company Act of 
1940;
    (2) Information (i) relating to the effects of changing prices on 
the business enterprise presented voluntarily or pursuant to item 303 of 
Regulation S-K (17 CFR 229.303), management's discussion and analysis of 
financial condition and results of operations, or item 302 of Regulation 
S-K (17 CFR 229.302), supplementary financial information, and (ii) 
disclosed in a document filed with the Office or in an annual report to 
shareholders meeting the requirements of 17 CFR 240.14a-3 (b) and (c) or 
17 CFR 240.14c-3 (a) and (b) under the Act: Provided, That such 
information included in a proxy statement or offering circular filed 
pursuant to part 563b of this chapter shall be reaffirmed in a 
registration statement under the Act on Form 10 filed with the Office 
within 180 days of the association's conversion.
    (c) For purposes of this section, the term ``forward-looking 
statement'' shall mean and shall be limited to:
    (1) A statement containing a projection of revenues, income (loss), 
earnings (loss) per share, capital expenditures, dividends, capital 
structure, or other financial items;
    (2) A statement of management's plans and objectives for future 
operations;
    (3) A statement of future economic performance contained in 
management's discussion and analysis of financial condition and results 
of operations pursuant to item 303 of Regulation S-K; or
    (4) A statement of the assumptions underlying or relating to any of 
the statements described in paragraph (c)(1), (c)(2), or (c)(3) of this 
section.
    (d) For purposes of this section, the term ``fraudulent statement'' 
shall mean a statement which is an untrue statement of a material fact, 
a statement false or misleading with respect

[[Page 286]]

to any material fact, an omission to state a material fact necessary to 
make a statement not misleading, or which constitutes the employment of 
a manipulative, deceptive, or fraudulent device, contrivance, scheme, 
transaction, act, practice, course of business, or an artifice to 
defraud, as those terms are used in the Securities Act of 1933 or the 
rules or regulations promulgated thereunder.



Sec. 563d.210  Form and content of financial statements.

    The financial statements required to be contained in filings with 
the Office under the Act are as set out in the applicable form and 
Regulation S-X, 17 CFR part 210. Those financial statements, however, 
shall conform as to form and content to the requirements of Sec. 563c.1 
of this chapter.



                       Subpart B--Interpretations



Sec. 563d.801  Application of this subpart.

    This subpart contains interpretations pertaining to the requirements 
of the Act and the rules and regulations thereunder as applied to 
savings associations by the Office.



Sec. 563d.802  Description of business.

    (a) This section applies to the description-of-business portion of:
    (1) Registration statements filed on Form 10 (item 1) (17 CFR 
249.210),
    (2) Proxy and information statements relating to mergers, 
consolidations, acquisitions, and similar matters (item 14 of Schedule 
14A and item 1 of Schedule 14C) (17 CFR 240.14a-101 and 240.14c-101), 
and
    (3) Annual reports filed on Form 10-K (item 7) (17 CFR 249.310).
    (b) The description of business should conform to the description of 
business required by item 7 of Form PS under part 563b of this chapter.
    (c) No repetitive disclosure is required by virtue of similar 
requirements in item 7 of Form PS and items 301 and 303 of Regulation S-
K (17 CFR 229.301, 303). However, there should be included appropriate 
disclosure which arises by virtue of the registrant being a stock 
savings association. For example, the table regarding return on equity 
and assets, item 7(d)(5), should include a line item for ``dividend 
payout ratio (dividends declared per share divided by net income per 
share).''



PART 563e--COMMUNITY REINVESTMENT--Table of Contents




                           Subpart A--General

Sec.
563e.11  Authority, purposes, and scope.
563e.12  Definitions.

             Subpart B--Standards for Assessing Performance

563e.21  Performance tests, standards, and ratings, in general.
563e.22  Lending test.
563e.23  Investment test.
563e.24  Service test.
563e.25  Community development test for wholesale or limited purpose 
          savings associations.
563e.26  Small savings association performance standards.
563e.27  Strategic plan.
563e.28  Assigned ratings.
563e.29  Effect of CRA performance on applications.

       Subpart C--Records, Reporting, and Disclosure Requirements

563e.41  Assessment area delineation.
563e.42  Data collection, reporting, and disclosure.
563e.43  Content and availability of public file.
563e.44  Public notice by savings associations.
563e.45  Publication of planned examination schedule.

Appendix A to Part 563e--Ratings
Appendix B to Part 563e--CRA Notice

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1814, 1816, 1828(c), 
and 2901 through 2907.

    Source: 54 FR 49635, Nov. 30, 1989, unless otherwise noted.



                           Subpart A--General

    Source: 60 FR 22212, May 4, 1995, unless otherwise noted.



Sec. 563e.11  Authority, purposes, and scope.

    (a) Authority and OMB control number--(1) Authority. This part is 
issued under the Community Reinvestment Act of 1977 (CRA), as amended 
(12 U.S.C. 2901 et seq.); section 5, as amended, and sections 3, 4, and 
10, as added,

[[Page 287]]

of the Home Owners' Loan Act of 1933 (12 U.S.C. 1462a, 1463, 1464, and 
1467a); and sections 4, 6, and 18(c), as amended of the Federal Deposit 
Insurance Act (12 U.S.C. 1814, 1816, 1828(c)).
    (2) OMB control number. The information collection requirements 
contained in this part were approved by the Office of Management and 
Budget under the provisions of 44 U.S.C. 3501 et seq. and have been 
assigned OMB control number 1550-0012.
    (b) Purposes. In enacting the CRA, the Congress required each 
appropriate Federal financial supervisory agency to assess an 
institution's record of helping to meet the credit needs of the local 
communities in which the institution is chartered, consistent with the 
safe and sound operation of the institution, and to take this record 
into account in the agency's evaluation of an application for a deposit 
facility by the institution. This part is intended to carry out the 
purposes of the CRA by:
    (1) Establishing the framework and criteria by which the OTS 
assesses a savings association's record of helping to meet the credit 
needs of its entire community, including low- and moderate-income 
neighborhoods, consistent with the safe and sound operation of the 
savings association; and
    (2) Providing that the OTS takes that record into account in 
considering certain applications.
    (c) Scope--(1) General. This part applies to all savings 
associations except as provided in paragraph (c)(2) of this section.
    (2) Certain special purpose savings associations. This part does not 
apply to special purpose savings associations that do not perform 
commercial or retail banking services by granting credit to the public 
in the ordinary course of business, other than as incident to their 
specialized operations. These associations include banker's banks, as 
defined in 12 U.S.C. 24 (Seventh), and associations that engage only in 
one or more of the following activities: providing cash management 
controlled disbursement services or serving as correspondent 
associations, trust companies, or clearing agents.

[60 FR 22212, May 4, 1995, as amended at 62 FR 67708, Dec. 30, 1997]



Sec. 563e.12  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Affiliate means any company that controls, is controlled by, or 
is under common control with another company. The term ``control'' has 
the meaning given to that term in 12 U.S.C. 1841(a)(2), and a company is 
under common control with another company if both companies are directly 
or indirectly controlled by the same company.
    (b) Area median income means:
    (1) The median family income for the MSA, if a person or geography 
is located in an MSA; or
    (2) The statewide nonmetropolitan median family income, if a person 
or geography is located outside an MSA.
    (c) Assessment area means a geographic area delineated in accordance 
with Sec. 563e.41.
    (d) Automated teller machine (ATM) means an automated, unstaffed 
banking facility owned or operated by, or operated exclusively for, the 
savings association at which deposits are received, cash dispersed, or 
money lent.
    (e) Branch means a staffed banking facility authorized as a branch, 
whether shared or unshared, including, for example, a mini-branch in a 
grocery store or a branch operated in conjunction with any other local 
business or nonprofit organization.
    (f) CMSA means a consolidated metropolitan statistical area as 
defined by the Director of the Office of Management and Budget.
    (g) Community development means:
    (1) Affordable housing (including multifamily rental housing) for 
low or moderate-income individuals;
    (2) Community services targeted to low- or moderate-income 
individuals;
    (3) Activities that promote economic development by financing 
businesses or farms that meet the size eligibility standards of the 
Small Business Administration's Development Company or Small Business 
Investment Company programs (13 CFR 121.301) or have gross annual 
revenues of $1 million or less; or
    (4) Activities that revitalize or stabilize low- or moderate-income 
geographies.

[[Page 288]]

    (h) Community development loan means a loan that:
    (1) Has as its primary purpose community development; and
    (2) Except in the case of a wholesale or limited purpose savings 
association:
    (i) Has not been reported or collected by the savings association or 
an affiliate for consideration in the savings association's assessment 
as a home mortgage, small business, small farm, or consumer loan, unless 
it is a multifamily dwelling loan (as described in Appendix A to Part 
203 of this title); and
    (ii) Benefits the savings association's assessment area(s) or a 
broader statewide or regional area that includes the savings 
association's assessment area(s).
    (i) Community development service means a service that:
    (1) Has as its primary purpose community development;
    (2) Is related to the provision of financial services; and
    (3) Has not been considered in the evaluation of the savings 
association's retail banking services under Sec. 563e.24(d).
    (j) Consumer loan means a loan to one or more individuals for 
household, family, or other personal expenditures. A consumer loan does 
not include a home mortgage, small business, or small farm loan. 
Consumer loans include the following categories of loans:
    (1) Motor vehicle loan, which is a consumer loan extended for the 
purchase of and secured by a motor vehicle;
    (2) Credit card loan, which is a line of credit for household, 
family, or other personal expenditures that is accessed by a borrower's 
use of a ``credit card,'' as this term is defined in Sec. 226.2 of this 
title;
    (3) Home equity loan, which is a consumer loan secured by a 
residence of the borrower;
    (4) Other secured consumer loan, which is a secured consumer loan 
that is not included in one of the other categories of consumer loans; 
and
    (5) Other unsecured consumer loan, which is an unsecured consumer 
loan that is not included in one of the other categories of consumer 
loans.
    (k) Geography means a census tract or a block numbering area 
delineated by the United States Bureau of the Census in the most recent 
decennial census.
    (l) Home mortgage loan means a ``home improvement loan'' or a ``home 
purchase loan'' as defined in Sec. 203.2 of this title.
    (m) Income level includes:
    (1) Low-income, which means an individual income that is less than 
50 percent of the area median income or a median family income that is 
less than 50 percent in the case of a geography.
    (2) Moderate-income, which means an individual income that is at 
least 50 percent and less than 80 percent of the area median income or a 
median family income that is at least 50 and less than 80 percent in the 
case of a geography.
    (3) Middle-income, which means an individual income that is at least 
80 percent and less than 120 percent of the area median income or a 
median family income that is at least 80 and less than 120 percent in 
the case of a geography.
    (4) Upper-income, which means an individual income that is 120 
percent or more of the area median income or a median family income that 
is 120 percent or more in the case of a geography.
    (n) Limited purpose savings association means a savings association 
that offers only a narrow product line (such as credit card or motor 
vehicle loans) to a regional or broader market and for which a 
designation as a limited purpose savings association is in effect, in 
accordance with Sec. 563e.25(b).
    (o) Loan location. A loan is located as follows:
    (1) A consumer loan is located in the geography where the borrower 
resides;
    (2) A home mortgage loan is located in the geography where the 
property to which the loan relates is located; and
    (3) A small business or small farm loan is located in the geography 
where the main business facility or farm is located or where the loan 
proceeds otherwise will be applied, as indicated by the borrower.
    (p) Loan production office means a staffed facility, other than a 
branch, that is open to the public and that provides lending-related 
services, such as loan information and applications.

[[Page 289]]

    (q) MSA means a metropolitan statistical area or a primary 
metropolitan statistical area as defined by the Director of the Office 
of Management and Budget.
    (r) Qualified investment means a lawful investment, deposit, 
membership share, or grant that has as its primary purpose community 
development.
    (s) Small savings association means a savings association that, as 
of December 31 of either of the prior two calendar years, had total 
assets of less than $250 million and was independent or an affiliate of 
a holding company that, as of December 31 of either of the prior two 
calendar years, had total banking and thrift assets of less than $1 
billion.
    (t) Small business loan means a loan included in ``loans to small 
businesses'' as defined in the instructions for preparation of the 
Thrift Financial Report.
    (u) Small farm loan means a loan included in ``loans to small 
farms'' as defined in the instructions for preparation of the Thrift 
Financial Report.
    (v) Wholesale savings association means a savings association that 
is not in the business of extending home mortgage, small business, small 
farm, or consumer loans to retail customers, and for which a designation 
as a wholesale savings association is in effect, in accordance with 
Sec. 563e.25(b).

[60 FR 22212, May 4, 1995, as amended at 60 FR 66050, Dec. 20, 1995; 61 
FR 21364, May 10, 1996]



             Subpart B--Standards for Assessing Performance

    Source: 60 FR 22213, May 4, 1995, unless otherwise noted.



Sec. 563e.21  Performance tests, standards, and ratings, in general.

    (a) Performance tests and standards. The OTS assesses the CRA 
performance of a savings association in an examination as follows:
    (1) Lending, investment, and service tests. The OTS applies the 
lending, investment, and service tests, as provided in Secs. 563e.22 
through 563e.24, in evaluating the performance of a savings association, 
except as provided in paragraphs (a)(2), (a)(3), and (a)(4) of this 
section.
    (2) Community development test for wholesale or limited purpose 
savings associations. The OTS applies the community development test for 
a wholesale or limited purpose savings association, as provided in 
Sec. 563e.25, except as provided in paragraph (a)(4) of this section.
    (3) Small savings association performance standards. The OTS applies 
the small savings association performance standards as provided in 
Sec. 563e.26 in evaluating the performance of a small savings 
association or a savings association that was a small savings 
association during the prior calendar year, unless the savings 
association elects to be assessed as provided in paragraphs (a)(1), 
(a)(2), or (a)(4) of this section. The savings association may elect to 
be assessed as provided in paragraph (a)(1) of this section only if it 
collects and reports the data required for other savings associations 
under Sec. 563e.42.
    (4) Strategic plan. The OTS evaluates the performance of a savings 
association under a strategic plan if the savings association submits, 
and the OTS approves, a strategic plan as provided in Sec. 563e.27.
    (b) Performance context. The OTS applies the tests and standards in 
paragraph (a) of this section and also considers whether to approve a 
proposed strategic plan in the context of:
    (1) Demographic data on median income levels, distribution of 
household income, nature of housing stock, housing costs, and other 
relevant data pertaining to a savings association's assessment area(s);
    (2) Any information about lending, investment, and service 
opportunities in the savings association's assessment area(s) maintained 
by the savings association or obtained from community organizations, 
state, local, and tribal governments, economic development agencies, or 
other sources;
    (3) The savings association's product offerings and business 
strategy as determined from data provided by the savings association;
    (4) Institutional capacity and constraints, including the size and 
financial condition of the savings association, the economic climate 
(national, regional, and local), safety and soundness limitations, and 
any other factors

[[Page 290]]

that significantly affect the savings association's ability to provide 
lending, investments, or services in its assessment area(s);
    (5) The savings association's past performance and the performance 
of similarly situated lenders;
    (6) The savings association's public file, as described in 
Sec. 563e.43, and any written comments about the savings association's 
CRA performance submitted to the savings association or the OTS; and
    (7) Any other information deemed relevant by the OTS.
    (c) Assigned ratings. The OTS assigns to a savings association one 
of the following four ratings pursuant to Sec. 563e.28 and Appendix A of 
this part: ``outstanding''; ``satisfactory''; ``needs to improve''; or 
``substantial noncompliance,'' as provided in 12 U.S.C. 2906(b)(2). The 
rating assigned by the OTS reflects the savings association's record of 
helping to meet the credit needs of its entire community, including low- 
and moderate-income neighborhoods, consistent with the safe and sound 
operation of the savings association.
    (d) Safe and sound operations. This part and the CRA do not require 
a savings association to make loans or investments or to provide 
services that are inconsistent with safe and sound operations. To the 
contrary, the OTS anticipates savings associations can meet the 
standards of this part with safe and sound loans, investments, and 
services on which the savings associations expect to make a profit. 
Savings associations are permitted and encouraged to develop and apply 
flexible underwriting standards for loans that benefit low- or moderate-
income geographies or individuals, only if consistent with safe and 
sound operations.



Sec. 563e.22  Lending test.

    (a) Scope of test. (1) The lending test evaluates a savings 
association's record of helping to meet the credit needs of its 
assessment area(s) through its lending activities by considering a 
savings association's home mortgage, small business, small farm, and 
community development lending. If consumer lending constitutes a 
substantial majority of a savings association's business, the OTS will 
evaluate the savings association's consumer lending in one or more of 
the following categories: motor vehicle, credit card, home equity, other 
secured, and other unsecured loans. In addition, at a savings 
association's option, the OTS will evaluate one or more categories of 
consumer lending, if the savings association has collected and 
maintained, as required in Sec. 563e.42(c)(1), the data for each 
category that the savings association elects to have the OTS evaluate.
    (2) The OTS considers originations and purchases of loans. The OTS 
will also consider any other loan data the savings association may 
choose to provide, including data on loans outstanding, commitments and 
letters of credit.
    (3) A savings association may ask the OTS to consider loans 
originated or purchased by consortia in which the savings association 
participates or by third parties in which the savings association has 
invested only if the loans meet the definition of community development 
loans and only in accordance with paragraph (d) of this section. The OTS 
will not consider these loans under any criterion of the lending test 
except the community development lending criterion.
    (b) Performance criteria. The OTS evaluates a savings association's 
lending performance pursuant to the following criteria:
    (1) Lending activity. The number and amount of the savings 
association's home mortgage, small business, small farm, and consumer 
loans, if applicable, in the savings association's assessment area(s);
    (2) Geographic distribution. The geographic distribution of the 
savings association's home mortgage, small business, small farm, and 
consumer loans, if applicable, based on the loan location, including:
    (i) The proportion of the savings association's lending in the 
savings association's assessment area(s);
    (ii) The dispersion of lending in the savings association's 
assessment area(s); and
    (iii) The number and amount of loans in low-, moderate-, middle-, 
and upper-income geographies in the savings association's assessment 
area(s);

[[Page 291]]

    (3) Borrower characteristics. The distribution, particularly in the 
savings association's assessment area(s), of the savings association's 
home mortgage, small business, small farm, and consumer loans, if 
applicable, based on borrower characteristics, including the number and 
amount of:
    (i) Home mortgage loans to low-, moderate-, middle-, and upper-
income individuals;
    (ii) Small business and small farm loans to businesses and farms 
with gross annual revenues of $1 million or less;
    (iii) Small business and small farm loans by loan amount at 
origination; and
    (iv) Consumer loans, if applicable, to low-, moderate-, middle-, and 
upper-income individuals;
    (4) Community development lending. The savings association's 
community development lending, including the number and amount of 
community development loans, and their complexity and innovativeness; 
and
    (5) Innovative or flexible lending practices. The savings 
association's use of innovative or flexible lending practices in a safe 
and sound manner to address the credit needs of low- or moderate-income 
individuals or geographies.
    (c) Affiliate lending. (1) At a savings association's option, the 
OTS will consider loans by an affiliate of the savings association, if 
the savings association provides data on the affiliate's loans pursuant 
to Sec. 563e.42.
    (2) The OTS considers affiliate lending subject to the following 
constraints:
    (i) No affiliate may claim a loan origination or loan purchase if 
another institution claims the same loan origination or purchase; and
    (ii) If a savings association elects to have the OTS consider loans 
within a particular lending category made by one or more of the savings 
association's affiliates in a particular assessment area, the savings 
association shall elect to have the OTS consider, in accordance with 
paragraph (c)(1) of this section, all the loans within that lending 
category in that particular assessment area made by all of the savings 
association's affiliates.
    (3) The OTS does not consider affiliate lending in assessing a 
savings association's performance under paragraph (b)(2)(i) of this 
section.
    (d) Lending by a consortium or a third party. Community development 
loans originated or purchased by a consortium in which the savings 
association participates or by a third party in which the savings 
association has invested:
    (1) Will be considered, at the savings association's option, if the 
savings association reports the data pertaining to these loans under 
Sec. 563e.42(b)(2); and
    (2) May be allocated among participants or investors, as they 
choose, for purposes of the lending test, except that no participant or 
investor:
    (i) May claim a loan origination or loan purchase if another 
participant or investor claims the same loan origination or purchase; or
    (ii) May claim loans accounting for more than its percentage share 
(based on the level of its participation or investment) of the total 
loans originated by the consortium or third party.
    (e) Lending performance rating. The OTS rates a savings 
association's lending performance as provided in Appendix A of this 
part.



Sec. 563e.23  Investment test.

    (a) Scope of test. The investment test evaluates a savings 
association's record of helping to meet the credit needs of its 
assessment area(s) through qualified investments that benefit its 
assessment area(s) or a broader statewide or regional area that includes 
the savings association's assessment area(s).
    (b) Exclusion. Activities considered under the lending or service 
tests may not be considered under the investment test.
    (c) Affiliate investment. At a savings association's option, the OTS 
will consider, in its assessment of a savings association's investment 
performance, a qualified investment made by an affiliate of the savings 
association, if the qualified investment is not claimed by any other 
institution.
    (d) Disposition of branch premises. Donating, selling on favorable 
terms, or making available on a rent-free basis a branch of the savings 
association that

[[Page 292]]

is located in a predominantly minority neighborhood to a minority 
depository institution or women's depository institution (as these terms 
are defined in 12 U.S.C. 2907(b)) will be considered as a qualified 
investment.
    (e) Performance criteria. The OTS evaluates the investment 
performance of a savings association pursuant to the following criteria:
    (1) The dollar amount of qualified investments;
    (2) The innovativeness or complexity of qualified investments;
    (3) The responsiveness of qualified investments to credit and 
community development needs; and
    (4) The degree to which the qualified investments are not routinely 
provided by private investors.
    (f) Investment performance rating. The OTS rates a savings 
association's investment performance as provided in Appendix A of this 
part.



Sec. 563e.24  Service test.

    (a) Scope of test. The service test evaluates a savings 
association's record of helping to meet the credit needs of its 
assessment area(s) by analyzing both the availability and effectiveness 
of a savings association's systems for delivering retail banking 
services and the extent and innovativeness of its community development 
services.
    (b) Area(s) benefitted. Community development services must benefit 
a savings association's assessment area(s) or a broader statewide or 
regional area that includes the savings association's assessment 
area(s).
    (c) Affiliate service. At a savings association's option, the OTS 
will consider, in its assessment of a savings association's service 
performance, a community development service provided by an affiliate of 
the savings association, if the community development service is not 
claimed by any other institution.
    (d) Performance criteria--retail banking services. The OTS evaluates 
the availability and effectiveness of a savings association's systems 
for delivering retail banking services, pursuant to the following 
criteria:
    (1) The current distribution of the savings association's branches 
among low-,moderate-, middle-, and upper-income geographies;
    (2) In the context of its current distribution of the savings 
association's branches, the savings association's record of opening and 
closing branches, particularly branches located in low- or moderate-
income geographies or primarily serving low- or moderate-income 
individuals;
    (3) The availability and effectiveness of alternative systems for 
delivering retail banking services (e.g., ATMs, ATMs not owned or 
operated by or exclusively for the savings association, banking by 
telephone or computer, loan production offices, and bank-at-work or 
bank-by-mail programs) in low- and moderate-income geographies and to 
low- and moderate-income individuals; and
    (4) The range of services provided in low-, moderate-, middle-, and 
upper-income geographies and the degree to which the services are 
tailored to meet the needs of those geographies.
    (e) Performance criteria--community development services. The OTS 
evaluates community development services pursuant to the following 
criteria:
    (1) The extent to which the savings association provides community 
development services; and
    (2) The innovativeness and responsiveness of community development 
services.
    (f) Service performance rating. The OTS rates a savings 
association's service performance as provided in Appendix A of this 
part.



Sec. 563e.25  Community development test for wholesale or limited purpose savings associations.

    (a) Scope of test. The OTS assesses a wholesale or limited purpose 
savings association's record of helping to meet the credit needs of its 
assessment area(s) under the community development test through its 
community development lending, qualified investments, or community 
development services.
    (b) Designation as a wholesale or limited purpose savings 
association. In order to receive a designation as a wholesale or limited 
purpose savings association, a savings association shall file a request, 
in writing, with the OTS, at

[[Page 293]]

least three months prior to the proposed effective date of the 
designation. If the OTS approves the designation, it remains in effect 
until the savings association requests revocation of the designation or 
until one year after the OTS notifies the savings association that the 
OTS has revoked the designation on its own initiative.
    (c) Performance criteria. The OTS evaluates the community 
development performance of a wholesale or limited purpose savings 
association pursuant to the following criteria:
    (1) The number and amount of community development loans (including 
originations and purchases of loans and other community development loan 
data provided by the savings association, such as data on loans 
outstanding, commitments, and letters of credit), qualified investments, 
or community development services;
    (2) The use of innovative or complex qualified investments, 
community development loans, or community development services and the 
extent to which the investments are not routinely provided by private 
investors; and
    (3) The savings association's responsiveness to credit and community 
development needs.
    (d) Indirect activities. At a savings association's option, the OTS 
will consider in its community development performance assessment:
    (1) Qualified investments or community development services provided 
by an affiliate of the savings association, if the investments or 
services are not claimed by any other institution; and
    (2) Community development lending by affiliates, consortia and third 
parties, subject to the requirements and limitations in Sec. 563e.22 (c) 
and (d).
    (e) Benefit to assessment area(s).--(1) Benefit inside assessment 
area(s). The OTS considers all qualified investments, community 
development loans, and community development services that benefit areas 
within the savings association's assessment area(s) or a broader 
statewide or regional area that includes the savings association's 
assessment area(s).
    (2) Benefit outside assessment area(s). The OTS considers the 
qualified investments, community development loans, and community 
development services that benefit areas outside the savings 
association's assessment area(s), if the savings association has 
adequately addressed the needs of its assessment area(s).
    (f) Community development performance rating. The OTS rates a 
savings association's community development performance as provided in 
Appendix A of this part.



Sec. 563e.26  Small savings association performance standards.

    (a) Performance criteria. The OTS evaluates the record of a small 
savings association, or a savings association that was a small savings 
association during the prior calendar year, of helping to meet the 
credit needs of its assessment area(s) pursuant to the following 
criteria:
    (1) The savings association's loan-to-deposit ratio, adjusted for 
seasonal variation and, as appropriate, other lending-related 
activities, such as loan originations for sale to the secondary markets, 
community development loans, or qualified investments;
    (2) The percentage of loans and, as appropriate, other lending-
related activities located in the savings association's assessment 
area(s);
    (3) The savings association's record of lending to and, as 
appropriate, engaging in other lending-related activities for borrowers 
of different income levels and businesses and farms of different sizes;
    (4) The geographic distribution of the savings association's loans; 
and
    (5) The savings association's record of taking action, if warranted, 
in response to written complaints about its performance in helping to 
meet credit needs in its assessment area(s).
    (b) Small savings association performance rating. The OTS rates the 
performance of a savings association evaluated under this section as 
provided in Appendix A of this part.



Sec. 563e.27  Strategic plan.

    (a) Alternative election. The OTS will assess a savings 
association's record of helping to meet the credit needs of its 
assessment area(s) under a strategic plan if:

[[Page 294]]

    (1) The savings association has submitted the plan to the OTS as 
provided for in this section;
    (2) The OTS has approved the plan;
    (3) The plan is in effect; and
    (4) The savings association has been operating under an approved 
plan for at least one year.
    (b) Data reporting. The OTS's approval of a plan does not affect the 
savings association's obligation, if any, to report data as required by 
Sec. 563e.42.
    (c) Plans in general. (1) Term. A plan may have a term of no more 
than five years, and any multi-year plan must include annual interim 
measurable goals under which the OTS will evaluate the savings 
association's performance.
    (2) Multiple assessment areas. A savings association with more than 
one assessment area may prepare a single plan for all of its assessment 
areas or one or more plans for one or more of its assessment areas.
    (3) Treatment of affiliates. Affiliated institutions may prepare a 
joint plan if the plan provides measurable goals for each institution. 
Activities may be allocated among institutions at the institutions' 
option, provided that the same activities are not considered for more 
than one institution.
    (d) Public participation in plan development. Before submitting a 
plan to the OTS for approval, a savings association shall:
    (1) Informally seek suggestions from members of the public in its 
assessment area(s) covered by the plan while developing the plan;
    (2) Once the savings association has developed a plan, formally 
solicit public comment on the plan for at least 30 days by publishing 
notice in at least one newspaper of general circulation in each 
assessment area covered by the plan; and
    (3) During the period of formal public comment, make copies of the 
plan available for review by the public at no cost at all offices of the 
savings association in any assessment area covered by the plan and 
provide copies of the plan upon request for a reasonable fee to cover 
copying and mailing, if applicable.
    (e) Submission of plan. The savings association shall submit its 
plan to the OTS at least three months prior to the proposed effective 
date of the plan. The savings association shall also submit with its 
plan a description of its informal efforts to seek suggestions from 
members of the public, any written public comment received, and, if the 
plan was revised in light of the comment received, the initial plan as 
released for public comment.
    (f) Plan content--(1) Measurable goals. (i) A savings association 
shall specify in its plan measurable goals for helping to meet the 
credit needs of each assessment area covered by the plan, particularly 
the needs of low- and moderate-income geographies and low- and moderate-
income individuals, through lending, investment, and services, as 
appropriate.
    (ii) A savings association shall address in its plan all three 
performance categories and, unless the savings association has been 
designated as a wholesale or limited purpose savings association, shall 
emphasize lending and lending-related activities. Nevertheless, a 
different emphasis, including a focus on one or more performance 
categories, may be appropriate if responsive to the characteristics and 
credit needs of its assessment area(s), considering public comment and 
the savings association's capacity and constraints, product offerings, 
and business strategy.
    (2) Confidential information. A savings association may submit 
additional information to the OTS on a confidential basis, but the goals 
stated in the plan must be sufficiently specific to enable the public 
and the OTS to judge the merits of the plan.
    (3) Satisfactory and outstanding goals. A savings association shall 
specify in its plan measurable goals that constitute ``satisfactory'' 
performance. A plan may specify measurable goals that constitute 
``outstanding'' performance. If a savings association submits, and the 
OTS approves, both ``satisfactory'' and ``outstanding'' performance 
goals, the OTS will consider the savings association eligible for an 
``outstanding'' performance rating.
    (4) Election if satisfactory goals not substantially met. A savings 
association may elect in its plan that, if the savings association fails 
to meet substantially its plan goals for a satisfactory

[[Page 295]]

rating, the OTS will evaluate the savings association's performance 
under the lending, investment, and service tests, the community 
development test, or the small savings association performance 
standards, as appropriate.
    (g) Plan approval--(1) Timing. The OTS will act upon a plan within 
60 calendar days after the OTS receives the complete plan and other 
material required under paragraph (d) of this section. If the OTS fails 
to act within this time period, the plan shall be deemed approved unless 
the OTS extends the review period for good cause.
    (2) Public participation. In evaluating the plan's goals, the OTS 
considers the public's involvement in formulating the plan, written 
public comment on the plan, and any response by the savings association 
to public comment on the plan.
    (3) Criteria for evaluating plan. The OTS evaluates a plan's 
measurable goals using the following criteria, as appropriate:
    (i) The extent and breadth of lending or lending-related activities, 
including, as appropriate, the distribution of loans among different 
geographies, businesses and farms of different sizes, and individuals of 
different income levels, the extent of community development lending, 
and the use of innovative or flexible lending practices to address 
credit needs;
    (ii) The amount and innovativeness, complexity, and responsiveness 
of the savings association's qualified investments; and
    (iii) The availability and effectiveness of the savings 
association's systems for delivering retail banking services and the 
extent and innovativeness of the savings association's community 
development services.
    (h) Plan amendment. During the term of a plan, a savings association 
may request the OTS to approve an amendment to the plan on grounds that 
there has been a material change in circumstances. The savings 
association shall develop an amendment to a previously approved plan in 
accordance with the public participation requirements of paragraph (d) 
of this section.
    (i) Plan assessment. The OTS approves the goals and assesses 
performance under a plan as provided for in Appendix A of this part.

[60 FR 22216, May 4, 1995, as amended at 60 FR 66050, Dec. 20, 1995]



Sec. 563e.28  Assigned ratings.

    (a) Ratings in general. Subject to paragraphs (b) and (c) of this 
section, the OTS assigns to a savings association a rating of 
``outstanding,'' ``satisfactory,'' ``needs to improve,'' or 
``substantial noncompliance'' based on the savings association's 
performance under the lending, investment and service tests, the 
community development test, the small savings association performance 
standards, or an approved strategic plan, as applicable.
    (b) Lending, investment, and service tests. The OTS assigns a rating 
for a savings association assessed under the lending, investment, and 
service tests in accordance with the following principles:
    (1) A savings association that receives an ``outstanding'' rating on 
the lending test receives an assigned rating of at least 
``satisfactory'';
    (2) A savings association that receives an ``outstanding'' rating on 
both the service test and the investment test and a rating of at least 
``high satisfactory'' on the lending test receives an assigned rating of 
``outstanding''; and
    (3) No savings association may receive an assigned rating of 
``satisfactory'' or higher unless it receives a rating of at least ``low 
satisfactory'' on the lending test.
    (c) Effect of evidence of discriminatory or other illegal credit 
practices. Evidence of discriminatory or other illegal credit practices 
adversely affects the OTS's evaluation of a savings association's 
performance. In determining the effect on the savings association's 
assigned rating, the OTS considers the nature and extent of the 
evidence, the policies and procedures that the savings association has 
in place to prevent discriminatory or other illegal credit practices, 
any corrective action that the savings association has taken or has 
committed to take, particularly voluntary corrective action resulting 
from self-assessment, and other relevant information.

[[Page 296]]



Sec. 563e.29  Effect of CRA performance on applications.

    (a) CRA performance. Among other factors, the OTS takes into account 
the record of performance under the CRA of each applicant savings 
association, and for applications under section 10(e) of the Home 
Owners' Loan Act (12 U.S.C. 1467a(e)), of each proposed subsidiary 
savings association, in considering an application for:
    (1) The establishment of a domestic branch or other facility that 
would be authorized to take deposits;
    (2) The relocation of the main office or a branch;
    (3) The merger or consolidation with or the acquisition of the 
assets or assumption of the liabilities of an insured depository 
institution requiring OTS approval under the Bank Merger Act (12 U.S.C. 
1828(c));
    (4) A Federal thrift charter; and
    (5) Acquisitions subject to section 10(e) of the Home Owners' Loan 
Act (12 U.S.C. 1467a(e)).
    (b) Charter application. An applicant for a Federal thrift charter 
shall submit with its application a description of how it will meet its 
CRA objectives. The OTS takes the description into account in 
considering the application and may deny or condition approval on that 
basis.
    (c) Interested parties. The OTS takes into account any views 
expressed by interested parties that are submitted in accordance with 
the applicable comment procedures in considering CRA performance in an 
application listed in paragraphs (a) and (b) of this section.
    (d) Denial or conditional approval of application. A savings 
association's record of performance may be the basis for denying or 
conditioning approval of an application listed in paragraph (a) of this 
section.
    (e) Insured depository institution. For purposes of this section, 
the term ``insured depository institution'' has the meaning given to 
that term in 12 U.S.C. 1813.



       Subpart C--Records, Reporting, and Disclosure Requirements

    Source: 60 FR 22217, May 4, 1995, unless otherwise noted.



Sec. 563e.41  Assessment area delineation.

    (a) In general. A savings association shall delineate one or more 
assessment areas within which the OTS evaluates the savings 
association's record of helping to meet the credit needs of its 
community. The OTS does not evaluate the savings association's 
delineation of its assessment area(s) as a separate performance 
criterion, but the OTS reviews the delineation for compliance with the 
requirements of this section.
    (b) Geographic area(s) for wholesale or limited purpose savings 
associations. The assessment area(s) for a wholesale or limited purpose 
savings association must consist generally of one or more MSAs (using 
the MSA boundaries that were in effect as of January 1 of the calendar 
year in which the delineation is made) or one or more contiguous 
political subdivisions, such as counties, cities, or towns, in which the 
savings association has its main office, branches, and deposit-taking 
ATMs.
    (c) Geographic area(s) for other savings associations. The 
assessment area(s) for a savings association other than a wholesale or 
limited purpose savings association must:
    (1) Consist generally of one or more MSAs (using the MSA boundaries 
that were in effect as of January 1 of the calendar year in which the 
delineation is made) or one or more contiguous political subdivisions, 
such as counties, cities, or towns; and
    (2) Include the geographies in which the savings association has its 
main office, its branches, and its deposit-taking ATMs, as well as the 
surrounding geographies in which the savings association has originated 
or purchased a substantial portion of its loans (including home mortgage 
loans, small business and small farm loans, and any other loans the 
savings association chooses, such as those consumer loans on which the 
savings association elects to have its performance assessed).
    (d) Adjustments to geographic area(s). A savings association may 
adjust the boundaries of its assessment area(s) to include only the 
portion of a political subdivision that it reasonably can be expected to 
serve. An adjustment is particularly appropriate in the case of an 
assessment area that otherwise would be extremely large, of unusual

[[Page 297]]

configuration, or divided by significant geographic barriers.
    (e) Limitations on the delineation of an assessment area. Each 
savings association's assessment area(s):
    (1) Must consist only of whole geographies;
    (2) May not reflect illegal discrimination;
    (3) May not arbitrarily exclude low- or moderate-income geographies, 
taking into account the savings association's size and financial 
condition; and
    (4) May not extend substantially beyond a CMSA boundary or beyond a 
state boundary unless the assessment area is located in a multistate 
MSA. If a savings association serves a geographic area that extends 
substantially beyond a state boundary, the savings association shall 
delineate separate assessment areas for the areas in each state. If a 
savings association serves a geographic area that extends substantially 
beyond a CMSA boundary, the savings association shall delineate separate 
assessment areas for the areas inside and outside the CMSA.
    (f) Savings associations serving military personnel. Notwithstanding 
the requirements of this section, a savings association whose business 
predominantly consists of serving the needs of military personnel or 
their dependents who are not located within a defined geographic area 
may delineate its entire deposit customer base as its assessment area.
    (g) Use of assessment area(s). The OTS uses the assessment area(s) 
delineated by a savings association in its evaluation of the savings 
association's CRA performance unless the OTS determines that the 
assessment area(s) do not comply with the requirements of this section.



Sec. 563e.42  Data collection, reporting, and disclosure.

    (a) Loan information required to be collected and maintained. A 
savings association, except a small savings association, shall collect, 
and maintain in machine readable form (as prescribed by the OTS) until 
the completion of its next CRA examination, the following data for each 
small business or small farm loan originated or purchased by the savings 
association:
    (1) A unique number or alpha-numeric symbol that can be used to 
identify the relevant loan file;
    (2) The loan amount at origination;
    (3) The loan location; and
    (4) An indicator whether the loan was to a business or farm with 
gross annual revenues of $1 million or less.
    (b) Loan information required to be reported. A savings association, 
except a small savings association or a savings association that was a 
small savings association during the prior calendar year, shall report 
annually by March 1 to the OTS in machine readable form (as prescribed 
by the OTS) the following data for the prior calendar year:
    (1) Small business and small farm loan data. For each geography in 
which the savings association originated or purchased a small business 
or small farm loan, the aggregate number and amount of loans:
    (i) With an amount at origination of $100,000 or less;
    (ii) With amount at origination of more than $100,000 but less than 
or equal to $250,000;
    (iii) With an amount at origination of more than $250,000; and
    (iv) To businesses and farms with gross annual revenues of $1 
million or less (using the revenues that the savings association 
considered in making its credit decision);
    (2) Community development loan data. The aggregate number and 
aggregate amount of community development loans originated or purchased; 
and
    (3) Home mortgage loans. If the savings association is subject to 
reporting under part 203 of this title, the location of each home 
mortgage loan application, origination, or purchase outside the MSAs in 
which the savings association has a home or branch office (or outside 
any MSA) in accordance with the requirements of part 203 of this title.
    (c) Optional data collection and maintenance--(1) Consumer loans. A 
savings association may collect and maintain in machine readable form 
(as prescribed by the OTS) data for consumer loans originated or 
purchased by the savings association for consideration under the lending 
test. A savings association may maintain data for one or more of the 
following categories of

[[Page 298]]

consumer loans: motor vehicle, credit card, home equity, other secured, 
and other unsecured. If the savings association maintains data for loans 
in a certain category, it shall maintain data for all loans originated 
or purchased within that category. The savings association shall 
maintain data separately for each category, including for each loan:
    (i) A unique number or alpha-numeric symbol that can be used to 
identify the relevant loan file;
    (ii) The loan amount at origination or purchase;
    (iii) The loan location; and
    (iv) The gross annual income of the borrower that the savings 
association considered in making its credit decision.
    (2) Other loan data. At its option, a savings association may 
provide other information concerning its lending performance, including 
additional loan distribution data.
    (d) Data on affiliate lending. A savings association that elects to 
have the OTS consider loans by an affiliate, for purposes of the lending 
or community development test or an approved strategic plan, shall 
collect, maintain, and report for those loans the data that the savings 
association would have collected, maintained, and reported pursuant to 
paragraphs (a), (b), and (c) of this section had the loans been 
originated or purchased by the savings association. For home mortgage 
loans, the savings association shall also be prepared to identify the 
home mortgage loans reported under part 203 of this title by the 
affiliate.
    (e) Data on lending by a consortium or a third-party. A savings 
association that elects to have the OTS consider community development 
loans by a consortium or third party, for purposes of the lending or 
community development tests or an approved strategic plan, shall report 
for those loans the data that the savings association would have 
reported under paragraph (b)(2) of this section had the loans been 
originated or purchased by the savings association.
    (f) Small savings associations electing evaluation under the 
lending, investment, and service tests. A savings association that 
qualifies for evaluation under the small savings association performance 
standards but elects evaluation under the lending, investment, and 
service tests shall collect, maintain, and report the data required for 
other savings associations pursuant to paragraphs (a) and (b) of this 
section.
    (g) Assessment area data. A savings association, except a small 
savings association or a savings association that was a small savings 
association during the prior calendar year, shall collect and report to 
the OTS by March 1 of each year a list for each assessment area showing 
the geographies within the area.
    (h) CRA Disclosure Statement. The OTS prepares annually for each 
savings association that reports data pursuant to this section a CRA 
Disclosure Statement that contains, on a state-by-state basis:
    (1) For each county (and for each assessment area smaller than a 
county) with a population of 500,000 persons or fewer in which the 
savings association reported a small business or small farm loan:
    (i) The number and amount of small business and small farm loans 
reported as originated or purchased located in low-, moderate-, middle-, 
and upper-income geographies;
    (ii) A list grouping each geography according to whether the 
geography is low-, moderate-, middle-, or upper-income;
    (iii) A list showing each geography in which the savings association 
reported a small business or small farm loan; and
    (iv) The number and amount of small business and small farm loans to 
businesses and farms with gross annual revenues of $1 million or less;
    (2) For each county (and for each assessment area smaller than a 
county) with a population in excess of 500,000 persons in which the 
savings association reported a small business or small farm loan:
    (i) The number and amount of small business and small farm loans 
reported as originated or purchased located in geographies with median 
income relative to the area median income of less than 10 percent, 10 or 
more but less than 20 percent, 20 or more but less than 30 percent, 30 
or more but less

[[Page 299]]

than 40 percent, 40 or more but less than 50 percent, 50 or more but 
less than 60 percent, 60 or more but less than 70 percent, 70 or more 
but less than 80 percent, 80 or more but less than 90 percent, 90 or 
more but less than 100 percent, 100 or more but less than 110 percent, 
110 or more but less than 120 percent, and 120 percent or more;
    (ii) A list grouping each geography in the county or assessment area 
according to whether the median income in the geography relative to the 
area median income is less than 10 percent, 10 or more but less than 20 
percent, 20 or more but less than 30 percent, 30 or more but less than 
40 percent, 40 or more but less than 50 percent, 50 or more but less 
than 60 percent, 60 or more but less than 70 percent, 70 or more but 
less than 80 percent, 80 or more but less than 90 percent, 90 or more 
but less than 100 percent, 100 or more but less than 110 percent, 110 or 
more but less than 120 percent, and 120 percent or more;
    (iii) A list showing each geography in which the savings association 
reported a small business or small farm loan; and
    (iv) The number and amount of small business and small farm loans to 
businesses and farms with gross annual revenues of $1 million or less;
    (3) The number and amount of small business and small farm loans 
located inside each assessment area reported by the savings association 
and the number and amount of small business and small farm loans located 
outside the assessment area(s) reported by the savings association; and
    (4) The number and amount of community development loans reported as 
originated or purchased.
    (i) Aggregate disclosure statements. The OTS, in conjunction with 
the Board of Governors of the Federal Reserve System, the Federal 
Deposit Insurance Corporation, and the Office of the Comptroller of the 
Currency, prepares annually, for each MSA (including an MSA that crosses 
a state boundary) and the non-MSA portion of each state, an aggregate 
disclosure statement of small business and small farm lending by all 
institutions subject to reporting under this part or parts 25, 228, or 
345 of this title. These disclosure statements indicate, for each 
geography, the number and amount of all small business and small farm 
loans originated or purchased by reporting institutions, except that the 
OTS may adjust the form of the disclosure if necessary, because of 
special circumstances, to protect the privacy of a borrower or the 
competitive position of an institution.
    (j) Central data depositories. The OTS makes the aggregate 
disclosure statements, described in paragraph (i) of this section, and 
the individual savings association CRA Disclosure Statements, described 
in paragraph (h) of this section, available to the public at central 
data depositories. The OTS publishes a list of the depositories at which 
the statements are available.



Sec. 563e.43  Content and availability of public file.

    (a) Information available to the public. A savings association shall 
maintain a public file that includes the following information:
    (1) All written comments received from the public for the current 
year and each of the prior two calendar years that specifically relate 
to the savings association's performance in helping to meet community 
credit needs, and any response to the comments by the savings 
association, if neither the comments nor the responses contain 
statements that reflect adversely on the good name or reputation of any 
persons other than the savings association or publication of which would 
violate specific provisions of law;
    (2) A copy of the public section of the savings association's most 
recent CRA Performance Evaluation prepared by the OTS. The savings 
association shall place this copy in the public file within 30 business 
days after its receipt from the OTS;
    (3) A list of the savings association's branches, their street 
addresses, and geographies;
    (4) A list of branches opened or closed by the savings association 
during the current year and each of the prior two calendar years, their 
street addresses, and geographies;
    (5) A list of services (including hours of operation, available loan 
and deposit

[[Page 300]]

products, and transaction fees) generally offered at the savings 
association's branches and descriptions of material differences in the 
availability or cost of services at particular branches, if any. At its 
option, a savings association may include information regarding the 
availability of alternative systems for delivering retail banking 
services (e.g., ATMs, ATMs not owned or operated by or exclusively for 
the savings association, banking by telephone or computer, loan 
production offices, and bank-at-work or bank-by-mail programs);
    (6) A map of each assessment area showing the boundaries of the area 
and identifying the geographies contained within the area, either on the 
map or in a separate list; and
    (7) Any other information the savings association chooses.
    (b) Additional information available to the public--(1) Savings 
associations other than small savings associations. A savings 
association, except a small savings association or a savings association 
that was a small savings association during the prior calendar year, 
shall include in its public file the following information pertaining to 
the savings association and its affiliates, if applicable, for each of 
the prior two calendar years:
    (i) If the savings association has elected to have one or more 
categories of its consumer loans considered under the lending test, for 
each of these categories, the number and amount of loans:
    (A) To low-, moderate-, middle-, and upper-income individuals;
    (B) Located in low-, moderate-, middle-, and upper-income census 
tracts; and
    (C) Located inside the savings association's assessment area(s) and 
outside the savings association's assessment area(s); and
    (ii) The savings association's CRA Disclosure Statement. The savings 
association shall place the statement in the public file within three 
business days of its receipt from the OTS.
    (2) Savings associations required to report Home Mortgage Disclosure 
Act (HMDA) data. A savings association required to report home mortgage 
loan data pursuant to part 203 of this title shall include in its public 
file a copy of the HMDA Disclosure Statement provided by the Federal 
Financial Institutions Examination Council pertaining to the savings 
association for each of the prior two calendar years. In addition, a 
savings association that elected to have the OTS consider the mortgage 
lending of an affiliate for any of these years shall include in its 
public file the affiliate's HMDA Disclosure Statement for those years. 
The savings association shall place the statement(s) in the public file 
within three business days after its receipt.
    (3) Small savings associations. A small savings association or a 
savings association that was a small savings association during the 
prior calendar year shall include in its public file:
    (i) The savings association's loan-to-deposit ratio for each quarter 
of the prior calendar year and, at its option, additional data on its 
loan-to-deposit ratio; and
    (ii) The information required for other savings associations by 
paragraph (b)(1) of this section, if the savings association has elected 
to be evaluated under the lending, investment, and service tests.
    (4) Savings associations with strategic plans. A savings association 
that has been approved to be assessed under a strategic plan shall 
include in its public file a copy of that plan. A savings association 
need not include information submitted to the OTS on a confidential 
basis in conjunction with the plan.
    (5) Savings associations with less than satisfactory ratings. A 
savings association that received a less than satisfactory rating during 
its most recent examination shall include in its public file a 
description of its current efforts to improve its performance in helping 
to meet the credit needs of its entire community. The savings 
association shall update the description quarterly.
    (c) Location of public information. A savings association shall make 
available to the public for inspection upon request and at no cost the 
information required in this section as follows:
    (1) At the main office and, if an interstate savings association, at 
one branch office in each state, all information in the public file; and

[[Page 301]]

    (2) At each branch:
    (i) A copy of the public section of the savings association's most 
recent CRA Performance Evaluation and a list of services provided by the 
branch; and
    (ii) Within five calendar days of the request, all the information 
in the public file relating to the assessment area in which the branch 
is located.
    (d) Copies. Upon request, a savings association shall provide 
copies, either on paper or in another form acceptable to the person 
making the request, of the information in its public file. The savings 
association may charge a reasonable fee not to exceed the cost of 
copying and mailing (if applicable).
    (e) Updating. Except as otherwise provided in this section, a 
savings association shall ensure that the information required by this 
section is current as of April 1 of each year.



Sec. 563e.44  Public notice by savings associations.

    A savings association shall provide in the public lobby of its main 
office and each of its branches the appropriate public notice set forth 
in Appendix B of this part. Only a branch of a savings association 
having more than one assessment area shall include the bracketed 
material in the notice for branch offices. Only a savings association 
that is an affiliate of a holding company shall include the last two 
sentences of the notices.



Sec. 563e.45  Publication of planned examination schedule.

    The OTS publishes at least 30 days in advance of the beginning of 
each calendar quarter a list of savings associations scheduled for CRA 
examinations in that quarter.

                    Appendix A to Part 563e--Ratings

    (a) Ratings in general. (1) In assigning a rating, the OTS evaluates 
a savings association's performance under the applicable performance 
criteria in this part, in accordance with Sec. 563e.21 and Sec. 563e.28, 
which provides for adjustments on the basis of evidence of 
discriminatory or other illegal credit practices.
    (2) A savings association's performance need not fit each aspect of 
a particular rating profile in order to receive that rating, and 
exceptionally strong performance with respect to some aspects may 
compensate for weak performance in others. The savings association's 
overall performance, however, must be consistent with safe and sound 
banking practices and generally with the appropriate rating profile as 
follows.
    (b) Savings associations evaluated under the lending, investment, 
and service tests. (1) Lending performance rating. The OTS assigns each 
savings association's lending performance one of the five following 
ratings.
    (i) Outstanding. The OTS rates a savings association's lending 
performance ``outstanding'' if, in general, it demonstrates:
    (A) Excellent responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in its 
assessment area(s);
    (B) A substantial majority of its loans are made in its assessment 
area(s);
    (C) An excellent geographic distribution of loans in its assessment 
area(s);
    (D) An excellent distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product lines 
offered by the savings association;
    (E) An excellent record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-income 
individuals, or businesses (including farms) with gross annual revenues 
of $1 million or less, consistent with safe and sound operations;
    (F) Extensive use of innovative or flexible lending practices in a 
safe and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
    (G) It is a leader in making community development loans.
    (ii) High satisfactory. The OTS rates a savings association's 
lending performance ``high satisfactory'' if, in general, it 
demonstrates:
    (A) Good responsiveness to credit needs in its assessment area(s), 
taking into account the number and amount of home mortgage, small 
business, small farm, and consumer loans, if applicable, in its 
assessment area(s);
    (B) A high percentage of its loans are made in its assessment 
area(s);
    (C) A good geographic distribution of loans in its assessment 
area(s);
    (D) A good distribution, particularly in its assessment area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different sizes, given the product lines offered by 
the savings association;
    (E) A good record of serving the credit needs of highly economically 
disadvantaged areas in its assessment area(s), low-income individuals, 
or businesses (including farms) with gross annual revenues of $1 million 
or less, consistent with safe and sound operations;

[[Page 302]]

    (F) Use of innovative or flexible lending practices in a safe and 
sound manner to address the credit needs of low- or moderate-income 
individuals or geographies; and
    (G) It has made a relatively high level of community development 
loans.
    (iii) Low satisfactory. The OTS rates a savings association's 
lending performance ``low satisfactory'' if, in general, it 
demonstrates:
    (A) Adequate responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in its 
assessment area(s);
    (B) An adequate percentage of its loans are made in its assessment 
area(s);
    (C) An adequate geographic distribution of loans in its assessment 
area(s);
    (D) An adequate distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product lines 
offered by the savings association;
    (E) An adequate record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-income 
individuals, or businesses (including farms) with gross annual revenues 
of $1 million or less, consistent with safe and sound operations;
    (F) Limited use of innovative or flexible lending practices in a 
safe and sound manner to address the credit needs of low- or moderate-
income individuals or geographies; and
    (G) It has made an adequate level of community development loans.
    (iv) Needs to improve. The OTS rates a savings association's lending 
performance ``needs to improve'' if, in general, it demonstrates:
    (A) Poor responsiveness to credit needs in its assessment area(s), 
taking into account the number and amount of home mortgage, small 
business, small farm, and consumer loans, if applicable, in its 
assessment area(s);
    (B) A small percentage of its loans are made in its assessment 
area(s);
    (C) A poor geographic distribution of loans, particularly to low- or 
moderate-income geographies, in its assessment area(s);
    (D) A poor distribution, particularly in its assessment area(s), of 
loans among individuals of different income levels and businesses 
(including farms) of different sizes, given the product lines offered by 
the savings association;
    (E) A poor record of serving the credit needs of highly economically 
disadvantaged areas in its assessment area(s), low-income individuals, 
or businesses (including farms) with gross annual revenues of $1 million 
or less, consistent with safe and sound operations;
    (F) Little use of innovative or flexible lending practices in a safe 
and sound manner to address the credit needs of low- or moderate-income 
individuals or geographies; and
    (G) It has made a low level of community development loans.
    (v) Substantial noncompliance. The OTS rates a savings association's 
lending performance as being in ``substantial noncompliance'' if, in 
general, it demonstrates:
    (A) A very poor responsiveness to credit needs in its assessment 
area(s), taking into account the number and amount of home mortgage, 
small business, small farm, and consumer loans, if applicable, in its 
assessment area(s);
    (B) A very small percentage of its loans are made in its assessment 
area(s);
    (C) A very poor geographic distribution of loans, particularly to 
low- or moderate-income geographies, in its assessment area(s);
    (D) A very poor distribution, particularly in its assessment 
area(s), of loans among individuals of different income levels and 
businesses (including farms) of different sizes, given the product lines 
offered by the savings association;
    (E) A very poor record of serving the credit needs of highly 
economically disadvantaged areas in its assessment area(s), low-income 
individuals, or businesses (including farms) with gross annual revenues 
of $1 million or less, consistent with safe and sound operations;
    (F) No use of innovative or flexible lending practices in a safe and 
sound manner to address the credit needs of low- or moderate-income 
individuals or geographies; and
    (G) It has made few, if any, community development loans.
    (2) Investment performance rating. The OTS assigns each savings 
association's investment performance one of the five following ratings.
    (i) Outstanding. The OTS rates a savings association's investment 
performance ``outstanding'' if, in general, it demonstrates:
    (A) An excellent level of qualified investments, particularly those 
that are not routinely provided by private investors, often in a 
leadership position;
    (B) Extensive use of innovative or complex qualified investments; 
and
    (C) Excellent responsiveness to credit and community development 
needs.
    (ii) High satisfactory. The OTS rates a savings association's 
investment performance ``high satisfactory'' if, in general, it 
demonstrates:
    (A) A significant level of qualified investments, particularly those 
that are not routinely provided by private investors, occasionally in a 
leadership position;
    (B) Significant use of innovative or complex qualified investments; 
and
    (C) Good responsiveness to credit and community development needs.
    (iii) Low satisfactory. The OTS rates a savings association's 
investment performance

[[Page 303]]

``low satisfactory'' if, in general, it demonstrates:
    (A) An adequate level of qualified investments, particularly those 
that are not routinely provided by private investors, although rarely in 
a leadership position;
    (B) Occasional use of innovative or complex qualified investments; 
and
    (C) Adequate responsiveness to credit and community development 
needs.
    (iv) Needs to improve. The OTS rates a savings association's 
investment performance ``needs to improve'' if, in general, it 
demonstrates:
    (A) A poor level of qualified investments, particularly those that 
are not routinely provided by private investors;
    (B) Rare use of innovative or complex qualified investments; and
    (C) Poor responsiveness to credit and community development needs.
    (v) Substantial noncompliance. The OTS rates a savings association's 
investment performance as being in ``substantial noncompliance'' if, in 
general, it demonstrates:
    (A) Few, if any, qualified investments, particularly those that are 
not routinely provided by private investors;
    (B) No use of innovative or complex qualified investments; and
    (C) Very poor responsiveness to credit and community development 
needs.
    (3) Service performance rating. The OTS assigns each savings 
association's service performance one of the five following ratings.
    (i) Outstanding. The OTS rates a savings association's service 
performance ``outstanding'' if, in general, the savings association 
demonstrates:
    (A) Its service delivery systems are readily accessible to 
geographies and individuals of different income levels in its assessment 
area(s);
    (B) To the extent changes have been made, its record of opening and 
closing branches has improved the accessibility of its delivery systems, 
particularly in low- or moderate-income geographies or to low- or 
moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) are 
tailored to the convenience and needs of its assessment area(s), 
particularly low- or moderate-income geographies or low- or moderate-
income individuals; and
    (D) It is a leader in providing community development services.
    (ii) High satisfactory. The OTS rates a savings association's 
service performance ``high satisfactory'' if, in general, the savings 
association demonstrates:
    (A) Its service delivery systems are accessible to geographies and 
individuals of different income levels in its assessment area(s);
    (B) To the extent changes have been made, its record of opening and 
closing branches has not adversely affected the accessibility of its 
delivery systems, particularly in low- and moderate-income geographies 
and to low- and moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) do 
not vary in a way that inconveniences its assessment area(s), 
particularly low- and moderate-income geographies and low- and moderate-
income individuals; and
    (D) It provides a relatively high level of community development 
services.
    (iii) Low satisfactory. The OTS rates a savings association's 
service performance ``low satisfactory'' if, in general, the savings 
association demonstrates:
    (A) Its service delivery systems are reasonably accessible to 
geographies and individuals of different income levels in its assessment 
area(s);
    (B) To the extent changes have been made, its record of opening and 
closing branches has generally not adversely affected the accessibility 
of its delivery systems, particularly in low- and moderate-income 
geographies and to low- and moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) do 
not vary in a way that inconveniences its assessment area(s), 
particularly low- and moderate-income geographies and low- and moderate-
income individuals; and
    (D) It provides an adequate level of community development services.
    (iv) Needs to improve. The OTS rates a savings association's service 
performance ``needs to improve'' if, in general, the savings association 
demonstrates:
    (A) Its service delivery systems are unreasonably inaccessible to 
portions of its assessment area(s), particularly to low- or moderate-
income geographies or to low- or moderate-income individuals;
    (B) To the extent changes have been made, its record of opening and 
closing branches has adversely affected the accessibility of its 
delivery systems, particularly in low- or moderate-income geographies or 
to low- or moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) vary 
in a way that inconveniences its assessment area(s), particularly low- 
or moderate-income geographies or low- or moderate-income individuals; 
and
    (D) It provides a limited level of community development services.
    (v) Substantial noncompliance. The OTS rates a savings association's 
service performance as being in ``substantial noncompliance'' if, in 
general, the savings association demonstrates:
    (A) Its service delivery systems are unreasonably inaccessible to 
significant portions of its assessment area(s), particularly to low- or 
moderate-income geographies or to low- or moderate-income individuals;

[[Page 304]]

    (B) To the extent changes have been made, its record of opening and 
closing branches has significantly adversely affected the accessibility 
of its delivery systems, particularly in low- or moderate-income 
geographies or to low- or moderate-income individuals;
    (C) Its services (including, where appropriate, business hours) vary 
in a way that significantly inconveniences its assessment area(s), 
particularly low- or moderate-income geographies or low- or moderate-
income individuals; and
    (D) It provides few, if any, community development services.
    (c) Wholesale or limited purpose savings associations. The OTS 
assigns each wholesale or limited purpose savings association's 
community development performance one of the four following ratings.
    (1) Outstanding. The OTS rates a wholesale or limited purpose 
savings association's community development performance ``outstanding'' 
if, in general, it demonstrates:
    (i) A high level of community development loans, community 
development services, or qualified investments, particularly investments 
that are not routinely provided by private investors;
    (ii) Extensive use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Excellent responsiveness to credit and community development 
needs in its assessment area(s).
    (2) Satisfactory. The OTS rates a wholesale or limited purpose 
savings association's community development performance ``satisfactory'' 
if, in general, it demonstrates:
    (i) An adequate level of community development loans, community 
development services, or qualified investments, particularly investments 
that are not routinely provided by private investors;
    (ii) Occasional use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Adequate responsiveness to credit and community development 
needs in its assessment area(s).
    (3) Needs to improve. The OTS rates a wholesale or limited purpose 
savings association's community development performance as ``needs to 
improve'' if, in general, it demonstrates:
    (i) A poor level of community development loans, community 
development services, or qualified investments, particularly investments 
that are not routinely provided by private investors;
    (ii) Rare use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Poor responsiveness to credit and community development needs 
in its assessment area(s).
    (4) Substantial noncompliance. The OTS rates a wholesale or limited 
purpose savings association's community development performance in 
``substantial noncompliance'' if, in general, it demonstrates:
    (i) Few, if any, community development loans, community development 
services, or qualified investments, particularly investments that are 
not routinely provided by private investors;
    (ii) No use of innovative or complex qualified investments, 
community development loans, or community development services; and
    (iii) Very poor responsiveness to credit and community development 
needs in its assessment area(s).
    (d) Savings associations evaluated under the small savings 
association performance standards. The OTS rates the performance of each 
savings association evaluated under the small savings association 
performance standards as follows:
    (1) Eligibility for a satisfactory rating. The OTS rates a savings 
association's performance ``satisfactory'' if, in general, the savings 
association demonstrates:
    (i) A reasonable loan-to-deposit ratio (considering seasonal 
variations) given the savings association's size, financial condition, 
the credit needs of its assessment area(s), and taking into account, as 
appropriate, lending-related activities such as loan originations for 
sale to the secondary markets and community development loans and 
qualified investments;
    (ii) A majority of its loans and, as appropriate, other lending-
related activities are in its assessment area(s);
    (iii) A distribution of loans to and, as appropriate, other lending 
related-activities for individuals of different income levels (including 
low- and moderate-income individuals) and businesses and farms of 
different sizes that is reasonable given the demographics of the savings 
association's assessment area(s);
    (iv) A record of taking appropriate action, as warranted, in 
response to written complaints, if any, about the savings association's 
performance in helping to meet the credit needs of its assessment 
area(s); and
    (v) A reasonable geographic distribution of loans given the savings 
association's assessment area(s).
    (2) Eligibility for an outstanding rating. A savings association 
that meets each of the standards for a ``satisfactory'' rating under 
this paragraph and exceeds some or all of those standards may warrant 
consideration

[[Page 305]]

for an overall rating of ``outstanding.'' In assessing whether a savings 
association's performance is ``outstanding,'' the OTS considers the 
extent to which the savings association exceeds each of the performance 
standards for a ``satisfactory'' rating and its performance in making 
qualified investments and its performance in providing branches and 
other services and delivery systems that enhance credit availability in 
its assessment area(s).
    (3) Needs to improve or substantial noncompliance ratings. A savings 
association also may receive a rating of ``needs to improve'' or 
``substantial noncompliance'' depending on the degree to which its 
performance has failed to meet the standards for a ``satisfactory'' 
rating.
    (e) Strategic plan assessment and rating. (1) Satisfactory goals. 
The OTS approves as ``satisfactory'' measurable goals that adequately 
help to meet the credit needs of the savings association's assessment 
area(s).
    (2) Outstanding goals. If the plan identifies a separate group of 
measurable goals that substantially exceed the levels approved as 
``satisfactory,'' the OTS will approve those goals as ``outstanding.''
    (3) Rating. The OTS assesses the performance of a savings 
association operating under an approved plan to determine if the savings 
association has met its plan goals:
    (i) If the savings association substantially achieves its plan goals 
for a satisfactory rating, the OTS will rate the savings association's 
performance under the plan as ``satisfactory.''
    (ii) If the savings association exceeds its plan goals for a 
satisfactory rating and substantially achieves its plan goals for an 
outstanding rating, the OTS will rate the savings association's 
performance under the plan as ``outstanding.''
    (iii) If the savings association fails to meet substantially its 
plan goals for a satisfactory rating, the OTS will rate the savings 
association as either ``needs to improve'' or ``substantial 
noncompliance,'' depending on the extent to which it falls short of its 
plan goals, unless the savings association elected in its plan to be 
rated otherwise, as provided in Sec. 25.27(f)(4).

[60 FR 22220, May 4, 1995]

                   Appendix B to Part 563e--CRA Notice

    (a) Notice for main offices and, if an interstate savings 
association, one branch office in each state.

                    Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the Office of 
Thrift Supervision (OTS) evaluates our record of helping to meet the 
credit needs of this community consistent with safe and sound 
operations. The OTS also takes this record into account when deciding on 
certain applications submitted by us.
    Your involvement is encouraged.
    You are entitled to certain information about our operations and our 
performance under the CRA, including, for example, information about our 
branches, such as their location and services provided at them; the 
public section of our most recent CRA Performance Evaluation, prepared 
by the OTS; and comments received from the public relating to our 
performance in helping to meet community credit needs, as well as our 
responses to those comments. You may review this information today.
    At least 30 days before the beginning of each quarter, the OTS 
publishes a nationwide list of the savings associations that are 
scheduled for CRA examination in that quarter. This list is available 
from the Regional Director (address). You may send written comments 
about our performance in helping to meet community credit needs to (name 
and address of official at savings association) and OTS (address). Your 
letter, together with any response by us, will be considered by the OTS 
in evaluating our CRA performance and may be made public.
    You may ask to look at any comments received by the Regional 
Director. You may also request from the Regional Director an 
announcement of our applications covered by the CRA filed with the OTS. 
We are an affiliate of (name of holding company), a savings and loan 
holding company. You may request from the Regional Director an 
announcement of applications covered by the CRA filed by savings and 
loan holding companies.
    (b) Notice for branch offices.

                    Community Reinvestment Act Notice

    Under the Federal Community Reinvestment Act (CRA), the Office of 
Thrift Supervision (OTS) evaluates our record of helping to meet the 
credit needs of this community consistent with safe and sound 
operations. The OTS also takes this record into account when deciding on 
certain applications submitted by us.
    Your involvement is encouraged.
    You are entitled to certain information about our operations and our 
performance under the CRA. You may review today the public section of 
our most recent CRA evaluation, prepared by the OTS, and a list of 
services provided at this branch. You may also have access to the 
following additional information, which we will make available to you at 
this branch within five calendar days after you make a request to us: 
(1) A map showing the assessment area containing this branch, which is 
the area in which the OTS evaluates our CRA performance in this 
community; (2) information about our branches in this assessment area; 
(3) a list of services we provide at those locations; (4)

[[Page 306]]

data on our lending performance in this assessment area; and (5) copies 
of all written comments received by us that specifically relate to our 
CRA performance in this assessment area, and any responses we have made 
to those comments. If we are operating under an approved strategic plan, 
you may also have access to a copy of the plan.
    [If you would like to review information about our CRA performance 
in other communities served by us, the public file for our entire 
savings association is available at (name of office located in state), 
located at (address).]
    At least 30 days before the beginning of each quarter, the OTS 
publishes a nationwide list of the savings associations that are 
scheduled for CRA examination in that quarter. This list is available 
from the Regional Director (address). You may send written comments 
about our performance in helping to meet community credit needs to (name 
and address of official at savings association) and the Regional 
Director (address). Your letter, together with any response by us, will 
be considered by the OTS in evaluating our CRA performance and may be 
made public.
    You may ask to look at any comments received by the Regional 
Director. You may also request from the Regional Director an 
announcement of our applications covered by the CRA filed with the OTS. 
We are an affiliate of (name of holding company), a savings and loan 
holding company. You may request from the Regional Director an 
announcement of applications covered by the CRA filed by savings and 
loan holding companies.

[60 FR 22223, May 4, 1995]



PART 563f--MANAGEMENT OFFICIAL INTERLOCKS--Table of Contents




Sec.
563f.1  Authority, purpose, and scope.
563f.2  Definitions.
563f.3  Prohibitions.
563f.4  Interlocking relationships permitted by statute.
563f.5  Small market share exemption.
563f.6  General exemption.
563f.7  Change in circumstances.
563f.8  Enforcement.
563f.9  Interlocking relationships permitted pursuant to Federal Deposit 
          Insurance Act.

    Authority: 12 U.S.C. 3201-3208.

    Source: 61 FR 40308, Aug. 2, 1996, unless otherwise noted.



Sec. 563f.1  Authority, purpose, and scope.

    (a) Authority. This part is issued under the provisions of the 
Depository Institution Management Interlocks Act (Interlocks Act) (12 
U.S.C. 3201 et seq.), as amended.
    (b) Purpose. The purpose of the Interlocks Act and this part is to 
foster competition by generally prohibiting a management official from 
serving two nonaffiliated depository organizations in situations where 
the management interlock likely would have an anticompetitive effect.
    (c) Scope. This part applies to management officials of savings 
associations, savings and loan holding companies, and affiliates of 
either.



Sec. 563f.2  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Affiliate. (1) The term affiliate has the meaning given in 
section 202 of the Interlocks Act (12 U.S.C. 3201). For purposes of that 
section 202, shares held by an individual include shares held by members 
of his or her immediate family. ``Immediate family'' means spouse, 
mother, father, child, grandchild, sister, brother, or any of their 
spouses, whether or not any of their shares are held in trust.
    (2) For purposes of section 202(3)(B) of the Interlocks Act (12 
U.S.C. 3201(3)(B)), an affiliate relationship involving a savings 
association or savings and loan holding company based on common 
ownership does not exist if the OTS determines, after giving the 
affected persons the opportunity to respond, that the asserted 
affiliation was established in order to avoid the prohibitions of the 
Interlocks Act and does not represent a true commonality of interest 
between the depository organizations. In making this determination, the 
OTS considers, among other things, whether a person, including members 
of his or her immediate family, whose shares are necessary to constitute 
the group owns a nominal percentage of the shares of one of the 
organizations and the percentage is substantially disproportionate to 
that person's ownership of shares in the other organization.
    (b) Area median income means:
    (1) The median family income for the metropolitan statistical area 
(MSA), if a depository organization is located in an MSA; or

[[Page 307]]

    (2) The statewide nonmetropolitan median family income, if a 
depository organization is located outside an MSA.
    (c) Community means a city, town, or village, and contiguous or 
adjacent cities, towns, or villages.
    (d) Contiguous or adjacent cities, towns, or villages means cities, 
towns, or villages whose borders touch each other or whose borders are 
within 10 road miles of each other at their closest points. The property 
line of an office located in an unincorporated city, town, or village is 
the boundary line of that city, town, or village for the purpose of this 
definition.
    (e) Depository holding company means a bank holding company or a 
savings and loan holding company (as more fully defined in section 202 
of the Interlocks Act (12 U.S.C. 3201)) having its principal office 
located in the United States.
    (f) Depository institution means a commercial bank (including a 
private bank), a savings bank, a trust company, a savings and loan 
association, a building and loan association, a homestead association, a 
cooperative bank, an industrial bank, or a credit union, chartered under 
the laws of the United States and having a principal office located in 
the United States. Additionally, a United States office, including a 
branch or agency, of a foreign commercial bank is a depository 
institution.
    (g) Depository institution affiliate means a depository institution 
that is an affiliate of a depository organization.
    (h) Depository organization means a depository institution or a 
depository holding company.
    (i) Low- and moderate-income areas means census tracts (or, if an 
area is not in a census tract, block numbering areas delineated by the 
United States Bureau of the Census) where the median family income is 
less than 100 percent of the area median income.
    (j) Management official. (1) The term management official means:
    (i) A director;
    (ii) An advisory or honorary director of a depository institution 
with total assets of $100 million or more;
    (iii) A senior executive officer as that term is defined in 
Sec. 563.555 of this chapter;
    (iv) A branch manager;
    (v) A trustee of a depository organization under the control of 
trustees; and
    (vi) Any person who has a representative or nominee serving in any 
of the capacities in this paragraph (l)(1).
    (2) The term management official does not include:
    (i) A person whose management functions relate exclusively to the 
business of retail merchandising or manufacturing;
    (ii) A person whose management functions relate principally to the 
business outside the United States of a foreign commercial bank; or
    (iii) A person described in the provisos of section 202(4) of the 
Interlocks Act (12 U.S.C. 3201(4)) (referring to an officer of a State-
chartered savings bank, cooperative bank, or trust company that neither 
makes real estate mortgage loans nor accepts savings).
    (k) Office means a principal or branch office of a depository 
institution located in the United States. Office does not include a 
representative office of a foreign commercial bank, an electronic 
terminal, or a loan production office.
    (l) Person means a natural person, corporation, or other business 
entity.
    (m) Relevant metropolitan statistical area (RMSA) means an MSA, a 
primary MSA, or a consolidated MSA that is not comprised of designated 
Primary MSAs to the extent that these terms are defined and applied by 
the Office of Management and Budget.
    (n) Representative or nominee means a natural person who serves as a 
management official and has an obligation to act on behalf of another 
person with respect to management responsibilities. The OTS will find 
that a person has an obligation to act on behalf of another person only 
if the first person has an agreement, express or implied, to act on 
behalf of the second person with respect to management responsibilities. 
The OTS will determine, after giving the affected persons an opportunity 
to respond, whether a person is a representative or nominee.
    (o) Savings association means:

[[Page 308]]

    (1) Any Federal savings association (as defined in section 3(b)(2) 
of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(2));
    (2) Any state savings association (as defined in section 3(b)(3) of 
the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(3)) the deposits of 
which are insured by the Federal Deposit Insurance Corporation; and
    (3) Any corporation (other than a bank as defined in section 3(a)(1) 
of the Federal Deposit Insurance Act (12 U.S.C. 1813(a)(1)) the deposits 
of which are insured by the Federal Deposit Insurance Corporation, that 
the Board of Directors of the Federal Deposit Insurance Corporation and 
the Director of the Office of Thrift Supervision jointly determine to be 
operating in substantially the same manner as a savings association.
    (p) Total assets. (1) The term total assets means assets measured on 
a consolidated basis and reported in the most recent fiscal year-end 
Consolidated Report of Condition and Income.
    (2) The term total assets does not include:
    (i) Assets of a diversified savings and loan holding company as 
defined by section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C. 
1467a(a)(1)(F)) other than the assets of its depository institution 
affiliate;
    (ii) Assets of a bank holding company that is exempt from the 
prohibitions of section 4 of the Bank Holding Company Act of 1956 
pursuant to an order issued under section 4(d) of that Act (12 U.S.C. 
1843(d)) other than the assets of its depository institution affiliate; 
or
    (iii) Assets of offices of a foreign commercial bank other than the 
assets of its United States branch or agency.
    (q) United States means the United States of America, any State or 
territory of the United States of America, the District of Columbia, 
Puerto Rico, Guam, American Samoa, and the Virgin Islands.

[61 FR 40308, Aug. 2, 1996, as amended at 63 FR 51275, Sept. 25, 1998; 
64 FR 51680, Sept. 24, 1999]



Sec. 563f.3  Prohibitions.

    (a) Community. A management official of a depository organization 
may not serve at the same time as a management official of an 
unaffiliated depository organization if the depository organizations in 
question (or a depository institution affiliate thereof) have offices in 
the same community.
    (b) RMSA. A management official of a depository organization may not 
serve at the same time as a management official of an unaffiliated 
depository organization if the depository organizations in question (or 
a depository institution affiliate thereof) have offices in the same 
RMSA and each depository organization has total assets of $20 million or 
more.
    (c) Major assets. A management official of a depository organization 
with total assets exceeding $2.5 billion (or any affiliate of such an 
organization) may not serve at the same time as a management official of 
an unaffiliated depository organization with total assets exceeding $1.5 
billion (or any affiliate of such an organization), regardless of the 
location of the two depository organizations. The OTS will adjust these 
thresholds, as necessary, based on the year-to-year change in the 
average of the Consumer Price Index for the Urban Wage Earners and 
Clerical Workers, not seasonally adjusted, with rounding to the nearest 
$100 million. The OTS will announce the revised thresholds by publishing 
a final rule without notice and comment in the Federal Register.

[61 FR 40308, Aug. 2, 1996, as amended at 64 FR 51680, Sept. 24, 1999]



Sec. 563f.4  Interlocking relationships permitted by statute.

    The prohibitions of Sec. 563f.3 do not apply in the case of any one 
or more of the following organizations or to a subsidiary thereof:
    (a) A depository organization that has been placed formally in 
liquidation, or which is in the hands of a receiver, conservator, or 
other official exercising a similar function;
    (b) A corporation operating under section 25 or section 25A of the 
Federal Reserve Act (12 U.S.C. 601 et seq. and 12 U.S.C. 611 et seq., 
respectively) (Edge Corporations and Agreement Corporations);
    (c) A credit union being served by a management official of another 
credit union;

[[Page 309]]

    (d) A depository organization that does not do business within the 
United States except as an incident to its activities outside the United 
States;
    (e) A State-chartered savings and loan guaranty corporation;
    (f) A Federal Home Loan Bank or any other bank organized solely to 
serve depository institutions (a bankers' bank) or solely for the 
purpose of providing securities clearing services and services related 
thereto for depository institutions and securities companies;
    (g) A depository organization that is closed or is in danger of 
closing as determined by the appropriate Federal depository institutions 
regulatory agency and is acquired by another depository organization. 
This exemption lasts for five years, beginning on the date the 
depository organization is acquired;
    (h)(1) A diversified savings and loan holding company (as defined in 
section 10(a)(1)(F) of the Home Owners' Loan Act (12 U.S.C. 
1467a(a)(1)(F)) with respect to the service of a director of such 
company who also is a director of an unaffiliated depository 
organization if:
    (i) Both the diversified savings and loan holding company and the 
unaffiliated depository organization notify their appropriate Federal 
depository institutions regulatory agency at least 60 days before the 
dual service is proposed to begin; and
    (ii) The appropriate regulatory agency does not disapprove the dual 
service before the end of the 60-day period.
    (2) The OTS may disapprove a notice of proposed service if it finds 
that:
    (i) The service cannot be structured or limited so as to preclude an 
anticompetitive effect in financial services in any part of the United 
States;
    (ii) The service would lead to substantial conflicts of interest or 
unsafe or unsound practices; or
    (iii) The notificant failed to furnish all the information required 
by the OTS.
    (3) The OTS may require that any interlock permitted under this 
paragraph (h) be terminated if a change in circumstances occurs with 
respect to one of the interlocked depository organizations that would 
have provided a basis for disapproval of the interlock during the notice 
period; and
    (i) Any savings association or any savings and loan holding company 
(as defined in section 10(a)(1)(D) of the Home Owners' Loan Act) which 
has issued stock in connection with a qualified stock issuance pursuant 
to section 10(q) of such Act, except that this paragraph (i) shall apply 
only with regard to service by a single management official of such 
savings association or holding company, or any subsidiary of such 
savings association or holding company, by a single management official 
of the savings and loan holding company which purchased the stock issued 
in connection with such qualified stock issuance, and shall apply only 
when the OTS has determined that such service is consistent with the 
purposes of the Interlocks Act and the Home Owners' Loan Act.



Sec. 563f.5  Small market share exemption.

    (a) Exemption. A management interlock that is prohibited by 
Sec. 563f.3 is permissible, if:
    (1) The interlock is not prohibited by Sec. 563f.3(c); and
    (2) The depository organizations (and their depository institution 
affiliates) hold, in the aggregate, no more than 20 percent of the 
deposits in each RMSA or community in which both depository 
organizations (or their depository institution affiliates) have offices. 
The amount of deposits shall be determined by reference to the most 
recent annual Summary of Deposits published by the FDIC for the RMSA or 
community.
    (b) Confirmation and records. Each depository organization must 
maintain records sufficient to support its determination of eligibility 
for the exemption under paragraph (a) of this section, and must 
reconfirm that determination on an annual basis.

[64 FR 51680, Sept. 24, 1999]



Sec. 563f.6  General exemption.

    (a) Exemption. The OTS may by agency order exempt an interlock from 
the prohibitions in Sec. 563f.3 if the OTS finds that the interlock 
would not result in a monopoly or substantial lessening of competition 
and would not present safety and soundness concerns. A depository 
organization may apply to

[[Page 310]]

OTS for an exemption under part 516, subpart E, of this chapter.
    (b) Presumptions. In reviewing an application for an exemption under 
this section, the OTS will apply a rebuttable presumption that an 
interlock will not result in a monopoly or substantial lessening of 
competition if the depository organization seeking to add a management 
official:
    (1) Primarily serves low- and moderate-income areas;
    (2) Is controlled or managed by persons who are members of a 
minority group, or women;
    (3) Is a depository institution that or has been chartered for less 
than two years; or
    (4) Is deemed to be in ``troubled condition'' as defined in 
Sec. 563.555 of this chapter.
    (c) Duration. Unless a shorter expiration period is provided in the 
OTS approval, an exemption permitted by paragraph (a) of this section 
may continue so long as it does not result in a monopoly or substantial 
lessening of competition, or is unsafe or unsound. If the OTS grants an 
interlock exemption in reliance upon a presumption under paragraph (b) 
of this section, the interlock may continue for three years, unless 
otherwise provided by the OTS in writing.

[64 FR 51680, Sept. 24, 1999, as amended at 66 FR 13009, Mar. 2, 2001]



Sec. 563f.7  Change in circumstances.

    (a) Termination. A management official shall terminate his or her 
service or apply for an exemption if a change in circumstances causes 
the service to become prohibited. A change in circumstances may include 
an increase in asset size of an organization, a change in the 
delineation of the RMSA or community, the establishment of an office, an 
increase in the aggregate deposits of the depository organization, or an 
acquisition, merger, consolidation, or reorganization of the ownership 
structure of a depository organization that causes a previously 
permissible interlock to become prohibited.
    (b) Transition period. A management official described in paragraph 
(a) of this section may continue to serve the depository organization 
involved in the interlock for 15 months following the date of the change 
in circumstances. The OTS may shorten this period under appropriate 
circumstances.

[61 FR 40308, Aug. 2, 1996, as amended at 64 FR 51681, Sept. 24, 1999]



Sec. 563f.8  Enforcement.

    Except as provided in this section, the OTS administers and enforces 
the Interlocks Act with respect to savings associations, savings and 
loan holding companies, and affiliates of either, and may refer any case 
of a prohibited interlocking relationship involving these entities to 
the Attorney General of the United States to enforce compliance with the 
Interlocks Act and this part. If an affiliate of a savings association 
or savings and loan holding company is subject to the primary regulation 
of another Federal depository organization supervisory agency, then the 
OTS does not administer and enforce the Interlocks Act with respect to 
that affiliate.



Sec. 563f.9  Interlocking relationships permitted pursuant to Federal Deposit Insurance Act.

    A management official or prospective management official of a 
depository organization may enter into an otherwise prohibited 
interlocking relationship with another depository organization for a 
period of up to 10 years if such relationship is approved by the Federal 
Deposit Insurance Corporation pursuant to section 13(k)(1)(A)(v) of the 
Federal Deposit Insurance Act, as amended (12 U.S.C. 1823(k)(1)(A)(v)).



PART 563g--SECURITIES OFFERINGS--Table of Contents




Sec.
563g.1  Definitions.
563g.2  Offering circular requirement.
563g.3  Exemptions.
563g.4  Non-public offering.
563g.5  Filing and signature requirements.
563g.6  Effective date.
563g.7  Form, content, and accounting.
563g.8  Use of the offering circular.
563g.9  Escrow requirement.
563g.10  Unsafe or unsound practices.
563g.11  Withdrawal or abandonment.
563g.12  Securities sale report.
563g.13  Public disclosure and confidential treatment.
563g.14  Waiver.
563g.15  Requests for interpretive advice or waiver.

[[Page 311]]

563g.16  Delayed or continuous offering and sale of securities.
563g.17  Sales of securities at an office of a savings association.
563g.18  Current and periodic reports.
563g.19  Approval of the security.
563g.20  Form for securities sale report.
563g.21  Filing of copies of offering circulars in certain exempt 
          offerings.

    Authority: 12 U.S.C. 1462a, 1463, 1464; 15 U.S.C. 78c(b), 78l, 78m, 
78n, 78p, 78w.

    Source: 54 FR 49641, Nov. 30, 1989, unless otherwise noted.



Sec. 563g.1  Definitions.

    (a) For purposes of this part, the following definitions apply:
    (1) Accredited investor means the same as in Commission Rule 501(a) 
(17 CFR 230.501(a)) under the Securities Act, and includes any savings 
association.
    (2) Commission means the Securities and Exchange Commission.
    (3) Dividend or interest reinvestment plan means a plan which is 
offered solely to existing security holders of the savings association 
which allows such persons to reinvest dividends or interest paid to them 
on securities issued by the savings association, and which also may 
allow additional cash amounts to be contributed by the participants in 
the plan, provided that the securities to be issued are newly issued, or 
are purchased for the account of plan participants, at prices not in 
excess of current market prices at the time of purchase, or at prices 
not in excess of an amount determined in accordance with a pricing 
formula specified in the plan and based upon average or current market 
prices at the time of purchase.
    (4) Employee benefit plan means any purchase, savings, option, 
rights, bonus, ownership, appreciation, profit sharing, thrift, 
incentive, pension or similar plan solely for officers, directors or 
employees.
    (5) Exchange Act means the Securities Exchange Act of 1934 (15 
U.S.C. 78a-78jj).
    (6) Filing date means the date on which a document is actually 
received during business hours, 9:00 a.m. to 5:00 p.m. Eastern Standard 
Time, by the Chief Counsel, Corporate and Securities Division, Office of 
Thrift Supervision, 1700 G Street, NW., Washington, DC 20552. However if 
the last date on which a document can be accepted falls on a Saturday, 
Sunday, or holiday, such document may be filed on the next business day.
    (7) Issuer means a savings association which issues or proposes to 
issue any security.
    (8) Offer; Sale or sell. For purposes of this part, the term offer, 
offer to sell, or offer for sale shall include every attempt or offer to 
dispose of, or solicitation of an offer to buy, a security or interest 
in a security, for value. However, these terms shall not include 
preliminary negotiations or agreements between an issuer and any 
underwriter or among underwriters who are or are to be in privity of 
contract with the issuer. Sale and sell includes every contract to sell 
or otherwise dispose of a security or interest in a security for value. 
Every offer or sale of a warrant or right to purchase or subscribe to 
another security of the same or another issuer, as well as every sale or 
offer of a security which gives the holder a present or future right or 
privilege to convert the security into another security of the same or 
another issuer, includes an offer and sale of the other security only at 
the time of the offer or sale of the warrant or right or convertible 
security; but neither the exercise of the right to purchase or subscribe 
or to convert nor the issuance of securities pursuant thereto is an 
offer or sale.
    (9) Person means the same as in Sec. 563b.2(a)(27) of this chapter, 
and includes a savings association.
    (10) Purchase and buy mean the same as in Sec. 563b.2(a)(29) of this 
chapter.
    (11) Savings association has the same meaning as in part 561 of this 
chapter, and includes a federally-chartered savings association in 
organization under this chapter, and a state-chartered savings 
association in organization which is granted conditional approval of 
insurance of accounts by the Federal Deposit Insurance Corporation. In 
addition, for purposes of Sec. 563g.2 of this part, savings association 
includes any underwriter participating in the distribution of securities 
of a savings association.
    (12) Securities Act means the Securities Act of 1933 (15 U.S.C. 77a-
77aa).
    (13) Security means any non-withdrawable account, note, stock,

[[Page 312]]

treasury stock, bond, debenture, evidence of indebtedness, certificate 
of interest or participation in any profit-sharing agreement, 
collateral-trust certificate, preorganization or subscription, 
transferable share, investment contract, voting trust certificate or, in 
general, any interest or instrument commonly known as a security, or any 
certificate of interest or participation in, temporary or interim 
certificate for, receipt for, guarantee of, or warrant or right to 
subscribe to or purchase any of the foregoing, except that a security 
shall not include an account insured, in whole or in part, by the 
Federal Deposit Insurance Corporation.
    (14) Underwriter means any person who has purchased from an issuer 
with a view to, or offers or sells for an issuer in connection with, the 
distribution of any security, or participates or has a participation in 
the direct or indirect underwriting of any such undertaking; but such 
term shall not include a person whose interest is limited to a 
commission from an underwriter or dealer not in excess of the usual and 
customary distributors' or sellers' commission and such term shall also 
not include any person who has continually held the securities being 
transferred for a period of two (2) consecutive years provided that the 
securities sold in any one (1) transaction shall be less than ten 
percent (10%) of the issued and outstanding securities of the same 
class. The following shall apply for the purpose of determining the 
period securities have been held:
    (i) Stock dividends, splits and recapitalizations. Securities 
acquired from the issuer as a dividend or pursuant to a stock split, 
reverse split or recapitalization shall be deemed to have been acquired 
at the same time as the securities on which the dividend or, if more 
than one, the initial dividend was paid, the securities involved in the 
split or reverse split, or the securities surrendered in connection with 
the recapitalization.
    (ii) Conversions. If the securities sold were acquired from the 
issuer for consideration consisting solely of other securities of the 
same issuer surrendered for conversion, the securities so acquired shall 
be deemed to have been acquired at the same time as the securities 
surrendered for conversion.
    (iii) Contingent issuance of securities. Securities acquired as a 
contingent payment of the purchase price of an equity interest in a 
business, or the assets of a business, sold to the issuer or an 
affiliate of the issuer shall be deemed to have been acquired at the 
time of such sale if the issuer was then committed to issue the 
securities subject only to conditions other than the payment of further 
consideration for such securities. An agreement entered into in 
connection with any such purchase to remain in the employment of, or not 
to compete with, the issuer or affiliate or the rendering of services 
pursuant to such agreement shall not be deemed to be the payment of 
further consideration for such securities.
    (iv) Pledged securities. Securities which are bona fide pledged by 
any person other than the issuer when sold by the pledgee, or by a 
purchaser, after a default in the obligation secured by the pledge, 
shall be deemed to have been acquired when they were acquired by the 
pledgor, except that if the securities were pledged without recourse 
they shall be deemed to have been acquired by the pledgee at the time of 
the pledge or by the purchaser at the time of purchase.
    (v) Gifts of securities. Securities acquired from any person, other 
than the issuer, by gift shall be deemed to have been acquired by the 
donee when they were acquired by the donor.
    (vi) Trusts. Securities acquired from the settler of a trust by the 
trust or acquired from the trust by the beneficiaries thereof shall be 
deemed to have been acquired when they were acquired by the settler.
    (vii) Estates. Securities held by the estate of a deceased person or 
acquired from such an estate by the beneficiaries thereof shall be 
deemed to have been acquired when they were acquired by the deceased 
person, except that no holding period is required if the estate is not 
an affiliate of the issuer or if the securities are sold by a 
beneficiary of the estate who is not such an affiliate.
    (viii) Exchange transactions. A person receiving securities in a 
transaction involving an exchange of the securities of

[[Page 313]]

one issuer for securities of another issuer shall be deemed to have 
acquired the securities received when such person acquired the 
securities exchanged.
    (b) A term not defined in this part but defined in another part of 
this chapter, when used in this part, shall have the meanings given in 
such other part, unless the context otherwise requires.
    (c) When used in the rules, regulations, or forms of the Commission 
referred to in this part, the term Commission shall be deemed to refer 
to the Office, the term registrant shall be deemed to refer to an issuer 
defined in this part, and the term registration statement or prospectus 
shall be deemed to refer to an offering circular filed under this part, 
unless the context otherwise requires.

[54 FR 49641, Nov. 30, 1989, as amended at 62 FR 54765, Oct. 22, 1997]



Sec. 563g.2  Offering circular requirement.

    (a) General. No savings association shall offer or sell, directly or 
indirectly, any security issued by it unless:
    (1) The offer or sale is accompanied or preceded by an offering 
circular which includes the information required by this part and which 
has been filed and declared effective pursuant to this part; or
    (2) An exemption is available under this part.
    (b) Communications not deemed an offer. The following communications 
shall not be deemed an offer under this section:
    (1) Prior to filing an offering circular, any notice of a proposed 
offering which satisfies the requirements of Commission Rule 135 (17 CFR 
230.135) under the Securities Act;
    (2) Subsequent to filing an offering circular, any notice circular, 
advertisement, letter, or other communication published or transmitted 
to any person which satisfies the requirements of Commission Rule 134 
(17 CFR 230.134) under the Securities Act; and
    (3) Oral offers of securities covered by an offering circular made 
after filing the offering circular with the Office.
    (c) Preliminary offering circular. Notwithstanding paragraph (a) of 
this section, a preliminary offering circular may be used for an offer 
of any security prior to the effective date of the offering circular if:
    (1) The preliminary offering circular has been filed pursuant to 
this part;
    (2) The preliminary offering circular includes the information 
required by this part, except for the omission of information relating 
to offering price, discounts or commissions, amount of proceeds, 
conversion rates, call prices, or other matters dependent on the 
offering price; and
    (3) The offering circular declared effective by the Office is 
furnished to the purchaser prior to, or simultaneously with, the sale of 
any such security.



Sec. 563g.3  Exemptions.

    The offering circular requirement of Sec. 563g.2 of this part shall 
not apply to an issuer's offer or sale of securities:
    (a) [Reserved]
    (b) Exempt from registration under either section 3(a) or section 4 
of the Securities Act, but only by reason of an exemption other than 
section 3(a)(5) (for regulated savings associations), and section 
3(a)(11) (for intrastate offerings) of the Securities Act;
    (c) In a conversion from the mutual to the stock form of 
organization pursuant to part 563b of this chapter, except for a 
supervisory conversion undertaken pursuant to subpart C of part 563b of 
this chapter;
    (d) In a non-public offering which satisfies the requirements of 
Sec. 563g.4 of this part;
    (e) That are debt securities issued in denominations of $100,000 or 
more, which are fully collateralized by cash, any security issued, or 
guaranteed as to principal and interest, by the United States, the 
Federal Home Loan Mortgage Corporation, Federal National Mortgage 
Association, Government National Mortgage Association or by interests in 
mortgage notes secured by real property;
    (f) Distributed exclusively abroad to foreign nationals: Provided, 
That (1) the offering is made subject to safeguards reasonably designed 
to preclude distribution or redistribution of the securities within, or 
to nationals of, the United States, and (2) such safeguards include, 
without limitation, measures that would be sufficient to ensure that 
registration of the securities would not

[[Page 314]]

be required if the securities were not exempt under the Securities Act; 
or
    (g) To its officers, directors or employees pursuant to an employee 
benefit plan or a dividend or interest reinvestment plan, and provided 
that any such plan has been approved by the majority of shareholders 
present in person or by proxy at an annual or special meeting of the 
shareholders of the savings association.

[54 FR 49641, Nov. 30, 1989, as amended at 65 FR 16305, Mar. 28, 2000]



Sec. 563g.4  Non-public offering.

    Offers and sales of securities by an issuer that satisfy the 
conditions of paragraph (a) or (b) of this section and the requirements 
of paragraphs (c) and (d) of this section shall be deemed to be 
transactions not involving any public offering within the meaning of 
section 4(2) of the Securities Act and Secs. 563g.3(b) and 563g.3(d) of 
this part. However, an issuer shall not be deemed to be not in 
compliance with the provisions of this section solely by reason of 
making an untimely filing of the notice required to be filed by 
paragraph (c) of this section so long as the notice is actually filed 
and all other conditions and requirements of this section are satisfied.
    (a) Regulation D. The offer and sale of all securities in the 
transaction satisfies the Commission's Regulation D (17 CFR 230.501-
230.506), except for the notice requirements of Commission Rule 503 (17 
CFR 230.503) and the limitations on resale in Commission Rule 502(d) (17 
CFR 230.502(d)).
    (b) Sales to 35 persons. The offer and sale of all securities in the 
transaction satisfies each of the following conditions:
    (1) Sales of the security are not made to more than 35 persons 
during the offering period, as determined under the integration 
provisions of Commission Rule 502(a) (17 CFR 230.502(a)). The number of 
purchasers referred to above is exclusive of any accredited investor, 
officer, director or affiliate of the issuer. For purposes of paragraph 
(b) of this section, a husband and wife (together with any custodian or 
trustee acting for the account of their minor children) are counted as 
one person and a partnership, corporation or other organization which 
was not specifically formed for the purpose of purchasing the security 
offered in reliance upon this exemption, is counted as one person.
    (2) All purchasers either have a preexisting personal or business 
relationship with the issuer or any of its officers, directors or 
controlling persons, or by reason of their business or financial 
experience or the business or financial experience of their professional 
advisors who are unaffiliated with and who are not compensated by the 
issuer or any affiliate or selling agent of the issuer, directly or 
indirectly, could reasonably be assumed to have the capacity to protect 
their own interests in connection with the transaction.
    (3) Each purchaser represents that the purchaser is purchasing for 
the purchaser's own account (or a trust account if the purchaser is a 
trustee) and not with a view to or for sale in connection with any 
distribution of the security.
    (4) The offer and sale of the security is not accomplished by the 
publication of any advertisement.
    (c) Filing of notice of sales. Within 30 days after the first sale 
of the securities, every six months after the first sale of the 
securities and not later than 30 days after the last sale of securities 
in an offering pursuant to this section, the issuer, shall file with the 
Office a report describing the results of the sale of securities as 
required by Sec. 563g.12(b) of this part.
    (d) Limitation on resale. The issuer shall exercise reasonable care 
to assure that the purchasers of the securities are not underwriters 
within the meaning of Sec. 563g.1(a)(14) of this part, which reasonable 
care shall include, but not be limited to, the following:
    (1) Reasonable inquiry to determine if the purchaser is acquiring 
the securities for the purchaser or for other persons;
    (2) Written disclosure to each purchaser prior to the sale that the 
securities are not offered by an offering circular filed with, and 
declared effective by, the Office pursuant to Sec. 563g.2 of this part, 
but instead are being sold in reliance upon the exemption from the 
offering circular requirement provided for by this section; and

[[Page 315]]

    (3) Placement of a legend on the certificate, or other document 
evidencing the securities, indicating that the securities have not been 
offered by an offering circular filed with, and declared effective by, 
the Office and that due care should be taken to ensure that the seller 
of the securities is not an underwriter within the meaning of 
Sec. 563g.1(a)(14) of this part.



Sec. 563g.5  Filing and signature requirements.

    (a) Procedures. An offering circular, amendment, notice, report, or 
other document required by this part shall, unless otherwise indicated, 
be filed in accordance with the requirements of Sec. 563b.8(e)(1), 
(e)(3) and (e)(4), (f) through (q), and (s), of this chapter.
    (b) Number of copies. (1) Unless otherwise required, any filing 
under this part shall include nine copies of the document to be filed 
with the Business Transactions Division, Chief Counsel's Office, as 
follows:
    (i) Seven copies, which shall include one manually signed copy with 
exhibits, three conformed copies with exhibits, and three conformed 
copies without exhibits, to the Securities Filing Desk, Office of Thrift 
Supervision, 1700 G Street, NW., Washington, DC 20552; and
    (ii) Two copies, which shall include one manually signed copy with 
exhibits and one conformed copy, without exhibits, to the Regional 
Director.
    (2) Within five days after the effective date of an offering 
circular or the commencement of a public offering after the effective 
date, whichever occurs later, nine copies of the offering circular used 
shall be filed with OTS, as follows: seven copies to the Securities 
Filing Desk, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC 20552, and two copies to the Regional Director.
    (3) After the effective date of an offering circular, an offering 
circular which varies from the form previously filed shall not be used, 
unless it includes only non-material supplemental or additional 
information and until 10 copies have been filed with the Office in the 
manner required.
    (c) Signature. (1) Any offering circular, amendment, or consent 
filed with the Office pursuant to this part shall include an attached 
manually signed signature page which authorizes the filing and has been 
signed by:
    (i) The issuer, by its duly authorized representative;
    (ii) The issuer's principal executive officer;
    (iii) The issuer's principal financial officer;
    (iv) The issuer's principal accounting officer; and
    (v) At least a majority of the issuer's directors.
    (2) Any other document filed pursuant to this part shall be signed 
by a person authorized to do so.
    (3) At least one copy of every document filed pursuant to this part 
shall be manually signed, and every copy of a document filed shall:
    (i) Have the name of each person who signs typed or printed beneath 
the signature;
    (ii) State the capacity or capacities in which the signature is 
provided;
    (iii) Provide the name of each director of the issuer, if a majority 
of directors is required to sign the document; and
    (iv) With regard to any copies not manually signed, bear typed or 
printed signatures.

[54 FR 49641, Nov. 30, 1989, as amended at 60 FR 66869, Dec. 27, 1995; 
66 FR 65821, Dec. 21, 2001]



Sec. 563g.6  Effective date.

    (a) Except as provided for in paragraph (d) of this section, an 
offering circular filed by a savings association shall be deemed to be 
automatically declared effective by the Office on the twentieth day 
after filing or on such earlier date as the Office may determine for 
good cause shown.
    (b) If any amendment is filed prior to the effective date, the 
offering circular shall be deemed to have been filed when such amendment 
was filed.
    (c) The period until automatic effectiveness under this section 
shall be stated at the bottom of the facing page of the Form OC or any 
amendment.
    (d) The effectiveness will be delayed if a duly authorized 
amendment, telegram confirmed in writing, or letter states that the 
effective date is delayed

[[Page 316]]

until a further amendment is filed specifically stating that the 
offering circular will become effective in accordance with this section.
    (e) An amendment filed after the effective date of the offering 
circular shall become effective on such date as the Office may 
determine.
    (f) If it appears to the Office at any time that the offering 
circular includes any untrue statement of a material fact or omits to 
state any material fact required to be stated therein or necessary to 
make the statements therein not misleading, then the Office may pursue 
any remedy it is authorized to pursue under section 5(d) of the Home 
Owners' Loan Act of 1933, as amended (12 U.S.C. 1464(d)) or section 8 of 
the Federal Deposit Insurance Act, as amended (12 U.S.C. 1818), 
including, but not limited to, institution of cease-and-desist 
proceedings.



Sec. 563g.7  Form, content, and accounting.

    (a) Form and content. Any offering circular or amendment filed 
pursuant to this part shall:
    (1) Be filed under cover of Form OC, which is under part 563b of 
this chapter;
    (2) Comply with the requirements of Items 3 and 4 of Form OC and the 
requirements of all items of the form for registration (17 CFR part 239) 
that the issuer would be eligible to use were it required to register 
the securities under the Securities Act;
    (3) Comply with all item requirements of the Form S-1 (17 CFR part 
239) for registration under the Securities Act, if the association 
issuing the securities is not in compliance with the Office's regulatory 
capital requirements during the time the offering is made;
    (4) Where a form specifies that the information required by an item 
in the Commission's Regulation S-K (17 CFR part 229) should be 
furnished, include such information and all of the information required 
by Item 7 of Form PS, which is under part 563b of this chapter;
    (5) Include after the facing page of the Form OC a cross-reference 
sheet listing each item requirement of the form for registration under 
the Securities Act and indicate for each item the applicable heading or 
subheading in the offering circular under which the required information 
is disclosed;
    (6) Include in part II of the Form OC the applicable undertakings 
required by the form for registration under the Securities Act;
    (7) If the issuer has not previously been required to file reports 
pursuant to section 13(a) of the Exchange Act or Sec. 563g.18 of this 
part, include in part II of Form OC the following undertaking: ``The 
issuer hereby undertakes, in connection with any distribution of the 
offering circular, to have a preliminary or effective offering circular 
including the information required by this part distributed to all 
persons expected to be mailed confirmations of sale not less than 48 
hours prior to the time such confirmations are expected to be mailed;''
    (8) In offerings involving the issuance of options, warrants, 
subscription rights or conversion rights within the meaning of 
Sec. 563g.1(a)(8) of this part, include in part II of Form OC an 
undertaking to provide a copy of the issuer's most recent audited 
financial statements to persons exercising such options, warrants or 
rights promptly upon receiving written notification of the exercise 
thereof;
    (9) Include as supplemental information and not as part of the Form 
OC and only with respect to de novo offerings, a copy of the application 
for permission to organize as submitted to the Office for federally-
chartered associations, or a copy of the application for insurance of 
accounts as submitted to the Federal Deposit Insurance Corporation for 
state-chartered associations; and
    (10) In addition to the information expressly required to be 
included by this section, there shall be added such further material 
information, if any, as may be necessary to make the required 
statements, in light of the circumstances under which they are made, not 
misleading.
    (b) Accounting requirements. To be declared effective an offering 
circular or amendment shall satisfy the accounting requirements in 
subpart A of part 563c of this chapter.

[[Page 317]]



Sec. 563g.8  Use of the offering circular.

    (a) An offering circular or amendment declared effective by the 
Office shall not be used more than nine months after the effective date, 
unless the information contained therein is as of a date not more than 
16 months prior to such use.
    (b) An offering circular filed under Sec. 563g.5(b)(3) of this part 
shall not extend the period for which an effective offering circular or 
amendment may be used under paragraph (c) of this section.
    (c) If any event arises, or change in fact occurs, after the 
effective date and such event or change in fact, individually or in the 
aggregate, results in the offering circular containing any untrue 
statement of material fact, or omitting to state a material fact 
necessary in order to make statements made in the offering circular not 
misleading under the circumstances, then no offering circular, which has 
been declared effective under this part, shall be used until an 
amendment reflecting such event or change in fact has been filed with, 
and declared effective by, the Office.



Sec. 563g.9  Escrow requirement.

    (a) Any funds received in an offering which is offered and sold on a 
best efforts all-or-none condition or with a minimum-maximum amount to 
be sold shall be held in an escrow or similar separate account until 
such time as all of the securities are sold with respect to a best 
efforts all-or-none offering or the stated minimum amount of securities 
are sold in a minimum-maximum offering.
    (b) If the amount of securities required to be sold under escrow 
conditions in paragraph (a) of this section are not sold within the time 
period for the offering as disclosed in the offering circular, all funds 
in the escrow account shall be promptly refunded unless the Office 
otherwise approves an extension of the offering period upon a showing of 
good cause and provided that the extension is consistent with the public 
interest and the protection of investors.



Sec. 563g.10  Unsafe or unsound practices.

    (a) No person shall directly or indirectly,
    (1) Employ any device, scheme or artifice to defraud,
    (2) Make any untrue statement of a material fact or omit to state a 
material fact necessary in order to make statements made, in light of 
the circumstances under which they were made, not misleading, or
    (3) Engage in any act, practice, or course of business which 
operates as a fraud or deceit upon any person, in connection with the 
purchase or sale of any security of a savings association.
    (b) Violations of this section shall constitute an unsafe or unsound 
practice within the meaning of section (3)(a) of the Home Owners' Loan 
Act of 1933, as amended, 12 U.S.C. 1462a(a), and section 8 of the 
Federal Deposit Insurance Act, as amended, 12 U.S.C. 1818.
    (c) Nothing in this section shall be construed as a limitation on 
the applicability of section 10(b) of the Exchange Act (15 U.S.C. 
78j(b)) or Rule 10b-5 promulgated thereunder (17 CFR 240.10b-5).



Sec. 563g.11  Withdrawal or abandonment.

    (a) Any offering circular, amendment, or exhibit may be withdrawn 
prior to the effective date. A withdrawal shall be signed and state the 
grounds upon which it is made. Any document withdrawn will not be 
removed from the files of the Office, but will be marked ``Withdrawn 
upon the request of the issuer on (date).''
    (b) When an offering circular or amendment has been on file with the 
Office for a period of nine months and has not become effective, the 
Office may, in its discretion, determine whether the filing has been 
abandoned, after notifying the issuer that the filing is out of date and 
must either be amended to comply with the applicable requirements of 
this part or be withdrawn within 30 days after the date of such notice. 
When a filing is abandoned, the filing will not be removed from the 
files of the Office, but will be marked ``Declared abandoned by the 
Office on (date).''



Sec. 563g.12  Securities sale report.

    (a) Within 30 days after the first sale of the securities, every six 
months after such 30 day period and not later than 30 days after the 
later of the last

[[Page 318]]

sale of securities in an offering pursuant to Sec. 563g.2 of this part 
or the application of the proceeds therefrom, the issuer shall file with 
the Office a report describing the results of the sale of the securities 
and the application of the proceeds, which shall include all of the 
information required by Form G-12 set forth at Sec. 563g.20 of this part 
and shall also include the following:
    (1) The name, address, and docket number of the issuer;
    (2) The title, number, aggregate and per-unit offering price of the 
securities sold;
    (3) The aggregate and per-unit dollar amounts of actual itemized 
expenses, discounts or commissions, and other fees;
    (4) The aggregate and per-unit dollar amounts of the net proceeds 
raised, and the use of proceeds therefrom; and
    (5) The number of purchasers of each class of securities sold and 
the number of owners of record of each class of the issuer's equity 
securities after the issuance of the securities or termination of the 
offer.
    (b) Within 30 days after the first sale of the securities, every six 
months after the first sale of the securities and not later than 30 days 
after the last sale of securities in an offering pursuant to Sec. 563g.4 
of this part, the issuer shall file with the Office a report describing 
the results of the sale of securities, which shall include all of the 
information required by Form G-12 set forth at Sec. 563g.20 of this 
part, and shall also include the following:
    (1) All of the information required by paragraph (a) of this 
section; and
    (2) A detailed statement of the factual and legal grounds for the 
exemption claimed.



Sec. 563g.13  Public disclosure and confidential treatment.

    (a) Any offering circular, amendment, exhibit, notice, or report 
filed pursuant to this part will be publicly available. Any other 
related documents will be treated in accordance with the provisions of 
the Freedom of Information Act (5 U.S.C. 552), the Privacy Act of 1974 
(5 U.S.C. 552a), and parts 503 and 505 of this chapter.
    (b) Any requests for confidential treatment of information in a 
document required to be filed under this part shall be made as required 
under Commission Rule 24b-2 (17 CFR 240.24b-2) under the Exchange Act.



Sec. 563g.14  Waiver.

    (a) The Office may waive any requirement of this part, or any 
required information:
    (1) Determined to be unnecessary by the Office;
    (2) In connection with a transaction approved by the Office for 
supervisory reasons, or
    (3) Where a provision of this part conflicts with a requirement of 
applicable state law.
    (b) Any condition, stipulation or provision binding any person 
acquiring a security issued by a savings association which seeks to 
waive compliance with any provision of this part shall be void, unless 
approved by the Office.



Sec. 563g.15  Requests for interpretive advice or waiver.

    Any requests to the Office for interpretive advice or a waiver with 
respect to any provision of this part shall satisfy the following 
requirements:
    (a) A copy of the request, including any attachments, shall be filed 
with the Chief Counsel, Corporate and Securities Division;
    (b) The provisions of this part to which the request relates, the 
participants in the proposed transaction, and the reasons for the 
request, shall be specifically identified or described; and
    (c) The request shall include a legal opinion as to each legal issue 
raised and an accounting opinion as to each accounting issue raised.



Sec. 563g.16  Delayed or continuous offering and sale of securities.

    Any offer or sale of securities under Sec. 563g.2 of this part may 
be made on a continuous or delayed basis in the future, if:
    (a) The securities would satisfy all of the eligibility requirements 
of the Commission's Rule 415, 17 CFR 230.415; and
    (b) The association issuing the securities is in compliance with the 
Office's regulatory capital requirements during the time the offering is 
made.

[[Page 319]]



Sec. 563g.17  Sales of securities at an office of a savings association.

    Sales of securities of a savings association or its affiliates at an 
office of a savings association may only be made in accordance with the 
provisions of 12 CFR 563.76.

[57 FR 46088, Oct. 7, 1992]



Sec. 563g.18  Current and periodic reports.

    (a) Each savings association which files an offering circular which 
becomes effective pursuant to this part, after such effective date, 
shall file with the Office periodic and current reports on Forms 8-K, 
10-Q and 10-K as may be required by section 13 of the Exchange Act (15 
U.S.C. 78m) as if the securities sold by such offering circular were 
securities registered pursuant to section 12 of the Exchange Act (15 
U.S.C. 78l). The duty to file periodic and current reports under this 
section shall be automatically suspended if and so long as any issue of 
securities of the savings association is registered pursuant to section 
12 of the Exchange Act (15 U.S.C. 78l). The duty to file under this 
section shall also be automatically suspended as to any fiscal year, 
other than the fiscal year within which such offering circular became 
effective, if, at the beginning of such fiscal year, the securities of 
each class to which the offering circular relates are held of record by 
less than three hundred persons and upon the filing of a Form 15.
    (b) For purposes of registering securities under section 12(b) or 
12(g) of the Exchange Act, an issuer subject to the reporting 
requirements of paragraph (a) of this section may use the Commission's 
registration statement on Form 10 or Form 8-A or 8-B as applicable.

[54 FR 49641, Nov. 30, 1989, as amended at 66 FR 65821, Dec. 21, 2001]



Sec. 563g.19  Approval of the security.

    Any securities of a savings association which are not exempt under 
this part and are offered or sold pursuant to an offering circular which 
becomes effective under this part, are deemed to be approved as to form 
and terms for purposes of Sec. 563.1 of this chapter.



Sec. 563g.20  Form for securities sale report.

 Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552

                               [Form G-12]

             Securities Sale Report Pursuant to Sec. 563g.12

OTS No._________________________________________________________________
Issuer's Name:__________________________________________________________
Address:________________________________________________________________
    If in organization, state the date of FDIC certification of 
insurance of          accounts: ____________
    State the title, number, aggregate and per-unit offering price of 
the securities sold: ____________
    State the aggregate and per-unit dollar amounts of actual itemized 
offering expenses, discounts, commissions, and other fees: ____________
    State the aggregate and per-unit dollar amounts of the net proceeds 
raised: ____________
    Describe the use of proceeds. If unknown, provide reasonable 
estimates of the dollar amount allocated to each purpose for which the 
proceeds will be used: ____________
    State the number of purchasers of each class of securities sold and 
the number of owners of record of each class of the issuer's equity 
securities at the close or termination of the offering: ____________
    For a non-public offering, also state the factual and legal grounds 
for the exemption claimed (attach additional pages if necessary): 
____________
    For a non-public offering, all offering materials used should be 
listed: ____________
Person to Contact:______________________________________________________
Telephone No.:__________________________________________________________
    This issuer has duly caused this securities sale report to be signed 
on its behalf by the undersigned person.
Date of securities sale report__________________________________________
Issuer:_________________________________________________________________
Signature:______________________________________________________________
Name:___________________________________________________________________
Title:__________________________________________________________________
    Instruction: Print the name and title of the signing representative 
under his or her signature. Ten copies of the securities sale report 
should be filed, including one copy manually signed, as required under 
12 CFR 563g.5.

                                Attention

    Intentional misstatements or omissions of fact constitute violations 
of Federal law (See 18 U.S.C. 1001 and 12 CFR 563.180(b)).

[[Page 320]]



Sec. 563g.21  Filing of copies of offering circulars in certain exempt offerings.

    A copy of the offering circular, or similar document, if any, used 
in connection with an offering exempt from the offering circular 
requirement of Sec. 563g.2 by reason of Sec. 563g.3(e) or Sec. 563g.4 of 
this part shall be mailed to the Office within 30 days after the first 
sale of such securities. Such copy of the offering circular, or similar 
document, is solely for the information of the Office and shall not be 
deemed to be ``filed'' with the Office pursuant to Sec. 563g.2 of this 
part. The mailing to the Office of such offering circular, or similar 
document, shall not be a pre-condition of the applicable exemption from 
the offering circular requirements of Sec. 563g.2 of this part.



PART 564--APPRAISALS--Table of Contents




Sec.
564.1  Authority, purpose, and scope.
564.2  Definitions.
564.3  Appraisals required; transactions requiring a State certified or 
          licensed appraiser.
564.4  Minimum appraisal standards.
564.5  Appraiser independence.
564.6  Professional association membership; competency.
564.7  Enforcement.
564.8  Appraisal policies and practices of savings associations and 
          subsidiaries.

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1828(m), 3331 et seq.
    Note: At 57 FR 54173, Nov. 17, 1992 a statement amd order was issued 
by the Office of the Comptroller of the Currency, Treasury; Board of 
Governors of the Federal Reserve System; Federal Deposit Insurance 
Corporation; Office of Thrift Supervision, Treasury; and National Credit 
Union Administration.
    Section 2 of the Depository Institutions Disaster Relief Act of 1992 
(DIDRA), signed by the President on October 23, 1992, authorizes the 
agencies to make exceptions to statutory and regulatory requirements 
relating to appraisals for certain transactions.
    This order is effective on November 17, 1992, and expires for 
specific areas on the dates listed.
    Exceptions for Florida and Louisiana counties affected by Hurricane 
Andrew expire August 23, 1995, and August 25, 1995, respectively. 
Exceptions for Hawaii counties affected by Hurricane Iniki expire 
September 11, 1995. Exceptions for Los Angeles County expire May 1, 
1995.

                                  Order

    In accordance with section 2 of DIDRA, relief is hereby granted from 
the provisions of title XI of FIRREA and the agencies' appraisal 
regulations promulgated thereunder \1\ for any real estate-related 
financial transaction that requires an appraisal under those provisions; 
provided that the transaction involves real property located in an area 
designated eligible for Federal assistance by the Federal Emergency 
Management Agency as a result of Hurricanes Andrew \2\ or Iniki \3\ or 
of the Los Angeles civil unrest in May 1992;\4\
---------------------------------------------------------------------------

    \1\ 12 CFR part 34, subpart C (OCC); 12 CFR parts 208 and 225, 
subpart G (Board); 12 CFR part 323 (FDIC); 12 CFR part 564 (OTS); 12 CFR 
part 722 (NCUA).
    \2\ Florida counties: Broward, Collier, Dade, Monroe.
    Louisiana parishes: Acadia, Allen, Ascension, Assumption, Avoyelles, 
Calcasieu, Cameron, East Baton Rouge, East Feliciana, Evangeline, 
Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, 
Livingston, Orleans, Plaquemines, Pointe Coupee, Rapides, St. Bernard, 
St. Charles, St. Helena, St. James, St. John the Baptist, St. Landry, 
St. Martin, St. Mary, St. Tammany, Tangipahoa, Terrebonne, Vermilion, 
Washington, West Baton Rouge, West Feliciana.
    \3\ Hawaiian counties: Hawaii, Kahoolawe, Kauai, Lanai, Maui, 
Molokai, Niihau, Oahu.
    \4\ Los Angeles County.
---------------------------------------------------------------------------

                                Provided

    The real property involved was directly affected by the major 
disaster; or
    The real property involved was not directly affected by the major 
disaster but the institution's records explain how the transaction would 
facilitate recovery from the disaster;

                          And further provided

    There is a binding commitment to fund a transaction that is made 
within three years after the date the major disaster was declared by the 
President; and
    The regulated institution retains in its files, for examiner review, 
appropriate documentation supporting the property's valuation.



Sec. 564.1  Authority, purpose, and scope.

    (a) Authority. This part is issued by the Office of Thrift 
Supervision (``OTS'') under title XI of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (``FIRREA'') (Pub. L. 101-
73, 103 Stat. 183, 511 (1989)), 12 U.S.C. 3301 et seq., and the Home 
Owners' Loan Act (``HOLA''), 12 U.S.C. 1461 et seq., as amended by 
FIRREA.

[[Page 321]]

    (b) Purpose and scope. (1) Title XI provides protection for federal 
financial and public policy interests in real estate related 
transactions by requiring real estate appraisals used in connection with 
federally related transactions to be performed in writing, in accordance 
with uniform standards, by appraisers whose competency has been 
demonstrated and whose professional conduct will be subject to effective 
supervision. This part implements the requirements of title XI and 
applies to all federally related transactions entered into by the OTS or 
by institutions regulated by the OTS (``regulated institutions'').
    (2) This part: (i) Identifies which real estate-related financial 
transactions require the services of an appraiser;
    (ii) Prescribes which categories of federally related transactions 
shall be appraised by a State certified appraiser and which by a State 
licensed appraiser; and
    (iii) Prescribes minimum standards for the performance of real 
estate appraisals in connection with federally related transactions 
under the jurisdiction of the OTS.

[55 FR 34547, Aug. 23, 1990]



Sec. 564.2  Definitions.

    (a) Appraisal means a written statement independently and 
impartially prepared by a qualified appraiser setting forth an opinion 
as to the market value of an adequately described property as of a 
specific date(s), supported by the presentation and analysis of relevant 
market information.
    (b) Appraisal Foundation means the Appraisal Foundation established 
on November 30, 1987, as a not-for-profit corporation under the laws of 
Illinois.
    (c) Appraisal Subcommittee means the Appraisal Subcommittee of the 
Federal Financial Institution Examination Council.
    (d) Business loan means a loan or extension of credit to any 
corporation, general or limited partnership, business trust, joint 
venture, pool, syndicate, sole proprietorship, or other business entity.
    (e) Complex 1-to-4 family residential property appraisal means one 
in which the property to be appraised, the form of ownership, or market 
conditions are atypical.
    (f) Federally related transaction means any real estate-related 
financial transaction entered into on or after August 9, 1990, that:
    (1) The OTS or any regulated institution engages in or contracts 
for; and
    (2) Requires the services of an appraiser.
    (g) Market value means the most probable price which a property 
should bring in a competitive and open market under all conditions 
requisite to a fair sale, the buyer and seller each acting prudently and 
knowledgeably, and assuming the price is not affected by undue stimulus. 
Implicit in this definition is the consummation of a sale as of a 
specified date and the passing of title from seller to buyer under 
conditions whereby:
    (1) Buyer and seller are typically motivated;
    (2) Both parties are well informed or well advised, and acting in 
what they consider their own best interests;
    (3) A reasonable time is allowed for exposure in the open market;
    (4) Payment is made in terms of cash in U.S. dollars or in terms of 
financial arrangements comparable thereto; and
    (5) The price represents the normal consideration for the property 
sold unaffected by special or creative financing or sales concessions 
granted by anyone associated with the sale.
    (h) Real estate or real property means an identified parcel or tract 
of land, with improvements, and includes easements, rights of way, 
undivided or future interests, or similar rights in a tract of land, but 
does not include mineral rights, timber rights, growing crops, water 
rights, or similar interests severable from the land when the 
transaction does not involve the associated parcel or tract of land.
    (i) Real estate-related financial transaction means any transaction 
involving:
    (1) The sale, lease, purchase, investment in or exchange of real 
property, including interests in property, or the financing thereof; or
    (2) The refinancing of real property or interests in real property; 
or
    (3) The use of real property or interests in property as security 
for a loan

[[Page 322]]

or investment, including mortgage-backed securities.
    (j) State certified appraiser means any individual who has satisfied 
the requirements for certification in a State or territory whose 
criteria for certification as a real estate appraiser currently meet the 
minimum criteria for certification issued by the Appraiser 
Qualifications Board of the Appraisal Foundation. No individual shall be 
a State certified appraiser unless such individual has achieved a 
passing grade upon a suitable examination administered by a State or 
territory that is consistent with and equivalent to the Uniform State 
Certification Examination issued or endorsed by the Appraiser 
Qualifications Board of the National Foundation. In addition, the 
Appraisal Subcommittee must not have issued a finding that the policies, 
practices, or procedures of the State or territory are inconsistent with 
title XI of FIRREA. The OTS may, from time to time, impose additional 
qualification criteria for certified appraisers performing appraisals in 
connection with federally related transactions within its jurisdiction.
    (k) State licensed appraiser means any individual who has satisfied 
the requirements for licensing in a State or territory where the 
licensing procedures comply with title XI of FIRREA and where the 
Appraisal Subcommittee has not issued a finding that the policies, 
practices, or procedures of the State or territory are inconsistent with 
title XI. The OTS may, from time to time, impose additional 
qualification criteria for licensed appraisers performing appraisals in 
connection with federally related transactions within its jurisdiction.
    (l) Tract development means a project of five units or more that is 
constructed or is to be constructed as a single development.
    (m) Transaction value means:
    (1) For loans or other extensions of credit, the amount of the loan 
or extension of credit;
    (2) For sales, leases, purchases, and investments in or exchanges of 
real property, the market value of the real property interest involved; 
and
    (3) For the pooling of loans or interests in real property for 
resale or purchase, the amount of the loan or market value of the real 
property calculated with respect to each such loan or interest in real 
property.

[55 FR 34547, Aug. 23, 1990, as amended at 57 FR 12705, Apr. 13, 1992; 
59 FR 29502, June 7, 1994]



Sec. 564.3  Appraisals required; transactions requiring a State certified or licensed appraiser.

    (a) Appraisals required. An appraisal performed by a State certified 
or licensed appraiser is required for all real estate-related financial 
transactions except those in which:
    (1) The transaction value is $250,000 or less;
    (2) A lien on real estate has been taken as collateral in an 
abundance of caution;
    (3) The transaction is not secured by real estate;
    (4) A lien on real estate has been taken for purposes other than the 
real estate's value;
    (5) The transaction is a business loan that:
    (i) Has a transaction value of $1 million or less; and
    (ii) Is not dependent on the sale of, or rental income derived from, 
real estate as the primary source of repayment;
    (6) A lease of real estate is entered into, unless the lease is the 
economic equivalent of a purchase or sale of the leased real estate;
    (7) The transaction involves an existing extension of credit at the 
lending institution, provided that:
    (i) There has been no obvious and material change in market 
conditions or physical aspects of the property that threatens the 
adequacy of the institution's real estate collateral protection after 
the transaction, even with the advancement of new monies; or
    (ii) There is no advancement of new monies, other than funds 
necessary to cover reasonable closing costs;
    (8) The transaction involves the purchase, sale, investment in, 
exchange of, or extension of credit secured by, a loan or interest in a 
loan, pooled loans, or interests in real property, including mortgaged-
backed securities, and each loan or interest in a loan, pooled loan,

[[Page 323]]

or real property interest met OTS regulatory requirements for appraisals 
at the time of origination;
    (9) The transaction is wholly or partially insured or guaranteed by 
a United States government agency or United States government sponsored 
agency;
    (10) The transaction either:
    (i) Qualifies for sale to a United States government agency or 
United States government sponsored agency; or
    (ii) Involves a residential real estate transaction in which the 
appraisal conforms to the Federal National Mortgage Association or 
Federal Home Loan Mortgage Corporation appraisal standards applicable to 
that category of real estate;
    (11) The regulated institution is acting in a fiduciary capacity and 
is not required to obtain an appraisal under other law; or
    (12) The OTS determines that the services of an appraiser are not 
necessary in order to protect Federal financial and public policy 
interests in real estate-related financial transactions or to protect 
the safety and soundness of the institution.
    (b) Evaluations required. For a transaction that does not require 
the services of a State certified or licensed appraiser under paragraph 
(a)(1), (a)(5) or (a)(7) of this section, the institution shall obtain 
an appropriate evaluation of real property collateral that is consistent 
with safe and sound banking practices.
    (c) Appraisals to address safety and soundness concerns. The OTS 
reserves the right to require an appraisal under this part whenever the 
agency believes it is necessary to address safety and soundness 
concerns.
    (d) Transactions requiring a State certified appraiser--(1) All 
transactions of $1,000,000 or more. All federally related transactions 
having a transaction value of $1,000,000 or more shall require an 
appraisal prepared by a State certified appraiser.
    (2) Nonresidential and residential (other than 1-to-4 family) 
transactions of $250,000 or more. All federally related transactions 
having a transaction value of $250,000 or more, other than those 
involving appraisals of 1-to-4 family residential properties, shall 
require an appraisal prepared by a State certified appraiser.
    (3) Complex residential transactions of $250,000 or more. All 
complex 1-to-4 family residential property appraisals rendered in 
connection with federally related transactions shall require a State 
certified appraiser if the transaction value is $250,000 or more. A 
regulated institution may presume that appraisals of 1-to-4 family 
residential properties are not complex, unless the institution has 
readily available information that a given appraisal will be complex. 
The regulated institution shall be responsible for making the final 
determination of whether the appraisal is complex. If during the course 
of the appraisal a licensed appraiser identifies factors that would 
result in the property, form of ownership, or market conditions being 
considered atypical, then either:
    (i) The regulated institution may ask the licensed appraiser to 
complete the appraisal and have a certified appraiser approve and co-
sign the appraisal; or
    (ii) The institution may engage a certified appraiser to complete 
the appraisal.
    (e) Transactions requiring either a State certified or licensed 
appraiser. All appraisals for federally related transactions not 
requiring the services of a State certified appraiser shall be prepared 
by either a State certified appraiser or a State licensed appraiser.
    (f) Effective date. Savings associations are required to use State 
certified or licensed appraisers as set forth in this part no later than 
December 31, 1992.

[55 FR 34548, Aug. 23, 1990, as amended at 57 FR 12705, Apr. 13, 1992; 
59 FR 29502, June 7, 1994]



Sec. 564.4  Minimum appraisal standards.

    For federally related transactions, all appraisals shall, at a 
minimum:
    (a) Conform to generally accepted appraisal standards as evidenced 
by the Uniform Standards of Professional Appraisal Practice (USPAP) 
promulgated by the Appraisal Standards Board of the Appraisal 
Foundation, 1029 Vermont Ave., NW., Washington, DC 20005, unless 
principles of safe and sound banking require compliance with stricter 
standards;

[[Page 324]]

    (b) Be written and contain sufficient information and analysis to 
support the institution's decision to engage in the transaction;
    (c) Analyze and report appropriate deductions and discounts for 
proposed construction or renovation, partially leased buildings, non-
market lease terms, and tract developments with unsold units;
    (d) Be based upon the definition of market value as set forth in 
this part; and
    (e) Be performed by State licensed or certified appraisers in 
accordance with requirements set forth in this part.

[59 FR 29503, June 7, 1994]



Sec. 564.5  Appraiser independence.

    (a) Staff appraisers. If an appraisal is prepared by a staff 
appraiser, that appraiser must be independent of the lending, 
investment, and collection functions and not involved, except as an 
appraiser, in the federally related transaction, and have no direct or 
indirect interest, financial or otherwise, in the property. If the only 
qualified persons available to perform an appraisal are involved in the 
lending, investment, or collection functions of the regulated 
institution, the regulated institution shall take appropriate steps to 
ensure that the appraisers exercise independent judgment and that the 
appraisal is adequate. Such steps include, but are not limited to, 
prohibiting an individual from performing an appraisal in connection 
with federally related transactions in which the appraiser is otherwise 
involved and prohibiting directors and officers from participating in 
any vote or approval involving assets on which they performed an 
appraisal.
    (b) Fee appraisers. (1) If an appraisal is prepared by a fee 
appraiser, the appraiser shall be engaged directly by the regulated 
institution or its agent, and have no direct or indirect interest, 
financial or otherwise, in the property or the transaction.
    (2) A regulated institution also may accept an appraisal that was 
prepared by an appraiser engaged directly by another financial services 
institution, if:
    (i) The appraiser has no direct or indirect interest, financial or 
otherwise, in the property or the transaction; and
    (ii) The regulated institution determines that the appraisal 
conforms to the requirements of this part and is otherwise acceptable.

[55 FR 34549, Aug. 23, 1990, as amended at 59 FR 29503, June 7, 1994]



Sec. 564.6  Professional association membership; competency.

    (a) Membership in appraisal organizations. A State certified 
appraiser or a State licensed appraiser may not be excluded from 
consideration for an assignment for a federally related transaction 
solely by virtue of membership or lack of membership in any particular 
appraisal organization.
    (b) Competency. All staff and fee appraisers performing appraisals 
in connection with federally related transactions must be State 
certified or licensed, as appropriate. However, a State certified or 
licensed appraiser may not be considered competent solely by virtue of 
being certified or licensed. Any determination of competency shall be 
based upon the individual's experience and educational background as 
they relate to the particular appraisal assignment for which he or she 
is being considered.

[55 FR 34549, Aug. 23, 1990]



Sec. 564.7  Enforcement.

    Institutions and institution-affiliated parties, including staff 
appraisers and fee appraisers, who violate this part may be subject to 
removal and/or prohibition orders, cease and desist orders, and the 
imposition of civil money penalties pursuant to the Federal Deposit 
Insurance Act, 12 U.S.C. 1811 et seq., as amended, or other applicable 
law.

[55 FR 34549, Aug. 23, 1990]



Sec. 564.8  Appraisal policies and practices of savings associations and subsidiaries.

    (a) Introduction. The soundness of a savings association's mortgage 
loans and real estate investments, and those of its service 
corporation(s), depends to a great extent upon the adequacy of the loan 
underwriting used to support these transactions. An appraisal standard 
is one of several critical components of a sound underwriting policy

[[Page 325]]

because appraisal reports contain estimates of the value of collateral 
held or assets owned. This section sets forth the responsibilities of 
management to develop, implement, and maintain appraisal standards in 
determining compliance with the appraisal requirements of Secs. 563.170 
and 563.172 of this part.
    (b) Definition. For purposes of this section, management means: the 
directors and officers of a savings association, or service corporation 
of such savings association, as those terms are defined in Secs. 561.18 
and 561.35 of this chapter respectively.
    (c) Responsibilities of management. An appraisal is a critical 
component of the loan underwriting or real estate investment decision. 
Therefore, management shall develop, implement, and maintain appraisal 
policies to ensure that appraisals reflect professional competence and 
to facilitate the reporting of estimates of market value upon which 
savings associations may rely to make lending decisions. To achieve 
these results:
    (1) Management shall develop written appraisal policies, subject to 
formal adoption by the savings association's board of directors, that it 
shall implement in consultation with other appropriate personnel. These 
policies shall ensure that adequate appraisals are obtained and proper 
appraisal procedures are followed consistent with the requirements of 
this part 564.
    (2) Management shall develop and adopt guidelines and institute 
procedures pertaining to the hiring of appraisers to perform appraisal 
services for the savings association consistent with the requirements of 
this part 564. These guidelines shall set forth specific factors to be 
considered by management including, but not limited to, an appraiser's 
State certification or licensing, professional education, and type of 
experience. An appraiser's membership in professional appraisal 
organizations may be considered consistent with the requirements of 
Sec. 564.6
    (3) Management shall review on an annual basis the performance of 
all approved appraisers used within the preceding 12-month period for 
compliance with (i) the savings association's appraisal policies and 
procedures; and (ii) the reasonableness of the value estimates reported.
    (d) Exemptions. The requirements of Sec. 564.4(b) through (d) shall 
not apply with respect to appraisals on nonresidential properties 
prepared on form reports approved by the Office and completed in 
accordance with the applicable instructional booklet.

[54 FR 49552, Nov. 30, 1989. Redesignated and amended at 55 FR 34549, 
Aug. 23, 1990; 55 FR 43440, Oct. 29, 1990; 59 FR 29503, June 7, 1994; 59 
FR 53571, Oct. 25, 1994]



PART 565--PROMPT CORRECTIVE ACTION--Table of Contents




Sec.
565.1  Authority, purpose, scope, other supervisory authority, and 
          disclosure of capital categories.
565.2  Definitions.
565.3  Notice of capital category.
565.4  Capital measures and capital category definitions.
565.5  Capital restoration plans.
565.6  Mandatory and discretionary supervisory actions under section 38.
565.7  Directives to take prompt corrective action.
565.8  Procedures for reclassifying a savings association based on 
          criteria other than capital.
565.9  Order to dismiss a director or senior executive officer.
565.10  Enforcement of directives.

    Authority: 12 U.S.C. 1831o.

    Source: 57 FR 44903, Sept. 29, 1992, unless otherwise noted.



Sec. 565.1  Authority, purpose, scope, other supervisory authority, and disclosure of capital categories.

    (a) Authority. This part is issued by the OTS pursuant to section 38 
(section 38) of the Federal Deposit Insurance Act (FDI Act) as added by 
section 131 of the Federal Deposit Insurance Corporation Improvement Act 
of 1991 (Pub. L. 102-242, 105 Stat. 2236 (1991)) (12 U.S.C. 1831o).
    (b) Purpose. Section 38 of the FDI Act establishes a framework of 
supervisory actions for insured depository institutions that are not 
adequately capitalized. The principal purpose of this part is to define, 
for savings associations, the capital measures and capital levels

[[Page 326]]

that are used for determining the supervisory actions authorized under 
section 38 of the FDI Act. This part also establishes procedures for 
submission and review of capital restoration plans and for issuance and 
review of directives and orders pursuant to section 38.
    (c) Scope. This part implements the provisions of section 38 of the 
FDI Act as they apply to savings associations. Certain of these 
provisions also apply to officers, directors and employees of savings 
associations. Other provisions apply to any company that controls a 
savings association and to the affiliates of a savings association.
    (d) Other supervisory authority. Neither section 38 nor this part in 
any way limits the authority of the OTS under any other provision of law 
to take supervisory actions to address unsafe or unsound practices, 
deficient capital levels, violations of law, unsafe or unsound 
conditions, or other practices. Action under section 38 of the FDI Act 
and this part may be taken independently of, in conjunction with, or in 
addition to any other enforcement action available to the OTS, including 
issuance of cease and desist orders, capital directives, approval or 
denial of applications or notices, assessment of civil money penalties, 
or any other actions authorized by law.
    (e) Disclosure of capital categories. The assignment of a savings 
association under this part within a particular capital category is for 
purposes of implementing and applying the provisions of section 38. 
Unless permitted by the OTS or otherwise required by law, no savings 
association may state in any advertisement or promotional material its 
capital category under this subpart or that the OTS or any other federal 
banking agency has assigned the savings association to a particular 
category.



Sec. 565.2  Definitions.

    For purposes of this part, except as modified in this section or 
unless the context otherwise requires, the terms used in this part have 
the same meanings as set forth in sections 38 and 3 of the FDI Act.
    (a)(1) Control has the same meaning assigned to it in section 2 of 
the Bank Holding Company Act (12 U.S.C. 1841), and the term 
``controlled'' shall be construed consistently with the term 
``control.''
    (2) Exclusion for fiduciary ownership. No insured depository 
institution or company controls another insured depository institution 
or company by virtue of its ownership or control of shares in a 
fiduciary capacity. Shares shall not be deemed to have been acquired in 
a fiduciary capacity if the acquiring insured depository institution or 
company has sole discretionary authority to exercise voting rights with 
respect thereto.
    (3) Exclusion for debts previously contracted. No insured depository 
institution or company controls another insured depository institution 
or company by virtue of its ownership or control of shares acquired in 
securing or collecting a debt previously contracted in good faith, until 
two years after the date of acquisition. The two-year period may be 
extended at the discretion of the appropriate federal banking agency for 
up to three one-year periods.
    (b) Controlling person means any person having control of an insured 
depository institution and any company controlled by that person.
    (c) Leverage ratio means the ratio of Tier 1 capital to adjusted 
total assets, as calculated in accordance with part 567 of this chapter.
    (d) Management fee means any payment of money or provision of any 
other thing of value to a company or individual for the provision of 
management services or advice to the savings association or related 
overhead expenses, including payments related to supervisory, executive, 
managerial or policymaking functions, other than compensation to an 
individual in the individual's capacity as an officer or employee of the 
savings association.
    (e) Risk-weighted assets means total risk-weighted assets, as 
calculated in accordance with part 567 of this chapter.
    (f) Tangible equity means the amount of a savings association's core 
capital as computed in part 567 of this chapter plus the amount of its 
outstanding cumulative perpetual preferred stock (including related 
surplus), minus intangible assets as defined in Sec. 567.1 of this

[[Page 327]]

chapter and nonmortgage servicing assets that have not been previously 
deducted in calculating core capital.
    (g) Tier 1 capital means the amount of core capital as defined in 
part 567 of this chapter.
    (h) Tier 1 risk-based capital ratio means the ratio of Tier 1 
capital to risk-weighted assets, as calculated in accordance with part 
567 of this chapter.
    (i) Total assets, for purposes of Sec. 565.4(b)(5), means adjusted 
total assets as calculated in accordance with part 567 of this chapter, 
minus intangible assets as provided in the definition of tangible 
equity.
    (j) Total risk-based capital ratio means the ratio of total capital 
to risk-weighted assets, as calculated in accordance with part 567 of 
this chapter.

[57 FR 44903, Sept. 29, 1992, as amended at 60 FR 39232, Aug. 1, 1995; 
62 FR 66263, Dec. 18, 1997; 63 FR 42678, Aug. 10, 1998]



Sec. 565.3  Notice of capital category.

    (a) Effective date of determination of capital category. A savings 
association shall be deemed to be within a given capital category for 
purposes of section 38 of the FDI Act and this part as of the date the 
savings association is notified of, or is deemed to have notice of, its 
capital category, pursuant to paragraph (b) of this section.
    (b) Notice of capital category. A savings association shall be 
deemed to have been notified of its capital levels and its capital 
category as of the most recent date:
    (1) A Thrift Financial Report (TFR) is required to be filed with the 
OTS;
    (2) A final report of examination is delivered to the savings 
association; or
    (3) Written notice is provided by the OTS to the savings association 
of its capital category for purposes of section 38 of the FDI Act and 
this part or that the savings association's capital category has changed 
as provided in paragraph (c) of this section or Sec. 565.4(c).
    (c) Adjustments to reported capital levels and category--(1) Notice 
of adjustment by savings association. A savings association shall 
provide the OTS with written notice that an adjustment to the savings 
association's capital category may have occurred no later than 15 
calendar days following the date that any material event has occurred 
that would cause the savings association to be placed in a lower capital 
category from the category assigned to the savings association for 
purposes of section 38 and this part on the basis of the savings 
association's most recent TFR or report of examination.
    (2) Determination by the OTS to change capital category. After 
receiving notice pursuant to paragraph (c)(1) of this section, the OTS 
shall determine whether to change the capital category of the savings 
association and shall notify the savings association of the OTS's 
determination.



Sec. 565.4  Capital measures and capital category definitions.

    (a) Capital measures. For purposes of section 38 and this part, the 
relevant capital measures shall be:
    (1) The total risk-based capital ratio;
    (2) The Tier 1 risk-based capital ratio; and
    (3) The leverage ratio.
    (b) Capital categories. For purposes of section 38 and this part, a 
savings association shall be deemed to be:
    (1) Well capitalized if the savings association:
    (i) Has a total risk-based capital ratio of 10.0 percent or greater; 
and
    (ii) Has a Tier 1 risk-based capital ratio of 6.0 percent or 
greater; and
    (iii) Has a leverage ratio of 5.0 percent or greater; and
    (iv) Is not subject to any written agreement, order, capital 
directive, or prompt corrective action directive issued by OTS under 
section 8 of the FDI Act, the International Lending Supervision Act of 
1983 (12 U.S.C. 3907), the Home Owners' Loan Act (12 U.S.C. 
1464(t)(6)(A)(ii)), or section 38 of the FDI Act, or any regulation 
thereunder, to meet and maintain a specific capital level for any 
capital measure.
    (2) Adequately capitalized if the savings association:
    (i) Has a total risk-based capital ratio of 8.0 percent or greater; 
and
    (ii) Has a Tier 1 risk-based capital ratio of 4.0 percent or 
greater; and
    (iii) Has:
    (A) A leverage ratio of 4.0 percent or greater; or

[[Page 328]]

    (B) A leverage ratio of 3.0 percent or greater if the savings 
association is assigned a composite rating of 1, as composite rating is 
defined in Sec. 516.5(c) of this chapter; and
    (iv) Does not meet the definition of a well capitalized savings 
association.
    (3) Undercapitalized if the savings association:
    (i) Has a total risk-based capital ratio that is less than 8.0 
percent; or
    (ii) Has a Tier 1 risk-based capital ratio that is less than 4.0 
percent; or
    (iii) (A) Except as provided in paragraph (b)(3)(iii) (B) of this 
section, has a leverage ratio that is less than 4.0 percent; or
    (B) Has a leverage ratio that is less than 3.0 percent if the 
savings association is assigned a composite rating of 1, as composite 
rating is defined in Sec. 516.5(c) of this chapter.
    (4) Significantly undercapitalized if the savings association has:
    (i) A total risk-based capital ratio that is less than 6.0 percent; 
or
    (ii) A Tier 1 risk-based capital ratio that is less than 3.0 
percent; or
    (iii) A leverage ratio that is less than 3.0 percent.
    (5) Critically undercapitalized if the savings association has a 
ratio of tangible equity to total assets that is equal to or less than 
2.0 percent.
    (c) Reclassification based on supervisory criteria other than 
capital. The OTS may reclassify a well capitalized savings association 
as adequately capitalized and may require an adequately capitalized or 
undercapitalized savings association to comply with certain mandatory or 
discretionary supervisory actions as if the savings association were in 
the next lower capital category (except that the OTS may not reclassify 
a significantly undercapitalized savings association as critically 
undercapitalized) (each of these actions are hereinafter referred to 
generally as ``reclassifications'') in the following circumstances:
    (1) Unsafe or unsound condition. The OTS has determined, after 
notice and opportunity for hearing pursuant to Sec. 565.8(a) of this 
part, that the savings association is in an unsafe or unsound condition; 
or
    (2) Unsafe or unsound practice. The OTS has determined, after notice 
and an opportunity for hearing pursuant to Sec. 565.8(a) of this part, 
that the savings association received a less-than-satisfactory rating 
for any rating category (other than in a rating category specifically 
addressing capital adequacy) under the Uniform Financial Institutions 
Rating System,\1\ or an equivalent rating under a comparable rating 
system adopted by the OTS; and has not corrected the conditions that 
served as the basis for the less than satisfactory rating. Ratings under 
this paragraph (c)(2) refer to the most recent ratings (as determined 
either on-site or off-site by the most recent examination) of which the 
savings association has been notified in writing.
---------------------------------------------------------------------------

    \1\ Copies are available at the address specified in Sec. 516.40 of 
this chapter.

[57 FR 44903, Sept. 29, 1992, as amended at 62 FR 3781, Jan. 27, 1997; 
66 FR 13009, Mar. 2, 2001; 66 FR 65821, Dec. 21, 2001]



Sec. 565.5  Capital restoration plans.

    (a) Schedule for filing plan--(1) In general. A savings association 
shall file a written capital restoration plan with the appropriate 
Regional Office within 45 days of the date that the savings association 
receives notice or is deemed to have notice that the savings association 
is undercapitalized, significantly undercapitalized, or critically 
undercapitalized, unless the OTS notifies the savings association in 
writing that the plan is to be filed within a different period. An 
adequately capitalized savings association that has been required 
pursuant to Sec. 565.4(c) to comply with supervisory actions as if the 
savings association were undercapitalized is not required to submit a 
capital restoration plan solely by virtue of the reclassification.
    (2) Additional capital restoration plans. Notwithstanding paragraph 
(a)(1) of this section, a savings association that has already submitted 
and is operating under a capital restoration plan approved under section 
38 and this part is not required to submit an additional capital 
restoration plan based on a revised calculation of its capital measures 
or a reclassification of the institution under Sec. 565.4(c) unless the 
OTS notifies the savings association that it must submit a new or 
revised capital

[[Page 329]]

plan. A savings association that is notified that it must submit a new 
or revised capital restoration plan shall file the plan in writing with 
the appropriate Regional Office within 45 days of receiving such notice, 
unless the OTS notifies the savings association in writing that the plan 
is to be filed within a different period.
    (b) Contents of plan. All financial data submitted in connection 
with a capital restoration plan shall be prepared in accordance with the 
instructions provided on the TFR, unless the OTS instructs otherwise. 
The capital restoration plan shall include all of the information 
required to be filed under section 38(e)(2) of the FDI Act. A savings 
association that is required to submit a capital restoration plan as the 
result of a reclassification of the savings association pursuant to 
Sec. 565.4(c) of this part shall include a description of the steps the 
savings association will take to correct the unsafe or unsound condition 
or practice. No plan shall be accepted unless it includes any 
performance guarantee described in section 38(e)(2)(C) of the FDI Act by 
each company that controls the savings association.
    (c) Review of capital restoration plans. Within 60 days after 
receiving a capital restoration plan under this part, the OTS shall 
provide written notice to the savings association of whether the plan 
has been approved. The OTS may extend the time within which notice 
regarding approval of a plan shall be provided.
    (d) Disapproval of capital plan. If a capital restoration plan is 
not approved by the OTS, the savings association shall submit a revised 
capital restoration plan, when directed to do so, within the time 
specified by the OTS. Upon receiving notice that its capital restoration 
plan has not been approved, any undercapitalized savings association (as 
defined in Sec. 565.4(b)(3) of this part) shall be subject to all of the 
provisions of section 38 and this part applicable to significantly 
undercapitalized institutions. These provisions shall be applicable 
until such time as a new or revised capital restoration plan submitted 
by the savings association has been approved by the OTS.
    (e) Failure to submit a capital restoration plan. A savings 
association that is undercapitalized (as defined in Sec. 565.4(b)(3) of 
this part) and that fails to submit a written capital restoration plan 
within the period provided in this section shall, upon the expiration of 
that period, be subject to all of the provisions of section 38 and this 
part applicable to significantly undercapitalized institutions.
    (f) Failure to implement a capital restoration plan. Any 
undercapitalized savings association that fails in any material respect 
to implement a capital restoration plan shall be subject to all of the 
provisions of section 38 and this part applicable to significantly 
undercapitalized institutions.
    (g) Amendment of capital plan. A savings association that has filed 
an approved capital restoration plan may, after prior written notice to 
and approval by the OTS, amend the plan to reflect a change in 
circumstance. Until such time as a proposed amendment has been approved, 
the savings association shall implement the capital restoration plan as 
approved prior to the proposed amendment.
    (h) Notice to FDIC. Within 45 days of the effective date of OTS 
approval of a capital restoration plan, or any amendment to a capital 
restoration plan, the OTS shall provide a copy of the plan or amendment 
to the FDIC.
    (i) Performance guarantee by companies that control a savings 
association--(1) Limitation on liability--(i) Amount limitation. The 
aggregate liability under the guarantee provided under section 38 and 
this part for all companies that control a specific savings association 
that is required to submit a capital restoration plan under this part 
shall be limited to the lesser of:
    (A) An amount equal to 5.0 percent of the savings association's 
total assets at the time the savings association was notified or deemed 
to have notice that the savings association was undercapitalized; or
    (B) The amount necessary to restore the relevant capital measures of 
the savings association to the levels required for the savings 
association to be classified as adequately capitalized, as those capital 
measures and levels are

[[Page 330]]

defined at the time that the savings association initially fails to 
comply with a capital restoration plan under this part.
    (ii) Limit on duration. The guarantee and limit of liability under 
section 38 and this part shall expire after the OTS notifies the savings 
association that it has remained adequately capitalized for each of four 
consecutive calendar quarters. The expiration or fulfillment by a 
company of a guarantee of a capital restoration plan shall not limit the 
liability of the company under any guarantee required or provided in 
connection with any capital restoration plan filed by the same savings 
association after expiration of the first guarantee.
    (iii) Collection on guarantee. Each company that controls a given 
savings association shall be jointly and severally liable for the 
guarantee for such savings association as required under section 38 and 
this part, and the OTS may require and collect payment of the full 
amount of that guarantee from any or all of the companies issuing the 
guarantee.
    (2) Failure to provide guarantee. In the event that a savings 
association that is controlled by any company submits a capital 
restoration plan that does not contain the guarantee required under 
section 38(e)(2) of the FDI Act, the savings association shall, upon 
submission of the plan, be subject to the provisions of section 38 and 
this part that are applicable to savings associations that have not 
submitted an acceptable capital restoration plan.
    (3) Failure to perform guarantee. Failure by any company that 
controls a savings association to perform fully its guarantee of any 
capital plan shall constitute a material failure to implement the plan 
for purposes of section 38(f) of the FDI Act. Upon such failure, the 
savings association shall be subject to the provisions of section 38 and 
this part that are applicable to savings associations that have failed 
in a material respect to implement a capital restoration plan.



Sec. 565.6  Mandatory and discretionary supervisory actions under section 38.

    (a) Mandatory supervisory actions--(1) Provisions applicable to all 
savings associations. All savings associations are subject to the 
restrictions contained in section 38(d) of the FDI Act on payment of 
capital distributions and management fees.
    (2) Provisions applicable to undercapitalized, significantly 
undercapitalized, and critically undercapitalized savings associations. 
Immediately upon receiving notice or being deemed to have notice, as 
provided in Sec. 565.3 or Sec. 565.5 of this part, that the savings 
association is undercapitalized, significantly undercapitalized, or 
critically undercapitalized, the savings association shall become 
subject to the provisions of section 38 of the FDI Act:
    (i) Restricting payment of capital distributions and management fees 
(section 38(d));
    (ii) Requiring that the OTS monitor the condition of the savings 
association (section 38(e)(1));
    (iii) Requiring submission of a capital restoration plan within the 
schedule established in this part (section 38(e)(2));
    (iv) Restricting the growth of the savings association's assets 
(section 38(e)(3)); and
    (v) Requiring prior approval of certain expansion proposals (section 
38(e)(4)).
    (3) Additional provisions applicable to significantly 
undercapitalized, and critically undercapitalized savings associations. 
In addition to the provisions of section 38 of the FDI Act described in 
paragraph (a)(2) of this section, immediately upon receiving notice or 
being deemed to have notice, as provided in Sec. 565.3 or Sec. 565.5 of 
this part, that the savings association is significantly 
undercapitalized, or critically undercapitalized, or that the savings 
association is subject to the provisions applicable to institutions that 
are significantly undercapitalized because the savings association 
failed to submit or implement in any material respect an acceptable 
capital restoration plan, the

[[Page 331]]

savings association shall become subject to the provisions of section 38 
of the FDI Act that restrict compensation paid to senior executive 
officers of the institution (section 38(f)(4)).
    (4) Additional provisions applicable to critically undercapitalized 
savings associations. In addition to the provisions of section 38 of the 
FDI Act described in paragraphs (a)(2) and (a)(3) of this section, 
immediately upon receiving notice or being deemed to have notice, as 
provided in Sec. 565.3 of this part, that the savings association is 
critically undercapitalized, the savings association shall become 
subject to the provisions of section 38 of the FDI Act:
    (i) Restricting the activities of the savings association (section 
38(h)(1)); and
    (ii) Restricting payments on subordinated debt of the savings 
association (section 38(h)(2)).
    (b) Discretionary supervisory actions. In taking any action under 
section 38 that is within the OTS's discretion to take in connection 
with: A savings association that is deemed to be undercapitalized, 
significantly undercapitalized or critically undercapitalized, or has 
been reclassified as undercapitalized, or significantly 
undercapitalized; an officer or director of such savings association; or 
a company that controls such savings association, the OTS shall follow 
the procedures for issuing directives under Secs. 565.7 and 565.9 of 
this part unless otherwise provided in section 38 or this part.



Sec. 565.7  Directives to take prompt corrective action.

    (a) Notice of intent to issue a directive--(1) In general. The OTS 
shall provide an undercapitalized, significantly undercapitalized, or 
critically undercapitalized savings association or, where appropriate, 
any company that controls the savings association, prior written notice 
of the OTS's intention to issue a directive requiring such savings 
association or company to take actions or to follow proscriptions 
described in section 38 that are within the OTS's discretion to require 
or impose under section 38 of the FDI Act, including sections 38(e)(5), 
(f)(2), (f)(3), or (f)(5). The savings association shall have such time 
to respond to a proposed directive as provided by the OTS under 
paragraph (c) of this section.
    (2) Immediate issuance of final directive. If the OTS finds it 
necessary in order to carry out the purposes of section 38 of the FDI 
Act, the OTS may, without providing the notice prescribed in paragraph 
(a)(1) of this section, issue a directive requiring a savings 
association or any company that controls a savings association 
immediately to take actions or to follow proscriptions described in 
section 38 that are within the OTS's discretion to require or impose 
under section 38 of the FDI Act, including section 38(e)(5), (f)(2), 
(f)(3), or (f)(5). A savings association or company that is subject to 
such an immediately effective directive may submit a written appeal of 
the directive to the OTS. Such an appeal must be received by the OTS 
within 14 calendar days of the issuance of the directive, unless the OTS 
permits a longer period. The OTS shall consider any such appeal, if 
filed in a timely matter, within 60 days of receiving the appeal. During 
such period of review, the directive shall remain in effect unless the 
OTS, in its sole discretion, stays the effectiveness of the directive.
    (b) Contents of notice. A notice of intention to issue a directive 
shall include:
    (1) A statement of the savings association's capital measures and 
capital levels;
    (2) A description of the restrictions, prohibitions or affirmative 
actions that the OTS proposes to impose or require;
    (3) The proposed date when such restrictions or prohibitions would 
be effective or the proposed date for completion of such affirmative 
actions; and
    (4) The date by which the savings association or company subject to 
the directive may file with the OTS a written response to the notice.
    (c) Response to notice--(1) Time for response. A savings association 
or company may file a written response to a notice of intent to issue a 
directive within the time period set by the OTS. The date shall be at 
least 14 calendar days from the date of the notice unless

[[Page 332]]

the OTS determines that a shorter period is appropriate in light of the 
financial condition of the savings association or other relevant 
circumstances.
    (2) Content of response. The response should include:
    (i) An explanation why the action proposed by the OTS is not an 
appropriate exercise of discretion under section 38;
    (ii) Any recommended modification of the proposed directive; and
    (iii) Any other relevant information, mitigating circumstances, 
documentation, or other evidence in support of the position of the 
savings association or company regarding the proposed directive.
    (d) OTS consideration of response. After considering the response, 
the OTS may:
    (1) Issue the directive as proposed or in modified form;
    (2) Determine not to issue the directive and so notify the savings 
association or company; or
    (3) Seek additional information or clarification of the response 
from the savings association or company, or any other relevant source.
    (e) Failure to file response. Failure by a savings association or 
company to file with the OTS, within the specified time period, a 
written response to a proposed directive shall constitute a waiver of 
the opportunity to respond and shall constitute consent to the issuance 
of the directive.
    (f) Request for modification or rescission of directive. Any savings 
association or company that is subject to a directive under this part 
may, upon a change in circumstances, request in writing that the OTS 
reconsider the terms of the directive, and may propose that the 
directive be rescinded or modified. Unless otherwise ordered by the OTS, 
the directive shall continue in place while such request is pending 
before the OTS.



Sec. 565.8  Procedures for reclassifying a savings association based on criteria other than capital.

    (a) Reclassification based on unsafe or unsound condition or 
practice--(1) Issuance of notice of proposed reclassification--(i) 
Grounds for reclassification. (A) Pursuant to Sec. 565.4(c) of this 
part, the OTS may reclassify a well capitalized savings association as 
adequately capitalized or subject an adequately capitalized or 
undercapitalized institution to the supervisory actions applicable to 
the next lower capital category if:
    (1) The OTS determines that the savings association is in unsafe or 
unsound condition; or
    (2) The OTS deems the savings association to be engaged in an unsafe 
or unsound practice and not to have corrected the deficiency.
    (B) Any action pursuant to this paragraph (a)(1)(i) shall 
hereinafter be referred to as ``reclassification.''
    (ii) Prior notice to institution. Prior to taking action pursuant to 
Sec. 565.4(c)(1), the OTS shall issue and serve on the savings 
association a written notice of the OTS's intention to reclassify the 
savings association.
    (2) Contents of notice. A notice of intention to reclassify a 
savings association based on unsafe or unsound condition shall include:
    (i) A statement of the savings association's capital measures and 
capital levels and the category to which the savings association would 
be reclassified;
    (ii) The reasons for reclassification of the savings association;
    (iii) The date by which the savings association subject to the 
notice of reclassification may file with the OTS a written appeal of the 
proposed reclassification and a request for a hearing, which shall be at 
least 14 calendar days from the date of service of the notice unless the 
OTS determines that a shorter period is appropriate in light of the 
financial condition of the savings association or other relevant 
circumstances.
    (3) Response to notice of proposed reclassification. A savings 
association may file a written response to a notice of proposed 
reclassification within the time period set by the OTS. The response 
should include:
    (i) An explanation of why the savings association is not in unsafe 
or unsound condition or otherwise should not be reclassified; and
    (ii) Any other relevant information, mitigating circumstances, 
documentation, or other evidence in support of the position of the 
savings association

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or company regarding the reclassification.
    (4) Failure to file response. Failure by a savings association to 
file, within the specified time period, a written response with the OTS 
to a notice of proposed reclassification shall constitute a waiver of 
the opportunity to respond and shall constitute consent to the 
reclassification.
    (5) Request for hearing and presentation of oral testimony or 
witnesses. The response may include a request for an informal hearing 
before the OTS or its designee under this section. If the savings 
association desires to present oral testimony or witnesses at the 
hearing, the savings association shall include a request to do so with 
the request for an informal hearing. A request to present oral testimony 
or witnesses shall specify the names of the witnesses and the general 
nature of their expected testimony. Failure to request a hearing shall 
constitute a waiver of any right to a hearing, and failure to request 
the opportunity to present oral testimony or witnesses shall constitute 
a waiver of any right to present oral testimony or witnesses.
    (6) Order for informal hearing. Upon receipt of a timely written 
request that includes a request for a hearing, the OTS shall issue an 
order directing an informal hearing to commence no later than 30 days 
after receipt of the request, unless the OTS allows further time at the 
request of the savings association. The hearing shall be held in 
Washington, DC or at such other place as may be designated by the OTS, 
before a presiding officer(s) designated by the OTS to conduct the 
hearing.
    (7) Hearing procedures. (i) The savings association shall have the 
right to introduce relevant written materials and to present oral 
argument at the hearing. The savings association may introduce oral 
testimony and present witnesses only if expressly authorized by the OTS 
or the presiding officer(s). Neither the provisions of the 
Administrative Procedure Act (5 U.S.C. 554-557) governing adjudications 
required by statute to be determined on the record nor part 509 of this 
chapter apply to an informal hearing under this section unless the OTS 
orders that such procedures shall apply.
    (ii) The informal hearing shall be recorded and a transcript 
furnished to the savings association upon request and payment of the 
cost thereof. Witnesses need not be sworn, unless specifically requested 
by a party or the presiding officer(s). The presiding officer(s) may ask 
questions of any witness.
    (iii) The presiding officer(s) may order that the hearing be 
continued for a reasonable period (normally five business days) 
following completion of oral testimony or argument to allow additional 
written submissions to the hearing record.
    (8) Recommendation of presiding officers. Within 20 calendar days 
following the date the hearing and the record on the proceeding are 
closed, the presiding officer(s) shall make a recommendation to the OTS 
on the reclassification.
    (9) Time for decision. Not later than 60 calendar days after the 
date the record is closed or the date of the response in a case where no 
hearing was requested, the OTS will decide whether to reclassify the 
savings association and notify the savings association of the OTS's 
decision.
    (b) Request for rescission of reclassification. Any savings 
association that has been reclassified under this section, may, upon a 
change in circumstances, request in writing that the OTS reconsider the 
reclassification, and may propose that the reclassification be rescinded 
and that any directives issued in connection with the reclassification 
be modified, rescinded, or removed. Unless otherwise ordered by the OTS, 
the savings association shall remain subject to the reclassification and 
to any directives issued in connection with that reclassification while 
such request is pending before the OTS.



Sec. 565.9  Order to dismiss a director or senior executive officer.

    (a) Service of notice. When the OTS issues and serves a directive on 
a savings association pursuant to section 565.7 requiring the savings 
association to dismiss any director or senior executive officer under 
section 38(f)(2)(F)(ii) of the FDI Act, the OTS shall also serve a copy 
of the directive, or the relevant portions of the directive where

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appropriate, upon the person to be dismissed.
    (b) Response to directive--(1) Request for reinstatement. A director 
or senior executive officer who has been served with a directive under 
paragraph (a) of this section (Respondent) may file a written request 
for reinstatement. The request for reinstatement shall be filed within 
10 calendar days of the receipt of the directive by the Respondent, 
unless further time is allowed by the OTS at the request of the 
Respondent.
    (2) Contents of request; informal hearing. The request for 
reinstatement should include reasons why the Respondent should be 
reinstated, and may include a request for an informal hearing before the 
OTS or its designee under this section. If the Respondent desires to 
present oral testimony or witnesses at the hearing, the Respondent shall 
include a request to do so with the request for an informal hearing. The 
request to present oral testimony or witnesses shall specify the names 
of the witnesses and the general nature of their expected testimony. 
Failure to request a hearing shall constitute a waiver of any right to a 
hearing and failure to request the opportunity to present oral testimony 
or witnesses shall constitute a waiver of any right or opportunity to 
present oral testimony or witnesses.
    (3) Effective date. Unless otherwise ordered by the OTS, the 
dismissal shall remain in effect while a request for reinstatement is 
pending.
    (c) Order for informal hearing. Upon receipt of a timely written 
request from a Respondent for an informal hearing on the portion of a 
directive requiring a savings association to dismiss from office any 
director or senior executive officer, the OTS shall issue an order 
directing an informal hearing to commence no later than 30 days after 
receipt of the request, unless the Respondent requests a later date. The 
hearing shall be held in Washington, DC, or at such other place as may 
be designated by the OTS, before a presiding officer(s) designated by 
the OTS to conduct the hearing.
    (d) Hearing procedures. (1) A Respondent may appear at the hearing 
personally or through counsel. A Respondent shall have the right to 
introduce relevant written materials and to present oral argument. A 
Respondent may introduce oral testimony and present witnesses only if 
expressly authorized by the OTS or the presiding officer(s). Neither the 
provisions of the Administrative Procedure Act governing adjudications 
required by statute to be determined on the record nor part 509 of this 
chapter apply to an informal hearing under this section unless the OTS 
orders that such procedures shall apply.
    (2) The informal hearing shall be recorded and a transcript 
furnished to the Respondent upon request and payment of the cost 
thereof. Witnesses need not be sworn, unless specifically requested by a 
party or the presiding officer(s). The presiding officer(s) may ask 
questions of any witness.
    (3) The presiding officer(s) may order that the hearing be continued 
for a reasonable period (normally five business days) following 
completion of oral testimony or argument to allow additional written 
submissions to the hearing record.
    (e) Standard for review. A Respondent shall bear the burden of 
demonstrating that his or her continued employment by or service with 
the savings association would materially strengthen the savings 
association's ability:
    (1) To become adequately capitalized, to the extent that the 
directive was issued as a result of the savings association's capital 
level or failure to submit or implement a capital restoration plan; and
    (2) To correct the unsafe or unsound condition or unsafe or unsound 
practice, to the extent that the directive was issued as a result of 
classification of the savings association based on supervisory criteria 
other than capital, pursuant to section 38(g) of the FDI Act.
    (f) Recommendation of presiding officers. Within 20 calendar days 
following the date the hearing and the record on the proceeding are 
closed, the presiding officer(s) shall make a recommendation to the OTS 
concerning the Respondent's request for reinstatement with the savings 
association.
    (g) Time for decision. Not later than 60 calendar days after the 
date the record is closed or the date of the response in

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a case where no hearing has been requested, the OTS shall grant or deny 
the request for reinstatement and notify the Respondent of the OTS's 
decision. If the OTS denies the request for reinstatement, the OTS shall 
set forth in the notification the reasons for the OTS's action.

[57 FR 44903, Sept. 29, 1992, as amended at 60 FR 66719, Dec. 26, 1995]



Sec. 565.10  Enforcement of directives.

    (a) Judicial remedies. Whenever a savings association or company 
that controls a savings association fails to comply with a directive 
issued under section 38, the OTS may seek enforcement of the directive 
in the appropriate United States district court pursuant to section 
8(i)(1) of the FDI Act.
    (b) Administrative remedies--(1) Failure to comply with directive. 
Pursuant to section 8(i)(2)(A) of the FDI Act, the OTS may assess a 
civil money penalty against any savings association or company that 
controls a savings association that violates or otherwise fails to 
comply with any final directive issued under section 38 and against any 
institution-affiliated party who participates in such violation or 
noncompliance.
    (2) Failure to implement capital restoration plan. The failure of a 
savings association to implement a capital restoration plan required 
under section 38, or this part, or the failure of a company having 
control of a savings association to fulfill a guarantee of a capital 
restoration plan made pursuant to section 38(e)(2) of the FDI Act shall 
subject the savings association or company to the assessment of civil 
money penalties pursuant to section 8(i)(2)(A) of the FDI Act.
    (c) Other enforcement action. In addition to the actions described 
in paragraphs (a) and (b) of this section, the OTS may seek enforcement 
of the provisions of section 38 or this part through any other judicial 
or administrative proceeding authorized by law.



PART 567--CAPITAL--Table of Contents




Sec.
567.1  Definitions.
567.2  Minimum regulatory capital requirement.
567.3  lndividual minimum capital requirements.
567.4  Capital directives.
567.5  Components of capital.
567.6  Risk-based capital credit risk-weight categories.
567.7  Interest-rate risk component.
567.8  Leverage ratio.
567.9  Tangible capital requirement.
567.10  Consequences of failure to meet capital requirements.
567.11  Reservation of authority.
567.12  Intangible assets, servicing assets, and credit-enhancing 
          interest-only strips.
567.13  Obligations of acquirors of savings associations to maintain 
          capital.
567.14-567.19  [Reserved]

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828 (note).

    Source: 54 FR 49649, Nov. 30, 1989, unless otherwise noted.



Sec. 567.1  Definitions.

    For purposes of this part:
    Adjusted total assets. The term adjusted total assets means:
    (1) A savings association's total assets as that term is defined in 
this section;
    (2) Plus
    (i) The prorated assets of any includable subsidiary in which the 
savings association has a minority ownership interest that is not 
consolidated under generally accepted accounting principles; and
    (ii) The remaining goodwill (FSLIC Capital Contributions) resulting 
from prior regulatory accounting practices as provided in the definition 
of qualifying supervisory goodwill in this section;
    (3) Minus
    (i) Assets not included in the applicable capital standard except 
for those subject to paragraphs (3)(ii) and (3)(iii) of this definition;
    (ii) Investments in any includable subsidiary in which a savings 
association has a minority interest;
    (iii) Investments in any subsidiary subject to consolidation under 
paragraph (2)(ii) of this definition; and
    (iv) For purposes of determining core capital, qualifying 
supervisory goodwill.
    Cash items in the process of collection. The term cash items in the 
process of collection means checks or drafts in the process of 
collection that are drawn on

[[Page 336]]

another depository institution, including a central bank, and that are 
payable immediately upon presentation; U.S. Government checks that are 
drawn on the United States Treasury or any other U.S. Government or 
Government-sponsored agency and that are payable immediately upon 
presentation; broker's security drafts and commodity or bill-of-lading 
drafts payable immediately upon presentation; and unposted debits.
    Commitment. The term commitment means any arrangement that obligates 
a savings association to:
    (1) Purchase loans or securities; or
    (2) Extend credit in the form of loans or leases, participations in 
loans or leases, overdraft facilities, revolving credit facilities, or 
similar transactions.
    Common stockholders' equity. The term common stockholders' equity 
means common stock, common stock surplus, retained earnings, and 
adjustments for the cumulative effect of foreign currency translation, 
less net unrealized losses on available-for-sale equity securities with 
readily determinable fair values.
    Conditional guarantee. The term conditional guarantee means a 
contingent obligation of the United States Government or its agencies, 
the validity of which to the beneficiary is dependent upon some 
affirmative action--e.g., servicing requirements--on the part of the 
beneficiary of the guarantee or a third party.
    Credit derivative. The term credit derivative means a contract that 
allows one party (the protection purchaser) to transfer the credit risk 
of an asset or off-balance sheet credit exposure to another party (the 
protection provider). The value of a credit derivative is dependent, at 
least in part, on the credit performance of a ``referenced asset.''
    Credit-enhancing interest-only strip. (1) The term credit-enhancing 
interest-only strip means an on-balance sheet asset that, in form or in 
substance:
    (i) Represents the contractual right to receive some or all of the 
interest due on transferred assets; and
    (ii) Exposes the savings association to credit risk directly or 
indirectly associated with the transferred assets that exceeds its pro 
rata share of the savings association's claim on the assets whether 
through subordination provisions or other credit enhancement techniques.
    (2) OTS reserves the right to identify other cash flows or related 
interests as a credit-enhancing interest-only strip. In determining 
whether a particular interest cash flow functions as a credit-enhancing 
interest-only strip, OTS will consider the economic substance of the 
transaction.
    Credit-enhancing representations and warranties. (1) The term 
credit-enhancing representations and warranties means representations 
and warranties that are made or assumed in connection with a transfer of 
assets (including loan servicing assets) and that obligate a savings 
association to protect investors from losses arising from credit risk in 
the assets transferred or loans serviced.
    (2) Credit-enhancing representations and warranties include promises 
to protect a party from losses resulting from the default or 
nonperformance of another party or from an insufficiency in the value of 
the collateral.
    (3) Credit-enhancing representations and warranties do not include:
    (i) Early-default clauses and similar warranties that permit the 
return of, or premium refund clauses covering, qualifying mortgage loans 
for a period not to exceed 120 days from the date of transfer. These 
warranties may cover only those loans that were originated within one 
year of the date of the transfer;
    (ii) Premium refund clauses covering assets guaranteed, in whole or 
in part, by the United States government, a United States government 
agency, or a United States government-sponsored enterprise, provided the 
premium refund clause is for a period not to exceed 120 days from the 
date of transfer; or
    (iii) Warranties that permit the return of assets in instances of 
fraud, misrepresentation or incomplete documentation.
    Depository institution. The term domestic depository institution 
means a financial institution that engages in the business of banking; 
that is recognized as a bank by the bank supervisory or monetary 
authorities of the country of its incorporation and the country of its

[[Page 337]]

principal banking operations; that receives deposits to a substantial 
extent in the regular course of business; and that has the power to 
accept demand deposits. In the United States, this definition 
encompasses all federally insured offices of commercial banks, mutual 
and stock savings banks, savings or building and loan associations 
(stock and mutual), cooperative banks, credit unions, and international 
banking facilities of domestic depository institutions. Bank holding 
companies and savings and loan holding companies are excluded from this 
definition. For the purposes of assigning risk weights, the 
differentiation between OECD depository institutions and non-OECD 
depository institutions is based on the country of incorporation. Claims 
on branches and agencies of foreign banks located in the United States 
are to be categorized on the basis of the parent bank's country of 
incorporation.
    Direct credit substitute. The term direct credit substitute means an 
arrangement in which a savings association assumes, in form or in 
substance, credit risk associated with an on-or off-balance sheet asset 
or exposure that was not previously owned by the savings association 
(third-party asset) and the risk assumed by the savings association 
exceeds the pro rata share of the savings association's interest in the 
third-party asset. If a savings association has no claim on the third-
party asset, then the savings association's assumption of any credit 
risk is a direct credit substitute. Direct credit substitutes include:
    (1) Financial standby letters of credit that support financial 
claims on a third party that exceed a savings association's pro rata 
share in the financial claim;
    (2) Guarantees, surety arrangements, credit derivatives, and similar 
instruments backing financial claims that exceed a savings association's 
pro rata share in the financial claim;
    (3) Purchased subordinated interests that absorb more than their pro 
rata share of losses from the underlying assets;
    (4) Credit derivative contracts under which the savings association 
assumes more than its pro rata share of credit risk on a third-party 
asset or exposure;
    (5) Loans or lines of credit that provide credit enhancement for the 
financial obligations of a third party;
    (6) Purchased loan servicing assets if the servicer is responsible 
for credit losses or if the servicer makes or assumes credit-enhancing 
representations and warranties with respect to the loans serviced. 
Servicer cash advances as defined in this section are not direct credit 
substitutes; and
    (7) Clean-up calls on third party assets. However, clean-up calls 
that are 10 percent or less of the original pool balance and that are 
exercisable at the option of the savings association are not direct 
credit substitutes.
    Eligible savings association. (1) The term eligible savings 
association means a savings association with respect to which the 
Director of the Office of Thrift Supervision has determined, on the 
basis of information available at the time, that:
    (i) The savings association's management appears to be competent;
    (ii) The savings association, as certified by its Board of 
Directors, is in substantial compliance with all applicable statutes, 
regulations, orders and written agreements and directives; and
    (iii) The savings association's management, as certified by its 
Board of Directors, has not engaged in insider dealing, speculative 
practices, or any other activities that have or may jeopardize the 
association's safety and soundness or contributed to impairing the 
association's capital.
    (2) Savings associations, for purposes of this paragraph, will be 
deemed to be eligible unless the Director makes a determination 
otherwise or notifies the savings association of its intent to conduct 
either an informal or formal examination to determine eligibility and 
provides written notification thereof to the savings association.
    Equity investments. (1) The term equity investments includes 
investments in equity securities and real property that would be 
considered an equity investment under generally accepted accounting 
principles.
    (2)(i) The term equity securities means any:

[[Page 338]]

    (A) Stock, certificate of interest of participation in any profit-
sharing agreement, collateral trust certificate or subscription, 
preorganization certificate or subscription, transferable share, 
investment contract, or voting trust certificate; or
    (B) In general, any interest or instrument commonly known as an 
equity security; or
    (C) Loans having profit sharing features which generally accepted 
accounting principles would reclassify as equity securities; or
    (D) Any security immediately convertible at the option of the holder 
without payment of substantial additional consideration into such a 
security; or
    (E) Any security carrying any warrant or right to subscribe to or 
purchase such a security; or
    (F) Any certificate of interest or participation in, temporary or 
Interim certificate for, or receipt for any of the foregoing or any 
partnership interest; or
    (G) Investments in equity securities and loans or advances to and 
guarantees issued on behalf of partnerships or joint ventures in which a 
savings association holds an interest in real property under generally 
accepted accounting principles.
    (ii) The term equity securities does not include investments in a 
subsidiary as that term is defined in this section, equity investments 
that are permissible for national banks, ownership interests in pools of 
assets that are risk-weighted in accordance with Sec. 567.6(a)(1)(vi) of 
this part, or the stock of Federal Home Loan Banks or Federal Reserve 
Banks.
    (3) For purposes of this part, the term equity investments in real 
property does not include interests in real property that are primarily 
used or intended to be used by the savings association, its 
subsidiaries, or its affiliates as offices or related facilities for the 
conduct of its business.
    (4) In addition, for purposes of this part, the term equity 
investments in real property does not include interests in real property 
that are acquired in satisfaction of a debt previously contracted in 
good faith or acquired in sales under judgments, decrees, or mortgages 
held by the savings association, provided that the property is not 
intended to be held for real estate investment purposes but is expected 
to be disposed of within five years or a longer period approved by the 
Office.
    Exchange rate contracts. The term exchange rate contracts includes 
cross-currency interest rate swaps; forward foreign exchange rate 
contracts; currency options purchased; and any similar instrument that, 
in the opinion of the Office, may give rise to similar risks.
    Face amount. The term face amount means the notational principal, or 
face value, amount of an off-balance sheet item or the amortized cost of 
an on-balance sheet asset.
    Financial asset. The term financial asset means cash or other 
monetary instrument, evidence of debt, evidence of an ownership interest 
in an entity, or a contract that conveys a right to receive or exchange 
cash or another financial instrument from another party.
    Financial standby letter of credit. The term financial standby 
letter of credit means a letter of credit or similar arrangement that 
represents an irrevocable obligation to a third-party beneficiary:
    (1) To repay money borrowed by, or advanced to, or for the account 
of, a second party (the account party); or
    (2) To make payment on behalf of the account party, in the event 
that the account party fails to fulfill its obligation to the 
beneficiary.
    Includable subsidiary. The term includable subsidiary means a 
subsidiary of a savings association that is:
    (1) Engaged solely in activities not impermissible for a national 
bank;
    (2) Engaged in activities not permissible for a national bank, but 
only if acting solely as agent for its customers and such agency 
position is clearly documented in the savings association's files;
    (3) Engaged solely in mortgage-banking activities;
    (4)(i) Itself an insured depository institution or a company the 
sole investment of which is an insured depository institution, and
    (ii) Was acquired by the parent savings association prior to May 1, 
1989; or
    (5) A subsidiary of any Federal savings association existing as a 
Federal

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savings association on August 9, 1989 that
    (i) Was chartered prior to October 15, 1982, as a savings bank or a 
cooperative bank under State law, or
    (ii) Acquired its principal assets from an association that was 
chartered prior to October 15, 1982, as a savings bank or a cooperative 
bank under State law.
    Intangible assets. The term intangible assets means assets 
considered to be intangible assets under generally accepted accounting 
principles. These assets include, but are not limited to, goodwill, core 
deposit premiums, purchased credit card relationships, and favorable 
leaseholds. Servicing assets are not intangible assets, and interest-
only strips receivable and other nonsecurity financial instruments are 
not intangible assets under this definition.
    Interest-rate contracts. The term interest-rate contracts includes 
single currency interest-rate swaps; basis swaps; forward rate 
agreements; interest-rate options purchased; forward forward deposits 
accepted; and any other instrument that, in the opinion of the Office, 
may give rise to similar risks, including when-issued securities.
    Mortgage-related securities. The term mortgage-related securities 
means any mortgage-related qualifying securities under section 3(a)(41) 
of the Securities Exchange Act of 1934, 15 U.S.C. 78c(a)(41), Provided, 
That the rating requirements of that section shall not be considered for 
purposes of this definition.
    Nationally recognized statistical rating organization (NRSRO). The 
term nationally recognized statistical rating organization means an 
entity recognized by the Division of Market Regulation of the Securities 
and Exchange Commission (Commission) as a nationally recognized 
statistical rating organization for various purposes, including the 
Commission's uniform net capital requirements for brokers and dealers.
    OECD-based country. The term OECD-based country means a member of 
the grouping of countries that are full members of the Organization of 
Economic Cooperation and Development, plus countries that have concluded 
special lending arrangements with the International Monetary Fund 
(``IMF'') associated with the IMF's capital General Arrangements to 
Borrow. These countries are hereinafter referred to as OECD countries. 
Public-sector entities include states, local authorities, and 
governmental subdivisions below the central government level in any 
OECD-country. The term Central government means the national governing 
authority of a country; it includes the departments of ministries and 
agencies of the central government and the central bank. The U.S. 
Central Bank includes the 12 Federal Reserve Banks. The definition does 
not include the following: State, provincial or local governments; 
commercial enterprises owned by the central government, which are 
entities engaged in activities involving trade, commerce or profit that 
are generally conducted or performed in the private sector of the United 
States economy; and non-central government entities whose obligations 
are guaranteed by the central government.
    Original maturity. The term original maturity means, with respect to 
a commitment, the earliest date after a commitment is made on which the 
commitment is scheduled to expire (i.e., it will reach its stated 
maturity and cease to be binding on either party), Provided, That 
either:
    (i) The commitment is not subject to extension or renewal and will 
actually expire on its stated expiration date; or
    (ii) If the commitment is subject to extension or renewal beyond its 
stated expiration date, the stated expiration date will be deemed the 
original maturity only if the extension or renewal must be based upon 
terms and conditions independently negotiated in good faith with the 
customer at the time of the extension or renewal and upon a new, bona 
fide credit analysis utilizing current information on financial 
condition and trends.
    Performance-based standby letter of credit. The term performance-
based standby letter of credit means any letter of credit, or similar 
arrangement, however named or described, which represents an irrevocable 
obligation to the beneficiary on the part of the issuer to make payment 
on account of any default by a third party in the performance of a 
nonfinancial or commercial

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obligation. Such letters of credit include arrangements backing 
subcontractors' and suppliers' performance, labor and materials 
contracts, and construction bids.
    Perpetual preferred stock. The term perpetual preferred stock means 
preferred stock without a fixed maturity date that cannot be redeemed at 
the option of the holder, and that has no other provisions that will 
require future redemption of the issue. For purposes of these 
instruments, preferred stock that can be redeemed at the option of the 
holder is deemed to have an ``original maturity'' of the earliest 
possible date on which it may be so redeemed. Cumulative perpetual 
preferred stock is preferred stock where the dividends accumulate from 
one period to the next. Noncumulative perpetual preferred stock is 
preferred stock where the unpaid dividends are not carried over to 
subsequent dividend periods.
    Problem institution. The term problem institution means a savings 
association that, at the time of its acquisition, merger, purchase of 
assets or other business combination with or by another savings 
association:
    (1) Was subject to special regulatory controls by its primary 
Federal or state regulatory authority;
    (2) Posed particular supervisory concerns to its primary Federal or 
state regulatory authority; or
    (3) Failed to meet its regulatory capital requirement immediately 
before the transaction.
    Prorated assets. The term prorated assets means the total assets (as 
determined in the most recently available GAAP report but in no event 
more than one year old) of a subsidiary (including those subsidiaries 
where the savings association has a minority interest) multiplied by the 
savings association's percentage of ownership of that subsidiary.
    Qualifying mortgage loan. The term qualifying mortgage loan means a 
1-4 family residential first mortgage loan that is prudently 
underwritten and is performing and not more than 90 days past due with a 
documented loan-to-value ratio not exceeding 80 percent (at origination) 
unless insured to at least an 80 percent loan-to-value ratio by private 
mortgage insurance provided by an issuer approved by the Federal Home 
Loan Mortgage Corporation or the Federal National Mortgage Association. 
Nonqualifying mortgage loans that are subsequently paid down to a loan-
to-value ratio of less than 80 percent (calculated using value at 
origination) may become qualifying loans if they meet all other 
requirements for qualifying mortgages. Loans to individual borrowers for 
the construction of their own homes may be included as qualifying 
mortgage loans. If a savings association holds the first and junior 
lien(s) on a residential property and no other party holds an 
intervening lien, the transaction is treated as a single loan secured by 
a first lien for the purposes of determining the loan-to-value ratio and 
the appropriate risk weight under Sec. 567.6(a).
    Qualifying multifamily mortgage loan. (1) The term qualifying 
multifamily mortgage loan means a loan secured by a first lien on 
multifamily residential properties consisting of 5 or more dwelling 
units, provided that:
    (i) The amortization of principal and interest occurs over a period 
of not more than 30 years;
    (ii) The original minimum maturity for repayment of principal on the 
loan is not less than seven years;
    (iii) When considering the loan for placement in a lower risk-weight 
category, all principal and interest payments have been made on a timely 
basis in accordance with its terms for the preceding year;
    (iv) The loan is performing and not 90 days or more past due;
    (v) The loan is made by the savings association in accordance with 
prudent underwriting standards; and
    (vi) If the interest rate on the loan does not change over the term 
of the loan:
    (A) The current loan balance amount does not exceed 80 percent of 
the value of the property securing the loan; and
    (B) For the property's most recent fiscal year, the ratio of annual 
net operating income generated by the property (before payment of any 
debt service on the loan) to annual debt service on the loan is not less 
than 120 percent, or in the case of cooperative or other not-for-profit 
housing projects, the

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property generates sufficient cash flows to provide comparable 
protection to the institution; or
    (vii) If the interest rate on the loan changes over the term of the 
loan:
    (A) The current loan balance amount does not exceed 75 percent of 
the value of the property securing the loan; and
    (B) For the property's most recent fiscal year, the ratio of annual 
net operating income generated by the property (before payment of any 
debt service on the loan) to annual debt service on the loan is not less 
than 115 percent, or in the case of cooperative or other not-for-profit 
housing projects, the property generates sufficient cash flows to 
provide comparable protection to the institution.
    (2) The term qualifying multifamily mortgage loan also includes a 
multifamily mortgage loan that on March 18, 1994 was a first mortgage 
loan on an existing property consisting of 5-36 dwelling units with an 
initial loan-to-value ratio of not more than 80% where an average annual 
occupancy rate of 80% or more of total units had existed for at least 
one year, and continues to meet these criteria.
    (3) For purposes of paragraphs (1) (vi) and (vii) of this 
definition, the term value of the property means, at origination of a 
loan to purchase a multifamily property: the lower of the purchase price 
or the amount of the initial appraisal, or if appropriate, the initial 
evaluation. In cases not involving the purchase of a multifamily loan, 
the value of the property is determined by the most current appraisal, 
or if appropriate, the most current evaluation.
    (4) In cases where a borrower refinances a loan on an existing 
property, as an alternative to paragraphs (1) (iii), (vi), and (vii) of 
this definition:
    (i) All principal and interest payments on the loan being refinanced 
have been made on a timely basis in accordance with the terms of that 
loan for the preceding year; and
    (ii) The net income on the property for the preceding year would 
support timely principal and interest payments on the new loan in 
accordance with the applicable debt service requirement.
    Qualifying residential construction loan. (1) The term qualifying 
residential construction loan, also referred to as a residential bridge 
loan, means a loan made in accordance with sound lending principles 
satisfying the following criteria:
    (i) The builder must have substantial project equity in the home 
construction project;
    (ii) The residence being constructed must be a 1-4 family residence 
sold to a home purchaser;
    (iii) The lending savings association must obtain sufficient 
documentation from a permanent lender (which may be the construction 
lender) demonstrating that:
    (A) The home buyer intends to purchase the residence; and
    (B) Has the ability to obtain a permanent qualifying mortgage loan 
sufficient to purchase the residence;
    (iv) The home purchaser must have made a substantial earnest money 
deposit;
    (v) The construction loan must not exceed 80 percent of the sales 
price of the residence;
    (vi) The construction loan must be secured by a first lien on the 
lot, residence under construction, and other improvements;
    (vii) The lending thrift must retain sufficient undisbursed loan 
funds throughout the construction period to ensure project completion;
    (viii) The builder must incur a significant percentage of direct 
costs (i.e., the actual costs of land, labor, and material) before any 
drawdown on the loan;
    (ix) If at any time during the life of the construction loan any of 
the criteria of this rule are no longer satisfied, the association must 
immediately recategorize the loan at a 100 percent risk-weight and must 
accurately report the loan in the association's next quarterly Thrift 
Financial Report;
    (x) The home purchaser must intend that the home will be owner-
occupied;
    (xi) The home purchaser(s) must be an individual(s), not a 
partnership, joint venture, trust corporation, or any other entity 
(including an entity acting as a sole proprietorship) that is purchasing 
the home(s) for speculative purposes; and
    (xii) The loan must be performing and not more than 90 days past 
due.

[[Page 342]]

    (2) The documentation for each loan and home sale must be sufficient 
to demonstrate compliance with the criteria in paragraph (1) of this 
definition. The OTS retains the discretion to determine that any loans 
not meeting sound lending principles must be placed in a higher risk-
weight category. The OTS also reserves the discretion to modify these 
criteria on a case-by-case basis provided that any such modifications 
are not inconsistent with the safety and soundness objectives of this 
definition.
    Qualifying supervisory goodwill. The term qualifying supervisory 
goodwill means, for eligible savings associations:
    (1) Any unamortized goodwill (FSLIC Capital Contributions, as 
reported in the September 30, 1989 Thrift Financial Report) that existed 
on April 12, 1989 resulting from prior regulatory accounting practices 
less any amortization that would have occurred subsequent to April 12, 
1989 through the current reporting period where the amortization is 
calculated on a straight line basis over the shorter of 20 years, or the 
remaining period for amortization in effect on April 12, 1989 for 
regulatory accounting practices; plus
    (2) The lesser of:
    (i) Supervisory goodwill as defined in this section that is included 
in goodwill that is reflected in the current reporting period under 
generally accepted accounting principles (``GAAP''); or
    (ii)(A) Supervisory goodwill as defined in this section that is 
included in goodwill that is reflected in the current reporting period 
under GAAP;
    (B) Plus any amortization of the goodwill in paragraph (2)(ii)(A) of 
this definition that occurred subsequent to April 12, 1989 for GAAP 
reporting purposes;
    (C) Minus the amortization of the goodwill in paragraph (2)(ii)(A) 
of this definition through the current reporting period that results 
when the goodwill is amortized subsequent to April 12, 1989 on a 
straightline basis over the shorter of--
    (1) 20 years; or
    (2) The remaining period for amortization in effect on April 12, 
1989 under regulatory accounting practices.
    Reciprocal holdings of depository institution instruments. The term 
reciprocal holdings of depository institution instruments means cross-
holdings or other formal or informal arrangements in which two or more 
depository institutions swap, exchange, or otherwise agree to hold each 
other's capital instruments. This definition does not include holdings 
of capital instruments issued by other depository institutions that were 
taken in satisfaction of debts previously contracted, provided that the 
reporting savings association has not held such instruments for more 
than five years or a longer period approved by the Office.
    Recourse. The term recourse means a savings association's retention, 
in form or in substance, of any credit risk directly or indirectly 
associated with an asset it has sold (in accordance with generally 
accepted accounting principles) that exceeds a pro rata share of that 
savings association's claim on the asset. If a savings association has 
no claim on a asset it has sold, then the retention of any credit risk 
is recourse. A recourse obligation typically arises when a savings 
association transfers assets in a sale and retains an explicit 
obligation to repurchase assets or to absorb losses due to a default on 
the payment of principal or interest or any other deficiency in the 
performance of the underlying obligor or some other party. Recourse may 
also exist implicitly if a savings association provides credit 
enhancement beyond any contractual obligation to support assets it has 
sold. Recourse obligations include:
    (1) Credit-enhancing representations and warranties made on 
transferred assets;
    (2) Loan servicing assets retained pursuant to an agreement under 
which the savings association will be responsible for losses associated 
with the loans serviced. Servicer cash advances as defined in this 
section are not recourse obligations;
    (3) Retained subordinated interests that absorb more than their pro 
rata share of losses from the underlying assets;
    (4) Assets sold under an agreement to repurchase, if the assets are 
not already included on the balance sheet;

[[Page 343]]

    (5) Loan strips sold without contractual recourse where the maturity 
of the transferred portion of the loan is shorter than the maturity of 
the commitment under which the loan is drawn;
    (6) Credit derivatives issued that absorb more than the savings 
association's pro rata share of losses from the transferred assets; and
    (7) Clean-up calls on assets the savings association has sold. 
However, clean-up calls that are 10 percent or less of the original pool 
balance and that are exercisable at the option of the savings 
association are not recourse arrangements.
    Replacement cost. The term replacement cost means, with respect to 
interest rate and exchange-rate contracts, the loss that would be 
incurred in the event of a counterparty default, as measured by the net 
cost of replacing the contract at the current market value. If default 
would result in a theoretical profit, the replacement value is 
considered to be zero. This mark-to-market process must incorporate 
changes in both interest rates and counterparty credit quality.
    Residential properties. The term residential properties means 
houses, condominiums, cooperative units, and manufactured homes. This 
definition does not include boats or motor homes, even if used as a 
primary residence, or timeshare properties.
    Residual characteristics. The term residual characteristics means 
interests similar to a multi-class pay-through obligation representing 
the excess cash flow generated from mortgage collateral over the amount 
required for the issue's debt service and ongoing administrative 
expenses or interests presenting similar degrees of interest-rate/
prepayment risk and principal loss risks.
    Residual interest. (1) The term residual interest means any on-
balance sheet asset that:
    (i) Represents an interest (including a beneficial interest) created 
by a transfer that qualifies as a sale (in accordance with generally 
accepted accounting principles) of financial assets, whether through a 
securitization or otherwise; and
    (ii) Exposes a savings association to credit risk directly or 
indirectly associated with the transferred asset that exceeds a pro rata 
share of that savings association's claim on the asset, whether through 
subordination provisions or other credit enhancement techniques.
    (2) Residual interests generally include credit-enhancing interest-
only strips, spread accounts, cash collateral accounts, retained 
subordinated interests (and other forms of overcollateralization), and 
similar assets that function as a credit enhancement.
    (3) Residual interests further include those exposures that, in 
substance, cause the savings association to retain the credit risk of an 
asset or exposure that had qualified as a residual interest before it 
was sold.
    (4) Residual interests generally do not include assets purchased 
from a third party. However, a credit-enhancing interest-only strip that 
is acquired in any asset transfer is a residual interest.
    Risk participation. The term risk participation means a 
participation in which the originating party remains liable to the 
beneficiary for the full amount of an obligation (e.g., a direct credit 
substitute), notwithstanding that another party has acquired a 
participation in that obligation.
    Risk-weighted assets. The term risk-weighted assets means the sum 
total of risk-weighted on-balance sheet assets and the total of risk-
weighted off-balance sheet credit equivalent amounts. These assets are 
calculated in accordance with Sec. 567.6 of this part.
    Securitization. The term securitization means the pooling and 
repackaging by a special purpose entity of assets or other credit 
exposures that can be sold to investors. Securitization includes 
transactions that create stratified credit risk positions whose 
performance is dependent upon an underlying pool of credit exposures, 
including loans and commitments.
    Servicer cash advance. The term servicer cash advance means funds 
that a residential mortgage servicer advances to ensure an uninterrupted 
flow of payments, including advances made

[[Page 344]]

to cover foreclosure costs or other expenses to facilitate the timely 
collection of the loan. A servicer cash advance is not a recourse 
obligation or a direct credit substitute if:
    (1) The servicer is entitled to full reimbursement and this right is 
not subordinated to other claims on the cash flows from the underlying 
asset pool; or
    (2) For any one loan, the servicer's obligation to make 
nonreimbursable advances is contractually limited to an insignificant 
amount of the outstanding principal amount on that loan.
    State. The term State means any one of the several states of the 
United States of America, the District of Columbia, Puerto Rico, and the 
territories and possessions of the United States.
    Structured financing program. The term structured financing program 
means a program where receivable interests and asset-or mortgage-backed 
securities issued by multiple participants are purchased by a special 
purpose entity that repackages those exposures into securities that can 
be sold to investors. Structured financing programs allocate credit 
risk, generally, between the participants and credit enhancement 
provided to the program.
    Subsidiary. The term subsidiary means any corporation, partnership, 
business trust, joint venture, association or similar organization in 
which a savings association directly or indirectly holds an ownership 
interest and the assets of which are consolidated with those of the 
savings association for purposes of reporting under Generally Accepted 
Accounting Principles (GAAP). Generally, these are majority-owned 
subsidiaries.\1\ This definition does not include ownership interests 
that were taken in satisfaction of debts previously contracted, provided 
that the reporting association has not held the interest for more than 
five years or a longer period approved by the OTS.
---------------------------------------------------------------------------

    \1\ The OTS reserves the right to review a savings association's 
investment in a subsidiary on a case-by-case basis. If the OTS 
determines that such investment is more appropriately treated as an 
equity security or an ownership interest in a subsidiary, it will make 
such determination regardless of the percentage of ownership held by the 
savings association.
---------------------------------------------------------------------------

    Supervisory goodwill. The term supervisory goodwill means goodwill 
\2\ resulting from the acquisition, merger, consolidation, purchase of 
assets, or other business combination (if such transaction occurred on 
or before April 12, 1989) of
---------------------------------------------------------------------------

    \2\ Goodwill that has been written off of an association's balance 
sheet for its GAAP financial statements or Thrift Financial Report 
cannot be counted as supervisory goodwill.
---------------------------------------------------------------------------

    (1) A savings association where the fair market value of assets was 
less than the fair market value of liabilities at the acquisition date; 
or
    (2) A problem institution.
    Tier 1 capital. The term Tier 1 capital means core capital as 
computed in accordance with Sec. 567.5(a) of this part.
    Tier 2 capital. The term Tier 2 capital means supplementary capital 
as computed in accordance with Sec. 567.5 of this part.
    Total assets. The term total assets means total assets as would be 
required to be reported for consolidated entities on period-end reports 
filed with the Office in accordance with generally accepted accounting 
principles.
    Traded position. The term traded position means a position retained, 
assumed, or issued in connection with a securitization that is rated by 
a NRSRO, where there is a reasonable expectation that, in the near 
future, the rating will be relied upon by:
    (1) Unaffiliated investors to purchase the security; or
    (2) An unaffiliated third party to enter into a transaction 
involving the position, such as a purchase, loan, or repurchase 
agreement.
    Unconditionally cancelable. The term unconditionally cancelable 
means, with respect to a commitment-type lending arrangement, that the 
savings association may, at any time, with or without cause, refuse to 
advance funds or extend credit under the facility. In the case of home 
equity lines of credit, the savings association is deemed able to 
unconditionally cancel the commitment if it can, at its option, prohibit 
additional extensions of credit, reduce

[[Page 345]]

the line, and terminate the commitment to the full extent permitted by 
relevant Federal law.
    United States Government or its agencies. The term United States 
Government or its agencies means an instrumentality of the U.S. 
Government whose debt obligations are fully and explicitly guaranteed as 
to the timely payment of principal and interest by the full faith and 
credit of the United States Government.
    United States Government-sponsored agency or corporation. The term 
United States Government-sponsored agency or corporation means an agency 
or corporation originally established or chartered to serve public 
purposes specified by the United States Congress but whose obligations 
are not explicitly guaranteed by the full faith and credit of the United 
States Government.

[54 FR 49649, Nov. 30, 1989, as amended at 57 FR 12709, Apr. 13, 1992; 
57 FR 33439, July 29, 1992; 58 FR 15086, Mar. 19, 1993; 59 FR 12810, 
Mar. 18, 1994; 60 FR 39232, Aug. 1, 1995; 60 FR 42028, Aug. 15, 1995; 61 
FR 66579, Dec. 18, 1996; 62 FR 66263, Dec. 18, 1997; 63 FR 42678, Aug. 
10, 1998; 64 FR 10200, Mar. 2, 1999; 66 FR 59661, Nov. 29, 2001]



Sec. 567.2  Minimum regulatory capital requirement.

    (a) To meet its regulatory capital requirement a savings association 
must satisfy each of the following capital standards:
    (1) Risk-based capital requirement. (i) A savings association's 
minimum risk-based capital requirement shall be an amount equal to 8% of 
its risk-weighted assets as measured under Sec. 567.6 of this part.
    (ii) A savings association may not use supplementary capital to 
satisfy this requirement in an amount greater than 100% of its core 
capital as defined in Sec. 567.5 of this part.
    (2) Leverage ratio requirement. (i) A savings association's minimum 
leverage ratio requirement shall be the amount set forth in Sec. 567.8 
of this part.
    (ii) A savings association must satisfy this requirement with core 
capital as defined in Sec. 567.5(a) of this part.
    (3) Tangible capital requirement. (i) A savings association's 
minimum tangible capital requirement shall be the amount set forth in 
Sec. 567.9 of this part.
    (ii) A savings association must satisfy this requirement with 
tangible capital as defined in Sec. 567.9 of this part in an amount not 
less than 1.5% of its adjusted total assets.
    (b) [Reserved]
    (c) Savings associations are expected to maintain compliance with 
all of these standards at all times.

[54 FR 49649, Nov. 30, 1989, as amended at 57 FR 33440, July 29, 1992; 
58 FR 45813, Aug. 31, 1993; 62 FR 66263, Dec. 18, 1997; 64 FR 10201, Mar 
2, 1999; 66 FR 59663, Nov. 29, 2001]



Sec. 567.3  Individual minimum capital requirements.

    (a) Purpose and scope. The rules and procedures specified in this 
section apply to the establishment of an individual minimum capital 
requirement for a savings association that varies from the requirement 
that would otherwise apply to the savings association under Sec. 567.2 
of this part. Pursuant to 12 U.S.C. 1464(s), the OTS may establish such 
individual minimum capital requirements for savings associations as it 
deems necessary or appropriate on a case-by-case basis in light of the 
particular circumstances of each savings association.
    (b) Appropriate considerations for establishing individual minimum 
capital requirements. Minimum capital levels higher than those required 
under Sec. 567.2 may be appropriate for individual savings associations. 
Increased individual minimum capital requirements may be established 
upon a determination that the savings association's capital is or may 
become inadequate in view of its circumstances. For example, higher 
capital levels may be appropriate for:
    (1) A savings association receiving special supervisory attention;
    (2) A savings association that has or is expected to have losses 
resulting in capital inadequacy;
    (3) A savings association that has a high degree of exposure to 
interest rate risk, prepayment risk, credit risk, concentration of 
credit risk, certain risks arising from nontraditional activities, or 
similar risks; or a high proportion of off-balance sheet risk, 
especially standby letters of credit;
    (4) A savings association that has poor liquidity or cash flow;

[[Page 346]]

    (5) A savings association growing, either internally or through 
acquisitions, at such a rate that supervisory problems are presented 
that are not dealt with adequately by other Office regulations or other 
guidance;
    (6) A savings association that may be adversely affected by the 
activities or condition of its holding company, affiliate(s), 
subsidiaries, or other persons or savings associations with which it has 
significant business relationships, including concentrations of credit;
    (7) A savings association with a portfolio reflecting weak credit 
quality or a significant likelihood of financial loss, or that has loans 
in nonperforming status or on which borrowers fail to comply with 
repayment terms;
    (8) A savings association that has inadequate underwriting policies, 
standards, or procedures for its loans and investments; or
    (9) A savings association that has a record of operational losses 
that exceeds the average of other, similarly situated savings 
associations; has management deficiencies, including failure to 
adequately monitor and control financial and operating risks, 
particularly the risks presented by concentrations of credit and 
nontraditional activities; or has a poor record of supervisory 
compliance.
    (c) Standards for determination of appropriate individual minimum 
capital requirements. The appropriate minimum capital level for an 
individual savings association cannot be determined solely through the 
application of a rigid mathematical formula or wholly objective 
criteria. The decision is necessarily based, in part, on subjective 
judgment grounded in agency expertise. The factors to be considered in 
the determination will vary in each case and may include, for example:
    (1) The conditions or circumstances leading to the determination 
that a higher minimum capital requirement is appropriate or necessary 
for the savings association;
    (2) The exigency of those circumstances or potential problems;
    (3) The overall condition, management strength, and future prospects 
of the savings association and, if applicable, its holding company, 
subsidiaries, and affiliates;
    (4) The savings association's liquidity, capital and other 
indicators of financial stability, particularly as compared with those 
of similarly situated savings associations; and
    (5) The policies and practices of the savings association's 
directors, officers, and senior management as well as the internal 
control and internal audit systems for implementation of such adopted 
policies and practices.
    (d) Procedures--(1) Notification. When the OTS determines that a 
minimum capital requirement different from that set forth in Sec. 567.2 
of this part is necessary or appropriate for a particular savings 
association, it shall notify the savings association in writing of its 
proposed individual minimum capital requirement; the schedule for 
compliance with the new requirement; and the specific causes for 
determining that the higher individual minimum capital requirement is 
necessary or appropriate for the savings association. The OTS shall 
forward the notifying letter to the appropriate state supervisor if a 
state-chartered savings association would be subject to an individual 
minimum capital requirement.
    (2) Response. (i) The response shall include any information that 
the savings association wants the OTS to consider in deciding whether to 
establish or to amend an individual minimum capital requirement for the 
savings association, what the individual capital requirement should be, 
and, if applicable, what compliance schedule is appropriate for 
achieving the required capital level. The responses of the savings 
association and appropriate state supervisor must be in writing and must 
be delivered to the OTS within 30 days after the date on which the 
notification was received. Such response must be filed in accordance 
with Secs. 516.30 and 516.40 of this chapter. The OTS may extend the 
time period for good cause. The time period for response by the insured 
savings association may be shortened for good cause:
    (A) When, in the opinion of the OTS, the condition of the savings 
association so requires, and the OTS informs the savings association of 
the shortened response period in the notice;
    (B) With the consent of the savings association; or

[[Page 347]]

    (C) When the savings association already has advised the OTS that it 
cannot or will not achieve its applicable minimum capital requirement.
    (ii) Failure to respond within 30 days, or such other time period as 
may be specified by the OTS, may constitute a waiver of any objections 
to the proposed individual minimum capital requirement or to the 
schedule for complying with it, unless the OTS has provided an extension 
of the response period for good cause.
    (3) Decision. After expiration of the response period, the OTS shall 
decide whether or not he believes the proposed individual minimum 
capital requirement should be established for the savings association, 
or whether that proposed requirement should be adopted in modified form, 
based on a review of the savings association's response and other 
relevant information. The OTS's decision shall address comments received 
within the response period from the savings association and the 
appropriate state supervisor (if a state-chartered savings association 
is involved) and shall state the level of capital required, the schedule 
for compliance with this requirement, and any specific remedial action 
the savings association could take to eliminate the need for continued 
applicability of the individual minimum capital requirement. The OTS 
shall provide the savings association and the appropriate state 
supervisor (if a state-chartered savings association is involved) with a 
written decision on the individual minimum capital requirement, 
addressing the substantive comments made by the savings association and 
setting forth the decision and the basis for that decision. Upon receipt 
of this decision by the savings association, the individual minimum 
capital requirement becomes effective and binding upon the savings 
association. This decision represents final agency action.
    (4) Failure to comply. Failure to satisfy an individual minimum 
capital requirement, or to meet any required incremental additions to 
capital under a schedule for compliance with such an individual minimum 
capital requirement, shall constitute a legal basis for issuing a 
capital directive pursuant to Sec. 567.4 of this part.
    (5) Change in circumstances. If, after a decision is made under 
paragraph (d)(3) of this section, there is a change in the circumstances 
affecting the savings association's capital adequacy or its ability to 
reach its required minimum capital level by the specified date, OTS may 
amend the individual minimum capital requirement or the savings 
association's schedule for such compliance. The OTS may decline to 
consider a savings association's request for such changes that are not 
based on a significant change in circumstances or that are repetitive or 
frivolous. Pending the OTS's reexamination of the original decision, 
that original decision and any compliance schedule established 
thereunder shall continue in full force and effect.

[54 FR 49649, Nov. 30, 1989, as amended at 55 FR 13516, Apr. 11, 1990; 
57 FR 14335, 14348, Apr. 20, 1992; 59 FR 64564, Dec. 15, 1994; 60 FR 
66719, Dec. 26, 1995; 66 FR 13009, Mar. 2, 2001]



Sec. 567.4  Capital directives.

    (a) Issuance of a Capital Directive--(1) Purpose. In addition to any 
other action authorized by law, the Office may issue a capital directive 
to a savings association that does not have an amount of capital 
satisfying its minimum capital requirement. Issuance of such a capital 
directive may be based on a savings association's noncompliance with a 
capital requirement established under Sec. 567.2, Sec. 567.3, by a 
written agreement under 12 U.S.C. 1464(s), or as a condition for 
approval of an application. A capital directive may order a savings 
association to:
    (i) Achieve its minimum capital requirement by a specified date;
    (ii) Adhere to the compliance schedule for achieving its individual 
minimum capital requirement;
    (iii) Submit and adhere to a capital plan acceptable to the Office 
describing the means and a time schedule by which the savings 
association shall reach its required capital level;
    (iv) Take other action, including but not limited to, reducing the 
savings association's assets or its rate of liability growth, or 
imposing restrictions on the savings association's payment of dividends, 
in order to cause the savings association to reach its required capital 
level;

[[Page 348]]

    (v) Take any action authorized under Sec. 567.10(e); or
    (vi) Take a combination of any of these actions.

A capital directive issued under this section, including a plan 
submitted pursuant to a capital directive, is enforceable under 12 
U.S.C. 1818 in the same manner and to the same extent as an effective 
and outstanding cease and desist order which has become final under 12 
U.S.C. 1818.
    (2) Notice of intent to issue capital directive. The OTS will 
determine whether to initiate the process of issuing a capital 
directive. The OTS will notify a savings association in writing by 
registered mail of its intention to issue a capital directive. If a 
state-chartered savings association is involved, the OTS will also 
notify and solicit comment from the appropriate state supervisor. The 
notice will state:
    (i) The reasons for issuance of the capital directive and
    (ii) The proposed contents of the capital directive.
    (3) Response to notice of intent. (i) A savings association may 
respond to the notice of intent by submitting its own compliance plan, 
or may propose an alternative plan. The response should also include any 
information that the savings association wishes the OTS to consider in 
deciding whether to issue a capital directive. The appropriate state 
supervisor may also submit a response. These responses must be in 
writing and be delivered within 30 days after the receipt of the 
notices. Such responses must be filed in accordance with Secs. 516.30 
and 516.40 of this chapter. In its discretion, the Office may extend the 
time period for the response for good cause. The Office may, for good 
cause, shorten the 30-day time period for response by the insured 
savings assocation:
    (A) When, in the opinion of the Office, the condition of the savings 
association so requires, and the Office informs the savings association 
of the shortened response period in the notice;
    (B) With the consent of the savings association; or
    (C) When the savings association already has advised the Office that 
it cannot or will not achieve its applicable minimum capital 
requirement.
    (ii) Failure to respond within 30 days of receipt, or such other 
time period as may be specified by the Office, may constitute a waiver 
of any objections to the capital directive unless the Office grants an 
extension of the time period for good cause.
    (4) Decision. After the closing date of the savings association's 
response period, or upon receipt of the savings association's response, 
if earlier, the Office shall consider the savings association's response 
and may seek additional information or clarification of the response. 
Thereafter, the Office will determine whether or not to issue a capital 
directive and, if one is to be issued, whether it should be as 
originally proposed or in modified form.
    (5) Service and effectiveness. (i) Upon issuance, a capital 
directive will be served upon the savings association. It will include 
or be accompanied by a statement of reasons for its issuance and shall 
address the responses received during the response period.
    (ii) A capital directive shall become effective upon the expiration 
of 30 days after service upon the savings association, unless the Office 
determines that a shorter effective period is necessary either on 
account of the public interest or in order to achieve the capital 
directive's purpose. If the savings association has consented to 
issuance of the capital directive, it may become effective immediately. 
A capital directive shall remain in effect and enforceable unless, and 
then only to the extent that, it is stayed, modified, or terminated by 
the Office.
    (6) Change in circumstances. Upon a change in circumstances, a 
savings association may submit a request to the OTS to reconsider the 
terms of the capital directive or consider changes in the savings 
association's capital plan issued under a directive for the savings 
association to achieve its minimum capital requirement. If the OTS 
believes such a change is warranted, the OTS may modify the savings 
association's capital requirement or may refuse to make such 
modification if it determines that there are not significant changes in 
circumstances. Pending a decision on reconsideration, the

[[Page 349]]

capital directive and capital plan shall continue in full force and 
effect.
    (b) Relation to other administrative actions. The Office--
    (1) May consider a savings association's progress in adhering to any 
capital plan required under this section whenever such savings 
association or any affiliate of such savings association (including any 
company which controls such savings association) seeks approval for any 
proposal that would have the effect of diverting earnings, diminishing 
capital, or otherwise impeding such savings association's progress in 
meeting its minimum capital requirement; and
    (2) May disapprove any proposal referred to in paragraph (b)(1) of 
this section if the Office determines that the proposal would adversely 
affect the ability of the savings association on a current or pro forma 
basis to satisfy its capital requirement.

[54 FR 49649, Nov. 30, 1989, as amended at 55 FR 13517, Apr. 11, 1990; 
57 FR 14335, Apr. 20, 1992; 57 FR 33440, July 29, 1992; 60 FR 66719, 
Dec. 26, 1995; 66 FR 13009, Mar. 2, 2001]



Sec. 567.5  Components of capital.

    (a) Core Capital. (1) The following elements,\3\ less the amount of 
any deductions pursuant to paragraph (a)(2) of this section, comprise a 
savings association' s core capital:
---------------------------------------------------------------------------

    \3\ Stock issues where the dividend is reset periodically based on 
current market conditions and the savings associations's current credit 
rating, including but not limited to, auction rate, money market or 
remarketable preferred stock, are assigned to supplementary capital, 
regardless of cumulative or noncumulative characteristics.
---------------------------------------------------------------------------

    (i) Common stockholders' equity (including retained earnings);
    (ii) Noncumulative perpetual preferred stock and related surplus;\4\
---------------------------------------------------------------------------

    \4\ Stock issued by subsidiaries that may not be counted by the 
parent savings association on the Thrift Financial Report, likewise 
shall not be considered in calculating capital. For example, preferred 
stock issued by a savings association or a subsidiary that is, in 
effect, collateralized by assets of the savings association or one of 
its subsidiaries shall not be included in capital. Similarly, common 
stock with mandatorily redeemable provisions is not includable in core 
capital.
---------------------------------------------------------------------------

    (iii) Minority interests in the equity accounts of subsidiaries that 
are fully consolidated;
    (iv) Nonwithdrawable accounts and pledged deposits of mutual savings 
associations (excluding any treasury shares held by the savings 
association) meeting the criteria of regulations and memoranda of the 
Office to the extent that such accounts or deposits have no fixed 
maturity date, cannot be withdrawn at the option of the accountholder, 
and do not earn interest that carries over to subsequent periods;
    (v) The remaining goodwill (FSLIC Capital Contributions) resulting 
from prior regulatory accounting practices as provided in paragraph (1) 
of the definition for qualifying supervisory goodwill in Sec. 567.1 of 
this part.
    (2) Deductions from core capital. (i) Intangible assets, as defined 
in Sec. 567.1 of this part, are deducted from assets and capital in 
computing core capital, except as otherwise provided by Sec. 567.12 of 
this part.
    (ii) Servicing assets that are not includable in core capital 
pursuant to Sec. 567.12 of this part are deducted from assets and 
capital in computing core capital.
    (iii) Credit-enhancing interest-only strips that are not includable 
in core capital under Sec. 567.12 of this part are deducted from assets 
and capital in computing core capital.
    (iv) Investments, both equity and debt, in subsidiaries that are not 
includable subsidiaries (including those subsidiaries where the savings 
association has a minority ownership interest) are deducted from assets 
and, thus core capital except as provided in paragraphs (a)(2)(v) and 
(a)(2)(vi) of this section.
    (v) If a savings association has any investments (both debt and 
equity) in one or more subsidiaries engaged as of April 12, 1989 and 
continuing to be engaged in any activity that would not fall within the 
scope of activities in which includable subsidiaries may engage, it must 
deduct such investments from assets and, thus, core capital in 
accordance with this paragraph (a)(2)(v). The savings association must 
first deduct from assets and, thus, core

[[Page 350]]

capital the amount by which any investments in such subsidiary(ies) 
exceed the amount of such investments held by the savings association as 
of April 12, 1989. Next the savings association must deduct from assets 
and, thus, core capital the lesser of:
    (A) The savings association's investments in and extensions of 
credit to the subsidiary as of April 12, 1989; or
    (B) The savings association's investments in and extensions of 
credit to the subsidiary on the date as of which the savings 
association's capital is being determined.
    (vi) If a savings association holds a subsidiary (either directly or 
through a subsidiary) that is itself a domestic depository institution, 
the Office may, in its sole discretion upon determining that the amount 
of core capital that would be required would be higher if the assets and 
liabilities of such subsidiary were consolidated with those of the 
parent savings association than the amount that would be required if the 
parent savings association's investment were deducted pursuant to 
paragraphs (a)(2)(iv) and (a)(2)(v) of this section, consolidate the 
assets and liabilities of that subsidiary with those of the parent 
savings association in calculating the capital adequacy of the parent 
savings association, regardless of whether the subsidiary would 
otherwise be an includable subsidiary as defined in Sec. 567.1 of this 
part.
    (b) Supplementary Capital. Supplementary capital counts towards a 
savings association's total capital up to a maximum of 100% of the 
savings association's core capital. The following elements comprise a 
savings association's supplementary capital:
    (1) Permanent Capital Instruments. (i) Cumulative perpetual 
preferred stock and other perpetual preferred stock \5\ issued pursuant 
to regulations and memoranda of the Office;
---------------------------------------------------------------------------

    \5\ Preferred stock issued by subsidiaries that may not be counted 
by the parent savings association on the Thrift Financial Report 
likewise may not be considered in calculating capital. Preferred stock 
issued by a savings association or a subsidiary that is, in effect, 
collateralized by assets of the savings association or one of its 
subsidiaries may not be included in capital.
---------------------------------------------------------------------------

    (ii) Mutual capital certificates issued pursuant to regulations and 
memoranda of the Office;
    (iii) Nonwithdrawable accounts and pledged deposits (excluding any 
treasury shares held by the savings association) meeting the criteria of 
12 CFR 561.42 to the extent that such instruments are not included in 
core capital under paragraph (a) of this section;
    (iv) Net worth certificates either issued pursuant to regulations 
and memoranda of the Office, or that the FDIC is committed to purchase;
    (v) Income capital certificates;
    (vi) Perpetual subordinated debt issued pursuant to regulations and 
memoranda of the Office; and
    (vii) Mandatory convertible subordinated debt (capital notes) issued 
pursuant to regulations and memoranda of the Office.
    (2) Maturing Capital Instruments. (i) Subordinated debt issued 
pursuant to regulations and memoranda of the Office;
    (ii) Intermediate-term preferred stock issued pursuant to 
regulations and memoranda of the Office and any related surplus:
    (iii) Mandatory convertible subordinated debt (commitment notes) 
issued pursuant to regulations and memoranda of the Office; and
    (iv) Mandatorily redeemable preferred stock that was issued before 
July 23, 1985 or issued pursuant to regulations and memoranda of the 
Office and approved in writing by the FSLIC for inclusion as regulatory 
capital before or after issuance.
    (3) Transition rules for maturing capital instruments--(i) Maturing 
capital instruments issued on or before November 7, 1989. All maturing 
capital instruments issued on or before November 7, 1989, are includable 
in supplementary capital to the extent such instruments were includable 
in capital pursuant to the regulations of the OTS in effect as of that 
date, including any applicable amortization schedules. With the prior 
approval of the OTS, a savings association may include maturing capital 
instruments issued on or before November 7, 1989, in supplementary 
capital in accordance with the treatment set forth in paragraph 
(b)(3)(ii) of this section.

[[Page 351]]



------------------------------------------------------------------------
                                                              Percent
                                                            included in
    Years to maturity of outstanding subordinated debt     supplementary
                                                              capital
------------------------------------------------------------------------
Greater than or equal to 7...............................          100
Less than 7 but greater than or equal to 6...............           86
Less than 6 but greater than or equal to 5...............           71
Less than 5 but greater than or equal to 4...............           57
Less than 4 but greater than or equal to 3...............           43
Less than 3 but greater than or equal to 2...............           29
Less than 2 but greater than or equal to 1...............           14
Less than 1..............................................            0
------------------------------------------------------------------------

    (ii) Maturing capital instruments issued after November 7, 1989. A 
savings association issuing maturing capital instruments after November 
7, 1989, may choose, subject to paragraph (b)(3)(ii)(C) of this section, 
to include such instruments pursuant to either paragraph (b)(3)(ii)(A) 
or (b)(3)(ii)(B) of this section.
    (A) At the beginning of each of the last five years of the life of 
the maturing capital instrument, the amount that is eligible to be 
included as supplementary capital is reduced by 20% of the original 
amount of that instrument (net of redemptions).\6\
---------------------------------------------------------------------------

    \6\ Capital instruments may be redeemed prior to maturity and 
without the prior approval of the Office, as long as the instruments are 
redeemed with the proceeds of, or replaced by, a like amount of a 
similar or higher quality capital instrument. However, the Office must 
be notified in writing at least 30 days in advance of such redemption.
---------------------------------------------------------------------------

    (B) Only the aggregate amount of maturing capital instruments that 
mature in any one year during the seven years immediately prior to an 
instrument's maturity that does not exceed 20% of an institution's 
capital will qualify as supplementary capital.
    (C) Once a savings association selects either paragraph 
(b)(3)(ii)(A) or (b)(3)(ii)(B) of this section for the issuance of a 
maturing capital instrument, it must continue to elect that option for 
all subsequent issuances of maturing capital instruments for as long as 
there is a balance outstanding of such post-November 7, 1989 issuances. 
Only when such issuances have all been repaid and the savings 
association has no balance of such issuances outstanding may the savings 
association elect the other option.
    (4) General valuation loan and lease loss allowances. General 
valuation loan and lease loss allowances established pursuant to 
regulations and memoranda of the Office up to a maximum of 1.25 percent 
of risk-weighted assets.\7\
---------------------------------------------------------------------------

    \7\ The amount of the general valuation loan and lease loss 
allowances that may be included in capital is based on a percentage of 
risk-weighted assets. The gross sum of risk-weighted assets used in this 
calculation includes all risk-weighted assets, with the exception of the 
assets required to be deducted under Sec. 567.6 in establishing risk-
weighted assets--``excess GVA'' defined as assets required to be 
deducted from capital under Sec. 567.5(a)(2). A savings association may 
deduct excess GVA from the gross sum of risk-weighted assets (i.e., 
risk-weighted assets including general valuation allowances) in 
computing the denominator of the risk-based capital standard. Thus, a 
savings association will exclude the same amount of excess GVA from both 
the numerator and the denominator of the risk-based capital ratio.
---------------------------------------------------------------------------

    (5) Unrealized gains on equity securities. Up to 45 percent of 
unrealized gains on available-for-sale equity securities with readily 
determinable fair values may be included in supplementary capital. 
Unrealized gains are unrealized holding gains, net of unrealized holding 
losses, before income taxes, calculated as the amount, if any, by which 
fair value exceeds historical cost. The OTS may disallow such inclusion 
in the calculation of supplementary capital if the Office determines 
that the equity securities are not prudently valued.
    (c) Total capital. (1) A savings association's total capital equals 
the sum of its core capital and supplementary capital (to the extent 
that such supplementary capital does not exceed 100% of its core 
capital).
    (2) The following assets, in addition to assets required to be 
deducted elsewhere in calculating core capital, are deducted from assets 
for purposes of determining total capital:
    (i) Reciprocal holdings of depository institution capital 
instruments;
    (ii) All equity investments; and
    (iii) That portion of land loans and nonresidential construction 
loans in excess of 80 percent loan-to-value ratio.
    (3) For the purposes of any risk-based capital requirement under 
this part, a savings association's total capital equals the amount 
calculated pursuant to paragraphs (c)(1) and (c)(2) of this

[[Page 352]]

section, minus the amount of its IRR component as calculated pursuant to 
Sec. 567.7 of this part.

[54 FR 49649, Nov. 30, 1989, as amended at 57 FR 33439, July 29, 1992; 
57 FR 33440, July 29, 1992; 58 FR 45813, Aug. 31, 1993; 59 FR 4788, Feb. 
2, 1994; 60 FR 39232, Aug. 1, 1995; 62 FR 66263, Dec. 18, 1997; 63 FR 
42678, Aug. 10, 1998; 63 FR 46524, Sept. 1, 1998; 66 FR 59663, Nov. 29, 
2001]



Sec. 567.6  Risk-based capital credit risk-weight categories.

    (a) Risk-weighted assets. Risk-weighted assets equal risk-weighted 
on-balance sheet assets (computed under paragraph (a)(1) of this 
section), plus risk-weighted off-balance sheet activities (computed 
under paragraph (a)(2) of this section), plus risk-weighted recourse 
obligations, direct credit substitutes, and certain other positions 
(computed under paragraph (b) of this section). Assets not included 
(i.e., deducted from capital) for purposes of calculating capital under 
Sec. 567.5 are not included in calculating risk-weighted assets.
    (1) On-balance sheet assets. Except as provided in paragraph (b) of 
this section, risk-weighted on-balance sheet assets are computed by 
multiplying the on-balance sheet asset amounts times the appropriate 
risk-weight categories. The risk-weight categories are:
    (i) Zero percent Risk Weight (Category 1). (A) Cash, including 
domestic and foreign currency owned and held in all offices of a savings 
association or in transit. Any foreign currency held by a savings 
association must be converted into U.S. dollar equivalents;
    (B) Securities issued by and other direct claims on the U.S. 
Government or its agencies (to the extent such securities or claims are 
unconditionally backed by the full faith and credit of the United States 
Government) or the central government of an OECD country;
    (C) Notes and obligations issued by either the Federal Savings and 
Loan Insurance Corporation or the Federal Deposit Insurance Corporation 
and backed by the full faith and credit of the United States Government;
    (D) Deposit reserves at, claims on, and balances due from Federal 
Reserve Banks;
    (E) The book value of paid-in Federal Reserve Bank stock;
    (F) That portion of assets that is fully covered against capital 
loss and/or yield maintenance agreements by the Federal Savings and Loan 
Insurance Corporation or any successor agency.
    (G) That portion of assets directly and unconditionally guaranteed 
by the United States Government or its agencies, or the central 
government of an OECD country.
    (ii) 20 percent Risk Weight (Category 2). (A) Cash items in the 
process of collection;
    (B) That portion of assets collateralized by the current market 
value of securities issued or guaranteed by the United States government 
or its agencies, or the central government of an OECD country;
    (C) That portion of assets conditionally guaranteed by the United 
States Government or its agencies, or the central government of an OECD 
country;
    (D) Securities (not including equity securities) issued by and other 
claims on the U.S. Government or its agencies which are not backed by 
the full faith and credit of the United States Government;
    (E) Securities (not including equity securities) issued by, or other 
direct claims on, United States Government-sponsored agencies;
    (F) That portion of assets guaranteed by United States Government-
sponsored agencies;
    (G) That portion of assets collateralized by the current market 
value of securities issued or guaranteed by United States Government-
sponsored agencies;
    (H) [Reserved]
    (I) Claims representing general obligations of any public-sector 
entity in an OECD country, and that portion of any claims guaranteed by 
any such public-sector entity;
    (J) Bonds issued by the Financing Corporation or the Resolution 
Funding Corporation;
    (K) Balances due from and all claims on domestic depository 
institutions. This includes demand deposits and other transaction 
accounts, savings deposits and time certificates of deposit,

[[Page 353]]

federal funds sold, loans to other depository institutions, including 
overdrafts and term federal funds, holdings of the savings association's 
own discounted acceptances for which the account party is a depository 
institution, holdings of bankers acceptances of other institutions and 
securities issued by depository institutions, except those that qualify 
as capital;
    (L) The book value of paid-in Federal Home Loan Bank stock;
    (M) Deposit reserves at, claims on and balances due from the Federal 
Home Loan Banks;
    (N) Assets collateralized by cash held in a segregated deposit 
account by the reporting savings association;
    (O) Claims on, or guaranteed by, official multilateral lending 
institutions or regional development institutions in which the United 
States Government is a shareholder or contributing member;\8\
---------------------------------------------------------------------------

    \8\ These institutions include, but are not limited to, the 
International Bank for Reconstruction and Development (World Bank), the 
Inter-American Development Bank, the Asian Development Bank, the African 
Development Bank, the European Investments Bank, the International 
Monetary Fund and the Bank for International Settlements.
---------------------------------------------------------------------------

    (P) That portion of assets collateralized by the current market 
value of securities issued by official multilateral lending institutions 
or regional development institutions in which the United States 
Government is a shareholder or contributing member.
    (Q) All claims on depository institutions incorporated in an OECD 
country, and all assets backed by the full faith and credit of 
depository institutions incorporated in an OECD country. This includes 
the credit equivalent amount of participations in commitments and 
standby letters of credit sold to other depository institutions 
incorporated in an OECD country, but only if the originating bank 
remains liable to the customer or beneficiary for the full amount of the 
commitment or standby letter of credit. Also included in this category 
are the credit equivalent amounts of risk participations in bankers' 
acceptances conveyed to other depository institutions incorporated in an 
OECD country. However, bank-issued securities that qualify as capital of 
the issuing bank are not included in this risk category;
    (R) Claims on, or guaranteed by depository institutions other than 
the central bank, incorporated in a non-OECD country, with a remaining 
maturity of one year or less;
    (S) That portion of local currency claims conditionally guaranteed 
by central governments of non-OECD countries, to the extent the savings 
association has local currency liabilities in that country.
    (iii) 50 percent Risk Weight (Category 3). (A) Revenue bonds issued 
by any public-sector entity in an OECD country for which the underlying 
obligor is a public- sector entity, but which are repayable solely from 
the revenues generated from the project financed through the issuance of 
the obligations;
    (B) Qualifying mortgage loans and qualifying multifamily mortgage 
loans;
    (C) Privately-issued mortgage-backed securities (i.e., those that do 
not carry the guarantee of a government or government sponsored entity) 
representing an interest in qualifying mortgage loans or qualifying 
multifamily mortgage loans. If the security is backed by qualifying 
multifamily mortgage loans, the savings association must receive timely 
payments of principal and interest in accordance with the terms of the 
security. Payments will generally be considered timely if they are not 
30 days past due;
    (D) Qualifying residential construction loans as defined in 
Sec. 567.1 of this part.
    (iv) 100 percent Risk Weight (Category 4). All assets not specified 
above or deducted from calculations of capital pursuant to Sec. 567.5 of 
this part, including, but not limited to:
    (A) Consumer loans;
    (B) Commercial loans;
    (C) Home equity loans;
    (D) Non-qualifying mortgage loans;
    (E) Non-qualifying multifamily mortgage loans;
    (F) Residential construction loans;
    (G) Land loans, except that portion of such loans that are in excess 
of 80% loan-to-value ratio;
    (H) Nonresidential construction loans, except that portion of such 
loans

[[Page 354]]

that are in excess of 80% loan-to-value ratio;
    (I) Obligations issued by any state or any politica1 subdivision 
thereof for the benefit of a private party or enterprise where that 
party or enterprise, rather than the issuing state or political 
subdivision, is responsible for the timely payment of principal and 
interest on the obligations, e.g., industrial development bonds;
    (J) Debt securities not otherwise described in this section;
    (K) Investments in fixed assets and premises;
    (L) Certain nonsecurity financial instruments including servicing 
assets and intangible assets includable in core capital under 
Sec. 567.12 of this part;
    (M) Interest-only strips receivable, other than credit-enhancing 
interest-only strips;
    (N)-(O) [Reserved]
    (P) That portion of equity investments not deducted pursuant to 
Sec. 567.5 of this part;
    (Q) The prorated assets of subsidiaries (except for the assets of 
includable, fully consolidated subsidiaries) to the extent such assets 
are included in adjusted total assets;
    (R) All repossessed assets or assets that are more than 90 days past 
due; and
    (S) Equity investments that the Office determines have the same risk 
characteristics as foreclosed real estate by the savings association;
    (T) Equity investments permissible for a national bank.
    (v) [Reserved]
    (vi) Indirect ownership interests in pools of assets. Assets 
representing an indirect holding of a pool of assets, e.g., mutual 
funds, are assigned to risk-weight categories under this section based 
upon the risk weight that would be assigned to the assets in the 
portfolio of the pool. An investment in shares of a mutual fund whose 
portfolio consists primarily of various securities or money market 
instruments that, if held separately, would be assigned to different 
risk-weight categories, generally is assigned to the risk-weight 
category appropriate to the highest risk-weighted asset that the fund is 
permitted to hold in accordance with the investment objectives set forth 
in its prospectus. The savings association may, at its option, assign 
the investment on a pro rata basis to different risk-weight categories 
according to the investment limits in its prospectus. In no case will an 
investment in shares in any such fund be assigned to a total risk weight 
less than 20 percent. If the savings association chooses to assign 
investments on a pro rata basis, and the sum of the investment limits of 
assets in the fund's prospectus exceeds 100 percent, the savings 
association must assign the highest pro rata amounts of its total 
investment to the higher risk categories. If, in order to maintain a 
necessary degree of short-term liquidity, a fund is permitted to hold an 
insignificant amount of its assets in short-term, highly liquid 
securities of superior credit quality that do not qualify for a 
preferential risk weight, such securities will generally be disregarded 
in determining the risk-weight category into which the savings 
association's holding in the overall fund should be assigned. The 
prudent use of hedging instruments by a mutual fund to reduce the risk 
of its assets will not increase the risk weighting of the mutual fund 
investment. For example, the use of hedging instruments by a mutual fund 
to reduce the interest rate risk of its government bond portfolio will 
not increase the risk weight of that fund above the 20 percent category. 
Nonetheless, if the fund engages in any activities that appear 
speculative in nature or has any other characteristics that are 
inconsistent with the preferential risk-weighting assigned to the fund's 
assets, holdings in the fund will be assigned to the 100 percent risk-
weight category.
    (2) Off-balance sheet items. Except as provided in paragraph (b) of 
this section, risk-weighted off-balance sheet items are determined by 
the following two-step process. First, the face amount of the off-
balance sheet item must be multiplied by the appropriate credit 
conversion factor listed in this paragraph (a)(2). This calculation 
translates the face amount of an off-balance sheet exposure into an on-
balance sheet credit-equivalent amount. Second, the credit-equivalent 
amount must be assigned to the appropriate

[[Page 355]]

risk-weight category using the criteria regarding obligors, guarantors, 
and collateral listed in paragraph (a)(1) of this section, provided that 
the maximum risk weight assigned to the credit-equivalent amount of an 
interest-rate or exchange-rate contract is 50 percent. The following are 
the credit conversion factors and the off-balance sheet items to which 
they apply.
    (i) 100 percent credit conversion factor (Group A).
    (A) [Reserved]
    (B) Risk participations purchased in bankers' acceptances;
    (C) [Reserved]
    (D) Forward agreements and other contingent obligations with a 
certain draw down, e.g., legally binding agreements to purchase assets 
at a specified future date. On the date an institution enters into a 
forward agreement or similar obligation, it should convert the principal 
amount of the assets to be purchased at 100 percent as of that date and 
then assign this amount to the risk-weight category appropriate to the 
obligor or guarantor of the item, or the nature of the collateral;
    (E) Indemnification of customers whose securities the savings 
association has lent as agent. If the customer is not indemnified 
against loss by the savings association, the transaction is excluded 
from the risk-based capital calculation. When a savings association 
lends its own securities, the transaction is treated as a loan. When a 
savings association lends its own securities or is acting as agent, 
agrees to indemnify a customer, the transaction is assigned to the risk 
weight appropriate to the obligor or collateral that is delivered to the 
lending or indemnifying institution or to an independent custodian 
acting on their behalf.
    (ii) 50 percent credit conversion factor (Group B). (A) Transaction-
related contingencies, including, among other things, performance bonds 
and performance-based standby letters of credit related to a particular 
transaction;
    (B) Unused portions of commitments, including home equity lines of 
credit, with an original maturity exceeding one year except those listed 
in paragraph (a)(2)(iv) of this section; and
    (C) Revolving underwriting facilities, note issuance facilities, and 
similar arrangements pursuant to which the savings association's 
customer can issue short-term debt obligations in its own name, but for 
which the savings association has a legally binding commitment to 
either:
    (1) Purchase the obligations the customer is unable to sell by a 
stated date; or
    (2) Advance funds to its customer, if the obligations cannot be 
sold.
    (iii) 20 percent credit conversion factor (Group C). Trade-related 
contingencies, i.e., short-term, self-liquidating instruments used to 
finance the movement of goods and collateralized by the underlying 
shipment. A commercial letter of credit is an example of such an 
instrument.
    (iv) Zero percent credit conversion factor (Group D). (A) unused 
commitments with an original maturity of one year or less;
    (B) Unused commitments with an original maturity greater than one 
year, if they are unconditionally cancelable at any time at the option 
of the savings association and the savings association has the 
contractual right to make, and in fact does make, either:
    (1) A separate credit decision based upon the borrower's current 
financial condition before each drawing under the lending facility; or
    (2) An annual (or more frequent) credit review based upon the 
borrower's current financial condition to determine whether or not the 
lending facility should be continued; and
    (C) The unused portion of retail credit card lines or other related 
plans that are unconditionally cancelable by the savings association in 
accordance with applicable law.
    (v) Off-balance sheet contracts; interest-rate and foreign exchange 
rate contracts (Group E)--(A) Calculation of credit equivalent amounts. 
The credit equivalent amount of an off-balance sheet interest rate or 
foreign exchange rate contract that is not subject to a qualifying 
bilateral netting contract in accordance with paragraph (a)(2)(v)(B) of 
this section is equal to the sum of the current credit exposure, i.e., 
the replacement cost of the contract, and the potential future credit 
exposure of the off-balance sheet rate contract. The calculation of 
credit equivalent

[[Page 356]]

amounts is measured in U.S. dollars, regardless of the currency or 
currencies specified in the off-balance sheet rate contract.
    (1) Current credit exposure. The current credit exposure of an off-
balance sheet rate contract is determined by the mark-to-market value of 
the contract. If the mark-to-market value is positive, then the current 
credit exposure equals that mark-to-market value. If the mark-to-market 
value is zero or negative, then the current exposure is zero. In 
determining its current credit exposure for multiple off-balance sheet 
rate contracts executed with a single counterparty, a savings 
association may net positive and negative mark-to-market values of off-
balance sheet rate contracts if subject to a bilateral netting contract 
as provided in paragraph (a)(2)(v)(B) of this section.
    (2) Potential future credit exposure. The potential future credit 
exposure of an off-balance sheet rate contract, including a contract 
with a negative mark-to-market value, is estimated by multiplying the 
notional principal \9\ by a credit conversion factor. Savings 
associations, subject to examiner review, should use the effective 
rather than the apparent or stated notional amount in this calculation. 
The conversion factors are:\10\
---------------------------------------------------------------------------

    \9\ For purposes of calculating potential future credit exposure for 
foreign exchange contracts and other similar contracts, in which 
notional principal is equivalent to cash flows, total notional principal 
is defined as the net receipts to each party falling due on each value 
date in each currency.
    \10\ No potential future credit exposure is calculated for single 
currency interest rate swaps in which payments are made based upon two 
floating rate indices, so-called floating/floating or basis swaps; the 
credit equivalent amount is measured solely on the basis of the current 
credit exposure.

------------------------------------------------------------------------
                                                               Foreign
                                                  Interest     exchange
              Remaining maturity                    rate         rate
                                                 contracts    contracts
                                                 (percents)   (percents)
------------------------------------------------------------------------
One year or less..............................          0.0          1.0
Over one year.................................          0.5          5.0
------------------------------------------------------------------------

    (B) Off-balance sheet rate contracts subject to bilateral netting 
contracts. In determining its current credit exposure for multiple off-
balance sheet rate contracts executed with a single counterparty, a 
savings association may net off-balance sheet rate contracts subject to 
a bilateral netting contract by offsetting positive and negative mark-
to-market values, provided that:
    (1) The bilateral netting contract is in writing;
    (2) The bilateral netting contract creates a single legal obligation 
for all individual off-balance sheet rate contracts covered by the 
bilateral netting contract. In effect, the bilateral netting contract 
provides that the savings association has a single claim or obligation 
either to receive or pay only the net amount of the sum of the positive 
and negative mark-to-market values on the individual off-balance sheet 
rate contracts covered by the bilateral netting contract. The single 
legal obligation for the net amount is operative in the event that a 
counterparty, or a counterparty to whom the bilateral netting contract 
has been validly assigned, fails to perform due to any of the following 
events: default, insolvency, bankruptcy, or other similar circumstances;
    (3) The savings association obtains a written and reasoned legal 
opinion(s) representing, with a high degree of certainty, that in the 
event of a legal challenge, including one resulting from default, 
insolvency, bankruptcy or similar circumstances, the relevant court and 
administrative authorities would find the savings association's exposure 
to be the net amount under:
    (i) The law of the jurisdiction in which the counterparty is 
chartered or the equivalent location in the case of noncorporate 
entities, and if a branch of the counterparty is involved, then also 
under the law of the jurisdiction in which the branch is located;
    (ii) The law that governs the individual off-balance sheet rate 
contracts covered by the bilateral netting contract; and
    (iii) The law that governs the bilateral netting contract;
    (4) The savings association establishes and maintains procedures to 
monitor possible changes in relevant law and to ensure that the 
bilateral netting contract continues to satisfy the requirements of this 
section; and

[[Page 357]]

    (5) The savings association maintains in its files documentation 
adequate to support the netting of an off-balance sheet rate 
contract.\11\
---------------------------------------------------------------------------

    \11\ By netting individual off-balance sheet rate contracts for the 
purpose of calculating its credit equivalent amount, a savings 
association represents that documentation adequate to support the 
netting of an off-balance sheet rate contract is in the savings 
association's files and available for inspection by the OTS. Upon 
determination by the OTS that a savings association's files are 
inadequate or that a bilateral netting contract may not be legally 
enforceable under any one of the bodies of law described in paragraphs 
(a)(2)(v)(B)(3) (i) through (iii) of this section, the underlying 
individual off-balance sheet rate contracts may not be netted for the 
purposes of this section.
---------------------------------------------------------------------------

    (C) Walkaway clause. A bilateral netting contract that contains a 
walkaway clause is not eligible for netting for purposes of calculating 
the current credit exposure amount. The term ``walkaway clause'' means a 
provision in a bilateral netting contract that permits a nondefaulting 
counterparty to make a lower payment than it would make otherwise under 
the bilateral netting contract, or no payment at all, to a defaulter or 
the estate of a defaulter, even if the defaulter or the estate of the 
defaulter is a net creditor under the bilateral netting contract.
    (D) Risk weighting. Once the savings association determines the 
credit equivalent amount for an off-balance sheet rate contract, that 
amount is assigned to the risk-weight category appropriate to the 
counterparty, or, if relevant, to the nature of any collateral or 
guarantee. Collateral held against a netting contract is not recognized 
for capital purposes unless it is legally available for all contracts 
included in the netting contract. However, the maximum risk weight for 
the credit equivalent amount of such off-balance sheet rate contracts is 
50 percent.
    (E) Exceptions. The following off-balance sheet rate contracts are 
not subject to the above calculation, and therefore, are not part of the 
denominator of a savings association's risk-based capital ratio:
    (1) A foreign exchange rate contract with an original maturity of 14 
calendar days or less; and
    (2) Any interest rate or foreign exchange rate contract that is 
traded on an exchange requiring the daily payment of any variations in 
the market value of the contract.
    (b) Recourse obligations, direct credit substitutes, and certain 
other positions. (1) In general. Except as otherwise permitted in this 
paragraph (b), to determine the risk-weighted asset amount for a 
recourse obligation or a direct credit substitute (but not a residual 
interest):
    (i) Multiply the full amount of the credit-enhanced assets for which 
the savings association directly or indirectly retains or assumes credit 
risk by a 100 percent conversion factor. (For a direct credit substitute 
that is an on-balance sheet asset (e.g., a purchased subordinated 
security), a savings association must use the amount of the direct 
credit substitute and the full amount of the asset its supports, i.e., 
all the more senior positions in the structure); and
    (ii) Assign this credit equivalent amount to the risk-weight 
category appropriate to the obligor in the underlying transaction, after 
considering any associated guarantees or collateral. Paragraph (a)(1) of 
this section lists the risk-weight categories.
    (2) Residual interests. Except as otherwise permitted under this 
paragraph (b), a savings association must maintain risk-based capital 
for residual interests as follows:
    (i) Credit-enhancing interest-only strips. After applying the 
concentration limit under Sec. 567.12(e)(2) of this part, a saving 
association must maintain risk-based capital for a credit-enhancing 
interest-only strip equal to the remaining amount of the strip (net of 
any existing associated deferred tax liability), even if the amount of 
risk-based capital that must be maintained exceeds the full risk-based 
capital requirement for the assets transferred. Transactions that, in 
substance, result in the retention of credit risk associated with a 
transferred credit-enhancing interest-only strip are treated as if the 
strip was retained by the savings association and was not transferred.

[[Page 358]]

    (ii) Other residual interests. A saving association must maintain 
risk-based capital for a residual interest (excluding a credit-enhancing 
interest-only strip) equal to the face amount of the residual interest 
(net of any existing associated deferred tax liability), even if the 
amount of risk-based capital that must be maintained exceeds the full 
risk-based capital requirement for the assets transferred. Transactions 
that, in substance, result in the retention of credit risk associated 
with a transferred residual interest are treated as if the residual 
interest was retained by the savings association and was not 
transferred.
    (iii) Residual interests and other recourse obligations. Where a 
savings association holds a residual interest (including a credit-
enhancing interest-only strip) and another recourse obligation in 
connection with the same transfer of assets, the savings association 
must maintain risk-based capital equal to the greater of:
    (A) The risk-based capital requirement for the residual interest as 
calculated under paragraph (b)(2)(i) through (ii) of this section; or
    (B) The full risk-based capital requirement for the assets 
transferred, subject to the low-level recourse rules under paragraph 
(b)(7) of this section.
    (3) Ratings-based approach--(i) Calculation. A savings association 
may calculate the risk-weighted asset amount for an eligible position 
described in paragraph (b)(3)(ii) of this section by multiplying the 
face amount of the position by the appropriate risk weight determined in 
accordance with Table A or B of this section.
    Note: Stripped mortgage-backed securities or other similar 
instruments, such as interest-only and principal-only strips, that are 
not credit enhancing must be assigned to the 100% risk-weight category.

                                 Table A
------------------------------------------------------------------------
                                                                  Risk
                                                                 weight
                  Long term rating category                       (In
                                                                percent)
------------------------------------------------------------------------
Highest or second highest investment grade...................         20
Third highest investment grade...............................         50
Lowest investment grade......................................        100
One category below investment grade..........................        200
------------------------------------------------------------------------


                                 Table B
------------------------------------------------------------------------
                                                                  Risk
                                                                 weight
                  Short term rating category                      (In
                                                                percent)
------------------------------------------------------------------------
Highest investment grade.....................................         20
Second highest investment grade..............................         50
Lowest investment grade......................................        100
------------------------------------------------------------------------

    (ii) Eligibility. (A) Traded positions. A position is eligible for 
the treatment described in paragraph (b)(3)(i) of this section, if:
    (1) The position is a recourse obligation, direct credit substitute, 
residual interest, or asset- or mortgage-backed security and is not a 
credit-enhancing interest-only strip;
    (2) The position is a traded position; and
    (3) The NRSRO has rated a long term position as one grade below 
investment grade or better or a short term position as investment grade. 
If two or more NRSROs assign ratings to a traded position, the savings 
association must use the lowest rating to determine the appropriate 
risk-weight category under paragraph (b)(3)(i) of this section.
    (B) Non-traded positions. A position that is not traded is eligible 
for the treatment described in paragraph (b)(3)(i) of this section if:
    (1) The position is a recourse obligation, direct credit substitute, 
residual interest, or asset- or mortgage-backed security extended in 
connection with a securitization and is not a credit-enhancing interest-
only strip;
    (2) More than one NRSRO rate the position;
    (3) All of the NRSROs that provide a rating rate a long term 
position as one grade below investment grade or better or a short term 
position as investment grade. If the NRSROs assign different ratings to 
the position, the savings association must use the lowest rating to 
determine the appropriate risk-weight category under paragraph (b)(3)(i) 
of this section;
    (4) The NRSROs base their ratings on the same criteria that they use 
to rate securities that are traded positions; and
    (5) The ratings are publicly available.
    (C) Unrated senior positions. If a recourse obligation, direct 
credit substitute, residual interest, or asset- or mortgage-backed 
security is not rated

[[Page 359]]

by an NRSRO, but is senior or preferred in all features to a traded 
position (including collateralization and maturity), the savings 
association may risk-weight the face amount of the senior position under 
paragraph (b)(3)(i) of this section, based on the rating of the traded 
position, subject to supervisory guidance. The savings association must 
satisfy OTS that this treatment is appropriate. This paragraph 
(b)(3)(i)(C) applies only if the traded position provides substantive 
credit support to the unrated position until the unrated position 
matures.
    (4) Certain positions that are not rated by NRSROs. (i) Calculation. 
A savings association may calculate the risk-weighted asset amount for 
eligible position described in paragraph (b)(4)(ii) of this section 
based on the savings association's determination of the credit rating of 
the position. To risk-weight the asset, the savings association must 
multiply the face amount of the position by the appropriate risk weight 
determined in accordance with Table C of this section.

                                 Table C
------------------------------------------------------------------------
                                                                  Risk
                                                                 weight
                       Rating category                            (In
                                                                percent)
------------------------------------------------------------------------
Investment grade.............................................        100
One category below investment grade..........................        200
------------------------------------------------------------------------

    (ii) Eligibility. A position extended in connection with a 
securitization is eligible for the treatment described in paragraph 
(b)(4)(i) of this section if it is not rated by an NRSRO, is not a 
residual interest, and meets the one of the three alternative standards 
described in paragraph (b)(4)(ii)(A), (B), or (C) below of this section:
    (A) Position rated internally. A direct credit substitute, but not a 
purchased credit-enhancing interest-only strip, is eligible for the 
treatment described under paragraph (b)(4)(i) of this section, if the 
position is assumed in connection with an asset-backed commercial paper 
program sponsored by the savings association. Before it may rely on an 
internal credit risk rating system, the saving association must 
demonstrate to OTS's satisfaction that the system is adequate. Adequate 
internal credit risk rating systems typically:
    (1) Are an integral part of the savings association's risk 
management system that explicitly incorporates the full range of risks 
arising from the savings association's participation in securitization 
activities;
    (2) Link internal credit ratings to measurable outcomes, such as the 
probability that the position will experience any loss, the expected 
loss on the position in the event of default, and the degree of variance 
in losses in the event of default on that position;
    (3) Separately consider the risk associated with the underlying 
loans or borrowers, and the risk associated with the structure of the 
particular securitization transaction;
    (4) Identify gradations of risk among ``pass'' assets and other risk 
positions;
    (5) Use clear, explicit criteria to classify assets into each 
internal rating grade, including subjective factors;
    (6) Employ independent credit risk management or loan review 
personnel to assign or review the credit risk ratings;
    (7) Include an internal audit procedure to periodically verify that 
internal risk ratings are assigned in accordance with the savings 
association's established criteria;
    (8) Monitor the performance of the assigned internal credit risk 
ratings over time to determine the appropriateness of the initial credit 
risk rating assignment, and adjust individual credit risk ratings or the 
overall internal credit risk rating system, as needed; and
    (9) Make credit risk rating assumptions that are consistent with, or 
more conservative than, the credit risk rating assumptions and 
methodologies of NRSROs.
    (B) Program ratings. (1) A recourse obligation or direct credit 
substitute, but not a residual interest, is eligible for the treatment 
described in paragraph (b)(4)(i) of this section, if the position is 
retained or assumed in connection with a structured finance program and 
an NRSRO has reviewed the terms of the program and stated a rating for 
positions associated with the program. If the program has options for 
different combinations of assets, standards, internal or external credit 
enhancements and other relevant factors, and the

[[Page 360]]

NRSRO specifies ranges of rating categories to them, the savings 
association may apply the rating category applicable to the option that 
corresponds to the savings association's position.
    (2) To rely on a program rating, the savings association must 
demonstrate to OTS's satisfaction that that the credit risk rating 
assigned to the program meets the same standards generally used by 
NRSROs for rating traded positions. The savings association must also 
demonstrate to OTS's satisfaction that the criteria underlying the 
assignments for the program are satisfied by the particular position.
    (3) If a savings association participates in a securitization 
sponsored by another party, OTS may authorize the savings association to 
use this approach based on a program rating obtained by the sponsor of 
the program.
    (C) Computer program. A recourse obligation or direct credit 
substitute, but not a residual interest, is eligible for the treatment 
described in paragraph (b)(4)(i) of this section, if the position is 
extended in connection with a structured financing program and the 
savings association uses an acceptable credit assessment computer 
program to determine the rating of the position. An NRSRO must have 
developed the computer program and the savings association must 
demonstrate to OTS's satisfaction that the ratings under the program 
correspond credibly and reliably with the rating of traded positions.
    (5) Alternative capital computation for small business obligations--
(i) Definitions. For the purposes of this paragraph (b)(5):
    (A) Qualified savings association means a savings association that:
    (1) Is well capitalized as defined in Sec. 565.4 of this chapter 
without applying the capital treatment described in this paragraph 
(b)(5); or
    (2) Is adequately capitalized as defined in Sec. 565.4 of this 
chapter without applying the capital treatment described in this 
paragraph (b)(5) and has received written permission from the OTS to 
apply that capital treatment.
    (B) Small business means a business that meets the criteria for a 
small business concern established by the Small Business Administration 
in 13 CFR 121 pursuant to 15 U.S.C. 632.
    (ii) Capital requirement. Notwithstanding any other provision of 
this paragraph (b), with respect to a transfer of a small business loan 
or lease of personal property with recourse that is a sale under 
generally accepted accounting principles, a qualified savings 
association may elect to include only the amount of its recourse in its 
risk-weighted assets. To qualify for this election, the savings 
association must establish and maintain a reserve under generally 
accepted accounting principles sufficient to meet the reasonable 
estimated liability of the savings association under the recourse 
obligation.
    (iii) Aggregate amount of recourse. The total outstanding amount of 
recourse retained by a qualified savings association with respect to 
transfers of small business loans and leases of personal property and 
included in the risk-weighted assets of the savings association as 
described in paragraph (b)(5)(ii) of this section, may not exceed 15 
percent of the association's total capital computed under Sec. 567.5(c).
    (iv) Savings association that ceases to be a qualified savings 
association or that exceeds aggregate limits. If a savings association 
ceases to be a qualified savings association or exceeds the aggregate 
limit described in paragraph (b)(5)(iii) of this section, the savings 
association may continue to apply the capital treatment described in 
paragraph (b)(5)(ii) of this section to transfers of small business 
loans and leases of personal property that occurred when the association 
was a qualified savings association and did not exceed the limit.
    (v) Prompt corrective action not affected. (A) A savings association 
shall compute its capital without regard to this paragraph (b)(5) of 
this section for purposes of prompt corrective action (12 U.S.C. 1831o), 
unless the savings association is adequately or well capitalized without 
applying the capital treatment described in this paragraph (b)(5) and 
would be well capitalized after applying that capital treatment.
    (B) A savings association shall compute its capital requirement 
without regard to this paragraph (b)(5) for the purposes of applying 12 
U.S.C. 1381o(g),

[[Page 361]]

regardless of the association's capital level.
    (6) Risk participations and syndications of direct credit 
substitutes. A savings association must calculate the risk-weighted 
asset amount for a risk participation in, or syndication of, a direct 
credit substitute as follows:
    (i) If a savings association conveys a risk participation in a 
direct credit substitute, the savings association must convert the full 
amount of the assets that are supported by the direct credit substitute 
to a credit equivalent amount using a 100 percent conversion factor. The 
savings association must assign the pro rata share of the credit 
equivalent amount that was conveyed through the risk participation to 
the lower of: The risk-weight category appropriate to the obligor in the 
underlying transaction, after considering any associated guarantees or 
collateral; or the risk-weight category appropriate to the party 
acquiring the participation. The savings association must assign the pro 
rata share of the credit equivalent amount that was not participated out 
to the risk-weight category appropriate to the obligor, after 
considering any associated guarantees or collateral.
    (ii) If a savings association acquires a risk participation in a 
direct credit substitute, the savings association must multiply its pro 
rata share of the direct credit substitute by the full amount of the 
assets that are supported by the direct credit substitute, and convert 
this amount to a credit equivalent amount using a 100 percent conversion 
factor. The savings association must assign the resulting credit 
equivalent amount to the risk-weight category appropriate to the obligor 
in the underlying transaction, after considering any associated 
guarantees or collateral.
    (iii) If the savings association holds a direct credit substitute in 
the form of a syndication where each savings association or other 
participant is obligated only for its pro rata share of the risk and 
there is no recourse to the originating party, the savings association 
must calculate the credit equivalent amount by multiplying only its pro 
rata share of the assets supported by the direct credit substitute by a 
100 percent conversion factor. The savings association must assign the 
resulting credit equivalent amount to the risk-weight category 
appropriate to the obligor in the underlying transaction after 
considering any associated guarantees or collateral.
    (7) Limitations on risk-based capital requirements--(i) Low-level 
exposure rule. If the maximum contractual exposure to loss retained or 
assumed by a savings association is less than the effective risk-based 
capital requirement, as determined in accordance with this paragraph 
(b), for the assets supported by the savings association's position, the 
risk-based capital requirement is limited to the savings association's 
contractual exposure less any recourse liability account established in 
accordance with generally accepted accounting principles. This 
limitation does not apply when a savings association provides credit 
enhancement beyond any contractual obligation to support assets it has 
sold.
    (ii) Mortgage-related securities or participation certificates 
retained in a mortgage loan swap. If a savings association holds a 
mortgage-related security or a participation certificate as a result of 
a mortgage loan swap with recourse, it must hold risk-based capital to 
support the recourse obligation and that percentage of the mortgage-
related security or participation certificate that is not covered by the 
recourse obligation. The total amount of risk-based capital required for 
the security (or certificate) and the recourse obligation is limited to 
the risk-based capital requirement for the underlying loans, calculated 
as if the savings association continued to hold these loans as an on-
balance sheet asset.
    (iii) Related on-balance sheet assets. If an asset is included in 
the calculation of the risk-based capital requirement under this 
paragraph (b) and also appears as an asset on the savings association's 
balance sheet, the savings association must risk-weight the asset only 
under this paragraph (b), except in the case of loan servicing assets 
and similar arrangements with embedded recourse obligations or direct 
credit substitutes. In that case, the savings association must 
separately risk-weight the on-balance sheet servicing

[[Page 362]]

asset and the related recourse obligations and direct credit substitutes 
under this section, and incorporate these amounts into the risk-based 
capital calculation.
    (8) Obligations of subsidiaries. If a savings association retains a 
recourse obligation or assumes a direct credit substitute on the 
obligation of a subsidiary that is not an includable subsidiary, and the 
recourse obligation or direct credit substitute is an equity or debt 
investment in that subsidiary under generally accepted accounting 
principles, the face amount of the recourse obligation or direct credit 
substitute is deducted for capital under Secs. 567.5(a)(2) and 567.9(c). 
All other recourse obligations and direct credit substitutes retained or 
assumed by a savings association on the obligations of an entity in 
which the savings association has an equity investment are risk-weighted 
in accordance with this paragraph (b).

[54 FR 49649, Nov. 30, 1989, as amended at 57 FR 33439, July 29, 1992; 
57 FR 12709, Apr. 13, 1992; 57 FR 33440, July 29, 1992; 58 FR 476, Jan. 
6, 1993; 58 FR 15086, Mar. 19, 1993; 58 FR 45813, Aug. 31, 1993; 59 FR 
12810, Mar. 18, 1994; 59 FR 4788, Feb. 2, 1994; 59 FR 66652, Dec. 28, 
1994; 60 FR 39232, Aug. 1, 1995; 60 FR 45621, Aug. 31, 1995; 62 FR 
66264, Dec. 18, 1997; 63 FR 42678, Aug. 10, 1998; 64 FR 10201, Mar. 2, 
1999; 66 FR 59663, Nov. 29, 2001]



Sec. 567.7  Interest-rate risk component.

    (a) Except as provided in paragraph (c) of this section, a savings 
association's interest rate risk (IRR) is measured by the decline in the 
Net Portfolio Value (NPV) that would result from a 200 basis point 
increase or decrease in market interest rates (whichever results in the 
lower NPV) divided by the estimated economic value of assets, as 
calculated in accordance with the OTS Model and guidance issued by the 
OTS, which will be provided to savings associations and to others in 
accordance with paragraph (f) of this section. A savings association 
whose measured IRR exposure exceeds .02 (i.e., 2%) must deduct an IRR 
component in calculating its total capital for purposes of determining 
whether it meets its risk-based capital requirement under Sec. 567.2 of 
this part. The IRR component is an amount equal to one-half of the 
difference between its measured interest rate risk and .02, multiplied 
by the estimated economic value of its total assets. Except as provided 
in paragraph (d) of this section, the IRR component deduction becomes 
effective beginning on the last day of the third quarter following the 
reporting date of the Schedule CMR on which the IRR component was based. 
For the purpose of this section, the reporting date is the last business 
day of each quarter.
    (b) Unless they are exempt from this reporting requirement, all 
saving associations must file information pertaining to their interest 
rate risk exposure on a form or schedule designated by the Director. 
Savings associations with less than $300 million in assets and risk-
based capital ratios in excess of 12 percent are exempt from filing the 
Schedule CMR but will be required to provide selected information in the 
manner determined by the OTS. The Director of the OTS or his designee 
may, within his discretion, require any otherwise exempt savings 
association to file the Schedule CMR on a quarterly basis.
    (c) A savings association's interest rate risk exposure is measured 
by the decline in the NPV that would result from a 200 basis point 
increase or decrease in market interest rates, except when the 3-month 
Treasury bond equivalent yield falls below 400 basis points. In that 
case, the decrease will be equal to one-half of that Treasury rate.
    (d) If a savings association, demonstrates to the OTS that it has 
reduced its IRR, in dollar amount, by the end of the quarter following 
the reporting date of the Schedule CMR on which the savings 
association's IRR component was based, the IRR component shall be 
lowered to that amount.
    (e) Exception. Notwithstanding paragraph (a) of this section, upon 
the request by a savings association, the Director of the OTS, or his 
designee, may waive or defer, but not lower except as a result of an 
appeal, a savings association's IRR component. For example, the Director 
may determine that a waiver or deferral is warranted if the savings 
association has taken meaningful steps to reduce or control its interest 
rate risk exposure.

[[Page 363]]

    (f) OTS will provide, upon request, manuals describing the OTS Model 
and guidance at the address set forth in Sec. 516.40(b) of this chapter.

[58 FR 45813, Aug. 31, 1993, as amended at 59 FR 12811, Mar. 18, 1994; 
66 FR 13009, Mar. 2, 2001]



Sec. 567.8  Leverage ratio.

    (a) The minimum leverage capital requirement for a savings 
association assigned a composite rating of 1, as defined in Sec. 516.3 
of this chapter, shall consist of a ratio of core capital to adjusted 
total assets of 3 percent. These generally are strong associations that 
are not anticipating or experiencing significant growth and have well-
diversified risks, including no undue interest rate risk exposure, 
excellent asset quality, high liquidity, and good earnings.
    (b) For all savings associations not meeting the conditions set 
forth in paragraph (a) of this section, the minimum leverage capital 
requirement shall consist of a ratio of core capital to adjusted total 
assets of 4 percent. Higher capital ratios may be required if warranted 
by the particular circumstances or risk profiles of an individual 
savings association. In all cases, savings associations should hold 
capital commensurate with the level and nature of all risks, including 
the volume and severity of problem loans, to which they are exposed.

[64 FR 10201, Mar. 2, 1999]



Sec. 567.9  Tangible capital requirement.

    (a) Savings associations shall have and maintain tangible capital in 
an amount equal to at least 1.5% of adjusted total assets.
    (b) The following elements, less the amount of any deductions 
pursuant to paragraph (c) of this section, comprise a savings 
association's tangible capital:
    (1) Common stockholders' equity (including retained earnings);
    (2) Noncumulative perpetual preferred stock and related earnings;
    (3) Nonwithdrawable accounts and pledged deposits that would qualify 
as core capital under Sec. 567.5 of this part; and
    (4) Minority interests in the equity accounts of fully consolidated 
subsidiaries.
    (c) Deductions from tangible capital. In calculating tangible 
capital, a savings association must deduct from assets, and, thus, from 
capital:
    (1) Intangible assets (as defined in Sec. 567.1), servicing assets, 
and credit-enhancing interest-only strips not includable in tangible 
capital under Sec. 567.12.
    (2) Investments, both equity and debt, in subsidiaries that are not 
includable subsidiaries (including those subsidiaries where the savings 
association has a minority ownership interest), except as provided in 
paragraphs (c)(3) and (c)(4) of this section.
    (3) If a savings association has any investments (both debt and 
equity) in one or more subsidiary(ies) engaged as of April 12, 1989 and 
continuing to be engaged in any activity that would not fall within the 
scope of activities in which includable subsidiaries may engage, it must 
deduct such investments from assets and, thus, tangible capital in 
accordance with this paragraph (c)(3). The savings association must 
first deduct from assets and, thus, capital the amount by which any 
investments in such a subsidiary(ies) exceed the amount of such 
investments held by the savings association as of April 12, 1989. Next, 
the savings association must deduct from assets and, thus, tangible 
capital the lesser of:
    (i) The savings association's investments in and extensions of 
credit to the subsidiary as of April 12, 1989; or
    (ii) The savings association's investments in and extensions of 
credit to the subsidiary on the date as of which the savings 
association's capital is being determined.
    (4) If a savings association holds a subsidiary (either directly or 
through a subsidiary) that is itself a domestic depository institution 
the Office may, in its sole discretion upon determining that the amount 
of tangible capital that would be required would be higher if the assets 
and liabilities of such subsidiary were consolidated with those of the 
parent savings association than the amount that would be required if the 
parent savings association's investment were deducted pursuant to 
paragraphs (c)(2) and (c)(3) of this section,

[[Page 364]]

consolidate the assets and liabilities of that subsidiary with those of 
the parent savings association in calculating the capital adequacy of 
the parent savings association, regardless of whether the subsidiary 
would otherwise be an includable subsidiary as defined in Sec. 567.1 of 
this part.

[54 FR 49649, Nov. 30, 1989, as amended at 57 FR 33441, July 29, 1992; 
59 FR 4788, Feb. 2, 1994; 60 FR 39232, Aug. 1, 1995; 62 FR 66264, Dec. 
18, 1997; 63 FR 42678, Aug. 10, 1998; 66 FR 59666, Nov. 29, 2001]



Sec. 567.10  Consequences of failure to meet capital requirements.

    (a) Capital plans. (1) [Reserved]
    (2) The Director shall require any savings association not in 
compliance with capital standards to submit a capital plan that:
    (i) Addresses the savings association's need for increased capital;
    (ii) Describes the manner in which the savings association will 
increase capital so as to achieve compliance with capital standards;
    (iii) Specifies types and levels of activities in which the savings 
association will engage;
    (iv) Requires any increase in assets to be accompanied by increase 
in tangible capital not less in percentage amount than the leverage 
limit then applicable;
    (v) Requires any increase in assets to be accompanied by an increase 
in capital not less in percentage amount than required under the risk-
based capital standard then applicable; and
    (vi) Is acceptable to the Director.
    (3) To be acceptable to the Director under this section, a plan 
must, in addition to satisfying all of the requirements set forth in 
paragraphs (a)(2)(i) through (a)(2)(v) of this section, contain a 
certification that while the plan is under review by the Office, the 
savings association will not, without the prior written approval of the 
Regional Director:
    (i) Grow beyond net interest credited;
    (ii) Make any capital distributions; or
    (iii) Act inconsistently with any other limitations on activities 
established by statute, regulation or by the Office in supervisory 
guidance for savings associations not meeting capital standards.
    (4) If the plan submitted to the Director under paragraph (a)(2) of 
this section is not approved by the Office, the savings association 
shall immediately and without any further action, be subject to the 
following restrictions:
    (i) It may not increase its assets beyond the amount held on the day 
it receives written notice of the Director's disapproval of the plan; 
and
    (ii) It must comply with any other restrictions or limitations set 
forth in the written notice of the Director's disapproval of the plan.
    (b) On or after January 1, 1991, the Director shall:
    (1) Prohibit any asset growth by any savings association not in 
compliance with capital standards, except as provided in paragraph (d) 
of this section; and
    (2) Require any savings association not in compliance with capital 
standards to comply with a capital directive issued by the Director 
which may include the restrictions contained in paragraph (e) of this 
section and any other restrictions the Director determines appropriate.
    (c) A savings association that wishes to obtain an exemption from 
the sanctions provided in paragraph (b)(2) of this section must file a 
request for exemption with the Regional Director. Such request must 
include a capital plan that satisfies the requirements of paragraph 
(a)(2) of this section.
    (d) The Director may permit any savings association that is subject 
to paragraph (b) of this section to increase its assets in an amount not 
exceeding the amount of net interest credited to the savings 
association's deposit liabilities, if:
    (1) The savings association obtains the Director's prior approval;
    (2) Any increase in assets is accompanied by an increase in tangible 
capital in an amount not less than 3% of the increase in assets;
    (3) Any increase in assets is accompanied by an increase in capital 
not less in percentage amount than required under the risk-based capital 
standards then applicable;
    (4) Any increase in assets is invested in low-risk assets; and

[[Page 365]]

    (5) The savings association's ratio of core capital to total assets 
is not less than the ratio existing on January 1, 1991.
    (e) If a savings association fails to meet any of the regulatory 
capital requirements set forth in Sec. 567.2 of this part, the Director 
may, through enforcement proceedings or otherwise, require such savings 
association to take one or more of the following corrective actions:
    (1) Increase the amount of its regulatory capital to a specified 
level or levels;
    (2) Convene a meeting or meetings with the Office's supervision 
staff for the purpose of accomplishing the objectives of this section;
    (3) Reduce the rate of earnings that may be paid on savings 
accounts;
    (4) Limit the receipt of deposits to those made to existing 
accounts;
    (5) Cease or limit the issuance of new accounts of any or all 
classes or categories, except in exchange for existing accounts;
    (6) Cease or limit lending or the making of a particular type or 
category of loan;
    (7) Cease or limit the purchase of loans or the making of specified 
other investments;
    (8) Limit operational expenditures to specified levels;
    (9) Increase liquid assets and maintain such increased liquidity at 
specified levels; or
    (10) Take such other action or actions as the Director may deem 
necessary or appropriate for the safety and soundness of the savings 
association, or depositors or investors in the savings association.
    (f) The Director shall treat as an unsafe and unsound practice any 
material failure by a savings association to comply with any plan, 
regulation, written agreement undertaken under this section or order or 
directive issued to comply with the requirements of this part.

[54 FR 49649, Nov. 30, 1989, as amended at 57 FR 33441, July 29, 1992; 
60 FR 66720, Dec. 26, 1995]



Sec. 567.11  Reservation of authority.

    (a) Transactions for purposes of evasion. The Director or the 
Regional Director for the region in which a savings association is 
located may disregard any transaction entered into primarily for the 
purpose of reducing the minimum required amount of regulatory capital or 
otherwise evading the requirements of this part.
    (b) Average versus period-end figures. The Office reserves the right 
to require a savings association to compute its capital ratios on the 
basis of average, rather than period-end, assets when the Office 
determines appropriate to carry out the purposes of this part.
    (c)(1) Reservation of authority. Notwithstanding the definitions of 
core and supplementary capital in Sec. 567.5 of this part, OTS may find 
that a particular type of purchased intangible asset or capital 
instrument constitutes or may constitute core or supplementary capital, 
and may permit one or more savings associations to include all or a 
portion of such intangible asset or funds obtained through such capital 
instrument as core or supplementary capital, permanently or on a 
temporary basis, for the purposes of compliance with this part or for 
any other purposes. Similarly, the Office may find that a particular 
asset or core or supplementary capital component has characteristics or 
terms that diminish its contribution to a savings association's ability 
to absorb losses, and the Office may require the discounting or 
deduction of such asset or component from the computation of core, 
supplementary, or total capital.
    (2) Notwithstanding Sec. 567.6 of this part, OTS will look to the 
substance of a transaction and may find that the assigned risk weight 
for any asset, or credit equivalent amount or credit conversion factor 
for any off-balance sheet item does not appropriately reflect the risks 
imposed on the savings association. OTS may require the savings 
association to apply another risk-weight, credit equivalent amount, or 
credit conversion factor that OTS deems appropriate.
    (3) If this part does not specifically assign a risk weight, credit 
equivalent amount, or credit conversion factor, OTS may assign any risk 
weight, credit equivalent amount, or credit conversion factor that it 
deems appropriate. In making this determination, OTS

[[Page 366]]

will consider the risks associated with the asset or off-balance sheet 
item as well as other relevant factors.

[54 FR 49649, Nov. 30, 1989, as amended at 57 FR 33441, July 29, 1992; 
66 FR 59666, Nov. 29, 2001]



Sec. 567.12  Intangible assets, servicing assets, and credit-enhancing interest-only strips.

    (a) Scope. This section prescribes the maximum amount of intangible 
assets, servicing assets, and credit-enhancing interest-only strips that 
savings associations may include in calculating tangible and core 
capital.
    (b) Computation of core and tangible capital. (1) Purchased credit 
card relationships may be included (that is, not deducted) in computing 
core capital in accordance with the restrictions in this section, but 
must be deducted in computing tangible capital.
    (2) In accordance with the restrictions in this section, mortgage 
servicing assets may be included in computing core and tangible capital 
and nonmortgage servicing assets may be included in core capital.
    (3) Intangible assets, as defined in Sec. 567.1 of this part, other 
than purchased credit card relationships described in paragraph (b)(1) 
of this section and core deposit intangibles described in paragraph 
(g)(3) of this section, are deducted in computing tangible and core 
capital.
    (4) Credit-enhancing interest-only strips may be included (that is 
not deducted) in computing core capital subject to the restrictions of 
this section, and may be included in tangible capital in the same 
amount.
    (c) Market valuations. The OTS reserves the authority to require any 
savings association to perform an independent market valuation of assets 
subject to this section on a case-by-case basis or through the issuance 
of policy guidance. An independent market valuation, if required, shall 
be conducted in accordance with any policy guidance issued by the OTS. A 
required valuation shall include adjustments for any significant changes 
in original valuation assumptions, including changes in prepayment 
estimates or attrition rates. The valuation shall determine the current 
fair value of assets subject to this section. This independent market 
valuation may be conducted by an independent valuation expert evaluating 
the reasonableness of the internal calculations and assumptions used by 
the association in conducting its internal analysis. The association 
shall calculate an estimated fair value for assets subject to this 
section at least quarterly regardless of whether an independent 
valuation expert is required to perform an independent market valuation
    (d) Value limitation. For purposes of calculating core capital under 
this part (but not for financial statement purposes), purchased credit 
card relationships and servicing assets must be valued at the lesser of:
    (1) 90 percent of their fair value determined in accordance with 
paragraph (c) of this section; or
    (2) 100 percent of their remaining unamortized book value determined 
in accordance with the instructions for the Thrift Financial Report.
    (e) Core capital limitations--(1) Servicing assets and purchased 
credit card relationships. (i) The maximum aggregate amount of servicing 
assets and purchased credit card relationships that may be included in 
core capital is limited to the lesser of:
    (A) 100 percent of the amount of core capital; or
    (B) The amount of servicing assets and purchased credit card 
relationships determined in accordance with paragraph (d) of this 
section.
    (ii) In addition to the aggregate limitation in paragraph (e)(1)(i) 
of this section, a sublimit applies to purchased credit card 
relationships and non mortgage-related serving assets. The maximum 
allowable amount of these two types of assets combined is limited to the 
lesser of:
    (A) 25 percent the amount of core capital; and
    (B) The amount of purchased credit card relationships and non 
mortgage-related servicing assets determined in accordance with 
paragraph (d) of this section.
    (2) Credit-enhancing interest-only strips. The maximum aggregate 
amount of credit-enhancing interest-only strips that may be included in 
core capital is limited to 25 percent of the amount of

[[Page 367]]

core capital. Purchased and retained credit-enhancing interest-only 
strips, on a non-tax adjusted basis, are included in the total amount 
that is used for purposes of determining whether a savings association 
exceeds the core capital limit.
    (3) Computation. (i) For purposes of computing the limits and 
sublimit in this paragraph (e), core capital is computed before the 
deduction of disallowed servicing assets, disallowed credit card 
relationships, and disallowed credit-enhancing interest-only strips.
    (ii) A savings association may elect to deduct disallowed servicing 
assets and credit-enhancing interest-only strips on a basis that is net 
of any associated deferred tax liability.
    (f) Tangible capital limitation. The maximum amount of mortgage 
servicing assets that may be included in tangible capital shall be the 
same amount includable in core capital in accordance with the 
limitations set by paragraph (e) of this section. All nonmortgage 
servicing assets are deducted in computing tangible capital.
    (g) Grandfathering. (1) Notwithstanding the core capital and 
tangible capital limitations set forth in paragraphs (e) and (f) of this 
section, any otherwise disallowed purchased mortgage servicing rights 
that were acquired on or before February 9, 1990, and any otherwise 
disallowed purchased mortgage servicing rights for which a contract to 
purchase the servicing rights had been executed on or before February 9, 
1990, may be grandfathered and recognized for regulatory capital 
purposes under this part to the extent permitted by the OTS. 
Grandfathered purchased mortgage servicing rights must be treated in 
accordance with generally accepted accounting principles and the 
requirements of paragraphs (c) and (d) of this section. Grandfathered 
purchased mortgage servicing rights will count toward the core capital 
and tangible capital limitations described in paragraphs (e) and (f) of 
this section.
    (2)(i) On a case-by-case basis, the OTS may extend grandfathered 
treatment prospectively to all or part of the purchased mortgage 
servicing rights acquired by an association to replace its grandfathered 
purchased mortgage servicing rights if OTS determines that:
    (A) The association is reducing, at an acceptable rate, its level of 
purchased mortgage servicing rights to the levels permitted by this 
section; and
    (B) The granting of such grandfathered treatment is consistent with 
the safe and sound operation of the association.
    (ii) The OTS may terminate or limit such grandfathered treatment at 
any time if it determines that either of the conditions in paragraph 
(g)(2)(i) of this section is not being satisfied.
    (3) Core deposit intangibles resulting from transactions consummated 
or under firm contract on the effective date of this rule may be 
grandfathered and recognized for capital purposes under this part, to 
the extent permitted by OTS, provided that such core deposit intangibles 
are valued in accordance with generally accepted accounting principles, 
supported by credible assumptions, and have their amortization adjusted 
at least annually to reflect decay rates (past and projected) in the 
acquired customer base.
    (h) Exemption for certain subsidiaries.--(1) Exemption standard. An 
association holding purchased mortgage servicing rights in separately 
capitalized, nonincludable subsidiaries may submit an application for 
approval by the OTS for an exemption from the deductions and limitations 
set forth in this section. The deductions and limitations will apply to 
such purchased mortgage servicing rights, however, if the OTS determines 
that:
    (i) The thrift and subsidiary are not conducting activities on an 
arm's length basis; or
    (ii) The exemption is not consistent with the association's safe and 
sound operation.
    (2) Applicable requirements. If the OTS determines to grant or to 
permit the continuation of an exemption under paragraph (h)(1) of this 
section, the association receiving the exemption must ensure the 
following:
    (i) The association's investments in, and extensions of credit to, 
the subsidiary are deducted from capital when calculating capital under 
this part;

[[Page 368]]

    (ii) Extensions of credit and other transactions with the subsidiary 
are conducted in compliance with the rules for covered transactions with 
affiliates set forth in sections 23A and 23B of the Federal Reserve Act, 
as applied to thrifts; and
    (iii) Any contracts entered into by the subsidiary include a written 
disclosure indicating that the subsidiary is not a bank or savings 
association; the subsidiary is an organization separate and apart from 
any bank or savings association; and the obligations of the subsidiary 
are not backed or guaranteed by any bank or savings association and are 
not insured by the FDIC.

[59 FR 4788, Feb. 2, 1994, as amended at 60 FR 39232, Aug. 1, 1995; 62 
FR 66264, Dec. 18, 1997; 63 FR 42678, Aug. 10, 1998; 66 FR 59666, Nov. 
29, 2001]



Sec. 567.13  Obligations of acquirors of savings associations to maintain capital.

    (a) Definitions. As used in this section, the following definitions 
apply, unless the context otherwise requires:
    (1) Acquiror means a person or company that controls a savings 
association.
    (2) Control means control as determined under Sec. 574.4(a) or (b) 
of this chapter.
    (3) Capital means the measure of capital used in the applicable 
capital maintenance obligation.
    (4) Capital maintenance obligation means an obligation to maintain 
the capital of a savings association imposed by means of a resolution 
issued or condition imposed by the Federal Savings and Loan Insurance 
Corporation (``FSLIC''), the Federal Home Loan Bank Board (``Board''), 
the Office, or any of their delegates, a stipulation to the FSLIC, the 
Board, the Office, or any of their delegates, or an agreement between 
the acquiror and the FSLIC, the Board, the Office, or any of their 
delegates.
    (5) Deficiency means the amount by which the level at which the 
acquiror is required to maintain the association's capital pursuant to a 
capital maintenance obligation exceeds the savings association's 
capital.
    (6) Divestiture or divest means any action or conduct that would 
result in the acquiror no longer being in control of the savings 
association.
    (7) Savings association means a Federal savings and loan association 
or a Federal savings bank chartered under section 5 of the Home Owners' 
Loan Act, a building and loan, savings and loan or homestead association 
or a cooperative bank (other than a cooperative bank described in 12 
U.S.C. 1813(a)(2)) the deposits of which are insured by the Federal 
Deposit Insurance Corporation, and any corporation (other than a bank) 
the deposits of which are insured by the Federal Deposit Insurance 
Corporation that the Office and the Federal Deposit Insurance 
Corporation jointly determine to be operating in substantially the same 
manner as a savings association, and shall include any savings bank or 
cooperative bank which is deemed by the Office to be a savings 
association under 12 U.S.C. 1467a(1).
    (8) Savings and loan holding company means a savings and loan 
holding company as defined in Sec. 574.2(q) of this chapter.
    (b) Notice. Prior to divestiture of a savings association, an 
acquiror that is subject to a capital maintenance obligation shall 
provide written notice of such divestiture to the Office on Form DV, 
including the certifications required therein. If the acquiror is unable 
to provide such certifications, the acquiror may submit alternative 
certifications addressing the subjects of each certification, in a form 
acceptable to the Office.
    (c) Determination of deficiency. Upon receipt of the notice required 
under paragraph (b) of this section, the Office will conduct a full or 
limited scope examination of the savings association, as deemed 
appropriate, to ascertain whether a deficiency exists as of the date of 
the examination. If such examination is not completed within 90 days of 
the notice required under paragraph (b) of this section, or the Office 
has not communicated the results of the examination to the acquiror 
within such period, the deficiency, if any, shall be calculated based on 
the savings association's most recent Thrift Financial Report, filed 
prior to the notice of divestiture, provided, however, that if the 
failure to complete an examination

[[Page 369]]

within 90 days is caused by any failure of the association or the 
acquiror to cooperate, the 90 day period may be extended by the Director 
of the Office for additional periods, including such time as may be 
needed to base a deficiency on the results of a completed examination. 
Notwithstanding any other provision of this section, if the Office 
determines that fraud or misrepresentation occurred during the course of 
an examination conducted to determine the association's capital, 
compliance with the procedures set forth in this section shall not be 
deemed to have extinguished an acquiror's capital maintenance obligation 
and the Office will seek appropriate enforcement remedies.
    (d) Divestiture. (1) In the event that the examination conducted 
under paragraph (c) of this section indicates that no deficiency exists, 
the acquiror may divest control of the savings association to which the 
capital maintenance obligation relates upon receiving written notice of 
the results of the examination. Where the examination was not completed 
or the results not communicated to the acquiror in a timely manner, and 
the savings association's most recent Thrift Financial Report filed 
before the filing of the notice of divestiture indicates no deficiency 
existed at that time, the acquiror may divest control of the savings 
association to which the capital maintenance obligation relates 91 days 
after the receipt of the notice by the Office, or such longer period as 
established under paragraph (c) of this section.
    (2) In the event that a deficiency exists, the acquiror may not 
divest control of the savings association to which the capital 
maintenance obligation relates unless:
    (i) The acquiror provides the office with an agreement to infuse 
into the savings association the amount necessary to remedy the 
deficiency and make arrangements, satisfactory to the Office, to assure 
payment of the deficiency; or
    (ii) The deficiency is satisfied.
    (3) An acquiror may divest control of a savings association to which 
a capital maintenance obligation relates prior to the completion of the 
examination conducted under paragraph (c) of this section if the 
acquiror provides the Office with an agreement to infuse into the 
savings association the amount necessary to remedy the deficiency and 
makes arrangements, satisfactory to the Office, to assure payment of any 
deficiency.
    (e) Effect of regulation on terms of capital maintenance 
obligations. This regulation does not supercede any liability imposed by 
a capital maintenance obligation.
    (f) Exceptions. The Director of the Office may, upon application or 
upon his or her own initiative, grant or deny exemptions from this 
section.

[55 FR 7478, Mar. 2, 1990, as amended at 60 FR 66720, Dec. 26, 1995]



Secs. 567.14-567.19  [Reserved]



PART 568--SECURITY PROCEDURES UNDER THE BANK PROTECTION ACT--Table of Contents




Sec.
568.1  Authority, purpose, and scope.
568.2  Designation of security officer.
568.3  Security program.
568.4  Report.
568.5  Protection of customer information.

    Authority: Secs. 2-5, 82 Stat. 294-295 (12 U.S.C. 1881-1884).

    Source: 56 FR 29566, June 28, 1991, unless otherwise noted.



Sec. 568.1  Authority, purpose, and scope.

    (a) This part is issued by the Office of Thrift Supervision (OTS) 
pursuant to section 3 of the Bank Protection Act of 1968 (12 U.S.C. 
1882), and sections 501 and 505(b)(1) of the Gramm-Leach-Bliley Act (12 
U.S.C. 6801, 6805(b)(1)). This part is applicable to savings 
associations. It requires each savings association to adopt appropriate 
security procedures to discourage robberies, burglaries, and larcenies 
and to assist in the identification and prosecution of persons who 
commit such acts. Section 568.5 of this part is applicable to savings 
associations and their subsidiaries (except brokers, dealers, persons 
providing insurance, investment companies, and investment advisers). 
Section 568.5 of this part requires covered institutions to establish 
and implement appropriate administrative, technical, and physical 
safeguards to protect the

[[Page 370]]

security, confidentiality, and integrity of customer information.
    (b) It is the responsibility of an association's board of directors 
to comply with this regulation and ensure that a written security 
program for the association's main office and branches is developed and 
implemented.

[56 FR 29566, June 28, 1991, as amended at 66 FR 8639, Feb. 1, 2001]



Sec. 568.2  Designation of security officer.

    Within 30 days after the effective date of insurance of accounts, 
the board of directors of each savings association shall designate a 
security officer who shall have the authority, subject to the approval 
of the board of directors, to develop, within a reasonable time but no 
later than 180 days, and to administer a written security program for 
each of the association's offices.



Sec. 568.3  Security program.

    (a) Contents of security program. The security program shall:
    (1) Establish procedures for opening and closing for business and 
for the safekeeping of all currency, negotiable securities, and similar 
valuables at all times;
    (2) Establish procedures that will assist in identifying persons 
committing crimes against the association and that will preserve 
evidence that may aid in their identification and prosecution. Such 
procedures may include, but are not limited to:
    (i) Maintaining a camera that records activity in the office;
    (ii) Using identification devices, such as prerecorded serial-
numbered bills, or chemical and electronic devices; and
    (iii) Retaining a record of any robbery, burglary, or larceny 
committed against the association;
    (3) Provide for initial and periodic training of officers and 
employees in their responsibilities under the security program and in 
proper employee conduct during and after a burglary, robbery, or 
larceny; and
    (4) Provide for selecting, testing, operating and maintaining 
appropriate security devices, as specified in paragraph (b) of this 
section.
    (b) Security devices. Each savings association shall have, at a 
minimum, the following security devices:
    (1) A means of protecting cash and other liquid assets, such as a 
vault, safe, or other secure space;
    (2) A lighting system for illuminating, during the hours of 
darkness, the area around the vault, if the vault is visible from 
outside the office;
    (3) Tamper-resistent locks on exterior doors and exterior windows 
that may be opened;
    (4) An alarm system or other appropriate device for promptly 
notifying the nearest responsible law enforcement officers of an 
attempted or perpetrated robbery or burglary; and
    (5) Such other devices as the security officer determines to be 
appropriate, taking into consideration:
    (i) The incidence of crimes against financial institutions in the 
area;
    (ii) The amount of currency and other valuables exposed to robbery, 
burglary, or larceny;
    (iii) The distance of the office from the nearest responsible law 
enforcement officers;
    (iv) The cost of the security devices;
    (v) Other security measures in effect at the office; and
    (vi) The physical characteristics of the structure of the office and 
its surroundings.



Sec. 568.4  Report.

    The security officer for each savings association shall report at 
least annually to the association's board of directors on the 
implementation, administration, and effectiveness of the security 
program.



568.5  Protection of customer information.

    Savings associations and their subsidiaries (except brokers, 
dealers, persons providing insurance, investment companies, and 
investment advisers) must comply with the Interagency Guidelines 
Establishing Standards for Safeguarding Customer Information prescribed 
pursuant to sections 501 and 505 of the Gramm-Leach-Bliley Act (15 
U.S.C. 6801 and 6805), set forth in appendix B to part 570 of this 
chapter.

[66 FR 8639, Feb. 1, 2001]

[[Page 371]]



PART 569--PROXIES--Table of Contents




Sec.
569.1  Definitions.
569.2  Form of proxies.
569.3  Holders of proxies.
569.4  Proxy soliciting material.

    Authority: Sec. 2, 48 Stat. 128, as amended (12 U.S.C. 1462); sec. 
3, as added by sec. 301, 103 Stat. 278 (12 U.S.C. 1462a); sec. 4, as 
added by sec. 301, 103 Stat. 280 (12 U.S.C. 1463).

    Source: 54 FR 49665, Nov. 30, 1989, unless otherwise noted.



Sec. 569.1  Definitions.

    As used in this part:
    (a) Security holder. The term security holder means any person 
having the right to vote in the affairs of a savings association by 
virtue of:
    (1) Ownership of any security of the association or
    (2) Any indebtedness to the association.

For purposes of this part, the term security holder shall include any 
account holder having the right to vote in the affairs of a mutual 
savings association.
    (b) Person. The term person includes, in addition to natural 
persons, corporations, partnerships, pension funds, profit-sharing 
funds, trusts, and any other group of associated persons of whatever 
nature.
    (c) Proxy. The term proxy includes every form of authorization by 
which a person is, or may be deemed to be, designated to act for the 
security holder in the exercise of his or her voting rights in the 
affairs of a savings association. Such an authorization may take the 
form of failure to dissent or object.
    (d) Solicit; solicitation. The terms solicit and solicitation refer 
to:
    (1) Any request for a proxy whether or not accompanied by or 
included in a form of proxy;
    (2) Any request to execute, not execute, or revoke a proxy; or
    (3) The furnishing of a form of proxy or other communication to 
security holders under circumstances reasonably calculated to result in 
the procurement, withholding, or revocation of a proxy.

The terms do not apply, however, to the furnishing of a form of proxy to 
a security holder upon the request of such security holder or to the 
performance by any person of ministerial acts on behalf of a person 
soliciting a proxy.



Sec. 569.2  Form of proxies.

    Every form of proxy shall conform to the following requirements:
    (a) The proxy shall be revocable at will by the person giving it. 
The power to revoke may not be conditioned on any event or occurrence or 
be otherwise limited; except that, in the case of a proxy relating to 
capital stock if such proxy is coupled with an interest, states such 
fact on its face, and is valid under the laws of the State in which it 
is to be exercised, such proxy may be made irrevocable to the extent 
permitted by such State law.
    (b) The proxy may not be part of any other document or instrument 
(such as an account card).
    (c) The proxy shall be clearly labeled ``Revocable Proxy'' in 
boldface type (at least as large as 18 point).



Sec. 569.3  Holders of proxies.

    No proxy of a mutual savings association with a term greater than 
eleven months or solicited at the expense of the association may 
designate as holder anyone other than the board of directors [trustees] 
as a whole, or a committee appointed by a majority of such board.



Sec. 569.4  Proxy soliciting material.

    No solicitation of a proxy shall be made by means of any statement, 
form of proxy, notice of meeting, or other communication, written or 
oral, which:
    (a) Solicits any undated or postdated proxy;
    (b) Solicits any proxy that provides that it shall be deemed to be 
dated as of any date subsequent to the date on which it is signed by the 
security holder; or
    (c)(1) Contains any statement that is false or misleading with 
respect to any material fact, or
    (2) Omits to state any material fact:
    (i) Necessary in order to make the statements therein not false or 
misleading or
    (ii) Necessary to correct any statement in any earlier communication 
with respect to the solicitation of a proxy for the same meeting or 
subject

[[Page 372]]

matter that has subsequently become false or misleading.



PART 570--SAFETY AND SOUNDNESS GUIDELINES AND COMPLIANCE PROCEDURES--Table of Contents




Sec.
570.1  Authority, purpose, scope and preservation of existing authority.
570.2  Determination and notification of failure to meet safety and 
          soundness standards and request for compliance plan.
570.3  Filing of safety and soundness compliance plan.
570.4  Issuance of orders to correct deficiencies and to take or refrain 
          from taking other actions.
570.5  Enforcement of orders.

Appendix A to Part 570--Interagency Guidelines Establishing Standards 
          for Safety and Soundness
Appendix B to Part 570--Interagency Guidelines Establishing Year 2000 
          Standards for Safety and Soundness

    Authority: 12 U.S.C. 1831p-1.

    Source: 60 FR 35686, July 10, 1995, unless otherwise noted.



Sec. 570.1  Authority, purpose, scope and preservation of existing authority.

    (a) Authority. This part and the Guidelines in Appendices A and B to 
this part are issued by the OTS under section 39 (section 39) of the 
Federal Deposit Insurance Act (FDI Act) (12 U.S.C. 1831p-1) as added by 
section 132 of the Federal Deposit Insurance Corporation Improvement Act 
of 1991 (FDICIA) (Pub. L. 102-242, 105 Stat. 2236 (1991)), and as 
amended by section 956 of the Housing and Community Development Act of 
1992 (Pub. L. 102-550, 106 Stat. 3895 (1992)), and as amended by section 
318 of the Community Development Banking Act of 1994 (Pub. L. 103-325, 
108 Stat. 2160 (1994)). Appendix B to this part is further issued under 
sections 501(b) and 505 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, 
113 Stat. 1338 (1999)).
    (b) Purpose. Section 39 of the FDI Act requires the OTS to establish 
safety and soundness standards. Pursuant to section 39, a savings 
association may be required to submit a compliance plan if it is not in 
compliance with a safety and soundness standard established by guideline 
under section 39 (a) or (b). An enforceable order under section 8 of the 
FDI Act may be issued if, after being notified that it is in violation 
of a safety and soundness standard prescribed under section 39, the 
savings association fails to submit an acceptable compliance plan or 
fails in any material respect to implement an accepted plan. This part 
establishes procedures for submission and review of safety and soundness 
compliance plans and for issuance and review of orders pursuant to 
section 39. Interagency Guidelines Establishing Standards for Safety and 
Soundness pursuant to section 39 of the FDI Act are set forth in 
Appendix A to this part. Interagency Guidelines Establishing Standards 
for Safeguarding Customer Information are set forth in appendix B to 
this part.
    (c) Scope. This part and the Interagency Guidelines Establishing 
Safety and Soundness Standards as set forth at appendix A to this part 
and the Interagency Guidelines Establishing Year 2000 Standards for 
Safety and Soundness as set forth at appendix B to this part implement 
the provisions of section 39 of the FDI Act as they apply to savings 
associations.
    (d) Preservation of existing authority. Neither section 39 of the 
FDI Act nor this part in any way limits the authority of the OTS under 
any other provision of law to take supervisory actions to address unsafe 
or unsound practices, violations of law, unsafe or unsound conditions, 
or other practices. Action under section 39 and this part may be taken 
independently of, in conjunction with, or in addition to any other 
enforcement action available to the OTS.

[60 FR 35686, July 10, 1995, as amended at 63 FR 55488, Oct. 15, 1998; 
64 FR 66708, Nov. 29, 1999; 66 FR 8639, Feb. 1, 2001]



Sec. 570.2  Determination and notification of failure to meet safety and soundness standards and request for compliance plan.

    (a) Determination. OTS may, based upon an examination, inspection, 
or any other information that becomes available to OTS, determine that a 
savings association has failed to satisfy the safety and soundness 
standards contained in the Interagency Guidelines Establishing Standards 
for Safety and Soundness as set forth in appendix A to this part or the 
Interagency

[[Page 373]]

Guidelines Establishing Standards for Safeguarding Customer Information 
as set forth in appendix B to this part.
    (b) Request for compliance plan. If the OTS determines that a 
savings association has failed to meet a safety and soundness standard 
pursuant to paragraph (a) of this section, the OTS may request by letter 
or through a report of examination, the submission of a compliance plan. 
The savings association shall be deemed to have notice of the request 
three days after mailing or delivery of the letter or report of 
examination by the OTS.

[60 FR 35686, July 10, 1995, as amended at 63 FR 55489, Oct. 15, 1998; 
66 FR 8639, Feb. 1, 2001]



Sec. 570.3  Filing of safety and soundness compliance plan.

    (a) Schedule for filing compliance plan--(1) In general. A savings 
association shall file a written safety and soundness compliance plan 
with the OTS within 30 days of receiving a request for a compliance plan 
pursuant to Sec. 570.2(b), unless the OTS notifies the savings 
association in writing that the plan is to be filed within a different 
period.
    (2) Other plans. If a savings association is obligated to file, or 
is currently operating under, a capital restoration plan submitted 
pursuant to section 38 of the FDI Act (12 U.S.C. 1831o), a cease-and-
desist order entered into pursuant to section 8 of the FDI Act, a formal 
or informal agreement, or a response to a report of examination, it may, 
with the permission of the OTS, submit a compliance plan under this 
section as part of that plan, order, agreement, or response, subject to 
the deadline provided in paragraph (a)(1) of this section.
    (b) Contents of plan. The compliance plan shall include a 
description of the steps the savings association will take to correct 
the deficiency and the time within which those steps will be taken.
    (c) Review of safety and soundness compliance plans. Within 30 days 
after receiving a safety and soundness compliance plan under this 
subpart, the OTS shall provide written notice to the savings association 
of whether the plan has been approved or seek additional information 
from the savings association regarding the plan. The OTS may extend the 
time within which notice regarding approval of a plan will be provided.
    (d) Failure to submit or implement a compliance plan. If a savings 
association fails to submit an acceptable plan within the time specified 
by the OTS or fails in any material respect to implement a compliance 
plan, then the OTS shall, by order, require the savings association to 
correct the deficiency and may take further actions provided in section 
39(e)(2)(B) of the FDI Act. Pursuant to section 39(e)(3), the OTS may be 
required to take certain actions if the savings association commenced 
operations or experienced a change in control within the previous 24-
month period, or the savings association experienced extraordinary 
growth during the previous 18-month period.
    (e) Amendment of compliance plan. A savings association that has 
filed an approved compliance plan may, after prior written notice to and 
approval by the OTS, amend the plan to reflect a change in circumstance. 
Until such time as a proposed amendment has been approved, the savings 
association shall implement the compliance plan as previously approved.



Sec. 570.4  Issuance of orders to correct deficiencies and to take or refrain from taking other actions.

    (a) Notice of intent to issue order--(1) In general. The OTS shall 
provide a savings association prior written notice of the OTS's 
intention to issue an order requiring the savings association to correct 
a safety and soundness deficiency or to take or refrain from taking 
other actions pursuant to section 39 of the FDI Act. The savings 
association shall have such time to respond to a proposed order as 
provided by the OTS under paragraph (c) of this section.
    (2) Immediate issuance of final order. If the OTS finds it necessary 
in order to carry out the purposes of section 39 of the FDI Act, the OTS 
may, without providing the notice prescribed in paragraph (a)(1) of this 
section, issue an order requiring a savings association immediately to 
take actions to correct a safety and soundness deficiency or to

[[Page 374]]

take or refrain from taking other actions pursuant to section 39. A 
savings association that is subject to such an immediately effective 
order may submit a written appeal of the order to the OTS. Such an 
appeal must be received by the OTS within 14 calendar days of the 
issuance of the order, unless the OTS permits a longer period. The OTS 
shall consider any such appeal, if filed in a timely manner, within 60 
days of receiving the appeal. During such period of review, the order 
shall remain in effect unless the OTS, in its sole discretion, stays the 
effectiveness of the order.
    (b) Contents of notice. A notice of intent to issue an order shall 
include:
    (1) A statement of the safety and soundness deficiency or 
deficiencies that have been identified at the savings association;
    (2) A description of any restrictions, prohibitions, or affirmative 
actions that the OTS proposes to impose or require;
    (3) The proposed date when such restrictions or prohibitions would 
be effective or the proposed date for completion of any required action; 
and
    (4) The date by which the savings association subject to the order 
may file with the OTS a written response to the notice.
    (c) Response to notice--(1) Time for response. A savings association 
may file a written response to a notice of intent to issue an order 
within the time period set by the OTS. Such a response must be received 
by the OTS within 14 calendar days from the date of the notice unless 
the OTS determines that a different period is appropriate in light of 
the safety and soundness of the savings association or other relevant 
circumstances.
    (2) Contents of response. The response should include:
    (i) An explanation why the action proposed by the OTS is not an 
appropriate exercise of discretion under section 39 of the FDI Act;
    (ii) Any recommended modification of the proposed order; and
    (iii) Any other relevant information, mitigating circumstances, 
documentation, or other evidence in support of the position of the 
savings association regarding the proposed order.
    (d) OTS consideration of response. After considering the response, 
the OTS may:
    (1) Issue the order as proposed or in modified form;
    (2) Determine not to issue the order and so notify the savings 
association; or
    (3) Seek additional information or clarification of the response 
from the savings association, or any other relevant source.
    (e) Failure to file response. Failure by a savings association to 
file with the OTS, within the specified time period, a written response 
to a proposed order shall constitute a waiver of the opportunity to 
respond and shall constitute consent to the issuance of the order.
    (f) Request for modification or rescission of order. Any savings 
association that is subject to an order under this subpart may, upon a 
change in circumstances, request in writing that the OTS reconsider the 
terms of the order, and may propose that the order be rescinded or 
modified. Unless otherwise ordered by the OTS, the order shall continue 
in place while such request is pending before the OTS.



Sec. 570.5  Enforcement of orders.

    (a) Judicial remedies. Whenever a savings association fails to 
comply with an order issued under section 39 of the FDI Act, the OTS may 
seek enforcement of the order in the appropriate United States district 
court pursuant to section 8(i)(1) of the FDI Act.
    (b) Administrative remedies. Pursuant to section 8(i)(2)(A) of the 
FDI Act, the OTS may assess a civil money penalty against any savings 
association that violates or otherwise fails to comply with any final 
order issued under section 39 and against any savings association-
affiliated party who participates in such violation or noncompliance.
    (c) Other enforcement action. In addition to the actions described 
in paragraphs (a) and (b) of this section, the OTS may seek enforcement 
of the provisions of section 39 of the FDI Act or this part through any 
other judicial or administrative proceeding authorized by law.

[[Page 375]]

 Appendix A to Part 570--Interagency Guidelines Establishing Standards 
                        for Safety and Soundness

                             I. Introduction

    A. Preservation of existing authority.
    B. Definitions.

                II. Operational and Managerial Standards

    A. Internal controls and information systems.
    B. Internal audit system.
    C. Loan documentation.
    D. Credit underwriting.
    E. Interest rate exposure.
    F. Asset growth.
    G. Asset quality.
    H. Earnings.
    I. Compensation, fees and benefits.

III. Prohibition on Compensation That Constitutes an Unsafe and Unsound 
                                Practice

    A. Excessive compensation.
    B. Compensation leading to material financial loss.

                             I. Introduction

    i. Section 39 of the Federal Deposit Insurance Act \1\ (FDI Act) 
requires each Federal banking agency (collectively, the agencies) to 
establish certain safety and soundness standards by regulation or by 
guideline for all insured depository institutions. Under section 39, the 
agencies must establish three types of standards: (1) Operational and 
managerial standards; (2) compensation standards; and (3) such standards 
relating to asset quality, earnings, and stock valuation as they 
determine to be appropriate.
---------------------------------------------------------------------------

    \1\ Section 39 of the Federal Deposit Insurance Act (12 U.S.C. 
1831p-1) was added by section 132 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (FDICIA), Pub. L. 102-242, 105 Stat. 
2236 (1991), and amended by section 956 of the Housing and Community 
Development Act of 1992, Pub. L. 102-550, 106 Stat. 3895 (1992) and 
section 318 of the Riegle Community Development and Regulatory 
Improvement Act of 1994, Pub. L. 103-325, 108 Stat. 2160 (1994).
---------------------------------------------------------------------------

    ii. Section 39(a) requires the agencies to establish operational and 
managerial standards relating to: (1) Internal controls, information 
systems and internal audit systems, in accordance with section 36 of the 
FDI Act (12 U.S.C. 1831m); (2) loan documentation; (3) credit 
underwriting; (4) interest rate exposure; (5) asset growth; and (6) 
compensation, fees, and benefits, in accordance with subsection (c) of 
section 39. Section 39(b) requires the agencies to establish standards 
relating to asset quality, earnings, and stock valuation that the 
agencies determine to be appropriate.
    iii. Section 39(c) requires the agencies to establish standards 
prohibiting as an unsafe and unsound practice any compensatory 
arrangement that would provide any executive officer, employee, 
director, or principal shareholder of the institution with excessive 
compensation, fees or benefits and any compensatory arrangement that 
could lead to material financial loss to an institution. Section 39(c) 
also requires that the agencies establish standards that specify when 
compensation is excessive.
    iv. If an agency determines that an institution fails to meet any 
standard established by guideline under subsection (a) or (b) of section 
39, the agency may require the institution to submit to the agency an 
acceptable plan to achieve compliance with the standard. In the event 
that an institution fails to submit an acceptable plan within the time 
allowed by the agency or fails in any material respect to implement an 
accepted plan, the agency must, by order, require the institution to 
correct the deficiency. The agency may, and in some cases must, take 
other supervisory actions until the deficiency has been corrected.
    v. The agencies have adopted amendments to their rules and 
regulations to establish deadlines for submission and review of 
compliance plans.\2\
---------------------------------------------------------------------------

    \2\ For the Office of the Comptroller of the Currency, these 
regulations appear at 12 CFR Part 30; for the Board of Governors of the 
Federal Reserve System, these regulations appear at 12 CFR Part 263; for 
the Federal Deposit Insurance Corporation, these regulations appear at 
12 CFR Part 308, subpart R, and for the Office of Thrift Supervision, 
these regulations appear at 12 CFR Part 570.
---------------------------------------------------------------------------

    vi. The following Guidelines set out the safety and soundness 
standards that the agencies use to identify and address problems at 
insured depository institutions before capital becomes impaired. The 
agencies believe that the standards adopted in these Guidelines serve 
this end without dictating how institutions must be managed and 
operated. These standards are designed to identify potential safety and 
soundness concerns and ensure that action is taken to address those 
concerns before they pose a risk to the deposit insurance funds.

                  A. Preservation of Existing Authority

    Neither section 39 nor these Guidelines in any way limits the 
authority of the agencies to address unsafe or unsound practices, 
violations of law, unsafe or unsound conditions, or other practices. 
Action under section 39 and these Guidelines may be taken independently 
of, in conjunction with, or in addition to any other enforcement action 
available to the agencies. Nothing in these Guidelines limits the 
authority of the FDIC pursuant to

[[Page 376]]

section 38(i)(2)(F) of the FDI Act (12 U.S.C. 1831(o)) and Part 325 of 
Title 12 of the Code of Federal Regulations.

                             B. Definitions

    1. In general. For purposes of these Guidelines, except as modified 
in the Guidelines or unless the context otherwise requires, the terms 
used have the same meanings as set forth in sections 3 and 39 of the FDI 
Act (12 U.S.C. 1813 and 1831p-1).
    2. Board of directors, in the case of a state-licensed insured 
branch of a foreign bank and in the case of a federal branch of a 
foreign bank, means the managing official in charge of the insured 
foreign branch.
    3. Compensation means all direct and indirect payments or benefits, 
both cash and non-cash, granted to or for the benefit of any executive 
officer, employee, director, or principal shareholder, including but not 
limited to payments or benefits derived from an employment contract, 
compensation or benefit agreement, fee arrangement, perquisite, stock 
option plan, postemployment benefit, or other compensatory arrangement.
    4. Director shall have the meaning described in 12 CFR 215.2(c).\3\
---------------------------------------------------------------------------

    \3\ In applying these definitions for savings associations, pursuant 
to 12 U.S.C. 1464, savings associations shall use the terms ``savings 
association'' and ``insured savings association'' in place of the terms 
``member bank'' and ``insured bank''.
---------------------------------------------------------------------------

    5. Executive officer shall have the meaning described in 12 CFR 
215.2(d).\4\
---------------------------------------------------------------------------

    \4\ See footnote 3 in section I.B.4. of this appendix.
---------------------------------------------------------------------------

    6. Principal shareholder shall have the meaning described in 12 CFR 
215.2(l).\5\
---------------------------------------------------------------------------

    \5\ See footnote 3 in section I.B.4. of this appendix.
---------------------------------------------------------------------------

                II. Operational and Managerial Standards

    A. Internal controls and information systems. An institution should 
have internal controls and information systems that are appropriate to 
the size of the institution and the nature, scope and risk of its 
activities and that provide for:
    1. An organizational structure that establishes clear lines of 
authority and responsibility for monitoring adherence to established 
policies;
    2. Effective risk assessment;
    3. Timely and accurate financial, operational and regulatory 
reports;
    4. Adequate procedures to safeguard and manage assets; and
    5. Compliance with applicable laws and regulations.
    B. Internal audit system. An institution should have an internal 
audit system that is appropriate to the size of the institution and the 
nature and scope of its activities and that provides for:
    1. Adequate monitoring of the system of internal controls through an 
internal audit function. For an institution whose size, complexity or 
scope of operations does not warrant a full scale internal audit 
function, a system of independent reviews of key internal controls may 
be used;
    2. Independence and objectivity;
    3. Qualified persons;
    4. Adequate testing and review of information systems;
    5. Adequate documentation of tests and findings and any corrective 
actions;
    6. Verification and review of management actions to address material 
weaknesses; and
    7. Review by the institution's audit committee or board of directors 
of the effectiveness of the internal audit systems.
    C. Loan documentation. An institution should establish and maintain 
loan documentation practices that:
    1. Enable the institution to make an informed lending decision and 
to assess risk, as necessary, on an ongoing basis;
    2. Identify the purpose of a loan and the source of repayment, and 
assess the ability of the borrower to repay the indebtedness in a timely 
manner;
    3. Ensure that any claim against a borrower is legally enforceable;
    4. Demonstrate appropriate administration and monitoring of a loan; 
and
    5. Take account of the size and complexity of a loan.
    D. Credit underwriting. An institution should establish and maintain 
prudent credit underwriting practices that:
    1. Are commensurate with the types of loans the institution will 
make and consider the terms and conditions under which they will be 
made;
    2. Consider the nature of the markets in which loans will be made;
    3. Provide for consideration, prior to credit commitment, of the 
borrower's overall financial condition and resources, the financial 
responsibility of any guarantor, the nature and value of any underlying 
collateral, and the borrower's character and willingness to repay as 
agreed;
    4. Establish a system of independent, ongoing credit review and 
appropriate communication to management and to the board of directors;
    5. Take adequate account of concentration of credit risk; and
    6. Are appropriate to the size of the institution and the nature and 
scope of its activities.
    E. Interest rate exposure. An institution should:
    1. Manage interest rate risk in a manner that is appropriate to the 
size of the institution and the complexity of its assets and 
liabilities; and

[[Page 377]]

    2. Provide for periodic reporting to management and the board of 
directors regarding interest rate risk with adequate information for 
management and the board of directors to assess the level of risk.
    F. Asset growth. An institution's asset growth should be prudent and 
consider:
    1. The source, volatility and use of the funds that support asset 
growth;
    2. Any increase in credit risk or interest rate risk as a result of 
growth; and
    3. The effect of growth on the institution's capital.
    G. Asset quality. An insured depository institution should establish 
and maintain a system that is commensurate with the institution's size 
and the nature and scope of its operations to identify problem assets 
and prevent deterioration in those assets. The institution should:
    1. Conduct periodic asset quality reviews to identify problem 
assets;
    2. Estimate the inherent losses in those assets and establish 
reserves that are sufficient to absorb estimated losses;
    3. Compare problem asset totals to capital;
    4. Take appropriate corrective action to resolve problem assets;
    5. Consider the size and potential risks of material asset 
concentrations; and
    6. Provide periodic asset reports with adequate information for 
management and the board of directors to assess the level of asset risk.
    H. Earnings. An insured depository institution should establish and 
maintain a system that is commensurate with the institution's size and 
the nature and scope of its operations to evaluate and monitor earnings 
and ensure that earnings are sufficient to maintain adequate capital and 
reserves. The institution should:
    1. Compare recent earnings trends relative to equity, assets, or 
other commonly used benchmarks to the institution's historical results 
and those of its peers;
    2. Evaluate the adequacy of earnings given the size, complexity, and 
risk profile of the institution's assets and operations;
    3. Assess the source, volatility, and sustainability of earnings, 
including the effect of nonrecurring or extraordinary income or expense;
    4. Take steps to ensure that earnings are sufficient to maintain 
adequate capital and reserves after considering the institution's asset 
quality and growth rate; and
    5. Provide periodic earnings reports with adequate information for 
management and the board of directors to assess earnings performance.
    I. Compensation, fees and benefits. An institution should maintain 
safeguards to prevent the payment of compensation, fees, and benefits 
that are excessive or that could lead to material financial loss to the 
institution.

III. Prohibition on Compensation That Constitutes an Unsafe and Unsound 
                                Practice

                        A. Excessive Compensation

    Excessive compensation is prohibited as an unsafe and unsound 
practice. Compensation shall be considered excessive when amounts paid 
are unreasonable or disproportionate to the services performed by an 
executive officer, employee, director, or principal shareholder, 
considering the following:
    1. The combined value of all cash and non-cash benefits provided to 
the individual;
    2. The compensation history of the individual and other individuals 
with comparable expertise at the institution;
    3. The financial condition of the institution;
    4. Comparable compensation practices at comparable institutions, 
based upon such factors as asset size, geographic location, and the 
complexity of the loan portfolio or other assets;
    5. For postemployment benefits, the projected total cost and benefit 
to the institution;
    6. Any connection between the individual and any fraudulent act or 
omission, breach of trust or fiduciary duty, or insider abuse with 
regard to the institution; and
    7. Any other factors the agencies determines to be relevant.

           B. Compensation Leading to Material Financial Loss

    Compensation that could lead to material financial loss to an 
institution is prohibited as an unsafe and unsound practice.

[60 FR 35678, 35687, July 10, 1995, as amended at 61 FR 43952, Aug. 27, 
1996]

 Appendix B to Part 570--Interagency Guidelines Establishing Standards 
                  for Safeguarding Customer Information

                            Table of Contents

I. Introduction
    A. Scope
    B. Preservation of Existing Authority
    C. Definitions
II. Standards for Safeguarding Customer Information
    A. Information Security Program
    B. Objectives
III. Development and Implementation of Customer Information Security 
Program
    A. Involve the Board of Directors
    B. Assess Risk
    C. Manage and Control Risk
    D. Oversee Service Provider Arrangements
    E. Adjust the Program
    F. Report to the Board
    G. Implement the Standards

[[Page 378]]

                             I. Introduction

    The Interagency Guidelines Establishing Standards for Safeguarding 
Customer Information (Guidelines) set forth standards pursuant to 
section 39 of the Federal Deposit Insurance Act (section 39, codified at 
12 U.S.C. 1831p-1), and sections 501 and 505(b), codified at 15 U.S.C. 
6801 and 6805(b), of the Gramm-Leach-Bliley Act. These Guidelines 
address standards for developing and implementing administrative, 
technical, and physical safeguards to protect the security, 
confidentiality, and integrity of customer information.
    A. Scope. The Guidelines apply to customer information maintained by 
or on behalf of entities over which OTS has authority. For purposes of 
this appendix, these entities are savings associations whose deposits 
are FDIC-insured and any subsidiaries of such savings associations, 
except brokers, dealers, persons providing insurance, investment 
companies, and investment advisers. This appendix refers to such 
entities as ``you'.
    B. Preservation of Existing Authority. Neither section 39 nor these 
Guidelines in any way limit OTS's authority to address unsafe or unsound 
practices, violations of law, unsafe or unsound conditions, or other 
practices. OTS may take action under section 39 and these Guidelines 
independently of, in conjunction with, or in addition to, any other 
enforcement action available to OTS.
    C. Definitions. 1. Except as modified in the Guidelines, or unless 
the context otherwise requires, the terms used in these Guidelines have 
the same meanings as set forth in sections 3 and 39 of the Federal 
Deposit Insurance Act (12 U.S.C. 1813 and 1831p-1).
    2. For purposes of the Guidelines, the following definitions apply:
    a. Customer means any of your customers as defined in Sec. 573.3(h) 
of this chapter.
    b. Customer information means any record containing nonpublic 
personal information, as defined in Sec. 573.3(n) of this chapter, about 
a customer, whether in paper, electronic, or other form, that you 
maintain or that is maintained on your behalf.
    c. Customer information systems means any methods used to access, 
collect, store, use, transmit, protect, or dispose of customer 
information.
    d. Service provider means any person or entity that maintains, 
processes, or otherwise is permitted access to customer information 
through its provision of services directly to you.

           II. Standards for Safeguarding Customer Information

    A. Information Security Program. You shall implement a comprehensive 
written information security program that includes administrative, 
technical, and physical safeguards appropriate to your size and 
complexity and the nature and scope of your activities. While all parts 
of your organization are not required to implement a uniform set of 
policies, all elements of your information security program must be 
coordinated.
    B. Objectives. Your information security program shall be designed 
to:
    1. Ensure the security and confidentiality of customer information;
    2. Protect against any anticipated threats or hazards to the 
security or integrity of such information; and
    3. Protect against unauthorized access to or use of such information 
that could result in substantial harm or inconvenience to any customer.

   III. Development and Implementation of Information Security Program

    A. Involve the Board of Directors. Your board of directors or an 
appropriate committee of the board shall:
    1. Approve your written information security program; and
    2. Oversee the development, implementation, and maintenance of your 
information security program, including assigning specific 
responsibility for its implementation and reviewing reports from 
management.
    B. Assess Risk. You shall:
    1. Identify reasonably foreseeable internal and external threats 
that could result in unauthorized disclosure, misuse, alteration, or 
destruction of customer information or customer information systems.
    2. Assess the likelihood and potential damage of these threats, 
taking into consideration the sensitivity of customer information.
    3. Assess the sufficiency of policies, procedures, customer 
information systems, and other arrangements in place to control risks.
    C. Manage and Control Risk. You shall:
    1. Design your information security program to control the 
identified risks, commensurate with the sensitivity of the information 
as well as the complexity and scope of your activities. You must 
consider whether the following security measures are appropriate for you 
and, if so, adopt those measures you conclude are appropriate:
    a. Access controls on customer information systems, including 
controls to authenticate and permit access only to authorized 
individuals and controls to prevent employees from providing customer 
information to unauthorized individuals who may seek to obtain this 
information through fraudulent means.
    b. Access restrictions at physical locations containing customer 
information, such as buildings, computer facilities, and records storage 
facilities to permit access only to authorized individuals;

[[Page 379]]

    c. Encryption of electronic customer information, including while in 
transit or in storage on networks or systems to which unauthorized 
individuals may have access;
    d. Procedures designed to ensure that customer information system 
modifications are consistent with your information security program;
    e. Dual control procedures, segregation of duties, and employee 
background checks for employees with responsibilities for or access to 
customer information;
    f. Monitoring systems and procedures to detect actual and attempted 
attacks on or intrusions into customer information systems;
    g. Response programs that specify actions for you to take when you 
suspect or detect that unauthorized individuals have gained access to 
customer information systems, including appropriate reports to 
regulatory and law enforcement agencies; and
    h. Measures to protect against destruction, loss, or damage of 
customer information due to potential environmental hazards, such as 
fire and water damage or technological failures.
    2. Train staff to implement your information security program.
    3. Regularly test the key controls, systems and procedures of the 
information security program. The frequency and nature of such tests 
should be determined by your risk assessment. Tests should be conducted 
or reviewed by independent third parties or staff independent of those 
that develop or maintain the security programs.
    D. Oversee Service Provider Arrangements. You shall:
    1. Exercise appropriate due diligence in selecting your service 
providers;
    2. Require your service providers by contract to implement 
appropriate measures designed to meet the objectives of these 
Guidelines; and
    3. Where indicated by your risk assessment, monitor your service 
providers to confirm that they have satisfied their obligations as 
required by paragraph D.2. As part of this monitoring, you should review 
audits, summaries of test results, or other equivalent evaluations of 
your service providers.
    E. Adjust the Program. You shall monitor, evaluate, and adjust, as 
appropriate, the information security program in light of any relevant 
changes in technology, the sensitivity of your customer information, 
internal or external threats to information, and your own changing 
business arrangements, such as mergers and acquisitions, alliances and 
joint ventures, outsourcing arrangements, and changes to customer 
information systems.
    F. Report to the Board. You shall report to your board or an 
appropriate committee of the board at least annually. This report should 
describe the overall status of the information security program and your 
compliance with these Guidelines. The reports should discuss material 
matters related to your program, addressing issues such as: risk 
assessment; risk management and control decisions; service provider 
arrangements; results of testing; security breaches or violations and 
management's responses; and recommendations for changes in the 
information security program.
    G. Implement the Standards. 1. Effective date. You must implement an 
information security program pursuant to these Guidelines by July 1, 
2001.
    2. Two-year grandfathering of agreements with service providers. 
Until July 1, 2003, a contract that you have entered into with a service 
provider to perform services for you or functions on your behalf 
satisfies the provisions of paragraph III.D., even if the contract does 
not include a requirement that the servicer maintain the security and 
confidentiality of customer information, as long as you entered into the 
contract on or before March 5, 2001.

[66 FR 8640, Feb. 1, 2001]



PART 572--LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS--Table of Contents




Sec.
572.1  Authority, purpose, and scope.
572.2  Definitions.
572.3  Requirement to purchase flood insurance where available.
572.4  Exemptions.
572.5  Escrow requirement.
572.6  Required use of standard flood hazard determination form.
572.7  Forced placement of flood insurance.
572.8  Determination fees.
572.9  Notice of special flood hazards and availability of Federal 
          disaster relief assistance.
572.10  Notice of servicer's identity.

Appendix A to Part 572--Sample Form of Notice of Special Flood Hazards 
          and Availability of Federal Disaster Relief Assistance

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464; 42 U.S.C. 4012a, 
4104a, 4104b, 4106, and 4128.

    Source: 61 FR 45709, Aug. 29, 1996, unless otherwise noted.



Sec. 572.1  Authority, purpose, and scope.

    (a) Authority. This part is issued pursuant to 12 U.S.C. 1462, 
1462a, 1463, 1464 and 42 U.S.C. 4012a, 4104a, 4104b, 4106, 4128.
    (b) Purpose. The purpose of this part is to implement the 
requirements of the National Flood Insurance Act of 1968 and the Flood 
Disaster Protection

[[Page 380]]

Act of 1973, as amended (42 U.S.C. 4001-4129).
    (c) Scope. This part, except for Secs. 572.6 and 572.8, applies to 
loans secured by buildings or mobile homes located or to be located in 
areas determined by the Director of the Federal Emergency Management 
Agency to have special flood hazards. Sections 572.6 and 572.8 of this 
part apply to loans secured by buildings or mobile homes, regardless of 
location.



Sec. 572.2  Definitions.

    (a) Act means the National Flood Insurance Act of 1968, as amended 
(42 U.S.C. 4001-4129).
    (b) Savings association means, for purposes of this part, a savings 
association as that term is defined in 12 U.S.C. 1813(b)(1) and any 
subsidiaries or service corporations thereof.
    (c) Building means a walled and roofed structure, other than a gas 
or liquid storage tank, that is principally above ground and affixed to 
a permanent site, and a walled and roofed structure while in the course 
of construction, alteration, or repair.
    (d) Community means a State or a political subdivision of a State 
that has zoning and building code jurisdiction over a particular area 
having special flood hazards.
    (e) Designated loan means a loan secured by a building or mobile 
home that is located or to be located in a special flood hazard area in 
which flood insurance is available under the Act.
    (f) Director of FEMA means the Director of the Federal Emergency 
Management Agency.
    (g) Mobile home means a structure, transportable in one or more 
sections, that is built on a permanent chassis and designed for use with 
or without a permanent foundation when attached to the required 
utilities. The term mobile home does not include a recreational vehicle. 
For purposes of this part, the term mobile home means a mobile home on a 
permanent foundation. The term mobile home includes a manufactured home 
as that term is used in the NFIP.
    (h) NFIP means the National Flood Insurance Program authorized under 
the Act.
    (i) Residential improved real estate means real estate upon which a 
home or other residential building is located or to be located.
    (j) Servicer means the person responsible for:
    (1) Receiving any scheduled, periodic payments from a borrower under 
the terms of a loan, including amounts for taxes, insurance premiums, 
and other charges with respect to the property securing the loan; and
    (2) Making payments of principal and interest and any other payments 
from the amounts received from the borrower as may be required under the 
terms of the loan.
    (k) Special flood hazard area means the land in the flood plain 
within a community having at least a one percent chance of flooding in 
any given year, as designated by the Director of FEMA.
    (l) Table funding means a settlement at which a loan is funded by a 
contemporaneous advance of loan funds and an assignment of the loan to 
the person advancing the funds.



Sec. 572.3  Requirement to purchase flood insurance where available.

    (a) In general. A savings association shall not make, increase, 
extend, or renew any designated loan unless the building or mobile home 
and any personal property securing the loan is covered by flood 
insurance for the term of the loan. The amount of insurance must be at 
least equal to the lesser of the outstanding principal balance of the 
designated loan or the maximum limit of coverage available for the 
particular type of property under the Act. Flood insurance coverage 
under the Act is limited to the overall value of the property securing 
the designated loan minus the value of the land on which the property is 
located.
    (b) Table funded loans. A savings association that acquires a loan 
from a mortgage broker or other entity through table funding shall be 
considered to be making a loan for the purposes of this part.



Sec. 572.4  Exemptions.

    The flood insurance requirement prescribed by Sec. 572.3 does not 
apply with respect to:

[[Page 381]]

    (a) Any State-owned property covered under a policy of self-
insurance satisfactory to the Director of FEMA, who publishes and 
periodically revises the list of States falling within this exemption; 
or
    (b) Property securing any loan with an original principal balance of 
$5,000 or less and a repayment term of one year or less.



Sec. 572.5  Escrow requirement.

    If a savings association requires the escrow of taxes, insurance 
premiums, fees, or any other charges for a loan secured by residential 
improved real estate or a mobile home that is made, increased, extended, 
or renewed on or after October 1, 1996, the savings association shall 
also require the escrow of all premiums and fees for any flood insurance 
required under Sec. 572.3. The savings association, or a servicer acting 
on behalf of the savings association, shall deposit the flood insurance 
premiums on behalf of the borrower in an escrow account. This escrow 
account will be subject to escrow requirements adopted pursuant to 
section 10 of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2609) (RESPA), which generally limits the amount that may be 
maintained in escrow accounts for certain types of loans and requires 
escrow account statements for those accounts, only if the loan is 
otherwise subject to RESPA. Following receipt of a notice from the 
Director of FEMA or other provider of flood insurance that premiums are 
due, the savings association, or a servicer acting on behalf of the 
savings association, shall pay the amount owed to the insurance provider 
from the escrow account by the date when such premiums are due.



Sec. 572.6  Required use of standard flood hazard determination form.

    (a) Use of form. A savings association shall use the standard flood 
hazard determination form developed by the Director of FEMA when 
determining whether the building or mobile home offered as collateral 
security for a loan is or will be located in a special flood hazard area 
in which flood insurance is available under the Act. The standard flood 
hazard determination form may be used in a printed, computerized, or 
electronic manner. A savings association may obtain the standard flood 
hazard determination form from FEMA, P.O. Box 2012, Jessup, MD 20794-
2012.
    (b) Retention of form. A savings association shall retain a copy of 
the completed standard flood hazard determination form, in either hard 
copy or electronic form, for the period of time the savings association 
owns the loan.

[61 FR 45709, Aug. 29, 1996, as amended at 64 FR 69185, Dec. 10, 1999]



Sec. 572.7  Forced placement of flood insurance.

    If a savings association, or a servicer acting on behalf of the 
savings association, determines at any time during the term of a 
designated loan that the building or mobile home and any personal 
property securing the designated loan is not covered by flood insurance 
or is covered by flood insurance in an amount less than the amount 
required under Sec. 572.3, then the savings association or its servicer 
shall notify the borrower that the borrower should obtain flood 
insurance, at the borrower's expense, in an amount at least equal to the 
amount required under Sec. 572.3, for the remaining term of the loan. If 
the borrower fails to obtain flood insurance within 45 days after 
notification, then the savings association or its servicer shall 
purchase insurance on the borrower's behalf. The savings association or 
its servicer may charge the borrower for the cost of premiums and fees 
incurred in purchasing the insurance.



Sec. 572.8  Determination fees.

    (a) General. Notwithstanding any Federal or State law other than the 
Flood Disaster Protection Act of 1973, as amended (42 U.S.C. 4001-4129), 
any savings association, or a servicer acting on behalf of the savings 
association, may charge a reasonable fee for determining whether the 
building or mobile home securing the loan is located or will be located 
in a special flood hazard area. A determination fee may also include, 
but is not limited to, a fee for life-of-loan monitoring.
    (b) Borrower fee. The determination fee authorized by paragraph (a) 
of this section may be charged to the borrower if the determination:

[[Page 382]]

    (1) Is made in connection with a making, increasing, extending, or 
renewing of the loan that is initiated by the borrower;
    (2) Reflects the Director of FEMA's revision or updating of 
floodplain areas or flood-risk zones;
    (3) Reflects the Director of FEMA's publication of a notice or 
compendium that:
    (i) Affects the area in which the building or mobile home securing 
the loan is located; or
    (ii) By determination of the Director of FEMA, may reasonably 
require a determination whether the building or mobile home securing the 
loan is located in a special flood hazard area; or
    (4) Results in the purchase of flood insurance coverage by the 
lender or its servicer on behalf of the borrower under Sec. 572.7.
    (c) Purchaser or transferee fee. The determination fee authorized by 
paragraph (a) of this section may be charged to the purchaser or 
transferee of a loan in the case of the sale or transfer of the loan.



Sec. 572.9  Notice of special flood hazards and availability of Federal disaster relief assistance.

    (a) Notice requirement. When a savings association makes, increases, 
extends, or renews a loan secured by a building or a mobile home located 
or to be located in a special flood hazard area, the savings association 
shall mail or deliver a written notice to the borrower and to the 
servicer in all cases whether or not flood insurance is available under 
the Act for the collateral securing the loan.
    (b) Contents of notice. The written notice must include the 
following information:
    (1) A warning, in a form approved by the Director of FEMA, that the 
building or the mobile home is or will be located in a special flood 
hazard area;
    (2) A description of the flood insurance purchase requirements set 
forth in section 102(b) of the Flood Disaster Protection Act of 1973, as 
amended (42 U.S.C. 4012a(b));
    (3) A statement, where applicable, that flood insurance coverage is 
available under the NFIP and may also be available from private 
insurers; and
    (4) A statement whether Federal disaster relief assistance may be 
available in the event of damage to the building or mobile home caused 
by flooding in a Federally-declared disaster.
    (c) Timing of notice. The savings association shall provide the 
notice required by paragraph (a) of this section to the borrower within 
a reasonable time before the completion of the transaction, and to the 
servicer as promptly as practicable after the savings association 
provides notice to the borrower and in any event no later than the 
savings association provides other similar notices to the servicer 
concerning hazard insurance and taxes. Notice to the servicer may be 
made electronically or may take the form of a copy of the notice to the 
borrower.
    (d) Record of receipt. The savings association shall retain a record 
of the receipt of the notices by the borrower and the servicer for the 
period of time the savings association owns the loan.
    (e) Alternate method of notice. Instead of providing the notice to 
the borrower required by paragraph (a) of this section, a savings 
association may obtain satisfactory written assurance from a seller or 
lessor that, within a reasonable time before the completion of the sale 
or lease transaction, the seller or lessor has provided such notice to 
the purchaser or lessee. The savings association shall retain a record 
of the written assurance from the seller or lessor for the period of 
time the savings association owns the loan.
    (f) Use of prescribed form of notice. A savings association will be 
considered to be in compliance with the requirement for notice to the 
borrower of this section by providing written notice to the borrower 
containing the language presented in appendix A to this part within a 
reasonable time before the completion of the transaction. The notice 
presented in appendix A to this part satisfies the borrower notice 
requirements of the Act.



Sec. 572.10  Notice of servicer's identity.

    (a) Notice requirement. When a savings association makes, increases, 
extends, renews, sells, or transfers a loan secured by a building or 
mobile home located or to be located in a special flood hazard area, the 
savings association

[[Page 383]]

shall notify the Director of FEMA (or the Director's designee) in 
writing of the identity of the servicer of the loan. The Director of 
FEMA has designated the insurance provider to receive the savings 
association's notice of the servicer's identity. This notice may be 
provided electronically if electronic transmission is satisfactory to 
the Director of FEMA's designee.
    (b) Transfer of servicing rights. The savings association shall 
notify the Director of FEMA (or the Director's designee) of any change 
in the servicer of a loan described in paragraph (a) of this section 
within 60 days after the effective date of the change. This notice may 
be provided electronically if electronic transmission is satisfactory to 
the Director of FEMA's designee. Upon any change in the servicing of a 
loan described in paragraph (a) of this section, the duty to provide 
notice under this paragraph (b) shall transfer to the transferee 
servicer.

 Appendix A to Part 572--Sample Form of Notice of Special Flood Hazards 
         and Availability of Federal Disaster Relief Assistance

    We are giving you this notice to inform you that:
    The building or mobile home securing the loan for which you have 
applied is or will be located in an area with special flood hazards.
    The area has been identified by the Director of the Federal 
Emergency Management Agency (FEMA) as a special flood hazard area using 
FEMA's Flood Insurance Rate Map or the Flood Hazard Boundary Map for the 
following community: ________________. This area has at least a one 
percent (1%) chance of a flood equal to or exceeding the base flood 
elevation (a 100-year flood) in any given year. During the life of a 30-
year mortgage loan the risk of a 100-year flood in a special flood 
hazard area is 26 percent (26%).
    Federal law allows a lender and borrower jointly to request the 
Director of FEMA to review the determination of whether the property 
securing the loan is located in a special flood hazard area. If you 
would like to make such a request, please contact us for further 
information.
    ______ The community in which the property securing the loan is 
located participates in the National Flood Insurance Program (NFIP). 
Federal law will not allow us to make you the loan that you have applied 
for if you do not purchase flood insurance. The flood insurance must be 
maintained for the life of the loan. If you fail to purchase or renew 
flood insurance on the property, Federal law authorizes and requires us 
to purchase the flood insurance for you at your expense.
     Flood insurance coverage under the NFIP may be purchased 
through an insurance agent who will obtain the policy either directly 
through the NFIP or through an insurance company that participates in 
the NFIP. Flood insurance also may be available from private insurers 
that do not participate in the NFIP.
     At a minimum, flood insurance purchased must cover the 
lesser of:
    (1) the outstanding principal balance of the loan; or
    (2) the maximum amount of coverage allowed for the type of property 
under the NFIP.
    Flood insurance coverage under the NFIP is limited to the overall 
value of the property securing the loan minus the value of the land on 
which the property is located.
     Federal disaster relief assistance (usually in the form of 
a low-interest loan) may be available for damages incurred in excess of 
your flood insurance if your community's participation in the NFIP is in 
accordance with NFIP requirements.
    ______ Flood insurance coverage under the NFIP is not available for 
the property securing the loan because the community in which the 
property is located does not participate in the NFIP. In addition, if 
the non-participating community has been identified for at least one 
year as containing a special flood hazard area, properties located in 
the community will not be eligible for Federal disaster relief 
assistance in the event of a Federally-declared flood disaster.



PART 573--PRIVACY OF CONSUMER FINANCIAL INFORMATION--Table of Contents




Sec.
573.1  Purpose and scope.
573.2  Rule of construction.
573.3  Definitions.

                 Subpart A--Privacy and Opt Out Notices

573.4  Initial privacy notice to consumers required.
573.5  Annual privacy notice to customers required.
573.6  Information to be included in privacy notices.
573.7  Form of opt out notice to consumers; opt out methods.
573.8  Revised privacy notices.
573.9  Delivering privacy and opt out notices.

[[Page 384]]

                    Subpart B--Limits on Disclosures

573.10  Limitation on disclosure of nonpublic personal information to 
          nonaffiliated third parties.
573.11  Limits on redisclosure and reuse of information.
573.12  Limits on sharing account number information for marketing 
          purposes.

                          Subpart C--Exceptions

573.13  Exception to opt out requirements for service providers and 
          joint marketing.
573.14  Exceptions to notice and opt out requirements for processing and 
          servicing transactions.
573.15  Other exceptions to notice and opt out requirements.

            Subpart D--Relation to Other Laws; Effective Date

573.16  Protection of Fair Credit Reporting Act.
573.17  Relation to State laws.
573.18  Effective date; transition rule.

Appendix A to Part 573--Sample Clauses

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1828; 15 U.S.C. 6801 et seq.

    Source: 65 FR 35226, June 1, 2000, unless otherwise noted.



Sec. 573.1  Purpose and scope.

    (a) Purpose. This part governs the treatment of nonpublic personal 
information about consumers by the financial institutions listed in 
paragraph (b) of this section. This part:
    (1) Requires a financial institution to provide notice to customers 
about its privacy policies and practices;
    (2) Describes the conditions under which a financial institution may 
disclose nonpublic personal information about consumers to nonaffiliated 
third parties; and
    (3) Provides a method for consumers to prevent a financial 
institution from disclosing that information to most nonaffiliated third 
parties by ``opting out'' of that disclosure, subject to the exceptions 
in Secs. 573.13, 573.14, and 573.15.
    (b) Scope. (1) This part applies only to nonpublic personal 
information about individuals who obtain financial products or services 
primarily for personal, family, or household purposes from the 
institutions listed below. This part does not apply to information about 
companies or about individuals who obtain financial products or services 
for business, commercial, or agricultural purposes. This part applies to 
savings associations whose deposits are insured by the Federal Deposit 
Insurance Corporation, and any subsidiaries of such savings 
associations, but not subsidiaries that are brokers, dealers, persons 
providing insurance, investment companies, or investment advisers. This 
part refers to these entities as ``you.''
    (2) Nothing in this part modifies, limits, or supersedes the 
standards governing individually identifiable health information 
promulgated by the Secretary of Health and Human Services under the 
authority of sections 262 and 264 of the Health Insurance Portability 
and Accountability Act of 1996 (42 U.S.C. 1320d-1320d-8).



Sec. 573.2  Rule of construction.

    The examples in this part and the sample clauses in appendix A of 
this part are not exclusive. Compliance with an example or use of a 
sample clause, to the extent applicable, constitutes compliance with 
this part.



Sec. 573.3  Definitions.

    As used in this part, unless the context requires otherwise:
    (a) Affiliate means any company that controls, is controlled by, or 
is under common control with another company.
    (b)(1) Clear and conspicuous means that a notice is reasonably 
understandable and designed to call attention to the nature and 
significance of the information in the notice.
    (2) Examples--(i) Reasonably understandable. You make your notice 
reasonably understandable if you:
    (A) Present the information in the notice in clear, concise 
sentences, paragraphs, and sections;
    (B) Use short explanatory sentences or bullet lists whenever 
possible;
    (C) Use definite, concrete, everyday words and active voice whenever 
possible;
    (D) Avoid multiple negatives;
    (E) Avoid legal and highly technical business terminology whenever 
possible; and
    (F) Avoid explanations that are imprecise and readily subject to 
different interpretations.

[[Page 385]]

    (ii) Designed to call attention. You design your notice to call 
attention to the nature and significance of the information in it if 
you:
    (A) Use a plain-language heading to call attention to the notice;
    (B) Use a typeface and type size that are easy to read;
    (C) Provide wide margins and ample line spacing;
    (D) Use boldface or italics for key words; and
    (E) In a form that combines your notice with other information, use 
distinctive type size, style, and graphic devices, such as shading or 
sidebars, when you combine your notice with other information.
    (iii) Notices on web sites. If you provide a notice on a web page, 
you design your notice to call attention to the nature and significance 
of the information in it if you use text or visual cues to encourage 
scrolling down the page if necessary to view the entire notice and 
ensure that other elements on the web site (such as text, graphics, 
hyperlinks, or sound) do not distract attention from the notice, and you 
either:
    (A) Place the notice on a screen that consumers frequently access, 
such as a page on which transactions are conducted; or
    (B) Place a link on a screen that consumers frequently access, such 
as a page on which transactions are conducted, that connects directly to 
the notice and is labeled appropriately to convey the importance, 
nature, and relevance of the notice.
    (c) Collect means to obtain information that you organize or can 
retrieve by the name of an individual or by identifying number, symbol, 
or other identifying particular assigned to the individual, irrespective 
of the source of the underlying information.
    (d) Company means any corporation, limited liability company, 
business trust, general or limited partnership, association, or similar 
organization.
    (e)(1) Consumer means an individual who obtains or has obtained a 
financial product or service from you that is to be used primarily for 
personal, family, or household purposes, or that individual's legal 
representative.
    (2) Examples--(i) An individual who applies to you for credit for 
personal, family, or household purposes is a consumer of a financial 
service, regardless of whether the credit is extended.
    (ii) An individual who provides nonpublic personal information to 
you in order to obtain a determination about whether he or she may 
qualify for a loan to be used primarily for personal, family, or 
household purposes is a consumer of a financial service, regardless of 
whether the loan is extended.
    (iii) An individual who provides nonpublic personal information to 
you in connection with obtaining or seeking to obtain financial, 
investment, or economic advisory services is a consumer regardless of 
whether you establish a continuing advisory relationship.
    (iv) If you hold ownership or servicing rights to an individual's 
loan that is used primarily for personal, family, or household purposes, 
the individual is your consumer, even if you hold those rights in 
conjunction with one or more other institutions. (The individual is also 
a consumer with respect to the other financial institutions involved.) 
An individual who has a loan in which you have ownership or servicing 
rights is your consumer, even if you, or another institution with those 
rights, hire an agent to collect on the loan.
    (v) An individual who is a consumer of another financial institution 
is not your consumer solely because you act as agent for, or provide 
processing or other services to, that financial institution.
    (vi) An individual is not your consumer solely because he or she has 
designated you as trustee for a trust.
    (vii) An individual is not your consumer solely because he or she is 
a beneficiary of a trust for which you are a trustee.
    (viii) An individual is not your consumer solely because he or she 
is a participant or a beneficiary of an employee benefit plan that you 
sponsor or for which you act as a trustee or fiduciary.
    (f) Consumer reporting agency has the same meaning as in section 
603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)).
    (g) Control of a company means:
    (1) Ownership, control, or power to vote 25 percent or more of the 
outstanding shares of any class of voting

[[Page 386]]

security of the company, directly or indirectly, or acting through one 
or more other persons;
    (2) Control in any manner over the election of a majority of the 
directors, trustees, or general partners (or individuals exercising 
similar functions) of the company; or
    (3) The power to exercise, directly or indirectly, a controlling 
influence over the management or policies of the company, as the OTS 
determines.
    (h) Customer means a consumer who has a customer relationship with 
you.
    (i)(1) Customer relationship means a continuing relationship between 
a consumer and you under which you provide one or more financial 
products or services to the consumer that are to be used primarily for 
personal, family, or household purposes.
    (2) Examples--(i) Continuing relationship. A consumer has a 
continuing relationship with you if the consumer:
    (A) Has a deposit or investment account with you;
    (B) Obtains a loan from you;
    (C) Has a loan for which you own the servicing rights;
    (D) Purchases an insurance product from you;
    (E) Holds an investment product through you, such as when you act as 
a custodian for securities or for assets in an Individual Retirement 
Arrangement;
    (F) Enters into an agreement or understanding with you whereby you 
undertake to arrange or broker a home mortgage loan for the consumer;
    (G) Enters into a lease of personal property with you; or
    (H) Obtains financial, investment, or economic advisory services 
from you for a fee.
    (ii) No continuing relationship. A consumer does not, however, have 
a continuing relationship with you if:
    (A) The consumer obtains a financial product or service only in 
isolated transactions, such as using your ATM to withdraw cash from an 
account at another financial institution or purchasing a cashier's check 
or money order;
    (B) You sell the consumer's loan and do not retain the rights to 
service that loan; or
    (C) You sell the consumer airline tickets, travel insurance, or 
traveler's checks in isolated transactions.
    (j) Federal functional regulator means:
    (1) The Board of Governors of the Federal Reserve System;
    (2) The Office of the Comptroller of the Currency;
    (3) The Board of Directors of the Federal Deposit Insurance 
Corporation;
    (4) The Director of the Office of Thrift Supervision;
    (5) The National Credit Union Administration Board; and
    (6) The Securities and Exchange Commission.
    (k)(1) Financial institution means any institution the business of 
which is engaging in activities that are financial in nature or 
incidental to such financial activities as described in section 4(k) of 
the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).
    (2) Financial institution does not include:
    (i) Any person or entity with respect to any financial activity that 
is subject to the jurisdiction of the Commodity Futures Trading 
Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.);
    (ii) The Federal Agricultural Mortgage Corporation or any entity 
chartered and operating under the Farm Credit Act of 1971 (12 U.S.C. 
2001 et seq.); or
    (iii) Institutions chartered by Congress specifically to engage in 
securitizations, secondary market sales (including sales of servicing 
rights), or similar transactions related to a transaction of a consumer, 
as long as such institutions do not sell or transfer nonpublic personal 
information to a nonaffiliated third party.
    (l)(1) Financial product or service means any product or service 
that a financial holding company could offer by engaging in an activity 
that is financial in nature or incidental to such a financial activity 
under section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1843(k)).
    (2) Financial service includes your evaluation or brokerage of 
information that you collect in connection with a

[[Page 387]]

request or an application from a consumer for a financial product or 
service.
    (m)(1) Nonaffiliated third party means any person except:
    (i) Your affiliate; or
    (ii) A person employed jointly by you and any company that is not 
your affiliate (but nonaffiliated third party includes the other company 
that jointly employs the person).
    (2) Nonaffiliated third party includes any company that is an 
affiliate solely by virtue of your or your affiliate's direct or 
indirect ownership or control of the company in conducting merchant 
banking or investment banking activities of the type described in 
section 4(k)(4)(H) or insurance company investment activities of the 
type described in section 4(k)(4)(I) of the Bank Holding Company Act of 
1956 (12 U.S.C. 1843(k)(4)(H) and (I)).
    (n)(1) Nonpublic personal information means:
    (i) Personally identifiable financial information; and
    (ii) Any list, description, or other grouping of consumers (and 
publicly available information pertaining to them) that is derived using 
any personally identifiable financial information that is not publicly 
available.
    (2) Nonpublic personal information does not include:
    (i) Publicly available information, except as included on a list 
described in paragraph (n)(1)(ii) of this section; or
    (ii) Any list, description, or other grouping of consumers (and 
publicly available information pertaining to them) that is derived 
without using any personally identifiable financial information that is 
not publicly available.
    (3) Examples of lists--(i) Nonpublic personal information includes 
any list of individuals' names and street addresses that is derived in 
whole or in part using personally identifiable financial information 
that is not publicly available, such as account numbers.
    (ii) Nonpublic personal information does not include any list of 
individuals' names and addresses that contains only publicly available 
information, is not derived in whole or in part using personally 
identifiable financial information that is not publicly available, and 
is not disclosed in a manner that indicates that any of the individuals 
on the list is a consumer of a financial institution.
    (o)(1) Personally identifiable financial information means any 
information:
    (i) A consumer provides to you to obtain a financial product or 
service from you;
    (ii) About a consumer resulting from any transaction involving a 
financial product or service between you and a consumer; or
    (iii) You otherwise obtain about a consumer in connection with 
providing a financial product or service to that consumer.
    (2) Examples--(i) Information included. Personally identifiable 
financial information includes:
    (A) Information a consumer provides to you on an application to 
obtain a loan, credit card, or other financial product or service;
    (B) Account balance information, payment history, overdraft history, 
and credit or debit card purchase information;
    (C) The fact that an individual is or has been one of your customers 
or has obtained a financial product or service from you;
    (D) Any information about your consumer if it is disclosed in a 
manner that indicates that the individual is or has been your consumer;
    (E) Any information that a consumer provides to you or that you or 
your agent otherwise obtain in connection with collecting on a loan or 
servicing a loan;
    (F) Any information you collect through an Internet ``cookie'' (an 
information collecting device from a web server); and
    (G) Information from a consumer report.
    (ii) Information not included. Personally identifiable financial 
information does not include:
    (A) A list of names and addresses of customers of an entity that is 
not a financial institution; and
    (B) Information that does not identify a consumer, such as aggregate 
information or blind data that does not contain personal identifiers 
such as account numbers, names, or addresses.

[[Page 388]]

    (p)(1) Publicly available information means any information that you 
have a reasonable basis to believe is lawfully made available to the 
general public from:
    (i) Federal, State, or local government records;
    (ii) Widely distributed media; or
    (iii) Disclosures to the general public that are required to be made 
by Federal, State, or local law.
    (2) Reasonable basis. You have a reasonable basis to believe that 
information is lawfully made available to the general public if you have 
taken steps to determine:
    (i) That the information is of the type that is available to the 
general public; and
    (ii) Whether an individual can direct that the information not be 
made available to the general public and, if so, that your consumer has 
not done so.
    (3) Examples--(i) Government records. Publicly available information 
in government records includes information in government real estate 
records and security interest filings.
    (ii) Widely distributed media. Publicly available information from 
widely distributed media includes information from a telephone book, a 
television or radio program, a newspaper, or a web site that is 
available to the general public on an unrestricted basis. A web site is 
not restricted merely because an Internet service provider or a site 
operator requires a fee or a password, so long as access is available to 
the general public.
    (iii) Reasonable basis--(A) You have a reasonable basis to believe 
that mortgage information is lawfully made available to the general 
public if you have determined that the information is of the type 
included on the public record in the jurisdiction where the mortgage 
would be recorded.
    (B) You have a reasonable basis to believe that an individual's 
telephone number is lawfully made available to the general public if you 
have located the telephone number in the telephone book or the consumer 
has informed you that the telephone number is not unlisted.



                 Subpart A--Privacy and Opt Out Notices



Sec. 573.4  Initial privacy notice to consumers required.

    (a) Initial notice requirement. You must provide a clear and 
conspicuous notice that accurately reflects your privacy policies and 
practices to:
    (1) Customer. An individual who becomes your customer, not later 
than when you establish a customer relationship, except as provided in 
paragraph (e) of this section; and
    (2) Consumer. A consumer, before you disclose any nonpublic personal 
information about the consumer to any nonaffiliated third party, if you 
make such a disclosure other than as authorized by Secs. 573.14 and 
573.15.
    (b) When initial notice to a consumer is not required. You are not 
required to provide an initial notice to a consumer under paragraph (a) 
of this section if:
    (1) You do not disclose any nonpublic personal information about the 
consumer to any nonaffiliated third party, other than as authorized by 
Secs. 573.14 and 573.15; and
    (2) You do not have a customer relationship with the consumer.
    (c) When you establish a customer relationship--(1) General rule. 
You establish a customer relationship when you and the consumer enter 
into a continuing relationship.
    (2) Special rule for loans.--You establish a customer relationship 
with a consumer when you originate a loan to the consumer for personal, 
family, or household purposes. If you subsequently transfer the 
servicing rights to that loan to another financial institution, the 
customer relationship transfers with the servicing rights.
    (3)(i) Examples of establishing customer relationship. You establish 
a customer relationship when the consumer:
    (A) Opens a credit card account with you;
    (B) Executes the contract to open a deposit account with you, 
obtains credit from you, or purchases insurance from you;
    (C) Agrees to obtain financial, economic, or investment advisory 
services from you for a fee; or

[[Page 389]]

    (D) Becomes your client for the purpose of your providing credit 
counseling or tax preparation services.
    (ii) Examples of loan rule. You establish a customer relationship 
with a consumer who obtains a loan for personal, family, or household 
purposes when you:
    (A) Originate the loan to the consumer; or
    (B) Purchase the servicing rights to the consumer's loan.
    (d) Existing customers. When an existing customer obtains a new 
financial product or service from you that is to be used primarily for 
personal, family, or household purposes, you satisfy the initial notice 
requirements of paragraph (a) of this section as follows:
    (1) You may provide a revised privacy notice, under Sec. 573.8, that 
covers the customer's new financial product or service; or
    (2) If the initial, revised, or annual notice that you most recently 
provided to that customer was accurate with respect to the new financial 
product or service, you do not need to provide a new privacy notice 
under paragraph (a) of this section.
    (e) Exceptions to allow subsequent delivery of notice. (1) You may 
provide the initial notice required by paragraph (a)(1) of this section 
within a reasonable time after you establish a customer relationship if:
    (i) Establishing the customer relationship is not at the customer's 
election; or
    (ii) Providing notice not later than when you establish a customer 
relationship would substantially delay the customer's transaction and 
the customer agrees to receive the notice at a later time.
    (2) Examples of exceptions--(i) Not at customer's election. 
Establishing a customer relationship is not at the customer's election 
if you acquire a customer's deposit liability or the servicing rights to 
a customer's loan from another financial institution and the customer 
does not have a choice about your acquisition.
    (ii) Substantial delay of customer's transaction. Providing notice 
not later than when you establish a customer relationship would 
substantially delay the customer's transaction when:
    (A) You and the individual agree over the telephone to enter into a 
customer relationship involving prompt delivery of the financial product 
or service; or
    (B) You establish a customer relationship with an individual under a 
program authorized by Title IV of the Higher Education Act of 1965 (20 
U.S.C. 1070 et seq.) or similar student loan programs where loan 
proceeds are disbursed promptly without prior communication between you 
and the customer.
    (iii) No substantial delay of customer's transaction. Providing 
notice not later than when you establish a customer relationship would 
not substantially delay the customer's transaction when the relationship 
is initiated in person at your office or through other means by which 
the customer may view the notice, such as on a web site.
    (f) Delivery. When you are required to deliver an initial privacy 
notice by this section, you must deliver it according to Sec. 573.9. If 
you use a short-form initial notice for non-customers according to 
Sec. 573.6(d), you may deliver your privacy notice according to 
Sec. 573.6(d)(3).



Sec. 573.5  Annual privacy notice to customers required.

    (a)(1) General rule. You must provide a clear and conspicuous notice 
to customers that accurately reflects your privacy policies and 
practices not less than annually during the continuation of the customer 
relationship. Annually means at least once in any period of 12 
consecutive months during which that relationship exists. You may define 
the 12-consecutive-month period, but you must apply it to the customer 
on a consistent basis.
    (2) Example. You provide a notice annually if you define the 12-
consecutive-month period as a calendar year and provide the annual 
notice to the customer once in each calendar year following the calendar 
year in which you provided the initial notice. For example, if a 
customer opens an account on any day of year 1, you must provide an 
annual notice to that customer by December 31 of year 2.
    (b)(1) Termination of customer relationship. You are not required to 
provide an annual notice to a former customer.

[[Page 390]]

    (2) Examples. Your customer becomes a former customer when:
    (i) In the case of a deposit account, the account is inactive under 
your policies;
    (ii) In the case of a closed-end loan, the customer pays the loan in 
full, you charge off the loan, or you sell the loan without retaining 
servicing rights;
    (iii) In the case of a credit card relationship or other open-end 
credit relationship, you no longer provide any statements or notices to 
the customer concerning that relationship or you sell the credit card 
receivables without retaining servicing rights; or
    (iv) You have not communicated with the customer about the 
relationship for a period of 12 consecutive months, other than to 
provide annual privacy notices or promotional material.
    (c) Special rule for loans. If you do not have a customer 
relationship with a consumer under the special rule for loans in 
Sec. 573.4(c)(2), then you need not provide an annual notice to that 
consumer under this section.
    (d) Delivery. When you are required to deliver an annual privacy 
notice by this section, you must deliver it according to Sec. 573.9.



Sec. 573.6  Information to be included in privacy notices.

    (a) General rule. The initial, annual, and revised privacy notices 
that you provide under Secs. 573.4, 573.5, 573.8 must include each of 
the following items of information, in addition to any other information 
you wish to provide, that applies to you and to the consumers to whom 
you send your privacy notice:
    (1) The categories of nonpublic personal information that you 
collect;
    (2) The categories of nonpublic personal information that you 
disclose;
    (3) The categories of affiliates and nonaffiliated third parties to 
whom you disclose nonpublic personal information, other than those 
parties to whom you disclose information under Secs. 573.14 and 573.15;
    (4) The categories of nonpublic personal information about your 
former customers that you disclose and the categories of affiliates and 
nonaffiliated third parties to whom you disclose nonpublic personal 
information about your former customers, other than those parties to 
whom you disclose information under Secs. 573.14 and 573.15;
    (5) If you disclose nonpublic personal information to a 
nonaffiliated third party under Sec. 573.13 (and no other exception in 
Sec. 573.14 or 573.15 applies to that disclosure), a separate statement 
of the categories of information you disclose and the categories of 
third parties with whom you have contracted;
    (6) An explanation of the consumer's right under Sec. 573.10(a) to 
opt out of the disclosure of nonpublic personal information to 
nonaffiliated third parties, including the method(s) by which the 
consumer may exercise that right at that time;
    (7) Any disclosures that you make under section 603(d)(2)(A)(iii) of 
the Fair Credit Reporting Act (15 U.S.C. 1681a(d)(2)(A)(iii)) (that is, 
notices regarding the ability to opt out of disclosures of information 
among affiliates);
    (8) Your policies and practices with respect to protecting the 
confidentiality and security of nonpublic personal information; and
    (9) Any disclosure that you make under paragraph (b) of this 
section.
    (b) Description of nonaffiliated third parties subject to 
exceptions. If you disclose nonpublic personal information to third 
parties as authorized under Secs. 573.14 and 573.15, you are not 
required to list those exceptions in the initial or annual privacy 
notices required by Secs. 573.4 and 573.5. When describing the 
categories with respect to those parties, you are required to state only 
that you make disclosures to other nonaffiliated third parties as 
permitted by law.
    (c) Examples--(1) Categories of nonpublic personal information that 
you collect. You satisfy the requirement to categorize the nonpublic 
personal information that you collect if you list the following 
categories, as applicable:
    (i) Information from the consumer;
    (ii) Information about the consumer's transactions with you or your 
affiliates;
    (iii) Information about the consumer's transactions with 
nonaffiliated third parties; and
    (iv) Information from a consumer reporting agency.

[[Page 391]]

    (2) Categories of nonpublic personal information you disclose--(i) 
You satisfy the requirement to categorize the nonpublic personal 
information that you disclose if you list the categories described in 
paragraph (c)(1) of this section, as applicable, and a few examples to 
illustrate the types of information in each category.
    (ii) If you reserve the right to disclose all of the nonpublic 
personal information about consumers that you collect, you may simply 
state that fact without describing the categories or examples of the 
nonpublic personal information you disclose.
    (3) Categories of affiliates and nonaffiliated third parties to whom 
you disclose. You satisfy the requirement to categorize the affiliates 
and nonaffiliated third parties to whom you disclose nonpublic personal 
information if you list the following categories, as applicable, and a 
few examples to illustrate the types of third parties in each category.
    (i) Financial service providers;
    (ii) Non-financial companies; and
    (iii) Others.
    (4) Disclosures under exception for service providers and joint 
marketers. If you disclose nonpublic personal information under the 
exception in Sec. 573.13 to a nonaffiliated third party to market 
products or services that you offer alone or jointly with another 
financial institution, you satisfy the disclosure requirement of 
paragraph (a)(5) of this section if you:
    (i) List the categories of nonpublic personal information you 
disclose, using the same categories and examples you used to meet the 
requirements of paragraph (a)(2) of this section, as applicable; and
    (ii) State whether the third party is:
    (A) A service provider that performs marketing services on your 
behalf or on behalf of you and another financial institution; or
    (B) A financial institution with whom you have a joint marketing 
agreement.
    (5) Simplified notices. If you do not disclose, and do not wish to 
reserve the right to disclose, nonpublic personal information about 
customers or former customers to affiliates or nonaffiliated third 
parties except as authorized under Secs. 573.14 and 573.15, you may 
simply state that fact, in addition to the information you must provide 
under paragraphs (a)(1), (a)(8), (a)(9), and (b) of this section.
    (6) Confidentiality and security. You describe your policies and 
practices with respect to protecting the confidentiality and security of 
nonpublic personal information if you do both of the following:
    (i) Describe in general terms who is authorized to have access to 
the information; and
    (ii) State whether you have security practices and procedures in 
place to ensure the confidentiality of the information in accordance 
with your policy. You are not required to describe technical information 
about the safeguards you use.
    (d) Short-form initial notice with opt out notice for non-
customers--(1) You may satisfy the initial notice requirements in 
Secs. 573.4(a)(2), 573.7(b), and 573.7(c) for a consumer who is not a 
customer by providing a short-form initial notice at the same time as 
you deliver an opt out notice as required in Sec. 573.7.
    (2) A short-form initial notice must:
    (i) Be clear and conspicuous;
    (ii) State that your privacy notice is available upon request; and
    (iii) Explain a reasonable means by which the consumer may obtain 
that notice.
    (3) You must deliver your short-form initial notice according to 
Sec. 573.9. You are not required to deliver your privacy notice with 
your short-form initial notice. You instead may simply provide the 
consumer a reasonable means to obtain your privacy notice. If a consumer 
who receives your short-form notice requests your privacy notice, you 
must deliver your privacy notice according to Sec. 573.9.
    (4) Examples of obtaining privacy notice. You provide a reasonable 
means by which a consumer may obtain a copy of your privacy notice if 
you:
    (i) Provide a toll-free telephone number that the consumer may call 
to request the notice; or
    (ii) For a consumer who conducts business in person at your office, 
maintain copies of the notice on hand that

[[Page 392]]

you provide to the consumer immediately upon request.
    (e) Future disclosures. Your notice may include:
    (1) Categories of nonpublic personal information that you reserve 
the right to disclose in the future, but do not currently disclose; and
    (2) Categories of affiliates or nonaffiliated third parties to whom 
you reserve the right in the future to disclose, but to whom you do not 
currently disclose, nonpublic personal information.
    (f) Sample clauses. Sample clauses illustrating some of the notice 
content required by this section are included in appendix A of this 
part.



Sec. 573.7  Form of opt out notice to consumers; opt out methods.

    (a)(1) Form of opt out notice. If you are required to provide an opt 
out notice under Sec. 573.10(a), you must provide a clear and 
conspicuous notice to each of your consumers that accurately explains 
the right to opt out under that section. The notice must state:
    (i) That you disclose or reserve the right to disclose nonpublic 
personal information about your consumer to a nonaffiliated third party;
    (ii) That the consumer has the right to opt out of that disclosure; 
and
    (iii) A reasonable means by which the consumer may exercise the opt 
out right.
    (2) Examples--(i) Adequate opt out notice. You provide adequate 
notice that the consumer can opt out of the disclosure of nonpublic 
personal information to a nonaffiliated third party if you:
    (A) Identify all of the categories of nonpublic personal information 
that you disclose or reserve the right to disclose, and all of the 
categories of nonaffiliated third parties to which you disclose the 
information, as described in Sec. 573.6(a)(2) and (3), and state that 
the consumer can opt out of the disclosure of that information; and
    (B) Identify the financial products or services that the consumer 
obtains from you, either singly or jointly, to which the opt out 
direction would apply.
    (ii) Reasonable opt out means. You provide a reasonable means to 
exercise an opt out right if you:
    (A) Designate check-off boxes in a prominent position on the 
relevant forms with the opt out notice;
    (B) Include a reply form together with the opt out notice;
    (C) Provide an electronic means to opt out, such as a form that can 
be sent via electronic mail or a process at your web site, if the 
consumer agrees to the electronic delivery of information; or
    (D) Provide a toll-free telephone number that consumers may call to 
opt out.
    (iii) Unreasonable opt out means. You do not provide a reasonable 
means of opting out if:
    (A) The only means of opting out is for the consumer to write his or 
her own letter to exercise that opt out right; or
    (B) The only means of opting out as described in any notice 
subsequent to the initial notice is to use a check-off box that you 
provided with the initial notice but did not include with the subsequent 
notice.
    (iv) Specific opt out means. You may require each consumer to opt 
out through a specific means, as long as that means is reasonable for 
that consumer.
    (b) Same form as initial notice permitted. You may provide the opt 
out notice together with or on the same written or electronic form as 
the initial notice you provide in accordance with Sec. 573.4.
    (c) Initial notice required when opt out notice delivered subsequent 
to initial notice. If you provide the opt out notice later than required 
for the initial notice in accordance with Sec. 573.4, you must also 
include a copy of the initial notice with the opt out notice in writing 
or, if the consumer agrees, electronically.
    (d) Joint relationships-(1) If two or more consumers jointly obtain 
a financial product or service from you, you may provide a single opt 
out notice. Your opt out notice must explain how you will treat an opt 
out direction by a joint consumer (as explained in paragraph (d)(5) of 
this section).
    (2) Any of the joint consumers may exercise the right to opt out. 
You may either:

[[Page 393]]

    (i) Treat an opt out direction by a joint consumer as applying to 
all of the associated joint consumers; or
    (ii) Permit each joint consumer to opt out separately.
    (3) If you permit each joint consumer to opt out separately, you 
must permit one of the joint consumers to opt out on behalf of all of 
the joint consumers.
    (4) You may not require all joint consumers to opt out before you 
implement any opt out direction.
    (5) Example. If John and Mary have a joint checking account with you 
and arrange for you to send statements to John's address, you may do any 
of the following, but you must explain in your opt out notice which opt 
out policy you will follow:
    (i) Send a single opt out notice to John's address, but you must 
accept an opt out direction from either John or Mary.
    (ii) Treat an opt out direction by either John or Mary as applying 
to the entire account. If you do so, and John opts out, you may not 
require Mary to opt out as well before implementing John's opt out 
direction.
    (iii) Permit John and Mary to make different opt out directions. If 
you do so:
    (A) You must permit John and Mary to opt out for each other;
    (B) If both opt out, you must permit both to notify you in a single 
response (such as on a form or through a telephone call); and
    (C) If John opts out and Mary does not, you may only disclose 
nonpublic personal information about Mary, but not about John and not 
about John and Mary jointly.
    (e) Time to comply with opt out. You must comply with a consumer's 
opt out direction as soon as reasonably practicable after you receive 
it.
    (f) Continuing right to opt out. A consumer may exercise the right 
to opt out at any time.
    (g) Duration of consumer's opt out direction-(1) A consumer's 
direction to opt out under this section is effective until the consumer 
revokes it in writing or, if the consumer agrees, electronically.
    (2) When a customer relationship terminates, the customer's opt out 
direction continues to apply to the nonpublic personal information that 
you collected during or related to that relationship. If the individual 
subsequently establishes a new customer relationship with you, the opt 
out direction that applied to the former relationship does not apply to 
the new relationship.
    (h) Delivery. When you are required to deliver an opt out notice by 
this section, you must deliver it according to Sec. 573.9.



Sec. 573.8  Revised privacy notices.

    (a) General rule. Except as otherwise authorized in this part, you 
must not, directly or through any affiliate, disclose any nonpublic 
personal information about a consumer to a nonaffiliated third party 
other than as described in the initial notice that you provided to that 
consumer under Sec. 573.4, unless:
    (1) You have provided to the consumer a clear and conspicuous 
revised notice that accurately describes your policies and practices;
    (2) You have provided to the consumer a new opt out notice;
    (3) You have given the consumer a reasonable opportunity, before you 
disclose the information to the nonaffiliated third party, to opt out of 
the disclosure; and
    (4) The consumer does not opt out.
    (b) Examples--(1) Except as otherwise permitted by Secs. 573.13, 
573.14, and 573.15, you must provide a revised notice before you:
    (i) Disclose a new category of nonpublic personal information to any 
nonaffiliated third party;
    (ii) Disclose nonpublic personal information to a new category of 
nonaffiliated third party; or
    (iii) Disclose nonpublic personal information about a former 
customer to a nonaffiliated third party, if that former customer has not 
had the opportunity to exercise an opt out right regarding that 
disclosure.
    (2) A revised notice is not required if you disclose nonpublic 
personal information to a new nonaffiliated third party that you 
adequately described in your prior notice.
    (c) Delivery. When you are required to deliver a revised privacy 
notice by this section, you must deliver it according to Sec. 573.9.

[[Page 394]]



Sec. 573.9  Delivering privacy and opt out notices.

    (a) How to provide notices. You must provide any privacy notices and 
opt out notices, including short-form initial notices, that this part 
requires so that each consumer can reasonably be expected to receive 
actual notice in writing or, if the consumer agrees, electronically.
    (b) (1) Examples of reasonable expectation of actual notice. You may 
reasonably expect that a consumer will receive actual notice if you:
    (i) Hand-deliver a printed copy of the notice to the consumer;
    (ii) Mail a printed copy of the notice to the last known address of 
the consumer;
    (iii) For the consumer who conducts transactions electronically, 
post the notice on the electronic site and require the consumer to 
acknowledge receipt of the notice as a necessary step to obtaining a 
particular financial product or service;
    (iv) For an isolated transaction with the consumer, such as an ATM 
transaction, post the notice on the ATM screen and require the consumer 
to acknowledge receipt of the notice as a necessary step to obtaining 
the particular financial product or service.
    (2) Examples of unreasonable expectation of actual notice. You may 
not, however, reasonably expect that a consumer will receive actual 
notice of your privacy policies and practices if you:
    (i) Only post a sign in your branch or office or generally publish 
advertisements of your privacy policies and practices;
    (ii) Send the notice via electronic mail to a consumer who does not 
obtain a financial product or service from you electronically.
    (c) Annual notices only. You may reasonably expect that a customer 
will receive actual notice of your annual privacy notice if:
    (1) The customer uses your web site to access financial products and 
services electronically and agrees to receive notices at the web site, 
and you post your current privacy notice continuously in a clear and 
conspicuous manner on the web site; or
    (2) The customer has requested that you refrain from sending any 
information regarding the customer relationship, and your current 
privacy notice remains available to the customer upon request.
    (d) Oral description of notice insufficient. You may not provide any 
notice required by this part solely by orally explaining the notice, 
either in person or over the telephone.
    (e) Retention or accessibility of notices for customers--(1) For 
customers only, you must provide the initial notice required by 
Sec. 573.4(a)(1), the annual notice required by Sec. 573.5(a), and the 
revised notice required by Sec. 573.8 so that the customer can retain 
them or obtain them later in writing or, if the customer agrees, 
electronically.
    (2) Examples of retention or accessibility. You provide a privacy 
notice to the customer so that the customer can retain it or obtain it 
later if you:
    (i) Hand-deliver a printed copy of the notice to the customer;
    (ii) Mail a printed copy of the notice to the last known address of 
the customer; or
    (iii) Make your current privacy notice available on a web site (or a 
link to another web site) for the customer who obtains a financial 
product or service electronically and agrees to receive the notice at 
the web site.
    (f) Joint notice with other financial institutions. You may provide 
a joint notice from you and one or more of your affiliates or other 
financial institutions, as identified in the notice, as long as the 
notice is accurate with respect to you and the other institutions.
    (g) Joint relationships. If two or more consumers jointly obtain a 
financial product or service from you, you may satisfy the initial, 
annual, and revised notice requirements of Secs. 573.4(a), 573.5(a), and 
573.8(a), respectively, by providing one notice to those consumers 
jointly.



                    Subpart B--Limits on Disclosures



Sec. 573.10  Limits on disclosure of non-public personal information to nonaffiliated third parties.

    (a)(1) Conditions for disclosure. Except as otherwise authorized in 
this part, you may not, directly or through any

[[Page 395]]

affiliate, disclose any nonpublic personal information about a consumer 
to a nonaffiliated third party unless:
    (i) You have provided to the consumer an initial notice as required 
under Sec. 573.4;
    (ii) You have provided to the consumer an opt out notice as required 
in Sec. 573.7;
    (iii) You have given the consumer a reasonable opportunity, before 
you disclose the information to the nonaffiliated third party, to opt 
out of the disclosure; and
    (iv) The consumer does not opt out.
    (2) Opt out definition. Opt out means a direction by the consumer 
that you not disclose nonpublic personal information about that consumer 
to a nonaffiliated third party, other than as permitted by Secs. 573.13, 
573.14, and 573.15.
    (3) Examples of reasonable opportunity to opt out. You provide a 
consumer with a reasonable opportunity to opt out if:
    (i) By mail. You mail the notices required in paragraph (a)(1) of 
this section to the consumer and allow the consumer to opt out by 
mailing a form, calling a toll-free telephone number, or any other 
reasonable means within 30 days from the date you mailed the notices.
    (ii) By electronic means. A customer opens an on-line account with 
you and agrees to receive the notices required in paragraph (a)(1) of 
this section electronically, and you allow the customer to opt out by 
any reasonable means within 30 days after the date that the customer 
acknowledges receipt of the notices in conjunction with opening the 
account.
    (iii) Isolated transaction with consumer. For an isolated 
transaction, such as the purchase of a cashier's check by a consumer, 
you provide the consumer with a reasonable opportunity to opt out if you 
provide the notices required in paragraph (a)(1) of this section at the 
time of the transaction and request that the consumer decide, as a 
necessary part of the transaction, whether to opt out before completing 
the transaction.
    (b) Application of opt out to all consumers and all nonpublic 
personal information--(1) You must comply with this section, regardless 
of whether you and the consumer have established a customer 
relationship.
    (2) Unless you comply with this section, you may not, directly or 
through any affiliate, disclose any nonpublic personal information about 
a consumer that you have collected, regardless of whether you collected 
it before or after receiving the direction to opt out from the consumer.
    (c) Partial opt out. You may allow a consumer to select certain 
nonpublic personal information or certain nonaffiliated third parties 
with respect to which the consumer wishes to opt out.



Sec. 573.11  Limits on redisclosure and reuse of information.

    (a)(1) Information you receive under an exception. If you receive 
nonpublic personal information from a nonaffiliated financial 
institution under an exception in Sec. 573.14 or 573.15 of this part, 
your disclosure and use of that information is limited as follows:
    (i) You may disclose the information to the affiliates of the 
financial institution from which you received the information;
    (ii) You may disclose the information to your affiliates, but your 
affiliates may, in turn, disclose and use the information only to the 
extent that you may disclose and use the information; and
    (iii) You may disclose and use the information pursuant to an 
exception in Sec. 573.14 or 573.15 in the ordinary course of business to 
carry out the activity covered by the exception under which you received 
the information.
    (2) Example. If you receive a customer list from a nonaffiliated 
financial institution in order to provide account processing services 
under the exception in Sec. 573.14(a), you may disclose that information 
under any exception in Sec. 573.14 or 573.15 in the ordinary course of 
business in order to provide those services. For example, you could 
disclose the information in response to a properly authorized subpoena 
or to your attorneys, accountants, and auditors. You could not disclose 
that information to a third party for marketing purposes or use that 
information for your own marketing purposes.
    (b)(1) Information you receive outside of an exception. If you 
receive nonpublic

[[Page 396]]

personal information from a nonaffiliated financial institution other 
than under an exception in Sec. 573.14 or 573.15 of this part, you may 
disclose the information only:
    (i) To the affiliates of the financial institution from which you 
received the information;
    (ii) To your affiliates, but your affiliates may, in turn, disclose 
the information only to the extent that you can disclose the 
information; and
    (iii) To any other person, if the disclosure would be lawful if made 
directly to that person by the financial institution from which you 
received the information.
    (2) Example. If you obtain a customer list from a nonaffiliated 
financial institution outside of the exceptions in Sec. 573.14 and 
573.15:
    (i) You may use that list for your own purposes; and
    (ii) You may disclose that list to another nonaffiliated third party 
only if the financial institution from which you purchased the list 
could have lawfully disclosed the list to that third party. That is, you 
may disclose the list in accordance with the privacy policy of the 
financial institution from which you received the list, as limited by 
the opt out direction of each consumer whose nonpublic personal 
information you intend to disclose, and you may disclose the list in 
accordance with an exception in Sec. 573.14 or 573.15, such as to your 
attorneys or accountants.
    (c) Information you disclose under an exception. If you disclose 
nonpublic personal information to a nonaffiliated third party under an 
exception in Sec. 573.14 or 573.15 of this part, the third party may 
disclose and use that information only as follows:
    (1) The third party may disclose the information to your affiliates;
    (2) The third party may disclose the information to its affiliates, 
but its affiliates may, in turn, disclose and use the information only 
to the extent that the third party may disclose and use the information; 
and
    (3) The third party may disclose and use the information pursuant to 
an exception in Sec. 573.14 or 573.15 in the ordinary course of business 
to carry out the activity covered by the exception under which it 
received the information.
    (d) Information you disclose outside of an exception. If you 
disclose nonpublic personal information to a nonaffiliated third party 
other than under an exception in Sec. 573.14 or 573.15 of this part, the 
third party may disclose the information only:
    (1) To your affiliates;
    (2) To its affiliates, but its affiliates, in turn, may disclose the 
information only to the extent the third party can disclose the 
information; and
    (3) To any other person, if the disclosure would be lawful if you 
made it directly to that person.



Sec. 573.12  Limits on sharing account number information for marketing purposes.

    (a) General prohibition on disclosure of account numbers. You must 
not, directly or through an affiliate, disclose, other than to a 
consumer reporting agency, an account number or similar form of access 
number or access code for a consumer's credit card account, deposit 
account, or transaction account to any nonaffiliated third party for use 
in telemarketing, direct mail marketing, or other marketing through 
electronic mail to the consumer.
    (b) Exceptions. Paragraph (a) of this section does not apply if you 
disclose an account number or similar form of access number or access 
code:
    (1) To your agent or service provider solely in order to perform 
marketing for your own products or services, as long as the agent or 
service provider is not authorized to directly initiate charges to the 
account; or
    (2) To a participant in a private label credit card program or an 
affinity or similar program where the participants in the program are 
identified to the customer when the customer enters into the program.
    (c) Examples--(1) Account number. An account number, or similar form 
of access number or access code, does not include a number or code in an 
encrypted form, as long as you do not provide the recipient with a means 
to decode the number or code.

[[Page 397]]

    (2) Transaction account. A transaction account is an account other 
than a deposit account or a credit card account. A transaction account 
does not include an account to which third parties cannot initiate 
charges.



                          Subpart C--Exceptions



Sec. 573.13  Exception to opt out requirements for service providers and joint marketing.

    (a) General rule. (1) The opt out requirements in Secs. 573.7 and 
573.10 do not apply when you provide nonpublic personal information to a 
nonaffiliated third party to perform services for you or functions on 
your behalf, if you:
    (i) Provide the initial notice in accordance with Sec. 573.4; and
    (ii) Enter into a contractual agreement with the third party that 
prohibits the third party from disclosing or using the information other 
than to carry out the purposes for which you disclosed the information, 
including use under an exception in Sec. 573.14 or 573.15 in the 
ordinary course of business to carry out those purposes.
    (2) Example. If you disclose nonpublic personal information under 
this section to a financial institution with which you perform joint 
marketing, your contractual agreement with that institution meets the 
requirements of paragraph (a)(1)(ii) of this section if it prohibits the 
institution from disclosing or using the nonpublic personal information 
except as necessary to carry out the joint marketing or under an 
exception in Sec. 573.14 or 573.15 in the ordinary course of business to 
carry out that joint marketing.
    (b) Service may include joint marketing. The services a 
nonaffiliated third party performs for you under paragraph (a) of this 
section may include marketing of your own products or services or 
marketing of financial products or services offered pursuant to joint 
agreements between you and one or more financial institutions.
    (c) Definition of joint agreement. For purposes of this section, 
joint agreement means a written contract pursuant to which you and one 
or more financial institutions jointly offer, endorse, or sponsor a 
financial product or service.



Sec. 573.14  Exceptions to notice and opt out requirements for processing and servicing transactions.

    (a) Exceptions for processing transactions at consumer's request. 
The requirements for initial notice in Sec. 573.4(a)(2), for the opt out 
in Secs. 573.7 and 573.10, and for service providers and joint marketing 
in Sec. 573.13 do not apply if you disclose nonpublic personal 
information as necessary to effect, administer, or enforce a transaction 
that a consumer requests or authorizes, or in connection with:
    (1) Servicing or processing a financial product or service that a 
consumer requests or authorizes;
    (2) Maintaining or servicing the consumer's account with you, or 
with another entity as part of a private label credit card program or 
other extension of credit on behalf of such entity; or
    (3) A proposed or actual securitization, secondary market sale 
(including sales of servicing rights), or similar transaction related to 
a transaction of the consumer.
    (b) Necessary to effect, administer, or enforce a transaction means 
that the disclosure is:
    (1) Required, or is one of the lawful or appropriate methods, to 
enforce your rights or the rights of other persons engaged in carrying 
out the financial transaction or providing the product or service; or
    (2) Required, or is a usual, appropriate or acceptable method:
    (i) To carry out the transaction or the product or service business 
of which the transaction is a part, and record, service, or maintain the 
consumer's account in the ordinary course of providing the financial 
service or financial product;
    (ii) To administer or service benefits or claims relating to the 
transaction or the product or service business of which it is a part;
    (iii) To provide a confirmation, statement, or other record of the 
transaction, or information on the status or value of the financial 
service or financial product to the consumer or the consumer's agent or 
broker;
    (iv) To accrue or recognize incentives or bonuses associated with 
the transaction that are provided by you or any other party;

[[Page 398]]

    (v) To underwrite insurance at the consumer's request or for 
reinsurance purposes, or for any of the following purposes as they 
relate to a consumer's insurance: account administration, reporting, 
investigating, or preventing fraud or material misrepresentation, 
processing premium payments, processing insurance claims, administering 
insurance benefits (including utilization review activities), 
participating in research projects, or as otherwise required or 
specifically permitted by Federal or State law;
    (vi) In connection with:
    (A) The authorization, settlement, billing, processing, clearing, 
transferring, reconciling or collection of amounts charged, debited, or 
otherwise paid using a debit, credit, or other payment card, check, or 
account number, or by other payment means;
    (B) The transfer of receivables, accounts, or interests therein; or
    (C) The audit of debit, credit, or other payment information.



Sec. 573.15  Other exceptions to notice and opt out requirements.

    (a) Exceptions to opt out requirements. The requirements for initial 
notice in Sec. 573.4(a)(2), for the opt out in Secs. 573.7 and 573.10, 
and for service providers and joint marketing in Sec. 573.13 do not 
apply when you disclose nonpublic personal information:
    (1) With the consent or at the direction of the consumer, provided 
that the consumer has not revoked the consent or direction;
    (2)(i) To protect the confidentiality or security of your records 
pertaining to the consumer, service, product, or transaction;
    (ii) To protect against or prevent actual or potential fraud, 
unauthorized transactions, claims, or other liability;
    (iii) For required institutional risk control or for resolving 
consumer disputes or inquiries;
    (iv) To persons holding a legal or beneficial interest relating to 
the consumer; or
    (v) To persons acting in a fiduciary or representative capacity on 
behalf of the consumer;
    (3) To provide information to insurance rate advisory organizations, 
guaranty funds or agencies, agencies that are rating you, persons that 
are assessing your compliance with industry standards, and your 
attorneys, accountants, and auditors;
    (4) To the extent specifically permitted or required under other 
provisions of law and in accordance with the Right to Financial Privacy 
Act of 1978 (12 U.S.C. 3401 et seq.), to law enforcement agencies 
(including a federal functional regulator, the Secretary of the 
Treasury, with respect to 31 U.S.C. Chapter 53, Subchapter II (Records 
and Reports on Monetary Instruments and Transactions) and 12 U.S.C. 
Chapter 21 (Financial Recordkeeping), a State insurance authority, with 
respect to any person domiciled in that insurance authority's State that 
is engaged in providing insurance, and the Federal Trade Commission), 
self-regulatory organizations, or for an investigation on a matter 
related to public safety;
    (5)(i) To a consumer reporting agency in accordance with the Fair 
Credit Reporting Act (15 U.S.C. 1681 et seq.), or
    (ii) From a consumer report reported by a consumer reporting agency;
    (6) In connection with a proposed or actual sale, merger, transfer, 
or exchange of all or a portion of a business or operating unit if the 
disclosure of nonpublic personal information concerns solely consumers 
of such business or unit; or
    (7)(i) To comply with Federal, State, or local laws, rules and other 
applicable legal requirements;
    (ii) To comply with a properly authorized civil, criminal, or 
regulatory investigation, or subpoena or summons by Federal, State, or 
local authorities; or
    (iii) To respond to judicial process or government regulatory 
authorities having jurisdiction over you for examination, compliance, or 
other purposes as authorized by law.
    (b) Examples of consent and revocation of consent. (1) A consumer 
may specifically consent to your disclosure to a nonaffiliated insurance 
company of the fact that the consumer has applied to you for a mortgage 
so that the insurance company can offer homeowner's insurance to the 
consumer.
    (2) A consumer may revoke consent by subsequently exercising the 
right to

[[Page 399]]

opt out of future disclosures of nonpublic personal information as 
permitted under Sec. 573.7(f).

[65 FR 35226, June 1, 2000, as amended at 66 FR 65822, Dec. 21, 2001]



            Subpart D--Relation to Other Laws; Effective Date



Sec. 573.16  Protection of Fair Credit Reporting Act.

    Nothing in this part shall be construed to modify, limit, or 
supersede the operation of the Fair Credit Reporting Act (15 U.S.C. 1681 
et seq.), and no inference shall be drawn on the basis of the provisions 
of this part regarding whether information is transaction or experience 
information under section 603 of that Act.



Sec. 573.17  Relation to State laws.

    (a) In general. This part shall not be construed as superseding, 
altering, or affecting any statute, regulation, order, or interpretation 
in effect in any State, except to the extent that such State statute, 
regulation, order, or interpretation is inconsistent with the provisions 
of this part, and then only to the extent of the inconsistency.
    (b) Greater protection under State law. For purposes of this 
section, a State statute, regulation, order, or interpretation is not 
inconsistent with the provisions of this part if the protection such 
statute, regulation, order, or interpretation affords any consumer is 
greater than the protection provided under this part, as determined by 
the Federal Trade Commission, after consultation with the OTS, on the 
Federal Trade Commission's own motion, or upon the petition of any 
interested party.



Sec. 573.18  Effective date; transition rule.

    (a) Effective date. This part is effective November 13, 2000. In 
order to provide sufficient time for you to establish policies and 
systems to comply with the requirements of this part, the OTS has 
extended the time for compliance with this part until July 1, 2001.
    (b)(1) Notice requirement for consumers who are your customers on 
the compliance date. By July 1, 2001, you must have provided an initial 
notice, as required by Sec. 573.4, to consumers who are your customers 
on July 1, 2001.
    (2) Example. You provide an initial notice to consumers who are your 
customers on July 1, 2001, if, by that date, you have established a 
system for providing an initial notice to all new customers and have 
mailed the initial notice to all your existing customers.
    (c) Two-year grandfathering of service agreements. Until July 1, 
2002, a contract that you have entered into with a nonaffiliated third 
party to perform services for you or functions on your behalf satisfies 
the provisions of Sec. 573.13(a)(1)(ii) of this part, even if the 
contract does not include a requirement that the third party maintain 
the confidentiality of nonpublic personal information, as long as you 
entered into the contract on or before July 1, 2000.

                 Appendix A to Part 573--Sample Clauses

    Financial institutions, including a group of financial holding 
company affiliates that use a common privacy notice, may use the 
following sample clauses, if the clause is accurate for each institution 
that uses the notice. (Note that disclosure of certain information, such 
as assets, income, and information from a consumer reporting agency, may 
give rise to obligations under the Fair Credit Reporting Act, such as a 
requirement to permit a consumer to opt out of disclosures to affiliates 
or designation as a consumer reporting agency if disclosures are made to 
nonaffiliated third parties.)

      A-1--Categories of information you collect (all institutions)

    You may use this clause, as applicable, to meet the requirement of 
Sec. 573.6(a)(1) to describe the categories of nonpublic personal 
information you collect.
    Sample Clause A-1:
    We collect nonpublic personal information about you from the 
following sources:
     Information we receive from you on applications or other 
forms;
     Information about your transactions with us, our 
affiliates, or others; and
     Information we receive from a consumer reporting agency.

A-2--Categories of information you disclose (institutions that disclose 
                       outside of the exceptions)

    You may use one of these clauses, as applicable, to meet the 
requirement of Sec. 573.6(a)(2) to describe the categories of nonpublic 
personal information you disclose. You may use

[[Page 400]]

these clauses if you disclose nonpublic personal information other than 
as permitted by the exceptions in Secs. 573.13, 573.14, and 573.15.
    Sample Clause A-2, Alternative 1:
    We may disclose the following kinds of nonpublic personal 
information about you:
     Information we receive from you on applications or other 
forms, such as [provide illustrative examples, such as ``your name, 
address, social security number, assets, and income''];
     Information about your transactions with us, our 
affiliates, or others, such as [provide illustrative examples, such as 
``your account balance, payment history, parties to transactions, and 
credit card usage'']; and
     Information we receive from a consumer reporting agency, 
such as [provide illustrative examples, such as ``your creditworthiness 
and credit history''].
    Sample Clause A-2, Alternative 2:
    We may disclose all of the information that we collect, as described 
[describe location in the notice, such as ``above'' or ``below''].

  A-3--Categories of information you disclose and parties to whom you 
 disclose (institutions that do not disclose outside of the exceptions)

    You may use this clause, as applicable, to meet the requirements of 
Secs. 573.6(a)(2), (3), and (4) to describe the categories of nonpublic 
personal information about customers and former customers that you 
disclose and the categories of affiliates and nonaffiliated third 
parties to whom you disclose. You may use this clause if you do not 
disclose nonpublic personal information to any party, other than as 
permitted by the exceptions in Secs. 573.14, and 573.15.
    Sample Clause A-3:
    We do not disclose any nonpublic personal information about our 
customers or former customers to anyone, except as permitted by law.

   A-4--Categories of parties to whom you disclose (institutions that 
                   disclose outside of the exceptions)

    You may use this clause, as applicable, to meet the requirement of 
Sec. 573.6(a)(3) to describe the categories of affiliates and 
nonaffiliated third parties to whom you disclose nonpublic personal 
information. You may use this clause if you disclose nonpublic personal 
information other than as permitted by the exceptions in Secs. 573.13, 
573.14, and 573.15, as well as when permitted by the exceptions in 
Secs. 573.14, and 573.15.
    Sample Clause A-4:
    We may disclose nonpublic personal information about you to the 
following types of third parties:
     Financial service providers, such as [provide illustrative 
examples, such as ``mortgage bankers, securities broker-dealers, and 
insurance agents''];
     Non-financial companies, such as [provide illustrative 
examples, such as ``retailers, direct marketers, airlines, and 
publishers'']; and
     Others, such as [provide illustrative examples, such as 
``non-profit organizations;''].
    We may also disclose nonpublic personal information about you to 
nonaffiliated third parties as permitted by law.

             A-5--Service provider/joint marketing exception

    You may use one of these clauses, as applicable, to meet the 
requirements of Sec. 573.6(a)(5) related to the exception for service 
providers and joint marketers in Sec. 573.13. If you disclose nonpublic 
personal information under this exception, you must describe the 
categories of nonpublic personal information you disclose and the 
categories of third parties with whom you have contracted.
    Sample Clause A-5, Alternative 1:
    We may disclose the following information to companies that perform 
marketing services on our behalf or to other financial institutions with 
whom we have joint marketing agreements:
     Information we receive from you on applications or other 
forms, such as [provide illustrative examples, such as ``your name, 
address, social security number, assets, and income''];
     Information about your transactions with us, our 
affiliates, or others, such as [provide illustrative examples, such as 
``your account balance, payment history, parties to transactions, and 
credit card usage'']; and
     Information we receive from a consumer reporting agency, 
such as [provide illustrative examples, such as ``your creditworthiness 
and credit history''].
    Sample Clause A-5, Alternative 2:
    We may disclose all of the information we collect, as described 
[describe location in the notice, such as ``above'' or ``below''] to 
companies that perform marketing services on our behalf or to other 
financial institutions with whom we have joint marketing agreements.

A-6--Explanation of opt out right (institutions that disclose outside of 
                             the exceptions)

    You may use this clause, as applicable, to meet the requirement of 
Sec. 573.6(a)(6) to provide an explanation of the consumer's right to 
opt out of the disclosure of nonpublic personal information to 
nonaffiliated third parties, including the method(s) by which the 
consumer may exercise that right. You may use this clause if you 
disclose nonpublic personal information other than as permitted by the 
exceptions in Secs. 573.13, 573.14, and 573.15.
    Sample Clause A-6:

[[Page 401]]

    If you prefer that we not disclose nonpublic personal information 
about you to nonaffiliated third parties, you may opt out of those 
disclosures, that is, you may direct us not to make those disclosures 
(other than disclosures permitted by law). If you wish to opt out of 
disclosures to nonaffiliated third parties, you may [describe a 
reasonable means of opting out, such as ``call the following toll-free 
number: (insert number)''].

          A-7--Confidentiality and security (all institutions)

    You may use this clause, as applicable, to meet the requirement of 
Sec. 573.6(a)(8) to describe your policies and practices with respect to 
protecting the confidentiality and security of nonpublic personal 
information.
    Sample Clause A-7:
    We restrict access to nonpublic personal information about you to 
[provide an appropriate description, such as ``those employees who need 
to know that information to provide products or services to you'']. We 
maintain physical, electronic, and procedural safeguards that comply 
with federal standards to guard your nonpublic personal information.



PART 574--ACQUISITION OF CONTROL OF SAVINGS ASSOCIATIONS--Table of Contents




Sec.
574.1  Scope of part.
574.2  Definitions.
574.3  Acquisition of control of savings associations.
574.4  Control.
574.5  Certifications of ownership.
574.6  Procedural requirements.
574.7  Determination by the OTS.
574.8  Qualified stock issuances by undercapitalized savings 
          associations or holding companies.
574.100  Rebuttal of control agreement.

    Authority: 12 U.S.C. 1467a, 1817.

    Source: 54 FR 49690, Nov. 30, 1989, unless otherwise noted.



Sec. 574.1  Scope of part.

    The purpose of this part is to implement the provisions of the 
Change in Bank Control Act, 12 U.S.C.1817(j) (``Control Act''), and the 
Savings and Loan Holding Company Act, 12 U.S.C. 1467a (``Holding Company 
Act''), relating to acquisitions and changes in control of savings 
associations that are organized in stock form and savings and loan 
holding companies thereof.

[61 FR 60184, Nov. 27, 1996]



Sec. 574.2  Definitions.

    As used in this part and in the forms under this part, the following 
definitions apply, unless the context otherwise requires:
    (a) Acquire when used in connection with the acquisition of stock of 
a savings association means obtaining ownership, control, power to vote, 
or sole power of disposition of stock, directly or indirectly or through 
one or more transactions or subsidiaries, through purchase, assignment, 
transfer, exchange, succession, or other means, including:
    (1) An increase in percentage ownership resulting from a redemption, 
repurchase, reverse stock split or a similar transaction involving other 
securities of the same class, and
    (2) The acquisition of stock by a group of persons and/or companies 
acting in concert which shall be deemed to occur upon formation of such 
group: Provided, That an investment advisor shall not be deemed to 
acquire the voting stock of its advisee if the advisor:
    (i) Votes the stock only upon instruction from the beneficial owner, 
and
    (ii) Does not provide the beneficial owner with advice concerning 
the voting of such stock.
    (b) Acquiror means a person or company.
    (c) Acting in concert means: (1) Knowing participation in a joint 
activity or interdependent conscious parallel action towards a common 
goal whether or not pursuant to an express agreement, or
    (2) 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.
    (3) A person or company which acts in concert with another person or 
company (``other party'') shall also be deemed to be acting in concert 
with any person or company who is also acting in concert with that other 
party, except that any tax-qualified employee stock benefit plan as 
defined in Sec. 563b.2(a)(39) will not be deemed to be acting in concert 
with its trustee or a person who serves in a similar capacity solely for 
the purpose of determining

[[Page 402]]

whether stock held by the trustee and stock held by the plan will be 
aggregated.
    (d) Affiliate means any person or company which controls, is 
controlled by or is under common control with a person, savings 
association or company.
    (e) BIF means the Bank Insurance Fund, as established by the Federal 
Deposit Insurance Act, 12 U.S.C. 1811 et seq.
    (f) Company means any corporation, partnership, trust, association, 
joint venture, pool, syndicate, unincorporated organization, joint-stock 
company or similar organization, as defined in paragraph (r) of this 
section; but a company does not include:
    (1) The Federal Deposit Insurance Corporation, the Resolution Trust 
Corporation, the Office of Thrift Supervision, or any Federal Home Loan 
Bank, or
    (2) Any company the majority of shares of which is owned by:
    (i) The United States or any State,
    (ii) An officer of the United States or any State in his or her 
official capacity, or
    (iii) An instrumentality of the United States or any State.
    (g) Controlling shareholder means any person who directly or 
indirectly or acting in concert with one or more persons or companies, 
or together with members of his or her immediate family, owns, controls, 
or holds with power to vote 10 percent or more of the voting stock of a 
company or controls in any manner the election or appointment of a 
majority of the company's board of directors.
    (h) Director means the Director of the Office of Thrift Supervision.
    (i) [Reserved]
    (j) Immediate family means a person's spouse, father, mother, 
children, brothers, sisters and grandchildren; the father, mother, 
brothers, and sisters of the person's spouse; and the spouse of the 
person's child, brother or sister.
    (k) Management official means any president, chief executive 
officer, chief operating officer, vice president, director, partner, or 
trustee, or any other person who performs or has a representative or 
nominee performing similar policymaking functions, including executive 
officers of principal business units or divisions or subsidiaries who 
perform policymaking functions, for a savings association or a company, 
whether or not incorporated.
    (l) Office means the Office of Thrift Supervision.
    (m) Person means an individual or a group of individuals acting in 
concert who do not constitute a ``company'' as defined in paragraph (f) 
of this section.
    (n) Repealed Control Act means the Change in Savings and Loan 
Control Act, 12 U.S.C. 1730(q), as in effect immediately prior to its 
repeal by the Financial Institutions Reform, Recovery, and Enforcement 
Act of 1989.
    (o) SAIF means the Savings Association Insurance Fund, as 
established by the Federal Deposit Insurance Act, 12 U.S.C. 1811 et seq.
    (p) Savings Association means a Federal savings and loan association 
or a Federal savings bank chartered under section 5 of the Home Owners' 
Loan Act, a building and loan, savings and loan or homestead association 
or a cooperative bank (other than a cooperative bank described in 12 
U.S.C. 1813(a)(2)) the deposits of which are insured by the Federal 
Deposit Insurance Corporation, and any corporation (other than a bank) 
the deposits of which are insured by the Federal Deposit Insurance 
Corporation that the Office and the Federal Deposit Insurance 
Corporation jointly determine to be operating in substantially the same 
manner as a savings association, and shall include any savings bank or 
any cooperative bank which is deemed by the Office to be a savings 
association under 12 U.S.C. 1467a(1), and any savings and loan holding 
company as defined in paragraph (q) of this section.
    (q) Savings and loan holding company means any company that directly 
or indirectly controls a savings association, but does not include:
    (1) Any company by virtue of its ownership or control of voting 
stock of a savings association acquired in connection with the 
underwriting of securities if such stock is held only for such period of 
time (not exceeding 120 days unless extended by the Office) as will 
permit the sale thereof on a reasonable basis; and
    (2) Any trust (other than a pension, profit-sharing, stockholders', 
voting, or

[[Page 403]]

business trust) which controls a savings association if such trust by 
its terms must terminate within 25 years or not later than 21 years and 
10 months after the death of individuals living on the effective date of 
the trust, and:
    (i) Was in existence and in control of a savings association on June 
26, 1967, or
    (ii) Is a testamentary trust; and
    (3) A bank holding company that is registered under, and subject to, 
the Bank Holding Company Act of 1956, or any company directly or 
indirectly controlled by such company (other than a savings 
association).
    (r) Similar organization for purposes of paragraph (f) of this 
section means a combination of parties with the potential for or 
practical likelihood of continuing rather than temporary existence, 
where the parties thereto have knowingly and voluntarily associated for 
a common purpose pursuant to identifiable and binding relationships 
which govern the parties with respect to either:
    (1) The transferability and voting of any stock or other indicia of 
participation in another entity, or
    (2) Achievement of a common or shared objective, such as to 
collectively manage or control another entity.
    (s) Stock means common or preferred stock, general or limited 
partnership shares or interests, or similar interests.
    (t) Uninsured institution means any financial institution the 
deposits of which are not insured by the Federal Deposit Insurance 
Corporation.
    (u)(1) Voting stock means common or preferred stock, general or 
limited partnership shares or interests, or similar interests if the 
shares or interests, by statute, charter or in any manner, entitle the 
holder:
    (i) To vote for or to select directors, trustees, or partners (or 
persons exercising similar functions of the issuing savings association 
or company); or
    (ii) To vote or to direct the conduct of the operations or other 
significant policies of the issuer:
    (2) Notwithstanding anything in paragraph (u)(1) of this section, 
preferred stock, limited partnership shares or interests, or similar 
interests are not ``voting stock'' if:
    (i) Voting rights associated with the stock, shares or interests are 
limited solely to the type customarily provided by statute with regard 
to matters that would significantly and adversely affect the rights or 
preference of the stock, security or other interest, such as the 
issuance of additional amounts or classes of senior securities, the 
modification of the terms of the stock, security or interest, the 
dissolution of the issuer, or the payment of dividends by the issuer 
when preferred dividends are in arrears;
    (ii) The stock, shares or interests represent an essentially passive 
investment or financing device and do not otherwise provide the holder 
with control over the issuer; and
    (iii) The stock, shares or interests do not at the time entitle the 
holder, by statute, charter, or otherwise, to select or to vote for the 
selection of directors, trustees, or partners (or persons exercising 
similar functions) of the issuer;
    (3) Notwithstanding anything in paragraphs (u)(1) and (u)(2) of this 
section, ``voting stock'' shall be deemed to include stock and other 
securities that, upon transfer or otherwise, are convertible into voting 
stock or exercisable to acquire voting stock where the holder of the 
stock, convertible security or right to acquire voting stock has the 
preponderant economic risk in the underlying voting stock. Securities 
immediately convertible into voting stock at the option of the holder 
without payment of additional consideration shall be deemed to 
constitute the voting stock into which they are convertible; other 
convertible securities and rights to acquire voting stock shall not be 
deemed to vest the holder with the preponderant economic risk in the 
underlying voting stock if the holder has paid less than 50 percent of 
the consideration required to directly acquire the voting stock and has 
no other economic interest in the underlying voting stock. For purposes 
of calculating the percentage of voting stock held by a particular 
acquiror, stock or other securities convertible into voting stock or 
exercisable to acquire voting stock which are deemed voting stock

[[Page 404]]

under this paragraph (u)(3) shall be included in calculating the amount 
of voting stock held by the acquiror and the total amount of stock 
outstanding only to the extent of the voting stock obtainable by such 
acquiror by such conversion or exercise of rights.

[54 FR 49690, Nov. 30, 1989, as amended at 60 FR 66720, Dec. 26, 1995; 
61 FR 60184, Nov. 27, 1996]



Sec. 574.3  Acquisition of control of savings associations.

    (a) Acquisition by a company or certain persons. Unless a 
transaction is exempt under paragraph (c) of this section, or exempt 
from prior approval under paragraph (d) of this section, no company or 
any director or officer of a savings and loan holding company, or any 
individual who owns, controls, or holds with power to vote (or holds 
proxies representing) more than 25 percent of the voting stock of a 
savings and loan holding company, shall acquire control, as defined in 
Sec. 574.4 (a) and (b) of this part, of a savings association except 
upon receipt of the written approval of the Office.
    (b) Acquisition by a person. Unless a transaction is exempt under 
paragraph (c) of this section, or exempt from prior notice under 
paragraph (d) of this section, no person (other than certain persons 
affiliated with a savings and loan holding company who are subject to 
paragraph (a) of this section), shall acquire control, as defined in 
Sec. 574.4 (a) and (b) of this part, of a savings association until 
written notice has been provided to the Office and (1) the Office 
indicates in writing its intent not to disapprove the proposed 
acquisition or (2) 60 days (or such period of time as the Office may 
specify if the review period has been extended under Sec. 574.6(c)(3) of 
this part) have passed since receipt of a notice deemed sufficient under 
Sec. 574.6(c)(2). Notwithstanding the forgoing, acquisitions by persons 
by means of a merger with an interim association are not subject to this 
part, but shall be subject to approval under Sec. 563.22, and either 
Sec. 552.13 or applicable state law.
    (c) Exempt transactions. (1) The following transactions are exempt 
from the application requirements of paragraph (a) of this section:
    (i) Control of a savings association acquired by devise under the 
terms of a will creating a trust which is excluded from the definition 
of savings and loan holding company under Sec. 574.2(q) of this part;
    (ii) Control of a savings association acquired in connection with a 
reorganization that involves solely the acquisition of control of that 
association by a newly formed company that is controlled by the same 
acquirors that controlled the savings association for the immediately 
preceding three years, and entails no other transactions, such as an 
assumption of the acquirors' debt by the newly formed company: Provided, 
that the acquirors have filed with the Office an H-(e)4 notification as 
provided in section 574.6 of this part and the OTS does not object to 
the acquisition within 30 days of the filing date;
    (iii) Control of a savings association acquired by a bank holding 
company that is registered under and subject to, the Bank Holding 
Company Act of 1956, or any company controlled by such bank holding 
company;
    (iv) Control of a savings association acquired solely as a result of 
(A) a pledge or hypothecation of stock to secure a loan contracted for 
in good faith or (B) the liquidation of a loan contracted for in good 
faith, in either case where such loan was made in the ordinary course of 
the business of the lender: Provided, further, That acquisition of 
control pursuant to such pledge, hypothecation or liquidation is 
reported to the Office within 30 days, and Provided, further, That the 
acquiror shall not retain such control for more than one year from the 
date on which such control was acquired; however, the Office may, upon 
application by an acquiror, extend such one-year period from year to 
year, for an additional period of time not exceeding three years, if the 
Office finds such extension is warranted and would not be detrimental to 
the public interest;
    (v) Control of a savings association acquired through a percentage 
increase in stock ownership following a pro rata stock dividend or stock 
split, if the proportional interests of the recipients remain 
substantially the same;

[[Page 405]]

    (vi) Acquisition of additional stock after approval under Sec. 574.7 
of this part, or any predecessor provision, has been received: Provided, 
That such acquisition is consistent with any conditions imposed in 
connection with such approval and with the representations made by the 
acquiror in its application;
    (vii) Acquisitions of up to twenty-five percent (25%) of a class of 
stock by a tax-qualified employee stock benefit plan as defined in 
Sec. 563b.2(a)(39); and
    (viii) Acquisitions of up to 15 percent of the voting stock of any 
savings association by a savings and loan holding company (other than a 
bank holding company) in connection with a qualified stock issuance if 
such acquisition is approved by the Office pursuant to Sec. 574.8(a).
    (2) The following transactions are exempt from the notice 
requirements of paragraph (b) of this section:
    (i) Transactions which are exempt pursuant to paragraphs 
(c)(1)(iii), (c)(1)(iv), (c)(1)(v), and (c)(1)(vi) of this section;
    (ii) Transactions for which approval is required under paragraph (a) 
of this section;
    (iii) Transactions for which approval is required under part 546 or 
Sec. 552.13 and Sec. 563.22 of this chapter;
    (iv) Transactions for which a change of control notice must be 
submitted to the Board of Governors of the Federal Reserve System 
pursuant to the Change in Bank Control Act, 12 U.S.C. 1817(j);
    (v) Acquisition of additional stock of a savings association by any 
person who:
    (A) Has held power to vote 25 percent or more of any class of voting 
stock in such association continuously since March 9, 1979; or
    (B) Has maintained control of the savings association continuously 
since acquiring control in compliance with the Control Act (or the 
Repealed Control Act) and the Office's regulations thereunder then in 
effect: Provided, That such acquisition is consistent with any 
conditions imposed in connection with such acquisition of control and 
with the representations made by the acquiror in its notice; and
    (vi) Acquisitions of stock of a de novo federal savings association 
in connection with the organization of such association: Provided, That 
the Office has considered the financial and managerial resources of the 
acquiror in granting the association its federal savings association 
charter; and additional acquisitions of stock of such association, and 
further provided, that the acquisitions are consistent with any 
conditions imposed in connection with the approval of the association's 
charter and with representations made by the acquiror in its application 
for a federal savings association charter, and that the Regional 
Director has no supervisory objection to the acquiror's additional 
acquisitions.
    (3) An acquiror that would be considered to be in control of a 
savings association pursuant to Sec. 574.4 of this part on December 26, 
1985, shall not be subject to this Sec. 574.3 unless the acquiror 
acquires additional stock of the savings association or obtains a 
control factor with respect to such association after December 26, 1985: 
Provided, That an acquiror shall not be deemed to have acquired control 
of a savings association on the basis of actions taken prior to December 
26, 1985, or on the basis of actions taken after December 26, 1985, if 
such actions are pursuant to and consistent with a materially complete 
application under the Holding Company Act or notice under the Repealed 
Control Act filed prior to December 26, 1985, if such acquisition is 
made pursuant to an application approved under the Holding Company Act 
or a notice under the Repealed Control Act that was not disapproved.
    (d) Transactions exempt from prior approval or notice. (1) Subject 
to the conditions set forth in paragraph (d)(2) of this section, the 
following transactions are exempt from prior approval and prior notice 
under Sec. 574.3: Provided, That the timing of the transaction was not 
within the control of the acquiror.
    (i) Control of a savings association acquired through bona fide 
gift;
    (ii) Control of a savings association acquired through liquidation 
of a loan contracted in good faith where the loan was not made in the 
ordinary course of business of the lender;

[[Page 406]]

    (iii) Control of a savings association acquired through a percentage 
increase in ownership following a stock split or redemption that was not 
pro rata;
    (iv) Control determined pursuant to Sec. 574.4 (a) or (b) as a 
result of actions by third parties that are not within the control of 
the acquiror;
    (v) Control of a savings association acquired through testate or 
intestate succession: Provided, That the acquiror transmits written 
notification of the acquisition to the Office within 60 days of the 
acquisition and provides such additional information as the Office may 
specifically request.
    (2) The exemptions provided by paragraphs (d)(1)(i) through 
(d)(1)(iv) of this section are subject to the following conditions:
    (i) The acquiror shall file an application, notice or rebuttal, as 
appropriate, with the Office within 90 days of acquisition of control;
    (ii) The acquiror shall not take any action to direct the management 
or policies of the savings association or which are designed to effect a 
change in the business plan of the savings association other than voting 
on matters that may be presented to stockholders by management of the 
savings association until the Office has acted favorably upon the 
acquiror's application or notice, and the Office may require that the 
acquiror take such steps as the Office deems necessary to insure that 
control is not exercised; and
    (iii) If the Office disapproves the acquiror's application or 
notice, the acquiror shall divest such portion of the stock held by the 
acquiror so as to cause the acquiror not to be determined to be in 
control of the savings association under Sec. 574.4 of this part, within 
one year or such shorter period of time and in the manner that the 
Office may order.
    (e) Prohibited acquisitions. No acquisition shall be approved by the 
Office pursuant to Sec. 574.3(a) which would result in the formation by 
any company, through one or more subsidiaries or through one or more 
transactions, of a multiple savings and loan holding company controlling 
savings associations in more than one state where the acquisition causes 
a savings association to become an affiliate of another savings 
association with which it was not previously affiliated unless:
    (1) Such company, or a savings association subsidiary of such 
company, is authorized to acquire control of a savings association 
subsidiary, or to operate a home or branch office, in the additional 
state or states pursuant to section 13(k) of the Federal Deposit 
Insurance Act, 12 U.S.C. 1823(k) (or section 408(m) of the National 
Housing Act as in effect immediately prior to enactment of the Financial 
Institutions Reform, Recovery and Enforcement Act of 1989);
    (2) Such company controls a savings association subsidiary which 
operated a home or branch office in the additional state or states as of 
March 5, 1987; or
    (3) The statute laws of the state in which the savings association, 
control of which is to be acquired, is located are such that a savings 
association chartered by such state could be acquired by a savings 
association chartered by the state where the acquiring savings 
association or savings and loan holding company is located (or by a 
holding company that controls such a state chartered savings 
association), and such statute laws specifically authorize such an 
acquisition by language to that effect and not merely by implication.

[54 FR 49690, Nov. 30, 1989, as amended at 57 FR 14348, Apr. 20, 1992; 
60 FR 66720, Dec. 26, 1995; 61 FR 60184, Nov. 27, 1996]



Sec. 574.4  Control.

    (a) Conclusive control. (1) An acquiror shall be deemed to have 
acquired control of a savings association, other than a savings and loan 
holding company, if the acquiror directly or indirectly, through one or 
more subsidiaries or transactions or acting in concert with one or more 
persons or companies:
    (i) Acquires more than 25 percent of any class of voting stock of 
the savings association;
    (ii) Acquires irrevocable proxies representing more than 25 percent 
of any class of voting stock of the savings association;
    (iii) Acquires any combination of voting stock and irrevocable 
proxies representing more than 25 percent of

[[Page 407]]

any class of voting stock of a savings association; or
    (iv) Controls in any manner the election of a majority of the 
directors of the savings association.
    (2) An acquiror shall be deemed to have acquired control of a 
company, including a savings and loan holding company, if the acquiror 
directly or indirectly, or through one or more subsidiaries or 
transactions or acting in concert with one or more persons or companies:
    (i) Acquires more than 25 percent of any class of voting stock of 
the company;
    (ii) Acquires irrevocable proxies representing more than 25 percent 
of any class of voting stock of the company;
    (iii) Acquires any combination of voting stock and irrevocable 
proxies representing more than 25 percent of any class of voting stock 
of a savings association;
    (iv) Controls in any manner the election of a majority of the 
directors or trustees of a company;
    (v) Is a general partner of a company;
    (vi) Has contributed more than 25 percent of the capital of the 
company; or
    (vii) Is a trustee of a trust.
    (3) A company shall be deemed to control a savings association if 
the Office finds, after notice and opportunity for hearing, that the 
company has the power directly or indirectly, to exercise a controlling 
influence over the management or policies of the savings association.
    (4) A person shall be deemed to control a savings association if the 
Office determines that such person has the power to direct the 
management or policies of the savings association.
    (b) Rebuttable control determinations. (1) Except as provided in 
Sec. 574.8, an acquiror shall be determined, subject to rebuttal, to 
have acquired control of a savings association, if the acquiror directly 
or indirectly, or through one or more subsidiaries or transactions or 
acting in concert with one or more persons or companies:
    (i) Acquires more than 10 percent of any class of voting stock of 
the savings association and is subject to any control factor, as defined 
in paragraph (c) of this section;
    (ii) Acquires more than 25 percent of any class of stock of the 
savings association and is subject to any control factor, as defined in 
paragraph (c) of this section.
    (2) An acquiror shall be determined, subject to rebuttal, to have 
acquired control of a savings association, if the acquiror directly or 
indirectly, or through one or more subsidiaries or transactions or 
acting in concert with one or more persons or companies, holds any 
combination of voting stock and revocable and/or irrevocable proxies, 
representing more than 25 percent of any class of voting stock of a 
savings association, excluding such proxies held in connection with a 
solicitation by, or in opposition to, a solicitation on behalf of 
management of the savings association, but including a solicitation in 
connection with an election of directors, and such proxies would enable 
the acquiror to:
    (i) Elect one-third or more of the savings association's board of 
directors, including nominees or representatives of the acquiror 
currently serving on such board;
    (ii) Cause the savings association's stockholders to approve the 
acquisition or corporate reorganization of the savings association; or
    (iii) Exert a continuing influence on a material aspect of the 
business operations of the savings association.
    (c) Control factors. For purposes of paragraph (b)(1) of this 
section, the following constitute control factors. References to the 
acquiror include actions taken directly or indirectly, or through one or 
more subsidiaries or transactions or acting in concert with one or more 
persons or companies:
    (1) The acquiror would be one of the two largest holders of any 
class of voting stock of the savings association.
    (2) The acquiror would hold more than 25 percent of the total 
stockholders' equity of the savings association.
    (3) The acquiror would hold more than 35 percent of the combined 
debt securities and stockholders' equity of the savings association.
    (4) The acquiror is party to any agreement:
    (i) Pursuant to which the acquiror possesses a material economic 
stake in

[[Page 408]]

the savings association resulting from a profit-sharing arrangement, use 
of common names, facilities or personnel, or the provision of essential 
services to the savings association; or
    (ii) That enables the acquiror to influence a material aspect of the 
management or policies of the savings association, other than agreements 
to which the savings association is a party where the restrictions are 
customary under the circumstances and in the case of an acquisition 
agreement, which apply only during the period when the acquiror is 
seeking the Office's approval to acquire the savings association, the 
agreement prohibits transactions between the acquiror and the savings 
association and their respective affiliates without approval by the 
Regional Director during the pendency of the application process, and 
the agreement contains no material forfeiture provisions applicable to 
the savings association in the event the acquisition is not approved or 
not approved by a specified date.
    (5) The acquiror would have the ability, other than through the 
holding of revocable proxies, to direct the votes of more than 25 
percent of a class of the savings association's voting stock or to vote 
more than 25 percent of a class of the savings association's voting 
stock in the future upon the occurrence of a future event.
    (6) The acquiror would have the power to direct the disposition of 
more than 25 percent of a class of the savings association's voting 
stock in a manner other than a widely dispersed or public offering.
    (7) The acquiror and/or the acquiror's representatives or nominees 
would constitute more than one member of the savings association's board 
of directors.
    (8) The acquiror or a nominee or management official of the acquiror 
would serve as the chairman of the board of directors, chairman of the 
executive committee, chief executive officer, chief operating officer, 
chief financial officer or in any position with similar policymaking 
authority in the savings association.
    (d) Rebuttable presumptions of concerted action. An acquiror will be 
presumed to be acting in concert with the following persons and 
companies:
    (1) A company will be presumed to be acting in concert with a 
controlling shareholder, partner, trustee or management official of such 
company with respect to the acquisition of stock of a savings 
association, if
    (i) Both the company and the person own stock in the savings 
association,
    (ii) The company provides credit to the person to purchase the 
savings association's stock, or
    (iii) The company pledges its assets or otherwise is instrumental in 
obtaining financing for the person to acquire stock of the savings 
association;
    (2) A person will be presumed to be acting in concert with members 
of the person's immediate family;
    (3) Persons will be presumed to be acting in concert with each other 
where
    (i) Both own stock in a savings association and both are also 
management officials, controlling shareholders, partners, or trustees of 
another company, or
    (ii) One person provides credit to another person or is instrumental 
in obtaining financing for another person to purchase stock of the 
savings association;
    (4) A company controlling or controlled by another company and 
companies under common control will be presumed to be acting in concert;
    (5) Persons or companies will be presumed to be acting in concert 
where they constitute a group under the beneficial ownership reporting 
rules under section 13 or the proxy rules under section 14 of the 
Securities Exchange Act of 1934, promulgated by the Securities and 
Exchange Commission.
    (6) A person or company will be presumed to be acting in concert 
with any trust for which such person or company serves as trustee, 
except that a tax-qualified employee stock benefit plan as defined in 
Sec. 563b.2(a)(39) shall not be presumed to be acting in concert with 
its trustee or person acting in a similar fiduciary capacity solely for 
the purposes of determining whether to combine the holdings of a plan 
and its trustee or fiduciary.
    (7) Persons or companies will be presumed to be acting in concert 
with

[[Page 409]]

each other and with any other person or company with which they also are 
presumed to act in concert.
    (e) Procedures for rebuttal--(1) Rebuttal of control determination. 
An acquiror attempting to rebut a determination of control that would 
arise under paragraph (b) of this section shall file a submission with 
the Office setting forth the facts and circumstances which support the 
acquiror's contention that no control relationship would exist if the 
acquiror acquires stock or obtains a control factor with respect to a 
savings association. The rebuttal must be filed and accepted in 
accordance with this section before the acquiror acquires such stock or 
control factor.
    (i) An acquiror seeking to rebut the determination of control 
arising under paragraph (b)(1) of this section shall submit to the 
Office an executed agreement materially conforming to the agreement set 
forth at Sec. 574.100 of this part. Unless agreed to by the Office in 
writing, no other agreement or filing shall be deemed to rebut the 
determination of control arising under paragraph (b)(1) of this section. 
If accepted by the Office, the acquiror shall furnish a copy of the 
executed agreement to the association to which the rebuttal pertains.
    (ii) An acquiror seeking to rebut the determination of control with 
respect to holding of proxies arising under paragraph (b)(2) of this 
section shall be subject to the requirements of paragraph (e)(1) of this 
section, except that in the case of a rebuttal of the presumption of 
control arising under paragraph (b)(2) of this section, the Office may 
require the acquiror to furnish information in response to a specific 
request for information and depending upon the particular facts and 
circumstances, to provide an executed rebuttal agreement materially 
conforming to the agreement set forth at Sec. 574.100 of this part, with 
any modifications deemed necessary by the Office.
    (2) Presumptions of concerted action. An acquiror attempting to 
rebut the presumption of concerted action arising under paragraph (d) of 
this section shall file a submission with the Office setting forth facts 
and circumstances which clearly and convincingly demonstrate the 
acquiror's contention that no action in concert exists. Such a statement 
must be accompanied by an affidavit, in form and content satisfactory to 
the Office, executed by each person or company presumed to be acting in 
concert, stating that such person or company does not and shall not, 
without having made necessary filings and obtained approval or clearance 
thereof under the Holding Company Act or the Control Act, as applicable, 
have any agreements or understandings, written or tacit, with respect to 
the exercise of control, directly or indirectly, over the management or 
policies of the savings association, including agreements relating to 
voting, acquisition or disposition of the savings association's stock. 
The affidavit shall also recite that the signatory is aware that the 
filing of a false affidavit may subject the person or company to 
criminal sanctions, would constitute a violation of the Office's 
regulations at 12 CFR 563.180(b), and would be considered a 
``presumptive disqualifier'' under 12 CFR 574.7(g)(1)(v).
    (3) Determination. A rebuttal filed pursuant to paragraph (e) of 
this section shall not be deemed sufficient unless it includes all the 
information, agreements, and affidavits required by the Office and this 
part, as well as any additional relevant information as the Office may 
require by written request to the acquiror. Within 20 calendar days 
after proper filing of a rebuttal submission, the Office will provide 
written notification of its determination to accept or reject the 
submission; request additional information in connection with the 
submission; or return the submission to the acquiror as materially 
deficient. Within 15 calendar days after proper filing of any additional 
information furnished in response to a specific request by the Office, 
the Office shall notify the acquiror in writing as to whether the 
rebuttal is thereby deemed to be sufficient. If the Office fails to 
notify an acquiror within such time, the rebuttal shall be deemed to be 
accepted. The Office may reject any rebuttal which is inconsistent with 
facts and circumstances known to it or where the

[[Page 410]]

rebuttal does not clearly and convincingly refute the rebuttable 
determination of control or presumption of action in concert, and may 
determine to reject a submission solely on such bases.
    (f) Safe harbor. Notwithstanding any other provision of this 
section, where an acquiror has no intention to participate in or to seek 
to exercise control over a savings association's management or policies, 
the acquiror may seek to qualify for a safe harbor with respect to its 
ownership of stock of a savings association.
    (1) In order to qualify for the safe harbor, an acquiror must submit 
a certification to the OTS that shall be signed by the acquiror or an 
authorized representative thereof and shall read as follows:

    The undersigned makes this submission pursuant to Sec. 574.4(f) of 
the regulations of the Office of Thrift Supervision (``Office'') with 
respect to [name of savings association] and hereby certifies to the 
Office the following:
    The undersigned is not in control of [name of savings association] 
under Sec. 574.4(a);
    The undersigned is not subject to any control factor as enumerated 
in Sec. 574.4(c) with respect to the [name of savings association];
    The undersigned will not solicit proxies relating to the voting 
stock of [name of savings association];
    Before any change in status occurs that would bring the undersigned 
within the scope of Sec. 574.4 (a) or (b), the undersigned will file and 
obtain approval of a rebuttal, notice or application, as appropriate.
    The undersigned has not acquired stock of [name of savings 
association] for the purpose or effect of changing or influencing the 
control of [name of savings association] or in connection with or as a 
participant in any transaction having such purpose or effect.

    (2) An acquiror claiming safe-harbor status may vote freely and 
dissent with respect to its own stock. Certifications provided for in 
this paragraph must be filed with OTS in accordance with Secs. 516.30 
and 516.40 of this chapter.

[54 FR 49690, Nov. 30, 1989, as amended at 57 FR 14349, Apr. 20, 1992; 
60 FR 66720, Dec. 26, 1995; 66 FR 13009, Mar. 2, 2001]



Sec. 574.5  Certifications of ownership.

    (a) Acquisition of stock. (1) Upon the acquisition of beneficial 
ownership that exceeds, in the aggregate, 10 percent of any class of 
stock of a savings association or additional stock above 10 percent of 
the stock of a savings association occurring after December 26, 1985, an 
acquiror shall file with the OTS a certification as described in this 
section.
    (2) The certification filed pursuant to this section shall be signed 
by the acquiror or an authorized representative thereof and shall read 
as follows:
    The undersigned is the beneficial owner of 10 percent or more of a 
class of stock of [name of savings association or holding company]. The 
undersigned is not in control of such association or company, as defined 
in 12 CFR 574.4(a), and is not subject to a rebuttable determination of 
control under Sec. 574.4(b), and will take no action that would result 
in a determination of control or a rebuttable determination of control 
without first filing and obtaining approval of an application under the 
Savings and Loan Holding Company Act, 12 U.S.C. 1467a, or notice under 
the Change in Bank Control Act, 12 U.S.C. 1817(j), or filing and 
obtaining acceptance by the Office of Thrift Supervision of a rebuttal 
of the rebuttable determination of control.
    (3) Notwithstanding anything contained in this paragraph (a), an 
acquiror is not required to file a certification if (i) the Office has 
approved the acquisition of the savings association or (ii) the acquiror 
has filed a materially complete application or notice pursuant to 
Sec. 574.3 of this part.
    (b) Privacy. All certifications filed under this Sec. 574.5 shall be 
for the information of the Office in connection with its examination 
functions and shall be provided confidential treatment by the Office.

[54 FR 49690, Nov. 30, 1989, as amended at 57 FR 14349, Apr. 20, 1992; 
59 FR 53571, Oct. 25, 1994]



Sec. 574.6  Procedural requirements.

    (a) Form of application or notice. An application, notice, or 
informational filing required by Sec. 574.3 of this part shall be filed 
on the Application/Information Filing H-(e) ________ form. (As specified 
in the form's instructions, the blank line following the H-(e) should be 
filled in by applicants with the appropriate ``1'', ``1-S'', ``2'', 
``3'', or ``4'' depending on the type of application.) The specific 
application requirements for each type of filing are indicated on the 
form. An acquiror may request confidential treatment of portions of an

[[Page 411]]

application or notice only by complying with the requirements of 
paragraph (f) of this section. In the case of an application involving a 
merger (including a merger with an interim association) the Application/
Information Filing H-(e) ________ form shall be used in lieu of an 
application that otherwise would be required for such merger under 
Secs. 546.2, 552.13, and 563.22 of this chapter.
    (1) H-(e)1. This application type shall be filed under Sec. 574.3(a) 
of this part by a company, other than a savings and loan holding 
company, for approval to acquire direct or indirect control of one 
savings association.
    (2) H-(e)1-S. This application type shall be filed under 
Sec. 574.3(a) of this part by a savings association for approval to 
reorganize into a holding company structure, provided that the proposed 
transaction satisfies each of the conditions for automatic approval 
specified in Sec. 574.7 (a)(2) and (a)(3) of this part.
    (3) H-(e)2. (i) This application type shall be filed under 
Sec. 574.3(a) of this part:
    (A) By a savings and loan holding company for approval to acquire 
and hold separately one or more savings associations;
    (B) By any other company for approval to acquire and hold separately 
more than one savings association;
    (C) By a savings and loan holding company for approval of an 
acquisition of shares issued by a savings association in a qualified 
stock issuance pursuant to Sec. 574.8 of this part; or
    (D) By any director, officer, or any individual who owns, controls, 
or holds with power to vote (or holds proxies representing) more than 25 
percent of the voting shares of a savings and loan holding company for 
approval of an acquisition of one or more savings associations.
    (ii) The OTS may determine as a general matter or on a case-by-case 
basis not to require application information not relevant to 
transactions described in paragraphs (a)(3)(i) (C) and (D) of this 
section.
    (4) H-(e)3. This application shall be used for all applications 
filed under Sec. 574.3(a) of this part:
    (i) By a savings and loan holding company for approval of 
acquisitions by a merger, consolidation, or purchase of assets of a 
savings association or uninsured institution or a savings and loan 
holding company; or
    (ii) By any company for approval of acquisitions by a merger, 
consolidation, or purchase of assets of two or more savings 
associations.
    (5) H-(e)4. This information filing shall be used to claim that a 
reorganization is exempt from prior written approval of the OTS under 
Sec. 574.3(c)(1)(ii) of this part.
    (6) Notice Form 1393, parts A and B. This form shall be used for all 
notices filed under Sec. 574.3(b) of this part regarding the acquisition 
of control of a savings association by any person or persons not 
constituting a company except as provided in paragraph (a)(3) of this 
section.
    (b) Filing requirements--(1) Applications, notices, and rebuttals. 
(i) Complete copies including exhibits and all other pertinent documents 
of applications, notices, and rebuttal submissions shall be filed with 
the Region in which the savings association or associations involved in 
the transaction have their home office or offices. Unsigned copies shall 
be conformed. Each copy shall include a summary of the proposed 
transaction.
    (ii) Any person or company may amend an application, notice or 
rebuttal submission, or file additional information, upon request of the 
OTS or, in the case of the party filing an application, notice, or 
rebuttal, upon such party's own initiative.
    (2) H-(e)4 Information filing. Any information filing required to be 
made to claim that a reorganization is exempt from prior written 
approval of the OTS under Sec. 574.3(c)(1)(ii) of this part shall be 
clearly labeled ``H-(e)4 Information Filing''.
    (c) Sufficiency and waiver. (1) Except as provided in 
Sec. 574.6(c)(5), an application or notice filed pursuant to Sec. 574.3 
(a) or (b) shall not be deemed sufficient unless it includes all of the 
information required by the form prescribed by the Office and this part, 
including a complete description of the acquiror's proposed plan for 
acquisition of control

[[Page 412]]

whether pursuant to one or more transactions, and any additional 
relevant information as the Office may require by written request to the 
applicant. Unless an application or notice specifically indicates 
otherwise, the application or notice shall be considered to pertain to 
acquisition of 100 percent of a savings association's voting stock. 
Where an application or notice pertains to a lesser amount of stock, the 
Office may condition its approval or non-disapproval to apply only to 
such amount, in which case additional acquisitions may be made only by 
amendment to the acquiror's application or notice and the Office's 
approval or non-disapproval thereof. Failure by an applicant to respond 
completely to a written request by the Office for additional information 
within 30 calendar days of the date of such request may be deemed to 
constitute withdrawal of the application, notice, or rebuttal filing or 
may be treated as grounds for denial of an application, issuance of a 
notice of disapproval of a notice, or rejection of a rebuttal.
    (2) The period for the Office's review of any proposed acquisition 
will commence upon receipt by the Office of a notice or application 
deemed sufficient under paragraph (c)(1) of this section. The Office 
shall notify an acquiror in writing within 30 calendar days after proper 
filing of an application or notice as to whether an application or 
notice--
    (i) Is sufficient;
    (ii) Is insufficient, and what additional information is requested 
in order to render the application or notice sufficient; or
    (iii) Is materially deficient and will not be processed: Provided, 
That if the public comment period specified in paragraph (e) of this 
section is extended, the 30 day period shall be extended for the same 
number of days the public comment period is extended. The Office also 
shall notify an acquiror in writing within 15 calendar days after proper 
filing of any additional information furnished in response to a specific 
request by the Office as to whether the application or notice is thereby 
deemed to be sufficient. If the Office fails to so notify an acquiror 
within such times, the application or notice shall be deemed to be 
sufficient as of the expiration of the applicable period.
    (3) After additional information has been requested and supplied, 
the Office may request additional information only with respect to 
matters derived from or prompted by information already furnished, or 
information of a material nature that was not reasonably available from 
the acquiror, was concealed, or pertains to developments subsequent to 
the time of the Office's initial request for additional information. 
With regard to information of a material nature that was not reasonably 
available from the acquiror or was concealed at the time an application 
or notice was deemed to be sufficient or which pertains to developments 
subsequent to the time an application or notice was deemed to be 
sufficient, the Office, at its option, may request such additional 
information as it considers necessary, or may deem the application or 
notice not to be sufficient until such additional information is 
furnished and cause the review period to commence again in its entirety 
upon receipt of such additional information.
    (i) The 60-day period for the Office's review of an application or 
notice deemed to be sufficient also may be extended by the Office for up 
to an additional 30 days.
    (ii) The period for the Office's review of a notice may be further 
extended not to exceed two additional times for not more than 45 days 
each time if--
    (A) The Office determines that any acquiring party has not furnished 
all the information required under this part;
    (B) In the Office's judgment, any material information submitted is 
substantially inaccurate;
    (C) The Office has been unable to complete an investigation of each 
acquiror because of any delay caused by, or the inadequate cooperation 
of, such acquiror; or
    (D) The Office determines that additional time is needed to 
investigate and determine that no acquiring party has a record of 
failing to comply with the requirements of subchapter II of chapter 53 
of title 31 of the United States Code.
    (4) With respect to an H-(e)4 information filing, the Chief Counsel 
or his or

[[Page 413]]

her designee shall have 30 days after receipt of a filing deemed 
sufficient to disapprove the assertion that the company qualifies for 
the exemption provided in Sec. 574.3(c)(1)(ii). After the expiration of 
such 30-day period without response from the Chief Counsel, the filing 
shall be deemed to be approved.
    (5) The Office may waive any requirements of this paragraph (c) 
determined to be unnecessary by the Office, upon its own initiative, 
upon the written request of an acquiring person, or in a supervisory 
case.
    (d) Publication. (1) An acquiror shall publish a notification as 
provided in this section no earlier than three calendar days before and 
no later than three calendar days after filing an application under 
Sec. 574.3(a) or 574.8 or notice under Sec. 574.3(b) and shall mail a 
copy of the notification to the association whose stock is sought to be 
acquired. Publication shall be made in the business section of a 
newspaper printed in the English language in:
    (i) The community in which the home office of the savings 
association is located; and
    (ii) If applicable, the community in which the home office of the 
largest subsidiary savings association of the acquiror is located.

If it is determined that the primary language of a significant number of 
adult residents of either community is a language other than English, 
the acquiror may be required to publish the notification simultaneously 
in the appropriate language(s).
    (2) Notice published pursuant to paragraph (d) of this section shall 
be published in a manner that is conspicuous to the average reader and 
shall be made in substantially the following form:

 Notice of Filing of Application or Notice for Acquisition of a Savings 
                               Association

    This is to inform the public that under Sec. 574.3 of the 
Regulations of the Office of Thrift Supervision (``OTS'') for 
Acquisitions of Savings Associations [Acquiror] [has filed/intends to 
file] an [application/notice] with OTS, for permission to [acquire 
control of/purchase a qualified stock issuance of] savings association, 
located in [location], on [date, or intended date of filing].
    Anyone may write in favor of or protest against the [application/
notice] and in so doing may submit such information as he or she deems 
relevant. Three copies of all submissions must be sent to OTS [give 
Region name and address] within 20 calendar days of the filing of the 
[application/notice]. Up to an additional 20 calendar days to submit 
comments may be obtained upon a showing of good cause, if a written 
request is received by the OTS within the initial 20-day period.
    You may inspect the non-confidential portion of the [application/
notice] and non-confidential portions of all comments filed with the OTS 
by contacting [give name and address.] If you have any questions 
concerning these procedures, contact the OTS Regional Office at (____) 
________.

    (3) Promptly after publication, the acquiror shall transmit copies 
of each notice, and a publisher's affidavit of publication in the same 
manner as the original filing in accordance with Sec. 574.6(b)(1).
    (4) Notice shall be provided to the appropriate state supervisor and 
to persons whose request for announcements under Sec. 563e.6 of this 
chapter have been received in time for such notification; these notices 
shall be in addition to legal notification as set forth in paragraph 
(d)(1) of this section. Any other persons who might have an interest in 
the application or notice may also be notified.
    (5) Disclosure of any part of an application or notice shall be made 
only in compliance with paragraph (f) of this section.
    (e) Public comment. Comments by the public shall be submitted only 
as provided in this paragraph (e) or as requested by the Office. Within 
20 calendar days of the date of filing (or up to 40 calendar days after 
such date if an extension is requested in writing within the initial 20-
day period) anyone may file comments in favor of or in protest of the 
application or notice and

[[Page 414]]

in so doing may submit such information as he or she deems relevant. 
Comments received after the comment period, unverified accusations, or 
materials pertaining to an application, notice, other filing or public 
comment which the commenter is unwilling to have disclosed to the party 
making such submission, shall not be part of the record and need not be 
considered by the Office. Comments shall be filed in the manner and in 
the locations provided in paragraph (b) of this section for the 
application or notice to which the comments pertain.
    (f) Disclosure. (1) Any application, notice, other filings, public 
comment, or portion thereof, made pursuant to this part for which 
confidential treatment is not requested in accordance with this 
paragraph (f), shall be immediately available to the public and not 
subject to the procedures set forth herein. Public disclosure shall be 
made of other portions of an application, notice, other filing or public 
comment in accordance with paragraph (f)(2) of this section, the 
provisions of the Freedom of Information Act (5 U.S.C. 552a) and parts 
503 and 505 of this chapter. Applicants and other submitters should 
provide confidential and non-confidential versions of their filings, as 
described in Sec. 574.6(f) (2) and (3) in order to facilitate this 
process.
    (2) Any person who submits any information or causes or permits any 
information to be submitted to the Office pursuant to this part may 
request that the Office afford confidential treatment under the Freedom 
of Information Act to such information for reasons of personal privacy 
or business confidentiality, which shall include such information that 
would be deemed to result in the commencement of a tender offer under 
Sec. 240.14d-2 of title 17 of the Code of Federal Regulations, or for 
any other reason permitted by Federal law. Such request for 
confidentiality must be made and justified in accordance with paragraph 
(f)(5) of this section at the time of filing, and must, to the extent 
practicable, identify with specificity the information for which 
confidential treatment may be available and not merely indicate portions 
of documents or entire documents in which such information is contained. 
Failure to specifically identify information for which confidential 
treatment is requested, failure to specifically justify the bases upon 
which confidentiality is claimed in accordance with paragraph (f)(5) of 
this section, or overbroad and indiscriminate claims for confidential 
treatment, may be bases for denial of the request. In addition, the 
filing party should take all steps reasonably necessary to ensure, as 
nearly as practicable, that at the time the information is first 
received by the Office (i) it is supplied segregated from information 
for which confidential treatment is not being requested, (ii) it is 
appropriately marked as confidential, and (iii) it is accompanied by a 
written request for confidential treatment which identifies with 
specificity the information as to which confidential treatment is 
requested. Any such request must be substantiated in accordance with 
paragraph (f)(5) of this section.
    (3) All documents which contain information for which a request for 
confidential treatment is made or the appropriate segregable portions 
thereof shall be marked by the person submitting the records with a 
prominent stamp, typed legend, or other suitable form of notice on each 
page or segregable portion of each page, stating ``Confidential 
Treatment Requested by [name].'' If such marking is impracticable under 
the circumstances, a cover sheet prominently marked ``Confidential 
Treatment Requested by [name]'' should be securely attached to each 
group of records submitted for which confidential treatment is 
requested. Each of the records transmitted in this manner should be 
individually marked with an identifying number and code so that they are 
separately identifiable.
    (4) A determination as to the validity of any request for 
confidential treatment may be made when a request for disclosure of the 
information under the Freedom of Information Act is received, or at any 
time prior thereto. If the Office receives a request for the information 
under the Freedom of Information Act, OTS will advise the filing party 
before it discloses material for which confidential treatment has been 
requested.

[[Page 415]]

    (5) Substantiation of a request for confidential treatment shall 
consist of a statement setting forth, to the extent appropriate or 
necessary for the determination of the request for confidential 
treatment, the following information regarding the request:
    (i) The reasons, concisely stated and referring to specific 
exemptive provisions of the Freedom of Information Act, why the 
information should be withheld from access under the Freedom of 
Information Act;
    (ii) The applicability of any specific statutory or regulatory 
provisions which govern or may govern the treatment of the information;
    (iii) The existence and applicability of any prior determination by 
the Office, other Federal agencies, or a court, concerning confidential 
treatment of the information;
    (iv) The adverse consequences to a business enterprise, financial or 
otherwise, that would result from disclosure of confidential commercial 
or financial information, including any adverse effect on the business' 
competitive position;
    (v) The measures taken by the business to protect the 
confidentiality of the commercial or financial information in question 
and of similar information, prior to, and after, its submission to the 
Office;
    (vi) The ease or difficulty of a competitor's obtaining or compiling 
the commercial or financial information;
    (vii) Whether commercial or financial information was voluntarily 
submitted to the Office, and, if so, whether and how disclosure of the 
information would tend to impede the availability of similar information 
to the Office;
    (viii) The extent, if any, to which portions of the substantiation 
of the request for confidential treatment should be afforded 
confidential treatment;
    (ix) The amount of time after the consummation of the proposed 
acquisition for which the information should remain confidential and a 
justification thereof;
    (x) Such additional facts and such legal and other authorities as 
the requesting person may consider appropriate.
    (6) Any person requesting access to an application, notice, other 
filing, or public comment made pursuant to this part for purposes of 
commenting on a pending submission may prominently label such request: 
``Request for Disclosure of Filing(s) Made Under part 574/Priority 
Treatment Requested.''
    (g) Supervisory cases. The provisions of paragraphs (d), (e) and (f) 
of this section may be waived by the Office in connection with a 
transaction approved by the Office for supervisory reasons.
    (h) Notification of State supervisor. Upon receiving a notice 
relating to an acquisition of control of a state-chartered savings 
association, the Office shall forward a copy of the notice to the 
appropriate state savings and loan association supervisory agency, and 
shall allow 30 days within which the views and recommendations of such 
state supervisory agency may be submitted. The Office shall give due 
consideration to the views and recommendations of such state agency in 
determining whether to disapprove any proposed acquisition. 
Notwithstanding the provisions of this paragraph (h), if the Office 
determines that it must act immediately upon any notice of a proposed 
acquisition in order to prevent the default of the association involved 
in the proposed acquisition, the Office may dispense with the 
requirement of this paragraph (h) or, if a copy of the notice is 
forwarded to the state supervisory agency, the Office may request that 
the views and recommendations of such state supervisory agency be 
submitted immediately in any form or by any means acceptable to the 
Office.
    (i) Additional procedures for acquisitions involving mergers. 
Acquisitions of control involving mergers (including mergers with an 
interim association) shall also be subject to the procedures set forth 
in Sec. 563.22 of this chapter to the extent applicable, except as 
provided in paragraph (a) of this section.
    (j) Additional procedures for acquisitions of recently converted 
savings associations. Applications, notices and rebuttals involving 
acquisitions of the stock of a recently converted savings association 
under Sec. 563b.3(i)(3) of this chapter shall also address the criteria

[[Page 416]]

for approval set forth at Sec. 563b.3(i)(5) of this chapter.

[54 FR 49690, Nov. 30, 1989, as amended at 55 FR 13517, Apr. 11, 1990; 
57 FR 14349, Apr. 20, 1992; 59 FR 28470, June 2, 1994; 60 FR 66720, Dec. 
26, 1995; 61 FR 65179, Dec. 11, 1996; 66 FR 13009, Mar. 2, 2001]



Sec. 574.7  Determination by the OTS.

    (a) Acquisition by a company. (1) The Office shall approve an 
application by any company other than a savings and loan holding company 
to acquire control of one savings association unless it determines that 
the criteria set forth in paragraph (c) of this section are not met. 
Acquisitions involving mergers with an interim association shall also be 
subject to Secs. 546.2, 552.13, and 563.22 of this chapter.
    (2) Subject to compliance with the requirements of Secs. 546.2, 
552.13 and 563.22, as applicable, an application filed pursuant to 
Sec. 574.6(a)(2) by a savings association solely for the purpose of 
obtaining approval for the creation of a savings and loan holding 
company by such savings association, and related applications for 
permission to organize an interim federal association, and for merger 
with such interim association, shall be deemed to be approved 45 
calendar days after such applications are properly filed in accordance 
with the procedures set forth herein, unless, prior to such date:
    (i) The Office has requested additional information of the applicant 
in writing;
    (ii) Notified the applicant that the application is materially 
deficient and will not be processed; or
    (iii) Denied the application prior to that time; provided that to be 
eligible for approval under this paragraph (a)(2):
    (A) The holding company shall not be capitalized initially in an 
amount exceeding the amount the savings association is permitted to pay 
in dividends to its holding company as of the date of the reorganization 
pursuant to applicable regulations or, in the absence thereof, pursuant 
to the then current policy guidelines issued by the OTS;
    (B) The creation of the savings and loan holding company by the 
association is the sole transaction contained in the application, and 
there are no other transactions requiring Office approval incident to 
the creation of the holding company (other than the creation of an 
interim association that will disappear upon consummation of the 
reorganization and the merger of the savings association with such 
interim association to effect the reorganization), and the holding 
company is not also seeking any regulatory waivers, regulatory 
forbearances, or resolution of legal or supervisory issues;
    (C) The board of directors and executive officers of the holding 
company are composed of persons who, at the time of acquisition, are 
executive officers and directors of the association;
    (D) The acquisition raises no significant issues of law or policy 
under then current Office policy;
    (E) Prior to consummation of the reorganization transaction, the 
holding company shall enter into any dividend limitation, regulatory 
capital maintenance, or prenuptial agreement required by Office 
regulations, or in the absence thereof, required pursuant to policy 
guidelines issued by the OTS;
    (F) The holding company shall furnish the following information in 
accordance with the specified time frames:
    (1) On the business day prior to the date of consummation of the 
acquisition, the chief financial officers of the holding company and the 
savings association shall certify to the OTS in writing that no material 
adverse events or material adverse changes have occurred with respect to 
the financial condition or operations of the holding company or the 
savings association since the date of the financial statements submitted 
with the application;
    (2) No later than thirty days from the date of consummation of the 
acquisition, the holding company shall file with the OTS a certification 
by legal counsel stating the effective date of the acquisition, the 
exact number of shares of stock of the savings association acquired by 
the holding company, and that the acquisition has been consummated in 
accordance with the provisions of all applicable laws and regulations 
and the application;

[[Page 417]]

    (3) No later than thirty days from the date of consummation of the 
acquisition, the holding company shall file with the OTS an opinion from 
its independent auditors certifying that the transaction was consummated 
in accordance with generally accepted accounting principles; and
    (4) No later than thirty days from the date of consummation of the 
acquisition, the holding company shall file with the OTS a certification 
stating that the holding company will not cause the savings association 
to deviate materially from the business plan submitted in connection 
with the application, unless prior written approval from the OTS is 
obtained;
    (G) In the event an interim association is utilized to facilitate 
the reorganization transaction, the resulting association shall, no 
later than 30 days from the date of consummation of the reorganization 
transaction, furnish a certification by legal counsel stating:
    (1) The effective date of the merger involving the interim 
association and that the merger has been consummated in accordance with 
the Agreement and Plan of Reorganization or similar document pursuant to 
which the transaction was accomplished;
    (2) The interim association has not opened for business;
    (3) The merger was consummated within 120 calendar days of the date 
of approval: and
    (4) After completion of the organization of the interim association, 
the board of directors of the interim association ratified the Agreement 
and Plan of Reorganization or similar document; and
    (H) The proposed acquisition shall be consummated within 120 days 
after the application is automatically approved under this 
Sec. 574.7(a)(2).
    (3) To the extent that an association reorganizing into holding 
company form is subject to provisions relating to its mutual to stock 
conversion imposed by l2 CFR 563b.3(c)(9), (c)(17), (c)(18), (c)(19), 
(g)(1) or (i), such provisions shall be applicable to any holding 
company approved automatically pursuant to paragraph (a)(2) of this 
section.
    (b) Acquisition by a savings and loan holdinq company. The Office 
shall not approve an acquisition by a savings and loan holding company 
to acquire control of a savings association, by any other company to 
acquire control of more than one savings association, by any director or 
officer of a savings and loan holding company, or any individual who 
owns, controls, or holds with power to vote (or holds proxies 
representing) more than 25 percent of the voting stock of a savings and 
loan holding company to acquire control of a savings association, or by 
a savings and loan holding company to acquire a qualified stock issuance 
by a savings association pursuant to Sec. 574.8 of this part, except in 
accordance with paragraph (c) of this section. Before approving any such 
acquisition, except a transaction under section 13(k) of the Federal 
Deposit Insurance Act, the Office shall request from the Attorney 
General and consider any report rendered within 30 days of such request 
on the competitive factors involved. Acquisitions involving mergers 
(including mergers with an interim association) shall also be subject to 
Secs. 546.2, 552.13, and 563.22 of this chapter.
    (c) Application criteria. (1) The OTS may deny an application by a 
company or certain persons, described in paragraph (b) of this section, 
affiliated with a savings and loan holding company, to acquire control 
of a savings association, or by a savings and loan holding company to 
acquire a qualified stock issuance pursuant to Sec. 574.8 of this part:
    (i) If the OTS finds that the financial and managerial resources and 
future prospects of the acquiror and association involved would be 
detrimental to the association or the insurance risk of the SAIF or BIF; 
or
    (ii) If the acquiror fails or refuses to furnish information 
requested by the OTS.
    (2) Consideration of the managerial resources of a company or 
savings association shall include consideration of the competence, 
experience, and integrity of the officers, directors, and controlling 
shareholders of the company or association. In connection with the 
applications filed pursuant to Secs. 574.6 (a)(3) and 574.8 of this 
part, the OTS will also consider the convenience and needs of the 
community to be served.

[[Page 418]]

Moreover, the OTS shall not approve any proposed acquisition:
    (i) Which would result in a monopoly, or which would be in 
furtherance of any combination or conspiracy to monopolize or to attempt 
to monopolize the savings and loan business in any part of the United 
States;
    (ii) The effect of which on any section of the country 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 OTS 
finds that the anticompetitive effects of the proposed acquisition are 
clearly outweighed in the public interest by the probable effect of the 
acquisition in meeting the convenience and needs of the community to be 
served;
    (iii) If the company fails to provide adequate assurances to the OTS 
that the company will make available to the OTS such information on the 
operations or activities of the company, and any affiliate of the 
company, as the OTS determines to be appropriate to determine and 
enforce compliance with the Home Owners' Loan Act; or
    (iv) In the case of an application by a foreign bank, if the foreign 
bank is not subject to comprehensive supervision or regulation on a 
consolidated basis by the appropriate authorities in the home country of 
the foreign bank. For purposes of this paragraph (c)(2)(iv), 
``comprehensive supervision or regulation on a consolidated basis by the 
appropriate authorities'' shall be determined using the standards set 
forth at 12 CFR 211.24(c)(1)(ii).
    (d) Notice criteria. In making its determination whether to 
disapprove a notice, the Office may disapprove any proposed acquisition, 
if the Office determines that:
    (1) The proposed acquisition of control would result in a monopoly 
or would be in furtherance of any combination or conspiracy to 
monopolize or to attempt to monopolize the banking business in any part 
of the United States;
    (2) The effect of the proposed acquisition of control in any section 
of the country may be substantially to lessen competition or to tend to 
create a monopoly or the proposed acquisition of control would in any 
other manner be in restraint of trade, and the anticompetitive effects 
of the proposed acquisition of control are not clearly outweighed in the 
public interest by the probable effect of the transaction in meeting the 
convenience and needs of the community to be served;
    (3) The financial condition of the acquiring person is such as might 
jeopardize the financial stability of the association or prejudice the 
interests of the depositors of the association;
    (4) The competence, experience, or integrity of the acquiring person 
or any of the proposed management personnel indicates that it would not 
be in the interests of the depositors of the association, the Office, or 
the public to permit such person to control the association;
    (5) The acquiring person fails or refuses to furnish information 
requested by the Office; or
    (6) The Office determines that the proposed acquisition would have 
an adverse effect on the SAIF or the BIF.
    (e) Failure to disapprove a notice. If, upon expiration of the 60-
day review period of any notice deemed to be sufficient filed pursuant 
to Sec. 574.6(c), or extension thereof, the Office has failed to 
disapprove such notice, the proposed acquisition may take place: 
Provided, That it is consummated within one year and in accordance with 
the terms and representations in the notice and that there is no 
material change in circumstances prior to the acquisition.
    (f) [Reserved]
    (g) Presumptive disqualifiers--(1) Integrity factors. The following 
factors shall give rise to a rebuttable presumption that an acquiror may 
fail to satisfy the managerial resources and future prospects tests of 
paragraph (c) of this section or the integrity test of paragraph (d)(4) 
of this section:
    (i) During the 10-year period immediately preceding filing of the 
application or notice, criminal, civil or administrative judgments, 
consents or orders, and any indictments, formal investigations, 
examinations, or civil or administrative proceedings (excluding routine 
or customary audits, inspections and investigations) that terminated in 
any agreements, undertakings, consents or orders, issued against, 
entered into by, or involving

[[Page 419]]

the acquiror or affiliates of the acquiror by any federal or state 
court, any department, agency, or commission of the U.S. Government, any 
state or municipality, any Federal Home Loan Bank, any self-regulatory 
trade or professional organization, or any foreign government or 
governmental entity, which involve:
    (A) Fraud, moral turpitude, dishonesty, breach of trust or fiduciary 
duties, organized crime or racketeering;
    (B) Violation of securities or commodities laws or regulations;
    (C) Violation of depository institution laws or regulations;
    (D) Violation of housing authority laws or regulations; or
    (E) Violation of the rules, regulations, codes of conduct or ethics 
of a self-regulatory trade or professional organization;
    (ii) Denial, or withdrawal after receipt of formal or informal 
notice of an intent to deny, by the acquiror or affiliates of the 
acquiror, of
    (A) Any application relating to the organization of a financial 
institution,
    (B) An application to acquire any financial institution or holding 
company thereof under the Holding Company Act or the Bank Holding 
Company Act or otherwise,
    (C) A notice relating to a change in control of any of the foregoing 
under the Control Act or the Repealed Control Act; or
    (D) An application or notice under a state holding company or change 
in control statute;
    (iii) The acquiror or affiliates of the acquiror were placed in 
receivership or conservatorship during the preceding 10 years, or any 
management official of the acquiror was a management official or 
director (other than an official or director serving at the request of 
the Office, the Federal Deposit Insurance Corporation, the Resolution 
Trust Corporation, or the former Federal Savings and Loan Insurance 
Corporation) or controlling shareholder of a company or savings 
association that was placed into receivership, conservatorship, or a 
management consignment program, or was liquidated during his or her 
tenure or control or within two years thereafter;
    (iv) Felony conviction of the acquiror, an affiliate of the acquiror 
or a management official of the acquiror or an affiliate of the 
acquiror;
    (v) Knowingly making any written or oral statement to the Office or 
any predecessor agency (or its delegate) in connection with an 
application, notice or other filing under this part that is false or 
misleading with respect to a material fact or omits to state a material 
fact with respect to information furnished or requested in connection 
with such an application, notice or other filing;
    (vi) Acquisition and retention at the time of submission of an 
application or notice, of stock in the savings association by the 
acquiror in violation of Sec. 574.3 or its predecessor sections.
    (2) Financial factors. The following shall give rise to a rebuttable 
presumption that an acquiror may fail to satisfy the financial-resources 
and future-prospects tests of paragraph (c) of this section, or the 
financial condition test of paragraph (d)(3) of this section:
    (i) Liability for amounts of debt which, in the opinion of the 
Office, create excessive risks of default and pressure on the savings 
association to be acquired; or
    (ii) Failure to furnish a business plan or furnishing a business 
plan projecting activities which are inconsistent with economical home 
financing.

[54 FR 49690, Nov. 30, 1989, as amended at 57 FR 14349, Apr. 20, 1992; 
59 FR 28471, June 2, 1994; 59 FR 44627, Aug. 30, 1994; 60 FR 66720, Dec. 
26, 1995]



Sec. 574.8  Qualified stock issuances by undercapitalized savings associations or holding companies.

    (a) Acquisitions by savings and loan holding companies. No savings 
and loan holding company shall be deemed to control a savings 
association solely by reason of the purchase by such savings and loan 
holding company of shares issued by such savings association, or issued 
by any savings and loan holding company (other than a bank holding 
company) which controls such savings association, in connection with a 
qualified stock issuance if prior approval of

[[Page 420]]

such acquisition is granted by the Office under this Sec. 574.8, unless 
the acquiring savings and loan holding company, directly or indirectly, 
or acting in concert with 1 or more other persons, or through 1 or more 
subsidiaries, owns, controls, or holds with power to vote, or holds 
proxies representing, more than 15 percent of the voting shares of such 
savings association or holding company.
    (b) Qualification. For purposes of this section, any issuance of 
shares of stock shall be treated as a qualified stock issuance if the 
following conditions are met:
    (1) The shares of stock are issued by--
    (i) An undercapitalized savings association, which for purposes of 
this paragraph (b)(1)(i) shall mean any savings association--
    (A) The assets of which exceed the liabilities of such association; 
and
    (B) Which does not comply with one or more of the capital standards 
in effect under section 5(t) of the Home Owners' Loan Act; or
    (ii) A savings and loan holding company which is not a bank holding 
company but which controls an undercapitalized savings association if, 
at the time of issuance, the savings and loan holding company is legally 
obligated to contribute the net proceeds from the issuance of such stock 
to the capital of an undercapitalized savings association subsidiary of 
such holding company.
    (2) All shares of stock issued consist of previously unissued stock 
or treasury shares.
    (3) All shares of stock issued are purchased by a savings and loan 
holding company that is registered, as of the date of purchase, with the 
Office in accordance with the provisions of section 10(b) of the Home 
Owners' Loan Act and the Office's regulations promulgated thereunder.
    (4) Subject to paragraph (c) of this section, the Office approves 
the purchase of the shares of stock by the acquiring savings and loan 
holding company.
    (5) The entire consideration for the stock issued is paid in cash by 
the acquiring savings and loan holding company.
    (6) At the time of the stock issuance, each savings association 
subsidiary of the acquiring savings and loan holding company (other than 
an association acquired in a transaction pursuant to section 13(c) or 
13(k) of the Federal Deposit Insurance Act, or section 408(m) of the 
National Housing Act, as in effect immediately prior to enactment of the 
Financial Institutions Reform, Recovery and Enforcement Act of 1989) has 
capital (after deducting any subordinated debt, intangible assets, and 
deferred, unamortized gains or losses) of not less than 6\1/2\ percent 
of the total assets of such savings association.
    (7) Immediately after the stock issuance, the acquiring savings and 
loan holding company holds not more than 15 percent of the outstanding 
voting stock of the issuing undercapitalized savings association or 
savings and loan holding company.
    (8) Not more than one of the directors of the issuing association or 
company is an officer, director, employee, or other representative of 
the acquiring company or any of its affiliates.
    (9) Transactions between the savings association or savings and loan 
holding company that issues the shares pursuant to this section and the 
acquiring company and any of its affiliates shall be subject to the 
provisions of section 11 of the Home Owners' Loan Act and the Office's 
regulations promulgated thereunder.
    (c) Approval of acquisitions--(1) Criteria. The Office, in deciding 
whether to approve or deny an application filed on the basis that it is 
a qualified stock issuance, shall apply the application criteria set 
forth in Sec. 574.7(c) of this part, including the presumptive 
disqualifiers set forth in Sec. 574.7(g) of this part.
    (2) Additional capital commitments not required. The Office shall 
not disapprove any application for the purchase of stock in connection 
with a qualified stock issuance on the grounds that the acquiring 
savings and loan holding company has failed to undertake to make 
subsequent additional capital contributions to maintain the capital of 
the undercapitalized savings association at or above the minimum level 
required by the Office or any

[[Page 421]]

other Federal agency having jurisdiction.
    (3) Other conditions. The Office shall impose such conditions on any 
approval of an application for the purchase of stock in connection with 
a qualified stock issuance as the Office determines to be appropriate, 
including--
    (i) A requirement that any savings association subsidiary of the 
acquiring savings and loan holding company limit dividends paid to such 
holding company for such period of time as the Office may require; and
    (ii) Such other conditions as the Office deems necessary or 
appropriate to prevent evasions of this section, including, but not 
limited to, requiring a rebuttal of control agreement in a form 
substantially similar to that appearing at Sec. 574.100.
    (4) Application deemed approved if not disapproved within 90 days. 
An application for approval of a purchase of stock in connection with a 
qualified stock issuance shall be deemed to have been approved by the 
Office if such application has not been disapproved by the Office before 
the end of the 90-day period beginning on the date such application has 
been deemed sufficient under this part.
    (d) No limitation on class of stock issued. The shares of stock 
issued in connection with a qualified stock issuance may be shares of 
any class.
    (e) Application form. A savings and loan holding company making 
application to acquire a qualified stock issuance pursuant to this 
Sec. 574.8, shall use Form H-(e)2, as provided in Sec. 574.6(a)(3).



Sec. 574.100  Rebuttal of control agreement.

                                Agreement

     Rebuttal of Rebuttable Determination Of Control Under Part 574

    I. WHEREAS
    A. [  ] is the owner of [  ] shares (the ``Shares'') of the [  ] 
stock (the ``Stock'') of [name and address of association], which Shares 
represent [  ] percent of a class of ``voting stock'' of [  ] as defined 
under the Acquisition of Control Regulations (``Regulations'') of the 
Office of Thrift Supervision (``Office''), 12 CFR part 574 (``Voting 
Stock'');
    B. [  ] is a ``savings association'' within the meaning of the 
Regulations;
    C. [  ] seeks to acquire additional shares of stock of [  ] 
(``Additional Shares''), such that [  ]'s ownership thereof will exceed 
10 percent of a class of Voting Stock but will not exceed 25 percent of 
a class of Voting Stock of [  ]; [and/or] [  ] seeks to [  ], which 
would constitute the acquisition of a ``control factor'' as defined in 
the Regulations (``Control Factor'');
    D. [  ] does not seek to acquire the [Additional Shares or Control 
Factor] for the purpose or effect of changing the control of [  ] or in 
connection with or as a participant in any transaction having such 
purpose or effect;
    E. The Regulations require a company or a person who intends to hold 
10 percent or more but not in excess of 25 percent of any class of 
Voting Stock of a savings association or holding company thereof and 
that also would possess any of the Control Factors specified in the 
Regulations, to file and obtain approval of an application 
(``Application'') under the Savings and Loan Holding Company Act 
(``Holding Company Act''), 12 U.S.C. 1467a, or file and obtain clearance 
of a notice (``Notice'') under the Change in Control Act (``Control 
Act''), 12 U.S.C. 1817(j), prior to acquiring such amount of stock and a 
Control Factor unless the rebuttable determination of control has been 
rebutted.
    F. Under the Regulations, [  ] would be determined to be in control, 
subject to rebuttal, of [  ] upon acquisition of the [Additional Shares 
or Control Factor];
    G. [  ] has no intention to manage or control, directly or 
indirectly, [  ];
    H. [  ] has filed on [  ], a written statement seeking to rebut the 
determination of control, attached hereto and incorporated by reference 
herein, (this submission referred to as the ``Rebuttal'');
    I. In order to rebut the rebuttable determination of contro1, [  ] 
agrees to offer this Agreement as evidence that the acquisition of the 
[Additional Shares or Control Factor] as proposed would not constitute 
an acquisition of control under the Regulations.
    II. The Office has determined, and hereby agrees, to act favorably 
on the Rebuttal, and in consideration of such a determination and 
agreement by the Office to act favorably on the Rebuttal, [ ] and any 
other existing, resulting or successor entities of [ ] agree with the 
Office that:
    A. Unless [  ] shall have filed a Notice under the Control Act, or 
an Application under the Holding Company Act, as appropriate, and either 
shall have obtained approval of the Application or clearance of the 
Notice in accordance with the Regulations, [ ] will not, except as 
expressly permitted otherwise herein or pursuant to an amendment to this 
Rebuttal Agreement:

[[Page 422]]

    1. Seek or accept representation of more than one member of the 
board of directors of [insert name of association and any holding 
company thereof];
    2. Have or seek to have any representative serve as the chairman of 
the board of directors, or chairman of an executive or similar committee 
of [insert name of association and any holding company thereof]'s board 
of directors or as president or chief executive officer of [insert name 
of association and any holding company thereof];
    3. Engage in any intercompany transaction with [  ] or [  ]'s 
affiliates;
    4. Propose a director in opposition to nominees proposed by the 
management of [insert name of association and any holding company 
thereof] for the board of directors of [insert name of association and 
any holding company thereof] other than as permitted in paragraph A-1;
    5. Solicit proxies or participate in any solicitation of proxies 
with respect to any matter presented to the stockholders [  ] other than 
in support of, or in opposition to, a solicitation conducted on behalf 
of management of [  ];
    6. Do any of the following, except as necessary solely in connection 
with [  ]'s performance of duties as a member of [  ]'s board of 
directors:
    (a) Influence or attempt to influence in any respect the loan and 
credit decisions or policies of [  ], the pricing of services, any 
personnel decisions, the location of any offices, branching, the hours 
of operation or similar activities of [  ];
    (b) Influence or attempt to influence the dividend policies and 
practices of [  ] or any decisions or policies of [  ] as to the 
offering or exchange of any securities;
    (c) Seek to amend, or otherwise take action to change, the bylaws, 
articles of incorporation, or charter of [  ];
    (d) Exercise, or attempt to exercise, directly or indirectly, 
control or a controlling influence over the management, policies or 
business operations of [  ]; or
    (e) Seek or accept access to any non-public information concerning [  
].
    B. [  ] is not a party to any agreement with [  ].
    C. [  ] shall not assist, aid or abet any of [  ]'s affiliates or 
associates that are not parties to this Agreement to act, or act in 
concert with any person or company, in a manner which is inconsistent 
with the terms hereof or which constitutes an attempt to evade the 
requirements of this Agreement.
    D. Any amendment to this Agreement shall only be proposed in 
connection with an amended rebuttal filed by [  ] with the Office for 
its determination;
    E. Prior to acquisition of any shares of ``Voting Stock'' of [  ] as 
defined in the Regulations in excess of the Additional Shares, any 
required filing will be made by [  ] under the Control Act or the 
Holding Company Act and either approval of the acquisition under the 
Holding Company Act shall be obtained from the Office or any Notice 
filed under the Control Act shall be cleared in accordance with the 
Regulations;
    F. At any time during which 10 percent or more of any class of 
Voting Stock of [  ] is owned or controlled by [  ], no action which is 
inconsistent with the provisions of this Agreement shall be taken by [  
] until [  ] files and either obtains from the Office a favorable 
determination with respect to either an amended rebuttal, approval of an 
Application under the Holding Company Act, or clearance of a Notice 
under the Control Act, in accordance with the Regulations;
    G. Where any amended rebuttal filed by [  ] is denied or 
disapproved, [  ] shall take no action which is inconsistent with the 
terms of this Agreement, except after either (1) reducing the amount of 
shares of Voting Stock of [  ] owned or controlled by [  ] to an amount 
under 10 percent of a class of Voting Stock, or immediately ceasing any 
other actions that give rise to a conclusive or rebuttable determination 
of control under the Regulations; or (2) filing a Notice under the 
Control Act, or an Application under the Holding Company Act, as 
appropriate, and either obtaining approval of the Application or 
clearance of the Notice, in accordance with the Regulations;
    H. Where any Application or Notice filed by [  ] is disapproved, [  
] shall take no action which is inconsistent with the terms of this 
Agreement, except after reducing the amount of shares of Voting Stock of 
[  ] owned or controlled by [  ] to an amount under 10 percent of any 
class of Voting Stock, or immediately ceasing any other actions that 
give rise to a conclusive or rebuttable determination of control under 
the Regulations;
    I. Should circumstances beyond [  ]'s control result in [  ] being 
placed in a position to direct the management or policies of [  ], then 
[  ] shall either (1) promptly file an Application under the Holding 
Company Act or a Notice under the Control Act, as appropriate, and take 
no affirmative steps to enlarge that control pending either a final 
determination with respect to the Application or Notice, or (2) promptly 
reduce the amount of shares of [  ] Voting Stock owned or controlled by 
[  ] to an amount under 10 percent of any class of Voting Stock or 
immediately cease any actions that give rise to a conclusive or 
rebuttable determination of control under the Regulations;
    J. By entering into this Agreement and by offering it for reliance 
in reaching a decision on the request to rebut the presumption of 
control under the Regulations, as long as 10 percent or more of any 
class of Voting Stock

[[Page 423]]

of [  ] is owned or controlled, directly or indirectly, by [  ], and [  
] possesses any Control Factor as defined in the Regulations, [  ] will 
submit to the jurisdiction of the Regulations, including (1) the filing 
of an amended rebuttal or Application or Notice for any proposed action 
which is prohibited by this Agreement, and (2) the provisions relating 
to a penalty for any person who willfully violates or with reckless 
disregard for the safety or soundness of a savings association 
participates in a violation of the [Holding Company Act or Control Act] 
and the Regulations thereunder, and any regulation or order issued by 
the Office.
    K. Any violation of this Agreement shall be deemed to be a violation 
of the [Holding Company Act or Control Act] and the Regulations, and 
shall be subject to such remedies and procedures as are provided in the 
[Holding Company Act or Control Act] and the Regulations for a violation 
thereunder and in addition shall be subject to any such additional 
remedies and procedures as are provided under any other applicable 
statutes or regulations for a violation, willful or otherwise, of any 
agreement entered into with the Office.
    III. This Agreement may be executed in one or more counterparts, 
each of which shall be deemed an original but all of which counterparts 
collectively shall constitute one instrument representing the Agreement 
among the parties thereto. It shall not be necessary that any one 
counterpart be signed by all of the parties hereto as long as each of 
the parties has signed at least one counterpart.
    IV. This Agreement shall be interpreted in a manner consistent with 
the provisions of the Rules and Regulations of the Office.
    V. This Agreement shall terminate upon (i) the approval by the 
Office of [  ]'s Application under the Holding Company Act or clearance 
by the Office of [  ]'s Notice under the Control Act to acquire [  ], 
and consummation of the transaction as described in such Application or 
Notice, (ii) in the disposition by [  ] of a sufficient number of shares 
of [  ], or (iii) the taking of such other action that thereafter [  ] 
is not in control and would not be determined to be in control of [  ] 
under the Control Act, the Holding Company Act or the Regulations of the 
Office as in effect at that time.
    VI. IN WITNESS THEREOF, the parties 0thereto have executed this 
Agreement by their duly authorized officer.
_______________________________________________________________________
[Acquiror]
Office of Thrift Supervision.

Date:___________________________________________________________________

By:_____________________________________________________________________

[54 FR 49690, Nov. 30, 1989, as amended at 63 FR 71213, Dec. 24, 1998]



PART 575--MUTUAL HOLDING COMPANIES--Table of Contents




Sec.
575.1  Scope.
575.2  Definitions.
575.3  Mutual holding company reorganizations.
575.4  Grounds for disapproval of reorganizations.
575.5  Membership rights.
575.6  Contents of Reorganization Plans.
575.7  Issuances of stock by savings association subsidiaries of mutual 
          holding companies.
575.8  Contents of Stock Issuance Plans.
575.9  Charters and bylaws for mutual holding companies and their 
          savings association subsidiaries.
575.10  Acquisition and disposition of savings associations, savings and 
          loan holding companies, and other corporations by mutual 
          holding companies.
575.11  Operating restrictions.
575.12  Conversion or liquidation of mutual holding companies.
575.13  Procedural requirements.
575.14  Subsidiary holding companies.

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828, 2901.

    Source: 58 FR 44114, Aug. 19, 1993, unless otherwise noted.



Sec. 575.1  Scope.

    (a) Purpose. The purpose of this part is to implement the mutual 
holding company provisions of the Savings and Loan Holding Company Act, 
12 U.S.C. 1467a(o).
    (b) General. Except as the OTS may otherwise determine, the 
provisions of this part shall exclusively govern the reorganization of 
mutual savings associations and any related stock issuances, and no 
mutual savings association shall reorganize to a mutual holding company 
or issue minority stock without the prior written approval of the OTS. 
The OTS may grant a waiver in writing from any requirement of this part 
for good cause shown.

[58 FR 44114, Aug. 19, 1993, as amended at 59 FR 61262, Nov. 30, 1994]



Sec. 575.2  Definitions.

    As used in this part, the following definitions apply, unless 
specified elsewhere in this part:
    (a) The terms associate and tax-qualified employee stock benefit 
plan have the meanings set forth in 12 CFR 563b.2.

[[Page 424]]

    (b) The terms acting in concert, affiliate, company, person, and 
savings association have the meanings set forth in Sec. 574.2 of this 
chapter.
    (c) The term acquiree association means any savings association, 
other than a resulting association, that:
    (1) Is acquired by a mutual holding company as part of, and 
concurrently with, a mutual holding company reorganization; and
    (2) Is in the mutual form immediately prior to such acquisition.
    (d) The term control has the same meaning as specified in Sec. 574.4 
of this chapter.
    (e) The term default means any adjudication or other official 
determination of a court of competent jurisdiction or other public 
authority pursuant to which a conservator, receiver, or other legal 
custodian is appointed for a mutual holding company or savings 
association subsidiary of a mutual holding company.
    (f) The term insider means any officer or director of a company or 
of any affiliate of such company, and any person acting in concert with 
any such officer or director.
    (g) The term member means any depositor or borrower of a mutual 
savings association that is entitled, under the charter of the savings 
association, to vote on matters affecting the association, and any 
depositor or borrower of a savings association subsidiary of a mutual 
holding company that is entitled, under the charter of the mutual 
holding company, to vote on matters affecting the mutual holding 
company.
    (h) The term mutual holding company means a mutual holding company 
organized under this part, and unless otherwise indicated, a subsidiary 
holding company controlled by a mutual holding company, organized under 
this part.
    (i) The term parent has the same meaning as the term parent company 
specified at Sec. 583.15 of this chapter.
    (j) The term Reorganization Notice means a notice of a proposed 
mutual holding company reorganization that is in the form and contains 
the information required by the OTS.
    (k) The term Reorganization Plan means a plan to reorganize into the 
mutual holding company format containing the information required by 
Sec. 575.6 of this part.
    (l) The term reorganizing association means a mutual savings 
association that proposes to reorganize to become a mutual holding 
company pursuant to this part.
    (m) The term resulting association means a savings association in 
the stock form that is organized as a subsidiary of a reorganizing 
association to receive the substantial part of the assets and 
liabilities (including all deposit accounts) of the reorganizing 
association upon consummation of the reorganization.
    (n) The term stock means common or preferred stock, or any other 
type of equity security, including (without limitation) warrants or 
options to acquire common or preferred stock, or other securities that 
are convertible into common or preferred stock.
    (o) The term Stock Issuance Plan means a plan, submitted pursuant to 
Sec. 575.7 and containing the information required by Sec. 575.8, 
providing for the issuance of stock by:
    (1) A savings association subsidiary of a mutual holding company; or
    (2) A subsidiary holding company.
    (p) The term subsidiary has the meaning specified at Sec. 583.23 of 
this chapter.
    (q) The term subsidiary holding company means a federally chartered 
stock holding company, controlled by a mutual holding company, that owns 
the stock of a savings association whose depositors have membership 
rights in the parent mutual holding company.

[58 FR 44114, Aug. 19, 1993, as amended at 60 FR 66720, Dec. 26, 1995; 
61 FR 60184, Nov. 27, 1996; 63 FR 11365, Mar. 9, 1998]



Sec. 575.3  Mutual holding company reorganizations.

    A mutual savings association may reorganize to become a mutual 
holding company, or join in a mutual holding company reorganization as 
an acquiree association, only upon satisfaction of the following 
conditions:
    (a) A Reorganization Plan is approved by a majority of the board of 
directors of the reorganizing association and any acquiree association;
    (b) A Reorganization Notice is filed with the OTS and either:

[[Page 425]]

    (1) The OTS has given written notice of its intent not to disapprove 
the proposed reorganization; or
    (2) Sixty days have passed since OTS received the Reorganization 
Notice and deemed it complete under Sec. 516.210 or Sec. 516.220 of this 
chapter, and OTS has not:
    (i) Given written notice that the proposed reorganization is 
disapproved; or
    (ii) Extended for an additional 30 days the period during which 
disapproval may be issued;
    (c) The Reorganization Plan is submitted to the members of the 
reorganizing association and any acquiree association pursuant to a 
proxy statement cleared in advance by the OTS and such Reorganization 
Plan is approved by a majority of the total votes of the members of each 
association eligible to be cast at a meeting held at the call of each 
association's directors in accordance with the procedures prescribed by 
each association's charter and bylaws; and
    (d) All necessary regulatory approvals have been obtained and all 
conditions specified in Sec. 575.9(c)(5) of this part or otherwise 
imposed by the OTS in connection with the issuance of a notice of intent 
not to disapprove under Sec. 575.3(b)(1) of this part or by the OTS in 
connection with the granting of the approvals specified in this 
paragraph have been satisfied.

[58 FR 44114, Aug. 19, 1993, as amended at 66 FR 13009, Mar. 2, 2001]



Sec. 575.4  Grounds for disapproval of reorganizations.

    (a) Basic standards. The OTS may disapprove a proposed mutual 
holding company reorganization pursuant to Sec. 575.3(b) of this part 
if:
    (1) Disapproval is necessary to prevent unsafe or unsound practices;
    (2) The financial or managerial resources of the reorganizing 
association or any acquiree association warrant disapproval;
    (3) The proposed capitalization of the mutual holding company fails 
to meet the requirements of paragraph (b) of this section;
    (4) A stock issuance is proposed in connection with the 
reorganization pursuant to Sec. 575.7 of this part that fails to meet 
the standards established by that section;
    (5) The reorganizing association or any acquiree association fails 
to furnish the information required to be included in the Reorganization 
Notice or any other information requested by the OTS in connection with 
the proposed reorganization; or
    (6) The proposed reorganization would violate any provision of law, 
including (without limitation) Sec. 575.3 (a) and (c) of this part 
(regarding board of directors and membership approval) or Sec. 575.5(a) 
of this part (regarding continuity of membership rights).
    (b) Capitalization. (1) The OTS shall disapprove a proposal by a 
reorganizing association or any acquiree association to capitalize a 
mutual holding company in an amount in excess of a nominal amount if 
immediately following the reorganization, the resulting association or 
the acquiree association would fail to be ``adequately capitalized'' as 
defined under 12 CFR part 565.
    (2) Proposals by reorganizing associations and acquiree associations 
to capitalize mutual holding companies shall also comply with any 
applicable statutes, and with regulations or written policies of the OTS 
governing capital distributions by savings associations in effect at the 
time of the reorganization. (Issuance by the OTS of a notice of intent 
not to disapprove a mutual holding company reorganization pursuant to 
Sec. 575.3(b) of this part, or failure by the OTS to disapprove such a 
reorganization within the time prescribed in Sec. 575.3(b) of this part, 
shall also be deemed to constitute OTS approval under any regulation or 
written policy of the OTS governing capital distributions by savings 
associations, if such approval is required, of the capitalization 
proposal set forth in the Reorganization Notice, subject to any 
conditions imposed by Sec. 575.4(d)(2) of this part.)
    (c) Presumptive disqualifiers--(1) Managerial resources. The factors 
specified in Sec. 574.7 (g)(1)(i)-(g)(1)(vi) of this chapter shall give 
rise to a rebuttable presumption that the managerial resources test of 
paragraph (a)(2) of this section is not met. For this purpose, each 
place the term acquiror appears in Sec. 574.7 (g)(1)(i)-(g)(1)(vi) of 
this chapter, it shall be

[[Page 426]]

read to mean the reorganizing association or any acquiree association, 
and the reference in Sec. 574.7(g)(1)(v) of this chapter to filings 
under this part shall be deemed to include filings under either part 574 
of this chapter or this part.
    (2) Safety and soundness and financial resources. Failure by a 
reorganizing association and any acquiree association to submit a 
business plan in connection with a Reorganization Notice, or submission 
of a business plan that projects activities that are inconsistent with 
economical home financing or that fails to demonstrate that the capital 
of the mutual holding company will be deployed in a safe and sound 
manner, shall give rise to a rebuttable presumption that the safety and 
soundness and financial resources tests of paragraphs (a)(1) and (a)(2) 
of this section are not met.
    (d) Failure of the OTS to act on a Reorganization Notice within the 
prescribed time period. A proposed reorganization that obtains 
regulatory clearance from the OTS due to the operation of 
Sec. 575.3(b)(2) of this part may take place in the manner proposed, 
subject to the following conditions:
    (1) The reorganization shall be consummated within one year of the 
date of the expiration of the OTS's review period under Sec. 575.3(b)(2) 
of this part;
    (2) The mutual holding company shall not be capitalized in an amount 
in excess of what is permissible under Sec. 575.4(b) of this part;
    (3) No request for regulatory waivers or forbearances shall be 
deemed granted;
    (4) The following information shall be submitted within the 
specified time frames:
    (i) On the business day prior to the date of the reorganization, the 
chief financial officers of the reorganizing association and any 
acquiree association shall certify to the OTS in writing that no 
material adverse events or material adverse changes have occurred with 
respect to the financial condition or operations of their respective 
associations since the date of the financial statements submitted with 
the Reorganization Notice;
    (ii) No later than thirty days after the reorganization, the mutual 
holding company shall file with the OTS a certification by legal counsel 
stating the effective date of the reorganization, the exact number of 
shares of stock of the resulting association and any acquiree 
association acquired by the mutual holding company and by any other 
persons, and that the reorganization has been consummated in accordance 
with Sec. 575.3 of this part and all other applicable laws and 
regulations and the Reorganization Notice;
    (iii) No later than thirty days after the reorganization, the mutual 
holding company shall file with the OTS an opinion from its independent 
auditors certifying that the reorganization was consummated in 
accordance with generally accepted accounting principles; and
    (iv) No later than thirty days after the reorganization, the mutual 
holding company shall file with the OTS a certification stating that the 
mutual holding company will not deviate materially, or cause its savings 
association subsidiaries to deviate materially, from the business plan 
submitted in connection with the Reorganization Notice, unless prior 
written approval from the Regional Director is obtained.



Sec. 575.5  Membership rights.

    (a) Depositors and borrowers of resulting associations, acquiree 
associations, and associations in mutual form when acquired. The charter 
of a mutual holding company must:
    (1) Confer upon existing and future depositors of the resulting 
association the same membership rights in the mutual holding company as 
were conferred upon depositors by the charter of the reorganizing 
association as in effect immediately prior to the reorganization;
    (2) Confer upon existing and future depositors of any acquiree 
association or any association that is in the mutual form when acquired 
by the mutual holding company the same membership rights in the mutual 
holding company as were conferred upon depositors by the charter of the 
acquired association immediately prior to acquisition, provided that if 
the acquired association is merged into another association from which 
the mutual holding company draws members, the depositors of the

[[Page 427]]

acquired association shall receive the same membership rights as the 
depositors of the association into which the acquired association is 
merged;
    (3) Confer upon the borrowers of the resulting association who are 
borrowers at the time of reorganization the same membership rights in 
the mutual holding company as were conferred upon them by the charter of 
the reorganizing association immediately prior to reorganization, but 
shall not confer any membership rights in connection with any borrowings 
made after the reorganization; and
    (4) Confer upon the borrowers of any acquiree association or any 
association that is in the mutual form when acquired by the mutual 
holding company who are borrowers at the time of the acquisition the 
same membership rights in the mutual holding company as were conferred 
upon them by the charter of the acquired association immediately prior 
to acquisition, but shall not confer any membership rights in connection 
with any borrowings made after the acquisition, provided that if the 
acquired association is merged into another association from which the 
mutual holding company draws members, the borrowers of the acquired 
association shall instead receive the same grandfathered membership 
rights as the borrowers of the association into which the acquired 
association is merged received at the time that association became a 
subsidiary of the mutual holding company.
    (b) Depositors and borrowers of associations in the stock form when 
acquired. A mutual holding company that acquires a savings association 
in the stock form, other than a resulting association or an acquiree 
association, shall not confer any membership rights upon the depositors 
and borrowers of such association, unless such association is merged 
into an association from which the mutual holding company draws members, 
in which case the depositors of the stock association shall receive the 
same membership rights as other depositors of the association into which 
the stock association is merged.



Sec. 575.6  Contents of Reorganization Plans.

    Each Reorganization Plan shall contain a complete description of all 
significant terms of the proposed reorganization, shall attach and 
incorporate any Stock Issuance Plan proposed in connection with the 
Reorganization Plan, and shall:
    (a) Provide for amendment of the charter and bylaws of the 
reorganizing association to read in the form of the charter and bylaws 
of a mutual holding company, and attach and incorporate such charter and 
bylaws;
    (b) Provide for the organization of the resulting association, which 
shall be an interim federal or state savings association subsidiary of 
the reorganizing association, and attach and incorporate the proposed 
charter and bylaws of such association;
    (c) If the reorganizing association proposes to form a subsidiary 
holding company, provide for the organization of a subsidiary holding 
company and attach and incorporate the proposed charter and bylaws of 
such subsidiary holding company.
    (d) Provide for amendment of the charter and bylaws of any acquiree 
association to read in the form of the charter and bylaws of a state or 
federal savings association in the stock form (as modified by 
Sec. 575.9(b) of this part), and attach and incorporate such charter and 
bylaws;
    (e) Provide that, upon consummation of the reorganization, 
substantially all of the assets and liabilities (including all savings 
accounts, demand accounts, tax and loan accounts, United States Treasury 
General Accounts, or United States Treasury Time Deposit Open Accounts, 
as defined in part 561 of this chapter) of the reorganizing association 
shall be transferred to the resulting association, which shall thereupon 
become an operating savings association subsidiary of the mutual holding 
company;
    (f) Provide that all assets, rights, obligations, and liabilities of 
whatever nature of the reorganizing association that are not expressly 
retained by the mutual holding company shall be

[[Page 428]]

deemed transferred to the resulting association;
    (g) Provide that each depositor in the reorganizing association or 
any acquiree association immediately prior to the reorganization shall 
upon consummation of the reorganization receive, without payment, an 
identical account in the resulting association or the acquiree 
association, as the case may be (Appropriate modifications should be 
made to this provision if savings associations are being merged as a 
part of the reorganization);
    (h) Provide that the Reorganization Plan as adopted by the boards of 
directors of the reorganizing association and any acquiree association 
may be substantively amended by those boards of directors as a result of 
comments from regulatory authorities or otherwise prior to the 
solicitation of proxies from the members of the reorganizing association 
and any acquiree association to vote on the Reorganization Plan and at 
any time thereafter with the concurrence of the OTS; and that the 
reorganization may be terminated by the board of directors of the 
reorganizing association or any acquiree association at any time prior 
to the meeting of the members of the association called to consider the 
Reorganization Plan and at any time thereafter with the concurrence of 
the OTS;
    (i) Provide that the Reorganization Plan shall be terminated if not 
completed within a specified period of time (The time period shall not 
be more than 24 months from the date upon which the members of the 
reorganizing association or the date upon which the members of any 
acquiree association, whichever is earlier, approve the Reorganization 
Plan and may not be extended by the reorganizing or acquiree 
association); and
    (j) Provide that the expenses incurred in connection with the 
reorganization shall be reasonable.

[58 FR 44114, Aug. 19, 1993, as amended at 63 FR 11365, Mar. 9, 1998]



Sec. 575.7  Issuances of stock by savings association subsidiaries of mutual holding companies.

    (a) Approval requirements. No savings association subsidiary of a 
mutual holding company (including any resulting association or acquiree 
association) may issue stock to persons other than its mutual holding 
company parent in connection with a mutual holding company 
reorganization, or at any time subsequent to the association's 
acquisition by the mutual holding company, unless the association 
obtains advance approval of each such issuance from the OTS. Issuance by 
the OTS of a notice of intent not to disapprove a mutual holding company 
reorganization pursuant to Sec. 575.3(b) of this part, or failure by the 
OTS to disapprove such a reorganization within the time prescribed in 
Sec. 575.3(b) of this part, shall be deemed to constitute approval of 
any stock issuance specifically applied for pursuant to this section in 
connection with the reorganization, unless otherwise specified by the 
OTS. The OTS shall approve any proposed issuance that meets each of the 
criteria set forth below in paragraphs (a)(1)-(a)(7) of this section.
    (1) The proposed issuance is to be made pursuant to a Stock Issuance 
Plan that contains all the provisions required by Sec. 575.8 of this 
part.
    (2) The Stock Issuance Plan is consistent with the terms of the 
association's charter (or any proposed amendments thereto), including 
terms governing the type and amount of stock that may be issued.
    (3) The Stock Issuance Plan would provide the association, its 
mutual holding company parent, and any other savings association 
subsidiaries of the mutual holding company with fully sufficient capital 
and would not be inequitable or detrimental to the association or its 
mutual holding company parent or to members of the mutual holding 
company parent.
    (4) The proposed price or price range of the stock to be issued is 
reasonable. (The OTS shall review the reasonableness of the proposed 
price or price range in accordance with paragraph (b) of this section.)
    (5) The aggregate amount of outstanding common stock of the 
association owned or controlled by persons other than the association's 
mutual holding company parent at the close of the proposed issuance 
shall be less than

[[Page 429]]

50% of the association's total outstanding common stock, unless the 
association was a stock association when acquired by the mutual holding 
company and is not a resulting association or an acquiree association, 
in which case the foregoing restriction shall not apply. Any amount of 
preferred stock may be issued by any savings association subsidiary of a 
mutual holding company to persons other than the association's mutual 
holding company, consistent with any other applicable laws and 
regulations.
    (6) The association furnishes the information required by the OTS in 
connection with the proposed issuance.
    (7) The proposed stock issuance would fail to meet the convenience 
and needs standard of Sec. 563b.11 of this chapter.
    (8) The proposed issuance complies with all other applicable laws 
and regulations.
    (b) Pricing and sale of securities. (1) All of the provisions of 
Sec. 563b.7 of this chapter shall apply to a stock issuance applied for 
pursuant to this section, unless otherwise provided for in this part or 
clearly inapplicable, as determined by the OTS. For purposes of this 
paragraph (b)(1), the term conversion as it appears in the provisions of 
Sec. 563b.7 of this chapter shall be deemed to refer to the stock 
issuance, and the term converted or converting savings association shall 
be deemed to refer to the savings association undertaking the stock 
issuance.
    (2) Unless otherwise determined by the OTS, the limitations on the 
minimum and maximum amounts of the estimated price range required by 
Sec. 563b.7(c) of this chapter shall not apply.
    (3) To the extent the pricing materials submitted pursuant to 
paragraph (b)(1) of this section include any discount due to the 
minority status of the stock to be offered, the materials must indicate 
the amount of the discount and how that amount was determined.
    (c) Related approvals. Approval by the OTS of any stock issuance 
pursuant to this section shall also be deemed to constitute:
    (1) Approval under Sec. 563.1 of this chapter of the form of stock 
certificate proposed to be utilized in connection with the stock 
issuance, provided such form was included in the application materials 
filed pursuant to this section; and
    (2) Preliminary approval under Sec. 552.4 of this chapter and 
approval under Sec. 563.1 of this chapter of any charter or bylaw 
amendment required to authorize issuance of the stock, provided such 
amendment was proposed in the application materials filed pursuant to 
this section.
    (d) Offering restrictions. (1) No representations may be made in any 
manner in connection with the offer or sale of any stock issued pursuant 
to this section that the price, price range or any other pricing 
information related to such stock issuance has been approved by the OTS 
or that the stock has been approved or disapproved by the OTS or that 
the OTS has endorsed the accuracy or adequacy of any securities offering 
documents disseminated in connection with such stock.
    (2) The sale of minority stock of the reorganized stock savings 
association to be made under the minority stock issuance plan, including 
any sale in a public offering or direct community marketing, shall be 
completed as promptly as possible and within 45 calendar days after the 
last day of the subscription period, unless extended by the OTS.
    (3) In the offer, sale, or purchase of stock issued pursuant to this 
section, no person shall:
    (i) Employ any device, scheme, or artifice to defraud;
    (ii) Make any untrue 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; 
or
    (iii) Engage in any act, practice, or course of business which 
operates or would operate as a fraud or deceit upon a purchaser or 
seller.
    (4) Prior to the completion of a stock issuance pursuant to this 
section, no person shall transfer, or enter into any agreement or 
understanding to transfer, the legal or beneficial ownership of the 
stock to be issued to any other person.
    (5) Prior to the completion of a stock issuance pursuant to this 
section, no

[[Page 430]]

person shall make any offer, or any announcement of any offer, to 
purchase any stock to be issued, or knowingly acquire any stock in the 
issuance, in excess of the maximum purchase limitations established in 
the Stock Issuance Plan.
    (6) All stock issuances pursuant to this section must:
    (i) Comply with 12 CFR part 563g and, to the extent applicable, 12 
CFR 563b.102; and
    (ii) Provide that the offering be structured in a manner similar to 
a standard conversion under 12 CFR part 563b, including the stock 
purchase priorities accorded members of the issuing association's mutual 
holding company, unless the association would qualify for a supervisory 
conversion if it were to undertake a conversion under 12 CFR part 563b; 
or demonstrates to the satisfaction of the OTS that a non-conforming 
issuance would be more beneficial to the association compared to a 
conforming offering, considering, in the aggregate, the effect of each 
on the association's financial and managerial resources and future 
prospects, the effect of the issuance upon the association, the 
insurance risk to the relevant Federal deposit insurance fund, and the 
convenience and needs of the community to be served.
    (e) Procedural and substantive requirements. The procedural and 
substantive requirements of Secs. 563b.3 through 563b.8 of this chapter 
shall apply to all mutual holding company stock issuances under this 
section, unless clearly inapplicable.

[58 FR 44114, Aug. 19, 1993, as amended at 59 FR 22735, May 3, 1994]



Sec. 575.8  Contents of Stock Issuance Plans.

    (a) Mandatory provisions. Each of the provisions mandatory for all 
stock issuance plans under this paragraph shall be deemed regulatory 
requirements. Each Stock Issuance Plan shall contain a complete 
description of all significant terms of the proposed stock issuance 
(including the information specified in Sec. 563b.27(a) of this chapter 
to the extent known), shall attach and incorporate the proposed form of 
stock certificate, the proposed stock order form, and any agreements or 
other documents defining the rights of the stockholders, and shall:
    (1) Provide that the stock shall be sold at a total price equal to 
the estimated pro forma market value of such stock, based upon an 
independent valuation, as provided in Sec. 575.7(b) of this part;
    (2) Provide that the aggregate amount of outstanding common stock of 
the association owned or controlled by persons other than the 
association's mutual holding company parent at the close of the proposed 
issuance shall be less than fifty percent of the association's total 
outstanding common stock (This provision may be omitted if the proposed 
issuance will be conducted by an association that was in the stock form 
when acquired by its mutual holding company parent, provided the 
association is not a resulting association or an acquiree association);
    (3) Provide that the aggregate amount of common stock acquired in 
the proposed issuance, plus all prior issuances of the association, by 
any non-tax-qualified employee stock benefit plan of the association or 
any insider of the association and his or her associates, exclusive of 
any stock acquired by said plan or insider and his or her associates in 
the secondary market, shall not exceed ten percent of the outstanding 
shares of common stock of the association held by persons other than the 
association's mutual holding company parent at the close of the proposed 
issuance. In calculating the number of shares held by any insider or 
associate under this provision or the provision in paragraph (a)(4) of 
this section, shares held by any tax-qualified or non-tax-qualified 
employee stock benefit plan of the association that are attributable to 
such person shall not be counted;
    (4) Provide that the aggregate amount of stock, whether common or 
preferred, acquired in the proposed issuance, plus all prior issuances 
of the association, by any non-tax-qualified employee stock benefit plan 
of the association or any insider of the association and his or her 
associates, exclusive of any stock acquired by said plan or insider and 
his or her associates in the secondary market, shall not exceed

[[Page 431]]

ten percent of the stockholders' equity of the association held by 
persons other than the association's mutual holding company parent at 
the close of the proposed issuance;
    (5) Provide that the aggregate amount of common stock acquired in 
the proposed issuance, plus all prior issuances of the association, by 
any one or more tax-qualified employee stock benefit plans of the 
association, exclusive of any stock acquired by such plans in the 
secondary market, shall not exceed ten percent of the outstanding shares 
of common stock of the association held by persons other than the 
association's mutual holding company parent at the close of the proposed 
issuance;
    (6) Provide that the aggregate amount of stock, whether common or 
preferred, acquired in the proposed issuance, plus all prior issuances 
of the association, by any one or more tax-qualified employee stock 
benefit plans of the association, exclusive of any stock acquired by 
such plans in the secondary market, shall not exceed ten percent of the 
stockholders' equity of the association held by persons other than the 
association's mutual holding company parent at the close of the proposed 
issuance;
    (7) Provide that the aggregate amount of common stock acquired in 
the proposed issuance, plus all prior issuances of the association, by 
all non-tax-qualified employee stock benefit plans of the association, 
insiders of the association, and associates of insiders of the 
association, exclusive of any stock acquired by said plans, insiders, 
and associates in the secondary market, shall not exceed thirty-five 
percent of the outstanding shares of common stock of the association 
held by persons other than the association's mutual holding company 
parent at the close of the proposed issuance if the association has less 
than $50 million in total assets prior to the issuance or twenty-five 
percent of such outstanding shares if the association has more than $500 
million in total assets prior to the issuance. If the association has 
between $50 million and $500 million in total assets prior to the 
issuance, the maximum percentage shall be equal to thirty-five percent 
minus one percent multiplied by the quotient of total assets less $50 
million divided by $45 million. (See example calculation set forth in 
Sec. 563b.3(c)(8) of this chapter.) In calculating the number of shares 
held by insiders and their associates under this provision or the 
provision in paragraph (a)(8) of this section, shares held by any tax-
qualified or non-tax qualified employee stock benefit plan of the 
association that are attributable to such persons shall not be counted;
    (8) Provide that the aggregate amount of stock, whether common or 
preferred, acquired in the proposed issuance, plus all prior issuances 
of the association, by all non-tax-qualified employee stock benefit 
plans of the association, insiders of the association, and associates of 
insiders of the association, exclusive of any stock acquired by said 
plans, insiders, and associates in the secondary market, shall not 
exceed thirty-five percent of the stockholders' equity of the 
association held by persons other than the association's mutual holding 
company parent at the close of the proposed issuance if the association 
has less than $50 million in total assets prior to the issuance or 
twenty-five percent of such stockholders' equity if the association has 
more than $500 million in total assets prior to the issuance. If the 
association has between $50 million and $500 million in total assets 
prior to the proposed issuance, the maximum percentage shall be equal to 
thirty-five percent minus one percent multiplied by the quotient of 
total assets less $50 million divided by $45 million. (See example 
calculation set forth in Sec. 563b.3(c)(8) of this chapter.);
    (9) Provide that the issuance shall be conducted in compliance with 
12 CFR part 563g and, to the extent applicable, 12 CFR 563b.102;
    (10) Provide that the sales price of the shares of stock to be sold 
in the issuance shall be a uniform price determined in accordance with 
Sec. 575.7 of this part;
    (11) Provide that, if at the close of the stock issuance the 
association has more than thirty-five shareholders of any class of 
stock, the association shall promptly register that class of

[[Page 432]]

stock pursuant to the Securities Exchange Act of 1934, as amended (15 
U.S.C. 78a-78jj), and undertake not to deregister such stock for a 
period of three years thereafter;
    (12) Provide that, if at the close of the stock issuance the 
association has more than one hundred shareholders of any class of 
stock, the association shall use its best efforts to:
    (i) Encourage and assist a market maker to establish and maintain a 
market for that class of stock; and
    (ii) List that class of stock on a national or regional securities 
exchange or on the NASDAQ quotation system;
    (13) Provide that, for a period of three years following the 
proposed issuance, no insider of the association or his or her 
associates shall purchase, without the prior written approval of the 
OTS, any stock of the association except from a broker dealer registered 
with the Securities and Exchange Commission, except that the foregoing 
restriction shall not apply to:
    (i) Negotiated transactions involving more than one percent of the 
outstanding stock in the class of stock; or
    (ii) Purchases of stock made by and held by any tax-qualified or 
non-tax-qualified employee stock benefit plan of the association even if 
such stock is attributable to insiders of the association or their 
associates;
    (14) Provide that stock purchased by insiders of the association and 
their associates in the proposed issuance shall not be sold for a period 
of at least one year following the date of purchase, except in the case 
of death of the insider or associate;
    (15) Provide that, in connection with stock subject to restriction 
on sale for a period of time:
    (i) Each certificate for such stock shall bear a legend giving 
appropriate notice of such restriction;
    (ii) Appropriate instructions shall be issued to the association's 
transfer agent with respect to applicable restrictions on transfer of 
such stock; and
    (iii) Any shares issued as a stock dividend, stock split, or 
otherwise with respect to any such restricted stock shall be subject to 
the same restrictions as apply to the restricted stock;
    (16) Provide that the association will not offer or sell any of the 
stock proposed to be issued to any person whose purchase would be 
financed by funds loaned, directly or indirectly, to the person by the 
association;
    (17) Provide that, if necessary, the association's charter will be 
amended to authorize issuance of the stock and attach and incorporate by 
reference the text of any such amendment;
    (18) Provide that the expenses incurred in connection with the 
issuance shall be reasonable;
    (19) Provide that the Stock Issuance Plan, if proposed as part of a 
Reorganization Plan, may be amended or terminated in the same manner as 
the Reorganization Plan. Otherwise, the Stock Issuance Plan shall 
provide that it may be substantively amended by the board of directors 
of the issuing association as a result of comments from regulatory 
authorities or otherwise prior to approval of the Plan by the OTS, and 
at any time thereafter with the concurrence of the OTS; and that the 
Stock Issuance Plan may be terminated by the board of directors at any 
time prior to approval of the Plan by the OTS, and at any time 
thereafter with the concurrence of the OTS;
    (20) Provide that, unless an extension is granted by the OTS, the 
Stock Issuance Plan shall be terminated if not completed within 90 days 
of:
    (i) The date of such approval; or
    (ii) For stock issuances subject to the offering circular 
requirements of part 563g of this chapter, the date on which the 
offering circular was declared effective by the OTS; and
    (21) Provide that the association may make scheduled discretionary 
contributions to a tax-qualified employee stock benefit plan provided 
such contributions do not cause the association to fail to meet any of 
its regulatory capital requirements.
    (b) Optional provisions. A Stock Issuance Plan may:
    (1) Provide that, in the event the proposed stock issuance is part 
of a Reorganization Plan, the stock offering may be commenced 
concurrently with or at any time after the mailing to the members of the 
reorganizing association and any acquiree association of any proxy 
statement(s) authorized for

[[Page 433]]

use by the OTS. The offering may be closed before the required 
membership vote(s), provided the offer and sale of the stock shall be 
conditioned upon the approval of the Reorganization Plan and Stock 
Issuance Plan by the members of the reorganizing association and any 
acquiree association;
    (2) Provide that any insignificant residue of stock of the 
association not sold in the offering may be sold in such other manner as 
provided in the Stock Issuance Plan, with the OTS's approval;
    (3) Provide that the association may issue and sell, in lieu of 
shares of its stock, units of securities consisting of stock and long-
term warrants or other equity securities, in which event any reference 
in the provisions of this section and in Sec. 575.7 of this part to 
stock shall apply to such units of equity securities unless the context 
otherwise requires; or
    (4) Provide that the association may reserve shares representing up 
to ten percent of the proposed offering for issuance in connection with 
an employee stock benefit plan.



Sec. 575.9  Charters and bylaws for mutual holding companies and their savings association subsidiaries.

    (a) Charters and bylaws for mutual holding companies--(1) Charters. 
The charter of a mutual holding company shall be in the form set forth 
in this paragraph (a)(1) and may include any of the additional 
provisions permitted pursuant to paragraph (a)(2) of this section.

                                 Charter

    Section 1: Corporate title. The name of the mutual holding company 
is ______(the ``Mutual Company'').
    Section 2: Duration. The duration of the Mutual Company is 
perpetual.
    Section 3: Purpose and powers. The purpose of the Mutual Company is 
to pursue any or all of the lawful objectives of a federal mutual 
savings and loan holding company chartered under section 10(o) of the 
Home Owners' Loan Act, 12 U.S.C. 1467a(o), and to exercise all of the 
express, implied, and incidental powers conferred thereby and all acts 
amendatory thereof and supplemental thereto, subject to the Constitution 
and the laws of the United States as they are now in effect, or as they 
may hereafter be amended, and subject to all lawful and applicable 
rules, regulations, and orders of the Office of Thrift Supervision 
(``OTS'').
    Section 4: Capital. The Mutual Company shall have no capital stock.
    Section 5: Members. [The content of this section 5 shall be 
identical to the content of the parallel section in the charter of the 
reorganizing association, with the following exceptions: (A) Any 
provisions conferring membership rights upon borrowers of the 
reorganizing association shall be eliminated and replaced with 
provisions grandfathering those rights in accordance with 12 CFR 575.5; 
and (B) appropriate changes shall be made to indicate that membership 
rights in the mutual holding company derive from deposit accounts in 
and, to the extent of any grandfather provisions, borrowings from the 
resulting association. Set forth below is an example of how section 5 
should appear in the charter of a mutual holding company formed by a 
reorganizing association whose charter conforms to the model charter 
prescribed for federal mutual savings associations for calendar year 
1989. Additional changes to this section 5 may be required whenever a 
mutual holding company reorganization involves an acquiree association, 
or a mutual holding company makes a post-reorganization acquisition of a 
mutual savings association, so as to preserve the membership rights of 
the members of the acquired association consistent with 12 CFR 575.5.]
    All holders of the savings, demand, or other authorized accounts of 
____________ [insert the name of the resulting association] (the 
``Association'') are members of the Mutual Company. With respect to all 
questions requiring action by the members of the Mutual Company, each 
holder of an account in the Association shall be permitted to cast one 
vote for each $100, or fraction thereof, of the withdrawal value of the 
member's account. In addition, borrowers from the Association as of 
____________ [insert the date of the reorganization or any earlier date 
as of which new borrowings ceased to result in membership rights] shall 
be entitled to one vote for the period of time during which such 
borrowings are in existence. [The foregoing sentence should be included 
only if the charter of the reorganizing association confers voting 
rights on any borrowers.] No member, however, shall cast more than one 
thousand votes. All accounts shall be nonassessable.
    Section 6. Directors. The Mutual Company shall be under the 
direction of a board of directors. The authorized number of directors 
shall not be fewer than five nor more than fifteen, as fixed in the 
Mutual Company's bylaws, except that the number of directors may be 
decreased to a number less than five or increased to a number greater 
than fifteen with the prior approval of the Director of the Office or 
his or her delegate.

[[Page 434]]

    Section 7: Capital, surplus, and distribution of earnings. [The 
content of this section 7 shall be identical to the content of the 
parallel section in the charter of the reorganizing association, except 
for changes made to indicate that distribution rights in the mutual 
holding company derive from deposit accounts in the resulting 
association, any changes required to provide that the Director of the 
OTS shall be the approving authority in instances where the charter 
requires regulatory approval of distributions, and any other changes 
necessary to accommodate the mutual holding company format. Set forth 
below is an example of how section 7 should appear in the charter of a 
mutual holding company formed by a reorganizing association whose 
charter conforms to the model charter prescribed for federal mutual 
savings associations for calendar year 1989. Additional changes to this 
section 7 may be required whenever a mutual holding company 
reorganization involves an acquiree association, or a mutual holding 
company makes a post-reorganization acquisition of a mutual savings 
association, so as to preserve the membership rights of the members of 
the acquired association consistent with 12 CFR 575.5.]
    The Mutual Company shall distribute net earnings to account holders 
of the Association on such basis and in accordance with such terms and 
conditions as may from time to time be authorized by the Director of the 
OTS, provided that the Mutual Company may establish minimum account 
balance requirements for account holders to be eligible for 
distributions of earnings.
    All holders of accounts of the Association shall be entitled to 
equal distribution of the assets of the Mutual Company, pro rata to the 
value of their accounts in the Association, in the event of voluntary or 
involuntary liquidation, dissolution, or winding up of the Mutual 
Company.
    Section 8. Amendment. Adoption of any preapproved charter amendment 
shall be effective after such preapproved amendment has been approved by 
the members at a legal meeting. Any other amendment, addition, change, 
or repeal of this charter must be approved by the Office prior to 
approval by the members at a legal meeting and shall be effective upon 
filing with the Office in accordance with regulatory procedures.

Attest:_________________________________________________________________
      Secretary of the Association

By:_____________________________________________________________________
      President or Chief Executive Officer of the Association

Attest:_________________________________________________________________
      Secretary of the Office of Thrift Supervision

By:_____________________________________________________________________
      Director of the Office of Thrift Supervision

Effective Date:_________________________________________________________

    (2) Charter amendments. The rules and regulations set forth in 
Sec. 544.2 of this chapter regarding charter amendments and reissuances 
of charters (including delegations and filing instructions) shall be 
applicable to mutual holding companies to the same extent as if mutual 
holding companies were Federal mutual savings associations, except that, 
with respect to the pre-approved charter amendments set forth in 
Sec. 544.2 of this chapter, Secs. 544.2(b)(1) and (b)(3) of this chapter 
shall not apply to mutual holding companies, and mutual holding 
companies changing their corporate title pursuant to Sec. 544.2(b)(2) of 
this chapter shall be required to comply with Sec. 575.9(a)(3) of this 
part as well as Sec. 543.1(b) of this chapter.
    (3) Corporate title. The corporate title of each mutual holding 
company shall include the term ``mutual'' or the abbreviation ``M.H.C.''
    (4) Bylaws. The rules and regulations set forth in Sec. 544.5 of 
this chapter regarding bylaws (including their content, any amendments 
thereto, delegations, and filing instructions) shall be applicable to 
mutual holding companies to the same extent as if mutual holding 
companies were federal mutual savings associations. The model bylaws for 
Federal mutual savings associations set forth in the OTS Applications 
Processing Handbook shall also serve as the model bylaws for mutual 
holding companies, except that the term ``association'' each time it 
appears therein shall be replaced with the term ``Mutual Company''; 
section 11(e) (extending leniency to borrowing members) and section 
11(f) (rejection of applications for accounts or membership) shall be 
removed and the remaining paragraphs of section 12 redesignated 
accordingly.
    (5) Availability of charter and bylaws. A mutual holding company 
shall make available to its members at all times in the offices of each 
subsidiary savings association from which the mutual holding company 
draws members a true copy of its charter and bylaws, including any 
amendments, and shall deliver such a copy to any member upon request. 
Mutual holding companies

[[Page 435]]

shall also be subject to the provisions of Sec. 544.8 of this chapter.
    (b) Charters and bylaws of subsidiary savings associations of mutual 
holding companies. Except as specified otherwise by the OTS in any 
notice of intent not to disapprove a mutual holding company 
reorganization or in any regulation or order, each subsidiary savings 
association of a mutual holding company shall be subject to the same 
rules and regulations regarding charters and bylaws as are applicable to 
stock savings associations that are chartered by the OTS, 12 CFR part 
552, or by the appropriate state chartering authority, as the case may 
be, provided that the charter of each resulting association, each 
acquiree association, and each mutual savings association that is 
acquired by a mutual holding company shall contain the provision set 
forth below:

In any situation in which the priority of the accounts of the 
association is in controversy, all such accounts shall, to the extent of 
their withdrawable value, be debts of the association having at least as 
high a priority as the claims of general creditors of the association 
not having priority (other than any priority arising or resulting from 
consensual subordination) over other general creditors of the 
association.

    (c) Approval of charters and bylaws of mutual holding companies and 
their savings association subsidiaries in connection with Reorganization 
Plans--(1) Issuance by the OTS of a notice of intent not to disapprove a 
reorganization pursuant to Sec. 575.3(b) of this part, or failure by the 
OTS to disapprove such a reorganization within the time prescribed in 
Sec. 575.3(b) of this part, shall be deemed to constitute:
    (i) Approval pursuant to Sec. 575.3(d) of this part and this section 
for the reorganizing association to amend its charter and bylaws in 
their entirety to read in the form of the mutual holding company charter 
and bylaws proposed in the Reorganization Notice (as modified by any 
conditions imposed by the OTS in its notice of intent not to disapprove 
or paragraph (c)(2) of this section and subject to paragraph (c)(5) of 
this section);
    (ii) If the Reorganization Plan provides that the resulting 
association is to be federally chartered, approval pursuant to 12 U.S.C. 
1464 (a) and (e) and Secs. 552.2-1 and 552.2-2 of this chapter of the 
organization of the resulting association and the proposed charter and 
bylaws of such association (as modified by any conditions imposed by the 
OTS in its notice of intent not to disapprove or by paragraph (c)(2) of 
this section and subject to paragraph (c)(5) of this section); and
    (iii) If the Reorganization Plan provides that the acquiree 
association is to be federally chartered, approval pursuant to 
Sec. 552.4 of this chapter of the amendment of the existing charter of 
the acquiree association in its entirety to read in the form of the 
proposed charter and bylaws of such association (as modified by any 
conditions imposed by the OTS in its notice of intent not to disapprove 
or paragraph (c)(2) of this section and subject to paragraph (c)(5) of 
this section).
    (2) In the event the charter and bylaws of a mutual holding company 
and of any federally-chartered resulting association or acquiree 
association are approved pursuant to paragraph (c)(1) of this section 
due to failure of the OTS to disapprove a Reorganization Notice within 
the time prescribed in Sec. 575.3(b) of this part, such approval shall 
be subject to the condition that such charter(s) and bylaws shall 
conform in every particular to the model charter(s) and bylaws for 
mutual holding companies and/or federal stock savings associations, as 
the case may be, as set forth in the OTS's regulations.
    (3) Promptly after approval of the amendment of the charter of a 
reorganizing association to read in the form of a mutual holding company 
charter pursuant to paragraph (c)(1) of this section, the OTS shall 
issue an executed copy of such charter to the reorganizing association. 
Such charter shall not become effective until consummation of the 
Reorganization Plan, at which point in time it shall replace and nullify 
the charter of the reorganizing association. The charter of the 
reorganizing association shall be surrendered to the OTS within five 
days after consummation of the Reorganization Plan. If the 
Reorganization Plan is terminated for any reason, the charter of the 
mutual holding company shall become

[[Page 436]]

immediately null and void and shall be returned to the OTS within five 
days.
    (4) Promptly after approval of any federal charter for a resulting 
association pursuant to paragraph (c)(1) of this section or approval of 
the amendment of any federal charter of an acquiree association pursuant 
to paragraph (c)(1) of this section, the OTS shall issue an executed 
copy of such charter(s) to the reorganizing association and/or the 
acquiree association, as the case may be.
    (i) Prior to consummation of the Reorganization Plan, the resulting 
association (whether chartered under federal or state law) shall 
constitute an interim savings association subsidiary of the reorganizing 
association and shall not accept any deposits or engage in any other 
business activities except for those activities necessary to consummate 
the Reorganization Plan. If the Reorganization Plan is terminated for 
any reason, the charter of the resulting association shall immediately 
become null and void and, if the resulting association is federally 
chartered, the charter shall be returned to the OTS within five days.
    (ii) Any amended charter issued to an acquiree association (whether 
by the OTS or the appropriate state authority) shall not become 
effective until consummation of the Reorganization Plan, at which point 
in time it shall replace and nullify the prior charter of the acquiree 
association. The prior charter of any federally-chartered acquiree 
association shall be surrendered to the OTS within five days after 
consummation of the Reorganization Plan. If the Reorganization Plan is 
terminated for any reason, the amended charter of the acquiree 
association shall become immediately null and void and, if the acquiree 
association is federally chartered, the amended charter shall be 
returned to the OTS within five days.
    (5) Approval of the amendment of the charter and bylaws of the 
reorganizing association to read in the form of the charter and bylaws 
of a mutual holding company and of any acquiree association to read in 
the form of a stock association and approval of the organization of any 
resulting association and of its charter and bylaws pursuant to 
paragraph (c)(1) of this section shall be subject to any conditions 
subsequent that the OTS may impose in connection therewith or with its 
notice of intent not to disapprove the reorganization.

[58 FR 44114, Aug. 19, 1993, as amended at 61 FR 64021, Dec. 3, 1996; 62 
FR 66264, Dec. 18, 1997]



Sec. 575.10  Acquisition and disposition of savings associations, savings and loan holding companies, and other corporations by mutual holding companies.

    (a) Acquisitions--(1) Stock savings associations. A mutual holding 
company may acquire control of a savings association that is in the 
stock form, provided the necessary approvals are obtained from the OTS, 
including (without limitation) approval pursuant to part 574 of this 
chapter and, if the acquisition involves a merger or transfer of assets 
or liabilities, approval pursuant to Secs. 552.13, 563.22, and part 546 
of this chapter, as appropriate.
    (2) Mutual savings associations. A mutual holding company may 
acquire a savings association in the mutual form by merger of such 
association into any subsidiary savings association of such holding 
company from which the parent mutual holding company draws members or 
into an interim savings association subsidiary of the mutual holding 
company, provided:
    (i) The proposed acquisition is approved by a majority of the board 
of directors of the mutual association;
    (ii) The proposed acquisition is submitted to the mutual 
association's members pursuant to a proxy statement authorized for use 
by the OTS and such acquisition is approved by a majority of the total 
votes of the association's members eligible to be cast at a meeting held 
at the call of the association's directors in accordance with the 
procedures prescribed by the association's charter and bylaws;
    (iii) The necessary approvals are obtained from the OTS, including 
(without limitation) approval pursuant to part 574 of this chapter and 
Secs. 552.13, 563.22, and part 546 of this chapter, as appropriate, and 
any approvals required to form an interim association, to amend the 
charter and bylaws of the

[[Page 437]]

association being acquired, and/or to amend the charter and bylaws of 
the mutual holding company consistent with 575.6(a) of this part; and
    (iv) The approval of the members of the mutual holding company is 
obtained, if the OTS advises the mutual holding company in writing that 
such approval will be required.
    (3) Mutual holding companies. A mutual holding company that is not a 
subsidiary holding company may acquire control of another mutual holding 
company, including a subsidiary holding company, by merging with or into 
such company, provided the necessary approvals are obtained from the 
OTS, including (without limitation) approval pursuant to part 574 of 
this chapter. The approval of the members of the mutual holding 
companies shall also be obtained if the OTS advises the mutual holding 
companies in writing that such approval will be required.
    (4) Stock holding companies. A mutual holding company may acquire 
control of a savings and loan holding company in the stock form that is 
not a subsidiary holding company, provided the necessary approvals are 
obtained from the OTS, including (without limitation) approval pursuant 
to part 574 of this chapter. The acquired holding company may be held as 
a subsidiary of the mutual holding company or merged into the mutual 
holding company.
    (5) Non-controlling acquisitions of savings association stock. A 
mutual holding company may acquire non-controlling amounts of the stock 
of savings associations and savings and loan holding companies subject 
to the restrictions imposed by 12 U.S.C. 1467a(e) and (q) and 
Secs. 574.8 and 584.4 of this chapter.
    (6) Other corporations. A mutual holding company may acquire control 
of, and make non-controlling investments in the stock of, any 
corporation other than a savings association or savings and loan holding 
company only if:
    (i) (A) Such corporation is engaged exclusively in activities that 
are permissible for mutual holding companies pursuant to Sec. 575.11(a) 
of this part; or
    (B) It is lawful for the stock of such corporation to be purchased 
by a federal savings association under part 559 of this chapter or by a 
state savings association under the law of any state where any 
subsidiary savings association of the mutual holding company has its 
home office; and
    (ii) Such corporation is not controlled, directly or indirectly, by 
a savings association subsidiary of the mutual holding company.
    (b) Dispositions--(1) A mutual holding company shall provide written 
notice to the OTS at least 30 days prior to the effective date of any 
direct or indirect transfer of any of the stock that it holds in a 
subsidiary holding company, a resulting association, an acquiree 
association, or any subsidiary savings association that was in the 
mutual form when acquired by the mutual holding company, including stock 
transferred in connection with a pledge pursuant to Sec. 575.11(b) or 
any transfer of all or a substantial portion of the assets or 
liabilities of any such subsidiary holding company or association. Any 
such disposition shall comply with the requirements of this part or with 
part 563b of this chapter, as appropriate, and with any other applicable 
statute or regulation including, without limitation, parts 546, 563 and 
574 of this chapter.
    (2) A mutual holding company may, subject to applicable laws and 
regulations, transfer any or all of the stock or cause or permit the 
transfer of any or all of the assets and liabilities of:
    (i) Any subsidiary savings association that was in the stock form 
when acquired, provided such association is not a resulting association 
or an acquiree association;
    (ii) Any subsidiary savings and loan holding company acquired 
pursuant to paragraph (a)(4) of this section; or
    (iii) Any corporation other than a savings association or savings 
and loan holding company.
    (3) A mutual holding company may, subject to applicable laws and 
regulations, transfer any stock acquired pursuant to paragraph (a)(5) of 
this section.
    (4) No transfer authorized by this section may be made to any 
insider of the mutual holding company, any associate of an insider of 
the mutual holding company, or any tax-qualified or non-tax-qualified 
employee stock benefit plan of the mutual holding company unless the 
mutual holding company provides notice to the OTS at

[[Page 438]]

least 30 days prior to the effective date of the proposed transfer. This 
notice shall be in addition to any other application or notice required 
under applicable laws or regulations, including, without limitation, 
this part and parts 563, 563b, 574 of this chapter.

[58 FR 44114, Aug. 19, 1993, as amended at 60 FR 66720, Dec. 26, 1995; 
63 FR 11365, Mar. 9, 1998]



Sec. 575.11  Operating restrictions.

    (a) Activities restrictions. A mutual holding company may engage in 
any business activity specified in 12 U.S.C. 1467a(c)(2) or 
(c)(9)(A)(ii). In addition, the business activities of subsidiaries of 
mutual holding companies may include the activities specified in 
Sec. 575.10(a)(6) of this part. A mutual holding company or its 
subsidiaries may engage in the foregoing activities only upon compliance 
with the procedures specified in Secs. 584.2-1(c) or 584.2-2(b) of this 
chapter.
    (b) Pledging stock--(1) No mutual holding company may pledge the 
stock of its resulting association, an acquiree association, or any 
subsidiary savings association that was in the mutual form when acquired 
by the mutual holding company (or its parent mutual holding company), 
unless the proceeds of the loan secured by the pledge are infused into 
the association whose stock is pledged. No mutual holding company may 
pledge the stock of its subsidiary holding company unless the proceeds 
of the loan secured by the pledge are infused into any savings 
association subsidiary of the subsidiary holding company that is a 
resulting association, an acquiree association, or a subsidiary savings 
association that was in the mutual form when acquired by the subsidiary 
holding company (or its parent mutual holding company). In the event the 
subsidiary holding company has more than one savings association 
subsidiary, the loan proceeds shall, unless otherwise approved by the 
OTS, be infused in equal amounts to each savings association subsidiary. 
Any amount of the stock of such association or subsidiary holding 
company may be pledged for these purposes. Nothing in this paragraph 
(b)(1) shall be deemed to prohibit:
    (i) The payment of dividends from a subsidiary savings association 
to its mutual holding company parent to the extent otherwise 
permissible; or
    (ii) The payment of dividends from a subsidiary holding company to 
its mutual holding company parent to the extent otherwise permissible; 
or
    (iii) A mutual holding company from pledging the stock of more than 
one savings association subsidiary provided that the stock pledged of 
each such subsidiary association is proportionate to the proceeds of the 
loan infused into each subsidiary association.
    (2) Within 10 days after its pledge of stock pursuant to paragraph 
(b)(1) of this section, a mutual holding company shall provide written 
notice to the OTS regarding the terms of the transaction (including the 
amount of principal and interest, repayment terms, maturity date, the 
nature and amount of collateral, and the terms governing seizure of the 
collateral) and shall include in such notice a certification that the 
proceeds of the loan have been transferred to the subsidiary savings 
association whose stock (or the stock of its parent subsidiary holding 
company) has been pledged.
    (3) Any mutual holding company that fails to make any payment on a 
loan secured by the pledge of stock pursuant to paragraph (b)(1) of this 
section on or before the date on which such payment is due shall, on the 
first day after such payment is due, provide written notice of 
nonpayment to the Regional Director.
    (c) Restrictions on stock repurchases. (1) No subsidiary savings 
association of a mutual holding company that has any stockholders other 
than the association's mutual holding company and no subsidiary holding 
company that has any stockholders other than its parent mutual holding 
company may repurchase any share of stock within one year of its date of 
issuance (which may include the time period the shares issued by the 
savings association were outstanding if the subsidiary holding company 
was formed after the initial issuance by the savings association), 
unless the repurchase:
    (i) Is in compliance with Sec. 563b3(g)(1) of this chapter;

[[Page 439]]

    (ii) Is part of a general repurchase made on a pro rata basis 
pursuant to an offer approved by the OTS and made to all stockholders of 
the association or subsidiary holding company (except that the parent 
mutual holding company may be excluded from the repurchase with the OTS' 
approval);
    (iii) Is limited to the repurchase of qualifying shares of a 
director; or
    (iv) Is purchased in the open market by a tax-qualified or non-tax-
qualified employee stock benefit plan of the savings association (or of 
a subsidiary holding company) in an amount reasonable and appropriate to 
fund such plan.
    (2) No mutual holding company may purchase shares of its subsidiary 
savings association or subsidiary holding company within one year after 
a stock issuance, except if the purchase complies with Sec. 563b.3(g)(1) 
of this chapter. For purposes of this subsection, the reference in 
Sec. 563b.3(g)(3) of this chapter to five percent refers to minority 
shareholders.
    (d) Restrictions on waiver of dividends. No mutual holding company 
may waive its right to receive any dividend declared by a subsidiary 
unless either:
    (1) No insider of the mutual holding company, associate of an 
insider, or tax-qualified or non-tax-qualified employee stock benefit 
plan of the mutual holding company holds any share of stock in the class 
of stock to which the waiver would apply; or
    (2) The mutual holding company provides the OTS with written notice 
of its intent to waive its right to receive dividends 30 days prior to 
the proposed date of payment of the dividend, and the OTS does not 
object. The OTS shall not object to a notice of intent to waive 
dividends if:
    (i) The waiver would not be detrimental to the safe and sound 
operation of the savings association; and
    (ii) The board of directors of the mutual holding company expressly 
determines that waiver of the dividend by the mutual holding company is 
consistent with the directors' fiduciary duties to the mutual members of 
such company. A dividend waiver notice shall include a copy of the 
resolution of the board of directors of the mutual holding company, in 
form and substance satisfactory to the OTS, together with any supporting 
materials relied upon by the board, concluding that the proposed 
dividend waiver is consistent with the board's fiduciary duties to the 
mutual members of the mutual holding company.
    (3) The OTS will not consider waived dividends in determining an 
appropriate exchange ratio in the event of a full conversion to stock 
form.
    (e) Restrictions on issuance of stock to insiders. A subsidiary of a 
mutual holding company that is not a savings association or subsidiary 
holding company may issue stock to any insider, associate of an insider 
or tax-qualified or non-tax-qualified employee stock benefit plan of the 
mutual holding company or any subsidiary of the mutual holding company, 
provided that such persons or plans provide written notice to the OTS at 
least 30 days prior to the stock issuance. Subsidiary savings 
associations and subsidiary holding companies may issue stock to such 
persons only in accordance with Sec. 575.7.
    (f) Restrictions on indemnification. The provisions of Sec. 545.121 
of this chapter shall apply to mutual holding companies in the same 
manner as if they were federal savings associations.
    (g) Restrictions on employment contracts. The provisions of 
Sec. 563.39 of this chapter and any policies of the OTS thereunder shall 
apply to mutual holding companies in the same manner as if they were 
savings associations.
    (h) Applicability of rules governing savings and loan holding 
companies. Except as expressly provided in this part, mutual holding 
companies shall be subject to the provisions of 12 U.S.C. 1467a and 3201 
et seq. and parts 563e, 574, 583, and 584 of this chapter.

[58 FR 44114, Aug. 19, 1993, as amended at 60 FR 66720, Dec. 26, 1995; 
63 FR 11365, Mar. 9, 1998; 65 FR 43091, July 12, 2000]



Sec. 575.12  Conversion or liquidation of mutual holding companies.

    (a) Conversion--(1) Generally. A mutual holding company may convert 
to the stock form in accordance with the rules and regulations set forth 
in part 563b of this chapter.
    (2) Exchange of savings association stock. Any stock issued pursuant 
to

[[Page 440]]

Sec. 575.7 by a subsidiary savings association or subsidiary holding 
company of a mutual holding company to persons other than the parent 
mutual holding company may be exchanged for the stock issued by the 
parent mutual holding company in connection with the conversion of the 
parent mutual holding company to stock form. The parent mutual holding 
company and the subsidiary holding company or savings association must 
demonstrate to the satisfaction of the OTS that the basis for the 
exchange is fair and reasonable.
    (b) Involuntary liquidation--(1) The OTS may file a petition with 
the federal bankruptcy courts requesting the liquidation of a mutual 
holding company pursuant to 12 U.S.C. 1467a(o)(9) and title 11, United 
States Code, upon the occurrence of any of the following events:
    (i) The default of the resulting association, any acquiree 
association, or any subsidiary savings association of the mutual holding 
company that was in the mutual form when acquired by the mutual holding 
company;
    (ii) The default of the parent mutual holding company or its 
subsidiary holding company; or
    (iii) Foreclosure on any pledge by the mutual holding company of 
subsidiary savings association stock or subsidiary holding company stock 
pursuant to Sec. 575.11(b).
    (2) Except as provided in paragraph (b)(3) of this section, the net 
proceeds of any liquidation of any mutual holding company shall be 
transferred to the members of the mutual holding company or the stock 
holders of the subsidiary holding company in accordance with the charter 
of the mutual holding company or subsidiary holding company.
    (3) If the FDIC incurs a loss as a result of the default of any 
savings association subsidiary of a mutual holding company and that 
mutual holding company is liquidated pursuant to paragraph (b)(1) of 
this section, the FDIC shall succeed to the membership interests of the 
depositors of such savings association in the mutual holding company, to 
the extent of the FDIC's loss.
    (c) Voluntary liquidation. The provisions of Sec. 546.4 of this 
chapter shall apply to mutual holding companies in the same manner as if 
they were federal savings associations.

[58 FR 44114, Aug. 19, 1993, as amended at 63 FR 11366, Mar. 9, 1998]



Sec. 575.13  Procedural requirements.

    (a) Proxies and proxy statements--(1) Solicitation of proxies. The 
provisions of Secs. 563b.5 and 563b.6 of this chapter (exclusive of 
Sec. 563b.6(c)(2)(iii), (d), and (e)) shall apply to all solicitations 
of proxies by any person in connection with any membership vote required 
under this part. All proxy materials utilized in connection with such 
solicitations shall be authorized for use by the OTS and shall be in the 
form and contain the information specified in Sec. 563b.5(d) of this 
chapter and Form PS, 12 CFR 563b.101, to the extent such information is 
relevant to the action that members are being asked to approve, with 
such additions, deletions, and other modifications as are necessary or 
appropriate under the disclosure standard set forth in Sec. 563b.5(g) of 
this chapter. Proxies and proxy statements must be filed in accordance 
with Sec. 563b.5(e) of this chapter and must be addressed to the 
Business Transactions Division, Chief Counsel's Office, Office of Thrift 
Supervision, at the address set forth in Sec. 516.40(b) of this chapter. 
For purposes of this paragraph (a)(1), the term conversion as it appears 
in the provisions of part 563b of this chapter cited above in this 
paragraph (a)(1) shall be deemed to refer to the reorganization or the 
stock issuance, as appropriate.
    (2) Additional proxy disclosure requirements. In addition to all 
disclosure required by Form PS, all proxies requesting accountholder 
approval of a mutual holding company reorganization shall address in 
detail:
    (i) The reasons for the reorganization, including the relative 
advantages and disadvantages of undertaking the transaction proposed 
instead of a standard conversion;
    (ii) Whether management believes the reorganization is in the best 
interests of the association and its accountholders and the basis of 
that belief;

[[Page 441]]

    (iii) The fiduciary duties owed to accountholders by the 
association's officers and directors and why the reorganization is in 
accord with those duties and is otherwise equitable to the 
accountholders and the association;
    (iv) Any compensation agreements that will be entered into by 
management in connection with the reorganization; and
    (v) Whether the mutual holding company intends to waive dividends, 
the implications to accountholders, and the reasons such waivers are 
consistent with the fiduciary duties of the directors of the mutual 
holding company.
    (3) Nonconforming minority stock issuances. Savings associations 
proposing non-conforming minority stock issuances pursuant to 
Sec. 575.7(d)(6)(ii)(2) of this part must include in the proxy materials 
to accountholders seeking approval of a proposed reorganization an 
additional disclosure statement that serves as a cover sheet that 
clearly addresses:
    (i) The consequences to accountholders of voting to approve a 
reorganization in which their subscription rights are prioritized 
differently and potentially eliminated; and
    (ii) Any intent by the mutual holding company to waive dividends, 
and the implications to accountholders.
    (4) Use of ``running'' proxies. A mutual savings association or 
mutual holding company may make use of any proxy conferring general 
authority to vote on any and all matters at any meeting of members, 
provided that the member granting such proxy has been furnished a proxy 
statement regarding the matters and the member does not grant a later-
dated proxy to vote at the meeting at which the matter will be 
considered or attend such meeting and vote in person, and further 
provided that ``running'' proxies or similar proxies may not be used to 
vote for a mutual holding company reorganization, mutual-to-stock 
conversion undertaken either by a mutual savings association or a mutual 
holding company or any other material transaction. Subject to the 
limitations set forth in this paragraph, any proxy conferring on the 
board of directors or officers of a mutual savings association general 
authority to cast a member's votes on any and all matters presented to 
the members shall be deemed to cover the member's votes as a member of 
the mutual holding company and such authority shall be conferred on the 
board of directors or officers of a mutual holding company.
    (b) Applications under this part. Except as provided in paragraph 
(c) of this section, any application, notice or certification required 
to be filed with OTS under this part must be filed in accordance with 
part 516, subpart A of this chapter.
    (c) Reorganization Notices and stock issuance applications--(1) 
Contents. Each Reorganization Notice submitted to the OTS pursuant to 
Sec. 575.3(b) of this part and each application for approval of the 
issuance of stock submitted to the OTS pursuant to Sec. 575.7(a) of this 
part shall be in the form and contain the information specified by the 
OTS.
    (2) Filing instructions. Any Reorganization Notice submitted under 
Sec. 575.3(b) of this part must be filed in accordance with part 516, 
subpart A of this chapter. Any stock issuance application submitted 
pursuant to Sec. 575.7(a) of this part shall be filed in accordance with 
Sec. 563b.8 of this chapter.
    (3) Public notice, agency reports, and related matters. (i) Sections 
563.22(e)(1), (e)(2), (e)(3), and (e)(4) of this chapter shall apply to 
all mutual holding company reorganizations.
    (ii) Public notice published pursuant to paragraph (c)(3)(i) of this 
section shall be published in a manner that is conspicuous to the 
average reader and shall be made substantially in the form indicated in 
this paragraph (c)(3)(ii). Such notice shall also be prominently posted 
in each office of the association for a period beginning on the date of 
the newspaper notice and ending on the date of the association's 
membership meeting.

  Announcement of Filing of Notice of Mutual Savings and Loan Holding 
                         Company Reorganization

    This is to inform the public that __________, located in __________, 
filed [intends to file] application materials with the Office of Thrift 
Supervision (the ``OTS'') on __________ [insert date] advising the OTS 
of its intent to reorganize into the mutual holding company format 
pursuant to 12 CFR part 575 (``Reorganization Notice'').

[[Page 442]]

    This public notice will appear at approximately one-week intervals 
over a thirty [ten] day period beginning __________ [insert date] and 
ending __________ [insert date].
    Anyone may submit written comments in favor of or against the 
proposed reorganization and in so doing may submit such information as 
he or she deems relevant. Such comments and information must be sent to 
the Regional Director at the following address: ____________________. 
Three additional copies of such comments and information must also be 
sent to the Applications Filing Room, Office of Thrift Supervision, 1700 
G Street, NW., Washington, DC 20552. Such comments and information must 
be submitted within thirty [ten] calendar days of the date on which this 
public notice was first published, as indicated in the preceding 
paragraph. Up to an additional ten calendar days may be granted by the 
Regional Director to submit such comments and information upon a showing 
of good cause if a written request is received by the Regional Director 
within the initial thirty [ten] day period specified above. Failure to 
submit written comments on a timely basis objecting to the 
Reorganization Notice may preclude the pursuit of any administrative or 
judicial remedies.
    You may inspect the non-confidential portion of the Reorganization 
Notice and non-confidential portions of all comments and information 
filed by the public in response to the Reorganization Notice by 
contacting the Regional Director or the Information Services Division, 
Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552. 
If you have any questions concerning these procedures, contact the 
Regional Director at (____) __________ or the Information Services 
Division at (202) 906-______.

    (iii) Promptly after publication, the association shall file copies 
of each notice and a publisher's affidavit of publication in the same 
manner as specified in paragraph (c)(2) of this section.
    (iv) If any Reorganization Notice includes an acquiree association, 
the publication requirements of this paragraph (c)(3) shall be fulfilled 
both by the reorganizing association and by the acquiree association and 
the first paragraph of the form of notice set forth in paragraph 
(c)(3)(ii) of this section shall be replaced with the following 
paragraph:

    This is to inform the public that __________, located in __________, 
and __________, located in __________, filed [intend to file] 
application materials with the Office of Thrift Supervision (the 
``OTS'') on __________   [insert date] advising the OTS of their intent 
to join together to reorganize into the mutual holding company format 
pursuant to 12 CFR part 575 (``Reorganization Notice'').

    (v) Upon receipt of a Reorganization Notice, the OTS shall notify 
persons whose request for announcements under Sec. 563e.6 of this 
chapter have been received in time for such notification. The OTS may 
also notify any other persons who might have an interest in the proposed 
reorganization.
    (vi) Disclosure of any part of a Reorganization Notice or any 
comments by the public thereon shall be made only in accordance with 
paragraph (f) of this section.
    (4) Public comment. Comments by the public shall be submitted only 
as provided in this paragraph (c)(4) or as requested by the OTS. Within 
thirty (or, if an emergency exists within the meaning of 
Sec. 563.22(d)(3) of this chapter, ten) calendar days of the date of 
publication of the first notice required by paragraph (c)(3) (i) and 
(ii) of this section, or up to forty (or, if an emergency exists, 
twenty), calendar days after such date if within the initial period an 
extension is requested in writing for good cause shown, anyone may file 
comments in favor of or against a Reorganization Notice and in so doing 
may submit such information as he or she deems relevant. Comments 
received after the comment period, except as requested by the OTS, 
unverified accusations, or materials pertaining to a Reorganization 
Notice or public comment that the commenter is unwilling to have 
disclosed to the party making such submission shall not be part of the 
record and need not be considered by the OTS. Comments shall be filed in 
the manner and in the locations provided in paragraph (c)(3)(ii) of this 
section.
    (d) Amendments. Any association or mutual holding company may amend 
any notice or application submitted pursuant to this part or file 
additional information with respect thereto upon request of the OTS or 
upon the association's or mutual holding company's own initiative.
    (e) Time-frames. All Reorganization Notices and applications filed 
pursuant to this part must be processed in accordance with standard 
treatment processing procedures at part 516, subparts A and E. Any 
related approvals

[[Page 443]]

requested in connection with Reorganization Notices or applications for 
approval of stock issuances (including, without limitation, requests for 
approval to transfer assets to resulting associations, to acquire 
acquiree associations, and to organize resulting associations or interim 
associations, and requests for approval of charters, bylaws, and stock 
forms) shall be processed pursuant to the procedures specified in this 
section in conjunction with the Reorganization Notice or stock issuance 
application to which they pertain, rather than pursuant to any 
inconsistent procedures specified elsewhere in this chapter. The 
approval standards for all such related applications, however, shall 
remain unchanged. The review by OTS of proxy solicitation materials, 
including forms of proxy and proxy statements, and of any other 
materials used in connection with the issuance of stock under Sec. 575.7 
of this part must not be subject to the applications processing time-
frames set forth in Secs. 516.210 through 516.290 of this chapter.
    (f) Disclosure. The rules governing disclosure of any notice or 
application submitted pursuant to this part, or any public comment 
submitted pursuant to paragraph (c)(4) of this section, shall be the 
same as set forth in Sec. 574.6(f) of this chapter for notices, 
applications, and public comments filed under part 574 of this chapter.
    (g) Supervisory cases. The provisions of paragraphs (c)(3), (c)(4) 
and (f) of this section may be waived by the OTS in connection with 
transactions approved, or not disapproved, by the OTS for supervisory 
reasons.
    (h) Appeals. Any party aggrieved by a final action by the OTS which 
approves or disapproves any application or notice pursuant to this part 
575 may obtain review of such action only by complying with 12 U.S.C. 
1467a(j).
    (i) Federal preemption. This part 575 preempts state law with regard 
to the creation and regulation of mutual holding companies.

[58 FR 44114, Aug. 19, 1993, as amended at 59 FR 22735, May 3, 1994; 59 
FR 44627, Aug. 30, 1994; 59 FR 61262, Nov. 30, 1994; 66 FR 13010, Mar. 
2, 2001]



Sec. 575.14  Subsidiary holding companies.

    (a) Subsidiary holding companies. A mutual holding company may 
establish a subsidiary holding company as a direct subsidiary to hold 
100% of the stock of its savings association subsidiary. The formation 
and operation of the subsidiary holding company may not be utilized as a 
means to evade or frustrate the purposes of this part 575 or part 563b 
of this chapter. The subsidiary holding company may be established 
either at the time of the initial mutual holding company reorganization 
or at a subsequent date, subject to the approval of the OTS.
    (b) Stock issuances. For purposes of Secs. 575.7 and 575.8, the 
subsidiary holding company shall be treated as a savings association 
issuing stock and shall be subject to the requirements of those 
sections. In the case of a stock issuance by a subsidiary holding 
company, the aggregate amount of outstanding common stock of the 
association owned or controlled by persons other than the subsidiary 
holding company's mutual holding company parent at the close of the 
proposed issuance shall be less than 50% of the subsidiary holding 
company's total outstanding common stock.
    (c) Charters and bylaws for subsidiary holding companies--(1) 
Charters. The charter of a subsidiary holding company shall be in the 
form set forth in this paragraph (c)(1) and may include any of the 
additional provisions permitted pursuant to paragraph (c)(2) of this 
section. The form of the charter is as follows:

             Federal MHC Subsidiary Holding Company Charter

    Section 1. Corporate title. The full corporate title of the MHC 
subsidiary holding company is XXX.
    Section 2. Domicile. The domicile of the MHC subsidiary holding 
company shall be in the city of __________________, in the State of 
____________.
    Section 3. Duration. The duration of the MHC subsidiary holding 
company is perpetual.
    Section 4. Purpose and powers. The purpose of the MHC subsidiary 
holding company is to pursue any or all of the lawful objectives of a 
federal mutual holding company chartered under section 10(o) of the Home 
Owners' Loan Act, 12 U.S.C. 1467a(o), and to

[[Page 444]]

exercise all of the express, implied, and incidental powers conferred 
thereby and by all acts amendatory thereof and supplemental thereto, 
subject to the Constitution and laws of the United States as they are 
now in effect, or as they may hereafter be amended, and subject to all 
lawful and applicable rules, regulations, and orders of the Office of 
Thrift Supervision (``Office'').
    Section 5. Capital stock. The total number of shares of all classes 
of the capital stock that the MHC subsidiary holding company has the 
authority to issue is ____________, all of which shall be common stock 
of par [or if no par is specified then shares shall 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 shall be 
paid in full before their issuance and shall not be less than the par 
[or stated] value. Neither promissory notes nor future services shall 
constitute payment or part payment for the issuance of shares of the MHC 
subsidiary holding company. The consideration for the shares shall be 
cash, tangible or intangible property (to the extent direct investment 
in such property would be permitted to the MHC subsidiary holding 
company), labor, or services actually performed for the MHC subsidiary 
holding company, 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 MHC subsidiary 
holding company, shall be conclusive. Upon payment of such 
consideration, such shares shall be deemed to be fully paid and 
nonassessable. In the case of a stock dividend, that part of the 
retained earnings of the MHC subsidiary holding company that is 
transferred to common stock or paid-in capital accounts upon the 
issuance of shares as a stock dividend shall be deemed to be the 
consideration for their issuance.
    Except for shares issued in the initial organization of the MHC 
subsidiary holding company, no shares of capital stock (including shares 
issuable upon conversion, exchange, or exercise of other securities) 
shall be issued, directly or indirectly, to officers, directors, or 
controlling persons (except for shares issued to the parent mutual 
holding company) of the MHC subsidiary holding company 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 shall exclusively possess all voting 
power. Each holder of shares of common stock shall be 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 shall 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 MHC subsidiary holding company, the holders of the 
common stock shall be entitled, after payment or provision for payment 
of all debts and liabilities of the MHC subsidiary holding company, to 
receive the remaining assets of the MHC subsidiary holding company 
available for distribution, in cash or in kind. Each share of common 
stock shall have the same relative rights as and be identical in all 
respects with all the other shares of common stock.
    Section 6. Preemptive rights. Holders of the capital stock of the 
MHC subsidiary holding company shall not be entitled to preemptive 
rights with respect to any shares of the MHC subsidiary holding company 
which may be issued.
    Section 7. Directors. The MHC subsidiary holding company shall be 
under the direction of a board of directors. The authorized number of 
directors, as stated in the MHC subsidiary holding company's bylaws, 
shall not be fewer than five nor more than fifteen except when a greater 
or lesser number is approved by the Director of the Office, or his or 
her delegate.
    Section 8. Amendment of charter. Except as provided in Section 5, no 
amendment, addition, alteration, change or repeal of this charter shall 
be made, unless such is proposed by the board of directors of the MHC 
subsidiary holding company, approved by the shareholders by a majority 
of the votes eligible to be cast at a legal meeting, unless a higher 
vote is otherwise required, and approved or preapproved by the Office.

Attest:_________________________________________________________________
Secretary of the Subsidiary Holding Company

By:_____________________________________________________________________
President or Chief Executive Officer of the Subsidiary Holding Company

Attest:_________________________________________________________________
Secretary of the Office of Thrift Supervision

By:_____________________________________________________________________
Director of the Office of Thrift Supervision

Effective Date:_________________________________________________________

    (2) Charter amendments. The rules and regulations set forth in 
Sec. 552.4 of this chapter regarding charter amendments and reissuances 
of charters (including delegations and filing instructions) shall be 
applicable to subsidiary holding companies to the same extent as if the 
subsidiary holding companies were

[[Page 445]]

Federal stock savings associations, except that, with respect to the 
pre-approved charter amendments set forth in Sec. 552.4 of this chapter, 
the reference to home office in Sec. 552.4(b)(2) of this chapter shall 
be deemed to refer to the domicile of the subsidiary holding company and 
the requirements of Sec. 545.95 of this chapter shall not apply to 
subsidiary holding companies.
    (3) Bylaws. The rules and regulations set forth in Sec. 552.5 of 
this chapter regarding bylaws (including their content, any amendments 
thereto, delegations, and filing instructions) shall be applicable to 
subsidiary holding companies to the same extent as if subsidiary holding 
companies were federal stock savings associations. The model bylaws for 
Federal stock savings associations set forth in the OTS Applications 
Processing Handbook shall also serve as the model bylaws for subsidiary 
holding companies, except that the term ``association'' each time it 
appears therein shall be replaced with the term ``Subsidiary Holding 
Company.''
    (4) Annual reports and books and records. The rules and regulations 
set forth in Secs. 552.10 and 552.11 of this chapter regarding annual 
reports to stockholders and maintaining books and records shall be 
applicable to subsidiary holding companies to the same extent as if 
subsidiary holding companies were Federal stock savings associations.

[63 FR 11366, Mar. 9, 1998]



PART 583--DEFINITIONS FOR REGULATIONS AFFECTING SAVINGS AND LOAN HOLDING COMPANIES--Table of Contents




Sec.
583.1  Acquire.
583.2  Affiliate.
583.3  Bank.
583.4  Bank holding company.
583.5  BIF.
583.6  Company.
583.7  Control.
583.8  Corporation.
583.9  Director.
583.11  Diversified savings and loan holding company.
583.12  Multiple savings and loan holding company.
583.13  Office.
583.14  Officer.
583.15  Parent company.
583.16  Person.
583.17  Qualified thrift lender.
583.18  Registrant.
583.19  SAIF.
583.20  Savings and loan holding company.
583.21  Savings association.
583.22  State.
583.23  Subsidiary.
583.24  Uninsured institution.

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1468.

    Source: 54 FR 49707, Nov. 30, 1989, unless otherwise noted.



Sec. 583.1  Acquire.

    The term acquire means to acquire, directly or indirectly, ownership 
or control through an acquisition of shares, an acquisition of assets or 
assumption of liabilities, a merger or consolidation, or any similar 
transaction.



Sec. 583.2  Affiliate.

    The term affiliate of a specified savings association means any 
person or company which controls, is controlled by, or is under common 
control with, such savings association.



Sec. 583.3  Bank.

    The term bank means any national bank, state bank, state-chartered 
savings bank, cooperative bank, or industrial bank, the deposits of 
which are insured by the Bank Insurance Fund and also includes any 
institution that converted from a savings association charter to a bank 
charter and whose deposits are insured by the Savings Association 
Insurance Fund.



Sec. 583.4  Bank holding company.

    The term bank holding company means any company which has control 
over any bank or over any company that is or becomes a bank holding 
company.



Sec. 583.5  BIF.

    The term BIF means the Bank Insurance Fund, established by the 
Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.).



Sec. 583.6  Company.

    The term company means any corporation, partnership, trust, joint-

[[Page 446]]

stock company, or similar organization, but does not include:
    (a) The Federal Deposit Insurance Corporation,
    (b) The Resolution Trust Corporation,
    (c) Any Federal Home Loan Bank,
    (d) The Office of Thrift Supervision, or
    (e) Any company the majority of the shares of which is owned by
    (1) The United States or any State,
    (2) An officer of the United States or any State in his or her 
official capacity, or
    (3) An instrumentality of the United States or any State.



Sec. 583.7  Control.

    For purposes of this chapter, a person shall be deemed to have 
control of:
    (a) A savings association if the person directly or indirectly or 
acting in concert with one or more other persons, or through one or more 
subsidiaries, owns, controls, or holds with power to vote, or holds 
proxies representing, more than 25 percent of the voting shares of such 
savings association, or controls in any manner the election of a 
majority of the directors of such association;
    (b) Any other company if the person directly or indirectly or acting 
in concert with one or more other persons, or through one or more 
subsidiaries, owns, controls, or holds with power to vote, or holds 
proxies representing, more than 25 percent of the voting shares or 
rights of such other company, or controls in any manner the election or 
appointment of a majority of the directors or trustees of such other 
company, or is a general partner in or has contributed more than 25 
percent of the capital of such other company;
    (c) A trust if the person is a trustee thereof; or
    (d) A savings association or any other company if the Office 
determines, after reasonable notice and opportunity for hearing, that 
such person directly or indirectly exercises a controlling influence 
over the management or policies of such association or other company.



Sec. 583.8  Corporation.

    The term Corporation means the Federal Deposit Insurance 
Corporation.



Sec. 583.9  Director.

    The term director as used in any document specified in part 584 of 
this chapter means any director of a corporation or any individual who 
performs similar functions in respect of any company, including a 
trustee under a trust.



Sec. 583.11  Diversified savings and loan holding company.

    The term diversified savings and loan holding company means any 
savings and loan holding company whose subsidiary savings association 
and related activities, as specified in 12 U.S.C. 1467a(c)(2), 
represented on either an actual or pro forma basis, less than 50 percent 
of its consolidated net worth at the close of its preceding fiscal year 
and of its consolidated net earnings for such fiscal year. For purposes 
of the foregoing, consolidated net worth and consolidated net earnings 
shall be determined in accordance with generally accepted accounting 
principles.



Sec. 583.12  Multiple savings and loan holding company.

    The term multiple savings and loan holding company means any savings 
and loan holding company which directly or indirectly controls two or 
more savings associations.



Sec. 583.13  Office.

    The term Office means the Office of Thrift Supervision.



Sec. 583.14  Officer.

    The term officer as used in any document specified in part 584 of 
this chapter means the chairman of the board, president, vice president, 
treasurer, secretary, or comptroller of any company, or any other person 
who participates in its major policy decisions.



Sec. 583.15  Parent company.

    The term parent company means any company which directly or 
indirectly controls any other company or companies.

[[Page 447]]



Sec. 583.16  Person.

    The term person means an individual or company.



Sec. 583.17  Qualified thrift lender.

    The term qualified thrift lender means a financial institution that 
meets the appropriate qualified thrift lender test set forth in 12 
U.S.C. 1467a(m).

[54 FR 49707, Nov. 30, 1989, as amended at 60 FR 66870, Dec. 27, 1995]



Sec. 583.18  Registrant.

    The term registrant means a savings and loan holding company filing 
a registration statement with the Office pursuant to Sec. 584.1 of this 
chapter.



Sec. 583.19  SAIF.

    The term SAIF means the Savings Association Insurance Fund, 
established by the Federal Deposit Insurance Act (l2 U.S.C. 1811 et 
seq.).



Sec. 583.20  Savings and loan holding company.

    The term savings and loan holding company means any company that 
directly or indirectly controls a savings association, but does not 
include:
    (a) Any company by virtue of its ownership or control of voting 
stock of a savings association or a savings and loan holding company 
acquired in connection with the underwriting of securities if such stock 
is held only for such period of time (not exceeding 120 days unless 
extended by the Office) as will permit the sale thereof on a reasonable 
basis; and
    (b) Any trust (other than a pension, profit-sharing, stockholders', 
voting or business trust) which directly or indirectly controls a 
savings association if such trust by its terms must terminate within 25 
years or not later than 21 years and 10 months after the death of 
individuals living on the effective date of the trust, and:
    (1) Was in existence and was directly or indirectly in control of a 
savings association on June 26, 1967, or
    (2) Is a testamentary trust; and
    (c) A bank holding company that is registered under, and subject to, 
the Bank Holding Company Act of 1956, or any company directly or 
indirectly controlled by such company (other than a savings 
association).

[54 FR 49707, Nov. 30, 1989, as amended at 61 FR 60185, Nov. 27, 1996]



Sec. 583.21  Savings association.

    The term savings association means a Federal savings and loan 
association or a Federal savings bank chartered under section 5 of the 
Home Owners' Loan Act, a building and loan, savings and loan or 
homestead association or a cooperative bank (other than a cooperative 
bank described in 12 U.S.C. 1813(a)(2)) the deposits of which are 
insured by the Corporation, and any corporation (other than a bank) the 
deposits of which are insured by the Corporation that the Office and the 
Corporation jointly determine to be operating in substantially the same 
manner as a savings association, and shall include any savings bank or 
any cooperative bank which is deemed by the Office to be a savings 
association under 12 U.S.C. 1467a(1).



Sec. 583.22  State.

    The term State includes the District of Columbia and the 
Commonwealth of Puerto Rico.



Sec. 583.23  Subsidiary.

    The term subsidiary means any company which is owned or controlled 
directly or indirectly by a person, and includes any service corporation 
owned in whole or in part by a savings association, or a subsidiary of 
such service corporation.



Sec. 583.24  Uninsured institution.

    The term uninsured institution means any depository institution the 
deposits of which are not insured by the Corporation.



PART 584--REGULATED ACTIVITIES--Table of Contents




Sec.
584.1  Registration, examination and reports.
584.2  Prohibited activities.
584.2a  Exempt savings and loan holding companies and grandfathered 
          activities.
584.2-1  Prescribed services and activities of savings and loan holding 
          companies.

[[Page 448]]

584.2-2  Permissible bank holding company activities of savings and loan 
          holding companies.
584.4  Prohibited acquisitions.
584.9  Prohibited acts.

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1468.

    Source: 54 FR 49708, Nov. 30, 1989, unless otherwise noted.



Sec. 584.1  Registration, examination and reports.

    (a) Filing of registration statement and other reports--(1) Filing 
of registration statement. Not later than 90 days after becoming a 
savings and loan holding company, each savings and loan holding company 
shall register with the OTS by filing a registration statement H-(b)10.
    (2) Filing of annual/current reports. Each registered savings and 
loan holding company, including subsidiary savings and loan holding 
companies, shall file an annual/current report H-(b)11, except that such 
report need not be filed by a savings and loan holding company that is a 
trust (other than a business trust), secured creditor, or corporate 
trustee. The H-(b)11 report must be filed no later than 90 days after 
the close of the fiscal year. Quarterly filings must also be submitted 
on the H-(b)11 report within 45 days of the end of each quarter (except 
for the fourth quarter of the holding company's fiscal year) and should 
describe any material changes from the most recently filed H-(b)11 
report or should indicate that no such changes have occurred. However, 
if material changes have occurred during the fourth quarter with respect 
to certain items described in the form instructions, an H-(b)11 report 
for such quarter must be filed within 45 days of the end of such 
quarter.
    (3) General. Registration statements and annual/current reports are 
to be filed with the OTS in accordance with the instructions contained 
in each form. In addition, multiple savings and loan holding companies 
must file conformed copies with any area office that has supervisory 
authority over a subsidiary savings association. Copies of the forms to 
be used in submitting registration statements or annual/current reports 
may be obtained from any Regional Director, or designee.
    (b) Date of registration. The date of registration of a savings and 
loan holding company shall be the date on which its registration 
statement is received by the Regional Director.
    (c) Extension of time for registration. For timely and good cause 
shown, the Office may extend the time within which a savings and loan 
holding company shall register.
    (d) Release from registration. The Office may at any time, upon its 
own motion or upon application, release a registered savings and loan 
holding company from any registration theretofore made by such company, 
if the Office shall determine that such company no longer has control of 
any savings association.
    (e) Reports. Each savings and loan holding company and each 
subsidiary thereof, other than a savings association, shall file with 
the OTS such reports as may be required by the OTS. Such reports shall 
be made under oath or otherwise, and shall be in such form and for such 
periods, as the OTS may prescribe. Each report shall contain information 
concerning the operations of such savings and loan holding company and 
its subsidiaries as the OTS may require.
    (f) Books and records. Each savings and loan holding company shall 
maintain such books and records as may be prescribed by the Office.
    (g) Examinations. Each savings and loan holding company and each 
subsidiary thereof shall be subject to such examinations as the Office 
may prescribe. The cost of such examinations (other than examinations of 
savings associations) shall be assessed against and paid by such holding 
company. Examination and other reports may be furnished by the Office to 
the appropriate State supervisory authority. The Office shall, to the 
extent deemed feasible, use for the purposes of this section reports 
filed with or examinations made by other Federal agencies or the 
appropriate State supervisory authority.
    (h) Appointment of agent. The Office may require any savings and 
loan holding company, or persons connected therewith if it is not a 
corporation, to

[[Page 449]]

execute and file a prescribed form of irrevocable appointment of agent 
for service of process.

[54 FR 49708, Nov. 30, 1989, as amended at 55 FR 13517, Apr. 11, 1990; 
57 FR 35458, Aug. 10, 1992; 60 FR 66720, Dec. 26, 1995]



Sec. 584.2  Prohibited activities.

    (a) Evasion of law or regulation. No savings and loan holding 
company or subsidiary thereof which is not a savings association shall, 
for or on behalf of a subsidiary savings association, engage in any 
activity or render any services for the purpose or with the effect of 
evading any law or regulation applicable to such savings association.
    (b) Unrelated business activity. No savings and loan holding company 
or subsidiary thereof that is not a savings association shall commence 
any business activity at any time, or continue any business activity 
after the end of the two-year period beginning on the date on which such 
company received approval to become a savings and loan holding company 
that is subject to the limitations of this paragraph (b), except (in 
either case) the following:
    (1) Furnishing or performing management services for a savings 
association subsidiary of such company;
    (2) Conducting an insurance agency or an escrow business;
    (3) Holding, managing, or liquidating assets owned by or acquired 
from a subsidiary savings association of such company;
    (4) Holding or managing properties used or occupied by a subsidiary 
savings association of such company;
    (5) Acting as trustee under deed of trust;
    (6) Any other activity: (i) That the Board of Governors of the 
Federal Reserve System has permitted for bank holding companies pursuant 
to 12 CFR 225.24 or 225.28, unless the Office, by regulation, prohibits 
or limits any such activity for savings and loan holding companies; or
    (ii) Is set forth in Sec. 584.2-1 of this part, subject to the 
limitations therein; or
    (7) In the case of a savings and loan holding company, purchasing, 
holding, or disposing of stock acquired in connection with a qualified 
stock issuance if prior approval for the acquisition of such stock by 
such savings and loan holding company is granted by the Office pursuant 
to Sec. 574.8 of this chapter.

Notwithstanding the provisions of this paragraph (b), any savings and 
loan holding company that, between March 5, 1987 and August 10, 1987, 
received approval pursuant to 12 U.S.C. 1730a(e), as then in effect, to 
acquire control of a savings association shall not continue any business 
activity other than those activities set forth in this paragraph (b) 
after August 10, 1987.
    (c) Treatment of certain holding companies. If a director or officer 
of a savings and loan holding company, or an individual who owns, 
controls, or holds with the power to vote (or proxies representing) more 
than 25 percent of the voting shares of a savings and loan holding 
company, directly or indirectly controls more than one savings 
association, any savings and loan holding company controlled by such 
individual shall be subject to the activities limitations contained in 
paragraph (b) of this section, to the same extent such limitations apply 
to multiple savings and loan holding companies pursuant to Secs. 584.2, 
584.2a, 584.2-1 and 584.2-2 of this part.

[54 FR 49708, Nov. 30, 1989, as amended at 63 FR 71213, Dec. 24, 1998]



Sec. 584.2a  Exempt savings and loan holding companies and grandfathered activities.

    (a) Exempt savings and loan holding companies. (1) The following 
savings and loan holding companies are exempt from the limitations of 
Sec. 584.2(b) of this part:
    (i) Any savings and loan holding company (or subsidiary of such 
company) that controls only one savings association, if the savings 
association subsidiary of such company is a qualified thrift lender as 
defined in Sec. 583.17 of this chapter.
    (ii) Any savings and loan holding company (or subsidiary thereof) 
that controls more than one savings association if all, or all but one 
of the savings association subsidiaries of such company were acquired 
pursuant to an acquisition under section 13(c) or 13(k) of the Federal 
Deposit Insurance Act, or section 408(m) of the National Housing Act, as 
in effect immediately prior

[[Page 450]]

to the date of enactment of the Financial Institutions Reform, Recovery 
and Enforcement Act of 1989, and all of the savings association 
subsidiaries of such company are qualified thrift lenders as defined in 
Sec. 583.17 of this chapter.
    (2) Any savings and loan holding company whose subsidiary savings 
association(s) fails to qualify as a qualified thrift lender pursuant to 
12 U.S.C. 1467a(m) may not commence, or continue, any service or 
activity other than those permitted under Sec. 584.2(b) of this part, 
except that, the Office may allow, for good cause shown, such company 
(or subsidiary of such company which is not a savings association) up to 
3 years to comply with the limitations set forth in Sec. 584.2(b) of 
this part: Provided, That effective August 9, 1990, any company that 
controls a savings association that should have become or ceases to be a 
qualified thrift lender, except a savings association that requalifed as 
a qualified thrift lender pursuant to section 10(m)(3)(D) of the Home 
Owners' Loan Act, shall within one year after the date on which the 
savings association fails to qualify as a qualified thrift lender, 
register as and be deemed to be a bank holding company, subject to all 
of the provisions of the Bank Holding Company Act, section 8 of the 
Federal Deposit Insurance Act, and other statutes applicable to bank 
holding companies in the same manner and to the same extent as if the 
company were a bank holding company and the savings association were a 
bank, as those terms are defined in the Bank Holding Company Act.
    (b) Grandfathered activities for certain savings and loan holding 
companies. Notwithstanding Sec. 584.2(b) of this part and subject to 
paragraph (c) of this section, any savings and loan holding company that 
received approval prior to March 5, 1987 to acquire control of a savings 
association may engage, directly or indirectly or through any subsidiary 
(other than a subsidiary savings association of such ccmpany) in any 
activity in which it was lawfully engaged on March 5, 1987, Provided, 
That:
    (1) The holding company does not, after August 10, 1987, acquire 
control of a bank or an additional savings association, other than a 
savings association acquired pursuant to section 13(c) or 13(k) of the 
Federal Deposit Insurance Act, or section 406(f) or 408(m) of the 
National Housing Act, as in effect immediately prior to the date of 
enactment of the Financial Institutions Reform, Recovery and Enforcement 
Act of 1989;
    (2) Any savings association subsidiary of the holding company 
continues to qualify as a domestic building and loan association under 
section 7701(a)(19) of the Internal Revenue Code of 1986 after August 
10, 1987;
    (3) The holding company does not engage in any business activity 
other than those permitted under Sec. 584.2(b) of this part or in which 
it was engaged on March 5, 1987;
    (4) Any savings association subsidiary of the holding company does 
not increase the number of locations from which such savings association 
conducts business after March 5, 1987, other than an increase due to a 
transaction under section 13(c) or 13(k) of the Federal Deposit 
Insurance Act, or under section 408(m) of the National Housing Act, as 
in effect immediately prior to the date of enactment of the Financial 
Institutions Reform, Recovery and Enforcement Act of 1989; and
    (5) Any savings association subsidiary of the holding company does 
not permit any overdraft (including an intra-day overdraft) or incur any 
such overdraft in its account at a Federal Reserve bank, on behalf of an 
affiliate, unless such overdraft results from an inadvertent computer or 
accounting error that is beyond the control of both the savings 
association subsidiary and the affiliate.
    (c) Termination by the Office of grandfathered activities. 
Notwithstanding the provisions of paragraph (b) of this section, the 
Office may, after opportunity for hearing, terminate any activity 
engaged in under paragraph (b) of this section upon determination that 
such action is necessary:
    (1) To prevent conflicts of interest;
    (2) To prevent unsafe or unsound practices; or
    (3) To protect the public interest.
    (d) Foreign holding company. Any savings and loan holding company 
organized under the laws of a foreign country as of June l, 1984 
(including any subsidiary thereof that is not a savings

[[Page 451]]

association) that controlled a single savings association on August 10, 
1987, shall not be subject to the restrictions set forth in 
Sec. 584.2(b) of this part with respect to any activities of such 
holding company that are conducted exclusively in a foreign country.

[54 FR 49708, Nov. 30, 1989, as amended at 60 FR 66870, Dec. 27, 1995; 
61 FR 60185, Nov. 27, 1996]



Sec. 584.2-1  Prescribed services and activities of savings and loan holding companies.

    (a) General. For the purpose of Sec. 584.2(b)(6)(ii) of this part, 
the activities set forth in paragraph (b) of this section are, and were 
as of March 5, 1987, permissible services and activities for savings and 
loan holding companies or subsidiaries thereof that are neither savings 
associations nor service corporation subsidiaries of subsidiary savings 
associations. Services and activities of service corporation 
subsidiaries of savings and loan holding company subsidiary savings 
associations are prescribed by paragraph (d) of this section.
    (b) Prescribed services and activities. Subject to the provisions of 
paragraph (c) of this section, a savings and loan holding company 
subject to restrictions on its activities pursuant to Sec. 584.2(b) of 
this part, or a subsidiary thereof which is neither a savings 
association nor a service corporation of a subsidiary savings 
association, may furnish or perform the following services and engage in 
the following activities to the extent that it has legal power to do so:
    (1) Originating, purchasing, selling and servicing any of the 
following:
    (i) Loans, and participation interests in loans, on a prudent basis 
and secured by real estate, including brokerage and warehousing of such 
real estate loans, except that such a company or subsidiary shall not 
invest in a loan secured by real estate as to which a subsidiary savings 
association of such company has a security interest;
    (ii) Manufactured home chattel paper (written evidence of both a 
monetary obligation and a security interest of first priority in one or 
more manufactured homes, and any equipment installed or to be installed 
therein), including brokerage and warehousing of such chattel paper;
    (iii) Loans, with or without security, for the altering, repairing, 
improving, equipping or furnishing of any residential real estate;
    (iv) Educational loans; and
    (v) Consumer loans, as defined in Sec. 560.3 of this chapter, 
Provided, That, no subsidiary savings association of such holding 
company or service corporation of such savings association shall engage 
directly or indirectly, in any transaction with any affiliate involving 
the purchase or sale, in whole or in part, of any consumer loan.
    (2) Subject to the provisions of 12 U.S.C. 1468, furnishing or 
performing clerical accounting and internal audit services primarily for 
its affiliates;
    (3) Subject to the provisions of 12 U.S.C. 1468, furnishing or 
performing the following services primarily for its affiliates, and for 
any savings association and service corporation subsidiary thereof, and 
for other multiple holding companies and affiliates thereof:
    (i) Data processing;
    (ii) Credit information, appraisals, construction loan inspections, 
and abstracting;
    (iii) Development and administration of personnel benefit programs, 
including life insurance, health insurance, and pension or retirement 
plans;
    (iv) Research, studies, and surveys;
    (v) Purchase of office supplies, furniture and equipment;
    (vi) Development and operation of storage facilities for microfilm 
or other duplicate records; and
    (vii) Advertising and other services to procure and retain both 
savings accounts and loans;
    (4) Acquisition of unimproved real estate lots, and acquisition of 
other unimproved real estate for the purpose of prompt development and 
subdivision, for:
    (i) Construction of improvements,
    (ii) Resale to others for such construction, or
    (iii) Use as mobile home sites;
    (5) Development, subdivision and construction of improvements on 
real estate acquired pursuant to paragraph (b)(4) of this section, for 
sale or rental;

[[Page 452]]

    (6) Acquisition of improved real estate and mobile homes to be held 
for rental;
    (7) Acquisition of improved real estate for remodeling, 
rehabilitation, modernization, renovation, or demolition and rebuilding 
for sale or for rental;
    (8) Maintenance and management of improved real estate;
    (9) Underwriting or reinsuring contract of credit life or credit 
health and accident insurance in connection with extensions of credit by 
the savings and loan holding company or any of its subsidiaries, or 
extensions of credit by any savings association or service corporation 
subsidiary thereof, or any other savings and loan holding company or 
subsidiary thereof;
    (10) Preparation of State and Federal tax returns for accountholders 
of or borrowers from (including immediate family members of such 
accountholders or borrowers but not including an accountholder or 
borrower which is a corporation operated for profit) an affiliated 
savings association;
    (11) Purchase and sale of gold coins minted and issued by the United 
States Treasury pursuant to Pub. L. 99-185, 99 Stat. 1177 (1985), and 
activities reasonably incident thereto; and
    (12) Any services or activities approved by order of the former 
Federal Savings and Loan Insurance Corporation prior to March 5, 1987, 
pursuant to its authority under section 408(c)(2)(F) of the National 
Housing Act, as in effect at the time.
    (c) Procedures for commencing services or activities. (1) Before a 
savings and loan holding company subject to restrictions on its 
activities pursuant to Sec. 584.2(b) of this part or a subsidiary 
thereof may commence performing or engaging in a service or activity 
prescribed by paragraph (b) of this section (other than purchase or sale 
of a government debt security), either de novo or by an acquisition of a 
going concern, it shall file a notice of intent to do so in a form 
prescribed by the OTS. The activity or service may be commenced unless, 
before the close of the period specified immediately below, the OTS 
finds that the activity or service proposed would not be, under the 
circumstances, a proper incident to the operations of savings 
associations or would be detrimental to the interests of savings account 
holders. The period for review shall be 30 calendar days after the date 
of receipt of such notice, in the case of a de novo entry, or 60 
calendar days, in the case of an acquisition of a going concern.
    (2) The Office may require a savings and loan holding company or 
subsidiary thereof which has commenced a service or activity pursuant to 
this section to modify or terminate, in whole or in part, such service 
or activity as the Office finds necessary in order to ensure compliance 
with the provisions and purposes of this part and of section 10 of the 
Home Owners' Loan Act, as amended, or to prevent evasions thereof.
    (3) Except as may be otherwise provided in a resolution by or on 
behalf of the Office in a particular case, a service or activity 
commenced pursuant to this section shall not be altered in any material 
respect from that described in the notice filed under paragraph (c)(1) 
of this section, unless before making such alteration notice of intent 
to do so is filed in compliance with the appropriate procedures of said 
paragraph (c)(1) of this section.
    (d) Service corporation subsidiaries of savings associations. The 
Office hereby approves without application the furnishing or performing 
of such services or engaging in such activities as permitted by the 
Office pursuant to 12 CFR 545.74, as in effect on March 5, 1987, if such 
service or activity is conducted by a service corporation subsidiary of 
a subsidiary savings association of a savings and loan holding company 
and if such service corporation has legal power to do so.

[54 FR 49708, Nov. 30, 1989, as amended at 55 FR 13518, Apr. 11, 1990; 
57 FR 14349, Apr. 20, 1992; 60 FR 66870, Dec. 27, 1995; 63 FR 71213, 
Dec. 24, 1998; 66 FR 15017, Mar. 15, 2001]



Sec. 584.2-2  Permissible bank holding company activities of savings and loan holding companies.

    (a) General. For purposes of Sec. 584.2(b)(6)(i) of this part, the 
services and activities permissible for bank holding companies pursuant 
to 12 CFR

[[Page 453]]

225.24 or 225.28 are permissible for savings and loan holding companies, 
or subsidiaries thereof that are neither savings associations nor 
service corporation subsidiaries of subsidiary savings associations: 
Provided, That no such savings and loan holding company or subsidiary 
thereof shall commence, either de novo or by an acquisition (in whole or 
in part) of a going concern, any activity described in this paragraph 
(a) without the prior approval of the Office pursuant to paragraph (b) 
of this section. Where an activity is within the scope of both 
Sec. 584.2-1 of this part and this section, the procedures of 
Sec. 584.2-1 of this part shall govern.
    (b) Procedures for applications. Applications to commence any 
activity prescribed under paragraph (a) of this section shall be filed 
with the OTS. OTS must act upon such application under the guidelines in 
part 516, subpart E of this chapter.
    (c) Factors considered in acting on applications. In evaluating an 
application filed under paragraph (b) of this section, the OTS shall 
consider whether the performance by the applicant of the activity can 
reasonably be expected to produce benefits to the public (such as 
greater convenience, increased competition, or gains in efficiency) that 
outweigh possible adverse effects (such as undue concentration of 
resources, decreased or unfair competition, conflicts of interest, or 
unsound financial practices). This consideration includes an evaluation 
of the financial and managerial resources of the applicant, including 
its subsidiaries, and of any company to be acquired, and the effect of 
the proposed transaction on those resources.

[54 FR 49708, Nov. 30, 1989, as amended at 55 FR 13518, Apr. 11, 1990; 
57 FR 14349, Apr. 20, 1992; 60 FR 66720, Dec. 26, 1995; 63 FR 71213, 
Dec. 24, 1998; 66 FR 13010, Mar. 2, 2001]



Sec. 584.4  Prohibited acquisitions.

    No savings and loan holding company, directly or indirectly, or 
through one or more subsidiaries or through one or more transactions, 
shall:
    (a) Acquire by purchase or otherwise, or retain, more than five 
percent of the voting stock or shares of a savings association not a 
subsidiary, or of a savings and loan holding company not a subsidiary, 
nor, in the case of a multiple savings and loan holding company (other 
than a multiple savings and loan holding company described in 
Sec. 584.2a(a)(ii) of this chapter), acquire or retain more than five 
percent of the voting shares of any company not a subsidiary that is 
engaged in any business activity other than those specified in 
Sec. 584.2(b) of this part: Provided, That this paragraph (a) shall not 
apply to voting shares of a savings association or of a savings and loan 
holding company--
    (1) Held as a bona fide fiduciary (whether with or without the sole 
discretion to vote such shares);
    (2) Held temporarily pursuant to an underwriting commitment in the 
normal course of an underwriting business;
    (3) Held in an account solely for trading purposes or over which no 
control is held other than control of voting rights acquired in the 
normal course of a proxy solicitation;
    (4) Acquired in securing or collecting a debt previously contracted 
in good faith, for two years after the date of acquisition or for such 
additional time (not exceeding 3 years) as the Office may permit if, in 
the Office's judgment, such an extension would not be detrimental to the 
public interest;
    (5) Acquired under section 13(k)(1)(A)(i) of the Federal Deposit 
Insurance Act (or section 408(m) of the National Housing Act as in 
effect immediately prior to the enactment of the Financial Institutions 
Reform, Recovery and Enforcement Act of 1989);
    (6) Held by any insurance companies as defined in section 2(a)(17) 
of the Investment Company Act of 1940: Provided, That all shares held by 
all insurance company affiliates of such savings association or savings 
and loan holding company may not in the aggregate exceed five percent of 
all outstanding shares or of the voting power of the savings association 
or savings and loan holding company, and such shares are not acquired or 
retained with a view to acquiring, exercising, or transferring control 
of the savings association or savings and loan holding company; and
    (7) Shares acquired pursuant to a qualified stock issuance if such a 
purchase is approved pursuant to Sec. 574.8 of

[[Page 454]]

this chapter; Provided, That the aggregate amount of shares held under 
this paragraph (a), (other than pursuant to paragraphs (a)(1), (a)(2), 
(a)(3), (a)(4), and (a)(6)) may not exceed 15 percent of all outstanding 
shares or the voting power of a savings association or savings and loan 
holding company.
    (b) Acquire control of an uninsured institution or retain, for more 
than one year after the date any savings association subsidiary becomes 
uninsured, control of such association.



Sec. 584.9  Prohibited acts.

    (a) Control of mutual savings association. No savings and loan 
holding company or any subsidiary thereof, or any director, officer, or 
employee of a savings and loan holding company or subsidiary thereof, or 
person owning, controlling, or holding with power to vote, or holding 
proxies representing, more than 25 percent of the voting shares of such 
holding company or subsidiary, may hold, solicit, or exercise any 
proxies in respect of any voting rights in a mutual savings association.
    (b) Management interlocks. No director or officer of a savings and 
loan holding company, or any person owning, controlling, or holding with 
power to vote, or holding proxies representing more than 25 percent of 
the voting shares of such holding company may acquire control of any 
savings association not a subsidiary of such savings and loan holding 
company, unless such acquisition is approved by the Office pursuant to 
Sec. 574.3(a) of this chapter.
    (c) Convicted persons. No individual who has been convicted of any 
criminal offense involving dishonesty or breach of trust may serve or 
act as a director, officer, or trustee of, or become a partner in, any 
savings and loan holding company, except with the prior written approval 
of the Office.
    (d) Applications for approval. Applications for an approval under 
paragraph (c) of this section shall contain a full statement of the 
reasons in support thereof. Such applications shall be filed with the 
OTS.

[54 FR 49708, Nov. 30, 1989, as amended at 57 FR 14349, Apr. 20, 1992]



PART 590--PREEMPTION OF STATE USURY LAWS--Table of Contents




Sec.
590.1  Authority, purpose, and scope.
590.2  Definitions.
590.3  Operation.
590.4  Consumer protection rules for federally-related loans, mortgages, 
          credit sales and advances secured by first liens on 
          residential mobile homes.
590.100  Status of Interpretations issued under Public Law 96-161.
590.101  State criminal usury statutes.

    Authority: 12 U.S.C. 1735f-7a.

    Source: 54 FR 49715, Nov. 30, 1989, unless otherwise noted.



Sec. 590.1  Authority, purpose, and scope.

    (a) Authority. This part contains regulations issued under section 
501 of the Depository Institutions Deregulation and Monetary Control Act 
of 1980, Pub. L. 96-221, 94 Stat. 161.
    (b) Purpose and scope. The purpose of this permanent preemption of 
state interest-rate ceilings applicable to Federally-related residential 
mortgage loans is to ensure that the availability of such loans is not 
impeded in states having restrictive interest limitations. This part 
applies to loans, mortages, credit sales, and advances, secured by first 
liens on residential real property, stock in residential cooperative 
housing corporations, or residential manufactured homes as defined in 
Sec. 590.2 of this part.



Sec. 590.2  Definitions.

    For the purposes of this part, the following definitions apply:
    (a) Loans mean any loans, mortgages, credit sales, or advances.
    (b) Federally-related loans include any loan:
    (1) Made by any lender whose deposits or accounts are insured by any 
agency of the Federal government;
    (2) Made by any lender regulated by any agency of the Federal 
government;
    (3) Made by any lender approved by the Secretary of Housing and 
Urban Development for participation in any mortgage insurance program 
under the National Housing Act;

[[Page 455]]

    (4) Made in whole or in part by the Secretary of Housing and Urban 
Development; insured, guaranteed, supplemented, or assisted in any way 
by the Secretary or any officer or agency of the Federal government, or 
made under or in connection with a housing or urban development program 
administered by the Secretary, or a housing or related program 
administered by any other such officer or agency;
    (5) Eligible for purchase by the Federal National Mortgage 
Association, the Government National Mortgage Association, or the 
Federal Home Loan Mortgage Corporation, or made by any financial 
institution from which the loan could be purchased by the Federal Home 
Loan Mortgage Corporation; or
    (6) Made in whole or in part by any entity which:
    (i) Regularly extends, or arranges for the extension of, credit 
payable by agreement in more than four installments or for which the 
payment of a finance charge is or may be required; and
    (ii) Makes or invests in residential real property loans, including 
loans secured by first liens on residential manufactured homes that 
aggregate more than $1,000,000 per year; except that the latter 
requirement shall not apply to such an entity selling residential 
manufactured homes and providing financing for such sales through loans 
or credit sales secured by first liens on residential manufactured 
homes, if the entity has an arrangement to sell such loans or credit 
sales in whole or in part, or where such loans or credit sales are sold 
in whole or in part, to a lender or other institution otherwise included 
in this section.
    (c) Loans which are secured by first liens on real estate means 
loans on the security of any instrument (whether a mortgage, deed of 
trust, or land contract) which makes the interest in real estate 
(whether in fee, or in a leasehold or subleasehold extending, or 
renewable, automatically or at the option of the holder or the lender, 
for a period of at least 5 years beyond the maturity of the loan) 
specific security for the payment of the obligation secured by the 
instrument: Provided, That the instrument is of such a nature that, in 
the event of default, the real estate described in the instrument could 
be subjected to the satisfaction of the obligation with the same 
priority as a first mortgage of a first deed of trust in the 
jurisdiction where the real estate is located.
    (d) Loans secured by first liens on stock in a residential 
cooperative housing corporation means loans on the security of:
    (1) A first security interest in stock or a membership certificate 
issued to a tenant stockholder or resident member by a cooperative 
housing organization; and
    (2) An assignment of the borrower's interest in the proprietary 
lease or occupancy agreement issued by such organization.
    (e) Loans secured by first liens on residential manufactured homes 
means a loan made pursuant to an agreement by which the party extending 
the credit acquires a security interest in the residential manufactured 
home which will have priority over any conflicting security interest.
    (f) Residential real property means real estate improved or to be 
improved by a structure or structures designed primarily for dwelling, 
as opposed to commercial use.
    (g) Residential manufactured home shall mean a manufactured home as 
defined in the National Manufactured Home Construction and Safety 
Standards Act, 42 U.S.C. 5402(6), which is or will be used as a 
residence.
    (h) State means the several states, Puerto Rico, the District of 
Columbia, Guam, the Trust Territories of the Pacific Islands, the 
Northern Mariana Islands, and the Virgin Islands, except as provided in 
section 501(a)(2)(B) of the Depository Institutions Deregulation and 
Monetary Control Act of 1980, Pub. L. 96-221, 94 Stat. 161.



Sec. 590.3  Operation.

    (a) The provisions of the constitution or law of any state expressly 
limiting the rate or amount of interest, discount points, finance 
charges, or other charges which may be charged, taken, received, or 
reserved shall not apply to any Federally-related loan:
    (1) Made after March 31, 1980; and
    (2) Secured by a first lien on:
    (i) Residential real property;

[[Page 456]]

    (ii) Stock in a residential cooperative housing corporation when the 
loan is used to finance the acquisition of such stock; or
    (iii) A residential manufactured home: Provided, That the loan so 
secured contains the consumer safeguards required by Sec. 590.4 of this 
part;
    (b) The provisions of paragraph (a) of this section shall apply to 
loans made in any state on or before the date (after April 1, 1980 and 
prior to April l, 1983) on which the state adopts a law or certifies 
that the voters of such state have voted in favor of any law, 
constitutional or otherwise, which states explicitly and by its terms 
that such state does not want the provisions of paragraph (a) of this 
section to apply with respect to loans made in such state, except that--
    (1) The provisions of paragraph (a) of this section shall apply to 
any loan which is made after such date pursuant to a commitment 
therefore which was entered into during the period beginning on April 1, 
1980, and ending on the date the state takes such action;
    (2) The provisions of paragraph (a) of this section shall apply to 
any rollover of a loan which loan was made, or committed to be made, 
during the period beginning on April 1, 1980, and ending on the date the 
state takes such action, if the mortgage document or loan note provided 
that the interest rate to the original borrower could be changed through 
the use of such a rollover; and
    (3) At any time after the date of adoption of these regulations, any 
state may adopt a provision of law placing limitations on discount 
points or such other charges on any loan described in this part.
    (c) Nothing in this section preempts limitations in state laws on 
prepayment charges, attorneys' fees, late charges or other provisions 
designed to protect borrowers.

[54 FR 49715, Nov. 30, 1989, as amended at 66 FR 65822, Dec. 21, 2001]



Sec. 590.4  Consumer protection rules for federally-related loans, mortgages, credit sales and advances secured by first liens on residential mobile homes.

    (a) Definitions. As used in this section:
    (1) Prepayment. A ``prepayment'' occurs upon--
    (i) Refinancing or consolidation of the indebtedness;
    (ii) Actual prepayment of the indebtedness by the debtor, whether 
voluntarily or following acceleration of the payment obligation by the 
creditor; or
    (iii) The entry of a judgment for the indebtedness in favor of the 
creditor.
    (2) Actuarial method. The term actuarial method means the method of 
allocating payments made on a debt between the outstanding balance of 
the obligation and the finance charge pursuant to which a payment is 
applied first to the accumulated finance charge and any remainder is 
subtracted from, or any deficiency is added to, the outstanding balance 
of the obligation.
    (3) Precomputed Finance Charge. The term precomputed finance charge 
means interest or a time/price differential as computed by the add-on or 
discount method. Precomputed finance charges do not include loan fees, 
points, finder's fees, or similar charges.
    (4) Creditor. The term creditor means any entity covered by this 
part, including those which regularly extend or arrange for the 
extension of credit and assignees that are creditors under section 
501(a)(1)(C)(v) of the Depository Institutions Deregulation and Monetary 
Control Act of 1980.
    (b) General. (1) The provisions of the constitution or the laws of 
any state expressly limiting the rate or amount of interest, discount 
points, finance charges, or other charges which may be charged, taken, 
received, or reserved shall not apply to any loan, mortgage, credit 
sale, or advance which is secured by a first lien on a residential 
mobile home if a creditor covered by this part complies with the 
consumer protection regulations of this section.
    (2) Relation to state law. (i) In making loans or credit sales 
subject to this section, creditors shall comply with state and Federal 
law in accordance with the following:
    (A) State law regulating matters not covered by this section. When 
state law regulating matters not covered by this section is otherwise 
applicable to a loan or credit sale subject to this section, creditors 
shall comply with such state law provisions.

[[Page 457]]

    (B) State law regulating matters covered by this section. Creditors 
need comply only with the provisions of this section, unless the Office 
determines that an otherwise applicable state law regulating matters 
covered by this section provides greater protection to consumers. Such 
determinations shall be published in the Federal Register and shall 
operate prospectively.
    (ii) Any interested party may petition the Office for a 
determination that state law requirements are more protective of 
consumers than the provisions of this section. Petitions shall be sent 
to: Secretary to the Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC 20552, and shall include:
    (A) A copy of the state law to be considered;
    (B) Copies of any relevant judicial, regulatory, or administrative 
interpretations of the state law; and
    (C) An opinion or memorandum from the state Attorney General or 
other appropriate state official having primary enforcement 
responsibilities for the subject state law provision, indicating how the 
state law to be considered offers greater protection to consumers than 
the Office's regulation.
    (c) Refund of precomputed finance charge. In the event the entire 
indebtedness is prepaid, the unearned portion of the precomputed finance 
charge shall be refunded to the debtor. This refund shall be in an 
amount not less than the amount which would be refunded if the unearned 
precomputed finance charge were calculated in accordance with the 
actuarial method, except that the debtor shall not be entitled to a 
refund which, is less than one dollar. The unearned portion of the 
precomputed finance charge is, at the option of the creditor, either:
    (1) That portion of the precomputed finance charge which is 
allocable to all unexpired payment periods as originally scheduled, or 
if deferred, as deferred. A payment period shall be deemed unexpired if 
prepayment is made within 15 days after the payment period's scheduled 
due date. The unearned precomputed finance charge is the total of that 
which would have been earned for each such period had the loan not been 
precomputed, by applying to unpaid balances of principal, according to 
the actuarial method, an annual percentage rate based on those charges 
which are considered precomputed finance charges in this section, 
assuming that all payments were made as originally scheduled, or as 
deferred, if deferred. The creditor, at its option, may round this 
annual percentage rate to the nearest one-quarter of one percent; or
    (2) The total precomputed finance charge less the earned precomputed 
finance charge. The earned precomputed finance charge shall be 
determined by applying an annual percentage rate based on the total 
precomputed finance charge (as that term is defined in this section), 
under the actuarial method, to the unpaid balances for the actual time 
those balances were unpaid up to the date of prepayment. If a late 
charge or deferral fee has been collected, it shall be treated as a 
payment.
    (d) Prepayment penalties. A debtor may prepay in full or in part the 
unpaid balance of the loan at any time without penalty. The right to 
prepay shall be disclosed in the loan contract in type larger than that 
used for the body of the document.
    (e) Balloon payments--(1) Federal savings associations. Federal 
savings association creditors may enter into agreements with debtors 
which provide for non-amortized and partially-amortized loans on 
residential manufactured homes, and such loans shall be governed by the 
provisions of this section and Sec. 560.220 of this chapter.
    (2) Other creditors. All other creditors may enter into agreements 
with debtors which provide for non-amortized and partially-amortized 
loans on residential manufactured homes to the extent authorized by 
applicable Federal or state law or regulation.
    (f) Late charges. (1) No late charge may be assessed, imposed, or 
collected unless provided for by written contract between the creditor 
and debtor.
    (2) To the extent that applicable state law does not provide for a 
longer period of time, no late charge may be collected on an installment 
which is paid in full on or before the 15th day after its scheduled or 
deferred due date

[[Page 458]]

even though an earlier maturing installment or a late charge on an 
earlier installment may not have been paid in full. For purposes of 
assessing late charges, payments received are deemed to be applied first 
to current installments.
    (3) A late charge may be imposed only once on an installment; 
however, no such charge may be collected for a late installment which 
has been deferred.
    (4) To the extent that applicable state law does not provide for a 
lower charge or longer grace period, a late charge on any installment 
not paid in full on or before the 15th day after its scheduled or 
deferred due date may not exceed the lesser of $5.00 or five percent of 
the unpaid amount of the installment.
    (5) If, at any time after imposition of a late charge, the lender 
provides the borrower with written notice regarding amounts claimed to 
be due but unpaid, the notice shall separately state the total of all 
late charges claimed.
    (6) Interest after the final scheduled maturity date may not exceed 
the maximum rate otherwise allowable under State law for such contracts, 
and if such interest is charged, no separate late charge may be made on 
the final scheduled installment.
    (g) Deferral fees. (1) With respect to mobile home credit 
transactions containing precomputed finance charges, agreements 
providing for deferral of all or part of one or more installments shall 
be in writing, signed by the parties, and
    (i) Provide, to the extent that applicable state law does not 
provide for a lower charge, for a charge not exceeding one percent of 
each installment or part thereof for each month from the date when such 
installment was due to the date when it is agreed to become payable and 
proportionately for a part of each month, counting each day as 1/30th of 
a month;
    (ii) Incorporate by reference the transaction to which the deferral 
applied;
    (iii) Disclose each installment or part thereof in the amount to be 
deferred, the date or dates originally payable, and the date or dates 
agreed to become payable: and
    (iv) Set forth the fact of the deferral charge, the dollar amount of 
the charge for each installment to be deferred, and the total dollar 
amount to be paid by the debtor for the privilege of deferring payment.
    (2) No term of a writing executed by the debtor shall constitute 
authority for a creditor unilaterally to grant a deferral with respect 
to which a charge is to be imposed or collected.
    (3) The deferral period is that period of time in which no payment 
is required or made by reason of the deferral.
    (4) Payments received with respect to deferred installments shall be 
deemed to be applied first to deferred installments.
    (5) A charge may not be collected for the deferral of an installment 
or any part thereof if, with respect to that installment, a refinancing 
or consolidation agreement is concluded by the parties, or a late charge 
has been imposed or collected, unless such late charge is refunded to 
the borrower or credited to the deferral charge.
    (h) Notice before repossession, foreclosure, or acceleration. (1) 
Except in the case of abandonment or other extreme circumstances, no 
action to repossess or foreclose, or to accelerate payment of the entire 
outstanding balance of the obligation, may be taken against the debtor 
until 30 days after the creditor sends the debtor a notice of default in 
the form set forth in paragraph (h)(2) of this section. Such notice 
shall be sent by registered or certified mail with return receipt 
requested. In the case of default on payments, the sum stated in the 
notice may only include payments in default and applicable late or 
deferral charges. If the debtor cures the default within 30 days of the 
postmark of the notice and subsequently defaults a second time, the 
creditor shall again give notice as described in this paragraph (h)(1). 
The debtor is not entitled to notice of default more than twice in any 
one-year period.
    (2) The notice in the following form shall state the nature of the 
default, the action the debtor must take to cure the default, the 
creditor's intended actions upon failure of the debtor to cure the 
default, and the debtor's right to redeem under state law.

[[Page 459]]

    To:
    Date:       , 19

                Notice of Default and Right to Cure Default

    Name, address, and telephone number of creditor
    Account number, if any
    Brief identification of credit transaction
    You are now in default on this credit transaction. You have a right 
to correct this default within 30 days from the postmarked date of this 
notice.
    If you correct the default, you may continue with the contract as 
though you did not default. Your default consists of:

                         Describe default alleged

    Cure of default: Within 30 days from the postmarked date of this 
notice, you may cure your default by (describe the acts necessary for 
cure, including, if applicable, the amount of payment required, 
including itemized delinquency or deferral charges).
    Creditor's rights: If you do not correct your default in the time 
allowed, we may exercise our rights against you under the law by 
(describe action creditor intends to take).
    If you have any questions, write (the creditor) at the above address 
or call (creditor's designated employee) at (telephone number) between 
the hours of      and      on (state days of week).
    If this default was caused by your failure to make a payment or 
payments, and you want to pay by mail, please send a check or money 
order; do not send cash.

[54 FR 49715, Nov. 30, 1989, as amended at 61 FR 50984, Sept. 30, 1996]



Sec. 590.100  Status of Interpretations issued under Public Law 96-161.

    The Office continues to adhere to the views expressed in the formal 
Interpretations issued under the authority of section 105(c) of Pub. L. 
96-161, 93 Stat. 1233 (l979). These interpretations, which relate to the 
temporary preemption of state interest ceilings contained in Pub. L. 96-
161, may be found at 45 FR 2840 (Jan. 15, 1980); 45 FR 6165 (Jan. 25, 
1980); 45 FR 8000 (Feb. 6, 1980); 45 FR 15921 (Mar. 12, 1980).



Sec. 590.101  State criminal usury statutes.

    (a) Section 501 provides that ``the provisions of the constitution 
or laws of any state expressly limiting the rate or amount of interest, 
discount points, finance charges, or other charges shall not apply to 
any'' federally-related loan secured by a first lien on residential real 
property, a residential manufactured home, or all the stock allocated to 
a dwelling unit in a residential housing cooperative. 12 U.S.C. 1735f-7 
note (Supp. IV 1980). The question has arisen as to whether the federal 
statute preempts a state law which deems it a criminal offense to charge 
interest at a rate in excess of that specified in the state law.
    (b) In the Office's view, section 501 preempts all state laws which 
expressly limit the rate or amount of interest chargeable on a 
federally-related residential first mortgage. It does not matter whether 
the statute in question imposes criminal or civil sanctions; section 
501, by its terms, preempts ``any'' state law which imposes a ceiling on 
interest rates. The wording of the federal statute clearly expresses an 
intent to displace all direct state law restraints on interest. Any 
state law that conflicts with this Congressional purpose must yield.



PART 591--PREEMPTION OF STATE DUE-ON-SALE LAWS--Table of Contents




Sec.
591.1  Authority, purpose, and scope.
591.2  Definitions.
591.3  Loans originated by Federal savings associations.
591.4  Loans originated by lenders other than Federal savings 
          associations.
591.5  Limitations on exercise of due-on-sale clauses.
591.6  Interpretations.

    Authority: Sec. 5, 48 Stat. 132, as amended (12 U.S.C. 1464); sec. 
341, 96 Stat. 1505, as amended (12 U.S.C. 1701j-3).

    Source: 54 FR 49718, Nov. 30, 1989, unless otherwise noted.



Sec. 591.1  Authority, purpose, and scope.

    (a) Authority. This part contains regulations issued under section 5 
of the Home Owners' Loan Act of 1933, as amended, and under section 341 
of the Garn-St Germain Depository Institutions Act of 1982, Pub. L. 97-
320, 96 Stat. 1469, 1505-1507.
    (b) Purpose and scope. The purpose of this permanent preemption of 
state prohibitions on the exercise of due-on-sale clauses by all 
lenders, whether federally- or state-chartered, is to reaffirm the 
authority of Federal savings

[[Page 460]]

associations to enforce due-on-sale clauses, and to confer on other 
lenders generally comparable authority with respect to the exercise of 
such clauses. This part applies to all real property loans, and all 
lenders making such loans, as those terms are defined in Sec. 591.2 of 
this part.



Sec. 591.2  Definitions.

    For the purposes of this part, the following definitions apply:
    (a) Assumed includes transfers of real property subject to a real 
property loan by assumptions, installment land sales contracts, 
wraparound loans, contracts for deed, transfers subject to the mortgage 
or similar lien, and other like transfers.``Completed credit 
application'' has the same meaning as completed application for credit 
as provided in Sec. 202.2(f) of this title.
    (b) Due-on-sale clause means a contract provision which authorizes 
the lender, at its option, to declare immediately due and payable sums 
secured by the lender's security instrument upon a sale of transfer of 
all or any part of the real property securing the loan without the 
lender's prior written consent. For purposes of this definition, a sale 
or transfer means the conveyance of real property of any right, title or 
interest therein, whether legal or equitable, whether voluntary or 
involuntary, by outright sale, deed, installment sale contract, land 
contract, contract for deed, leasehold interest with a term greater than 
three years, lease-option contract or any other method of conveyance of 
real property interests.
    (c) Federal savings association has the same meaning as provided in 
Sec. 541.11 of this chapter.
    (d) Federal credit union means a credit union chartered under the 
Federal Credit Union Act.
    (e) Home has the same meaning as provided in Sec. 541.14 of this 
chapter.
    (f) Savings association has the same meaning as provided in 
Sec. 561.43 of this chapter.
    (g) Lender means a person or government agency making a real 
property loan, including without limitation, individuals, Federal 
savings associations, state-chartered savings associations, national 
banks, state-chartered banks and state-chartered mutual savings banks, 
Federal credit unions, state-chartered credit unions, mortgage banks, 
insurance companies and finance companies which make real property 
loans, manufactured-home retailers who extend credit, agencies of the 
Federal government, any lender approved by the Secretary of Housing and 
Urban Development for participation in any mortgage insurance program 
under the National Housing Act, and any assignee or transferee, in whole 
or part, of any such persons or agencies.
    (h) Loan secured by a lien on real property means a loan on the 
security of any instrument (whether a mortgage, deed or trust, or land 
contract) which makes the interest in real property (whether in fee, or 
in a leasehold or subleasehold) specific security for the payment of the 
obligation secured by the instrument.
    (i) Loan secured by a lien on stock in a residential cooperative 
housing corporation means a loan on the security of:
    (1) A security interest in stock or a membership certificate issued 
to a tenant stockholder or resident member by a cooperative housing 
organization; and
    (2) An assignment of the borrower's interest in the proprietary 
lease or occupancy agreement issued by such organization.
    (j) Loan secured by a lien on a residential manufactured home, 
whether real or personal property, means a loan made pursuant to an 
agreement by which the party extending the credit acquires a security 
interest in the residential manufactured home.
    (k) Loan originated by a Federal savings association or other lender 
means any loan for which the lender makes the first advance of credit 
thereunder, Provided, That such lender then held a beneficial interest 
in the loan, whether as to the whole loan or a portion thereof, and 
whether or not the loan is later held by or transferred to another 
lender.
    (l) Real property loan means any loan, mortgage, advance or credit 
sale secured by a lien on real property, the

[[Page 461]]

stock or membership certificate allocated to a dwelling unit in a 
cooperative housing corporation, or a residential manufactured home, 
whether real or personal property.
    (m) Residential manufactured home has the same meaning as provided 
in Sec. 590.2(g) of this chapter.
    (n) Reverse mortgage means an instrument providing periodic payments 
to homeowners based on accumulated equity, whether the payments are made 
directly by the lender, through purchase of an annuity through an 
insurance company or in any other manner. The loan may be due either 
upon a specific date or when a specified event occurs, such as the sale 
of the property or death of the borrower.
    (o) State means the several states, Puerto Rico, the District of 
Columbia, Guam, the Trust Territory of the Pacific Islands, the Northern 
Mariana Islands, the Virgin Islands, and American Samoa.
    (p)(1) A window-period loan means a real property loan, not 
originated by a Federal savings association, which was made or assumed 
during a window-period created by state law and subject to that law, 
which loan was recorded, at the time of origination or assumption, 
before October 15, 1982, or within 60 days thereafter (December 14, 
1982).
    (2) The window-period begins on: (i) The date a state adopted a law 
(by means of a constitutional provision or statute) prohibiting the 
unrestricted exercise of due-on-sale clauses upon outright transfers of 
property securing loans subject to the state law creating the window-
period, or the effective date of a constitutional or statutory provision 
so adopted, whichever is later; or
    (ii) The date on which the highest court of the state rendered a 
decision prohibiting such unrestricted exercise (or if the highest court 
has not so decided, the date on which the next highest appellate court 
rendered a decision resulting in a final judgment which applies 
statewide), and ends on the earlier of the date such state law 
prohibition terminated under state law or October 15, 1982.
    (3) Categories of state law which create window-periods by 
prohibiting the unrestricted exercise of due-on-sale clauses upon 
outright transfers of property securing loans subject to such state law 
restrictions include laws or judicial decisions which permit the lender 
to exercise its option under a due-on-sale clause only where:
    (i) The lender's security interest or the likelihood of repayment is 
impaired; or
    (ii) The lender is required to accept an assumption of the existing 
loan without an interest-rate change or with an interest-rate change 
below the market interest rate currently being offered by the lender on 
similar loans secured by similar property at the time of the transfer.



Sec. 591.3  Loans originated by Federal savings associations.

    (a) With regard to any real property loan originated or to be 
originated by a Federal savings association, as a matter of contract 
between it and the borrower, a Federal savings association continues to 
have the power to include a due-on-sale clause in its loan instrument.
    (b) Except as otherwise provided in Sec. 591.5 of this part with 
respect to any such loan made on the security of a home occupied or to 
be occupied by the borrower, exercise by any lender of a due-on-sale 
clause in a loan originated by a Federal savings association shall be 
exclusively governed by the terms of the loan contract, and all rights 
and remedies of the lender and borrower shall at all times be fixed and 
governed by that contract.



Sec. 591.4  Loans originated by lenders other than Federal savings associations.

    (a) With regard to any real property loan originated by a lender 
other than a Federal savings association, as a matter of contract 
between it and the borrower, the lender has the power to include a due 
on sale clause in its loan instrument.
    (b) Except as otherwise provided in paragraph (c) of this section 
and Sec. 591.5 of this part, the exercise of due-on-sale clauses in 
loans originated by lenders other than Federal savings associations 
shall be governed exclusively by the terms of the loan contract, and all 
rights and remedies of the lender and

[[Page 462]]

the borrower shall be fixed and governed by that contract.
    (c)(1) In the case of a window-period loan, the provisions of 
paragraph (b) of this section shall apply only in the case of a sale or 
transfer of the property subject to the real property loan and only if 
such sale or transfer occurs on or after October 15, 1985: Provided, 
That:
    (i) With respect to real property loans originated in a state by 
lenders other than national banks, Federal savings associations, and 
Federal credit unions, a state may otherwise regulate such contracts by 
state law enacted prior to October 16, 1985, in which case paragraph (b) 
of this section shall apply only if such state law so provides; and
    (ii) With respect to real property loans originated by national 
banks and Federal credit unions, the Comptroller of the Currency or the 
National Credit Union Administration Board, respectively, may otherwise 
regulate such contracts by regulations promulgated prior to October 16, 
1985, in which case paragraph (b) of this section shall apply only if 
such regulation so provides.
    (2) A lender may not exercise its options pursuant to a due-on-sale 
clause contained in a window-period loan in the case of a sale or 
transfer of property securing such loan where the sale or transfer 
occurred prior to October 15, 1982.
    (d)(1) Prior to the sale or transfer of property securing a window-
period loan subject to the provisions of paragraph (c) of this section.
    (i) Any lender in the business of making real property loans may 
require any successor or transferee of the borrower to supply credit 
information customarily required by the lender in connection with credit 
applications, to complete its customary credit application, and to meet 
customary credit standards applied by such lender, at the date of sale 
or transfer, to the lender's similar loans secured by similar property.
    (ii) Any lender not in the business of making loans may require any 
successor or transferee of the borrower to meet credit standards 
customarily applied by other similarly situated lenders or sellers in 
the geographic market within which the transaction occurs, for similar 
loans secured by similar property, prior to the lender's consent to the 
transfer.
    (2) The lender may exercise a due-on-sale clause in a window-period 
loan if:
    (i) The successor or transferee of the borrower fails to meet the 
lender's credit standards as set forth in paragraphs (b)(1)(i) and 
(b)(1)(ii) of this section; or
    (ii) Upon transfer of the security property and not later than 
fifteen days after written request by the lender, the successor or 
transferee of the borrower fails to provide information requested by the 
lender pursuant to paragraph (d)(1)(i) or (d)(1)(ii) of this section, to 
determine whether such successor or transferee of the borrower meets the 
lender's customary credit standards.
    (3) The lender shall, within thirty days of receipt of a completed 
credit application and any other related information provided by the 
successor or transferee of the borrower, determine whether such 
successor or transferee meets the customary credit standards of the 
lender and provide written notice to the successor or transferee of its 
decision, and the reasons in the event of a disapproval. Failure of the 
lender to provide such notice shall preclude the lender from exercise of 
its due-on-sale clause upon the sale or transfer of the property 
securing the loan.
    (4) The lender's right to exercise a due-on-sale clause pursuant to 
this paragraph (d)(4) is in addition to any other rights afforded the 
lender by state law regulating window-period loans with regard to the 
exercise of due-on-sale clauses and loan assumptions.



Sec. 591.5  Limitation on exercise of due-on-sale clauses.

    (a) General. Except as provided in Sec. 591.4 (c) and (d)(4) of this 
part, due-on-sale practices of Federal savings associations and other 
lenders shall be governed exclusively by the Office's regulations, in 
preemption of and without regard to any limitations imposed by state law 
on either their inclusion or exercise including, without limitation,

[[Page 463]]

state law prohibitions against restraints on alienation, prohibitions 
against penalties and forfeitures, equitable restrictions and state law 
dealing with equitable transfers.
    (b) Specific limitations. With respect to any loan on the security 
of a home occupied or to be occupied by the borrower,
    (1) A lender shall not (except with regard to a reverse mortgage) 
exercise its option pursuant to a due-on-sale clause upon:
    (i) The creation of a lien or other encumbrance subordinate to the 
lender's security instrument which does not relate to a transfer of 
rights of occupancy in the property: Provided, That such lien or 
encumbrance is not created pursuant to a contract for deed;
    (ii) The creation of a purchase-money security interest for 
household appliances;
    (iii) A transfer by devise, descent, or operation of law on the 
death of a joint tenant or tenant by the entirety;
    (iv) The granting of a leasehold interest which has a term of three 
years or less and which does not contain an option to purchase (that is, 
either a lease of more than three years or a lease with an option to 
purchase will allow the exercise of a due-on-sale clause);
    (v) A transfer, in which the transferee is a person who occupies or 
will occupy the property, which is:
    (A) A transfer to a relative resulting from the death of the 
borrower;
    (B) A transfer where the spouse or child(ren) becomes an owner of 
the property; or
    (C) A transfer resulting from a decree of dissolution of marriage, 
legal separation agreement, or from an incidental property settlement 
agreement by which the spouse becomes an owner of the property; or
    (vi) A transfer into an inter vivos trust in which the borrower is 
and remains the beneficiary and occupant of the property, unless, as a 
condition precedent to such transfer, the borrower refuses to provide 
the lender with reasonable means acceptable to the lender by which the 
lender will be assured of timely notice of any subsequent transfer of 
the beneficial interest or change in occupancy.
    (2) A lender shall not impose a prepayment penalty or equivalent fee 
when the lender or party acting on behalf of the lender
    (i) Declares by written notice that the loan is due pursuant to a 
due-on-sale clause or
    (ii) Commences a judicial or nonjudicial foreclosure proceeding to 
enforce a due-on-sale clause or to seek payment in full as a result of 
invoking such clause.
    (3) A lender shall not impose a prepayment penalty or equivalent fee 
when the lender or party acting on behalf of the lender fails to approve 
within 30 days the completed credit application of a qualified 
transferee of the security property to assume the loan in accordance 
with the terms of the loan, and thereafter the borrower transfers the 
security property to such transferee and prepays the loan in full within 
120 days after receipt by the lender of the completed credit 
application. For purposes of this paragraph (b)(3), a qualified 
transferee is a person who qualifies for the loan under the lender's 
applicable underwriting standards and who occupies or will occupy the 
security property.
    (4) A lender waives its option to exercise a due-on-sale clause as 
to a specific transfer if, before the transfer, the lender and the 
existing borrower's prospective successor in interest agree in writing 
that the successor in interest will be obligated under the terms of the 
loan and that interest on sums secured by the lender's security interest 
will be payable at a rate the lender shall request. Upon such agreement 
and resultant waiver, a lender shall release the existing borrower from 
all obligations under the loan instruments, and the lender is deemed to 
have made a new loan to the existing borrower's successor in interest. 
The waiver and release apply to all loans secured by homes occupied by 
borrowers made by a Federal savings association after July 31, 1976, and 
to all loans secured by homes occupied by borrowers made by other 
lenders after the effective date of this regulation.
    (5) Nothing in paragraph (b)(1) of this section shall be construed 
to restrict a lender's right to enforce a due-on-sale clause upon the 
subsequent occurrence

[[Page 464]]

of any event which disqualifies a transfer for a previously-applicable 
exception under that paragraph (b)(1).
    (c) Policy considerations. Paragraph (b) of this section does not 
prohibit a lender from requiring, as a condition to an assumption, 
continued maintenance of mortgage insurance by the existing borrower's 
successor in interest, whether by endorsement of the existing policy or 
by entrance into a new contract of insurance.



Sec. 591.6  Interpretations.

    The Office periodically will publish Interpretations under section 
341 of the Garn-St Germain Depository Institutions Act of 1982, Pub. L. 
97-320, 96 Stat. 1469, 1505-1507, in the Federal Register in response to 
written requests sent to the Secretary, Office of Thrift Supervision, 
1700 G Street, NW., Washington, DC 20552.

                        PARTS 592--599 [RESERVED]


[[Page 465]]



                              FINDING AIDS




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

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  Redesignation Table
  List of CFR Sections Affected



[[Page 467]]



                    Table of CFR Titles and Chapters




                     (Revised as of January 1, 2002)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2--[Reserved]

              

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
       VII  Advisory Commission on Intergovernmental Relations 
                (Parts 1700--1799)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)

[[Page 468]]

     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)
    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
    LXXIII  Department of Agriculture (Part 8301)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                          Title 6--[Reserved]

              

[[Page 469]]

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
      XIII  Northeast Dairy Compact Commission (Parts 1300--1399)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)

[[Page 470]]

      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Immigration and Naturalization Service, Department of 
                Justice (Parts 1--599)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

[[Page 471]]

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Office of Management and Budget (Parts 1300--1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)

[[Page 472]]

        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Export Administration, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  United States Customs Service, Department of the 
                Treasury (Parts 1--199)

[[Page 473]]

        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board Regulations (Parts 
                900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)

[[Page 474]]

        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--999)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)

[[Page 475]]

       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Bureau of Alcohol, Tobacco and Firearms, Department of 
                the Treasury (Parts 1--299)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--199)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

[[Page 476]]

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Pension and Welfare Benefits Administration, 
                Department of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
        VI  Bureau of Mines, Department of the Interior (Parts 
                600--699)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)

[[Page 477]]

        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)

[[Page 478]]

        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Part 1501)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

[[Page 479]]

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--799)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-70)

[[Page 480]]

       304  Payment from a Non-Federal Source for Travel Expenses 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10005)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)

[[Page 481]]

         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Transportation (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)

[[Page 482]]

         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Part 
                5452)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)

[[Page 483]]

        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Transportation (Parts 400--
                499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Bureau of Transportation Statistics, Department of 
                Transportation (Parts 1400--1499)
       XII  Transportation Security Administration, Department of 
                Transportation (Parts 1500--1599)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR



[[Page 485]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of January 1, 2002)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Commission on Intergovernmental          5, VII
     Relations
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Alcohol, Tobacco and Firearms, Bureau of          27, I
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
   Compliance Board
[[Page 486]]

Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Export Administration, Bureau of                15, VII
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs Service, United States                    19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII

[[Page 487]]

  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I, IV, VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                5, III, LXXVII; 14, VI; 
                                                  48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export Administration, Bureau of                  15, VII
Export-Import Bank of the United States           5, LII; 12, IV

[[Page 488]]

Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulation          41, 101

[[Page 489]]

  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Centers for Medicare & Medicaid Services        42, IV
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Centers for Medicare & Medicaid Services          42, IV
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Naturalization Service            8, I
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Intergovernmental Relations, Advisory Commission  5, VII
     on
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV

[[Page 490]]

  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  Mines, Bureau of                                30, VI
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I, XI; 40, 
                                                  IV
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration and Naturalization Service          8, I
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Pension and Welfare Benefits Administration     29, XXV
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99

[[Page 491]]

Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Mines, Bureau of                                  30, VI
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Dairy Compact Commission                7, XIII
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35

[[Page 492]]

Panama Canal Regulations                          35, I
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension and Welfare Benefits Administration       29, XXV
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Commercial Space Transportation                 14, III

[[Page 493]]

  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Security Administration          49, XII
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Brureau                 49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol, Tobacco and Firearms, Bureau of        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs Service, United States                  19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 495]]

                                     

                                     



                           Redesignation Table



The Office of Thrift Supervision, Department of the Treasury, 
reorganized chapter V at 54 FR 49420, November 30, 1989. The following 
Distribution Table shows the relationship of former section numbers 
within chapter V to the new section numbers.

----------------------------------------------------------------------------------------------------------------
   Previous section       Previous title        New section                         New title
----------------------------------------------------------------------------------------------------------------
       PART 500
 
500.1................  General statement     500.1............  General statement and statutory authority.
                        and statutory
                        authority.
500.2................  The Federal Home      Removed..........  ................................................
                        Loan Bank system.
500.3................  The Federal savings   500.3............  The Federal savings association system.
                        and loan system.
500.4................  The Federal Savings   Removed..........  ................................................
                        and Loan Insurance
                        Corporation.
                       ....................  500.4............  Supervision and regulation of savings
                                                                 associations.
500.5................  District of Columbia  500.5............  District of Columbia savings associations.
                        savings and loan
                        associations.
500.6................  General statement     500.6............  General statement concerning gender-related
                        concerning gender-                       terminology.
                        related terminology.
500.10...............  The Board...........  Removed..........  ................................................
                       ....................  500.10...........  The Office.
500.11...............  Secretary to the      500.11...........  Secretary to the Office.
                        Board.
500.12...............  Congressional         500.12...........  Senior Deputy Director for Congressional
                        Liaison Officer.                         Relations and Communications.
500.13...............  Director of the       500.13...........  Senior Deputy Director for Management.
                        Office of
                        Management Systems
                        and Administration.
500.14...............  Director of the       500.14...........  Chief Economist.
                        Office of Economic
                        Research.
500.15...............  Director of the       Removed..........  ................................................
                        Office of
                        Enforcement.
500.16...............  Director of the       Removed..........
                        Office of
                        Communications.
500.17...............  The General Counsel.  500.17...........  The Chief Counsel.
500.19...............  Director of the       Removed..........  ................................................
                        Office of District
                        Banks.
                                             500.19...........  Senior Deputy Director for Supervision
                                                                 (Operations).
500.20...............  Director of the       Removed..........
                        Office of the
                        Federal Savings and
                        Loan Insurance
                        Corporation.
                                             500.20...........  Senior Deputy Director for Supervision (Policy).
500.22...............  Director of the       Removed..........  ................................................
                        Office of Housing
                        and Urban Affairs.
500.30...............  General statement     500.30...........  General statement concerning procedures and
                        concerning                               forms.
                        procedures and
                        forms.
500.31...............  Forms...............  Removed..........  ................................................
500.32...............  Offices of the        500.32...........  Offices of the Office of Thrift Supervision;
                        Board; information                       information and submittals.
                        and submittals.
500.40...............  Director of the       Removed..........  ................................................
                        Office of the
                        Federal Savings and
                        Loan Insurance
                        Corporation.
 
       PART 501
 
501.1................  Claims of the Board   Removed..........  ................................................
                        and the Federal
                        Savings and Loan
                        Insurance
                        Corporation.
501.2................  Assessments.........  Removed..........  ................................................
501.10...............  Officers as agents..  Removed..........  ................................................
501.11...............  Designation of        Removed..........
                        principal
                        supervisory agent
                        and supervisory
                        agents.
 
       PART 502
 
                                             502.1............  Interim assessments and fees.
 
       PART 505
 
505.1................  Basis and scope.....  505.1............  Basis and scope.
505.2................  Definitions.........  Removed..........  ................................................
                                             505.2............  Public reading room.
505.3................  Published             Removed..........  ................................................
                        information.
                                             505.3............  Requests for records.
505.4................  Access to records...  Removed..........  ................................................

[[Page 496]]

 
                       ....................  505.4............  Administrative appeal of initial determination
                                                                 to deny records.
505.5................  Information not       Removed..........  ................................................
                        disclosed.
                       ....................  505.5............  Delivery of process.
505.6................  Subpoenas...........  Removed..........
 
      PART 505a                                   PART 503
 
505a.1...............  Purpose and scope...  503.1............  Scope and procedures.
505a.2...............  Definitions as used   Removed..........  ................................................
                        in this part 505a.
505a.3...............  Procedures or         Removed..........  ................................................
                        requests pertaining
                        to individual
                        records in a record
                        system.
505a.4...............  Times, places, and    Removed..........  ................................................
                        requirements for
                        identification of
                        individuals making
                        requests.
505a.5...............  Disclosure of         Removed..........  ................................................
                        requested
                        information to
                        individuals.
505a.6...............  Special procedures    Removed..........  ................................................
                        for medical records.
505a.7...............  Request for           Removed..........  ................................................
                        amendment of record.
505a.8...............  Agency review of      Removed..........  ................................................
                        request for
                        amendment of record.
505a.9...............  Appeals.............  Removed..........  ................................................
505a.10..............  Fees for providing    Removed..........  ................................................
                        copies of records.
505a.11..............  Criminal penalties..  Removed..........  ................................................
505a.12..............  Exemptions..........  Removed..........  ................................................
505a.13..............  Exemptions of         Removed..........  ................................................
                        records containing
                        investigatory
                        material compiled
                        for law enforcement
                        purposes.
 
      PART 505b
 
505b.1...............  Purpose and scope...  Removed..........  ................................................
505b.2...............  Definitions.........  Removed..........  ................................................
505b.3...............  Open meetings.......  Removed..........  ................................................
505b.4...............  Exemptions..........  Removed..........  ................................................
505b.5...............  Closed meetings.....  Removed..........  ................................................
505b.6...............  Public announcements  Removed..........  ................................................
                        of meetings.
505b.7...............  Accommodation for     Removed..........  ................................................
                        public attendance
                        at open meetings.
 
      PART 505c                                   PART 504
 
505c.1...............  Purpose and scope...  504.1............  Purpose and scope.
505c.2...............  Policy..............  504.2............  Policy.
505c.3...............  Administration of     504.3............  Administration of program.
                        program.
505c.4...............  Mandatory review      504.4............  Mandatory review procedure.
                        procedure.
 
      PART 505d
 
505d.1...............  OMB control numbers   Removed..........  ................................................
                        assigned pursuant
                        to the Paperwork
                        Reduction Act.
 
       PART 506                                   PART 910
 
506.1................  Issuance of           Removed..........  (FHFB-910.1).
                        consolidated bonds.
506.2................  Form of consolidated  Removed..........  (FHFB-910.2).
                        bonds.
506.3................  Transactions in       Removed..........  (FHFB-910.3).
                        consolidated bonds.
506.4................  Lost, stolen,         Removed..........  (FHFB-910.4).
                        destroyed,
                        mutilated, or
                        defaced bonds.
506.5................  Administrative        Removed..........  (FHFB-910.5).
                        provision.
506.6................  Reservation of right  Removed..........  (FHFB-910.6).
                        to revoke or amend;
                        limitation thereon.
 
      PART 506a                                   PART 912
 
506a.1...............  Definition of terms.  Removed..........  (FHFB-912.1).
506a.2...............  Authority of Reserve  Removed..........  (FHFB-912.2).
                        Banks.
506a.3...............  Scope and effect of   Removed..........  (FHFB-912.3).
                        book-entry
                        procedure.
506a.4...............  Transfer or pledge..  Removed..........  (FHFB-912.4).
506a.5...............  Withdrawal of         Removed..........  (FHFB-912.5).
                        Federal Home Loan
                        Bank Securities.
506a.6...............  Delivery of Federal   Removed..........  (FHFB-912.6).
                        Home Loan Bank
                        Securities.
506a.7...............  Registered bonds and  Removed..........  (FHFB-912.7).
                        notes.
506a.8...............  Servicing book-entry  Removed..........  (FHFB-912.8).
                        Federal Home Loan
                        Bank securities;
                        payment of
                        interest; payment
                        at maturity or on
                        call.
506a.9...............  Obligation of United  Removed..........  (FHFB-912.9).
                        States with respect
                        to Federal Home
                        Loan Bank
                        securities.
 
       PART 507
 
507.10...............  Hearings on           Removed..........  ................................................
                        regulations for
                        Federal Home Loan
                        Banks.

[[Page 497]]

 
507.11...............  Recommendations and   Removed..........  ................................................
                        representations at
                        hearings by.
 
       PART 508
 
508.10...............  Reservation of right  510.2(a).........  Amendments.
                        to amend.
508.10-1.............  Waiver or relaxation  510.2(b).........  Waiver or relaxation of regulatory provisions
                        of regulatory                            with respect to disaster or emergency areas.
                        provisions with
                        respect to disaster
                        or emergency areas.
508.11...............  Amendments of         Removed..........  ................................................
                        regulations without
                        notice.
508.12...............  Notice of proposed    Removed..........  ................................................
                        amendments or
                        regulations not
                        within Sec.  508.11.
508.13...............  Participation of      510.2(c).........  Bar on participation in notice and comment
                        interested persons                       rulemaking by suspended or disbarred persons.
                        in a proposed
                        amendment or rule.
508.14...............  Effective dates of    Removed..........  ................................................
                        amendments and
                        rules.
508.15...............  Repeal of rules and   Removed..........  ................................................
                        regulations.
508.16...............  Coordination of       510.3............  Coordination of chapters.
                        chapters.
 
       PART 509
 
509.1................  Scope of regulations  509.1............  Scope of regulations.
509.2................  Definitions.........  509.2............  Definitions.
509.3................  Appointment of        509.3............  Appointment of Administrative Law Judge.
                        Administrative Law
                        Judge.
509.4................  Authority of the      509.4............  Authority of the Administrative Law Judge.
                        Administrative Law
                        Judge.
509.5................  Appearance and        509.5............  Appearance and practice in adjudicatory
                        practice in                              proceedings.
                        adjudicatory
                        proceedings.
509.6................  Good faith            509.6............  Good faith certification.
                        certification.
509.7................  Ex parte              509.7............  Ex parte communications.
                        communications.
509.8................  Maintenance of the    509.8............  Maintenance of the record.
                        record.
509.9................  Service.............  509.9............  Service.
509.10...............  Filing of papers....  509.10...........  Filing of papers.
509.11...............  Formal requirements   509.11...........  Formal requirements as to papers filed.
                        as to papers filed.
509.12...............  Computing time......  509.12...........  Computing time.
509.13...............  Notice..............  509.13...........  Notice.
509.14...............  Answer..............  509.14...........  Answer.
509.15...............  Amending pleadings..  509.15...........  Amending pleadings.
509.16...............  Consolidation and     509.16...........  Consolidation and severance of proceedings.
                        severance of
                        proceedings.
509.17...............  Motions.............  509.17...........  Motions.
509.18...............  Interlocutory review  509.18...........  Interlocutory review.
509.19...............  Prehearing            509.19...........  Prehearing conference and exchange of
                        conference and                           information.
                        exchange of
                        information.
509.20...............  Opportunity for       509.20...........  Opportunity for informal settlement.
                        informal settlement.
509.21...............  Discovery...........  509.21...........  Discovery.
509.22...............  Subpoenas for         509.22...........  Subpoenas for documentary or physical evidence
                        documentary or                           or for witness attendance.
                        physical evidence
                        or for witness
                        attendance.
509.23...............  Depositions.........  509.23...........  Depositions.
509.24...............  Conduct of hearings.  509.24...........  Conduct of hearings.
509.25...............  Private and public    509.25...........  Private and public hearings.
                        hearings.
509.26...............  Summary disposition.  509.26...........  Summary disposition.
509.27...............  Proposed findings of  509.27...........  Proposed findings of fact and conclusions of
                        fact and                                 law.
                        conclusions of law.
509.28...............  Briefs..............  509.28...........  Briefs.
509.29...............  Exceptions..........  509.29...........  Exceptions.
509.30...............  Oral argument before  509.30...........  Oral argument before the Office.
                        the Board.
509.31...............  Notice of submission  509.31...........  Notice of submission to the Office.
                        to the Board.
509.32...............  Decision of the       509.32...........  Decision of the Office.
                        Board.
509.33...............  Scope...............  509.33...........  Scope.
509.34...............  Notice of             509.34...........  Notice of assessment; request for hearing;
                        assessment; request                      answer.
                        for hearing; answer.
509.35...............  Notice of hearing...  509.35...........  Notice of hearing.
509.36...............  Assessment orders...  509.36...........  Assessment orders.
509.37...............  Payment of civil      509.37...........  Payment of civil penalty.
                        penalty.
509.38...............  Relevant              509.38...........  Relevant considerations.
                        considerations.
 
      PART 509a                                   PART 508
 
509a.1...............  Scope...............  508.1............  Scope.
509a.2...............  Definitions.........  508.2............  Definitions.
509a.3...............  Issuance of Notice    508.3............  Issuance of Notice or Order.
                        or Order.
509a.4...............  Contents and service  508.4............  Contents and service of the Notice or Order.
                        of the Notice or
                        Order.
509a.5...............  Petition for hearing  508.5............  Petition for hearing.
509a.6...............  Initiation of         508.6............  Initiation of hearing.
                        hearing.
509a.7...............  Conduct of hearings.  508.7............  Conduct of hearings.
509a.8...............  Default.............  508.8............  Default.
509a.9...............  Rules of evidence...  508.9............  Rules of evidence.
509a.10..............  Burden of persuasion  508.10...........  Burden of persuasion.

[[Page 498]]

 
509a.11..............  Relevant              508.11...........  Relevant considerations.
                        considerations.
509a.12..............  Proposed findings     508.12...........  Proposed findings and conclusions and
                        and conclusions and                      recommended decision.
                        recommended
                        decision.
509a.13..............  Decision of the       508.13...........  Decision of the Office.
                        Board.
509a.14..............  Miscellaneous.......  508.14...........  Miscellaneous.
 
      PART 509b        [Previously Removed]    ...............
 
       PART 510
 
510.1................  Provisions relating   510.1............  Provisions relating to ex parte communications.
                        to ex parte
                        communications.
 
      PART 510a                                   PART 515
 
510a.1...............  Purpose and scope...  515.1............  Purpose and scope.
510a.2...............  Contact person for    515.2............  Contact person for missing children photographs
                        missing children                         on penalty mail.
                        photographs on
                        penalty mail.
510a.3...............  Policy and            515.3............  Policy and implementation.
                        implementation.
510a.4...............  Responsibility of     515.4............  Responsibility of Board administrative unit for
                        Board                                    implementation and procedure governing use of
                        administrative unit                      penalty mail in location of missing children.
                        for implementation
                        and procedure
                        governing use of
                        penalty mail in
                        location of missing
                        children.
510a.5...............  Exceptions to use of  515.5............  Exceptions to use of missing children
                        missing children                         photographs and biographical data on penalty
                        photographs and                          mail.
                        biographical data
                        on penalty mail.
510a.6...............  Expiration date.....  515.6............  Expiration date.
 
       PART 511
 
511.735-1............  Purpose.............  Removed..........
511.735-2............  Definition..........  Removed..........
511.735-3............  Effective date and    Removed..........
                        distribution.
511.735-4............  Counseling..........  Removed..........
511.735-10...........  General prohibitions  Removed..........
511.735-11...........  Gifts,                Removed..........
                        entertainment,
                        favors and loans.
511.735-12...........  Soliciting            Removed..........
                        contributions;
                        accepting and
                        giving gifts.
511.735-13...........  Accepting gifts from  Removed..........
                        foreign governments.
511.735-14...........  Outside employment    Removed..........
                        and other
                        activities.
511.735-15...........  Receipt of salary or  Removed..........
                        compensation for
                        service to Agency.
511.735-16...........  Payments to Board     Removed..........  ................................................
                        Members.
511.735-17...........  Financial interest..  Removed..........  ................................................
511.735-18...........  Use of Agency         Removed..........  ................................................
                        property.
511.735-19...........  Misuse of             Removed..........  ................................................
                        information.
511.735-20...........  Indebtedness........  Removed..........  ................................................
511.735-21...........  Gambling, betting     Removed..........  ................................................
                        and lotteries.
511.735-22...........  General conduct       Removed..........  ................................................
                        prejudicial to the
                        Government.
511.735-25...........  Use of Agency         Removed..........  ................................................
                        employment.
511.735-26...........  Use of inside         Removed..........  ................................................
                        information.
511.735-27...........  Coercion............  Removed..........  ................................................
511.735-28...........  Gifts, entertainment  Removed..........  ................................................
                        and favors.
511.735-29...........  Other provisions      Removed..........  ................................................
                        applicable to
                        special Government
                        employees.
511.735-35...........  Filing and review of  Removed..........  ................................................
                        statements of
                        employment and
                        financial interests.
511.735-36...........  Employees required    Removed..........  ................................................
                        to submit
                        statements.
511.735-36a..........  Employees complaint   Removed..........  ................................................
                        on filing
                        requirement.
511.735-37...........  Board Members not     Removed..........  ................................................
                        required to submit
                        statements.
511.735-38...........  Time and place for    Removed..........  ................................................
                        submission of
                        employees'
                        statements.
511.735-39...........  Supplementary         Removed..........  ................................................
                        statements.
511.735-40...........  Interests of          Removed..........  ................................................
                        employees'
                        relatives.
511.735-41...........  Information not       Removed..........  ................................................
                        known by employees.
511.735-42...........  Information not       Removed..........  ................................................
                        required.
511.735-43...........  Effect of employees'  Removed..........  ................................................
                        statements on other
                        requirements.
511.735-44...........  Specific provisions   Removed..........  ................................................
                        of Agency
                        regulations for
                        special.
511.735-50...........  Reporting unresolved  Removed..........  ................................................
                        conflicts of
                        interest.
511.735-51...........  Opportunity to be     Removed..........  ................................................
                        heard.
511.735-52...........  Action by the         Removed..........  ................................................
                        Chairman.
511.735-53...........  Violations of this    Removed..........  ................................................
                        part cause for
                        disciplinary action.

[[Page 499]]

 
511.735-54...........  Remedial action to    Removed..........  ................................................
                        be effected in
                        accordance with law
                        and regulation.
511.735-55...........  Miscellaneous         Removed..........  ................................................
                        statutory
                        provisions.
511.737-1............  Applicable            Removed..........  ................................................
                        provisions of law.
511.737-2............  Enforcement           Removed..........  ................................................
                        proceedings.
 
512.1................  Scope of part.......  512.1............  Scope of part.
512.2................  Definitions.........  512.2............  Definitions.
512.3................  Confidentiality of    512.3............  Confidentiality of proceedings.
                        proceedings.
512.4................  Transcripts.........  512.4............  Transcripts.
512.5................  Rights of witnesses.  512.5............  Rights of witnesses.
512.6................  Obstruction of the    512.6............  Obstruction of the proceedings.
                        proceedings.
512.7................  Subpoenas...........  512.7............  Subpoenas.
 
       PART 513
 
513.1................  Scope of part.......  513.1............  Scope of part.
513.2................  Definitions.........  513.2............  Definitions.
513.3................  Who may practice....  513.3............  Who may practice.
513.4................  Suspension and        513.4............  Suspension and debarment.
                        debarment.
513.5................  Reinstatement.......  513.5............  Reinstatement.
513.6................  Duty to file          513.6............  Duty to file information concerning adverse
                        information                              judicial or administrative action.
                        concerning adverse
                        judicial or
                        administrative
                        action.
513.7................  Proceeding under      513.7............  Proceeding under this part.
                        this part.
 
       PART 514
 
514.1................  Scope...............  Removed..........  ................................................
514.2................  Definitions.........  Removed..........  ................................................
514.3................  Duties and            Removed..........  ................................................
                        responsibilities of
                        the Advisory
                        Committee.
514.4................  Membership..........  Removed..........  ................................................
514.5................  Vacancies...........  Removed..........  ................................................
514.6................  Chairperson           Removed..........  ................................................
                        responsibilities
                        and duties.
514.7................  Meeting procedures..  Removed..........  ................................................
514.8................  Travel expense        Removed..........  ................................................
                        reimbursement.
514.9................  Conflict of interest  Removed..........  ................................................
                        and disclosure of
                        sensitive
                        information.
514.10...............  Advisory Committee    Removed..........  ................................................
                        responsibility for
                        safe-guarding
                        sensitive
                        information.
514.11...............  Execution of          Removed..........  ................................................
                        agreement with
                        Corporation.
 
       PART 516
 
516.100..............  Purpose.............  Removed..........  ................................................
516.105..............  Definitions.........  Removed..........  ................................................
516.110..............  Coverage............  Removed..........  ................................................
516.115..............  Policy..............  Removed..........  ................................................
516.200..............  Debarment or          Removed..........  ................................................
                        suspension.
516.205..............  Ineligible persons..  Removed..........  ................................................
516.210..............  Voluntary exclusion.  Removed..........  ................................................
516.215..............  Exception provision.  Removed..........  ................................................
516.220..............  Continuation of       Removed..........  ................................................
                        covered
                        transactions.
516.225..............  Failure to adhere to  Removed..........  ................................................
                        restrictions.
516.300..............  General.............  Removed..........  ................................................
516.305..............  Causes for debarment  Removed..........  ................................................
516.310..............  Procedures..........  Removed..........  ................................................
516.311..............  Investigation and     Removed..........  ................................................
                        referral.
516.312..............  Notice of proposed    Removed..........  ................................................
                        debarment.
516.313..............  Opportunity to        Removed..........  ................................................
                        contest proposed
                        debarment.
516.314..............  Debarring official's  Removed..........  ................................................
                        decision.
516.315..............  Settlement of         Removed..........  ................................................
                        voluntary exclusion.
516.320..............  Period of debarment.  Removed..........  ................................................
516.325..............  Scope of debarment..  Removed..........  ................................................
516.400..............  General.............  Removed..........  ................................................
516.405..............  Causes for            Removed..........  ................................................
                        suspension.
516.410..............  Procedures..........  Removed..........  ................................................
516.411..............  Notice of suspension  Removed..........  ................................................
516.412..............  Opportunity to        Removed..........  ................................................
                        contest suspension.
516.413..............  Suspending            Removed..........  ................................................
                        official's decision.
516.415..............  Period of suspension  Removed..........  ................................................
516.420..............  Scope of suspension.  Removed..........  ................................................
516.500..............  GSA responsibilities  Removed..........  ................................................
516.505..............  Board                 Removed..........  ................................................
                        responsibilities.
516.510..............  Participants'         Removed..........  ................................................
                        responsibilities.
516.600..............  Purpose.............  Removed..........  ................................................
516.605..............  Definitions.........  Removed..........  ................................................

[[Page 500]]

 
516.610..............  Coverage............  Removed..........  ................................................
516.615..............  Grounds for           Removed..........  ................................................
                        suspension of
                        payments,
                        suspension or
                        termination of
                        grants, or
                        suspension or
                        debarment.
516.620..............  Effect of violation.  Removed..........  ................................................
516.625..............  Exception provision.  Removed..........  ................................................
516.630..............  Grantees'             Removed..........  ................................................
                        responsibilities.
Appendix A...........  Certification         Removed..........  ................................................
                        regarding
                        debarment,
                        suspension, and
                        other
                        responsibility
                        matters--Primary
                        covered transaction.
Appendix B...........  Certification         Removed..........  ................................................
                        regarding
                        debarment,
                        suspension,
                        ineligibility and
                        voluntary
                        exclusion--Lower
                        tier covered
                        transactions.
Appendix C...........  Certification         Removed..........  ................................................
                        regarding drug-free
                        workplace
                        requirements.
 
       PART 521                                   PART 931
 
521.1................  Act.................  Removed..........  (FHFB-931.1).
521.2................  Bank................  Removed..........  (FHFB-931.2).
521.3................  Board...............  Removed..........  (FHFB-931.3).
521.4................  Creditor liabilities  Removed..........  (FHFB-931.4).
521.5................  Deposits in banks or  Removed..........  (FHFB-931.5).
                        trust companies.
521.6................  Home mortgage.......  561.23...........  Home mortgage.
521.6-1..............  Home................  Removed..........  (FHFB-931.7).
521.6-2..............  Other dwelling unit.  Removed..........  (FHFB-931.8).
521.7................  Member..............  Removed..........  (FHFB-931.9).
521.8................  [Previously Removed]  .................  ................................................
521.9................  Obligations of the    Removed..........  (FHFB-931.11).
                        United States.
521.10...............  Paid-in value of      Removed..........  (FHFB-931.12).
                        stock in a Bank.
521.11...............  State...............  Removed..........  (FHFB-931.13).
 
       PART 522                                   PART 932
 
522.1................  Charter.............  Removed..........  (FHFB-932.1).
522.5................  Par value and price   Removed..........  (FHFB-932.2).
                        of stock.
522.6................  Dividends...........  Removed..........  (FHFB-932.3).
522.10...............  Issuance and form of  Removed..........  (FHFB-932.4).
                        stock.
522.11...............  Stock in              Removed..........  (FHFB-932.5).
                        consolidations.
522.12...............  Stock in              Removed..........  (FHFB-932.6).
                        reorganizations.
522.13...............  Loss or destroyed     Removed..........  (FHFB-932.7).
                        certificates.
522.20...............  General.............  Removed..........  (FHFB-932.8).
522.21...............  Director              Removed..........  (FHFB-932.9).
                        representing Puerto
                        Rico.
522.22...............  Definition of member  Removed..........  (FHFB-932.10).
522.23...............  Location of member..  Removed..........  (FHFB-932.11).
522.24...............  Report of stock       Removed..........  (FHFB-932.12).
                        investment.
522.25...............  Designation and       Removed..........  (FHFB-932.13).
                        nomination of
                        elective
                        directorship.
522.26...............  Election of           Removed..........  (FHFB-932.14).
                        directors.
522.26a..............  Special provisions    Removed..........  ................................................
                        for election of
                        directors during
                        calendar year 1988.
522.27...............  Prohibition of        Removed..........  (FHFB-932.15).
                        actions influencing
                        votes.
522.28...............  Definition of         Removed..........  (FHFB-932.16).
                        ``State''.
522.30...............  Special scheduling    Removed..........  ................................................
                        provisions for
                        election of
                        directors during
                        calendar year 1989.
522.60...............  Compensation........  Removed..........  (FHFB-932.27).
522.61...............  Duties..............  Removed..........  (FHFB-932.28).
522.62...............  Responsibility of     Removed..........  (FHFB-932.29).
                        bank directors.
522.70...............  Selection...........  Removed..........  (FHFB-932.40).
522.71...............  Compensation........  Removed..........  (FHFB-932.41).
522.72...............  Indemnification.....  Removed..........  (FHFB-932.42).
522.73...............  Restrictions as to    Removed..........  (FHFB-932.43).
                        former employees.
522.75...............  General.............  Removed..........  (FHFB-932.50).
522.76...............  President...........  Removed..........  (FHFB-932.51).
522.80...............  General.............  Removed..........  (FHFB-932.55).
522.81...............  Functions of Office   Removed..........  (FHFB-932.56).
                        of Finance.
522.82...............  Budget and expenses.  Removed..........  (FHFB-932.57).
522.83...............  [Previously Revoked]  .................  ................................................
522.85...............  General.............  Removed..........  (FHFB-932.60).
522.86...............  Functions and duties  Removed..........  (FHFB-932.61).
                        of Office of
                        Neighborhood
                        Reinvestment.
522.87...............  Budget and expenses.  Removed..........  (FHFB-932.62).
522.90...............  Office of Regulatory  Removed..........  (FHFB-932.65).
                        Policy, Oversight,
                        and Supervision.
 
       PART 523                                   PART 933
 
523.1................  Application form....  Removed..........  (FHFB-933.1).

[[Page 501]]

 
523.2................  [Previously Removed]  .................  ................................................
523.3................  Board action on       Removed..........  (FHFB-933.3).
                        applications.
523.3-1..............  Automatic board       Removed..........  (FHFB-933.4).
                        approval in certain
                        cases.
523.3-2..............  Membership at         Removed..........  (FHFB-933.5).
                        principal place of
                        business
                        designation,
                        transfer of
                        membership.
523.3-3..............  Delegations.........  Removed..........  (FHFB-933.6).
523.4................  Subscription........  Removed..........  (FHFB-933.7).
523.5................  Additional            Removed..........  (FHFB-933.8).
                        subscription.
523.6................  Adjustments in        Removed..........  (FHFB-933.9).
                        holdings.
523.7................  Excess subscription.  Removed..........  (FHFB-933.10).
523.8................  Payment on            Removed..........  (FHFB-933.11).
                        subscription.
523.9................  [Previously Deleted]  .................  ................................................
523.10...............  Definitions for       566.1............  Definitions.
                        purposes of this
                        Section, Sec.
                        523.11 and Sec.
                        523.12.
523.11...............  Liquidity             566.2............  Requirements.
                        requirements.
523.12...............  Deficiencies and      566.3............  Deficiencies and penalties.
                        penalties.
523.13...............  Reports; records....  566.4............  Reports; records.
523.14...............  Payment of penalty..  566.5............  Payment of penalty.
523.15...............  Reports.............  Removed..........  (FHFB-933.18).
523.20...............  Examinations of       Removed..........  (FHFB-933.22).
                        members.
523.25...............  Official membership   Removed..........  (FHFB-933.27).
                        insignia.
523.29...............  Flood disaster        563.48...........  Flood disaster protection.
                        protection.
523.30...............  Procedure for         Removed..........  (FHFB-933.32).
                        withdrawal.
523.31...............  Procedure for         Removed..........  (FHFB-933.33).
                        removal.
523.32...............  [Previously Deleted]  .................  ................................................
 
       PART 524                                   PART 934
 
524.1................  Investments.........  Removed..........  (FHFB-934.1).
524.2................  Loans guaranteed      Removed..........  (FHFB-934.2).
                        under the Foreign
                        Assistance Act of
                        1961.
524.3................  Transfer of funds     Removed..........  (FHFB-934.3).
                        between banks.
524.4................  Deposits from         Removed..........  (FHFB-934.4).
                        members.
524.5................  Trustee powers......  Removed..........  (FHFB-934.5).
524.6................  Budgets.............  Removed..........  (FHFB-934.6).
524.7................  Surety bonds........  Removed..........  (FHFB-934.7).
524.8................  Insurance...........  Removed..........  (FHFB-934.8).
524.9................  Safe-keeping          Removed..........  (FHFB-934.9).
                        accounts.
524.10...............  Securities held in    Removed..........  (FHFB-934.10).
                        trust or as
                        collateral.
524.11...............  Donations...........  Removed..........  (FHFB-934.11).
524.12...............  Accounting..........  Removed..........  (FHFB-934.12).
524.13...............  Gold and gold-        Removed..........  (FHFB-934.13).
                        related
                        transactions.
 
  PART 525--ADVANCES                              PART 935
 
525.1................  Limitations on        Removed..........  (FHFB-935.1).
                        advances.
525.2................  Extension of credit.  Removed..........  (FHFB-935.2).
525.3................  Interest rates......  Removed..........  (FHFB-935.3).
525.4................  Bank stock            Removed..........  (FHFB-935.4).
                        collateral.
525.5................  Gold and gold-        Removed..........  (FHFB-935.5).
                        related securities
                        ineligible as
                        collateral.
525.6................  Terms of advances...  Removed..........  (FHFB-935.6).
525.7................  Collateral securing   Removed..........  (FHFB-935.7).
                        advances.
525.8................  Determination of      Removed..........  (FHFB-935.8).
                        value of collateral.
525.9................  Additional            Removed..........  (FHFB-935.9).
                        collateral.
525.10...............  Short term advances.  Removed..........  (FHFB-935.10).
525.33...............  Lines of credit.....  Removed..........  (FHFB-935.30).
525.34...............  Eligible              Removed..........  (FHFB-935.31).
                        institutions.
525.35...............  Rates of interest...  Removed..........  (FHFB-935.32).
525.36...............  Application for       Removed..........  (FHFB-935.33).
                        advances.
 
       PART 526
 
526.1................  Definitions.........  See below........  ................................................
526.1(a).............  Member..............  Removed..........  ................................................
526.1(b).............  Certificate account.  561.9............  Certificate account.
526.1(c).............  Savings account.....  561.42...........  Savings account.
526.1(d).............  Tax and loan account  561.52...........  Tax and loan account.
526.1(e).............  Note account........  561.33...........  Note account.
526.1(f).............  United States         561.53...........  United States Treasury General Account.
                        Treasury general
                        account.
526.1(g).............  United States         561.54...........  United States Treasury Time Deposit Open
                        Treasury time                            Account.
                        deposit open
                        account.
526.2................  Advertising interest  563.27...........  Advertising.
                        or dividends on
                        savings accounts.
 
       PART 527                                   PART 937
 
527.1................  General.............  Removed..........  (FHFB-937.1).

[[Page 502]]

 
527.2................  Definitions.........  Removed..........  (FHFB-937.2).
527.3................  Middle-income         Removed..........  (FHFB-937.3).
                        families.
527.4................  Low-income families.  Removed..........  (FHFB-937.4).
527.5................  Credits to member     Removed..........  (FHFB-937.5).
                        institutions.
527.6................  Disbursement of       Removed..........  (FHFB-937.6).
                        funds to Banks.
527.7................  Retention of          Removed..........  (FHFB-937.7)
                        documents.
527.8................  Recertification of    Removed..........  (FHFB-937.8).
                        income.
 
       PART 528
 
528.1................  Definitions.........  528.1............  Definitions.
528.1a...............  Supplementary         528.1a...........  Supplementary guidelines.
                        guidelines.
528.2................  Nondiscrimination in  528.2............  Nondiscrimination in lending and other services.
                        lending and other
                        services.
528.2a...............  Nondiscriminatory     528.2a...........  Nondiscriminatory appraisal and underwriting.
                        appraisal and
                        underwriting.
528.3................  Nondiscrimination in  528.3............  Nondiscrimination in applications.
                        applications.
528.4................  Nondiscriminatory     528.4............  Nondiscriminatory advertising.
                        advertising.
528.5................  Equal Housing Lender  528.5............  Equal Housing Lender poster.
                        poster.
528.6................  Monitoring            528.6............  Monitoring information.
                        information.
 
Appendix A...........  Association           Appendix A.......  ................................................
                        instructions for
                        preparation of loan.
 
to Sec.  528.6.......  application           to Sec.  528.6...  ................................................
                        registers.
 
Appendix B...........  Association           Appendix B.......  ................................................
                        instructions for
                        preparation of data.
 
to Sec.  528.6.......  submission report...  to Sec.  528.6...  ................................................
528.7................  Nondiscrimination in  528.7............  Nondiscrimination in employment.
                        employment.
528.8................  Complaints..........  528.8............  Complaints.
 
       PART 529
 
5291.................  Purpose.............  529.1............  Purpose.
529.2................  Definitions.........  529.2............  Definitions.
529.3................  Application of this   529.3............  Application of this part.
                        part.
529.4................  Discrimination        529.4............  Discrimination prohibited.
                        prohibited.
529.5................  Assurances required.  529.5............  Assurances required.
529.6................  Compliance            529.6............  Compliance information.
                        information.
529.7................  Conduct of            529.7............  Conduct of investigations.
                        investigations.
529.8................  Procedure for         529.8............  Procedure for effecting compliance.
                        effecting
                        compliance.
529.9................  Hearings............  529.9............  Hearings.
529.10...............  Decisions and         529.10...........  Decisions and notices.
                        notices.
529.11...............  Judicial review.....  529.11...........  Judicial review.
529.12...............  Effect on other       529.12...........  Effect on other regulations.
                        regulations.
 
Appendix A...........  Activities to which   Appendix.........  ................................................
                        this part applies.
 
       PART 531                                   PART 940
 
531.1................  Policy on advance to  Removed..........  (FHFB-940.1).
                        members.
531.2................  Policy on Federal     Removed..........  (FHFB-940.2).
                        Savings and Loan
                        Insurance
                        Corporation--guaran
                        teed advances and
                        loans to the
                        Federal Savings and
                        Loan Insurance
                        Corporation.
531.3................  [Previously Deleted]  .................  ................................................
531.4................  Assigned collateral;  Removed..........  (FHFB-940.3).
                        verification.
531.5................  [Previously Deleted]  .................  ................................................
531.6................  [Previously Deleted]  .................  ................................................
531.7................  [Previously           .................  ................................................
                        Reserved].
531.8................  Guidelines relating   571.24...........  Guidelines relating to nondiscrimination in
                        to                                       lending.
                        nondiscrimination
                        in lending.
531.9................  Interest rates on     Removed..........  (FHFB-940.5).
                        advances.
531.10...............  Accepting pooled      571.25...........  Accepting pooled accounts.
                        accounts.
531.12...............  Transfer and          Removed..........
                        repurchase of
                        government
                        securities
                        [Redesignated as
                        FSLIC-Insured
                        Institution
                        regulation, 12 CFR
                        563.8-4, " 4668,
                        effective May 27,
                        1982].
 
       PART 532
 
532.1................  Payment in gold or    571.17...........  Payment in gold ot its equivalent.
                        its equivalent.
 
       PART 533
 
533.1................  Electronic fund       533.1............  Electronic fund transfers subject to Regulation
                        transfers subject                        E.
                        to Regulation E.
 
       PART 534                                   PART 943
 
534.1................  Authority and scope.  Removed..........  (FHFB-943.1).

[[Page 503]]

 
534.2................  Definitions.........  Removed..........  (FHFB-943.2).
534.3................  General provisions..  Removed..........  (FHFB-943.3).
534.4................  Incidental powers...  Removed..........  (FHFB-943.4).
534.5................  Operations..........  Removed..........  (FHFB-943.5).
534.6................  Pricing of services.  Removed..........  (FHFB-943.6).
534.7................  Rights, powers,       Removed..........  (FHFB-943.7).
                        responsibilities,
                        duties and
                        liabilities.
 
       PART 535
 
535.1................  Definitions.........  535.1............  Definitions.
535.2................  Unfair credit         535.2............  Unfair credit practices.
                        contract provisions.
535.3................  Unfair or deceptive   535.3............  Unfair or deceptive cosigner practices.
                        cosigner practices.
535.4................  Late charges........  535.4............  Late charges.
535.5................  State exemptions....  535.5............  State exemptions.
 
       PART 541
 
541.1................  General.............  541.1............  General.
541.2................  Act.................  541.2............  Act.
541.3................  Combination of        541.4............  Combination of residential real estate and
                        residential real                         business property involving only minor or
                        estate and business                      incidental business use.
                        property involving
                        only minor or
                        incidental business
                        use.
541.4................  Combination of home   541.3............  Combination of home and business property.
                        and business
                        property.
541.5................  Cooperative housing   541.6............  Cooperative housing development.
                        development.
541.6................  Director............  Removed..........  ................................................
541.7................  Dwelling unit.......  541.10...........  Dwelling unit.
541.8................  Federal association.  541.11...........  Federal savings association.
541.9................  Interim Federal       541.18...........  Interim Federal savings association.
                        association.
                                             541.9............  District Director.
541.10...............  Interim state         541.19...........  Interim state savings association.
                        institution.
541.11...............  Insured institution.  Removed..........  ................................................
541.12...............  General reserves....  541.12...........  General reserves.
541.13...............  Guaranteed loan.....  541.13...........  Guaranteed loan.
541.14...............  Home................  541.14...........  Home.
541.15...............  Improved residential  541.16...........  Improved residential real estate.
                        real estate.
541.16...............  Insured loan........  541.17...........  Insured loan.
541.17...............  Regulatory capital..  Removed..........
541.18...............  Principal             Removed..........
                        Supervisory Agent.
541.19...............  Short-term savings    541.24...........  Short-term savings account.
                        account.
541.20...............  Single-family         541.25...........  Single-family dwelling.
                        dwelling.
541.21...............  Supervisory Agent...  Removed..........  ................................................
541.22...............  Surplus.............  541.26...........  Surplus.
                                             541.22...........  [Reserved]
541.23...............  Withdrawal value of   541.28...........  Withdrawal value of a savings account.
                        a savings account.
541.24...............  Loans...............  541.20...........  Loans.
541.25...............  Commercial paper....  541.5............  Commercial paper.
541.26...............  Corporate debt        541.7............  Corporate debt security.
                        security.
541.27...............  Unimproved real       541.27...........  Unimproved real estate.
                        estate.
541.28...............  Debit card..........  541.8............  Debit card.
541.29...............  Residential real      541.23...........  Residential real estate.
                        estate.
541.30...............  Nonresidential real   541.21...........  Nonresidential real estate.
                        estate.
541.31...............  Improved              541.15...........  Improved nonresidential real estate.
                        nonresidential real
                        estate.
 
 PART 542--[Removed]
 
       PART 543
 
543.1................  Corporate title.....  543.1............  Corporate title.
543.2................  Application for       543.2............  Application for permission to organize.
                        permission to
                        organize.
543.3................  [Removed December     .................  ................................................
                        15, 1982].
543.4................  [Removed December     .................  ................................................
                        15, 1982].
543.5................  Issuance of Charter.  543.5............  Issuance of charter.
543.6................  Completion of         543.6............  Completion of organization.
                        organization.
543.7................  Limitations on        543.7............  Limitations on transaction of business.
                        transaction of
                        business.
543.7-1..............  Federal association   543.7-1..........  Federal savings association created in
                        proposed by Federal                      connection with an association in default or in
                        Savings and Loan                         danger of default.
                        Insurance
                        Corporation.
543.8................  General.............  543.8............  Conversion from State mutual charter to Federal
                                                                 charter.
543.9................  Application.........  543.9............  Application for Conversion to Federal mutual
                                                                 charter.
543.10...............  Organization after    543.10...........  Organization after conversion.
                        conversion.
543.11...............  Organization plan     543.11...........  Organization plan for governance during first
                        for governance                           years after issuance of Federal mutual savings
                        during first years                       bank charter.
                        after issuance of
                        Federal mutual
                        savings bank
                        charter.

[[Page 504]]

 
543.11-1.............  Grandfathered         543.11-1.........  Grandfathered authority.
                        authority.
543.12...............  FDIC-insured federal  543.12...........  BIF-insured Federal savings banks.
                        savings banks.
543.13...............  Notice to FDIC......  543.13...........  Notice to FDIC.
543.14...............  Continuity of         543.14...........  Continuity of existence.
                        existence.
 
       PART 544
 
544.1................  Federal mutual        544.1............  Federal mutual charter.
                        charter.
544.2................  Charter amendments..  544.2............  Charter amendments.
544.2-1..............  [Previously Removed]  .................  ................................................
544.2-2..............  [Previously Removed]  .................  ................................................
544.3................  Adoption of new       544.3............  Adoption of new federal charter by a federal
                        federal charter by                       savings association.
                        a federal
                        association.
544.4................  Issuance of charter.  544.4............  Issuance of charter.
544.5................  Federal mutual        544.5............  Federal mutual savings association by laws.
                        association bylaws.
544.5-1..............  [Previously Removed]    ...............
544.6................  Effect of subsequent  544.6............  Effect of subsequent charter or bylaw change.
                        charter or bylaw
                        change.
544.6-1..............  [Previously Removed]    ...............
544.7................  In association        544.7............  In association offices.
                        offices.
544.8................  References to old     544.8............  References to old and new charters; rules
                        and new charters;                        applicable to trustees of Federal mutual
                        rules applicable to                      savings banks.
                        trustees of federal
                        mutual savings
                        banks.
544.9................  Obsolete charter      544.9............  Obsolete charter provision for Charter B
                        provision for                            associations.
                        Charter B
                        associations.
 
Appendix.............  Model bylaws for      Appendix.........  Model bylaws for mutual savings associations.
                        mutual institutions.
 
       PART 545
 
545.1................  General authority...  545.1............  General authority.
545.2................  Federal preemption..  545.2............  Federal preemption.
545.3-545.9..........  [Reserved]..........  545.3.-545.9.....  [Reserved].
  ...................                        545.10...........  Savings deposits or shares.
545.11...............  Insured accounts....  545.11...........  Issuance of accounts.
545.12...............  Demand deposit        545.12...........  Demand deposit accounts.
                        accounts.
545.13...............  Account records.....  545.13...........  Account records.
545.14...............  Determination and     545.14...........  Determination and distribution of earnings.
                        distribution of
                        earnings.
545.15...............  Withdrawals.........  545.15...........  Withdrawal requests.
545.16...............  Public deposits,      545.16...........  Public deposits, depositaries, and fiscal
                        depositaries, and                        agents.
                        fiscal agents.
545.17...............  Funds transfer        545.17...........  Funds transfer services.
                        services.
545.18...............  Issuance of mutual    545.18...........  Issuance of mutual capital certificates.
                        capital
                        certificates.
545.19...............  Issuance of net       545.19...........  Issuance of net worth certificates.
                        worth certificates.
545.20...............  Borrowing, issuing    545.20...........  Borrowing, issuing obligations and securities,
                        obligations and                          and giving security.
                        securities, and
                        giving security.
545.21...............  Give-aways..........  545.21...........  Give-aways.
545.22-545.30........  [Reserved]..........  545.22-545.30....  [Reserved].
545.31...............  Election regarding    545.31...........  Election regarding classification of loans or
                        classification of                        investments.
                        loans or
                        investments.
545.32...............  Real estate loans...  545.32...........  Real estate loans.
545.33...............  Home loans..........  545.33...........  Home loans.
545.34...............  Limitations for home  545.34...........  Limitations for home loans secured by borrower-
                        loans secured by                         occupied property.
                        borrower-occupied
                        property.
545.35...............  Other real estate     545.35...........  Other real estate loans.
                        loans.
545.36...............  Loans to acquire or   545.36...........  Loans to acquire or to improve real estate.
                        to improve real
                        estate.
545.37...............  Combination loans...  545.37...........  Combination loans.
545.38...............  Insured and           545.38...........  Insured and guaranteed loans.
                        guaranteed loans.
545.39...............  Loans guaranteed      545.39...........  Loans guaranteed under the Foreign Assistance
                        under the Foreign                        Act of 1961.
                        Assistance Act of
                        1961.
545.40...............  Loans on low-rent     545.40...........  Loans on low-rent housing.
                        housing.
545.41...............  Community             545.41...........  Community development loans and investments.
                        development loans
                        and investments.
545.42...............  Home improvement      545.42...........  Home improvement loans.
                        loans.
545.43...............  State housing         545.43...........  State housing corporation investment-insured.
                        corporation
                        investment-insured.
545.44...............  Mortgage              545.44...........  Mortgage transactions with the Federal Home Loan
                        transactions with                        Mortgage Corporation.
                        the Federal Home
                        Loan Mortgage
                        Corporation.
545.45...............  Manufactured home     545.45...........  Manufactured home financing.
                        financing.
545.46...............  Commercial loans....  545.46...........  Commercial loans.
545.47...............  Overdraft loans.....  545.47...........  Overdraft loans.
545.48...............  Letters of credit...  545.48...........  Letters of credit.
545.49...............  Loans on securities.  545.49...........  Loans on securities.
545.50...............  Consumer loans......  545.50...........  Consumer loans.
545.51...............  Credit cards........  545.51...........  Credit cards.
545.52...............  Loans on savings      545.52...........  Loans on savings accounts.
                        accounts.

[[Page 505]]

 
545.53...............  Finance leasing.....  545.53...........  Finance leasing.
545.54-545.70........  [Reserved]..........  545.54-545.70....  [Reserved].
545.71...............  Liquid assets.......  545.71...........  Liquid assets.
545.72...............  Government            545.72...........  Government obligations.
                        obligations.
545.73...............  Inter-American        545.73...........  Inter-American Savings and Loan Bank.
                        Savings and Loan
                        Bank.
545.74...............  Service corporations  545.74...........  Service corporations.
545.75...............  Commercial paper and  545.75...........  Commercial paper and corporate debt securities.
                        corporate debt
                        securities.
545.76...............  Investment in open-   545.76...........  Investment in open-end management investment
                        end management                           companies.
                        investment
                        companies.
545.77...............  Real estate for       545.77...........  Real estate for office and related facilities.
                        office and related
                        facilities.
545.78...............  Leasing.............  545.78...........  Leasing.
545.79...............  Gold transactions...  545.79...........  Gold transactions.
545.80...............  Small business        545.80...........  Small Business Investment Corporations.
                        investment
                        corporations.
545.81...............  [Reserved]..........  545.81...........  [Reserved].
545.82...............  Finance subsidiaries  545.82...........  Finance subsidiaries.
545.83-545.90........  [Reserved]..........  545.83-545.90....  [Reserved].
545.91...............  Home office.........  545.91...........  Home office.
545.92...............  Branch offices......  545.92...........  Branch offices.
545.93...............  Upgrading of          545.93...........  Upgrading of approved branch office.
                        approved branch
                        office.
545.94...............  Closing a branch      545.94...........  Closing a branch office.
                        office.
545.95...............  Change of office      545.95...........  Change of office location and redesignation of
                        location and                             offices.
                        redesignation of
                        offices.
545.96...............  Agency..............  545.96...........  Agency.
545.97-545.100.......  [Reserved]..........  545.97-545.100...  [Reserved].
545.101..............  Fiscal agency.......  545.101..........  Fiscal agency.
545.102..............  Trustee.............  545.102..........  Trustee.
545.103..............  Suretyship..........  545.103..........  Suretyship.
545.104-545.110......  [Reserved]..........  545.104-545.110..  [Reserved].
545.111..............  Adjustments to book   545.111..........  Adjustments to book value of assets.
                        value of assets.
545.112..............  [Removed and          545.112..........  [Reserved].
                        Reserved].
545.113..............  Accounting records..  545.113..........  Accounting records.
545.114..............  Monthly reports.....  545.114..........  Monthly reports.
545.115..............  Statement of          545.115..........  Statement of condition.
                        condition.
545.116-545.120......  [Reserved]..........  545.116-545.120..  [Reserved].
545.121..............  Indemnification of    545.121..........  Indemnification of directors, officers, and
                        directors,                               employees.
                        officers, and
                        employees.
545.122..............  Employment contracts  545.122..........  Employment contracts.
545.123..............  Advisory boards and   545.123..........  Advisory boards and committees.
                        committees.
545.124-545.125......  [Reserved]..........  545.124-545.125..  [Reserved].
545.126..............  Referral of           545.126..........  Referral of insurance business.
                        insurance business.
545.127-545.130......  [Reserved]..........  545.127-545.130..  [Reserved].
545.131..............  Communication         545.131..........  Communication between members of a federal
                        between members of                       mutual savings association.
                        a federal mutual
                        association.
545.132..............  Disclosure of         545.132..........  Disclosure of customer records.
                        customer records.
545.133-545.135......  [Reserved]..........  545.133-545.135..  [Reserved].
545.136..............  Financial future      545.136..........  Financial future transactions.
                        transactions.
545.137..............  Financial options     545.137..........  Financial options transactions.
                        transactions.
545.138..............  Data-processing       545.138..........  Data-processing services.
                        services.
545.139-545.140......  [Reserved]..........  545.139-545.140..  [Reserved].
545.141..............  Remote service units  545.141..........  Remote service units (RSUs).
                        (RSUs).
545.142..............  Home banking          545.142..........  Home banking services.
                        services.
Appendix.............  Notice to housing     Removed..........  ................................................
                        creditors regarding
                        alternative
                        mortgage
                        transactions.
 
       PART 546
 
546.1................  Definitions.........  546.1............  Definitions.
546.2................  Procedure; effective  546.2............  Procedure; effective date.
                        date.
546.3................  Transfer of assets    546.3............  Transfer of assets upon merger.
                        upon merger.
546.4................  Voluntary             546.4............  Voluntary dissolution.
                        dissolution.
546.5................  [Removed effective    .................  ................................................
                        December 15, 1982].
 
       PART 547
 
547.1................  Grounds for           Removed..........  ................................................
                        appointment of
                        conservator or
                        receiver.

[[Page 506]]

 
547.2................  Appointment of        Removed..........  ................................................
                        conservator or
                        receiver.
547.3................  Appointments on       Removed..........  ................................................
                        other grounds.
547.4................  Notice of             558.2............  Notice of appointment.
                        appointment.
                                             559.2............  Notice of appointment.
547.5................  Removal of            Removed..........  ................................................
                        conservator or
                        receiver.
547.6................  Federal Savings and   Removed..........  ................................................
                        Loan Insurance
                        Corporation as
                        receiver.
547.7................  Possession by         Removed..........  ................................................
                        conservator or
                        receiver.
547.8................  Surrender of          558.6............  Surrender of a possession by a conservator.
                        possession by
                        conservator or
                        receiver.
 
       PART 548                                   PART 558
 
548.1................  Procedure upon        558.1............  Procedure upon taking possession.
                        taking possession.
548.2................  Powers and duties of  Removed..........  (FDIC-382.2).
                        conservator.
548.3................  Creditors...........  Removed..........  (FDIC-382.3).
548.4................  Share interests.....  Removed..........  (FDIC-382.4).
548.5................  Inventory;            558.3............  Inventory.
                        examinations and
                        audits, and costs
                        thereof; accounting
                        practices.
548.6................  Final discharge and   558.7............  Final discharge and release of conservator.
                        release of
                        conservator.
548.7................  Inspection of         558.4............  Inspection of reports.
                        reports.
548.8................  Delegation by         558.5............  Delegation by conservator.
                        conservator.
 
       PART 549                                   PART 559
 
549.1................  Definitions.........  Removed..........  (FDIC-383.1).
549.2................  Procedure upon        559.1............  Procedure upon taking possession.
                        taking possession.
549.3................  Powers and duties of  Removed..........  (FDIC-383.3).
                        receiver.
549.4................  Creditor claims.....  Removed..........  (FDIC-383.4).
549.5................  Share interest        Removed..........  (FDIC-383.5).
                        claims.
                                             559.5............  Delegation by receiver.
549.5-1..............  Deposit associations  Removed..........  (FDIC-383.6).
549.6................  Inventory;            559.3............  Inventory.
                        examinations and
                        audits, and costs
                        thereof; accounting
                        practices.
549.7................  Final discharge and   559.6............  Final discharge and release of receiver.
                        release of receiver.
549.8................  Inspection of         559.4............  Inspection of reports.
                        reports.
 
       PART 550
 
550.1................  Definitions.........  550.1............  Definitions.
550.2................  Applications........  550.2............  Applications.
550.3................  Consolidation or      550.3............  Consolidation or merger of two or more Federal
                        merger of two or                         savings associations.
                        more Federal
                        associations.
550.4................  Deposit of            550.4............  Deposit of securities with state authorities.
                        securities with
                        state authorities.
550.5................  Administration of     550.5............  Administration of trust powers.
                        trust powers.
550.6................  Books and accounts..  550.6............  Books and accounts.
550.7................  Audit of trust        550.7............  Audit of trust department.
                        department.
550.8................  Funds awaiting        550.8............  Funds awaiting investment or distribution.
                        investment or
                        distribution.
550.9................  Investment of funds   550.9............  Investment of funds held as fiduciary.
                        held as fiduciary.
550.10...............  Self-dealing........  550.10...........  Self-dealing.
550.11...............  Custody of            550.11...........  Custody of investments.
                        investments.
550.12...............  Compensation of       550.12...........  Compensation of Federal savings association.
                        association.
550.13...............  Collective            550.13...........  Collective investment.
                        investment.
550.14...............  Surrender of trust    550.14...........  Surrender of trust powers.
                        powers.
550.15...............  Effect on trust       550.15...........  Effect on trust accounts of appointment of
                        accounts of                              conservator or receiver or voluntary
                        appointment of                           dissolution of association.
                        conservator or
                        receiver or
                        voluntary
                        dissolution of
                        association.
550.16...............  Revocation of trust   550.16...........  Revocation of trust powers.
                        powers.
 
       PART 551
 
551.1................  Service of process..  510.4............  Service of process.
 
       PART 552
 
552.1................  Definitions.........  552.1............  Definitions.
552.2................  Corporate title.....  552.2............  Corporate title.
552.2-1..............  Procedure for         552.2-1..........  Procedure for organization of Federal stock
                        organization of                          association.
                        Federal stock
                        association.
552.2-2..............  Procedures for        552.2-2..........  Procedures for organization of interim Federal
                        organization of                          stock association.
                        interim Federal
                        stock association.
552.2-3..............  Federal stock         552.2-3..........  Federal stock association created in connection
                        association                              with an association in default or in danger of
                        proposed by Federal                      default.
                        Savings and Loan
                        Insurance
                        Corporation.
552.2-4..............  Limitations on        552.2-4..........  Limitations on transaction of business.
                        transaction of
                        business.
552.2-5..............  Conversion from       552.2-5..........  Conversation from Federal mutual to Federal
                        Federal mutual to                        stock charter.
                        Federal stock
                        charter.
552.2-6..............  Conversion from       552.2-6..........  Conversion from state stock to Federal stock
                        state stock to                           charter.
                        Federal stock
                        charter.
552.3................  Charters for Federal  552.3............  Charters for Federal stock associations.
                        stock associations.

[[Page 507]]

 
552.4................  Charter amendments..  552.4............  Charter amendments.
552.5................  Bylaws..............  552.5............  Bylaws.
552.6................  Shareholders........  552.6............  Shareholders.
552.6-1..............  Board of directors..  552.6-1..........  Board of directors.
552.6-2..............  Officers............  552.6-2..........  Officers.
552.6-3..............  Certificates for      552.6-3..........  Certificates for shares and their transfer.
                        shares and their
                        transfer.
552.6-4..............  Fiscal year; annual   552.6-4..........  Fiscal year; annual audit.
                        audit.
552.7................  Description of        552.7............  Description of Federal stock associations.
                        federal stock
                        associations.
552.8................  Savings deposits....  552.8............  Savings deposits.
552.9................  Investments,          Removed..........  ................................................
                        services and
                        borrowings.
552.10...............  Annual reports to     552.10...........  Annual reports to stockholders.
                        stockholders.
552.11...............  Books and records...  552.11...........  Books and records.
552.13...............  Combinations          552.13...........  Combinations involving Federal stock
                        involving federal                        associations.
                        stock associations.
552.14...............  Dissenter and         552.14...........  Dissenter and appraisal rights.
                        appraisal rights.
552.15...............  Supervisory           552.15...........  Supervisory combinations.
                        combinations.
552.16...............  Effect of subsequent  552.16...........  Effect of subsequent charter of bylaw change.
                        charter of bylaw
                        change.
Appendix.............  Model bylaws for      Appendix.........  Model bylaws for stock associations.
                        stock associations.
 
       PART 555                                   PART 556
 
555.1................  Directors...........  556.1............  Directors.
555.2................  Power to engage in    556.2............  Power to engage in escrow business.
                        escrow business.
555.3................  Real estate.........  556.3............  Real estate.
555.5................  Insurance...........  556.4............  Insurance.
555.8................  Savings accounts....  556.6............  Savings accounts.
555.9................  Effect of loan        556.17...........  Effect of loan participation on status of
                        participation on                         borrowing members.
                        status of borrowing
                        members.
555.10...............  Service corporation   556.7............  Service corporation secured debt limitation.
                        secured debt
                        limitation.
555.12...............  Drive-in and          556.15...........  Drive-in and pedestrian facilities.
                        pedestrian
                        facilities.
555.13...............  First liens on        556.10...........  First liens on properties sold by the Secretary
                        properties sold by                       of HUD.
                        the Secretary of
                        HUD.
555.14...............  Chief executive       556.14...........  Chief executive officer of a branch office.
                        officer of a branch
                        office.
555.15...............  Prepayment penalty    556.11...........  Prepayment penalty on mortgage loans.
                        on mortgage loans.
555.17...............  Insurance agencies--  556.16...........  Insurance agencies--usurpation of corporate
                        usurpation of                            opportunity.
                        corporate
                        opportunity.
555.18...............  Deposit assurance of  556.12...........  Deposit assurance of direct deposit of social
                        direct deposit of                        security payments.
                        social security
                        payments.
555.19...............  Receipt of interest   556.13...........  Receipt of interest expressed as a percentage of
                        expressed as a                           other income.
                        percentage of other
                        income.
 
       PART 556
 
556.1................  [Previously Deleted]  .................  ................................................
556.2................  [Previously           .................  ................................................
                        Rescinded].
556.3................  [Previously           .................  ................................................
                        Rescinded].
556.4................  [Previously           .................  ................................................
                        Rescinded].
556.5................  Establishment of      556.5............  Establishment of branch offices.
                        branch offices.
556.7................  Service corporation   Removed..........  ................................................
                        involvement with
                        gold or gold
                        related
                        transactions.
556.8................  Suretyship..........  556.8............  Suretyship.
556.9................  Imposition of late    556.9............  Imposition of late charges and due-on-sale
                        charges and due-on-                      clauses.
                        sale clauses.
556.10...............  [Removed effective    .................  ................................................
                        February 13, 1981].
 
       PART 561
 
561.1................  Insured institution.  561.43...........  Savings association.
                                             561.1............  General.
561.2................  Insured member......  561.3............  Accountholder.
561.2a...............  Deposit broker......  561.17...........  Deposit broker.
561.3................  Insured account.....  561.2............  Account.
561.4................  Trust estate........  Removed..........  ................................................
561.5................  Public Unit.........  561.40...........  Public unit.
561.5a...............  Political             561.38...........  Political subdivision.
                        subdivision.
561.5b...............  Independent activity  Removed..........  ................................................
561.6................  All insured accounts  Removed..........  ................................................
561.7................  Principal office....  561.39...........  Principal office.
                                             561.7............  BIF.
561.8................  With recourse.......  561.55...........  With recourse.
561.9................  Premium.............  Removed..........  ................................................
561.10...............  Primary reserve;      Removed..........  ................................................
                        secondary reserve.
561.11...............  Savings accounts....  Removed..........  ................................................
561.11a..............  Checking accounts...  561.16...........  Demand accounts.
561.11b..............  Tax and loan          Removed..........  ................................................
                        accounts.
561.11c..............  Note account........  Removed..........  ................................................
561.11d..............  United States         Removed..........  ................................................
                        Treasury General
                        Account.

[[Page 508]]

 
561.11e..............  United States         Removed..........  ................................................
                        Treasury Time
                        Deposit-Open
                        Account.
561.11f..............  Money Market Deposit  561.28...........  Money Market Deposit Accounts.
                        Accounts.
561.11g..............  Negotiable order of   561.29...........  Negotiable Order of Withdrawal Accounts.
                        withdrawal accounts.
561.12...............  Closing date........  561.11...........  Closing date.
561.13...............  Regulatory capital..  Removed..........  (OTS-54 FR 46845).
561.14...............  [Removed effective    .................  ................................................
                        Aug. 16, 1982].
561.15...............  Scheduled items       Removed..........  ................................................
                        [Reserved].
                                             561.15...........  Corporation.
561.16...............  Slow loans..........  561.48...........  Slow loans.
561.16a..............  Slow consumer credit  561.47...........  Slow consumer credit.
561.16b..............  Consumer credit       561.13...........  Consumer credit classified as a loss.
                        classified as a
                        loss.
561.16c..............  Classification of     563.160..........  Classification of certain assets.
                        certain assets.
561.17...............  [Previously Removed   .................  ................................................
                        and Reserved].
561.18...............  Land loan...........  561.26...........  Land loan.
561.19...............  Nonresidential        561.30...........  Nonresidential construction loan.
                        construction loan.
561.20...............  Insured loan........  561.25...........  Insured loan.
561.21...............  Guaranteed loan.....  561.20...........  Guaranteed loan.
561.21a..............  Guaranteed            561.21...........  Guaranteed obligation.
                        obligation.
561.22...............  Normal lending        561.32...........  Normal lending territory.
                        territory.
561.23...............  Low-rent housing....  561.27...........  Low-rent housing.
561.24...............  Subordinated debt     561.51...........  Subordinated debt security.
                        security.
561.24a..............  [Deleted effective    .................  ................................................
                        May 30, 1980].
561.25...............  Affiliate...........  561.4............  Affiliate.
561.26...............  Service corporation.  561.45...........  Service corporation.
561.27...............  Service corporation   561.46...........  Service corporation affiliate.
                        affiliate.
561.28...............  Controlling person..  561.14...........  Controlling person.
561.29...............  Affiliated person...  561.5............  Affiliated person.
561.30...............  Immediate family....  561.24...........  Immediate family.
561.31...............  Director............  561.18...........  Director.
561.32...............  Officer.............  561.35...........  Officer.
561.33...............  Financial             561.19...........  Financial institution.
                        institution.
561.34...............  Holding company       561.22...........  Holding company affiliate.
                        affiliate.
                                             561.34...........  Office.
561.35...............  Principal             Removed..........  ................................................
                        supervisory agent.
561.36...............  Parent company;       561.37...........  Parent company; subsidiary.
                        subsidiary.
561.37...............  Audit period........  561.6............  Audit period.
561.38...............  Consumer credit.....  561.12...........  Consumer credit.
561.39...............  Open-end consumer     561.36...........  Open-end consumer credit.
                        credit.
561.40...............  Closed-end credit...  561.10...........  Closed-end consumer credit.
561.41...............  Security............  561.44...........  Security.
                                             561.41...........  SAIF.
561.42...............  Nonwithdrawable       561.31...........  Nonwithdrawable account.
                        account.
                                             561.49...........  [Reserved].
                                             561.50...........  State.
 
       PART 562                                   PART 384
 
562.1................  General provisions..  Removed..........  (FDIC-384.1).
562.2................  Application form....  Removed..........  (FDIC-384.2).
562.3................  Filing and amendment  Removed..........  (FDIC-384.3).
                        of application.
562.4................  Processing of         Removed..........  (FDIC-384.4).
                        application.
562.5................  [Previously Deleted]                     ................................................
562.6................  Exceptions to         Removed..........  (FDIC-384.5).
                        foregoing procedure.
562.7................  Action by             Removed..........  (FDIC-384.6).
                        Corporation.
562.8................  Costs of              Removed..........  (FDIC-384.7).
                        examination, audit,
                        and appraisal.
562.9................  Effective date of     Removed..........  (FDIC-384.8).
                        insurance; initial
                        premium payment,
                        issuance of
                        certificate of
                        insurance.
562.10...............  Prohibition against   Removed..........  (FDIC-384.9).
                        advertising
                        prospective
                        insurance.
 
       PART 563
 
563.1................  Form of account.....  563.1............  Form of account.
563.2................  Simple form of        563.2............  Simple form of certificate; passbooks.
                        certificate;
                        passbooks.
563.3................  Long form of          563.3............  Long form of membership certificate.
                        membership
                        certificate.
563.3-1..............  Fixed-term accounts   563.7............  Fixed-term accounts (certificate accounts).
                        (certificate
                        accounts).
563.3-2..............  Negotiable order of   563.8............  Negotiable order of withdrawal accounts
                        withdrawal accounts                      authorized.
                        authorized.
563.3-3..............  Eurodollar deposits.  563.9............  Eurodollar deposits.
563.3-10.............  Earnings-based        563.10...........  Earnings-based accounts.
                        accounts.
563.4................  Brokered deposits...  563.4............  Brokered deposits.
563.5................  Securities:           563.5............  Securities: statement of non-insurance.
                        statement of non-
                        insurance.
563.6................  Payment of insured    563.6............  Payment of insured accounts on demand.
                        accounts on demand.
563.7................  [Removed effective    .................  ................................................
                        April 25, 1982].

[[Page 509]]

 
563.7-1..............  Savings deposits or   545.10...........  Savings deposits or shares.
                        shares of Federal
                        savings and loan
                        associations.
563.7-2..............  Form, return and      563.72...........  Form, return and maturity of securities.
                        maturity of
                        securities.
563.7-3..............  [Previously           .................  ................................................
                        Rescinded].
563.7-4..............  Mutual capital        563.74...........  Mutual capital certificates.
                        certificates.
563.7-5..............  Mandatorily           563.75...........  Mandatorily redeemable preferred stock.
                        redeemable
                        preferred stock.
563.8................  Borrowing             563.80...........  Borrowing limitations.
                        limitations.
563.8-1..............  Issuance of           563.81...........  Issuance of subordinated debt securities.
                        subordinated debt
                        securities.
563.8-2..............  Corporation's right   Removed..........  (FDIC-385.5).
                        of purchase.
563.8-3..............  [Removed effective    .................  ................................................
                        February 14, 1982].
563.8-4..............  Transfer and          563.84...........  Transfer and repurchase of government
                        repurchase of                            securities.
                        government
                        securities.
563.9................  Geographic lending    563.90...........  Appraisals on loans outside lending area.
                        restrictions.
563.9-1-563.9-2......  [Previously           .................  ................................................
                        Rescinded].
563.9-3..............  Loans to one          563.93...........  Loans to one borrower.
                        borrower.
563.9-4..............  Mortgage              563.94...........  Mortgage transactions with the Federal Home Loan
                        transactions with                        Mortgage Corporation.
                        the Federal Home
                        Loan Mortgage
                        Corporation.
563.9-5..............  Investment in state   563.95...........  Investment in state housing corporations.
                        housing
                        corporations.
563.9-6..............  Limitation on         563.96...........  Limitation on investment in accounts of
                        investment in                            commercial banks and thrift institutions and in
                        accounts of                              debt securities hedged with forward
                        commercial banks                         commitments.
                        and thrift
                        institutions and in
                        debt securities
                        hedged with forward
                        commitments.
563.9-7..............  Loans in excess of    563.97...........  Loans in excess of 90 percent of value.
                        90 percent of value.
563.9-8..............  Regulation of equity  563.98...........  Regulation of equity risk investment in equity
                        risk investment in                       securities, real estate, service corporations,
                        equity securities,                       operating subsidiaries, certain land loans, and
                        real estate,                             nonresidential construction loans.
                        service
                        corporations,
                        operating
                        subsidiaries,
                        certain land loans,
                        and nonresidential
                        construction loans.
563.9-9..............  Adjustable-rate       563.99...........  Fixed-rate and adjustable-rate mortgage loan
                        mortgage loan                            disclosures, adjustment notices, and interest
                        disclosures.                             rate caps.
Appendix.............  Adjustable-rate       Appendix to        ................................................
                        mortgage disclosure   563.99.
                        sample.
563.10--563.11.......  [Previously           .................  ................................................
                        Rescinded].
563.12...............  [Previously Deleted]  .................  ................................................
563.13...............  Regulatory capital    .................  Removed (OTS-54 FR 46845).
                        requirement.
563.13-1.............  Liability growth....  563.131..........  Liability growth.
563.13-2.............  Securities issued     563.132..........  Securities issued through subsidiaries.
                        through
                        subsidiaries.
563.13-3.............  Sale of Federal Home  563.133..........  Sale of Federal Home Loan Mortgage Corporation
                        Loan Mortgage                            preferred stock.
                        Corporation
                        preferred stock.
563.14...............  Individual minimum    567.3............  Individual minimum capital requirements.
                        capital
                        requirements.
563.14-1.............  Capital directives..  567.4............  Capital directives.
563.15...............  Premiums............  Removed..........  (FDIC-385.6).
563.16...............  Premiums in mergers,  Removed..........  (FDIC-385.7).
                        consolidations, or
                        purchases of bulk
                        assets.
563.16-1.............  [Previously Revoked]  .................  ................................................
563.16-2.............  Secondary reserve...  Removed..........  (FDIC-385.8).
563.17...............  Management and        563.161..........  Management and financial policies.
                        financial policies.
563.17-1.............  Examinations and      563.170..........  Examinations and audits; appraisals;
                        audits; appraisals;                      establishment and maintenance of records.
                        establishment and
                        maintenance of
                        records.
563.17-1a............  Appraisal policies    563.171..........  Appraisal policies and practice of savings
                        and practice of                          associations and service corporations.
                        insured
                        institutions and
                        service
                        corporations.
563.17-2.............  Re-evaluation of      563.172..........  Re-evaluation of assets; adjustment of book
                        assets; adjustment                       value; adjustment charges.
                        of book value;
                        adjustment charges.
563.17-3.............  Forward commitments.  563.173..........  Forward commitments.
563.17-4.............  Futures transactions  563.174..........  Futures transactions.
563.17-5.............  Financial options     563.175..........  Financial options transactions.
                        transactions.
563.17-6.............  Interest-rate-risk-   563.176..........  Interest-rate-risk-management procedures.
                        management
                        procedures.
563.17-7.............  Procedures for        563.177..........  Procedures for monitoring Bank Secrecy Act
                        monitoring Bank                          compliance.
                        Secrecy Act
                        compliance.
563.18...............  Reports to the        563.180..........  Criminal referrals and other reports or
                        Corporation.                             statements.
563.18-1.............  Reports of change in  563.181..........  Reports of change in control of mutual savings
                        control of mutual                        associations.
                        institutions.
563.18-2.............  [Previously Removed]  .................  ................................................
563.18-3.............  Reports of change in  563.183..........  Reports of change in chief executive officer or
                        chief executive                          director; other reports; from and filing of
                        officer or                               such reports.
                        director; other
                        reports; form and
                        filing of such
                        reports.
563.19...............  Bonds for directors,  563.190..........  Bonds for directors, officers, employees, and
                        officers,                                agents; form and amount of bonds.
                        employees, and
                        agents; form of and
                        amount of bonds.
563.20...............  Bonds for agents....  563.191..........  Bonds for agents.
563.21...............  Safe deposit          563.192..........  Safe deposit business.
                        business.

[[Page 510]]

 
563.22...............  Merger,               563.22...........  Merger, consolidation, purchase or sale of
                        consolidation,                           assets, or assumption of liabilities.
                        purchase or sale of
                        assets, or
                        assumption of
                        liabilities.
562.22-1.............  [Previously Revoked]  .................  ................................................
563.23...............  [Previously Removed]  .................  ................................................
563.23-1.............  Premium, discounts,   563.231..........  Premiums and discounts with respect to loans.
                        charges, and
                        credits with
                        respect to loans;
                        sale of real
                        estate; and related
                        items.
563.23-2.............  Accounting for gains  Removed..........  ................................................
                        and losses with
                        respect to
                        transactions in
                        securities.
563.23-3.............  Accounting            563.233..........  Accounting principles and procedures.
                        principles and
                        procedures.
563.23-4.............  Accounting for        563.234..........  Accounting for troubled debt restructuring.
                        troubled debt
                        restructuring.
563.24...............  Sales plans; give-    563.24...........  Sales plans; give-aways.
                        aways.
563.25-563.26........  [Previously Removed]  .................  ................................................
563.27...............  Advertising must be   563.27...........  Advertising.
                        accurate.
563.28...............  Advertising of        Removed..........  (FDIC-385.9).
                        insurance of
                        accounts.
563.29...............  Name of association.  563.29...........  Name of association.
563.29-1.............  Continuation of       Removed..........  (FDIC-385.1).
                        insurance.
563.30...............  Reservation of right  Removed..........  (FDIC-385.2).
                        concerning
                        advertising.
563.31...............  Other insurance or    Removed..........  (FDIC-385.3).
                        guaranty.
563.32...............  Payment of trustee    563.32...........  Payment of trustee fees on pension trust
                        fees on pension                          accounts.
                        trust accounts.
563.33...............  Directors, officers,  563.33...........  Directors, officers, and employees.
                        and employees.
563.34...............  Deposit               563.34...........  Deposit relationships involving affiliated
                        relationships                            persons.
                        involving
                        affiliated persons.
563.35...............  Restrictions          563.35...........  Restrictions involving loan services.
                        involving loan
                        services.
563.36...............  Equal Opportunity in  Removed..........  (FDIC-385.4).
                        Employment.
563.37...............  Operation of service  563.37...........  Operation of service corporations, limited
                        corporations;                            liability of savings association, for debt of
                        limited liability                        service corporation.
                        of insured
                        institution for
                        debt of service
                        corporation.
563.38...............  Salvage power of      563.38...........  Salvage power of savings association to assist
                        insured institution                      service corporation.
                        to assist service
                        corporation.
563.39...............  Employment contracts  563.39...........  Employment contracts.
563.39-1.............  Pension plans.......  563.47...........  Pension plans.
563.40...............  Restrictions on loan  563.40...........  Restrictions on loan procurement fees, kickbacks
                        procurement fees,                        and unearned fees.
                        kickbacks and
                        unearned fees.
563.41...............  Restrictions on real  563.41...........  Restrictions on real and personal property
                        and personal                             transactions with affiliated persons.
                        property
                        transactions with
                        affiliated persons.
563.42...............  [Reserved]..........  563.42...........  [Reserved].
563.43...............  Restrictions on       563.43...........  Restrictions on loans and other investments
                        loans and other                          involving affiliates and affiliated persons.
                        investments
                        involving
                        affiliated persons.
563.44...............  Loans involving       563.44...........  Loans involving mortgage insurance.
                        mortgage insurance.
563.45...............  Disclosure..........  563.45...........  Disclosure.
563.46...............  Charge-off of         563.46...........  Charge-off of consumer credit classified as a
                        consumer credit                          loss.
                        classified as a
                        loss.
563.47...............  Capital forbearance.  567.20...........  Grandfathered capital forbearances.
 
      PART 563a                                   PART 568
 
563a.1...............  Scope of part and     568.1............  Scope of part and definitions.
                        definitions.
563a.2...............  Designation of        568.2............  Designation of security officer.
                        security officer.
563a.3...............  Security devices....  568.3............  Security devices.
563a.4...............  Security procedures.  568.4............  Security procedures.
563a.5...............  Reports and records.  568.5............  Reports and records.
563a.6...............  Corrective action...  568.6............  Corrective action.
563a.7...............  Penalty provision...  568.7............  Penalty provision.
Appendix A...........  Minimum standards     Appendix A.......  Minimum standards for security devices.
                        for security
                        devices.
Appendix B...........  Proper employee       Appendix B.......  Proper employee conduct during and after a
                        conduct during and                       robbery.
                        after a robbery.
 
      PART 563b
 
563b.1...............  Scope of part.......  563b.1...........  Scope of part.
563b.2...............  Definitions.........  563b.2...........  Definitions.
563b.3...............  General principles    563b.3...........  General principles for conversions.
                        for conversions.
563b.4...............  Notice of filing;     563b.4...........  Notice of filing; public statements;
                        public statements;                       confidentiality.
                        confidentiality.
563b.5...............  Solicitation of       563b.5...........  Solicitation of proxies; proxy statement.
                        proxies; proxy
                        statement.
563b.6...............  Vote by members.....  563b.6...........  Vote by members.
563b.7...............  Pricing and sale of   563b.7...........  Pricing and sale of securities.
                        security.
563b.8...............  Procedural            563b.8...........  Procedural requirements.
                        requirements.
563b.9...............  Conversion of an      563b.9...........  Conversion of a savings association in
                        insured institution                      connection with the formation of a holding
                        in connection with                       company.
                        the formation of a
                        holding company.

[[Page 511]]

 
563b.10..............  Conversion of an      563b.10..........  Conversion of a savings association in
                        insured institution                      connection with an acquisition by an existing
                        in connection with                       holding company; conversion of a savings
                        an acquisition by                        association through merger with an existing
                        an existing holding                      stock savings association.
                        company; conversion
                        of an insured
                        institution through
                        merger with an
                        insured stock
                        institution.
Subpart B............  [Removed effective    .................  ................................................
                        January 4, 1984].
563b.20..............  Scope of subpart....  563b.20..........  Scope of subpart.
563b.21..............  Voluntary             563b.21..........  Voluntary supervisory conversions.
                        supervisory
                        conversions.
563b.22..............  Purpose of subpart..  563b.22..........  Purpose of subpart.
563b.23..............  Authority of          563b.23..........  Authorization of supervisory conversions.
                        supervisory
                        conversions.
563b.24..............  Qualification for     563b.24..........  Qualification for supervisory conversion of SAIF-
                        supervisory                              insured savings associations.
                        conversion of FSLIC-
                        insured
                        institutions.
563b.25..............  Qualifications for    563b.25..........  Qualifications for supervisory conversion of BIF-
                        supervisory                              insured savings associations.
                        conversion of FDIC-
                        insured
                        institutions.
563b.26..............  Viability of          563b.26..........  Viability of converted savings association.
                        converted insured
                        institution.
563b.27..............  Application for       563b.27..........  Application for voluntary supervisory stock
                        voluntary                                conversion.
                        supervisory stock
                        conversion.
563b.28..............  Procedural            563b.28..........  Procedural requirements.
                        requirements.
563b.29..............  Conditions of         563b.29..........  Conditions of approval.
                        approval.
563b.30..............  Sale of conversion    563b.30..........  Sale of conversion stock.
                        stock.
563b.31..............  Expenses............  563b.31..........  Expenses.
563b.32..............  Employment contracts  563b.32..........  Employment contracts.
563b.33..............  [Previously Removed]  .................  ................................................
563b.34..............  Scope of subpart....  563b.34..........  Scope of subpart.
563b.35..............  Modified stock        563b.35..........  Modified stock conversion.
                        conversion.
563b.36..............  Purpose of subpart..  563b.36..........  Purpose of subpart.
563b.37..............  Qualification for     563b.37..........  Qualification for modified conversion.
                        modified conversion.
563b.38..............  Authorization of      563b.38..........  Authorization of modified conversion.
                        modified conversion.
563b.39..............  Application for       563b.39..........  Application for modified conversion.
                        modified conversion.
563b.40..............  Sale of stock.......  563b.40..........  Sale of stock.
563b.41..............  Procedural            563b.41..........  Procedural requirements.
                        requirements.
563b.100.............  Form AC--Application  563b.100.........  Form AC--Application for Conversion.
                        for Conversion.
563b.101.............  Form PS--Proxy        563b.101.........  Form PS--Proxy Statements.
                        Statements.
563b.102.............  Form OC--Offering     563b.102.........  Form OC--Offering Circulars.
                        Circulars.
 
      PART 563c
 
563c.1...............  Form and content of   563c.1...........  Form and content of financial statements.
                        financial
                        statements.
563c.2...............  Definitions.........  563c.2...........  Definitions.
563c.3...............  Qualification of      563c.3...........  Qualification of Public Accountant.
                        public accountant.
563c.4...............  Condensed financial   563c.4...........  Condensed financial information [Parent only].
                        information [Parent
                        only].
563c.10..............  Use of accrual basis  563c.10..........  Use of accrual basis of accounting.
                        of accounting.
563c.11..............  Accounting for        Removed..........  ................................................
                        uncollectible
                        income.
563c.12..............  Accounting for net    563c.12..........  Accounting for net income.
                        income.
563c.13..............  Accounting for        563c.13..........  Accounting for investment in service
                        investment in                            corporation.
                        service corporation.
563c.14..............  Accounting for gains  563c.14..........  Accounting for gains and losses on the sale or
                        and losses on the                        other disposition of mortgage loans, redeemable
                        sale or other                            ground-rent leases, and certain securities;
                        disposition of                           matching the amortization of discounts and
                        mortgage loans,                          losses.
                        redeemable ground-
                        rent leases, and
                        certain securities;
                        matching the
                        amortization of
                        discounts and
                        losses.
563c.101.............  Application of this   563c.101.........  Application of this subpart.
                        subpart.
563c.102.............  Financial statement   563c.102.........  Financial statement presentation.
                        presentation.
 
      PART 563d
 
563d.1...............  Requirements under    563d.1...........  Requirements under certain sections of the
                        certain sections of                      Securities Exchange Act of 1934.
                        the Securities
                        Exchange Act of
                        1934.
563d.2...............  Mailing requirements  563d.2...........  Mailing requirements for securities filings.
                        for securities
                        filings.
563d.3b-6............  Liability for         563d.3d-6........  Liability for certain statements by savings
                        certain statements                       associations.
                        by registrants.
563d.200.30..........  Delegation of         563d.200-30......  Delegation of authority to Chief Counsel.
                        authority to
                        General Counsel.
563d.210.............  Form and content of   563d.210.........  Form and content of financial statements.
                        financial
                        statements.
563d.801.............  Application of this   563d.801.........  Application of this subpart.
                        Subpart.
563d.802.............  Description of        563d.802.........  Description of business.
                        business.
 
      PART 563e
 
563e.1...............  Authority...........  563e.1...........  Authority.
563e.2...............  Purposes............  563e.2...........  Purposes.
563e.3...............  Delineation of        563e.3...........  Delineation of community.
                        community.
563e.4...............  Community             563e.4...........  Community Reinvestment Act statement.
                        Reinvestment Act
                        statement.
563e.5...............  Files of public       563e.5...........  Files of public comments and recent CRA
                        comments and recent                      statements.
                        CRA statements.
563e.6...............  Public notice.......  563e.6...........  Public notice.
563e.7...............  Assessing the record  563e.7...........  Assessing the record of performance.
                        of performance.
563e.8...............  Effect on             563e.8...........  Effect on applications.
                        applications.
 

[[Page 512]]

 
      PART 563f
 
563f.1...............  Authority, purpose,   563f.1...........  Authority, purpose, and scope.
                        and scope.
563f.2...............  Definitions.........  563f.2...........  Definitions.
563f.3...............  General prohibitions  563f.3...........  General prohibitions.
563f.4...............  Permitted             563f.4...........  Permitted interlocking relationships.
                        interlocking
                        relationships.
563f.5...............  Grandfathered         563f.5...........  Grandfathered interlocking relationships.
                        interlocking
                        relationships.
563f.6...............  Changes in            563f.6...........  Changes in circumstances.
                        circumstances.
563f.7...............  Delegation of         563f.7...........  Delegation of authority to grant exemptions and
                        authority to grant                       extensions of time.
                        exemptions and
                        extensions of time.
563f.8...............  Enforcement.........  563f.8...........  Enforcement.
 
      PART 563g
 
563g.1...............  Definitions.........  563g.1...........  Definitions.
563g.2...............  Offering circular     563g.2...........  Offering circular requirement.
                        requirements.
563g.3...............  Exemptions..........  563g.3...........  Exemptions.
563g.4...............  Non-public offerings  563g.4...........  Non-public offering.
563g.5...............  Filing and signature  563g.5...........  Filing and signature requirements.
                        requirements.
563g.6...............  Effective date......  563g.6...........  Effective date.
563g.7...............  Form, content, and    563g.7...........  Form, content, and accounting.
                        accounting.
563g.8...............  Use of the offering   563g.8...........  Use of the offering circular.
                        circular.
563g.9...............  Escrow requirement..  563g.9...........  Escrow requirement.
563g.10..............  Unsafe or unsound     563g.10..........  Unsafe or unsound practices.
                        practices.
563g.11..............  Withdrawal or         563g.11..........  Withdrawal or abandonment.
                        abandonment.
563g.12..............  Securities sale       563g.12..........  Securities sale report.
                        report.
563g.13..............  Public disclosure     563g.13..........  Public disclosure and confidential treatment.
                        and confidential
                        treatment.
563g.14..............  Waiver..............  563g.14..........  Waiver.
563g.15..............  Requests for          563g.15..........  Requests for interpretive advice or waiver.
                        interpretive advice
                        or waiver.
563g.16..............  Delayed or            563g.16..........  Delayed or continuous offering and sale of
                        continuous offering                      securities.
                        and sale of
                        securities.
563g.17..............  Direct sales of       563g.17..........  Direct sales of securities at an office.
                        securities at an
                        office.
563g.18..............  Current and periodic  563g.18..........  Current and periodic reports.
                        reports.
563g.19..............  Approval of the       563g.19..........  Approval of the security.
                        security.
563g.20..............  Form for securities   563g.20..........  Form for securities sale report.
                        sale report.
563g.21..............  Filing of copies of   563g.21..........  Filing of copies of offering circulars in
                        offering circulars                       certain exempt offerings.
                        in certain exempt
                        offerings.
563g.22..............  Delegation of         563g.22..........  Delegation of authority.
                        authority.
 
       PART 564                                   PART 386
 
 
 
564.1................  Settlement of         Removed..........  (FDIC-386.1).
                        insurance upon
                        default.
564.2................  General principles    Removed..........  (FDIC-386.2).
                        applicable in
                        determining
                        insurance of
                        accounts.
564.3................  Single ownership      Removed..........  (FDIC-386.3).
                        accounts.
564.4................  Testamentary          Removed..........  (FDIC-386.4).
                        accounts.
564.5................  Accounts held by      Removed..........  (FDIC-386.5).
                        executors or
                        administrators.
564.6................  Accounts held by a    Removed..........  (FDIC-386.6).
                        corporation or
                        partnership.
564.7................  Accounts held by an   Removed..........  (FDIC-386.7).
                        unincorporated
                        association.
564.8................  Public unit accounts  Removed..........  (FDIC-386.8).
564.9................  Joint account.......  Removed..........  (FDIC-386.9).
564.10...............  Trust accounts and    Removed..........  (FDIC-386.10).
                        IRA and Keogh
                        accounts.
564.11...............  FDIC-insured federal  Removed..........  (FDIC-386.11).
                        associations.
564.12...............  [Invalidated by       .................  ................................................
                        court order, June
                        20, 1984 (49 FR
                        27294)].
Appendix.............  Examples of           Removed..........  (FDIC-Appendix to Part 386).
                        insurance coverage
                        afforded accounts
                        in institutions
                        insured by the
                        Federal Savings and
                        Loan Insurance
                        Corporation.
 
       PART 565                                   PART 387
 
565.1................  Voluntary             Removed..........  (FDIC-387.1).
                        termination of
                        insurance.
565.2................  Termination by the    Removed..........  (FDIC-387.2).
                        Corporation.
565.3................  Termination of        Removed..........  (FDIC-387.3).
                        insurance resulting
                        from removal from
                        Federal Home Loan
                        Bank membership.
565.4................  Date of termination   Removed..........  (FDIC-387.4).
                        of insured status.
565.5................  Notice to insured     Removed..........  (FDIC-387.5).
                        members.
565.6................  Cessation of          Removed..........  (FDIC-387.6).
                        existence; mergers
                        and consolidations.
565.7................  Cessation of          Removed..........  (FDIC-387.7).
                        existence; other
                        cases.

[[Page 513]]

 
565.8................  Surrender of          Removed..........  (FDIC-387.8).
                        insurance
                        certificate.
565.9................  FDIC-insured federal  Removed..........  (FDIC-387.9).
                        associations.
565.10...............  Liquidation account.  Removed..........  (FDIC-387.10).
 
 PART 566-[Rescinded]
 
       PART 567
 
567.1................  Amendment of rules    Removed..........  (OTS-54 FR 46845).
                        and regulations.
                                             567.1............  Definitions.
567.2................  [Previously Revoked]  Removed..........  ................................................
                                             567.2............  Minimum regulatory capital requirement.
                                             567.5............  Components of capital.
                                             567.6............  Risk-based capital credit risk weight
                                                                 categories.
                                             567.8............  Leverage ratio.
                                             567.9............  Tangible capital requirement.
                                             567.10...........  Consequences of failure to meet capital
                                                                 requirements.
                                             567.11...........  Reservation of authority.
 
       PART 568
 
568.1................  Agents for service    Removed..........  ................................................
                        of process.
 
       PART 569
 
569.1................  Definitions.........  569.1............  Definitions.
569.2................  Form of proxies.....  569.2............  Form of proxies.
569.3................  Holders or proxies..  569.3............  Holders of proxies.
569.4................  Proxy soliciting      569.4............  Proxy soliciting material.
                        material.
 
      PART 569a                                   PART 579
 
569a.1...............  Grounds for           Removed..........  ................................................
                        appointment of
                        receiver.
                                             579.1............  Scope.
569a.2...............  Appointment of        Removed..........  ................................................
                        Receiver.
569a.3...............  Notice of             579.3............  Notice.
                        appointment.
569a.4...............  Possession by         Removed..........  (FDIC-388.1).
                        Receiver.
                                             579.4............  Inventory.
569a.5...............  Procedure on taking   579.2............  Procedure on taking possession.
                        possession.
                                             579.5............  Inspection of report.
569a.6...............  Powers and duties as  Removed..........  (FDIC-388.3).
                        Receiver.
                                             579.6............  Delegation by conservator.
569a.7...............  Priority of claims..  Removed..........  (FDIC-388.4).
                                             579.7............  Surrender of possession by a conservator.
569a.8...............  Creditor claims.....  Removed..........  (FDIC-388.5).
569a.9...............  Claims of             Removed..........  (FDIC-388.6).
                        accountholders.
569a.10..............  Audits..............  Removed..........  (FDIC-388.7).
569.11...............  Accounting            Removed..........  (FDIC-388.8).
                        practices; reports.
569.12...............  Final discharge and   579.8............  Final discharge and release of conservator.
                        release of Receiver.
569a.13..............  Purchase and          Removed..........  (FDIC-388.10).
                        assumption
                        transactions.
 
      PART 569c                                   PART 389
 
569c.1...............  Definitions.........  Removed..........  (FDIC-389.1).
569c.2...............  Scope...............  Removed..........  (FDIC-389.2)
569c.3-569c.6........  [Previously           Removed..........  (FDIC-389.3)
                        Reserved].
569c.7-1.............  Subrogation of the    Removed..........  (FDIC-389.4)
                        Corporation and
                        Assignment of Claim.
569c.8-1.............  Federal Home Loan     Removed..........  (FDIC-389.5)
                        Banks as Secured
                        Creditors.
569c.9-569c.10.......  [Previously           Removed..........  (FDIC-389.6)
                        Reserved].
569c.11..............  Priorities..........  Removed..........  (FDIC-389.7)
 
       PART 570
 
570.1................  [Previously           .................  ................................................
                        Rescinded].
570.2................  [Previously Revoked]  .................  ................................................
570.3................  Reserves; Federal     Removed..........  ................................................
                        insurance reserve;
                        transfers from;
                        undivided profits.
570.4................  Regulatory capital..  571.23...........  Regulatory capital.
570.5................  [Removed effective    .................  ................................................
                        March 21, 1985].
570.6................  [Previously Revoked]  .................  ................................................
570.7................  Appraisals; payment   571.20...........  Payment for appraisals.
                        for.
570.8................  Computation of        Removed..........  ................................................
                        scheduled items,
                        assets and
                        specified assets.
570.9................  [Removed effective    .................  ................................................
                        August 16, 1982].
570.10...............  Separate corporate    571.21...........  Separate corporate existence of a service
                        existence of a                           corporation.
                        service corporation.
570.11...............  Most favored lender   571.22...........  Most favored lender status.
                        status.

[[Page 514]]

 
570.12...............  Insurance of          Removed..........  (FDIC-386.12).
                        accounts evidenced
                        by negotiable
                        instruments.
570.13...............  Insurance of annuity  Removed..........  (FDIC-386.13).
                        accounts.
 
       PART 571
 
571.1................  Appraisal of real     571.1............  Appraisal of real estate securing asset of
                        estate securing                          savings associations.
                        asset of insured
                        institutions.
571.1a...............  Classification of     571.26...........  Classification of certain assets.
                        certain assets.
571.1b...............  Appraisal policies    571.27...........  Appraisal policies and practices of savings
                        and practices of                         associations.
                        insured
                        institutions.
571.2................  Audits of insured     571.2............  Audits of savings associations.
                        institutions.
571.3................  Interest-rate-risk    571.3............  Interest-rate-risk management.
                        management.
571.4................  Hazard insurance....  571.4............  Hazard insurance.
571.5................  Mergers and           571.5............  Mergers and transfers of assets and liabilities.
                        transfers of assets
                        and liabilities.
571.6................  Policy                571.6............  Policy considerations regarding `de novo'
                        considerations                           applications.
                        regarding `de novo'
                        applications for
                        insurance of
                        accounts.
571.7................  Conflicts of          571.7............  Conflicts of interest.
                        interest.
571.8................  Investment in state   571.8............  Investment in state housing corporations.
                        housing corporation.
571.9................  Corporate             571.9............  Corporate opportunity in savings associations.
                        opportunity in
                        insured
                        institutions.
571.10...............  Gold and gold-        571.10...........  Gold and gold-related transactions.
                        related
                        transactions.
571.11...............  Exclusive leases and  571.11...........  Exclusive leases and similar agreements.
                        similar agreements.
571.12...............  Applications          571.12...........  Applications processing guidelines.
                        processing
                        guidelines.
571.13...............  Participation         571.13...........  Participation interests in pools of loans.
                        interests in pools
                        of loans.
571.14...............  Fidelity bonds;       571.14...........  Fidelity bonds; acceptable surety companies.
                        acceptable surety
                        companies.
571.15...............  Fiduciary activities  571.15...........  Fiduciary activities of state-chartered savings
                        of state-chartered                       associations and service corporations.
                        insured
                        institutions and
                        service
                        corporations.
571.16...............  Mortgage-backed-      571.6............  Mortgage-backed-securities transaction.
                        securities
                        transaction.
571.17...............  [Previously Removed]  .................  ................................................
571.18...............  Accounting for        571.18...........  Accounting for troubled debt restructuring.
                        troubled debt
                        restructuring.
571.19...............  Investment Portfolio  571.19...........  Investment portfolio policy and accounting
                        Policy and                               guidelines.
                        accounting
                        guidelines.
 
       PART 572                                   PART 390
 
572.1................  Purchase of net       Removed..........  (FDIC-390.1).
                        worth certificates.
572.2................  Definitions.........  Removed..........  (FDIC-390.2).
572.3................  Application for       Removed..........  (FDIC-390.3).
                        Corporation
                        purchases of net
                        worth certificates.
572.4................  Delegations.........  Removed..........  (FDIC-390.4).
572.5................  Right of appeal.....  Removed..........  (FDIC-390.5).
572.6................  Effect of             Removed..........  (FDIC-390.6).
                        Corporation
                        purchase of net
                        worth certificates.
572.7................  Dividends...........  Removed..........  (FDIC-390.7).
572.8................  Branching...........  Removed..........  (FDIC-390.8).
572.9................  Transactions with     Removed..........  (FDIC-390.9).
                        holding company.
572.10...............  Board statutory       Removed..........  (FDIC-390.10).
                        authority.
 
      PART 572a                                   PART 391
 
572a.1...............  Statement of policy.  Removed..........  (FDIC-391.1).
572a.2...............  Definitions.........  Removed..........  (FDIC-391.2).
572a.3...............  Standards of          Removed..........  (FDIC-391.3).
                        eligibility.
572a.4...............  Procedure for         Removed..........  (FDIC-391.4).
                        recommendation and
                        designation.
572a.5...............  Actions by Principal  Removed..........  (FDIC-391.5).
                        Supervisory Agent.
572a.6...............  Sunset..............  Removed..........  (FDIC-391.6).
 
       PART 574
 
574.1................  Scope of part.......  574.1............  Scope of part.
574.2................  Definitions.........  574.2............  Definitions.
574.3................  Acquisition of        574.3............  Acquisition of control of savings associations.
                        control of insured
                        institutions.
574.4................  Control.............  574.4............  Control.
574.5................  Certifications of     574.5............  Certifications of ownership and other reports.
                        ownership and other
                        reports.
574.6................  Procedural            574.6............  Procedural requirements.
                        requirements.
574.7................  Determination by the  574.7............  Determination by the Office.
                        Corporation..
                                             574.8............  Qualified stock issuances by under-capitalized
                                                                 savings associations or holding companies.
574.8................  Delegations of        574.9............  Delegations of authority.
                        authority.
574.100..............  Rebuttal of control   574.100..........  Rebuttal of control agreement.
                        agreement.
 
       PART 575                                   PART 392
 

[[Page 515]]

 
575.1................  Purpose.............  Removed..........  (FDIC-392.1).
575.2................  Definitions.........  Removed..........  (FDIC-392.2).
575.3................  Publication of        Removed..........  (FDIC-392.3).
                        notice.
575.4................  Proof of claim......  Removed..........  (FDIC-392.4).
575.5................  Insured deposits....  Removed..........  (FDIC-392.5).
575.6................  Uninsured deposits..  Removed..........  (FDIC-392.6).
575.7................  Agents of the         Removed..........  (FDIC-392.7).
                        special
                        representative.
575.8................  Control log for       Removed..........  (FDIC-392.8).
                        proofs of claims.
575.9................  Review of proof of    Removed..........  (FDIC-392.9).
                        claims.
575.10...............  Review on the merits  Removed..........  (FDIC-392.10).
                        of a claim.
575.11...............  Allowance,            Removed..........  (FDIC-392.11).
                        disallowance, or
                        retention for
                        further review of
                        claim.
575.12...............  Special               Removed..........  (FDIC-392.12).
                        representative and
                        claims counsel.
575.13...............  Elements of review..  Removed..........  (FDIC-392.13).
575.14...............  Request for           Removed..........  (FDIC-392.14).
                        immediate
                        determination.
575.15...............  Burden of proof.....  Removed..........  (FDIC-392.15).
575.16...............  Exclusion from        Removed..........  (FDIC-392.16).
                        claims procedure.
575.17...............  Application of        Removed..........  (FDIC-392.17).
                        claims procedure.
575.18...............  Criteria for the      Removed..........  (FDIC-392.18).
                        determination of
                        claims for
                        provision of
                        services, supplies,
                        and material.
575.19...............  Claims to security,   Removed..........  (FDIC-392.19).
                        priority, or
                        preference.
 
      PART 575a                                   PART 393
 
575a.1...............  Presentment of        Removed..........  (FDIC-393.1).
                        claims to receivers
                        required as
                        prerequisite to
                        commencing
                        litigation.
575a.2...............  Inclusion of          Removed..........  (FDIC-393.2).
                        presentment
                        requirement in
                        notices to
                        potential creditors.
 
       PART 576                                   PART 394
 
576.1................  Purpose.............  Removed..........  (FDIC-394.1).
576.2................  Notice of right to    Removed..........  (FDIC-394.2).
                        file a request for
                        review.
576.3................  Filing a request for  Removed..........  (FDIC-394.3).
                        review.
576.4................  Control of request    Removed..........  (FDIC-394.4).
                        for review.
576.5................  Basis for board       Removed..........  (FDIC-394.5).
                        decision.
576.6................  Burden of proof.....  Removed..........  (FDIC-394.5).
576.7................  Issuance of decision  Removed..........  (FDIC-394.7).
576.8................  Decision in writing.  Removed..........  (FDIC-394.8).
576.9................  Denial of claim.....  Removed..........  (FDIC-394.9).
576.10...............  Requests for          Removed..........  (FDIC-394.10).
                        extension of time
                        or waiver of other
                        procedural
                        requirements.
576.11...............  Satisfaction of       Removed..........  (FDIC-394.11).
                        claim certificate.
576.12...............  Procedural questions  Removed..........  (FDIC-394.12).
 
       PART 577        ....................  PART 395
 
577.1................  Purpose.............  Removed..........  (FDIC-395.1).
577.2................  How to file a         Removed..........  (FDIC-395.2).
                        request for
                        expedited relief.
577.3................  Content of request    Removed..........  (FDIC-395.3).
                        for expedited
                        relief.
577.4................  Decision............  Removed..........  (FDIC-395.4).
577.5................  Requests for          Removed..........  (FDIC-395.5).
                        extension of time
                        or waiver of other
                        procedural
                        requirements.
 
       PART 578                                   PART 396
 
578.1................  Assignment or pledge  Removed..........  (FDIC-396.1).
                        of Corporation's
                        assets.
 
 PART 580--POSSESSION
   BY RECEIVERS FOR
   STATE ASSOCATIONS
                                             580.1............  Scope.
                                             580.2............  Procedure upon taking possession.
                                             580.3............  Notice of appointment.
                                             580.4............  Inventory.
                                             580.5............  Inspection of reports.
                                             580.6............  Delegation by receiver.
                                             580.7............  Final discharge and release of receiver.
 
       PART 583
 
583.1................  Bank................  583.3............  Bank.
                                             583.1............  Acquire.
583.2................  Board...............  Removed..........  ................................................
583.3................  Corporation.........  Removed..........  ................................................

[[Page 516]]

 
583.4................  State...............  583.22...........  State.
                                             583.4............  Bank holding company.
583.5................  Supervisory agent...  583.10...........  District Director.
                                             583.5............  BIF.
583.6................  Insured institution.  583.21...........  Savings Association.
583.7................  Uninsured             583.24...........  Uninsured Institution.
                        institution.
583.8................  Person..............  583.16...........  Person.
                                             583.8............  Corporation.
583.9................  Company.............  583.6............  Company.
583.10...............  Parent Company......  583.15...........  Parent Company.
583.11...............  Savings and loan      583.20...........  Savings and Loan Holding Company.
                        holding company.
583.12...............  Multiple savings and  583.12...........  Multiple Savings and Loan Holding Company.
                        loan holding
                        company.
583.13...............  Diversifed savings    583.11...........  Diversified Savings and Loan Holding Company.
                        and loan holding
                        company.
                                             583.13...........  Office.
583.14...............  Subsidiary..........  583.23...........  Subsidiary.
583.15...............  Affiliate...........  583.2............  Affiliate.
583.16...............  Debt security.......  Removed..........  ................................................
583.17...............  Outstanding debt....  Removed..........  ................................................
                                             583.17...........  Qualified thrift lender.
583.18...............  Net worth...........  Removed..........  ................................................
583.19...............  Consolidated net      Removed..........  ................................................
                        worth.
                                             583.19...........  SAIF.
583.20...............  Consolidated net      Removed..........  ................................................
                        earnings.
583.21...............  Consolidated net      Removed..........  ................................................
                        income available
                        for interest.
583.22...............  Consolidated debt     Removed..........  ................................................
                        service
                        requirements.
583.23...............  Registrant..........  583.18...........  Registrant.
583.24...............  Officer.............  583.14...........  Officer.
583.25...............  Director............  583.9............  Director.
583.26...............  Control.............  583.7............  Control.
583.27...............  Qualified thrift      584.6............  Qualified thrift lender status.
                        lender status.
 
       PART 584
 
584.1................  Registration,         584.1............  Registration, examination, and reports.
                        examination, and
                        reports.
584.2................  Prohibited            584.2............  Prohibited activities.
                        activities.
584.2a...............  Exempt savings and    584.2a...........  Exempt savings and loan holding companies and
                        loan holding                             grandfathered activities.
                        companies and
                        grandfathered
                        activities.
584.2-1..............  Prescribed services   584.2-1..........  Prescribed services and activities of savings
                        and activities of                        and loan holding companies.
                        savings and loan
                        holding companies.
584.2-2..............  Permissible           584.2-2..........  Permissible bank holding company activities of
                        nonbanking                               savings and loan holding companies.
                        activities of
                        savings and loan
                        holding companies.
584.3................  Transactions with     584.3............  Transactions with affiliates.
                        affiliates.
584.4................  Prohibited            584.4............  Prohibited acquisitions.
                        acquisitions.
584.4-1..............  [Previously Removed]  .................  ................................................
584.5................  Advance notice of     584.5............  Advance notice of proposed dividend
                        proposed dividend                        declarations.
                        declarations.
584.5-1..............  Relief from           Removed..........  ................................................
                        outstanding
                        prohibitions on
                        payment of
                        dividends.
584.6................  Holding company       Removed..........  ................................................
                        indebtedness.
584.7................  Payment of dividends  Removed..........  ................................................
                        to a diversified
                        savings and loan
                        holding company.
584.8................  Claims of             Removed..........  ................................................
                        diversified savings
                        and loan holding
                        company status.
584.9................  Prohibited acts.....  584.9............  Prohibited acts.
584.10...............  Statements,           584.10...........  Statements, applications, reports, and notices
                        applications,                            to be filed.
                        reports, and
                        notices to be filed.
 
       PART 585
 
585.1................  Amendment of          Removed..........  ................................................
                        regulations.
585.2................  Hearings............  584.11...........  Hearings.
 
       PART 588
 
588.1................  Applications          Removed..........
                        involving gold or
                        gold-related
                        transactions.
 
       PART 589
 
589.1................  [Previously Removed]  .................  ................................................
589.2................  [Previously Removed]  .................  ................................................
589.3................  [Previously Removed]  .................  ................................................
 
       PART 590
 
590.1................  Authority, purpose,   590.1............  Authority, purpose, scope.
                        scope.
590.2................  Definitions.........  590.2............  Definitions.
590.3................  Operation...........  590.3............  Operation.

[[Page 517]]

 
590.4................  Consumer protection   590.4............  Consumer protection rules for federally-related
                        rules for federally-                     loans, mortgages, credit sales and advance
                        related loans,                           secured by first liens on residential mobile
                        mortgages, credit                        homes.
                        sales and advances
                        secured by first
                        liens on
                        residential mobile
                        homes.
590.5................  Interpretations.....  Removed..........  ................................................
590.100..............  Status of             590.100..........  Status of interpretations issued under Public
                        interpretations                          Law 96-161.
                        issued under Public
                        Law 96-161.
590.101..............  State criminal usury  590.101..........  State criminal usury statutes.
                        statutes.
 
       PART 591
 
591.1................  Authority, purpose,   591.1............  Authority, purpose, and scope.
                        and scope.
591.2................  Definitions.........  591.2............  Definitions.
591.3................  Loans originated by   591.3............  Loans originated by Federal savings
                        federal                                  associations.
                        associations.
591.4................  Loans originated by   591.4............  Loans originated by lenders other than federal
                        lenders other than                       savings associations.
                        federal
                        associations.
591.5................  Limitation on         591.5............  Limitation on exercise of due-on-sale clauses.
                        exercise of due-on-
                        sale clauses.
591.6................  Interpretations.....  591.6............  Interpretations.
 
       PART 592
 
592.1................  Definitions.........  Removed..........  ................................................
592.2-592.10.........  [Reserved]..........  Removed..........  ................................................
592.11...............  General authority...  Removed..........  ................................................
592.12...............  Assessments on        Removed..........  ................................................
                        insured
                        institutions.
592.13-592.16........  [Reserved]..........  Removed..........  ................................................
592.17...............  Book-entry procedure  Removed..........  ................................................
                        for Financing
                        Corporation
                        securities.
----------------------------------------------------------------------------------------------------------------


[[Page 519]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations which were 
made by documents published in the Federal Register since January 1, 
1986, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 1986, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, and 1973-1985,'' published in seven 
separate volumes.

                                  1986

12 CFR
                                                                   51 FR
                                                                    Page
Chapter V
500  Authority citation revised....................................27165
500.15  Added.......................................................8791
500.17  Revised.....................................................8791
500.18  Removed....................................................27165
500.31  Amended....................................................33584
500.40  Authority citation removed.................................27165
501  Authority citation revised....................................27165
501.10  (d) added..................................................28221
501.11  Amended....................................................27165
    Revised........................................................28221
505a  Authority citation revised...................................45879
505a.13  Added.....................................................45879
505d  Authority citation revised...................................15876
505d.1  (b) correctly revised......................................15876
512  Authority citation revised.....................................8791
512.5  (a) amended; authority citation removed......................8791
522  Authority citation revised....................................27165
    Section authority citations removed............................27166
522.62  Added......................................................28222
    Correctly designated...........................................28690
522.90  Added......................................................27165
523.2  Removed.....................................................28222
524  Authority citation revised....................................34951
524.1  Authority citation removed..................................34951
524.7  Authority citation removed..................................34951
524.13  Revised....................................................34951
526  Revised.......................................................10816
526.2  (h) revised.................................................34951
531  Authority citation revised....................................10816
531.1  (a) and (d) amended.........................................33584
531.10  Removed; new 531.10 redesignated from 531.11 and authority 
        citation removed...........................................10816
531.11  Redesignated as 531.10 and authority citation removed......10816
532  Authority citation revised....................................10816
532.1  Amended..............................................10816, 34951
535  Exemption.....................................................45879
541.17  Amended....................................................33584
543  Authority citation revised; section authority citations 
        removed....................................................40147
543.2  (h)(3) revised..............................................40147
543.11-1  (c) amended..............................................33584
545  Authority citation revised..............................9178, 10817
    Authority citation revised; section authority citations 
removed............................................................30851
545.11  (a) revised................................................10817
545.12  Revised....................................................10817
545.13  (a) amended................................................30851
545.14  (a) revised................................................10817
545.16  (c) revised................................................10817
545.21  (a)(1) revised.............................................10817
545.38  (b)(3) amended.............................................33584
545.73  (a) amended................................................33584
545.74  (b)(3)(i), (c)(3)(viii), and (d)(2) and (4) amended........33584
    (c)(5)(viii) amended; (c)(5)(ix) added.........................34952
545.77  (a) amended................................................33584
545.79  Revised.............................................10817, 34952
545.82  (c)(2), (d)(4)(ii)(B), and (f)(3)(i) amended...............33584

[[Page 520]]

545.102  Revised....................................................9178
545.115  (a) amended...............................................33584
546  Authority citation revised; section authority citations 
        removed....................................................40147
546.2  (h)(1)(xii) amended.........................................33584
    (i)(1)(vi) and (vii) added.....................................40147
550.2  (c)(2) and (4) amended......................................33584
552  Authority citation revised; section authority citations 
        removed....................................................40147
552.2-2  (d) revised...............................................40147
552.4  (b)(8) amended..............................................40147
555  Authority citation revised....................................10817
555.8  (c) revised.................................................10817
556  Authority citation revised....................................16291
556.5  (a)(3) (v) and (vi) added; authority citation removed.......16291
    (a)(1) through (3)(iv) revised.................................16505
    (b)(2) amended.................................................33584
556.7  Revised.....................................................34952
556.9  Authority citation removed..................................16291
561  Authority citation revised....................................10817
    Authority citation revised; section authority citations 
removed............................................................33584
561.2a  Heading corrected...........................................6394
561.11  Revised....................................................10817
561.11a  Revised...................................................10817
561.11b  Amended...................................................10818
561.11c  Amended...................................................10818
561.11d  Amended...................................................10818
561.11e  Amended...................................................10818
561.11f  Added.....................................................10818
561.11g  Added.....................................................10818
561.13  Heading and (a) revised; (b), (c), (d), (e), and (f) 
        amended....................................................33584
561.18  Added......................................................33584
561.19  Added......................................................33584
562  Authority citation revised....................................40147
562.3  Authority citation removed..................................40147
562.4  Authority citation removed..................................40147
562.5  Authority citation removed..................................40147
562.7  Existing text designated as (a); new (b) added..............40147
563  Authority citation revised........................731, 10818, 15877
    Authority citation revised; section authority citations 
removed............................................................33584
563.1  (a)(1) and (b)(2) amended; authority citation removed.......10819
563.3-1  Revised; authority citation removed.......................10819
563.3-2  Added.....................................................10819
563.3-3  (d)(3) and (f) removed; (d)(4) and (g) redesignated as 
        (d)(3) and (f); new (f) amended............................10819
    Authority citation removed.....................................10819
563.3-10  (b)(2), (c)(1)(i) and (3)(v), and (d) amended............33584
563.4  (b), (c), and (d) amended...................................33584
563.6  Revised.....................................................10819
563.7-2  Authority citation removed................................10820
563.7-4  (i)(2)(v)(c), (vii)(b), and (x) amended...................33584
563.7-5  (a), (b), and (d)(1)(iii) amended.........................33584
563.8  (e) amended.................................................33584
563.8-1  (b)(2)(i) and (d)(1)(iv) amended..........................33584
563.8-4  (b)(5), (6), and (7) amended..............................33584
563.9-3  (a)(4), (b)(1) and (5), and (c) amended...................33584
563.9-4  Amended...................................................33584
563.9-6  Amended...................................................33584
563.9-8  (c)(2), (e), (f), and (g) amended.........................33584
    (h) amended....................................................47003
563.13  (b)(2) revised; authority citation removed.................15877
    Heading, (a)(1), and (b) revised; (a)(2), (c), (d), (e), and 
(f) amended........................................................33584
    (e), (g), and (i) removed; (f) and (h) redesignated as (e) and 
(f)................................................................33587
563.13-1  Revised..................................................33587
563.13-2  (c) introductory text and (e)(3) amended.................33584
    (c)(1) amended.................................................33588
563.15  (b)(1)(i) and (2) corrected.................................1246
563.17-1  (a)(2) correctly added.....................................732
    (c) revised....................................................30851
    (c)(1)(viii), (5), (7), and (9) corrected......................33736
563.17-3  (c)(2) amended...........................................33584
563.17-6  (b)(2) amended...........................................33584
563.22  (e)(1)(xii) and (h)(1)(ii) amended.........................33584
    (f)(1)(vi) added...............................................40148
563.31  Authority citation removed.................................10820
    (b) revised....................................................26228
563.39-1  (c)(2) amended...........................................33584

[[Page 521]]

563b  Authority citation revised; section authority citations 
        removed....................................................40148
563b.1  (a)(2) amended.............................................33584
563b.2  (a)(1) through (36) redesignated as (a)(2) through (36) 
        and (38); new (a)(1) and (37) added; (a)(5)(ii) revised....40148
563b.3  (b)(2), (f)(1), and (g)(2) amended.........................33584
    (c)(6)(i), (7) through (9), (d)(3) introductory text, (4), and 
(5), (f)(3), (g)(1), and (i)(3) and (6) revised; (c)(23) and (24) 
and (i)(5)(v) added................................................40148
    (i)(8)(v) removed..............................................40150
563b.7  (a) and (e) revised........................................40150
563b.10  (c) redesignated as (c)(1); (c)(2) added..................40150
563b.20  Revised...................................................40150
563b.21  Revised...................................................40150
563b.22  Redesignated as 563b.23 and revised; new 563b.22 added....40151
563b.23  Redesignated as 563b.24...................................40150
    Redesignated from 563b.22 and revised..........................40151
563b.24  Removed; new 563b.24 redesignated from 563b.23............40150
    Revised........................................................40151
563b.25  Removed; new 563b.25 added................................40151
563b.26  (a) and (b) amended.......................................33584
    Revised........................................................40151
563b.27  (c) amended...............................................33584
    Revised........................................................40151
563b.28  Removed...................................................40151
    Added..........................................................40152
563b.29  Revised...................................................40153
563b.30  Revised...................................................40153
563b.31  Removed...................................................40151
    Added..........................................................40153
563b.32  (a) and (b) amended.......................................33584
    Removed........................................................40151
    Added..........................................................40153
563b.33  Amended...................................................33584
    Removed........................................................40151
563b.34  Revised...................................................40153
563b.35  Redesignated as 563b.36 and revised; new 563b.35 added....40153
563b.36  (c)(1), (2), and (3) amended..............................33584
    Redesignated as 563b.37 and revised; new 563b.36 redesignated 
from 563b.35 and revised...........................................40153
563b.37  (f) and (g) amended.......................................33584
    Redesignated as 563b.38 and revised; new 563b.37 redesignated 
from 563b.36 and revised...........................................40153
563b.38  Removed; new 563b.38 redesignated from 563b.37 and 
        revised....................................................40153
563b.39  Revised...................................................40154
563b.40  Revised...................................................40155
563b.41  Added.....................................................40155
563b.101  Form PS corrected..........................................593
    Form PS amended................................................33584
563c.10  (d)(2) amended............................................33584
563c.102  Amended..................................................33584
563d.1  Amended.....................................................7248
563d.2  Added.......................................................7248
563g  Revised.......................................................8187
563g.3  (b) amended................................................33584
563g.7  (a)(3) amended.............................................33584
563g.16  (b) amended...............................................33584
563g.17  (d) amended...............................................33584
564  Authority citation revised.............................10820, 12123
564.1  Authority citation removed..................................10820
564.2  Authority citation removed..................................10820
    (b)(3) removed; (b) (4) and (5) redesignated as (b) (3) and 
(4)................................................................12123
564.8  Authority citation removed..................................12123
569a.1  Authority citation removed.................................35501
569a.6  (c) revised................................................35501
569a.7  Authority citation removed.................................35501
570  Authority citation revised....................................29459
570.4  Amended.....................................................33584
570.11  Authority citation removed.................................29459
570.12  Authority citation removed.................................29459
570.13  Added......................................................29459
571  Authority citation revised....................................10820
    Authority citation revised; section authority citations 
removed............................................................36529
571.1a  (a) amended................................................33584
571.5  (f) revised; authority citation removed.....................10820
    (c)(2) and (k)(3) amended......................................33584

[[Page 522]]

    (a) revised....................................................36529
571.6  (a)(2) and (d)(4) amended...................................33584
571.10  Revised....................................................34952
572.1  (g)(1) and (j) amended......................................33584
572.2  (c) amended.................................................33584
572a.5  (c)(2)(ii), (3), and (4) amended...........................33584
574  Authority citation revised....................................40155
574.2  (c)(3) revised..............................................40155
574.3  (c)(1)(vi) added............................................40155
574.4  (d)(6) revised..............................................40155
574.8  (a) and (b)(1)(ii) amended..................................33584
    (a)(1)(v) and (vi) added.......................................40156
584  Authority citation revised; section authority citations 
        removed....................................................34952
584.2-1  (b)(9) and (10) amended; (b)(11) added....................34952
584.5-1  Amended...................................................33584

                                  1987

12 CFR
                                                                   52 FR
                                                                    Page
Chapter V
500.10  Amended.....................................................7120
500.31  Revised.....................................................5942
    (a) (1) and (2) amended........................................10557
500.32  (a), (b) (1), (3), (5), (6), (8), (9), (10), and (12), and 
        (c) introductory text revised...............................7120
    (c) introductory text corrected.................................8550
505  Authority citation revised.....................................7121
505.3  (c) and (d) removed; (e) and (f) redesignated as (c) and 
        (d); new (d) revised........................................7121
505.4  (d) amended; authority citation removed......................7121
505a  Authority citation revised....................................7121
505a.3  (c) revised.................................................7121
505b  Authority citation revised....................................7121
505b.7  Amended.....................................................7121
508  Authority citation revised; section authority citations 
        removed.....................................................7121
508.13  Amended.....................................................7121
510a  Added........................................................17392
514  Added.........................................................41701
522  Authority citation revised....................................33402
522.81  (a) (3) and (4) amended; (a)(5) added......................33402
522.87  (a) designation removed.....................................7122
522.90  (a)(2) and (c) revised; (b)(2) amended.....................37763
523  Authority citation revised; section authority citations 
        removed.....................................................7122
523.3-2  Heading and (b) revised; (c) through (g) added............30142
523.3-3  Amended....................................................7122
523.10  (h)(5) amended..............................................7122
524  Authority citation revised....................................49381
524.11  Revised....................................................49381
545.3  Removed.....................................................36751
545.11  (a) heading added; (b) amended..............................7122
545.74  (d)(4) amended..............................................7122
    (d)(4) amendment at 52 FR 7122 removed.........................36751
545.82  (e) amended.................................................7122
545.102  (b) revised...............................................24135
545.115  (b) revised...............................................18350
    Eff. date deferred to 1-1-89...................................39068
545.138  (f) heading added..........................................7122
546.2  (d)(3) and (h)(1)(i) revised.................................9800
552  Authority citation revised; section authority citations 
        removed.....................................................7122
552.2-2  (d) amended................................................7122
    (d) amendment at 52 FR 7122 removed............................36751
552.8  (b) and (f)(2) amended; (f)(1) revised.......................7122
552.13  (h)(2) amended..............................................7122
    (i)(3) revised; (j)(3) amended..................................9800
552.14  (b) amended...........................................7122, 9800
555  Authority citation revised; section authority citations 
        removed.....................................................7122
555.10  Amended.....................................................7122
555.12  Amended.....................................................7122
555.17  (d)(2) amended..............................................7122
556  Authority citation corrected...................................8550
556.5  (i) amended..................................................7123
556.8  Amended......................................................7123
561  Authority citation revised.....................................7123
561.8  (b) corrected...............................................36751
561.11a  (f)(2) introductory text revised...........................8242
561.11f  (a)(3)(ii) amended.........................................8242
561.11g  (a) amended................................................8242
561.13  (c) (1) and (2) amended.....................................7123
    Revised........................................................18350
    Eff. date deferred to 1-1-89...................................39068
561.15  (b), (d)(2), and (j) (1) and (3) amended....................7123
    (j)(1) correctly designated.....................................8550
    (j)(1) corrected...............................................36751
561.17  (a) amended.................................................7123

[[Page 523]]

563.4  (d)(3) amended...............................................7123
563.6  (d) revised..................................................8242
563.7-4  (i)(2)(iv) amended.........................................7123
563.8  (c) heading added............................................7123
563.8-1  (d)(1)(v)(c) amended.......................................7123
563.9-7  (b) amended................................................7123
563.9-8  (h) amended; interim.......................................7822
    (b)(1)(i), (g)(6), and (h) amended; (f) text designated as 
(f)(1); (b)(11), (c)(3), (f)(2), and (g)(3)(iv) added; (c)(2) and 
(g)(2)(v) and (3)(ii) introductory text and (A) through (C) 
revised.............................................................8205
    Heading, (a), (c)(2) (i) and (ii), and (e)(2) revised; 
nomenclature change; (b)(1) introductory text and (6)(ii) and 
(e)(1) amended; (b)(6)(iii), (9), (10), and (11) redesignated as 
(b)(6)(iv), (10), (11), and (12); new (b)(6)(iii) and (9) and 
(f)(3) added.......................................................23802
563.13  (b)(4)(i)(E) revised.......................................23641
    Nomenclature change............................................23802
    (b)(4)(ii)(D)(2)(iii) amended; (b)(4)(ii)(D)(2)(iv) 
redesignated as (b)(4)(ii)(D)(2)(v); new (b)(4)(ii)(D)(2)(iv) 
added; (b)(4)(ii)(E)(2) and (F)(2) revised.........................23803
563.13-1  (e) introductory text amended.............................7123
563.13-2  (a)(4) and (e)(1)(i) amended.............................23802
563.15  Heading and (b)(1) introductory text revised; (a) (3) and 
        (4) added; (c) and (d) redesignated as (d) and (e); new 
        (c) added..................................................33402
563.16  Amended....................................................33402
563.17-1  (c)(8) amended............................................7123
    (c)(8) corrected................................................8550
563.17-4  (g) removed..............................................18351
    Eff. date deferred to 1-1-89...................................39068
563.17-7  Added.....................................................2860
    OMB number......................................................3207
563.22  (b) amended; (d) and (e)(1)(i) revised......................9800
563.23-1  (f)(3)(i) revised.........................................7123
    (a) and (b) revised; (f) removed; (g) redesignated as new (f) 
                                                                   18351
    Eff. date deferred to 1-1-89...................................39068
563.23-2  Removed..................................................18351
    Eff. date deferred to 1-1-89...................................39068
563.23-3  (c) revised; (d) added...................................18352
    Eff. date deferred to 1-1-89...................................39068
563.27  (b) amended.................................................7123
563.31  (b)(1) amended.............................................36751
563.35  (b) and (d) introductory text amended.......................7123
563.37  (b) amended................................................23802
563.38  (a) amended................................................23802
563.39  (b) (2) and (3) revised.....................................4892
563.43  (b)(5) amended..............................................7123
563.45  (c) and (d) amended.........................................7123
563b  Authority citation revised.............................7123, 36751
563b.1  (a)(2) removed; (a)(1) designation removed..................7123
    Amendatory instruction corrected................................8550
563b.2  (a)(19) revised.............................................7123
563b.3  (i)(3) revised.............................................42092
563b.8  (w)(2) revised.............................................42092
563b.101  Form PS amended....................................7124, 36752
563c  Authority citation revised.............................7124, 18352
563c.14  (f) added.................................................18352
    Eff. date deferred to 1-1-89...................................39068
563c.102  Amended...................................................7124
    Corrected.......................................................8550
564  Authority citation revised.....................................7124
564.9  (b) amended..................................................7124
    (b) revised....................................................10558
569  Authority citation revised.....................................7124
569.3  (b)(2) amended; (c)(2) removed; (c)(1) designation removed 
                                                                    7124
570  Authority citation revised....................................18352
570.4  Heading and (a) revised.....................................18352
    Eff. date deferred to 1-1-89...................................39068
571  Authority citation revised; section authority citations 
        removed.....................................................7124
    Authority citation revised.....................................23941
571.5  (a) revised.................................................23941
    Effective date corrected.......................................26295
571.8  Amended......................................................7124
571.12  Added......................................................39067
572  Authority citation revised.....................................7124
572.1  (c)(2) and (e)(3) amended....................................7124
572a  Authority citation revised....................................9801
572a.5  (c)(5) amended..............................................9801
574  Authority citation revised.....................................7124
574.2  (a)(2) revised; (k)(2) amended...............................9801
574.3  (c)(2)(iii) amended..........................................7124
    (c)(2)(iv)(A) revised...........................................9801
574.4  (d)(5) revised...............................................9801
574.5  (a)(1) revised...............................................9801

[[Page 524]]

574.6  (a)(3) revised; (e) and (f)(2) amended.......................9801
    (b) (1) and (6), (c) (1) and (2), (d)(1), and (e) amended; (b) 
(2), (3), and (5) and (d)(2) revised...............................48520
574.7  (e), (f), (g)(1)(ii) introductory text and (iii) revised.....9801
574.8  (a)(3)(iv) revised...........................................9802
584  Authority citation revised; section authority citations 
        removed.....................................................7124
584.1  (a)(4) revised..............................................36752
584.2-1  (a) and (b)(1)(v) amended..................................7124
584.4  (a) amended..................................................7124
584.6  (c)(1) amended...............................................7124
    (d) and (f) revised; (g) added.................................49383
592 (Subchapter H and Part)  Added.................................33403

                                  1988

12 CFR
                                                                   53 FR
                                                                    Page
Chapter V
500.13  (a) amended................................................33104
500.19  Revised....................................................33104
500.21  Removed....................................................33104
501.10  Introductory text revised...................................1003
    (a) revised....................................................33104
501.11  Heading and (a) revised; (i) added..........................1003
    (d) revised....................................................33104
505.4  (d) and (e) revised.........................................16055
510a.6  Revised....................................................30251
522.10  Revised....................................................18262
522.26a  Added; eff. to 12-31-88...................................44396
522.72  Revised....................................................52655
524.6  Amended.....................................................30252
525  Authority citation revised; section authority citations 
        removed......................................................320
525.1  Revised.......................................................320
545.33  (e) introductory text and (4) revised; (f) removed; (g) 
        and (h) redesignated as (f) and (g); new (h) added.........18265
545  Appendix removed..............................................18266
547  Interim procedures............................................13105
    Interim procedures removed.....................................43852
548  Interim procedures............................................13105
    Interim procedures removed.....................................43852
549  Interim procedures............................................13105
    Authority citation revised.....................................25132
    Interim procedures removed.....................................43852
549.5-1  (b)(5) revised; authority citation removed................25132
561.13  Revised......................................................334
561.15  Removed......................................................352
561.16c  (a), (c) and (d) revised; (e) and (f) added.................352
563  Authority citation revised.............................11245, 18266
    Interim procedures.............................................13105
    Interim procedures removed.....................................43852
563.9-3  (b)(4) revised..............................................361
563.9-9  Heading, (a)(1), (b), and (c) revised; (a) (2) and (3) 
        and (d) redesignated as (a) (3) and (4) and (f); new 
        (a)(2), (d), and (e) added; new (f) revised................18266
563.13  (b)(4)(i)(D) and (ii)(B) revised; (b)(4)(i)(F) added.........353
    (a) revised......................................................369
    (b)(2)(iv) revised.............................................11245
563.13-3  Added (temporary)........................................27155
    Removed........................................................27814
    Added..........................................................27816
563.14  Added........................................................369
563.14-1  Added......................................................371
563.17-1  (c)(8) revised...........................................20612
563.17-1a  Added.....................................................382
563.17-2  (a) and (b) revised........................................353
563.17-5  (a)(4), (c), (e) heading and (2), (g)(2), and (3)(ii) 
        (B) and (C) revised; (g)(3)(ii)(D) redesignated as 
        (g)(3)(ii)(E) and revised; (a)(13) and new (g)(3)(ii)(D) 
        added......................................................27672
563.18  (d) revised................................................11243
563.22  (e)(1)(xii) amended........................................20612
563.23-1  Heading and (b) revised; (c) through (f) removed...........336
563.23-3  (c) and (d) revised; (e) added.............................336
563.23-4  Added......................................................388
563.31  (b)(1) revised.............................................20612
563.41  Heading and (a) revised....................................31701
563.43  (a) revised................................................31701
563.45  (c) and (d) revised; Form AR amended........................1004
563.47  Added........................................................361
563b.3  (g)(4) added................................................2478
563c.11  Removed.....................................................337
563c.14  (f) eff. date corrected to 1-1-88..........................6792
564.2  (b)(3) removed...............................................8169
564.9  Revised......................................................8169
564  Appendix amended...............................................8170
569a  Interim procedures...........................................13105
    Authority citation revised.....................................25132

[[Page 525]]

    Interim procedures removed.....................................43852
569a.7  Revised....................................................25132
569b  Interim procedures...........................................13105
    Interim procedures removed.....................................43852
569c  Interim procedures...........................................13105
    Added..........................................................25132
    Interim procedures removed.....................................43852
569c.11  (a)(6) revised............................................30667
570.13  (c) revised................................................27675
571.1a  (a) introductory text amended; (b)(3), (c), and (d) 
        revised......................................................353
571.1b  Added........................................................383
571.17  Removed....................................................45455
571.18  Added........................................................388
574.4  (e)(1)(i) and (3) revised; (f)(2) amended...................33106
574.5  (a)(1) amended..............................................33107
574.6  (b)(1) revised; (b) (3), (4) and (5) removed; (b) (6) 
        through (9) redesignated as (b) (3) through (6); new (b) 
        (4) through (6) amended....................................33107
574.8  (a)(1) (i) and (v) removed; (a)(1) (ii), (iii), (iv), and 
        (vi) and (2), (3) and (4) redesignated as (a)(1) (i) 
        through (iv) and (3), (4) and (5); new (a)(2) added; new 
        (a) (3), (4) introductory text and (ii), and (5) revised 
                                                                   33107
    (a)(1)(iii)(A) removed; (a)(1)(iii)(B) redesignated as 
(a)(1)(iii)(A); (b)(1)(ii) revised.................................47942
574.100  Added.....................................................33108
575  Added.........................................................43852
576  Added.........................................................43857
577  Added.........................................................43858
583  Authority citation revised; section authority citations 
        removed......................................................321
583.5  Revised......................................................1004
583.6  Revised.......................................................321
583.27  Added........................................................321
584.2  Heading, (b) and (c) revised..................................322
584.2a  Added........................................................323
584.2-1  Heading and (a) revised; (b)(12) added......................323
584.2-2  Revised.....................................................323

                                  1989

12 CFR
                                                                   54 FR
                                                                    Page
Chapter V
Chapter V  Heading revised.........................................35453
    Revised........................................................49440
502  Added; interim................................................39984
506  Redesignated as 12 CFR Part 910 and heading revised...........36759
    Added..........................................................51739
506a  Redesignated as 12 CFR Part 912 and heading revised..........36759
509  Revised.......................................................26359
512  Authority citation revised....................................26369
512.1  Revised.....................................................26369
512.2  (c) revised.................................................26369
512.3  Revised.....................................................26370
512.4  Revised.....................................................26370
512.5  (b) (1) and (2) revised.....................................26370
    (c) removed....................................................26370
512.7  Revised.....................................................26370
516  Added; nomenclature change.....................................4733
    Heading and authority citation revised..........................4953
    Technical correction............................................6363
516.105  (w) added..................................................4733
516.305  (c) (3) and (4) amended; (c)(5) added; interim.............4953
516.320  (a) revised; interim.......................................4953
516.600--516.630 (Subpart F)  Added; interim........................4953
516  Appendix C added; interim......................................4953
521  Redesignated as 12 CFR Part 931...............................36759
522  Redesignated as 12 CFR Part 932...............................36759
522.30  Added (temporary)..........................................26018
    Removed; eff. 6-14-90..........................................26019
    Removed........................................................38592
523  Redesignated as 12 CFR Part 933...............................36759
524  Redesignated as 12 CFR Part 934...............................36759
525  Redesignated as 12 CFR Part 935...............................36759
525.7  (b)(3) amended; (b)(4) redesignated as (b)(5); new (b)(4) 
        added.......................................................6113
526  Redesignated as 12 CFR Part 936...............................36759
527  Redesignated as 12 CFR Part 937...............................36759
528  Authority citation revised....................................30537
    Redesignated as 12 CFR Part 938................................36759
528.1  (c) revised.................................................30537
528.1a  Revised....................................................30537
528.2  Revised.....................................................30537
528.3  (a) revised.................................................30537
528.4  Revised.....................................................30537

[[Page 526]]

528.5  (b) revised.................................................30537
528.6  Appendixes A and B revised..................................30538
528.7  (f) revised.................................................30541
528.8  Revised.....................................................30541
529  Redesignated as 12 CFR Part 939...............................36759
531  Redesignated as 12 CFR Part 940...............................36759
531.8  (a) revised; (c)(8) added...................................30542
532  Redesignated as 12 CFR Part 941 and heading revised...........36759
533  Redesignated as 12 CFR Part 942...............................36759
534  Redesignated as 12 CFR Part 943...............................36759
535  Redesignated as 12 CFR Part 944...............................36759
544.2  (d) and (e) added............................................4259
544.5  (c) and (d) added............................................4259
545.45  (e)(1) designation and (e)(2) removed......................34146
545.73  (a) revised................................................34146
545.74  (c) (4), (5), and (6) redesignated as (c) (5), (6), and 
        (7); new (c)(4), (f) and (g) added; new (c)(5)(v) and new 
        (7) revised................................................32958
    (a)(4) and (d)(4) removed; (a)(5) redesignated as new (a)(4); 
(d)(2) introductory text revised...................................34146
545.96  (a) and (d) revised; eff. 1-8-90...........................50614
545.112  Removed...................................................34146
545.131  (a) and (b) removed; (c), (d), and (e) redesignated as 
        (a), (b), and (c); new (a) and new (b)(5)(ii) revised......33868
545.132  Added.....................................................33868
545.141  (d) revised...............................................33870
546.2  (h)(1)(xii) amended.........................................34146
548  Redesignated as Part 382 and amended..........................42801
549  Redesignated as Part 383 and amended..........................42801
549.5-1  (b)(6) added..............................................19156
550.2  (c) introductory text revised; (c) removed; (c)(2) through 
        (11) redesignated as (c)(1) through (10)....................7396
550.14  (a), (b), and (c) amended...................................7396
552.4  (e) and (f) added............................................4260
552.5  (d) and (e) added............................................4261
561--574 (Subchapter D) Heading corrected..........................50582
561  Authority citation revised....................................46866
561.13  Removed....................................................46866
561.17  Removed....................................................34146
562  Redesignated as Part 384 and amended..........................42801
563  Authority citation revised....................................46866
563.7-5  (b)(2)(ii) removed; (b)(2) (iii) and (iv) redesignated as 
        (b)(2) (ii) and (iii)......................................34146
563.8  (e)(1) introductory text revised............................34146
563.8-1  (b)(2)(ii) removed; (b)(2) (iii), (iv), and (v) 
        redesignated as (b)(2) (ii), (iii), and (iv)...............34146
    (b) (2), (3), (d)(i)(iv), (e), (h), and (i) revised; (d)(4), 
(j), and (k) added.................................................34153
563.8-2  Redesignated as 385.5 and amended.........................42801
563.8-4  (b)(7) amended............................................34146
563.9-7  (b) revised...............................................34147
563.9-8  (h) amended........................................15401, 47511
    (b)(2)(i) and (d)(1)(iv) revised; (f)(4) added.................33873
    (g)(3)(ii)(A)(1)(iii)..........................................34147
563.13  Removed....................................................46866
563.13-2  (c) and (d) removed; (e) redesignated as (c).............46866
563.13-3  Added......................................................396
563.15  Redesignated as 385.6 and amended..........................42801
563.16  Redesignated as 385.7 and amended..........................42801
563.16-2  Redesignated as 385.8 and amended........................42801
563.17-2  (a), (b), and (d) revised................................34147
563.18  (d)(1)(ii), (2)(i), and (4) revised.........................4262
563.19  (b) revised................................................25100
563.22  (e)(1)(xii) amended........................................34147
563.28  Redesignated as 385.9 and amended..........................42801
563.29-1  Redesignated as 385.1 and amended........................42801
563.30  Redesignated as 385.2 and amended..........................42801
563.31  Redesignated as 385.3 and amended..........................42801
563.36  Redesignated as 385.4 and amended..........................42801
563b.101  Amended..................................................34147
563c.14  (a) amended...............................................34148
563c.102  Amended...........................................23468, 34148
563f  Authority citation revised; section authority citations 
        removed....................................................21596
563f.7  Revised....................................................21596

[[Page 527]]

564  Redesignated as Part 386 and amended..........................42801
564.1  Redesignated as 386.1 and amended...........................42801
564.2  Redesignated as 386.2 and amended...........................42801
564.3  Redesignated as 386.3 and amended...........................42801
564.4  Redesignated as 386.4 and amended...........................42801
564.5  Redesignated as 386.5 and amended...........................42801
564.6  Redesignated as 386.6 and amended...........................42801
564.7  Redesignated as 386.7 and amended...........................42801
564.8  Redesignated as 386.8 and amended...........................42801
564.9  Redesignated as 386.9 and amended...........................42801
564.10  Redesignated as 386.10 and amended.........................42801
564.11  Redesignated as 386.11 and amended.........................42801
564  Appendix redesignated as Part 386 Appendix and amended........42801
565  Redesignated as Part 387 and amended..........................42801
567  Revised.......................................................46866
569a.4  Redesignated as 388.1 and amended..........................42801
569a.5  Redesignated as 388.2 and amended..........................42801
569a.6  Redesignated as 388.3 and amended..........................42801
569a.7  Revised....................................................19156
    Redesignated as 388.4 and amended..............................42801
569a.8  Redesignated as 388.5 and amended..........................42801
569a.9  Redesignated as 388.6 and amended..........................42801
569a.10  Redesignated as 388.7 and amended.........................42801
569a.11  Redesignated as 388.8 and amended.........................42801
569a.12  Redesignated as 388.9 and amended.........................42801
569a.13  Redesignated as 388.10 and amended........................42801
569c  Redesignated as Part 389 and amended.........................42801
569c.7-1  Added.....................................................6112
569c.8-1  Added....................................................19156
570.8  Removed.....................................................34148
570.12  Redesignated as 386.12 and amended.........................42801
570.13  Redesignated as 386.13 and amended.........................42801
571  Authority citation revised....................................35453
571.1  (b) amended; (d) removed....................................34148
571.1a  Introductory text revised..................................34148
571.12  Revised....................................................35172
571.13  (a) introductory text and (3) revised......................34148
571.19  Added......................................................23468
    (e) amended....................................................35453
572  Redesignated as Part 390 and amended..........................42801
572a  Redesignated as Part 391 and amended.........................42801
574.6  (a) (2) through (5) redesignated as (a) (3) through (6); 
        new (a)(2) added...........................................33185
574.7  (a) redesignated as (a)(1); new (a) (2) and (3) added.......32962
    (a)(2) introductory text revised...............................33186
575  Redesignated as Part 392 and amended..........................42801
575a  Added........................................................12414
    Redesignated as Part 393 and amended...........................42801
576  Redesignated as Part 394 and amended..........................42801
577  Redesignated as Part 395 and amended..........................42801
    Redesignation table corrected..................................42801
578  Added..........................................................6109
    Redesignated as Part 396 and amended...........................42801
584  Authority citation revised....................................22414
584.9  (d) and (e) revised.........................................22414
592  Removed.......................................................38598

                                  1990

12 CFR
                                                                   55 FR
                                                                    Page
Chapter V
500.32  (c) added..................................................13509
502  Revised.......................................................34529
503.2  Added.......................................................31371
506.1  (b) revised (OMB numbers)...................................22892
    (b) table amended..............................................34546
510.5  Added........................................................7695
528  Revised........................................................1388
543.2  (b) and (d)(2) revised......................................13510
543.9  (a) revised.................................................13510

[[Page 528]]

544.2  (a), (c) and (e) revised; (d)(2) amended....................13510
544.3  Introductory text amended...................................13511
544.5  (a) and (d) revised; (c)(2) amended.........................13511
545.32  (b)(1) amended.............................................34547
545.74  (c) introductory text, (3)(vi) and (g) revised.............13511
545.75  (b)(3) revised; interim....................................11307
    (b)(3) revised.................................................28162
545.77  (b) revised................................................13512
545.82  (f)(1) introductory text, (3)(i), and (iii) revised........13512
545.92  (c) revised................................................13512
545.96  (b) revised................................................13512
545.132  Removed...................................................34699
546.2  (d)(1) revised..............................................13512
546.4  Concluding text amended.....................................13512
550.2  (a) revised.................................................13512
550.14  (a) revised................................................13513
552.2-2  (b) revised...............................................13513
552.4  (a), (d) and (f) revised; (e)(2) amended....................13513
552.5  (c) and (e) revised; (d)(2) amended.........................13513
552.6-3  (a) amended...............................................13514
552.10  Revised....................................................13514
563.1  (b) revised.................................................13514
563.10  (c)(1) introductory text revised...........................13514
563.22  (c)(2), (d)(1) and (f)(1) revised..........................13514
563.38  (b) amended................................................13514
563.41  (b) revised................................................13515
563.74  (e) revised................................................13515
563.75  (i) removed.................................................7300
    (e) revised....................................................13515
563.80  (e)(2) revised..............................................7300
    (e)(2) amended.................................................13515
563.81  (e) revised; (j) amended...................................13515
563.93  Revised; interim...........................................11307
    Revised........................................................28162
    (a) corrected..................................................29453
563.98  (g)(1) revised.............................................13515
563.131  (c) introductory text revised.............................13515
563.132  (c) and (d) removed; (e) redesignated as new (c)...........4602
    (c)(1) introductory text, (3) and (5) revised..................13515
563.134  Added.....................................................27196
563.170  (c)(1)(iv) revised........................................34547
563.171  Redesignated as 564.8 and heading, (b), (c)(1), (2) and 
        (d) introductory text revised..............................34549
563.172  (a) amended...............................................34547
563.233  (e)(1) and (3)(i) revised; (e)(4) amended.................13516
563b.3  (i)(3)(i) revised..........................................13516
    (g)(2) revised; (g)(3) removed; (g)(4) redesignated as (g)(3) 
                                                                   27197
563b.28  (a) revised...............................................13516
563d.1  Amended....................................................34531
563d.2  Revised.....................................................3041
563e.4  (f) revised; interim.......................................26628
563e.5  (a)(2) and (3) redesignated as (a)(3) and (4); new (a)(3), 
        (4), (c)(1), and (2) revised; new (a)(2), new (c)(3), and 
        (d) added; interim.........................................26628
563e.6  Existing text designated as (a) and amended; (b) added; 
        interim....................................................26628
563f.7  Amended....................................................13516
564  Added.........................................................34547
564.8  Redesignated from 563.171; heading, (b), (c)(1), (2), and 
        (d) introductory text revised..............................34549
    (c)(2) and (d) corrected.......................................43440
564  Appendix A added; interim; eff. 1-30-91................53612, 53618
567.3  (d)(2)(i) introductory text revised.........................13516
567.4  (a)(3)(i) introductory text revised.........................13517
567.13  Added.......................................................7478
571  Technical correction............................................696
571.19  (e) amended..................................................126
571.27  Removed....................................................34550
574.6  (b)(1)(i), (iv), (2) through (6), (d)(2) introductory text 
        and (3) revised; (b)(1)(ii) and (d)(2) amended.............13517
584.1  (a)(4), (b) and (e) revised.................................13517
584.2-1  (c)(1) amended............................................13518
584.2-2  (b) amended...............................................13518
584.5  Amended.....................................................13518

                                  1991

12 CFR
                                                                   56 FR
                                                                    Page
Chapter V
505.2  Revised.....................................................59866
505.3  Revised.....................................................59866
505.4  Revised.....................................................59866
506.1  (b) table amended....................................29566, 34010
508.4  (b) amended.................................................38306
508.6  (c) amended.................................................38306
508.7  (a) amended.................................................38306
508.13  (b) amended................................................38306
508.14  Amended....................................................38306

[[Page 529]]

509  Revised.......................................................38306
509.1  (c) revised.................................................59866
512.7  (b) introductory text and (4) amended.......................38317
513.1  Amended.....................................................38317
513.5  (b) amended.................................................38318
545.12  (b) amended................................................59866
545.121  (g) amended...............................................59866
552.6-2  (a) and (b) amended.......................................59866
563.41  (b) and (c) redesignated as 563.43(e) and (f); removed.....34010
    Added..........................................................34011
563.42  Added......................................................34013
563.43  (e) and (f) redesignated from 563.41(b) and (c); heading 
        and (a) revised............................................34010
    (f) introductory text revised..................................59866
563.45  Amended....................................................59866
563.50  Added......................................................31067
563.51  Added......................................................31067
563.52  Added......................................................31068
563.50--563.52  Appendix A added...................................31069
563.93  (a) and (d)(1) revised; (b)(3) and (7) removed; (b)(4), 
        (5), (6) and (8) through (13) redesignated as (3) through 
        (11); (f)(2) amended.......................................34014
563.98  Removed....................................................59866
563.132  (a)(4) amended............................................59867
563.180  (d)(2) introductory text revised..........................29566
    (d)(2) introductory text corrected.............................32474
563b.3  (f)(1) amended.............................................59867
563e.4  Regulation at 55 FR 26628 confirmed........................26906
563e.5  Regulation at 55 FR 26628 confirmed; (a)(3) and (c)(3) 
        revised....................................................26906
563e.6  Regulation at 55 FR 26628 confirmed........................26906
564  Technical correction............................................778
    Appendix A corrected............................................1229
568  Revised.......................................................29566
584.6  Revised.....................................................31070

                                  1992

12 CFR
                                                                   57 FR
                                                                    Page
Chapter V
500.10--500.17 (Subpart B)  Revised................................14335
500.32  Removed....................................................14336
506  Authority citation revised.............................45980, 48947
506.1  (b) table amended (OMB numbers)...............45980, 48947, 49380
    (b) table revised (OMB numbers)................................48947
    (b) table amended (OMB numbers); eff. 1-25-93..................61250
516  Added.........................................................14336
543.1  (b) amended.................................................14338
543.2  (a) and (g)(1) introductory text revised; (b), (g) 
        introductory text and (h)(3) removed; (d), (e) and (f) 
        amended....................................................14338
543.8  (b) revised.................................................14339
543.9  (a) revised; (c) amended....................................14339
544.2  (a) and (b) introductory text revised; (c) amended; (d) and 
        (e) removed................................................14339
544.3  Introductory text revised...................................14339
544.5  (a), (c) and (d) revised....................................14339
545  Authority citation revised....................................33437
545.14  (c) revised................................................33437
545.32  (b)(2) removed; (b)(1) redesignated as (b)(2); (b)(3) 
        amended; new (b)(1) added; (d) revised; eff. 3-19-93.......62900
545.33  (a) and (b) removed; (c) through (h) redesignated as (a) 
        through (f); newly designated (b)(1) amended; eff. 3-19-93
                                                                   62900
    (b)(2) introductory text, new (e) and (f) amended; eff. 3-19-
93
545.35  (d) revised................................................33437
    (a) through (c) removed; (d) redesignated as (b); new (a) 
added; eff. 3-19-93................................................62901
545.36  (a) and (b) revised; eff. 3-19-93..........................62901
545.37  (c) and (d) removed; (b) revised; eff. 3-19-93.............62901
545.38  (b)(3) revised.............................................33437
545.40  Introductory text and concluding text amended; eff. 3-19-
        93.........................................................62901
545.42  Revised; eff. 3-19-93......................................62901
545.45  (d)(2)(ii) and (3)(i) amended; eff. 3-19-93................62901
545.74  (b)(7), (c) introductory text, (3)(vi), (4)(iii) and (e) 
        revised; (c)(4)(i)(D) amended; (f) and (g) removed.........14340
    (d)(2) revised.................................................33437
    (a) introductory text, (1), (b)(1), (2), (3), (5), (c) 
introductory text and (d)(2) introductory text revised; (a)(5) 
added; (b)(6) and (7) removed......................................48949

[[Page 530]]

    (c) introductory text and (b)(2) amended.......................62474
545.77  Revised....................................................14340
545.81  Added......................................................48947
    (c)(1)(ii) and (2)(i) amended..................................62474
545.82  (f) heading, (1) introductory text and (3) revised.........14340
    (c)(2) removed; (e) introductory text revised..................33437
545.92  (a), (b), (c), (e), (f) and (h)(1) revised; (h)(3) 
        removed; (j) added.........................................14341
    (i) removed; interim...........................................37084
545.93  (b) and (c) amended........................................14341
545.94  Removed....................................................14341
545.95  Revised....................................................14341
545.96  (b) revised; (d) removed...................................14342
545.111  Removed...................................................40090
545.113  Removed...................................................40090
545.114  Removed...................................................40090
545.115  Removed...................................................40090
546.2  (d)(2) and (e) amended......................................14342
546.4  (c) and concluding text revised.............................14342
550.2  (a) amended.................................................14342
552.2-1  (b) introductory text, (1) introductory text and (i) 
        revised....................................................14342
552.2-2  (b) and (c) amended; (d) removed..........................14342
552.4  (a) and (b) introductory text revised; (c) and (d) amended; 
        (e) and (f) removed........................................14343
552.5  Revised  ...................................................14343
552.6-3  (a) amended...............................................14343
552.10  Revised....................................................14343
552.13  (i) revised; (m) removed...................................14343
556.5  Revised.....................................................12207
558.3  Amended.....................................................14335
558.4  Amended.....................................................14335
559.3  Amended.....................................................14335
561  Authority citation revised....................................33437
561.55  (b)(2) revised; (c) added..................................33437
562  Added.........................................................40090
563  Authority citation revised......................33437, 45980, 46088
563.1  Revised.....................................................14344
563.4  Removed.....................................................14344
563.10  (b)(1) amended; (c) heading and (1) introductory text 
        revised....................................................14344
    (b)(2), (c)(1)(i) and (3)(v) revised; (d) removed; (e) 
redesignated as (d)................................................33438
563.22  (c)(2) revised; (e) heading and (1) amended; (d)(1), 
        (e)(2), (3) and (f) removed................................14344
563.37  (c) revised................................................14344
563.38  (b) amended................................................14344
563.41  (e)(2)(ii)(D) revised......................................14344
563.43  (d) amended; (e) and (f) revised...........................14344
    Revised........................................................45980
563.45  Amended....................................................14345
563.46  Removed....................................................40091
563.74  (e) revised................................................14345
563.75  Removed....................................................14345
563.76  Added......................................................46088
563.80  (e)(2) revised.............................................14345
    (e)(1) introductory text amended...............................33438
563.81  Heading, (a), (b), (c), (d) introductory text, (1)(iv), 
        (2), (h) and (k) revised; (d)(1) introductory text, (iii), 
        (v), (vi) introductory text, (f) and (g) amended; (e), (i) 
        and (j) removed............................................14345
563.84  (b)(7) introductory text revised...........................33438
563.93  (b)(6)(iii) amended; (d)(3)(iii) revised; (g) removed......14347
563.94  Removed....................................................33438
563.96  Amended....................................................33438
563.97  (a) amended; eff. 3-19-93..................................62901
563.100  Added; eff. 3-19-93.......................................62901
563.101  Added; eff. 3-19-93.......................................62901
563.90--563.101 (Subpart D)  Appendix A added; eff. 3-19-93.......62896, 
                                                                   62901
563.131  (a)(1), (b), (d) and (e) amended; (c) introductory text 
        revised....................................................14347
    (b) revised....................................................33438
563.132  (a)(1)(ii), (c)(2) and (4) amended; (c)(5) removed; (c) 
        heading, (1) introductory text and (3) revised.............14347
563.133  Removed...................................................14347
563.134  (c) and (e)(3) amended....................................14347
    (a)(3), (6) and (b)(1) revised.................................33438
563.160  (f)(3) amended............................................14335
563.170  (c)(4) amended............................................14335
    (d) revised....................................................40092
563.172  (b) through (d) removed...................................40091
    (a) designation and heading removed; revised...................40092
563.173  (c)(2) revised............................................33438
    (f) removed....................................................40091

[[Page 531]]

563.174  (a), (b), (d), (e) and (f) revised........................40092
563.175  (a)(13)(iii) revised......................................33438
    (a), (e) and (f) revised; (g) removed..........................40093
563.180  (e) added; eff. 1-25-93...................................61251
563.190  Revised...................................................12698
563.231--563.234 (Subpart H)  Removed..............................40091
563.233  (c) and (d) revised.......................................33438
    Removed........................................................40091
563.234  Removed...................................................40091
563b  Authority citation revised...................................49380
563b.3  (i)(3)(i) amended..........................................14347
563b.8  (w) removed................................................14348
563b.21  Revised...................................................49380
563b.23  Revised...................................................49381
563b.24  Revised...................................................49381
563b.26  (b) revised...............................................49381
563b.27  (e) amended...............................................14335
    (l) removed; (m) through (s) redesignated as (l) through (r); 
introductory text, (a), (d), (e), new (l), (n) and (o) revised; 
new (s) added......................................................49381
563b.28  (c)(2) amended............................................14335
    (a) revised; (c) removed.......................................14348
    Redesignated as 563b.29; new 563b.28 added.....................49382
563b.29  (a) amended...............................................14348
    Redesignated as 563b.30; new 563b.29 redesignated from 563b.28
                                                                   49382
563b.30  Redesignated as 563b.31; new 563b.30 redesignated from 
        563b.29....................................................49382
563b.31  Redesignated as 563b.32; new 563b.31 redesignated from 
        563b.30....................................................49382
563b.32  Redesignated as 563b.33; new 563b.32 redesignated from 
        563b.31....................................................49382
563b.33  Redesignated from 563b.32.................................49382
563b.34--563b.41 (Subpart D)  Removed..............................49382
563b.39  (d) and (m) revised.......................................14348
563b.41  (a) revised; (c) removed..................................14348
563c  Authority citation revised...................................33439
563c.10--563c.13 (Subpart B)  Removed..............................40094
563c.12  Removed...................................................40094
563c.13  Removed...................................................40094
563c.14  Removed...................................................33439
563c.102  Amended..................................................26990
563f.7  Revised....................................................14348
563g  Authority citation revised...................................46088
563g.17  Revised...................................................46088
564  Authority citation revised....................................12705
    Temporary exceptions...........................................54173
564.2  (g) through (k) redesignated as (h) through (l); new (g) 
        added......................................................12705
564.3  Heading, (a) introductory text, (1) and (2) revised; (d) 
        added......................................................12705
565  Added.........................................................44903
566.3  Removed.....................................................14348
566.4  Revised.....................................................14348
566.5  Removed.....................................................14348
567  Authority citation revised....................................33439
567.1  (jj) added..................................................12709
    (a)(2)(i) removed; (a)(2)(ii), (iii) and (iv) redesignated as 
(a)(2)(i), (ii) and (iii); (a)(3)(iii), (k), (o), (q), (u), (v), 
(w)(2)(ii)(C) and (gg) revised; (p) and (ee) amended; (kk) and 
(ll) added.........................................................33439
567.2  (b) heading and (2) revised.................................33440
567.3  (a)(1), (2), (d)(1), (3) and (5) amended....................14335
    (d)(2)(i) introductory text amended............................14348
567.4  (a)(1) introductory text, (2) introductory text, (3)(i) 
        introductory text and (4) amended..........................14335
    (a)(1) introductory text and concluding text amended...........33440
567.5  (a)(1) introductory text, (ii), (iv) and (b)(4) amended; 
        (a)(2)(v)(A) introductory text and (b)(3)(i) revised.......33440
567.6  (a)(1)(iii)(D) added........................................12709
    (a) introductory text, (1)(ii)(N), (O) and (2)(i)(C) revised; 
(a)(1)(vi)(C) redesignated as (a)(1)(vi)(C)(1); (a)(1) heading, 
(ii)(R), (v)(A), (vi) heading, (A), (2) introductory text, (iv) 
heading, (A), (B) and (C) revised; (a)(1)(ii)(S) and new 
(vi)(C)(2) amended.................................................33440
567.9  (c)(1) and (3)(i) introductory text revised.................33441

[[Page 532]]

567.10  (a) heading, (2) introductory text and (f) revised; (a)(1) 
        removed....................................................33441
567.11  (a) revised; (c) amended...................................33441
571  Authority citation revised....................................33442
571.1  (a)(1) amended..............................................14335
571.2  (b), (d)(1) and (e)(4)(ii) amended..........................14335
571.11  Removed; interim...........................................37084
571.12  Removed....................................................14348
571.14  Removed....................................................12698
571.16  (c)(10) amended............................................14335
571.18  Removed....................................................40094
571.19  Removed....................................................26990
571.23  Removed....................................................33442
574.3  (c)(1)(ii) revised..........................................14348
574.4  (f)(1) introductory text revised............................14349
574.5  (a)(1) revised..............................................14349
574.6  (b) and (d)(2) revised; (j) added...........................14349
574.7  (f) removed.................................................14349
574.9  Removed.....................................................14349
579.5  Amended.....................................................14335
584  Authority citation revised....................................35458
584.1  (a) and (e) revised.........................................35458
584.2-1  (c)(1) revised............................................14349
584.2-2  (b) amended...............................................14349
584.5  Removed.....................................................35458
584.9  (d) revised.................................................14349
584.10  Removed....................................................35458

                                  1993

12 CFR
                                                                   58 FR
                                                                    Page
Chapter V
506  Technical correction..........................................11186
506.1  (b) table amended (OMB number).................4311, 44114, 45427
509  Technical correction..........................................11186
509.104  (b) and (f) revised; (g) redesignated as (i); new (g) and 
        (h) added...................................................4311
516  Authority citation revised.....................................4312
    Technical correction...........................................11186
516.1  (c) introductory text amended................................4312
516.2  (d)(1) amended..............................................44114
517  Added.........................................................33324
528  Authority citation revised.....................................4312
    Technical correction...........................................11186
528.1  (d) through (g) removed......................................4312
528.6  Revised......................................................4312
541  Authority citation revised.....................................4312
    Technical correction...........................................11186
541.9  Removed......................................................4312
541.12  Removed.....................................................4312
541.24  Removed.....................................................4312
543  Authority citation revised.....................................4312
    Technical correction...........................................11186
543.1  (a) amended..................................................4312
545  Technical correction..........................................11186
545.12  (b) revised.................................................4312
545.21  Removed.....................................................4312
545.34  (b) and (c) amended.........................................4312
545.36  (d) amended.................................................4312
545.41  (a) revised.................................................4312
545.75  (b)(5) removed..............................................4312
545.79  Removed.....................................................4312
545.93  Removed.....................................................4312
545.123  Removed....................................................4312
552  Authority citation revised.....................................4312
    Technical correction...........................................11186
552.6-1  (b) amended................................................4312
552.7  Removed......................................................4312
552.8  (b) removed..................................................4312
556  Authority citation revised.....................................4312
    Technical correction...........................................11186
556.7  Removed......................................................4312
558  Revised........................................................4312
    Technical correction...........................................11186
559  Removed........................................................4313
    Technical correction...........................................11186
561  Authority citation revised.....................................4313
    Technical correction...........................................11186
561.5  Removed......................................................4313
561.16  (b) through (e) and (g) removed; (f) redesignated as (b) 
                                                                    4313
561.17  Removed.....................................................4313
561.22  Removed.....................................................4313
561.46  Removed.....................................................4313
563  Technical correction..........................................11186
563.7  (d) removed; (e) redesignated as (d).........................4313
563.24  Removed.....................................................4313
563.27  (a), (b) designation, heading, (1) designation and (2) 
        removed.....................................................4313
563.29  Removed.....................................................4313
563.32  Removed.....................................................4313
563.33  (b) removed.................................................4313
563.34  Removed.....................................................4313
563.45  Removed.....................................................4313
563.48  (e) amended.................................................4313
563.49  Added; eff. 4-19-93 through 4-19-95........................14513
563.50  (a), (b), (d), (e), and (g)(2) introductory text revised 
                                                                   15084

[[Page 533]]

563.51  (f)(1)(vi) redesignated as (f)(1)(vii); new (f)(1)(vi) and 
        new (f)(1)(vii)(G) added; new (f)(1)(vii)(E) amended; (e), 
        (f)(1)(vii) introductory text and new (f)(1)(vii)(F) 
        revised....................................................15084
563.50--563.52  appendix A Removed.................................15085
563.90  Removed.....................................................4313
563.93  (b)(6)(i) and (d)(3)(ii) amended............................4313
563.99  (d) removed.................................................4314
563.90--563.101 (Subpart D)  Appendix A corrected...................4460
563.131  Removed....................................................4314
563.132  (a)(1)(ii) revised.........................................4314
563.170  (c)(10) added; interim....................................28348
563.176  (b) removed; (c) through (f) redesignated as (b) through 
        (e)........................................................45813
563.192  Removed....................................................4314
563b  Technical correction.........................................11186
563b.3  (i)(4)(vi) added............................................4314
563e  Authority citation revised....................................4314
    Technical correction...........................................11186
563e.6  Amended.....................................................4314
564  Temporary exceptions..........................................42640
567  Authority citation revised.....................................4314
    Technical correction...........................................11186
567.1  (i)(2) amended..............................................15086
567.2  (a)(1)(i) revised...........................................45813
567.5  (c)(4) added................................................45813
567.6  Heading revised; (a)(1)(iv)(Q) amended; (a)(1)(iv)(R) and 
        (S) added; (a)(1)(v) removed.................................476
    (a)(1)(iv)(S) amended; (a)(1)(iv)(T) added.....................15086
    (a)(1)(iv)(O) removed; (a)(1)(ii)(H), (iii)(C) and (iv)(N) 
revised; eff. 7-1-94...............................................45813
567.7  Added.......................................................45813
567.20  Removed.....................................................4314
571  Authority citation revised.....................................4314
    Technical correction...........................................11186
571.1  Removed......................................................4314
571.3  Removed......................................................4314
571.10  Removed.....................................................4314
571.16  Removed.....................................................4314
571.17  Removed.....................................................4314
571.25  Removed.....................................................4314
571.26  Removed.....................................................4314
574  Authority citation revised....................................45427
574.9  Added.......................................................45427
    (a)(5)(i)(B) corrected.........................................52140
575  Added.........................................................44114
579--580 (Subchapter E)  Removed....................................4314
579  Technical correction..........................................11186
580  Technical correction..........................................11186

                                  1994

12 CFR
                                                                   59 FR
                                                                    Page
Chapter V
Chapter  V Nomenclature change.....................................18475
500  Authority citation revised....................................53570
500.30  (a) amended................................................53570
503  Authority citation revised....................................18475
503.1  (e) amended.................................................18475
504  Authority citation revised....................................18475
504.3  Introductory text amended...................................18475
504.4  Amended.....................................................18475
505  Authority citation revised....................................18475
505.2  Amended.....................................................18475
505.4  Amended.....................................................18475
506.1  (b) table amended (OMB numbers).............................44622
    (b)  table amended (OMB numbers)...............................53570
508  Authority citation revised....................................53570
508.13  (b) amended................................................53570
515  Authority citation revised....................................18475
515.2  Amended.....................................................18475
515.4  (a) introductory text and (b) amended.......................18475
515.5  Amended.....................................................18476
544  Authority citation revised....................................18476
544  appendix amended..............................................18476
545.32  (b)(2) amended.............................................29502
545.33  (c) introductory text amended..............................53570
545.35  (b) amended................................................53570
545.74  (b)(2), (c)(5)(v) and (d)(1)(iv) amended...................53570
545.81  (d) heading, (1) introductory text and (2) revised; (d) 
        introductory text added....................................53570
545.103  (b) amended...............................................29502
545.141  (d) removed; (e) revised..................................53571
546  Authority citation revised....................................44622
546.1  Revised.....................................................44622
546.2  Revised.....................................................44622
546.3  Revised.....................................................44623
546.4  Amended.....................................................44623
550  Authority citation revised....................................60303
550.7  Revised.....................................................60303
552.2-6  Revised...................................................44623

[[Page 534]]

552.2-7  Added.....................................................44623
552.3  (a) designation removed.....................................53571
552.4  (d) amended.................................................18476
552.6  (d)(1) amended..............................................18476
552.6-4  Removed...................................................60303
552.13  (a) through (f), (h)(1), (2) introductory text, (iii), 
        (iv), (j), (k) and (l) revised; (g) removed................44623
552  appendix amended..............................................18476
558.1  (a) amended; (b)(6) revised.................................53571
558.2  Revised.....................................................53571
561.5  Added.......................................................18476
562.3  (b)(2) removed; (b)(3) redesignated as (b)(2); (d) revised 
                                                                   60303
562.4  Added.......................................................60304
563  Authority citation revised....................................53571
563.10  (c)(2), (3) introductory text and (d) amended..............66159
563.22  (c), (d), and (e) redesignated as (d), (e) and (f); (e) 
        introductory text and (1) removed; new (e)(2), (3), (4), 
        (f)(1) introductory text, (i) through (xi), (xiv), (xv), 
        (xvii) and (xviii) redesignated as (e)(1), (2), (3), (f) 
        introductory text, (1) through (11), (12), (13), (14) and 
        (15); (a), (b), new (d), new (e)(1), (2), (f)(1), (9), 
        (14) and (g) revised; new (f)(1)(xii), (xiii) and new 
        (xvi) removed; new (c), new (e)(4), new (5) and (h) added 
                                                                   44624
    (f)(2),  (4) and (11) amended; (f)(9), (10), (14) and (15) 
revised............................................................66159
563.43  Introductory text revised; (c) and (d) amended; (e) added 
                                                                   53571
563.47  (d) amended................................................66159
563.74  (c) and (h) amended........................................66159
563.84  (b)(7)(i) introductory text amended........................66159
563.93  (f)(1) amended.............................................53571
563.96  Removed....................................................53571
563.170  (c)(1)(iv) revised........................................29502
    (c)(10)(i)(B)  revised.........................................53571
    (a)(1)  designation and (2) removed............................60304
563.176  (e) removed...............................................53571
563.180  (c) amended...............................................66159
563b  Authority citation revised...................................61260
563b.2  (a)(14) removed; (a)(15) through (19) and (29) through 
        (40) redesignated as (a)(14) through (18) and (30) through 
        (41); new (a)(16) revised; new (a)(19) and (29) added; 
        interim....................................................22732
    Regulation  at 59 FR 22732 confirmed...........................61260
    (a)(19)  revised...............................................61261
563b.3  (c)(2)(i), (ii), (4)(i) through (iv), (5)(i) and (ii) 
        redesignated as (c)(2)(ii), (iii), (4)(ii) through (v), 
        (5)(ii) and (iii); new (c)(2)(i), new (4)(i), new (5)(i) 
        and (g)(4) added; (c)(6)(i), (iv), (7), (14), (23), 
        (d)(4), (g) heading, (1)(i), (ii) and (3) revised; 
        (g)(1)(iii) removed........................................22733
    (c)(2)(i),  (4)(i) and (5)(i) removed; (c)(2)(ii), (iii), 
(4)(ii) through (v), (5)(ii), (iii) and (d)(12) redesignated as 
(c)(2)(i), (ii), (4)(i) through (iv), (5)(i), (ii) and (d)(13); 
(c)(6)(iv), (23), (g)(3)(i)(B), (D) introductory text, (ii), and 
(4)(vii) through (xi) revised; (d)(12), (g)(4)(xii), (xiii) and 
(xiv) added........................................................61261
    Regulation  at 59 FR 22733 confirmed...........................61260
563b.4  (b)(1) existing text designated in part as (b)(1)(i) and 
        in part as (ii); new (b)(1)(i) revised.....................61261
    (b)(1)  amended; (c) revised; interim..........................22734
    Regulation  at 59 FR 22734 confirmed...........................61260
563b.5  (d)(4) and (e)(5) revised; interim.........................22734
    Regulation  at 59 FR 22734 confirmed...........................61260
563b.7  (f)(1)(ii) and (3) revised; (f)(1)(iii) amended; 
        (f)(1)(iv) added; interim..................................22734
    Regulation  at 59 FR 22734 confirmed...........................61260
    (f)(2)  amended................................................61262
563b.8  (e)(1) and (t)(1) amended; interim.........................22735
    Regulation  at 59 FR 22735 confirmed...........................61260
563b.10  Revised; interim..........................................22735

[[Page 535]]

    Regulation  at 59 FR 22735 confirmed...........................61260
563b.11  Added.....................................................61262
563b.100  Amended; interim.........................................22735
    Regulation  at 59 FR 22735 confirmed...........................61260
563b.101  Amended; interim.........................................22735
    Regulation  at 59 FR 22735 confirmed...........................61260
564  Statement and order.....................................6531, 40202
    Authority  citation revised....................................29502
    Temporary  exceptions..........................................62562
564.2  (d) through (l) redesignated as (e) through (m); new (d) 
        added......................................................29502
564.3  (a) revised; (b), (c) and (d) redesignated as (d), (e) and 
        (f); new (b) and new (c) added.............................29502
564.4  Revised.....................................................29503
564.5  (b) revised.................................................29503
564.8  (d) introductory text and (2) amended; (d)(1) removed; 
        (d)(2) designation removed.................................29503
    (d)  introductory text amended.................................53571
564  appendix A removed............................................29503
567  Authority citation revised.....................................4788
567.1  (v) revised.................................................12810
567.3  (b)(3) and (9) revised; eff. 1-17-95........................64564
567.5  (a)(2)(i) and (ii) revised; (a)(2)(iii) removed..............4788
567.6  (a)(1)(iii)(C) revised; eff. in part 3-18-94 to 9-29-94 and 
        9-30-94....................................................12810
    (a)(1)(iv)(L)  revised..........................................4788
    (a)(2)(v)  revised.............................................66652
567.7  (a) amended.................................................12811
567.9  (c)(1) revised...............................................4788
567.12  Added.......................................................4788
571.2  Removed.....................................................60304
571.5  Removed.....................................................44627
574.5  Heading amended; (b) removed; (c) amended and redesignated 
        as (b).....................................................53571
574.6  (a) revised.................................................28470
574.7  Heading and (c) revised.....................................28471
    (a)(1)  and (b) amended........................................44627
575  Authority citation revised....................................61262
575.1  Existing text designated as (a); (a) heading and (b) added 
                                                                   61262
575.7  (e) added; interim..........................................22735
    Regulation  at 59 FR 22735 confirmed...........................61260
    (a)(7)  redesignated as (a)(8); new (a)(7) added; (d)(2) 
revised............................................................61262
575.13  (a)(4) amended; interim....................................22735
    (c)(3)(i)  revised.............................................44627
    Regulation  at 59 FR 22735 confirmed...........................61260
    (a)(4)  revised................................................61262
590  Authority citation revised....................................53571

                                  1995

12 CFR
                                                                   60 FR
                                                                    Page
Chapter V
500--517 (Subchapter A)  Heading removed; nomenclature change......66715
500.1  Existing text designated as (a); (b), (c) and (d) 
        redesignated from 500.3, 500.4 and 500.5...................66868
500.3  Existing text redesignated as 500.1(b); removed.............66868
500.4  Existing text redesignated as 500.1(c); removed.............66868
500.5  Existing text redesignated as 500.1(d); removed.............66868
500.10  Amended....................................................66869
500.11  Removed....................................................66869
500.12  Removed....................................................66869
500.14  Removed....................................................66869
500.15  Removed....................................................66869
500.17  Removed....................................................66869
504  Removed.......................................................66869
505.1  (a) and (b) amended.........................................66715
505.2  Revised.....................................................66716
505.3  Revised.....................................................66716
505.4  Revised.....................................................66716
506.1  (b) table amended (OMB numbers).............................28031
    Revised (OMB numbers)..........................................66716
509.9  (a) and (b) revised; (e) added..............................28035
510  Authority citation revised.............................28031, 66716
510.1  Removed.....................................................66869
510.2  (a) amended.................................................66716
510.3  Removed.....................................................66869
510.5  Revised.....................................................28031
512  Authority citation revised....................................66716
512.4  Amended.....................................................66717
512.5  (a) amended.................................................66717
515  Removed.......................................................66869
516.1  (b)(1) through (5) amended..................................66717
516.3  (c) revised.................................................66717

[[Page 536]]

528--535 (Subchapter B)  Heading removed; nomenclature change......66715
529  Removed.......................................................66869
533  Removed.......................................................66869
541--558 (Subchapter C)  Heading removed; nomenclature change......66715
543.8  (a) amended.................................................66717
543.11  (c)(1)(iii)(C) amended.....................................66717
543.12  Removed....................................................66869
543.13  Removed....................................................66869
544.3  Amended.....................................................66717
545.15  Removed....................................................66869
545.18  Removed....................................................66869
545.19  Removed....................................................66869
545.20  Removed....................................................66869
545.44  Removed....................................................66869
545.74  (c)(4)(iv) amended.........................................66717
545.82  (c)(1)(i), (ii) and (f)(2) amended.........................66717
545.121  (c) concluding text and (e) amended.......................66717
545.122  Removed...................................................66869
545.131  (b)(7) introductory text amended..........................66717
545.136  Removed...................................................66869
545.137  Removed...................................................66869
550.2  (c) introductory text, (1), (4), (5), (7), (9) and (d) 
        amended....................................................66717
550.3  Amended.....................................................66717
550.10  (b)(2) amended.............................................66717
550.13  (b) amended................................................66717
550.14  (a), (b) and (c) introductory text amended.................66717
550.15  (a) amended................................................66718
552.2-4  Removed...................................................66869
552.5  (a) and (b)(1)(ii) amended..................................66718
552.6-2  (b) amended...............................................66869
552  appendix amended..............................................66718
556.4  Removed.....................................................66869
556.5  (c)(4) amended..............................................66718
556.6  Removed.....................................................66869
556.8  Removed.....................................................66869
556.9  Removed.....................................................66869
556.11  Removed....................................................66869
556.14  Removed....................................................66869
556.15  Removed....................................................66869
561--575 (Subchapter D)  Heading removed; nomenclature change......66715
562.3  Removed.....................................................66869
563  Authority citation revised....................................35288
563.8  Removed.....................................................66869
563.9  (f) amended.................................................66718
563.41  (b)(11) added; (d)(1) removed; (d)(2) through (7) 
        redesignated as (d)(1) through (6); (b)(10)(iv) and new 
        (d)(1) amended.............................................66869
563.42  (d)(1) amended.............................................66869
563.43  (f) added..................................................66869
563.48  (f) added; eff. 1-2-96.....................................35288
563.49  Removed....................................................66869
563.52  (b) amended................................................66869
563.72  Removed....................................................66869
563.93  (b) introductory text, (9), (c) introductory text, 
        (d)(3)(ii), (f)(1) and appendix amended; (b)(6) and (11) 
        revised; interim...........................................15863
    Regulation at 60 FR 15861 confirmed............................66715
    (b)(11)(ii) amended............................................66718
563.134  (b)(5) and (c) amended....................................66718
563.160  (c)(2) and (d)(1) amended; (f) removed....................66718
563.170  (b)(1), (c)(3)(iii) and (e) amended.......................66718
563.177  (a) and (b) amended.......................................66718
563b.2  (a)(15) removed; (a)(16) redesignated as (a)(15); new 
        (a)(16) added..............................................66718
563b.3  (c)(8) and (13) amended....................................66718
563b.4  (b)(1)(i) concluding text redesignated as (b)(2)(ii) and 
        amended....................................................66718
563b.8  (e)(1) amended.............................................66718
563b.29  (b) amended...............................................66718
563c  Authority citation revised...................................66718
563c.3  (a) designation and (b) removed............................66718
563d  Authority citation revised...................................66718
563d.1  Amended....................................................66718
563d.2  Amended....................................................66718
563d.200-30  Removed...............................................66869
563e  Authority citation revised...................................22212
563e.1  Removed....................................................22223
563e.2  Removed....................................................22223
563e.3  Removed; eff. 7-1-97.......................................22223
563e.4  Removed; eff. 7-1-97.......................................22223
563e.5  Removed; eff. 7-1-97.......................................22223
563e.6  Removed; eff. 7-1-97.......................................22223
563e.7  Removed; eff. 7-1-97.......................................22223
563e.8  Removed....................................................22223
563e.11--563e.12 (Subpart A)  Added................................22212
563e.12  (g)(3) amended............................................66050

[[Page 537]]

563e.21--563e.29 (Subpart B)  Added................................22213
563e.27  (h) amended...............................................66050
563e.41--563e.45 (Subpart C)  Added................................22217
563e.51 (Subpart D)  Added.........................................22220
    Removed; eff. 7-1-97...........................................22223
    (a) amended....................................................66050
563e  appendix A added.............................................22220
    appendix B added...............................................22223
563g.5  (b)(1) and (2) revised.....................................66869
563g.22  Removed...................................................66870
565.2  (f) revised; interim........................................39232
565.9  (a) amended.................................................66719
566  Authority citation revised....................................66719
566.2  (c) amended.................................................66719
567  Authority citation revised....................................45621
567.1  (m) revised; interim........................................39232
    (d) revised....................................................42028
567.3  (a), (d)(1) and (5) revised; (b)(5), (d)(2) and (3) amended
                                                                   66719
567.4  (a)(1) introductory text, (3)(i) introductory text, (A), 
        (C), (ii), (4), (5)(ii) and (b)(1) amended; (a)(2) 
        introductory text and (6) revised..........................66719
567.5  (a)(2) heading, (i) and (ii) revised; interim...............39232
567.6  (a)(1)(iv)(L) and (M) revised; interim......................39232
    (a) and (2)(i)(C) amended; (a)(3) added; interim...............45621
567.9  (c)(1) revised; interim.....................................39232
567.10  (a)(3) introductory text and (c) amended...................66720
567.12  Heading and (a) through (f) revised; interim...............39232
567.13  (c) amended................................................66720
570  Added.........................................................35686
570  appendix A added.......................................35678, 35687
571.6  (a)(2)(iv), (b)(3)(i), (d)(1), (2), (4)(ii) and (g) 
        amended; (b)(3)(i) redesignated as (b)(3)..................66720
571.13  (a) introductory text and (1) amended......................66720
571.20  (a) amended................................................66720
571.24  (a) amended................................................66870
574.2  (i) removed.................................................66720
574.3  (c)(2)(v) amended...........................................66720
574.4  (c)(4)(ii) and (f)(2) amended...............................66720
574.6  (a)(4), (5) and (6) added; (c)(3)(ii)(D) amended; 
        (c)(3)(iii) removed........................................66720
574.7  (a)(2)(iii)(A), (E), (F)(1) through (4) and (c)(2) 
        introductory text amended..................................66720
575.2  (i) and (p) amended.........................................66720
575.10  (a)(1) and (2)(iii) amended................................66720
575.11  (g) amended................................................66720
583--584 (Subchapter F)  Heading removed; nomenclature change......66715
583  Authority citation revised.............................66720, 66870
583.10  Removed....................................................66720
583.17  Amended....................................................66870
584.1  (b) amended.................................................66720
584.2-1  (b)(2) and (3) introductory text amended..................66870
584.2a  (a)(2) amended.............................................66870
584.2-2  (b) and (c) amended.......................................66720
584.3  Removed.....................................................66870
584.6  Removed.....................................................66870
584.11  Removed....................................................66870
590--591 (Subchapter G)  Heading removed; nomenclature change......66715

                                  1996

12 CFR
                                                                   61 FR
                                                                    Page
Chapter V
500--517 (Subchapter A)  Regulation at 60 FR 66715 eff. date 
        corrected to 12-26-95........................................575
505.1  Regulation at 60 FR 66715 eff. date corrected to 12-26-95 
                                                                     575
505.2  Regulation at 60 FR 66716 eff. date corrected to 12-26-95 
                                                                     575
505.3  Regulation at 60 FR 66716 eff. date corrected to 12-26-95 
                                                                     575
505.4  Regulation at 60 FR 66716 eff. date corrected to 12-26-95 
                                                                     575
506.1  Regulation at 60 FR 66716 eff. date corrected to 12-26-95 
                                                                     575
    (b) revised (OMB numbers)......................................65178
509  Authority citation revised....................................20353
509.1  (e)(7) amended; (f) redesignated as (g); (e)(9), (10) and 
        new (f) added; new (g) revised.............................20353
509.6  (a)(3) revised..............................................20354
509.8  (b) revised.................................................20354
509.11  (c)(2) and (d) revised.....................................20354
509.12  (a), (c)(1), (2) and (3) revised...........................20354
509.20  Revised....................................................20354
509.24  (a) and (b) revised........................................20354

[[Page 538]]

509.25  (a), (b), (e) and (g) revised..............................20355
509.33  (a) revised................................................20355
509.34  (a) and (b)(1) revised.....................................20355
509.35  (a)(3) redesignated as (a)(4); new (a)(3) added; (b) 
        revised....................................................20356
509.37  Heading and (a)(1) revised.................................20356
509.38  Revised....................................................20356
509.102  (g)(2) revised............................................20356
509.104  (h) removed; (i) redesignated as (h)......................20356
510  Authority citation revised....................................56119
510.2  Regulation at 60 FR 66716 eff. date corrected to 12-26-95 
                                                                     575
510.6  Added.......................................................56119
512.4  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
512.5  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
516.1  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
516.3  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
528--535 (Subchapter B)  Regulation at 60 FR 66715 eff. date 
        corrected to 12-26-95........................................575
541--558 (Subchapter C)  Regulation at 60 FR 66715 eff. date 
        corrected to 12-26-95........................................575
543.1  (b) amended.................................................64015
543.8  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
543.11  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
543.14  Amended....................................................64015
544.1  Amended.....................................................64015
544.2  (a)(2), (b)(4) and (c) revised; (b) introductory text 
        amended....................................................64016
544.3  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
    Removed........................................................64016
544.5  (b) amended; (b)(12) and (15) removed; (b)(5) through (11), 
        (16), (17), (c)(1) introductory text, (i), (ii), (iii) and 
        concluding text redesignated as (b)(6) through (12), (15), 
        (16), (c)(1)(i) introductory text, (A), (B), (C) and 
        (iii); (a), new (b)(6), new (7), new (8), new (11), new 
        (15), new (16), new (c)(1)(i) introductory text, new (B), 
        new (iii), (2) and (d) revised; (b)(1) through (4), new 
        (10)(i), new (ii) and new (13) amended; new (b)(5), 
        (c)(1)(ii) and (3) added...................................64016
544.8  Removed.....................................................64017
    Redesignated from 545.131......................................64018
544.9  Removed.....................................................64017
544  Appendix removed..............................................64017
545.31  Removed....................................................50971
545.32  Removed....................................................50971
545.33  Removed....................................................50971
545.34  Removed....................................................50971
545.35  Removed....................................................50971
545.36  Removed....................................................50971
545.37  Removed....................................................50971
545.38  Removed....................................................50971
545.39  Removed....................................................50971
545.40  Removed....................................................50971
545.41  Removed....................................................50971
545.42  Removed....................................................50971
545.43  Removed....................................................50971
545.45  Removed....................................................50971
545.46  Removed....................................................50971
545.47  Removed....................................................50971
545.48  Removed....................................................50971
545.49  Removed....................................................50971
545.50  Removed....................................................50971
545.51  Removed....................................................50971
545.52  Removed....................................................50971
545.53  Removed....................................................50971
545.72  Removed....................................................50971
545.73  Removed....................................................50971
545.74  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
    (c)(1)(vi) revised.............................................50971

[[Page 539]]

    (a), (b), (c) heading and introductory text, (1), (2), (3), 
(4) heading, (ii)(F), (5), (6), (7), (d) and (e) removed; 
(c)(4)(i) introductory text, (A) through (E), (ii) introductory 
text, (A) through (E), (G), (iii) and (iv) redesignated as (a) 
introductory text, (1) through (5), (b) introductory text, (1) 
through (5), (6), (c) and (d); heading and new (a) introductory 
text revised; new (b) introductory text, new (1) and new (c) 
amended............................................................66570
545.75  Removed....................................................50971
545.76  Removed....................................................66571
545.77  Removed....................................................66571
545.78  Removed....................................................50971
545.80  Removed....................................................66571
545.81  Removed....................................................66571
545.82  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
    Removed........................................................66571
545.121  Regulation at 60 FR 66717 eff. date corrected to 12-26-95
                                                                     575
545.126  Removed...................................................60178
545.131  Regulation at 60 FR 66717 eff. date corrected to 12-26-95
                                                                     575
    Redesignated as 544.8..........................................64018
550.2  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
550.3  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
550.10  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
550.13  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
550.14  Regulation at 60 FR 66717 eff. date corrected to 12-26-95 
                                                                     575
550.15  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
552.1  Removed.....................................................64018
552.2  Removed.....................................................64018
552.2-5  Removed...................................................64018
552.3  Amended.....................................................64018
552.4  (b)(3) removed; (b)(4), (5) and (6) redesignated as (b)(3), 
        (4) and (5); (a)(1), (b) introductory text and new (4) 
        amended; (a)(2), new (b)(3), new (5) and (c) revised; 
        (b)(1) heading, (2) heading, (6) and (8) heading added.....64018
552.5  (a) amended; (b)(1) introductory text, (i), (ii) and 
        concluding text redesignated as (b)(1)(i) introductory 
        text, (A), (B) and (iii); new (b)(1)(i) introductory text, 
        new (B), new (iii) and (2) revised; new (b)(1)(ii), (3) 
        and (d) added..............................................64019
    Regulation at 60 FR 66718 eff. date corrected to 12-26-95........575
552.6  (a), (b), (e) and (f)(1) amended; (d)(1) revised; (f)(3) 
        removed; (h) added.........................................64020
552.6-1  (a), (c) and (e) amended; (b), (f) heading, (1) and (k) 
        revised....................................................64020
552.6-2  (a) amended; (c) revised..................................64020
552.8  Removed.....................................................64020
552.11  (b) amended................................................64020
552  Regulation at 60 FR 66718 eff. date corrected to 12-26-95.......575
    Appendix removed...............................................64020
556.1  Removed.....................................................64020
556.2  Removed.....................................................50971
556.3  Removed.....................................................50971
556.5  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
556.10  Removed....................................................50971
556.16  Removed....................................................60178
556.17  Removed....................................................64020
559  Added.........................................................66571
560  Added.........................................................50971
    Authority citation revised.....................................60184
560.3  Amended; interim............................................60184
560.30  Revised....................................................66577
560.32  Added......................................................66578
560.36  Added......................................................66579
560.37  Added......................................................66579
560.93  (a) revised................................................66579
560.130  Added.....................................................60178
561--575 (Subchapter D)  Regulation at 60 FR 66715 eff. date 
        corrected to 12-26-95........................................575
561.13  Tables amended.............................................65179
563  Authority citation revised..............................6105, 45709
563.7  (a) and (d)(2) amended......................................65179

[[Page 540]]

563.9  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
563.35  Removed....................................................60178
563.36  Added; interim.............................................60184
563.37  Removed....................................................66579
563.38  Removed....................................................66579
563.40  Removed....................................................60178
563.41  (e)(2)(iii) redesignated as (e)(3); (e)(2)(i), (ii)(B) and 
        new (3) amended............................................65179
    (b)(4) revised.................................................66579
563.44  Removed....................................................60178
563.48  Removed....................................................45709
563.50  Removed; interim...........................................60184
563.51  (f)(1)(i) amended..........................................50984
    Removed; interim...............................................60184
563.52  Removed; interim...........................................60184
563.93--563.101 (Subpart D)  Removed...............................50984
563.93  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
563.132  Removed...................................................66579
563.134  Regulation at 60 FR 66718 eff. date corrected to 12-26-95
                                                                     575
563.160  Regulation at 60 FR 66718 eff. date corrected to 12-26-95
                                                                     575
    Removed........................................................50984
563.170  Regulation at 60 FR 66718 eff. date corrected to 12-26-95
                                                                     575
    (c) revised....................................................50984
563.172  Removed...................................................50984
563.177  Regulation at 60 FR 66718 eff. date corrected to 12-26-95
                                                                     575
563.180  Heading and (d) revised....................................6105
563.200  Added.....................................................60178
563.201  Added.....................................................60179
563b.2  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
563b.3  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
563b.4  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
563b.8  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
563b.29  Regulation at 60 FR 66718 eff. date corrected to 12-26-95
                                                                     575
563c.3  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
563d.1  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
    Amended........................................................65179
563d.2  Regulation at 60 FR 66718 eff. date corrected to 12-26-95 
                                                                     575
563e.12  (g)(3) amended............................................21364
563f  Revised......................................................40308
565.9  Regulation at 60 FR 66719 eff. date corrected to 12-26-95 
                                                                     575
566.1  (g)(6)(i) amended...........................................50984
566.2  Regulation at 60 FR 66719 eff. date corrected to 12-26-95 
                                                                     575
567.1  (l)(1) amended; (dd) revised................................66579
567.3  Regulation at 60 FR 66719 eff. date corrected to 12-26-95 
                                                                     575
567.4  Regulation at 60 FR 66719 eff. date corrected to 12-26-95 
                                                                     575
567.10  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
567.13  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
570  Appendix A amended............................................43952
571.4  Removed.....................................................60179
571.6  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
571.7  Removed.....................................................60179
571.8  Removed.....................................................50984
571.9  Removed.....................................................60179
571.13  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
    Removed........................................................50984
571.20  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
    Removed........................................................50984
571.21  Removed....................................................66579
571.22  Removed....................................................50984
572  Added.........................................................45709
574.1  Revised; interim............................................60184
574.2  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
    (q)(2)(ii) revised; (q)(3) added; interim......................60184

[[Page 541]]

574.3  (c)(1)(iii) through (vii), (2)(iv) and (v) redesignated as 
        (c)(1)(iv) through (viii), (2)(v) and (vi); (c)(1)(ii) and 
        new (2)(v) amended; new (c)(1)(iii) and (2)(iv) added; 
        (c)(2)(i) revised; interim.................................60184
    Regulation at 60 FR 66720 eff. date corrected to 12-26-95........575
574.4  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
574.6  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
    (c)(5) amended.................................................65179
574.7  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
575  Heading revised; interim......................................60184
575.2  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
    (h) revised; interim...........................................60184
575.9  (a)(1), (4) and (5) amended; (a)(2) revised.................64021
575.10  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
575.11  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
583--584 (Subchapter F)  Regulation at 60 FR 66715 eff. date 
        corrected to 12-26-95........................................575
583.10  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
583.20  (b)(2) revised; (c) added; interim.........................60185
584.1  Regulation at 60 FR 66720 eff. date corrected to 12-26-95 
                                                                     575
584.2-2  Regulation at 60 FR 66720 eff. date corrected to 12-26-95
                                                                     575
584.2a  (e) removed; interim.......................................60185
590--591 (Subchapter G)  Regulation at 60 FR 66715 eff. date 
        corrected to 12-26-95........................................575
590.4  (e)(1) amended..............................................50984

                                  1997

12 CFR
                                                                   62 FR
                                                                    Page
Chapter V
502  Authority citation revised.....................................3780
502.1  (f) revised..................................................3780
506.1  (b) table amended (OMB numbers)......................54764, 66261
    Regulation at 62 FR 66261 eff. date corrected to 12-18-97......67117
516  Authority citation revised....................................64143
516.1-516.3 (Subpart A)  Existing sections designated as Subpart A
                                                                   64143
516.2  (c)(6) removed..............................................64143
516.3  (a)(1)(i), (b)(1)(i) and (c) revised.........................3780
516.50--516.80 (Subpart B)  Added..................................64143
516.100--516.150 (Subpart C)  Added................................64144
516.160--516.190 (Subpart D)  Added................................64144
543.2  (g)(1)(iv), (v) and (vi) amended; (g)(2) removed; (g)(3) 
        redesignated as (g)(2).....................................27180
    (c) removed; (d)(1), (3), (4), (e), (f) and (h)(1) revised.....64145
543.3  Added.......................................................27180
    (c)(1)(v) corrected............................................28983
543.8  Heading and (a) revised.....................................45309
543.9  (a) and (c) introductory text revised.......................45309
544.5  (a) amended.................................................66262
    Regulation at 62 FR 66262 eff. date corrected to 12-18-97......67117
545.10  Removed....................................................54764
545.11  Removed....................................................54764
545.12  Removed....................................................54764
545.13  Removed....................................................54764
545.14  Removed....................................................54764
545.71  Removed....................................................66262
    Regulation at 62 FR 66261 eff. date corrected to 12-18-97......67117
545.92  (d), (e) heading, (2) and (f) revised; (i) and (j) removed
                                                                   64145
545.95  (a) and (b)(1)(ii) revised.................................64146
545.102  Removed...................................................67703
550  Revised.......................................................67703
552.2-1  (a) amended; (b)(2) removed...............................27181
    (a) revised....................................................64146
552.2-2  (a) revised...............................................64146
552.4  (b)(4) amended..............................................66262
    Regulation at 62 FR 66262 eff. date corrected to 12-18-97......67117
552.6-1  (c) amended...............................................66262
    Regulation at 62 FR 66262 eff. date corrected to 12-18-97......67117
552.10  Amended....................................................66262
    Regulation at 62 FR 66262 eff. date corrected to 12-18-97......67117
556.5  (c)(4) revised..............................................64146
556.12  Removed....................................................54764

[[Page 542]]

557  Added.........................................................54764
559.3  (g)(2) amended..............................................66262
    Regulation at 62 FR 66262 eff. date corrected to 12-18-97......67117
560.3  Amended; introductory text revised..........................15825
560.93  (b)(6) removed; (d)(3)(ii) revised.........................66262
    Regulation at 62 FR 66262 eff. date corrected to 12-18-97......67117
560.100  Amended...................................................66262
    Regulation at 62 FR 66262 eff. date corrected to 12-18-97......67117
561.16  (a) amended................................................54765
561.42  Amended....................................................54765
561.45  Amended....................................................66262
    Regulation at 62 FR 66262 eff. date corrected to 12-18-97......67117
562.4  (b)(1) and (c)(2) revised....................................3780
563  Authority citation revised.....................................6453
563.2  Removed.....................................................54765
563.3  Removed.....................................................54765
563.6  Removed.....................................................54765
563.7  Removed.....................................................54765
563.9  Removed.....................................................54765
563.10  Removed....................................................54765
563.22  (e)(1), (4) and (f)(3) revised.............................64146
563.41  (e)(2)(ii)(A) revised.......................................3781
    (b)(11) amended................................................66262
    Regulation at 62 FR 66262 eff. date corrected to 12-18-97......67117
563.81  (d)(1)(vi) and (3) amended.................................66262
    Regulation at 62 FR 66262 eff. date corrected to 12-18-97......67117
563.134  (a)(3) revised; (a)(7), (8) and (9) amended...............66263
    Regulation at 62 FR 66263 eff. date corrected to 12-18-97......67117
563.171  Added; interim.............................................6453
563e.11  (c) revised...............................................67708
563g.1  (a)(13) amended............................................54765
565.2  (f) amended.................................................66263
    Regulation at 62 FR 66263 eff. date corrected to 12-18-97......67117
565.4  (b)(2)(iii)(B), (3)(iii)(B) and (c)(2) revised...............3781
566.1  (d), (g)(2), (3), (4)(i)(A), (B), (8), (9) and (10) 
        revised; (g)(11)(i) amended; (g)(12) and (13) added; (h) 
        removed....................................................62512
566.2  Revised.....................................................62513
567.1  Amended.....................................................66263
    Regulation at 62 FR 66263 eff. date corrected to 12-18-97......67117
567.2  (b) removed.................................................66263
    Regulation at 62 FR 66263 eff. date corrected to 12-18-97......67117
567.5  (a)(1)(v), (2)(i), (v) and (c) revised; (a)(2)(vi) and 
        (b)(4) amended.............................................66263
    Regulation at 62 FR 66263 eff. date corrected to 12-18-97......67117
567.6  Regulation at 60 FR 45621 confirmed.........................55493
    (a)(1)(iii)(D) revised.........................................66264
    Regulation at 62 FR 66264 eff. date corrected to 12-18-97......67117
567.9  (c)(1) and (4) amended; (c)(3) revised......................66264
    Regulation at 62 FR 66264 eff. date corrected to 12-18-97......67117
567.12  (a) revised; (b) amended...................................66264
    Regulation at 62 FR 66264 eff. date corrected to 12-18-97......67117
571.6  Removed.....................................................27181
571.15  Removed....................................................67708
574.9  (a)(5)(i)(A) revised.........................................3781
575.9  (a)(4) amended..............................................66264
    Regulation at 62 FR 66264 eff. date corrected to 12-18-97......67117

                                  1998

12 CFR
                                                                   63 FR
                                                                    Page
Chapter V
502  Revised.......................................................65670
506.1  (b) revised (OMB numbers)...................................71211
528.1  (a) amended.................................................71212
528.1a  Revised....................................................71212
528.2  Note revised................................................71212
528.2a  Note revised...............................................71212
528.3  Note revised................................................71212
528.9  Redesignated from 571.24....................................71212
544.2  (b)(4) amended..............................................46160
545.92  (a) revised................................................65682
545.138  Removed...................................................65682
545.141  Removed...................................................65682
545.142  Removed...................................................65682
555  Added.........................................................65682
557.11  Heading and (a) introductory text revised..................71212
559.3  (o)(2) revised..............................................65683
560.210  (b)(2) introductory text, (viii) and (ix) revised; 
        (b)(2)(x) removed; (b)(2)(xi), (xii) and (xiii) 
        redesignated as (b)(2)(x), (xi) and (xii); interim..........1053
    Revised........................................................38463
563  Authority citation revised....................................51274

[[Page 543]]

563.41  (a)(3) revised.............................................43293
563.171  Revised...................................................16381
563.172  Added.....................................................66349
563.173  Removed...................................................66349
563.174  Removed...................................................66349
563.175  Removed...................................................66349
563.550--563.590 (Subpart H)  Added................................51274
563f.2  (l)(1)(iii) revised........................................51275
563f.5  (b)(2)(i) and (ii) revised.................................51275
563f.6  (b)(1) and (2) revised.....................................51275
565.2  (f) revised.................................................42678
566.1  (d) amended.................................................71213
567  Technical correction..........................................48571
567.1  Amended.....................................................42678
567.5  (a)(2)(ii) revised..........................................42678
    (b)(5) added...................................................46524
567.6  (a)(1)(iv)(L) and (M) revised...............................42678
567.9  (c)(1) revised..............................................42678
567.12  Heading and (a) through (f) revised........................42678
570.1  (a) and (c) revised; (b) amended; interim...................55488
570.2  (a) revised; interim........................................55489
570  Appendix B added; interim..............................55484, 55486
571  Removed.......................................................71213
571.24  Redesignated as 528.9......................................71212
574  Authority citation revised....................................51275
574.9  Removed.....................................................51275
574.100  Amended...................................................71213
575.2  (h) and (o) revised; (q) added..............................11365
575.6  (c) through (i) redesignated as (d) through (j); new (c) 
        added......................................................11365
575.10  (a)(2) introductory text, (3), (4) and (b)(1) amended; 
        (a)(6)(i)(B) revised.......................................11365
575.11  (b)(1) introductory text (2), (c) introductory text, (1), 
        (3) and (e) revised; (b)(1)(ii) redesignated as 
        (b)(1)(iii); new (b)(1)(ii) added..........................11365
575.12  (a)(2), (b)(1)(ii), (iii) and (2) revised..................11366
575.14  Added......................................................11366
584.2  (b)(6)(i) revised...........................................71213
584.2-1  (a) and (b)(1)(v) amended.................................71213
584.2-2  (a) amended...............................................71213

                                  1999

12 CFR
                                                                   64 FR
                                                                    Page
Chapter V
503.1  (b), (c) and (d) amended....................................69184
505.2  Amended.....................................................69184
505.3  Amended.....................................................69184
505.4  Amended.....................................................69184
541.3  Removed.....................................................46564
541.4  Removed.....................................................46564
541.6  Removed.....................................................46564
541.13  Removed....................................................46564
541.17  Removed....................................................46564
541.23  Revised....................................................46564
545.103  Redesignated as 560.60....................................46565
557.11  (a) introductory text revised..............................69184
559.11  Amended....................................................69185
560.60  Redesignated from 545.103 and revised......................46565
560.3  Amended.....................................................46565
560.50  Added......................................................46565
560.120  (a) amended; (b)(2)(ii) revised...........................46565
561.10  Removed....................................................46565
561.11  Removed....................................................46565
561.13  Removed.....................................................6503
561.20  Removed....................................................46565
561.21  Removed....................................................46565
561.23  Removed....................................................46565
561.25  Removed....................................................46565
561.32  Removed....................................................46565
561.36  Removed....................................................46565
561.47  Removed.....................................................6503
561.48  Removed.....................................................6503
563  Authority citation revised.....................................2809
563.41  (b)(1)(v)(B) revised.......................................69185
563.134  Removed....................................................2809
563.140--563.146 (Subpart E)  Revised...............................2809
563.171  Heading revised...........................................69185
563b.3  (g)(2) amended..............................................2810
563f.2  (b) and (f) removed; (c) through (s) redesignated as (b) 
        through (q)................................................51680
563f.3  (c) revised................................................51680
563f.5  Revised....................................................51680
563f.6  Revised....................................................51680
563f.7  (a) revised................................................51681
567.1  Amended.....................................................10200
567.2  (a)(2)(ii) revised..........................................10201
567.6  (a)(1)(vi) revised..........................................10201
567.8  Revised.....................................................10201
570.1  Regulation at 63 FR 55488 confirmed; (c) revised............66708
570  Appendix B revised.....................................66704, 66706
572.6  (a) revised.................................................69185

[[Page 544]]

                                  2000

12 CFR
                                                                   65 FR
                                                                    Page
Chapter V
506.1  (b) amended.................................................78900
509  Authority citation revised....................................61262
509.19  (c)(1) amended.............................................78901
509.31  (b)(3) revised.............................................78901
509.103  Added.....................................................61262
510.6  Removed.....................................................61262
536  Added; eff. 4-1-01............................................75845
560.30  Amended....................................................78901
563  Effective date confirmation...................................30257
563.84  Removed....................................................16305
563b  Comment period extention.....................................60096
563b.3  (g)(1) and (3) revised; interim............................43090
563c  Effective date confirmation..................................30257
563c.101  (c) revised..............................................16305
563g  Effective date confirmation..................................30257
563g.3  (a) removed................................................16305
573  Added.........................................................35226
575  Comment period extention......................................60096
575.11  (c) introductory text, (1), (2) and (3) redesignated as 
        (c)(1) introductory text, (ii), (iii) and (iv); (a), new 
        (c)(1) introductory text and (iv) amended; (c)(1)(i), new 
        (2) and (d)(3) added; interim..............................43091

                                  2001

12 CFR
                                                                   66 FR
                                                                    Page
Chapter V
500  Heading revised...............................................65819
502.20  Revised....................................................33159
505.1  (b) amended.................................................65819
505.2  Revised.....................................................65819
505.3  Amended.....................................................65819
505.4  Amended.....................................................65819
506.1  (b) table amended...........................................65819
506.1  (b) amended; interim........................................15017
    Regulation at 66 FR 15017 confirmed............................37407
516  Heading revised...............................................65820
516.1--516.3 (Subpart A)   Removed.................................13000
516.1  Added.......................................................13000
516.5  Added.......................................................13000
516.10  Added......................................................13000
516.15--516.47 (Subpart A)  Added..................................13000
516.40  (a)(2) revised.............................................65820
516.55  Added......................................................13002
516.110  Amended...................................................13003
516.120  Revised...................................................13003
516.130  Revised...................................................13003
516.140  Revised...................................................13003
516.150  Revised...................................................13003
516.185  Added.....................................................13003
516.190  Revised...................................................13003
516.200--516.290 (Subpart E)  Added................................13003
517  Heading revised...............................................65820
517.6  (b) revised.................................................13005
533  Added..........................................................2106
536  Regulation at 65 FR 75845 eff. date delayed...................15345
541  Heading revised...............................................65820
543  Heading revised...............................................65820
543.9  (a) revised.................................................13005
544  Heading revised...............................................65820
544.2  (c) amended.................................................13005
544.5  (c)(1)(ii) revised..........................................13006
    (c)(1)(iii) revised............................................15020
545  Heading revised...............................................65820
545.92  (b) and (d)(2) revised; (f) amended........................13006
545.92  (d)(2) revised.............................................65820
545.93  Redesignated from 556.5....................................65820
546  Heading revised...............................................65820
550.80  Revised....................................................13006
550.260  (b)(2) amended............................................13006
550.530  Amended...................................................13006
552  Heading revised...............................................65820
552.2-6  Amended...................................................13006
    Existing text designated as (a); (b) added.....................23154
    Regulation at 66 FR 37407 confirmed............................37408
552.4  (d) amended.................................................13006
552.5  (b)(1)(ii) revised..........................................13006
    (b)(1)(iii) revised............................................15020
555.310  (a) introductory text amended.............................13006
556  Removed.......................................................65820
556.5  Redesignated as 545.93......................................65820
556.347  Revised...................................................19854
559.3  (e)(2)(i) and (ii) amended..................................13006
559.4  Introductory text amended...................................13007
    Introductory text, (g)(3), (h)(2), (3) and (i) revised; (j) 
added..............................................................65824
559.11  Amended....................................................13007
559.13  (b) revised................................................13007
560.3  Amended.....................................................65825
560.30  Table amended; interim.....................................15017

[[Page 545]]

    Regulation at 66 FR 15017 confirmed............................15017
    Revised........................................................65825
560.32  (c) amended................................................13007
560.35  (d)(3) revised.............................................13007
560.36  Revised....................................................65826
560.40  (a)(2)(ii) amended; (c) added..............................65826
560.42  Revised....................................................65826
560.93  (d)(3)(iii) amended........................................13007
560.101  Appendix amended..........................................65821
560.160  (a)(1) revised............................................13007
561  Heading revised...............................................65821
562.4  (b)(1) revised..............................................13007
    (c)(3) correctly added; CFR correction.........................33632
563  Heading revised...............................................65821
563.22  (b)(1)(ii), (2), (d)(4), (f)(1) and (h)(2) revised.........13007
563.41  (e)(2)(ii)(A) revised......................................13008
563.81  (a)(1), (2) and (c) amended................................13008
563.143  Heading revised; (a)(1) amended...........................13008
563.161  (a) revised; interim......................................15017
    Regulation at 66 FR 15017 confirmed............................15017
563.171  (b)(4) revised............................................13008
563.180  (d)(11) revised...........................................13008
563.183  (c)(1) revised............................................13008
563.555  Amended...................................................13008
563.565  Revised...................................................13009
563b.27  (e) footnote 1 amended....................................13009
563d.1  Amended....................................................65821
563d.2  Amended....................................................65821
563f.6  (a) amended................................................13009
563g.5  (b)(1) introductory text, (1)(i) and (2) revised...........65821
563g.18  (a) amended...............................................65821
565.4  (b)(2)(iii)(B), (3)(iii)(B) and (c)(2) note 1 amended.......13009
    (b)(1)(iv) revised.............................................65821
566  Removed; interim..............................................15017
    Regulation at 66 FR 15017 confirmed............................15017
567.1  Amended.....................................................59661
567.2  (a)(1)(i) revised...........................................59663
567.3  (d)(2)(i) introductory text amended.........................13009
    (a)(2) correctly removed; CFR correction.......................33632
567.4  (a)(3)(i) amended...........................................13009
567.5  (a)(2)(iii) added...........................................59663
567.6  (a) introductory text, (1), (ii)(R), (iii)(C), (iv)(J), 
        (M), (2) introductory text, (i)(B) and (ii)(A) revised; 
        (a)(1)(ii)(H), (iv)(N), (2)(i)(A), (C) and (3) removed; 
        (b) added..................................................59663
567.7  (f) revised.................................................13009
567.9  (c)(1) revised..............................................59666
567.11  (c) redesignated as (c)(1); (c)(2) and (3) added...........59666
567.12  Heading, (a) and (e) revised; (b)(4) added.................59667
568  Authority citation revised.....................................8639
    Heading and authority citation revised.........................65821
568.1  (a) revised..................................................8639
568.5  Added........................................................8639
570  Heading revised...............................................65821
570.1  (a) and (b) amended..........................................8639
570.2  (a) revised..................................................8639
570  Appendix B revised.............................................8640
573.15  (a)(7)(ii) revised.........................................65822
574.4  (f)(2) amended..............................................13009
574.6  (f)(4) amended..............................................13009
575.3  (b)(2) introductory text revised............................13009
575.13  (a)(1), (b), (c)(2) and (e) amended........................13010
583  Heading revised...............................................65822
584.2-1  (a) and (c)(1) amended; interim...........................15017
    Regulation at 66 FR 15017 confirmed............................15017
584.2-2  (b) amended...............................................13010
590.3  (c) revised.................................................65822